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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.

GADAG CO-OPERATIVE TEXTILE

INDUSTRY, HULKOTI-GADAG.

S.V.M.VV.SANGHA’S INSTITUTE OF MANAGEMENT STUDIES. ILKAL

1


SL.NO. CONTENTS PAGE NO.

1 CHAPTER 1

EXECUTIVE SUMMERY

INDUSTRY PROFILE.

COMPANY PROFILE

NEED FOR STUDY

OBJECTIVE OF THE STUDY

RESERCH METHDOLOGY

FINDING

SUGGESTION

CONCLUSION

2 CHAPTER 2

INTRODUCTION OF INDUSTRY

INDUSTRY PROFILE

3 CHAPTER 3

INTRODUCTION OF COMPANY

COMPANY PROFILE

VISION AND MISSION.

MEMBER AND SHARE CAPITAL OF THE

COMPANY.

BOARD OF DIRECORS.

OBJETIVES OF G.C.T.M HULKOTI.

PRODUCT PROFILE.

ACHIEVEMENTS AND AWARDS.

ORGANIZATION FLOW CHART.

DEPARTMENT STUDIES OF G.C.T.M

HULKOTI.

SWOT ANALYSIS.


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4 CHAPTER 4

RESEARCH METHDOLOGY

SCOPE OF STUDIES.OBJECTIVE OF STUDIES

METHDOLOGY

5CHAPTER 5WORKING CAPITAL MANAGEMENT

MEANING OF CAPITAL.

FORM OF CAPITAL.

MEANING OF WORKING CAPITAL.

TYPE OF WORKING CAPITAL.

NATURE OF WORKING CAPITAL.

FACTORS DETERMINING WORKING CAPITAL

REQUIREMENTS.

FINANCIAL SOURCES OF WORKINGCAPITAL.

COMPONENTS OF W.C.

WORKING CAPITAL COMPOSITION.

6 CHAPTER 6DATA ANANLYSIS AND INTERPRETATION

7 CHAPTER 7FINDINGSSUGGESTIONSCONCLUSIONS

ANNEXURE

BALANCE SHEET

BIBLOGROPHY


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EXECUTIVE SUMMARY


4

CHAPTER 1

EXECUTIVE SUMMARY

CHAPTER 1

EXECUTIVE SUMMARY

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. The project has been under taken under as the part of master of business

administration course as per the direction of Karnataka university dharwad. The second

year MBA students will take part in this project were the summer in plant project for the

period of two months and the project is related to finance and the topic of this project is

“The study of working capital management”.

The Gadag co-operative textile mill ltd established in 1972 by late

shri.K.H.Patil at Hulkoti in Gadag district. It is producing main product as yarn. The

company started with a production cost of RS.220lakhs.It is started producing yarn in the

year 1973.

Working capital (also known as net working capital) is a financial metric that

measures a company’s operating liquidity.

Working capital is defined as current assets minus current liabilities. A positive

position means that a company is able to support its day-to-day operations—i.e., to

serve both maturing short-term debt and upcoming operational expenses.

One of the metric’s shortcomings, however, is that current assets often cannot be

liquidated in the short term. High working capital positions often indicate that there is

too much money tied up in accounts receivable and inventory, rather than short-term

liquidity.

All companies should therefore focus on the tight management of working capital.

Inventory, accounts receivable, and accounts payable are of specific importance since

they can be influenced most directly by operational management.

Companies that improve their working capital management are able to free up cash

and thus can, for example, reduce their dependence on outside funding, or finance

additional growth projects.

If done right, working capital management generates cash for growth together with

streamlined processes along the value chain and lower costs.

INDUSTRY PROFILE:-


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Textile co-operative is being important tradition cottage industries play a vital role in

meeting the clothing requirements of the people. The handloom industry is meeting

nearly 1/3 of clothing requirements of the country’s population. The government of India

assigned to the handloom sector the task of increasing the handloom production year by

year.

COMPANY PROFILE:-

The Gadag Co-Operative Textile Mill was established in the year 1972 with a project cost

of Rs 220 lacks and commenced its trial production in April 1973 we have a feather in the

cap for having installed 25000 spindles capacity mill in a record time in the entire

country. Late Shri K.H.Patil, a son of soil and veteran Co-Operator devoted his time fully

for the establishment of a Co-Operative network around Hulkoti providing various

amenities and scope for development of farmers which went ahead against all odds both

traditional and political, till he transformed a vision into a reality. This endure has

transformed into worthy institution located on either side of highway number 63 between

Hulkoti and Gadag.

NEED FOR THE STUDY:-

The project work (summer in plant training) is compulsory made by Karnataka University

Dharwad for the MBA students for the fulfillment of the requirement of MBA degree as

part of our curriculum

And also to become a sound person and get the practical knowledge about the

industrial working capital and activities carried in the organization

OBJECTIVES OF THE STUDY:-

1) To know the sources of working capital.

2) To study the various proportions of working capital of GADAG CO-OPERTIVE

TEXTILE industry.

3) To find out different ratios related with working capital.

4) To check the impact of cash flows on working capital of GADAG CO-

OPERATIVE TEXTILE industry.

5) To know the current trend of Assets and Liabilities.


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METHODALOGY:-

In preparing of project the information collected from the two sources.

PRIMARY DATA: - The information collected from personal interaction with

Manager and other staffs

SECOUNDRY DATA: - The annual report of the company and company

Website.

FINDINGS:-

1) The current ratio of the firm is not satisfactory because the firm is not utilizing

available recourses properly. The highest ratio is 2.88 recorded in the year 2004-05

and the lowest ratio is 0.96 recorded in the year 2009-010. So the current ratio is not

satisfactory. The firm needs to concentrate on current assets. By utilizing the available

resources properly the firm may improve the current ratio

2) The quick ratio of firm is not satisfactory because in the firm’s quick assets there

excess amount than requirement it shows that the company is not utilizing available

resources properly. The highest quick ratio is 1.66 recorded in the year 2004-05 and

the lowest ratio 0.88 recorded in the year 2009-010. The company needs to

concentrate on quick assets. By utilizing quick assets properly the firm may improve

this ratio.

SUGGESTIONS:-

1) To improve the current ratio and quick ratio the company needs to concentrate on

current assets by utilizing available resources in the current assets the company may

improve its current ratio and quick ratio.

2) The company increase there creditors period and maintain the standard period. The

company was very high debtor’s collection period it should be decrease.

CONCLUTION:-

This study helps to know that the companies financial position. The sale of the

company is decline in the year 2010. There is an increases cost in some years so it is

needs to reduce its costs.

As the study helps to know that the changes in financial statements i.e. increase

or decrease in the liabilities and assets. By the ratio analysis we come to know that the

companies solvency. The companies have to take some measures to control the costs. By

working capital we comes to know its working capital management


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8

CHAPTER 2

INTRODUCTION OF THE INDUSTRY

INDUSTRY PROFILE

CHAPTER 2

INTRODUCTION OF THE INDUSTRY

INDUSTRY PROFILE


HISTORY OF TEXTILE INDUSTRY


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. India has been known for textile goods since ancient times. The traditional textile

industry was virtually decayed during the colonial regime. However, the modern textile

industry took birth in India in the yearly 19th century when the first textile mill in the

country was established at Fort Gloster near Calcutta in 1818. The cotton textile industry

however made its real beginning in Bombay, in 1950’s.

A Paris Cotton merchant then engaged overseas and internal trade established the

first cotton textile mill of Bombay in 1854. Indeed, the vast majority of the early mills

were the handy work of Paris merchants engaged in yarn and cloths tread at home and

Chinese and African markets.

The cotton textile industry made rapid progress in the second half of the 19 th

century and by the end of the century there were 178 cotton textile mills, but during 19 th

century cotton textile industry was in bad state due to the grate famine and a no of mills

of Bombay and Ahemadabad were to be closed down for long periods. The two world

wars and the swadeshi movement provided grate stimulus to the Indian cotton textile

industry.

The number mills increased from 178 with 4.05lakh looms in 1901 to 249 mills with

13.35lakh looms in 1921 and further 396mill with over 20lakhs. After independence the

Indian union had 409 textile mills.


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Figure .1 Traditional cotton mill and its operation in India

MARKET SHARE OF MAJOR COUNTRIES IN THE GLOBAL

TEXTILE INDUSTRY

Although the development of textile sector was earlier taking place in terms of

general policies, in recognition of the importance of this sector, for the first time a

separate Policy Statement was made in 1985 in regard to development of textile sector.

The textile policy of 2000 aims at achieving the target of textile and apparel exports of

US $ 50 billion by 2010 of which the share of garments will be US $ 25 billion. The main

markets for Indian textiles and apparels are USA, UAE, UK, Germany, France, Italy,

Russia, Canada, Bangladesh and Japan. The main objective of the textile policy 2000 is to

provide cloth of acceptable quality at reasonable prices for the vast majority of the

population of the country, to increasingly contribute to the provision of sustainable

employment and the economic growth of the nation; and to compete with confidence for

an increasing share of the global market.


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TEXTILE CONTRIBUTION TO INDIAN ECONOMY

With a total market size (2004-05) of US$ 38 billion, the textiles domestic

market comprises US $ 25 billion and exports US $ 13 billion. The Indian textiles sector

has a strong contribution to the Economy. Few of them are listed below.

14 per cent contribution to industrial production

04 per cent contribution to GDP

16 per cent contribution to export earnings

Direct employment to more than 35 million people

The textile industry functions in the form of clusters (roughly 70 in number)

across India, producing 80 per cent of the country’s total textile.

CURRENT SCENARIO

Developing countries with both textile and clothing capacity may be able to

prosper in the new competitive environment after the textile quota regime of quantitative

import restrictions under the multi-fiber arrangement (MFA) came to an end on 1st

January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and

Clothing.

act, India can envisage its textile sector becoming $100b industry by 2010. This will

include exports of $50b. The proposed targets would be achieved provided reforms are

initiated in textile sector and local manufacturers adopt measures to improve their

competitiveness.

Proposals for modernization of NTC mills have been made to the consultative

committee members, including formation of a committee of experts to improve

management of these mills. Even the present status of jute industry was under the scanner

of the consultative committee.


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LATEST NEWS IN TEXTILE SECTOR:-

Ministry of finance has added 165 new textile products under duty drawback schedule.

The new products included wool tops, cotton yarn, acrylic yarn, viscose yarn, various

blended yarn/fabrics, fishing nets etc. Further, the existing entries in the drawback

schedule relating to garments have been expanded to create separate entries of garments

made up of (1) cotton; (2) man made fibre blend and (3) MMF. Separate rates have been

prescribed for these categories of garments on the basis of composition of textiles.

After the phasing out of quota regime under the multi-fibre pact, India can

envisage its textile sector becoming $100b industry by 2010. This will include exports of

$50b. The proposed targets would be achieved provided reforms are initiated in textile

sector and local manufacturers adopt measures to improve their competitiveness.

Proposals for modernization of NTC mills have been made to the consultative

committee members, including formation of a committee of experts to improve

management of these mills. Even the present status of jute industry was under the scanner

of the consultative committee.

Current facts on India textile industry:

India retained its position as world’s second highest cotton producer.

Acreage under cotton reduced about 1% during 2008-09.

The productivity of cotton which was growing up over the years has decreased in

2008-09.

Substantial increase of Minimum Support Prices (MSPs).

Cotton exports couldn't pick up owing to disparity in domestic and international

cotton prices.

Imports of cotton were limited to shortage in supply of Extra Long staple cottons.


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14

CHAPTER 3

INRODUCTION OF THE COMPANY

COMPANY PROFILE.

VISION AND MISSION.

MEMBER AND SHARE CAPITAL OF THE

COMPANY.

BOARD OF DIRECTORS.

OBJECTIVES.

PRODUCT PROFILE.

ACHIEVEMENTS AND AWARDS.

DEPARTMENT STUDIES.

ORGANIZATION FLOW CHART.

SWOT ANALYSIS.


COMPANY PROFILE:-

The village Hulkoti has a population of around10,000, comprising of various

section of people and since long it has been the cradle of cooperation in having the first

primary Credit Co-operative Societies established in the east while Bombay State. The

occupation of the village is mainly agriculture. The farmer and the farm laborers form a

nucleus of this rural area. The main crop grown around Hulkoti is Jawar, Cotton,

Groundnut, Chilly and other pulses. Since there are no major irrigation projects, dry land

cultivation is the only way-out for the farming community. Agricultural produce

particularly Cotton, Groundnut, Jawar etc., were being marked to the tune of Rs.90 to 100

crores Per Annum in and around Gadag. Prior to the emergence of the Gadag Co-

operative Cotton Sale Society Ltd., Gadag farming community was undesirably exploited

by private tenders and commission agents. It is at this juncture, releasing the need for

upliftment of much neglected farmers community and to better the lot of Rural area, Late

Shri K. H. Patil, a son of soil and foreran Cooperator devoted fully for the establishment

of Co-operative network around Hulkoti providing various amenities and scope for

development of farmers which went ahead against all odds both Traditional and Political,

till he transformed vision into a reality. This Endeavour had transformed into worthy

institution located on either side of Karwar-Bellary Road between Hulkoti and Gadag.

