excel final report

8/10/2019 Excel Final Report

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INDEX

Introduction................................................................................................................................. 3

Research Methodology ............................................................................................................... 4

INDUSTRY PROFILE ............................................................................................................... 6

Overview Of The Industry ........................................................................................................... 7

Market Share ............................................................................................................................... 8

COMPANY PROFILE ............................................................................................................... 9

History And Development ......................................................................................................... 10

Excel Crop Care Ltd. At Bhavnagar ............................................................................................ 11

Company Profile ........................................................................................................................ 12

Organization Chart .................................................................................................................... 14

Vision Statement ....................................................................................................................... 15

Mission ...................................................................................................................................... 15

Production ................................................................................................................................. 16

Products .................................................................................................................................... 17

Product Planning ....................................................................................................................... 18

Production Process .................................................................................................................... 19

Quality Assurance ...................................................................................................................... 19

Export Area ................................................................................................................................ 21

Time Keeping System ................................................................................................................ 22

Employee Welfare Activity ........................................................................................................ 23

FINANCE DEPARTMENT : WORKING CAPITAL MANAGEMENT ............................................... 24

Introduction............................................................................................................................... 25

Organization Structure Of Finance Department ....................................................................... 25

Financial Planning ...................................................................................................................... 26

Capitalization ............................................................................................................................. 27

Theoretical Aspects Of Working Capital Management ............................................................. 28

Type Of Working Capital ........................................................................................................... 29

Sources Of Working Capital ................................................................................................................... 31

Constituents Of Working Capital ........................................................................................................... 34

Factors Determining The Working Capital Requirements ..................................................................... 36

Need For Working Capital ...................................................................................................................... 38

Management Of Working Capital .......................................................................................................... 39


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DATA INTERPRETATION AND ANALYSIS ............................................................................... 40

Management Of Working Capital In Excel Crop Care Ltd. ..................................................................... 41

Operating Cycle ...................................................................................................................................... 42

Time And Money Concept In Working Capital Cycle ............................................................................. 42

Operating Cycle Period .......................................................................................................................... 44

Control For A, B & C Items ..................................................................................................................... 47

Statement Showing Working Capital Requirement ............................................................................... 49

Inventory ................................................................................................................................................ 50

Swot Analysis ......................................................................................................................................... 51

Working Capital Analysis ........................................................................................................................ 52

Profitability Ratio Analysis ..................................................................................................................... 53

Working Capital Related Ratio Analysis ................................................................................................. 54

A) Liquidity Ratios: ....................................................................................................................... 54

1. Current Ratio: ........................................................................................................................ 54

2. Quick Ratio ........................................................................................................................... 56

B) Current Assets Movement Ratios .............................................................................................. 58

1. Inventory Turnover Or Stock Turnover Ratio: ....................................................................... 59

2. Debtors Turnover Ratio: ........................................................................................................ 60

3. Creditor Turnover Ratio: ....................................................................................................... 634. Working Capital Turnover Ratio: .......................................................................................... 65

Findings ........................................................................................................................... 66

Recommendations ........................................................................................................... 67

Conclusion ....................................................................................................................... 68

Bibliography ..................................................................................................................... 69


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INTRODUCTION

Small businesses often need ready access to working capital to deal with unforeseen

circumstances, remain competitive, or expand infrastructure. Funds may be supplied by surplus

profits, a small business cash advance, or bank financing but one thing is certain: at times,

sufficient working capital can be absolutely essential for a small business.

Working capital management is the process of planning and controlling the level and mix

of the current assets of the firm as well as financing these assets. Specially, working capital

management requires financial managers to decide what quantities of cash, other liquid assets.

Accounts receivable, and inventories the firm will hold at any point in time. In addition,financial managers must decide how their current assets are to be financed. Financing choices

include the mix of current as well as long-term liabilities.

This high degree of divisibility has two important implications for the management of

working capital, first, if the management to choose; working capital can be acquired piecemeal

to meet immediate needs as they arise. In the management of working capital, the firm is faced

with two key questions. First given the level of sales and the relevant cost considerations, what

are the optimal amounts of cash assets, account receivable, and inventories that a firm should

choose to maintain? Second, given these optimal amounts, what is the most economical way to

finance these working capital investments?

I have chosen this title to know that how we have to manage working capital. Excel crop

care ltd. Producing crop care product and they are importing raw material from outside, so by

choosing this title, I want to know that how to manage inventory and its cost and debtors as well

as creditors. Their product demand is more in particular season only, so in that case how tomanage working capital in organization because here the creditors are there and no debtors.


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RESEARCH METHODOLOGY

A)OBJECTIVES:

1. To study the working capital management of excel crop care ltd.

2. To study the optimum level of current assets and current liabilities of the company.

3. To study the liquidity position through various working capital related ratios.

4. To study the working capital components such as receivables accounts, cash

management, Inventory position

5. To study the way and means of working capital finance

B) IMPORTANCE OF STUDY:

Efficient management of working capital is one of the pre-conditions for the success of

an enterprise. Adequate amount working capital is maintained smooth running of a firm and for

fulfillment of twin objective of liquidity and profitability. This study is helpful to understand the

liquid position of the EXCEL CROP CARE LTD.

C) PROBLEMS TO INVESTIGATE:Working capital has acquired a great significant and sound position in recent year with

an objective profitability and liquidity. The success of failure of business enterprise largely

dependent upon the management of working capital higher amount of working capital will

increase the liquidity at same time will create impact on profitability.

Lower amount of working capital decrease the liquidity. But day-to-day functioning of

business will also affect. Adequate amount of working capital require for the business. Thus it is

essential to study the management of working capital in industries and association of liquidity

and profitability with reference previous year.

D)RESEARCH DESIGN:

Primary Data: Through interview

Secondary Data: 3 years annual report of EXCEL CROP CARE LTD. and web data has

been collected.

Instrument For Data Collection: Interviews, the annual report of the company, Web

data collection.


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E) LIMITATION OF STUDY

It is limited to only this particular company

Only last three years data is used so, its limited to only particular time period

It is done according to my knowledge regarding working capital.

It is done from secondary data, there may be mistakes in secondary data

The conclusion done according to my analytical ability so, there may be mistakes


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INDUSTRY

PROFILE


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OVERVIEW OF THE INDUSTRYThe process of globalization of Indian chemical industry was initiated in the early 1990s. The

erstwhile Indian chemical industry suffered due to the absolute monopoly of the government of

India enterprises.

But with the opening of the Indian market to foreign institutional investors (FII) and foreign

direct investment (FDI). The monopolies of this government institution were curtailed

substantially. This gave rise to the opening up of the Indian chemical industry to host of the

untapped opportunities. With the introduction of the open market economic policy by the

government of India the process of globalization of Indian chemical industry took a steady rise.

The Department of chemicals & Agrochemicals under Government of India is the

concerned highest authority that regulates the Indian chemical Industry and the allied areas of

environmental concern. The chemical Industry of India is at par with world standard and it

shares a good portion of chemical business in world market. Asian countries, African countries

and even Arab world buys Indian chemical products.

