Working Capital Management

“A study on Working Capital Management at Cochin Kagaz Ltd.”
MAJOR PROJECT REPORT Submitted in partial fulfillment of the requirements for the award of the degree of

Master of Business Administration
UNIVERSITY OF CALICUT
By

NIJU K A
MBA III SEMESTER REG. NO: JMAJMBA 019 Under the guidance of

Major. P. T. Jose
Faculty

Dept. of Commerce, St. Allocius College Thrissur.

SCHOOL OF MANAGEMENT STUDIES UNIVERSITY OF CALICUT DR. JOHN MATTHAI CENTRE, ARANATTUKARA, THRISSUR 2009-2011

SCHOOL OF MANAGEMENT STUDIES UNIVERSITY OF CALICUT DR. JOHN MATTHAI CENTRE ARANATTUKARA, THRISSUR

CERTIFICATE
This is to certify that this major project report on “A study on Working Capital Management at Cochin Kagaz Ltd.” is a bonafide record of the project submitted by MR. NIJU K. A. of School Of Management Studies, Dr. John Matthai Centre, Thrissur, towards the partial fulfillment of the award of the degree of Master of Business Administration, University of Calicut, under the guidance of Major. P. T. Jose Faculty, Dept. of Commerce, St. Allocius College, Thrissur, and that this work has not been submitted by him for any degree, diploma, or any other title of any university or institution. Dr. K. P. MURALEEDHARAN (Co-ordinator), Place: Thrissur Date: 18/06/2011 School of Management Studies, University of Calicut, Dr. John Matthai Centre, Aranattukara, Thrissur.

SCHOOL OF MANAGEMENT STUDIES UNIVERSITY OF CALICUT DR. JOHN MATTHAI CENTRE ARANATTUKARA, THRISSUR

CERTIFICATE

This is to certify that Mr. NIJU K A has prepared this major project report on “A study on Working Capital Management at Cochin Kagaz Ltd.” and is done under my supervision for the partial fulfillment of the requirement for the award of the degree of Master of Business Administration, University of Calicut and that has not been previously formatted for the basis for the award of any degree, diploma, or fellowship or other similar titles of any university or institution.

Major. P. T. Jose Place: Thrissur Date: 18/06/2011 Faculty, Dept. of Commerce St. Allocius College, Elthuruth, Thrissur.

DECLARATION

I, NIJU K A, the student of School of Management Studies, Dr. John Matthai Centre, University of Calicut, Aranattukara, Thrissur hereby declare that the project report on “A study on Working Capital Management at Cochin Kagaz Ltd.” in partial fulfillment of the requirement for the award of the degree of Master Of Business Administration of Calicut University, is a bonafide work carried out by me for a period of six weeks under the guidance of Mr. Major. P. T. Jose, Faculty, Dept. of Commerce, St Allocius College, Elthuruth, Thrissur. I further declare that this project report has not previously formed the basis for the award of any degree, diploma, fellowship, associate ship, or other similar title of recognition.

`

NIJU K A IV SEM MBA Student School of management studies Place: Thrissur Date: 18/06/2011 Dr. John Matthai Centre University of Calicut Aranattukara, Thrissur

ACKNOWLEDGEMENT
The successful completion of this project was made possible through the direct and indirect co-ordination of various persons for whom I wish to express my appreciation and gratitude. First, I would like to thank almighty for making me capable to do the work successfully. I am grateful to Mr. Major. P. T. Jose, Faculty, Dept. of Commerce, St. Allocius College, Elthuruth, Thrissurr, for his valuable and timely guidance and motivation to my project My deep sense of gratitude regards and thanks to Dr. K.P. MURALEEDHARAN, Co-ordinator, School of Management Studies, Dr. John Matthai Centre, University of Calicut, Regional Campus, Aranattukara, Thrissur. I would like to acknowledge my sincere thanks to Dr. V. M. XAVIOUR, Additional Co-ordinator , School of Management Studies, Dr. John Matthai Centre, University of Calicut, Regional Campus, Aranattukara, Thrissur for his excellent guidance for the completion of this project successfully. My sincere thanks to Mrs. Veena, Chief Financial Officer, Cochin Kagaz Ltd. for allowing me to do this project in Cochin Kagaz Ltd. I wish to express my sincere thanks to all teaching and non- teaching staffs of School of Management Studies, Dr. John Matthai Centre, Aranattukara, Thrissur, for their moral support and motivation. I wish to express my deep sense of gratitude to all my friends who gave moral support to me during this venture. Finally yet importantly, acknowledge my family members for their inspiration and whole-hearted support. I am well aware that my words are insufficient to acknowledge the due support and encouragement that has been bestowed upon me. NIJU K A

CONTENTS
Chapter No.

TITLE
List of Tables List of Figures

Page No.

I. II.

I

INTRODUCTION 1.1 Introduction to Study 1.2 Statement of the problem 1.3 Objective of the study 1.4 Scope of the study 1.5 Significance of the study 1.6 Research Methodology 1.6 Limitation 1 3 4 5 6 7 8 9

II III IV

THEORETICAL FRAMEWORK REVIEW OF LITERATURE PROFILES IV.1 Industry profile IV.2 Company profile

35 47 58 60

V VI

DATA ANALYSIS AND INTERPRETATION FINDINGS ,SUGGESTIONS, AND CONCLUSION Findings Suggestions Conclusion BIBLIOGRAPHY ANNEXURE

93 95 99 99

LIST OF TABLES
TABLE NO: 1 2 3 4 5 6 7 8 9 10 11 12 13
14

TITLE Statement of Working Capital Common size Balance sheet Current Ratio Quick Ratio Absolute Liquidity Ratio Net working capital Ratio Current assets to working capital ratio Current liabilities to working capital ratio Current assets to fixed assets Inventory turnover ratio Debtors Turnover Ratio Creditors’ turnover ratio Working capital turnover ratio

PAGE NO 60 62 63 65 67 69 71 73 75 78 80 82 84

Current Asset turnover ratio
Net profit ratio Gross Profit Ratio Return on capital employed I. 86 88 90

15 16 17

LIST OF CHARTS
Chart No. 1 TITLE Classification of working capital PAGE NO. 10

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Temporary Working Capital Working capital cycle Operating cycle of Inventory Making of Paper Challenges of Paper Industry Structure of the Company Statement of Net working capital Common size balance sheet Current Ratio Quick ratio Absolute Liquidity ratio Net Working Capital Ratio Current assets to working capital ratio Current liabilities to working capital ratio Current assets to fixed assets

12 13 35 40 48 52 61 62 64 66 68 70 72 74 76

17

Inventory turnover ratio

78

18
19 20 21 22

Inventory collection period Debtors’ turnover ratio

79
81 81 83 83

Debtors Collection period
Creditors’ turnover ratio Average inventory period Working capital turnover ratio

23
24 25 26 27

85

Current asset turnover ratio
Net profit ratio Gross Profit Ratio Return on capital employed
87 89 91

II.

CHAPTER 1

INTRODUCTION

CHAPTER 2

THEORETICAL FRAMEWORK

CHAPTER 2

PROFILES

CHAPTER 4

REVIEW OF LITERATURE

CHAPTER 5

DATA ANALYSIS AND INTERPRETATION

CHAPTER 6

FINDINGS AND SUGGESSTIONS

ANNEXURE

BIBLIOGRAPHY



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