TABLE OF CONTENT

1. INTRODUCTION OF TOPIC 2. ADVANTAGE OF WORKING CAPITAL 3. PURPOSE OF STUDY 4. COMPANY PROFILE 6. WORING CAPITAL MANAGEMENT OF AURANGABAD POLYCONTAINER 7. METHOD OF DATA COLLECTION 8. SUGGESTION 9. BIBLIOGRAPHY

Executive Summary:-

The project is under taken with for with prime motive of undertaking the Manpower Planning study of workers in Aurangabad Polycontainer Ltd. The concept of Manpower Planning study is explained in this Project with the help of periodic Review through Analysis of work force And Availability of workers in the organization to fulfill that particular task within a specific stipulated time. The various Aspect of manpower Planning has been discussed in brief followed by a Case study on Aurangabad Polycontainer ltd. In the line of Polycontainer Business the demand of the product continuously undergoes increases in the International as well as Domestic Market day by day. Therefore, it is necessary for any polycontainer company to increase therir production capacity through proper periodic review of Manpower Planning to achive desired demand arises from the market. It will helps to strengthening financial position of the company through maintaining the proper balance in between liquidity and profitability position of the organization by the help of proper projection of mathematical requirement of manpower in the organization Due to increase in work force and work load to fulfill additional demand and production arises from the market. Aurangabad Polycontainer ltd. Having liberalized H.R, Policy in case of Mathematical projection of Manpower Planning in the Organization as per the ratio of increase in Production, demend, work force and work load. Manpower Planning plays vital role in an each an every organization to overcome the problem of manpower requirement in the organization as well as cope of with the expansion, Diversification and mergers and Acquisition as well as Organizational set up. Therefore Manpower Planning is an important issue and requires proper H.R. policies and efficient execution of such policies

INTRODUCTION OF TOPIC

INTRODUCTION OF WORKING CAPITAL

Definition and meaning of the term Working Capital Working capital defined as excess of current assets over current liabilities And provisions it is that part of that part of the capital which is required for the daily working of the business. Working capital is also called as circulating capital. In the words of Shubin, "Working capital is the amount of funds necessary to cover the cost of operating the enterprise." In the words of Louis brand, "We need to know when to look for working capital funds, how to use them and how to measure, plan and control them". CONCEPTS OF WOKING CAPITAL :There are two concepts of working capital Gross concept and Net concept. Gross working capital simply called as working capital, refers to the firms investment in current assets. CURRENT ASSETS : Current assets are which can be converted into cash within an accounting year. It includes cash in hand, cash at bank, short-term securities, debtors, bills receivables and stocks (inventories), prepaid expenses, loan and advances, investments etc. Net working capital refers to the difference between current assets and current liabilities.

WORING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES

CURRENT LIABILITIES : Current liabilities are those claims of outsiders which are expected to mature for payment within an accounting year. It includes creditors, bills payables and outstanding expenses, bank overdrafts, provisions, loans etc. Net working capital can be positive or negative. A positive net working capital will arise when current assets exceeds current liabilities. A negative net working capital occurs when current liabilities are in excess of current assets. The consideration of the level of investment in current assets should avoid two danger points excessive and inadequate investment in current assets. Investment in current assets should be neither excess nor short. Idle investment earn nothing but it block capital, on the other hand , inadequate amount of working capital can threaten solvency of the firm, if it fails to meet its current obligations. Working capital needs of the firm may be fluctuating with change in business activities. The management should be prompt to initiate an action and correct the imbalance. It indicates the liquidity position of the firm and suggests the extent to which working capital needs may be financed by permanent sources of funds. Working capital drives the ordinary operating cycle of business, running expenses, daily expenses of the firm. NEED OF WORKING CAPITAL Working capital run day-to-day business activities. We know that firms aim at maximizing the shareholders wealth. The firm should earn sufficient return from its operations. So the firm has to invest enough funds in current assets for operational activities. Working capital is require because sales do not convert into cash immediately. DETERMINANTS OF WORKING CAPITAL

1. Nature and Size of Business Trading and financial firms have very less investment in fixed assets, but require a large sum of money to be invested in working capital. Retail stores, for example, must carry large stocks of a variety of goods to satisfy the continuous demand of their customers. In contrast, public utilities have a very limited need for working capital and have invested abundantly in fixed assets. A firm with larger scale of operation Will need more working capital than a small firm.

