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WORKING CAPITAL MANAGEMENT AND PROFITABILITY ANALYSIS OF

E.I.D PARRY (INDIA) LIMITED IN TAMIL NADU

Mrs. J. JEYANTHI1, Dr. K. RAMESH KUMAR2

1Assistant Professor, Department of Commerce, Sri Sarada Niketan College of Science for Women, Karur,

India 2Head, PG & Research Department of Commerce, Valluvar College of Science and Management, Karur, India

Abstract

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 companies 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 firm’s

liquidity, holding of excess working capital results in the reduction of the profitability. Therefore, the present

study intends to examine whether there exists any relationship between efficient management of working capital

funds and firm level profitability in E. I. D. Parry (India) Limited.

Keywords: Working Capital, Finance, Liquidity, Profitability and Liquidity.

INTRODUCTION

Working capital is the backbone of an organization. It refers to the portion of the total fund which

finances the day to day working expenses during the operating cycle. Working capital management is concerned

with problem that arises in attempting to manage the current assets, the current liabilities and the

interrelationship that exists between them. Business firm cannot make progress without adequate working

capital. Inadequate working capital means shortage of inputs, whereas excess of it leads to extra cost. So, the

quantum of working capital in every business firm should be neither more nor less than what is actually required.

The management has to see that funds invested as working capital in their organization earn return at least as

much as they would have earned return if it invested anywhere else. At the time of increasing capital costs and

scare funds, the area of working capital management assumes added importance as it deeply influences a firm's

liquidity and profitability. So, the main objective of working capital management is to arrange the needed funds

on the right time from the right source and for the right period, so that a tradeoff between liquidity and

profitability may be achieved.

SCOPE AND IMPORTANCE OF PRESENT STUDY

Sugar industry is one of the most important agro based industries which contributes significantly to the

growth of the global economy by providing large scale direct employment to several thousands of people and

indirect employment to several lakhs of farmers and agriculture workers in the rural areas who are involved in

the cultivation of sugarcane, harvesting, transport and other services. Brazil is the largest producer of sugar in

the World. India and Thailand are some of the major producers of sugar in the Asian region.

The sugar industry in Tamil Nadu plays a vital role in the economic development of the state, particularly

in rural areas. E.I.D.-Parry was the first company in India and the earliest in the world to manufacture sugar in

1842.E.I.D.-Parry (India) Limited has nine sugar plant units spread across in India of which four units are in

Tamil Nadu, one unit in Puducherry, three units in Karnataka and one unit in Andhra Pradesh. Out of these nine

units the researcher has undertaken only four units in Tamil Nadu for research purpose.

The International journal of analytical and experimental modal analysis

Volume XI, Issue VIII, August/2019

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The present study “Working Capital Management and Profitability Analysis of E.I.D.-Parry (India)

Limited in Tamil Nadu” analyses the efficiency of working capital management and its components i.e.

inventory amount, cash and bank balance and various current liabilities. The study attempts to determine the

efficiency and effectiveness of management in each segment of working capital. Since the net concept of

working capital has been taken in the present study the management of both current assets and current liabilities

will be critically reviewed.

The importance of the study is emphasized by the fact that the manner of administration of current asset

and current liabilities determines to a very large extent the success or failure of a business. The efficient and

effective management of working capital is of crucial importance for the success of a business which involves

the management of the current assets and the current liabilities. The business concern has, therefore, to optimize

the use of available resources through the efficient and effective management of the current assets and current

liabilities. This will increase the profitability of the concern and the firm can meet its current obligation well in

time.

STATEMENT OF THE PROBLEM

Working capital management is an integral part of the overall management of any business. The

efficiency in the management of working capital has thus always been appreciated by well-run enterprises. If

the working capital is not managed efficiently, the flow of money gets checked; raw material supplies get

interrupted, wage payment gets delayed and also delayed for clearance of outstanding expenses all of them

leading to a virtual stoppage of operations. Therefore, it is necessary for an enterprise to maintain satisfactory

level of working capital. It is learned that the growth of an enterprise depends on the growth rate of profit

earned by a firm over the years. The growth of profit can be achieved by a firm over the years if such a firm

efficiently manages the working capital. Against this background, this paper analyses the working capital

management and profitability analysis of E.I.D.-Parry (India) Limited in Tamil Nadu.

