project study of sln polymers

8/3/2019 Project Study of Sln Polymers

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The Study of Working Capital Management of SLN POLYMERS LTD

CHAPTER-1

INTRODUCTION

A) INTRODUCTION OF INDUSTRY:

Polymers account for around 70% of petrochemicals and that is the

reason that I- they are the most important constituent of the Indian

chemical industry. Polymers are essentially used in the manufacture of

various plastic products. In the consumption of the basis petrochemical,

polymers form the bulk of demand with a share of around 55%.

The share of polymers in the product mix in india for various crackers

ranges form 60% to 90%. The segment of polymers have registered a

growth of 18% while there have been an increase of 26% in the capacities

CAGR. The by products of polymers are:

o

Polystyreneo PVC

o Poly Propylene

o LDPE / LLDPE

o HDPE

1. Polystyrene, a byproduct of polymers has Rs. 435 crore market size

its market price was around Rs. 42.5 per kg in 1999. The major

companies involved in the production of polystyrene are Rajasthan

Polymers, Mc Dowell & Co., and Supreme Petrochem. PVC, a

polymers byproduct, is in demand in the Indian market at 554,000 tons

per annum.

Lal Bahadhur Shastri Government First Grade College 1


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This segment has been growing at the rate of 15% yearly. Around 54%

of PVC is used in the manufacturing of pipes and 14% is used in the

production of cable sheathing. The cost of PVC was Rs. 44.95 per kg

in 1999. The main companies involved in the production RIL.

Polypropylene is a very light weight polymer and that is the main

reason why it is used as a substitute for various other polymers. During

1997-1998, around 11,000 tons of poly propylene was imported. Over

the last 3 years, the demand for this product has increased by 38% and

now stands at 595000 tons. The price of polypropylene was Rs 47.50

per kg in 1999. It is mainly used in manufacture of injection molding,

BOPP, ropes twines, and in India, low- density polyethylene (LDPE)

and linear segment of polymers is growing at the rate of 12%per year.

More than 50% of LDPE/ LDPE are used by the packing industry and

they were priced at around Rs 54.25 per kg in 1999. The companies

which make LDPE/LLDPE are Oswald, RIL and IPCL. The second

most used polymer in India is HDPE, with a share of 22%. The value

of its domestic consumption is Rs 2123 crore and it is growing at the

rate of 15% per year. It cost around Rs. 50/- per kg in 1999. HDPE is

used in the manufacturing of raffia, blow molding, injection molding,

and in the paper industry as well. The companies involved in the

production of HDPE are NOCIL, RIL and IPCL.

Polymers form an important constituent of the Indian

petrochemical industry. So efforts must be taken by the industry and

the government of India, so that the production and quality of polymers

remain top class.

Polymers are a manufacturing company making scientific

instruments for monitoring production processes. We use company



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developed technology and expertise to design and construct

instruments that are based on dielectric, optical, flurescence

spectrosoppy ultrasonics and rheology concepts. Our instruments are

designed to measure physical properties of materials in real-time as thy

are processed, including:

Dielectric properties

Dielectric measurements

Dielectric spectroscopy

Dielectric relaxation

Fluorescence spectroscopy

Optical transmission

Fluorescence based temperature

Fluorescence based temperature profiles

Ultrasonic velocity

Viscosity

Thermodynamic and equation of state properties

Rheology

Optical fiber sensor technology

Industrial and R&D applications to polymer process monitoring,materials compounding and chemical mixing are special interests of T

Bur Associates. Our newest instrument is the dielectric slit die, an on-line

multi-functional system.

The dielectric slit die is shown attached to a twin screw

extruder during the compounding of nylon 6 with clay. With this

instrument dielectric, optical and reheological properties of the processed



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resin can be obtained in real-time. The collection of data from several

sensors yields a multi-faced picture of resin physical properties and

process in

B) INTRODUCTION OF SUBJECT:

WORKING CAPITAL MANAGEMENT-I

Definition:-

Working capital is the amount of funds necessary to cover the cost

of operating the enterprises.

-by Shubin.

Meaning of working capital:-

Capital required for a business can be classified under two main

categories viz.,

i) Fixed capital and

ii) Working capital

Every business needs funds for two purposes for its establishment

and to carry out its day-to-day operations. Long-term funds are requiredto create production facilities through purchase of fixed assets such as

plant and machinery, land etc.

Investments in these assets represent that part of firms capital

which is blocked on a permanent or fixed basis is called fixed capital.



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Funds are also needed for short term purpose for the purchase of

raw materials, payment of wages and other day-to-day expenses, etc.

these funds are known as working capital.

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

capital, which is required for financing short term or current assets such

as cash, marketable securities, debtors and inventories.

Kinds of working capital:

Working capital may be classified in two ways:

a) On the basis of concept.

b) On the basis of time.

Kinds of working capital

On the basis of concept On the basis of time

Gross Net Permanent Temporary

Working working or fixed or variableCapital capital working working

Capital capital

Regular Reserve Seasonal Special



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working working working working

capital capital capital capital

a) On the basis of concept:

i) Gross working capital:

It is the amount of funds invested in the various components of

current assets. It has the following advantages.

a) Finance managers are mainly concerned with management of

current assets.

b) It enables a firm to release the greatest returns on its investments.

c) It enables a firm to plan and control the funds at its disposal.

d) It helps in the fixation of various areas of financial responsibility.

ii) Net working capital :

It is the difference between current assets and current liabilities.

The concept of net working capital enables a firm to determine the exact

amount available at its disposal for operational requirements.

b) On the basis of time:

i) Permanent or fixed working capital:

It is the minimum amount of investment in all current assets which

is regarded at all times to carry on minimum level of business activities.

The operating cycle is a continuous process and therefore, the need for



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current assets. But the magnitude of current assets and decreases

overtime.

Features of permanent working capital:

a) Amount of permanent working capital remains in the business in

one form or another.

b) There is a positive co-relation between the amount of permanent

working capital and the size of the business

ii) Temporary or variable working capital:

It is also called as fluctuating working capital. It is the amount of

working capital which is required to meet the seasonal and some special

exigencies. Variable working capital can be further classified as seasonal

working capital and special working capital.

a) Seasonal working capital:

The capital required to meet the seasonal needs of the enterprise is

called seasonal working capital.

b) Special working capital:

It is that part of working capital which is required to meet special

exigencies such as launching of extensive marketing campaigns forconducting research, etc.

Problems associated with excess and inadequate working capital:

Both the excessive and the inadequate working capital positions are

dangerous from the firms point of view. Excess working capital results

in idle funds, which do not earn any return for the firm. Shortage of



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working capital impairs firms profitability because of production

interruptions.

Dangers of Excess Working Capital:

1) It results in unnecessary accumulation of inventories. Thus, the

chances of inventory mishandling, waste, theft and loses increase.

2) It is an indication of defective credit policy and stack collection

period. Consequently, higher incidence of bad debts adversely

affects profits.

3) Excessive working capital makes management complacent, which

degenerates into managerial inefficiency.

4) Tendencies of accumulating inventories to make speculative profits

grow.

Dangers of Inadequate Working Capital:

a) It stagnates growth. It becomes difficult for the firm to undertake

profitable projects due to non-availability of the working capital

funds.

b) It becomes difficult to implement operating plans and achieve the

firms profit target.

c) Operating inefficiencies creep in when it becomes difficult even to

meet day-to-day commitments.



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d) Fixed assets are not efficiently utilized for the lack of working

capital funds. Thus, the rate of return on investment slumps.

