1.

1 INTRODUCTION Financial management is that managerial activity which is concerned with the planning and control of the firms financial resources. It was a branch of economics till 1890, and as a separate discipline, it is of recent origin. Still it has no unique body of knowledge of its own, and draws heavily on economics for its theoretical concepts even today. The subject of financial management is of immense interest to both academicians and practicing manager. It is of great interest to academicians because the subject is still developing, and there are still certain areas where controversies exist for which no unanimous solution has been reached as yet. MEANING OF FINICIAL MANAGEMENT From the various definitions of the term business given above, it can be concluded that the term business. Finance mainly involves, rising of funds, and their effective utilization keeping in view the overall objective of the firm.

DEFINITION 1. Financial management is concerned with the efficient use of important economic sources namely capital funds. Solomon 2. Financial management is the application of the planning and control function to the finance function. Howard and Upton

NATURE OF FINACE Financial statement are prepared for the purpose of presenting a periodical review or report by management and deal with the state of investment in business and real achieved during the period under review.

From this is clear that financial statements are affected by three things. 1. Recorded Facts 2. Accounting Conventions 3. Personal Judgment

SCOPE OF FINANCE What is finance? What are a firms financial activities? How are they related to the firms other activities? Firms create manufacturing capacities for production of goods. Some provide services to customers. They sell their goods or services to earn profit. They raise funds to acquire manufacturing and other facilities. Thus the three most important activities of a business firm are: 1. Production 2. Marketing 3. Finance FINANCE FUNCTIONS The finance functions from the production marketing and other functions but function themselves can be readily identified. The function of raising funds, investment them in asset and distributing returns earned form assets from assets to shareholders are respectively know as finance decision, investment decision and dividend decisions. INVESTMENT DECISION A firm investment decisions involve capital expenditures. They are, therefore, referred as capital budgeting decisions. long-term assets: Which yield a return over a period of time in future? Short _ term or current assets: Define as those which in the normal course of business are convertible into cash without dimension in value, usually within a year.

FINANCIAL DECISION Financial function is a second important function to be performed by the financial manager. Broadly he or she must decide when. Where from and how to acquire funds to meet the firms investment needs. DIVIDEND DECISION Dividend decision is the third major financial decision. The financial manager must decide whether the firm should distribute all profits or retain them, of distribution a period and retain the balance. LIQUIDITY DECISION Investment in current assets affects the firm profitability and liquidity. Current assets management that affects a firms liquidity is yet another important finance function. Current assets should be managed efficiently of safe guarding the against the risk of liquidity.

WORKING CAPITAL MANAGEMENT Working capital may be regarded as lifeblood of a business. The success of business is depends upon the efficiency of working capital, while its inefficient management can lead not only to loss profit but also the ultimate downfall of what otherwise might be considered as a promising concern. A study of working capital is of major important to internal & external analysis because of its close relationship with the current day-to-day operation of business. In the word of Ralph Kennedy and Steward MC Muller, inadequacy of miss management is the leading cause of risk in business which related to current operations and represented at any one time by the operating cycle of such item as against receivables and cash. In accounting working capital is the difference between the inflow and outflow of funds, it is also called net cash inflow.

It is defined as the excess of current assets and current liabilities and provisions. In other words net current assets or net working capital, this definition of working capital is qualitative in character. Working capital represents the total of all current assets. In other word it is called gross Working capital or circulating capital of current capital. The current liabilities and provisions excess assets, the difference are referred to as negative working capital the use of the circulating capital instead of working capital indicate that the flow is circular in nature. The beginning of business venture, cash is providing by owners and lender. This is used for purchasing of fixed assets, which is not to be sold throughout the year during the normal course of business. Remaining cash will be used for working capital to meet the current requirement of a business enterprise such the purchase to service .raw material etc.., when receivable are collected .

PRINCIPLES OF WORKING CAPITAL MANAGEMENT Principal of risk variation:Risk refers to the inability of firm to maintain sufficient current assets to pay full obligation. If working capital sufficient current assets to pay full its obligation. if working capital is varied relative to sales, the amount of risk that a firm assumed is also varied, and the opportunity for a gain or loss is increased . In other there is definite relationship between the degree of risk and the rate of between. A firm assumes more to sales decreased the degree or rest increase. Thus working capital group the amount of risk goes down, the opportunity for a gain or loss is likewise adversely affected. The good of management should however be that level of working capital which would optimize a firms rate or return. This live the incremental by associated with the decrease in working capital investment greater than the increment gain associated with that investment. Principal of cost of capital:-

The different source of finance for each source has a different cost of capital. It should be remembered that the cost of capital moves insecurely with risk. Thus additional risk capital results in the decline in the cost of capital. Principal of equality position:According to this principle, the amount of working capital investment in each component should be adequately justified by a firms equality position. Every rupee invested in the working capital should contribute to new work of the firm. Principle of maturity of payment:A company should make every effort to relate maturities of payment to be flow of internally generated funds. There should be the least disparity between the maturities a firms short-term debt instruments and its flow of internally generated funds because a greater risk in generated with greater disparity. A margin of safety should. However be provided for short term debt payment. SOURCE OF WORKING CAPITAL:The need of working capital is increased by raising prices of end produce and relative inputs. Financing if additional working capital requirement in such an environment because s real problem to a finance manager. Commercial banks play a most important role in providing working capital finance especially in the India. In inflation situation the R.B.I. has taken up certain fiscal measure to check money supply in the economy the balancing need has be managed either by long term borrowing or by issuing equity etc. are the additional working capital requirement. The first choice to finance manager is for getting additional finance is banks; it may not provide he go long-term sources of finance. a. Loan from financial institutions: The opinion is normally ruled out, because financial institutions do not provide finance for working capital requirement. This facility is not applicable for all companies including small companies also. b. Floating or Debentures:The probability of a successful floatation of debenture seems to be rather merging. In India capital market, floating of debenture has still to gain popularity debenture issues

of companies. For this modes of raising funds by issuing convertible debentures or bonds is also considered, which may attract a number of investors. c. Accepting public deposits:The issue of tapping public deposits is directly to the image of the company seeking to invite public deposits. But the problem of low profitability in many industries is varying common.

d. Issues of shares :With a view to financing additional working capital needs issued of additional shares should be one way to raise the equity base. India companies find themselves in a bad shape in this context too. Low profit margins as well as lack of knowledge, about the company make the success of a capital issues very dim. e. Raising funds by internal financing;Raising equity by operational profits poses problems for many companies in order to overcome this, increasing profitability through cost control and cost reduction measure managing the case operation cycle, rationalizing inventory stocks and so on. Among main source of working capital, one source is the funds provided though profit on current operations. Other sources are banks credit other short-term loans trade credit sale of marketable securities etc. EX:- Receipts from sale are used not only to replenish the working capital invested in inventories and to pay operation costs but also to generated new working capital. TYPES OF WORKING CAPITAL:1. NET WORKING CAPITAL:The net working capital is the difference between current assets and current liabilities. The concept of networking capital enables a firm to determine how much amount is left for operational requirement. 2 . GROSS WORKING CAPITAL:Gross working capital is the amount of funds invested in the various components of current assets. Advantages of Gross Working Capital are.

