Kavita SRF Fincine Company FINAL

7/29/2019 Kavita SRF Fincine Company FINAL

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A

PROJECT REPORT

On

WORKING CAPITAL MANAGEMENT

SRF LIMITED, MALANPUR GWALIOR

FOR THE PARTIAL FULFILLMENT OF BACHELOR OF BUSINESS

ADMINISTRATION

(2011-2013)

Submitted To Submitted byKAVITA PACHORI

M.B.A III Semester

JIWAJI UNIVERSITY, GWALIOR


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DECLARATION

I am Kavita Pachori student of M.B A III SEM. JIWAJI UNIVERSITY, GWALIOR,

hereby declare that the project report entitled WORKING CAPITAL

MANAGEMENT is an Authentic and genuine bona fide work done by me under the

supervision of Mr. Santosh Pathak (Manager) at SRF Limited Malanpur (MP).The

empirical findings in this report are based on imperative information assembled at SRF

Ltd.

Kavita Pachori

M.B.A III Sem


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ACKNOWLEDGEMENT

This thesis is great source of learning, a good experience as it made me aware of

professional culture and conducts that exist in the industry.

Though at the onset of any ambitious thesis one always encounters certain difficulties in

the beginning, however, overcoming these difficulties, completing the thesis as well as

making it a success greatly depends on the encouragement, inspiration. For completion of

this thesis various people have put lot of efforts.

I would like to thank HOD ----------------------------- (Jiwaji University, Gwalior) for

giving me an opportunity to do thesis on WORKING CAPITAL MANAGEMENT in

SRF Limited. I would like to express my gratitude to Prof. Surya Prakash Parashar,

(Asst. Prof. SRCEM), Mr. VIVEK VAJPAYEE , Mr. SANJAY KAPOOR (Senior

Executive) for his continuous inspiration, guidance and valuable suggestion that helped

me in every step.

Kavita Pachori

MBA III Sem.


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PREFACE

This report has been prepared towards the partial fulfillment of curriculum M.B.A. This

research is on the topic of WORKING CAPITAL MANAGEMENT OF SRF

LIMITED Although I had tried my level best to prepare this report an error free report

every effort had been made to offer the most authenticate position with accuracy. The

research provides an opportunity to a student to demonstrate application of his/her

knowledge, skill and competencies required during the technical session. Research also

helps the students to devote his/ her skill to analyse the problem to suggest alternative

solutions, to evaluate them and to provide feasible recommendations on the provided

data. This topic emphasize the importance of training need identification we can focus on

the following areas if training will make a difference in productivity and the bottom line,

decide what specific training each employee needs and what will improve his or her job

performance, To differentiate between the need for training and organizational issues and

bring about a match between individual aspirations and organizational goals.


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CONTENTS

COMPANY PROFILE About SRF

Milestone

Theoretical Aspect

Practical Aspect

INTRODUCTION TOPIC

Working Capital management

RESEARCH METHODOLOGY

Definition

Types of research

Data collection method

Primary data

Secondary data

Sample

Sampling method

DATA ANALYSIS & GRAPHICAL PRESENTATION

FINDINGS

SUGGESTION

CONCLUSION

BIBLIOGRAPHY

QUESTIONNAIRES


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COMPANY PROFILE

The SRF Group

The Rs 980 crore SRF Group is an Indian market leader in industrial yarn and

fabric as well as refrigerant gases. Since its inception in 1974, the SRF Group has

emerged as an industrial major in its core business areas, which has about 2,500

employees operating out of 14 locations in India, UAE and USA.

In its Industrial Synthetics Business, which manufactures Nylon Tyre Cord

Fabric, it is the 7th largest producer in the world. The Chemicals Businessmanufacturers refrigerant gases used by customers in around 45 countries. Its

Industrial Fabrics business is reputed for its high quality fabrics used for non-

tyre applications in the international and domestic market. In its Information

Technology Business (ITB), SRF is offering high quality Business Process

Outsourcing (BPO) solutions to international customers.

In 2001, SRF Ltd. de-merged three smaller businesses that manufacture

Engineering Plastics, Fishnet Twines and Polyester Films into a separate

company - SRF Polymers Ltd. This restructuring is a move towards a more

focused business portfolio, which will help spearhead growth.

At SRF, our vision is to build a world class, knowledge-driven, customer-

oriented and process-based organisation that is committed to complete customer

satisfaction, high returns for its investors, improved quality of life for its people

and being an ideal corporate citizen. SRF and its people are guided by certain

values and principles in their approach to work and their dealings with others.

These principles are classified as work-related and people-related.