Therefore, every firm should aim at maintaining a right amount ofworking capital on a continuous basis.

Determinants of working capital:

A large number of factors influence working capital needs of a

firm. The basic objective of working capital management is to manage

the firms current assets and current liabilities in such a way that a

satisfactory level of a working capital is maintained.

The following factors determine the amount of working

capital:

1) Nature of industry:

The composition of current assets is a function of the size of a

business and the industry to which it belongs. Small companies have

smaller proportions of cash, receivables and inventory than large

corporations. This difference becomes more marked in large corporations

of public utility concern for examples, mostly employ fixed assets in its

operations, needs for working capital are thus determined by the nature of

an enterprise.

2) Size of business:

The size of business has also an important impact on its working

capital needs. Size may be measured in terms of a scale of operation. A



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firm with large-scale operation will need more working capital than a

small firm.

3) Manufacturing cycle:

Longer the manufacturing process, the higher will be the

requirements of working capital and vice versa. This is because of the

fact that highly capital-intensive industries require a large amount of

working capital to run their sophisticated and long production process.

4) Production policy:

The production policies pursued by the management have a

significant effect on the requirements of working capital of the business.

The production schedule has a great influence on the level of inventories;

the decision of the management regarding automation etc. will also have

its effects on working capital requirements.

5) Volume of sales:

This is the most important factor affecting the size and components

of working capital. A firm maintains current assets because they are

needed to support the operational activities, which result in sales. The

volume of sales and the working capital are directly related to each other.

As the volume of sales increases, there is an increase in the investment of

working capital.

6) Terms of purchases and sales:

A firm, which allows liberal credits to its customers, may enjoy

higher sales but will need more working capital as compared to firm

enforcing strict credit terms. The working capital requirements are also

affected by the credit facilities enjoyed by the firm. A firm enjoying



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liberal credit facilities from its suppliers requires lower amount of

working capital as compared to a firm, which does not enjoy such liberal

credit facilities.

7) Business cycle:

Business expands during the period of prosperity and declines

during the period of depression. Consequently, more working capital is

required during the period of prosperity and less during the period of

depression. Under boom, additional investment in fixed assets may be

made by some firms to increase this productive capacity. This act of the

firm will require further additions of working capital, to meet their

requirement of funds for fixed assets and current assets under boom

period the firms generally resort to substantial borrowings.

8) Fluctuations in the supply of raw materials:

Certain companies have to obtain and maintain large reserves of

raw materials due to their irregular sales and intermittent supply. This is

particularly true in case of companies requiring special kind of raw

materials available only from one or two sources. Thus in this case the

working capital requirements in such industries would be large.

9) Price level changes:

The increasing shifts in price levels make the functions of financial

manager difficult. He should anticipate the effect of price level changes

on working capital requirements of the firm. Generally rising price levels

will require a firm to maintain higher amount of working capital. The

same levels of current assets will need increased investment when prices

are increasing.



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10) Operating efficiency:

The operating efficiency of the firm relates to the optimum

utilization of resources at minimum cost. The firm will be effectively

contributing costs. Although it may not be possible for a firm to control

the prices of materials or the wage of labour, it can certainly ensure

efficient and effective use of its materials, labour and other resources.

11) Profit Margin:

Firms differ in their capacity to generate profit from business

operations. Some firm enjoy a dominant position, due to quality product

or good marketing management or monopoly power in the market and

earn a high profit margin, some other firms may have to operate in an

environment of intense competition and may earn low margin of profits.

12) Profit Appropriation:

Even if net profits are earned in cash at the end of the period,

whole of it is not available for working capital purposes, the contribution

towards working capital would be affected by the way in which profits

are appropriated. The availability of cash generated from operations thus,

depends upon taxation, dividend, retention policy and depreciation

policy.

Principles of working capital management or policy:

The following are the general principles of a sound working capital

management

Principles of working capital management



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1) Principles of risk variation:

Risk here refers to the inability of a firm to meet its obligations as

and when they become due for payment. Larger investment in current

assets with less dependence on short term borrowings increase liquidity,

reduces dependence on short-term borrowings increase liquidity, reduces

risk and thereby decreases the opportunity for gain or loss.

2) Principles of Cost of Capital:

The various source of raising working capital have different cost of

capital and the degree of risk involved. Generally, higher the risk lower is

the cost and lower the risk higher the cost. A sound working capital

management should always try to achieve the balance between these two

sources.

3) Principles of Equity Position:

It is concerned with planning the total investment in current assets.

According to this principle, the amount of working capital invested in

each component should be adequately justified by a firms equity portion.

Every rupee invested in the current assets should contribute to the net

worth of the firm. The finance manager may consider the relevant

industrial averages.

4) Principles of Maturity of Payment:


Principlesof risk

variation

Principlesof cost of

ca ital

Principlesof equity

osition

Principlesof

maturit


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It is concerned with planning the sources of finance for working

capital according to this principles, a firm should make effort to relate

maturities of payment to its flow of internally generated funds. Maturity

Pattern of various current obligations is an important factor in risk

assumptions and risk assessments.

WORKING CAPITAL MANAGEMENT-II

(Cash, Receivables and Inventory Management)

Management of Cash

Introduction:

Cash is one of the current assets of a business. It is needed at all

times to keep the business going. A business concern should always keep

sufficient cash for meeting it obligations. Any shortages of cash will

hamper the operations of a concern and any excess of it will be

unproductive. Cash is the most unproductive of all the assets. While fixed

assets like machinery, plant etc. and current assets such as inventory will

help the business in increasing its earning capacity

Motives for holding cash:

The firms needs for cash may be attributed to the following needs:

Motive holding cash

Transaction Precautionary SpeculativeMotive motive motive



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Some people are of the view that are business requires cash only

for the first two motives while other feel that speculative motive alsoremains. These motives are discussed as follows:

1) Transaction Motive:

A firm needs cash for making transaction in the day-to day

operations. The cash is needed to make purchases, pay expenses, taxes,

dividend, etc. the cash needs arise due to the fact that this is no complete

synchronization between cash receipts and payments sometimes, cash

receipts exceed cash payments or vice-versa. The receipts in future may

be also anticipated but the things do not happen as desired. If more cash

is needed for payments than receipts, it may be raised through bank

overdraft. On the other hand if there are more cash receipts than

payments, it may be spent on marketable securities.

2) Precautionary motive:

A firm is required to keep cash for meeting various contingencies.

Though cash inflows and cash outflows are anticipated but these may be

variations in this estimate. For example, a debtor who was to pay after 7

day may inform of his inability to pay. In these situations cash receipts

will be less then expected and cash payment will be more, as purchasesmay have to be made for cash instead of credit. Such contingencies often

arise in a business. A firm should keep certain cash for such a situations

or contingencies.

3) Speculative Motive:

It relates to holding of cash for investing in profitable opportunities

as and when they arise. Such an opportunities do not come in a regular



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manner. These opportunities cannot be scientifically predicted but only

conjectures can be made about their occurrence for example, the pieces of

raw materials may fall temporarily and a firm may like to make purchases

at these prices. Such opportunities can be availed of if a firm has cash

balance with it. The primary motive of a firm is not to indulge in

speculative transactions but such investments may be made at times.