 Gross working capital provides the current of working capital at the right time. It enables a firm to realize the greatest return on its investment. It helps in the fixation of various areas of financial responsibility.

3. PERMANENT WORKING CAPITAL:Permanent working capital is the minimum amount of current assets which is needed to conduct a business even during the dullest season of year. This amount various from year to year. Depending upon the growth of the company. Permanent working capital has following characteristics It is classified on the basis of time factor. It constantly changes from one asset to another and continues to remains in the business process It size increase with the growth of business operations

4. TEMPORARY (or) VARIABLE WORKING CAPATIAL:It represent the additional assets which we required at different time during the operation year additional inventory, extra cash etc, Seasonal working capital is the additional amount of assets-particularly cash, receivables and inventory which are required during the more active business seasons of the year. Temporary working capital characteristics are It is not always gainful employees, though it may change from one asset to another, as permanent working capital does and It is particularly suited to business of seasonal or cyclical nature

Working Capital (RS)

Temporary or variable

Permanent or regular Time

BALANCE SHEET WORKING CAPITAL:The balance sheet working capital is one which is calculated from the item appearing in the balance sheet. Gross working capital which is represented by the excess of current assets and Net working capital which is represented by the excess of current assets over current liabilities is example of the balance sheet working capital. 6. CASH WORKING CAPITAL:Cash working capital is one which is calculated from the items appearing in the profits & loss account it shows the real flow of money or value at a particular time and is considered to be the most realistic approach in working capital management in financial management in recent years. The reason is that the cash working capital indicates the adequacy of the cash flow, which is essential prerequisite of the business. 7. NEGATIVE WORKING CAPITAL:Negative working capital emerges when current liabilities exceed current assets. Such a situation is not absolutely theoretical, and occurs when a firm is nearing a crisis of some magnitude.

Working capital cycle:Maximization of share holders wealth of a firm is possible only when there are sufficient returns for their operations. But profits can be earned will naturally depend upon the magnitude of the sales. In other words, successful sales activity is necessary for earning profits. Sales do not convert in to cash immediately. There is invisible time between sale of goods and receipt of cash. In other words, sufficient working capital is necessary to sustain sales activity. The operating of working capital cycle concept penetrates to the heart of working capital management in a more dynamic form. The time elapses to convert raw-materials in to cash is known as working capital operating cycles. In other words the time that elapses between the purchase of raw-materials and collection of cash for sale is referred to as the working capital operating cycle. The working capital operating cycle involves the following procedure: a) b) c) d) e) Conversion of into raw-materials. Conversion of raw-materials into work-in-progress. Conversion of work-in-progress into finished goods. Conversion of finished goods into sales (debtors & cash). Conversion of debtors into cash.

The working capital operating cycle normally confines to a year to year with reference to which various factors of working capital are evaluated. Working capital cycle is the period with in which either raw-material converts itself to cash or commences with cash and ends with cash. METHOD OF ESTIMATING WORKING CAPITAL:There are two methods which are usually followed in determining working capital requirements 1. CONVENTIONAL METHOD:According to the conventional method, cash inflows and out flows are matched with each other. Greater emphasis is laid on liquidity and greater importance is attached to current ratio, liquidity ratio etc. which pertain to the liquidity of a business. 2. OPERATING CYCLE METHOD:In order to understand what gives rise to difference. In the amount of timing of cash flows we should first know the length of time which is required to covert cash into resources into financial products, the final produce into receivables

back into cash. The length of the operating cycle is a function of the nature of the nature of the business. There is four majors component of the operating cycle of a manufacturing company. The cycle starts with free capital in the firm of cash and credit, followed by investment in materials. Manpower and service. Production phase Storage of the finished products terminating at the time finished product is sold. New free capital then the becomes available for productive reinvestment. When new liquid capital becomes available for recommitment to productive activity, a new operating cycle begins. This method is more dynamic and refers to working capital in a realistic way. This method helps in increasing the profitability of business. It enables a company to maintains liquidity and preserve that liquidity through profitability. The operating cycle and considered production and other business operations, and forecast the changes that may be necessary in the pursuit of the future activities. Ratio analysis is one of the powerful tools of the financial analysis. A Ratio can be defined as The indicated quotient of two mathematical expressions. A Ratio can be used as a yardstick for evaluating the financial position and performance of a concern because the absolute accounting data cannot provide meaningful understanding and interpretation. Current Ratio: Current ratio measure the liquidity position of the business or ability of the business to meet its current obligations. Conventionally, 2:1 ratio is referred to as bankers rule of thumb, which represents a healthy trend in the business. However, there is no ratio that can be treated as standard or ideal for all firms in an industry or for similar firms in different industries. Each firm has to develop its own standard or ideal ratio from past experience and this only can be taken as a norm. Current Assets Current Ratio = Current Liabilities

In any operating concern, the current ratio should be 2:1 which is referred to as bankers rule of thumb or accepted standard of liquidity Liquid Ratio : The quick ratio is better test of financial strength than the current ratio, as it gives no consideration to inventory, which cannot be sold at fair prices immediately. In other words, Acid ratio is a measure of judging the immediate ability of the company to pay- off its current obligations. This ratio lays more emphasis on immediate conversion of assets into cash. A quick ratio of 1:1 is usually considered favorable. During the financial years under study the quick ratio has decreased every year, though it has decreased, the company has maintained a good position in this regard. A high liquidity ratio compared to current ratio may indicate under stocking, while low liquidity ratio may indicate over stocking. Almost for all the years, the company had been maintaining good inventory levels. Liquid Assets Liquid Ratio = --------------------------------------Current liabilities

Super Quick Ratio: Through receivables are generally more liquid than inventories, there may be debts having doubt regarding their real stability in time. So, to get idea about the absolute liquidity of a concern, both receivables and inventories are excluded from current assets and only absolute liquid assets, such as cash in hand, cash at bank and readily realizable securities are taken in to consideration. Super Quick Ratio is calculated as follows: Cash in hand and at bank Super Quick Ratio = --------------------------------------Current liabilities

The desirable norm for his ratio is 1:2 i.e., Re. 1 Worth of absolute liquid assets are sufficient for Rs.2 worth of current liabilities. Even through the ration given a more meaningful measure of liquidity, it is not in much use because the idea of keeping large cash balance or near cash Current Assets to Total Assets: It expresses the fund investment in working capital and the proportion of current assets to total assets. This ratio helps to assess the importance of current assets in total assets. Higher proportion reveals that the company gives more importance to working capital investment and vice versa. It can be seen from table that the companys current assets to total assets ratio has increased every year during the period of study. On an average 68 Percent of the amount invested in current assets. It shows that the company had given greater emphasis to working capital investment as compared to fixed assets and current assets is high which shows that company has excessive liquidity Current Assets Current assets to total assets ratio = --------------------------Total Assets Current Assets to Fixed Assets Ratio: The finance manager should determine the optimum level of current assets so that the wealth of shareholders is maximized (walker, 1964).A company needs currents and fixed assets to achieve the desired level of output. If the output and sales increase, the need for current assets increases. Increases in current assets are not proportionate to the output. The level of the current assets can be measured by relating current assets to fixed assets. The ratio of the company indicates that the company has followed the conservative current assets policy which shows that the company has liquidity and low risk. Current Assets Current assets to fixed assets ratio = Net fixed Assets