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People-related Principles Work-related Principles

Create a win/win situation for all

stakeholders

Leadership by example

Self discipline

Participation by all

Continuing education for all

Focus on Quality, not short-term

profits

Market in, not product out

Be customer oriented

Work with facts and data

Act on causes, not just phenomena

Be process oriented

Prioritize

SRF PURPOSE

To be an inspired, caring and joyous organization

To create extraordinary value for all

To pursue excellence and customer loyalty

To always meet tomorrow's challenges today

SRF VALUES

To trust and be trustworthy

Show respect and care for each individual

Foster creativity and innovation

Live by high standards of ethics and integrity

Avoid all discrimination

Contribute to the benefit of society


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SRF VISION

To be one of the most admired business organizations in India,

deeply loved by its people, respected and sought after by its

customers and shareholders.

To be World Leader in at least one of its businesses with global

operations and technology leadership.

To be one of the most sought after employers in the country. A

Company known for its people management skills. One that can

unlock the talent hidden in employees and inspire them to take on

and accomplish extraordinary future challenges. Its employeesmust be amongst the best paid in the country.

To establish an outstanding track record of shareholder value

creation by 2005.

To be a shining example of deep commitment and contribution to

development of people and society.

SRF MISSION

Enable customer satisfaction of a high level and a standard higher

than that of competitors.

Provide good returns to our shareholders and other financial

stakeholders.

Continuously enhance the total quality of life of our employees and

help them realize their potential.

Contribute to the development of the society and the nation.


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SRF STRENGTHS

The company has a very strong brand image in the trade market and is perceived

to be the best in its product market segments.

All major OEMs use SRFs fabric for their soft-top vehicles.

The companys fabrics have been approved for defense and navy

applications.

The companys products are also used in niche markets like sport

goods, ducting and pitch covers. All the major cricket grounds in

Asia and Middle East are covered by SRF tarpaulins.

To strengthen quality, the company adopted TQM practices.

World standards achieved in manning.

The company achieved a significant presence in the US tarpaulin

market.

QUALITY POLICY

To maintain market leadership in tyre cord in the country and to make their

presence stronger in the global market, SRF Ld. (ISB-G) aim at excellence in the

quality of products and customer delight beyond contractual obligations.

To accomplish this, the company is committed to implement and follow Quality

Management System as per ISO 9002 and strive for continuous quality

improvement through team work and motivation at all levels preserving ecology

and environment.


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TOTAL QUALITY MANAGEMENT

At SRF, Total Quality Management is a management approach that profoundlyintegrates principles, methods, systems and tools, and transforms the way people

in the organization think and do things, as well as the way in which they manage

it.

Because of TQM, SRF has made fundamental improvements in all areas. This in

turn has meant satisfied stakeholders, which is the true meaning of a win-win

approach.

The TQM journey at SRF is characterized by three key methods of management.

* Daily Management which is a means to preserve status quo and make

continuous improvements.

* Breakthrough Management which provides a method for making

quantum improvements or breakthroughs.

* Upstream Management - which prevents potential problems from

arising at the production stage and creates products that satisfy

customers.

SRF COMMITMENTS

SHAREHOLDERS:

High growth and profitability, risk reduction, good governance.

Perform: Productivity, scalability, de-risking and profitability.

Conform: Adherence to corporate governance code.


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Inform: Sharing of information with shareholders and other

investors.

PEOPLE:

Experience: Joy, culture, pride, camaraderie, challenge.

Learning: Training and development to enhance skills, knowledge

and personality.

Contributing: Opportunity for meaningful and challenging work.

Growing: Growth in responsibilities and quality of life.

CUSTOMERS:

Value Preposition superior to benchmark competition in terms of

Quality, Cost, Delivery.

SOCIETY:

Compliance: with laws of the country and being a good corporatecitizen.

Welfare: contributing to the well being of the society we live in.

Environment: care and protection of communities around our

workplace.

SRF STRATEGIES

In the Industrial Synthetics Business, the company, a domestic

leader with more than 40 % market share, is now seeking to

consolidate Asian capacities by acquisitions and alliances, to

emerge as an Asian leader.


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In Industrial Fabrics Business the company is striving to build on

its dominance in the Indian market where its market share ranges

between 75-100% in various product segments. While it will

continue efforts to retain this dominant position at home, it is also

exploring export markets in the US and Europe where it has

already made some headway, emerging as the fifth largest player

in the world in Belting Fabrics, riding on the back of its

relationships with the world leaders in Conveyor Belting. The

objective is to emerge as cost-competitive global suppliers to these

leading companies.

