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A Summer Training Report
ON
Working Capital Management
CONDUCTED AT
PARLE BISCUITS PRIVATE LIMITEDBahadurgarh
Submitted in partial fulfillment for the award of degree of
MASTER OF BUSINESS ADMINISTRATION(SESSION 2005-2007)
SUBMITTED BY:
BHUPENDER SINGH
MBA 2ND YEAR
P.D.M.COLLEGE OF ENGINEERING,
SARAI AURANGABAD, BAHADURGARH
APPROVED BY
MAHARISHI DAYANAND UNIVERSITY, ROHTAK
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DECLARATION
I, Roll No Class of the PDM College of
Engineering here by declared at the project entitled
is an original work and the same has not been submitted to any other
institute for the award of any other degree. The interim was presented to the supervisor on
and the pre submission presentation was made on ____________. The feasible suggestions have
been only incorporated in consultation with the supervisor.
Countersigned
Signature of the Supervisor
Forwarded By Signature of the candidate
Director/Principal of the Institute
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TABLE OF CONTENTS
ACKNOWLEDGMENT 4
PREFACE 5
INTRODUCTION
* HISTORY OF COMPANY 6
* PRODUCT PROFILE 18
MANAGERIAL USEFULNESS OF STUDY 49
CONCEPTS USED IN STUDY 50
FOCUS OF THE PROBLEMS 51
OBJECTIVES OF THE PROJECT 52
SCOPE OF THE WORK 54 RESEARCH METHODOLOGY 55
* RESEARCH DESIGN
* UNIVERSE AND SURVEY POPULATION
* SAMPLE
* SAMPLING METHOD
* COLLECTION OF DATA
DATA ANALYSIS 60
FINDINGS 74
RECOMMENDATION 76
LIMITATIONS 77
CONCLUSIONS 78
BIBLIOGRAPHY
79
ANNEXURE
80
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ACKLNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful completion of any task would
be, but incomplete without mentioning the people who made it possible, whose constant guidance
encouraging crowned my effort with success.
I would like to begin with a special note of gratitude and heartfelt thanks to Mr. S. S.
SHIVRAIN,General Manager, who gave me the opportunity to complete my summer project at PARLE
BISCUITS PRIVATE LIMITED Bhadurgarh, Haryana.
I am extremely grateful to the Deputy Managerof FinanceDepartmentMr. JAIDEEP
BHALA for his constant encouragement and valuable suggestions throughout my summer training and
project for his cooperation extended to me.
I am extremely indebted to Mr. PAWAN TYAGI, Mrs. SANTOSH NARWAL, Mr. S.N.
VERMA, Mr. AKHIL RASTOGI, Mr. VINOD, Mr. AJAY SINGAL, Mr. PARMINDER SINGH,
Mr. VIJENDER SINGH, and Mr. MANOJ for sharing their valuable time, comments and encouraging
suggestions which guided and inspired me throughout the preparation of the project.
I express my special thanks to Mr. K.G. CHACKO (OFFICE MANAGER), Mr. RAJIV
SINGH (I.T. MANAGER), Mr. VIJAY KUMAR THAKUR (I.T. ASSTT. MANAGER), Mr. JANAK
SHEKHAWAT (HR &P), Mr. SANJAY GOEL, Mr. VIDYA DHAR KASWAN (PURCHASE
OFFICERS) for giving me their valuable opinions time to time.
At last but not the least, I am very thankful to all the staff members of I.T. department also.
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PREFACE
Practical work experience is the integral part of individual learning. An individual who is
learning managerial concepts has to undergo this practical experience for being a future executive.
Master of Business Administration is a two-year programme that inserts management
knowledge in an individual to make that individual completely professional for which practical experience
is must.
Parle Biscuits Pvt. Ltd. is the market leader in biscuit industry. Bahadurgarh plant
of PBPL offered me a project on Working Capital Management to understand the current position through
dates provided by them.
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HISTORY OF COMPANY
INTRODUCTION
A long time ago, when the British ruled India, a small factory was set up in
the suburbs of MUMBAI city, to manufacture sweets and toffees. The year was 1929 and the market was
dominated by famous international brands that were imported freely. Despite the odds and unequal
competition, this company called
Parle Products, survived and succeeded, by adhering to high quality and improvising from time to time.
