The City of Gwalior

7/30/2019 The City of Gwalior

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The city of Gwalior, one of the favorite tourist destinations in India is located in

the state of Madhya Pradesh at a distance of 122 km to the south of Agra. If you

are willing to know about Gwalior, you will find that the city, with a strong

historical backdrop, is deeply associated with the various highs and lows of Indias

past.

History

History about Gwalior says that it owes its name to a sage of former times. The

story goes thus - Suraj Sen, a prince of the Kachhwaha clan of the 8th century had

lost his way in the jungle and ultimately wandered up to a secluded hill. Thereafterhe met an old man, Sage Gwalipa, whose influence almost took him by surprise.

On asking the sage for some drinking water he was led to a pond. The pool waters

not only quenched his thirst but cured him of leprosy as well. Out of gratefulness

he wished to offer something in return to the sage and the sage asked him to build a


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fort on the hill. Thus came up the fort named Gwalior, and eventually the city that

developed around it got its name.

Best Season, Climate, and Clothing

Hot summers and cold winters characterize the climate of Gwalior. During the

summers mercury soars as high as 46C, while in the winters it can reach below

5C. Monsoons hit the land from the first week of June and continue till

August/September. Gwalior is best visited from the months of October to March.

Light cotton clothing is fitting for summers and woolens are good for winters.

Fast Facts

Area 289.85 sq km

Population 8,26,919

Altitude 212 meters above sea level

Languages Hindi and English

Best Time to Visit October-March

STD code 0751


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Chocolate

The very word makes your mouth water.

Chocolate is more than just a food: its a state of mind.

CADBURY
http://www.packaging-technology.com/projects/cadbury/index.htmlhttp://www.cadbury.co.nz/carnival/index.htmhttp://www.packaging-technology.com/projects/cadbury/index.htmlhttp://www.cadbury.co.nz/carnival/index.htmhttp://www.packaging-technology.com/projects/cadbury/index.htmlhttp://www.cadbury.co.nz/carnival/index.htmhttp://www.packaging-technology.com/projects/cadbury/index.htmlhttp://www.cadbury.co.nz/carnival/index.htm


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How Cadbury Chocolate is made

John Cadbury

Milk chocolate for eating was first made by Cadbury in 1897 by adding milk

powder John paste to the dark chocolate recipe of cocoa mass, cocoa butter and

sugar. By today's standards this chocolate was not particularly good: it was coarseand dry and not sweet or milky enough for public tastes.

There was a great deal of competition from continental manufacturers, not only the

French,but also the Swiss, renowned for their milk chocolate.

Led by George Cadbury Junior, the Bournville experts set out to meet the

challenge. A considerable amount of time and money was spent on research and on

new plant designed to produce the chocolate in larger quantities.

A recipe was formulated incorporating fresh milk, and production processes were

developed to produce a milk chocolate 'not merely as good as, but better than' the

imported milk chocolate'.

Four years of hard work were invested in the project and in 1905

what was to be Cadbury's top selling brand was launched.

Three names were considered: Jersey, Highland Milk and Dairy


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Maid. Dairy Maid became Dairy Milk, and Cadbury's Dairy Milk, with its unique

flavour and smooth creamy texture, was ready to challenge the Swiss domination

of the milk chocolate market.

By 1913 Dairy Milk had become the company's best selling line and in the mid

twenties Cadbury's Dairy Milkgained its status as the brand leader, a position it

has held ever since.

COMPANY OVERVIEW OF CADBURY INDIA

Cadbury began its operations in 1948 by importing chocolates and then re-packing

them before distribution in the Indian market. After 59 years of existence, it today

has five company-owned manufacturing facilities at Thane, Induri (Pune) and

Malanpur (Gwalior), Bangalore and Baddi (Himachal Pradesh) and 4 sales offices

(New Delhi, Mumbai, Kolkota and Chennai). The corporate office is in Mumbai.

Currently Cadbury India operates in three sectors viz. Chocolate Confectionery,

Milk Food Drinks and in the Candy category.
http://www.cadburyindia.com/brands/choco1.asphttp://www.cadburyindia.com/brands/choco1.asphttp://www.cadburyindia.com/brands/choco1.asphttp://www.cadburyindia.com/brands/choco1.asp


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In the Chocolate Confectionery business, Cadbury has maintained its undisputed

leadership over the years. Some of the key brands are Cadbury Dairy Milk, 5 Star,

Perk, clairs and Celebrations. Cadbury enjoys a value market share of over 70% -

the highest Cadbury brand share in the world! Their flagship brand Cadbury DairyMilk is considered the "gold standard" for chocolates in India. The pure taste of

CDM defines the chocolate taste for the Indian consumer.

In the Milk Food drinks segment their main product is Bournvita - the leading

Malted Food Drink (MFD) in the country. Similarly in the medicated candy

category Halls is the undisputed leader.