The demand for Indian chemical products is high across the world. The reason for this

popularity is its high quality and competitive price. Indias low cost and high quality chemical

product manufacturing expertise coupled with world class. Manufacturing infrastructure is the

main leveraging factor for the rise of this industry. India offers high class chemical products at a

substantial discount than its a western counterpart while delivering the same grade of output.

VISION OF AN INDIAN CROP CARE INDUSTRY

To steer the Indian agrochemical industry towards global recognition in terms of:

Product quality

Promoting safe and judicious use of agrochemicals in Agri and Public Health fields

Responsible distribution and extension

Cost-effective, modern and safe manufacturing facilities and practice


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MARKET SHARE

COMPANY NAME PERCENTAGE SALES

Bayer Cropscien 29.75 2,139.27

Rallis India 14.94 1,074.22

MeghmaniOrgani 12.04 865.83

Excel Crop Care 10.16 731.15

PI Industries 10.00 719.3

Insecticides In 6.64 477.9

Sabero Organics 5.74 412.72

DhanukaAgritec 5.66 407.53

Monsanto India 5.03 362.12

TOTAL 100 7,190.04

30%

15%

12%

10%

10%

6%

6%

6%5%

Market ShareBayer Cropscien

Rallis India

Meghmani Organi

Excel Crop Care

PI Industries

Insecticides In

Sabero Organics

Dhanuka Agritec

Monsanto India


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COMPANYPROFILE


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HISTORY AND DEVELOPMENT

Excel industries ltd. has comes a long way since its origin in a kitchen laboratory in 1941

and then the company has started on 5th September 1960. As a private limited company and

became public limited company in 1965. The company manufactures basic industrial chemicals,

pesticides, fumigants etc.

Over the years, excel came to be known as an industry leader in the area of agro-

chemicals and agro chemicals intermediates by using its expertise in chemical technology. Excel

also expanded its chemicals manufacturing range to include water treatment chemicals and

polymer additives and few other specialty chemicals.

Excels commitment to sustainable development led us to venture into the field of

environment and bio-technology. Excel is a pioneer and technology leader is rapid conversion of

municipal solid waste to organic compost. Organization organic plant protection and soil / crop

productivity enhancers are well accepted in the marker.

In order to ensure focused attention to the expanded range of activities. The agro

business division was spun off as a separate company. Excel crop care limited in 2003. Excel

crop care was set up in 2003 and actively promotes integrated pest management (IPM) to Indian

farmers. Excel is organized into two divisionsi.e.

1. chemicals

2. environment and biotech

Ever since their inception, organization has built up a solid history and reputation of

developing, Manufacturing and exporting chemicals. They have achieved over 100 product and

process break through that even now are serving the specific needs. Organization has excellent

research facilities in Mumbai and at their manufacturing locations. During the last six decades,

they have received numerous awards in recognition of our dedication and excellence in the field

of agro chemicals and others.


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COMPANY PROFILE

Companys Name : Excel Crop Care Ltd.

Address : 6/2Ruvapary Road,

Bhavnagar.-364005

Gujarat, India.

E-mail : [email protected]

Registered Office : 184-87, swami vivekanand road ,

Jogeshwari (west)

Mumbai.400102

Locations : Bhavnagar

Ahmedabad

Secundrabad

New Delhi

Mumbai

Kolkata

Phone : (0278)-2212401

(0278)-2212402

No. of Employees : 1001 to 2500

Turnover (in Crores) : 500 to 1000 crores

Establishment : 19thNovember 1941(In Bhavnagar 1969)

Board Of Director : D. S. Shath (chairman)

K. C. Shroff (vice chairman)

A. C. Shoff (M.D)

Dipesh K. Shroff (Executive Director)

Prakash K. Shroff

P. V. S. Manyan

A. D. Mango

J. R. Naik

M. L. Shah

Mukul G. Asher


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Vice President : V.K.Parmar

Banker : Bank of India

City bank

Syndicate bank

State bank of india

AbnAmro bank

HDFC

ICICI

UTI bank

Standard Chartered Bank

Auditors : S.V.Ghatalia&associates chartered accountants

Type of product : Agro chemical and industrial chemical.

Branch offices : New Delhi, Calcutta, Hyderabad,Bangalore,

Madurai-Patna, headband

Company logo :


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ORGANIZATION CHART

Vice President

General President

Senior President

Manager

Personnel Production Marketing Engineering R & D Administration

Executive

Officer

Staff

Supervisor

Workers


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PRODUCTS

Product portfolio

Product portfolio is the statement in which the product is listedi.e. list of some of the

product. The products of excel crop care ltd are as follows.

I ndustri al chemicals:

Phosphorous trichloride

Phosphorous elemental

Phosphorous pentasalphide

Acetyl chloride

Agri cultur e chemicals:

EndocelChemical (endosulfanChemical)

Endocel 35 E.C(endosulfan formulation)

Trial technical (chlorphyphos technical)

Trial 20 E.C (chlorphyphos formulation)

Celphos (aluminiumphospide)

Sulfex (wattle sulfur)

Glycel technical (glyphosate Chemical)

Glycel 41 % SL (glyphosate formulation)


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PRODUCTPLANNING

Product is a key element in the market offering. Product is anything that can be offered to satisfy

a want or need. In absence of product there is nothing to distribute, promote or to sale. Thus

there is a need for proper planning of the product. Product planning is the process of determining

that line of product, which can secure maximum net realization from the intended markets.

Long Range Planni ng:

It includes planning over period of 3-5 years. The planning is done at corporate level. It

is for overall development of the organization.

Annual Operation Planning:

The annual operation planning is yearly plan set after consulting the concerned persons

from different sites. It involves marketing, production and purchase functions. It considers

Market Share

Market Demand

Market Competition

Monsoon Position

Distribution Demand


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PRODUCTION PROCESS

Process Of Endosulfan

HCCP Plant B.D.

Reactor

Filtration

Thinly Chloride SolideIntermediates

Reactor

Flaking

Flakes

Packing


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QUALITY ASSURANCE

The quality of the product is the essential priority of excel crop care ltd. The company

has successfully implemented KAIZEN technology of quality improvement.

Company also continues to ISO 14001: 2004 environmental management systems. The

company continues to enjoy continues reputation of quality suppliers.

Kaizen Implementation

For TQM (Total quality management) the company employed KAIZEN approach which

works very smoothly in a successful manner. The main 5s included in KAIZEN approach are

segregation, strengthen, shinning, standardization, self-discipline.

License

There are about 5 licenses given to the product out them some are listed below:

Canteen license under contract hotel and restaurant.

Licenses to import store and use spirit.

Endo tech. ISI and Endocel 35% ECISI.

Factory license

ISO: 14001 certification


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EXPORT AREA

SAFETY

The objectives of the safety department of excel crop care ltd. are;

Zero accidents

Maintain safe working procedures.

Provide safety instruments

Good housekeeping within the factory.

Legal complaints.

The Bhavnagar plant continues to maintain the OHAS: 18000 certificate for occupational

health and safety management system from 2002. They also achieved social accountability

standard certificate from national accreditation control board for laboratory in 2007.