2. Manufacturing Cycle
Longer the manufacturing cycle, larger will be the working capital requirements and vice versa.

3. Business Fluctuation
Most firms experience seasonal and cyclical fluctuations in the demand for their products and services. These business variations affect the working capital requirements. Seasonal fluctuations not only affect working capital requirements but also create production problem for the firm. During period of peak demand, increasing production may be expensive for the firm. Similarly, it will be more expensive during slack periods.

4. Production Policy
A steady production policy will cause inventories to accumulate during the off-season periods and the firm will be exposed to greater inventories costs and risks.

5. Firms Credit Policy

The credit terms to be granted to customers may depend upon norms of the industry to which the firm belongs. Depending upon the individual case, different terms may be given to the different customers. A high collection period will mean tie-up of funds. It increases chances of bad debts.

6. Growth and Expansion Activities

The working capital needs of the firms increase as it grows in terms of sales or fixed assets. It is necessary to make advance planning of working capital for a growing firm on a continuous basis. This will turn into increase investment in current assets.

7. Profit Margin
In fact, the net profit is a source of working capital to the extent it has been earned in cash. Some firms make high margin of profit but some firms make low margin of profits. A high net profit margin contributes towards the working capital pool.

8. Price Level Changes

If the prices of raw materials and other production related products increases then more will be working capital required, but when prices of own products increases then less will be working capital required.

Types of working capital: Gross of working capital:This concept implies the total of all current assets of a business firm. A current asset is that asset which can be converted into cash within in accounting year of an operation cycle. The current assets include cash and bank balances, debtors, bills receivables, inventories and expenses prepaid and short- term investments. Net working capital :The net working capital is the difference between current assets and current liabilities. Current liabilities are those liabilities, which are expected to mature for payment within an accounting year and include creditors bills payable, outstanding expenses, bank overdraft and other short term loans. The net working capital can be positive or negative. If current assets exceed current liabilities, the difference is positive net working capital and when current liabilities exceed current assets, the difference is negative working capital. Fixed working capital :Every business requires some minimum amount of working capital in spite of level of operations, throughout the year. These amounts represent the fixed amount of working capital.

 Fluctuating working capital:In many business firms, the level of operations fluctuates from time to time depending upon demand pattern. In case the demand picks up in a particular season the need for working capital also increases and during low demand periods the need for working capital also comes down.

Working capital cycle:Working capital cycle or operating cycle consists of following steps: Step 1. Conversion of cash into raw material. Step 2. Conversion of raw material into work-in-progress. Step 3. Conversion of work-in-progress into finished goods. Step 4. Time for sale of finished goods.( Cash sales and credit sale) Step 5. Credit period allowed by creditors for credit purchase of raw material and inventory.

CASH

RAW MATERIAL

WIP

FINISHED GOODS

A/C RECEIVABLES

Above is production cycle. Working capital is required for each and every stage of manufacturing.

The Current assets are required because the operations do not convert into cash immediately. Following is the Working Capital Cycle. Conversion of raw materials into finished goods is not immediate. So cash is required to purchase raw materials & for other expenses, as there may not be perfect matching between Cash inflow & Cash outflow. When the flow of Working Capital is smooth & rapid, the amount of Working Capital required to produce a given output is less. If the receipts & payments are perfectly synchronized, the firm can maintain operations with little amount of initial Working Capital.

Estimating working capital requirement:A firm has to ensure a balance between the two i.e. current assets and current liabilities and for doing this is of paramount importance to prepare an estimate of working capital. A statement showing estimate of working capital is also known as working capital budget. It helps to compare the projected working capital and actual working capital. The following steps are taken in predicting the working capital needs:Estimating current assets: In the prediction of working capital it is essential to predict the current assets. To predict the current assets. Current assets include the following assets. a. Stock or raw materials, work in process and finished god b. Sundry debtors c. Any advance payment of expenses. d. Cash and bank balances.

Estimating current liabilities:The second step in estimating working capital requirement is to estimate the current liabilities. The current liabilities include. a. Trade creditors. b. Bills payable c. Bank overdraft d. Expenses due but not paid and other short-term liabilities. Contingency margins:The difference between estimate current assets and estimated current liabilities will be net working capital requirements. To be on the safer sides a contingency margin of 10% to 15% may be added in the net figure calculated as per the above explanation. Factors affecting working capital:The working capital needs of a firm are affected by numerous factors. The important factors are us follows:1. Nature of business. 2. Production policy. 3. Market conditions. 4. Seasonal fluctuations. 5. Growth and expansion activities. 6. Operating deficiency. 7. Credit policy. 8. Sales growth. 9. Dividend policy.