The Cadbury India Brand Strategy has received consistent support through simple

but imaginative extensions to product categories and distribution. A good example

of this is the development of Bytes. Crispy wafers filled with coca cream in the

form of a bagged snack, Bytes is positioned as "The new concept of sweet

snacking". It delivers the taste of chocolate in the form of a light snack, and thus

heralds the entry of Cadbury India into the growing bagged Snack Market, which

has been dominated until now by Salted Bagged Snack Brands. Bytes was first

launched in South India in 2003.

Since 1965 Cadbury has also pioneered the development of cocoa cultivation in

India. For over two decades, it has worked with the Kerala Agriculture University

to undertake cocoa research and released clones, hybrids that improve the cocoa

yield.

Today, Cadbury is poised in its leap towards quantum growth and new categories

of business, namely gums, mints, snacking and gifting. It is a part of the Cadbury

Schweppes Group, world's No.1 Confectionery Company.
http://www.cadburyindia.com/brands/choco1.asphttp://www.cadburyindia.com/brands/choco2.asphttp://www.cadburyindia.com/brands/choco3.asphttp://www.cadburyindia.com/brands/choco4.asphttp://www.cadburyindia.com/brands/bev1.asphttp://www.cadburyindia.com/brands/conf1.asphttp://www.cadburyindia.com/brands/conf1.asphttp://www.cadburyindia.com/brands/bev1.asphttp://www.cadburyindia.com/brands/choco4.asphttp://www.cadburyindia.com/brands/choco3.asphttp://www.cadburyindia.com/brands/choco2.asphttp://www.cadburyindia.com/brands/choco1.asp


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CADBURY WORLD WIDE

Cadbury is the world's largest confectionery company and have a

strong regional presence in beverages in the Americas and

Australia.

With origins stretching back over 200 years, today their products - which include

brands such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor,

Dentyne, Bubblicious and Bassett - are enjoyed in almost every country around the

world. We employ around 60,00 people.

Their heritage starts back in 1783 when Jacob Schweppe

perfected his process for manufacturing carbonated mineral water

in Geneva, Switzerland. And in 1824 John Cadbury opened in

Birmingham selling cocoa and chocolate.

These two great household names merged in 1969 to form Cadbury

Schweppes plc. Since then they have expanded their business throughoutthe world by a programme of organic and acquisition led growth.

Concentrating on their core brands in beverages and confectionery since the

1980s, they have strengthened their portfolio through almost fifty acquisitions,

including brand icons such as Mott's, Canada Dry, Halls, Trident, Dentyne,

Bubblicious, Trebor, Bassett, Dr Pepper, 7 Up and Snapple.

- It employ 60,000 people in over 200 countries

- Worlds No 1 Confectionery company

- World's No 2 Gums company

- World's No 3 beverage company
http://www.cadburyschweppes.com/http://www.cadburyschweppes.com/http://www.cadburyschweppes.com/http://www.cadburyschweppes.com/


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Cadbury Brands:

ChocolatesSnacksBeveragesCandy

SNACKS:

Bytes

BEVERAGES

Bournvita

CANDY

Halls

CHOCOLATES

Dairy Milk

5 Star

Perk

Celebrations

Temptation

Eclairs

Gems


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DAIRY MILK

The story of Cadbury Dairy Milk started way back in 1905 at Bournville, U.K.,

but the journey with chocolate lovers in India began in 1948.

The variants Fruit & Nut, Crackle and Roast Almond, combine the classic taste of

Cadbury Dairy Milk with a variety of ingredients and are very popular amongst

teens & adults.

Cadbury Dairy Milk has exciting products on offer - Cadbury Dairy Milk Wowie,

chocolate with Disney characters embossed in it, and Cadbury Dairy Milk 2 in 1, a

delightful combination of milk chocolate and white chocolate. Giving consumers

an exciting reason to keep coming back into the fun filled world of Cadbury.

Today, Cadbury Dairy Milk alone holds 30% value share of the Indian chocolate

market.

5 STAR

the second largest after Cadbury Dairy Milk with a market share of 14%, Cadbury

5 Star moves from strength to strength every year by increasing its user base.


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Launched in 1969 as a bar of chocolate that was hard outside with soft caramel

nougat inside, Cadbury 5 Star has re-invented itself over the years to keep

satisfying the consumers taste for a high quality & different chocolate eating

experience.

One of the key properties that Cadbury 5 Star was associated with was its classic

Gold colour. And through the passage of time, this was one property that both, the

brand and the consumer stuck to as a valuable association.

More recently, to give consumers another reason to come into the Cadbury 5 Star

fold, Cadbury 5 Star Crunchy was launched. The same delicious Cadbury 5 Starwas now available with a dash of rice crispies.

PERK

Cadbury launched Perk in 1996. With its light chocolate and wafer construct,

Cadbury Perk targeted the casual snacking space that was dominated primarily by

chips & wafers.

