Académique Documents
Professionnel Documents
Culture Documents
ON
WORKING CAPITAL MANAGEMENT OF RIL & CUSTOMER PREFERENCE
TOWARDS RELIANCE COMMUNICATIONS
Submitted In Partial Fulfillment Of The Requirements For The Award Of Degree Of
MASTER OF BUSINESS ADMINISTRATION
(2014-2016)
Submitted by:
ROSHNI SINGH
(ASSISTANT PROFESSOR)
ACKNOWLEDGMENT
Knowledge is an experience gained in life, it is the choicest possession, which should not be
shelved but should be happily shared with others.
No work in this world can be completed successfully if guidance is not provided in the right
direction. In this regard, I express my gratitude to my esteemed mentor, Mrs. AMITA RANI for
her valuable critiques, assistance and encouragement, which enabled me to carry on the project
successfully. I thank her for giving me a wonderful opportunity to work on this project. Her timeto-time guidance and incessant support helped me to broaden my outlook on the project I am
highly obliged for their support throughout the preparation of this project. I would also like to
thank Mr. Deepak Puri for providing company details like Annual Statements and some more
valuable information and guidance. Last but not the least I would also like to thank the
respondents who spared their valuable time to fill the questionnaire.
I would like to thank all for giving their valuable inputs and time.
DECLARATION
This is to state that the Project titled WORKING CAPITAL MANAGEMENT OF RIL &
CUSTOMER PREFERENCE TOWARDS RELIANCE COMMUNICATIONS is based on
the original work carried out by me and is being submitted towards partial fulfillment of the
requirement for the MBA program of the Kanpur institute of technologey. This has been
submitted for the award of any other degree or diploma.
(Roshni Singh)
EXECUTIVE SUMMARY
It gives me an immense pleasure in presenting this final project report on WORKING CAPITAL
MANAGEMENT
OF
RIL
&
CUSTOMER
PREFERENCE
TOWARDS
RELIANCE
Administration (2008-10). This report gives the reader an overview of the concept of working
capital in the simplest language as far as possible. It also gives information on the working
capital management of Reliance Industries Limited and customer preference towards Reliance
Communications.
The result is purely based on a complete survey carried out for the project. Both Primary Data
i.e. by exploratory research, information from residents of sector 8 and 9, Chandigarh and people
coming to recharge dealers in sector 8 and Secondary Data i.e. by annual reports, newspapers,
magazines and scheme brochures. To make the report simpler and easier to understand graphs,
pie- charts, tables and Chi-Square Test are used wherever possible and interpretation of the same
has been given.
Special care has been taken to ensure that this report is free of any printing mistakes but I
apologize if any printing error creeps in. At the end, I hope this report fulfills its purpose by
providing an in-depth knowledge of mutual funds.
CHAPTER NUMBER
CHAPTER 1
INTRODUCTION
CHAPTER 2
CHAPTER 3
RESEARCH METHODOLOGY
CHAPTER 4
CHAPTER 5
FINDINGS
CHAPTER 6
SUGGESTIONS
CHAPTER 7
CONCLUSION
CHAPTER 8
REFERENCES
CHAPTER 9
ANNEXURES
Fixed Capital is that part of which is required for the purchase of fixed assets like Land
and Building , Plant and machinery etc. The fixed capital provides the basic means for the
business to earn its return... But by themselves, these fixed assets would not produce anything. For
instance, to operate the machines, we require men, materials, power, tools, accessories etc. These
factors involve expenses. In addition, we have to maintain certain current assets like stocks, stores,
equipments, etc. All these require enough resources to keep the wheels of the business in motion.
Therefore, in addition to the amount of fixed capital every business whether new or growing
requires Working Capital. Working Capital is that portion of a business concerns total capital,
which is employed in term of operations. Without working capital, fixed capital would be idle and
ineffectual.
A number of definitions have been formulated: perhaps the most widely acceptable would be:
WORKING CAPITAL represents the excess of CURRENT ASSETS over CURRENT
LIABILITIES.
The same may be designated in the following equation:
WORKING CAPITAL= CURRENT ASSETS CURRENT LIABILITIES:
Funds thus invested in current assets keep revolving fast and are being constantly converted in to
cash and this cash flows out again in exchange for other current assets. Thus it is known as
revolving or circulating capital or short term capital.
Investment in current assets and the level of current liabilities have to be geared quickly to
change in sales. To be sure, fixed asset investment and long term financing are responsive
to variation in sales. However, this relationship is not as close and direct as it is in the
b)
Net working capital is the difference between current assets and current liabilities.
Though the later concept of working capital is commonly used it is an accounting concept
with little sense to say that a firm manages its net working capital. What a firm really does is
to take decisions with respect to various current assets and current liabilities. The constituents
of current assets & current liabilities are shown in table A.
TABLE A:
Constituents of Current Assets and Current Liabilities
PART A: CURRENT ASSETS
Trade Debtors.
Investments.
Sundry Creditors.
Trade Advances.
Borrowings.
Provisions.
assets is called permanent or fixed working capital as their part of working capital is permanently
blocked in current assets. With the growth of business there is an increase in current assets.
Temporary or Variable Working Capital:
Temporary or Variable Working Capital is the amount of working capital that is required to meet
the seasonal demands and some special exigencies. Variable working capital can be further
classified as:a) Seasonal Working Capital.
b) Special Working Capital.
Most of the enterprises have to provide additional working capital to meet the special and seasonal
needs. The capital required to meet the seasonal needs of enterprise is called Seasonal working
capital. Special working capital is the part of working capital which is required to meet the
special exigencies such as part of working capital which is required to meet special exigencies
such as launching of extensive marketing campaigns for conducting research etc. is called Special
working capital.
and prepaid basis. But trading concerns (merchandising companies) make a greater use of working
capital, since inventory represents a major item of investment. A relatively small proportion will
consist of working capital in case of manufacturing concerns. Larger working capital will require
in labor intensive industries than in highly mechanized industries. In chemical or engineering
industries, working capital would be relatively larger.
