Project Report

(Submitted for the Degree of B.Com. Honours in Accounting and

Finance under the University of Calcutta)

Title of the Project

WORKING CAPITAL MANAGEMENT

Name of the Candidate :- PRANAV TEBRIWAL

Registration No:-126-1111-0393-17

C.U.Roll No:-171126-21-0779

Name of the College :-UMESCHANDRA COLLEGE

College Roll No. :- 408

College Section :- C

Supervised by

Name of the Supervisor:-MRIGANKA GOPE

Name of the College:-UMESCHANDRA COLLEGE

Month & Year of Submission

SEPTEMBER, 2020
 ACKNOWLEDGEMENT

The successful completion of any task would be incomplete greeting

those who made it possible and whose guidance and encouragement
made out the effort success.

It is a matter of great pleasure for me in submitting the project

report on “WORKING CAPITAL MANAGEMENT”- a study for the
fulfillment of the degree course of B.Com. Honours in Accounting and
Finance under the University of Calcutta.

My sincere thanks to MRIGANKA GOPE for his

valuable guidance, constructive criticism, untiring effort and immense
encouragement during the entire course of the study due to which my
efforts have been rewarded. I am also thankful to my parents,
classmates, friends for their guidance.
 CONTENTS
S.NO. PAGE
PARTICULARS NO.

INTRODUCTION 1-7
1.
OBJECTIVES OF THE STUDY 8-9
2.
CONCEPTUAL FRAMEWORK 10-17
3.
DATA ANALYSIS & INTERPRETATION 18-24
4.
RATIO ANALYSIS & INTERPRETATION 25-32
5.
LIMITATIONS OF THE STUDY 33
6.
RECOMMENDATIONS & CONCLUSION 34-35
7.
BIBLIOGRAPHY 36
8.
ANNEXURE-IA 37
9.
10. ANNEXURE-IB 38
CHAPTER-1
Introduction
The project undertaken is on “WORKING CAPITAL
MANAGEMENT IN MRF.TYRES”
It describes about how the company manages its working capital
and the various steps that are required in the management of working
capital.
Working capital management is a business strategy designed to
ensure that a company operates efficiently by monitoring and using
its current assets and liabilities to the best effect. The primary
purpose of working capital management is to enable the company to
maintain sufficient cash flow to meet its short-term operating costs
and short-term debt obligations.
Cash is the lifeline of a company. If this lifeline deteriorates, so
does the company's ability to fund operations, reinvest and meet
capital requirements and payments. Understanding a company's cash
flow health is essential to making investment decisions. A good way
to judge a company's cash flow prospects is to look at its working
capital management (WCM).
Working capital refers to the cash a business requires for day-to-
day operations or, more specifically, for financing the conversion of
raw materials into finished goods, which the company sells for
payment. Among the most important items of working capital are
levels of inventory, accounts receivable, and accounts payable.
Analysts look at these items for signs of a company's efficiency and
financial strength.
The working capital is an important yardstick to measure the
company’s operational and financial efficiency. Any company should
have a right amount of cash and lines of credit for its business needs
at all times. This project describes how the management of working
capital takes place at MRF.TYRES.
 Definition
Working Capital is the money needed to fund the normal day to day
operations of a business. It ensures that the business have enough cash
to pay its debts & expenses as they fall due. Working capital measures
how much in liquid assets a company has available to build its business.
Working Capital of an organization can be calculated by deducting
current assets from current liabilities.

Working Capital Management is the most important area in day to day

management of any firm. It is the functional area of finance. It is
concerned with the management of current assets, current liabilities and
total working capital.

Working Capital Management involves managing the balance between

firm’s short-term asset and its short-term liabilities. The goal 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.
Working capital management commonly involves monitoring cash flow,
current assets, and current liabilities through ratio analysis of the key
elements of operating expenses, including the working capital ratio,
collection ratio, and inventory turnover ratio.

