PROJECT REPORT On

SUBMITTED BY
NAME ENROLLMENT NO : :

Submitted in partial fulfillment of the requirements for qualifying

MBA (FINANCE)

UNDER SUPERVISION OF

Submitted By: Name Programme Code Enrollment No. Name of the Study Centre Study Centre Code : : : : MBA (FINANCE)

ACKNOWLEDGEMENT
With Candor and Pleasure I take opportunity to express my sincere thanks and obligation to my esteemed guide ... It is because of his able and mature guidance and co-operation without which it would not have been possible for me to complete my project. It is my pleasant duty to thank all the staff member of the computer center who never hesitated me from time during the project.

Finally, I gratefully acknowledge the support, encouragement & patience of my family, and as always, nothing in my life would be possible without God, Thank You!

DECLARATION
I hereby declare that this project work titled Working Capital Management of Taj Hotel is my original work and no part of it has been submitted for any other degree purpose or published in any other from till date.

TABLE OF CONTENTS
S. NO. 1. 2. 3. 4. 5. 6. 7. 8. CONTENTS PAGE NO.

Introduction to topic.7 Review of Literature.......28 Objective of the study.42 Research Methodology...43 Data Analysis......44 Conclusion and Major Finding...........84 Recommendation and Limitation86 References.......88

CHAPTER -1
INTRODUCTION
The Indian Hotels Company Limited (IHCL) and its subsidiaries are collectively known as Taj Hotels Resorts and Palaces and is recognized as one of Asia's largest and finest hotel company. Incorporated by the founder of the Tata Group, Mr. Jamsetji N. Tata, the company opened its first property, The Taj Mahal Palace Hotel, Bombay in 1903. The Taj, a symbol of Indian hospitality, completed its centenary year in 2003.

Taj Hotels Resorts and Palaces comprises 66 hotels in 42 locations across India with an additional 16 international hotels in the Maldives, Malaysia, Australia, UK, USA, Bhutan, Sri Lanka, Africa and the Middle East.

Spanning the length and breadth of the country, gracing important industrial towns and cities, beaches, hill stations, historical and pilgrim centres and wildlife destinations, each Taj hotel offers the luxury of service, the apogee of Indian hospitality, vantage locations, modern amenities and business facilities.

In the coming years, IHCL will see growth through the addition of 80 Luxury Residences at the Taj Wellington Mews, Mumbai, as well as rooms added at Taj Lands End, Mumbai and Taj West End, Bangalore. The Taj Lands End is a hotel built with a capacity of 500 rooms with an additional 50,000 sq. ft. approximately that is yet to be built. We will aim to reach this capacity over the next two years, which will include adding rooms and developing high-end offices or retail space created in the new 50, 000 sq. ft. block. Taj West End will have approximately 175 rooms added to it over the next two years. IHCL continues to pursue management contracts in India as well as in South and South East Asia. Associate companies viz. Taj GVK Hotels & Resorts Limited and Oriental Hotels Limited are also in the process of setting up properties in Chandigarh and Bangalore respectively, which would add to the properties under the Taj group. IHCL has secured two management contracts for a high end luxury resort and an upmarket resort in 7

Kovalam, Kerala. Both the hotels are under construction and will open in the current financial year.

IHCL operate in the luxury, premium, mid-market and value segments of the market through the following:

Taj (luxury full-service hotels, resorts and palaces) is our flagship brand for the worlds most discerning travelers seeking authentic experiences given that luxury is a way of life to which they are accustomed. Spanning world-renowned landmarks, modern business hotels, idyllic beach resorts, authentic Rajput palaces and rustic safari lodges, each Taj hotel reinterprets the tradition of hospitality in a refreshingly modern way to create unique experiences and lifelong memories.

Taj also encompasses a unique set of iconic properties rooted in history and tradition that deliver truly unforgettable experiences. A collection of outstanding properties with strong heritage as hotels or palaces which offer something more than great physical product and exceptional service. This group is defined by the emotional and unique equity of its iconic properties that are authentic, non- replicable with great potential to create memories and stories.