A decade later, in 1939, Parle Products began manufacturing biscuits, in addition to sweets
and toffees. Having already established a reputation for quality, the Parle brand name grew in strength with
this diversification. Parle Glucose and Parle Monaco were the first brands of biscuits to be introduced,
which later went on to become leading names for great taste and quality.
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HOW PARLE FOUGHT TO MAKE BISCUITS AFFORDABLE TO ALL
Biscuits were very much a luxury food in INDIA, when Parle began production in 1939.
Apart from Glucose and Monaco biscuits, Parle did offer a wide variety of brands.
However, during the Second World War, all domestic production was diverted to assist the
Indian Soldiers in India and Far East. Apart from this, the shortage of wheat in those days, made Parle
decide to concentrate on the more popular brands, so that people could enjoy the price benefits.
Thankfully today, theres no dearth of ingredients and the demand for more premium
brands is on the rise. Thats why; we now have a wide range of biscuits mouthwatering confectioneries to
offer.
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THE QUALITY COMMITMENT
Parle Product Private Limited has 3 manufacturing plants
1) VILE PARLE in Mumbai (Maharashtra)
2) BHUJ (Gujarat)
3) BANGLORE (Karnataka)
Apart these plants Parle Product Pvt. Ltd. maintain 20 contract base manufacturing units in
all over INDIA. These plants and CMUs produce sweets and confectionary products.
Parle Product Pvt. Ltd. has also a subsidiary company, which is Parle Biscuit Pvt. Ltd. This
subsidiary company produces only biscuits. It also has 2 manufacturing plants
1) BAHADURGARH in Gurgaon (Haryana)
2) NEEMRANA in Alwar (Rajasthan)
Apart these two plants Parle Biscuit Pvt. Ltd. maintain 11 contract base manufacturing units
on different locations, which produce only biscuits.
All these factories are located at strategic locations, so as to ensure a constant output & easy
distribution. Each factory has state-of-the-art machinery with automatic printing & packaging facilities.
All Parle products are manufactured under the most hygienic conditions. Great care is
exercised in the selection & quality control of raw materials; packaging materials & rigid quality standard
are ensured at every stage of the manufacturing process. Every batch of biscuits & confectioneries are
thoroughly checked by expert staff, using the most modern equipment.
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EMERGING TRENDS OF THE BRAND
Since its inception in the 30s Pale biscuits have prided itself in offering quality products
that are affordable to the common man. The marketing mix has evolved with the times
THE PRODUCT
Parle biscuits have a range of variants in its product portfolio. The popular brands Parle-G,
Krackjack, Monaco and its variants (zeera, onion and methi) are available in packets of various
convenient sizes. New products like Hide & Seekare a foray into the premium segment.
THE PRICING STRATEGY
This biscuit major has not bothered to raise the price of its flagship brand Parle-G for the
past 6-8 years and has always tried to provide its offerings at nearly 33% discount as compared to other
competitive brands.
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PARE BISCUTS PRIVATE LIMITED (BAHADURGARH)
Parle Biscuit Pvt. Ltd. is a subsidiary of Parle Product Pvt. Ltd.
The manufacturing at Bahadurgarh unit started in 1982 forParle-G with a single plant. It is planted in near
about 16 acres of land.
Including General Manager 78 employees of Managerial and Officer
class are working in this plant. Production is going on in this plant 24 hours in three shifts. Number of
permanent workers of thrice shifts is 680 and around 400 workers are there on contract basis.
In 1990s Krackjack production began followed by Monaco and Nimkin. Average
Production capacity of Bahadurgarh unit per month is-
1) Parle-G 3500 Metric Tonnes
2) Krackjack 1600 Metric Tonnes
3) Monaco 800 Metric Tonnes
The plant works in coordination with the Mumbai office, Neemrana (Rajasthan) Plant of
PBPL, 11-contract base manufacturing units and 40 depots. But the accounts are finalized of Neemrana
plant and 11 CMUS at Bahadurgarh Plant.
