WORKING CAPITAL MANAGEMENT

DEFINITION: The amount required for taking decisions relating to fulfill the purpose of short-term investment in the business such as purchasing of raw materials, wages to be paid and other activities for maintain or running day to day transactions. To carry out operation, the funds used are known as "WORKING CAPITAL".

Working capital plays a key role in a business enterprise just as the role of heart in human body. Its effective provision can ensure the success of business while its inefficient management can lead not only to loss but also insolvent and may be forced into bankruptcy. In other words efficiency of a business enterprise depends largely on its ability to manage its working capital. Working capital management therefore is one of the important facts of a firms overall financial management.

MEANING OF WORKING CAPITAL

Working capital refers to short term funds to meet operating expenses. "It refers to the funds, which a company must possess to finance its day to day operations". It is concerned with the management of the firms current assets and current liabilities. It relates to with the problems that arise in attempting to manage the current assets, current liabilities and their inter-relationship that exists between them. If a firm cannot maintain a satisfactory level of working capital, it is likely to become insolvent and may even be forced into bankruptcy.

NEED FOR WORKING CAPITAL The need for working capital cannot be over emphasized. Every business needs some amount of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. There is an operating cycle involved in the sales 1

and realization of cash. There are time gaps in purchase of raw materials and production; production and sales; and sales and realization of cash.

Thus, working capital is needed for the following purposes. For the purchase of the raw materials, components and spares. To pay wages and salaries. To incur day to day expenses and overhead costs such as fuel, power and office expenses. To meet the selling costs as packing, advertising. To provide credit facilities to the customers. To maintain the inventories of raw

materials, work in progress, stores and spares and finished stock.

Operating Cycle of Working Capital

It is clear that working capital is required because of the time gap between the sales and their actual realization into cash. This time gap is technically called as "Operating cycle" of the business.

In case of a manufacturing company the operating cycle is the length of time necessary to complete the following cycle of events. i. ii. iii. iv. v. Conversion of cash into raw materials Conversion of raw materials into work in progress Conversion of work in progress into finished goods Conversion of finished goods into accounts receivable, and Conversion of accounts receivable into cash

This cycle will be repeated again and again. The speed with which the working capital completes one cycle determines the requirements of working capital longer the period of the cycle larger is the requirement of working capital.

The operation cycle of manufacturing business can be shown as in the following chart. Accounts Receivables

Cash

Finished Goods

Raw Materials

Work in Progress

TYPES OF WORKING CAPITAL

Types of Working Capital

On the basis of Concept

On the basis of Time

Gross Working Capital

Net Working Capital

Permanent or Fixed Working Capital

Temporary or Variable Working Capital

Regular Working Capital

Seasonal Working Capital

Reserve Working Capital

Special Working Capital

TYPES OF WORKING CAPITAL WORKING CAPITAL may be classified in to two ways: On the basis of concept On the basis of time On the basis of concept, Working Capital is classified as Gross working capital Net working capital This classification is important from the point of view of the financial manager. Gross Working Capital: It refers to the companys investments in Current Assets. Current Assets are the assets which can be converted into cash within an accounting year and include cash, short-term securities, debtors, bills receivables and stock.

Net Working Capital: It refers to the difference between current assets and current liabilities. Current

Liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year and include creditors, bills payable, and outstanding expenses. Networking Capital can be positive or negative. A positive net working capital will arise when current assets are in excess of current liabilities. A negative net working capital occurs when current liabilities are in excess of current assets. The two concepts of working capital gross and net working capital are not exclusive; rather they have equal significance from management view point.

On the basis of time, working capital may be classified as Permanent or fixed working capital Temporary or variable working capital 4

Permanent or fixed working capital: It is the minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. There is always a minimum level of current assets which is continuously required by the enterprise to carry out its normal business. Example: Every firm has to maintain a minimum level of raw materials work in process, finished goods and cash balances. This minimum level of current assets is called permanent or fixed working capital as this part of capital is permanently blocked in current assets. As the business grows, the requirements of permanent or fixed working capital also increase due to the increase in the current assets. The permanent working capital can further be classified as Regular working capital Reserve working capital

Regular working capital: It is required to ensure circulation of current assets from cash to inventories, from inventories to receivables and from receivables to cash and so on. Reserve working capital: It is the excess amount over the requirement for regular working capital which may be provided for contingencies that may arise at unstated periods such as strikes, rise in prices, depression. Temporary or variable working capital: It is the amount of working capital which is required to meet the seasonal demands and special exigencies. Variable working capital can be further classified as Seasonal working capital 5

 Special working capital Seasonal working capital: The capital is required to meet the seasonal needs of the enterprise is called seasonal working capital. Special working capital: It is threat part of working capital which is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research.

FACTORS DETERMINING THE WORKING CAPITAL

A firm should have neither low nor high working capital involves more risk and more returns. A high working capital involves less risk and returns. The amount of working capital is determined by wide variety of factors such as:

a. General Nature of business. b. Production cycle. c. Business cycle. d. Production policy. e. Credit policy. f. Growth and Expansion. g. Vagaries in the Availability of Raw Material. h. Profit level. i. Level of taxes. j. Dividend policy. k. Depreciation policy. l. Price level changes. m. Operating efficiency.

SOURCES OF WORKING CAPITAL

The working capital requirements of a concern are brought into two categories. They are: a. Permanent or fixed capital requirements and b. Temporary or variable working capital requirements The fixed proportion of working capital should be generally financed from the long term sources while the temporary or variable working capital requirements of a concern may be met from short term sources. The various long term sources for financing of working capital requirements are as follows: a. Equity capital (including retained earnings/surplus) b. Debentures and preference shares c. Long term loans The Various short term sources for financing of working capital requirements: a. Trade credit (sundry creditors, bills payable) b. Bank over draft c. Current provisions d. Short term loans from sources other than Banks (such as loans from Directors, partners, employees outstanding wages and salaries)

WORKING CAPITAL MANAGEMENT Working capital, in general practice, refers to the excess of current assets over current liabilities. Management of working capital therefore, is concerned with the problem that arise in attempting to manage the current assets, the current liabilities and the inter relationship that exist between them. In other words, it refers to all aspects of administration of both current assets and current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such that a satisfactory level of working capital is maintained, i.e., it is neither inadequate nor excessive. This is so because both inadequate as well as excessive 7

working capital positions are bad for any business. Inadequacy of working capital may lead the firm to insolvency and excessive working capital implies idle funds which earn no profits for the business. Working capital management policies of a firm have a great effect on its profitability, liquidity and structural health of the organization. In this context working capital management is three dimensional in nature: i. Dimension I is concerned with the formulation of policies with regard to profitability, risk and liquidity. ii. Dimension II is concerned with the decisions about the composition and level of current assets. iii. Dimension III is concerned with the decisions about the composition and level of current liabilities.