With the rise of more value-for-money brands in the wafer chocolate segment,

Cadbury Perk unveiled two new offerings - Perk XL and XXL. In 2004, with anadded dose of 'Real Cadbury Dairy Milk' and an 'improved wafer', Perk became

even more irresistible


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CELEBRATIONS

Cadbury Celebrations was aimed at replacing traditional gifting options like Mithai

and dry- fruits during festive seasons.

Cadbury Celebrations is available in several assortments: An assortment of

chocolates like 5 Star, Perk, Gems, Dairy Milk and Nutties and rich dry fruits

enrobed in Cadbury dairy milk chocolate in 5 variants, Almond magic, raisin

magic, cashew magic, nut butterscotch and caramels.

The super premium Celebrations Rich Dry Fruit Collection which is a festive

offering is an exotic range of chocolate covered dry fruits and nuts in various

flavours and the premium dark chocolate range which is exotic dark chocolate inluscious flavours.

TEMPTATION


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Cadbury Temptations is a range of delicious premium chocolate in five

flavours variants - Roast Almond Coffee, Honey Apricot, Mint Crunch, Black

Forest and Old Jamaica.

History of Cadbury

Cadbury, the global leader in the chocolate confectionery market, began in 1824

when a young Quaker named John Cadbury opened up a shop in Birmingham.

John sold coffee, tea, drinking chocolate and cocoa at his shop. Believing that

alcohol was a main cause of poverty, John hoped his products might serve as an

alternative. He also sold hops and mustard. Like many Quakers John had highquality standards for all of his products.

At that time in England, Quakers were prohibited from attending university, since

it was affiliated with the established church, and their pacifist beliefs kept them

from joining the military. With few opportunities available, Quakers often went

into business-related fields and/or devoted their time to missions of social reform.

By 1842 John was selling 11 kinds of cocoa and 16 kinds of drinking chocolate.

Soon Johns brother Benjamin joined the company to form Cadbury Brothers of

Birmingham. The Cadbury brothers opened an office in London and received a

Royal Warrant (one of many) as manufacturers of chocolate and cocoa to Queen

Victoria in 1854. Six years later the brothers dissolved their partnership because of

Johns failing health and the death of his wife. They left the business to John's sons

George and Richard. John devoted the rest of his life to social work and died in

1889.


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George and Richard continued to expand

the product line, and by 1864, they were

pulling a profit. Cadburys Cocoa

Essence, which was advertised as"absolutely pure and therefore best," was

an all-natural product made with pure

cocoa butter and no starchy ingredients.

Cocoa Essence was the beginning of

chocolate as we know it today. The

brothers soon moved their manufacturing

operations to a larger facility four miles south of Birmingham. The factory and

area became known as Bournville.

With Cadburys continued success in chocolate, George and Richard stopped

selling tea in 1873. Master confectioner Frederic Kinchelman was appointed to

share his recipe and production secrets with Cadbury workers. This resulted in

Cadbury producing chocolate covered nougats, bonbons delices, pistache,caramels, avelines and more. Cadbury manufactured its first milk chocolate in

1897. Two years later the Bournville factory employed 2,600 people and Cadbury

was incorporated as a limited company.

During World War I, more than 2,000 of Cadburys male employees joined the

Armed Forces. Cadbury supported the war effort, sending warm clothing, books

and chocolate to the soldiers. Cadbury supplemented the government allowances to

the dependants of their workers. When the workers returned, they were able to

return to work, take educational courses, and injured or ill employees were looked

after in convalescent homes. During this period trade overseas increased, and

Packing room at Cadbury's Bournville

factory..
http://lib.store.yahoo.net/lib/englishteastore/bournville.jpg


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Cadbury opened its first overseas factory near Hobart, Tasmania. The next year

Cadbury merged with JS Fry & Sons, a past market leader in chocolate.

Cadbury supported the war effort during World War II by converting parts of its

factory into workrooms to manufacture equipment like milling machines for rifle

factories and parts like pilot seats for Defiant fighter planes. Workers plowed

football fields to grow crops, and the Cadbury St. Johns Ambulance unit helped

people during air raids. Chocolate was considered essential for the Armed Forces

and civilians. Rationing finally ended in 1949.

In 1969 Cadbury merged with Schweppes to form Cadbury Schweppes.Schweppes was a well-known British brand that manufactured carbonated mineral

water and soft drinks. The merged companies would go on to acquire Sunkist,

Canada Dry, Typhoo Tea and more. Schweppes Beverages was created, and the

manufacture of Cadbury confectionery brands was licensed to Hershey.

Today Cadbury Schweppes is the largest confectionery company in the world,

employing more than 70,000 employees. In 2006 the company had over $15 billionin overall sales. In March of 2007, Cadbury Scheweppes announced that it intends

to separate its confectionery and beverage businesses. With almost 200 years in the

business, Cadbury Schweppes will continue to prosper in the coming decades.

