taj report amaity

8/2/2019 Taj Report Amaity

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PROJECT REPORT

On

SUBMITTED BY

NAME :

ENROLLMENT NO :

Submitted in partial fulfillment of the requirements for qualifying

MBA (FINANCE)


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UNDER SUPERVISION OF :

Submitted By:

Name :

Programme Code : MBA (FINANCE)

Enrollment No. :

Name of the Study Centre :

Study Centre Code :


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ACKNOWLEDGEMENT

With Candor and Pleasure I take opportunity to express my sincere thanks and obligation

to my esteemed guide ...It is because of his able and mature guidance

and co-operation without which it would not have been possible for me to complete my

project.

It is my pleasant duty to thank all the staff member of the computer center who never

hesitated me from time during the project.

Finally, I gratefully acknowledge the support, encouragement & patience of my family,

and as always, nothing in my life would be possible without God, Thank You!


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DECLARATION

I hereby declare that this project work titled Working Capital Management of Taj

Hotel is my original work and no part of it has been submitted for any other degree

purpose or published in any other from till date.


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S. NO. CONTENTS PAGE NO.

1. Introduction to topic.7

2. Review of Literature.......28

3. Objective of the study.42

4. Research Methodology...43

5. Data Analysis......44

6. Conclusion and Major Finding...........84

7. Recommendation and Limitation86

8. References.......88

TABLE OF CONTENTS


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CHAPTER -1

INTRODUCTION

The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known

as Taj Hotels Resorts and Palaces and is recognized as one of Asia's largest and finest

hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the

company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The

Taj, a symbol of Indian hospitality, completed its centenary year in 2003.

Taj Hotels Resorts and Palaces comprises 66 hotels in 42 locations across India with an

additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA,

Bhutan, Sri Lanka, Africa and the Middle East.

Spanning the length and breadth of the country, gracing important industrial towns and

cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each

Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations,

modern amenities and business facilities.

In the coming years, IHCL will see growth through the addition of 80 Luxury Residences

at the Taj Wellington Mews, Mumbai, as well as rooms added at Taj Lands End, Mumbai

and Taj West End, Bangalore. The Taj Lands End is a hotel built with a capacity of 500

rooms with an additional 50,000 sq. ft. approximately that is yet to be built. We will aim

to reach this capacity over the next two years, which will include adding rooms and

developing high-end offices or retail space created in the new 50, 000 sq. ft. block. Taj

West End will have approximately 175 rooms added to it over the next two years. IHCL

continues to pursue management contracts in India as well as in South and South East

Asia. Associate companies viz. Taj GVK Hotels & Resorts Limited and Oriental Hotels

Limited are also in the process of setting up properties in Chandigarh and Bangalore

respectively, which would add to the properties under the Taj group. IHCL has secured

two management contracts for a high end luxury resort and an upmarket resort in


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Kovalam, Kerala. Both the hotels are under construction and will open in the current

financial year.

IHCL operate in the luxury, premium, mid-market and value segments of the market

through the following:

Taj (luxury full-service hotels, resorts and palaces) is our flagship brand for the worlds

most discerning travelers seeking authentic experiences given that luxury is a way of life

to which they are accustomed. Spanning world-renowned landmarks, modern business

hotels, idyllic beach resorts, authentic Rajput palaces and rustic safari lodges, each Taj

hotel reinterprets the tradition of hospitality in a refreshingly modern way to create

unique experiences and lifelong memories.

Taj also encompasses a unique set of iconic properties rooted in history and tradition that

deliver truly unforgettable experiences. A collection of outstanding properties with strong

heritage as hotels or palaces which offer something more than great physical product and

exceptional service. This group is defined by the emotional and unique equity of its

iconic properties that are authentic, non- replicable with great potential to create

memories and stories.

Taj Exotica is our resort and spa brand found in the most exotic and relaxing locales of

the world. The properties are defined by the privacy and intimacy they provide. The

hotels are clearly differentiated by their product philosophy and service design. They are

centered around high end accommodation, intimacy and an environment that allows its

guest unrivalled comfort and privacy. They are defined by a sensibility of intimate design

and by their varied and eclectic culinary experiences, impeccable service and authentic

Indian Spa sanctuaries.

Taj Safaris are wildlife lodges that allow travelers to experience the unparalleled beauty

of the Indian jungle amidst luxurious surroundings. They offer Indias first and only

wildlife luxury lodge circuit. Taj Safaris provide guests with the ultimate, interpretive,


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wild life experience based on a proven sustainable ecotourism model.

Vivanta by Taj Hotels & Resorts span options for the work-hard-play-hard traveller

across metropolitan cities, other commercially important centres as well as some of the

best-loved vacation spots.

Stylish & sophisticated, Vivanta by Taj delivers premium hotel experiences with

imagination, energy & efficiency. It's the flavour of contemporary luxury, laced with cool

informality and the charming Taj hospitality. Created for the cosmopolitan global

traveller and bon vivant, Vivanta by Taj Hotels & Resorts create experiences that will

amuse, invigorate & inspire you.

Vivanta revels in a spirit that presents the normal with an unexpected twist. Experiences

which make you pause & appreciate the hidden beauty in life! It challenges your

expectations of a hotel and unfolds multiple layers of delight. Innovative cuisine

concepts, the smart use of technology & the challenge to constantly engage, energize and

relax you all add up to make Vivanta by Taj the new signature in hospitality.

The Gateway Hotel (upscale/mid-market full service hotels and resorts) is a pan-India

network of hotels and resorts that offers business and leisure travelers a hotel designed,

keeping the modern nomad in mind. At the Gateway Hotel, we believe in keeping things

simple. This is why, our hotels are divided into 7 simple zones- Stay, Hangout, Meet,

Work, Workout, Unwind and Explore.

As travel often means more hassle than harmony, more stress than satisfaction, modern

travelers are looking for smarter choices. Driven by our passion for perfection, we

welcome our customers to a refreshingly enjoyable and hassle-free experience, anytime,

everywhere. Offering the highest consistency in quality, service and style we set new

standards and take the unwanted surprises out of traveling. Our warm welcomes make

our guests feel at home, away from home and our crisp and courteous service empowers

them to get more done with greater effectiveness and control. And through our unrivalled


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network we provide service that is effortless, simple, never overwhelming, always warm.

Ginger (economy hotels) is IHCLs revolutionary concept in hospitality for the value

segment. Intelligently designed facilities, consistency and affordability are hallmarks of

this brand targeted at travelers who value simplicity and self-service.

Taj Hotels Resorts and Palaces is committed to replicate its domestic success onto

international shores with plans to build an international network of luxury hotels, which

will provide an exemplary product-service combination and in the process create a global

brand. The current international portfolio includes luxury resorts in the Indian Ocean,

business and resort destinations in the Middle East and Africa, serviced apartments in the

UK, the first hotel in Australia and three a top-end luxury hotels in the US.

Throughout the Companys expansion, its mandate has been twofold: to infuse a sense of

Indian heritage and culture within each diverse property, while also anticipating the needs

and desires of the sophisticated traveler. Over the years, the Taj has won international

acclaim for its quality hotels and its excellence in business facilities, services, cuisine and

interiors.

The Taj strengthened its presence in the Indian Ocean rim with the Exotica Brand. The

Taj Exotica was evolved as part of Taj Hotels Resorts and Palaces intent to position it as

a brand that is clearly differentiated by its product philosophy and service design. The Taj

Exotica Resort and Spa, in Maldives is centered on high-end accommodation, intimacy

and an environment that allows its guests unrivalled comfort and privacy.

Taj Hotels further expanded its global footprint by securing management contracts at

Palm Island, Jumeirah in Dubai, Saraya Islands in Ras Al Khaimah, Aldar Group in Abu

Dhabi, UAE Langkawi in Malaysia and Thimpu in Bhutan. The most significant

additions to the portfolio have been The Pierre, the iconic landmark hotel on New York's

Fifth Avenue, Taj Boston and Blue, Sydney.


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The presence of Taj Hotels Resorts and Palaces internationally has been developed

through a network of Taj regional sales and PR offices in the United Kingdom, France,

Germany, Italy, Dubai, Singapore, Australia, Japan, Russia and the United States of

America.