Taj Exotica is our resort and spa brand found in the most exotic and relaxing locales of the world. The properties are defined by the privacy and intimacy they provide. The hotels are clearly differentiated by their product philosophy and service design. They are centered around high end accommodation, intimacy and an environment that allows its guest unrivalled comfort and privacy. They are defined by a sensibility of intimate design and by their varied and eclectic culinary experiences, impeccable service and authentic Indian Spa sanctuaries.

Taj Safaris are wildlife lodges that allow travelers to experience the unparalleled beauty of the Indian jungle amidst luxurious surroundings. They offer Indias first and only wildlife luxury lodge circuit. Taj Safaris provide guests with the ultimate, interpretive, 8

wild

life

experience

based

on

proven

sustainable

ecotourism

model.

Vivanta by Taj Hotels & Resorts span options for the work-hard-play-hard traveller across metropolitan cities, other commercially important centres as well as some of the best-loved vacation spots.

Stylish & sophisticated, Vivanta by Taj delivers premium hotel experiences with imagination, energy & efficiency. It's the flavour of contemporary luxury, laced with cool informality and the charming Taj hospitality. Created for the cosmopolitan global traveller and bon vivant, Vivanta by Taj Hotels & Resorts create experiences that will amuse, invigorate & inspire you.

Vivanta revels in a spirit that presents the normal with an unexpected twist. Experiences which make you pause & appreciate the hidden beauty in life! It challenges your expectations of a hotel and unfolds multiple layers of delight. Innovative cuisine concepts, the smart use of technology & the challenge to constantly engage, energize and relax you all add up to make Vivanta by Taj the new signature in hospitality.

The Gateway Hotel (upscale/mid-market full service hotels and resorts) is a pan-India network of hotels and resorts that offers business and leisure travelers a hotel designed, keeping the modern nomad in mind. At the Gateway Hotel, we believe in keeping things simple. This is why, our hotels are divided into 7 simple zones- Stay, Hangout, Meet, Work, Workout, Unwind and Explore.

As travel often means more hassle than harmony, more stress than satisfaction, modern travelers are looking for smarter choices. Driven by our passion for perfection, we welcome our customers to a refreshingly enjoyable and hassle-free experience, anytime, everywhere. Offering the highest consistency in quality, service and style we set new standards and take the unwanted surprises out of traveling. Our warm welcomes make our guests feel at home, away from home and our crisp and courteous service empowers them to get more done with greater effectiveness and control. And through our unrivalled 9

network we provide service that is effortless, simple, never overwhelming, always warm.

Ginger (economy hotels) is IHCLs revolutionary concept in hospitality for the value segment. Intelligently designed facilities, consistency and affordability are hallmarks of this brand targeted at travelers who value simplicity and self-service.

Taj Hotels Resorts and Palaces is committed to replicate its domestic success onto international shores with plans to build an international network of luxury hotels, which will provide an exemplary product-service combination and in the process create a global brand. The current international portfolio includes luxury resorts in the Indian Ocean, business and resort destinations in the Middle East and Africa, serviced apartments in the UK, the first hotel in Australia and three a top-end luxury hotels in the US.

Throughout the Companys expansion, its mandate has been twofold: to infuse a sense of Indian heritage and culture within each diverse property, while also anticipating the needs and desires of the sophisticated traveler. Over the years, the Taj has won international acclaim for its quality hotels and its excellence in business facilities, services, cuisine and interiors.

The Taj strengthened its presence in the Indian Ocean rim with the Exotica Brand. The Taj Exotica was evolved as part of Taj Hotels Resorts and Palaces intent to position it as a brand that is clearly differentiated by its product philosophy and service design. The Taj Exotica Resort and Spa, in Maldives is centered on high-end accommodation, intimacy and an environment that allows its guests unrivalled comfort and privacy.