Sources for financing working capital needs:Trade credit:The trade credit implies the credit allowed by the supplier to the purchasing firm. Trade credits do not actually mean rising of money from outside but on the other hand it is only the postponement of the payment to the creditors. Trade credit is a useful mode of financing working capital needs and many firms rely on such credit. Credit granted by the supplier can be on open account. Which implies that goods are sold on credit without any formal instrument and the customer is expected to make the payment according to the credit period? In some cases, the creditor prepares an instrument known as bill of exchange, which is accepted by the purchaser. Form the purchasers angle it is a bills payable. The amount of the bills payable is to be paid after the expiry of the period of credit. Bank finance:Another commonly used source for financing working capital working capital need is the bank finance. A bank assesses the requirements of customers for working capital needs. This assessment is done on the basis if the sales level as well as production plans of the firm. After deducting the margin money from the total requirements the balance is financed by the bank. The bank borrowing may be in following forms:1. Bank overdraft: - This is most common method of bank financing customers is allowed to withdraw more amount than the balance at his credit in the account. The limits are decided after a careful scrutiny of the bank account

transaction of the customer. Interest is charged only to the amount, which is withdrawn as overdraft. 2. Cash credit: - In the method also a bank sanctions a bank sanctions a particular limit up to which a borrower can borrow. It is not necessary for a borrower to withdraw the entire amount of borrowing immediately. He can withdraw the amount as per his requirements. Interest is charged only on the amount sanctioned. A bank may demand security in the form of a current asset. 3. Bills discounting: - A bill of exchange, which is drawn by a creditor on his debtor, is negotiable instrument. It contains an unconditional order to pay a certain sum of money after a certain period of time to the creditor. But the creditor has to wait till the maturity date before he receives the payment. His money remains blocked till the period is over. In order to remove this difficulty. The creditor can discount the bill with his bank deducts certain amount as discount from the amount of the bill and the remaining amount is paid to the creditor, the credit rating of the drawer is checked by the bank. 4. Working capital loans: - In addition to the above mentioned methods Sometimes temporary working capital loan may also be sanctioned by the bank.

Assessment of the working capital & requirement The components of working capital requirement are, a) Raw material consumables. b) Work in progress c) Bills receivable

1. Raw materials, consumables Requirements of funds holding raw materials and consumables depend on, a) Average consumption of raw material. b) Function in the raw material availability c) Fluctuations in the raw material consumption (depends on whether the terms are regularly consumed or bulk quantities are required at a time) d) Safety stock required to be maintaining to ensure uninterrupted production activity. e) Minimum quantities supplied by the market (minimum order Quantities) f) Storage facility availability g) Criticality of an item (i.e. how important an order to maintain uninterrupted production)

2. Work in progress

The fund blocked up in work in progress depends on the following factors. i. Time required for conversion of raw materials to finished goods. ii. Number of products handled at a time in the process. iii. Average quantities of each product process at each time (batch Quantity) iv. The process that is the manner in which raw materials are added in the process. To illustrate the major raw materials in the case of gray iron foundry are added in the initial stages itself while in an assembly unit like in TV industry the Major raw materials and components are added at the last stage of the process. The requirements of funds of work in process hence depends on, 1) 2) Value of raw material in semi-finished components/products. Value added at each stage.

In case where a number of components are involved the general practice of Valuation of work in process is raw materials+(value added/2). Where: - Value added = selling price - profit material cost 3. Finished goods:Goods may be manufactured against firm orders of against anticipate orders in the former case the quantum of finished goods held depends on a) b) Delays due to inspection of the finished goods especially in Where an external agency is involved. Delays in preparation of dispatch documents.

c) d) e) truckload.)

Delays in shipment Delay due to non-availability of wagons. Minimum quantity that can be dispatched. (E.g. full

In the case of goods manufactures to stock against anticipated orders the Quantum of finished goods held depends on, a) b) c) d) Average dispatch quantity of finished goods. Variation due to sudden increase in demands of slumps in the Market. Minimum quantities that can be dispatched. Delays due to non-availability of truck wagon etc.

The requirement of working funds blocked up in finished goods is expressed as so many days production. The valuation of the finished goods is expressed as so many days production. The valuation of finished goods is at the full cost of production of the production. 4. Bills receivables:Sale may be affected under three different methods a. b. c. Against advance received against cash on credit

In the cash of against advance received no funds are blocked up in bills are more over the advance received it self goes to meet the working capital needs. In the case of cash sales no funds are blocked up and hence funds are needed.