In the Chemicals Business, where SRF is the Indian market leader

with a market share of more than 40%, the company is seeking to

consolidate on this by building its distribution networks and

moving into the new-age replacement gases as some of its existing

products are phased out under the Montreal Protocol. The

company will also seek to focus on the after-market in these

products, both in India and some countries of Asia. It is also

exploring the possibility of engaging in Contract Manufacture of

Custom Synthetics of Chemicals.

In the IT Business, SRF is providing high quality Business Process

Outsourcing (BPO) services to international customers. Currently,

the company is providing outsourcing in the areas of Healthcare,

Finance & Accounts and Opportunistic Data Mining.


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GROWTH PLANS

The company is now structured into four separate businesses:

A) Industiral Synthtics Business:

SRF is a domestic leader in this business with more than 40% market share. This

seeks to consolidate Asian capacity, by acquisitions and alliances, to emerge as

an Asian leader. For the moment, they are seeking to protect their turf in India

and would seek any capacity in Asia that would be available.

B) Industrial Fabrics Business:

They are a dominant player in India, with market share ranging from 75% to

100% in their entire product segment. They seek to retain this position, and

explore export markets in the US and Europe. They have made some headway,

emerging as the fifth largest player in the world in Belting Fabrics, riding on the

back of their relationship with world leaders in

Conveyor Belting. They now seek to emerge as cost-competitive global suppliers

to these companies.

C) Chemicals Business:

They are market leader in India, with a market share of more than 40%. They

seek to consolidate on this, build their distribution networks, move into the new-

age replacement gases as some of their existing products are phased out under


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the Montreal Protocol, and retain market leadership in those products, both in

India and some countries of Asia.

They are also exploring the possibility of emerging in Contract Manufacture of

Custom Synthesis of Chemicals.

D) IT Enabled Service Business:

They are testing the waters in this business. They feel that there are lot

opportunities in Business Process Outsourcing and are looking at opportunities

in the Medical Billing space.

SRF MILESTONES

1970 Incorporation of the Company

1974 Commissioning of Nylon Tyre Cord Fabric plant at Chennai

1977 Introduction of Fishnet Twines at Chennai

1979 Introduction of Nylon Engineering Plastics at Chennai

1981 Commissioning of Chafer and Belting Fabrics project at Tiruchirapalli,

Tamil Nadu

1985 1] Takeover of Shriram Bearings Ltd., and Shriram Needle Bearing

Industries Ltd.

2] Commissioning of Industrial Fabrics Plant at Tiruchirapalli

3] Substantial expansion of Nylon Tyre Cord Fabric capacity at Chennai

1986 1] Commissioning of Coated Fabrics project at Tiruchirapalli2] Commencement of commercial production at SRF Nippondenso Ltd.

3] Commencement of operations at SRF Finance Ltd.

1989 Commencement of commercial production of Florochemicals at


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Bhiwadi, Rajasthan

1993 Adoption of Total Quality Management (TQM)

1994 1] Divestment of equity in SRF Nippondenso Ltd.

2] Commencement of Halon production based on in-house R&D at

Bhiwadi

3] Commencement of operations at SRF International Ltd.

1995 1] Acquisition of Ceat's Nylon Tyre Cord & Fabrics plant at Gwalior,

Madhaya Pradesh

2] Commencement of Chloromethanes production at Bhiwadi towardsbackward integration for Fluorochemicals Incorporation of SRF

Americas Inc.

3] Commencement of Vision Care Project at Bangalore

1996 Commencement of Tyre Cord Fabric production at SRF Overseas plant

in Dubai

1997 Divestment of equity in SRF Finance Ltd.

1998 1] Divestment of Ophthalmic Lenses business

2] Closure of SRF International Ltd.

3] Equity rights issue taken out of Rs 43 crore

1999 1] Acquisition of DuPont Fibers Ltd, subsequently renamed Nylon

Tyrecord Fabric Ltd.

2] ISO 9000 certification awarded to all SRF plants

2000 Divestment of Shriram Bearings Ltd. and Shriram Needle Bearing

Industries Ltd.

2001 Capacity of Nylon Tyre Cord Fabrics doubled, SRF becomes 7th largest

merchant manufacturer in the world.


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2002 1] Merger of Tyrecord Fabric Ltd. with SRF Ltd.

2] Polyster Films, Fishnet Twines and Engineering Plastics businesses

spun off a separate entity SRF Polymers Ltd.