Goals of Cash Management:

The primary aim or goal of cash management in a firm is to strike

trade-off between liquidity and profitability in order to maximize long-

term profit. It is possible only when the firm aims to optimizing the use of

funds in the working capital pool. This overall objective can be translated

into the following operational goals:

i) To satisfy day-to-day business requirements;

ii) To provide for scheduled major payments;

iii) To face unexpected cash drains;

iv) To seize potential opportunities for profitable long-term

investments;

v) To meet requirements of banks relationship;

vi) To build image of creditworthiness;

vii) To earn on cash balance;

viii) To build reservoir for net cash inflows till the availability of better

uses of funds by conscious planning;

ix) To minimize the operating costs of cash management;

x) To maintain minimum cash resources;



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xi) To determine criteria for investment of excess cash;

xii) To determine the safety level for cash;

xiii) To regulate the cash inflows and cash outflows.

Receivables Management:

Introduction:

Receivables represent amounts owned to the firm as a result of sale

of goods of services in the ordinary course of business. These are claims

of the firm against its customers and form part of its current assets.

Receivables are also known as account receivables, trade receivables,

customer receivables or book debts. The receivables are carried for the

customers. The period of credit and extent of receivable depends upon the

credit policy followed by the firm.

Factors influence the size of receivables:

Besides sales a number of other factors also influence the size of

receivables. The following factors directly and indirectly affect the size of

receivables,

1) Size of credit sales:

The volume of credit sales is the first factor, which increases or

decreases the size of receivables. If a concern sells only on cash basis, as

in the cash of Bata Shoe Company, then there will be no receivables. The

higher the part of credit sales out of total sales, figures of receivables will

also be more or vice versa.

2) Credit policies:



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A firm with consecutive credit policy will have a low size of

receivables while a firm with liberal credit policy will be increasing this

figure. If collections are prompt then even if credit is liberally extendedthe size of receivables.

3) Terms of Trade:

The size of receivables also depends upon the terms of trade. The

period of credit allowed and rates of discount given are linked with

receivables. If credit period allowed is more than receivables will be alsomore.

4) Expansion plans:

When a concern wants to expand its activities, it will have to enter

new markets, to attract customers, it will give incentives in the form of

credit facilities. In the early stages of expansion more credit becomes

essential and size of receivables will be more.

5) Relation with profits:

The credit policy is followed with a view to increase sales. When

than the increase in revenues. It will be beneficial to increase sales

beyond a point because it will be beneficial to increase sales beyond a

point because it will be more profits.

6) Credit collection efforts:



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The collection of credit should be streamlined. The customers

should be sent periodical remainders if they reduce to pay in time. If

these efforts are slower than outstanding amounts will be more.

7) Habits of customers:

The paying habits of customers also have a bearing on the size of

Receivables. The concern should remain in Touch with such customers

and should make them realize the urgency of

Their needs.

Cost of maintaining receivables:

The allowing of credit to customers means giving of funds for the

Customers use. The concern incurs the following costs on maintaining

receivables:

1) Cost of financing receivables:

When goods and services are provided on credit then concerns

capital is allowed to be used by the customers. The receivables are

financed from the funds supplied by shareholders for long term financing

and through retained earnings.

2) Cost of collection:

A proper collection of receivables is essential for receivables

management. The customers who do not pay the money during a

stipulated credit period are sent remainders for early payments. In some

cases legal recourse may have to be taken for collecting receivables.

3) Bad debts:



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Some customers may fall to pay the amount due towards them. The

amounts, which the customers fall to play, are known as bad debts.

Though a concern may be able to reduce bad debts through efficientcollection machinery but one cannot altogether rule out this cost.

Inventory Management:

Introduction

Every enterprise needs inventory for smooth running of its

activities. It serves as a link between production and distribution

processes. There is generally, a time lag between the recognition of a

need and its fulfillment, the greater the higher the requirements for

inventory.

The investment in inventories constitutes the most significant part

of current assets/working capital in most of the under takings. Thus, it is

very essential to have proper control and management of inventories.

Meaning:

The word inventory is understood differently by various authors. In

accounting language it may mean stock of finished goods only. In a

manufacturing concern, it may include raw materials, work-in-progress

and stores etc.

The dictionary meaning of inventory is stock of goods or a list of

goods.



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Risk and cost holding inventories:

The holding of inventories involves blocking of a firms funds and

incurrence of capital and other costs. It also exposes the firm to certain

risks. The various costs and risks involved in holding inventories are as

below:

a) Capital costs:

Maintaining of inventories results in blocking of the firms

financial resources. The firms has, therefore, to average for additional

funds to meet the cost of inventories. The funds may be arranged from

own resources or from outsiders. But in both the cases, the firm incurs a

cost. In the former case, there is an opportunity cost of investment while

in the later case, the firms has to pay interest to the outsiders.

b) Storage and handling costs:

Holding of inventories also involves costs on storage as well as

handling of materials. The storage costs include the rental of the god

own, insurance charges etc.

c) Risk of price decline:

There is always a risk of reduction in the pieces of inventories by

the suppliers in holding inventories. This may be due to increased market

supplies, competition or general depression in the market.

d) Risk of obsolescence:



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The inventories may become obsolete due to improved technology

changes in requirements, change in customers tastes etc.

e) Risk deterioration in quality:

The quality of the materials may also deteriorate while the

inventories are kept in stores.

Objectives of inventory management:

The following are the objectives of inventory management:

1) To avoid both over-stocking and under-stocking of inventory.

2) To ensure continuous supply of materials spares and finished goods

so that production should not suffer at any time and the customer

demand should also be met.

3) To maintain investments in inventories at the optimum level of as

required by the operational and sales activities.

4) To design proper organization for inventory management. A clear-

cut accountability should be actually lying in the stores.

5) To facilitate furnishing of data for short term planning and controlof inventory.



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CHAPTER-2

DESIGN OF THE STUDY

Title of the study:

A study of working capital management of SLN POLYMERS

LTD.

Introduction:

Business finance is defined as the process of rising, providing and

managing of all the money to be used in connection with business

activities.

Working capital refers to the difference between the inflows and

outflows of funds. Types of working capital are:

a) Permanent working capital.

b) Temporary working capital.

c) Gross working capital.

d) Net working capital.

e) Negative working capital.

Effective and efficient cash management calls for cash planning,

evaluation of benefits and costs of policies, procedures and practices and

synchronization of cash inflows and outflows.



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The objectives of cash management are:

1) To make cash payment.

2) To maintain minimum cash reserve.Accounts receivable is a permanent investment and is an ever

rolling account. Accounts receivable management is a decision making

process, which takes into account the creation of debtors, debtors

turnover and minimizing the cost of borrowing of working capital due to

lacking of forms in accounts receivable.

Factors influencing inventory management:

1) Nature of business activity.

2) Inventory turnover.

3) Special circumstances.

4) Nature of arrangements with suppliers of goods.

5) Scope of business activity.

6) Quantum of anticipated production.

7) Business cycles.

8) Management policy.

9) Period of production cycle.

Objectives of the study:

1) To Study the Growth of the Business of SLN POLYMERS

(trends).

2) To know the formalities to became a finance manager of operating

cycle.



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3) To study the performance of working capital management practices

of SLN POLYMERS (Ratio Analysis).

4) To offer Summary of Findings and Suggestions.

Scope of the study:

A research design is overall operations pattern of framework of the

project that stipulates what information is to be collected by objective and

economical procedures. Survey method was adopted for this study. Field

work was carried out to collect the necessary data. Distributors and

customers were asked questions according to a prepared questionnaire.

Data Collection:

Primary data was collected manually.

Secondary data was collected from annual reports, magazines,

internet etc.

