ON

A STUDY ON WORKING CAPITAL MANAGEMENT OF UNIK TECHNO SYSTEMS PVT. LTD.

Submitted by

NAME: AMAR DILIP CHAVAN

(MBA, GDC & A)

CLASS: M. PHIL ROLL NO. 22

Under the Guidance of

Dr. P. B PATIL
(PH.D., M.PHIL, M.COM, GDC&A)

CHH. SHAHU INSTITUTE OF BUSINESS EDUCATION

& RESEARCH

KOLHAPUR

2010-2011.

RESEARCH METHODOLOGY INTRODUCTION

Research Methodology is a purposeful, precise and systematic search for new knowledge, skills, attitudes and values, or for the re-interpretation of existing knowledge, skills, attitudes and values. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying now research is done systematically. In that various steps, those are generally adopted by a researcher in studying his problem along with the logic behind them. This project requires a detailed understanding of the concept Working Capital Management. Therefore, firstly we need to have a clear idea of what is working capital, how it is managed in AI LLC, what are the different ways in which the financing of working capital is done in the company. Working capital occupies a peculiar position in the capital structure of a company. The decision as to the adequacy of working capital is a complicated and yet a very important decision. The management of working capital involves managing inventories, accounts receivable and payable and cash. Therefore one also needs to have a sound knowledge about cash management, inventory management and receivables management. Then comes the financing of working capital requirement, i.e. how the working capital is financed, what are the various sources through which it is done. And, in the end, suggestions and recommendations on ways for better management and control of working capital are provided. Working capital is the life-blood of all types of enterprises, manufacturing and trading both. It is constantly required to buy raw materials for payment of wages and other day-to-day expenses. Without adequate working capital, manufacturing operations will be crippled. It is a base on which all the activities of business enterprise depend. The working capital management refers to the management of working capital, or precisely to the management of current assets. A firms working capital consists of its investments in current assets, which includes short-term assets cash and bank balance, inventories, receivable and marketable securities. This project tries to evaluate how the management of working capital is done in Unik Techno Systems Pvt. ltd., through inventory ratios, working capital ratios, trends, computation of cash, inventory and working capital, and short term financing. Working capital is primarily concerned with inventories management, Receivable management, cash management & Payable management. The objective of the company now is to increase the scale of its business by increasing its profits and the turnover and also by venturing into new line of business. It is now targeting to be the World Class Industrial Enterprise from the present status. It is striving to have a huge global base.

The project undertaken is on Working Capital Management of Unik Techno Systems Pvt. Ltd. It describes about how the company manages its working capital and the various steps that are required in the management of working capital. Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its Working Capital Management (WCM).

Working capital refers to the cash of 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. Among the most important items of working capital are levels of inventory, accounts receivable, and accounts payable. Analysts look at these items for signs of a company's efficiency and financial strength.

Thus efficient management of working capital in an important prerequisite for successful working of a business concern it reduces the chances of business failure generates a felling of security and confidence in the minds of personnel in the organization it assurance solvency of steady of the organization

OBJECTIVES OF THE STUDY

1. 2. 3. To study the optimum level of current assets and current liabilities of the company. To estimate the operating cash cycle and working capital requirement of the company. To find out the effects of different components of working capital management on Profitability To establish a relationship between the two objectives of liquidity and profitability of the firm. 5. 6. To study the liquidity position through various working capital related ratios. To study the working capital components such as receivables accounts, cash management, Inventory position

4.

NEED AND SCOPE/ IMPORTANCE OF THE STUDY.

1.This projects is helpful in knowing the companies position of funds maintenance and setting the standards for working capital inventory levels, current ratio level, quick ratio, current asset turnover level & size of current liability etc. 2. This project is helpful to the managements for expanding the dualism & the project viability & present availability of funds. 3. This project is also useful as it combines the present year data with the previous year data and there by it show the trend analysis, i.e. increasing fund or decreasing fund. 4. The project is done as a whole entirely. It will give overall view of the organization and it is useful in further expansion decision to be taken by management.

STATEMENT OF PROBLEM

In the management of working capital, the firm is faced with two. Key problems: 1. First, given the level of sales and the relevant cost considerations, what are the optimal amounts of cash, accounts receivable and inventories that a firm should choose to maintain? 2. Second, given these optimal amounts, what is the most economical way to finance these working capital investments? To produce the best possible results, firms should keep no unproductive assets and should finance with the cheapest available sources of funds. Why? In general, it is quite advantageous for the firm to invest in short term assets and to finance short-term liabilities.

HYPOTHESIS
Hypothesis is a conjectural statement of the relationships between two or more variables. It is testable, tentative problem explanation of the relationship between two or more variables that create a state of affairs or phenomenon.E,C, Osuola said hypothesis should always be in declarative sentence form, and they should relate to them generally or specially variable to variables.