The government of Gujarat has recognized the Bhavnagar factory with an award for achieving 1

million hours of accident free factory operations.

AMERICA USA, Mexico , Haiti, Argentina , Chile

EUROPBelgium , Bulgaria , Germany , France, U.K. , Spain , Italy

Netherlands, Greece.

AFRICA

Kenya , Zimbabwe , Sudan , Egypt , Ethiopia , Tanzania , Ivory Coast ,

South Africa , Djibouti

MIDDLE EAST

Iran , Saudi Arabia , U.A.E. Oman c Cyprus, Turkey , Israel , Syria ,

Y.A.R.

ASIA SPESIFIC

Australia ,New Zealand, Thailand, Myanmar, Malaysia , Philippines ,

Bangalore, Hong Kong, Singapore, Japan, South Korea , Taiwan , Nepal


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TIME KEEPING SYSTEM

Time is an important and valuable element factor in any organization. Excel

industry ltd is more conscious of the time keeping. For the smooth running of any organization

activity,it is necessary to have a sound of time keeping system. It helps to an employee for

calculation and determination of wages and salary.

Time keeping system follow by excel industries ltd is as follows.

Late coming workers:

10 minutes late coming is allowed for workers. They are provided 5 minutes more to

enter into premises. In terms of workers half hour wages will be cut.

Staff member and supervisors:

15 minutes late coming is allowed to them. But if staff comes after 15 minutes than

short leave will be considered and his one short leave will be used. Supervisor can use the short

leave only twice a month.

Management:

5 minutes late coming is allowed that is 8:40 a.m. more than this time if they come late.

Their half day salary will cut from their monthly salary

SHIFT TIME

A 07:00 am---to---03:00 pm

B 03:00 pm---to---11:00 pm

C (NIGHT) 11:00 pm---to---07:00 am

D (GENERAL) 08:30 am---to---05:00 pm


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FINANCE

DEPARTMENT:

Working CapitalManagement


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Introduction

Finance may be defined as the part of Art and science it is the art and science of

managing money. Financial management is that managerial activity which is concerned with the

planning and controlling of the firms financial resource.

Finance and accounting as such are separate function but are sufficiently related to be

described together. Accounting covers the classification of financial transactions and

summarization into the standard financial statement.

The finance function of management will have particular responsibility

Ensuring a fair return on investment

Generating and building up surplus

Planning, directing and controlling the utilization of fund.

Excel Crop Care Ltd Bhavnagar has its accounting department and head of its is K.K Mehta

ORGANIZATION STRUCTURE OF FINANCE DEPARTMENT

General Manager

Finance Manager

Office (Auditing) Staff manager Office (Accounting)


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FINANCIAL PLANNING

Financial planning is pre-requisite for the smooth functioning finance department and for

the purpose of growth and expansion of business activities.

There are two types of financial plan:

1. Long term Financial planning

2. Short term Financial planning

The term financial plan are formulated for the expansion of business for starting new

units for developing new products for modernization of the unit and for the purpose of sales of

fixed assets.

At excel they have planning about long term as well as short term financial planning.

Short term financial planning is for monthly planning and long term planning is for yearly

planning. Financial planning and decision making are undertaken at central level decision are

made in the contest of organization objectives.


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CAPITALIZATION

Capitalization is defined as the sum of par value of outstanding stock and the bonds.

Capitalization word is used to refer and funded obligation, which may report wholly fictitious

value; Capitalization is the estimation of present value.

In common parlance the phase Capitalization refers to total amount of capital employed

in business depending upon the efficiency of management of utilize installed capacity a

company may be under capitalization over capitalization for fair capitalization.

A company is undercapitalized if its real value is more than book value. A company is

over capitalized value is less than book value. A company is said to be fair capitalized if its real

value is equal to book values.

Book value of shares = Capital +Reserves+ Surplus

No .of shares

= 2,07,69,64,000

1, 10, 05,630

= 188.72

(www.moneycontrol.com)

Capital structure refers to the making of capitalization. In a broader sense capital structure

includes shares reserves etc and the components so the total capital the optimum capital structure

may be defined as the capital maximum value of firm.

Particulars RS. (in lacs)

Share Capital 550.28

Reserves & Surplus 17,376.19

Secured Loan 5,002.75

Unsecured Loan 9,554.82


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THEORETICAL ASPECTS OF WORKING CAPITAL MANAGEMENT

More business fails for lack of cash than for want of profit

Efficient management of working capital is one of the pre-conditions for the success of

an enterprise. Efficient management of working capital means management of various

components of working capital in such a way that an adequate amount of working capital is

maintained for smooth running of a firm and for fulfillment of twin objectives of liquidity and

profitability.

While inadequate amount of working capital impairs the firms liquidity. Holding of

excess working capital, results in the reduction of the profitability. But the proper estimation of

working capital actually required, is a difficult task for the management because the amount of

working capital varies across firms over the periods depending upon the nature of business,

production cycle, credit policy, availability of raw material, etc.

Thus efficient management of working capital is an important indicator of sound health

of an organization which requires reduction of unnecessary blocking of capital in order to bring

down the cost of financing.

Meaning of Working Capital:

Working capital is the amount of capital that a business has available to meet the day to-

day cash requirements of its operations, or more specially, for financing the conversion of raw

material into finished goods, which the company sells for payment. Funds are also needed for

short-term purposes for the purpose of raw materials, payment of wages and other day-to-day

expenses, etc. These funds are known as working capital.

In simple words, working capital refers to that part of the firms capital, which is required

for financing short-term or current assets such as cash, marketable securities, debtors and

inventories.

Working capital is a valuation metric that is calculated as current assets minus current

liabilities. Working capital is also known as operating capital.


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TYPE OF WORKING CAPITAL

On the Basis of Concept:

1. Gross Worki ng Capital:

The gross working capital refers to the firms investment in all the assets taken together.

The total of investment in all the individual current assets is the gross working capital.

For example: If a firm has a cash balance of Rs. 50,000 ,debtors of Rs.70,000 and inventory of

raw material and finished goods has been assessed at Rs.1,00,000,then the gross working capital

of the firm is Rs.2,20,000 (i.e. ,Rs50,000+Rs.70,000+Rs.1,00,000).

2. Net working capital:

The term net working capital may be defined as the excess of total current assets over

total current liabilities. Current liabilities refer to those liabilities which are payable within a

period of 1 year. The net working capital may either be positive or negative. If the total current

assets are more than total current liabilities, then the difference is known as positive net working

capital, otherwise the difference is known as negative net working capital. The net working

capital measures the firms liquidity. The greater the margin, the better will be the liquidity of

the firm.

Net Working Capital= Total Current AssetsTotal Current Liabilities

Working Capital

Basis of Concept

Gross WorkingCapital

Net WorkingCapital

Basis of Time

Permanent ORFixed Working

Capital

Temporary ORVariable Working

Capital


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A financial manager must consider both (gross and net working capital) because they

provide different interpretation. The gross working capital denotes the total working capital or

the total investment in current assets. This will help avoiding 1.the unnecessarily stoppage of

work or chance of liquidation due to insufficient working capital, and 2.effects on profitability

(over flowing working capital implies cost).The gross working capital also gives an idea of total

funds required for maintaining current assets.

