A

SYNOPSIS
ON
WORKING CAPITAL
MANAGEMENT
IN
SEJAL GLASS LIMITED
(SESSION 2018 - 2019)

Submitted in the partial fulfillment of the requirement for the Degree of

Master of Business Administration to
DR. A.P.J. ABDUL KALAM TECHNICAL UNIVERSITY,
LUCKNOW

SUBMITTED TO SUBMITTED By
Dr. MAMTA SHUKLA NIVEDITA SRIVASTAVA
(H.O.D of M.B.A) MBA- II year
ROLL NO.-1752270019

MAHARANA PRATAP COLLEGE OF ENGINEERING MANDHANA,

KANPUR, UTTAR PRADESH

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 TABLE CONTENT
PART NO. PARTICULARS PAGE NO.

1 INTRODRUCTION 3

2 LITERATURE REVIEW 4-5

3 OBJECTIVE OF STUDY 6

4 RESEARCH PROBLEM 7

5 LIMITATION 8

6 RESEARCH METHODOLOGY 9

7 RESEARCH DESIGNING 9

8 SAMPLING 10

9 METHOD OF DATA COLLECTION 10

 SECONDARY DATA
10 PROPOSED CHAPTER 11

11 PROPOSED OUTCOMES 12

12 BIBILIOGRAPHY 13

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 1. INTRODUCTION
In simple terms working capital means is that the amount of funds that a company require finance for its day-
to-day operations. Working capital states that the period of debtors, receivables etc for a company to raise
finance from them at the earliest. Finance manager should develop sound techniques of managing current
assets.
Working capital management involves managing the relationship between a firm's short- term assets and its
short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its
operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming
operational expenses.

The following should be effective in working capital management:

Cash management: Identify the cash balance which allows for the business to meet day to day expenses, but
reduces cash holding costs.

Inventory management: Identify the level of inventory which allows for uninterrupted production but reduces
the investment in raw materials—and minimizes reordering costs—and hence increases cash flow. Besides
this, the lead times in production should be lowered to reduce Work in Process (WIP) and similarly, the
Finished Goods should be kept on as low level as possible to avoid over production.

Debtors management: Identify the appropriate credit policy, i.e. credit terms, discounts etc. which will attract
customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased
revenue and hence Return on Capital. Debtors credit period should be less than 90 days to achieve good
working capital ratio and position of the company.

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 2. Literature Review
Working capital is very important for every company to meet day to day operation expenses and urgent
payments. Effective working capital increase the company profit and vice versa. For effective working
capital, collection days should be less and payment days should be more overall cash conversion cycle days
should very low or in negative.

Many researchers have studied working capital from different views and in different environments. The
following ones were very interesting and useful for our research:

Eljelly (2004) Identified the relation between profitability and liquidity who was examined, as measured by
current ratio and cash gap (cash conversion cycle) on a sample of joint stock firms in Saudi Arabia. The study
found that the cash conversion cycle was of more importance as a measure of liquidity than the current
ratio that affects profitability. The size variable was found to have significant effect on profitability at the
industry level. The results were stable and had important implications for liquidity management in various
Saudi firms. First, it was clear that there was negative relationship between profitability and liquidity
indicators such as current ratio and cash gap in the Saudi sample examined. Second, the study also revealed
that there was great variation among industries with respect to the significant measure of liquidity.

Lazaridis and Tryfonidis (2006) have explored the relationship between corporate profitability and WCM
in the Athens Stock Exchange. The finding of results shows a negative relationship between profitability and
working capital indicators like days of accounts receivable, account payable and cash conversion cycle. They
concluded that firms can create profits by effectively handling each component of the cash conversion cycle.

Saswata Chatterjee (2010) Focused on the importance of the fixed and current assets in the successful
running of any organization. It poses direct impacts on the profitability liquidity. There have been a
phenomenon observed in the business that most of the companies increase the margin for the profits and
losses because this act shrinks the size of working capital relative to sales. But if the companies want to
increase or improve its liquidity, then it has to increase its working capital. In the response of this policy the
organization has to lower down its sales and hence the profitability will be affected due to this action. For
this purpose 30 United Kingdom based companies were selected which were listed in the London Stock
exchange. The data were taken of three years 2006-2008. It analyzed the impact of the working capital on the
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profitability. The dimensions of working capital management included in this research which is quick ratios,
current ratios C.C.C, average days of payment, Inventory turnover, and A.C.P (average collection period. on
the net operating profitability of the UK companies.

Mohamad and Saad (2010) Used Bloomberg's database of 172 listed companies randomly selected from
Bursa Malaysia main board for five year period from 2003 to 2007. Applying correlations and multiple
regression analysis, they found that current assets to total asset ratio shows positive significant relationship
with Tobin Q, ROA and ROI. Cash conversion cycle, current asset to current liabilities ratio and current
liabilities to total assets ratio illustrate negative significant relations with Tobin Q, ROA and ROIC.

All the above studies provide us a solid base and give us idea regarding working capital management and its
components. They also give us the results and conclusions of those researches already conducted on the same
area for different countries and environment from different aspects. On basis of these researches done in
different countries, we have developed our own methodology for research.

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 3. Objective of study

To study the various

components of
working capital.

To analyze the liquidity

trend of Sejal Glass
Ltd..