It is however in the case of credit sales that working funds are required depends on the period of credit given the computation on the value of the working funds in based on cost of production. Examples:In is generally expected that about one months requirement of cash expenses is required to kept in the form of cash for meeting contingencies like fluctuation in material prices delays in sale realization etc. however, for activities having long processing time like in ship building higher quantum of such cash balances have to be retained. The working capital of an industry can thus be summarizing as below: 1) 2) 3) 4) 5) Raw material Months Stock in process Weeks Finished goods Months cost Sundry debtors Months Expenses on months Rs. A Rs. B Rs.C Rs.D Rs. E ABCDE Less: Credit received __________ months Advance payment on order received Working capital Requirement (H) = (A+B+C+D+E+) - (F+ G) Rs. H Rs.F Rs.G

Current liabilities are those liabilities that can be repayable within an accounting year.

FACTORS DETERMINING THE WORKING CAPITAL: The working capital requirements of concern depend upon a large Number of factors. 1. Nature or character of business: The working capital requirements of a firm basically depend upon the nature of its business. Public utility undertakings like Electricity water supply and railways need very limited working capital because they offer cash sales only and supply services, not products, and as such no funds are tied up in inventories and receivables. On the other hand trading and financial firms require less investment in fixed assets but have to invest large amounts in current assets like inventories, receivables and cash; as such they need large amount of working capital. The manufacturing undertakings also require sizable working capital along with fixed investments. Generally speaking it may be said that public utility undertakings require small amount of working capital, trading and financial firms require relatively very large amount, whereas manufacturing undertakings require sizable working capital between these two extremes.

2. Size of business / scale of operations: The working capital requirements of concern are directly influenced by the size of its business, which may be measured in terms of scale of operations. Greater the size of a business unit, generally large will be the requirements of working capital. However, in some cases even a smaller concern may need more working capital due to high overhead charges, inefficient use of available resources and other economic disadvantages of small size. 3. Production policy: In certain industries the demand is subject to wide fluctuations due to seasonal variations. The requirements of working capital, in such cases, depend upon the production policy. The production could be kept either steady by accumulating inventories during slack periods with a view to meet high demand during the peak seasons or the production could be curtailed during slack season and increased during peak season. If the policy is to keep production steady by accumulating inventories it will require higher working capital.

4. Manufacturing process / length of production cycle: In manufacturing business, the requirements of working capital Increase in direct proportion to length of manufacturing process. Longer the process period of manufacture, larger is the amount of working capital Required. The longer the manufacturing time, the raw materials and other Supplies have to be carried for a longer period in the process with Progressive increment of labour and service cost before the finished product is finally obtained. Therefore, if there are alternative processes of Production, the process with the shortest production period should be Chosen.

5. Seasonal variations: In certain industries raw material is not available throughout the year. They have to buy raw materials in bulk during the season to ensure an uninterrupted flow and process them during the entire year. A huge amount is, thus, blocked in the form of material inventories during such season, which gives rise to more working capital requirements. Generally, during the busy season, a firm requires larger working capital than in slack season.

6. Working capital cycle: In a manufacturing concern, the working capital cycle starts with the purchase of raw material and ends with the realization of cash from the sale of finished products. This cycle involves purchase of raw materials and stores, its conversion into stocks of finished goods through work-in-progress with progressive increment of labour and service costs, conversion of finished stock into sales, debtors and receivables and ultimately realization of cash and this cycle continues again from cash to purchase of raw materials and so on.

7. Rate of stock turnover: There is a high degree of inverse co-relationship between the Quantum of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover will need lower amount of working capital as compared to a firm having a low rate of turnover.

8. Credit policy: The credit policy of a concern in its dealing with debtors and creditors influence considerably the requirements of working capital. A concern that purchases its requirements on credit and sells its products/services on cash requirement lesser amount of working capital. On the other hand a concern buying its requirements for cash and allowing credit to its customers, shall need larger amount of working capital as very huge amount of funds are bound to be tied up in debtors of bills receivables.

9. Business cycles: Business cycle refers to alternate expansion and contraction in general business activity. In a period of boom i.e., when the business is prosperous, there is a need for larger amount of working capital due to increase in sales, rise in prices, optimistic expansion of business, etc. on the contrary in the times of depression i.e., when there is down swing of the cycle, the business contracts, sales decline, difficulties are faced in Collections from debtors and firms may have a large amount of working Capital lying idle.

10. Rate of growth of business: The working capital requirement of a concern increase with the Growth and expansion of its business activities. Although, it is difficult to determine the relationship between the growth in the volume of business and the growth in the working capital of a business, yet it may be concluded that for normal rate of expansion in the volume of business, we may have retained profits to provide for more working capital but in fast growing concerns, we shall require larger amount of working capital.