Location of the 11 CMUS is as follows-
5 at Kanpur
1 at Gorakhpur
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1 at Patna
1 at Faizabad
1 at Raipur
1 at Varanasi
1 at Ajmer
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DEPARTMENTS IN PLANT
FINANCE
HR & PERSONNEL
QUALITY ASSURANCE
PRODUCTION & PRINTING
EXCISE & DESPATCH
ENGINEERING
I.T.
PURCHASE
STORE
The organization follows a flat structure with less hierarchal levels. The heads of the
different departments report to the General Manager through direct communication. The working
atmosphere is not stressful with enough work-flexibility given to staff and managers.
The plant also has auditorium and viewing gallery, which is used during the visit of
school children. A retail shop at the Plant provides Parle Products at M.R.P. rates.
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CREDIT POLICY OF PARLE BISCUITS PVT. LTD.
Before coming to the credit policy its necessary to be aware with the goods distribution
policy of Parle Biscuits Pvt. Ltd.
For fulfilling the demand of its customers timely Parle Biscuits Pvt. Ltd. maintains 40
DEPOTS in all over INDIA. Finished goods are transferred from production plants to these depots.
According to their transportation facilities customers of Parle Biscuits Pvt. Ltd. ask their demand of
different products to depots.
Then its the responsibility of these depots to fulfill the demand of customers of Parle Biscuits Pvt. Ltd.
Parle Biscuits Pvt. Ltd. doesnt has credit policy it deals in cash. For the collection of its
payment PBPL deals with 5 banks which are as follows:
1) UTI
2) STANDARD CHARTERED
3) HDFC
4) BANK OF PUNJAB
5) CORPORATION BANK
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The Parle toffees brands are:
1) Funtoosh
2) Mango Bite
3) Orange Candy
4) Poppins
5) Roll-A-Cola
6) Tangy Candy
7) Boo
8) Pippermint
9) Rose Mint
10) M Choco
11) Melody
12) Dairy Toffee
13) Lux Toffee
14) Mayfair Toffee
15) Kismi
16) Mahakismi
17) Smoothies
18) Cafechino
19) Chox Bar
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Introduction of Topic
WORKING CAPITAL AT A GLANCE
INTRODUCTION
TYPES
FEATURES
DETERMINANTS
COMPONENTS
WORKING CAPITAL CYCLE
INTRODUCTION
A successful sales program is necessary for earning profits by any business enterprise. Sales
dont convert into cash instantly. There is a time lag between the sale of goods and receipt of cash.
Therefore, there is 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 against goods sold. Therefore sufficient
working capital is necessary to sustain sales activity.
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FEATURES
1) Working capital is regarded as the excess of current assets over current liabilities.
2) Working capital indicates circular flow of funds in the day-to-day activities of business. Thats why it
is also called circulating capital.
3) Working capital represents the minimum amount of investment in raw materials, work-in progress,
finished goods, stores and spares, accounts receivables and cash balance.
TYPES
Working capital can be classified either on the basis of concept or on the basis of
periodicity of its requirement.
1) ON THE BASIS OF CONCEPT
On the basis of concept working capital is of 2 types.
A) Gross working capital - Gross working capital is represented by the total Current assets.
Gross working capital = Total current assets
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B) Net working capital -Net working capital is the excess of current assets over current liabilities.
Net working capital = Current assets Current liabilities
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5) Terms of purchase - If suppliers allow continuous credit, payment can be postponed for some
time and can be made out of the sale proceeds of the goods produced. In such a case, the
requirements of working capital will be reduced.
6) Dynamic Attitudes As a company grows, it is logical to expect the large amount of working
capital will be required.
7) Business cycles Requirement of working capital also varies with the business. When the price
level is up due to boom conditions, the inflationary conditions create demand for more working
capital. During depression also a heavy amount of working capital is needed due to the inventories
being locked unsold and book debts uncollected.
8) Requirement of cash - The working capital requirements of a company are also influenced by
the amount of cash required by it for various purposes. The greater the requirement of cash, the
higher will be the working capital needs of the company.