At the Taj Hotels Resorts and Palaces luxurious living and fine dining find common

ground. Whether it is introducing exotic world cuisines to India or taking authentic Indian

fare to the world, the Taj Hotels Resorts and Palaces is renowned for the eclectic culinary

experiences it brings to its guests. Through a vast repertoire of award-winning

restaurants, legendary recipes from royal kitchens and celebrated food festivals, the Taj

has pioneered innovation in fine dining across the world.

Taj Hotels also promise a whole new experience of tranquillity and total wellness,

through Jiva Spas a unique concept, which brings together the wisdom and heritage of

the Asian and Indian Philosophy of Wellness and Well-being. Rooted in ancient Indian

healing knowledge, Jiva Spas derive inspiration and spirit from the holistic concept of

living. There is a rich basket of fresh and unique experiences under the Jiva Spa umbrella

of offering, Yoga and Meditation, mastered and disseminated by accomplished

practitioners, authentic Ayurveda, and unique Taj signature treatments. Royal traditions

of wellness in service experiences, holistic treatments involving body therapies,

enlivening and meaningful rituals and ceremonies and unique natural products blended

by hand, come together to offer a truly calming experience.

IHCL operates Taj Air, a luxury private jet operation with state-of-the-art Falcon 2000

aircrafts designed by Dassault Aviation, France; and Taj Yachts, two 3-bedroom luxury

yachts which can be used by guests in Mumbai and Kochi, in Kerala.

IHCL also operates Taj Sats Air Catering Ltd., the largest airline catering service in

South Asia, as a joint venture with Singapore Airport Terminal Services, a subsidiary of

Singapore Airlines.


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Additionally, it operates the Indian Institute of Hotel Management, Aurangabad since

1993. The institute offers a three-year diploma, designed with the help of international

faculty and has affiliations with several American and European programmes.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSBILITY

As a part of Tatas; Indias premier business house; we; at Taj Hotels, have always

believed in society and environment being integral stakeholders in our business along

with our shareholders, customers, vendors and others. Over the last decade, the

movement towards ecologically sound tourism has gained urgency and importance across

the globe and we recognize that responsible practices in vogue are as diverse as the

geographies.

We promote corporate citizenship through our strategic public-private partnerships which

encourage building livelihoods of less-advantaged youth and women. The causes we

promote include reducing malnutrition, promoting indigenous artisans and craftsmen and

enhancing employability of identified target groups by sharing our core competencies as

a leading hospitality company. We encourage training and development of differently

abled youth.

We at Taj have the unique scope and opportunity to develop raw potential into a skilled

workforce that is immediately employable by various players in the industry. A majority

of our community projects are focused around extending our key strengths in food

production, kitchen management, housekeeping, customer service and spas to promote

economic empowerment of candidates from vulnerable socio-economic backgrounds. We

are fully committed to the cause of building a sustainable environment by reducing the

impact of our daily operations on the environment and improving operational

efficiencies, resource conservation, reuse and recycling of key resources.


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Our seventh Corporate Sustainability Report was submitted to the United Nations Global

Compact society in August, 2010. The United Nations Global Compact is a strategic

policy initiative for businesses that are committed to aligning their operations and

strategies with ten universally accepted principles in the areas of human rights, labor,

safety & security, environment and anti-corruption. This Corporate Sustainability report

also serves as our GRI (Global Reporting Initiative) as well as Triple Bottom Line report.

The report focuses on identified priorities at IHCL and responds to key stakeholder

needs. We plan to continue and further strengthen our commitment to the environment

and societies in which we operate.

We believe in continuous learning and sharing and would be delighted to have your

thoughts and suggestions.

EARTH

In an endeavour to reinstate its vision and efforts to boost sustainable tourism, Taj Hotels

Resorts and Palaces presented EARTH (Environment Awareness & Renewal at Taj

Hotels) this year. Implementing schemes such as the Gangroti Glacier Clean-Up

Expedition, as well as designated Earth rooms, which minimise environmental impact,

Taj is one of Asias largest group of hotels to commit to energy conservation and

environmental management. EARTH has received certification from Green Globe, the

only worldwide environmental certification program for travel and tourism.

The Taj began a century ago with a single landmark The Taj Mahal Palace Hotel,

Mumbai. Today, the various Taj hotels, in all their variety and historical richness, are

recognised internationally as the symbols of true Indian hospitality. The Companys

history is integral to Indias emergence into the global business and leisure travel

community; and looking to the future, Taj Hotels Resorts and Palaces is well positioned

to meet the increase in travel activity with the rapid expansion of the Indian economy.


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INTRODUCTION OF WORKING CAPITAL

Working capital refers to the cash that a business requires for day-to-day operations or

more specifically, for financing the conversion of raw materials into finished goods

which the company sells for payment. Working Capital is a life blood and nerve centre of

business. Just as circulation of blood is essential for the survival of the human being,

similarly working capital is necessary for the survival of every business organization,

whether it is a small organization or a big organization.

Every business needs funds for two purposes-for 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 plant & machinery, land & building, furniture & fixtures

etc. Investment in these assets present that part of the firms capital which is blocked on a

permanent or fixed basis and is called fixed capital. Funds are also needed for short-term

purposes as for the purchase of raw material, payment of wages & 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 requiredfor financing short term or current assets such as, cash, marketable securities, debtors and

inventories In other words; the working capital is the excess of current assets over current

liabilities.

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TYPES OF WORKING CAPITAL

Working capital may be classified in two ways:

a) On the basis of concept

b) On the basis of time

On the basis of concept, working capital is classified as gross working capital and net

working capital. This classification is important from the point of view of the financial

manager.

GGRROOSSSS WWOORRKKIINNGG CCAAPPIITTAALL: This is a wider term in relation to the working

capital. It includes all current assets. So gross working capital of Taj Hotel in 2010 was

Rs. 43.20 crore. Thus the gross working capital is the capital invested in total current

assets of the company. Current assets include-

Cash in hand and bank

Bills receivables

Sundry debtors

Short term loans and advances

Inventory of stock

Prepaid expenses

NNEETT WWOORRKKIINNGG CCAAPPIITTAALL:: is the difference between the current assets and current

liabilities. Therefore it is called net working capital. When current assets exceed current

liabilities,then the working capital is positive otherwise negative. Current liabilities

include-

Bill Payable

Sundry creditors

Gross Working Capital = Total Current Assets


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Outstanding expenses

Short term loans

Bank overdraft

COMPANYS NET WORKING CAPITAL

On the BASIS OF TIME, working capital is classified as PERMANENT OR FIXED

WORKING CAPITAL and TEMPORARY OR VERIABLE WORKING

CAPITAL:

PPEERRMMAANNEENNTT OORR FFIIXXEEDD WWOORRKKIINNGG CCAAPPIITTAALL: Permanent working capital is the

minimum amount which is required to ensure effective utilization of fixed facilities and

or maintaining the circulation of current assets. There is always a minimum level of

current assets which is continuously required by the enterprise to carry out its normal

business operations. For example, work-in-progress, finished goods and cash balance.

This minimum level of current assets is called permanent working capital as this part of

the capital is permanently blocked in current assets. As the business grows, the

requirements of permanent working capital also increase due to the increase in current

assets.

TTEEMMPPOORRAARRYY OORR VVAARRIIAABBLLEE WWOORRKKIINNGG CCAAPPIIAALL: Temporary working capital

is the amount of working capital which is required to meet the seasonal demands and

some special exigencies. Variable working capital can be further classified as seasonal

working capital and special working capital. Most of the enterprises have to provide

additional working capital to meet the seasonal and social needs. The capital required to

meet the seasonal needs of the enterprise is called seasonal working capital. Special

working capital is that part of working capital which is required to meet exigencies such

as launching of extensive marketing campaign for conducting research, etc.

Net Working Capital = Current Assets Current Liabilities


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FINANCING OF WORKING CAPITAL

A firm can adopt different financial policies to finance its current assets. There are

various types of sources for financing working capital. These are as follows:

[[

1. Commercial banks

1 Share

1. Debentures 2. Indigeneous bankers

2. Public deposits 3. Trade creditors

3. Ploughing back of profits 4. Instalment credit

4. Loans from financial institutions 5. Advances

6. Accounts receivable

7. Accrued expenses

Permanent or Fixed Temporary or variable

Sources of Working Capital


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Sources of Permanent or Fixed Working Capital

Permanent working capital should be financed in such a matter that the enterprise may

have its uninterrupted use for a long period. There are five sources of long term workingcapital:

1. Shares: Issue of shares is the most important source for raising long term capital. A

company can issue various types of shares like equity shares, preference shares and

deffered shares. As\far as possible, a company should raise the maximum amount of

permanent capital by issue of shares.