Size of Business :
The working capital requirements of a concern are directly influenced by the size of the business
which may be measured in terms of scale of operations. Greater the size of a business unit
generally larger will be the requirement of working capital. However, in some cases even a
smaller
concern
may
need more
working capital
due to high
overhead charges
Insufficient use of available resources and other economic disadvantages of small size.
Production Policy :
In certain industries the demand is subject to wide fluctuation due to seasonal variation. The
requirement of working capital, in such cases depends upon the production policy. The production
could be kept either steady by accumulating inventories during slack period with a view to meet
high demand during the peak season or the production could be curtailed during the slack season
and increased during peak season. If the policy is to keep production steady by accumulation
inventories it will require higher working capital. A company should have some production policy
i.e. to maintain the production is a considerable range in order to meet the changing demand. A
company like RIL whose productive capacities can be utilized for manufacturing varied products
can have the advantages of diversified activities and solve their working capital problem.
Manufacturing Process/ Length of the production cycle :
In manufacturing business, the requirements of working capital increase in direct proportion to
length of manufacturing process, longer the process period of manufacture, longer is the amount
of working capital required. The longer the manufacturing time, the raw materials and other
supplies have to be carried for a longer period in the process with progressive increment of labor
and service costs before the finished product is finally obtained. Therefore, if there is alternative
process of production, the process with the shortest production period should be chosen.
capital due to increase in sales, rise in prices, optimistic expansion of business etc. On the country
at the time of depression i.e. when there is a down swing of the cycle, business contracts, sales
decline, difficulties are faced in collections from debtors and firms may have a large amount of
working capital lying ideal
Rate of Growth Of business :
The working capital requirements of a concern increase with the growth and expansion of its
business activities. Although it is difficult to determine the relation between growth in the volume
of the business and in the growth of the working capital of the business, yet it may be concluded
that for normal rate of expansion in the volume of the business, we may have retained profits to
provide for more working capital but in the first growing concerns, we shall require larger amount
of capital.
Earning Capacity And Dividend policy :
Some firms have more earning capacity than others due to the quality of their products, monopoly
conditions etc. Such firms with high earning capacity may generate cash profits from operations
and contribute to their capital. The dividend policy of a concern also influences the requirements
of the working capital. A firm that maintains steady high rate of cash dividend irrespective of its
generation of profits needs more capital than the firm retains larger part of its profits and does not
pay high rate of cash dividend.
Price Level Changes :
Changes in the prices level also effects the working capital requirements. Generally the rising
prices will require the firm to maintain larger amount of working capital as more funds will
require maintaining the same current assets. The effect of rising prices may be different for
different firms. Some firms may be affected much while some other may not be affected at all by
the rise in prices.
Other Factors :
Certain other factors such as operating efficiency, management ability, irregularities a supply,
import policy, asset structure, importance of labor, banking facilities etc. also influences the
requirement of working capital.
FINANCING OF WORKING CAPITAL
The working capital requirements of a business concern can be classified as:a)
b)
In concern, a part of working capital investments are as permanent investment in fixed assets. This
is so because there always a minimum level of current assets which are continuously required by
the enterprise to carry out its day-to-day business operations and this minimum cannot be
expected to reduce at any time. This minimum level of current assets gives rise to permanent or
fixed working capital as this part of working capital is permanently blocked in current assets.
Similarly some amount of working capital may be required to meet the seasonal demands and
some special exigencies such as rise in prices, strikes etc. this proportion of working capital gives
rise to temporary or variable working capital which cannot be permanently employed gainfully in
business.
The fixed proportion of working capital should be generally financed from the fixed capital
sources while the temporary or variable working capital requirements of a concern may be met
from the short term sources of capital. The various sources for the financing of working capital
are:PERMANENT OR FIXED SOURCES OF WORKING CAPITAL
1) Shares
2) Debentures
3) Public Deposits
4) Ploughing back of profits
5) Loans from financial institutions
TEMPORARY OR VARIABLE SOURSES OF WORKING CAPITAL
1) Commercial banks
2) Indigenous bankers
3) Trade creditors
4) Installment credit
5) Advances
6) Accounts receivable- credit/factoring
7) Accrued expenses
8) Commercial paper
Commercial banks are the most important sources of short term capital. The major portions of
working capital loans are provided by commercial banks. They provide of wide variety of loans
tailored to meet the specific requirements of a concern. The different forms in which the banks
normally provide loans and advances are as follows:a) Loans
b) Cash credits
c) Overdrafts
d) Purchasing and discounting of bills
In addition to the above mentioned forms of direct finance, commercial banks help their
customers in obtaining credit form their suppliers through the letter of credit arrangements.
It is always a test to the prudence of a financial manager to obtain the correct amount of working
capital at the right time, at a reasonable cost and at the most favorable terms.
MANAGEMENT OF INVENTORY
MANAGEMENT OF CASH
MANAGEMENT OF RECEIVABLES
MANAGEMENT OF INVENTORY
Inventories constitute the most significant part of current assets of a large majority of companies
in India. On an average, inventories are approximately 60 % of current assets in public limited
companies in India.
Because of the large size of inventories maintained by firms maintained by firms, a considerable
amount of funds is required to be committed to them. It is, therefore very necessary to manage
inventories efficiently and effectively in order to avoid unnecessary investments. A firm
neglecting a firm the management of inventories will be jeopardizing its long run profitability
and may fail ultimately.
The purpose of inventory management is to ensure availability of materials in sufficient quantity
as and when required and also to minimize investment in inventories at considerable degrees,
without any adverse effect on production and sales, by using simple inventory planning and
control techniques.
