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INTRODUCTION

Introduction Working capital management


Working capital refers to that part of the firms capital which is required for financing shortterm or current assets such as cash, marketable securities, debtors & inventories. Funds, thus,
invested in current assts keep revolving fast and are being constantly converted in to cash and
this cash flows out again in exchange for other current assets. Hence, it is also known as
revolving or circulating capital or short term capital.
Working capital management is concerned with the problems arise in attempting to manage the
current assets, the current liabilities and the inter relationship that exist between them.
The term current assets refers to those assets which in ordinary course of business can be, or, will
be, turned in to cash within one year without undergoing a diminution in value and without
disrupting the operation of the firm. The major current assets are cash, marketable securities,
account receivable and inventory.
Current liabilities ware those liabilities which intended at there inception to be paid in ordinary
course of business, within a year, out of the current assets or earnings of the concern. The basic
current liabilities are account payable, bill payable, bank over-draft, and outstanding expenses.
The goal of working capital management is to manage the firms current assets and current
liabilities in such way that the satisfactory level of working capital is mentioned.
Definition:According to Guttmann & DougallExcess of current assets over current liabilities.
According to Park & GladsonThe excess of current assets of a business (i.e. cash, accounts receivables, inventories) over
current items owned to employees and others (such as salaries & wages payable, accounts
payable, taxes owned to Government).
Capital required for a business can be classified under two main categories via,
1) Fixed Capital
2) Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- today operations. Long terms funds are required to create production facilities through purchase of
fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that
part of firms capital which is blocked on permanent or fixed basis and is called fixed capital.
Funds are also needed for short-term purposes for the purchase of raw material, payment of
wages and other day to- day expenses etc.
CONCEPT OF WORKING CAPITAL
There are two concepts of working capital:
1. Gross working capital
2. Net working capital
The gross working capital is the capital invested in the total current assets of the enterprises
current assets are those assets which can convert in to cash within a short period normally one
accounting year.
CONSTITUENTS OF CURRENT ASSETS
1) Cash in hand and cash at bank
2) Bills receivables
3) Sundry debtors
4) Short term loans and advances
5) Inventories of stock as:
a.
Raw material
b. Work in process
c. Stores and spares
d. Finished goods
6. Temporary investment of surplus funds.
7. Prepaid expenses
8. Accrued incomes.
9. Marketable securities.
In a narrow sense, the term working capital refers to the net working. Net working capital is the
excess of current assets over current liability, or, say:
NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES.
Net working capital can be positive or negative. When the current assets exceeds the current
liabilities are more than the current assets. Current liabilities are those liabilities, which are
intended to be paid in the ordinary course of business within a short period of normally one
accounting year out of the current assts or the income business.
CONSTITUENTS OF CURRENT LIABILITIES
1. Accrued or outstanding expenses.
2. Short term loans, advances and deposits.
3. Dividends payable.
4. Bank overdraft.
5. Provision for taxation, if it does not amt. to app. of profit.
6. Bills payable.
7. Sundry creditors.
CLASSIFICATION OF WORKING CAPITAL
Working capital may be classified in to ways:
o

On the basis of concept.


o
On the basis of time.
On the basis of concept working capital can be classified as gross working capital and net
working capital. On the basis of time, working capital may be classified as:
Permanent or fixed working capital.
Temporary or variable working capital
Amount of Working
Capital
Temporary capital

Permanent Capital
Time
PERMANENT OR FIXED WORKING CAPITAL
Permanent or fixed working capital is minimum amount which is required to ensure effective
utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has
to maintain a minimum level of raw material, work- in-process, finished goods and cash balance.
This minimum level of current assts is called permanent or fixed working capital as this part of
working is permanently blocked in current assets. As the business grow the requirements of
working capital also increases due to increase in current assets.
TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary or variable working capital is the amount of working capital which is required to
meet the seasonal demands and some special exigencies. Variable working capital can further be
classified as seasonal working capital and special working capital. The capital required to meet
the seasonal need of the enterprise is called seasonal working capital. Special working capital is
that part of working capital which is required to meet special exigencies such as launching of
extensive marketing for conducting research, etc.
Temporary working capital differs from permanent working capital in the sense that is required
for short periods and cannot be permanently employed gainfully in the business.
And some special al is the amount of working capital which is required to meet the seasonal sets.
IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL


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 Commitments:
It 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.
Ability to Face Crises:
A concern can face the situation during the depression.
.
FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS
1. NATURE OF BUSINESS:
The requirements of working is very limited in public utility undertakings such as electricity,
water supply and railways because they offer cash sale only and supply services not products,
and no funds are tied up in inventories and receivables. On the other hand the trading and
financial firms requires less investment in fixed assets but have to invest large amt. of working
capital along with fixed investments.
2. SIZE OF THE BUSINESS:
Greater the size of the business, greater is the requirement of working capital.
3. PRODUCTION POLICY:
If the policy is to keep production steady by accumulating inventories it will require higher
working capital.
4. LENTH OF PRDUCTION CYCLE:
The longer the manufacturing time the raw material and other supplies have to be carried for a
longer in the process with progressive increment of labor and service costs before the final
product is obtained. So working capital is directly proportional to the length of the
manufacturing process.
Sources of working capital
The company can choose to finance its current assets by
1. Long term sources
2. Short term sources
3. A combination of them.
Long term sources of permanent working capital include equity and preference shares, retained
earning, debentures and other long term debts from public deposits and financial institution. The
long term working capital needs should meet through long term means of financing. Financing
through long term means provides stability, reduces risk or payment and increases liquidity of
the business concern. Various types of long term sources of working capital are summarized as
follow:

1. Issue of shares:
It is the primary and most important sources of regular or permanent working capital. Issuing
equity shares as it does not create and burden on the income of the concern. Nor the concern is
obliged to refund capital should preferably raise permanent working capital.
2. Retained earnings:
Retain earning accumulated profits are a permanent sources of regular working capital. It is
regular and cheapest. It creates not charge on future profits of the enterprises.
3. Issue of debentures:
It crates a fixed charge on future earnings of the company. Company is obliged to pay interest.
Management should make wise choice in procuring funds by issue of debentures.

Short term sources of temporary working capital


Temporary working capital is required to meet the day to day business expenditures. The
variable working capital would finance from short term sources of funds. And only the period
needed. It has the benefits of, low cost and establishes closer relationships with banker.
Some sources of temporary working capital are given below:
1. Commercial bank:
A commercial bank constitutes significant sources for short term or temporary working capital.
This will be in the form of short term loans, cash credit, and overdraft and though discounting
the bills of exchanges.

2. Public deposits:
Most of the companies in recent years depend on this source to meet their short term working
capital requirements ranging fro six month to three years.
3. Various credits:
Trade credit, business credit papers and customer credit are other sources of short term working
capital. Credit from suppliers, advances from customers, bills of exchanges, etc helps to raise
temporary working capital
4. Reserves and other funds:

Various funds of the company like depreciation fund. Provision for tax and other provisions kept
with the company can be used as temporary working capital.The company should meet its
working capital needs through both long term and short term funds. It will be appropriate to meet
at least 2/3 of the permanent working capital equipments form long term sources, whereas the
variables working capital should be financed from short term sources. The working capital
financing mix should be designed in such a way that the overall cost of working capital is the
lowest, and the funds are available on time and for the period they are really required.