OBJECTIVES OF STUDY

The specific objectives of the study are:

1. To analyze and evaluate the performance of inventory, receivable, cash and payable management of

E.I.D.-Parry (India) Limited.

2. To examine the profitability of the concern.

3. To assess the impact of working capital on profitability of E.I.D.-Parry (India) Limited.

4. To know the profitability of E.I.D.-Parry (India) Limited and its impact on working capital.

METHODOLOGY

The study was concerned with sugar manufacturer and it has been confined to E.I.D.-Parry (India)

Limited, Tamil Nadu. The study covers 10 years period from 2009-10 to 2018-19. The study was based on

secondary data which is collected from Annual reports of the Company, different publication and websites. The

collected data has been tabulated, analyzed and interpreted with the help of different financial ratios and

statistical tools.

REVIEW OF LITERATURE

Saravanan (2001) he employed several statistical tools on different ratios to examine the effective

management of working capital. He concluded that the sample firms had placed more importance upon the

liquidity aspect compared to that of the profitability aspect compared to that of the profitability.

Vijayakumar.A. (2002) his “Determinants of profitability”-divided into the various determinants of

profitability viz., growth rate of sales, vertical integration and leverage.



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A part from these three variables he has selected current ratio, operate expenses to sales ratio and

inventory turnover ratio. The researcher noted in his conclusion that efficiency in Inventory management and

current assets are important to improve profitability. M.A. Zariyawati, M.N. Annur and A.S. Abdul Rahim

(2009) investigated the relationship between working capital management and profitability of the firm. The

researcher used the cash conversion cycle as a measure of working capital management. The co-efficient results

of pooled OLS regression analysis provide a strong negative significant relationship between cash conversion

cycle and profitability of the firms. It is revealed that by reducing the conversion cycle, a firm's profitability can

be increased. Uma Devi (2018) examined the impact of working capital on the profitability of Maruti Suzuki

India ltd. 2012-13 to 2016 – 17. The study was based on secondary data, it has been collected from the published

annual reports of the company, books, journals, magazines newspapers and websites. The study concludes that

there was a negative relationship between profitability and working capital of the company during the study

period. The performance of the company is significantly increasing during the study period.

DATA ANALYSIS AND INTERPRETATION

I. WORKING CAPITAL RATIOS

TABLE 1: CURRENT RATIO (Rs. in crores)

Years Current Assets Current Liabilities Current Ratio

2009-10 589.80 453.89 1.88

2010-11 765.59 496.16 5.06

2011-12 740.25 767.85 0.96

2012-13 1314.40 1394.68 0.94

2013-14 1479.08 1551.17 0.95

2014-15 1532.04 1797.01 0.85

2015-16 1088.30 1557.13 0.70

2016-17 1132.62 1377.68 0.82

2017-18 1643.78 2111.43 0.78

2018-19 1453.59 1802.40 0.81

Average 1173.95 1330.94 0.97

SD 371.95 571.33 0.26

Growth Rate 146.45 297.10 -37.94

CV 863.8 1349 -0.49

r 0.9594

Source: Computed from Annual Report

It can be inferred from the above Table that current assets increased from Rs. 589.80 corers in 2009-10

to Rs. 1453.59 corers in 2018-19, registering a growth rate of 146.45% As against this, the total amount of

current liability increased from Rs. 453.89 corers in 2009-10 to Rs. 1802.40 corers in 2018-19 depicting a

growth rate of 297.10%. The Current Ratio thumb rule was 2:1. During the study period, the company did not

satisfy the standard norms except in the year 2009-10 and 2010-11. So, the management should concentrate on

current ratio in future. There is a positive relationship between Current Assets and Current Liabilities of E.I.D.-

Parry (India) Limited



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TABLE 2: QUICK RATIO (Rs. in crores)