Working capital management helps maintain the smooth operation of

the net operating cycle, also known as the cash conversion cycle
(CCC)—the minimum amount of time required to convert net current
assets and liabilities into cash.
TYPES OF WORKING CAPITAL
GROSS WORKNGCAPITAL
Gross working capital refers to
the firm’s investment in current
assets. Current assets are those
assets which can be converted
into cash within an accounting
year. Current assets include:
stocks of raw materials, work-
in-progress, finished goods,
trade debtors, prepayments, cash
etc

NET WORKING CAPITAL

Net Working Capital refers to the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders which are expected to
nature for payment within an accounting year. Current liabilities include: trade
creditors, accruals, taxation payable, bills payables, outstanding expenses,
dividends payable and short term loans.

PERMANENT WORKING CAPITAL

Permanent working capital is the minimum level of current assets which is
continuously required by a firm for carrying out its business activities and that
cannot be converted into cash in normal course of business. Permanent working
capital is either constant or it increase with the size of the business or its scale of
operation.

TEMPORARY WORKING CAPITAL

Temporary working capital refers to that part of total working capital, which is
required by a business over and above permanent working capital. Since the
volume of the temporary working capital keeps on fluctuating from time to time
according to the business activities it may be financed from short-term sources.
FACTORS AFFECTING WORKING
CAPITALREQUIREMENTS
(1) Nature of Business:

The requirement of working capital depends on the nature of business. The

nature of business is usually of two types: Manufacturing Business and Trading
Business. In the case of manufacturing business it takes a lot of time in
converting raw material into finished goods. Therefore, capital remains invested
for a long time in raw material, semi-finished goods and the stocking of the
finished goods.
Consequently, more working capital is required. On the contrary, in case of
trading business the goods are sold immediately after purchasing or sometimes
the sale is affected even before the purchase itself. Therefore, very little working
capital is required. Moreover, in case of service businesses, the working capital is
almost zero since there is nothing in stock.

(2) Scale of Operations:

There is a direct link between the working capital and the scale of operations. In
other words, more working capital is required in case of big organizations while
less working capital is needed in case of small organizations.

(3) Business Cycle:

The need for the working capital is affected by various stages of the business
cycle. During the boom period, the demand of a product increases and sales also
increase. Therefore, more working capital is needed. On the contrary, during the
period of depression, the demand declines and it affects both the production and
sales of goods. Therefore, in such a situation less working capital is required.

(4) Seasonal Factors:

Some goods are demanded throughout the year while others have seasonal
demand. Goods which have uniform demand the whole year their production and
sale are continuous. Consequently, such enterprises need little workingcapital.
On the other hand, some goods have seasonal demand but the same are produced
almost the whole year so that their supply is available readily whendemanded.
Such enterprises have to maintain large stocks of raw material and finished
products and so they need large amount of working capital for this purpose.
Woolen mills are a good example of it.

(5) Production Cycle:

Production cycle means the time involved in converting raw material into
finished product. The longer this period, the more will be the time for which the
capital remains blocked in raw material and semi-manufactured products. Thus,
more working capital will be needed. On the contrary, where period of
production cycle is little, less working capital will be needed.

(6) Credit Allowed:

Those enterprises which sell goods on cash payment basis need little working
capital but those who provide credit facilities to the customers need more
working capital.

(7) Credit Availed:

If raw material and other inputs are easily available on credit, less working
capital is needed. On the contrary, if these things are not available on credit then
to make cash payment quickly large amount of working capital will be needed.

(8) Operating Efficiency:

Operating efficiency means efficiently completing the various business

operations. Operating efficiency of every organization happens to be
different.

Some such examples are: (I) converting raw material into finished goods at the
earliest, (ii) selling the finished goods quickly, and (iii) quickly gets payments
from the debtors. A company which has a better operating efficiency has to
invest less in stock and the debtors. Therefore, it requires less working capital,
while the case is different in respect of companies with less operating efficiency.