SOURCES OF ADDITIONAL WORKING CAPITAL


Sources of additional working capital include the following1. Existing cash reserves
2. Profits (when you secure it as cash)
3. Payables (credit from suppliers)
4. New equity or loans from shareholder
5. Bank overdrafts line of credit
6. Long term loans
If we have insufficient working capital and try to increase sales, we can easily over stretch the
financial resources of the business. This is called overtrading. Early warning signs include
1. Pressure on existing cash
2. Exceptional cash generating activities. Offering high discounts for clear
cash payment
3. Bank overdraft exceeds authorized limit
4. Seeking greater overdrafts or lines of credit
5. Part paying suppliers or there creditor.
6. Management pre occupation with surviving rather than managing.
Different Aspects of Working Capital Management
Management of Inventory
es/Debtors

MANAGEMENT OF INVENTORY
Inventories constitute the most significant part of current assets of a large majority of companies.
On an aver
anagement of Payables/Creditors

MANAGEMENT OF INVENTORY
Inventories constitute the most significant part of current assets of a large majority of companies.
On an avera
age, inventories are approximately 60% of current assets. Because of large size, it requires a
considerable amount of fund. The inventory means and includes the goods and services being
sold by the firm and the raw material or other components being used in the manufacturing of
such goods and services.

Nature of Inventory:
The common type of inventories for most of the business firms may be classified as rawmaterial, work-in-progress, finished goods.

Raw material:
it is basic inputs that are converted into finished products
through the manufacturing process. Raw materials inventories are those units which have been
purchased and stored for future productions.
inprocess:
Work-in-process is semi-manufactured products.
They represent products that need more work before them
become finished products for sale.

These are completely manufactured products which are


ready for s
inished goods:
These are completely manufactured products which are
ready for sa
ale. Stocks of raw materials and work-in-process facilitate production, while stock of finished
goods is required for smooth marketing operations. Thus inventories serve as a link between the
production and consumption of goods.The levels of three kinds of inventories for a firm depend
on the nature of business. A manufacturing firm will have substantially high levels of all the
three kinds of inventories. While retail or wholesale firm will have a very high level of finished
goods inventories and no raw material and work-in-process inventories.

So operating cycle can be known as following:-

Sales

Need to hold inventories


Maintaining inventories involves trying up of the companys funds and incurrence
of storage and holding costs. There are three general motives for holding
inventories:
Transactions Motive: IT emphasizes the need to maintain inventories to
facilitate smooth production and sales operation.
Precautionary Motive: It necessitates holding of inventories to guard
against the risk of unpredictable changes in demand
and supply forces and other factors.
Speculative Motive: It influences the decision to increase or reduce
inventory levels to take advantage of price fluctuations.

Management of Receivables/Debtors

The Receivables (including the debtors and the bills) constitute a significant portion of the
working capital. The receivables emerge whenever goods are sold on credit and payments are
deferred by customers. A promise is made by the customer to pay cash within a specified period.
The customers from whom receivable or book debts have to be collected in the future are called
trade debtors and represents the firms claim or assets. Thus, receivable is s type of loan
extended by the seller to the buyer to facilitate the purchase process. Receivable Management
may be defined as collection of steps and procedure required to properly weight the costs and
benefits attached with the credit policy. The Receivable Management consist of matching the
cost of increasing sales (particularly credit sales) with the benefits arising out of increased sales
with the objective of maximizing the return on investment of the firm.
Nature
The term credit policy is used to refer to the combination of three decision variables:
1. Credit standards: It is the criteria to decide the type of customers to
whom goods could be sold on credit. If a firm has more
slow paying customers, its investment in accounts
receivable will increase. The firm will also be exposed to
higher risk of default.

2. Credit terms:

It specifies duration of credit and terms of payment by


Customer Investment in accounts receivable will be high
if customers are allowed extended time period for
making payments.

3. Collection efforts: It determine the actual collection period. The lower


the collection period, the lower the investment in
accounts receivable and vice versa.

Management of Cash
Cash management refers to management of cash balance and the bank balance and also includes
the short terms deposits. Cash is the important current asset for the operations of the business.
Cash is the basic input needed to keep the business running on a continuous basis. It is also the
ultimate output expected to be realized by selling the service or product manufactured by the
firm. The term cash includes coins, currency, and cheque held by the firm and balance in the
bank accounts.
Factors of Cash Management:
Cash management is concerned with the managing of
1. Cash flows into and out of the firm
2. Cash flows within the firm and

3. Cash balance held by the firm at a point of time by financing deficit or


investing surplus cash. Sales generate cash which has to be disbursed out. The surplus cash has
to be invested while deficit has to borrow. Cash management seeks to accomplish this cycle at a
minimum cost and it also seeks to achieve liquidity and control.
Motives of holding cash
A distinguishing feature of cash as an asset is that it does not earn any substantial return for the
business. Even though firm hold cash for following motives:
Transaction motive:
Precautionary motive
Speculative motives
Compensatory motive

Transaction motive: This refers to the holding of cash to meet routine cash
requirement to finance. The transactions, which a
firm carries on in the ordinary course of business.
1.Precautionary motive: This implies the needs to hold cash to meet
unpredictable contingencies such as strike, sharp increase in raw materials prices. If a firm can
borrow at short notice to pay them unforeseen contingency, it will need to maintain relatively
small balances and vice-versa.
2. Speculative motives: It refers to the desire of the firm to take advantage
of opportunities which present themselves at unexpected movements and which are typically
outside the normal course of business.
3. Compensatory motive: Bank provides certain services to their client free
of cost. They therefore, usually require client to keep
minimum cash balance with them to earn interest and
thus compensate them for the free service so provided.

Management of Payables/Creditors
Creditors are a vital part of effective cash management and should be managed carefully to
enhance the cash position. Purchasing initiates cash outflows and an over-zealous purchasing
function can create liquidity problems. Consider the
Following:
Who authorizes purchasing in our company-is it tightly managed or spread among a number of

people?
-holding and
purchasing costs?
rying stock?

increase?
MANAGEMENT OF WORKIN
G CAPITAL
Management of working capital is concerned with the problem that arises in attempting to
manage the current assets, current liabilities. The basic goal of working capital management is to
manage the current assets and current liabilities of a firm in such a way that a satisfactory level
of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations
are bad for any firm. There should be no shortage of funds and also no working capital should be
ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its
probability, liquidity and structural health of the organization. So working capital management is
three dimensional in nature as
1. It concerned with the formulation of policies with regard to profitability, liquidity and risk.
2. It is concerned with the decision about the composition and level of current assets.
3. It is concerned with the decision about the composition and level of current liabilities.
WORKING CAPITAL ANALYSIS
As we know working capital is the life blood and the centre of a business. Adequate amount of
working capital is very much essential for the smooth running of the business. And the most
important part is the efficient management of working capital in right time. The liquidity position
of the firm is totally effected by the management of working capital. So, a study of changes in
the uses and sources of working capital is necessary to evaluate the efficiency with which the
working capital is employed in a business. This involves the need of working capital analysis.
The analysis of working capital can be conducted through a number of devices, such as:
1. Ratio analysis.
2. Fund flow analysis.
3. Budgeting.
METHODS OF working capital ANALYSIS

There are so many methods for analysis of financial statements but RIL LTD used the following
techniques:Comparative size statements
Trend analysis
Cash flow statement
Ratio analysis
A detail description of these methods is as follows:-

COMPARATIVE SIZE STATEMENTS:When two or more than two years figures are compared to each other than we called comparative
size statements in order to estimate the future progress of the business, it is necessary to look the
past performance of the company. These statements show the absolute figures and also show the
change from one year to another.
TREND ANALYSIS:To analyze many years financial statements RIL LTD uses this method. This indicates the
direction on movement over the long time and help in the financial statements.
Procedure for calculating trends:Previous year is taken as a base year.
Figures of the base year are taken 100.
Trend % are calculated in relation to base year.
CASH FLOW STATEMENT:Cash flow statements are the statements of changes in the financial position prepared on the basis
of funds defined in cash or cash equivalents. In short cash flow statement summaries the cash
inflows and outflows of the firm during a particular period of time.
Benefits for the RIL LTD:To prepare the cash budget.
To compare the cash budgets .
To show the position of the cash and cash equivalents.
RATIO ANALYSIS:Ratio analysis is the process of the determining and presenting the relationship of the items and
group of items in the statements.
Benefits of ratio analysis to RIL LTD:Helpful in analysis of financial statements.
Helpful in comparative study.
Helpful in locating the weak spots of the RIL LTD.
Helpful in forecasting.
Estimate about the trend of the business.
Fixation of ideal standards.
Effective control.
Study of financial soundness.
Types of ratio:Liquidity ratio: They indicate the firms ability to meet its current obligation out of current
resources.
Current ratio:- Current assets / Current liabilities
Quick ratio:Liquid assets / Current liabilities