MANAGEMENT OF CASH
Cash is the important current asset for the operation of the business. Cash is the basic input needed
to keep the business running in the continuous basis, it is also the ultimate output expected to be
realized
The firm should keep sufficient cash neither more nor less. Cash shortage will disrupt the firms
manufacturing operations while excessive cash will simply remain ideal without contributing
anything towards the firms profitability. Thus a major function of the financial manager is to
maintain a sound cash position.
Cash is the money, which a firm can disburse immediately without any restriction. The term cash
includes coins, currency and cheques held by the firm and balances in its bank account.
Sometimes near cash items such as marketing securities or bank term deposits are also included in
cash. Generally when a firm has excess cash, it invests it is marketable securities. This kind of
investment contributes some profit to the firm.
NEEDTO HOLD CASH
The firms need to hold cash may be attributed to the following three motives:The Transaction Motive: The transaction motive requires a firm to hold cash to conduct its
business in the ordinary course. The firm needs cash primarily to make payments for purchases,
wages and salaries, other operating expenses, taxes, dividends, etc.
The Precautionary Motive: A firm is required to keep cash for meeting various contingencies.
Though cash inflows and outflows are anticipated but there may be variations in these estimates.
For example a debtor who pays after 7 days may inform of his inability to pay, on the other hand a
supplier who used to give credit for 15 days may not have the stock to supply or he may not be in
opposition to give credit at present.
Speculative Motive: - The speculative motive relates to the holding of cash for investing in profit
making opportunities as and when they arise.
The opportunities to make profit changes. The firm will hold cash, when it is expected that interest
rates will rise and security price will fall.
MANAGEMENT OF RECEIVABLE
A sound managerial control requires proper management of liquid assets and inventory. These
assets are a part of working capital of the business. An efficient use of financial resources is
necessary to avoid financial distress. Receivables result from credit sales. A concern is required to
allow credit sales in order to expand its sales volume. It is not always possible to sell goods on
cash basis only. Sometimes other concern in that line might have established a practice of selling
goods on credit basis. Under these circumstances, it is not possible to avoid credit sales without
adversely affecting sales. The increase in sales is also essential to increases profitability. After a
certain level of sales the increase in sales will not proportionately increase production costs. The
increase in sales will bring in more profits. Thus, receivables constitute a significant portion of
current assets of a firm. But for investment in receivables, a firm has to insure certain costs.
Further, there is a risk of bad debts also. It is therefore, very necessary to have a proper control
and management of receivables.
Operating cycle
Operating cycle refers to the time duration required to convert sales ,after the conversion of
recourses into inventories, into cash .the operating cycle of a manufacturing company like RIL
includes:
1.) Acquisition of resources such as raw materials, labor, power and fuel etc.
2.) Manufacture of the product which includes conversion of materials into work-in-progress into
finished goods.
3.) Sale of the product either for cash or on credit. Credit sales create account receivables for
collection.
INDIAN OVERVIEW
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. The reform measures coupled with the proactive policies of the
Department of Telecommunications have resulted in an unprecedented growth of the telecom
sector.
The thrust areas presently are:
1. Building a modern and efficient infrastructure ensuring greater competitive environment.
2. With equal opportunities and level playing field for all stakeholders.
3. Strengthening research and development for manufacturing, value added services.
4. Efficient and transparent spectrum management
Indian Telecom sector, like any other industrial sector in the country, has gone through many
phases of growth and diversification. Starting from telegraphic and telephonic systems in the
19th century, the field of telephonic communication has now expanded to make use of advanced
technologies like GSM, CDMA, and WLL to the great 3G Technology in mobile phones. Day by
day, both the Public Players and the Private Players are putting in their resources and efforts to
improve the telecommunication technology so as to give the maximum to their customers.
HISTORY OF IPCL
2002 ONWARDS-RELIANCE ACQISITION
The government of India handled over management control to Reliance group on June 4, 2002,
since then the company is being managed by reliance. The new management team has reendorsed the companys mission to create value for all stakeholders. All over efforts are being
made to enhance productivity and control cost for superior value addition.
The physical and cultural integration began from the word go, both IPCL and Reliance started
adopting Best Practices from each other. This led to optimal utilization of available resources
for enhancing productivity. The profit for the first financial year(2002-03) under the reliance
management stood at INR 2.04 billion, 90% jump over the previous years profit of INR 1.07
billion.
Commenting on the results for 2002-2003, Mr. Mukesh Ambani, Chairman, said we are
delighted with the complete turnaround in IPCLs performance in the very first year of
acquisition by reliance. The successful absorption of Reliances best practice by IPCL in all
areas of operations, and positive impact of measures introduced for cost reduction and
productivity and efficiency gains. We have great confidence in the capabilities of IPCL and its
people, and are confident of further improvement in the companys performance in the future.
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.
HIGHLIGHTS(2008-09)
Turnover
PBDIT
Cash Profit
Net Profit
25 %
Total Assets
COMPANY LOGOS
This decision of the government, Every thing under one roof inspired
the second logo of IPCL. IPCL took up the challenge of setting up the entire integrated complex
at Vadodara.
The government of India handled over management control to Reliance group on June 4, 2002,
since then the company is being managed by reliance.
RIL MILESTONE
YEAR
EVENTS
1969
1970
1973
1992
1992
1996
1999
2000
2002
2004
2005
2006
2007
2008
2009
petrochemical plants.
RPL merged with RIL Ltd : value creation through scale & synergies.
Environmental protection is an integral part of the planning, design, construction, operation and
maintenance of all our projects.