Taj Hotels further expanded its global footprint by securing management contracts at Palm Island, Jumeirah in Dubai, Saraya Islands in Ras Al Khaimah, Aldar Group in Abu Dhabi, UAE Langkawi in Malaysia and Thimpu in Bhutan. The most significant additions to the portfolio have been The Pierre, the iconic landmark hotel on New York's Fifth Avenue, Taj Boston and Blue, Sydney.

10

The presence of Taj Hotels Resorts and Palaces internationally has been developed through a network of Taj regional sales and PR offices in the United Kingdom, France, Germany, Italy, Dubai, Singapore, Australia, Japan, Russia and the United States of America.

At the Taj Hotels Resorts and Palaces luxurious living and fine dining find common ground. Whether it is introducing exotic world cuisines to India or taking authentic Indian fare to the world, the Taj Hotels Resorts and Palaces is renowned for the eclectic culinary experiences it brings to its guests. Through a vast repertoire of award-winning restaurants, legendary recipes from royal kitchens and celebrated food festivals, the Taj has pioneered innovation in fine dining across the world.

Taj Hotels also promise a whole new experience of tranquillity and total wellness, through Jiva Spas a unique concept, which brings together the wisdom and heritage of the Asian and Indian Philosophy of Wellness and Well-being. Rooted in ancient Indian healing knowledge, Jiva Spas derive inspiration and spirit from the holistic concept of living. There is a rich basket of fresh and unique experiences under the Jiva Spa umbrella of offering, Yoga and Meditation, mastered and disseminated by accomplished practitioners, authentic Ayurveda, and unique Taj signature treatments. Royal traditions of wellness in service experiences, holistic treatments involving body therapies, enlivening and meaningful rituals and ceremonies and unique natural products blended by hand, come together to offer a truly calming experience.

IHCL operates Taj Air, a luxury private jet operation with state-of-the-art Falcon 2000 aircrafts designed by Dassault Aviation, France; and Taj Yachts, two 3-bedroom luxury yachts which can be used by guests in Mumbai and Kochi, in Kerala.

IHCL also operates Taj Sats Air Catering Ltd., the largest airline catering service in South Asia, as a joint venture with Singapore Airport Terminal Services, a subsidiary of Singapore Airlines. 11

Additionally, it operates the Indian Institute of Hotel Management, Aurangabad since 1993. The institute offers a three-year diploma, designed with the help of international faculty and has affiliations with several American and European programmes.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSBILITY As a part of Tatas; Indias premier business house; we; at Taj Hotels, have always believed in society and environment being integral stakeholders in our business along with our shareholders, customers, vendors and others. Over the last decade, the movement towards ecologically sound tourism has gained urgency and importance across the globe and we recognize that responsible practices in vogue are as diverse as the geographies.

We promote corporate citizenship through our strategic public-private partnerships which encourage building livelihoods of less-advantaged youth and women. The causes we promote include reducing malnutrition, promoting indigenous artisans and craftsmen and enhancing employability of identified target groups by sharing our core competencies as a leading hospitality company. We encourage training and development of differently abled youth.

We at Taj have the unique scope and opportunity to develop raw potential into a skilled workforce that is immediately employable by various players in the industry. A majority of our community projects are focused around extending our key strengths in food production, kitchen management, housekeeping, customer service and spas to promote economic empowerment of candidates from vulnerable socio-economic backgrounds. We are fully committed to the cause of building a sustainable environment by reducing the impact of our daily operations on the environment and improving operational efficiencies, resource conservation, reuse and recycling of key resources.

12

Our seventh

Corporate Sustainability Report

was submitted to the United Nations Global

Compact society in August, 2010. The United Nations Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, safety & security, environment and anti-corruption. This Corporate Sustainability report also serves as our GRI (Global Reporting Initiative) as well as Triple Bottom Line report. The report focuses on identified priorities at IHCL and responds to key stakeholder needs. We plan to continue and further strengthen our commitment to the environment and societies in which we operate.

We believe in continuous learning and sharing and would be delighted to have your thoughts and suggestions.