2. Debentures: A debentures is an instrument issued by the company acknowledging

to its debt to its holder. The debenture holders are the creditors of the company. A

fixed rate of interest is paid on the debentures. The debentures may be of various

kinds such as unsecured, secured, redeemable, irredeemable, convertible debentures

and non convertible debentures. The debentures as a source of finance have a

number of advantages both to investors and company.

3.

Public Deposits: Public deposits are the fixed deposits accepted by a businessenterprise directly from the public. This source of raising short term and medium

term finance was very popular in absence of banking facilities. Public deposits as a

source of finance have a large number of advantages such a convenient source of

finance, taxation benefits, no need of securities and inexpensive source of finance.

4. Ploughing Back of Profits: It means the reinvestment by the concern of its surplus

earning in its business. This method of finance has a large number of advantages as

it is the cheapest rather cost free source of finance, there is no need to keep

securities, it ensures stable dividend policy.

5. Loan From Financial Institutions: Financial institutions such as commercial

banks, insurance corporations, idbi etc also provides short term, medium term and


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long term loans. This source of finance is more suitable to meet the medium term

demands of working capital.

Financing Of Short Term Working Capital

The main source of short term working capital are as follows:

1. Indigenous Bankers: Private money lenders and other country bankers used to be

the only source of finance prior to the establishment of commercial banks. They

used to charge very high rate of interest. Even today some business houses have to

depend upon indigenous bankers for obtaining loans to meet their working capital

requirements.

2. Trade Credit: Trade credit refers to the credit extended by the suppliers of goods in

the normal course of business. At present commerce is build upon credit, trade

credit arrangement of a firm with its suppliers is an important source of finance. It

may also take the form of bills payable whereby the buyer signs a bills of exchange

payable on a specified future date.

3. Instalment Credit: This is another method by which the assets are purchased and

the possession of goods is taken immediately but the payment is made in

instalments over a pre determined period of time. In this interest is charged on the

unpaid price or it may be adjusted in the price.

4. Commercial Paper: It is an important money market instrument for raising short-

term finances. Commercial papers represents the unsecured promissory notes issued

by firms to raise short term funds. Firms, banks, insurance companies, individuals

etc. With short-term surplus funds invest in commercial papers. Investors wouldgenerally invest in commercial paper of a financially sound and creditworthy firm.

In India, commercial papers of 91 to 180 days maturity are being floated. The

interest rate will be determined in the market.


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5. Advances: Some business houses get advantages from their customers and agents

against orders and this source is a short term source of finance for them. It is a cheap

source of finance and in order to minimize their investment in working capital.

6. Commercial banks: Commercial banks are most important source of short term

capital. The major portion of working capital loans are provided by commercial

banks. They provide a large variety of loans to meet the specific requirements of a

firm. The different form in which the banks normally provide loans and advances

are as follows:

(a)Loans

(b)Cash credits

(c)Overdrafts(d)Discounting of bills

FACTORS DETERMINING THE WORKING CAPITAL

The working capital requirement of the concern depends upon a large numbers of factors

such as nature and the size of business, the character of their operations, the length of

production cycles, the rate of stock turnover and the state of economic situation. It is not

possible to rank them because all such factors are of different importance and influence

of individual factor changes for a firm overtime. However, the following are important

factors generally influencing the working capital requirements.

Nature and character of business.

Size of business\scale of operation.

Production policy.

Manufacturing process\length of production cycle.

Seasonal variation.

Working capital cycle : The working capital cycle can be defined as:


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The period of time which elapses between the point at which cash begins to be expended

on the production of a product and the collection of cash from a customer

The way working capital moves around the business is modeled by the working capital

cycle. This shows the cash coming into the business, what happens to it while the

business has it and then where it goes. A simple working capital cycle may look

something like:-

Between each stage of this working capital cycle there is a time delay. For some

businesses this will be very long where it takes them a long time to make and sell the

product. They will need a substantial amount of working capital to survive. Others

though may receive their cash very quickly after paying out for raw materials etc.

(perhaps even before they've paid their bills) - They will need less working capital.

For all businesses though they need to plan how much cash they are going to have. The

best way of doing this is a CASH FLOW FORECAST.


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IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is a life blood and nerve centre of business. Just as the circulation of

blood is essential in the human bodies for maintaining life, working capital is very

essential to maintain the running of business. No business can run successfully without an

adequate amount of working capital.

Merits of working capital are as follows:

1. Solvency of business: Adequate working capital helps in maintaining solvency of

the business by providing uninterrupted flow of production.

2. Goodwill: Sufficient working capital enables a business concern to make prompt

payments.

3. Easy loans: A concern having adequate working capital high solvency and good

credit standing can arrange loans from banks and other on easy terms.

4. Cash discounts: Adequate working capital also enables a concern to avail cash

discounts on the purchase and hence it reduces costs.

5. Regular supply of raw materials: Adequate working capital ensures regular and

continuous supply of raw materials.

6. Regular payments of salaries, wages & other day to day commitments: A

company which has adequate working capital can make regular payments of

salaries, wages & other day to day commitments with raises the morale of its

employees, increase their efficiencies, reduces wastages and enhance production

and profits.

7. Ability to face crises: Adequate working capital also enables a concern to face

business crises in emergencies such as depression because in such periods,

generally, there is much pressure on working capital.


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Excessive or inadequate working capital

Every business concern should have adequate working capital to run its business

operations. Both excess as well as short working capital positions are bad for any

business.

Disadvantages of excessive working capital

1. Excessive working capital means idle funds, which earn no profits for the

business and hence business cannot earn a proper rate of return on its investment.

2. Excessive working capital implies excessive debtors.

3. It may result into overall inefficiency in the organization.

4. When there is a excessive working capital, relations with banks and other

financial institutions may not be maintained.

5. The excessive working capital gives rise to speculative transactions.

Working Capital Management

Working capital is the life blood and nerve centre of a business. Just as circulation ofblood is essential in the human body for maintaining life, working capital is very

essential to maintain the smooth running of a business. No business can run successfully

without an adequate amount of working capital.

Working capital refers to that part of firms capital which is required for financing short

term or current assets such as cash, marketable securities, debtors, and inventories. In

other words working capital is the amount of funds necessary to cover the cost of

operating the enterprise.


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In working capital management, we analyze following three points.

First Point

What is the need for working capital?

After study the nature of production, we can estimate the need for working capital. If

Hotel available large scale of facilities and comforts, then it needs high amount of

working capital.

Second Point

What is optimum level of working capital in Taj Hotel?

Have you achieved the optimum level of working capital which has invested in current

assets? Because high amount of working capital will decrease the return on investment

and low amount of working capital will increase the risk of business. So, it is very

important decision to get optimum level of working capital where both profitability and

risk will be balanced

Third Point

What are main working capital policies of Taj Hotel?

Polices are the guidelines which are helpful to direct business. Finance manager can also

make working capital policies.

First working Capital Policy

Liquidity policy

Taj has been practicing good Corporate Governance even before Securities Exchange

Board of India (SEBI) made it a mandatory requirement from 2001. At the Taj Mahal's

sister hotel in New Delhi, all visitors had to pass through. It is the global crunch and

India's home-grown liquidity. Under this policy, finance manager will increase the

amount of liquidity for reducing the risk of business. If business has high volume of cash

and bank balance then business can easily pays his dues at maturity.


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Second working capital policy

Profitability Policy

Under is policy, finance manager will keep low amount of cash in business and try to

invest maximum amount of cash and bank balance. It will sure that profit of business will

increase due to increasing of investment in proper way but risk of business will also

increase. So reported net profit of Taj Hotel in 2010 was Rs. 36.27 Crore.

ESTIMATION OF WORKING CAPITAL MANGEMENT

As discussed above a number of factors are responsible for determining the amount of

working capital required by firm. Let us know discuss the various methods/ technique

used in assessment of firms working capital requirements. These methods are.

Estimation of components of working capital method

This method is based on the basic definition of working capitalizes, excess of current

assets over the current liabilities. In other word the amount of different constituent of the

working capital such as debtors, cash inventories, creditors etc are estimated separately

and the total amount of working capital requirement is worked out accordingly.