Cadbury Product Timeline


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1865Cadbury Cocoa Essence

1875Cadbury Easter Eggs

1897Cadbury Milk Chocolate

1905Cadbury Dairy Milk1908Cadbury Bournville Chocolate

1915Cadbury Milk Tray

1920Cadbury Flake

1923Cadbury Crme Eggs

1929Cadbury Crunchie

1938Cadbury Roses

1948Cadbury Fudge

1968Cadbury Picnic

1960Cadbury Buttons

1970Cadbury Curly Wurly

1983Cadbury Wispa

1985Cadbury Boost

1987Cadbury Twirl

1992Cadbury Timeout

1996Cadbury Fuse

2001Cadbury Brunchbar, Dream & SnowFlake

Interesting Facts about Cadbury

chocolate boxes.

Cadbury didnt want to take mothers away from their children, so he

developed a company rule that women had to leave work when they got married.

Each married woman was given a bible and a carnation as wedding gifts.


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irst firms to have dining rooms with

kitchens and food for sale.

turtle) was given away with specially designed cocoa tins in 1934. In the sameyear, Cadbury's tokens, which came with packs of cocoa, could be redeemed for

lamps, kettles and saucepans.

in 1936.

its first year.


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Financial & PositionBalance Sheet of Cadbury India ------------------- in Rs. Cr. ------------------

Dec '09 Dec '08 Dec '07 Dec '06 Dec '05

12 mths 12 mths 12 mths 12 mths 12 mths

ces Of Fundsl Share Capital 31.07 32.18 33.20 34.36 35.71ty Share Capital 31.07 32.18 33.20 34.36 35.71e Application Money 0.00 0.00 0.00 0.00 0.00rence Share Capital 0.00 0.00 0.00 0.00 0.00rves 499.73 432.22 372.94 357.73 398.10luation Reserves 0.00 0.00 0.00 0.00 0.00orth 530.80 464.40 406.14 392.09 433.81

red Loans 2.28 32.02 1.28 3.26 3.71cured Loans 9.89 9.68 7.48 6.75 4.51l Debt 12.17 41.70 8.76 10.01 8.22l Liabilities 542.97 506.10 414.90 402.10 442.03

Dec '09 Dec '08 Dec '07 Dec '06 Dec '0512 mths 12 mths 12 mths 12 mths 12 mths

ication Of Fundss Block 724.75 586.94 544.77 430.21 395.50: Accum. Depreciation 372.09 335.55 299.18 265.13 234.88

lock 352.66 251.39 245.59 165.08 160.62tal Work in Progress 152.53 123.86 25.58 82.18 29.55stments 18.01 2.92 298.49 253.42 258.21tories 199.82 222.81 151.02 122.08 102.33ry Debtors 31.09 19.67 13.14 11.37 10.68and Bank Balance 271.50 269.59 8.90 11.20 18.40

l Current Assets 502.41 512.07 173.06 144.65 131.41s and Advances 74.20 69.82 72.34 44.27 53.39

d Deposits 0.00 0.00 0.62 0.62 0.00l CA, Loans & Advances 576.61 581.89 246.02 189.54 184.80ered Credit 0.00 0.00 0.00 0.00 0.00ent Liabilities 534.02 433.56 370.89 275.84 205.09isions 22.83 20.40 29.91 25.96 13.41l CL & Provisions 556.85 453.96 400.80 301.80 218.50

urrent Assets 19.76 127.93 -154.78 -112.26 -33.70ellaneous Expenses 0.00 0.00 0.00 13.68 27.35


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l Assets 542.96 506.10 414.88 402.10 442.03ingent Liabilities 150.97 113.74 106.12 84.75 66.54Value (Rs) ,708.53 144.30 122.32 114.12 121.48

ce : Dion Global Solutions Limited

Vision, Mission & Values

Our Vision

The Barrow Cadbury Trusts vision is of a peaceful, equitable society, free from

discrimination and based on the principle of social justice for all.

Our Mission

The Barrow Cadbury Trusts mission is to promote social justice through grant

making, research, influencing public opinion and policy and supporting local

communities.

Our Values

Promotion of social justice the Trust aims to put fairness and equality atthe heart of all its work

Empowerment the Trust seeks to uphold and extend the rights ofmarginalised groups, to reflect the grassroots experience of local

communities and to support them in making their voices heard

Partnership the Trust works in partnership with other grant-makers andwith stakeholders at international, national, regional and local levels

Local focusthe Trust values its historic relationship with Birmingham andthe West Midlands


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Relationship with funded groupsthe Trust aims to be an approachable, fairand responsive grant-make

Valuing learning the Trust aims to be a learning organisation open to theexchange of information and ideas, with its work grounded in a solidevidence base

Innovation and Independence as an independent grant-maker, the Trust isalive to emerging needs and new ideas and ways of working and is willing to

take risks in pursuit of social justice

Quaker ethos while there is no requirement for Trustees or staff to beQuakers, and most are not, the Trust values its historical roots within the

Quaker ways of working and tradition of social and penal reform.