LOCATIONS


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ABOUT THE PLANT

This plant was established in 1990 as Tyre Cord Division of CEAT LIMITED. It

was largely funded by debt, which initially strained the company, but latervarious policies helped it to recover from it and emerge as a domestic leader with

market share exceeding 40 %. It was set up in collaboration with M/s Toray

Industries, Japan. Full care was taken with respect to quality during

procurement, erection and commissioning of the plant. The commercial

production started in March 1993. With the endless efforts of the employees,

benchmark level quality was achieved from day one and the product was well

accepted in India as well as in the global market, within a short span of one year.

This unit was acquired by M/s SRF LIMITED on the midnight of 8th /9th Feb

1996. The acquisition was a watershed. Consequently the name of the company

has been changed to SRF LIMITED. The company got ISO-9002 certificate on

Sept. 1st 1995. Recently it has got ISO-14000 (Environment Management System )

certificate which means that work procedure and processes in plant are safe and

environment friendly.

Malanpur plant has got one of the sharpest profiles in the world in terms of

input-output ratio, raw materials, process productivity and operating profit etc.

The ISB-G plant is fully integrated with facilities for producing Nylon Chips both

conventional and Spin draw, Yarn and Fabrics. Business of industrial synthetics

constitutes the largest part of SRF portfolio and will continue to grow rapidly.

As a leading Indian producer of Nylon 6 tyre cord SRF now accounts for over

40% of the domestic demand for tyre cord. Tyre cord fabric is a griege fabric

made from tyre yarn and dipped fabric converted from griege fabric, which has

applications as reinforcement material for making all kinds of tyres. The ISB-G


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plant has the capacity of producing tyre cord fabric to the extent of 8500tpa per

year.

There is realization at SRF that industrial activity needs to preserve and work for

Environment and Ecology. The ISB-G plant has also given equal importance toboth. Following steps have been taken to preserve and enrich the environment

and ecology at SRF Ltd., Malanpur :-

Technology selected which is less polluting. Training people and creating full awareness in this direction. Pollution control is considered a social need instead of legal

requirement.

Integrated facility for Effluent Treatment and its monitoring. In house facility for Ambient and Stack monitoring. Biogas plant installed for safe disposal of canteen waste. Extensive tree plantation. There is 100% recycle of Effluent towards horticulture.

The ISB-G, Malanpur is supposed to achieve DEMING AWARD by 2004.


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ISB-G, MALANPUR AT A GLANCE

LOCATION

MALANPUR INDUSTRIAL AREA

MALANPUR, DIST. BHIND (M.P.) 22K.M.FROM GWALIOR

START- UP YEAR 1993

TECHNICAL COLLABORATER M/S TORAY IND. (JAPAN)

QUALITY ACCREDITATION ISO 9002 & ISO 14001

TOTAL AREA 73 ACRES

TOTAL INVESTMENT RS. 350 CRORES

MANPOWER

WORKMEN

STAFF

SUPERVISOR & ABOVE

316

63

61

TOTAL 440

CAPACITY (TPA)

NYLON-6 TYRE CORD CHIPS

NYLON-6 TYRE CORD YARN

NYLON-6 TYRE CORD FABRIC

10500

11000

8500

UTILISATION 98%


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OBJECTIVE OF RESEARCH

Understand the Performance management and appraisal process of the

Company.

Understand and to successfully implement the Division of Personnels

Employee Working capital System.

Improve two way communication between supervisor and employees.

Elucidate tasks, goals, responsibilities, priorities and expectations.


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INTRODUCTION TOPIC


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CONCEPTUAL FRAMEWORK

WORKING CAPITAL

Working capital, also known as "WC", is a financial metric which represents

operating liquidity available to a business. Along with fixed assets such as plant andequipment, working capital is considered a part of operating capital. It is calculated as

current assets minus current liabilities. If current assets are less than current liabilities,

an entity has a working capital deficiency, also called a working capital deficit. Net

working capital is working capital minus cash (which is a current asset). It is a

derivation of working capital that is commonly used in valuation techniques such as

DCFs (Discounted cash flows).

A company can be endowed with assets and profitability but short of liquidity if its

assets cannot readily be converted into cash. Positive working capital is required to

ensure that a firm is able to continue its operations and that it has sufficient funds to

satisfy both maturing short-term debt and upcoming operational expenses. The

management of working capital involves managing inventories, accounts receivable

and payable and cash.

Definition:-

According to Guttmann & Dougall-

Excess of current assets over current liabilities.

According to Park & Gladson-

The excess of current assets of a business (i.e. cash, accounts receivables, inventories)

over current items owned to employees and others (such as salaries & wages payable,

accounts payable, taxes owned to government).

Capital Structure

Capital Structure refers to the composition of the long-term sources of funds. It includes

equity capital including retained earnings and long-term debts. Thus, short-term liabilities

should be excluded from the formulation of capital structure.