On the other hand, net working capital refers to the amount of funds that must

beinvested by firm, more or less, regularly in current assets. The net working capital also

denotes the net liquidity being maintained by the firm.

On the Basis of Time

1. Permanent /f ixed working capital:

Permanent working capital may be defined as the minimum level of current assets, which

is required by a firm to carry on its business operations. Every firm has to maintain a minimum

level of raw materials, work-in-progress, finished goods and cash balances.

For example-extra inventory of finished goods will have to be maintained to support the peak

periods of sale. Permanent working capital is permanently needed for the business and therefore,

it should be financed out of long term funds.

2. Fluctuating /var iable working capital:

It is the extra working capital needed to support the changing production and sales

activities of the firm. The amount of temporary working capital keeps on fluctuating on time to

time on the basis of business activity. Both kind of working capital permanent and fluctuating

(temporary) are necessary to facilitate production and sales through the operating cycle. Theamount over and above permanent working capital is temporarily variable or fluctuating.


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B. Short Term Sources Of Temporary Working Capital

Temporary working capital is required to meet the day to day business expenditures.

The variable working capital would finance from short term sources of funds. And only the

period needed. It has the benefits of, low cost and establishes closer relationships with banker.

Some sources of temporary working capital are given below:

1. Commercial bank:

A commercial bank constitutes significant sources for short term or temporary working

capital. This will be in the form of short term loans, cash credit, and overdraft and though

discounting the bills of exchanges.

2. Publ ic deposits:

Most of the companies in recent years depend on this source to meet their short term

working capital requirements ranging from six month to three years.

3. Var ious credits:

Trade credit, business credit papers and customer credit are other sources of short term

working capital. Credit from suppliers, advances from customers, bills of exchanges, etc helps to

raise temporary working capital.

4. Reserves and other funds:

Various funds of the company like depreciation fund. Provision for tax and other

provisions kept with the company can be used as temporary working capital.The company

should meet its working capital needs through both long term and short term funds. It will be

appropriate to meet at least 2/3 of the permanent working capital equipments form long term

sources, whereas the variables working capital should be financed from short term sources. The

working capital financing mix should be designed in such a way that the overall cost of working

capital is the lowest, and the funds are available on time and for the period they are really

required


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C. Sources Of Additional Working Capital

1. Existing cash reserves

2. Prof its (when you secure it as cash)

3. Payables (credit fr om suppliers)

4. New equi ty or loans fr om shareholder

5. Bank overdrafts line of credit

6. Long term loans

If we have insufficient working capital and try to increase sales, we can easily over stretch the

financial resources of the business. This is called overtrading. Early warning signs include:

1. Pressure on existing cash

2. Exceptional cash generating activities. Offering high discounts for clear cash payment

3. Bank overdraft exceeds authorized limit

4. Seeking greater overdrafts or lines of credit

5. Part paying suppliers or there creditor.

6. Management pre occupation with surviving rather than managing.


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CONSTITUENTS OF WORKING CAPITAL

CURRENT ASSETS:

The assets which are in the ordinary course of business could be converted into cash

within an accounting period. The following are listed by the EXCEL CROP CARE LTD as

current assets

1) Inventor ies

a) Raw material and packaging material

b) Work in progress

c) Finish goods

2) Sundry debtors:

a) Debts outstanding for a period exceeding six months

b) Other debts

3) Cash and bank balances:

Expected month end bank balances are supposed to be budgeted. This will be calculated

as Customer collections plus Remittance from India less Repatriation to India. We have bank

account in scheduled banks.

4) Loan and advances

a) Sundry deposits.

b) Balances with custom and excise authority

c) Advance payment of taxes

d) Prepaid expenses like payment of insurance premium

CURRENT LIABILITY:

The liabilities which are to be paid in the ordinary course of business within an

accounting year out of the current assets or earnings of the business concern are current

liabilities. The following items are included under this category for EXCEL CROP CARE LTD

1) Current li abil ity

a) Sundry creditor

b) Advance from customers


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2) Shor t term credit :

a) Short term loans

b) Cash credit from banks

c) Other short term payables.

3) Provisions:

a) Provision for Gratuity

b) Provision for compensated absences


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FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENTS

1. Nature Of Business: The requirements of working is very limited in public utility

undertakings such as electricity, water supply and railways because they offer cash sale only

and supply services not products, and no funds are tied up in inventories and receivables. On

the other hand the trading and financial firms requires less investment in fixed assets but

have to invest large amt. of working capital along with fixed investments.

2. Size of the Business: Greater the size of the business, greater is the requirement of working

capital. Bundy India has more product line so required more capital.

3. Production Policy: If the policy is to keep production steady by accumulating inventories it

will require higher working capital. Bundy India ltd. Production policy is based on customer

requirement and specification. So we store raw material and common spare parts which use

by all automobiles company.

4. Length of Production Cycle: The longer the manufacturing time the raw material and other

supplies have to be carried for a longer in the process with progressive increment of labor

and service costs before the final product is obtained. So working capital is directly

proportional to the length of the manufacturing process.

5. Worki ng Capital Cycle: The speed with which the working cycle completes one cycle

determines the requirements of working capital. Longer the cycle larger is the requirement of

working capital.

6. Rate of Stock Turnover: There is an inverse co-relationship between the question of

working capital and the velocity or speed with which the sales are affected. A firm having a

high rate of stock turnover will needs lower amt. of working capital as compared to a firm

having a low rate of turnover.

7. Credit Policy: A concern that purchases its requirements on credit and sales its product /

services on cash requires lesser amt. of working capital and vice-versa.


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8. Business Cycle:In period of boom, when the business is prosperous, there is need for larger

amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business,

etc. On the contrary in time of depression, the business contracts, sales decline, difficulties

are faced in collection from debtor and the firm may have a large amt. of working capital.

9. Rate of Growth Of Business: In faster growing concern, we shall require large amt. of

working capital.

10.Earning Capacity: Some firms have more earning capacity than other due to quality of their

products, monopoly conditions, etc. Such firms may generate cash profits from operations

and contribute to their working capital. The dividend policy also affects the requirement of

working capital. A firm which is maintaining a steady high rate of cash dividend irrespectiveof its profits needs working capital than the firm that retains larger part of its profits and does

not pay so high rate of cash dividend.

11.Price Level Changes: Changes in the price level also affect the working capital

requirements. Generally rise in prices leads to increase in working capital.

12.Others Factors:

a) Operating efficiency.

b) Management ability.

c) Irregularities of supply.

d) Import policy.

e) Asset structure.

f) Importance of labor.

g) Banking facilities, etc


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NEED FOR WORKING CAPITAL

The basic objective of financial management is to maximize shareholders wealth. For

this it is necessary to generate sufficient profits. The extent to it, which the profit can be earned,

largely depends on the magnitude of sales. However sales do not convert into cash instantly.