OBJECTIVES OF WORKING CAPITAL MANAGEMENT The objectives of Working Capital Management could be stated as To ensure optimum investment in current assets. To strike a balance between the twin objectives of liquidity and profitability in the use of funds. To ensure adequate flow of funds for current operations. To speed up the flow of funds or to minimize the stagnation of funds.

DETERMINANTS OF WORKING CAPITAL There are no set rules to determine the working capital requirements of firms. A large number of factors, each having a different importance, influence working capital needs of firms, therefore, an analysis of relevant factors should be made in order to determine total investment in working capital. The following is the description of factors, which generally influence the working capital requirements of firms.

1.

NATURE AND SIZE OF BUSINESS: The size of business also has an important impact on its working capital needs. Size may

be measured in terms of the scale of operations. A firm with large scale of operations will need working capital than small term. The working capital requirements of a firm are basically influenced by the nature of business trading and financial firm has a very less investment in fixed assets, but require a large sum of money to be invested in working capital.

2.

TECHNOLOGY AND MANUFACTURING POLICY: The manufacturing cycle starts with the purchase and use of raw materials and completes

with the production of finished goods. Longer the manufacturing cycle, larger will be the firm working capital requirements. An extended manufacturing time span means a larger tie-up of funds in inventories. Thus if there are alternative technologies of manufacturing a product, the technological process with the shortest manufacturing cycle may be chooses.

3.

FIRMS CREDIT POLICY: The credit policy of the firm affects the working capital by influencing the level of

debtors. The credit term to be granted to customers may depend upon the forms of the industry to which the firm belongs.

4.

AVAILABILITY OF CREDIT: Creditors also affect the working capital requirements of a firm. A firm will need less

working capital if liberal credit terms are available to it. 5. OPERATING EFFICIENCY: The operating efficiency of the firm relates to the optimum utilization of resources at minimum costs. The firm will be effectively contributing in keeping the working capital

investment at a lower level if it is efficient to controlling operating costs and utilizing current

assets.

The use of working capital is improved and pace of a cash conversion cycle is

accelerated with operating efficiency.

6.

BUSINESS FLUCTUATIONS: Most firms experience seasonal and cyclical fluctuations in the demand for their products

and services. This business variation effects the working capital requirements especially the temporary working capital requirement of the firm. When there is an upward swing in the economy, sales will increase and vice-versa.

7.

PRODUCTION POLICY: A steady production policy will cause inventories to accumulate during the off-season

periods and the firm will be exposed to greater inventory cost and risk. Thus, if the cost and risks of maintaining a constant production schedules are high, the firm may adopt the policy of varying its production schedules in accordance with the change in demand.

8.

GROWTH AND EXPANSION ACTIVITES: The working capital needs of firm increases it growth in terms of sales of fixed assets. If

it is difficult to precisely determine the relationship between volume of sales and the working capital needs. The critical fact however that is the need for increased working capital funds does not follow growth in business activities but precedes it.

9.

PROFIT MARGIN AND PROFIT APPROPRIATION: Firms differ in their capacity to generate profit from business operations. Some firms

enjoy a dominant position, due to quality product or good marketing management or monopoly power in the market and earn a high profit margin. Some other firms may have to operate in an environment of intense competition and may earn low margin of profits. A high net profit margin contributes towards the working capital pool. Infact the net profit is a source of working capital to the extent it has earned in cash.

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OBJECTIVES OF THE STUDY

1. To study the working capital performance of the Kesoram Cement Ltd. 2. To examine the feasibility of present system of managing cash, debtors and inventory. 3. To study the management of current assets and current liabilities of Kesoram Cement Ltd. 4. To know the liquidity position of the company. 5. To give suggestions for better working capital management.

SCOPE OF THE STUDY

1. The scope is limited to the operations of Kesoram Cement Ltd, karimnagar. 2. The study is confined to the evaluation of last five years reports. 3. The study focuses on analyzing the working capital management only. 4. The information obtained from secondary sources was limited to Kesoram Cement Ltd.

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LIMITATIONS OF THE STUDY

1. The study was limited to only for a period of 5 years i.e. 2005-2010. 2. The data was collected only through secondary sources. 3. As the study period was very short, the complete financial status of the company was not done. 4. The study was limited up to the data and information provided by Kesoram Cement Ltd. and its annual reports. 5. The study has concentrated only on the working capital management of the company. The other financial aspects or components were ignored. 6. This study is confined to the Kesoram Cement Ltd, Basanth Nagar, karimnagar only.

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RESEARCH METHODOLOGY Research methodology is the scientific way to solve the research problem. This involves exploring all possible methods of solving the research problem and examine the alternative methods and arriving at the best possible method considering the resources at the disposal of the researcher.

Definition of Research: Research is the manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aids in construction of theory on in the practice of an art. Meaning of Research: Research is the process of finding solutions to a problem after a thorough study and analysis of the situational factors. Research is the systematic study directed towards fully scientific knowledge or understanding of the subject studied. Research is common parlance refers to a search for knowledge. In fact research is an act of scientific investigation. Research methodology is a way to systematically solve research problem. In it we study the various steps that are generally adopted by researcher in studying his research problem along with logic behind them. It is necessary for a researcher to know not only the research method/techniques but also the methodology. It may be noted, in the context of planning & development that the significance of research lines in its quality and not in quantity. Researcher should know how to apply particular research techniques, but they also need to know which of these methods or techniques, are relevant and which are not, and what would they mean and indicate and why?

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Research design of study: The design of study is as follows. 1. Streamlining of cash inputs. 2. Forecast of material requirements. 3. Computerized bill passing system and customer payment. 4. Keeping track of system of centralize cash collection.

Collection of Data The sources of data can be classified as 1. Primary Data: The data that is collected for the first time for any statistical investigation and is used in the statistical analysis is termed as primary data. Primary data is collected by the following methods. a) Personal observation. b) Interactions with the staff members. 2. Secondary Data: The data whether published or unpublished, which have been already collected and processed by some agency or person and take over from them and used by any other agency or person for their statistical work are termed as secondary data. The secondary data was collected mainly from the following sources. 1. Annual Reports 2. Manuals and Magazines 3. Website related to the company www.kesoramcement.com

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COMPANY PROFILE

HISTORY: The company was incorporated on 18th October, 1919 under the Indian Companies Act, 1913, in the name and style of Kesoram Cotton Mills Limited. It had a Textile Mill at 42, Garden Reach Road, Calcutta 700024. The name of the company was changed to Kesoram Industries & Cotton Mills Limited on 30th August, 1961 and the same was further changed to Kesoram Industries Limited on 9th July, 1986. The said Textile Mill at Garden Reach Road was eventually demerged into a separate company.