Growth is betting on our people
Reliance builds with care a workplace that proactively fosters professional as well as personal
growth. There is freedom to explore and learn; and there are opportunities that inspire initiative
and intrinsic motivation. We believe that people must dream to achieve, that these dreams will
drive the company's excellence in all its businesses. Reliance thinks, behaves, lives and thrives
with a global mindset, encouraging every employee to reach his / her full potential by availing
opportunities that arise across the group.
Growth is thinking beyond business
As corporate citizens, we invest in social infrastructure, believing strongly that our business
strength fuels our social contributions. To this end, Reliance encourages, funds and develops
numerous education, health, human capital and infrastructure initiatives. These initiatives are
undertaken through partnerships with non-governmental organizations, corporate and trusts.
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:
"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.
"Dreams and Vision are the most potent fuels in the world." - This is an unmistakable
Reliance hallmark espoused both by the founder Chairman Sh. Dhirubhai Ambani and the
current Chairman Sh. Mukesh Ambani. To a question on what would be his next big
ambition Sh. Mukesh Ambani answered
"Rural transformation. - Creating direct employment for half a million people in rural
India. Creating a supply chain that the world will envy."
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.
The leadership of RIL recognizes that its biggest competitive advantage and differentiator in the
future would be innovation. Innovation has to become the language, the behaviour definer, the
culture and the soul of Reliance, even more explicitly than ever before.
The Late Dhirubhai Ambani dreamt of a digital India an India where the common man would
have access to affordable means of information and communication. Dhirubhai, who singlehandedly built Indias largest private sector company virtually from scratch, had stated as early
as 1999: Make the tools of information and communication available to people at an affordable
cost. They will overcome the handicaps of illiteracy and lack of mobility.
It was with this belief in mind that Reliance Communications (formerly Reliance Infocomm)
started laying 60,000 route kilometers of a pan-India fiber optic backbone. This backbone was
commissioned on 28 December 2002, the auspicious occasion of Dhirubhais 70th birthday,
though sadly after his unexpected demise on 6 July 2002.
Reliance Communications has a reliable, high-capacity, integrated (both wireless and wireline)
and convergent (voice, data and video) digital network. It is capable of delivering a range of
services spanning the entire infocomm (information and communication) value chain, including
infrastructure and services for enterprises as well as individuals, applications, and consulting.
Today, Reliance Communications is revolutionizing the way India communicates and networks,
truly bringing about a new way of life.
overall, between level of working capital and operating performance as measured by operating
returns and operating margins (Peterson and Rajan, 1997). Under conditions of certainty (i.e.
sales, costs, lead times, payment periods, and so on, are known), firms have little reason to hold
more working capital than a minimum level. Larger amounts would increase the level of
operating assets, increase the need for external funding, resulting in lower return on assets and a
lower return on equity, without any increase in profit.
However the picture changes when uncertainty (i.e. uncertain growth) is introduced (Brigham
and Houston, 2000). Larger amounts of cash, securities, accounts receivables, marketable
securities, inventories, and fixed assets will be needed to support increased sales Required levels
will be based on expected sales levels and expected order lead times. Additional holdings may be
needed to enable the firm to deal with departures from the expected values. Further, firms will
also attempt to increase their accounts payable balances as a means of financing increased levels
of current operating assets. Firms which are in high growth stages will face the challenge of
maintaining the necessary level of operating assets to support subsequent growth, while at the
same time attempting to maintain adequate performance indicators.
From the above reviews it can be concluded that many researches have been
conducted before relating to the concept of working capital but no researches
have been conducted to study the working capital management of Reliance
Industries Limited. This gap has been fulfilled by this research report which
gives an practical insight into the concept of working capital management.
Internet service providers in India, Rao (2000), provide a broad view of the role of an
Internet service provider (ISP) in a nascent market of India. Building local content,
foreknowledge of new Internet technologies, connecting issues, competitiveness, etc. would
help in their sustainability.
The role of technology in the emergence of the information society in India, Singh
(2005), describes the role that information and communication technologies are playing for
Indian society to educate them formally or informally which is ultimately helping India to
emerge as an information society.
T.H. Chowdary (1999) discusses how Telecom reform, or demonopolization, in India has
been bungled. Shaped by legislation dating back to the colonial era and post Second World
War socialist policies, by the mid-1980s India realized that its poor telecommunications
infrastructure and service needed reform. At the heart of the problem lay the monopoly by the
governments Department of Telecommunications (DOT) in equipment, networks and
services. The National Telecom Policy 1994 spelt out decent objectives for reform but
tragically its implementation was entrusted to the DOT. This created an untenable situation in
which the DOT became policymaker, licenser, regulator, operator and also arbitrator in
disputes between itself and licensed competitors. He discusses the question: Why did India
get it so wrong? and What India should do now?
a real alternative. The article provides a reflexive, critical account of public service
telecommunications in India and suggests that it can be strengthened by learning gained from
the continual renewal of public service ideals and action by the postal services and a peoplebased demand model linked to the Right to Information Movement. All studies done by the
researcher suggests that the right to information movement has contributed to the
revitalization of participatory democracy in India and to a strengthening of public service
telecommunications.
GROWTH IN SEGMENTS
According to a Frost & Sullivan industry analyst, by 2012, fixed line revenues are expected to
touch US$ 12.2 billion while mobile revenues will reach US$ 39.8 billion in India. Fixed line
capex is projected to be US$ 3.2 billion, and mobile capex is likely to touch US$ 9.4 billion.
Further, according to a report by Gartner Inc., India is likely to remain the world's second largest
wireless market after China in terms of mobile connections. According to recent data released by
the COAI, Indian telecom operators added a total of 10.66 million wireless subscribers in
December 2008. Further, the total wireless subscriber base stood at 346.89 million at the end of
December 2008.
The overall cellular services revenue in India is projected to grow at a CAGR of 18 per cent from
2008-2012 to exceed US$ 37 billion. Cellular market penetration will rise to 60.7 per cent from
19.8 per cent in 2007.