There is invariable the time gap between the sales of goods and receipts of cash. There is,

therefore, a need for working capital in the form of Current Assets to deal with the problem

arising. Out of the lack of immediate realization of cash again goods sold. Therefore, sufficient

working capital is necessary to sustain sales activity.

Working capital is needed for the following purpose:

1. For the purchase of raw material, components and spares.

2. To incur day to day expenses and overhead costs such as fuel, power and office

expenses, etc.

3. To meet selling costs as packing, advertisement etc.

4. To provide credit facilities to the customers.

5. To maintain the inventories of raw material, work in progress, stores and spare and

finished goods.

6. To pay wages and salaries.


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MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in attempting

to manage the current assets, current liabilities. The basic goal of working capital management is

to manage the current assets and current liabilities of a firm in such a way that a satisfactory

level of working capital is maintained, i.e. it is neither adequate nor excessive as both the

situations are bad for any firm. There should be no shortage of funds and also no working capital

should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its

probability, liquidity and structural health of the organization. So working capital management

is three dimensional in nature as

It concerned with the formulation of policies with regard to profitability, liquidity and

risk.

It is concerned with the decision about the composition and level of current assets.

It is concerned with the decision about the composition and level of current liabilities.

Objectives of Working Capital Management:

1. Deciding Optimum Level of Investment in various WC Assets

2. Decide Optimal Mix of Short Term and Long Term Capital

3. Decide Appropriate means of Short Term Financing


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MANAGEMENT OF WORKING CAPITAL IN EXCEL CROP CARE

LTD.

Working capital may be defined as the capital invested in the working assets like stocks

of raw materials, semi finished goods, debtors etc.

1. I nventory M anagement:

Excel crop care ltd has techniques for maintaining inventory at proper level. the

techniques adopted by excel crop care ltd are as under;

Economic Order Quantity. ABC analysis

Both techniques are used in excel crop care ltd. so they never face any crises of inventory.

2. Management Of Receivable:

Excel crop care ltd. is investing consideration proportion of working capital in trade

creditor book debt. So it should be managed well. Company has fixed as 30 % of working

capital in book debt. Excel crop care ltd. has adopted selective credit policy to every customer

but only that financial position is good and payment 3 months credit facility to its customer.

Excel crop care ltd has developed such optimum credit policy through its liquidity position is

very good and so. It is investing more aims in book and attracting customers.

3. Cash And Bank Management:

Excel crop care ltd. of each branch prepare budget twice in a month and money addition

cash are budget for shorts time and long period are also prepared to make cash planning more

effective. In every 15 days they prepare summery of cash inflow and outflow and find out

surplus or deficit and there after it is sent to head office. If there is and deficit than head office

provides cash. (Rs. In Lacs)

Particulars 2010-11 2009-10 2008-09

Current assets

Inventories 13,954.62 14,298.27 13,000.14

Sundry debtors 14,984.10 16,474.49 13,177.71

Cash & bank balance 850.10 1,093.85 1,215.32

Other current assets 1,263.73 589.13 800.06

Loan & advances 3,567.53 4,122.67 3,871.73

Less: Current liabilities & provision

Liabilities 11,766.77 13,112.41 10,825.49

Provisions 1,944.07 1,928.62 1,696.08

Net current assets 20,909.24 21,537.38 19,543.39


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Raw

Materials

Work-in-

Progress

FinishedGoods

Sales

AccountReceivables

Cash

OPERATING CYCLE

The working capital requirement of a firm depends, to a great extent upon the operating

cycle of the firm. The operating cycle may be defined as the time duration starting from theprocurement of goods or raw material and ending with the sales of realization. The length and

nature of the operating cycle may differ from one firm to another depending upon the size and

nature of the firm. In a trading concern, there is a series of activities starting from procurement

of goods (saleable goods) and ending with the realization of sales revenue. Similarly in case of

manufacturing concern, this series starts from the procurement of raw materials and ending with

the sales realization of finished goods. In both the cases, however, there is a time gap between

the happening of the first event and the happening of the last event. This time gap is called the

operating cycle. Thus, the operating cycle of a firm consists of the time required for the

completion of the chronological sequences of some or all of the following:

1. Procurement of raw material and services.

2. Conversion of raw material into work-in-progress.

3. Conversion of work-in-progress into finished goods.

4. Sale of finished goods (cash or credit)

5. Conversion of receivable into cash.


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TIME AND MONEY CONCEPT IN WORKING CAPITAL CYCLE

Each component of working capital (namely inventory, receivables and payables) has

two dimensions .TIME and MONEY, when it comes to managing working capital.

Time is Money

If we can get money to move faster around the cycle (e.g. collect money due from

debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels

relative to sales), the business will generate more cash or it will need to borrow less money to

fund working capital. As a consequence, we can reduce the cost of bank interest or will have

additional free money available to support additional sales growth or investment. Similarly, if

we can negotiate improved terms with suppliers,

E.g. get longer credit or an increased credit limit; we effectively create free finance to help

future sales.

IF WE THEN

Collect receivables (debtors) faster We release cash from cycle

Collect receivables(debtors) faster Our receivables soak up cash

Get better credit(in terms of duration or

amount from suppliers)We increase our cash resources

Shift inventory(stocks)faster We free up cash

Move inventory(stocks) slower We consume more cash


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OPERATING CYCLE PERIOD

The length or time duration of the operating cycle of any firm can be defined as the sum of

its inventory conversion period and the receivable conversion period.

1. I nventory conversion period:

It is the time required for the conversion of raw material into finished goods sales. In a

manufacturing firm the inventory conversion period is consisting of raw material conversion

period (RMCP), work-in-progress conversion period (WPCP) and finished goods conversion

period (FGCP).

Raw material conversion period refers to the period for which the raw material is

generally kept in stores before it is issued to the production department.

The work-in-progress conversion period (WPCP) refers to the period for which the

raw material remains in the production process before it is taken out as finished units.

The finished goods conversion period refers to the period for which finished units

remains in stores before being sold a customer.

2. Receivable conversion period (RCP):

It is the time required to convert the credit sales into cash realization. It refers to the

period between the occurrence of credit sales and collection from debtors. The total of Inventory

conversion period (ICP) and Receivable conversion period (RCP) is also known as total

operating cycle period (TOCP).the firm might be getting some credit facilities from supplier of

raw material, wages earners etc. This period for which the payment to these parties are deferred

or delayed is known as deferred period (DP).the net operating cycle (NOC) of the firm is arrived

at by deducting the DP from TOCP.

NOC = TOCP-DP

= ICP+RCP-DP


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The operating cycle concept indicates a companys true liquidity. By tracking the

historical record of the operating cycle of a company and comparing it to its peer groups in the

same industry, it gives investors investment quality of a company.

A short company operating cycle is preferable since a company realizes its profits

quickly and allows a company to quickly acquire cash that can be used for reinvestment. A long

business operating cycle means it takes longer time for a company to turn purchases into cash

through sales. In general, the shorter the cycle, the better a company is since less time capital is

tied up in the business process.