To appraise the
utilization of current
asset and current
liabilities and find out
short- comings if any..

To suggest measure for

effective management
of working capital.

To measure and
evaluate the liquidity
and profitability
position of Sejal Glass
Ltd.

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 4. Research Problem
Sejal Glass limited sold their Float Glass manufacturing plant to Saint Gobain because it was
continuous production plant so company could not have reduced their production where their
sales was less because of more competition. They could not have reduced their fixed cost, so
day by day expenditure was increasing, it was not their cup of tea to reduce the cost therefore
they sold the plant.

After selling plant, company facing many problems from suppliers because of low capital
they are unable to make payment on time so more than 50% of suppliers are not supplying
on credit basis. So that company has to make payment in advance and on delivery.

Customers delaying invoice payment was deemed by survey respondents to have had a high
or very high impact on working capital over the past 12 months. Similarly, customers
exerting pressure on businesses to extend their credit and payment terms were also placing
high or very high pressure on working capital.

The main problem from suppliers i.e. 80% suppliers are from India from that 70% suppliers
allowing 30 - 45 days credit and for rest of them company has to make payment in advance.
20% suppliers from rest of the country from that 40% of suppliers allowing 60 - 90 days
credit and for rest of them company has to make payment in advance.

Stretching credit period of suppliers is the main source to improve working capital but here
it is not there. So this is one of the cause for working capital. Company spending a lot for
unnecessary things therefore Company’s expenditure is also more than income since 3 years.

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 5. Limitation
 Time factor is the most crucial one. The study was conducted within a short period of
two months.

 Sejal glass executives were hesitating to provide information.

 I had to wait for a long time to make contact with the executives, because they were
busy with their work.

 Due to busy work schedule, detailed discussions were not possible

 It is also found that some of the executives lack interest, enthusiasm, initiative and
involvement, which was de-motivated me.

 Competitors of sejal glass have given less information and data.

 Lot of time consumed during survey.

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 6. Research Methodology
A Research Design is an arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
 A Sample Design is a definite plan for obtaining a sample from a given
population.
 For carrying out my research work I would follow Exploratory cum
Descriptive research design.

7. RESEARCH DESIGN

Problem: In Sejal Glass, since 3 years there is negative and equal relationship between current
assets and current liabilities. Collection period is more than payment period so cash conversion
cycle is more which should be less or negative. This is main pressure on working capital.
Objective: The main objective of research is to appraise the utilization of current asset and
current liabilities and find out short-comings if any and to suggest measure for effective
management of working capital.
Sampling Design: I have been used judgement method in non random sampling. Because all
will not be good respondents to answer my questions. I have selected those who know about
working capital, debtors, creditors, stock etc. Sample size is 50 in different glass industry from
different departments.
Data Collection: I have been collected data through both primary and secondary. Primary data
from Questionnaire, Observation and Personal interview with CFO, executives and senior
employees. Secondary data from annual reports and company websites.
Areas of Data Collection: I was visiting different company to collect data. I have done survey
other than Sejal Glass in FG Glass Industry, NSD Glass Industry.

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 8. SAMPLING DESIGN

Sampling Method:
I have been used appropriate sample to collect right data from respondents. For research in
finance we cannot ask information to everyone regarding finance. We should concern the
person who is aware about the company finance. So that I have used non random sampling
under this I have used judgement method to collect data. I have gathered data by judgement. I
have concerned the one those who aware about company’s working capital i.e. debtors,
creditors, receivables, payables, stock cycle etc. I have done survey in different glass industry
i.e. FG Glass Industry, NSD Global Trade Pvt Ltd to collect data.
Sample Size:
The study encompassed a representation of a sample of 30 respondents from Sejal Glass, FG
Glass Industry and NSD Global Trade Pvt Ltd.

9. DATA COLLECTION
Sources of Data: There were mainly two major sources of data namely;
 Primary Data:
 Secondary Data:
I Used Secondary Data for this survey.

Secondary Data: Secondary data has been obtained from published reports like the
annual reports of the company, balance sheets, and profit and loss account, websites, records
such as files, reports maintained by the company.

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 10. Proposed Chapters
PART NO. PARTICULARS PAGE NO.

1 INTRODRUCTION

2 LITERATURE REVIEW

3 OBJECTIVE OF STUDY

4 RESEARCH PROBLEM

5 RESEARCH METHODOLOGY

SAMPLING

DATA COLLECTION
 SECONDARY DATA
Statistical Tool
 Graph
 Chart

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 11.PROPOSED OUTCOMES
 With reference to the working capital study of SEJAL GLASS LIMITED quantity
of working capital is contributed by short source of finance.
 In this gross working capital of the firm, a major part is occupied by inventory and
sundry debtors. Multiple revenue collected by merchant banking.
 The current ratio is maintained by the company is 2:1; the company exceed minimum
current ratio at all the years statement.
 The company has been maintaining sufficient amount of working capital in all the
years.

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 12.Bibliography
Books:
Research Methodology- R.C. Kothari.
Research Methods In Business- Dhruv Shah, Rupal Jain.
Research Methodology- Michal Vaz, Madhu Nair.
Financial Management – Prasanna Chandra.

Annual Reports:
 Sejal Glass limited Annual Report .
Websites:
 www.google.com
 www.wikipedia.com
 www.fm-magazine.com
 www.accountingtools.com

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