The main hub of production and processing of Agro Industries is farmer and farming

community.

After successfully setting up of Ginning and Pressing unit by the Gadag Co-

operative Cotton Sale Society, the next ambition of our Cooperators, was to establish a

Textile Mill of 25,000 Spindles capacity which would consume the main agriculture

produce by paying remunerative prices to Cotton Growers and to save the farming

community from the clothes of Private Tenders.

It is with this ideal background. The Gadag Co-operative Textile Mill was established in

the year 1972 with a project cost of Rest. 220 Lakes and was commenced itstrial

production in April 1973. We have a feather in the gap for having installed 25,000

spindles capacity Mill in a record time in the whole of India. In brief the profile of the

mill is presented in table1.


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1 MILL PROFILE

Name THE GADAG CO-OPERATIVE TEXTILE MILL LTD.

HULKOTI – 582 205.

Status This Co-operative Society registered under the Co-operatives

Societies Act of 1959

Location Karnataka state, Gadag Dist, Hulkoti

Chairman Shri D.R. Patil, Ex M.L.A. Gadag.

Area of

operation

Haveri, Gadag and Dharwad

Export places New-Delhi, Vietnam, South Korea, China and Couple of European

countries

Nature of

Business

Production and sale of YARN

Membership

and Share

capital

3021 Co-operative societies and 817.71 Lakhs

No of

departments

8 [Eight] Departments

Number of

employees

750

No of Board of

Directors

Elected members – 18

Ex – office members – 1

Nominated by Govt – 3

Production

capacity

8,500 kgs of yarn per day as per the 2009-2010 report.

Storage

capacity

7500 Million TON.


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VISION , MISSION AND VALUES OF THE GCTM LTD:

Vision:

After 18 years there was a need for upgrading technology of certain machines and to

eater to the export needs the management proposed a modernization programmed at a

cost of Rest. 429.00 laks.

To met the standard of the quality of yearn in demand, both in domestic as well as in

international markets the management of the mills thought it inevitable to launch

another modernization programmed.

G.C.T.M. has already replaced 50% of new machinery and it also intended to install

another 50 % of new machinery.

Mission:

To achieve international standards of excellence in all aspects of energy and diversified

business with focus on customer delight through value of products and services and cost

reduction.

→ To maximize creation of wealth, value and satisfaction for the share holders.

→ To attain leadership in developing, adopting and assimilating state-of-the art

technology fro competitive advantages.

→ To provide technology and services through sustained research and development.

→ To faster a culture of participation and innovation for employee growth and

contribution.

→ To cultivate high standards of business ethics and total quality management for a

strong corporate identify and brand equity.

→ To help enrich the quality of life of the community and presence ecological balance

and heritage through a strong environment conscience.


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.MEMBER AND SHARE CAPITAL OF THE COMPANY

Being one of the best-run Co-operative Mills in India, having following

membership and paid-up share capital structure as on 31st March 2004 as shown in

table2.

Table .2 Members and its share holders of the company

Sl.

No

Category No of share

Holders

Paid-Up Share

Capital

1 “A” Class (Individual/Societies) 3014 Rest. 107.47 Lakes

2 “B” Class (K.A.I.C) 1 Rest. 015.00 Lakes

3 “C” Class (State Government) 1 Rest. 695.26 Lakes

Total 3016 Rest. 817.73 Lakes

As against authorized Share Capital of Rest. 556.00 Lakes the Mill could achieve

the total paid-up Share Capital of Rs.817.68 Lakes as on this date.

PROJECT COST

The Mill has another distinction for having established with a Project cost of

Rs.817.68 Lakes which was met out in the following manner:

1 Members Share Contribution - Rs.040.00 Lakes

2 Government Share Contribution - Rs.080.00 Lakes

3 Term Loans (I.F.C.I) - Rs.100.00 Lakes

Total - Rest. 220.00 Lakes

Being predominantly a Growers Mill, for the First time, the mill had received the

Share capital assistance from NCDC New Delhi.


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OWNERSHIP PATTERN:-

Type of company: Co-operative

Board of Directors:

Shri D.R. Patil and H.M. Soppin are chairman and Vice chairman of the GADAG

CO-OPERATIVE TEXTILE MILL LTD., HULKOTI respectively and others following

these prestigious persons are Board of Directors of Garage Co-operative Textile Mill Ltd.,

Hulkoti.

BOARD OF DIRECTORS

S.L.

No:

Name Designation

1 Shri D. R. Patil Chairman

2 Shri H.M. Soppin Vice Chairman

3 Shri R.M. Mulimani Director

4 Shri V.B. Inamati Director

5 Shri T.B. Mundavad Director

6 Shri C.B. Karikatti Director

7 Shri V. R. Naganur Director

8 Shri S.B. Balaraddi Director

9 Shri S.B. Bhasetti Director

10 Shri S.C. Kanavi Director

11 Shri S.C. Huilgol Director

12 Shri G.N. Patil Director

13 Shri A.S. Patil Director

14 Shri R.B. Hosamani Director

15 Shri B.H. Dyavanashi Director

16 Shri S. K. Kuradagi Director

17 Shri D.S. Odugoudar Director

18 Shri R.Y.

Kempalinganagoudar

Director


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General Manager

District Industries center Garage Director

Deputy Director of Handlooms

And Textile Inviters

Joint Registrar of

Co-operative societies Director

Shri T. Shantaveerappa

Managing Director Director

OBJECTIVES OF THE GADAG CO-OPERATIVE TEXTILE MILL LTD.

The primary object of the Mill is to encourage the cotton growers and help them by

purchasing their cotton for the Mill by eliminating middlemen to produces and supply

yarn directly to the weaver members continually.

To set up sales depots.

To set up credit facilities to the members.

To enter into Trading /manufacturing activity of any articles or the agricultural

produce to the society.

To enter service areas like supplying of fuel and gases and any other services which

will be beneficial to the society.

To know the perception about the customers.

To increase their productivity.


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NATURE OF THE BUSINESS CARRIED:-

The first step the company purchases the raw material i.e. cotton from the farmers.

Then it mixes it with different quality cotton according to the quality of yarn needed.

The next step is cleaning the minor part and spraying the water to it. Then it kept 1

day in the cool place. Next step it goes to major cleaning part it goes to all cleaning of the

cotton.

The next process is carding process. Here the cotton will become smoothly and white.

Next goes to the simplex method. In this cotton becomes big layers and it makes the

group of layers.

The next procedure is rolling and grilling. Here the big layers are rolled and it is

separated from the group and comes in the form of loose thread and next process is

drafting and twisting and the thread becomes strong and it comes layer by layer in the

form of thin yearn. The next step is noting here if thread goes into two parts the machine

will join it. It is called noting process.

Finally after all these process the raw material is converted into the finished goods which

are in the form of yarn.

PRODUCT PROFILE:-

The G.C.T.M. (Garage Co-operative Textile Mill) manufactures the Hank Yarn

and Cone Yarn.

ABOUT YARN COUNT

Yarn count is used to define fineness or thickness of the yarn.

Cotton Yarn Count System: This system is mostly based on the number of 840 yards

length per pound in weight.

Example: 1 pound of 20s yarn has 16,800(20*840)yards in length; and 1 pound of 10s

yarn, which is 2 times heavier and thicker than 20s yarn, has only 8400(10*840) yards in

length. Direct system filament yarn is counted by the direct system – higher numbers

denotes thicker yarn size


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Different types of cotton yarn are produced in G.C.T.M. (Garage Co-operative Textile

Mill) are:

10s, 20s, 40s, 60s, 80s, 100s, 2/20s, 2/40s, 2/60s.

Figures .2 Different types of Yarn Count and Hank Yarn

Figure .3 Company Products


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. ABOUT COMPANY CUSTOMERS

The Co-operative Textile Mill has many customers. Few of them are listed below.

Samrudha Over Sales Ltd., Mumbai

Suryajoti International Mill Ltd., Sikandrabad.

Dhanalaxmi (C & R) Mill, Ganapavaram.

Rahul Computer Ltd., Kolkatta.

Suryalaxmi Cotton Mills Ltd., Sikandrabad.

PRODUCTION PERFORMANCE OF THE COMPANY FROM 2003 – 2009

The table 3 indicates the production Performance/progress of the company since

2003 – 04 to 2008 – 09.

Table.3 Production performance of the company

Sl. No. Particulars 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

A Production

1 Cotton consumed Kgs. In

Lakes

33.37 35.20 32.31 32.49 32.39 28.44

2 Value in Lakes Rest. 1894.90 1812.2

5

1375 1461.90 1695.15 1696.85

3 Yarn produced in Lakes

Kgs.

28.01 29.57 26.80 27.53 27.86 24.35

B Capacity Utilization &

Productivity

1 Spdl. Utilization % 63.57 71.39 73.49 73.97 69.81 55.91

2 Production (converted to

40s in Gram Per Spindle

84.00 82.37 82.15 83.18 86.20 87.53

AREA OF OPERATION GLOBAL\NATIONAL\ REGIONAL


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Area of operation of the company is Regional those are namely Dharwad, Haveri

and Garage. The Cotton Advisory Board (CAB) in its meeting held on 26 th May, 2006

estimated the area under cotton cultivation at 88.72 lakh hectares for 2005-06 seasons as

against 89.20 lakh hectare in 2004-05. The crop was estimated at an all time record of 244

lakh bales of 170 kgs. Each (inclusive of 12 lakh bales of lose cotton) for the cotton

season 2005-06 as against the estimated coop. of 243 lakh bales for the cotton season

2004-05.

Table. 4 Area and Production Estimates

State Area Production Estimates

2004-05 2005-06 2004-05 2005-06

Punjab 5.09 5.57 16.50 21.00

Haryana 6.21 5.83 15.50 14.00

Rajasthan 4.38 4.72 11.00 11.00

Total North Zone 15.68 16.12 43.00 46.00

Gujarat 19.06 20.77 73.00 89.00

Maharashtra 29.80 28.89 52.00 36.00

Madhya Pradesh 5.76 6.00 16.00 18.00

Total Central Zone 54.62 55.66 141.00 143.00

Andhra Pradesh 11.74 10.37 32.50 30.00

Karnataka 5.12 4.50 8.00 6.50

Tamil Nadu 1.42 1.36 5.50 5.50

Total South Zone 18.28 16.23 46.00 42.00

Others 0.62 0.72 1.00 1.09

Total 89.20 88.73 231.00 232.00

Loose Production - - 12.00

All India 89.20 88.17 243.00 244.00

Area in lakh hectares – Production in lakh bales.

COMPETITORS INFORMATION:


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.These following companies are the competitors of the G.C.T.M.

Banahatti Co-operative Spinning Mill Ltd.

Sangola Co-operative Spinning Mill Ltd.

Farmers Co-operative Spinning Mill Ltd.

Forbes Campbell Knitwear Gokak Ltd.

The Garage Co-operative Textile Mill (G.C.T.M.) face major competition from the above

4 competitors and it also face the competition from which those companies have national

presence.

But, the Garage Co-operative Textile Mill (G.C.T.M.) has been facing the competition

through maintaining good quality off cotton yarn and also reasonable price, prompt

service, advertisements, and also through maintaining good relation with the suppliers,

consumers with society.

INFRASTRUCTURE FACILITIES:

Mill is providing a canteen in the campus area which is very helpful for the

employees working in the mill.

Mill is also providing a school and P.U College for the employee children.

Mill is also providing the guest house facility for the visitors.

A good sophisticated building is there for the mill for working and transportation facility

also provided for the workers.

Table 5 Estimated project cost of the company

Land and building

Plant and machinery

Miscellaneous

Contingency

Working capital margin

Free operative expenses

33.71 Lakes

177.70 Lakes

24.08 Lakes

6.00 Lakes

22.00 Lakes

15.00 Lakes

Total 220.00 Lakes

The Mill has another distinction of having established with a project cost of Rest

220.00 Lakes, which was, met out in the following manner.


25

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Table 6 Means of Finance

Members of share capital

Government share capital

Team loan

40.00 Lakes

80.00 Lakes

100.00 Lakes

Total 220.00 Lakes

Being predominantly a Growers Mill, for the First time, our Mill had received the share

capital assistance from NCDS New Delhi.