Activity rations are employed to evaluate the efficiency with which the firm manages and utilizes its assets. These rations are also called turnover into sales. Activity ratios, thus involve a relationship between sales and assets. Debtors Turnover Ratio: A firm may sell goods on cash as well as on credit. When the goods are sold on credit, the parties or whom the goods have been sold, are called as debtors or bookdebtors in accounting terminology. There must be proper credit collection policy to ensure proper credit collection policy to ensure proper collection of debts without which there is every possibility of outstanding debts becoming bad. Therefore debtors turnover ratio is calculated to measure the efficiency of credit promotion policy and credit collection policy. Debtors turnover ratio indicates the speed with which the debtors are turned over during a year it is expressed in number of times the debtors are turned over.

Credit sales Debtors Turnover Ratio = Average Trade Debtors

AVERAGE TRADE DEBTORS= (Opening Trade debtors+ Bills Receivables)+ (ClosingTraders+Bills Receivables) Higher Debtors Turn over (DTO) ratio indicates more efficient collection of debts and signifies the more liquidity of debts and signifies the more liquidity of debts and lower DTO ratio indicates more inefficient collection of debts and signifies less liquidity of debts Working Capital Turnover Ratio: It indicates the efficiency of the company in utilizing the working capital in business. High ratio denotes more efficient use of working capital in the business and vice versa. Table indicates that the ratio varies from 6.71 to 28.59. Net sales Working Capital Turnover Ratio = Working Capital

 Return On Investment : The term investment may refer to total assets or net assets. The funds employed in net assets in known as capital employed. Net assets equal net fixed assets plus current assts minus current liabilities excluding bank loans. Alternatively, capital employed equal to net worth plus total debt. EBIT Return on Investment = X100 Net Asset

Return On Equity:

Common or ordinary shareholders are entitled to residual profits. The rat dividend is not fixed; the earnings may be distributed to shareholders or retained in the business. Nevertheless, the profits after taxes represent their return. A return. A return on shareholders equity or net worth will include paid-up share capital, share premium and reserves and surplus less accumulated losses. Net worth can also found by subtracting total liabilities form total assets. PAT Return on Equity = X100 Capital employed

Net Profit Ratio: For a business to survive in the long-term it must generate profit therefore

the net profit margin ratio is one of the key performance indicates for your business. Use information from your business annual profit and loss statements to input into the tool. Net Profit after Tax Net Profit Ratio = X100 Debt Equity Ratio: Net Sales

A measure of companys financial leverage calculated by dividing its total liabilities by shareholders equity. It indicates what proportion of equity and debt the company is using to finance its assets. Total Long term Debt Debt Equity Ratio = Shareholders fund

Total Long term Debt = Secured loan + Unsecured loan Shareholders fund = Share capital + Reserve Fixed Assets Turnover Ratio: Measure of the productivity of a firm, it indicates the amount of sales generated by each dollar spent on fixed assets, and the amount of fixed assets required to generate a specific level of revenue changes in this ratio over time reflect whether or not the firm its becoming more efficient in the use of its fixed assets. Net Sales Fixed Assets Turnover Ratio = Net Fixed Assets

Net Fixed Assets = Fixed Asset Depreciation Net Sales = Sales- Return Proprietary Raito: The higher this proprietary ratio denotes that the shareholders have provided the funds to purchase the assets of the concern instead of relying on other sources of funds like bank borrowings, the trade creditors and others. This ratio is a test of credit strength as too low a proprietary ratio would mean than the enterprise is relying a lot more on its creditors to supply its working capital. Shareholders Fund

Proprietary Ratio =

Total Tangible Assets

Shareholders Fund = Share capital + Reserves Total Tangible Assets = Fixed Asset + Current Assets

1.2 INDUSTRY PROFILE

The Indian Gems and Jewellery industry is one of the fastest growing segments in the Indian economy with an annual growth rate of approximately 16 per cent. The domestic market is estimated to be around US$ 16.1 billion and CII expects it to grow to US$ 30 billion in the next 4 years. The country is also the largest consumer of gold in the world. It consumes in excess of 800 tonnes of gold that accounts for 21 per cent of world gold consumption, of which nearly 620 tonnes go into making jewellery. India is also emerging as the world's largest trading centre for gold targeting US$ 17 billion by 2011. The industry has the best skilled manpower for designing and producing high volumes of exquisite jewellery at low labour costs. India is the largest diamond cutting and polishing centre in the worldthe industry enjoys 60 per cent value share, 82 per cent carat share and 95 per cent share of the world market in terms of number of pieces. In other words, nearly 9 out of 10 diamonds sold worldwide are cut and polished in India. India exported cut and polished diamonds worth US$ 14.18 billion in 2008-09. The Indian Gems and Jewellery market continues to be dominated by the unorganized sector. However, with the Indian consumer becoming more aware and quality conscious, branded jewellery is becoming very popular and the market for branded jewellery is likely to be worth US$ 2.2 billion by 2010, according to a McKinsey report. Moreover, the government allows 51 per cent FDI in single brand retail outlets,

attracting both global and domestic players to this sector. The World Gold Council recently estimated the size of India's gold coin market at about US$ 2.11 billion. Key Initiatives / Information Fulbright-Nehru-CII Fellowships for Leadership in Management Program Confederation of Indian Industry (CII) and United States-India Educational Foundation (USIEF) announce the Fulbright-Nehru-CII Fellowships for Leadership in Management Program for the academic year 2012-2013. Indian business managers, whose employers would be willing to bear 50% (US$ 18,400) of the total cost (US$ 36,800), may compete to attend this specially designed management program at the Carnegie Mellon Universitys Tepper School of Business in Pittsburgh from May 23 to July 31, 2012. Aimed to broaden overall perspectives and to strengthen strategic, functional and leadership skills in global business, this program combines classes with group work, industry visits, and networking. Complete announcement matter and application materials are available at USIEF website www.usief.org.in. November 15, 2011 is the application deadline. 76th CII NR Business Outlook Survey 76th CII Northern Region Business Outlook Survey is a quarterly study conducted to gauge the sentiment in the economy. Earlier, the survey was conducted bi-annually, but from the 74th Survey onwards the study is conducted on a quarterly basis in order to get a more frequent indicator of business sentiment. The current survey gives an outlook on business sentiments for the first quarter of 2012-13 as compared to the last quarter of 2010-11. CII Recommendations of Policy Reforms for the overall growth of Gems & Jewellery Industry in India The CII National Committee on Gems & Jewellery has been an essential part of industrys policy advocacy. Some important issues of concern that need policy reforms for the overall growth of the industry include direct import of gold, infrastructure etc. CII News Update Our agenda is to accelerate economic (GDP) growth to 6 6.5 percent this year and to take it to 8.5 9 percent as quickly as possible: S Gopalakrishnan, President CII