In a simple way, capital structure is used to represent the proportionate relationship

between debt and equity. A firms capital structure is then the composition or structure of


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its liabilities. The capital structure of a company essentially describes the financing of the

company. This can be viewed through the right side of the balance sheet which displays

liabilities and shareholders equity. Many different firms of analysis, through many

different financial ratios, can be performed gauge near term and long term financial

health of the company.

Definitions:

According to Nemmers and Grunewald, Capital structure refers to all the financial

resources marshaled by the firm, short as well as long term, and all forms of debt as well

as equity.

According to Gerestenbeg, Capital structure of a company refers to the composition or

make-up of its capitalization and it includes all long-term capital resources viz: loans,

reserves, shares and bonds.

PROFITABILITY (EBIT)

An indicator of a company's profitability, calculated as revenue minus expenses,

excluding tax and interest. EBIT is also referred to as "operating earnings", "operating

profit" and "operating income", as you can re-arrange the formula to be calculated as

follows:

EBIT = Revenue - Operating ExpensesAlso known as Profit Before Interest & Taxes (PBIT), and equals Net Income with

interest and taxes added back to it.

In other words, EBIT is all profits before taking into account interest payments and

income taxes. An important factor contributing to the widespread use of EBIT is the way

in which it nulls the effects of the different capital structures and tax rates used by

different companies. By excluding both taxes and interest expenses, the figure hones in

on the company's ability to profit and thus makes for easier cross-company comparisons.

EBIT was the precursor to the EBITDA calculation, which takes the process further by

removing two non-cash items from the equation (depreciation and amortization).

REVIEW OF LITRATURE


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Hyun-Han Shin and Luc Soenen (1998) has done a study on Efficiency of

Working Capital Management and Corporate Profitability

Efficient working capital management is an integral part of the overall corporate strategy

to create shareholder value. We investigate the relation between the firm's net-trade cycle

and its profitability. This relationship is examined using correlation and regression

analysis, by industry and working capital intensity. Using a Compustat sample of 58,985

firm years covering the period 1975-1994, we find, in all cases, a strong negative relation

between the length of the firm's net-trade cycle and its profitability. In addition, shorter

net-trade cycles are associated with higher risk-adjusted stock returns. [JEL: G30, G32,

MIO]

Kaushik Chakraborty (2008) has done a study on Working Capital and

Profitability: An Empirical Analysis of Their Relationship with Reference to Selected

Companies in the Indian Pharmaceutical Industry

Working capital is essential for the day-to-day operations of a business, and hence it is

the life-blood of any business. Working capital management is about the management of

current assets and current liabilities in such a way that a satisfactory level of working

capital, which maximizes the profits of the firm, is maintained. Inadequacy of working

capital may lead the firm to insolvency, whereas excessive working capital implies idle

funds which earn no profits. Therefore, efficient management of working capital is an

integral part of the overall corporate strategy to improve corporate profitability. But in

reality, controversy persists on the issue whether the working capital of a firm affects its

profitability or not. Empirical studies that have been conducted in India also ended with

contradictory results. Besides this, there are many intricacies in examining the influence

of working capital on the profitability. Against this backdrop, this paper seeks to evaluate

the relationship between working capital and profitability of 25 selected companies in the

Indian pharmaceutical industry during the period 1996-97 to 2007-08. The issue has been

tackled using relevant statistical tools and techniques.


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J P Singh and Shishir Pandey (2008) has done a study Impact of Working Capital

in the Management Profitability of Hindalco Industries Limited

For the successful working of any business organization, fixed and current play a vital

role. Management of working capital is essential as it has assets a direct impact on

profitability and liquidity. An attempt has been made in this paper to study the working

capital components and the impact of working capital management on profitability of

Hindalco Industries Limited. The paper also makes an attempt to study the correlation

between liquidity, profitability and Profit Before Tax (PBT) of Hindalco. The study is

based on secondary data collected from annual reports of Hindalco for the study period

1990 to 2007. The ratio analysis, percentage method and coefficient of correlation have

been used to analyze the data. Multiple regressions were used to check the significant

impact on the profitability of Hindalco.

Mian Sajid Nazir and Talat Afza (2009) explained Impact of Aggressive

Working Capital Management Policy on Firms Profitability

The present study investigates the traditional relationship between working capital

management policies and a firms profitability. Using the panel data set for the period

1998-2005, the impact of aggressive working capital investment and financing policies

has been evaluated using return on assets as well as Tobins q. Managers can create value

if they adopt a conservative approach towards working capital investment and working

capital financing policies. The study also finds that investors give weight to the stocks of

those firms that adopt an aggressive approach to managing their short-term liabilities.