11. Earning capacity and dividend policy: Some firms have more earning capacity than others due to quality of Their products, monopoly conditions, etc. Such firms with high earning

Capacity may generate cash profits from operations and contribute to their Working capital. The dividend policy of a concern also influences the Requirements of its working capital. A firm that maintains a steady high rate of cash dividend irrespective of its generation of profits needs more working capital than the firm that retains larger part of its profits and does not pay so high rate of cash dividend.

12. Price level changes: Changes in price level also affect the working capital requirements. Generally, the rising prices will require the firm to maintain larger amount of working capital, as more funds will be required to maintain the same current assets. The effect of rising prices may be different for different firms. Some firms may be affected much while some others may not be affected at all by the rise in prices.

13. Other factors: Certain other factors such as operating efficiency, management ability, irregularities of supply, import policy, assets structure, importance of labour, banking facilities, etc., also influences the requirements of working capital.

EXCESS OR INADEQUATE WORKING CAPITAL: Every business concern should have adequate working capital to turn its business operations. It should have either redundant or excess working capital nor inadequate or shortage of working capital. Both excess as well as short working capital positions are bad for any business. However, out of two, it is the inadequacy of working capital, which is more dangerous from the point of view of the firm.

ABOUT COMPANY

Aurangabad Polycontainer co.Ltd. Is one of the leading companies of disposable cups, bowls, plates, and cutlery and food containers in Maharashtra. They are producing cups ranging from 50cc to 3000cc in their high-tech modern machines with their numerous forming tools.
This company established in 1998 and after that this well known company developed very fastly.Company having three plants in all over India. The owner of company is Mr. They are competent to produce a large variety of cups, bowls, plates and cutlery in different shape, size and volume. In their machines millions of hygienic cups, bowls, plates, cutlery and food containers are produced. They are used safely for drinking water, tea, coffee, fruit juice, ice cream, yoghurt and many other foods as a cup, bowl, plate and containers. They are not only experienced and competent in producing reliable cup, bowl, plate, cutlery and food container products, but also producing Thermoform production machines and moulds in our other departments. This gives them the chance to produce according to your project in short period and deliver immediately. They are continuously expanding and developing their production capacity and product range to be able to supply customer's demands. The strength of workers is 500. And on those 500 workers 250 are un-skilled workers, 200 are semi- skilled workers and remaining 50 are skilled workers. The workers are getting his training regularly. The product of company is going under three stages. The raw material is used for product is Polypropylene. The main strength of this company is they made the advanced booking of their products. The company having the customer in all over India. This company is no need for doing the more marketing.

Introduction Today consumption of Disposable products is breaking records. Disposable products are easy to handle, economical and can be disposed easily. With the changing lifestyle of Mankind, the use of disposable products is raising like anything. Plastic Disposable products are very popular because it can be carried easily, and very low in prices too. There is a huge variety available in Plastic Disposable products. Plastic

Disposable products are like a gift for toady's hectic lifestyle, they save your energy and money both.

Disposable Plastic Product

The products designed to disposed easily after use are called Disposable products & the products which are made with any kind of plastic and can be disposed easily after use are known as Disposable Plastic Products. Plastic glasses have changed the trends of glasses and are on the verge of almost replacing old fashioned glasses that were delicate and brittle. Plastic glasses are another option for glasses as they are light and can be replaced if scratched or any other problems. Also, plastic glasses are availed in the most affordable prices that make it easily accessible to the common masses. There are loads of plastic glasses of different patterns we use like; plastic glasses are used in, drinking glasses, lids and many more. At top of that there is a rapid ongoing innovation and up gradation in the plastic glasses that has made them more superior and usable.

Why only Disposable Plastic Products?

Disposable products are made of various materials such as dry leaves, papers and plastic etc. Plastic is one of the most preferred materials for disposable products. Plastic is known as one of the most consumptive material for disposable products. These are few characteristics of plastics which makes it most suitable for disposable products.

Plastic is an easily available material. Plastic can be molded easily in desired shape. Plastic is highly flexible. Plastic is safe to keep eatables. Plastic is counted as one of the most heat resistant material. Plastic is very cost effective.

Range & Variety

There is an extensive range available in Disposable Plastic Products. Disposable Plastic products are made with various kind of plastics. Manufactures use different kind of plastics as per the utility, design and shape of Disposable Plastic Products. The disposable plastic hand gloves, for medical use are usually made with LDPE plastics. Disposable plastic products are highly demanded in Medical Sector, packaging Industry, toys, cutlery and multipurpose boxes etc.