Data analysis:

Simple statistical technique like percentage, average, bar charts andpie charts are used.

Sampling technique:

It is an in-depth analysis of a single case. Hence sampling

technique was not adopted.



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Methodology of research:

Case study method has been adopted for the purpose of doing

research.

Operational definitions of the concept:

Current assets:

It includes cash and those assets, which can be covered into cash

within a year, such as marketable securities, debtors and stock. Prepaidexpenses are also included in current assets.

Current liabilities:

All the obligations maturing within a year are included in the

current liabilities. It includes creditors bills. Bill payable, accrued

expenses, bank overdraft, income tax liability and long term debt are

maturing in the current year.

Current ratio:

It is a measure of the firms short term solvency. It indicates the

availability of current assets in rupees for every one rupee of current

liability. A ratio of Greater than one means that the firm has morecurrent assets than current claims against of the firm. It is also known as

Working capital ratio.

The current ratio is calculated by the following formula:

Current assets

Current ratio = -----------------------

Current liability



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Liquid assets:

An asset is liquid, if it can be covered into cash immediately or

reasonably soon without a loss of value. Liquid assets are cash, debtors,

bill receivable and marketing securities or temporary investments.

Liquid liabilities:

Liquid liabilities mean liabilities payable within a short period. The

formula for calculating liquid liabilities.

Current ratio

Liabilities = -------------------- x Current assets

Quick ratio

Liquid ratio:

It shows the ability of a business to meet its immediate financial

commitments. It is a more severe test of liquidity of a company. It is also

known as Acid test ratio or quick ratio.

The formula for calculating liquid ratio is:

Liquid assets

Liquid ratio = -----------------------

Liquid liability

Working capital turnover ratio:

This ratio indicates whether or not the working capital has been

effectively utilized in making sales. This ratio is calculated as follows:

Net sales

Working capital turnover ratio = ----------------------------Working capital



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Turnover ratio:

Turnover ratios are employed to evaluate the efficiency with whichthe firm manages and utilizes its assets. They indicate speeds with which

the assets are being turnover into sales. They involve a relationship

between the assets and various assets.

Review of the previous literature:

As the mark of the literature survey several visits were paid todifferent libraries in the city and the previous project reports were

reviewed and it was noticed that no other research work on the same topic

carried out. Hence this study is undertaken.

Limitation:

The study has certain limitations under which it was carried out. As

these were unavoidable so it was decided to carry out the study in spite of

all these limitations. These limitations are as follows:

1) Due to lack of time detailed research work could not taken.

2) Only few parameters were used for the purpose of evaluating the

financial statements.

3) The analysis of the data has been made only by taking the

published information.

Chapter scheme:

Chapter no. Contents

1) It deals with introduction.



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2) It consists the design of the study.

3) It deals with the profile of the company (SLN

POLYMERS).

4) It consists of analysis and interpretation.

5) It consists of summary of finding.

CHAPTER-3

THE COMPANY PROFILE

S.L.N. POLYMERS LTD. BANGALORE, is a private limited company

incorporated in the year 2000 with a view to provide various

administrative and facility management services to different corporate

clients this company was promoted by a professional Sri. V.

NARASHIMA MURTHY Managing Director of the company, who had a

vast experience in various manufacturing companies in the personnel,

Human resource and administrative functions. He saw for a demand and

need for services providers, during the decade 1900-2000, and later there

was a sprat of activity in Information Technology and other

Manufacturing industries, which were looking for service providers to

take up the noncore support services like housekeeping, canteen

Management, Maintain functions transport of Employees and such other

areas. This was from the angle of cost reduction efficiency of operatins,

professional expertise the mentioned services and with a view to avoid

unionism and expert skills development among the support staff.

The company strives to work for the quality of the products. The

company creates the granules which is very important elements of the



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plastic products. These products are very good and qualitative, they are

eco-friendly.

Our Business Philosophy

Quality is important to a manufacturer. We emphasize

quality throughout each step of our manufacturing process. We also strive

to be as efficient as possible so we can offer a competitive price to our

customers. Because the manufacturing of our instruments is overseen by

the scientists who designed and developed them, quality is assured.

Technical expertise carries over to the post delivery phase when

customers can tap he extensive experience and knowledge of our

principal.

Companys Suppliers

The company gets the raw materials in the form of plastics

which is of course scrap. The scrap is recycled and molded in the form of

Granules of different colors as and how it is needed by the different

customers.

Its Suppliers are:

LML GLASS FIBER LIMITED,

DENSO KIRLOSKAR LIMITED, BANGALORE

CANBANK FIBRES BANGALORE.



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Employee Structure:

Initially the number of employees was just 40. These employess

were well trained and well skilled who supported our mission and helped

us to develop the products in accordance with customers. Subsequently,

the firm expanded by providing services to various other government and

non-government institutions. The company grew from employees

strength of 40 in 1990 to around 80 employees in 2005.

Companys Turnover:

Initially the companys turnover was just 50 kgs of plastic

granules. With the expansions of the company the production capacity

has increase to 80 Kgs in 2005. Todays it is proud to tell that the

companys production has increased to 1.5 tons per day. Now the

company is aiming at producing around 2 tons per day.

Organogram:

MANAGING DIRECTOR

EXECUTIVE DIRECTOR

MANAGER-FINANCE



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The companys management is vested with the following person. The

following individuals work for the management and are responsible for

the improvement and success of the company

MANAGING DIRECTOR NARASIMHA MURTHY

EXECUTIVE DIRECTOR VENKATESH. V

MANGER- FINANCE MURTHY.V

MANAGER-OPERATION SURESH AHSRU

EXECUTIVE-ADMN&OPTN SUDAKAR. RAO

FIELD OFFICERS MANI AND BHASKAR

MISSION

Is to embrace a new paradigm of technological advancement that

enable us:

To become a Global player offering our products and services

so clearly outstanding in innovation, quality and value that we

are consistently the suppliers of choice.

To identify potential customers and their requirements.

To assess customer values.

Lal Bahadhur Shastri Government First Grade College

MANAGER-FINANCE

MANAGER-FINANCE MANAGER-FINANCE

32


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To offer a wide range of products and services to our customers.

Vision 2020

To increase the production capacity from the present 1 tons

per day to 3 tons per day.

To increase the employability of the employees by providing

them further incentives and good remuneration. Also to

provide them perquisites which are in-comparably better than

the other industry

To install new and sophisticated machineries which

promises good qualitative goods.

To install new and sophisticated machineries which help to

produce the next process from plastic granules to plastic

products

To export our products to outside Karnataka

To expand the operations of the company from Peenya

Industrial Estate to other parts of Bangalore as well as in other

part of Karnataka

To develop the products in an eco-friendly way

To get the ISO certification.



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CHAPTER-4

ANALYSIS AND INTERPRETATION

MASTER TABLE OF SLN POLYMERS

Growth and Performance of SLN POLYMERS:

Table No.1

Table showing the Turnover for the year 2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Turnover350936 411128 722045 1859832

Percentage100% 117% 205% 529%

Incremental value1 17 88 324



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Graph No.1

Turnover

0%

100%

200%

300%

400%

500%

600%

2008 2009 2010 2011

Percentage

Analysis: From the above table and graph it is observed that there is a

substantial increase in the turnover year after year.

Interpretation: From the above table and graph further assume that the

market share of SLN polymers ltd. may be growing considerably.