Liquid assets =Current assets Stock -Prepaid expenses


Leverage or Capital structure ratio: This ratio discloses the firms ability to meet the interest
costs regularly and long term solvency of the firm.
Debt equity ratio:- Long term loans / Shareholders funds or net Worth
Debt to total fund ratio:- Long terms loans/ share holder funds +long term loan
Proprietary ratio:- Shareholders fund/ shareholders fund+long term loan
Activity ratio or Turnover ratio:- They indicate the rapidity with which the resources available to
the concern are being used to produce sales.
Stock turnover ratio:- Cost of good sold/Average stock
(Cost of good sold= Net sales/ Gross profit,
Average stock=Opening stock+closing stock/2)
Debtors turnover ratio:- Net credit sales/ Average debtors
+Average B/R
Average collection period:- Debtors+B/R /Credit sales per
(Credit sales per day=Net credit sales of the year/365)
Creditors Turnover Ratio:- Net credit purchases/ Average
Creditors + Average B/P
Average Payment Period: - Creditors + B/P/ Credit purchase per day.
Fixed Assets Turnover ratio:- Cost of goods sold/Net fixed Assets
(Net Fixed Assets = Fixed Assets depreciation)
Working Capital Turnover Ratio:- Cost of goods sold/
Working Capital
(Working capital= current assets current liability)

Profitability Ratios or Income ratios:- The main objective of every business concern is to earn
profits. A business must be able to earn adequate profit in relation to the risk and capital invested
in it.

Gross profit ratio:- Gross profit / Net Sales * 100


(Net sales= Sales Sales return)
Net profit Ratio:- Net profit / Net sales * 100
(Operating Net Profit= operating net profit/ Net Sales *100 or operating Net profit= gross profit
operating expenses)
Operating Ratio :- Cost of goods sold + Operating expenses/Net Sales * 100

(Cost of goods sold = Net Sales Gross profit, Operating expenses = office & administration
expenses + Selling & distribution expenses + discount + bad debts + interest on short term
loans)
Earning per share(E.P.S.) :- Net Profit dividend on preference share / No. of equity shares
Dividend per share (D.P.S.):- Dividend paid to equity share Holders / No. of equity shares *100.
Dividend Payout ratio(D.P.) :- D.P.S. / E.P.S. *100

COMPANY PROFILE

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MERGEFORMATINET
"Growth has no limit at Reliance. I keep revising my vision.
Only when you can dream it, you can do it."

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Dhirubhai H. Ambani
Founder Chairman Reliance Group
December 28, 1932 - July 6, 2002

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The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private
sector enterprise, with businesses in the energy and materials value chain. Group's annual
revenues are in excess of US$ 44 billion. The flagship company,
HYPERLINK "http://www.ril.com" \o "RIL"
Reliance Industries Limited
, is a Fortune Global 500 company and is the largest private sector company in India.
Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre
producer in the world and among the top five to ten producers in the world in major
petrochemical products.
Major Group Companies are Reliance Industries Limited (including main subsidiary Reliance
Retail Limited) and
HYPERLINK "http://www.riil.in/" \t "_blank"
Reliance Industrial Infrastructure Limited
ABOUT TELECOM INDUSTRY
World telecom industry is an uprising industry, proceeding towards a goal of achieving two third
of the world's telecom connections. Over the past few years information and communications
technology has changed in a dramatic manner and as a result of that world telecom industry is
going to be a booming industry. Substantial economic growth and mounting population enable
the rapid growth of this industry. The world telecommunications market is expected to rise at an
11 percent compound annual growth rate at the end of year 2010. The leading telecom
companies like AT&T, Vodafone, Verizon, SBC Communications, Bell South, Qwest
Communications are trying to take the advantage of this growth. These companies are working
on telecommunication fields like broadband technologies, EDGE(Enhanced Data rates for
Global Evolution) technologies, LAN-WAN inter networking, optical networking, voice over
Internet protocol, wireless data service etc.
Economical aspect of telecommunication industry: World telecom industry is taking a crucial
part of world economy. The total revenue earned from this industry is 3 percent of the gross
world products and is aiming at attaining more revenues. One statistical report reveals that
approximately 16.9% of the world population has access to the Internet.
Present market scenario of world telecom industry: Over the last couple of years, world
telecommunication industry has been consolidating by allowing private organizations the
opportunities to run their businesses with this industry. The Government monopolies are now
being privatized and consequently competition is developing. Among all, the domestic and small

business markets are the hardest.

INDIAN OVERVIEW
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MERGEFORMATINET
Today the Indian telecommunications network with over 375 Million subscribers is second
largest network in the world after China. India is also the fastest growing telecom market in the
world with an addition of 9- 10 million monthly subscribers. The teledensity of the Country has
increased from 18% in 2006 to 33% in December 2008, showing a stupendous annual growth of
about 50%, one of the highest in any sector of the Indian Economy. The Department of
Telecommunications has been able to provide state of the art world-class infrastructure at
globally competitive tariffs and reduce the digital divide by extending connectivity to the
unconnected areas. India has emerged as a major base for the telecom industry worldwide. Thus
Indian telecom sector has come a long way in achieving its dream of providing affordable and
effective communication facilities to Indian citizens. As a result common man today has access
to this most needed facility.

ABOUT RELIANCE INDUSTRIES LIMITED


MISSION & VISION
Continuously innovate to remain Partners in human progress by Harnessing science &
technology in the petrochemicals domain
OUR MISSION
Be a globally preferred Business associate with responsible Concern for ecology, society, and
stake holders value.

VALUES & QUALITY POLICY


OUR VALUES
Integrity, Respect for People, Unity of Purpose, Outside-in Focus, Agility and Innovation.
QUALITY POLICY
Bare committed to meet customers requirements through continual improvement Of our
quality management systems. We shall sustain organizational excellence through visionary
leadership and innovative efforts.
RIL MILESTONE

YEAR
EVENTS
1969
IPCL was incorporated under company act.
1970
Construction of our first Petrochemicals complex commenced at Vadodara, Gujarat.
1973
Commenced commercial operation at Vadodara.
1992
Initial public offering and listing on the Vadodara stock exchange
1992
Second Petrochemical Complex commenced at Nagothane, Maharashtra
1996
Third Petrochemical Complex commenced at Gandhar
1999
Gandhar complex commissioned.
2000
Completion of the second phase of the Gandhar complex
2002
Reliance took over IPCL.
2004
Amendment agreement between the government and the strategic partner, Reliance petroleum
limited, a Reliance group company.
2005
Government of India withdrew its nominee directors from the board of directors of India
petrochemicals co. ltd.
2006
Amalgamation of six polyester companies i.e. Apollo fibres ltd, Central India ploysters ltd, India
polyfibres ltd, Orissa polyfibres ltd, Recron synthetics ltd and Silvassa industries Pvt ltd with
IPCL.
2007
RIL complete a landmark acquisition of IPCL.