Kesoram Cement Industry is one of the leading manufacturing of cements in India. Incorporated by the promoters of Birla Group Company, it is a dry process cement plant. The plant capacity is 8.28 lakh tonnes per annum. It is located at Basanthnagar in Karimnagar District of Andhra Pradesh. This is 8 KM away from the Ramagundam Railway, linking Madras to New Delhi. The companys first unit at Basanthnagar with a capacity of 2.1 lakh tonnes per annum incorporating Humboldt suspension pre-heater system was commissioned during the year 1969. The second unit was set up in the year 1971 with a capacity of 2.1 lakh tonnes per annum and the third unit with a capacity of 2.5 lakh tonnes per annum went on steam in the year 1978. The coal for this company is supplied by Singareni Collieries and the power is obtained from APSEB, the power demand for the factory is about 21MW Kesoram got DG sets of 4 MW each installed in the year 1987. Kesoram Cement has set up a 15 MW captive power plant to facilitate for an uninterrupted power supply for manufacturing of cement started on 24th August, 1997 per hour 12 MW, actual power is 15 MW. Kesoram Cement Industry distinguished itself among all the cement factories in India by bagging the national productivity award consecutively for two years that is for the year 1985-86 & 1986-87.

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One among of the industries gains in the country today serving the nation on the industrial front, Kesoram Industries Limited has a chequered and eventful history dating to the twenties when the industrial house of Birla acquired it with only a Textile Mill under its banner in 1924. It grew from strength to and spread its activities to never fields like Rayon Pulp, Transparent Paper, Spun Pipes, Refractoriness, Tiers and other product. Looking to the wide gap between the demand and supply of a vital commodity cement which plays an important role in national building activity, the government of India had deli censed the cements industry in the year 1966 with a view to attract private entrepreneurs to augment to cement production. Kesoram rose to the occasion and decided to set up a few cement plants in the country. Birla Supreme is a popular brand of Kesoram Cement from its prestigious plant of Basanthnagar in A.P. which has outstanding track record in performances and productivity serving the nation for the last two and half decades it has proved its distinction by bagging several national awards and state awards. It also has the distinction of achieving optimum capacity utilization. Kesoram offers a choice of top quality Portland Cement for light heavy constructions and allied applications. Quality is built to every fact of the operation. The plant layout is national to being with the lime stone is rich in calcium carbonate a key factor the influence the quality of the final product. The dry process, technology used in the latest computerized monitoring overseas. The manufacturing process samples are sent regularly to the bureau of India Standards national council of construction and building measures for Newspaper, Magazines Hoardings etc. Kesoram cement undertaking marketing activities extensively in the states of Andhra Pradesh, Karnataka, Tamilnadu, Kerala, Maharashtra and Gujarat. In Andhra Pradesh sales deposits are located in different areas like Karimnagar, Warangal, Nizamabad, Vijayawada and Nellore. In other states it has opened around 10 depots. The market share of Kesoram Cement in all India Cement Market is 1.19%. In Andhra Pradesh it is a 7.05%.

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GROWTH: The first plant for manufacturing of rayon yarn was established at Tribeni, District Hooghly, West Bengal and the same was commissioned in December, 1959 and the second plant was commissioned in the year 1962 enabling it to manufacture 4,635 metric tonnes per annum (mtpa) of rayon yarn. This unit has 6,500 metric tonnes per annum (mtpa) capacity as on 31.03.2007. The plant for manufacturing of transparent paper was also set up at the same location at Tribeni, District Hooghly, West Bengal, in June, 1961. It has the annual capacity to manufacture 3,600 metric tonnes per annum (mtpa) of transparent paper. The company diversified into manufacturing of Cast Iron Spun Pipes and Pipe Fittings at Bansberia, District Hooghly, West Bengal, with a production capacity of 45,000 metric tonnes per annum (mtpa) of cast iron spun pipes and pipe fittings in December, 1964. The company subsequently diversified into the manufacturing of Cement and in 1969 established its first cement plant under the name "Kesoram Cement" at Basanthnagar, Karimnagar District (Andhra Pradesh) and to take advantage of favorable market conditions, in 1986 another cement plant, known as 'Vasavadatta Cement', was commissioned by it at Sedam, Gulbraga District (Karnataka). The cement manufacturing capacities at both the plants were augmented from time to time according to the market conditions and as on 31.03.2007 have annual cement manufacturing capacities of 0.9 million tonnes and 3.65 million tonnes respectively. The company in March 1992, commissioned a plant at Balasore known as Birla Tires in Orissa, for manufacturing of 10,00,000 mtpa automotive tires and tubes in the first phase in collaboration with Pirelli Limited, U.K., a subsidiary company of the world famous Pirelli Group of Italy a pioneer in production and development of automotive tires in the world. The company as on 31.03.2007 had the manufacturing capacities of 1.95 million tires, 1.4 million tubes and 1.1 million flaps per annum in the said plant.

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It has small manufacturing capacities of various chemicals at Kharda in the State of West Bengal also. It has the annual manufacturing capacities of 12,410 mtpa of Caustic Soda Lye, 5,045 mtpa of Liquid Chlorine, 6,205 mtpa of Sodium Hypochlorite, 8,200 mtpa of Hydrochloric Acid, 3,200 mtpa of Ferric Alum, 18,700 mtpa of Sulphuric Acid and 1,620,000 m3 of purified Hydrogen Gas.

TODAY: The company is a well-diversified entity in the fields of Cement, Tire, Rayon Yarn, Transparent Paper, Spun Pipes and Heavy Chemicals with two core business segments i.e. Cement and Tires.

The company as of now is listed on three major Stock Exchanges in India i.e. Bombay Stock Exchange Limited, Mumbai, Calcutta Stock Exchange Association Limited, Kolkata and National Stock Exchange of India Limited, Mumbai.

FUTURE: A further expansion up to 1.65 million tonnes of cement per annum in Vasavadatta Cement at Sedam in Karnataka at the same site is in progress, with a Captive Power Plant, involving a capital expenditure of about Rs.5.50 crores.

Further, after agnation of the existing capacity of tire plant at Balasore in Orissa, which was the total capacity of 252 metric tonnes per day as on date, the Board has sanctioned setting up of a Greenfield Project of 257 metric tonnes per day capacity in the State of Uttaranchal with a capex of about Rs.60 crores. The work on which is in progress.