Table No.2

Table showing the Consumption of Stores and Spares for the year

2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Consumption of stores

and spares182019 217557 146430 122392

Percentage 100% 119% 80% 67%

Incremental value 1 19 39 13

Graph no.2

Consumtion of stores and spares



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0%

20%

40%

60%

80%

100%

120%

2008 2009 2010 2011

Percentage

Analysis:

From the above table it is observed that in the year 2008 growth is

100% and during the year 2009, 2010 and 2011 is 87%, 63%, and 68%

respectively. There is a slight decrease and increase in the growth.

Interpretation:

From the graph it is inferred that the consumption of stores and

spares is fluctuating in all years.

Table No.3

Table showing Trading Expenses for the year 2010-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Trading expenses 90335 78101 114990 97672

Percentage 100% 85% 127% 108%

Incremental value 1 15 -42 19

Graph no.3

Trading expenses



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0

50

100

150

2008 2009 2010 2011

Year

Net Profit

Percentage


0%

20%40%

60%

80%

100%

120%

140%

2008 2009 2010 2011

Percentage

Analysis:

From the above table and graph it can be observed that there is

considerable improvement in the incremental values of the proportions of

trading expenses components.

Interpretation:

It is satisfactory however a care should be taken in order to reduce

downward fluctuations.

Table No.4

Table showing the basis of Net Profit for the year 2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Net profit 139049 57034 149924 161948

Percentage 100% 41% 107% 116%

Incremental value 1 -59 66 9

Graph no.4



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Reserves and Surplus

80

85

90

95

100

105

2008 2009 2010 2011

Year

Percentage


Analysis:

From the above table and graph it is observed that there was a

decline during the year 2009, however the same has been recovered the

profit was multiplied in the years later.

Interpretation:

From the above table and graph it is observed that the net profit is

substantially growing.

Table No.5

Table showing the sift of Reserves and Surplus from the year

2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Reserves & surplus 1065454 943201 1011280 1097202Percentage 100% 88% 94% 103%


Graph no.5



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Current liabilities

100, 21%

89, 19%

93, 20%

186, 40%

2008 2009 2010 2011


Analysis:


100% and during the year 2009, 2010 & 2011 is 88, 94, and 103


Interpretation:

From the graph it is inferred that the reserves and surplus is

fluctuating in all years

Table No.6

Table showing the small detachment of current liabilities for the year

2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Current liabilities 1303623 1162484 1215920 2428251

Trends 100% 89% 93% 186%

Incremental value 1 11 -4 -93

Graph no.6



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0

20

40

60

80

100

2004 2005 2006 2007

Years

Inventories

Percentage


Analysis:

From the above table and graph it is observed that there is a

substantial fluctuations in the current liabilities.

Interpretation:

The constitution of the current liabilities of the company under

study seems to be varying without any control mechanisms.

Table No.7

Table showing the facts of companys inventories for the year

2008-2011

(Rupees in lakhs)

Particulars2008 2009 2010 2011

Inventories 1000217 873766 639872 689861

Percentage 100% 87% 63% 68%

Incremental value 1 -13 -24 5

Graph no.7



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0

20

40

60

80

100

120

2008 2009 2010 2011

Years

Sundry Debtors

Percentage


Analysis:

From the above table and graph it is observed that there is a

substantial fluctuation in the inventory levels.

Interpretation:

Though there is a fluctuation, the level of inventory might be

satisfactory, if there is a proper match between demand and supply.

Table no.8

Table showing the deceive of sundry debtors for the year 2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Sundry debtors 297818 154189 302072 314190

Percentage 100% 51% 101% 105%


Graph no.8



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0

50

100

150

200

250

2008 2009 2010 2011

Year

Cash and bank balance


Analysis:


100% and during the year 2009, 2010 and 2011 is 51%, 101% & 105%


Interpretation:

If 105% more growth means care should be taken in the recovery

of debtors and the aging of debtors.

Table no.9

Table showing the companys Cash and Bank Balance for the year

2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Cash & Bank 327853 624797 795692 258133

Percentage 100% 190% 243% 78%

Incremental value 1 90 53 -165

Graph no.9



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Analysis:


100% and during the year 2009, 2010 and 2011 is 190%, 243%, & 78%

respectively. There is a slight increasing and decreasing in the growth.

Interpretation:

From the graph it is inferred that the Cash and Bank is fluctuating

in all years.

Table No.10

Table showing the details of Fixed Assets for the year 2008-2011

(Rupees in lakhs)

Particulars 2008 2009 2010 2011

Fixed Assets 698840 704214 743173 859181

Percentage 100% 100% 106% 122%

Incremental value 1 0 -6 -16

Graph No.10


0

20

40

60

80

100

120

140

2008 2009 2010 2011

Years

Fixed assets


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Analysis:


100% and during the year 2009, 2010 and 2011 is 100%, 106% and

122% respectively. There is a slight decrease and increase in the growth.

Interpretation:

From the graph it is inferred that the fixed assets is increasing

years.

ANALYSIS OF WORKING CAPITAL MANAGEMENT

A financial statement represents the snap shot of the organizational

activities at the end of the particular period. At the time they portray the

efficiency of management to what extent it has succeeded, what are their

failures and to what it has justified its course of action during the period

under review.

Financial statement analysis means bringing out the meaning of

such statements with the help of analysis.

Ratio analysis:

Ratio expresses the numerical relationship between two numbers.

Ratio establishes relationship between related items.



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Financial ratio analysis is a study of ratios between various items in

financial statements. Financial ratios have been classified in several ways.

In this contest, we divide ratio into four board categories as follows.

1. Liquidity ratio.

2. Leverage ratio.

3. Turnover ratio.

4. Profitability ratio.

1. Liquidity ratio:

The word liquidity means conversion of assets into cash during

the normal course of business and have a regular uninterrupted flow of

cash to meet outside current liabilities or obligations and when due and

payable. Liquidity ratios refers to the ability of a firm to meet its

obligation in shortest, usually one year.

a) Current ratio

b) Liquidity ratio

c) Absolute liquid ratio

a) Current ratio:

Current ratio is very popularly called as liquidity ratio, 2:1 ratio,

solvency ratio or working capital ratio. Current ratio is the indicator ofthe relationship between current assets and total of current liabilities. This

ratio is applied to test solvency as well as determining short-term

financial strength of the business.

It is defined as: Current assets

Current ratio = ------------------------------

Current liabilities



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b) Liquid ratio:

Liquid ratio is also known as solvency ratio, liquid assets ratio, and

acid test ratio, near money ratio. Liquid ratio will be indicative of theability of organization to meet its obligation. Liquid ratio is a more

stringent test of firms statement ability to meet its current liabilities.

Liquid ratio is considered as a more refined indicator of the current liquid

position or status. Here inventory and prepaid expenses are excluded

from the current assets in order to arrive at the amount of liquid assets.

Liquid ratio is defined as:

Current assets (inventory)

= -------------------------------------------------

Current liabilities

c) Absolute ratio:

Absolute ratio is defined as:

Absolute liquid assets

= ----------------------------------

Current liabilities

The ratio should be 1:2. This helps to measure the firms statement

ability to pay its current liabilities.