(9) Availability of Raw Material:

Availability of raw material also influences the amount of working capital. If the
enterprise makes use of such raw material which is available easily throughout
the year, then less working capital will be required, because there will be no need
to stock it in large quantity.

On the contrary, if the enterprise makes use of such raw material which is
available only in some particular months of the year whereas for continuous
production it is needed all the year round, then large quantity of it will be
stocked. Under the circumstances, more working capital will be required.

(10) Growth Prospects:

Growth means the development of the scale of business operations (production,

sales, etc.). The organizations which have sufficient possibilities of growth
require more working capital, while the case is different in respect of companies
with less growth prospects.

(11) Level of Competition:

High level of competition increases the need for more working capital. In order
to face competition, more stock is required for quick delivery and credit facility
for a long period has to be made available.

(12) Inflation:

Inflation means rise in prices. In such a situation more capital is required than
before in order to maintain the previous scale of production and sales. Therefore,
with the increasing rate of inflation, there is a corresponding increase in the
working capital.
APPROACHES FOR FINANCING WORKINGCAPITAL

 Matching or Hedging Approach

The term hedging is very often used in the sense of risk reducing investment
strategy involving transactions of a simultaneous but opposite nature so that the
loss arising out of one transaction is likely to offset in the other due to the
financing mix. The term hedging can be said to refer to the process of matching
maturities of debt with the maturities of financial needs. That is why it is called
matching approach. According to this approach, the maturity of the sources of
funds should match the nature of the assets to be financed. For analytical purpose
Current Assets can be broadly classified into:

• Those, which require certain amount for given level of operation and hence do
not vary overtime.
• Those, which fluctuates overtime.

This approach suggests that long-term funds should be used to finance the fixed
portion of Current Assets requirements as spelt out in a manner similar to the
financing of fixed assets.

 Conservative Approach

The financing policy of the firm is said to be conservative when it depends more
on long-term funds for financing needs. Under this approach, the firm finances
its permanent assets and also a part of temporary Current Assets with long-term
financing. In the periods when the firm has no need for temporary Current
Assets, the idle long-term funds can be invested in tradable securities to conserve
liquidity.

 Aggressive Approach

A firm may be said to be adopting an aggressive policy when it used more of

short- term financing than warranted by the matching plan. Under this approach,
the firm finances a part of its permanent Current Assets with short-term
financing. Some extremely aggressive firms may even finance a part of their
fixed assets with short-term financing. Relatively more the use of short-term
financing makes the firm more risky.
CHAPTER-2

OBJECTIVES OF THE STUDY

The two main objectives of working capital management are:

• To ensure the organization has sufficient working capital resources to function

and grow
• To improve profitability by keeping the investment in working capital to the
minimum required.

These two objectives may conflict. For example, whilst an excessively

conservative approach to working capital management may provide ample
liquidity it may also reduce profits because excessive funds tied up in working
capital will not be available to invest in profitable opportunities. The superior
objective of financial management is wealth maximization and that can be gained
by profit maximization accompanied with sustainable growth and development.

For sustainable growth and development, the objectives of all the stakeholders
including customers, suppliers, employees, etc should be aligned to the growth of
the organization.
In the light of above statement, the objectives of working capital management are
described as below:

Smooth Working Capital Operating Cycle This implies that the operating cycle
i.e. the cycle starting from acquisition of raw material to its conversion to cash
should be smooth. It is not easy; it is as good as circulating 5 balls with two
hands without dropping a single one. If following 6 points can be managed, this
operating cycle can be management well.

1. .It means raw material should be present on requirement and it should not
be a cause to stoppages of production.
2. All other requirements of production should be in place before time.
3. The finished goods should be sold as early as possible once they are
produced and inventoried.
4. The accounts receivable should be collected on time.
5. Accounts payable should be paid when due without any delay.
6. Cash should be available as and when required along with some cushion.
IMPORTANCE OR ADVANTAGE OF ADEQUATE
WORKINGCAPITAL
SOLVENCY OF THE BUSINESS
Adequate working capital helps in maintaining the solvency of the business by
providing uninterrupted of production.