2008
RIL signed MOU with GAIL(INDIA) Ltd. to explore opportunities of setting of petrochemical
plants.

Products & Brands


The Company expanded into textiles in 1975. Since its initial public offering in 1977, the
Company has expanded rapidly and integrated backwards into other industry sectors, most
notably the production of petrochemicals and the refining of crude oil.
The Company from time to time seeks to further diversify into other industries. The Company
now has operations that span from the exploration and production of oil and gas to the
manufacture of petroleum products, polyester products, polyester intermediates, plastics,
polymer intermediates, chemicals and synthetic textiles and fabrics.
The Company's major products and brands, from oil and gas to textiles are tightly integrated and
benefit from synergies across the Company. Central to the Company's operations is its vertical
backward integration strategy; raw materials such as PTA, MEG, ethylene, propylene and
normal paraffin that were previously imported at a higher cost and subject to import duties are
now sourced from within the Company. This has had a positive effect on the Company's
operating margins and interest costs and decreased the Company's exposure to the cyclicality of
markets and raw material prices. The Company believes that this strategy is also important in
maintaining a domestic market leadership position in its major product lines and in providing a
competitive advantage.
The Company's operations can be classified into four segments namely:
Petroleum Refining and Marketing business
Petrochemicals business
Oil and Gas Exploration & Production business
Others
The Company has the largest refining capacity at any single location.
The Company is:
Largest producer of Polyester Fibre and Yarn
4th largest producer of Paraxylene (PX)
5th largest producer of Polypropylene (PP)
7th largest producer of Purified Terephthalic Acid (PTA) and Mono Ethylene Glycol (MEG)
Manufacturing Facilities
Reliance Industries Limited operates world-class manufacturing facilities across the country at
Allahabad, Barabanki, Dahej, Hazira, Hoshiarpur, Jamnagar, Nagothane, Nagpur, Naroda,
Patalganga, Silvassa and Vadodara.
Allahabad Manufacturing Division is located in Allahabad, Uttar Pradesh. It is equipped with
batch polymerization and continuous polymerization facilities.
Barabanki Manufacturing Division is located near Lucknow, Uttar Pradesh. It manufactures
Black Fibre.
Dahej Manufacturing Division is located near Bharuch, Gujarat. It comprises of an ethane /
propane recovery unit, a gas cracker, a caustic chlorine plant and 4 downstream plants, which
manufacture polymers and fibre intermediates.
Hoshiarpur Manufacturing Division is located in Hoshiarpur, Punjab. It manufactures a wide

range of PSF, PFF, POY and polyester chips.


Hazira Manufacturing Division is located near Surat, Gujarat. It comprises of a Naptha cracker
feeding downstream fibre intermediates, plastics and polyester plants.
Jamnagar Manufacturing Division is located near Jamnagar. It comprises of a petroleum
refineries and associated petrochemical plants. The refineries are equipped to refine various
types of crude oil (sour crude, sweet crude or a mixture of both) and manufactures various grades
of fuel from motor gasoline to Aviation Turbine Fuel (ATF). The petrochemicals plants produces
plastics and fibre intermediates.
Nagothane Manufacturing Division is located in Raigad, Maharashtra. It comprises of an ethane
and propane gas cracker and five downstream plants for the manufacture of polymers, fibre
intermediates and chemicals.
Nagpur Manufacturing Division is located in Nagpur, Maharashtra. It manufactures polyester
filament yarn, dope-dyed specialty products of different ranges, fully drawn yarn and polyester
chips.
Naroda Manufacturing Division is located near Ahmedabad, Gujarat, is RILs first
manufacturing facility. This synthetic textiles and fabrics manufacturing facility manufactures
and markets woven and knitted fabrics for home textiles, synthetic and worsted suiting and
shirting, ready to wear garments and automotive fabrics.
Patalganga Manufacturing Division is located near Mumbai, Maharashtra. It comprises of
polyester, fibre intermediates and linear alklyl benzene manufacturing plants.
Silvassa Manufacturing Division is located in the Union Territory of Dadra and Nagar Haveli. It
manufactures a wide range of specialty products such as Recron Stretch, Linen Like, Melange,
Thick-n-thin and Bi-shrinkage yarns.
Vadodara Manufacturing Division is located in Vadodara, Gujarat. It comprises of a Naptha
cracker and 15 downstream plants for the manufacture of polymers, fibres, fibre intermediates
and chemicals.
Each of these complexes has world class manufacturing facilities.
INOVATIONS OF RIL
INCLUDEPICTURE "http://www.stockwatch.in/files/Reliance-Communications-India.jpg" \*
MERGEFORMATINET
For those who study innovative organizations Reliance Industries will be a shining example of
how innovation is practised in almost everything that they do. Here are few things that set them
apart:
"Impossible is an inspiring word" - Nothing turns on the leadership at Reliance Industries than
this magical word. Again to quote the Jamnagar example, it was considered impossible to turn a
barren land into a greenbelt. Today mangoes grown in Jamnagar are sold in Harrods London.
"Hands on thinking, hands off execution." - It is characteristic of Reliance leadership. They think
everything through and meticulous planning is their hall mark. When it comes to execution
empowerment delegation down to the last employee in the chain is clearly demonstrated.
"First time it is learning. Second time it is a mistake." - Mistakes are never frowned upon;
instead they are treated as a learning opportunity. It is one such mistake converted to learning
that created the world's largest 'Craft Centre' located at Jamnagar. Cumulatively it has trained 1,
50,000 workmen - electricians, welders, carpenters.
"Sense of urgency" - Reliance speed is legendary now. Reliance has mastered project

management skills and has made it virtually into a fine art. It is this sense of speed that restored
operations in record time in Jamnagar, Patalganga and Hazira after being affected by cyclones
and floods.
"Hard work, timely decisions, speed and ingenuity" says one of the senior managers of Reliance
Industries to sum up what Reliance is all about.
It is evident that Reliance Industries is where it is today because of Innovation in thinking and
execution. Given its ambition for India and its own organization Reliance leadership has now
taken on a major initiative in the innovation domain.

OBJECTIVES
OF
THE STUDY

ObjectiveS of Study
Find out Ratios related to working capital management of RIL and compare with last 5 years.
Find deviation of calculated from standard or Norms.
To study the customer preference towards reliance communications as compared to its
competitors namely Airtel, Vodafone, Idea, Tata Docomo.
To suggest measures to improve its market share and positioning.

Scope of Study
The scope of this study is to provide an insight into concept of working capital management and
illustrate it by actually working capital management of RIL. This study also provides insight of
the customer preference of Reliance Communications and its market share as compared to Airtel,
Vodafone, Idea, Tata Docomo

RESEARCH
METHODOLOGY

RESEARCH METHODOLOGY

For every comprehensive research a proper research methodology is indispensable & it has to be
properly conceived. The methodology adopted by me is as follows:RESEARCH PROBLEM
To know the working capital management of RIL with the help of ratio analysis.
To analyze the market strength of reliance communications.
HYPOTHESIS OF THE STUDY
A research hypothesis is the statement created by a researcher when they speculate upon the
outcome of a
HYPERLINK "http://www.experiment-resources.com/what-is-research.html"
research
HYPERLINK "http://www.experiment-resources.com/experimental-research.html"
experiment
.

For the study of customer preference towards Reliance Communications the following
hypothesis was set up.
H0: There is no significant relationship between factors and satisfaction level.
H1: There is significant relationship between factors and satisfaction level.