Years Quick Assets Quick Liabilities Quick Ratio

2009-10 393.24 453.89 0.87

2010-11 569.13 496.16 1.15

2011-12 484.59 767.85 0.63

2012-13 531.87 1394.68 0.38

2013-14 430.08 1551.17 0.28

2014-15 453.2 1797.01 0.25

2015-16 399.81 1557.13 0.26

2016-17 398.06 1377.68 0.29

2017-18 546.16 2111.43 0.26

2018-19 480.87 1802.40 0.27

Average 468.70 1330.94 0.47

SD 64.67 571.33 0.32

Growth Rate 22.28 297.10 -69.21

CV 13.80 42.93 68.26

r 0.027


The above Table further shows that the ratio of quick assets and quick liabilities were as high as 1.15 in

the year 2010-11 and as low as 0.25 in the year 2014-15. The co-efficient of variation, in case of quick assets,

was lower with 13.8% in comparison to quick liabilities being 42.93%. This shows greater variability of quick

assets rather than quick liability. As a rule of thumb or as a convention quick ratio of 1:1 is considered

satisfactory. During the study period, the company did not satisfy the standard norms of quick ratio except in

the year 2010-11. So, the management should concentrate on quick ratio in future. There is a positive

relationship between quick assets and quick liabilities of E.I.D.-Parry (India) Limited

TABLE 3: INVENTORY TURNOVER RATIO (Rs. in crores)

Years Sales Average Inventories Ratio

2009-10 1147.32 169.91 6.75

2010-11 1255.69 190.53 6.59

2011-12 1519.91 222.95 6.82

2012-13 1964.51 518.98 3.79

2013-14 1767.42 916.10 1.93

2014-15 2054.79 1064.25 1.99

2015-16 2272.30 883.67 2.66

2016-17 2229.96 711.53 3.28

2017-18 1896.23 916.09 2.09

2018-19 1855.03 1035.17 1.79

Average 1822.68 662.92 3.77

SD 412.04 358.92 2.13

Growth Rate 61.68 509.26 -

CV 22.61 54.14 56.57

r 0.746




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It could be inferred from the table that the growth rate of sales during the study period was 61.68% against the

growth rate of inventory 509.26%. The ratio showed a steep declining throughout the study period. The overall

analysis of the table indicates that during the study period, the inventory was not properly utilized. So, the

management has to take appropriate steps to ensure effective use of inventory. There is a positive relationship

between Sales and Average Stock of E.I.D.-Parry (India) Limited.

TABLE 4: DEBTORS TURN OVER RATIO (Rs. in crores)

Years Sales Average Debtors Ratio

2009-10 1147.32 125.92 9.11

2010-11 1255.69 123.1 10.20

2011-12 1519.91 174.73 8.70

2012-13 1964.51 217.9 9.02

2013-14 1767.42 231.42 7.64

2014-15 2054.79 255.95 8.27

2015-16 2272.30 254.14 9.24

2016-17 2229.96 227.12 10.29

2017-18 1896.23 172.46 11.11

2018-19 1855.03 148.11 12.53

Average 1822.68 193.08 9.61

SD 412.04 50.68 1.45

Growth Rate 61.68 17.62 -

CV 22.61 26.25 15.06

r 0.833


It is also evident from the above Table that the debtors turnover ratio was recorded as high as 12.53 in

the year 2018-19 and as low as 7.64 in the year 2013-14. This shows that there were wide fluctuations in the

ratio during the study period. The above analysis shows that the debtors turnover ratio of E.I.D.-Parry (India)

Limited was more or less efficiently managed during the study period. In order to make the more profitability

of a concern the management may concentrate on receivables management in an effective manner. There is a

positive relationship between net sales and average debtors of E.I.D.-Parry (India) Limited.

TABLE 5: CASH TURN OVER RATIO (Rs. in crores)

Years Sales Cash Ratio

2009-10 1147.32 79.97 14.35

2010-11 1255.69 61.72 20.35

2011-12 1519.91 41.99 36.20

2012-13 1964.51 25.75 76.31

2013-14 1767.42 40.07 44.11

2014-15 2054.79 52.66 40.18

2015-16 2272.30 60.84 38.59

2016-17 2229.96 42.85 54.53

2017-18 1896.23 8.12 236.21

2018-19 1855.03 17.35 106.95

Average 1822.68 43.13 66.78

SD 412.04 21.89 65.34

Growth Rate 61.68 -78.31 -

CV 22.61 50.74 97.84

r -0.364




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The average cash balance decreased from Rs.79.97 crores in 2009-10 to Rs.17.35 corers in 2018-19

depicting a declining rate of -78.31% as against sales. This also reveals that the ratio was highly fluctuating

during the study period. The management of E.I.D.-Parry should take appropriate steps to manage cash balance

in an effective manner. There is a negative relationship between sales and cash balance of E.I.D.-Parry (India)

Limited.