Goodwill
Sufficient amount of working capital enables a firm to make prompt payments
and makes and maintain the goodwill.

Easy loans
Adequate working capital leads to high solvency and credit standing can arrange
loans from banks and other on easy and favorable terms.
Cash Discounts
Adequate working capital also enables a concern to avail cash discounts on the
purchases and hence reduces cost.

Regular Supply of Raw Material

Sufficient working capital ensures regular supply of raw material and continuous
production.
Regular Payment of Salaries, Wages and Other Day TO Day
CommitmentIt leads to the satisfaction of the employees and raises the morale of
its employees, increases their efficiency, reduces wastage and costs and enhances
production and profits.
Exploitation Of Favorable Market Conditions
If a firm is having adequate working capital then it can exploit the favorable
market conditions such as purchasing its requirements in bulk when the prices
are lower and holdings its inventories for higher prices.

Ability to Face Cries

A concern can face the situation during the depression.

Quick And Regular Return On Investments

Sufficient working capital enables a concern to pay quick and regular of
dividends to its investors and gains confidence of the investors and can raise
more funds in future
CHAPTER-3
CONCEPTUAL FRAMEWORK
Need of Working Capital:-

Working Capital is the life blood and nerve centre of business .Working capital is
very essential to maintain smooth running of a business .No business can run
successfully without an adequate amount of working capital. The main advantage
or needs of working capital are as follows:

(1) Strengthen the solvency:-

Working Capital helps to operate the business smoothly without any financial
problem for making the payment of short term liabilities. Purchase of raw
materials and payment of salary, wages and overhead can be made without any
delay. Adequate working capital helps in maintaining solvency of the business by
providing uninterrupted flow of production.

(2) Enhance Goodwill:-

Sufficient working capital enhances a business concern to make prompt
payments and hence3 helps in creating and maintaining goodwill. Goodwill is
enhanced because all current liabilities and operating expenses are paid on time.

(3) Easy obtaining loan:-

A firm having adequate working credit rating can arrange loans from banks
financial institutions in easy and favorable terms.

(4) Regular supply of raw materials:-

Quick payment of credit purchase of raw materials ensures the regular supply of
raw materials from suppliers. Suppliers are satisfied by the payment on time. It
ensures regular supply of raw materials and continuous production.

(5) Smooth Business Operations:-

Working capital is really a life blood of any business organization which
maintains the firm in well condition. Any day to day financial requirement can be
met without any shortage of fund. An expenses and current liabilities are paid on
time.
(6) Ability of facearises:-
Adequate Working Capital enables a firm to face business crisis in emergencies
such as depression

 Importance of WorkingCapital:-
Sometime, if creditors demands their money from company, at this time
company’s high working capital saves company from this situation. The
adequacy of working capital helps in raising credit standing of a business
concern because of better terms on goods purchased lower cost of manufacturing
on account of the receipts of cash discount favorable rates of interest on bank
loans etc.

Secondly, a business enterprise with adequate working capital is always in a

position to avail advantages of any favorable opportunity either to purchase raw
materials or to execute a special order or to wait for better market position.
Thirdly, the general morale of the management of a company increases by its
financial sounders

Lastly, during slump the demand for working capital instead of coming down
goes up. A large amount is locked up in the inventories and receivable.
Companies having ample working capital can tide over the period of depression.
If company have sufficient working capital ,company can easily pay off the
creditors and create his reputation in market .But if a company have zero
working capital and then company cannot pay creditors in emergency time and
either company becomes bankrupt or takes loan at higher of interest .For solution
company needs to keep some amount in workingcapital.