Plastic boxes are one of the most commonly used Disposable Plastic Product. Theses boxes are available in different shapes and size. These plastics boxes are used to carry the things safely or to keep them safe for long time. Plastic plates, cups, glasses, spoons and bowls are quite popular and counted as best selling Disposable Plastic Products. The list of disposable plastic products is never ending but few other most commonly used Disposable Plastic Products are Plastic Diaphragms, Plastic Boxes, Plastic Automotive Parts and Plastic Balls etc.

Some Product of Aurangabad Polycontainer

Name Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

:350cc PP Plastic Cup :350cc :PP (Polypropylene) : :Transparent or required color : : :

Rim Diameter (mm) :95

Name Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

:400 cc PLASTIC CUP :400 cc :PP (Polypropylene) : :Transparent or required color : : :

Rim Diameter (mm) : 95

Name Rim Diameter (mm) Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

: 500 cc PLASTIC CUP -08 : 95 : 500 cc : PP. / PS. : 145.5 mm : Transparent or required color : 1000 (20X50) : 520 x 410 x 500 :

Name Rim Diameter (mm) Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

: CRYSTAL CUP -09 : 78.5 : 180 cc : CYRISTAL : 71 mm : Clear : 2000 (25X80) : 410x660x440

Name Rim Diameter (mm) Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

: 500 cc PLASTIC CUP -08 : 95 : 500 cc : PP. / PS. : 145.5 mm : Transparent or required color : 1000 (20X50) : 520 x 410 x 500 :

Name Rim Diameter (mm) Volume Raw Material Height Color Box Quantity Box Size (mm) Quantity per Container

: 400 cc PLASTIC CUP : 95 : 400 cc : PP (Polypropylene) : : Transparent or required color : : :

ADVANTAGE OF WORKING CAPITAL

1)

A firm has to ensure a balance between current assets and current liabilities.

2)

Working capital help to compare the projected working capital and actual working capital.

3)

It is require for effective management of inventory, cash, and debtor.

DISADVANTAGES OF EXCESSIVE WORKING CAPITAL: 1. Excessive working capital means idle funds which earn no profits for the business and hence the business cannot earn a proper rate of return on its investments. 2. When there is a redundant working capital, it may lead to Unnecessary purchasing and accumulation of inventories causing more chances of theft, waste and losses. 3. Excessive working capital implies excessive debtors and Defective credit policy, which may cause higher incidents of bad debts. 4. It may result into overall inefficiency in the organization. 5. When there is excessive working capital, relations with banks and financial institutions may not be maintained. 6. Due to low rate of return on investments, the value of shares may also fall. 7. The redundant working capital gives rise to speculative Transactions.

DISADVANTAGES OR DANGERS OF INADEQUATE

WORKING CAPITAL: 1. A concern, which has inadequate working capital, cannot pay its Short-term liabilities in time. Thus, it will lose its reputation and Shall not be able to get good credit facilities. 2. It cannot buy its requirements in bulk and cannot avail of Discounts, etc. 3. It becomes difficult for the firm to exploit favorable market Conditions and undertake profitable projects due to lack of working capital. 4. The firm pays day-to-day expenses of its operations and it creates inefficiencies, increases cost and reduces the profits of the business. 5. It becomes impossible to utilize efficiently the fixed assets due to non - availability of liquid funds. 6. The rate of return on investments also falls with the shortage of Working capital.

IMPORTANCE OF WORKING CAPITAL: Working capital is the life blood of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of business. No business can run successfully without an adequate amount of working capital. The main advantages of maintaining adequate amount of working capital is as follows:

1. Solvency of the business:

Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production.

2. Goodwill :
Sufficient working capital enables a business concern to make prompt payments and helps in creating and maintaining goodwill.

3. Easy loans :
A concern having adequate working capital, high solvency and good credit standing can arrange loans from banks and other on easy and favorable terms.

4. Cash discounts :
Adequate working capital also enables a concern to avail cash discounts on the purchases and hence it reduces the costs.

5. Regular supply of raw materials :

Sufficient working capital ensures regular supply of raw materials and continuous production.

6. Regular payments of salaries, wages other commitments :

Other day-to-day commitments, which raises the morale of its employees increases their efficiency, reduces wastages and costs and enhances production and profits.

7. Exploitation of favorable market conditions :

Only concerns with adequate working capital can exploit favorable market conditions such as purchasing its requirements in bulk when the prices are lower and by holding its inventories for higher prices.

8. Ability to face crisis:

Adequate working capital enables a concern to face business crisis in emergencies such as depression because during such periods, generally, there is a much pressure on working capital.