EARTH In an endeavour to reinstate its vision and efforts to boost sustainable tourism, Taj Hotels Resorts and Palaces presented EARTH (Environment Awareness & Renewal at Taj Hotels) this year. Implementing schemes such as the Gangroti Glacier Clean-Up Expedition, as well as designated Earth rooms, which minimise environmental impact, Taj is one of Asias largest group of hotels to commit to energy conservation and environmental management. EARTH has received certification from Green Globe, the only worldwide environmental certification program for travel and tourism.

The Taj began a century ago with a single landmark The Taj Mahal Palace Hotel, Mumbai. Today, the various Taj hotels, in all their variety and historical richness, are recognised internationally as the symbols of true Indian hospitality. The Companys history is integral to Indias emergence into the global business and leisure travel community; and looking to the future, Taj Hotels Resorts and Palaces is well positioned to meet the increase in travel activity with the rapid expansion of the Indian economy.

13

INTRODUCTION OF WORKING CAPITAL

Working capital

refers to the cash that a business requires for day-to-day operations or

more specifically, for financing the conversion of raw materials into finished goods which the company sells for payment. Working Capital is a life blood and nerve centre of business. Just as circulation of blood is essential for the survival of the human being, similarly working capital is necessary for the survival of every business organization, whether it is a small organization or a big organization.

Every business needs funds for two purposes-for establishment and to carry out its dayto-day operations. Long terms funds are required to create production facilities through purchase of fixed assets, such as plant & machinery, land & building, furniture & fixtures etc. Investment in these assets present that part of the firms capital which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes as for the purchase of raw material, payment of wages & other day-to-day expenses etc. These funds are known as working capital.

In simple words, working capital refers to that part of the firms capital which is required for financing short term or current assets such as, cash, marketable securities, debtors and inventories In other words; the working capital is the excess of current assets over current liabilities.

W WO OR RK KI IN NG GC CA AP PI IT TA AL L= =C CU UR RR RE EN NT TA AS SS SE ET TS S--C CU UR RR RE EN NT TL LI IA AB BI IL LI IT TI IE ES S

14

TYPES OF WORKING CAPITAL

Working capital may be classified in two ways: a) b) On the basis of concept On the basis of time

On the basis of concept, working capital is classified as gross working capital and net working capital. This classification is important from the point of view of the financial manager. GROSS WORKING CAPITAL: This is a wider term in relation to the working

capital. It includes all current assets. So gross working capital of Taj Hotel in 2010 was Rs. 43.20 crore. Thus the gross working capital is the capital invested in total current assets of the company. Current assets includeCash in hand and bank Bills receivables Sundry debtors Short term loans and advances Inventory of stock Prepaid expenses Gross Working Capital = Total Current Assets

NET WORKING CAPITAL: is the difference between the current assets and current liabilities. Therefore it is called net working capital. When current assets exceed current liabilities,then the working capital is positive otherwise negative. Current liabilities includeBill Payable Sundry creditors 15

Outstanding expenses Short term loans Bank overdraft

COMPANYS NET WORKING CAPITAL

Net Working Capital = Current Assets Current Liabilities

On the BASIS OF TIME, working capital is classified as PERMANENT OR FIXED WORKING CAPITAL: PERMANENT OR FIXED WORKING CAPITAL: Permanent working capital is the minimum amount which is required to ensure effective utilization of fixed facilities and or maintaining the circulation of current assets. There is always a minimum level of current assets which is continuously required by the enterprise to carry out its normal business operations. For example, work-in-progress, finished goods and cash balance. This minimum level of current assets is called permanent working capital as this part of the capital is permanently blocked in current assets. As the business grows, the requirements of permanent working capital also increase due to the increase in current assets. TEMPORARY OR VARIABLE WORKING CAPIAL: Temporary working capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working capital can be further classified as seasonal working capital and special working capital. Most of the enterprises have to provide additional working capital to meet the seasonal and social needs. The capital required to meet the seasonal needs of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet exigencies such as launching of extensive marketing campaign for conducting research, etc. CAPITAL and TEMPORARY OR VERIABLE WORKING