Hypothesis thus:1. Explain observed events in a systematic manner 2. Predict the outcome of events and relationships 3. Systematically summarized existing knowledge.

In essence, there exist null hypothesis set up only to nullify the research hypothesis and the alternative hypothesis, for the purpose of the study. For the efficiency of the study, the hypothesis is as follows:

H0
1. Working capital does not help the business concern in maintaining the goodwill 2. Working capital does not create an environment of security, confidence, and overall efficiency in a business

H1
1. Working capital helps the business concern in maintaining the goodwill. 2. Working capital creates an environment of security, confidence, and overall efficiency in business.

METHODOLOGY
Methodology may be a description of process, or may be expanded to include a philosophically coherent collection of theories, concepts or ideas as they relate to a particular discipline or field of inquiry. This project requires a detailed understanding of the concept Working Capital Management. Therefore, firstly we need to have a clear idea of, what is working capital, how it is managed in Unik Techno Systems Pvt. Ltd., what are the different ways in which the financing of working capital is done in the organization etc. To recognize the various type of information which are necessary for the study of working capital management.

The management of working capital involves managing inventories, accounts receivable and payable and cash. Therefore one also needs to have a sound knowledge about cash management, inventory management and receivables management.

Then comes the financing of working capital requirement, i.e. how the working capital is financed, what are the various sources through which it is done.

And, in the end, suggestions and recommendations on ways for better management and control of working capital are provided.

Collection of data from various department of Unik Techno Systems Pvt. Ltd., to analyze the working capital management of the firm.

COLLECTION OF DATA
There are several ways of collecting both data-Primary and Secondary data, which differ considerably in context of money, cost, time and other sources at the disposable of the researcher.

There are two types of data: Primary data Secondary data

1-Primary Data
Definition:The first handed information/Fresh data collected through various methods is known as primary data.

In respect of primary data which the researchers are directly collects data that have not been previously collected. The primary data was gathered through personal interaction with various functional heads and other technical personnel. Some information was also collected by observation.

2-Secondary Data :
Definition:The data which have been already collected & comprised for another purpose. Secondary data was collected various reports, annual reports, documents charts, management information systems, etc in Unik Techno Systems Pvt. Ltd., And also collected various magazines, books, newspapers etc.

The analysis of the information gathered has been made on the basis of the clarifications sought during the personal discussions with the concerned people and perception during the personal visits to the important areas of services.

In marking observations identifying problems and suggesting certain remedies such emphasis was given on the basis of opinions gathered during the personal discussions.

LIMITATIONS OF THE STUDY.

The following are the various limitations involved in the study.

1. The study in limited 4 years (2006-2007) to (2009-2010) performance of the company.

2. The data used in this study have been taken from published annual report only. 3. This study in conducted within a short period. During the limited period the study may not be retailed, full fledged and utilization in all aspects. 4. We cannot do comparisons with other companies unless and until we have the data of other companies on the same subject. 5. Lastly, due to shortage of time it is not possible to cover all the factors and details regarding the subject of study.

COMPANY PROFILE
M/S Unik Techno Systems Pvt. Ltd. has been established in the year 1999. The Company has two proven product lines and these are Battery Machineries and Industrial Batteries. Also as we are an ISO 9000-2008 Company, housekeeping and safety is an integral part of the company and it is very essential for customer delight and satisfaction. UNIK machines have been exported to Bangladesh, Myanmar, Fiji Islands and South Africa. In India the UNIK machines are in operation in Jammu, Punjab, Delhi, Goa, Gujarat, Kolkata, Maharashtra, Karnataka, Kerala, Tamilnadu, Assam and many other states also.

THEORETICAL ASPECTS OF THE STUDY

An overview of working capital management which gives the theoretical knowledge of working capital management which in turn would help building a strong base for the research ahead. Theory is accompanied by graphs and diagrams which would help the reader to understand the project and the subject thoroughly. The chapter wise categorization of study can be given under this topic.

DATA ANALYSIS & INTERPRETATION

This chapter contains the critical evaluation of the presentation and analysis of data. Analyzing the data available with the help of various diagrams and graphical tools of presentation like bar graphs, line graphs etc. This would strengthen the theoretical knowledge that we have about working capital management. Together with simple graphics analysis, they form the basis of virtually every quantitative analysis of data. With descriptive statistics you are simply describing what is, what the data shows. The data analyses tools are mainly mathematical tools, Tables and Charts are used for this study.

FINDINGS SUGGESTIONS AND CONCLUSION

The last chapter is Conclusion & Recommendations. The findings and conclusions of this report are based on my study and experience. Suggestions can be use by the firm for the betterment increased of the firm after study and analysis of project report on study.

BIBLIOGRAPHY
Details about source of material, reference books, articles, web resources etc. used for research study.

_________________________

_________________________

NAME: AMAR DILIP CHAVAN

(MBA, GDC & A)

DR . P. B. PATIL
(PH.D., M.PHIL, M.COM, GDC&A)