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FUNCTIONS OF CEMENT INGREDIENTS LIMESTONE: This is the important composition of cement and its proportion is to be carefully maintained. Limestone is excess make the cement unsound and causes the cement to expand and disintegrate. On the other hand, if lime is in deficiency strength of cement is decreased and it causes cement to set quickly. CALCIUM SULPHATE: This ingredient imparts color, hardness and strength to cement.

COKE BREEZE: It is a fuel, helps to burn the nudels in the kiln. TYPES OF CEMENT India is currently produces many variables cement like 1. ORDINARY PORTLAND CEMENT: This is mixture of calcareous (limestone, marble, chalk etc.,) and argillaceous (clay, shale etc.,) to which other materials like silica, alumna or iron oxide are added. They are burnt at a clinking temperature and the resulting clinker is then ground. After burning, only gypsum or air entering agent is added. 2. PORTLAND BLAST FURNACE SLAG CEMENT: A fine mixture Portland cement clinker and granulated blast furnace slag makes Portland blast furnace slag makes Portland slag cement. The clinker for this from is manufactured in the same manner as for ordinary Portland cement. The granulated blast furnace slag is a nonmetallic product obtained by rapidly chilling or dipping in water stream or aid. The molten slag cement to comply with the requirement under IS: 455-1976. It highly suitable for marine structure, or structure involving large masses of concrete such as such drams, retaining was and

19

bridge abutments, for municipal works such as sewers and structures exposed to sulfate bearing such as foundation and road.

3.

PORTLAND POZZALANA CEMENT: This is manufactured in two ways. Either by grinding together Portland cement clinker

and pozzalana used varies 10 to 25% by weight of cement. In mass concrete construction PPC concrete have show better resistance to cracking then the OPC to sulphate attack and sea water is similar to that of sulphate resisting Portland cement. 4. RAPID HARDENING PORTLAND CEMENT: It is from OPC, it contains a higher percentage of tri-calcium silicate and secondly, it is more finely ground than OPC. Rapid Hardening Portland Cement, True top its attaining in 7 days. This cement is used when a structure is required to carry loads earlier that would be possible with the use of OPC for example for roads air fields and concentrate products industry. 5. HIGH ALUMINA CEMENT: The major ingredient in this type of cement is hydraulic calcium aluminates. It hardness rapidly in one day, strength equivalent by OPC in above 28 days it is not recommended for structural use, thought it has a high resistance to chemical attack by seawater and sulphate bearing soil. It makes a good refractory concrete when used with crushed bricks. 6. OIL-WELL CEMENT: This is a specific kind of cement for use in drilling of oil wells in the space between the steel liming tubes and the well walls. It sets slowly in order to give slurry made with it, sufficient time to reach the large depths of the oils wells. However, once it seeks, develops strength rapidly and remains stable at high temperature.

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7.

WHITE CEMENT: It is primarily used for decorative purpose and also in the manufacturing of tile. The

materials are so chosen that the maximum iron oxide content is strictly limited to 1%. A variety of colors can be obtained by the addition of pigments.

8.

ACID RESISTANT CEMENT: With a predominant base of silicates it is characterized by a quick set, good mechanical

strength and high resistance to most acids, corrosive organic chemicals mineral soils and greases. It is used for binding and joining acid proof bricks and tiles, construction of acid resistant industrial floorings.

Manufacturing Process: Portland cement, the fundamental ingredient in concrete, is calcium silicate cement made with a combination of calcium, silicon, aluminum, and iron. Producing cement that meets specific chemical and physical specifications requires careful control of the manufacturing proceeds. The first step in the Portland cement manufacturing process is obtaining raw

materials. Generally, raw materials consisting of combinations of limestone, shells or chalk, and shale, clay, sand or iron ore are mined from a quarry near the plant. At the quarry, the raw materials are reduced by primary and secondary crushers. Stone is first reduced to 5-inch size (125-mm), then to -inch (19-mm). Once the raw materials arrive at the cement plant, the materials are proportioned to create cement with a specific chemical composition. Two different methods dry and wet are used to manufacture Portland cement. In the dry process, dry raw materials are proportioned, ground to a powder, blended together and fed to the kiln in a dry state. In the wet process, slurry is formed by adding water to the properly proportioned raw materials. The grinding and blending operations are then completed with the materials in slurry form. After blending, the mixture of raw materials is fed into the upper end of a titled rotating, cylindrical kiln. The mixture passes through the kiln at a rate controlled by the slope and rotational speed of the kiln. Burning fuel consisting of powdered coal or natural gas is forced

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into the lower end of the kiln. Inside the kiln, raw materials reach temperatures of 2600 F to 3000 F (1430 C to 1650 C). At 2700 F (1480 C), a series of chemical reactions cause the materials to fuse and create cement clinker-grayish-black pellets, often the size of marbles.

LIST OF AWARDS BAGGED KESORAM CEMENT S.No. 01 02 Year 1984 1985 Details FAPCCI Award for Best Family Planning Efforts in States FAPCCI Award for Best Industrial Promotion / Expansion Efforts in the State. 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 1986 1987 1987-88 1988 1988-89 1989-90 1990-91 1991 1991 1991-92 1993-94 1993 1995 1996 1997 1997-98 1998 1999 Best Family Planning in the State National Productivity Award National Award for Mines Safety National Productivity Award National Award for Mines Safety Best Family Planning Efforts in States AP State Award for Best Industrial Relations AP State Yahamanya Rathna and Best Management Award FAPCCI Award for Best Family Planning Efforts in States NCBMs National Award for Energy Performance Indira Gandhi Memorial National Award for Excellence in Industry FAPCCI Award Jawaharlal Nehru Silver Trophy Best Management Award by AP Govt. Mines Safety Awards in AP Mines Safety Awards in AP Best Workers Welfare by FAPPCI Achieved ISO-9002 Certification from Bureau of Indian Standards The "Best Pay Roll savings group award among Private Sector". 1st Prize in the level by International Savings Organization, Govt. of India. 21 2000-01 The best efforts in rural development by an industry in the State by 22

the Federation of AP of Commerce & Industry (FAPCCI) 22 23 2001 2001-02 1st Prize Mines Environment and Pollution Control Award for efforts in environmental protection in the region by the Godavari Pradushana Pariharana Paryavarna Pariieractionavkhamu (GPPPPG) (A voluntary organization for pollution and control and environment) 24 2003 1st Prize of Horticulture Show (for Corombola Fruit) held at public gardens, Hyderabad being organized the director of Horticulture. 25 2002-03 Award for best efforts in environmental protection in the region by the Godavari Pradusha Pariharana Paryavarana Pareiractionavkhamu (GPPPPG) (A voluntary organization for pollution and control and environment) 26 2003 Achieved ISO 14001 certification pertaining to environment from Bureau of Indian Standards 27 28 2003 2002-03 Vana Mithra Awards from the District Collector Award for the best efforts put in by Kesoram Cement for protecting the environment 29 30 2004 2005 Achieved OHSAS-18001 Certification from DNV Delhi 1st Prize for Horticulture Show (for Sapota, Banana & Corombola Fruit) in connection with Shathavahanakalotsavalu.