9. Quick and regular return on investments:

Every investor wants a quick and regular return on his investments. Sufficient of working capital enables a concern to pay quick and Regular dividends to its investors as there may not be much pressure to plough back profits. This gains the confidence of investors and creates the favorable market to raise additional funds in the future.

OBJECTIVES OF STUDY

Finance is the life-blood of business, like human body. Without blood there is no meaning of human body, like this without finance there is no means to business. The main and basic objective of business organization is to earn more profit. Business organization runs only for earning profit. For achieving this objective, funds are required. Therefore, procuring fund, raising fund, allocating funds are the process or functions of management finance. After these processing, investing funds in the right place so as to incur more benefits i.e., more return is an important task. Management fails because of decision. That means investment is done from where return on investment is more. ROI is greater. Before proceeding to examine the allocation and rising of funds, tools of analysis is important. In allocation and raising funds, the finance manager uses certain tools of Analysis, planning and control.To analyse the concepts of working capital to find out the determinants of working capital in Aurangabad polycontainer. To study finance of working capital in Aurangabad polycontainer and from that determining financial condition of the company.

CHAPTER II RESEARCH METHODOLOGY

WORKING CAPITAL MANAGEMENT OF AURANGABAD POLYCONTAINERS LTD.

Working Capital = current assets current liabilities Current assets consist of raw materials; work in-process, finished goods debtors, prepaid expenses, cash and bank balance. Current liabilities consist of creditors, delay in payment of expenses. Inventory management:The inventories which include inventories of raw materials, finished goods and work-in-progress constitute quite a significant part of the total current assets. It has been observed that in many cases inventories are more than 60-65% of the total current assets of a firm. This naturally means that a very large amount is blocked in inventories and therefore management of inventory has assumed a great importance. Efficient management of inventory involves:1. To plan optimum level of inventory. 2. At the same time to ensure that inventories are not so inadequate that it will affect adversely the smooth flow of production and sales. 3. Minimize the carrying cost. The objective of inventory management is to ensure a free and uninterrupted flow of materials and avoiding excessive investment in inventories in order to achieve these objectives the following techniques are highly useful :-

1. The economic order quantity: The economic order quantity is that quantity to be purchased which will minimize the total of carrying and ordering costs. 2. Fixation of the levels: another very useful technique used for inventory control is the fixation of various inventory levels i.e. reorders level maximum level, minimum level and average stock level. 3. ABC analysis it is also known as selective inventory control in this technique the items in inventory are to be classified between A class items, B class items and C class items. Raw material for LT motor division is copper, aluminum. Steel, and bearing etc. the raw materials requirement is prepared and order is given. Inventory turnover ratio:This ratio establishes relationship between cost of goods sold and the average is the number of times finished stock is turned over during a given accounting period, Higher the ratio, the better it is because it shows turnover of stock . A low turnover ratio is indicative if slow moving stock. Inventory turnover ratio = cost of goods sold / Average stock during that period.

Year 2005-06 2006-07 2007-08

Inventory turnover ratio

CASH MANAGEMENT Cash is very crucial asset in the day to day operations of a business firm. Cash is the basic input required to run the business continuously. A firm has to strike a balance between maintaining a very high cash balance. If excessive cash balance is maintained, the excess cash will remain idle affecting the profitability of the business adversely. On the other hand, if too small amount of cash balance is maintained, it will lead to shortage of cash resulting into disruption of manufacturing operations of a business firm. Therefore, the major aspect of cash management is to keep proper cash balance. Cash management thus is concerned with, the managing of. 1) Cash flows into and out of the firm. 2) Cash flows within the firm. 3) Cash balance held by the firm at a point of time by financing deficit or investing surplus cash. The market of Compton greaves Ltd. Is divided into four regions. It organized geographically into Northern, Eastern, Western and southern. These regions are divided into branch offices. Debtors are collected by branch offices and the funds are directly sent to corporate office and corporate office provides funds to manufacturing units or other units according to their requirement. All the payments are made through cheques. The major source of funds is collection from debtors. Company rationalized its borrowing through efficient treasury and working capital management. It swapped high cost rupee working capital loans to low cost foreign currency loans it negotiated with banks to improve borrowing rates.

It leveraged other financial products / exports to strengthen its cash flow.