TABLE 6: CREDITORS TURN OVER RATIO (Rs. in crores)

Years Purchases Average Creditors Ratio

2009-10 676.33 155.11 4.36

2010-11 725.92 134.42 5.40

2011-12 1095.98 110.12 9.95

2012-13 1637.28 170.3 9.61

2013-14 1218.81 289.58 4.21

2014-15 1394.82 349.61 3.99

2015-16 1327.08 367.50 3.61

2016-17 1369.52 340.47 4.02

2017-18 1634.78 424.75 3.85

2018-19 1240.03 488.05 2.54

Average 1232.06 282.99 5.15

SD 327.38 132.53 2.54

Growth Rate 84.35 214.64 -

CV 26.57 46.83 49.27

r +0.537


It is also evident from the above Table that the creditors turnover ratio was recorded as high as 9.95 in

the year 2011-12 and as low as 2.54 in the year 2018-19. This shows that there were wide fluctuations in the

ratio during the study period. In the above analysis, creditors turnover ratio of the second half of the study period

shows a better position when compared to the first half of the study period. But at the same time, in the year

2018-19 it gradually decreased. So, the concern should concentrate on credit policy in the forthcoming years.

There is a positive relationship between credit purchase and average creditors of E.I.D.-Parry (India) Limited.

TABLE 7: WORKING CAPITAL TURNOVER RATIO (Rs. in crores)

Years Sales Working Capital Amount

2009-10 1147.32 135.91 8.44

2010-11 1255.69 269.43 4.66

2011-12 1519.91 -27.6 -55.07

2012-13 1964.51 -80.28 -24.47

2013-14 1767.42 -72.09 -24.52

2014-15 2054.79 -264.97 -7.98

2015-16 2272.30 -468.83 -5.01

2016-17 2229.96 -245.06 -9.53

2017-18 1896.23 -467.65 -4.10

2018-19 1855.03 -348.81 -5.32

Average 1822.68 -157.00 -12.29

SD 412.04 246.63 18.38

Growth Rate 61.68 -356.65

CV 22.61 -157.09 -149.54

r -0.819




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The sales of E.I.D.-Parry (India) Limited increased from Rs.1147.32 corers in 2009-10 to Rs.1855.03 in

2018-19 registering a growth rate of 61.68%. The Net Working Capital of E.I.D.-Parry decreased from

Rs.135.91 corers in 2009-10 to Rs. -348.81 corers in 2018-19. During the study period, the net working capital

of the concern registering a declining rate of -356.65%. The co-efficient of variation of sales (22.61%) is less

variable than Net Working Capital (-157.09%). The analysis of the above Table reveals the ratio variation

between (8.44) in 2009-2010 to (-24.47) in 2012-13. Sales were managed efficiently during the first half of the

study period. Therefore, the management has to take all possible steps to avoid Negative ratio in future. There

is a negative relationship between Sales and Net Working Capital of E.I.D.-Parry (India) Limited.

II PROFITABILITY ANALYSIS

TABLE 8: GROSS PROFIT RATIO (Rs. in crores)

Years Gross Profit Sales Ratio

2009-10 105.21 1147.32 9.17

2010-11 235.82 1255.69 18.78

2011-12 333.16 1519.91 21.92

2012-13 128.68 1964.51 6.55

2013-14 330.33 1767.42 18.69

2014-15 311.44 2054.79 14.72

2015-16 400.28 2272.30 17.05

2016-17 415.92 2229.96 17.80

2017-18 285.23 1896.23 14.88

2018-19 571.72 1855.03 30.82

Average 311.78 1822.68 17.04

SD 1822.68 412.04 6.68

Growth Rate 443.41 61.68

CV 22.61 39.23

r +0.50


The above table shows that the ratio of GP to sales was high 30.82 in the year 2018-19 and as low as

6.55 in the year 2012-13. The growth rate of gross profit was higher when compared with growth rate of sales

throughout the study period. The growth rate of gross profit shows an enormous increase of 443.41%. The

highest ratio indicates an increase in the selling price of the goods sold without any corresponding increasing in

the cost of goods sold. A lower ratio may be a result of unfavorable purchasing policies. From the table it can

be inferred that the ratio fluctuated over a period of time. It shows the average progress of the company. There

is a positive relationship between gross profit and sales of E.I.D.-Parry (India) Limited.