WELFARE AND RECREATION FACILITIES AT A GLANCE: 1) Recreation Club: For the purpose of recreation facilities to auditors are provided for the employees to indoor games like shuttle, chess, caroms and for organizing culture functions and activities like drama, music and dance concert etc. 2) Libraries and Reading Rooms: The Company has provided libraries and reading rooms for the benefit of the employee. About 5000 books are available in read the libraries. All kinds of newspaper and magazines are made available in reading rooms for the daily reading rooms for the employees and their families. 3) Canteen: Is provided to cater to the needs of the employees for the supply of snacks, tea, coffee and meals. 23

4) Schools: One English Medium School and Telugu Medium School are provided to meet the educational requirements of the employees children. 5) Dispensary: The Company has provided a dispensary with a qualified Medical Officer and Para Medical Staff for the benefit or the employee. The employees conversed under ESI scheme has to avail the medical facilities from the ESI Hospital. 6) House Journal: A House Journal in the name of Basanthnagar Samachar is brought out quarterly where in all the important activities of the plant are published. 7) Kesoram Consumer Co-operative Store: Consumer Co-operative stores are available to meet the needs of the employees for supply of essential commodities like rice, wheat, sugar, kerosene on cash credit basis. 8) Sport and Games: Competitors in sport and games are conducted every year for 15th August & 26th January.

AIMS: Continuous effort to improving productivity. Evaluating individual skill through training and motivations. Total involvement through participants management activities. Creating healthy and safe environment. Social development.

CHAIRMANS REPORT We have much to feel happy that India remaining one of the worlds fastest growing economics with our GDP registering rises of 902 percent during 2008-09 on the back of 9 percent improvement in previous year. There is no doubt that such sterling performance of the economy, which is rightly winning global plaudit is because of the reforms and a conscious decision to give a free play to entrepreneurial genius of the citizens. It is not only the

outstanding growth which cause for celebration. But we also fined at the macro economics fundamental like progress is fiscal consolidation and improvement in balance of payments position are becoming stronger. I feel that we should be able to achieve the annual average 24

growth target of 9 percent during the current eleventh five year plan, what is particularly gratifying is the 10 percent growth of the industrial sector with the manufacturing sub sector growing at a good 11.3 percent such performance of the industrial sector should remain sustainable since we have been seeing a marked rise investment rate in recent years. While there is much to cheer about the economy, I am concerned about supply side constraints contributing to inflation and a disappointing 2.7 percent growth agriculture last year again a cause of inflation capacity utilization in mast industries is high and therefore supply improvement of industrial product call for creation of new capacities at a rapid pace. The Indian Cement Industry that worlds second largest with capacity of 165 million tones, once again gave a good account of itself last year when dispatches were up 11.3 percent to 151.8 million tones. In my opinion the challenge of the industry is to see that the announced fresh capacity of 80 million tones is commissioned in time. The plan projection is that demand for the cement will be growing 11.5 percent at compounded annual growth rate (CAGR) during the 11th plan period. It goes to the industrys credit that is ploughing back surplus resources to create new capacities. Never before has India invited as much global attention as is the case today. All this is because the world has finally come to appreciate the economic potential of the country and the quality of our human resources. As we continue to make inexorable process to becoming a developed economy, the Indian economic experiment will be a source of inspiration for all other developing countries.

VISION & MISSION: The salient features of Vision and Mission core values are as follows: The business strategies and practices have to be changed continuously and they should be adapted to a changing world. Towards this direction many great companies have developed

their policies for their vision for future and core values. The Kesoram Cement also has set its vision and core values. 25

VISION: We the members of Kesoram Cement family, in our continuous pursuit for excellent cement quality and customer satisfaction, are committed to achieve cost leadership optimally utilizing our resources by: 1. Striving for 'ZERO' ACCIDENTS, 'ZERO' quality complaints and 'ZERO' downtime 2. To enhance individual skill through training, motivation and make Kesoram cement a learning organization. 3. Total involvement through participative management activities. 4. Creating healthy, safe and green environment. 5. Continuous efforts for improving productivity. 6. To be market leader in the cement sector and a role model by setting bench marks in process and productivity. 7. To achieve excellence through the application of TPM, ISO 9001:2000, ISO 14001 and IS 18001 2000. 8. To protect the environment from dust and green house gases. 9. To conserve energy and minerals. 10. To avoid all types of wastages and use the wastages of even other industries to the needs.

ENVIRONMENTAL POLICY OBJECTIVES: 1. Reducing the dust emission and other pollutants from all sources. 2. Comply with relevant environmental legislation and regulation as applicable to our plant operations. 3. Maintaining clean and green environment by plantation programs. 4. Preserving natural resources by reducing energy and water consumption. 5. Providing training to all the employees for achieving the required objectives and targets, subject to review. 6. This policy is available to all our employees and can be made available to public on demand. 26

QUALITY POLICY: This shall be achieved by 1. Improvement in quality of raw material inputs 2. Progressive increase in productivity and equipment efficiency. 3. Total involvement of employees through participative management activities. 4. Enhancing individual skills through training and motivation. 5. Reduction of chronic losses. 6. Technological innovations.

TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT (R & D): a) Specific areas in which R & D carried out Trial for consumption of pond Ash / bed ash conducted and R & D cell continued to cater the requirement of improving the productivity with special attention on energy conservation. Improvement in output and quality of product. Cost of production reduced by use of pond ash. Increase the percentage of fly ash in blended cement. Separate allocation was made, however, the company paid access @ Re.0.75 per ton of cement dispatched to the development commissioner of cement industry, Govt. of India who in turn assists financially to national council of cement and building materials to carryout research and development projects and programs in

b) Benefits derived as a result of above R & D

c) Future plan of action

d) Expenditure on R & D 1. Capital 2. Recurring 3. Total 4. Total R & D expenditure as a percentage of the total turnover

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the interest of the cement industry. During the year 2006-07 the company paid Rs.25.80 lakhs to the said authority. A sum of Rs.8.42 lacs was also paid by the vasavadatta cement section to the said authority towards contribution for R & D energy audit study. PERFORMANCE OF COMPANY IN MARKETING:

In the year in which cement prices came under server downwards pressure your company has turned over satisfactory working results for the year ending 31st March 2007, while production of cement was higher at 59.69 lakh tones as against 54.64 lakh as against 54.64 lakh tonnes in the previous year, sales and other income increased from Rs.1361.84 crores to 1419.66 crores from Rs.261 crores in the previous year, mainly due to a drop in other income by 30.96 crores and increase interest and depreciation charges by 22.46 crores.