MARC DELOOF (2003) has discussed Does Working Capital Management

Affect Profitability of Belgian Firms?

Most firms have a large amount of cash invested in working capital. It can therefore be

expected that the way in which working capital is managed will have a significant impact

on the profitability of firms. Shin and Soenen (1998) find a strong negative relation

between the cash conversion cycle and corporate profitability for a large sample of listed

American firms for the 1975-1994 periods. In this paper, I find a significant negative


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relation between gross operating income and the number of days accounts receivable,

inventories and accounts payable of Belgian firms.

Debasish Sur and Kaushik Chakraborty(2011)have explainedEvaluating

Relationship of Working Capital and Profitability: A Study of Select Multinational

Companies in the Indian Pharmaceutical Sector

In the present environment of cut-throat competition, almost all the business firms have

no other option but cutting the cost of operations in order to be competitive as well as

financially healthy. So, like other aspects of financial management, working capital

management must have a significant role in reaching this target. However, a great deal of

controversy exists over the issue whether the working capital of a firm, as determined by

its financing and investment decisions, affects its profitability or not. The present study

seeks to reexamine the interrelationship between working capital management and

profitability of ten select multinational companies in the Indian pharmaceutical industry

during the period 1996-97 to 2007-08. The selection of the companies has been made

using purposive sampling procedure. Relevant statistical techniques and tests have been

applied in carrying out the analysis. Although the study has failed to provide final

solution to this highly controversial issue, a significant outcome has been derived from it.

Shishir Pandey and Vikas Kumar Jaiswal (2011) has done a study on

Effectiveness on Profitability: Working Capital Management

For a successful working of a business organization fixed and current assets play a vital

role? Management of working capital is essential as it has direct impact on profitability

and liquidity. An attempt has been made in this paper to study the working capital

components and impact of working capital management on profitability of NALCO. The

paper also makes an attempt to study the correlation between liquidity and profitability

(PBT) of NALCO, the study is based on secondary data collected from annual reports of

NALCO for the study period 1995 to 2008. Ratio analysis and percentage method and co

- efficient of correlation have been used to analyze the data. Multiple regressions were

used to check the significant impact on the profitability of NALCO.


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Amarjit Gill, Nahum Biger, Neil Mathur (2011) explained The Effect of

Capital Structure on Profitability: Evidence from the United States

The relationship between capital structure and profitability cannot be ignored because theimprovement in the profitability is necessary for the long-term survivability of the firm.

This paper seeks to extend Abors (2005) findings regarding the effect of capital structure

on profitability by examining the effect of capital structure on profitability of the

American service and manufacturing firms. A sample of 272 American firms listed on

New York Stock Exchange for a period of 3 years from 2005 2007 was selected. The

correlations and regression analyses were used to estimate the functions relating to

profitability (measured by return on equity) with measures of capital structure. Empirical

results show a positive relationship between i) short-term debt to total assets and

profitability and ii) total debt to total assets and profitability in the service industry. The

findings of this paper show a positive relationship between i) short-term debt to total

assets and profitability, ii) long-term debt to total assets and profitability, and iii) total

debt to total assets and profitability in the manufacturing industry. This paper offers

useful insights for the owners/operators, managers, and lending institutions based on

empirical evidence.

Michael Faulkender & Mitchell A. Petersen (2003) explained Does the

Source of Capital Affect Capital Structure?

Empirical examinations of capital structure have led some to conclude that firms are

under levered. Implicit in this argument and much of the empirical work on leverage is

the assumption that the availability of incremental capital depends solely on the risk of

the firms cash flows and characteristics of the firm. However, the same market frictions

that make capital structure relevant suggest that firms may be rationed by lenders, leadingsome firms to appear to be under-levered relative to unconstrained firms. We examine

this theory, arguing that the same characteristics that may be associated with firms being

rationed by the debt markets are also associated with financial intermediaries, opposed to

bond markets, being the source of a firms debt capital. We find that firms have

significantly different leverage ratios based on whether they have access to public bond


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markets as measured by the firm having a debt rating. Although firms with a debt rating

are fundamentally different, these differences do not explain our findings. Even after

controlling for the firm characteristics previously found to determine observed capital

structure and the possible endogeneity of having a bond rating, we find that firms which

are able to raise debt from public markets have 35 percent more debt.