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INTRODUCTION


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Introduction Working capital management

Working capital refers to that part of the firms capital which is required forfinancing shortterm or current assets such as cash, marketable securities, debtors& inventories. Funds, thus, invested in current assts keep revolving fast and arebeing constantly converted in to cash and this cash flows out again in exchange forother current assets. Hence, it is also known as revolving or circulating capital orshort term capital.

Working capital management is concerned with the problems arise in attempting tomanage the current assets, the current liabilities and the inter relationship that existbetween them.

The term current assets refers to those assets which in ordinary course of businesscan be, or, will be, turned in to cash within one year without undergoing adiminution in value and without disrupting the operation of the firm. The majorcurrent assets are cash, marketable securities, account receivable and inventory.Current liabilities ware those liabilities which intended at there inception to be paidin ordinary course of business, within a year, out of the current assets or earningsof the concern. The basic current liabilities are account payable, bill payable, bank

over-draft, and outstanding expenses.

The goal of working capital management is to manage the firms current assets and

current liabilities in such way that the satisfactory level of working capital ismentioned.

Definition:-

According to Guttmann & Dougall-

Excessof current assets over current liabilities.

According to Park & Gladson-

The excess of current assets of a business (i.e. cash, accounts receivables,

inventories) over current items owned to employees and others (such as salaries &wages payable, accounts payable, taxes owned to Government).


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Capital required for a business can be classified under two main categories via,

1) Fixed Capital

2) Working Capital

Every business needs funds for two purposes for its establishment and to carry

out its day- to-day operations. Long terms funds are required to create production

facilities through purchase of fixed assets such as p&m, land, building, furniture,

etc. Investments in these assets represent that part of firms capital which is

blocked on permanent or fixed basis and is called fixed capital. Funds are also

needed for short-term purposes for the purchase of raw material, payment of wages

and other dayto- day expenses etc.


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CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital

2. Net working capital

The gross working capital is the capital invested in the total current assets of the

enterprises current assets are those assets which can convert in to cash within a

short period normally one accounting year.

CONSTITUENTS OF CURRENT ASSETS

1) Cash in hand and cash at bank

2) Bills receivables

3) Sundry debtors

4) Short term loans and advances

5) Inventories of stock as:

a. Raw material

b. Work in process

c. Stores and spares

d. Finished goods

6. Temporary investment of surplus funds.

7. Prepaid expenses


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8. Accrued incomes.

9. Marketable securities.

In a narrow sense, the term working capital refers to the net working. Net

working capital is the excess of current assets over current liability, or, say:

NET WORKING CAPITAL = CURRENT ASSETSCURRENT LIABILITIES.

Net working capital can be positive or negative. When the current assets

exceeds the current liabilities are more than the current assets. Current

liabilities are those liabilities, which are intended to be paid in the ordinarycourse of business within a short period of normally one accounting year

out of the current assts or the income business.

CONSTITUENTS OF CURRENT LIABILITIES

1. Accrued or outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation, if it does not amt. to app. of profit.

6. Bills payable.

7. Sundry creditors.


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CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in to ways:

o On the basis of concept.

o On the basis of time.

On the basis of concept working capital can be classified as gross working

capital and net working capital. On the basis of time, working capital may

be classified as:

Permanent or fixed working capital.

Temporary or variable working capital

Amount of Working

Capital Temporary

capital

Permanent Capital

Time


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PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to

ensure effective utilization of fixed facilities and for maintaining the circulation of

current assets. Every firm has to maintain a minimum level of raw material, work-

in-process, finished goods and cash balance. This minimum level of current assts is

called permanent or fixed working capital as this part of working is permanently

blocked in current assets. As the business grow the requirements of working capital

also increases due to increase in current assets.

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is

required to meet the seasonal demands and some special exigencies. Variable

working capital can further be classified as seasonal working capital and special

working capital. The capital required to meet the seasonal need of the enterprise is

called seasonal working capital. Special working capital is that part of working

capital which is required to meet special exigencies such as launching of extensive

marketing for conducting research, etc.

Temporary working capital differs from permanent working capital in the sense

that is required for short periods and cannot be permanently employed gainfully in

the business.

IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL


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SOLVENCY OF THE BUSINESS:Adequate working capital helps in maintaining the solvency of the business by

providing uninterrupted of production.

Goodwill:Sufficient amount of working capital enables a firm to make prompt payments

and makes and maintain the goodwill.

Easy loans:

SIGNIFICAN--CE OFWORKINGCAPITAL

PAYMENT TOSUPPLIERS

DIVIDENDDISTRIBUTI-ON

INCREASEDEBTCAPACITY

INCREASE INFI X ASSETS

INCREASEEFFECIENC-Y

EASY LOANFROM BANKS


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Adequate working capital leads to high solvency and credit standing can

arrange loans from banks and other on easy and favorable terms.