TYPES OF SALES

1. Depot Sales 2. Site Sales Depot Sales: The required amount of cement is supplied to the dealers from the depot. The branches of the company make these sales. Site Sales: The Company to required group or organization dealers etc. directly sells the required quantity of cement.

Distribution Channel: Kesoram cement follows intensive type of distribution channel. Services available in as many outlets as possible.

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Dealers Selection: The Company selects the dealers after taking into consideration, the financial position the area and the dealers opinion regarding the product the company takes more attention for selecting dealers in the urban region.

Sales promotion: The Company has got healthy sales promotions it has taken much concentration in advertising of the product through various means like 1. Newspaper 2. Television 3. Wall painting 4. Bus panels 5. Shop painting REASON TO PREFER THE CEMENT: REASON Quality Price Strength Others Total NO.OF RESPONDENTS 31 23 40 06 100 PERCENTAGE 31 23 40 06 100

Most number of the respondents approximately 40% of the customers given an importance to the strength of cement which are available in the market for their own construction and next they prefer for the good quality cement. Now a days 31% of the customers prefer the quality in cement 23% of the customers also give an importance to the price of the cement. The middle class people were looking to save the money when they are buying any product.

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GRADE PREFERENCE WHICH IS AVAILABLE IN THE MARKET GRADE 53 Grade 43 Grade Both Total NO.OF RESPONDENTS 57 08 35 100 PERCENTAGE 57 08 35 100

In the market there are 43 and 53 grade cement for available. The customer wants to build their constructions with strong and good quality cement. 57% of the customers prefers for the 53 grade cement that is they want to strength in the cement. 35% of the customer wants both 43 and 53 grade cement. 8% of customers prefer for the 43 grade cement.

The competition between the cement manufacturing companies is increasing day by day in the cement market thats why people customers preferred for the strong and good quality cement with less cost.

PRODUCTION FIGURES OF THIS SECTION ARE AS UNDER 2009-10 (Mt) 8,85,950 10,56,742 2008-09 (Mt) 9,06,850 10,46,166 2007-08 (Mt) 8,95,790 9,84,574 2006-07 (Mt) 18,80,316 20,14,264

Clinker Cement

Clinker and cement production could have been still higher but for the stoppage of one kiln for about a month to carry out some modifications. There has been a substantial increase in the cost of raw materials, coal and power however; the same has been offset since cement prices have improved during the year due to good demand. Production of blended cement sold under the brand name "BIRLA SHAKTI" has increased from 5.09 lac tones a growth of 18% due to aggressive advertisement campaign. All efforts are being continued to raise the blended cement production further. The captive power generated during the year is 1050.08 lac units, which is highest generation ever. This includes 30

66.28 lac units supplied to AP TRANSCO. Captive thermal power plant continues to play an important role in controlling cost of cement production. The suit challenging the validity of imposition of electricity duty on captive power generation @25 paise per unit from 17/07/2003 by the government of Andhra Pradesh continues to be pending before the Honble High Court of Andhra Pradesh. The government has field the counter but the case has not yet been listed for hearing. Water requirement to run the cement plant as also the captive thermal power plant is met through our own reservoir created in our mines and the water position is, therefore comfortable. Industrial relation yes were cordial and peaceful Limestone mines of section bagged 1 st prize in waste dump management, a forestation and community development from the India bureau of mines during the mines environment and mineral conservation week celebrations. The mines also got 2nd prize in overall performance also with first prize from environment and health management, hazard identification and risk management from the director general of mines safety during the mines safety week celebration. This unit is conscious of its social responsibilities towards the community at large. It rural and community developments activity include adoption of nearby villages, running an agricultural demonstration farm, a model dairy farm and undertaking many other social welfare activities, such as farmers training, animal health camps, distribution of agricultural implements, tree plantation, a forestation, clean and programs.

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SCHEDULE OF CHANGES IN WORKING CAPITAL STATEMENT FOR THE YEAR ENDING 2005-06 OF KESORAM CEMENT LIMITED

Particulars CURRENT ASSETS Inventories Sundry Debtors Cash and bank balances Other Current Assets Loans and Advances Total Current Assets (A) CURRENT LIABILITIES Current Liabilities Provisions Total Current Liabilities (B) Net Working Capital Decrease (A-B) in Working Capital TOTAL

2006 Amount (Rs)

2007 Amount (Rs)

Changes in Working Capital Increase Decrease Amount (Rs) Amount (Rs)

230,24,07,828 255,18,52,443 201,42,28,443 184,37,25,247 19,78,35,867 23,17,25,933 24,83,13,629 28,89,28,154

24,94,44,615 5,04,77,762 5,72,02,221 -

17,05,03,196 39,48,40,974

156,01,54,141 116,53,13,167 630,63,52,212 609,81,32,640

185,59,95,199 161,23,30,585 45,12,32,233 76,21,94,061

24,36,64,614 -

31,09,61,828

230,72,27,432 237,45,24,646 399,91,24,780 372,36,07,994 399,91,24,780 27,55,16,786 39991,24,780 27,55,16,786 87,63,05,998 87,63,05,998

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INTERPRETATION: 1. The inventories were increased by Rs.24, 94,44,615 as there was additional purchase of raw materials. 2. Sundry Debtors were decreased by Rs.17,05,03,196 as the cash was collected. 3. Cash at bank was increased by Rs.5,04,77,762, due to the collection of Loans and Advances from the employees. 4. The current liabilities were decreased by Rs.24,36,64,614 as they were repaid. 5. The Net working capital was decreased by Rs.27,55,16,786, due to decrease in current assets.