Research Design
According to Clifford Woody, research comprises defining and redefining problems,
formulating hypothesis or suggested solutions; collecting, organizing and evaluating data;
making deductions and reaching conclusions; and at last carefully testing the conclusions to
determine whether they fit the formulating hypothesis.
This research is divided in two parts:
Working Capital Management through secondary data based on certain parameters;
an exploratory research based on a survey of the concerning literature. A sample survey was
conducting with the help of Scheduling Method of collecting data i.e. personally the enumerator
visited and got the questionnaires filled from the respondents. The enumerator in this method
helps the respondents in recording their answers to various questions in the said schedules.
SOURCES OF DATA
There are two types of data viz. primary and secondary. The primary data are those which are
collected afresh and for the first time, and thus happen to be original in character.
The secondary data, on the other hand, are those which have already been collected by someone
else and which have already been passed through the statistical process.
For this research report, primary data was collected through questionnaires from customers and
recharge dealers of sector 8 and 9 and there was no bias on the part of the enumerator while
selecting the sample for the analysis concerning Reliance Competitors.
Secondary data was used for the working capital management of RIL that is company annual
reports, profit and loss account and balance sheet for the years 2004-05, 2005-06, 2006-07, 200708, 2008-09, brochures from recharge dealers, magazines and newspapers.
Sample size
For this research, in part one, a sample size of annual reports for 5 years 2004-05, 2005-06,
2006-07, 2007-08, 2008-09 were taken.
For the second part, a sample size of 100 respondents was taken out of the total customers using
mobile phones.
SAMPLE
AREA
The sample area was Bhopal involved respondents coming to recharge dealers in sector 8 and 9
and the residents of sector 8.
STATISTICAL TOOLS USED
The various statistical tool used were data distribution tables, graphs and pie charts. Ratio
analysis was used for determining the working capital management of RIL. Hypothesis testing

through Chi Square test was used in Customer Preference Towards Reliance Communications.

LIMITATIONS OF THE STUDY


Following were the limitations of the study:
Time was limited.
The sample size of 100 is very small and more than that could not be possible.
The study was only based on the survey of respondents in CHANDIGARH and no other area
could be undertaken for the survey due to lack of transport and time.
This of working capital management is based solely upon the annual reports of the company in
hard copy and through company website.
Only 5 companies could be compared for the market analysis in order to avoid complexity of
data.

DATA COLLECTION

Types of data collection


There are two types of data collection methods available.
1. Primary data collection
2. Secondary data collection
Primary data collection method
The primary data is that data which is collected fresh or first hand, and for first time which is
original in nature. Primary data can collect through personal interview, questionnaire etc. to
support the secondary data.
2) Secondary data collection method
The secondary data are those which have already collected and stored.
Secondary data easily get those secondary data from records, journals, annual reports of the
company etc. It will save the time, money and efforts to collect the data. Secondary data also
made available through trade magazines, balance sheets, books etc.
This project is based on primary data collected through personal interview of
head of account department, head of SQC department and other concerned staff member of
finance department. But primary data collection had limitations such as matter confidential
information thus project is based on secondary information collected through five years annual
report of the company, supported by various books and internet sides. The data collection was
aimed at study of working capital management of the company

INCLUDEPICTURE "http://www.orc.co.uk/images/web-analytics-graph.jpg" \*
MERGEFORMATINET
Data analysis
&
Interpretation

(WORKING CAPITAL MANAGEMENT OF RIL)


CURRENT RATIO
It is also known as working capital ratio .It is a measures of short-term financial strength of the
business and shows whether the business will be able to meet it s current liabilities as when
they mature.
Current Assets including assets which can be converted in to cash easily and itself like market
securities debtors, inventory, prepaid expenses etc.
Current Liabilities included creditors, bills payable, accrual expenses, short term bank loan,
income tax liabilities and long term debt maturity in current year. In short it can be said as all
obligation within a year are included in current liabilities.
Current ratio is a measure of the firms short term solvency. It indicate the availability of current
assets in rupee of current liabilities. As a conventional rule, a current ratio should be or slightly
more. It focuses the strong of weak position of the company.
For the year:
2008 - 09 =

Rs. 58746.07 = 1.61:1


Rs. 35756.98

2007 - 08 =

Rs. 51488.87 = 2.19:1


Rs. 23417.51

2006 - 07 =

Rs. 29913.35 = 1.77:1


Rs. 16865.53

2005 - 06 =

Rs. 24574.45 = 1.96:1


Rs. 12563.50

2004 - 05 =

Rs. 28452.51 = 2.14:1


Rs. 13283.95

YEARS
CURRENT RATIO
2008-09
1.61:1

2007-08
2.19:1
2006-07
1.77:1
2005-06
1.96:1
2004-05
2.14:1

Interpretation:
It is generally believed that 2:1 ratio shows a comfortable working capital position. The tendon
committee appointed by RBI had wide recommended a current ratio of 2:1.
Company has maintained this ration and increased it year by year. A current ratio is 1.61 in the
current year. But in the other year the ratio is nearer to 1:2 so we can say that the company
having comfortable working capital position.

ACID-TEST RATIO
The measure of absolute liquidity may be obtained only cash and bank balance as well as only
ready marketable security with liquid liabilities. This is every existing standard of liquidity and it
is satisfaction if the ratio is 1.50:1.
For the year:

2008 - 09 =

Rs. 58746.07 20109.61 = 1.08:1


Rs.
35756.98

2007 - 08 =

Rs. 51488.87 - 19126.14 = 2.19:1


Rs.
23417.51

2006 - 07 =

Rs. 29913.35 12136.51


Rs.
16865.53

= 1.38:1

2005 - 06 =

Rs. 24574.45 10119.82


Rs.
12563.50

= 1.15:1

Rs. 28452.51 7412.88 = 1.58:1


Rs.
13283.95
YEARS
ACID-TEST RATIO

2004 - 05 =

2008-09
1.08:1
2007-08
1.38:1
2006-07
1.05:1
2005-06
1.15:1
2004-05
1.58:1

Interpretation:
Acid-test ratio is near to one in current year that is 1.08 as compare to 1.38 in the previous year.
Over all the acid-test ratio of last five year is very satisfactory so we can conclude that the
absolute liquidity of the Reliance Industries Limited is in favor.
DEBTORS TURNOVER RATIO
This ratio shows the proportion of sales to average receivables. It shows the efficiency of the
collection policy of the firm. The higher the ratio, the less satisfactory position of the firm.
Higher ratio indicates weak collection policy of the firm.
For the year:

2008 - 09 =

Rs. 151224.01 = 31.21:1


Rs. 4844.97

2007 - 08 =

Rs. 137146.66 = 22.60:1


Rs. 6068.30

2006 - 07 =

Rs. 111692.72
Rs. 3732.42

= 29.92:1

2005 - 06 =

Rs. 81211.33
Rs. 4163.62

= 19.50:1

2004 - 05 =

Rs. 66051.30
Rs. 3927.81

= 16.82:1

YEARS
DEBTORS TURNOVER RATIO
2008-09
31.21:1
2007-08
22.60:1
2006-07
29.92:1
2005-06
19.50:1
2004-05
16.82:1

Interpretation:
We know that the higher Debtors turnover ratio is not good for the firm. In the year 2008-09 it is
31.21:1 but in the previous year it was 22.60:1. So some improvement is needed.
CREDITORS TURNOVER RATIO :
Creditors turnover ratio shows the proportion of purchase to account payable number of days
within which we make payment to our creditors for credit purchases estimated the creditors ratio
if this ratio is higher it means company has to check whether company is making payment within
credit period available. If it is making payment before the due date means the company is not
taking full advantage of it credit period and if company making the payment the period that

indicates that the company is not taking the benefit of discount allowed.
For the year:
2008 - 09 = Rs. 118961.16 = 3.33:1
Rs. 35756.98
2007 - 08 =

Rs. 108270 = 4.62:1


Rs. 23417.51

2006 - 07 =

Rs. 92301.09
Rs. 16835.53

= 5.47:1

2005 - 06 =

Rs. 69043.43
Rs. 12563.50

= 5.49:1

2004 - 05 =

Rs. 52715.92
Rs. 13283.95

= 3.96:1

YEARS
CREDITORS TURNOVER RATI
2008-09
3.33:1
2007-08
4.62:1
2006-07
5.47:1
2005-06
5.49:1
2004-05
3.96:1

Interpretation:
Higher Ratio of creditor turnover forces the company to check that payment is made with in
credit period properly or not. The creditors turnover ratio is 3.33 in 2008-09 as compare to
2007-08 the ratio is 4.62 which is higher than the other years.