Percent sales method

This is the most simple and widely used method in combination with other scientific

methods. According to this method a ratio is determined for estimating the future

working capital requirement. This is the generally based on the past experience of

management as the ratio varies from industry to industry.

For example if the past experience shows that the amount of working capital has been20% of sales and projected amount of sales for the next year is Rs 10 lakes, the required

amount of working capital shall be Rs 2 lakh.


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As seen from above the above method is merely an estimation based on past experience.

Therefore a lot depends on the efficiency of decision maker, which may not be correct in

all circumstances. Moreover the basic assumptions regarding linear relationship between

sales and the working capital may not hold well in all the cases. Therefore this method is

not dependable and not universally acceptable. At best, this method gives a rough idea

about the working capital.

Operating cycle approach

The need of working capital arises mainly because of them gap between the production of

goods and their actual realization after sales. This gap is technically referred as the

operating cycle or the cash cycle of the business. If it were possible to complete the

entire job instantaneously, there would be no need for current asset (working capital) but

since it is not possible, every business organization is forced to have current asset and

hence operating cycle. It may be divided into four stages.

1. Raw materials and stores storage space.

2. Work in process stage.

3. Finished goods inventory stage.

4. Debtors collection stage,

Duration of operating cycle

The duration of the operating cycle is equal to sum of the duration of these stages less the

credit period allowed by the suppliers of the firm. In symbol

OC= R+W+F+DC

WHERE

OC= Duration of the Operating Cycle

R= Raw materials and storage space periods

W= work in process periods.

F= finished goods storage periods


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D= debtor collection period

C= Creditors collection period.

The component of the operating cycles has already been calculated in ratio Analysis

which is as follow.

R = Average stock of raw material

Average raw material consumption per day

F = Average stock of stores

Average stores consumption per day

W = Average work in process inventory

Average cost of production per day

D = Average book debts

Average credit sales per day

C = Average trade credit

Average trade credit purchase per day


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CHAPTER -2

REVIEW OF LITERATURE

Working capital shows a companys operational efficiency. If there is any money that is

used for inventory or customers accounts, it cannot be used to pay a companys bills or

other liabilities. An increase in working capital means that it is negative and a firm is not

being efficient in its operations and accounts receivable collections are slow. Since

working capital is the current assets minus the current liabilities, it can be used by

investors and other reviewers of financial statements to show that a company is having

trouble paying its creditors short term. The firm may have to consider bankruptcy as a

way to take care of their liabilities and hopefully regain strength in their assets

(Investopedia, 2010). A positive working capital discloses that a company can pay its

short term liabilities. Working capital management is how companies improve their

earnings, keep sufficient

An efficient Working Capital Management (WCM) has a significant effect toward the

creation of a firms value. It is a fact that financial managers in the firms used to give

concentration on managing long-term financial decisions, especially capital structure,

investment decisions, company valuation & dividends decisions. Only little attention was

given to managing the short-term assets and liabilities, managers began to realize the

importance of investigating those short-term assets and liabilities since the working

capital management has an important role for the firms profitability & risk and the

overall value of the firm. There is no doubt about the criticality of this issue to firms as

holding too much working capital is inefficient and holding too little is dangerous to the

organization's survival. This study looks at some. For the successful working of any

business organization, fixed and current assets play a vital role. Management of working

capital is essential as it has a direct impact on profitability and liquidity.

In intention to discover the relationship between efficient working capital management

and firms profitability(Shin & Soenen, 1998) used net-trade cycle (NTC) as a measure of

working capital management. NTC is basically equal to the CCC whereby all three


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components are expressed as a percentage of sales. The reason by using NTC because it

can be an easy device to estimate for additional financing needs with regard to working

capital expressed as a function of the projected sales growth. This relationship is

examined using correlation and regression analysis, by industry and working capital

intensity. Using a Compustat sample of 58,985 firm years covering the period 1975-1994,

in all cases, they found, a strong negative relation between the length of the firm's net-

trade cycle and its profitability. In addition, shorter NTC are associated with higher risk-

adjusted stock returns. In other word, (Shin & Soenen, 1998) suggest that one possible

way the firm to create shareholder value is by reducing firms NTC.

The study of (Shin & Soenen, 1998) consistent with later study on the same objective

that done by (Deloof, 2003) by using sample of 1009 large Belgian non-financial firms

for the period of 1992-1996. However, (Deloof, 2003) used trade credit policy and

inventory policy are measured by number of days accounts receivable, accounts payable

and inventories, and the cash conversion cycle as a comprehensive measure of working

capital management. He founds a significant negative relation between gross operating

income and the number of days accounts receivable, inventories and accounts payable.

Thus, he suggests that managers can create value for their shareholders by reducing the

number of days accounts receivable and inventories to a reasonable minimum. He also

suggests that less profitable firms wait longer to pay their bills.

In other study, (Lyroudi & Lazaridis, 2000) use food industry Greek to examined the

cash conversion cycle (CCC) as a liquidity indicator of the firms and tries to determine its

relationship with the current and the quick ratios, with its component variables, and

investigates the implications of the CCC in terms of profitability, indebtness and firm

size. The results of their study indicate that there is a significant positive relationship

between the cash conversion cycle and the traditional liquidity measures of current and

quick ratios. The cash conversion cycle also positively related to the return on assets and

the net profit margin but had no linear relationship with the leverage ratios. Conversely,

the current and quick ratios had negative relationship with the debt to equity ratio, and a


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positive one with the times interest earned ratio. Finally, there is no difference between

the liquidity ratios of large and small firms.

Many researchers have studied working capital from different views and in different

environments. The following ones were very interesting and useful for our research:

(Eljelly, 2004) elucidated that efficient liquidity management involves planning and

controlling current assets and current liabilities in such a manner that eliminates the risk

of inability to meet due short-term obligations and avoids excessive investment in these

assets. The relation between profitability and liquidity was examined, as measured by

current ratio and cash gap (cash conversion cycle) on a sample of joint stock companies

in Saudi Arabia using correlation and regression analysis. The study found that the cash

conversion cycle was of more importance as a measure of liquidity than the current ratio

that affects profitability. The size variable was found to have significant effect on

profitability at the industry level. The results were stable and had important implications

for liquidity management in various Saudi companies. First, it was clear that there was a

negative relationship between profitability and liquidity indicators such as current ratio

and cash gap in the Saudi sample examined. Second, the study also revealed that there

was great variation among industries with respect to the significant measure of liquidity.

According to Deloof, 2003:-

Discussed that most firms had a large amount of cash invested in working capital. It can

therefore be expected that the way in which working capital is managed will have a

significant impact on profitability of those firms. Using correlation and regression tests

he found a significant negative relationship between gross operating income and the

number of days accounts receivable, inventories and accounts payable of Belgian firms.

On basis of these results he suggested that managers could create value for their

shareholders by reducing the number of days accounts receivable and inventories to a

reasonable minimum. The negative relationship between accounts payable and

profitability is consistent with the view that less profitable firms wait longer to pay their

bills.


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According to Ghosh and Maji, 2003:-

In this paper made an attempt to examine the efficiency of working capital management

of the Indian cement companies during 1992 1993 to 2001 2002. For measuring the

efficiency of working capital management, performance, utilization, and overallefficiency indices were calculated instead of using some common working capital

management ratios. Setting industry norms as target-efficiency levels of the individual

firms, this paper also tested the speed of achieving that target level of efficiency by an

individual firm during the period of study. Findings of the study indicated that the Indian

Cement Industry as a whole did not perform remarkably well during this period.

According to Shin and Soenen, 1998:-

Highlighted that efficient Working Capital Management (WCM) was very important for

creating value for the shareholders. The way working capital was managed had a

significant impact on both profitability and liquidity. The relationship between the length

of Net Trading Cycle, corporate profitability and risk adjusted stock return was examined

using correlation and regression analysis, by industry and capital intensity. They found a

strong negative relationship between lengths of the firms nettradingCycle and its

profitability. In addition, shorter net trade cycles were associated with higher risk

adjusted stock returns.