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SCHEDULE OF CHANGES IN WORKING CAPITAL STATEMENT FOR THE YEAR ENDING 2006-07 OF KESORAM CEMENT LIMITED

Particulars CURRENT ASSETS Inventories Sundry Debtors Cash and bank balances Other Current Assets Loans and

2007 Amount (Rs)

2008 Amount (Rs)

Changes in Working Capital Increase Decrease Amount (Rs) Amount (Rs)

255,18,52,443 376,88,27,777 184,37,25,247 245,94,52,581 24,83,13,629 27,24,22,341

121,69,75,334 61,57,27,334 2,41,08,712

28,89,28,154

11,81,99,412

17,07,28,742

116,53,13,167 206,22,47,261 Advances Total Current Assets (A) CURRENT LIABILITIES Current Liabilities Provisions Total Current Liabilities (B) Net Working Capital (A-B) Increase in Working Capital TOTAL 609,81,32,640 868,11,49,372

89,69,34,094

161,23,30,585 226,82,92,085 76,21,94,061 135,70,49,221 237,45,24,646 362,53,41,306 372,36,07,994 505,58,08,066 133,22,00,072 -

65,59,61,500 59,48,55,160

27537,45,474

133,22,00,072 275,37,45,474

505,58,08,066 505,58,08,066

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INTERPRETATION:

1. The inventories were increased by Rs.121,69,75,334 as there was additional purchase of raw materials. 2. Sundry debtors were increased by Rs.61,57,27,334 as the company allowed credit sales to its customers. 3. Cash at bank was increased by Rs.2,41,08,712 due to the collection of loans and advances from the employees. 4. The current liabilities were increased by Rs.65,59,61,500 as the inventory was purchased on credit. 5. The net working capital was increased by Rs.133,22,00,072 as the current assets were more than current liabilities.

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SCHEDULE OF CHANGES IN WORKING CAPITAL STATEMENT FOR THE YEAR ENDING 2008-09 OF KESORAM CEMENT LIMITED

Particulars CURRENT ASSETS Inventories Sundry Debtors Cash and bank balances Other Current Assets Loans and Advances Total Current Assets (A) CURRENT LIABILITIES Current Liabilities Provisions Total Current Liabilities (B) Net Working Capital (A-B) Increase in Working Capital TOTAL

2007 Amount (Rs)

2008 Amount (Rs)

Changes in Working Capital Increase Decrease Amount (Rs) Amount (Rs)

376,88,27,777 245,94,52,581 27,24,22,341 11,81,99,412 206,22,47,261

442,17,01,810 273,07,35,205 40,54,21,333 21,46,91,785

65,28,74,033 27,12,82,624 13,29,98,992 9,64,92,373

429,01,79,191 222,79,31,930

868,11,49,372 1206,27,29,324

226,82,92,085 135,70,49,221 362,53,41,306 505,58,08,066 67,26,70,610 572,84,78,676

303,03,23,592 330,39,27,056 633,42,50,648 572,84,78,676 -

76,20,31,507

- 194,68,77,835

67,26,70,610

572,84,78,676 338,15,79,952 338,15,79,952

36

INTERPRETATION:

1. The inventories were increased by Rs.65,28,74,033 raw materials were purchased. 2. Sundry debtors were increased by Rs.27,12,85,624 as the company allowed credit sales. 3. Cash and bank balances were increased by Rs.13,29,98,992 as the employees repaid loans and advances. 4. The current liabilities were increased by Rs.76,20,31,507 due to increase in credit purchases of raw materials. 5. The networking capital was increased by Rs.67,26,70,610 due to increase in current assets.

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SCHEDULE OF CHANGES IN WORKING CAPITAL STATEMENT FOR THE YEAR ENDING 2009-10 OF KESORAM CEMENT LIMITED

Particulars CURRENT ASSETS Inventories Sundry Debtors Cash and bank balances Other Current Assets Loans and Advances Total Current Assets (A) CURRENT LIABILITIES Current Liabilities Provisions Total Current Liabilities (B) Net Working Capital (A-B) Increase in Working Capital TOTAL

2008 Amount (Rs)

2009 Amount (Rs)

Changes in Working Capital Increase Decrease Amount(Rs) Amount (Rs)

442,17,01,810 273,07,35,205 40,54,21,333 21,46,91,785 429,01,79,191 1,206,27,29,324

589,06,12,970 380,17,05,637 56,85,52,594 22,36,41,866 527,13,80,085 1,575,58,93,152

146,89,11,160 107,09,70,432 16,31,31,261 89,50,081 98,12,00,894

303,03,23,592 330,39,27,056 633,42,50,648 572,84,78,676 294,34,26,293 867,19,04,969

363,11,25,661 345,28,62,522 708,39,88,183 867,19,04,969 867,19,04,969

60,08,02,069 14,89,35,466

369,31,63,828

294,34,26,293 369,31,63,828

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INTERPRETATION:

1. The inventories were increased by Rs.146,89,11,160 as there was additional purchase of raw materials. 2. Sundry debtors were increased by Rs.107,09,70,432 because the credit sales were more. 3. Cash at bank were increased by Rs.16,31,31,261 due to the collection of loans and advances from the employees. 4. The current liabilities were increased by Rs.60,08,02,069 due to increase in credit purchases of raw material. 5. The networking capital was increased by Rs.294,34,26,293 due to increase in current assets.

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SCHEDULE OF CHANGES IN WORKING CAPITAL STATEMENT FOR THE YEAR ENDING 2010-11 OF KESORAM CEMENT LIMITED

Particulars CURRENT ASSETS Inventories Sundry Debtors Cash and bank

2009 Amount (Rs)

2010 Amount (Rs)

Changes in Working Capital Increase Decrease Amount (Rs) Amount (Rs)

589,06,12,970 380,17,05,637

916,19,41,383 542,88,86,145

327,13,28,413 162,71,80,508

56,85,52,594 balances Other Current Assets Loans and Advances Total Current Assets (A) CURRENT LIABILITIES Current Liabilities Provisions Total Current Liabilities (B) Net Working Capital (A-B) Increase in Working Capital TOTAL 22,36,41,866 213,24,11,958 1,261,69,25,025

80,44,88,277

23,59,35,683

30,13,37,962 287,46,21,844 1,857,12,75,611

7,76,96,096 74,22,09,886

363,11,25,661 31,38,94,395 394,50,20,056

528,62,44,550 14,99,25,238 543,61,69,788

- 165,51,18,889 16,39,69,157

867,19,04,969 1,313,51,05,823 446,32,00,854 1,313,51,05,823 1,313,51,05,823 - 446,32,00,854 611,83,19,743 611,83,19,743

40

INTERPRETATION:

1. The inventories were increased by Rs.327,13,28,413 as there was additional purchase of raw materials. 2. Sundry debtors were increased by Rs.162,71,80,508 because the credit sales were allowed by the company. 3. Cash at bank was increased by Rs.23,59,35,683 due to the collection of loans and advances from the employees. 4. The current liabilities were increased by Rs.165,51,18,889 due to increase in credit purchases. 5. The net working capital was increased by Rs.446,32,00,854 as current assets were more than current liabilities.