INVENTORY TURNOVER RATIO

This ratio is also known as stock turnover ratio. The number of times the average stock is
turnover during the year is known as stock turnover. It is computed by deciding the sales by the
inventory. The ratio is important in joining the ability of management which it can move the
stock.
For the year:
2008 - 09 =

Rs. 151224.01 = 7.51 times


Rs. 20109.61

2007 - 08 =

Rs. 137146.66 = 7.17 times


Rs. 19126.14

2006 - 07 =

Rs. 111692.72
Rs. 12136.51

= 9.20 times

2005 - 06 =

Rs. 81211.33
Rs. 10119.82

= 8 times

2004 - 05 =

Rs. 66051.30
Rs. 7412.88

= 8.91 times

YEARS
INVENTORY TURNOVER RATIO
2008-09
7.51 times
2007-08
7.17 times
2006-07
9.20 times
2005-06
8.00 times
2004-05
8.91 times

Interpretation:
Higher the ratio more profitability the business would be. The ratio is joining the ability of
management with which it can move the stock. Inventory turnover ratio is highest in the year
2006-07 is 9.20 as compare to the other year but in current year it is 7.51 which is little lower
than previous year but it is obvious that in heavy industries like Reliance Industries Limited have
lower ration as compare to FMCG.

NET WORKING CAPITAL TURNOVER RATIO


Net working capital turnover ratio is obtained by net working capital joining to sales. The excess
of current assets over current liabilities is called working capital. It is found for measuring firm
liquidity. It also measures the firm potential reserve of funds.
For the year:
2008 - 09 =

Rs. 151224.01 = 5.83 times


Rs. 19874.06

2007 - 08 =

Rs. 137146.66
Rs. 24622.18

= 5.57 times

2006 - 07 =

Rs. 111692.72
Rs. 11334.95

= 9.85 times

2005 - 06 =

Rs. 81211.33
Rs. 8119.97

= 10 times

2004 - 05 =

Rs. 66051.30
Rs. 11320

= 5.83 times

YEARS
WORKING CAPITAL TURNOVER RATIO
2008-09
7.60 times
2007-08
5.57 times
2006-07
9.85 times
2005-06
10.00 times
2004-05
5.83 times

INTERPETATION:
As per the balance sheet data of the creditor the working capital turnover ratio is different for the
different years. The ratio is 7.60 in 2008-09 and 5.57 in 2007-08 but the best favorable ratio is in

2005-06 which is 10 times. So it means that higher the ratio better the working capital condition
of the company.
DEBTOR COLLECTION PERIOD
The Debt Collection shows the number of days taken to collect the debts of credit sales. It shows
the efficiency and collection policy of the company. The ratio is computed by dividing the
Debtors turnover ratio in to 365 days.
For the year:
2008 - 09 = 365 days
31.21
2007 - 08 = 365 days
22.60
2006 - 07 = 365 days
29.92
2005 - 06 = 365 days
19.50
2004 - 05 = 365 days
16.82

= 11 days
= 16.15 days
= 12.20 days
= 18.71 days
= 21.70 days

YEARS
DEBTORS COLLECTION PERIOD
2008-09
11.00 days
2007-08
16.15 days
2006-07
12.20 days
2005-06
18.71 days
2004-05
20.71 days

INTERPRETATION:
The collection period is highest in 2004-05 is 20.71 days as compare to very low in 2008-09 is

only 11 days. This shows the improvement in collection policy of the Reliance Industries
Limited. So it is very important for any company to collect the debs which this company do very
well.
STATEMENT OF RATIO ANALYSIS
RATIOS
2008-09
2007-08
2006-07
2005-06
2004-05
Current ratio
1.64
2.19
1.77
1.96
2.14
Acid-test ratio
1.08
1.38
1.05
1.15
1.58
Debtors turnover ratio
31.21
22.60
29.92
19.50
16.82
Creditors turnover ratio
3.33
4.62
5.47
5.49
3.96
Inventory turnover ratio
7.51
7.17
9.20
8.00

8.91
Net-working capital turnover ratio
7.60
5.57
9.85
10.00
5.83
Debt collection period
11
16.15
12.20
18.71
21.70

TABLE 1
CONSUMER PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS
S.NO
NAME OF THE SERVICE PROVIDER
NUMBER OF RESPONDENTS
1
Reliance Communications
49
2
Airtel
54
3
Vodafone
61
4
Idea
23
5
Tata Docomo
39

INTERPRETATION:
Most of the Respondents prefer Vodafone followed by Airtel, Reliance Communications, Tata
Docomo and Idea respectively.
The number of respondents are more than 100 because of multiple responses by the respondents.

TABLE 2
SERVICE PREFERENCE OF RESPONDENTS ON THE BASIS OF AGE WISE
CLASSIFICATION
S.NO
NAME OF THE SERVICE PROVIDER
UPTO 20 years.
21-30 years

NO. OF RESPONDENTS
% OF RESPONDENTS
NO. OF RESPONDENTS
% OF RESPONDENTS
1
Reliance Communications
8
32
21
33.8
2
Airtel
9
36
19
30.2
3
Vodafone
6
24
21
33.87
4
Idea
2

8
0
0
5
Tata Docomo
0
0
1
1.6

TOTAL
25
100
62
100

31-40 years
40 years and Above
TOTAL
NO. OF RESPONDENTS
% OF RESPONDENTS
NO. OF RESPONDENTS
% OF RESPONDENTS
NO. OF RESPONDENTS
% OF RESPONDENTS
1
16.67
2
28.57
32
32
2
33.33
4
57.14
34
34
3

50
1
14.29
31
31
0
0
0
0
2
2
0
0
0
0
1

6
100
7
100
100
100

INFERENCE:
Among respondents upto 20 years of age group, majority of them (i.e. 36%) are using Airtel
folllowed by Reliance users(32%).
Consumers in the age group of 21 30 years 57% of respondents are mostly prefer Vodafone
and Reliance(33.8% and 33.87% respectively) and 30% of the respondents are using Airtel.
50% of customers are using Vodafone, who are in the age group of 31 40 years.
41 and above 57% of the respondents are using Airtel and 28.57% of respondents are using
Reliance.

TABLE 3
COMPOSITION OF RESPONDENTS ON THE BASIS OF MARITAL STATUS

S.NO.
MARITAL STATUS
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
MARRIED
33
33
2
UNMARRIED
67
67
TOTAL
100
100

INFERENCE:
The married respondents are using cell phones in 33%, but the unmarried respondents are using
cell phones in 67%.

TABLE 4
COMPOSITION OF RESPONDENTS ON THE BASIS OF EDUCATION QUALIFICATION
S.NO.
EDUCATIONAL QUALIFICATION
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
UPTO HIGHER SENIOR SECONDARY
32
32
2
GRADUATES
61

61
3
PROFESSIONALS
7
7
4
OTHERS
0
0
TOTAL
100
100


INFERENCE:
The majority of the respondents 62.50% (graduates) are using cell phones and 30.77% (upto
HSC) respondents are using cell phones
TABLE 5
COMPOSITION OF RESPONDENTS ON THE BASIS OF OCCUPATION
S.NO.
OCCUPATION
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
BUISNESS
12
12
2
PROFESSIONAL
2
2
3
EMPLYOEE
33
33

4
HOME MAKER
8
8
5
STUDENT
44
44
6
OTHERS
1
1
TOTAL
100
100

INFERENCE:
44% of the total sample who are students are using cell phones, followed by employees (33%),
businessmen (8%), home makers (8%) and others (1%).
TABLE 6
TABLE SHOWING SOURCE OF INFORMATION TO SELECT SERVICE PROVIDERS
S.NO.
OCCUPATION
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
Family Members
40
40
2
Neighbours
2
2
3
Relations
5
5

4
Friends
37
37
5
Advertisement
4
4
6
Dealers
6
6
7
Others
6
6
TOTAL
100
100

INFERENCE:
The most influencing factor for choosing the service provider according to the respondents is
Family Members (40%) followed by Friends (37%), Dealers and Others (6% both), Relations
(5%), Advertisement (4%) and Neighbours (2%).