The Indian telecommunications industry is on a growth trajectory with the GSM operators
adding a record 9.3 million new subscribers in January 2009, taking the total user base to 267.5
million, according to the data released by COAI. However, this figure does not include the
number of subscribers added by Reliance Telecom.
In WiMax, India is slated to become the largest WiMAX market in the Asia-Pacific by 2013. A
recent study sees India's WiMAX subscriber base hitting 14 million by 2013 and growing
annually at nearly 130 per cent. And investments in WiMAX ventures are slated to top US$ 500
million in India, according to a report by US-based research and consulting firm, Strategy
Analytics.
From the above reviews it can be concluded that many researches have been
conducted before but no researches have been conducted to study the
performance of leading players. This topic had been chosen keeping in mind
the increasing competition in telecom industry and to study the position of
Reliance communications as compared to 4 other top players. This gap has
been fulfilled by this research report which gives a practical insight into the
concept of working capital management.
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:-
CHAPTER: 3(a)
RESEARCH PROBLEM
To know the working capital management of RIL with the help of ratio analysis.
To analyze the market strength of reliance communications.
CHAPTER: 3(b)
CHAPTER 3(c)
OBJECTIVES OF STUDY
Find out Ratios related to working capital management of RIL and compare with last 5
years.
CHAPTER 3(d)
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.
CHAPTER 3(e)
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:
(i)
(ii)
CHAPTER 3(f)
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.
CHAPTER 3(g)
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.
CHAPTER 3(h)
SAMPLE AREA
The sample area was Chandigarh and involved respondents coming to recharge dealers in sector
8 and 9 and the residents of sector 8.
CHAPTER 3(i)
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.
CHAPTER 3(j)
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.
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.
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.
2007 - 08 =
35756.98
23417.51
2006 - 07 =
2005 - 06 =
2004 - 05 =
16865.53
= 1.15:1
12563.50
= 1.38:1
= 1.58:1
13283.95
YEARS
ACID-TEST RATIO
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 favour.
2007 - 08 =
2006 - 07 =
6068.30
Rs. 111692.72
= 29.92:1
Rs. 3732.42
2005 - 06 =
Rs. 81211.33
= 19.50:1
Rs. 4163.62
2004 - 05 =
Rs. 66051.30
Rs. 3927.81
= 16.82:1
YEARS
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 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.
2007 - 08 =
Rs. 108270
= 4.62:1
Rs. 23417.51
2006 - 07 =
Rs. 92301.09
= 5.47:1
Rs. 16835.53
2005 - 06 =
Rs. 69043.43
= 5.49:1
Rs. 12563.50
2004 - 05 =
Rs. 52715.92
= 3.96:1
Rs. 13283.95
YEARS
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.
2008 - 09 =
2007 - 08 =
2006 - 07 =
Rs. 111692.72
= 9.20 times
Rs. 12136.51
2005 - 06 =
Rs. 81211.33
= 8 times
Rs. 10119.82
2004 - 05 =
Rs. 66051.30
= 8.91 times
Rs. 7412.88
YEARS
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.
2007 - 08 =
Rs. 137146.66
= 5.57 times
Rs. 24622.18
2006 - 07 =
Rs. 111692.72
= 9.85 times
Rs. 11334.95
2005 - 06 =
Rs. 81211.33
= 10 times
Rs. 8119.97
2004 - 05 =
Rs. 66051.30
= 5.83 times
Rs. 11320
YEARS
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.
= 11 days
31.21
2007 - 08 = 365 days
= 16.15 days
22.60
2006 - 07 = 365 days
= 12.20 days
29.92
2005 - 06
= 365 days
= 18.71 days
19.50
2004 - 05 = 365 days
= 21.70 days
16.82
YEARS
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.
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
31.21
22.60
29.92
19.50
16.82
3.33
4.62
5.47
5.49
3.96
7.51
7.17
9.20
8.00
8.91
5.57
9.85
10.00
5.83
16.15
12.20
18.71
21.70
11
TABLE 1
CONSUMER PREFERENCE TOWARDS CELL PHONE SERVICE PROVIDERS
S.NO
NUMBER OF
PROVIDER
RESPONDENTS
Reliance Communications
49
Airtel
54
Vodafone
61
Idea
23
Tata Docomo
39
INTERPRETATION:
S.NO
NAME OF THE
SERVICE
UPTO 20 years.
21-30 years
Reliance
NO. OF
% OF
RESPONDENTS RESPONDENT
S
8
32
Communications
Airtel
36
19
30.2
Vodafone
24
21
33.87
Idea
Tata Docomo
1.6
TOTAL
25
100
62
PROVIDER
NO. OF
RESPONDENTS
% OF
RESPONDENTS
21
33.8
100
31-40 years
TOTAL
NO. OF
RESPONDENT
S
% OF
RESPONDENT
S
NO. OF
RESPONDENT
S
% OF
RESPONDENT
S
NO. OF
RESPONDENT
S
% OF
RESPONDEN
TS
16.67
28.57
32
32
33.33
57.14
34
34
50
14.29
31
31
100
100
100
100
INFERENCE:
Among respondents upto 20 years of age group, majority of them (i.e. 36%) are using
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
UNMARRIED
67
67
100
100
TOTAL
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.
32
32
UPTO HIGHER
SENIOR
SECONDARY
GRADUATES
61
61
PROFESSIONALS
OTHERS
100
100
TOTAL
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 CCUPATION
S.NO.
OCCUPATION
NUMBER OF
RESPONDENTS
% OF RESPONDENTS
1.