The drivers for growth would be reforms and governance, inclusive growth and affirmative action, innovation, entrepreneurship and growth of MSMEs and transformation of sectors: S Gopalakrishnan, President CII India ranks 132nd among 185 countries on the parameter of ease of doing business; this ... CIIs Made in Pakistan back in city to promote people to people connect The 4 day Made in Pakistan Show, organised by Confederation of Indian Industry (CII), opened at Himachal Bhawan, Sector 28, here in Chandigarh on Wednesday and Attracted good crowds, especially women. The Show was formally inaugurated by Mr Anil Kumar, Home Secretary, UT Chandigarh. In the ... Creating public information infrastructure would lead to democratizing information: Sam Pitroda We need to create our own model of development based on affordability, scalability and sustainability: Sam Pitroda India holds tremendous growth potential, we can increase our per capita income through innovations propelled by infrastructure, information technology and inclusive growth: S ... R Mukundan of Tata Chemicals elected Chairman CII Western Region and Chetan Tamboli of Steelcast Limited elected Deputy Chairman CII Western Region Mr R Mukundan is elected as the Chairman of the Confederation of Indian Industry (CII) Western Region for 2013-14. Mr R Mukundan is the Managing Director of Tata Chemicals Limited. He joined Tata Administrative Service in 1990, after completing his MBA from FMS, Delhi University. He is an Engineer ... Continuous Change and Improvement is the key driver for overall growth of an Organisation Dr Kumar Lean Six Sigma A Key Mantra for Business Transformation Continuous Change and

Improvement is the key driver for overall growth of the Organisation said by Dr Krishan Kumar, Former Director, Maruti Centre of Excellence (MACE) in his special address at the 4th Lean Six Sigma Summit ... Mr Ninad Karpe as the new Chairman for CII Maharashtra State Council & Mr Ashwini Malhotra as the Vice Chairman for 2013-14

Mr Ninad Karpe, CEO & Managing Director, Aptech Ltd is elected as the Chairman of CII Maharashtra State Council for the year 2013- 14. He succeeds Mr Satish Jamdar, Managing Director, Blue Star Ltd. Mr Ashwini Malhotra, Managing Director,Weikfield Foods Pvt Ltd was elected the Vice Chairman. ... This Budget is All About the Future Focused on Equality, Innovation, Education and Skilling: Mr R Mukundan, Deputy Chairman CII WR Commenting on the Union Budget at CII's exclusive Session on Budget Impact Analysis in Financial Capital of India in Mumbai today, Mr Arun Nanda, Past Chairman CII WR and Director, Mahindra & Mahindra said, "All the populist schemes announced by the Finance Minister have either a job creation ... Budget Announcements to Provide Particular Benefits to the Western States: Mr Pradeep Bhargava, Chairman, CII WR Commenting on the Union Budget, Mr Pradeep Bharagava, Chairman, CII Western Region said that, This budget has a number of investments that would benefit the states in Western India. Incentives in the areas of industrial corridors, road construction, rural ... A single point plan that the country now needs is Implementation Mr Arun Maira Manufacturing sector growth needs to increase to ~2-4% more than GDP growth for it to become the Growth Engine of the economy Mr Arun Maira Addressing the 11th edition of CIIs Manufacturing Summit on the second day with the theme Re-igniting Indias Quest for Manufacturing Leadership, ... 11th CII Manufacturing Summit 2012 Re-igniting Indias Quest for Manufacturing Leadership Monday Tuesday, 17-18 December 2012, Vivanta by Taj President, Mumbai India is steadily making its presence felt on the global manufacturing front. The recent events surrounding China's decreasing cost competitiveness due to Yuan ... Consulting / Advisory Services Six Sigma Services

Six Sigma approach is being widely used all over the world for reduction in process variation and waste elimination. Total Productive Maintenance (TPM) Total Productive Maintenance, shortly termed as TPM, is the concept originated and developed by Japan Institute of plant Maintenance (JIPM) Tokyo, since late sixties. JIPMTPM is the key for the operational excellence for many Japanese companies. Legal Metrology and Measurement System Legal metrological requirements, relevant to the manufacturing sector, as laid down by way of standards under the Weights and Measures Act, 1976 and the Packaged Commodity Rules, 1977 have assumed critical importance in modern production lines. CII EXIM Bank Award for Business Excellence CII and Export-Import (EXIM) Bank of India jointly established the Award for Business Excellence in 1994 with the aim to enhance the ''Competitiveness of India Inc.'' The Award is based on the EFQM (European Foundation for Quality Management) Model for Excellence. Human Resource Management The key to ensure sustainable Quality up gradation and continuous improvement in an Organization is the willingness of its employees to adapt to changing paradigms. Total Cost Management Increased global competition has forced companies to think aggressively about effective Cost Management. A low cost high quality product has become an object of desire, to gain a competitive edge. It is essential that cost management addresses not just individual activities or cost centres but the e Manufacturing Excellence To gain a competitive edge in todays marketplace, an organization must embrace new ideas and processes and requires constant improvement. Manufacturing Excellence is an imperative tool that leads an organization to the path of competitiveness. The underlying objective of these initiatives is

CII Awards & Recognitions CII-EXIM Bank Award for Business Excellence CII and Export Import Bank of India have, in 1994, jointly established the CII-EXIM Bank Award for Business Excellence, with the aim of enhancing the Competitiveness of India Inc. The Award is based on the internationally recognized EFQM Excellence Model.

India's gems and jewellery industry is a bright star of the economy, and one of the important foundations of the country's export-led growth. The consumption of gold and jewellery products in India has grown rapidly over the years at the rate of 10-15 per cent per annum and today, the domestic Indian market is estimated to be over US$ 30 billion. According to a recent study, India and China are now emerging as one of the leaders in the global jewellery industry in terms of consumption, besides production and trade. The countries jointly would account for over 30 per cent of global diamond market in 2015. India possesses world's most competitive gems and jewellery market due to its low cost of production, highly skilled, low-cost and best artisan force for designing and crafting jewellery, along with strong government support in the form of incentives and establishment of special economic zones (SEZs). Industry Structure Indian gems and jewellery sector is expected to grow at a compound annual growth rate (CAGR) of around 16.26 per cent during the period 2012-13 to 2016-17 on account of increasing government efforts and incentives coupled with private sector initiatives, according to a report of the working group on 'Boosting India's Manufacturing Exports', by Ministry of Commerce & Industry. Shipment of gems and jewellery makes up about 14 percent of India's total exports, and the sector employs about 3.4 million workers, with the Middle East taking most of the market.