9) Dividend policy of concern If the management follows a conservative dividend policy the
needs of working capital can be met with the retained earnings. The relationship between dividend
policy and working capital is well established and mostly companies declare dividend after a careful
study of their cash requirements.
10) Other Factors - Other factors, which affect the requirement of working capital, are lack of co-
operation in production and distribution policies, transport and communication facilities, the fiscal
and tariff policies of the government etc.
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3) Account Receivable - Though accounts receivable are a vital investment of any business
organization, little analytical work as been done to determine credit policies. Maintaining account
receivable has its cost implications in that the firms monetary resources are tied up. This is of greater
significance in the inflationary economy, because of the depreciation in the value of money.
Basically, this is a two-step account. When goods are shipped, inventories are reduced and accounts
receivable is created. When payment is made, this account is reduced and the cash level increases.
Accounts receivables are, therefore a function of the volume of credit sales and the average length of
time between sales and collections.
4) InventoryInventories represent a substantial amount of a firms current assets. Management of
inventories should be efficiently carried out so that this investment doesnt become too large, as it
would result in blocked capital which could put to productive use elsewhere. On the other hand,
having too small an inventory could result in loss of sale or loss of customer goodwill. An optimum
level of inventory should therefore be maintained.
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WORKING CAPITAL CYCLE
Working capital cycle indicates the length of time between a firms paying for materials
entering into stock and receiving the cash from sale of finished goods. In a manufacturing firm, the duration
of time required to complete the sequence of events is called operating cycle.
In case of a manufacturing company, the operating cycle is the length of time necessary to
complete the following cycle of events: -
1) Conversion of cash into raw materials
2) Conversion of raw materials into work-in-progress
3) Conversion of work-in-progress into finished goods
4) Conversion of finished goods into accounts receivable
5) Conversion of accounts receivable into cash
The above operating cycle is repeated again & again over the period depending upon the nature of the
business & type of product etc. the duration of the operating cycle for the purpose of estimating working
capital is equal to the sum of duration allowed by the suppliers.
Working capital cycle can be expressed as:
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OPERATING CYCLE OF MANUFACTURING BUSINESS
REALIZATION Accounts SALES
Receivables
Cash Finished Goods
PURCHASES PRODUCTION
PRODUCTION PROCESS
Raw Materials Work-in-Process
PROCESS
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SALES per month 67829.07 = 5652.422 Rs.
12
Total EXPENSES 60450.77 = 5037.66 Rs.
Per month 12
WORKING CAPITAL REQUIRED = Total Length of X Monthly Expenses
Operating Cycle
__________________________________
30
= 21.34 X 5037.66
30
= 3583.45Rs.
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1 Months Finished Goods = 40275.31/12 = 3356.27Rs.
2004-05:
Cost of Goods Sold = 41529.54Rs.
1 Months Finished Goods = 41529.54/12 = 3460.85Rs.
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NAME OF THE COMMODITY YEAR AMOUNT (In Rs/-)
Stores and spares 2003-04 82, 91,000
2004-05 57, 29,000
Raw Materials 2003-04 10, 21,52,000
2004-05 8,11,54,000
Packing Material 2003-04 5,82,08,000
2004-05 7,08,06,000
Finished Goods 2003-04 11,61,33,000
2004.5 9,46,87,000
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CASH MANAGEMENT IN PARLE BISCUITS PVT. LTD.
Cash management in Parle Biscuits Pvt. Ltd. is as follows-
Average daily collection of the Parle Biscuits Pvt. Ltd. is 2 crores.
Salaries and Wages are distributed in Parle Biscuits Pvt. Ltd on monthly basis. 50,00,000-
75,00,000 salaries and wages are distributed in one month. Like this all other daily transactions are
completed by daily collection.
In case of strike or any contingency supply of demand is completed by another plant of Parle Biscuits
Pvt. Ltd. and by 11 CMUS. Supply doesnt disturb.
Authority for getting the benefit of any opportunity is given to Mumbai office of Parle Biscuits Pvt.
Ltd. That decides the policy regarding to any market opportunity.