ACHIEVEMENTS AND AWARDS

The utilization of the machinery from 2002 to 2006 has been increasing year by

year, so it indicates the increasing. In the proper utilization of the machinery. Similarly

increasing in the average number of yarn.

Fluctuations in the total production of yearn from year to year has effected on the

total sales of the yarn, because total sale of yarn also has been fluctuating from year to

year. And in the average production of yarn has been increasing from year to year. So it

indicates the growth in the average production.

Lastly, Garage Co-operative Textile Mill (G.C.T.M). in loss from 4 years as per my

study, but loss has been decreasing from year to year i.e. 2001-02 it's (-) 335.28. But in

2008-2009 it's (-) 132.12 Lakes. During the year 2009-2010 mill has earned a profit of

Rs21.66 as on 30/09/2009. So it's the indication growth and good performance of the

Garage Co-operative Textile Mill (G.C.T.M.).

AWARDS

All India spinning mill productivity first to India in 1978 to 1981.

The awards were decided on the basis of their performance during 2003-04 as per techno-

economic data presented by the mills.

The Federation presented five awards each in the following key areas of operation.

Operating Net Profit per installed spindle.

Operating Cash Profit per installed spindle.

Machine Productivity Index.

Sale value of Production per spindle.


26

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Two awards were pretend to the mills which have accumulated net profit as on 31 st

March, 04. In addition to these 22 awards, 2 mills were presented Certificate of

Appreciation for having operating net profit per installed spindle and six Certificate of

Appreciation to the mills having operating cash profit per installed spindle for the year

2003-04.

WORK FLOW MODEL (End-to-End)


27

Drawing Carding

Simplex Spinning

Mixing Blow Room

Ring Frame

Conditioning Tank Doubling (Double Yarn)

Reeling

Conditioning Tank

Cone Packing

Conditioning Tank

Single Yarn Tank

Bundle Press

Conditioning Tank

Fully Automatic yarn is spoiled

where will be no knots

Realing

Bundle Press

Cone Packing

Bale


The work flow model of the company is shown with a block diagram, its important

components are summarized below.

MIXING: Bales of different counts are mixed along with usable wastes, on different

percentage in the mixing bins, cotton bales of different quality are opened and stacked,

called stock mixing, 24 Hours for conditioning before it is process further.

BLOW ROOM: Cotton in losses form is spending on mixing bale openers and taken

further of different cleaning points where the cotton is beaten and trash is extracted.

Finally converted into Lap form of different length, weigh per yard, depending on the

count.

CARDING: Lap form Blow room feed to Cards where the cotton is converted from Lap

form to sliver form. During this process trash, short fibers and other impurities are

extracted the different cleaning points, like licker in, Flats section Units. The sliver is

produced of different Hank depending on the counts.

PREPARATORY: Cards sliver is drawn through different drafting Rollers and the

sliver is elongated and increasingly the length of the sliver and radiating in the cross

section by passing through different drafting rollers and convert into a suitable package

by giving little twist to the material called Rove and wound on a Bobbin.

SPINNING: The bobbins from the Preparatory process are feed to the drafting rollers as

final treatment to the material and further increasing the length and reduction the cross

section of the material. This process the material process through Ring and Traveler and


28

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.would on the bobbin to form a suitable package the giving optimum of the twist

depending on count of the yarn.

CONE WINDING: Here the yarn spun is cleaned by passing through cleaning devise

called slob catcher and would through suitable package of required length and weight in

the form of a Cone.

DOUBLING: Here two yarn of the same count are doubled by giving necessary twist in

the form of package called bobbins.

REELING: Here single yarn or doubled yarn are wound on the swifting of the machine

called Reel in the form of Hank and are make in the form of Knots. There are two types, a

Plain or Cross Reel.

BUNDLING & BALING: Here the number of knots plain or cross is in a press

depending on the count and weight of the boundless are as per requirements. Bundles are

pressed in the form of Bale depending on the count, Plain or Cross as per the requirement

from the market.

PACKING: Here number of cones or cheeses is bagged depending on the count of the

yarn number of cones and weight of the cones. Depending on the requirement of the

market.

Figures 4. work flow end to end

Ring spinning Ring spinning


29

http://en.wikipedia.org/wiki/File:Textile-Spinning_room.jpg

http://en.wikipedia.org/wiki/File:Catalonia_Terrassa_mNATEC_Selfactina.jpg

http://en.wikipedia.org/wiki/File:Ringspinnen.JPG

http://en.wikipedia.org/wiki/File:Ring_spinning_machine_in_the_1920s.jpg


Mule spinning Mule spinning

Carding Realing

FUTURE GROWTH AND PROSPECTUS

The Co-operative textile mill challenge to the society they have the capacity of

increasing the quality of their products.


30

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. The-operative textile mill needs good specialized types of machines and

modernization of machines.

It challenges to the competed for market shares. The government has also helped the

mill by giving the financial assistance to improve the industry.

Submitted project report of Rest. 19.00 crores to the Government towards third face

modernization.

DEPARTMENTAL STUDIES:-

1. Production Department

2. Human Resource Department

3. Purchase Department

4. Finance Department

5. Quality Control Department

6. Marketing Department

7. Stores Department

1. PRODUCTION DEPARTMENT:-

The Garage Co-operative Mill is going to receive the ginned cotton. (Cotton fibers

are separated from the seeds) from the above mentioned suppliers. Before going to

production of yarn they classified the cotton on the basis of staple length of cotton, fiber

and decide what count can be spun out of the cotton received.

There are number of variety of yarn which are 10s, 16s (short staple) 18s, 20s, 40s

(medium staple), 50s, 60s, 62s, (long staple) and 60s, 80s, 100s (Super Staple).

OBJECTIVES OF PRODUCTION DEPARTMENTS:

To produce quality productions.

Reduction in waste of raw materials.

To maintain the production capacity of machine.

2. HUMAN RESOURCE DEPARTMENT:-

This department looks after the recruitment, selection and welfare of the employees. It

also conduct and orientation programmes. Facilities given to employees are as follows.

Transportation


31


Medical

Canteen

Uniform

Provident fund

Gratuity

Women's pregnancy allowance.

LABOUR WELFARE

The mills have provided a gainful employment to 750 regular employees and

about 300 trainees of 3 shifts basis. The employees are given Bonus up to 20% &

residential accommodation on nominal rent. Besides the employees are given

confessional transport facilities from Gadag to Hulkoti. They are also members of the

employees credit Co-operative society for getting loans.

RECRUITMENT PLANNING

Maintaining an organization culture of outpace elements like mutual trust,

human values, openness etc, requires a proper recruitment plan on the part of the human

resources manager. Hence, recruitment plan is an important component of the human

resource plan.

It is recruitment which enables an organization to provide a substantially large pool of

potential candidates for each join, so that adequate talents would be available for the

organization on to select whenever needs arise.

OBJECTIVES OF THE H.R.D. DEPARTMENTS

There are mainly two types of workers is there in G.C.T.M. They are skilled

and unskilled workers.

The total workers of the G.C.T.M. (Gadag Co-operative Textile Mill)

The strength of skilled workers 314

The strength of unskilled workers 622

Total workers 936

RECRUITMENT PROCEDURE


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GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Interview panel of G.C.T.M. (Gadag Co-operative Textile Mill) consist of 4

members who will responsible for selection of worker or employees. The interview panel

will be same for every time. In case of lower level management direct recruitment is

preferred. In case of top level management such as Accountants, Engineering, Managers

etc. They need B.Com, B.E., M.B.A., M.Com, Etc., In case of production level G.C.T.M.

(Gadag Co-operative Textile Mill) will prefer diploma in electrical or diploma in

mechanism or any graduate who will be suitable for job.

Figure 7. Recruitment procedures

Interview Panel Consist

G.M.H.R.

A.G.M.H.R.

Section In charge of Senior Supervisor

Shift Supervisor

Shift Assistant

They will be judge the candidate through rational scale of technique. And

our G.C.T.M. (Gadag Co-operative Textile Mill) will maintain minimum wage act.

INDUSTRIAL RELATIONS

G.C.T.M. (Gadag Co-operative Textile Mill) has started in 1975 means in the year

2010. This is the 35th year of G.C.T.M. (Gadag Co-operative Textile Mill) as per the

information given by the G.C.T.M. (Gadag Co-operative Textile Mill) management since

from 35th years there is no any strike, disputes anything means it indicates about the

healthy relationship between the employees themselves and management at G.C.T.M.

(Gadag Co-operative Textile Mill).


33

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. WORKERS PARTICIPATION IN MANAGEMENT

But our G.C.T.M. (Gadag Co-operative Textile Mill) has provides opportunity to

workers to participate in management, while taking any new decisions management will

ask workers suggestions. If they give good suggestions they will accept & management

will finally decide about it in meeting.

3. PURCHASE DEPARTMENT:-

The Cotton Purchase policy of the mill is designed in a way so as to provide an

incentive price to the Cotton Growers. The Mill purchases its cotton at the open auction

held by Co-operatives namely The Gadag Co-op. Cotton Sale Society. T.A.P.C.S.M.

Society of Annigeri. Cotton brought in these Societies is graded by the A.P.M.C.

Agricultural authority. Around 3000 Grower members and also 10200 other cotton

Grower derive a a significant economic benefits from our mills.

PURCHASING PROCEDURE

4.4.3.2 Suppliers

Cotton Corporation of India (CCI)

Maharastra State Cotton Federation (MSCF)

Shanty textile Mumbai

Pm kolhar Gokak

Baradia cotton cooperative Mumbai

ECONOMIC BENEFITS TO MEMBERS

The rates offered for cotton by our Mill in the Tenders at the Marketing Societies are

generally higher than the rates available to the farmers at Tenders carried out at the premises

of Private Commission Agent.


34

Local & National

Cotton Industry

Agriculture Area


A price incentive of Rs. 100 to Rs. 150 per quintal over the market rates are given to every

member linked to the Share value of Rs. 100 each.

Member's cotton is ginned and converted into yarn on behalf of them and after deduction of

conversion cots; the profits are passed on to members concerned. Form 1982-83 onwards

members availing of such scheme got up to Rs. 150 per quintal after sale of yarn.

Extension advice to improve cotton production is given by Agricultural Science Foundation

established by the Mill. Our mill has been arranging Workshops/Seminars by inviting

Agricultural experts for the benefits of Farming Community of this area.

4. FINANCE DEPARTMENT;

Functions of finance department:

1) Finance department looks after the finance &prepare the accounts of G.C.T.M.

2) Finance department taken up functions like investment decisions, Finance decisions,

& capital building working capital management etc.

3) It borrows loans from national co-operative development corporation

4) (N.C.D.C.), Government of Karnataka, Banks from share holders, money lenders.

5) It consists at share capital, secured and unsecured loans.

Accounting system

Gadag Cooperative Textile mill ltd Finance, Every company needs finance to

carry on its business operations and to achieve its targets and finance is the lifeblood of

the business. It is the foundation of every economic activities needs. A business requires

finance at every stage. Finance is needed for bringing a business in no existence. It is

required for financing. The fixed capital is used for expansion and modernization of

business and also for financing the working capital.

There are mainly 2 types of financial requirement:

1. Long Term – Acquisition fixed assets

2. Short Tem – Working capital needs

5. QUALITY CONTROL DEPARTMENT:-

The main objective of the quality control department is to check the quality of the

cotton and the cotton yarn I the firm. The step by step tests are conducted by the officers

to meet this requirement. If any product does not pass through the quality standards than


35

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.that is rejected. Even before dispatching the products they undergo testing and they must

be approved by the quality department.

THE STEPS OF MAINTAINING QUALITY

1) 3% before and removing waste.

2) Blorem drafting 2.5% to 3% waste will be removed.

3) Carding hell 1.25% to 1.5% flame waste will be removed.

4) 3% to 5% flame waste will be removed.

THE STEPS OF TESTING

Raw materials testing i.e. cotton testing.

Testing at first stage i.e. blorem stage.

Testing at the carding level.

Testing the yarn at processing level.

Testing at the final stage.

IMPORTANCE OF THE QUALITY CONTROL

The brand products build up goodwill or image, which ultimately increase sales of

G.C.T.M. (Gadag Co-operative Textile Mill) yarn.

It helps the manufacturers in fixing responsibility of workers in the production process.

Quality control also helps in minimizing the costs by increasing efficiency,

standardization, working conditions at the G.C.T.M. (Gadag Co-operative Textile Mill).