2) Leverage ratio:

Leverage ratios are calculated to know the long-term financial

position of the firm. This ratio will indicate the proportion of debt and

equity in the capital structure of the organization. These are called

capital structure ratio and solvency ratio. The various leverage ratio

are

a) Debt equity ratio



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b) Debt assets ratio

c) Debt assets coverage ratio

d) Fixed assets to net worth

3) Turnover ratio:

Turnover ratio indicates the effectiveness with which the assets are

utilized in the firm. These are also called activity ratio.

a) Inventory turnover ratio:

Inventory turnover ratio is also called as stock turnover ratio,

measures how fast the inventory is moving through the firm and

generating sales. It is defined as:

Cost of goods sold or sales

= ----------------------------------------

Average inventory

b) Receivables turnover ratio:

Receivables turnover ratio is also called as debtor turnover ratio or

accounts turnover ratio. The ratio is an indicator of quickness in

realization of sundry debtors. If it is found that the credit period allowed

to customer is very long, management will have to devise ways and

means to improve the collection. The ratio indicates the speed at whichthe debtors are converted into cash. It is defined as:

Credit sales

= ------------------------

Average debtors



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A high receivable turnover ratio indicates the efficient management of

account receivables turnover ratio and low receivables turnover ratio

indicates poor collection from debtors.

c) Average collection period:

Average collection period represents the number of days worth of

credit sales that is locked in debtors. It is defined as:

Days in a year

= -----------------------

Debtors turnover ratio

d) Working capital turnover ratio:

Working capital turnover ratio measures the efficiency with the

working capital is being used by the firm. It indicates the number of times

the working capital is turned over in the course of a year. It is defined as:

SalesW.C.T.R = ------------------------------

Networking capital

A higher ratio indicates efficient utilization of working capital and a low

ratio indicates otherwise.

e) Current assets turnover ratio:

Current assets turnover ratio is to ascertain the efficiency with the

current assets have been turned over during assets particular period of

assets year and so it shows the relationship between the current assets to

sales. It is defined as:

Sales

=-----------------------

Current assets



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4) Profitability ratio:

Profitability reflects the final result of business operation. These

ratios show the relationship between profit and sales. The various

profitability ratios are:

a) Gross profit ratio:

Gross profit ratio is defined as the difference between net sales and

the cost of goods sold. Gross profit ratio is defined as:

Gross profit=---------------------- x 100

Net sales

b) Net profit ratio:

Net profit ratio shows the earnings left for shareholders as assets

percentage of net sales. It measures overall efficiency of production,

administration, selling, financing, profit and tax management. It is also

known as final net ratio profit to net sales ratio. It is defined as:

Net profit

=----------------- x 100

Net sales

c) Return on equity:

Return on equity capital is assets measure of great interest to equity

shareholders, the return on equity is defined as:

Net profit

= -------------------

Equity capital



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0

0.5

1

1.5

2

2004 2008 2009 2010

Years

Current ratio


d) Capital turnover ratio:

Capital turnover ratio shows the relationship between the cost of

goods sold and capital employed. This ratio is calculated to measure the

efficiency or effectiveness with which assets firm utilizes its resources of

the capital employed. It is defined as:

Sales

= ------------------------

Capital employed

As capital is invested in assets business to make sales and profits,

this ratio is assets good indicator of overall profitability of assets concern.

RATIO ANALYSIS

Table 1

Current assets

Current ratio = ----------------------

Current liabilities

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Current assets 2367.84 2167.20 2319.58 3499.34

Current liabilities 1303.62 1162.48 1215.91 2428.24

Current ratio 1.81 1.86 1.90 1.44

Graph no.1



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Analysis: This ratio is applied to test solvency as well as determining

short-term financial strength of the business. Current ratio for the SLN

POLYMERS for the last four years is 1.81, 1.86, 1.90 and 1.44

respectively.

Interpretation: The standard for current ratio is 2:1. Though current ratio

in SLN POLYMERS has increasing trend for three years, company hasthe ratio almost near to the standard not more than the standard so the

firms ability to honor the short-term obligations is not so efficient.

Owing to increase in current liability the last year ratio has declined.

Table 2

Current assets (inventory)

Quick ratio = --------------------------------------------

Current liabilities

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Liquid assets 1367.63 1293.44 1679.71 2809.48


Liquid ratio 1.04 1.11 1.38 1.15

Graph no.2



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0

0.2

0.4

0.6

0.8

1

1.2

1.4

2008 2009 2010 2011

3-D Column 1

3-D Column 2

Liquid ratio

Analysis:

Higher liquid ratio indicates the higher ability of the company to

meet its short-term obligations. Liquid ratio of the SLN POLYMERS is

higher, though it can meet its short term obligations.

Interpretation:

SLN POLYMERS has liquid ratio which is more than the standard

1:1. The liquid ratio of SLN POLYMERS is healthy.

Table 3

Net sales

Current assets turnover ratio = -------------------------

Current assets

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Net sales 3509.36 4111.28 7220.45 18598.32

Current assets 2367.84 2167.20 2319.58 3499.34



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Current assets

turnover ratio1.48 1.89 3.11 5.31

Graph no.3

Current assets turnover ratio

1.48

1.89

3.11

5.31

2008 2009 2010 2011

Analysis:

Current turnover ratio is increasing for the last four years. There is a

substantial increase in the turnover year after year.

Interpretation:

Ratios are increasing over a period. The increasing ratio indicates

that the firm is effectively using its current assets. Further assume that the

market share of SLN POLYMERS may be growing considerably.

Table 4

Net sales

Inventory / stock turnover ratio = -------------------------

Inventory

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Net sales 3509.36 4111.28 7220.45 18598.32

Inventory 1000.21 873.76 639.87 689.86



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0

5

10

15

20

25

30

2008 2009 2010 2011

Years

Inventory turnover ratio


Inventory

turnover ratio3.50 4.70 11.28 26.95

Graph no.4

Analysis:- A high inventory turnover ratio is indicative of good inventory

management. In SLN POLYMERS ratio of SLN POLYMERS for the last

four years are 3.5, 4.7, 11.28 and 26.95 respectively.

Interpretation: - Inventory turnover ratio is increasing. SLN

POLYMERS is very much successful in managing its inventory.

Inventory turnover ratio is increasing for the last four years.

Table 5

Cost of goods sold / sales

Working capital turnover ratio =---------------------------------------

Net working capital

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011



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0

5

10

15

20

2008 2009 2010 2011

Years

Working capital turnover ratio


Current assets 2367.84 2167.20 2319.58 3499.34


Net sales 3509.36 4111.28 7220.45 18598.32

Net Working

capital= CA CL1064.22 1004.72 1103.67 1071.10

Working capital

turnover ratio3.29 4.09 6.54 17.36

Graph no.5

Analysis: A high working capital turnover ratio is preferred. In SLN

POLYMERS working capital turnover ratio is high. The ratios of

company are 3.29, 4.09, 6.54 and 17.36 respectively.

Interpretation: working capital turnover ratio of SLN POLYMERS is

increasing over a period of study. This indicates the company sales are

growing year after year.

Table 6

Net sales

Fixed asset turnover ratio = -----------------------------

Net fixed assets

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Net sales 3509.36 4111.28 7220.45 18598.32

Net fixed assets 698.84 7042.21 743.17 859.18



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Fixed assets

turnover ratio5.02 0.58 9.71 21.64

Fixed assets turnover ratio

5.02

0.58

9.7121.64

2008 2009 2010 2011

z

Analysis:

A high fixed assets turnover ratio indicates efficient utilization of

fixed assets in generating sales. In SLN POLYMERS fixed assets

turnover ratio of last four years are 5.02, 0.58, 9.71 and 21.64

Interpretation:

Though its fixed assets turnover ratio is fluctuating the company is

utilizing its fixed assets efficiently.