BUISNESS
12
12
PROFESSIONAL
EMPLYOEE
33
33
HOME MAKER
STUDENT
44
44
OTHERS
100
100
TOTAL
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
COMPOSITION OF RESPONDENTS ON THE BASIS OF FAMILY INCOME
(PER MONTH)
S.NO.
OCCUPATION
NUMBER OF
RESPONDENTS
% OF RESPONDENTS
1.
31
31
45
45
13
13
11
11
100
100
TOTAL
INFERENCE:
45% of respondents are get monthly income of Rs.5,000 Rs.10,000, and 31% of respondents
are get monthly income as less than Rs.5,000. On the other hand, 13% of the respondents get a
monthly income of Rs. 10,000 Rs. 15,000 and 11% get Rs. 10,000 and above.
TABLE 7
TABLE SHOWING SOURCE OF INFORMATION TO SELECT SERVICE
PROVIDERS
S.NO.
OCCUPATION
NUMBER OF
RESPONDENTS
% OF RESPONDENTS
1.
Family Members
40
40
Neighbours
Relations
Friends
37
37
Advertisement
Dealers
Others
100
100
TOTAL
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
For Personal
58
58
100
100
TOTAL
INFERENCE:
42% of respondents are using cell phones for their business, and 58% of respondents are using
cell phones for their personal usage.
TABLE 9
TYPE OF CONNECTION PEFERRED
S.NO SERVICE
PROVIDERS
PREPAID
POST
PAID
TOTAL
NO. OF
RESPONDENTS
21
28
49
Reliance
Communnications
Airtel
51
54
Vodafone
52
61
Idea
37
38
Tata Docomo
24
24
INFERENCE:
Majority of people prefer prepaid connections with Vodafonel at top followed by Airtel, Idea and
Tata Docomo. People prefer postpaid connection of Reliance but substantial but less people
prefer prepais connection for Reliance.
TABLE 10
AWARENESS OF VARIOUS SCHEMES
S.No
VARIOUS
SERVICES
AWARE
NO.OF
RESPON
DENTS
% OF
RESPON
DENTS
UNAWARE
NO.OF
% OF
RESPON
RESPON
DENTS
DENTS
TOTAL
NO.OF
RESPOND
ENTS
% OF
RESPONDEN
TS
1
2
3
4
SCHEME OF
INITIAL
PURCHASE
BALANCE
OF TALK
CHARGES
PERIODICA
L
OFFERS
CALL
WAITING
AND CALL
DIVERTING
OPTION
MODES OF
PAYMENT
61
61
39
39
100
100
63
63
37
37
100
100
58
58
42
42
100
100
61
61
39
39
100
100
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
Brand Image
45
45
Availability
10
10
Credit
Connection
Customer Care Service
17
17
Service Charges
100
100
TOTAL
INFERENCE:
Facility
for 8
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.N
O
1
2
3
4
5
SERVICE
PROVIDER
Reliance
Comunication
s
Airtel
Vodafone
Idea
Tata Docomo
HIGHLY
SATISFACTORY NON
TOTAL
SATISFACTORY
SATISFACTORY
28
12
9
49
30
38
10
14
20
13
5
7
4
10
13
3
54
61
38
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.N
O
SERVICE
PROVIDER
Reliance
Comunication
HIGHLY
SATISFACTOR
Y
31
SATISFACTOR
Y
12
NON
SATISFACTOR
Y
6
TOTAL
49
2
3
4
5
s
Airtel
Vodafone
Idea
Tata Docomo
45
39
9
15
5
12
5
6
4
10
14
3
54
61
38
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: 14
CONSUMERS SATISFACTION LEVEL THE BASIS OF PERIODICAL OFFERS
PROVIDED BY THE SERVICE PROVIDERS
S.N
O
1
SERVICE
PROVIDER
Reliance
Comunication
s
HIGHLY
SATISFACTORY NON
TOTAL
SATISFACTORY
SATISFACTORY
33
12
4
49
2
3
4
5
Airtel
Vodafone
Idea
Tata Docomo
25
42
9
14
12
5
5
7
1
14
14
3
54
61
38
24
INFERENCE:
On the basis of periodical offers 42 of Vodafone respondents followed by 33 of Reliance are
highly satisfied, and only 9 respondents for Idea.
12 respondents are satisfied (average) of Airtels and Reliances periodical offers.
14 respondents of Vodafone and Idea are dissatisfied whereas 4 and 1 respondents are
dissatisfied for Reliance and Airtel respectively.
TABLE NO 15
CONSUMERS ATTITUDE TOWARDS THE IMPORTANCE OF CELL PHONES
CALCULATION OF SATISFACTORY SCORES
S.NO.
NATURE
NUMBER OF
%age OF
1
2
3
TOTAL
Necessity
Status
Luxury
RESPONDENTS
64
25
11
100
RESPONDENTS
64
25
11
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.
CHI-SQUARE TEST
Chi-square test is one of the simplest and most widely used nonparametric tests in statistical
work. This test was first used by Karl Pearson in the year 1900. The quantity describes the
magnitude of the discrepancy between theory and observation. It is a method to test the
relationship between the theoretical (hypothesis) & the observed value.
Chi square test (2) = (O E)2 / E
Degrees Of Freedom = V = (R 1) (C -1)
Were,
O = Observed Frequency
E = Expected Frequency (Emn = total of column m * total of row n)
Total number of frequencies
R = Number of Rows
C = Number of Columns
For all the chi-square test the table value has taken @ 5% level of significance.
Q11 has been used for the chi-square test.