Gold Jewellery Gold with its intrinsic luster and ease of fabrication has always been the jewellers' favourite metal. Gold jewellery enjoys the leading position in various markets across the world and forms around 80 per cent of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond and gemstone studded jewellery. Gitanjali Group, the world's largest integrated branded jewellery retailer-manufacturer, plans to set up additional 300 shops in India by the end of current year in order to expand its retail business, as per Mehul Choksi, Chairman and Managing Director, Gitanjali Group. Tanishq, the jewellery wing of Titan Industries Ltd, plans to invest more than Rs 1,000 crore (US$ 184.89 million) to expand its network across the country in 2013-14. Diamonds India has the distinction of being one of the first countries to introduce diamonds to the world. Diamonds manufactured in India constitute 65 per cent by value, 85 per cent by volume and 92 per cent by pieces of the world diamond production, making the country not only the leading global manufacturer but also one of the highest consumers of rough diamonds in the world. The increase in imports of rough diamonds by 12.65 per cent indicates an increase in cutting, polishing and other manufacturing activities in India. Developed by the De Beers group of companies, the diamond brand Forevermark has benefited from more than a century's worth of innovation, creativity as well as technological advances. Today, the brand joins the group in celebrations for 125 years of diamond excellence and expertise. Likely to come into commercial production in 2017, discovery of the Bunder diamond project in 2004 by Rio Tinto, signals a new chapter in an alliance with Rio Tinto presenting a unique opportunity for India to mine, manufacture and market its own diamonds. Once developed the Bunder project is expected to place Madhya Pradesh in the top ten diamond producing regions of the world.

Coloured Gemstones The coloured gemstone sector is a fast growing segment of the Indian gems and jewellery industry. India is a leading source for a spectrum of gemstones, progressing from its traditional concentration on emeralds and Tanzanites to now manufacturing a dazzling array of coloured gemstones. Jaipur is considered as the country's hub for the cutting, polishing, manufacturing and trading of all types of precious and semi-precious gemstones as manufacturers of Jaipur continue to successfully apply modern technology and exceptionally brilliant craftsmanship to produce highest quality gemstones. China and Hong Kong are leading export destinations for the Indian colored gemstones and the global demand for these has been growing consistently over the last five years. The coloured gemstones from India have gained immense international recognition which is clearly demonstrated by the steady growth in exports each year, as per Mr Vipul Shah, Chairman, Gems & Jewellery Export Promotion Council (GJEPC). Export of Gems and Jewellery Indian gems & jewellery industry saw an increase in manufacturing activities indicated by the 33 percent growth in the export of gold jewellery contributing significantly to India's foreign exchange earnings and supported balance of payments. Total gems and jewellery exports for the FY13 stood at Rs 212,638.89 crore (US$ 39.31 billion) as compared to Rs 206,080.09 crore (US$ 38.10 billion) last fiscal. The exports of cut and polished diamonds from India during April 2012-February 2013 stood at Rs 81958.50 crore (US$ 15.15 billion), gold at Rs 90235.98 crore (US$ 16.68 billion), coloured gemstones at Rs 3255.31 crore (US$ 601.77 million) and silver jewellery at Rs 3900.57 crore (US$ 721.05 million), besides others, according to the provisional data released by Gem & Jewellery Export Promotion Council of India (GJEPC). Government Initiatives

The Government of India has allowed 100 per cent foreign direct investment (FDI) in gems and jewellery sector through the automatic route

FDI up to 74 per cent is allowed under the automatic route for exploration and mining of diamonds and precious stones. Further, 100 per cent FDI is allowed for exploration and mining of gold and silver and minerals other than diamonds and precious stones, metallurgy and processing, etc.

In the Union Budget 2013-14, the Government has reduced basic custom duty on preforms of precious and semi-precious stones (other than diamonds) from 10 to 2 per cent

Duty free limit on import of jewellery under the baggage rules increased to Rs 50,000 (US$ 924.28) in case of male passenger and Rs 100,000 (US$ 1,847.9) in case of a female passenger subject to conditions

Foreign Trade Policy (2009-2014) Initiatives The government has announced several measures for the promotion of the gems and jewellery sector in the New Foreign Trade Policy (2009-2014), some of the important ones being:

The number of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days Duty free re-import entitlement for rejected jewellery shall be 2 per cent of free on board (FOB) value of exports

The value limit of personal carriage has been increased from US$ 2 million to US$ 5 million in case of participation in overseas exhibitions. The limit in case of personal carriage as samples for export promotion tours has also been increased from US$ 0.1 million to US$ 1 million

The Gem & Jewellery Export Promotion Council (GJEPC) today announced the

annual performance forthe Indian Gem & Jewellery sector, declaring a contribution of US $ 2,132.82 million to Indias coffers in terms of foreign exchange earnings, up 154 percent as compared to the same period last year. The financial year 2012-13 ended on a positive note with imports of rough diamonds

going up by 12.65 percent indicating an increase in cutting, polishing and other manufacturing activities in India.

The industry also saw an increase in manufacturing activities indicated by the 33

percent growth in the export of gold jewellery contributing significantly to Indias foreign exchange earnings and supported balance of payments.The year also witnessed a significant drop of 61.45 percent in the import of cut and polished diamonds indicating a huge cut in Indias foreign exchange spending, thereby reducing the countrys current account deficit (CAD). Total gem and jewellery exports for the year 2012-13 was US $ 39.033 billion. Commenting on the annual results, Mr. Vipul Shah, Chairman of Gem & Jewellery

Export Promotion Council, said, The results have been quite favorable this year. The industry has strived hard towards reducing Indias current account deficit by controlling imports and increasing exports. The industrys contribution towards Indias exchequer has also seen a staggering rise of 154 percent. Mr. Shah added, At a time when the industry was going through a challenging

period, governmental regulations related to the reintroduction of bonded warehouse facility for diamond exporters and revision in duty drawback rate facility for Gold jewellery exporters has helped strengthen the industry further. The Council also applauds the governments efforts for accepting recommendations of Task Group report to make India an International Trading hub for rough diamonds Commenting on the outlook for 2013-14 Mr. Shah added, The outlook for 2013-14

looks positive with an estimated growth of 12 to 15 percent in the overall gems & jewellery exports in the current fiscal. The US and Japanese jewellery markets will bounce back with an estimated 5 % growth while China will remain stable at 10 % growth. Other proposals in the offing for the year 2013-14 include regulatory measures such as introduction of consignment imports of diamonds,start of rough diamonds tenders and auctions in India, formation of committee for looking into lending norms for banks to the diamond and jewellery sector as well as commissioning of a study on ECIB covers by ECGC to banks. The Gem & Jewellery Export Promotion Council continued with its various initiatives

aimed at promoting international as well as domestic trade in India. Some of the initiatives included India International Jewellery Week (IIJW), India International Jewellery Show (IIJS), India-China Buyer Seller meet, budget recommendations to the Government of India, seminar on synthetic diamonds and regular industry reports. Last month the Council also organized its first business to consumer event, India Gems & Jewellery Fair (IGJF) in New

Delhi in association with ITPO as well as having hosted the India International Jewellery Week (IIJW) in New Delhi. Council in its endeavor for better interaction & understanding between the trade & banks successfully organized Banking Summit in Mumbai in April. Senior Officials from RBI & other leading banks along with Credit Institutions and trade members participated in this symposium.