Parle Biscuits Pvt. Ltd. doesnt have any credit policy. It deals in cash. Thats why it doesnt has any
cash problem.
Distribution channel of Parle Biscuits Pvt. Ltd. is very short only depots are there as a middleman
between plant & open market. Thats why there isnt any necessity of more cash.
Biscuits come in FMCG product. So circulation of cash is smooth & fast.
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Production cycle is short. Thats why Parle Biscuits Pvt. Ltd has less demand of cash.
FUND FLOW ANALYSIS
The statement of change in financial position, prepared to determine only the sources and
uses of working capital between dates of the two Balance Sheets is known as the Fund Flow Statement.
Working Capital is defined as the difference between Current Assets and Current Liabilities. Working
determines the liquidity of the firm.
The Working Capital flow or fund arises when the net effect of transaction is to increase or
decrease the amount of Working Capital. Normally, a firm will have some transactions that will change Net
Working Capital and some that ill cause no change in Net Working Capital. The transaction will cause Net
Change of Working Capital only when one of the accounts affected is a current account (Current Liability)
and account is non-current account (Long-term Assets or Long term Liability).
The concepts of Working Capital may be summarized as follows:
The Net Working Capital increases or decreases when a transaction involves a current account and
a non-current asset account.
The Net Working Capital remains unaffected when a transaction involves only Current accounts.
The Net Working Capital remains unaffected when a transaction involves only non current
accounts.
Now let us examine the Working Capital flow of Parle Biscuits Pvt. Ltd. through the statement of
change in Working Capital.
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BANK CREDIT
Bank Credit is the primary institutional source of Working Capital finance in India.
In fact, it represents the most important source for financing of Current Assets.
Working Capital finance is provided by banks in five ways:
1) Cash Credits/Overdrafts
2) Loans
3) Purchase/Discount Bills
4) Letter of Credit
5) Working Capital term loans
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INTERNAL SOURCES
This is also another major source for financing of Working Capital. Internal Sources include
profits, reserves etc.
FINANCING OF WORKING CAPITAL IN PARLE BISCUITS PVT. LTD.
In Parle Biscuits Pvt. Ltd financing of Working Capital is done through only
internal sources. Profits and reserves of Parle Biscuits Pvt. Ltd. are enough to fulfill the demand of its
Working Capital.
Parle Biscuits Pvt. Ltd. doesnt use any other source apart internal for financing its
Working Capital
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MANAGERIAL USEFULNESS OF STUDY
Today in the business line every man. want to know about his company financial condition. A
working capital is a part of finance. The working capital are calculated by the current assets and
current liabilities which are related to annual report of the company. With the help of working
capital management we can calculated the liquidity position of the company. If the current assets
are more than the current liabilities thus we can say that the liquidity position of the company is
satisfactory, the usefulness of study is included the signification of the working capital. Working
capital management is manage the operating process in the organization & company.
All the businessmen want to know how much they have gained or lost
during the year; how much capital is invested in the business at the end (if the year; how much
amount, they are liable to pay and to whom they owe it; how much is owed to them and by whom
etc. In order to attain such information, it is essential to keep a complete and systematic record of
each and every business transaction entered into during the year.
By keeping a complete and systematic record of every business dealing the businessman can know
how much the amount of purchases is; how much is the amount of sales; what are his total
expenses and what is the amount of profit earned or loss incurred during the year. Furthermore, he
can ascertain the financial position of his business, such as, how much capital it has at the end for
the year and how that capital stands invested in various assets; how much amount he has to take
and from whom and how much amount he is liable to pay and to whom. Besides, the properly
maintained accounts are helpful in the assessment of Income-tax and Sales
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CONCEPT USED IN STUDY
In this project I used working the ratio which are used for calculating for the financial
conditions of Parle Biscuit Pvt. Ltd. I have used the ratio which are networking capital
ratio, current ratio, average collection ratio and quick ratio. These ratio are very useful to
understand the topic because we can calculate the working capital by the help of these ratio.
I have used these ratio by the declaration of financial manager of Parle Biscuit Pvt. Ltd.