Cash Discounts:Adequate working capital also enables a concern to avail cash discounts on the

purchases and hence reduces cost.

Regular Supply of Raw Material:Sufficient working capital ensures regular supply of raw material and

continuous production.

Regular Payment Of Salaries, Wages And Other Day TO DayCommitments:

It leads to the satisfaction of the employees and raises the morale of its

employees, increases their efficiency, reduces wastage and costs and enhances

production and profits.

Ability to Face Crises:A concern can face the situation during the depression.

.


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FACTORS DETERMINING THE WORKING CAPITAL

REQUIREMENTS

1. NATURE OF BUSINESS:

The requirements of working is very limited in public utility undertakings

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

only and supply services not products, and no funds are tied up in

inventories and receivables. On the other hand the trading and financial

firms requires less investment in fixed assets but have to invest large amt. of

working capital along with fixed investments.

2. SIZE OF THE BUSINESS:

Greater the size of the business, greater is the requirement of working

capital.

3. PRODUCTION POLICY:

If the policy is to keep production steady by accumulating inventories it will

require higher working capital.

4. LENTH OF PRDUCTION CYCLE:

The longer the manufacturing time the raw material and other supplies have

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

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

directly proportional to the length of the manufacturing process.


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Sources of working capital

The company can choose to finance its current assets by1. Long term sources

2. Short term sources3. A combination of them.

Long term sources of permanent working capital include equity and preferenceshares, retained earning, debentures and other long term debts from public depositsand financial institution. The long term working capital needs should meet throughlong term means of financing. Financing through long term means providesstability, reduces risk or payment and increases liquidity of the business concern.Various types of long term sources of working capital are summarized as follow:

1. Issue of shares:

It is the primary and most important sources of regular or permanent workingcapital. Issuing equity shares as it does not create and burden on the income of theconcern. Nor the concern is obliged to refund capital should preferably raisepermanent working capital.

2. Retained earnings:

Retain earning accumulated profits are a permanent sources of regular workingcapital. It is regular and cheapest. It creates not charge on future profits of theenterprises.

3. Issue of debentures:

It crates a fixed charge on future earnings of the company. Company is obliged topay interest. Management should make wise choice in procuring funds by issue ofdebentures.

Short term sources of temporary working capital

Temporary working capital is required to meet the day to day businessexpenditures. The variable working capital would finance from short term sourcesof funds. And only the period needed. It has the benefits of, low cost andestablishes closer relationships with banker.


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Some sources of temporary working capital are given below:

1. Commercial bank:

A commercial bank constitutes significant sources for short term or temporaryworking capital. This will be in the form of short term loans, cash credit, andoverdraft and though discounting the bills of exchanges.

2. Public deposits:

Most of the companies in recent years depend on this source to meet their shortterm working capital requirements ranging fro six month to three years.

3. Various credits:

Trade credit, business credit papers and customer credit are other sources of shortterm working capital. Credit from suppliers, advances from customers, bills ofexchanges, etc helps to raise temporary working capital

4. Reserves and other funds:

Various funds of the company like depreciation fund. Provision for tax and otherprovisions kept with the company can be used as temporary working capital.Thecompany should meet its working capital needs through both long term and shortterm funds. It will be appropriate to meet at least 2/3 of the permanent workingcapital equipments form long term sources, whereas the variables working capitalshould be financed from short term sources. The working capital financing mixshould be designed in such a way that the overall cost of working capital is thelowest, and the funds are available on time and for the period they are reallyrequired.


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SOURCES OF ADDITIONAL WORKING CAPITAL

Sources of additional working capital include the following-1. Existing cash reserves2. Profits (when you secure it as cash)3. Payables (credit from suppliers)4. New equity or loans from shareholder5. Bank overdrafts line of credit6. Long term loans

If we have insufficient working capital and try to increase sales, we can easily overstretch the financial resources of the business. This is called overtrading. Earlywarning signs include

1. Pressure on existing cash2. Exceptional cash generating activities. Offering high discounts for clear

cash payment3. Bank overdraft exceeds authorized limit4. Seeking greater overdrafts or lines of credit5. Part paying suppliers or there creditor.6. Management pre occupation with surviving rather than managing.

Different Aspects of Working Capital Management

MANAGEMENT OF INVENTORY

Inventories constitute the most significant part of current assets of a large majority

of companies. On an average, inventories are approximately 60% of current assets.Because of large size, it requires a considerable amount of fund. The inventorymeans and includes the goods and services being sold by the firm and the rawmaterial or other components being used in the manufacturing of such goods andservices.


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Nature of Inventory:

The common type of inventories for most of the business firms may be classifiedas raw-material, work-in-progress, finished goods.

Raw material:

it is basic inputs that are converted into finished productsthrough the manufacturing process. Raw materials inventories arethose units which have been purchased and stored for futureproductions.

Workinprocess:

Work-in-process is semi-manufactured products.They represent products that need more work before thembecome finished products for sale.