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According to Smith and Begemann 1997:-

Emphasized that those who promoted working capital theory shared that profitability and

liquidity comprised the salient goals of working capital management. The problem arose

because the maximization of the firm's returns could seriously threaten its liquidity, andthe pursuit of liquidity had a tendency to dilute returns. This article evaluated the

association between traditional and alternative working capital measures and return on

investment (ROI), specifically in industrial firms listed on the Johannesburg Stock

Exchange (JSE). The problem under investigation was to establish whether the more

recently developed alternative working capital concepts showed improved association

with return on investment to that of traditional working capital ratios or not. Results

indicated that there were no significant differences amongst the years with respect to the

independent variables. The results of their stepwise regression corroborated that total

current liabilities divided by funds flow accounted for most of the variability in Return on

Investment (ROI). The statistical test results showed that a traditional working capital

leverage ratio, current liabilities divided by funds flow, displayed the greatest

associations with return on investment. Wellknown liquidity concepts such as the current

and quick ratios registered insignificant associations whilst only one of the newer

working capital concepts, the comprehensive liquidity index, indicated significant

associations with return on investment. All the above studies provide us a solid base and

give us idea regarding working capital management and its components. They also give

us the results and conclusions of those researches already conducted on the same area for

different countries and environment from different aspects. On basis of these researches

done in different countries, we have developed our own methodology for research.

According to Marc Deloof 25th

APR 2003:-

The relation between working capital management and corporate profitablity is

investigated for a sample of 1,009 large Belgian non-financial firms for the 1992-1996

period. Trade credit policy and inventory policy are measured by number of days

accounts receivable, accounts payable and inventories, and the cash conversion cycle is

used as a comprehensice measure of working capital management. The results suggest


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that managers can increase corporate profitablity by reducing the number of days

accounts receivable and inventories. Less profitable firms wait longer to pay their bills.

M. A., Zariyawati a, M. N., Annuar b and A.S., Abdul Rahim c a ,b & c UniveristiPutra Malaysia, Malaysia.

Working capital management is important part in firm financial management decision.

An optimal working capital management is expected to contribute positively to the

creation of firm value. To reach optimal working capital management firm manager

should control the trade off between profitability and liquidity accurately. The purpose of

this study is to investigate the relationship between working capital management and firm

profitability. Cash conversion cycle is used as measure of working capital management.

This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist

of six different economic sectors which are listed in Bursa Malaysia. The coefficient

results of Pooled OLS regression analysis provide a strong negative significant

relationship between

Amber Collins University of Phoenix:-

Working Capital Management Concepts Worksheet Concept Application of Concept in

the Simulation Reference to Concept in Reading Describe the firm's cash conversion

cycle: Cash inflow "Most firms keep track of the average time it takes customers to pay

their bills. From this they can forecast what proportion of a quarter's sales is likely to be

converted into cash in that quarter and what proportion is likely to be carried over to the

next quarter as accounts receivable" (Allen, Brealey, & Myers 2005). Lawrence having

a positive cash balance would have help in the event of emergencies as well as unplanned

outflow of money. Cash flow comes from collections on accounts receivable (Allen,

Brealey, & Myers 2005). Examine the effects of credit policy on cash conversion cycle

and revenue: Commitment Lawrence had a commitment to the bank, Mayo, Murray, and

Gartner.


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According to Carole Howorth and Paul Westhead March 2003:-

Working capital management routines of a large random sample of small companies in

the UK are examined. Considerable variability in the take-up of 11 working capital

management routines was detected. Principal components analysis and cluster analysisconfirm the identification of four distinct types of companies with regard to patterns of

working capital management. The first three types of companies focused upon cash

management, stock or debtors routines respectively, whilst the fourth type were less

likely to take-up any working capital management routines. Influences on the amount and

focus of working capital management are discussed. Multinomial logistic regression

analysis suggests that the selected independent variables successfully discriminated

between the four types of companies. The results suggest that small companies focus

only on areas of working capital management where they expect to improve marginal

returns. The difficulties of establishing causality are highlighted and implications for

academics, policy-makers and practitioners are reported.

According to Maynard E. Rafuse, (1996):-

Argues that attempts to improve working capital by delaying payment to creditors is

counter-productive to individuals and to the economy as a whole. Claims that altering

debtor and creditor levels for individual tiers within a value system will rarely produce

any net benefit. Proposes that stock reduction generates system-wide financial

improvements and other important benefits. Urges those organizations seeking

concentrated working capital reduction strategies to focus on stock management

strategies based on lean supply-chain techniques.

According to James A. Gentry, Dileep R. Mehta

Working capital literature is rather limited and the process of managing shortterm

resources is not understood well by academicians. In contrast, corporate managers are

continuously involved in the working capital decision-making process, but their

perspective is limited to the practices within their firm. In order to fill this gap in the

working capital literature, a study of management perceptions of the working capital


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process was undertaken. A survey was used to collect information from a sample of

marketing, production, and financial executives in large corporations in Belgium, France,

India, and the United States. The study interprets management ranking of working capital

objectives and indicates the need to improve financial planning models to include

explicitly short-run objectives; further, predictability of cash inflows and outflows is

examined and the potential factors affecting predictability are evaluated. Finally, this

study examines management perceptions of long-range objectives in order to provide a

proper perspective to the shortrun financial planning.

According to M.K. Kolay:-

The article analyses the pros and cons of different strategies to be adopted to manage

and avoid working capital crisis situations in any organisation. The working capital

position depends on many organisational parameters which are interrelated and

interdependent, and also vary over time. In such a situation, the use of a system dynamics

approach has been advocated to reflect the relevant dynamic cause-and-effect

relationships for the development of appropriate long-term and short-term strategies.

According toWang Zhuquan et al 2007:-

Working capital management is the main contents of corporate finance, so the study in

this field should gain much attention. Compared with the rapidly development of the

practice, the development of the theory has been lagged obviously since 1990's.We

suggest that the study should begin from the reclassification of working capital, and then,

the new framework of the theory should be set up, which is based on the supply-chain

management, the channel management and the customer relationship management.

Meanwhile, we should launch on the survey of working capital management of Chinese

companies and promulgate the results, which can offer the data for the study and

evaluation of working capital management.


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According to James A. Gentry, Paul Newbold, David T. Whitford, (1984)

The objectives of this study are to offer cash based funds flow components as an

alternative to financial ratios for classifying the financial performance of companies; to

test empirically the ability of funds flow components to distinguish between failed and nofailed companies with special emphasis on working capital components; to analyze the

empirical results and make recommendations for future study.

According to Jeffrey Ashe 2000:-

Working Capital is the United States' largest peer-group lending program. This article

reviews what Working Capital has learned about the market, its customers, program

impact, and service delivery over its ten year history. It presents a model forunderstanding how participating in peer lending groups develops social and economic

capital in poor communities. The article then discusses how participants judge the group

model as they identify the characteristics of successful groups and the impact of the

group on their businesses, on themselves personally, and on the larger community. The

rest of the article discusses how Working Capital evolved from a start-up operation in a

single town into a multistate program and explores the advantages and limitations of

rapid expansion. A checklist for choosing affiliate partners is presented, along with a list

of the lessons learned about delivering services though affiliates.

According to Alan P. Hamlin, David F. Heathfield 2000:-

Working capital is a necessary input to the production process and yet is ignored in most

economic models of production. The implications of modeling the time dimension of

production, and hence the working capital requirements of firms, are explored, with

particular stress placed on the competitive advantage gained by firms that retain

flexibility in the time structure of their production.


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According to VELLANKI S.S. KUMAR, AWAD S. HANNA, TERESA ADAMS,(2000):-

The systematic assessment of working capital requirement in construction projects deals

with the analysis of various quantitative and qualitative factors in which information is

subjective and based on uncertainty. There exists an inherent difficulty in the classical

approach to evaluate the impact of qualitative factors for the assessment of working

capital requirement. This paper presents a methodology to incorporate linguistic variables

into workable mathematical propositions for the assessment of working capital using

fuzzy set theory. This article takes into consideration the uncertainty associated with

many of the project resource variables and these are reflected satisfactorily in the

working capital computations. A case study illustrates the application of the fuzzy set

approach. The results of the case study demonstrate the superiority of the fuzzy set

approach to classical methods in the assessment of realistic working capital requirements

for construction projects.

According to Richard Petty, James Guthrie, (2000):-

The rise of the new economy, one principally driven by information and knowledge, is

attributed to the increased prominence of intellectual capital (IC) as a business and

research topic. Intellectual capital is implicated in recent economic, managerial,

technological, and sociological developments in a manner previously unknown and

largely unforeseen. Whether these developments are viewed through the filter of the

information society, the knowledge-based economy, the network society, or innovation,

there is much to support the assertion that IC is instrumental in the determination of

enterprise value and national economic performance. First, we seek to review some of the

most significant extant literature on intellectual capital and its developed path. The

emphasis is on important theoretical and empirical contributions relating to the

measurement and reporting of intellectual capital. The second part of this paper identifies

possible future research issues into the nature, impact and value of intellectual

management and reporting.