These ratio are shows the liquidity position in the financial competition. Ratio help to
summaries the large quantities of financial data and to make qualitative judgment about the
firms financial performance. The project is developed keeping in mind the security of
working capital of the company. That is possible with the help of ratio analysis.
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Scope of the Work
Company has opportunities of tapping new markets by their products. Company is
trying to expand its network in many countries. Societal effects, company has a good scope
in the field of home loans and insurance sector. On one side it will be good for the society
and on the other side it will be beneficial for the company , as the loans have good profits
margins.
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RESEARCH METHODOLOGY
After knowing the job profile of every employee of finance department in Bahadurgarh
plant of PBPL. I choose the project of Working Capital Management. I discussed the project with my
instructor and coordinatorMr. JAIDEEP BHALA Deputy Manager of Finance Department.
He approved the project. After that a simple course of action has been followed for working
on this project. All the data are gathered from the respective annual report of Parle Biscuits Pvt. Ltd. All the
figures are taken from their balance sheet, profit & loss account of the respective years and other internal
documents.
My instructor Mr. JAIDEEP BHALA in understanding the facts and figures provided a
great help. Mr. BHALA made it possible for me to ask my queries from that person who can answer these
best rather than anybody else in the company. Although is has been a difficult task but the availability of
proper data and timely guidance given by Mr. BHALA made it a little simpler to complete this project.
In a lucid way I can summarize the steps of Research Methodology as-
1)Collection
2)Organization
3) Presentation
4)Interpretation
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1. Primary Data
Primary data is the data collected specially for the specific purpose, it can be collected through experiment
or through survey. In a case of survey data can be collected by one or more of the following ways.
1)COMMUNICATION METHOD
2)OBSERVATION METHOD
All the datahas been collected from the primary sources.
1. Communication
In Communication data we uses the mode of communication which we uses oftenly. By collecting the data
from this method is the direct interaction. We can collect this data for further use also. Because this data
can be used during comparison from last ones.
2. Observation
During the Data Collection first of all we have to see all the aspect related to data. From where we can get
the input according to our project. As the data collection will be taken initially then we can get the best
output.
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2. Secondary Data
Secondary data consists of information that already exists somewhere and was collected for another
purpose which may not be the same.
Secondary Data used here
- Various files
- Magazine and Books
- Performas and Websites
I have used secondary data in the completion of this summer training report.
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In year 2002-03 Investments were 20,000 lacs Rs/- so % of Working Capital to
Investments was 12.5 and in year 2003-04 Investments were 15,000 lacs Rs/- so % of Working Capital to
Investments was 20.
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% of Working
Capital to Sales
9.7
% of Working
Capital to
Investment
19.67 19.32
7.56
0
5
10
15
20
25
1 2
2003-04
2004-05
Amount in Lacs
RATIO ANALYSIS
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It is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of
two mathematical expressions and as the relationship between two or more things. Ratio helps to
summaries the large quantities of financial data and to make qualitative judgment about the firms financial
performance. The point to note is that a ratio indicates a quantitative relationship, which can be turn, used
to make a qualitative judgment.
Here are some of the calculated ratios of the financial year of Parle Biscuits Pvt. Ltd.
All the ratios are calculated in Lacs Rs/- figures.
Net Working Capital Ratio
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Net Working Capital Ratio
0.22
0.15
0
0.05
0.1
0.15
0.2
0.25
2003-04 2004-05
2003-04 0.22
2004-05 0.15
Net Working Capital Ration
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Current Ratio
Current Assets
Current Liabilities
2003.4 2004-05
Current Assets 26686.68 28602.82
Current Liabilities 20090.52 23308.81
Ratio 1.33: 1 1.23: 1
Current Assets include cash and those assets, which can be converted into cash within a
year. All obligations maturing within a year are included in current liabilities.
As a conventional rule a current ratio 2: 1 or more is considered satisfactory. The current
ratio doesnt represent margin of safety i.e. a cushion of protection for creditors.
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Average Collection Ratio
Debtors*360
Sales
2003-04 2004-05
Debtors*360 1217.16*360 821.90*360
Sales 68000 70,000
Days 6.45 4.22
The average collection period shows the efficiency of debtors. It tells that Parle Biscuits
Pvt. Ltd doesnt has credit policy and if is given then in rare cases.