Table 7

Sales

Capital employed turnover ratio = ----------------------------

Capital employed

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010

Net sales 3125.64 3509.36 4111.28

Capital employed 1547.10 1697.99 1636.06

Capital employedturnover ratio

2.02 2.06 2.5



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0

10

20

30

40

50

60

2008 2009 2010 2011

Years

Capital employed turnover ratio


Analysis: Higher the capital ratio indicates effective utilization of capital

for the purpose of making profit. The ratio for the past four years is

increasing i.e. 11.45, 13.15, 22.87 and 57.93 respectively.

Interpretation: Capital in SLN POLYMERS is increasing over the

period of study. This shows that the company is effectively utilizing its

capital in making profit.

Table 8



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0

1

2

3

4

5

2008 2009 2010 2011

Years

Total assets turnover ratio


Net sales

Total assets turnover ratio = -----------------------

Total assets

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Net sales 3509.36 4111.28 7220.45 18598.32

Total assets =

FA + CA

3066.68 2871.41 3062.75 4358.52

Total assets

turnover ratio1.14 1.43 2.35 4.26

Analysis:

Total assets turnover ratio of SLN POLYMERS for the past four

years is substantially increasing. Higher total assets turnover ratio

indicates efficient utilization of fixed assets and current assets for the

purpose of sales.

Interpretation: Though total assets turnover ratio in SLN POLYMERS

has increasing trend, the assets of the firm is utilizing efficiently



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Table 9

Sales current period sales last periodSales growth rate ratio = -------------------------------------------------------

Sales last period

(Amount in lakhs)

Year 2007-2008 2008-2009 2009-2010 2010-2011

Sales of current period 3509.36 4111.28 7220.45 18598.32

Sales of last period 3125.64 3509.36 4111.28 7220.45

Sales current period

-sales last period320.36 601.92 3109.17 11377.87

Sales growth ratio 0.11 0.17 0.75 1.57

Sales Growth ratio

0.11 0.17

0.751.57

2008 2009 2010 2011

Analysis: The sales growth ratio of SLN POLYMER is 0.10, 0.17, 0.75

and 1.57 respectively. It indicates how the sale of the firm is increasing

over the years.

Interpretation: From the above table and graph assume that the market

share of SLN POLYMERS may be growing considerably.



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Table No.10

Schedule of Changes in Working Capital during the year 2009compared to 2008(Rupees in Lacs)

Particulars 2008 2009

Changes in working

capital

Increase Decrease

Current assets

1.Inventories 1000.21 873.76 126.45

2.Sundry debtors 297.81 154.18 143.63

3.Cash and bank balance 327.85 624.79 296.944.Loans and advances 741.97 514.47 227.50

T.C.A 2367.84 2167.20

Current liabilities

1.Liabilities 1288.51 1153.11 135.40

2.Provisions 15.11 9.37 5.74

T.C.L 1303.62 1162.48

W.C = T.C.A T.C.L 1064.22 1004.72 59.50

Net decrease in working

capital59.50

Total 1064.22 1064.22 497.58 497.58

Table No.11

Schedule of Changes in Working Capital during the year 2010

compared to 2009(Rupees in Lacs)


Changes in working

capital

Increase Decrease

Current assets

a) Inventories 873.76 639.87 233.89

b) Sundry debtors 154.18 302.07 147.89

c) Cash & Bank balance 624.79 795.69 170.90



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d) Loans & advances 514.47 581.95 67.48

T.C.A 2167.20 2319.58

Current Liabilities

a) Liabilities 1153.11 1154.66 1.55

b) Provisions 9.37 61.25 51.88T.C.L 1162.48 1215.91

W.C = T.C.A T.C.L 1004.72 1103.67

Net increase in working

capital98.95

98.95

Total 1103.67 1103.67 386.27 386.27

Table No.12

Schedule of Changes in Working Capital during the year

2011compared to 2010 (Rupees in Lacs)


Changes in working

capitalIncrease Decrease

Current assets

a) Inventories 639.87 689.86 49.99

b) Sundry debtors 302.07 314.19 12.12

c) Cash & Bank balance 795.69 258.13 537.56

d) Loans & advances 581.95 2237.16 1655.21

T.C.A 2319.58 3499.34

Current Liabilities

a) Liabilities 1154.66 2402.27 1247.61b) Provisions 61.25 25.97 35.28

T.C.L 1215.91 2428.24

W.C = T.C.A T.C.L 1103.67 1071.10 32.57

Net decrease in working

capital32.57

Total 1103.67 1103.67 1785.17 1785.17



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Analysis and interpretation of Table no.10,11 &12

2005(working capital of current year)

Working Capital = ----------------------------------------------------

2004(working capital of previous year)

1004.72

= -------------- X 100

1064.22

= 94.41

2006(working capital of current year)Working Capital= ----------------------------------------------------


1103.67= ---------------- x 100

1004.72

= 109.85

2007(working capital of current year)

Working Capital = ----------------------------------------------------


1071.10= ---------------- x 100

1103.67

= 97.05

An analysis of table 10,11 & 12 and a comparisons of above ratios

reveals that there is 5.69% decrease in working capital during the year

2005 when compared to its preceding year(2004).



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However there was a growth of 9.85% during 2006 over its earlier

years and there was considerable decline 2.95% in the working capital.

This trend can be attributed to the behavior of inventories which were

maintained in all these years.

Further current ratios and liquid ratios which are exhibited in table

10, 11 & 12shows that the ratios are healthy.

CHAPTER-5

SUMMARY OF FINDINGS

Surplus money is being invested efficiently to make profit

over a period of time.

Company sales are growing for the last four years.

The fixed assets of SLN P have increasing trend over the

study period of time i.e. in 2004, 2005, 2006 and 2007.

The company is making continuous profit over a study

period of study.



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Cash and bank balance has increasing trend in the year

2004, 2005 and 2006.

Sundry debtor has increasing trend in the year 2005, 2006

and 2007.

The inventory of the company is stable and are valued at cost

by adopting First-in-First Out method.

CHAPTER-6

SUGGESTION & CONCLUSION

The company can make good plans to utilize the funds in

better manner.

The expense of the company can be reduced by introducing

high level technology.



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The company can compete with maintaining all the ratio and

financial statement so that the company performance

will be good.

The company should concentrate to maintain liquidity.

CONCLUSIONS

The overall performance of working capital management of SLN

POLYMERS is efficient. But there are some areas where company has to

forces to increase its efficiency. Company could achieve efficient

working capital management with the equal contribution of all the related

departments. Working capital management efficiency of SLN

POLYMERS is higher. Since, there is increasing orders for the units of

products and services, the need for efficient working capital management

in future also will be high.

ANNEXURE-1

Statement of share capital as on 31-03-2011

Sl

No

.

Particulars Issued capital Subscribed & paid up

capital

Un-subscribed capital

Equity shares Equity shares Equity shares

No. Value No. Value No. Value

1 Govt. of Karnataka

1,57,500 1,57,50,000 1,35,000 1,35,00,000 22,500 22,50,000

2 Govt. of

India (NSC)

1,35,000 1,35,00,000 62,230 62,23,000 72,770 72,77,000

3 Seed 1,57,000 1,57,50,000 1,30,670 12,380,575 26,830 26,83,000



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Growers

Total 4,50,000 4,50,00,000 3,27,900 3,21,03,575 1,22,100 1,22,10,000

12,500 Preference Shares of GOK & 23,012 Preference shares ofGOI has been converted into equity shares as approved in the 164 th

& 178th board meeting held on 30-07-1997 & 19-02-1999

respectively.