ABC ANALYSIS

Different types of analysis each having its own specific advantages and purposes, help in

bringing a practical solution to the control of Inventory .The most important of all such analysis

is ABC analysis. This analysis is based on the principle of VITALFEW TRIVIAL MANY

and a higher degree of attention is focused on VITAL FEW, which affect the result

significantly.

An effective inventory control system should classify inventories according to value so

That the most valuable items may be paid greater and due attention regarding their safety and

supply items. Both purchased and manufactured depending upon their importance and subject

each class and group of item to control commensurate with their importance. This is the

principle of Control by Importance and Exception (C.I.E.) of selective control as applied to

inventories and the technique of grouping is termed as ABC. Analysis or classification which is

said Always Better Control. As the items are classified on the basis of importance of their

relative value, this approach is also known as proportional value analysis.

Procedure For Implementing the ABC Technique is as Follows:

i. Classify the items of inventories.

ii. Determine the expected used in units over a given period of time.

iii. Determin3e the total cost of each item by multiplying the expected units by its unit price.

iv. Rank the items in accordance with total cost, giving first rank to the item with highest

total cost and so on.


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v. Calculate percentage of number of unit of each item to total units of all items and the

percentage of total cost of each item to total cost of all items

vi. Combine items on the basis of their relative value to form three categories A, B, and C

Class Percentage of Item Percentage of Cost

A 8% 75%

B 25% 20%

C 67% 5%

The above mentioned example is clearly explained by the graph.

From the graphical analysis: it may be found that about 8% of items cost more than 75%

of the cost on inventory. This is grouped as an item which from the most important items the

control point of view. B items forming 25% of total items constitute 20% of the total on

inventory. These are of secondary importance and lie in between A and C items which are

the numerous inexpensive items, i.e. about 75% of the items contributing to only 5% of the total

cost of material.

0%

10%

20%

30%

40%

50%

60%

70%

80%

A B C

ABC Evaluation

Percentage of Item Percentage of Cost


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CONTROL FOR A, B& C ITEMS

Now we discuss the purchasing and stocking policies recommended for the different

classes of item A, B, & C. all these emanate from two basic requirements viz., (1) to keep thecapital tied up in the inventories as low as is practicable, and (2) to make sure that the materials

would be available when required for consumption.

I. Policies for A items ( about 8% items costing 75% in value )

1. Since these items account for over 75% percent of the value, they should be ordered

more frequently to reduce the capital locked up at a time in inventories

2. These would be many items for which the consumption varies considerably from time to

time during a year. For such items the expected future consumption should be estimated

in advance and they should then be procured on a planned basis, so that only the required

quantities arrive a little before they are required for consumption. Of course, a small

extra stock (buffer) would be carried throughout to meet any eventualities. It may be

pointed out here that the advance estimation of future consumption can be made with the

help of periodic production schedules and master schedules. In the absence of proper

production schedule there is not reliable way of estimating what quantities would be

rather difficult.

3. Annul or 6-monthly contracts with schedule deliveries or deliveries within a specified

period of order are welcome for a items.

4. Develop and revise more often ordering quantities, reorder points and safety stock for

items not covered by long term contracts mentioned in(3).

5. Since these items are to be stocked as less as possible, purchasing department should

make maximum efforts to expedite the delivery of these items.

6. As for as possible. Two or more suppliers should be sought for each item so that the

dependency on one supplier is an avoided. Due to strike, fire, accidents,. Or any other

eventualities if one supplier fails to supply, the other suppliers fan be approached.

7. Purchase of items should be looked into by the top execution in the purchasing

department to ensure prompt service from suppliers.

8. Stock and issue record should be meticulously maintained in the inventory control

department or in the stores as the case may be to be able to get the up-to-date position of

stocks at any times.


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Policies for B items (above 25% of items having 20% value)

1. The policies for B items in general are intermediate between those for A and C items.

2. Order quantities, reorder points and safety stock should be fixed for B items and barring

exception revisions once a year is adequate.

3. Annual or half yearly contracts with scheduled deliveries can be used to an advance for

items.

4. Stock and issue records are necessarily to be maintained.

5. Should be ordered less frequently than an item about 3 to 6 orders per year is the range

of frequency.

II. Policies for C items (about 67% items claiming 5% value)

1. Since the items are too many and the value is less the policies are to be aimed at reducing

the ordering and stock keeping work to an extent possible and ensuring the availability at

all times by stoking liberal quantities.

2. Liberal quantities can be kept in stock since in case of C item it does not involve much

capital tie-up.

3. Annual or 6 monthly orders, should be pleaded to reduce paper work in the purchasing

department and also to take advantage of quantity discounts for bulk purchase

4. Item should be grouped like all electrical, all hardware, all paint etc. and one group of

items should be ordered all at once preferably from one or two vendors. This saves

ordering work and also transportation costs. In additions because of the inclusion of

several items.

5. Authority for the purchase of C items could be delegated to the junior executives in the

purchasing department or even to the store keeper so as Not to bother the personnel at

higher levels with work on these low value sundry items.

6. Stock and issue records can be minimized to the extent the rules of the organization

allow. In some companies for most of the C items only record of receipts is kept. In

other one consolidated issue entry month for an item is recorded. However, in quite a

few cases on records are maintained at all for C items barring some pilfer able and short

life items.


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SWOT ANALYSIS

Strength:

Company has a good reach in markets supported with an efficient and effective distributionnetwork

Company offers extensive solutions to farmers ranging from soil enrichment products, crop

protection in the form of pesticides, fungicides and weedicides that help the farmers curtail crop

loss throughout the crop cycle and with provisions for post harvest treatment

Weakness:

Company is having 10% market share in crop care industry

Company is having only few locations in India

Excel crop care is not that much famous as compared to Byre CropScience, Rillas India and

others.

Opportunity:

Agricultural production is not growing in response to the food demand. Currently average cropyields in India are muchlower than global benchmarks. India has the resources necessary to meet

all its increasing needs, while keeping a surplus of farm produce, if the arable landscape is

cultivated effectively. There is a need for a holistic friend -of-the-farmer approach, offering

locally relevant farming solutions.

Widening coverage of existing products of subsidiary company

Threats:

Registration and regulatory clearances for products require detailed processing which spans

across years. This has impacted the introduction of new products or opening of new markets.

The have to maintain a level safety and security in the manufacturing site as it is a chemical

company, so government rules and regulations are imposed on the firm regarding this matter.


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WORKING CAPITAL ANALYSIS

As we know working capital is the life blood and the center of a business. Adequate

amount of working capital is very much essential for the smooth running of the business. Andthe most important part is the efficient management of working capital in right time.

The liquidity position of the firm is totally effected by the management of working

capital. So, a study of changes in the uses and sources of working capital is necessary to evaluate

the efficiency with which the working capital is employed in a business. This involves the need

of working capital analysis.

The analysis of working capital can be conducted through a number of devices like

Profitability ratio analysis, Working Capital Related Ratio Analysis.