ANALYSIS
ON
THE
RELATIONSHIP BETWEEN
AGE
AND
LEVEL OF SATISFACTION
MODERATE
LOW
22
1
34
13
6
0
4
2
66
16
HIGH
2
15
0
1
18
TOTAL
25
62
6
7
100
O
2
15
0
1
22
34
6
4
1
13
0
2
E
4.50
11.16
1.08
1.26
16.50
40.92
3.96
4.62
4
9.92
0.96
1.12
(O-E)
- 2.50
3.84
- 1.08
- 0.26
5.50
- 6.82
2.04
- 0.62
-3
3.08
- 0.96
0.88
(O-E)2
6.25
14.7
1.16
0.07
30.25
46.5
4.16
0.38
9
9.5
0.92
0.77
(O-E)2/E
1.39
1.32
1.08
0.05
1.83
1.14
1.05
0.08
2.25
0.96
0.96
0.69
Since some expected values are less than 5 we are clubbing 1 st,3rd,4th, 7th, 8th, 9th, 11th and 12th
frequencies:
O
15
16
22
34
13
TOTAL
E
11.16
21.5
16.50
40.92
9.92
(O-E)
3.84
- 5.5
5.5
- 6.82
3.08
(O-E)2
14.7
30.25
30.25
46.5
9.5
(O-E)2/E
1.32
1.341
1.83
1.14
0.96
6.591
2 = (O-E)2 / E = 6.591
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2)= 6
AGE
Married
Unmarried
TOTAL
LEVEL OF SATISFACTION
MODERATE
LOW
26
3
25
13
51
16
HIGH
4
29
33
TOTAL
33
67
100
E
10.89
22.11
16.83
34.17
5.28
10.72
(O-E)
- 6.89
6.89
9.17
- 9.17
- 2.28
2.28
(O-E)2
47.5
47.5
84
84
5.20
5.20
2 = (O-E)2 / E = 15.43
Number of degree of freedom: ndf = (row-1) (column 1) = (1) (2) = 2
Table value of 2 at 5% level of significant = 5.99
(O-E)2/E
4.36
2.15
4.99
2.46
0.98
0.49
15.43
Conclusion:
H1 is accepted since the calculated value of 2 (15.43) more than the table value of 2 (5.99)
hence there is significant relationship between level of satisfaction and marital status.
34
2
0
48
LEVEL OF SATISFACTION
MODERATE
LOW
TOTAL
19
32
23
3
0
45
4
2
0
7
61
7
0
100
E
15.36
20.74
3.36
0
14.40
27.45
3.15
0
2.24
4.27
0.49
0
O
12
E
15.36
(O-E)
- 3.36
(O-E)2
11.29
(O-E)2/E
0.74
34
19
23
12
TOTAL
20.74
14.40
27.45
13.51
13.26
4.60
- 4.45
- 1.51
175.8
21.16
19.80
2.28
8.48
1.47
0.72
0.17
11.58
2 = (O-E)2 / E = 11.58
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2) = 6
Table value of 2 at 5% level of significant = 12.59
Conclusion:
H0 is accepted since the calculated value of 2 (11.58) less than the table value of 2 (12.59)
hence there is significant relationship between level of satisfaction and educational qualification.
QUALIFICATION
BUISNESS
6
LEVEL OF SATISFACTION
MODERATE
LOW
TOTAL
12
PROFESSIONAL
EMPLYOEE
15
15
33
HOME MAKER
STUDENT
35
44
OTHERS
TOTAL
61
30
100
O
6
1
15
3
35
1
5
1
15
4
4
0
1
0
3
1
4
0
MERGING:
E
7.32
1.32
20.13
4.88
26.84
0.61
3.60
0.60
9.90
2.40
13.20
0.30
1.08
0.18
2.97
0.72
3.96
0.09
O
24
6
15
35
15
TOTAL
E
22.63
7.32
20.13
26.84
9.90
(O-E)
1.37
- 1.32
- 5.13
- 13.84
5.10
(O-E)2
1.88
1.74
26.32
191.55
26.01
(O-E)2/E
0.08
0.24
1.31
7.14
2.63
11.40
2= (O-E)2 / E = 11.40
Number of degree of freedom: ndf = (row-1) (column 1) = (5) (2) = 10
Table value of 2 at 5% level of significant = 18.30
Conclusion:
H0 is accepted since the calculated value of 2 (11.40) less than the table value of x2 (18.30)
hence there is no significant relationship between level of satisfaction and occupation.
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
TOTAL
16
13
31
20
45
000
Rs. 10,001 to Rs. 3
13
15,000
Above Rs. 15,000
TOTAL
6
44
3
13
11
100
2
43
H0: There is no significant relationship between monthly income and level of satisfaction.
H1: There is significant relationship between monthly income and level of satisfaction.
O
16
22
3
2
13
20
5
6
2
3
5
3
E
13.33
19.35
5.59
4.73
13.64
19.80
5.72
4.84
4.03
5.85
1.69
1.43
MERGING:
O
18
16
22
3
E
16.72
13.33
19.35
5.59
(O-E)
1.28
2.67
2.65
- 2.59
(O-E)2
1.64
7.13
7.02
6.71
(O-E)2/E
0.10
0.53
0.36
1.20
13
13.64
- 0.64
0.41
20
19.80
0.2
0.04
5
5.72
- 0.72
0.52
3
5.85
- 2.85
8.12
TOTAL
2= (O-E)2 / E = 3.702
Number of degree of freedom: ndf = (row-1) (column 1) = (3) (2) = 6
0.03
0.002
0.09
1.39
3.702
ANALYSIS
ON
THE
RELATIONSHIP
BETWEEN
SERVICE
HIGH
38
LEVEL OF SATISFACTION
MODERATE
LOW
8
TOTAL
49
Communications
Airtel
49
4
1
54
Vodafone
23
35
3
61
Idea
13
7
3
23
Tata Docomo
12
18
9
39
TOTAL
135
72
19
226
(The total number of respondents here is more than 100 because of multiple responses by
respondents.)