It also help or enables the G.C.T.M. (Gadag Co-operative Textile Mill) to know the cost

of their product quite in advance which helps them in determining competitive prices of

their product.

Last but not the least; the G.C.T.M. (Gadag Co-operative Textile Mill) can confirm

whether the yarn manufactured by them is in accordance with standard set by the

government. It further facilities the G.C.T.M. (Gadag Co-operative Textile Mill) to take

necessary actions to comply with the standard set.


36


6. MARKETING DEPARTMENT:-

The Mill manufactures 10s, 14s 20s, 30s, 34s, 40s, 60s, 80s, 100s, 2/20s, 2/40s,

2/60s, etc., in the form of Hanks as well as Cones as per the prevailing market demand.

Sale of hank yarn and cone forms 40:60 respectively. We have been fulfilling the Hank

Yarn obligated stipulated by the Textile Commissioner, Government of India at the end of

every quarter. The daily production of yarn is about 8,500 kgs. And Mills is working

round the clock for all the seven days of the week. Special preference is selling yarn is

given to Weavers Co-operative Apex Organizations and Karnataka Handloom

Development Corporation. Export of yarn has been our priority Yarn is being exported to

countries like Vietnam, South Korea, China and couple of European Countries. In last Six

years, we have exported yarn worth Rs. 676.00 Lakhs. We are happy to inform that, we

have fulfilled Export obligation as stipulated by the D.G.F.T., New-Delhi.

Sales Places:

1) National Handloom Development Corporation

2) Karnataka Hand look Development Corporation

3) Depot

i. Coimbatore

ii. Solapur

iii. Ieachalkaranji

iv. Malegaon

7. STORES DEPARTMENT:- Stores Department is one which stores all the

materials, equipments and spare parts etc. which are needed in the signalization for its

smooth running.

Material Stores

It is a sub department of the stores, which maintain the stock of raw material needed in

the plant i.e. cotton, paper cones, bags. This department mainly concerned with the

storage of 30 days stock of raw material in the plant.

General Stores

It is also a sub department of the stores which maintaining the stock of General materials

like, paper, files, uniforms of workers, shoes, goggles, helmets, glows, cups, spare .

The stores department is maintaining mainly 2 ledgers, they are:


37

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.1)Material Receipt Ledger.

2)Material Issued Ledger.

At the time of each entry in the ledger they are quoting the date, item no. quantity

price / piece, total price.

STAFF:-Classification of staff and Duties and Responsibilities of various groups of staff.

1) Administrative staff

2) Technical and factory staff

Administrative staff

Chairman

The chairman of the Mill shall have an over all control over the day to day management

of the Mill. He shall preside over the meetings of the Board of Directors and the General

Body. The chairman of the Mill shall have general control over the affairs of the Mill. He

shall exercise such of the powers of the Board as may be delegated to him form time to

time.

Managing DirectorThere shall be a Managing Director appointed by the Board of Directors. He shall be a

professionally qualified experienced man in the textile industry. He shall be the Chief

Executive Officer of the Mill. He shall be an Ex-officio, Member of the Board of

Directors. He shall be responsible for the Executive Administration of the Mill subject to

the control of the Board and chairman.

Secretary

There shall be a Secretary to assist the Managing Director in the day - to day working of

the society who shall have such powers as delegated by the board from time to time.

To keep or cause to keep all accounts and registers required by the rules, to prepare all the

vouchers, Balance Sheet and other documents required for the transactions of the Mill in,

Administrative section.

Purchaser

He is the most important Administrative staff in the company. He purchases row

materials for production of finished goods.

Seller

He is also one of the staff in the company. By the name itself he sells finished goods

effectively and efficiently.


38


Technical & Factory staff

General Manager

General Manager overall production performance of the Mill mainly machine

utilization, productivity in each department men engage, power control, maintenance etc.

Deputy Spinning Master

There are two Deputy Spinning Master in the Mill. One should look up to Spinning

point and another Deputy Spinning Master look past spinning.

Assistance Spinning Master

There are two Assistance Spinning Master in the Mill. They are shift in chargers. There

are three shifts First shift from 8.30 am to 4.30 pm. Second shift from 4.30 pm to 12.30

am. Third shift from 12.30 am to 8.30 am.

SupervisorsSupervisor is one of the technical staff in the Mill. He takes every work from every

section.

SYSTEM :-

The system of GCTM is mainly based on co-operative system, which is made very stable.

The roles and responsibilities of the managers and directors are fixed. Hence there will be

no interfacing in other work and there will be no misunderstandings. Compared to other

co-operative societies the GCTM looks more stable and good corporate environment

exists here.

Inventory control system

This is also followed daily and it is also computerized.

Purchase:

Variety wise row materials opening stock xxx

Add: purchase xxx

Total xxx

Less: Issued for consumption xxx

Closing stock xxx

Sales:

Variety wise finished goods xxx

Add: Production xxx

Total xxx

Less: Sold xxx


39

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Closing stock xxx

Order of execution:

A committee consisting of seven directors and chairman / managing directors

will meet every Saturday in the meeting after completion and after formalities committee

will purchase the Row materials (cotton) and sell the finished goods (yarn) the officials

will execute the decisions made in the committee meeting and act accordingly.

SKILLS:-

These are the qualities or characteristics of the individuals. The skills can be acquired by

earning, observation and experience. GCTM has the following skill in its employees in

key positions.

Leadership

Good knowledge of the market

Visualization

Coordinating

Technical skills

Classification of skill

Male Female Total

Skilled 111 44 155

Semi- Skilled 230 223 453

Trainee 26 66 92

STYLE:-

One decision making parameter should be studied pertaining to day to day operation, to

conclude the style of functioning. A committee consisting of seven Directors and

Chairman /Managing Director will meet every Saturday. In the meeting after completion

and after formalities committee will purchase the row materials(cotton) and sell the

finished goods (yarn) the officials will execute the decisions made in the committee

meeting and act accordingly.

SHARED VALUES The shared values are those which guide all the employees in

a similar way. These values are practiced by the employees irrespective of profitability.

These values are not formal set of objectives. These values determine the image of the


40

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.organization in the society. The goals are not the formal goals. These are the goals which

go beyond the written set of goals and objectives the values and goals adopted GCTM

are,

Commitment

Alacrity

Respect for the individuals

Transparency

ORGANIZATION FLOW CHART

Organization structure

P.R.D – Public Relation Department

S.Q.C – Statistical Quality Control


41

CHAIRMAN

MANAGINGDIRECTOR

GENERAL MANAGER

CIVIL ENGINEER

P.R.D SECRETARY

SPINNING MASTER

A.DTRANSPO

RTLOANS,

ACT AND OPERATIO

S

SALESPURCHAS

E

E.S.T. AND

ADMIN

ASSIT. SPINNING MASTER

ELECTRICAL ENGINEER

LABOUR OFFICER

WORKSHOP TIME OFFICE

Note: G.M. and secretary shall be the invitees in subcommittee/ Board meeting G.B. (S.G.B) as per buy law provision

MAINTENANCE

ENGINEER

STORES S.Q.C SECURITYY

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.A.D – Administration Department

SWOT ANALYSIS:-

STRENGTHS:

1) Nearest to the row materials source

Availability of the row material to the G.C.T.M. is very near, it is in such way that

is, the purchase cotton from around 3000 grower members of G.C.T.M. and the mill

purchases its cotton at the open auction held by co-operatives namely The Gadag Co-

operative cotton sale society, T.A.P.C.S.M. society of Annigeri and in Gadag A.P.M.C.

this is result in less transport cost.

2) Less transport cost

G.C.T.M. purchases row materials around the Gadag area, so carrying cost of the

row material is very less.

3) Goodwill

Around Gadag area there are less industries, and it has provided large

employment opportunities to people. So it has good will in south Karnataka.

4) Satisfaction of consumer needs

G.C.T.M. (Gadag Co-operative Textile Mill) Hulkoti has been satisfying the

consumer needs.

5) Highly quality

And also G.C.T.M. maintains high quality of cotton yarn.

6) Availability of cheap labor


42


WEAKNESS:

1) National presence is not there:

In international market G.C.T.M. has been demand for its product, so it has less

national presence.

2) Heavy excise duty:

Government has fix up heavy excise duty on cotton yarn export of G.C.T.M.

3) Less working capital:

The main weakness of G.C.T.M. is the less working capital for its day to day

activities.

4) Electricity problem:

G.C.T.M. (Gadag Co-operative Textile Mill) also facing the electricity problem.

So it is also one of the barriers to continuous production.

OPPORTUNITIES :

1) Grab market in south Karnataka

G.C.T.M.(Gadag Co-operative Textile Mill) has it maximum share in south

Karnataka.

2) Increase in production capacity

Due to the installation of new technology, new machines, production capacity of

the G.C.T.M. has been increasing.

3) Increasing demand for yarn

Step by step demand for yarn and yarn products have been increasing.


43

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.4) Bank finance

G.C.T.M. takes its financial assistance from K.C.C. Bank, N.C.D.C. Bank,

Bijapur, D.C.C. Bank.

5) Employment Oriented

G.C.T.M. is the employment oriented unit.

THREATS:

1) Danger from the strong competitors

Danger from the strong competitors who are having national presence and spend a

lot on promotion activities.

2) Danger of loosing international market

It is because of other strong competition from the other standard companies who are

having a national.

3) Heavy excise duty

G.C.T.M. is in loss. So excise duty on its sales and export is the major threat for

G.C.T.M.


44



CHAPTER 4

METHODOLOGY

S SCOPE OF THE STUDY OBJECTIVE OF THE STUDY RESEARCH METHODOLOGY

CHAPTER 4

METHODOLOGY

S SCOPE OF THE STUDY OBJECTIVE OF THE STUDY RESEARCH METHODOLOGY

45


Scope and limitations of the study:-

This project acts as a reference guide or as a source of information. It gives the

idea about the financial analysis of the firm. The main scope of the study was to put into

practical the theoretical aspect of the study into real life work experience. The study deals

with analysis and interpretation of the data collected through the sources of primary and

secondary data for a period of five financial years. I.e. 2005-2006, 2006-2007, 2007-

2008, 2008-2009 and 2009-2010 Graphs, diagrams and tabulation methods are used to

analyze and interpret the data collected. It will help to understand the company’s liquidity

position. Since the decision regarding working capital are of an operating nature not one

time decision, the scope of the study is geared towards identifying important areas of

control and to establish model for better control of the various components of working

capital

The study would also attempt to identify the various sources available for

financing of working capital.

The study gives a fair idea of improvement in efficiency of working capital

management and also to have proper control over the components of working capital and

managing of efficiency.

Objectives of the study

To know how to manage current assets and current liabilities so that satisfactory level of working capital is maintained.

To know how to manage receivable, inventory and cash.

To study the different sources of financing working capital.

To study the operating cycle of company.

To study the liquidity position of company.

To look at possible remedial measures if any on the basis of which tied-up funds in working capital could be used effectively and efficiently.


46


To suggest, if possible on the basis of conclusion some modification to meet the situation.

Limitations of the study:

The study fully depends on financial data collected from the published financial statement (Annual Report) of company. The data collected from above the sources are not of detailed nature. Thus study incorporates all the limitations that are inherent in the considered financial statement.

There are controversies related to correctness of current assets and current liabilities that enters in to the domain of working capital management.

Methodology

The data in this project is enabling in secondary in nature. Financial reports, company

records were referred for data analysis. The study has been undertaken by collecting

relevant data from the balance sheet, profit and loss a/c, annul report & Audit report of

the gadag co-operative textile mill, hulkoti. The company is used financial tools for the

analyzing and interpretation data.

However primary data is also collected by observation discussing with company

officials. This primary data is used to fill in the gaps while preparing this report and to

know the latest procedures adopted by the company. This has helped to draw inferences

and conclusions.

Primary and secondary are sources of Data Collection

Primary Data:-

Primary Data consists of asking the questions and direct meet is used in research

study. Primary data includes.

1) Discussion with Textile Industries, managing direct with relating to the Market Management and Administration of the Industries.

2) Collecting information from each person of that company.3) Some information has been interacting with Managing Director and Manager of that

company.4) Direct interview of each of the Department sources of the organization.5) Discussion with Quality Control Faculty.6) Observation made during the project sessions.

Secondary Data:-


47


1) Study of the some related textile books and magazines.2) Some sort of information is collected from the Internet relating to the textile industries.3) Information collected from the induction manual of the company.4) Annual reports of the company.5) Some data from Brief Note of the Company.6) Establishment report of the organization.