TABLE NO: 8
COMPOSITION OF RESPONDENTS ON THE BASIS OF PURPOSE OF PURCHASE OF
THE CELL PHONES
S.NO.
PURPOSE
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
For Business
42
42

2
For Personal
58
58
TOTAL
100
100

INFERENCE:
42% of respondents are using cell phones for their business, and 58% of respondents are using
cell phones for their personal usage.
TABLE 10
AWARENESS OF VARIOUS SCHEMES
S.No
VARIOUS SERVICES
AWARE
UNAWARE
TOTAL

NO.OF RESPONDENTS
% OF RESPONDENTS
NO.OF RESPONDENTS
% OF RESPONDENTS
NO.OF RESPONDENTS
% OF RESPONDENTS
1
SCHEME OF
INITIAL
PURCHASE
61
61
39
39
100
100
2

BALANCE
OF TALK
CHARGES
63
63
37
37
100
100
3
PERIODICAL
OFFERS
58
58
42
42
100
100
4
CALL
WAITING
AND CALL
DIVERTING
OPTION
61
61
39
39
100
100
5
MODES OF
PAYMENT
54
54
46
46
100
100

INFERENCE:

63% of respondents are aware about the talk charges, 58% of respondents are aware about
various periodical offers and 39 % are unaware of call waiting and call diverting option.
46% of respondents are unaware about the modes of payment and 61% of respondents only
aware about the schmes of initial purchase

TABLE NO: 11
INFLUENCING FACTORS TO SELECT THE SERVICE PROVIDER
S.NO.
FACTORS
NUMBER OF RESPONDENTS
% OF RESPONDENTS
1.
Deposit Amount
13
13
2
Brand Image
45
45
3
Availability
10

10
4
Credit Facility for Connection
8
8
5
Customer Care Service
17
17
6
Service Charges
7
7

TOTAL
100
100
INFERENCE:
45% of respondents are purchasing a particular service provider by its Brand Image, 17% of
respondents are choosing the particular service provider by their customer care service, 13% by
Deposit Amount, 10% by Availability, 8% by Credit Facility for Connection and 7% by Service
Charges.

TABLE NO: 12
CONSUMERS SATISFACTION LEVEL ON THE BASIS OF PRICE OF THE CELL PHONE
PROVIDERS

S.NO
SERVICE PROVIDER
HIGHLY SATISFACTORY
SATISFACTORY
NON SATISFACTORY
TOTAL
1
Reliance Comunications
28
12
9

49
2
Airtel
30
20
4
54
3
Vodafone
38
13
10
61
4
Idea
10
5
13
38
5
Tata Docomo
14
7
3
24

INFERENCE:
38% of the respondents are highly satisfied for the price of Vodafone followed by Airtel, reliance
Communications, Tata Docomo and Idea respectively. People using Idea service are not satisfied
in majority out of the total number of respondents using Idea service.
TABLE NO: 13
CONSUMERS SATISFACTION LEVEL ON THE BASIS OF AFTER SALES SERVICE OF
THE SERVICE PROVIDER
S.NO
SERVICE PROVIDER
HIGHLY SATISFACTORY
SATISFACTORY
NON SATISFACTORY
TOTAL
1

Reliance Comunications
31
12
6
49
2
Airtel
45
5
4
54
3
Vodafone
39
12
10
61
4
Idea
9
5
14
38
5
Tata Docomo
15
6
3
24

INFERENCE:
Majority of the respondents (45) are highly satisfied about after sales service by Airtel, followed
by Vodafone, Reliance, Tata Docomo and Idea respectively. 12 (Reliance users) and 5 (Airtel
users) are satisfied (average) by the after sales service. 14 respondents of total Idea users are
dissatisfied by the after sales service whereas only 6 and 4 users of Reliance and Airtel are
dissatisfied.
TABLE NO 15
CONSUMERS ATTITUDE TOWARDS THE IMPORTANCE OF CELL PHONES

CALCULATION OF SATISFACTORY SCORES


S.NO.
NATURE
NUMBER OF RESPONDENTS
%age OF RESPONDENTS
1
Necessity
64
64
2
Status
25
25
3
Luxury
11
11
TOTAL
100
100

INFERENCE:
64% of the respondents state that cell phones are necessity, 25% state cell phones as a status
symbol and 11% of respondents are only states that cell phones are luxury.
TABLE 16
REASONS FOR FACING DIFFICULTY IN CELL PHONE CONNECTION
REASONS
NO. OF RESPONDENTS
Coverage
42
Service
32
Clarity
45
Network Busy

56

INFERENCE:
Majority of respondents face difficulty in their cell phone connection due to Network problem
followed by Coverage problem, clarity and Service.

OBSERVATIONS
&
FINDINGS

OBSERVATIONS & FINDINGS


Findings of working capital management of RIL
The company having comfortable working capital position.

The absolute liquidity of the Reliance Industries Limited is in favour.


The collection policy of the company is very good.
The creditors turnover ratio is 3.33 in 2008-09 as compare to 2007-08 the ratio is 4.62 which is
higher than the other years.
Inventory turnover ratio is highest in the year 2006-07 is 9.20 as compare to the other year but in
current year it is 7.51 which is little bit lower than previous year but it is obvious that in heavy
industries like Reliance Industries Limited have lower ratio as compared to FMCG.
The working capital ratio is 7.60 in 2008-09 and 5.57 in 2007-08 but the best favorable ratio is in
2005-06 which is 10 times. So it indicates better working capital condition of the company.
This is an improvement in collection policy of the Reliance Industries Limited.

FINDINGS FOR RELIANCE COMMUNICATIONS


(CUSTOMER PREFERENCE)
On the basis of consumer preference, majority of the peoples are preferred Vodafone and
Reliance at the 3rd position.
On the basis of age group, most of the respondents (33.8%), are using Reliance, who are in the
age group of 21-30 years.
On the basis of marital status mostly unmarried respondents are using cell phones than married
respondents.
On the basis of educational qualification, most of the graduates are using cell phones.
On the basis of occupation, the students and employees are using cell phones in more level.
On the basis of family income, 45% of the respondents are using cell phones, who are all get
family income of Rs.5, 001 10, 000.
Majority of the peoples choose the service provider by family members influence.
4% of respondents are only influenced by advertisements.
Majority of the peoples are using cell phones for personal usage.
Majority of the peoples are using prepaid scheme.
Majority of the people are aware of the various schemes provided by the service providers.
Majority of the people keep in mind the brand image before selecting their service provider.
Majority of the respondents are highly satisfied about the price of Airtel
People using Idea service are not satisfied in majority out of the total number of respondents
using Idea service.
On the basis of after sales service, the majority of the respondents are highly satisfied in Airtel,
Vodafone and Reliance respectively.
On the basis of periodical offers, majority of the people are highly satisfied by Vodafone and
Reliance respectively.
On the basis of consumers attitude, majority of the people are states that cell phones are
necessity to all.
Reasons for facing difficulty in cell phone connection are Network problem followed by

Coverage problem, clarity and Service.

CONCLUSIO
attitude, majority of the people are states that cell phones are necessity to all.
Reasons for facing difficulty in cell phone connection are Network problem followed by
Coverage problem, clarity and Service.