1.3 COMPANY PROFILE Known for developing and offering the finest jewelry designs, "M/S TAJ ENTERPRISES" are a well established name in the jewellery industry. The company is amongst the leading manufacturers and exporters in its domain. Since its inception in 1995, the company has been supplying an exotic range of Costume & Fashion Jewellery to a number of locations worldwide. We offer an exquisite collection of Fashion Jewelry, Handmade Jewellery, Custom Made Jewellery, High Fashion Jewellery, etc. We have acquired a wide base of customers who appreciate us for our business expertise, superior product quality, innovative designs and swift delivery services. Our products are exported to locations such as USA, Australia and Gulf. We are backed by a team of highly skilled designers and craftsmen. Our designers are efficient at understanding both the expressed and implied needs of our customers and develop products that fully meet the clients' expectations. We Offer We are one of the reputed manufacturers and exporters of a wide spectrum of aesthetically designed jewellery. The jewellery pieces offered by us are made using the finest quality stones and metals. The entire range is designed by our creative designers, who undertake regular market studies to identify new trends and innovative ideas that can be incorporated in our range of jewellery. The jewellery offered by us strikes a harmonious balance between the traditional & contemporary designs and has an universal appeal. Our product range comprises:

Bead Necklace Glass Necklace Metal Necklaces Horn Necklace Decorative Brooches Flower Brooches Pearl Brooches Button Brooches Handcraft Necklace Bone Necklaces Zari Necklace Thread Necklace Wooden Necklaces Fabric Necklaces Fashion Bracelet Silver Beaded Bracelets Silver Stone Bracelet Bone Bracelets Fashion Belts Leather Belts Metal Belt

Kodi Belts Handcrafted Rings Blue Ring Stone Rings Shimmer Rings Metal Rings Stone Metal Rings Stylish Cuffs Brass Cuffs Colorful Cuffs Designer Hand Cuffs Elegant Cuffs Trendy Cuffs Hand Cuffs Earrings Spiral Earring Key Chain Fashion Couch Key Chain Spiral Rings Come With Me Key Chain Loose Beads

Fabric Piping Covered Beads Wax Cord Covered Beads Frayed Yarn Covered Beads Elegance Tassels Stone Tassels Decorative Tassels Yarn Tassels Trendy Door Tassels Beaded Tassels Door Tassels Cushion & Cushion Cover Cushion Cover Flower Brooches Wool Brooches Beaded Brooches Fashion Brooches Lace Brooches Metal Brooches Bouncy Bows Fancy Brooches

Quality Standards

We are a quality conscious entity and have adopted a stringent quality policy to guide our operations. The material used for fabricating our range of jewelry are sourced from reliable and well known vendors. All the processes have been well integrated to achieve swiftness and time effectiveness in our operations. Our team of well experienced designers and craftsmen are apt in developing products that are high on aesthetics. Each process is well monitored by our quality inspectors, who ensure that the products are manufactured as per given specifications. The final products are tested on different quality parameters to assure optimum quality to the customers. Production Facilities We have been designing, manufacturing and exporting a wide collection of attractive jewelry. Our well equipped manufacturing unit facilitates efficient and timely production. Latest technology machines such as sawing machine, casting machine, molding machine, jewelry polishing machine, etc. have been installed at our facility and are operated by well trained personnel. We are also backed by a strong power backup system that ensures smooth production at the time of power failure. Our diligent team consists of designers, quality inspectors and craftsmen, who work in close coordination to complete all the orders on time. Our USP With a proven expertise of more than a decade, M/s Taj Enterprises have acquired a prominent position in the market. Following are some of the factors that have led to our immense popularity: Products are developed by using fabrics and are handmade. Complete in house solutions Wide Range Exotic collection of designer jewellery High quality standards Dexterous team of professionals Timely delivery of products

Wide network of distributors Customer oriented approach We Deliver To We are a well known manufacturer and exporter of Fashion Jewelry, Handmade Jewellery, Custom Made Jewellery, High Fashion Jewellery therefore we deliver our products all over India and to London & Spain. The Gem & Jewellery Export Promotion Council (GJEPC) today announced the annual performance forthe Indian Gem & Jewellery sector, declaring a contribution of US $ 2,132.82 million to Indias coffers in terms of foreign exchange earnings, up 154 percent as compared to the same period last year.

The financial year 2012-13 ended on a positive note with imports of rough diamonds going up by 12.65 percent indicating an increase in cutting, polishing and other manufacturing activities in India. The industry also saw an increase in manufacturing activities indicated by the 33 percent growth in the export of gold jewellery contributing significantly to Indias foreign exchange earnings and supported balance of payments.The year also witnessed a significant drop of 61.45 percent in the import of cut and polished diamonds indicating a huge cut in Indias foreign exchange spending, thereby reducing the countrys current account deficit (CAD). Total gem and jewellery exports for the year 2012-13 was US $ 39.033 billion. Commenting on the annual results, Mr. Vipul Shah, Chairman of Gem & Jewellery Export Promotion Council, said, The results have been quite favorable this year. The industry has strived hard towards reducing Indias current account deficit by controlling imports and increasing exports. The industrys contribution towards Indias exchequer has also seen a staggering rise of 154 percent. Mr. Shah added, At a time when the industry was going through a challenging period, governmental regulations related to the reintroduction of bonded warehouse facility for diamond exporters and revision in duty drawback rate facility for Gold jewellery exporters has helped strengthen the industry further. The Council also applauds the governments

efforts for accepting recommendations of Task Group report to make India an International Trading hub for rough diamonds Commenting on the outlook for 2013-14 Mr. Shah added, The outlook for 2013-14 looks positive with an estimated growth of 12 to 15 percent in the overall gems & jewellery exports in the current fiscal. The US and Japanese jewellery markets will bounce back with an estimated 5 % growth while China will remain stable at 10 % growth. Other proposals in the offing for the year 2013-14 include regulatory measures such as introduction of consignment imports of diamonds,start of rough diamonds tenders and auctions in India, formation of committee for looking into lending norms for banks to the diamond and jewellery sector as well as commissioning of a study on ECIB covers by ECGC to banks. The Gem & Jewellery Export Promotion Council continued with its various initiatives aimed at promoting international as well as domestic trade in India. Some of the initiatives included India International Jewellery Week (IIJW), India International Jewellery Show (IIJS), IndiaChina Buyer Seller meet, budget recommendations to the Government of India, seminar on synthetic diamonds and regular industry reports. Last month the Council also organized its first business to consumer event, India Gems & Jewellery Fair (IGJF) in New Delhi in association with ITPO as well as having hosted the India International Jewellery Week (IIJW) in New Delhi. Council in its endeavor for better interaction & understanding between the trade & banks successfully organized Banking Summit in Mumbai in April. Senior Officials from RBI & other leading banks along with Credit Institutions and trade members participated in this symposium.

2.1 NEED FOR THE STUDY

The theoretical background would not be useful for any one unless it is done practically. So the importance of any project is to gain practical exposure and proper insight in the topic under study.