48


CAPITAL:-

Introduction:-


CHAPTER 4

WORKING CAPITAL

MEANING OF CAPITAL

MEANING OF WORKING CAPITAL

TYPE OF WORKING CAPITAL

NATURE OF WORKING CAPITAL

FACTORS DETERMINING WORKING

CAPITAL REQUIREMENTS.

FINANCIAL SOURCES OF WORKING

CAPITAL

COMPONENTS OF W.C

CHAPTER 4

WORKING CAPITAL

MEANING OF CAPITAL

MEANING OF WORKING CAPITAL

TYPE OF WORKING CAPITAL

NATURE OF WORKING CAPITAL

FACTORS DETERMINING WORKING

CAPITAL REQUIREMENTS.

FINANCIAL SOURCES OF WORKING

CAPITAL

COMPONENTS OF W.C

49

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Capital is the keynote of economic development. In this modern age, the level

of economic development is determined by the proportion of capital available.

Meaning of Capital:-

In the ordinary sense of the word Capital means money. But in economics,

Capital has a special meaning. All those man made goods used in the production process

is called capital.

Definition:-

“Capital consists of all kinds of wealth, other than free gifts of nature which

yield income.”

Features of Capital :-

Capital has the following features.

1. Capital is a man made.

2. Capital is a perishable.

3. Capital is a human control possible.

4. Capital is a mobile.

5. Capital is a human sacrifice.

6. Capital is a scarce.

7. Capital is a passive factor.

.

INTRODUCTION OF WORKING CAPITAL


50

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. As every enterprise knows that, working capital is the lifeblood and control of

nerve center of the business. Just as circulation of blood is the essential for maintaining

life, working capital is also essential for maintaining the smooth running of the business.

The importance of working capital management is indisputable; Business

liability relies on its ability to effective management of receivables, inventory, and

payables. By minimizing the amount of funds tied up in current assets. Firms are able to

reduce financing costs or increase the funds available for expansion. Many managerial

efforts are put into bringing non-optimal level of current assets and liabilities back

towards their optimal levels.

Working Capital refers to the amount of capital which is readily available to an

organization that is, working capital is the difference between resources in cash and

readily convertible into cash (current assets) and organizational commitments for which

cash will soon be required (current liabilities).

Thus, working capital involves activities such as arranging the short-term

finance, negotiating favorable credit terms, controlling the movement of cash,

administrating accounts receivables and monitoring the investments also a great deal of

time.

MEANING & DEFINITION OF WORKING CAPITAL: -

Working capital in simple terms is the amount of funds, which a company, must

have to finance its day-to-day operation, it can be regarded as part/portion of capital,

which is, employed in short operation.

Every organization invests their funds in two terms of capital namely,

1. Fixed Capital.

2. Working Capital

The amount invested in the assets like Plant and Machinery, Building, Furniture

etc, blocked on permanent basis and is called Fixed Capital Organization not only


51

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.requires Fixed Capital, but also need of fund to meet day to day operations for short term

purpose, such funds is called Working Capital.

A Study of Working Capital is of major part of the external and internal analysis

because of its close relationship with the current day to day operation of business.

Working Capital consists broadly for that position/the assets of a business that are used at

related current operations and is represented by raw materials, stores, work in process and

finished goods merchandise, note/bill receivable.

Definition of Working Capital:-

According to C.W. Gestenbergh:-

“Working capital is ordinarily defined as the excess of the current assets over

current liabilities”.

According to Lawrence. J. Gitmen:-

“The most common definition of working capital is the difference of the

firm’s current assets and current liabilities.”

According to Gathman & Dug wall: -

“Working Capital as excess of current assets over current liabilities.”

According to Westen & Brigham: -

“Working capital refers to a term investment in short term assets cash, short

term securities accounts receivables and inventories.”

According to J. Smith: -

“The Sum of the current assets is the working capital of the business.”

“WORKING CAPITAL = CURRENT ASSETS – CURRENT LIABILITIES”.

Definition of working capital management:-


52


“Working capital management involves the relationship between a

firm's short-term assets and its short-term liabilities. The goal of working capital

management is to ensure that a firm is able to continue its operations and that it has

sufficient ability to satisfy both maturing short-term debt and upcoming operational

expenses. The management of working capital involves managing inventories, accounts

receivable and payable, and cash.”

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital that are:

1) Balance sheet concept

2) Operating cycle concept.

1) Balance sheet concept:

Working capital as per this defined in terms of current assets and current liabilities.

Balance sheet concept further classifies working capital into a) gross and b) net working

capital.

a) Gross working capital: it refers to total investment made in current assets. It is also

called circulating rotating from one head to another. Ex. Cash to raw material, raw

material to finished products, finished products to debtors, and debtors to cash. This

concept stresses on quantity aspect; i.e. to refer to total investment made in different

current assets. Bonneville and beway have defined gross working capital as ’’ any fund

received which increases the current assets”.

b) Net Working capital: as per this concept working capital is the difference between

current assets and current liabilities. This concept stresses on quality aspect of working

capital. The difference between current assets highlights on liquidity aspect and quality of

current assets. A firm that has excess of current assets over liabilities is said to possess

adequate liquidity. On the contrary firm that has excess of current liability over current

assets means it does not have adequate liquidity. It means that part of current assets of

such firm are financed through fixed assets.

2) Operating cycle concept:


53

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Operating Cycle or Working Capital Cycle indicates the length of time between

affirms paying for raw materials entering into finished stock and receiving cash on the

sales of such Finished Stock.

This operating cycle differs from firm to firm. Longer the operating cycle greater

will be the amount of Working Capital required and vice versa. Thus it plays an important

role in determining the Working Capital needs of a firm.

OPERATING CYCLE CHART

Operating Cycle is the time duration required to convert sales, after the conversion

of resources into inventories, into cash. The operating cycle of a G.C.T.M involves three

phases.

1. Acquisition of resources such as raw material, labour, power and

fuel etc.

2. Manufacture of the product which includes conversion of raw

material into work-In- progress into finished goods.

3. Sales of the product either for cash or on credit. Credit sales creates

book Debts for collection.


Cash Raw Materials

Work In Process

Finished goodSales

Debtors

54

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. In the GADAG CO-OPERATIVE TEXTILE MILL LTD (manufacturing

concern), the working capital operating cycle starts with the purchase of raw materials

and ends with the realization of cash from the sale of finished products. It is also called

as cash conversion cycle, production cycle etc. It involves the purchase of raw materials

and stores, its into stocks of finished goods through the work-in-Progress with the

progressive increment of labor and service costs, conversion of finished goods (Yarn

Products) into sales, Debtors and receivables and ultimately realization of cash and this

cycle continuous again from cash to purchases of raw material and so on.

TYPES OF WORKING CAPITAL

Working capital can be classified either on the basis of concept or on

the basis of periodicity of its requirement.


KINDS OF WORKING CAPITAL

1. ON THE BASIS OF CONCEPT

2. ON THE BASIS OF

REQUIREMENTS

GROSS WORKING CAPITAL

NET WORKING CAPITAL

PERMANENT OR FIXED

TEMPORARY OR VARIABLE

SEASONAL SPECIAL

55


1) on the basis of concept.

On the basis of concept working capital is of two types.

Gross working capital - Gross working capital is represented by the total Current

assets.

Gross working capital = Total current assets

Net working capital - Net working capital is the excess of current assets over current

liabilities.

Net working capital = Current assets – Current liabilities

2) on the basis of requirements.

on the basis of requirement working capital is also two types.

a) Permanent working capital - It is that amount of investment which should

always be there in the fixes or minimum current assets like inventory, accounts

receivables or cash balance etc. to carry out business smoothly. Such an amount cant

be reduced if the firms wants to carry on business operations without interruption.

b) Variable working capital - The excess the amount of working capital over

permanent working capital is known as variable working capital. It may also be

subdivided into two parts.

Seasonal working capital - Such capital is required to meet out the

Seasonal demands of busy periods occurring at stated intervals.

Special working capital - Such capital is required to meet out the extraordinary

needs for contingencies. Events like strike, fire, unexpected competition, rising price

tendencies, or initiating a big advertisement campaign require such capital.


56


IMPORTANCE OF WORKING CAPITAL: -

Working Capital is most important in every organization whether it is a small or big

concern. Therefore it is said that, working capital is the blood and center at a business.

1) Adequately Working Capital creates certainty, security and confidence in the minds of

the person in the might as well in the minds of creditors and workers.

2) It creates a good credit standing for the firm because credit standing depends upon the

ability to pay promptly. A company with adequate working capital is always able to

meet C.L. in time.

3) It ensure solvency and stability of the enterprise it also ensures continuity in

production and sales.

4) It enables the company to take advantage of cash discount allowed by the suppliers of

raw materials or merchandise.

5) It enables the prestige of the company and the morale of its workers because a

company with adequately working capital is always able to pay wages and salaries

promptly and regularly.

6) It enables the company to procure loans terms banks on easy and competitive terms.

7) In terms of boon it enables the company to meet increasing demand of its product.

8) In the time of depression, it enables the company to overcome the crises successfully.

9) It enables the company to hold up inventory and wait for better marketing

opportunities so as to secure higher prices.

10) It enable the company on its business successfully and achieve progress and

prosperity,

Needs of Working Capital:-


57

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. The need for working capital to run the day-to-day business activities cannot be

overemphasized. We will hardly find a business firm which does not required any amount

of working capital. Indeed, firms differ in their requirements of the working capital.

The firm’s aim is that maximizing the wealth of shareholders. Earning a steady

amount of profit requires successful sales activity. The firm has to invest enough funds in

current assets for generating of sales activity. Current assets are needed because sales do

not convert into cash instantaneously. There is always an operating cycle involved in the

conversion of sales into cash. Therefore Working Capital required for:

1) To meet the cost of inventories including total of raw materials purchased parts,

operating Supplies, work in progress, finished goods.

2) To pay wages, salaries, for indirect labor, clerical staff, managerial and

supervision staff.

3) To meet overhead costs, including those of maintenance services activities, fuel,

power charges, taxes and general expense administration.

4) To bear the expansion (with regard to promotion of sales) e.g. expenses on

packing, advertisement, salesmanship, Sales Servicing, After requires, Credit

Facilities, Delivery Services, etc.

NATURE OF WORKING CAPITAL MANAGEMENT

Working Capital Management is concerned with the problems that arise in

attempting to manage the Current Assets, the Current Liabilities and the inter-relationship

that exists between them. The term Current Assets refers to those Assets which in the

ordinary course of business can be, or will be, converted into Cash within one year

without undergoing a diminution in value and without disrupting the operations of the

firm. The Major Current Assets are Cash, Marketable Securities, Accounts Receivables

and Inventory.

Current Liabilities are those Liabilities, which are intended at their inception, to be paid in

the ordinary course of business, within a year out of the current assets or the earnings of

the concern .The basic Current Liabilities are Accounts Payable, Bills Payable, Bank


58

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Overdraft and outstanding expense. The goal of Working Capital Management is to

manage the firm's Assets and Liabilities in such a way that a satisfactory level of working

capital is maintained. This is so because if the firm cannot maintain a satisfactory level of

working capital, it is likely to become insolvent and may even be forced into bankruptcy.

The Current Assets should be large enough to cover its current liabilities in order to

ensure a reasonable margin of safety. Each of the current assets must be managed

efficiently in order to maintain the liquidity of the firm while not keeping too high a level

of any one of them. Each of the short term sources of financing must be continuously

managed to ensure that they are obtained and used in the best possible way. The

interaction between current assets and current liabilities is, therefore, the main theme of

the theory of management of working capital.

Working capital management is three dimensional in nature-

1) It is concerned with the formulation of policies with regard to profitability, liquidity

and risk.

2) It is concerned with the decisions about the composition and level of current assets.

3) It is concerned with the decisions about the composition and level of current

Liabilities.

ADEQUACY OF WORKING CAPITAL:

A business enterprise should have enough Working Capital. Without adequate Working

Capital it cannot be run effectively a manufacturing concern is sure to collapse if it is run

for longer period without or with meager amount of Working Capital. Therefore, the

enterprise has to maintain adequate Working Capital can avail following advantages:

It enables the enterprise to enjoy uninterrupted flow of production by obtaining

the raw material well in time.