 Significance of WorkingCapital:-
Investments in Fixed Assets only are not sufficient to run the business. Working
capital and investments are also helps in purchase of raw materials and for
meeting the day to day expenditure on salaries, wages, rents, advertisement etc.
Adequacy of the working capital in business is must .Inadequate working capital
as well as redundant working capital is dangerous for the health of industry. The
significance of working capital in a business enterprise is undeniable. Lack of
working capital may endanger the survival of the business
.so company needs a sufficient working capital.
Advantages:-

(1) Regular supply of rawmaterials:-

Raw materials are the primary factor of production .for continuous production, a
regular supply of raw materials is needed. Working capital ensures the supply of
continuous production.

(2) Availability of cashDiscount:-

For purpose of discount in cash a company can pay in cash, for purchase of raw
materials and merchandise.

(3) Regular payment of wages andsalaries:-

For having sufficient working capital company can pay its daily wages and
salaries to the workers, which helps to increase their efficiency and raise their
morals.
(4) Increase in efficiency andproductivity:-
The regular flow of working capital enhances productivity of labor and increase
managerialefficiency.

(5) HighMorale:-
Adequacy of working capital creates an environment of society, confidence, high
morale and overall efficiency of laborers. It also helps in the timely payment of
dues, if any to employees besides regular salary and wages.

(6) Regular payment of overheadexpenses:-

It pays some important overhead expenses day to day .regular payment of these
expenses without delay reduces wastage and costs and enhances production and
ultimately the profit of the company.

(7) Smoothly production:-

To maintain continuous and smooth outflows of production working capital is
required. Without working capital can’t be continued.

(8) Regular supply ofmerchandise:-

In case of a trading concern working capital assures regular supply of
merchandise and a continuous process sale.

(9) Solvency:-
Adequate working capital helps in maintaining the solvency of the business.
Funds are available to make all the payments in time, as and when they are due.
(10) Sound Goodwill and Debtcapacity:-
It is common experience of all prudent businessmen that promptness of payment
in business creates goodwill and increase the debt of the capacity of the business.
A firm can raise fund
From the market, purchase goods on credit borrow short-term funds from bank
etc that helps to invest in company.

(11) Easy loanfrombank:-

An adequate working capital i.e. excess of current assets over current liabilities
helps the company to borrow loans from the bank because the excess provides a
good security to the unsecured loans ,bank favor in granting seasonal loans ,if
business has a good credit standing and trade reputation.

(12) Distribution ofDividend:-

If company is short of working capital, it cannot distribute the good dividend to
its shareholders inspire of sufficient profits. Profit is to be retained in the
business to make up the deficiency of working capital. On the other contrary, it
working capital is sufficient, ample dividend can be declared and distributed .it
increases the market value of share.

Volume of Working Capital:-

The temporary or varying working capital varies with the volume to operations.
It fluctuates with the scale of operations. This is the additional working capital
required from time to time over and above the permanent of fixed working
capital.

During seasons, more production/sales take place resulting in larger working

capital need. The reserve is true during off seasons. As seasons vary, temporary
working capital requirement moves up and down. Temporary working capital can
be financed through short- term funds like current liabilities. When the level of
temporary working capital moves up, the business might use short term funds
and when the level for temporary working capital needs. The business may retire
its short-termloans.

Effecting area:-

Working capital refers to the funds needed by a business to conduct its daily
operations, such as payment of wages, purchase of materials, covering overhead
costs and offering credit services. Working capital can be sub-divided into two
areas, i.e., regular working capital that provides a steady base for overall business
objectives and short-term working capital used to facilitate the day to day
business operations. Sources of finance for working capital include bank loans,
retained earnings, credit from suppliers, and long-term loans from financial
institutions, on proceeds from sale of assets.
Working Capital Forecast:

Working capital represents funds required to meet short-term commercial

operations of a business. It is an important task of management accountant to
forecast the requirement of working capital in judicious and prudent manner.
Working capital forecast in the process, it requires efficient working capital
management. It means the next year the requirement of working capital.

Many things have to take in consideration and managers should calculate in an

optimum level so that the next year’s working capital should calculate in an
optimum level so that next year’s working capital should adequate. Many things
like costs with inflation rates, raw material and finished goods holding period,
policies and cash must be calculated in that process.