CONCLUSION
SUGGESTION

CONCLUSION
In the present study I have analyzed the working capital management of RIL INDUSTRY
Limited.
The study involves practical and conceptual over view of decisions concerning current assets
like cash and bank balance ,inventories( like raw materials ,w-i-p,finished goods ),sundry
debtors, loans and advances, other current assets and current liabilities like sundry creditors,
securities and other deposits, other current liabilities and provisions of RIL. Was with the
objective of maximizing the overall net profit of the bank. And complete synchronization and co
ordination among the working capital components which shall contribute to optimum level of
operations. Mismanagement of each or any of these components shall be detrimental to the
objectives of efficient operation, profitability and maximization of overall value of the bank.

The working capital limits would be considered only after the project nearing completion and
after ensuring control over the inventory. The inventory is a great concern for RIL and it need
proper procurement and management.
Eligible working capital limits would be assessed by cash Budget method And Projected
production method depending the market condition, scale of operation, nature of
activity/enterprise and duration/length of operating cycle etc.
This study also attempts to find out the satisfaction of consumer regarding cell phone service
providers. This is an information era significance of information cannot be over emphasized.
This decade, most of the peoples using cell phones. So, service providers are increasing in more
level increasing the level of competition. This leads to adding new features, schemes, periodical
offers to their service and the consumers get maximum benefit from their service provider.
Now-a-days, cell phones are very necessity to all. Because, it is give safety to the men and
women also. They have also become a status symbol for young geeration.
But one should also not forget the disadvantages of cell phones and should try avoiding it
especiaaly for children as it hampers their development mentally and can endager their health.
Crimes are also increasing relating to cell phones and people should be careful

SUGGESTIONS

The recommendation & suggestion for effective management of working capital at RIL are given
bellow:
1) For inventory, in order to improve the position, RIL can reduce the level of stocks by resorting
to phased production i.e. producing according to requirement and disposing off or recycling the

unserviceable inventories.
However, the low turnover of stock may also be due to problems with generation of sales.
Inventory management is a great concern for RIL especially stores and spares. The purchase
manager should take proper steps for procurement of inventories.
2.) The company must take certain steps to decrease the working capital cycle. One way can be
better management of inventories.
3.) RIL is suggested to maintain a balance in capacities, synchronization of various inputs
availability of some materials or parts which are not easily available.
4.) Short term credit period availed must be reduced and sundry creditors should be paid faster.
5.) It should maintain inventory at an optimum level rather than a very optimistic level.
6.) The procurement for materials requisition processing should be reduced so as to minimize the
lead time.
7.) Freedom should be there in deciding the credit policies, cash discount or credit ratings.
8). RIL can also consider negotiating its creditors for relaxing the debt repayment period and
repaying only on or just before the expiry of the credit period.

The recommendation & suggestion for effective management of working capital at RIL are given
bellow:
Reliance Comm. should expand their customer base. But it also has an advantage over Tata
Docomo and Idea.
Reliance Comm. should try to attract old people also.
It should concentrate on good advertisements for their service because, advertisements take little
part for influencing the consumers.
It should try to increase post paid users.
More awareness of their services should be spread to the customers.
Reliance should attract the customers by reducing their price.
Reliance should try to increase their after sales services and decrease their dissatisfied customers
by providing good after sales services.
Reliance should give more periodical offers to its customers.
It should come up with more reasonable and attractive plans for business use.
It needs to focus on providing good clarity of signals as customers prefer Airtel in terms of signal
clarity.

BIBLIOGRAPHY

BIBLIOGRAPHY
HYPERLINK "http://www.ril.com"
www.ril.com
HYPERLINK "http://www.ril.com/html/investor/financials.html"
http://www.ril.com/html/investor/financials.html
HYPERLINK

"http://www.ril.com/rportal1/DownloadLibUploads/1256022656138_AR0809.pdf" \t "_blank"
Annual Report for the year 2008-2009
HYPERLINK
"http://www.ril.com/rportal1/DownloadLibUploads/1210924385906_AR0708R.pdf" \t "_blank"
Annual Report for the year 2007-2008
HYPERLINK
"http://www.ril.com/rportal1/DownloadLibUploads/1210924385906_AR0708R.pdf" \t "_blank"
Annual Report for the year 2006-2007
HYPERLINK
"http://www.ril.com/rportal1/DownloadLibUploads/1210924385906_AR0708R.pdf" \t "_blank"
Annual Report for the year 2005-2006
HYPERLINK
"http://www.ril.com/rportal1/DownloadLibUploads/1210924385906_AR0708R.pdf" \t "_blank"
Annual Report for the year 2004-2005
HYPERLINK "http://www.studyfinance.com/lessons/workcap/"
http://www.studyfinance.com/lessons/workcap/
HYPERLINK "http://en.wikipedia.org/wiki/Working_capital"
http://en.wikipedia.org/wiki/Working_capital
HYPERLINK "http://www.rcom.co.in"
www.rcom.co.in
HYPERLINK "http://www.trai.gov.in"
www.trai.gov.in
HYPERLINK "http://www.ibef.org/industry/telecommunications.aspx"
http://www.ibef.org/industry/telecommunications.aspx
EMBED MS_ClipArt_Gallery
Financial Management
Khan & in
EMBED MS_ClipArt_Gallery
Financial Management
I.M.Pandey
EMBED MS_ClipArt_Gallery
Research Methodology
C.R.Kothari

ANNEXURE

QUESTIONNAIRE

I am DINESH SHARMA, a student of MILLENNIUM Institute of tech. & science, Bhopal and
this questionnaire is a part of my research on A STUDY OF WORKING CAPITAL
MANAGEMENT OF RELIANCE INDUSTRY & CUSTOMER PREFERENCE TOWARDS
RELIANCE COMMUNICATION. I would therefore request you to give your response to the
questionnaire.
Name :
Sex :
Male

Female

Age :
Upto 20 yrs
21-30 yrs
31-40 yrs
40 yrs. and above
Marital Status :
Married

Unmarried

Q1. What is the qualification Educational Qualification?


Up to HSC
Graduation

Professional
Others _____________________________________
Q2. What is your occupation ?
Business
Professional

Employee
Student
Home maker
others
Q3. what is your Family income (Per/month)
Less than Rs.5, 000/

Rs. 5,000/- to 10,000/Rs. 10,000/- to 15,000/Above Rs. 15, 000/-

Q4.) Which cell phone (Service Provider) do you possess?


Reliance Communications

Airtel



Vodafone
Tata Docomo
Idea

Q5.) Who influenced you to by the particular cell phone service


Provider?
Family Member

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Q6.) Why do you buy the cell phones?


For business

for personal

Q7) Which type of scheme is most preferable by you?


Prepaid

Q8)

Postpaid

If you have postpaid / prepaid connection mention scheme Name & Monthly rental
Charges?
________________________________________________

Q9) Are you aware of the following details relating in your connection? (Pre / Postpaid
connection)
SCHEME
AWARE
UNAWARE

Scheme of Initial Purchase

Balance of Talk Charges

Periodical Offers

Call Waiting and Call Diverting Option

Modes of Payment

Q10) What factor influenced you to decide your Cell Phones service?
Deposit amount
Brand Image
Availability
Credit facility for your connection
Customer care service
Service charges
Q11) Are you satisfied with your cell phone service provider?
HIGHLY SATISFACTORY
SATISFACTORY
NOT SATISFACTORY
Price

After Sales Service

Periodical Offers

Q12) You consider mobile as a:


Necessity
Status

Luxury

Q10.) What are the reasons of difficulty you face in you cell phone connection (if any)?
Coverage
Service


Clarity
Network Busy

THANKING YOU
PAGE
PAGE
EMBED Excel.Chart.8 \s
EMBED Excel.Chart.8 \s
Raw Material
Work in Progress
Cash Collection from
Debtors
Finished Goods
Credit Sales
Cash Sales

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Diagram 40
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