It enables an enterprise to avail cash discounts on the purchase and hence, it

reduces costs,

It enables to make regular payments of salaries, wages and other day to day

commitments which raise the morale of its employees, increases their efficiency,

reduce-wastage and costs,


59


It enables to extend favorable credit terms to customers,

It will help to maintain the good will and credit worthiness which is essential for

raising the loans from banks and others on easy and favorable terms,

It helps to exploit favorable market conditions such as, purchasing its

requirements in bulk when the prices are lower and by holding its inventories for

higher prices,

This gains the confidence of its investors and creates a favorable market to raise

additional funds in the future and

It creates an environment of security, confidence, high morale and overall

efficiency in a business, etc.

Adequate working capital determines short term solvency of the firm.

INADEQUACY OF WORKING CAPITAL:

At the same time inadequacy of Working Capital will affect business prospects adversely.

Goodwill of the firm will be at stake if the Working Capital gap is not bridged. Shortage

of Working Capital or inadequacy of Working Capital will affect profitability. Liquidity

and soundness of a business enterprise, it can cause following damages:

It stagnates growth. It becomes difficult for the enterprise to undertake

profitable projects for non-availability of the Working Capital funds,

It becomes difficult to implement operating plans and achieve an enterprise’s

profit target,

An enterprise may not be able to take advantage of cash discount facilities,

An enterprise will not be able to pay its dividends because of the non

availability of funds,

An enterprise may have to borrow funds at exorbitant rates of interest,

Operating inefficiencies creep in when it becomes difficult even to meet day-

to-day commitments,

An enterprise loses its reputation when it is not in a position to honor its short term

obligations. As a result, an enterprise faces tight credit terms.

FACTORS DETERMINING WORKING CAPITAL

REQUIREMENTS


60

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. Requirement of working capital differs from one firm to other. This is

because of business conditions and policies of conducting business differ. Working

capital required by each from is determined by following factors.

Nature of business:- important factor that determines requirement of working capital

is nature of business a firm is undertaking. Firm that are engaged in production and

marketing need more working capital compared to the firm that are in trading or

service oriented business. This is because manufacturing units need more current

assets compared to service oriented units.

Size of business:- Size of the business obviously determines the requirement of the

working capital bigger the size more is the requirement of the working capital. Larger

the scale of operations, larger the investment required in current assets.

Operating cycle:- Operating cycle means period from which investment is locked up

in different operations. Longer the period of inventory holding, work in progress,

finished goods etc more is the investment needed in the operations. This necessities

more investment in current assets.

Stock turn over:- stock turnover refers to number of times stock is turned over that is

it refers to sales. Quicker the stock turn over (quick sales) less is the working capital.

Slow pace of stock turnover demands more investment is locked up in operation.

Credit policy:- Credit policy of the firm will influence requirements of working

capital. Firms that offer liberal credit to the debtor have make more investment in

production operations. Such firms need more working capital to keep their production

operation continuous. Requirement of working capital will be much more if the firm

buys on cash and sells on credit. On the contrary firms that buy on credit and sell on

cash basis need less working capital.

Production policy:- Firms that undertakes all production operations within the

organization need more working capital. Such firms have to make investment to

manufacture every component or part. On the contrary, firms which undertake


61


outsourcing that is buying some of the components or parts from out side agencies

need less working capital.

Growth of business:- Firms that are experiencing growth need more working capital.

Such firms have to constantly increase their production levels. To meet rising needs of

sales targets. They need to continuously increase investment in current assets.

Earning capacity and its appropriation:- firms that earn sufficient profits and invest

a portion of profit in business needs less working capital. Ploughing back of profits

and accumulated reserves will minimize dependency on external capital for working

capital needs. On the contrary firms that follow liberal divided policy are firms that do

not have adequate surplus need to borrow more to meet regular working capital needs.

ESTIMATION OF WORKING CAPITAL REQUIREMENTS

Managing the working capital is a matter of balance. The firms must have sufficient

funds on hand to meet its immediate needs. The gadag co-operative textile mill.hulkoti is

manufacturing oriented organization; the following aspects have to be taken into

consideration while estimating the working capital requirements. They are:

1) Total costs incurred on material, wages and overheads.

2) The length of time for which raw material are to remain in stores before they are

issued for production.

3) The length of the production cycle or work-in-process, i.e., the time taken

for conversion of raw material into finished goods.

4) The length of sales cycle during which finished goods to be kept waiting for sales.

5) The average period of credit allowed to customers.

6) The amount of cash required paying day-today expenses of the business.

7) The average amount of cash required to make advance payments

8) The average credit period expected to be allowed by suppliers.

9) Time lag in the payment of wages and other expenses.

FORMAT OF WORKING CAPITAL:-


62


PARTICULARS AMOUNT

1) Estimation of current assets

A] Minimum desired cash and bank balance xxx

B] Inventories

Raw materials xxx

Work in progress xxx

Finished goods xxx xxx

C] Debtors xxx

Total current assets xxxx

3)Estimation of current liabilities

A] Creditors xxx

B] Wages xxx

C] Over Heads xxx

Total current liabilities xxxx

Net working capital [1-2] xxxx

Add: 10% contingencies xxx

Total net working capital xxxx

FINANCIAL SOURCES OF WORKING CAPITAL


63

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Introduction: -

This chapter put forth the discussion on the sources available for financing

the working capital of an organization.

Funding of working capital is continuous problem for all management.

Basically sources of financing working capital are broadly bifurcated into two sources

they are as follows.

Long Term Sources of Working Capital

The following are the some important of the long term sources of working

capital.

A. Issue of Shares: Issuing shares can finance a part of long-term working capital.

B. Issue of Debenture: Long Term Working Capital can be collected by the way of

issuing the debentures.

C. Retained Profits: Accumulated large profit can also consider as a source of financing

the long-term capital.

D. Term Loans: - The mid and term loan above three year are also important source of

financing the long term working capital needs.

E. Reserves and Surplus: -These are also useful for financing long-term working capital.


64

SOURCES OF WORKING CAPITAL

Short term sourcesLong term sources:Issue of sharesIssue of debenturesRetained profitReserves and surplusLong term loans

Internal and externalDepreciation fundsProvision for taxationAccured expenses

Short term sourcesTrade creditsBank creditCredit paperConsumer creditPublic depositsFinancial co-operationGovt assistanceLoan from directors


SHORT TERM SOURCES OF WORKING CAPITAL

Duration for this generally do not exceeds one year. Its sources are

INTERNAL SHORT TERM SOURCES

1. Depreciation Funds: Depreciation Funds created out of the profit is good source for

short-term source of financing working capital.

2. Provision for Taxation: Provision made for the companies, can use taxation as a

source of working capital during the intermediate period.

3. Accrued Expenses: The company executives postpone the payment of certain

expenditures due the date of finalization of account. These accrued expenses are useful as

working capital.

EXTERNAL SHORT TERM SOURCES .

1. Trade Credit: Trade Credits extended by one business unit to the other on the

purchase sale of goods and equipments are very important.

2. Bank Credit: - Commercial banks are providing a greater part of working capital in

the form of over drafts cash credit and short-term loans.

3. Credit Papers: - Bills Payable, promissory notes etc are usefully for working capital

requirements.

4. Customer Credit: Amount may also be obtained from customer and these amounts

can be used for purchasing raw materials, paying expenses etc.

5. Financial Corporation: The financial corporation likes IDBI, IFCI, ICICI, etc,

advances loans for various types of assistance.

6. Government Assistance: State and Central Government, of the country provide short-

term finance industries on easy terms.


65

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.7. Loan from Directors: - One enterprise can also obtain loan from its directors, officers,

M.D. etc

COMPONENTS OF WORKING CAPITAL

Main components of working capital are as follows:

1. Cash Management:

Cash is the important current asset for the operation of the business. cash is the

basic input needed to keep the business running on a continuous basis; it is also the

ultimate output expected to be realized by selling the service or product manufactured by

the firm. The firm should keep sufficient cash, neither more nor less.

Cash is the liquid form of an asset. It is the ready money available in the firm

or with the business, essential for its operations. A firm needs the cash for the following

three purposes:

(a) The Transaction Motive:

(b) The Precautionary Motive:

(c) The Speculative Motive:

2. Receivables Management:

Receivable represents amounts owed to the firm as a result of sale of

goods or services on the ordinary course of business. These are claims of the firm

against its customers and form part of its current assets. These receivables are

carried for the customers. The period of credit and extent of receivables depends

upon the credit policy followed by the firm. The main purpose of maintaining or

investing in receivables is to meet competitors, to increase sales, and to maintain a

cordial relationship with the clients.

3. Inventory management:

Every enterprise needs inventory for smooth running of its activities. It

serves as a link between production and distribution process. There is, generally a


66

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.time lag between the recognition of a need and its fulfillment. The greater the time

lag, the higher the requirements for inventory. The unforeseen fluctuations in demand

and supply of goods necessitate the need for inventory. Moreover, it provides a

cushion for future price fluctuations.

4. Marketable Securities:

Though marketable securities provides a such lower yield that the firm’s

operation assets. They serve two useful functions. Firstly, they act as a substitute for

cash, and secondly, are used as temporary investment. Where these securities are held

in lieu of the cash balance, they act as a substitute for transactional or precautionary

balances. Normally, these aren’t used as speculative balances, but only as a guard

against the possible shortage of bank credit.

Marketable securities (as temporary investment) may be held for one of theFollowing reasons:

Seasonal or cyclical operations

To meet known financial requirements. Construction of an additional plant.

Immediately after the sale of long-term securities.


67



68

CHAPTER 6

DATA ANALYSIS AND INTERPETATION

CHAPTER 6

DATA ANALYSIS AND INTERPETATION


ANALYSIS AND INTERPRETATION

Statement of changes in working capital for the year 2005-2006

PARTICULARS 31/3/2005 31/3/2006 INCREASE DECREASE

A) CURRENT ASSETSCash in handCash at bankF.D with banksDepositsSundry DebtorsLoan to F C S M,HulkotiPre-University collageAdvancesOther receivablesClosing stock

TOTAL CURRENT

151435027449160518224628150353711428500000255296161617263363352948390

125047197

4155046344972468224630150515790318500000255296406246863163353043163

127624610

26407

200016207889

2446296

94773

39295215805000

2000


69

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.ASSETS

B) CURRENT LIABILITIES Current liabilities Bonus provision payableOther payables

TOTAL CURRENT LIABILITIES

4005074612542482090328

43395322

4909833512800422713579

53091956

904758925794623251

NET WORKING CAPITAL (A-B)

81651875 74532654 18777365 25896586

Increase or Decrease in working capital

7119221 7119221

TOTAL WORKING CAPITAL

81651875 81651875 25896586 25896586

Net working capital decreases of Rs.7119221.

INTERPRETATION :

This statement shows that the changes in working capital in the year 2004-05

and 2005-06. It shows how the current assets and current liabilities are changes in two

years the different between current asset and current liabilities i.e. Net working capital of

two years 2004-05 and 2005-06 is Rs 81651875 and Rs 74532654 respectively it shows

the working capital decreases of Rs 7119221 in 2005-06 which compare to 2004-05. Here

due to decrease the firm is not satisfactory with its working capital.

In current assets

1. Cash in hand increases of Rs 26407

2. Cash at bank is decreasing of Rs 392952

3. F.D with banks is also decreased Rs 15805000

4. Deposits has increased of Rs 2000


70


5. Sundry debtors has increased of Rs 16207889

6. Advances has increased to Rs 2446296

7. Other receivables has decreases of Rs 2000

8. Closing stock has increased to Rs 94773

In current liabilities

1. Bonus provision is increasing of Rs 25794

2. Other payables is increasing of Rs 623251

3. Other liabilities are increased to Rs 9047589

Statement of changes in working capital for the year 2006 -2007



TOTAL CURRENT ASSETS

4155046344972468224630150515790318500000255296406246863163353043163

127624610

20530189299022650784630150474347818500000255296518269070626763097651

149022345

1429540518256

11202227463410054488

21020

4144250

B) CURRENT LIABILITIES


71

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.Current liabilities Bonus provision payableOther payables


4909833512800422713579

53091956

6025833413958792832793

64487006

11159999115837119214


74532654 84535339 25563005 15560320


10002685 10002685


84535339 84535339 25563005 25563005

Net working capital is increases of Rs.10002685.

INTERPRETATION:

This statement shows that the changes in working capital in the year 2005-06

and 2006-07. It shows how the current assets and current liabilities are changes in the two

years the difference between current assets and current liabilities i.e. Net working capital

of two years is 2005-06 and 2006-07 is Rs 74532654 and Rs 84535339 respectively. It

shows the working capital increases Rs 10002685 in the year 2006-07 compare to 2005-

06 by increasing the firm is satisfactory with its working capital.