DEBTORS MANAGEMENT:Business firms generally sell goods on credit, which is granted to facilitate sales. It is valuable to customers as it augments their resources. It is particularly appealing to those customers who cannot borrow from other resources or find it very expensive According to O.M. Joy the term receivables is defined as debts owned to the firm by customer arising from sale of goods or services in the ordinary course of business. Sale of goods on credit is an essential part of modern competitive economic system. Because financial manager realized that if credit is not offered customer will migrate to those who allow delayed payment. In CGL they have their own sale network. This network is divided into four regions. And these regions are divided into branch offices. These branch offices Receives the orders, gives the information about the order to the units, provide products to the customers; collect the funds from the customer and debtors. And collected fund is send to corporate office. Goods are dispatched and the dispatched documents send to branches, these branches give delivery to the customers, and customers make payment according To terms.

Debtors turnover ratio:This ratio is calculated as follows: Debtors turnover ratio=sales/Average accounts Receivables. The higher the ratio, lower is the collection period. While low ratio indicates higher collection period.

Year 2005-06 2006-07 2007-08 In addition to

Debtors Turnover

the

above-

mentioned points any proposed additions in fixed assts should also be taken into consideration if it is going to affect the working capital position. Similarly how fare changes in sales are going to affect the level of current assets should also be taken into consideration.

The format of working capital budget is given below.

-Working capital budget-

Particulars

Amount Rs.

Amount Rs.

A Current Assets:
1. Stock -in-trade a) Raw materials b)Work-in-process c) Finished goods

2. Debtors 3. Prepaid expenses. 4. Cash and bank balance Total A

Current Liabilities: 1. Creditors 2. Delay in payment of expenses Total B

Net working capital: (A-B)

Add: any

Contingency

margin

if

Total working capital requirement

WORKING CAPITAL MANAGEMENT 2004-05

CURRENT ASSETS Stock in trade Raw materials Work-in process Finished goods Debtors Prepaid expenses Cash & bank balance

Amount Rs.

Amount Rs.

Total A CURRENT LIABILITED Creditors Customer Advances Other current libilites Total B WORKING CAPITAL

WORKING CAPITAL MANAGEMENT 2005-06

CURRENT ASSETS Stock in trade Raw materials Work-in process Finished goods Debtors Prepaid expenses Cash & bank balance

Amount Rs.

Amount Rs.

Total A CURRENT LIABILITED Creditors Customer Advances Other current libilites Total B WORKING CAPITAL

WORKING CAPITAL MANAGEMENT 2006-07

CURRENT ASSETS Stock in trade Raw materials Work-in process Finished goods Debtors Prepaid expenses Cash & bank balance

Amount Rs.

Amount Rs.

Total A CURRENT LIABILITED Creditors Customer Advances Other current libilites Total B WORKING CAPITAL

METHOD OF DATA COLLECTION

PRIMARY METHOD OF DATA COLLECTION

The primary Data for working capital was collected from the Annual General Report and Budget for study facts & figures. After that, company provide research project report of enhancing profitability, Project report on Capital Expenditure and working capital management, Report on Receivables management.

Secondary Method of Data Collection

I was provided pamphlets, Annual report by Aurangabad polycontainers, which gives information about products, locations and information regarding finance of Aurangabad poly containers. A book Financial Management written by Prof. N.M.Vechalekar, help me a lot.

SUGGESATION Give Advance Technical Training To Worker. Increase Quality Of Product, Similarly Reduce The Price.

BIBLIOGRAPHY

Financial Management Prof. N.M.Vechalekar

ADVANCED MANAGEMENT ACCOUNTING By R.K. Sharma & Shashi K. Gupta. FINANCIAL ACCOUNTING By I.M. Pandey. FUNDAMENTALS OF FINANCIAL MANAGEMENT By James C. Van Horne. COST & MANAGEMENT ACCOUNTING By S.P. Jain & K.L. Narang.

SUMMARY
Working capital to a company is like the blood of human body. It is the most vital ingredient of a business. Working capital management if carried out effectively, efficiently and consistently, will assure the health of an organization. Every enterprise has to arrange for adequate funds for meeting day-to-day expenditure apart from investments in fixed assets. Working capital is the flow of ready funds necessary working of the enterprise. It consists of funds invested in current assets or those assets which in the ordinary course of business can be turned into cash within a brief period without undergoing diminution in value and without disruption of the organization. Current liabilities are those intended to be paid in the ordinary course of business within a short time. The need for working capital (gross) or current assets arise from the operating or cash cycle of the firm. The operating cycle refers to the length of time to convert the non-cash current assets into cash. Working capital can be divided into permanent or temporary, depending on the need of the firm. Working capital requirements are determined by a variety of factors. A) Prerequisite of efficient working capital management is its correct computation. Typically, working capital requirements/current assets are financed by a combination of long terms and short-term sources. The important traditional shortterm sources of current assets of financing are trade credit and bank credit. Two newly emerging sources of working capital finance are factoring and commercial papers.