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TABLE 9: NET PROFIT RATIO (Rs. in crores)

Years Net Profit Net Sales Amount

2009-10 205.28 1147.32 17.89

2010-11 79.26 1255.69 6.31

2011-12 137.32 1519.91 9.03

2012-13 331.71 1964.51 16.89

2013-14 26.53 1767.42 1.50

2014-15 148.25 2054.79 7.01

2015-16 -66.45 2272.30 -2.83

2016-17 283.61 2229.96 12.14

2017-18 101.01 1896.23 5.27

2018-19 163.13 1855.03 8.79

Average 140.97 1822.68 8.20

SD 116.88 412.04 6.38

Growth Rate -20.53 61.68

CV 82.91 22.61 77.77

r -0.024

Source: Computed from Annual Report It can be observed from the above table that the net profit ratio of the company was volatile during the

study period. The lowest Net profit ratio (-2.83%) was observed in the year 2018 – 2019, where it was highest

(16.89%) during the year 2010 – 2011. The co-efficient of variation was 77.77%. It showed a fluctuating trend

during the study period and a poor performance was observed during second half of the study period. There is

a negative relationship between Net Profit and Sales of E.I.D.-Parry (India) Limited.

TABLE 10: OPERATING PROFIT RATIO (Rs. in crores)

Years Operating Profit Net Sales Amount

2009-10 284.31 1147.32 24.78

2010-11 114.02 1255.69 9.08

2011-12 197.59 1519.91 13

2012-13 228.67 1964.51 11.64

2013-14 163.66 1767.42 9.26

2014-15 291.77 2054.79 13.79

2015-16 47.66 2272.30 2.03

2016-17 396.76 2229.96 16.98

2017-18 247.28 1896.23 12.90

2018-19 56.39 1855.03 3.04

Average 202.81 1822.68 11.65

SD 110.44 412.04 6.56

Growth rate -80.16 61.68 -

CV 54.55 22.61 56.34

r 0.113


The operating profit ratio of the concern showed average progress. During the study period. The lowest

ratio (2.03) was observed in the year 2015-16 and the highest ratio (24.78) was evidenced in the year 2009 –

2010. The co-efficient of variance was 56.34 during the study period. There is positive relationship between

operating profit and sales of E.I.D.-Parry (India) Limited.



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TABLE 11: RETURN ON TOTAL ASSET (Rs. in crores)

Years Net Profit Total Assets Ratio

2009-10 205.28 2124.80 0.10

2010-11 79.26 2082.21 0.04

2011-12 137.32 2444.39 0.06

2012-13 331.71 3634.52 0.09

2013-14 26.53 3829.21 0.01

2014-15 148.25 3912.61 0.04

2015-16 -66.45 4042.21 -0.02

2016-17 283.61 3445.41 0.08

2017-18 101.01 3475.03 0.03

2018-19 163.13 3895.57 0.04

Average 140.97 3288.60 0.05

SD 116.88 768.08 0.04

Growth Rate -20.53 83.34 -

CV 82.91 23.38 78.37

r -0.144


It is also clear from the above Table that the highest ratio (0.08) was recorded in the year 2016-17 and

the lowest ratio (-0.02) was recorded in the year 2015-16. During the study period, return on total assets of

E.I.D.-Parry (India) Limited was not well. Hence, the management should take necessary steps to use the total

assets in an effective manner. There is a negative relationship between net profit after tax and total assets of

E.I.D.-Parry (India) Limited.

TABLE 12: RETURN ON NET WORTH (Rs. in crores)

Years Net Profit Net Worth Amount

2009-10 205.28 1096.34 0.19

2010-11 79.26 1150.28 0.07

2011-12 137.32 1217.63 0.11

2012-13 331.71 1346.88 0.25

2013-14 26.53 1279.42 0.02

2014-15 148.25 1369.18 0.11

2015-16 -66.45 1290.68 -0.05

2016-17 283.61 1477.35 0.19

2017-18 101.01 1638.13 0.06

2018-19 163.13 1713.50 0.10

Average 140.97 1357.94 0.10

SD 116.88 200.38 0.09

Growth Rate -20.53 56.29

CV 82.91 14.76 84.20

r 0.148


The highest value of Return on Net Worth was 0.25, and the least value was -0.05 and the mean value

was observed at about 0.10 and the co-efficient of variation was 84.20%. Hence the Return on Net Worth

showed a fluctuating trend over the study period.