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0
1
2
3
4
5
6
7
2003-04
2004-05
2003-04 6.45
2004-05 4.22
Average collection ratio
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Quick Ratio or Acid Test
Current Assets - Inventories
Current Liabilities
2003.4 2004-05
Current Assets Inventories 26686.68-2869.33= 28602.82 -2524.98=
23817.35 26077.84
Current Liabilities 20090.52 23308.81
Ratio 1.18: 1 1.12: 1
Generally a quick ratio of 1:1 is considered to represent a satisfactory position. But it cant
be said tat a company having quick ratio of less than 1:1 isnt financially sound, Because it depends upon
the nature of debtors. If the debtors are slow paying the quick ratio of more than 1:1 can become harmful.
But if debtors are liquid like in this organization than even less than 1:1 can work out to be satisfactory.
As debtors of this organization arent slow paying so that quick ratio is satisfactory.
The above made calculation of various ratios has told us about the various aspects of
Working Capital of Parle Biscuits Pvt. Ltd. The system is well under control an effective but still in some
areas a little more concentration to be needed.
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SCHEDULE OF CHANGE IN WORKING CAPITAL
73
1.09
1.1
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
2003-04
2004-05
2003-04 1.18
2004-05 1.12
Quick Ratio
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Particulars 2003-04 2004-05 Effect on Working capitalIncrease Decrease
Current
AssetsInventories 270934 289272 18338
Debtors 172716 188725 16009
Cash 153228 168070 14842
Accured Income 816122 868345 52223
Total 1413000 1514412
Current LiabilitiesC/L (Cr.) 297238 357239 60001
Provisions 1111814 1151815 40001
Total 1409052 1509054
W.C (A-B) 3948 5358 101412 100002Pos. Inc. in W.C 1410
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The project is developed keeping in mind the security of Working Capital of the company.
Means that no one can enter in the confidential data of the company and without permission the senior
officer one cant enter in the main programme whether he is Manager, Employee or the Guest.
FINDINGS
It is very difficult to make the project or the analysis in such a way that can solve all the problems
according to the requirements. In this project it is being tried to give more and more facilities but in a short
period of training time, as much as possible has been done.
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1.In the year 2002-03 working capital of Parle Biscuit Pvt. Ltd. Was 2500 Lacks
Rs/. While in the same period the sales was noticed 65,000 Lacks Rs/. Then %
of working capital to sale was 3.84 but in the next year 2003-04 sales was
50,000 Lacks Rs/. And working capital was 3,000 Lacks Rs/. So in year 2003-
04 % of working capital to sales was 6.
2.In the year 2002-03 investment were 20,000 Lacks Rs/. So % of working
capital to investments was 12.5 and in year 2003-04 investment were 15,000
Lacks Rs/. So % of working capital to investments was 20.
3. The Position of Net Working Capital in the year 2003-04 is better as
compared with the year 2002-03. The important thing to say is that this
organization has healthy current assets.
4. As a Conventional rule a current ratio 2:1 or more is considered satisfactory
the current ratio dont represent margin of safety i.e. a cushion of
protection for creditors.
5. The average Collection period shows the efficiency of the debtors, it tells
that Parle Biscuit Pvt. Ltd doesnt has credit policy and if is given then in
rare cases.
6. It can not be said that a Company having a quick ratio of less than 1:1 isnt
financially sound because it depends upon the nature of debtors. If the
debtors are slow paying the quick ratio of more than 1:1 can become
harmful. But if debtors are liquid like in this organization than even less
than 1:1 can work out to be satisfactory.
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Recommendation
Total Current assets need to be increased.
Total Liabilities of outsiders should be deceased.
Net Profit need to be improved.
Overall Management should be improved.
Expenditure should be decreased.
Organization has healthy current assets but it is need to more improved
current assets and liquidity power.
The organization is well under controlled and effective but still in some
areas a little more concentration to be needed.
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Limitations of the Study
The major limitations of my study are as under.