Working Capital Policy:

There are two important issues in formulating a working capital policy for a
business:

(a) Current AssetsPolicy:-

It is the ratio of current assets to sales that represents the relation between sales
and stock and debtors and cash. Because if sale done then the debtors and cash
can increase which is bad and good respectively.

(b) Current Assets Financing Policy: -

It is the ratio of short-term financing to long-term financing for working
capital that represents using a higher proportion of short- term funds current
assets.

Working Capital Leverage:-

In formulating the working capital policy, the effect of working capital leverage
is very important. It reflects the sensibility of the return on capital employed to
changes in levels of current assets. It is measured by the following formula:-
Working Capital Leverage = Percentage change in RCCE /Percentage change in
CA.

Financing of Working Capital:-

A firm has to arrange necessary finance after determining of the level of

working. It has to arrange finance both for its permanent or fixed working capital
as well as for temporary or variable workingcapital.

For Fixed Working Capital Sources:-

(1) Issue of Equity or PreferenceShares:-

Issue of equity and Preference share is most important sources of capital. Equity
shares are redeemable only at the time of liquidation. So it is most important
source and it also don’t have fixed rate of dividend but preference shares has
fixed rate of dividend. And one have to redeem the preference share within a
period of maximum 0 years from date of issue U/S 80 (5A) of the companies
(Amendment) act, 1996.

(2) Issue ofDebenture:-

Issue of debenture is an important source of working capital. It is a debt type
paper. By which debenture holders get a fixed rate of interest and secured
debenture holders enjoy a priority over the other creditors.

(3) Loans from FinancialInstitutions:

This is also an important source of external finance. Long- term or short- term
loans may be taken for financing permanent working capital from different
financial institutions, such as, Industrial Finance Corporation of India (IFCI),
State Industrial Finance Corporation (SIFCs), Industrial Development Bank of
India (IDBI) etc.

(4) Securities from employees andcustomers:-

It is also a source of working capital. Securities issued to employees and
customers and the fund of capital is increases.
Variable Working Capital Sources:-

 InternalSources:

(1) Provision for Depreciation andTaxation:

Depreciation and tax provision are two important sources of variable working
capital. As provision for depreciation is non-cash item and no outflow of cash is
held, so it is a main sources. And in case of provision for taxation, it is an item of
future expenses that assumed, it is the expenses items than the bond then the rest
of amount is a variable source of working capital

(2) Outstanding Wages andExpenses:-

Outstanding wages and expenses are those which have already been due but not
paid. Usually outstanding wages and expenses are paid at the end of the month.
Thus it’s a variable source of working capital.

 ExternalSources:-

(1) Loans from Bank and financialInstitution:-

Those are most popular sources of working capital. Bank may grant loan in the
form of cash credit, bank overdraft, short-term loan etc. But interest must be paid
to the lending institutions.

(2) PublicDeposits:-
Public deposits are the fixed deposits accepted by a business concern directly
from the public. Popularly it is a source of short-term finance and medium-term
finance (minimum period of deposits is months and maximum is 36 months).
Non-banking concerns are not eligible to take more than 25% of its paid up
capital and free reserve by way of public deposits.

(3) TradeCreditors:-
Trade creditors are the suppliers of goods. It is an easy and convenient method of
finance as it does not involve any financing cost. The business concern always
wants to avail longer periods of credit as it reduces the need of working capital.

(4) InstallmentCredit:-
In installment credit system payment not require quickly, it can be done part by
part. It also demotivates needs working capital.
(5) CommercialPaper:-
It is an unsecured promissory note issued by large listed joint stock company
under approval of RBI with a fixed maturity. It is also a source.

(6) Advance fromCustomers:-

By taking advance from customers a company can fulfill its need of working
capital I short- term.

(7) Factoring:-
It is agreement in which receivable arising as a result of credit sale are sold to the
‘Factor’ ( a financial intermediary ) for the purpose of discounting the bill,
collection of debts and for some other purpose.