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The Net Worth of E.I.D.-Parry (India) Limited gradually increased during the study period from a

minimum of Rs. 1096.34 crores to a maximum of Rs. 1713.50 corers whereas the net profit after tax fluctuated

at a minimum value of Rs. -66.45 corers. and a maximum value of Rs. 331.71 corers.

TABLE 13: RETURN ON CAPITAL EMPLOYED (Rs. in crores)

Years Net Profit Capital Employed Amount

2009-10 205.28 1670.91 12.29

2010-11 79.26 1586.1 5

2011-12 137.32 1676.54 8.19

2012-13 331.71 2239.84 14.81

2013-14 26.53 2278.04 1.16

2014-15 148.25 2115.6 7.01

2015-16 -66.45 2485.08 -2.67

2016-17 283.61 2067.73 13.72

2017-18 101.01 1363.6 7.41

2018-19 163.13 2093.2 7.79

Average 140.97 1957.66 7.47

SD 116.88 360.27 5.43

Growth Rate -20.53 25.27 -

CV 82.91 18.40 72.74

r -0.114


It is also clear from the above Table that the return on investment decreased from 12.29 in 2009-10 to

7.79% in 2018-19. The overall analysis of the Table indicates that the ratio was volatile and not satisfactory

during the study period. So, the management has to take appropriate steps to utilize the capital in an effective

manner.

There is a positive relationship between Net Profit after tax and capital employed of E.I.D.-Parry (India)

Limited.

IMPACT OF WORKING CAPITAL RATIOS ON PROFITABILITY – MULTIPLE REGRESSION ANALYSIS

For the purpose of establishing definite relationships between working capital ratios and profitability

ratio, Karl Person’s correlation co-efficient can be applied. It implies the interdependence of the set of variables

upon each other in such a way that changes in one are associated with changes in the other. In this section, in

order to identify the working capital influence on profitability, a linear multiple regression model is used. In the

analysis, working capital ratios viz ITR - Inventory turnover ratio, DTR – Debtors turnover ratio, CTR – Cash

Turnover Ratio, CRTR – Creditors Turnover Ratio, WTR- Working Capital Ratio, CR – Current ratio and LR

– Liquidity ratio on the profitability ratios of E.I.D.-Parry (India) Limited.

Null Hypothesis (Ho)

There is no significant relationship between working capital ratios and net profit of E.I.D.-Parry (India)

Limited.



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TABLE NO. 4.14

MULTIPLE CORRELATION CO-EFFICIENTS AMONG WORKING CAPITAL RATIOS AND

NET PROFIT RATIO

Regression Statistics

Multiple R 0.700183

R Square 0.490257

Adjusted R Square -1.29385

Standard Error 177.0179

Observations 10

ANOVA

df SS MS F

Significance

F Result

Regression 7 60274.88 8610.697 0.274792 0.917495 NS

Residual 2 62670.7 31335.35 Total 9 122945.6

Source: Computed from the Annual Reports of the Selected Cement companies.

It is inferred from the above table that there is a correlation between net profit ratio and working capital ratios

of E.I.D.-Parry (India) Limited. The R square value indicates that 49.03 % variation in net profit ratio in E.I.D.-

Parry (India) Limited.

SUGGESTIONS

Keeping in view the above observations relating to the study. The following measures and suggested

which would go a long way to improve the management of Working Capital Management and profitability of

E.I.D Parry India Limited.

1. Current Assets trend of E.I.D Parry India Limited was favourable throughout the study period. So, the

concern may maintain the same position in the following years.

2. Throughout the study period Current Liability trends shows an enormous and it is not good for the firm.

So, the management has to stop this growth

3. During the study period by did not satisfy the CR’s standard norms of 2:1. So, the management should

concentrate on to Current Assets so as to pay Current Liability in future.

4. In order to improve the liquidity position of the concern, the management net only give concentration to

Current Liability but management also give importance to Current Assets which may improve the liquidity

position in future.

Independent Variables B Std.