In current assets

1. Cash in hand has decreased by Rs 21020.

2. Cash at bank is increased to Rs 14295405.

3. F.D with bank is increasing of Rs 18256.

4. There is no increase or decrease in deposits.


72


5. A sundry debtor is decreased to Rs 4144250.

6. Advances paying increased to Rs 1120222

7. Other receivable has decreased to Rs 74634.

8. Closing stock is increased to Rs 10054488

In current liabilities

1. Bonus provision is increased of Rs 115837

2. Other payable is also increased of Rs 119214

3. Other liabilities is increased to Rs 11159999





20530189299022650784630150474347818500000255296518269070626763097651

149022345

40460162287262750784431466517099438500000255296571872453587458071735

145767302

19930

10000

4275162

536034

2701176

198684

1703935025916


73


B) CURRENT LIABILITIES Current liabilities Bonus provision payableOther payablesNCDC expenses payable TOTAL CURRENT LIABILITIES

6025833413958792832793

64487006

49593596156400030024591319412

55479467

106647381681211696601319412


84535340 90287835 15505864 9753368


5752495 5752495


90287835 90287835 15505864 15505864

Net working capital is increases of Rs.5752495.

INTERPRETATION:

The statement shows that the changes in working capital in the year 2006-07 and

2007-08 it shows how the current assets and current liabilities are changes in the two


of the two years is 2006-07 and 2007-08 is Rs 84535340 and 90287835 respectively. It

shows the working capital increases of Rs 5752495 in the year 2007-08 compare to 2006-

07 by the increase in the net working capital firm is satisfactory with its working capital.

In current asset

1. Cash in hand increased of Rs 19930

2. Cash at bank decreased of Rs 2701176

3. F.D. with bank has increased of Rs 10000

4. Deposits has decreased to Rs 198684


74


5. Sundry debtors has increased to Rs 4275162

6. Advances paying is increased to Rs 536034

7. Other receivables also decreases of Rs 170393

8. Closing stock has decreases of Rs 5025916

In current liability

1. Bonus provision has increases of Rs 168121

2. Other payable has increases of Rs 169660

3. NCDC expenses payable Rs 1319412

4. Other liabilities has decreased to Rs 10664738




TOTAL CURRENT

40460162287262750784431466517099438500000255296571872453587458071735

145767302

27094193463102750784052950515850298500000255296479042910396847130016

97001885

3117584

503810

13366

378516124914

928295

50941719


75

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.ASSETS

B) CURRENT LIABILITIES Current liabilities Bonus provision payableOther payablesNCDC expenses payable


49593596156400030024591319412

55479467

4988848612275354791386--------------

55907407

336465

1319412

294890

1788927


90287835 41094478 5277270 54470627


49193357 49193357


90287835 90287835 54470627 54470627

Net working capital is decrease of Rs.49193357.

INTERPRETATION :



years the difference between current assets and current liabilities i.e. net working capital

of the two years 2007-08 and 2008-09 is Rs 90287835 and Rs 41094478 respectively it

shows the decreasing of Rs 49193357 in 2008-09 which compare to 2007-08 by

decreasing in net working capital the firm is not satisfactory with its working capital

In current assets

1. Cash in hand has decreased of Rs 13366.2. Cash at bank is increased of Rs 3117584.3. F.D with bank has no changes.4. Deposits have been decreased of Rs 378516. 5. Sundry debtors have decreased to Rs 124914.


76


6. Advances are decreased of Rs 928295.7. Other receivables has increased of Rs 5038108. Closing stock is decreased to Rs 50941719


1. Bonus provision is decreased to Rs 3364652. Other payables is increases of Rs 17889273. NCDC payables in decreased of Rs 13194124. Other liabilities has increased of Rs 294890




27094193463102750784052950515850298500000255296479042910396847130016

4966386266152750784045150533679988500000255296591164117005527306759

22569

1782969

1121212660868176743

10719695

7800


77



97001885 90038752

B) CURRENT LIABILITIES Current liabilities Bonus provision payableOther payablesNCDC expenses payable


4988848612275354791386--------------

55907407

8777880212318044816149

93826755

37890316426924763


41094478 (3788003) 3764361 48646843


44882481 44882482


41094478 41094478 48646843 48646843

Net working capital is decreasing of Rs,44882481.

INTERPRETATION:




of the two years 2008-09 and 2009-010 is Rs 41094478 and Rs 48646843 respectively it

shows the decreasing of Rs (3788003) in 2008-09 which compare to 2009-010 by

decreasing in net working capital the firm is not satisfactory with its working capital

In current assets

1) Cash in hand has increases of Rs 22569. 2) Cash at bank is increased of Rs 10719695.


78


3) F.D with bank has no changes.4) A deposit has been decreased of Rs 7800. 5) A sundry debtor has increases to Rs 1782969.6) An advance is increases of Rs 1121212.7) Other receivables has increased of Rs 6608688) Closing stock is increased to Rs 176743


1) Bonus provision is increased to Rs 4269.2) Other payable is increases of Rs 24763.3) Other liabilities have increased of Rs 37890316.

RATIO ANALYSES

FINANCIAL RATIO ANALYS:-

Ratio Analysis is the process of identifying the financial strengths and

weaknesses of the enterprise by establishing relationship logically between the items of

Balance Sheet &/or Profit and Loss a/c (Income Statement) or both and interpreting the

results to derive meaningful conclusions.

Financial Ratio measures relationship expressed in mathematical terms between

figures, which are connected with each other in significant manner. A ratio is a statistical

yardstick that provides a measure of relationship between two financial figures. It is a

process of determining, interpreting and presenting numerical relationships of items and

group of the financial statements.

An Accounting Ratio is a mathematical expression of a quantitative relationship between

two items or group of items having mutual cause & effect relationship, taken from Profit

& Loss a/c (Income Statement) or Balance Sheet or both, which the financial analyst may


79

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.use to make a decisive judgments about the financial position and performance of a

concern.

“Ratio analysis is a process of analysis of the ratios in such a manner so that the

management can take actions on off standard performance.”

The process can be segregated into:

1. Working of Ratios

2. Interpretation of Ratios

3. Remedial actions on variance with the objective of improvement in efficiency.

ANALYSIS AND INTERPRETATION

Analysis: "A process of grouping or sub grouping of a given data for the purpose of

developing some relationships among the groups either for decisions or for future

prediction".

The financial analysis involves the division of facts or information on the

basis of some definite plans and to classify them into groups on the basis of some

conditions and presenting them in most convenient, simple and understandable form.

Interpretation: To interpret means to put the meaning of data in simple and

understandable manner to the user of information. In simple terms it is the explanation for

the conclusions drawn from analysis.

Net working capital:- Net working capital is the difference between current assets

and current liabilities.

Years Current assets Current Liabilities NWC 2004-2005 125047197 43395322 81651875

2005-2006 127624610 53091956 74532654

2006-2007 149022345 64487006 84535339

2007-2008 145767302 55479467 90287835

2008-2009 97001885 55907407 41094478

2009-2010 90038752 93826755 (3788003)


80


-10000000

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

NWC

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

YEAR

NET WORKING CACITAL

INTERPRETATION:-

In the above table shows the net working capital changes in the year 2004-05 to 2009-010. In the year 2004-05 company has 81651875 net working capital and in the year 2005-06 Company has 74532654 net working capital. Compare to these two years the net working capital is decreases. In the year 2006-07 company has 84535339 and in the year 2007-08 Company has 90287835 net working capital. Compare to these two years the net working capital is increases. In the year 2008-09 company has 41094478 and in the year 2009-010 company has (3788003) net working capital. Compare to these two year the net working capital is decreases. It shows the company not satisfied there working.

2) Current ratio:-

The current ratio of a unit measures firm’s short-term solvency, that is, its ability

to meet short-term obligations. It is the ratio of total current assets to total current

liabilities.

Current Ratio = Current Assets/ Current Liabilities

Years Current assets Current Liabilities Ratio 2004-2005 125047197 43395322 2.88

2005-2006 127624610 53091956 2.40

2006-2007 149022345 64487006 2.31

2007-2008 145767302 55479467 2.62

2008-2009 97001885 55907407 1.73

2009-2010 90038752 93826755 0.96


81


0

0.5

1

1.5

2

2.5

3

RATIO

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

YEAR

CURRENT RATIO

INTERPRETATION:-

The above chart shows that there is a slight fluctuation in the current assets and

current liabilities. In present year the current ratio is less i.e. 0.96 compare to previous

year. The above chart reveals that the current ratio increasing year by year except 2009

and 2010

The current ratio is not satisfactory with a standard i.e. 2:1 so company as to maintain

standard ratio. In the present year the current ratio is not satisfactory.

3) Absolute liquid ratio:-

Absolute liquidity ratio is a ratio of cash in hand and cash at bank to current liabilities. The standard ratio is 0.5: 1.

Absolute liquidity Ratio = Cash in hand + Cash at bank Current Liabilities

Years Cash in hand

Cash at bank Current Liabilities Absolute Liquidity Ratio

2004-05 15143 5027449 43395322 0.12

2005-06 41550 4634497 53091956 0.09

2006-07 20530 18929902 64487006 0.29

2007-08 40460 16228726 55479467 0.29

2008-09 27094 19346310 55907407 0.34

2009-010 49663 8626615 93826755 0.09


82


00.050.1

0.150.2

0.250.3

0.35

Ratio

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

ABSOLUTE LIQUID RATIO

INTERPRETATION:-

In the above table shows the absolute liquid ratio. The absolute liquidity ratio

was 0.12 in the year 2004-2005 and decreased to 0.09 in the year 2005 – 2006 but in

the year 2006 -2007 and 2007-2008 it was same and in the year 2008-09 absolute

liquid ratio was 0.34 increases compare to previous year. In the year 2009-010 the

absolute liquid ratio was 0.09 decreases compare to previous year. The absolute

liquidity ratio is below the standard of 0.5: 1 ratio. It shows that the liquidity position

of the company is not satisfied.

4) Liquidity Ratio or Liquid ratio:-

This ratio indicates very short term or immediate or very instant financial position.

Liquidity Ratio = Quick Assets Quick Liabilities

Years Quick assets Quick Liabilities Ratio

2004-2005 72098807 43395322 1.66 2005-2006 74581447 53091956 1.40

2006-2007 85924694 64487006 1.33 2007-2008 87695567 55479467 1.58 2008-2009 89871869 55907407 1.60 2009-2010 82731993 93826755 0.88


83


LIQUID RATIO

00.20.40.60.8

11.21.41.61.8

2004-2005

2005-06

2006-07

2007-08

2008-09

2009-010

Years

Ra

tio

Ratio

INTERPRETATION:-

The above chart shows that there is a slight fluctuation in the quick assets and quick

liabilities. In the year 2004-05 the quick ratio is 1.66 and in the year 2005-06 the quick

ratio is 1.40. Compare to these two years the quick ratio was decreases. In the year 2006-

07 and 2007-08 the quick ratio was 1, 33 and 1.58 respectively. Compare to these two

year s the quick ratio was increases and in the year 2008-09 and 2009-010 the quick ratio

was 1.60 and 0.88 respectively. Compare to these two years the quick ratio was decreases.

The above chart reveals that there is not much difference in liquid ratio of the

company.

In the present year the quick ratio is not satisfactory.

5) Working capital turnover ratio:-

It is taken as one of the primary indicators of the short-term solvency of

the business. It establishes the relationship with the net sales. It measures the

efficiency with which the working capital is being used by the firm.

WORKING CAPITAL TURNOVER RATIO = Net Sales

Net Working Capital

Year Net Sales Net Working

Capital Ratio

2004 - 2005 269932512 81651875 3.30

2005 -2006 231390442 74532654 3.10

2006 - 2007 249863772 84535339 2.95

2007-2008 263287867 90287835 2.91


84


2008-2009 246399551 41094478 5.99

2009-2010 235751054 (3788003) -62.23

WORKING CAPITAL TURNOVER RATIO

-70

-60

-50

-40

-30

-20

-10

0

10

2004-2005

2005-06

2006-07

2007-08

2008-09

2009-010

Years

Ra

tio

Ratio

INTERPRETATION:- In the above graph shows that the working capital turnover ratio. In the years

2004-05, 2005-06, 2006-07 and 2007-08 are 3.30, 3.10, 2.95 and 2.91 respectively. It

shows the working capital turnover ratio continuously decreases year by year and in the

year 2008-09 the working capital turnover ratio was increases I.e. 5.99. In the year 2009-

010 the working capital turnover ratio shows the negative working capital. In indicates

the company not satisfied their working capital.

6) Inventory turnover ratio:-

Inventory turnover ratio is the ratio, which indicates the number of times the stock is

turned over i.e., sold during the year. In other words, it is the ratio between the Net sales

and closing inventory. This ratio can be calculated as follows.