(8) Pre-ReceivedIncome:-
This is also a source of working capital. Pre-received incomes are the incomes
which been actually received but not due.
CHAPTER-4
DATA ANALYSIS & INTERPRETATION
MRF Tyres

MRF Limited (MRF) is an

Indian multinational and the
largest manufacturer of tires in
India and the fourteenth largest
manufacturer in the world.It is
headquartered in Chennai,
India. The company
manufactures rubber products
including tyres, treads, tubes
and conveyor belts, paints and
toys. MRF also runs the MRF
Pace Foundation, Chennai and
MRF Challenge in motorsport.

MRF won the JD Power Award

for the record 11th time in 2014.
The company has won several awards and accolades including the All India
Rubber Industries Association's (AIRIA) award for 'Highest Export Awards
(Auto Tyre Sector)', 'Top Export Award' from Chemicals & Allied Products
Export Promotion Council (CAPEXIL) for 2009–10. In 2014, MRF was ranked
48th among India's most trusted brands according to the Brand Trust Report, a
study conducted by Trust Research Advisory.

MRF had been the bat sponsor for many cricketers of the game. Sachin
Tendulkar, Brian Lara and Steve Waugh have endorsed MRF products. MRF has
also sponsored Indian batsmen Rohit Sharma,Gautam Gambhir and Sanju
Samson. Currently MRF is endorsed by star batsmen Prithvi Shaw, Shikhar
Dhawan, Virat Kohli and AB de Villiers.
HISTORY
Madras Rubber Factory was started
by K. M. Mammen Mappillai as a toy
balloon manufacturing unit in 1946 at
Tiruvottiyur, Madras (now Chennai).
In 1952, the company ventured into
the manufacture of tread rubber.
Madras Rubber Factory limited was
incorporated as a private company in
November 1960 and ventured into
manufacture of tyres in partnership
with Mansfield Tire & Rubber
company based in Ohio, United States.The company went public on 1
April 1961 and an office was established in Beirut, Lebanon to develop
the export market in 1964 and its current logo of the muscleman was
born. In 1967, it became the first Indian company to export tyres to
USA.

In 1973, MRF started manufacturing Nylon tyres for the first time. The
Company entered into with a technical know-how collaboration with B.
F. Goodrich in 1978.The Mansfield Tire & Rubber Co sold out its share
in 1979 and the name of the company was changed to MRF Ltd in the
year. The company finalized a technical collaboration agreement with
Marangoni TRS SPA, Italy for the manufacture of pre-cured tread
rubber for retreading industry. MRF tyres supplied tyres to Maruti 800,
India's first modern small car.

In 1989, the company collaborated with Hasbro International United

States, the world's largest toy maker and launched Funskool India. Also,
they entered into a pact with Vapocure of Australia to manufacture
polyurethane paint formulations and with Italian tyre manufacturer
Pirelli for conveyor and elevator belt manufacture. During the year
2004-05, the product range of the company expanded with Go-kart &
rally tyres and tyres for two/three wheelers.
STATEMENT OFPROFITANDLOSSof MRF
Tyers for the yearended31ST March, 2017-2018
BALANCE SHEET OF MRF TYERS FOR
THEPERIOD OF 31STMARCH 2018-2019
CASH FLOW STATEMENT of MRF tyers
FORTHE YEAR ENDED MARCH 31st 2018-
2019

CONTD.
CHAPTER-5
INTERPRETATION

Total Assets Turnover ratio is properly interpreted when compared to a

company’s past performance. A higher total assets turnover ratio is
more favorable than a lower one.
Companies that see continual increases in turnover ratio are improving
how efficiently manager use the company’s assets to generate revenue.
If we analyze the two years data we can see that total assets turnover
ratio has gradually declined in the year 2018-2019 than in the year
2017-2018. So the company is more investing in its assets.
INTERPRETATION

Taking the base year as 2017, we observed that Working Capital

increased byRs.1303.68 cores in 2018 and also it Increases by
Rs.1435.68 . In the year 2017 Working capital increases which means
the company’s Current Assets position is very good, that it can pay its
Liabilities. In the year 2018 Working Capital upward and becomes
positive, which means Current Assets is more than Current Liabilities
and the company can pay its liabilities
CHAPTER-6
LIMITATIONS OF THE STUDY
 Due to shortage of time it is not possible to cover all the factors and
details regarding the subject of study.