O
38
49
23
13
12
8
4
35
7
18
3
1
3
3
9
E
29.27
32.26
36.44
13,74
23.30
15.61
17.20
19.43
7.33
12.42
4.12
4.54
5.13
1.93
3.28
MERGING:
O
16
38
49
23
13
12
8
4
35
7
18
3
1
3
3
9
TOTAL
E
13.87
29.27
32.26
36.44
13.74
23.30
15.61
17.20
19.43
7.33
12.42
4.12
4.54
5.13
1.93
3.28
(O-E)
2.13
8.73
16.74
- 13.44
- 0.74
- 11.3
- 7.61
- 13.20
15.57
- 0.33
5.58
- 1.12
- 3.54
- 2.13
1.07
5.72
(O-E)2
4.53
76.2
280.23
180.63
0.55
127.69
57.91
174.24
242.42
0.11
31.14
1.25
12.53
4.54
1.14
32.72
(O-E)2/E
0.33
2.60
8.69
4.9
0.04
5.48
3.71
10.13
12.48
0.02
2.51
0.30
2.76
0.88
0.59
9.98
65.40
2= (O-E)2 / E = 21.06
Number of degree of freedom: ndf = (row-1) (column 1) = (6) (2) = 12
Table value of 2 at 5% level of significant = 21.06
Conclusion:
H1 is accepted since the calculated value of 2 (65.40) is more than the table value of 2 (21.06)
hence there is significant relationship between level of satisfaction and service provider.
TABLE NO. 5.7
CHI-SQUARE ANALYSIS ON THE RELATIONSHIP BETWEEN USE OF CELL
PHONE AND SATISFACTION
PURPOSE
For Buiness
For Personal
TOTAL
HIGH
16
12
28
LEVEL OF SATISFACTION
MODERATE
LOW
24
2
22
24
46
26
TOTAL
42
58
100
H0: There is no significant relationship between use of cell phone and level of satisfaction.
H1: There is significant relationship between use of cell phone and level of satisfaction.
O
16
12
24
22
2
24
TOTAL
E
11.76
16.24
19.32
26.68
10.92
15.08
(O-E)
4.24
- 4.24
4.68
- 4.68
- 8.92
8.92
(O-E)2
17.98
17.98
21.90
21.90
79.57
79.57
(O-E)2/E
1.11
1.11
0.82
0.82
5.28
5.28
14.42
2= (O-E)2 / E = 14.42
Number of degree of freedom: ndf = (row-1) (column 1) = (1) (2) = 2
Table value of 2 at 5% level of significant = 5.99
Conclusion:
H1 is accepted since the calculated value of 2 (14.42) is more than the table value of 2 (5.99)
hence there is significant relationship between level of satisfaction and use of cell phone.
This chapter is allocated to express the findings of this study. Statistical tools are applied to
analyze the data. It includes the result of each and every tables, charts and tests.
FINDINGS FOR RELIANCE INDUSTRIES LIMITED
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.
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.
Majority of the peoples are using cell phones for personal usage.
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.
FINDINGS FROM CHI-SQUARE TEST
Chi-square test reveals that there is no significant relationship between satisfaction level
and age.
There is significant relationship between the marital status and level of satisfaction.
Chi-square test reveals that there is no significant relationship between occupation and
level of satisfaction.
Chi-square test shows that there is no significant relationship between monthly income
and level of satisfaction.
Chi-square test indicate that there is significant relationship between service provider and
satisfaction level.
There is significant relationship between level of satisfaction and use of cell phone.
OVERALL CONCLUSION:
Since majority of the factors have significant relationship with the satisfaction level we can
conclude that there is significant relationship between the factors and the satisfaction and hence
we accept the alternative hypothesis of the project i.e. H1.
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 should try to increase their after sales services and decrease their dissatisfied
customers by providing good after sales services.
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.
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.
www.ril.com
http://www.ril.com/html/investor/financials.html
http://www.studyfinance.com/lessons/workcap/
http://en.wikipedia.org/wiki/Working_capital
www.rcom.co.in
www.trai.gov.in
http://www.ibef.org/industry/telecommunications.aspx
Financial Management
Financial Management
I.M.Pandey
Research Methodology
C.R.Kothari
QUESTIONNAIRE
I am Roshni singh, a student of KIT, Rooma, kanpur and this questionnaire is a part of my
research on Performance comparison of Midcap Funds. 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
Marital Status :
Married
Unmarried
Educational Qualification
Upto HSC
Graduation
Professional
Occupation :
Business
Professional
Home maker
Student
Employee
Others
Airtel
Vodafone
Tata Docomo
Neighbours
Relations
Advertisement
Dealers
Others
Q3.)
Q4)
For personal
Q5)
Postpaid
If you have postpaid / prepaid connection mention scheme Name & Monthly rental
charges ?
______________________________________________________
Q6) Are you aware of the following details relating in your connection? (Pre / Postpaid
connection)
SCHEME
Scheme of Initial Purchase
Balance of Talk Charges
Periodical Offers
Call Waiting and Call Diverting Option
AWARE
UNAWARE
Modes of Payment
Q7)
SATISFACTORY
SATISFACTORY
NOT
SATISFACTORY
Price
After Sales Service
Periodical Offers
Q9.) 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
Q11.) Rate the service connection you are using on the basis of some factors as follows:
AGE
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
QUALIFICATION
HSC
GRADUATE
PROFESSIONAL
OTHERS
EDUCATIONAL
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
QUALIFICATION
BUISNESS
PROFESSIONAL
EMPLYOEE
HOME MAKER
STUDENT
OTHERS
MONTHLY INCOME
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
HIGH
LEVEL OF SATISFACTION
MODERATE
LOW
UPTO 20 yrs.
21-30 yrs.
31-40 yrs.
40 yrs. and above
Marital Status
Married
Unmarried
EDUCATIONAL
THANKYOU