Error t P-value Result

(Constant) 28.809 3.871 - - -

Inventory turnover ratio -0.831 0.247 -3.360 0.078 NS

Debtors turnover ratio -0.205 0.497 -0.413 0.720 NS

Cash turnover ratio 0.037 0.075 0.489 0.673 NS

Creditors turnover ratio 2.497 2.754 0.907 0.460 NS

Working capital turnover ratio -0.781 3.678 -0.212 0.851 NS

Current ratio -15.498 7.308 -2.121 0.168 NS

Liquid ratio 15.977 7.592 2.105 0.170 NS



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5. The management of E.I.D Parry India Limited should take appropriate steps to reduce inventories in

future which may improve the profitability and unnecessary investment of the inventories.

6. Cash balance in current assets may not be too high or too low. If it is too high or too low, it will affect the

profitability of the concern. Hence, the management of E.I.D.-Parry (India) Limited should take appropriate

steps to improve the cash position of the concern in the forthcoming years.

7. E.I.D.-Parry (India) Limited was able to pay its payments as early as possible and it was successful in

reducing the duration of creditors. The management may maintain the same position in future.

8. The credit purchase of E.I.D.-Parry (India) Limited formed only a small part of company’s total purchase.

Under these circumstances it is suggested to examine the feasibility of purchasing goods on credit to a

significant extent so that purchase would be promoted.

9. Net working capital shows an unfavourable condition. So, necessary steps must be taken by E.I.D.-Parry

(India) Limited to develop the situation and keep up an optimum net working capital in future.

10. In order to improve the Return on Capital Employed, the management has to utilize the capital in the

best way. Otherwise, of the share holders will be affects.

11. The management has to utilize total assets in an effective manner.

CONCLUSION

Working Capital Management envisages the need for better management. Whatever may be the type of

industry, a planned working capital management advances for improvement in financial aspects. Owing to

industrial recession globally, everyone is concentrating on core industries. To relieve from the recession every

country is taking its own policies and procedures. The profitability-liquidity linkage among the corporate sector

in India especially in Sugar Industries, depends on working capital base. The main aim of sugar industries should

be on working capital forecast to ensure industrial development and for the betterment of the standard of living

of the farmers, employees and investors of sugar industries.

Hence, it can be concluded that apart from the investment in fixed assets, every organization must have

adequate funds to meet day-to-day operations. Smooth running of business operation depends on the working

capital position of a firm. If a firm cannot maintain a satisfactory level of working capital, it is likely to become

illiquidate. The share of cash and bank balance in the total amount of current assets in E.I.D.-Parry (India)

Limited is very meagre. So, E.I.D.-Parry (India) Limited should increase its level of cash. On the whole, if the

authorities concerned endevour to manage their respective working capital more effectively by implementing

the aforesaid suggestions along with other working capital management techniques, the performance and the

profitability of the company would reach newer heights in the years to come.

REFERENCES 1. Saravanan P., “A study on working capital management non-banking Finance companies”- Finance India,

2001, Vol.XV.No.3, pp.987-994.

2. R. Uma Devi (2018). “Impact of Working Capital Management on The Profitability of The Company- A

Case Study of Maruti Suzuki India Limited.” International Journal of Engineering and Management Sciences,

Volume 9, Issue 2, pp. 22-25.

3. A. Vijayakumar., “Working Capital Finance in National Corporative Sugar Mills Ltd., Tamil Nadu. A case

study” Research studies in commerce and management setia pointers, New Delhi, p.7.

4. M.A. Zariyawati, M.N. Annur and A.S. Abdul Rahim (2009), "Working capital management and corporate

performance" - Case of Malaysia", University Putra Malaysia, Malaysia, Journal of Modem Accounting and

Auditing, Vol.5. No.11.



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5. M Y Khan and P K Jain (2003) ‟Financial management text and problems” Tata McGraw Hill publishing

company Limited. New Delhi.

6. Prasana Chandra, (2002) “Financial management theory and practice”, Tata McGraw Hill Publishing

company Limited, New Delhi.

7. Shashi K. Gupta and R.K. Sharma (2013) (Management Accounting Principles and Practice” Kalyani

Publishers, New Delhi.

8. Annual Reports of E.I.D Parry (India) Limited – 2009-10 to 2018-19



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