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5.35

5.90 5.83

5

5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.85.9

6

2008-09 2009-10 2010-11

Percentage(%)

Year

Net Profit Ratio

PROFITABILITY RATIO ANALYSIS

Net Profit Ratio:

Net profit ratio indicates the proportion of net profit amount in relation to total net sales amount.

The equation of the Net profit is as follow:

Net Profit

Net Profit Ratio = 100Sales

Year Profit Sales Ratio (NP/Sales) %2008-09 27.80 519.83 5.35

2009-10 37.43 634.41 5.90

2010-11 43.69 749.02 5.83

Interpretation:

This ratio indicates that proportion of net profit in relation to sales amount. Here the net profit

ratio is showing a volatile balance in nature as it increase in 2009-10 by 0.55% and then

decrease in 2010-11 by 0.7%

This is occurred because the increment proportion of sales is not more than increment proportion

of net profit.


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WORKING CAPITAL RELATED RATIO ANALYSIS

The short term creditors of a company such as suppliers of goods of credit and

commercial banks short-term loans are primarily interested to know the ability of a firm to meetits obligations in time. The short term obligations of a firm can be met in time only when it is

having sufficient liquid assets. So to with the confidence of investors, creditors, the smooth

functioning of the firm and the efficient use of fixed assets the liquid position of the firm must

be strong. But a very high degree of liquidity of the firm being tied up in current assets.

Therefore, it is important proper balance in regard to the liquidity of the firm. Two types of

ratios can be calculated for measuring short-term financial position or short-term solvency

position of the firm.

A) LIQUIDITY RATIOS:

Liquidity refers to the ability of a firm to meet its current obligations as and when these

become due. The short-term obligations are met by realizing amounts from current, floating or

circulating assts. The current assets should either be liquid or near about liquidity. These should

be convertible in cash for paying obligations of short-term nature. The sufficiency or

insufficiency of current assets should be assessed by comparing them with short-term liabilities.If current assets can pay off the current liabilities then the liquidity position is satisfactory. On

the other hand, if the current liabilities cannot be met out of the current assets then the liquidity

position is bad. To measure the liquidity of a firm, the following ratios can be calculated:

1. CURRENT RATIO

2. QUICK RATIO

1. CURRENT RATIO:

Current Ratio, also known as working capital ratio is a measure of general liquidity and

its most widely used to make the analysis of short-term financial position or liquidity of a firm.

It is defined as the relation between current assets and current liabilities. Thus,

CURRENT RATIO = Current Assets

Current Liabilities


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The two components of this ratio are:

1) CURRENT ASSETS

2) CURRENT LIABILITIES

Current assets include cash, marketable securities, bill receivables, sundry debtors,

inventories and work-in-progresses. Current liabilities include outstanding expenses, bill

payable, dividend payable etc.

A relatively high current ratio is an indication that the firm is liquid and has the ability to

pay its current obligations in time. On the hand a low current ratio represents that the liquidity

position of the firm is not good and the firm shall not be able to pay its current liabilities in time.

A ratio equal or near to the rule of thumb of 2:1 i.e. current assets double the current liabilities is

considered to be satisfactory.

PARTICULARYEAR

2008-09 2009-10 2010-11

Total Current Assets 273.72 318.65 346.20

Total Current Liabilities 126.4 147.93 137.11

CURRENT RATIO 2.17 :1 2.15:1 2.53:1

2.17 2.15

2.53

1.9

2

2.1

2.2

2.32.4

2.5

2.6

2008-09 2009-10 2010-11

Ratio

Year

CURRENT RATIO


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Interpretation:

Acceptable current ratio values vary from industry to industry. Generally, a current ratio

of 2:1 is considered to be acceptable. The higher the current ratio is, the more capable thecompany is to pay its obligations. Current ratio is also affected by seasonality.

If current ratio is below 1 (current liabilities exceed current assets), then the company

may have problems paying its bills on time. However, low values do not indicate a critical

problem but should concern the management. Current ratio gives an idea of company's operating

efficiency. A high ratio indicates "safe" liquidity, but also it can be a signal that the company has

problems getting paid on its receivable or have long inventory turnover, both symptoms that the

company may not be efficiently using its current assets.

From the above chart of current ratio of EXCEL CROP CARE LTD. nearer to 2:1 which

is shows that the company has good liquidity position. Since last two year companys liquidity

position is increasing which good signal for company.

2. QUICK RATIO

Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be

defined as the relationship between quick/liquid assets and current or liquid liabilities. An asset

is said to be liquid if it can be converted into cash with a short period without loss of value. It

measures the firms capacity to pay off current obligations immediately.

QUICK RATIO = Quick Assets

Current Liabilities

Where Quick Assets are:

All current assets (Except Inventories)

A high ratio is an indication that the firm is liquid and has the ability to meet its current

liabilities in time and on the other hand a low quick ratio represents that the firms liquidity

position is not good.


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1.14

1.19

1.25

1.08

1.1

1.12

1.14

1.16

1.18

1.2

1.22

1.24

1.26

1.28

2008-09 2009-10 2010-11

Ratio

Year

QUICK RATIO

As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if

quick assets are equal to the current liabilities then the concern may be able to meet its short-

term obligations. However, a firm having high quick ratio may not have a satisfactory liquidity

position if it has slow paying debtors. On the other hand, a firm having a low liquidity position if

it has fast moving inventories.

CALCULATION OF QUICK RATIO

PARTICULAR

YEAR

2008-09 2009-10 2010-11

QUICK ASSETS 143.72 175.67 171.97

CURRENT LIABILITIES 126.4 147.93 137.11

QUICK RATIO 1.14 1.19 1.25


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Interpretation:

Quick ratio specifies whether the assets that can be quickly converted into cash are

sufficient to cover current liabilities.

If quick ratio is higher, company may keep too much cash on hand or have a problem

collecting its accounts receivable. Higher quick ratio is needed when the company has difficulty

borrowing on short-term notes. A quick ratio higher than 1:1 indicates that the business can meet

its current financial obligations with the available quick funds on hand.

A quick ratio lowers than 1:1, may indicate that the company relies too much on

inventory or other assets to pay its short-term liabilities.Many lenders are interested in this ratio

because it does not include inventory, which may or may not be easily converted into cash.

In EXCEL CROP CARE LTD. quick ratio is greater than standard one. It shows that the

company has much cash on hand as its ratio is some of higher than standard one.

B) CURRENT ASSETS MOVEMENT RATIOS

Funds are invested in various assets in business to make sales and earn profits. The

efficiency with which assets are managed directly affects the volume of sales. The better the

management of assets, large is the amount of sales and profits. Current assets movement ratios

measure the efficiency with which a firm manages its resources. These ratios are called turnover

ratios because they indicate the speed with which assets are converted or turned over into sales.

Depending upon the purpose, a number of turnover ratios can be calculated. These are

1. Inventory Turnover Ratio

2. Debtors Turnover Ratio

3. Creditors Turnover Ratio

4. Working Capital Turnover Ratio

The current ratio and quick ratio give misleading results if current assets include high

amount of debtors due to slow credit collections and moreover if the assets include high amount

of slow moving inventories. As both the ratios ignore the movement of current assets, it is

important to calculate the turnover ratio.