Inventory turn over ratio=Net sales/closing inventory

Year Net Sales Closing inventory Ratio

2004 - 2005 269932512 22505675 11.99 Times

2005 -2006 231390442 24564678 9.41 Times

2006 - 2007 249863772 25143129 9.94 Times

2007-2008 263287867 22012721 11.96 Times

2008-2009 246399551 20090743 12.26 Times


85


2009-2010 235751054 28024450 8.41 Times

0

2

46

8

1012

14

Ratio

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

INVENTORY TURNOVER RATIO

INTERPRETATION:-

The above graph shows that how the inventory turnover ratio changes the year by

year. Here in the firm highest inventory turnover is 12.26 in 2008-09. It indicates that

there was a good inventory management in 2008-09 whereas in the year 2009-010 there

is low inventory turnover ratio which implies that in 2009-010 there was a less sales and

very high closing inventory. It shows the company not satisfies its inventory. In the year

2004-05, 2005-06, 2006-2007 and 2007-08 are 11.99, 9.41, 9.94 and 11.96 respectively.

INVENTORY HOLDING PERIOD

Year Days Inventory ratio Inventory holding period

2004 - 2005 365 11.99 30.44 Days

2005 -2006 365 9.41 38.78 Days

2006 - 2007 365 9.94 36.72 Days

2007-2008 365 11.96 30.51 Days

2008-2009 365 12.26 29.77 Days

2009-2010 365 8.41 43.40 Days


86


05

1015202530354045

Days

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

INVENTORY HOLDING PERIOD

INTERPRETATION:-

The above graph shows the inventory holding period. In the year 2004-05 and

2005-06 Company has 30.44 and 38.78 respectively. Compare to these two years 2004-05 is

better inventory holding period. In the year 2006-07 and 2007-08 are 36.72, 30.51

respectively. Compare to these two years 2007-08 is good inventory holding period. In the

year 2008-09 and 2009-010 are 29.77, 43.40 respectively. Compare to these two years 2008-

09 is better inventory holding period. Finally it shows the present year inventory holding

period the company was not satisfied.

7) Detbtors turnover ratio :-

It indicate the how many times debtors turnover each year. Generally, the higher the

ratio of debtor’s turnover, the more efficient is the management of credit. The ratio measured

how will reveal the days of debts to be collected.

Debtors Turnover Ratio= credit Sales

Average debtors

Year Credit sales Average Debtors Ratio

2004 – 2005 269932512 35371142 7.632005 – 2006 231390442 51579031 4.482006 – 2007 249863771 47434781 5.26


87


2007-2008 263287867 51585029 5.10

2008-2009 246399551 51709942 4.76

2009-010 235751054 53367998 4.41

012345678

Ratio

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

DEBTORS TURNOVER RATIO

INTERPRETATION:-

There has been increased debtor in the year 2004-05 as compared to other

years, high ratio indicates of shorter time gap between credit sales and cash

collection. A low ratio shows that debts are not being collected rapidly. So, the

standard norm this high ratio reveals that company has quite efficient management

of debtors. But it shows that the company debtor’s turnover ratio continuously

decreasing year by year. So it indicates the company not satisfied there debtor’s

turnover ratio.

DEBTORS COLLECTION PERIOD:-

Year Days Debtors ratio Debtors collection period

2004 - 2005 365 7.63 47.83

2005 -2006 365 4.48 81.47

2006 - 2007 365 5.26 69.39

2007-2008 365 5.10 71.56

2008-2009 365 4.76 76.68

2009-2010 365 4.41 82.76


88


0

20

40

60

80

100

Days

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

DEBTORS COLLECTION PERIOD

INTERPRETATION:-

In above graph shows that the debtor’s collection period. In the year 2004-05

the company has 47.83 days debtors collection period and it indicates the company

satisfied there collection period. The next four years the company increases there

collection period it shows that the company not satisfied its debtors collection period.

The debt collection period is not satisfactory. The standard period of collecting

debt is 30 days. Within 30 days the debt to be collected but the mill has taken more time.

If affect all the current assets.

Here the company should not take more time.

8) Creditors turnover ratio:-

Creditors’ turnover ratio establishes relationship between not credit

purchases and average trade creditors and accounts payable. The ratio indicates the

velocity with which the creditors are turned over in relation to purchases.

Creditors Turnover Ratio = Net Credit Purchases Average creditors

Year Credit purchases Average creditors Ratio

2004 – 2005 151120775 40050746 3.77


89


2005 – 2006 151120775 49098335 3.072006 – 2007 151220775 60258334 2.502007-2008 179305351 49593596 3.61

2008-2009 168217038 49888486 3.37

2009-010 202006582 87778802 2.30

00.5

11.5

22.5

33.5

4

Ratio

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

CREDITORS TURNOVER RATIO

INTERPRETATION:-

The creditor ratio is fluctuating year by year. In the year 2004-05 it is 3.77,but it

decreases in the year 2005-06 and 2006-07 the ratio is3.07 and 2.50, and again increase

in the year 2007-08, the ratios are 3.61, but in the year 2008-09 and 2009-010 it is again

decreases.

Creditor’s collection Period

Creditors collection Period =days/ Creditors turnover ratioYear Days Creditors turnover

ratioCreditors collection

period2004 - 2005 365

3.77 96.812005 -2006 365

3.07 118.892006 - 2007 365 2.50 146

2007-2008 365 3.61 101.10

2008-2009 365 3.37 108.30


90


2009-2010 365 2.30 158.69

020406080

100120140160

Days

Years 2004-05

2005-06

2006-07

2007-08

2008-09

2009-010

Years

CREDITORS COLLECTION PERIOD

INTERPRETATION:-

In the year 2004-05 it is 96.81 but it increases in the year 2005-06 I.e. 118.89

and again next year the days are increased in 2006-07 it 146 and 2007-08 it is decreases

of 101.10 but it’s again increased in the year 2008-09 and 2009-010 are 108.30 and

158.69 respectively. Finally it shows the company satisfied there creditors collection

period.

FINDINGS:-

This study was undertaken at GADAG CO-OPERATIVE TEXTILE MILL.

HULKOTI to understand and analyses working capital management to find out

company’s present financial standing or status. Accordingly last five years balance sheet

was considered for analyzing working capital management. The major findings with

respect to study are given below:


91


1) The current ratio of the firm is not satisfactory because the firm is not utilizing

available recourses properly. The highest ratio is 2.88 recorded in the year 2004-05

and the lowest ratio is 0.96 recorded in the year 2009-010. So the current ratio is not

satisfactory. The firm needs to concentrate on current assets. By utilizing the

available resources properly the firm may improve the current ratio.

2) The quick ratio of firm is not satisfactory because in the firm’s quick assets there

excess amount than requirement it shows that the company is not utilizing available

resources properly. The highest quick ratio is 1.66 recorded in the year 2004-05 and

the lowest ratio 0.88 recorded in the year 2009-010. The company needs to

concentrate on quick assets. By utilizing quick assets properly the firm may improve

this ratio.

3) The inventory turnover ratio is not satisfactory in the year 2009-010. Because of the

net sales decreases and closing inventory increases it shows the inventory not

maintain properly.

4) A working capital turnover ratio indicates that of high working capital turnover and

low net working capital here in the firm there is a continuous decrease for 3 years but

in 4th year it has been increased in working capital turnover ratio. The firm is

satisfactory with its 4th year turnover ratio and in the year 2009-2010 its again

decreases. The firm has to maintain in increasing the working capital turnover ratio.

5) The changes in working capital of 2004-05 and 2005-06 is 81651875 and 74532654

respectively it shows working capital decreased to 7119221 in 2005-06 which

compare to 2004-05 here the decreasing the net working capital firm may not

satisfactory with its working capital.


respectively it shows the working capital increased of 10002685 in the year 2006-07

compare to 2005-06. By increasing net working capital the firm may satisfactory with

its working capital.


92

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.7) The changes in working capital of 2006-07 and 2007-08 is 84535339 and 90287835

respectively it shows the working capital increased of 5752495 in the year 2007-08

compare to 2006-07. By increasing in net working capital the firm may satisfactory

with its working capital.


respectively it shows the working capital decreased of 49193357 in the year 2008-09

compare to 2007-08. By decreasing net working capital the firm is not satisfactory

with its working capital.

9) The changes in working capital of 2008-09 and 2009-010 is 41094478 and (3788003)

respectively it shows the working capital decreased of 44882481 in the year 2009-010

compare to previous year. By the negative net working capital the firm is not

satisfactory with its working capital.

SUGGESTIONS:-

1) To improve the current ratio and quick ratio the company needs to concentrate on

current assets by utilizing available resources in the current assets the company may

improve its current ratio and quick ratio.

2) The company increase their creditors period and maintain the standard period. The

company was very high debtor’s collection period it should be decrease.


93

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI.3) The company should give more importance to inventory management and try to

reduce inventory to gross working capital ratio. This will help in reducing inventory

costs and decrease their inventory holding period.

4) During the year 2004-05 and 2005-06 the companies working capital is decreased due

to less current assets and more liability so it has to make proper use of its current

assets and to make improve.

5) During the year 2009 and 2010 the companies’ working capital again decreased so

the firm has to have to concentrate on its current assets to maintain the business

transaction. The negative net working capital is not good for the company and more

concentration on the current assets and also decreases the current liabilities.

6) It should enhance its employee’s efficiency, more training needed to its employees in

order to increase its production capacity and minimize mistakes while performing the

tasks, also more safety precaution need to implement to the employees who directly

working on yarn making process.

CONCLUSION:-

This study helps to know that the companies financial position. The sale of the

company is decline in the year 2010. There is an increases cost in some years so it is

needs to reduce its costs.

As the study helps to know that the changes in financial statements i.e. increase

or decrease in the liabilities and assets. By the ratio analysis we come to know that the

companies solvency. The companies have to take some measures to control the costs. By

working capital we comes to know its working capital management


94

GADAG CO-OPERATIVE TEXTILE MILL. HULKOTI. This study helps us to know that the companies’ financial position is not

appreciable because there is loss in the present year due to high expenses. So it has to

control the costs.

By the analysis of financial statements I conclude that, overall financial

performance of the company is not satisfactory. The company can try to take a some

measures to increase profit i.e. proper utilization of available resources.


95


FINANCIAL STATEMENT

BIBLIOGRAPHY

TENTATIVE BALANCE SHEET AS ON 31-3-2010

LIABILITIES Rs Ps ASSETS Rs Ps


96


AUTHORISED

SHARE CAPITAL

Share capital

Rehabilitation Fund

Share suspense Reserve

fund

Other Funds

Modernization Fund

Subsidy

BARROWINGS( A

AND B)

A)K C C Bank ltd.loan

B)N C D C Loan

Deposits

Current Liabilities

Bonus Provision

payable

Reserve for

Bad&Doubtfull

Debts

Other payables

TOTAL

82700000.00

81773300.00

10000000.00

12945559.76

172663387.76

1000000.00

2035400.00

22500000.00

36800000.00

4012383.00

87778801.35

1231804.00

10200000.00

4816149.25

447756784.89

Cash in hand

Cash at bank

F D with banks

Investments

Deposits

Sundry debtors

Loan to F C S M Hulkoti

Pre- university collage

Advances

Fixed assets( Land)

Buildings

Equipments(old)

Equipments(Modernization)

Plant and Machinery

Other receivables

Vehicles

Furniture and Fixtures

Library(Books)

Rehabilitation A/C

Closing stock

Stock as per Mfg A/c

Stock as per TR A/c

Previous years loss

TOTAL

49663.00

8626614.87

275077.54

12442533.00

4045150.00

53367997.96

8500000.00

255296.95

5911641.49

123187.00

15672362.49

1577875.91

7740422.00

125274234.40

1700552.00

1717288.19

1875910.61

103424.31

6063048.72

7306758,52

57885700.00

28024450.00

99219595.93

44775684.89

Bibliography


97


TEXT BOOKS

M.Y.Khan / P.K Jain, Financial Management Taxt, Problem’s Cases, 5TH

Edition,Tata McGraw –Hill Publishing Company Limited, New Delhi, 2007.

Prasanna Chandra, Financial Management Theory and Practice, 5TH

Edition, Tata McGraw –Hill Publishing Company Limited, New Delhi, 2001.

Memorandum and Articles of Association of gadag co-operative textile mill. hulkoti

Annual Report of gadag co-operative textile mill. hulkoti

Audit Report of gadag co-operative textile mill. hulkoti

WEB SITE VISITED

www.google.com


98

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