 The analysis is limited to just two years of data (from year 2017 to
2018) for financial analysis.

 The findings of the study are based on the information retrieved by

the selected unit.

 Only the printed data about the company was available and not the
back–end details.

 Comparison with other companies was not possible due to time

constraint.

 The analysis does not reflect the general trend of Working Capital
Management in the corporate sector.
CHAPTER-7
RECOMMENDATIONS
Working Capital of MRF TYRES has been upward. It has increased
in the year 2017 & 2018. Working Capital of company has increasing
.So we can say the company has good working capital.

stable position except

in the year 2017-2018 where current liabilities is more than that of
current assets. But the ratios are below the standard ratio and the
company has to improve its position.

ds
the standard ratio and the company has to maintain it further.
d, but it
has to tighten its credit policy and has to put effort for faster
realization from debtors.

e effective measures to
improve its Working Capital.
 CONCLUSION
In earlier discussions I have tried to assess Working Capital of MRF
TYRES Of the year 2017-18, 2018-19, constitute of Working Capital
and financing Working Capital through different source.

I have taken only one company as sample unit of good number of study
only two years because of time constraints. In carrying on this project, I
have taken help and publish annual report of the company.

My findings do not reflect the general trend of the corporate sector in

regard to Working Capital management.

This is a very small effect in management of Working Capital. This

study will provides ample scope to draw the trends of Working Capital
of the corporate sector should a good number of companies are taken as
sample units.
 BIBLOGRAPHY
TEXT BOOKS
M.Y.Khan / P.K Jain, Financial Management.
DR. DEBASHIS MAZUNDAR, SK. RAJU ALI, LUTFEN NESHA
Financial Management

BHADRA, SATPATI Financial Management

Annual Report of MRF TYRES INDUSTRIES LIMITED.

Website used for reference

www.google.com
www.mrftyres.com
www.wikipedia.com
Annexure-IA

Supervisor’s Certificate

This is to certify that Mr. PRANAV TEBRIWAL, a student of

B.Com. Honors in Accounting & Finance of UMESHCHANDRA
COLLEGE under the University of Calcutta has worked under my
supervision and guidance for his Project Work and prepared a Project
Report with the title of WORKING CAPITAL MANAGEMENT
which he is submitting, is his genuine and original work to the best of
my knowledge.

PLACE:- KOLKATA
DATE:-27/09/2020

SIGNATURE:-
NAME:-MRIGANKA GOPE
DESIGNATION:-STATE AIDED
COLLEGE TEACHER
NAME OF THE COLLEGE:-
UMESCHANDRA COLLEGE
Annexure-IB

Student’s Declaration
I hereby declare that the Project Work, WORKING CAPITAL
MANAGEMENT IN COCERN TO MRF TYRES LIMITED
Submitted by me for the partial fulfillment of the degree of
B.Com. Honors in Accounting and Finance in Business under
the University of Calcutta is my original work and has not been
submitted earlier to any other University for the fulfillment of the
requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has

been incorporated in this report from any earlier work done by others or
by me. However, extracts of any literature which has been used for this
report has been duly acknowledged providing details of such literature
in the references.

SIGNATURE:

NAME:- PRANAV TEBRIWAL

ADDRESS:-51/2, REGENT FRIENDS CLUB
TOLLYGUNG
REGISTRATION NO:-126-1111-0393-
17
PLACE:-KOLKATA
DATE:-27 /09/2020