Finished goods:

These are completely manufactured products which areready for sale. Stocks of raw materials and work-in-process facilitateproduction, while stock of finished goods is required for smoothmarketing operations. Thus inventories serve as a link between theproduction and consumption of goods.The levels of three kinds ofinventories for a firm depend on the nature of business. Amanufacturing firm will have substantially high levels of all the threekinds of inventories. While retail or wholesale firm will have a veryhigh level of finished goods inventories and no raw material andwork-in-process inventories.


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So operating cycle can be known as following:-

Sales

CASH

RAW

MATERIALS

WIPFINISHED

GODS

BOOK

DEBTS

Raw Material

Work in Progress

Cash Collection fromDebtors

Finished Goods

Credit Sales Cash Sales


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Need to hold inventories

Maintaining inventories involves trying up of the companys funds and incurrenceof storage and holding costs. There are three general motives for holdinginventories:

Transactions Motive: IT emphasizes the need to maintain inventories tofacilitate smooth production and sales operation.

Precautionary Motive: It necessitates holding of inventories to guardagainst the risk of unpredictable changes in demandand supply forces and other factors.

Speculative Motive: It influences the decision to increase or reduceinventory levels to take advantage of price fluctuations.

Management of Receivables/Debtors

The Receivables (including the debtors and the bills) constitute a significantportion of the working capital. The receivables emerge whenever goods are soldon credit and payments are deferred by customers. A promise is made by thecustomer to pay cash within a specified period. The customers from whomreceivable or book debts have to be collected in the future are called trade debtorsand represents the firms claim or assets. Thus, receivable is s type of loanextended by the seller to the buyer to facilitate the purchase process. ReceivableManagement may be defined as collection of steps and procedure required toproperly weight the costs and benefits attached with the credit policy. TheReceivable Management consist of matching the cost of increasing sales(particularly credit sales) with the benefits arising out of increased sales with theobjective of maximizing the return on investment of the firm.

Nature

The term credit policy is used to refer to the combination of three decisionvariables:

1. Credit standards: It is the criteria to decide the type of customers to


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whom goods could be sold on credit. If a firm has moreslowpaying customers, its investment in accountsreceivable will increase. The firm will also be exposed tohigher risk of default.

2. Credit terms: It specifies duration of credit and terms of payment byCustomer Investment in accounts receivable will be highif customers are allowed extended time period formaking payments.

3. Collection efforts: It determine the actual collection period. The lowerthe collection period, the lower the investment inaccounts receivable and vice versa.

Management of Cash

Cash management refers to management of cash balance and the bank balance andalso includes the short terms deposits. Cash is the important current asset for theoperations of the business. Cash is the basic input needed to keep the businessrunning on a continuous basis. It is also the ultimate output expected to be realizedby selling the service or product manufactured by the firm. The term cash includescoins, currency, and cheque held by the firm and balance in the bank accounts.

Factors of Cash Management:

Cash management is concerned with the managing of1. Cash flows into and out of the firm2. Cash flows within the firm and3. Cash balance held by the firm at a point of time by financing deficit or

investing surplus cash. Sales generate cash which has to be disbursed out. The

surplus cash has to be invested while deficit has to borrow. Cash managementseeks to accomplish this cycle at a minimum cost and it also seeks to achieveliquidity and control.


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Motives of holding cash

A distinguishing feature of cash as an asset is that it does not earn any substantialreturn for the business. Even though firm hold cash for following motives:

Transaction motive:Precautionary motive

Speculative motives

Compensatory motive

Transaction motive: This refers to the holding of cash to meet routine cashrequirement to finance. The transactions, which afirm carries on in the ordinary course of business.

1.Precautionary motive: This implies the needs to hold cash to meetunpredictable contingencies such as strike, sharp increase inraw materials prices. If a firm can borrow at short notice topay them unforeseen contingency, it will need to maintainrelatively small balances and vice-versa.

2. Speculative motives: It refers to the desire of the firm to take advantageof opportunities which present themselves at unexpectedmovements and which are typically outside the normal courseof business.

3. Compensatory motive: Bank provides certain services to their client freeof cost. They therefore, usually require client to keepminimum cash balance with them to earn interest andthus compensate them for the free service so provided.

Management of Payables/Creditors

Creditors are a vital part of effective cash management and should be managedcarefully to enhance the cash position. Purchasing initiates cash outflows and anover-zealous purchasing function can create liquidity problems. Consider theFollowing:


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-is it tightly managed or spreadamong a number of people?

-holding andpurchasing costs?

increase?

MANAGEMENT OF WORKING CAPITAL

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

attempting to manage the current assets, current liabilities. The basic goal of

working capital management is to manage the current assets and current

liabilities of a firm in such a way that a satisfactory level of working capital

is maintained, i.e. it is neither adequate nor excessive as both the situations

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

working capital should be ideal. WORKING CAPITAL MANAGEMENTPOLICES of a firm has a great on its probability, liquidity and structural

health of the organization. So working capital management is three

dimensional in nature as

1. It concerned with the formulation of policies with regard to

profitability, liquidity and risk.