Growers paid-up-capital Government paid-up-capital

No Value No ValueFully paid-

up-capital

1,19,630 1,19,63,000.00 Equity

share

capital

62,23,000 1,35,00,000

Partly paid-

up shares

11,040 4,17,574.68

Calls in-

arrears

- 6,86,425.32

Total 1,30,670 1,30,67,000.00 62,23,000 1,35,00,000

Authorized capital - Rs.500.00 lakhs.

Issued capital - Rs.450.00 lakhs.

Subscribed & paid up capital - Rs.321.04 lakhs.

Un-subscribed capital - Rs.122.10 lakhs

Calls in arrears + 6.86 lakhs

ANNEXURE-2

District wise share holders as on 31-03-2011

Sl NO. Districts No. of share

holders

No of shares

1 BANGALORE ( U&R) 123 1570

2 TUMKUR 501 5165

3 KOLAR 1081 18315

4 MYSORE 412 5445

5 C.R.NAGAR 77 9856 MANDYA 81 945



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7 HASSAN 39 535

8 SHIMOGA 59 685

9 DAVANAGERE 1150 15760

10 CHITRADURGA 380 4075

11 BELLARY 786 908012 RAICHUR 317 3815

13 KOPPAL 758 7860

14 U.KANNADA 02 20

15 CHIKKAMANGALORE 15 305

16 DHARWAR 412 4605

17 HAVERI 1075 13645

18 GADAG 1305 15050

19 BELGUM 182 1840

20 BIJAPUR 69 85521 BAGALKOTE 460 5120

22 GULBARGA 222 3120

23 BIDAR 79 835

Total :- 9585 119630

ANNEXURE-3

Location of seeds processing units, its capacity vs. utilization

(2010-2011)

Sl

No.

Location Installed

capacity in

Qtls. Per

Annum

Actual

production

% of

capacity

utilization

1 C.B.PUR 7500 3633 48.44

2 KOLAR 7500 5264 70.183 TUMKUR 7500 11191 149.21



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4 MYSORE 20000 13626 68.13

5 K.R.NAGAR 15000 15741 104.94

6 MANDYA 7500 5550 74.00

7 C.R.PATNA 7500 6072 80.96

8 DAVANGERE 20000 21949 109.759 SHIMOGA 15000 23812 158.75

10 DHARWAR 7500 10231 136.41

11 GADAG 15000 7510 50.07

12 HAVERI 15000 4473 29.82

13 BELLARY 20000 19523 97.62

14 SINDHANUR 7500 6456 86.08

15 RAICHUR 7500 6094 81.25

16 KOPPAL 7500 10321 137.61

17 GULBARGA 7500 3390 45.2018 BHALKI 7500 4293 57.24

19 B.R.GUDI 15000 2831 18.87

20 BAGALKOTE 7500 3449 45.99

Total 225000 185409 82.40

STORAGE CAPACITY:

The corporation has 35 operation centers, 20 seed processing

units and 37 sale points. The cumulative seed storage capacity of the

corporation is 12715 M.Ts. out of which 17 godowns are owned by SLN

POLYMERS, with a storage capacity of 9010 M.Ts. and balance storage

capacity is hired from different sources.

ANNEXURE-4

Sales Turnover & Net Profit for the year from 1983 to2012

Year Quantity

procured

Sales

quantity

Sales

turnover

Profit Remarks

1983-84 27182 24725 167.36 17.84

1984-85 44276 38401 185.60 12.52

1985-86 58526 58470 268.45 9.68

1986-87 61039 45623 290.55 9.72

1987-88 84759 90895 600.73 0.43

1988-89 73442 73520 625.99 5.23



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1989-90 106723 73283 805.60 7012

1990-91 58202 86794 842.85 8.45

1991-92 90023 87889 886.09 12.47

1992-93 62268 61870 860.27 16.86

1993-94 63961 71067 1137.68 5.071994-95 70399 68998 1268.95 44081

1995-96 67819 80327 1336.33 35.41

1996-97 91704 79935 1670.63 68.71

1997-98 114642 94296 1545.99 39.07

1998-99 128408 129970 2036.17 11.72

1999-00 132341 126803 2571.37 85.96

2000-01 135411 142941 2767.82 61.40

2001-02 162363 159100 3073.16 214.72

2002-03 146683 148021 3252.62 39.782003-04 149462 141499 3265.26 42.93

2004-05 172269 175615 3392.13 49.52

2005-06 173005 141734 2972.31 32.89

2006-07 173635 164375 3125.64 108.01

2007-08 160547 180676 3729.35 139.05

2008-09 218226 215400 4111.28 57.04

2009-10 234499 237971 7220.46 149.92

2010-11 472825 485971 18598.32 161.95

2011-12(budgeted)

225774 232937 5411.08 144.23(p)

Note:1.SLN POLYMERS under went financial restructuring during the

year 1997-98.

2.2002-03 sales quantity excluded disposal of 32,524 qtls unfit seed.

3. Operations of SLN POLYMERS during the year 2002-03 have

reported loss due to continuous drought condition prevailed

in the state.

ANNEXURE-5

Crop / Varieties of seeds of different crops produced and marketed

by S.L.N.POLYMERS as on 31-3-2007

Sl

No

CROP VARIETIES

CEREALS1 HY.JOWAR CSH-14, CSH-16

2 IMP.JOWAR M-35-2, Phuleyashoda3 HY.MAIZE RMH-32, RMH-222, RMH-333, RMH-555,



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RMH-999

4 IMP.MAIZE South African Tall

5 IMP.BAJRA ICTP-8203

6 RAGI Indaf-7, Indaf-9, MR-2, PR-202, GPU-28,

GPU-26, GPU-45, GPU-48

7 HY.PADDY KRH-28 PADDY Jaya, Tellahamsa, Rasi, BPT-5204, IR-64,

Intan, IET-7191, IET-13901 Jyothi, Bahamas

IR-30864, CTH-1, JGL-1798, Thanu, MTU-

1010, Uma, MO-4,

9 WHEAT DWR-162, DWR-195, Lok-1

PULSES10 COWPEA C-152

11 GRRENGRAM China Moong (C.M),

12 BLACKGRAM TAU-1, T-9

13 REDGRAM TTB-7, ICPL-8863, WRP-1, BSMR-736,BRG-1, ICPL-87119, JS-1

14 BENGALGRAM A-1, Vijaya, JG-11

OILSEEDS15 GROUNDNUT TMV-2, GPBD-4, JL-24

16 HY.SUNFLOWER KBSH-1, KBSH-41,KBSH-44

17 SUNFLOWER Morden,

18 SOYBEAN JS-335

19 SAFFLOWER A-2

FIBRE CROPS

20 HY.COTTON DCH-32,Varalaxmi, NHH-44, DHH-1121 GREEN MANURE Sunhemp / Diancha

VEGETABLE SEEDS22 BEANS Arka Komal

23 BHENDI Arka Anamika

24 TOMATO PKM-1

BIBLIOGRAPHY

Financial Management :Dr.P.N.Reddy, Appannaiah and

Satyaprasad, Himalaya Publishing House, edition 2003.



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Working capital management : V.K.Bhalla

Essentials of business finance : Reddy, Appannaiah &

Srivastava.

Newspaper: Kannada Praba

Booklet: Old Projects.

Internet:

1) www.google.com

2) www.SLN Polymers.com

project study of sln polymers

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