The study is on internal financing pattern of the working capital management. Which deals with determining size of working capital needs to achieve certain long term operation goals. Therefore an analysis is to be made to know the reasons & find out the measures to be made to know the reasons & find out the measures to be taken to make it more successful.

The study helps to know a liquidity, solvency, profitability and turnover position of the company. It also helps to analyze the various elements and components of working capital. It helps to find out the changes in working capital.

2.2 SCOPE FOR THE STUDY

Working capital is the money used to make goods and attract sales. The less Working Capital used to attract sales, the higher is likely to be the return on investment. Working capital management is not an end in itself. It is an integral part of the departments overall management. In further needs of efficient working capital management must be considered in relation to other aspects of the departments financial and non-financial performance. It is often advantageous for the firm to invest in invest in short-term assets and to finance with short-term liabilities. The firm is faced with uncertainty regarding the level of its future cash flows and will incur substantial costs if it has insufficient cash to meet expenses. It addition to its use as a means of handling uncertainty, the management of working capital pays an important role in maintaining the financial health of the firm during the normal course of business.

2.3 OBJECTIVES OF THE STUDY

To analyze the effective utilization of working capital in Taj Enterprises. To know the changes in working capital management in Taj Enterprises. To determine liquidity and profitability position of the company by using suitable Financial ratios. To assess the working capital position of the Taj Enterprises. To study the liquidity position of the company. To know the overall financial positions the Taj Enterprises

2.4 RESEARCH METHODOLOGY

METHOD OF DATA COLLECTION The task of data collection begins after a research problem as been defined and research design chalked out. While deciding about to the method of data collection to be used for the study. These are mainly two sources of data available for the researcher. They are primary data and secondary data. The primary data are those which are collected a fresh 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 though the statistical process. This study is generally based on the secondary data. Which was obtained from the published sources i.e, annual reports of Taj Enterprises for a period of five years from 2008-09 to 2012-13.

2.5 LIMITATIONS OF THE STUDY

 The study is not completely generalized because limited rations are calculated only based on the financial information given by the company. The interpretation of rations is only based on the assumptions of the researcher due to lack of fixed standards or rules of thumb. The rations calculated my also suffer from the inherent weakness of accounting data provided by the company. The study was limited to only five years. The study is purely based on secondary data which were taken primarily from published annual reports of Taj Enterprises

Table - 3.1 In Crores Statement of Changes in Working Capital for the Year 2008-2009 Particulars As on 31-3As on 31-3Effect on Working Capital 2008 2009 Increase Decrease CURRENT ASSETS Inventories Sundry debtors Cash & Bank balance Loans and Advances (A)Total Current Assets CURRENT LIABILITIES Current Liabilities Provisions (B)Total Liabilities Current 26.71 0.47 27.18 26.57 1.24 27.81 0.14 0.77 3.58 13.5 0.59 13.5 31.17 2.88 23.05 1.05 12.67 39.65 9.55 0.46 0.83 0.7

(A)-(B) Net Working Capital Increase in Working Capital TOTAL

3.99 7.85 11.84

11.84 9.24 11.84 10.01 10.01

Interpretation: The working capital is increased in 2008-09 i.e Rs.7.85 Crores compared to 2007-08.

This is because There is decrease in current assets such as Inventories by Rs 0.7 Crores, Loans and Advances by Rs 0.83 Crores, and Increased Sundry debtors by Rs 9.55 Crores, Cash & Bank balance by Rs 0.46 Crores. There is increased in current liabilities such as Current liabilities by Rs 0.14 Crores and Decreased Provisions by Rs 0.77 Crores.

Table - 3.2

In Crores

Statement of Changes in Working Capital for the Year 2009-2010 Particulars As on 31-3As on 31-3-2010 Effect on Working Capital 2009 Increase Decrease CURRENT ASSETS Inventories Sundry debtors Cash & Bank balance Loans and Advances (A)Total Current Assets CURRENT LIABILITIES Current Liabilities Provisions (B)Total Liabilities (A)-(B) Capital Increase Capital Net in TOTAL Current 26.57 1.24 27.81 25.30 1.35 26.65 1.27 0.11 2.88 23.05 1.05 12.67 39.65 1.9 23.92 1.93 10.92 38.67 0.87 0.88 1.75 0.98

Working 11.84 Working 0.18 12.02 12.02 1.75 0.66 1.75 12.02

Interpretation: The working capital is increased in 2009-10 i.e Rs.0.18 Crores compared to 2008-09.

This is because There is decrease in current assets such as Inventories by Rs 0.98 Crores, Loans and Advances by Rs 1.75 Crores and Increased Sundry debtors by Rs 0.87 Crores, Cash & Bank balance by Rs 0.88 Crores. There is increased in current liabilities such as Current liabilities by Rs 1.27 Crores and Decreased Provisions by Rs 0.11 Crores.

Table - 3.3

In Crores

Statement of Changes in Working Capital for the Year 2010-2011 Particulars As on 31-3As on 31-3-2011 Effect on Working Capital 2010 Increase Decrease CURRENT ASSETS Inventories Sundry debtors Cash & Bank balance Loans and Advances (A)Total Current Assets CURRENT LIABILITIES Current Liabilities Provisions (B)Total Liabilities (A)-(B) Capital Increase Capital Net in TOTAL Current 25.30 1.35 26.65 27.03 1.38 28.41 1.73 0.03 1.9 23.92 1.93 10.92 38.67 1.67 24.53 3.11 11.21 40.52 0.61 1.18 0.29 0.23

Working 12.02 Working 0.09 12.11 12.11 1.79 0.03 1.79 12.11

Interpretation: The working capital is increased in 2010-11 i.e Rs.0.09 Crores compared to 2009-10. This is because

There is decrease in current assets such as Inventories by Rs 0.23 Crores and Increased Sundry debtors by Rs 0.87 Crores, Cash & Bank balance by Rs 0.88 Crores, Loans and Advances by Rs 1.75 Crores. There is Decreased in current liabilities such as Current liabilities by Rs 1.73 Crores and Provisions by Rs 0.03 Crores.

Table - 3.4

In Crores

Statement of Changes in Working Capital for the Year 2011-2012 Particulars As on 31-3As on 31-3-2012 Effect on Working Capital 2011 Increase Decrease CURRENT ASSETS Inventories Sundry debtors Cash & Bank balance Loans and Advances (A)Total Current Assets CURRENT LIABILITIES Current Liabilities Provisions (B)Total Liabilities (A)-(B) Capital Increase Capital Net in TOTAL Current 27.03 1.38 28.41 31.36 1.59 32.95 4.33 0.21 1.67 24.53 3.11 11.21 40.52 3.68 26.74 3.85 11.88 46.15 2.01 2.21 0.74 0.67

Working 12.11 Working 1.09 13.20 13.20 5.63 1.09 5.63 13.20

Interpretation: The working capital is increased in 2011-12 i.e Rs.1.09 Crores compared to 2010-11. This is because

There is Increase in current assets such as Inventories by Rs 2.01 Crores, Sundry debtors by Rs 2.21 Crores, Cash & Bank balance by Rs 0.74 Crores, Loans and Advances by Rs 0.67 Crores. There is decreased in current liabilities such as Current liabilities by Rs 4.33 Crores and Provisions by Rs 0.21 Crores.

