sachin final synopsis

8/6/2019 Sachin Final Synopsis

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Introduction to Working capital management:

Working capital could be defined as the portion of assets used in current

Operations. The movements of the funds from capital to income and profits and back to

Working capital are one of the most important characteristics of the business.

This cyclical operation is concerned with utilization of the funds with the hope that will

return with an additional amount called income.

If the operations of the company are to run smoothly, a proper relationship between

fixed capital and current capital has to maintain. Sufficiently liquidity is important and

must be achieved and maintained to provide that funds to pay off obligation as they

arise.

Financial management is that managerial activity which is concerned with the planningand controlling of the firms financial resources.

The term working capital refers to current assets, which may be defined as:

i) Those which are convertible into cash or equivalents with the period of

one

Year and

ii) Those which are required to meet day to day operations,

The fixed as well as current assets, both requires investment of Funds. So the

Management of working capital and fixed assets apparently seem to involve it type of

Consideration but it is no so. The management of working capital involve different

Concept and methodology than the techniques used in fixed assets management.

Financial management focuses on finance manager performing various tasks as

Budgeting, Financial Forecasting, Cash Management, Credit Administration, Investment

Analysis, Funds Management, etc. Which help in the process of decision making.

The management of fixed and current assets, however, differs in three important ways:

Firstly, in managing fixed assets, time is very important; consequently discounting and

compounding aspects of time element play an important role in capital budgeting and a

minor one in the management of current assets. Secondly, the large holdings of current

assets, especially cash, strengthen firms liquidity position but it also reduces its overall

profitability. Thirdly, the level of fixed as well as current assets depends upon the

expected sales, but it is only the current assets, which can be adjusted with sales

fluctuation in the short run.



Introduction of Videocon Industries Ltd.

Shri Nandlal Madhavlal Dhoot, the founder of the Videocon Group, completed

his education in Ahmednagar and Pune. He was a successful sugarcane and cotton

cultivator. As a next logical step to vertical integration, he boldly took upon an

entrepreneurial venture by importing machinery from Europe to set up the Gangapur

Sakhar Karkhana (Sugar Mill) in 1955. Those were the times when the village did not

even have electricity. Thus was unleashed an Industrial Revolution.

In 1984, the Dhoot family launched Videocon International Limited with an

avowed purpose of producing world class Color Television set thought technical tie- up

with Toshiba Corporation of Japan.

Videocon group companies have won prestigious approval and certificate from

India and abroad. These includes the approval from VDE testing a nd Certificate Institute

Germany, the British Standard, the CE approval for exporting to Europe and the ISO

9002 certification.

Videocon sprawling state of the art facility is spread across 18 locations in India.

The latest inclusion is the Rs.400 crore. Ultra modern and environmental friendly

manufacturing facility set up at Banglore.

The inertia of diversification was catalyzed with the inspection of Videocon

Appliance ltd. In 1988. The company manufactured advanced washing machines and

has

thus changed the lives of millions of women. The company has revolutionized the A.C.

market by creating superior quality A.C. 1992 Videocon breathed new life into the

refrigerator market by introducing Indias first No frost refrigerator. The refrigerator

plant follows the international quality to ensure defect free products with a total

production capacity of more than 1.5 million refrigerator per year.

Objective:

Working capital management is very important in modern business. The analysis of

working capital is also very useful for short-term management of funds. The following

are objective of study:

1) To make. Items wise analysis of the elements or component of working capital to

identify the items responsible for change in working capital.

2) To calculate of working capital for last Four Year.



Scope & Limitation of the Study

1. The Study is limited to Four Years performance of

the Company.

2. The data used in this study have been from published annual reports only.

As per the requirement and necessary some data are grouped and sub

Grouped.

3. For making a clear-cut opinion, Ratio technique of financial management

has been used.

Data & Methodology Of The Study:

The data of videocon appliances Ltd. For this study have been taken from secondary

sources e.g. Published annual report of the company. Editing, classification and

tabulation of the financial data, which are collected from the above-mentioned sources,

have been done as per the requirement of the study.

Factors determining working capital

1) Nature or character of Business.

2) Production cycle.

3) Production Policy.

4) Credit Policy.

5) Growth and Expansion.

6) Seasonal Variation.

7) Earning Capacity.

8) Dividend Policy.

9) Other Factors.



Sources Of Working Capital

Mainly there are two sources of working capital:

I. Permanent or Fixed working capital

II. Temporary or variables working capital

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 most important part is the efficient management of working capital in

right time. The liquidity position of t he firm is totally effected by management of

working capital. So, study of changes in the uses and sources of working capital is

necessary to evaluate the 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 though a number of devices such as:

1. Ratio analysis.

2. Budgeting.

sachin final synopsis

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