Kesseven Padachi (2006) has discussed Trends in Working Capital Management

and its Impact on Firms Performance: An Analysis of Mauritian Small Manufacturing

Firms

A well designed and implemented working capital management is expected to contribute

positively to the creation of a firms value The purpose of this paper is to examine the

trends in working capital management and its impact on firms performance. The trend in

working capital needs and profitability of firms are examined to identify the causes for

any significant differences between the industries. The dependent variable, return on total

assets is used as a measure of profitability and the relation between working capital

management and corporate profitability is investigated for a sample of 58 small

manufacturing firms, using panel data analysis for the period 19982003. The regression

results show that high investment in inventories and receivables is associated with lower

profitability. The key variables used in the analysis are inventories days, accounts

receivables days, accounts payable days and cash conversion cycle. A strong significant

relationship between working capital management and profitability has been found in

previous empirical work. An analysis of the liquidity, profitability and operational

efficiency of the five industries shows significant changes and how best practices in the

paper industry have contributed to performance. The findings also reveal an increasing

trend in the short-term component of working capital financing.

Stein Frydenberg (2004) has done a study onTheory of Capital Structure

This paper is a review of the central theoretical literature. The most important arguments

for what could determine capital structure is the pecking order theory and the static trade

off theory. These two theories are reviewed, but neither of them provides a complete


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description of the situation and why some firms prefer equity and others debt under

different circumstances. The paper is ended by a summary where the option price

paradigm is proposed as a comprehensible model that can augment most partial

arguments. The capital structure and corporate finance literature is filled with different

models, but few, if any give a complete picture

RATIONALE OF THE STUDY

Many studies have already been done across the globe on Impact of Working Capital

Management & Capital Structure on Profitability. In this study there are three variables:

Working Capital Management, Capital Structure, and Profitability of JK Tyre. Here

Working Capital Management & Capital Structure is the independent variable and

Profitability is the dependent variable.

In this study we have found out the Impact of Working Capital Management & Capital

Structure on Profitability. As Working Capital is very necessary for smooth running of

the business & it has been proven many times that it has an impact on profitability.

Similarly, Capital Structure also indicates the wealth of shareholders. This research has

opened new dimensions for further study.


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RESEARCH METHODOLOGY

DEFINITION

The advanced learner dictionary of current English lays down. The meaning of

researcher as, A careful investigation or inquiry specially through such for new

facts in any branch of knowledge.

Redman & more define -

" Research as a systamized refers to gain new knowledge"

Some people consider, Research as a movement, a movement for the known to

the unknown.

TYPES OF RESEARCH

Their are two types of research are as follows -

(A) Exploratory research.

It includes literature survey and experience survey.

(B) Conclusive research.

Conclusive research is used for the hypotheses testing generated by exploratory

research.

It can be classified -

* Descriptive Research

* Experimental Research

Here I have mainly used Exploratory Research i.e. to find the Working capital ofthe Employees. This chapter deals with research methodology adopted by the

researcher. The researcher has conducted the study using both the primary and

secondary data.


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DATA COLLECTION METHOD

PRIMARY DATA -

Primary data is a data, which has been collected by the researcher himself to

reveal the facts related to the research objective. Generally primary source

information is gathered through direct observation, questionnaire, schedule and

interview methods.

For our purpose of data collection questioner and interview methods is most

suitable because at give accurate data that why we use these methods.

SECONDARY DATA -

Secondary data are the information, which are attained indirectly. Secondary

data are gathered from information collected from the individuals and

institutions through personal diaries, letters, survey documents etc.

The researcher started the research work with the help of secondary data from

various books and magazines. When the researcher collected a fair amount of

idea about the type of study that has been conducted and how he should go with

it. Then he moved on to the primary sources of data collection.

The main source here were the interviews and semi structured questions.

SAMPLE -

The researcher is partly based on sample survey.

It is an integrated component of research of design. It consists of three parts.

1. Population SRF Malanpur, Gwalior

2. Sampling size (number of respondent) - 70

3. Duration of time - 8 week.

SAMPLING METHOD

I have used Random Sampling method to find the questionnaire from employee.


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DATA ANALYSIS & INTERPRETATION

1 Are you aware of your Strength & Weakness?

60% People are aware about their strength & weakness.

2. How do you utilize your skills?

Most of the People utilize their skills in optimum way.

60

40

0

10

20

30

40

50

60

70

Yes No

Series1

82

18

0

10

20

30

40

50

60

70

80

90

In Optimistic way In Pessimistic way

Series1


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3. How would you rate you learning attitude ?

About 46% People rate their learning attitude at high level.

4. Are you satisfy with the existing appraisal?

About 68% people are satisfied with the exiting Appraisal

46

30

24

0

5

10

15

20

25

30

35

40

45

50

High Level Middle Level Low Level

Series1

68

32

0

10

20

30

40

50

60

70

80

Yes No

Series1


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5. Are you mobile in term of your transferability? (Y/N) if no (Why)

About 62% people are mobile in term of their transferability.