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According to Sushma Vishnani, FCA, and Finance Faculty:-

It is felt that there is the need to study the role of working capital management policies on

profitability of a company. Conventionally, it has been seen that if a company desires to

take a greater risk for bigger profits and losses, it reduces the size of its working capital inrelation to its sales. If it is interested in improving its liquidity, it increases the level of its

working capital. However, this policy is likely to result in a reduction of the sales

volume, therefore of profitability. Hence, a company should strike a balance between

liquidity and profitability. In this paper an effort has been made to make an empirical

study of Indian Consumer Electronics Industry for assessing the impact of working

capital policies & practices on profitability during the period 199495 to 200405. The

impact of working capital policies on profitability has been examined by computing

coefficient of correlation and regression analysis between profitability ratio and some key

working capital policy indicator ratios.

According to Charles O. Egbu, (2004):-

Innovation is viewed as a major source of competitive advantage and is perceived to be a

pre-requisite for organizational success and survival. The ability to innovate depends

largely on the way in which an organisation uses and exploits the resources available to

it. The paper explores the importance of knowledge management (KM) and intellectual

capital (IC) in organisations. It also considers the critical factors that lead to successful

innovations and the role of KM and IC in this regard. The paper argues that effective

management of knowledge assets involves a holistic approach to a host of factors. It is

also suggested that there are a host of factors that combine in different ways to produce

successful organizational innovations. It recommends that more is needed on the

education and training of construction personnel and that these education and training

programmes should reflect the nature of innovation and KM dimensions as very complex

social processes.


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According to Kenneth A. Froot and Jeremy C. Stein in 1998:-

We develop a framework for analyzing the capital allocation and capital structure

decisions facing financial institutions. Our model incorporates two key features: (i) value-

maximizing banks have a well-founded concern with risk management; and (ii) not all

the risks they face can be frictionlessly hedged in the capital market. This approach

allows us to show how bank-level risk management considerations should factor into the

pricing of those risks that cannot be easily hedged. We examine several applications,

including: the evaluation of proprietary trading operations, and the pricing of

unhedgeable derivatives positions. We also compare our approach to the RAROC

methodology that has been adopted by a number of banks.

According to Pradeep Singh (2008):-

Empirically analysed that a firms working capital consists of its investments in current

assets, which includes short-term assetscash and bank balance, inventories, receivable

and marketable securities. Therefore, the working capital management refers to the

management of the levels of all these individual current assets. On the other hand,

inventory, which is one of the important elements of current assets, reflects the

investment of a firms fund. Hence, it is necessary to efficiently manage inventories in

order to avoid unnecessary investments. A firm, which neglects the management of

inventories, will have to face serious problems relating to long-term profitability and may

fail to survive. With the help of better inventory management, a firm can reduce the

levels of inventories to a considerable degree.This paper tries to evaluate the effect of the

size of inventory and the impact on working capital through inventory ratios, working

capital ratios, trends, computation of inventory and working capital, and liquidity

ranking. Finally, it was found that the size of inventory directly affects working capital

and it's management. Size of the inventory and working capital of Indian Farmers

Fertilizer Cooperative Limited (IFFCO) is properly managed and controlled compared to

National Fertilizer Ltd. (NFL).


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According to Pedro Juan Garca-Teruel and Pedro Martnez-Solano (2007):-

Conducted research for the object of the research presented in this paper is to provide

empirical evidence on the effects of working capital management on the profitability of a

sample of small and medium-sized Spanish firms. The results, which are robust to thepresence of endogeneity, demonstrate that managers can create value by reducing their

inventories and the number of days for which their accounts are outstanding. Moreover,

shortening the cash conversion cycle also improves the firms profitability. The aim is to

ensure that the relationships found in the analysis carried out are due to the effects of the

cash conversion cycle on corporate profitability and not vice versa.

According to Naila Iqbal (2001):-

Examined that for increasing shareholder's wealth a firm has to analyze the effect of fixed

assets and current assets on its return and risk. Working Capital Management is related

with the Management of current assets. The Management of current assets is different

from fixed assets on the basis of the following points i.e Current assets are for short

period while fixed assets are for more than one Year.The large holdings of current assets,

especially cash, strengthens Liquidity position but also reduces overall profitability, and

to maintain an optimum level of liquidity and profitability, risk return trade off is

involved holding Current assets.Only Current Assets can be adjusted with sales

fluctuating in the short run. Thus, the firm has greater degree of flexibility in managing

current Assets. The management of Current Assets helps affirm in building a good

market reputation regarding its business and economic condition.

According to Vellanki S. Kumar, Awad S.Hanna, Teresa Adams (2000):-

Conducted research and examined that the systematic assessment of working capital

requirement in construction projects deals with the analysis of various quantitative and

qualitative factors in which information is subjective and based on uncertainty. There

exists an inherent difficulty in the classical approach to evaluate the impact of qualitative

factors for the assessment of working capital requirement. This paper presents a

methodology to incorporate linguistic variables into workable mathematical propositions


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CHAPTER -3

OBJECTIVES OF THE REASERCH

Following are the objectives which are being considered in my study:-

1. To analyze the various components of working capital of Taj Hotels.

2. To study the financing of working capital of Taj Group of Hotel.

3. To study and analyze the operating cycle of Taj Group of Hotel.


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CHAPTER -4

RESEARCH METHODOLOGY:

The research design is a pattern or an outline of research project working. It is a

statement of only essential elements of study, those that provide basic guidelines for

the details of the project. The present study is being conducted followed by

Descriptive Research Design.

Data Collection: Primary as well as secondary data is used for the project. The

research vehicle for primary data collection is unstructured interview with the

managers to get information regarding all variables for working capital management.

Secondary data is collected from Annual Report, relevant files & records of Taj

Group of hotels.

Analysis of Data: The information gathered are the policies & practices regarding

management of the working capital. Analysis is done in terms of theoretical concepts.

Analysis of working capital performance is done with the help of percentages by

showing graphs, ratios etc.


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CHAPTER - 5

DATA ANALYSIS

1. EARNINGS: TAJ GVK HOTELS

Quarterly Results of Taj GVK Hotels &Resorts

-------- in Rs. Cr. --------

Dec '09 Sep '10 Dec '10

Sales Turnover 64.36 59.76 70.24

Other Income -- -- --

Total Income 64.36 59.76 70.24

Total Expenses 38.26 40.47 42.40

Operating Profit 26.10 19.29 27.84Profit On Sale Of Assets -- -- --

Profit On Sale Of Investments -- -- --

Gain/Loss On Foreign Exchange -- -- --

VRS Adjustment -- -- --

Other Extraordinary Income/Expenses -- -- --

Total Extraordinary Income/Expenses -- -- --

Tax On Extraordinary Items -- -- --

Net Extra Ordinary Income/Expenses -- -- --

Gross Profit 26.10 19.29 27.84Interest 2.75 2.99 3.00

PBDT 23.31 16.28 24.81

Depreciation 4.89 5.01 5.28

Depreciation On Revaluation Of Assets -- -- --

PBT 18.42 11.27 19.53

Tax 6.22 3.84 6.61

Net Profit 12.20 7.43 12.92

Prior Years Income/Expenses -0.04 -0.03 -0.03

Depreciation for Previous Years Written Back/

Provided -- -- --

Dividend -- -- --

Dividend Tax -- -- --

Dividend (%) -- -- --

Earnings Per Share 1.95 1.18 2.06

Book Value -- -- --


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Equity 12.54 12.54 12.54

Reserves -- -- --

Face Value 2.00 2.00 2.00

Capital Structure (Taj GVK Hotels & Resorts)


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2. CAPITAL STRUCTURE:-

Period Instrument Authorized

Capital

Issued Capital - P A I D U P -

From To (Rs. cr) (Rs. cr) Shares (nos) Face Value Capita

2009 2010 Equity Share 34.1 12.54 62701495 2 12.5

2008 2009 Equity Share 34.1 12.54 62701495 2 12.5

2007 2008 Equity Share 34.1 12.54 62701495 2 12.5

2006 2007 Equity Share 34.1 12.54 62701495 2 12.5

2005 2006 Equity Share 34.1 12.54 62701495 2 12.5

2004 2005 Equity Share 34.1 12.54 12540299 10 12.5

2003 2004 Equity Share 34.1 12.54 12540299 10 12.5

2002 2003 Equity Share 34.1 12.54 12540299 10 12.5

2000 2002 Equity Share 34.1 12.54 12540299 10 12.5


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3. BALANCE SHEET.