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

current assets.


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

current liabilities.

WORKING CAPITAL ANALYSIS

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

Adequate amount of working capital is very much essential for the smooth

running of the business. And the most important part is the efficient

management of working capital in right time. The liquidity position of the

firm is totally effected by the management of working capital. So, a study of

changes in the uses and sources of working capital is necessary to evaluatethe efficiency with which the working capital is employed in a business.

This involves the need of working capital analysis.

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

devices, such as:

1. Ratio analysis.

2. Fund flow analysis.

3. Budgeting.

METHODS OF WORKING CAPITAL ANALYSIS

There are so many methods for analysis of financial statements but RIL LTD usedthe following techniques:-

Comparative size statements Trend analysis


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Cash flow statement Ratio analysis

A detail description of these methods is as follows:-

COMPARATIVE SIZE STATEMENTS:-

When two or more than two years figures are compared to each other than we

called comparative size statements in order to estimate the future progress of the

business, it is necessary to look the past performance of the company. These

statements show the absolute figures and also show the change from one year to

another.

TREND ANALYSIS:-

To analyze many years financial statements RIL LTD uses this method. This

indicates the direction on movement over the long time and help in the financial

statements.

Procedure for calculating trends:-

1. Previous year is taken as a base year.2. Figures of the base year are taken 100.3. Trend % are calculated in relation to base year.

CASH FLOW STATEMENT:-

Cash flow statements are the statements of changes in the financial position

prepared on the basis of funds defined in cash or cash equivalents. In short cashflow statement summaries the cash inflows and outflows of the firm during a

particular period of time.


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Benefits for the RIL LTD:-

To prepare the cash budget. To compare the cash budgets . To show the position of the cash and cash equivalents.

RATIO ANALYSIS:-

Ratio analysis is the process of the determining and presenting the relationship of

the items and group of items in the statements.

Benefits of ratio analysis to RIL LTD:-

1. Helpful in analysis of financial statements.2. Helpful in comparative study.3. Helpful in locating the weak spots of the RIL LTD.4. Helpful in forecasting.5. Estimate about the trend of the business.6. Fixation of ideal standards.7. Effective control.8. Study of financial soundness.

Types of ratio:-

L iquidity ratio:They indicate the firms ability to meet its currentobligation out of current resources.

Current ratio:- Current assets / Current liabilities


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Quick ratio:- Liquid assets / Current liabilitiesLiquid assets =Current assetsStock -Prepaid expenses

Leverage or Capital structure ratio:This ratio discloses the firms abilityto meet the interest costs regularly and long term solvency of the firm.

Debt equity ratio:- Long term loans / Shareholders funds or netWorth

Debt to total fund ratio:- Long terms loans/ share holder funds+long term loan

Proprietary ratio:- Shareholders fund/ shareholders fund+longterm loan

Activity ratio or Turnover r atio:-They indicate the rapidity with whichthe resources available to the concern are being used to produce sales.

Stock turnover ratio:- Cost of good sold/Average stock(Cost of good sold= Net sales/ Gross profit,

Average stock=Opening stock+closing stock/2)

Debtors turnover ratio:-Net credit sales/ Average debtors+Average B/R

Average collection period:- Debtors+B/R /Credit sales per

(Credit sales per day=Net credit sales of the year/365)

Creditors Turnover Ratio:-Net credit purchases/ AverageCreditors + Average B/P


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Average Payment Period: - Creditors + B/P/ Credit purchase perday.

Fixed Assets Turnover ratio:- Cost of goods sold/Net fixedAssets

(Net Fixed Assets = Fixed Assetsdepreciation)

Working Capital Turnover Ratio:- Cost of goods sold/Working Capital

(Working capital= current assetscurrent liability)

Prof itabil ity Ratios or I ncome ratios:-The main objective of everybusiness concern is to earn profits. A business must be able to earn

adequate profit in relation to the risk and capital invested in it.

Gross profit ratio:- Gross profit / Net Sales * 100(Net sales= SalesSales return)

Net profit Ratio:-Net profit / Net sales * 100(Operating Net Profit= operating net profit/ Net Sales *100 or

operating Net profit= gross profitoperating expenses)

Operating Ratio :- Cost of goods sold + Operatingexpenses/Net Sales * 100

(Cost of goods sold = Net SalesGross profit, Operating expenses =

office & administration expenses + Selling & distribution expenses +

discount + bad debts + interest on short term loans)


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Earning per share(E.P.S.) :-Net Profitdividend on preferenceshare / No. of equity shares

Dividend per share (D.P.S.):- Dividend paid to equity shareHolders / No. of equity shares *100.

Dividend Payout ratio(D.P.) :- D.P.S. / E.P.S. *100


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Documents

The City of Gwalior