6. Do you feel your total job performance need to be improved?

Only 30% people think their job performance need to be improved.

62

38

0

10

20

30

40

50

60

70

Yes No

Series1

30

70

0

10

20

30

40

50

60

70

80

Yes No

Series1


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Q7 Do you feel your work contribution is important?

About 75% People believe that their work contribution is important..

75

25

0

10

20

30

40

50

60

70

80

Yes No

Series1


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FINDINGS

60% People are aware about their strength & weakness.

Most of the People utilize their skills in optimum way.

About 46% People rate their learning attitude at high level.

About 68% people are satisfied with the exiting Appraisal

About 62% people are mobile in term of their transferability.

Only 30% people think their job performance need to be improved.

About 75% People believe that their work contribution is important..


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CONCLUSION

After conducting the Studies on working capital Management in SRF Ltd. I reach

on the conclusion that is company uses self appraisal method to Appraise the

performance of its employees.

Appraisal method emphasizes human relation, which supervisors focus on

Technical knowledge and imitative. This approach:

1) Results in superior upward flow of information,

2) Forces the subordinate to become more personally involved and to some

constrains him to think about himself and hi work

3) Improves communication between Superior and subordinate, in that each

is given more information by the other when disagreements are

discovered and

4) Improves motivation as result of great participation.

But this approach has its disadvantage that the individual may rate himself

excessively high than would be if he was rated by the superior. But this

disadvantage can be removed considering the following suggestions.


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SUGGESTIONS

Self appraisal should be filled and obtained from the appraise on

Monthly or quarterly basis instead of Six monthly/yearly.

Specific duties/assignments should be allotted to every employee

in writing, which can help in flexing the responsibility/

accountability on the individuals, so at the time of writing self

appraisal by the appraise, he may not rate himself excessively high

than it would be.

Views / observations of reporting officer should be communicated

to the concerned appraise under his acknowledgement. The

comments of the reporting officer should clearly indicate the

performance and deficiencies with reasons to appraise so the

appraise can further improve his performance

The opportunity should be given to the appraise to submit the

reasons of his deficit so the authority can sort out the problem as

per norms of the company.


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LIMITATION OF WORKING CAPITAL

1 Error in Rating:- Working capital may not be valid indicator of performance

and potential of employees due to the following type of error

a) Halo effect: it is the tendency to the rate an employee constantly high or

low on the basis of over all impression.

b) Stereotyping: It implies forming the mental picture of a person on the

basis of his age Sex, cast and religion.

c) Central Tendency : It means assigning average rating to the entire

employee in order to avoid commitment

d) Constant Error: Some evaluator tends to be lenient while other is strict in

assigning performance.

e) Spill over effect: This arise when past performance effect assessments of

present performance.

Lack of Reliability: - Reliability employee stability, consistency, in the

measurement lack of consistence over time and among different raters may

reduce the reliability of working capital

Incompetence: Raters may be fail to evaluate performance accurately due to

lack of knowledge an experience


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Negative approach: Working capital losses most of its values with the focus

of management is on punishment rather than development of employee.


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BIBLIOGRAPHY

BOOKS

Author Book Title Publication Edition [Yr.]

Robbins Stephen P Organization

Behaviour

Pearson

Publication

6th Edition [2001]

Chabra T.N. Human Resource

Management

S. Chand

Publication

5th Edition [1999]

Kothari C.R. Research

methodology

New Delhi,

Vishwa

Prakashans, Year -

1999

Second

Websites :

www.srfIndia.com
http://www./http://www./http://www./


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QUESTIONNAIRE

PART-I [PROFILE OF EMPLOYEE]

Name of the Employee :

Designation :

Employee Code :

Grid Code :

Dept Name :

Dept Code :

PART II [QUESTIONS OF WORKING CAPITAL ]

Q.1 Are you aware of your Strength & Weakness?

Yes No

Q.2 How do you utilize your skills?

In Optimistic Way In Pessimistic Way

Q.3 How would you rate you learning attitude ?

High Level Middle Level Low Level

Q.4 Are you satisfy with the existing appraisal?

Yes No


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Q.5 Are you mobile in term of your transferability? (Y/N) if no (Why)

Yes No

Q.6 Do you feel your total job performance need to be improved?

Yes No

Q.7 Do you feel your work contribution is important?

Yes No

Q.8 Please specify the function / processes that you are open to being ?

Documents

Kavita SRF Fincine Company FINAL