Balance Sheet of Taj GVKHotels & Resorts

------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 12.54 12.54 12.54 12.54 12.54

Equity Share Capital 12.54 12.54 12.54 12.54 12.54

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 139.08 173.44 220.39 258.49 280.13

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 151.62 185.98 232.93 271.03 292.67

Secured Loans 70.63 68.39 50.47 108.99 120.33

Unsecured Loans 15.20 5.00 24.00 30.00 5.00

Total Debt 85.83 73.39 74.47 138.99 125.33

Total Liabilities 237.45 259.37 307.40 410.02 418.00



Application Of Funds

Gross Block 254.08 258.13 268.61 463.13 482.96

Less: Accum. Depreciation 60.89 64.45 75.86 89.12 107.48

Net Block 193.19 193.68 192.75 374.01 375.48

Capital Work in Progress 20.74 76.02 138.64 69.37 84.29

Investments 13.96 0.00 0.00 0.00 0.02

Inventories 2.54 3.07 3.91 4.49 4.41

Sundry Debtors 7.35 6.01 5.37 6.35 6.84

Cash and Bank Balance 5.00 3.25 3.82 2.13 2.89

Total Current Assets 14.89 12.33 13.10 12.97 14.14

Loans and Advances 38.86 27.58 29.69 19.85 22.28

Fixed Deposits 9.00 22.00 7.50 0.00 0.00

Total CA, Loans & Advances 62.75 61.91 50.29 32.82 36.42Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 41.49 48.26 50.00 52.90 62.71

Provisions 15.52 26.72 26.10 14.94 16.99

Total CL & Provisions 57.01 74.98 76.10 67.84 79.70

Net Current Assets 5.74 -13.07 -25.81 -35.02 -43.28

Miscellaneous Expenses 3.81 2.73 1.82 1.66 1.50


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Total Assets 237.44 259.36 307.40 410.02 418.01

Contingent Liabilities 17.77 46.51 28.98 13.87 34.61

Book Value (Rs) 24.18 29.66 37.15 43.22 46.68


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4. PROFITS AND LOSS A/C

Profit & Loss account ofTaj GVK Hotels & Resorts

------------------- in Rs. Cr. -------------------



Income

Sales Turnover 188.74 242.95 257.49 237.48 228.25

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 188.74 242.95 257.49 237.48 228.25

Other Income -0.30 0.54 0.88 0.28 0.90

Stock Adjustments 0.00 0.00 0.00 0.00 0.00

Total Income 188.44 243.49 258.37 237.76 229.15

Expenditure

Raw Materials 15.28 19.96 21.18 0.00 0.00

Power & Fuel Cost 11.49 13.10 14.00 15.19 18.60

Employee Cost 27.81 31.94 35.19 41.08 30.02

Other Manufacturing Expenses 6.81 8.86 9.12 35.22 38.00

Selling and Admin Expenses 23.58 29.37 29.10 30.57 28.66

Miscellaneous Expenses 17.05 23.14 25.17 28.84 26.76

Preoperative Exp Capitalised 0.00 0.00 0.00 -15.38 0.00

Total Expenses 102.02 126.37 133.76 135.52 142.04

Mar '06 Mar '07 Mar '08 Mar '09 Mar '1012 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 86.72 116.58 123.73 101.96 86.21

PBDIT 86.42 117.12 124.61 102.24 87.11

Interest 5.18 4.22 4.43 6.63 12.22

PBDT 81.24 112.90 120.18 95.61 74.89

Depreciation 10.89 11.22 11.48 13.65 19.61

Other Written Off 0.48 1.13 0.92 0.00 0.00

Profit Before Tax 69.87 100.55 107.78 81.96 55.28

Extra-ordinary items 0.09 -0.26 0.53 2.42 -0.33PBT (Post Extra-ord Items) 69.96 100.29 108.31 84.38 54.95

Tax 23.70 35.80 37.87 28.92 18.69

Reported Net Profit 46.25 64.32 70.42 52.77 36.27

Total Value Addition 86.74 106.40 112.58 135.52 142.04

Preference Dividend 0.00 0.00 0.00 0.00 0.00


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Equity Dividend 12.54 18.81 20.06 12.54 12.54

Corporate Dividend Tax 1.76 3.20 3.41 2.13 2.08

Per share data (annualised)

Shares in issue (lakhs) 627.01 627.01 627.01 627.01 627.01

Earning Per Share (Rs) 7.38 10.26 11.23 8.42 5.78Equity Dividend (%) 100.00 150.00 160.00 100.00 100.00

Book Value (Rs) 24.18 29.66 37.15 43.22 46.68


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5. QUARTERLY RESULT

Quarterly Results of TajGVK Hotels & Resorts

------------------- in Rs. Cr. -------------------

Dec '09 Mar '10 Jun '10 Sep '10 Dec '10

Sales Turnover 64.36 63.34 60.99 59.76 70.24

Other Income -- -- -- -- --

Total Income 64.36 63.34 60.99 59.76 70.24

Total Expenses 38.26 37.04 38.15 40.47 42.40


Profit On Sale Of Assets -- -- -- -- --

Profit On Sale Of Investments -- -- -- -- --

Gain/Loss On Foreign Exchange -- -- -- -- --

VRS Adjustment -- -- -- -- --

Other Extraordinary

Income/Expenses-- -- -- -- --

Total ExtraordinaryIncome/Expenses

-- -- -- -- --

Tax On Extraordinary Items -- -- -- -- --

Net Extra Ordinary


Gross Profit 26.10 26.30 22.84 19.29 27.84

Interest 2.75 2.86 2.64 2.99 3.00

PBDT 23.31 23.67 20.20 16.28 24.81

Depreciation 4.89 5.05 5.05 5.01 5.28

Depreciation On Revaluation Of

Assets-- -- -- -- --

PBT 18.42 18.62 15.15 11.27 19.53

Tax 6.22 6.44 5.04 3.84 6.61

Net Profit 12.20 12.18 10.11 7.43 12.92

Prior Years Income/Expenses -0.04 0.23 -- -0.03 -0.03

Depreciation for Previous YearsWritten Back/ Provided

-- -- -- -- --

Dividend -- -- -- -- --

Dividend Tax -- -- -- -- --

Dividend (%) -- -- -- -- --

Earnings Per Share 1.95 1.94 1.61 1.18 2.06

Book Value -- -- -- -- --

Equity 12.54 12.54 12.54 12.54 12.54


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Reserves -- -- -- -- --

Face Value 2.00 2.00 2.00 2.00 2.00


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6. HALF YEARLY RESULT

Half Yearly Results of Taj

GVK Hotels & Resorts------------------- in Rs. Cr. -------------------

Sep '08 Mar '09 Sep '09 Mar '10 Sep '10


Sales Turnover 120.58 117.63 101.55 127.70 120.75

Other Income -- -- -- -- --

Total Income 120.58 117.63 101.55 127.70 120.75

Total Expenses 65.46 70.43 67.22 75.30 78.62

Operating Profit 55.12 47.20 34.33 52.40 42.13Profit On Sale Of Assets -- -- -- -- --




Other Extraordinary


Total ExtraordinaryIncome/Expenses

-- -0.86 -- -- --


Net Extra OrdinaryIncome/Expenses -- -- -- -- --

Gross Profit 55.12 47.20 34.33 52.40 42.13

Interest 1.39 4.77 6.56 5.61 5.63

PBDT 53.73 41.57 27.78 46.98 36.48

Depreciation 5.78 7.84 9.67 9.94 10.06


Assets-- -- -- -- --

PBT 47.95 33.73 18.11 37.04 26.42

Tax 16.61 12.22 6.22 12.66 8.88

Net Profit 31.34 21.51 11.89 24.38 17.54Prior Year Income/Expenses -- -0.09 -- 0.19 -0.03

Depreciation for Previous Years

Written Back/ Provided-- -- -- -- --

Dividend -- -- -- -- --


Dividend (%) -- -- -- -- --


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Earnings Per Share(Rs) 5.00 3.43 1.90 3.89 2.80