Limited Time : Although the staff of Parle Company Pvt. Ltd. was very
efficient and highly co-operative and devoted enough of their valuable
time to us. But because of time constant. We were not able to devote as
much time with their employees.
Secrecy: Some of the information was kept confidential and was not
disclosed to any person who so ever.
Lack of Comparative Data : Due to non availability of other industries
in the same line we were not able to compare the data of one organization
with other one. Inspire of these difficulties we still put our best efforts to
try to do the full justice subject matter and in completion of the report.
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Conclusions
Success is achieved by those who try where there is nothing to loose by trying a great deal
to gain if successful, by all means try.
W.Clement Stone
The study has its own importance in its own way. With the help of this study one can know about
the struggle and success of Parle Biscuits Pvt. Ltd. Efforts, which is due to its efficient management.
The study will definitely increase the morale of each employee and by studying this managers come
to know that what effective measures can be taken to maintain the effective use of working capital in the
organization and thus to achieve goals of the organizations.
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BIBLIOGRAPHY
Text Books
D.C.Sharma & K.G.Gupta Management Accounting
M.Y.Khan & P.K.Jain Financial Management
Annual Reports
1) Parle Biscuits Pvt. Ltd. annual report 2001-02
2) Parle Biscuits Pvt. Ltd. annual report 2002-03
3) Parle Biscuits Pvt. Ltd. annual report 2003-04
ANNEXURE
Profit and Loss Account
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Particulars 2003-04 2004-05
Sales 5282907 5505061
Less: Cost of Goods Sold
Opening Stock 137107 136933
Add: Raw Material Consumed 3067148 3268256Packing Material Consumed 723740 666587
Payment to an Provisions for employees 171429 126067
Store and Spare Parts Consumed 43975 40306
Power and Fuel 120505 142037
Conversion Charges 257928 305061
Rates and Taxes 68721 78051
Less: Closing Stocks 136933 105061
Gross Profit 829287 846824Less : Operating Expenses
Selling and Distribution expenses
Repair and Maintenance 44499 40507
Advertisement and Sales/ Marketing Expenses 187875 250507
Communication Expenses 2103 2209
Cash Discount 20440 25061
Traveling and Convince Expenses 6312 7051
General and Administrative Expenses
Rent 4636 2051
Printing and Stationary 2276 2051
Insurance 3531 3033
Legal and Professional 3642 4050
Financial ExpensesDepreciation 103900 95061
Miscellaneous 5488 6057
Operating Profit 327846 396336
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Add : Not Operating Income
Income from Investment 87622 146251
Other Incomes 10606 21872
Less : Non Operating Expenses
Net income before Tax 426074 564459
Less : Tax@38.5% 164038 217317
Net Income 262036 347142
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Common Size Statement
Profit and loss Account
Particulars 2003-04 2004-05
Sales 100 100
Less Cost of Good Sold 84.3 84.62
Gross Profit 15.7 15.38Less : Operating Expenses
Selling and Distribution Expenses 7.15 6.14
General and Administration Expenses .27 .20
Financial Expenses 1.97 1.72
Misc. Expenses .10 .11
Total Operating Expenses 9.5 8.18
Operating Profit 6.21 7.2
Total Income 1.86 3.05Less : Other Expenses
Income Before Tax 8.07 10.25
Less : Provision for Tax 3.11 3.95
Income after Tax 4.96 6.3
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Balance Sheet
Particulars 2003-04 2004-05
Liabilities
Share Capital 4950 4950
Reserves and Surplus 1494788 1759852
Secured Loans
Unsecured Loans
Current Liabilities and
Provisions
a) Current Liabilities(Creditors) 297238 357239
b) Provisions 1111814 1151815
Contingent Liabilities
Total 2908790 3273856
Particulars 2003-04 2004-05
Assets
Fixed Assets 556596 583761
Investment 939194 1175683
Current Assets, Loans and
Advances
a) Current assets
Stock 270934 289272Debtors 172716 188725
Cash 153228 1680707
b) Loans and Advances 816122 868345
Misc. Expenditure
Profit and Loss A/c(Dr. Balance)
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Total 2908790 3273856
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