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RATIO ANALYSIS A ratio is simple mathematical expression. It is the number expressed in terms of another number, expressing the quantitative relationship between the two numbers Ratio Analysis is the technique of interpretation of financial statements with help of various meaning ratios. Ratios do not add any information that is already available, but they show the relationship between two items in a more meaningful way. They help us to draw certain conclusions. Comparison with related facts is the basis of ratio analysis.

Ratio may be used for comparison in any of the following ways.

1) Comparison of a firm with its own performance in the past. 2) Comparison of one firm with another firm in the industry. 3) Comparison of one firm with the industry as a whole. 4) Comparison of an achieved performance with pre-determined standards. 5) Comparison of one department of a concern with other departments.

CLASSIFICATION OF RATIOS

Several Ratios calculated from the accounting data, can be grouped into various classes according to the financial activity or function to be evaluated.

In view of the requirements of the various users of ratios, they are classified into the following four important categories. i) ii) iii) iv) Liquidity Ratios Leverage or Solvency Ratios Efficiency or Activity Ratios Profitability Ratios

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LIQUIDITY RATIOS Liquidity refers to the ability of a concern to meet its current obligations as and when these become due. The short-term obligations are met by realizing amounts from current, floating or circulating assets.

The current assets should either be liquid or near liquidity. These should be convertible into cash for paying obligations of short-term nature. If current assets can pay off current liabilities, then liquidity position will be satisfactory. On the other hand, if current liabilities may not be easily met out of current assets then liquidity position will be bad. The bankers, suppliers of goods and other short-term creditors are

interested in the liquidity of the concern. They will extend credit only if they are sure that current assets are enough to pay out the obligations. A very high degree of liquidity is not good for a firm because such a situation represents excessive funds of firm being tied in currents assets. Therefore, it is necessary to strike a proper balance between high liquidity and lack of liquidity.

The most common ratios, which measures the liquidity of the firm are as follows: 1. Current Ratio 2. Quick Ratio

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1.

CURRENT RATIO

This Ratio establishes the relationship between Current Assets and Current Liabilities. The Current Ratio is the measure of firms short-term solvency. It indicates the availability of Current Assets in rupees for every one rupee of Current Liabilities. Generally 2:1 is considered ideal for a concern. If the ratio is less than 2:1 the firm experiences difficulty in meeting its current obligations and if the ratio is higher than 2:1 there will be idle assets in the firm. It is calculated as follows: Current Assets Current Liabilities

Current Ratio

For the calculation of this ratio Current Assets include cash, bank, short term investments, bills receivable, trade debtors, short term loans and advances, inventory and prepaid expenses. Current Liabilities include Bank overdraft, bills payable, trade creditors and

unclaimed dividends.

Years 2006-07 2007-08 2008-09 2009-10 2010-11 Average

Current Assets Amount (Rs.) 609,81,32,640 868,11,49,372 1,206,27,29,324 1,575,58,93,152 1,857,12,75,611 1,223,38,36,020

Current Liabilities Amount (Rs.) 237,45,24,646 362,53,41,306 633,42,50,648 708,39,88,183 543,61,69,788 497,08,54,914

Ratio 2.56 : 1 2.39 : 1 1.90 : 1 2.22 : 1 2.22 : 1 2.49 : 1

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Graph Showing the Current Ratio

Chart Title
3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Series1

INTERPRETATION:

The average current ratio of the company is 2.49 : 1; the ideal current ratio is 2: 1. After comparing the companys average current ratio (2.49:1) with the standard ratio (2:1), it is analyzed that the companys liquidity status is satisfactory.

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2. QUICK OR ACID TEST RATIO Quick Ratio also called as Acid Test Ratio or Liquid Ratio. This ratio establishes the relationship between liquid assets and current liabilities. Quick assets are those, which can be converted into cash very quickly. They include cash balance, bills receivable, sundry debtors, and short-term investments. Quick liabilities include all those current liabilities excluding bank overdraft. The desirable norm for this ratio is 1 : 1, it is considered ideal for a concern.

Quick Ratio

Quick Assets Current Liabilities

Years 2006-07 2007-08 2008-09 2009-10 2010-11 Average

Quick Assets Amount (Rs.) 354,62,80,197 491,23,21,597 321,54,29,486 986,52,80,182 940,93,34,228 618,97,29,138

Current Liabilities Amount (Rs.) 237,45,24,646 362,53,41,306 633,42,50,648 708,39,88,183 543,61,69,788 497,08,54,914

Ratio 1.45 :1 1.35 : 1 1.21 : 1 1.39 : 1 1.73 : 1 1.40 : 1

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Graph Showing the Quick Ratio

1.80 1.60 1.40 QUICK RATIO 1.20 1.00 0.80 0.60 0.40 0.20 0.00 1.45 1.35 1.21 1.39

1.73

FINANCIAL YEARS

INTERPRETAITON:

The average quick ratio of the company is 1.40 : 1, the ideal quick ratio is 1:1. After comparing the companys average quick ratio (1.40:1) with the standard ratio (1:1). analyzed that the companys liquidity status is satisfactory. It is

47

CONCLUSIONS

1.

The liquidity positon of the company was satisfactory. The overall working capital position of the company was satisfactory. The current liabilities were increased as the company purchased the raw material on credit basis.

2. 3.

4.

The amount of sundry debtors have been increased as the company has allowed more credit sales to its customers.

5. 6. 7.

Loans were increased as the company was providing more short term loans. Additional inventories were purhased as there was heavy demand. Cash and bankbalances were increased as the employees have repaid loans and advances.

8.

The provisions were increased as the company allocated more amount of financial resources to it.

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SUGGESTIONS
1. 2. 3. 4. 5. 6. 7. The company should concentrate on recovery of debtors by reducing credit sales. The company is providing more loans to its employees. So this has to be reduced. Necessary steps should be taken to improve sales and reduce the stock. The company has to manage its current liabilities properly. The company has to follow the same trend as its liquidity status is satisfactory. The company has to follow the same trend in maintaining its working capital. It is advised that the company has to reduce the credit purchases of raw materials.

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BIBLIOGRAPHY

1. IM PANDEY

Financial Management, Vikas Publishing House Private Limited.

2. D. CHANDRABOSE -

Fundamentals of Financial Management, Prentice Hall of India Private Limited

3. Annual Reports of Kesoram Cement Limited.

4. Website :

www.kesoramcement.com www.google.com

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