Book Value(Rs) -- -- -- -- --

Equity 12.54 12.54 12.54 12.54 12.54

Reserves -- 258.49 -- -- --

Face Value(Rs) 2.00 2.00 2.00 2.00 2.00


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7. NINE MONTHLY RESULT

Nine Months of Taj GVKHotels & Resorts

------------------- in Rs. Cr. -------------------

Dec '06 Dec '07 Dec '08 Dec '09 Dec '10

Sales Turnover 175.01 186.11 180.62 165.91 190.99

Other Income 0.76 1.32 0.64 -- --

Total Income 175.78 187.43 181.27 165.91 190.99

Total Expenses 93.81 99.76 99.90 105.48 121.01






Other ExtraordinaryIncome/Expenses

-- -- -- -- --

Total Extraordinary

Income/Expenses-- -- -0.68 -- --


Net Extra Ordinary


Gross Profit 81.96 87.67 81.36 60.43 69.98

Interest 2.42 2.07 2.60 9.30 8.63

PBDT 79.56 85.59 78.07 51.08 61.32

Depreciation 9.59 8.61 8.90 14.56 15.34


Assets-- -- -- -- --

PBT 69.97 76.98 69.17 36.52 45.98

Tax 23.70 26.60 24.23 12.43 15.52

Net Profit 46.27 50.38 44.94 24.09 30.46

Prior Years Income/Expenses -0.67 -- -0.09 -0.06 -0.03Depreciation for Previous YearsWritten Back/ Provided

-- -- -- -- --

Dividend -- -- -- -- --


Dividend (%) -- -- -- -- --



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Book Value -- -- -- -- --

Equity 12.54 12.54 12.54 12.54 12.54

Reserves -- -- -- -- --

Face Value 2.00 2.00 2.00 2.00 2.00


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8. YEAR RESULT

Yearly Results of Taj GVKHotels & Resorts

------------------- in Rs. Cr. -------------------


Sales Turnover 188.74 242.76 257.49 238.21 229.25

Other Income 0.65 1.46 1.58 -- --

Total Income 189.39 244.22 259.06 238.21 229.25

Total Expenses 103.37 127.94 135.54 135.89 142.52



Profit On Sale Of Investments -- -- -- -- --Gain/Loss On Foreign Exchange -- -- -- -- --


Other ExtraordinaryIncome/Expenses

-- -- -- -- --

Total Extraordinary

Income/Expenses-- -- -- -0.86 --


Net Extra Ordinary


Gross Profit 86.02 116.28 123.53 102.32 86.73Interest 3.97 3.14 2.83 6.16 12.17

PBDT 82.05 113.14 120.69 95.22 74.74

Depreciation 12.10 12.35 12.40 13.61 19.61


Assets-- -- -- -- --

PBT 69.95 100.79 108.29 81.61 55.13

Tax 23.70 36.47 37.87 28.84 18.86

Net Profit 46.25 64.32 70.42 52.77 36.27

Prior Years Income/Expenses -- -- -- -0.09 0.17

Depreciation for Previous Years

Written Back/ Provided-- -- -- -- --

Dividend -- -- -- -- --


Dividend (%) -- -- -- -- --



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Book Value -- -- -- -- --

Equity 12.54 12.54 12.54 12.54 12.54

Reserves 139.08 -- -- 258.49 280.13

Face Value 10.00 2.00 2.00 2.00 2.00


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9.CASH FLOW

Cash Flow of Taj GVKHotels & Resorts

------------------- in Rs. Cr. -------------------


12 mths 12 mths 12 mths 12 mths 12 mth

Net Profit Before Tax 69.95 100.79 108.29 81.69 54.9

Net Cash From Operating

Activities57.08 71.67 79.23 85.20 65.4

Net Cash (used in)/fromInvesting Activities

-46.94 -34.85 -73.18 -125.75 -36.2

Net Cash (used in)/from Financing

Activities 2.70 -25.80 -19.99 31.37 -28.5

Net (decrease)/increase In Cash and

Cash Equivalents12.84 11.02 -13.94 -9.18 0.7

Opening Cash & Cash Equivalents 1.15 14.24 25.26 11.32 2.1

Closing Cash & Cash Equivalents 14.00 25.26 11.32 2.13 2.8


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10. RATIO

Key Financial Ratios of Taj

GVK Hotels & Resorts

------------------- in Rs. Cr. -------------------


Investment Valuation Ratios

Face Value 2.00 2.00 2.00 2.00 2.00

Dividend Per Share 2.00 3.00 3.20 2.00 2.00

Operating Profit Per Share (Rs) 13.83 18.57 19.73 16.26 13.75

Net Operating Profit Per Share (Rs) 30.10 38.75 41.07 37.88 36.40

Free Reserves Per Share (Rs) 15.61 21.26 28.90 35.43 38.90

Bonus in Equity Capital -- -- -- -- -

Profitability Ratios

Operating Profit Margin(%) 45.94 47.91 48.04 42.93 37.77

Profit Before Interest And Tax

Margin(%)40.06 43.16 43.44 37.01 29.04

Gross Profit Margin(%) 43.99 46.78 43.58 37.18 29.18

Cash Profit Margin(%) 30.19 31.00 31.84 28.29 24.57

Adjusted Cash Margin(%) 30.82 31.65 31.84 28.29 24.57

Net Profit Margin(%) 24.43 26.39 27.25 22.11 15.8

Adjusted Net Profit Margin(%) 24.81 26.58 27.25 22.11 15.8

Return On Capital Employed(%) 31.94 40.39 36.49 21.80 16.18

Return On Net Worth(%) 30.50 34.58 30.47 19.58 12.45Adjusted Return on Net Worth(%) 31.77 35.34 30.23 19.99 12.6

Return on Assets Excluding

Revaluations15.71 29.23 36.86 42.96 46.44

Return on Assets IncludingRevaluations

15.71 29.23 36.86 42.96 46.44

Return on Long Term Funds(%) 31.94 40.44 38.27 22.43 16.22

Liquidity And Solvency Ratios

Current Ratio 1.10 0.82 0.54 0.38 0.45

Quick Ratio 1.06 0.78 0.61 0.42 0.39

Debt Equity Ratio 0.57 0.39 0.32 0.51 0.43Long Term Debt Equity Ratio 0.57 0.39 0.26 0.47 0.42

Debt Coverage Ratios

Interest Cover 19.11 33.38 39.60 13.49 5.54

Total Debt to Owners Fund 0.57 0.39 0.32 0.51 0.43

Financial Charges Coverage Ratio 16.82 27.78 28.09 15.55 7.14

Financial Charges Coverage Ratio 12.11 19.19 19.68 11.02 5.57


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Post Tax

Management Efficiency Ratios

Inventory Turnover Ratio 74.48 79.39 71.84 96.36 87.42

Debtors Turnover Ratio 34.48 36.37 45.22 40.49 34.60

Investments Turnover Ratio 80.84 86.57 71.84 96.36 87.42

Fixed Assets Turnover Ratio 0.96 1.00 0.96 0.51 0.47

Total Assets Turnover Ratio 0.79 0.94 0.84 0.58 0.55

Asset Turnover Ratio 0.74 0.94 0.96 0.51 0.47

Average Raw Material Holding -- -- -- -- -

Average Finished Goods Held -- -- -- -- -

Number of Days In Working

Capital10.95 -19.35 -36.08 -53.08 -68.28

Profit & Loss Account Ratios

Material Cost Composition 8.09 8.21 8.22 -- -Imported Composition of Raw

Materials Consumed-- -- -- -- -

Selling Distribution Cost

Composition3.65 3.43 3.42 3.61 3.95

Expenses as Composition of Total

Sales41.68 41.45 35.03 28.09 27.10

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 30.91 34.21 33.33 27.80 40.3

Dividend Payout Ratio Cash Profit 24.81 28.70 28.34 22.09 26.16

Earning Retention Ratio 69.56 66.03 66.41 72.77 60.2

Cash Earning Retention Ratio 75.50 71.47 71.47 78.27 74.06

AdjustedCash Flow Times 1.47 0.95 0.91 2.06 2.22



Book Value 24.18 29.66 37.15 43.22 46.68


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11.MARKET CAPITALISATION:- HOTELS

Company Name Last Price % Chg52 wkHigh

52 wkLow

Market Cap(Rs. cr)

Indian H

taj report amaity

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