Table - 3.5

In Crores

Statement of Changes in Working Capital for the Year 2012-2013 Particulars As on 31-3As on 31-3-2013 Effect on Working Capital 2012 Increase Decrease CURRENT ASSETS Inventories Sundry debtors Cash & Bank balance Loans and Advances (A)Total Current Assets CURRENT LIABILITIES Current Liabilities Provisions (B)Total Liabilities (A)-(B) Capital Increase Capital Net in TOTAL Current 31.36 1.59 32.95 32.08 1.67 33.75 0.72 0.08 3.68 26.74 3.85 11.88 46.15 3.23 22.51 3.11 18.69 47.54 6.81 0.45 4.23 0.74

Working 13.20 Working 0.59 13.79 13.79 6.81 1.04 6.81 13.79

Interpretation: The working capital is increased in 2012-13 i.e Rs.0.59 Crores compared to 2011-12.

This is because There is Decrease in current assets such as Inventories by Rs 0.45 Crores, Sundry debtors by Rs 4.23 Crores, Cash & Bank balance by Rs 0.74 Crores, and Increased Loans and Advances by Rs 6.81 Crores. There is decreased in current liabilities such as Current liabilities by Rs 0.72 Crores and Provisions by Rs 0.08 Crores.

Table - 3.6 Current assets Current Ratio =-------------------------Current Liabilities Current Liabilities 27.81 26.65 28.41 32.95 33.75

Years 2008-09 2009-10 2010-11 2011-12 2012-13

Current assets 39.65 38.67 40.52 46.15 47.54

Ratio 1.43 1.45 1.43 1.40 1.41

Graph 3.1

Interpretation: The current ratio is showing increasing and decreasing trend in all years, i.e 1.43, 1.45, 1.43, 1.40 and 1.41. It is in the above the standard ratio.

Table - 3.7

Quick Assets (Current Assets Inventory) Quick Ratio = ----------------------------------------------------------Current Liabilities Current Liabilities 34.47 63.47 75.73 55.25 122.52

Years 2008-09 2009-10 2010-11 2011-12 2012-13

Quick Assets 36.77 36.77 38.85 42.47 44.31

Ratio 1.07 0.58 0.51 0.77 0.36

Graph 3.2

Interpretation: The quick ratio is showing down word trend in 2008-2013, i.e 1.07, 0.58, 0.51, 0.77 and 0.36.

Table - 3.8 Gross Profit Gross Profit Ratio = -----------------------------------Net Sales

Years 2008-09 2009-10 2010-11 2011-12 2012-13

Grass Profit 58.64 69 51.91 62.02 37.02

Net Sales 65.88 81.4 60.54 69.52 44.64

Ratio 0.89 0.85 0.86 0.89 0.83

Graph 3.3

Interpretation: Gross profit ratio is showing decreasing trend in 2008-10, i.e 0.89, 0.85 and it is increased in 2010-12, i.e 0.86,0.89 and again it is decreasd in 2012-13, i.e 0.83.

Table - 3.9

Profit before Interest, Tax & Dividend Return on Investment (ROI) =--------------------------------------------------Capital Employed

Years 2008-09 2009-10 2010-11 2011-12 2012-13

PBIT 0.48 0.86 0.23 -0.33 0.46

Capital Employed 6 6 6 6 6

Ratio 0.08 0.14 0.04 -0.06 0.08

Graph 3.4

Interpretation: Return on investment ratio is showing increasing trend in 2008-10, i.e 0.08, 0.14 and it is decreased in 2010-12, i.e 0.04, -0.06 and again it is increasd in 2012-13, i.e 0.08.

Table - 3.10 Net Sales Capital Turnover Ratio =----------------------------------Capital Employed Capi tal Employed 6 6 6 6 6

Years 2008-09 2009-10 2010-11 2011-12 2012-13

Net Sales 65.88 81.4 60.54 69.52 44.64

Ratio 10.98 13.57 10.09 11.59 7.44

Graph 3.5

Interpretation: Capital turnover ratio is showing increasing trend in 2008-10, i.e 10.98, 13.57 and it is decreased in 2010-11, 2012-13 i.e 10.09, 7.44 and it is increasd in 2011-12, i.e 11.59.

4.1 FINDINGS

The working capital is increased in 2008-09 i.e Rs.7.85 Crores compared to 2007-08. The working capital is increased in 2009-10 i.e Rs.0.18 Crores compared to 2008-09. The working capital is increased in 2010-11 i.e Rs.0.09 Crores compared to 2009-10. The working capital is increased in 2011-12 i.e Rs.1.09 Crores compared to 2010-11. The working capital is increased in 2012-13 i.e Rs.0.59 Crores compared to 2011-12. The current ratio is showing increasing and decreasing trend in all years, i.e 1.43, 1.45, 1.43, 1.40 and 1.41. It is in the above the standard ratio. The quick ratio is showing down word trend in 2008-2013, i.e 1.07, 0.58, 0.51, 0.77 and 0.36.

 Gross profit ratio is showing decreasing trend in 2008-10, i.e 0.89, 0.85 and it is increased in 2010-12, i.e 0.86,0.89 and again it is decreasd in 2012-13, i.e 0.83. Return on investment ratio is showing increasing trend in 2008-10, i.e 0.08, 0.14 and it is decreased in 2010-12, i.e 0.04, -0.06 and again it is increasd in 2012-13, i.e 0.08. Capital turnover ratio is showing increasing trend in 2008-10, i.e 10.98, 13.57 and it is decreased in 2010-11, 2012-13 i.e 10.09, 7.44 and it is increasd in 2011-12, i.e 11.59.

4.2 SUGGESTIONS

The company should improve the profit ratio. It study shown that profitability position of the company was found to be unhealthy during the period of study. The company was facing problem with over capital. It is better to go for Investment in other sources to get more income. Improve the Net profit ratio by increase the net sales.

4.3 CONCLUSION

The study has come to conclusion that the liquidity position of the Taj Enterprises was termed to be satisfactory during the period of study. It can be clearly observed from the study that the quick assets position of the company was not healthy during study period as the super quick ratio of the company was lower than the ideal ratio of 05:1. This study also reveals that the company has adopted conservative current assets policy for meeting its working capital needs effectively. The study reveals that the relationship between liquidity and profitability of the company was negatively correlated during the period of study.

BIBLIOGRAPHY

Advanced Accountancy volume 1, Sultan Chand & Sons Publishers R.L.GUPTA & M. RADHA SWAMY Advanced Accountancy volume 2, Sultan Chand & Sons Publishers R.L.GUPTA & M. RADHA SWAMY Financial Management, Tata McGraw Hill Publishing Company Ltd. M.Y. KHAN & P.K.JAIN Financial Management, Vikas Publishing House Pvt. Ltd. M.Y. KHAN & P.K. JAIN

 Financial Management, Tata McGraw Hill publishing Company Ltd. PRASANNA CHANDRA