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1. INVENTORY TURNOVER OR STOCK TURNOVER RATIO:

Every firm has to maintain a certain amount of inventory of finished goods so as to meet the

requirements of the business. But the level of inventory should neither be too high nor too low.

Because it is harmful to hold more inventory as some amount of capital is blocked in it and

some cost is involved in it. It will therefore be advisable to dispose the inventory as soon as

possible.

INVENTORY TURNOVER RATIO = Cost of Goods Sold

Average Inventory

Inventory turnover ratio measures the speed with which the stock is converted into sales.

Usually a high inventory ratio indicates an efficient management of inventory because more

frequently the stocks are sold; the lesser amount of money is required to finance the

inventory,whereas low inventory turnover ratio indicates the inefficient management of

inventory. A low inventory turnover implies over investment in inventories, dull business, poor

quality of goods, stock accumulations and slow moving goods and low profits as compared to

total investment.

AVERAGE STOCK = Opening Stock + Closing Stock

2

Year 2009 2010 2011

Cogs 382.82 289.04 320.45

Average Inventory 35.80 40.59 44.68

Inventory Turnover Ratio 10.69 Times 7.12 Times 7.17 Times

10.69

7.12 7.17

0

2

4

6

8

10

12

2009 2010 2011

Times

Year

Inventory Turnover Ratio


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5.11

5.90

4.284.76

0.00

1.00

2.00

3.00

4.00

5.00

6.007.00

2008 2009 2010 2011

Times

Year

Debtors Turnover Ratio

YEAR 2008 2009 2010 2011

Average debtors 101.645 122.675 148.26 157.29

Sales 519.83 724.04 634.41 749.02

Debtors Turnover Ratio 5.11 times 5.90 times 4.28 times 4.76 times

Interpretation:

This ratio indicates the speed with which debtors are being converted or turnover into

sales. The higher the values or turnover into sales,the higher the values of debtors turnover, themore efficient is the management of credit. In EXCEL CROP CARE LTD. the debtor turnover

ratio is increased from 5.11 in 2008 to 5.9 in 2009. But in2010, it decreases so much and

reached at 4.28 which shows bad for company. In 2010, there is less debtors turnover. This

shows that company is not utilizing its debtors efficiency in 2010. But in 2011, again it

increased to 4.76


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(B) AVERAGE COLLECTION PERIOD:

Average Collection Period = No. of Working Days


The average collection period ratio represents the average number of days for which a

firm has to wait before its receivables are converted into cash. It measures the quality of debtors.

Generally, shorter the average collection period the better is the quality of debtors as a short

collection period implies quick payment by debtors and vice-versa.

Average Collection Period = 365 (Net Working Days)


YEAR 2008 2009 2010 2011

Days 365 365 365 365

Debtors turnover ratio 5.11 times 5.90 times 4.28 times 4.76 times

Average Collection Period71.43

Days

61.86

Days

85.28

Days

76.68

Days


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The formula for this ratio is:

CREDITORS TURNOVER RATIO = Cost Of Sales

Creditors

YEAR 2008 2009 2010 2011

Cost Of Sales 379.94 545.28 488.58 320.45

Creditors 82.12 85.09 100.77 104.21

Creditors Turnover Ratio4.63 times 6.41 times 4.85 times 3.07 times

Interpretation:

It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable

include both sundry creditors and bills payable.Higher the payable period lower the working

capital requirement, but on the other hand it may affect the prestige of the firm so the company

has to frame creditorspolicy in such manner. In EXCEL CROP CARE LTD. in years 2008 and

2009 the credit policy was good as it decreased but in 2009 ratio increases which might affect

the company prestige. In 2011 they have again good credit policy as the ratio is 3.07 times.

4.63

6.41

4.85

3.07

0

1

2

3

4

5

6

7

2008 2009 2010 2011

Times

Year

Creditors Turnover Ratio


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FINDINGS

Working capital management is important aspects of financial management. The study of

working capital of Excel Crop Care Ltd. has reviled that the liquidity ratio was as per the

standard industrial practices. The study has been conducted on working capital ratios analysis,

ABC analysis and operating and cash cycle analysis which helped the company to manage its

working capital efficiency and affectively.

Current assets are more than current liabilities indicates that company use long term

funds for short term requirements, where long term funds are most costly than short term

Company has more inventories in total current assets.

Working capital turnover ratio leads towards profitability. Working capital turnover ratio

has a positive correlation (0.42). It means that changes in working capital turnover

directly effect on profitability of the business. Thus, working capital turnover is very

important for the business.

Current ratio of the company in last year nearer to the ideal current ratio. It indicates

companys good liquidity position but in 2009 and 2010, current ratio is higher than

standard one, it shows that the company has unnecessary investment in last two year in

current assets.

Quick ratio of EXCEL CROP CARE LTD. above the ideal ratio. Here company required

to reduce some investment in current assets so the cost of fund reduces and profitability

increase.

EXCEL CROP CARE LTD. working capital shows the good liquidity position. Positive

working capital indicates that company has the ability of the payments of short terms liabilities.

Working capital of EXCEL CROP CARE LTD. not indicates any trend for particular period of

time. All over working capital management of the company is average.


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CONCLUSION

The mission of Excel is providing best quality to customers. It is financially very sound

organization. The performance of the Excel has been good. Due to constant work on the quality,better concentration on the material usage and proper prices, the Excel could improve maximum

its performance. They are some of weak at maintenance of inventory stock as they have more

current assets (cash) block in it. The reason behind it is seasonal demand of product.Excel is

continuously trying to maximize the wealth of share holders.

Company manage its working capital carefully but in last year because of problem

related to endosulfan the main product of the company in Bhavnagar unit, they are lacking in

management of working capital said by finance manager Mr.Mukharjee

The company required more days in operating cycle and cash cycle because it is crop care

product manufacturing organization and this crop care product endosulfan used in a particular

season only. To meet with large demand of product they are producing whole year and selling it

on a particular season, so there is large operating cycle. They have large number of different

types of inventory and they do ABC analysis efficiently. Out of all product of this company,

large production is ofendosulfan done by the company, and 70% of total production of

endosulfan is exported.


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BIBLIOGRAPHY

BOOK REFERENCES

M Y Khan P K Jain (2008); Financial Management, Theory andProblems, 2nd

edition,

published by Tata McGraw-Hill

G Sudarsana Reddy(2009); financial management ,principle and practices, 2ndedition,

published by Himalaya publishing house

WEB SITES

www.excelcropcareindia.com

http://www.moneycontrol.com/india/stockpricequote/pesticidesagrochemicals/excelcropcare/ECC03

http://www.indiainfoline.com/Markets/Company/Fundamentals/Management-

Discussions/Excel-Crop-Care-Ltd/532511

http://books.google.com/books/about/Encyclopaedia_Of_Working_Capital_Managem.ht

ml?id=l1vVAAAACAAJ

ANNUAL REPORTS:

Annual Reports of Excelcrop care Ltd of last 3 years

excel final report

Documents