16

FINANCING OF WORKING CAPITAL

A firm can adopt different financial policies to finance its current assets. There are various types of sources for financing working capital. These are as follows:
[[

Sources of Working Capital

Permanent or Fixed

Temporary or variable

1. Commercial banks

1 Share 1. Debentures 2. Public deposits 3. Ploughing back of profits 4. Loans from financial institutions 2. Indigeneous bankers 3. Trade creditors 4. Instalment credit 5. Advances 6. Accounts receivable 7. Accrued expenses

17

Sources of Permanent or Fixed Working Capital

Permanent working capital should be financed in such a matter that the enterprise may have its uninterrupted use for a long period. There are five sources of long term working capital:

1. Shares: Issue of shares is the most important source for raising long term capital. A
company can issue various types of shares like equity shares, preference shares and deffered shares. As\far as possible, a company should raise the maximum amount of permanent capital by issue of shares.

2. Debentures: A debentures is an instrument issued by the company acknowledging

to its debt to its holder. The debenture holders are the creditors of the company. A fixed rate of interest is paid on the debentures. The debentures may be of various kinds such as unsecured, secured, redeemable, irredeemable, convertible debentures and non convertible debentures. The debentures as a source of finance have a number of advantages both to investors and company.

3. Public Deposits: Public deposits are the fixed deposits accepted by a business
enterprise directly from the public. This source of raising short term and medium term finance was very popular in absence of banking facilities. Public deposits as a source of finance have a large number of advantages such a convenient source of finance, taxation benefits, no need of securities and inexpensive source of finance.

4. Ploughing Back of Profits: It means the reinvestment by the concern of its surplus
earning in its business. This method of finance has a large number of advantages as it is the cheapest rather cost free source of finance, there is no need to keep securities, it ensures stable dividend policy.

5. Loan From Financial Institutions: Financial institutions such as commercial

banks, insurance corporations, idbi etc also provides short term, medium term and 18

long term loans. This source of finance is more suitable to meet the medium term demands of working capital.

Financing Of Short Term Working Capital

The main source of short term working capital are as follows:

1. Indigenous Bankers: Private money lenders and other country bankers used to be
the only source of finance prior to the establishment of commercial banks. They used to charge very high rate of interest. Even today some business houses have to depend upon indigenous bankers for obtaining loans to meet their working capital requirements.

2. Trade Credit: Trade credit refers to the credit extended by the suppliers of goods in
the normal course of business. At present commerce is build upon credit, trade credit arrangement of a firm with its suppliers is an important source of finance. It may also take the form of bills payable whereby the buyer signs a bills of exchange payable on a specified future date.

3. Instalment Credit: This is another method by which the assets are purchased and
the possession of goods is taken immediately but the payment is made in instalments over a pre determined period of time. In this interest is charged on the unpaid price or it may be adjusted in the price.

4. Commercial Paper: It is an important money market instrument for raising shortterm finances. Commercial papers represents the unsecured promissory notes issued by firms to raise short term funds. Firms, banks, insurance companies, individuals etc. With short-term surplus funds invest in commercial papers. Investors would generally invest in commercial paper of a financially sound and creditworthy firm. In India, commercial papers of 91 to 180 days maturity are being floated. The interest rate will be determined in the market.

19

5. Advances: Some business houses get advantages from their customers and agents
against orders and this source is a short term source of finance for them. It is a cheap source of finance and in order to minimize their investment in working capital.

6. Commercial banks: Commercial banks are most important source of short term
capital. The major portion of working capital loans are provided by commercial banks. They provide a large variety of loans to meet the specific requirements of a firm. The different form in which the banks normally provide loans and advances are as follows: (a) Loans (b) Cash credits (c) Overdrafts (d) Discounting of bills

FACTORS DETERMINING THE WORKING CAPITAL

The working capital requirement of the concern depends upon a large numbers of factors such as nature and the size of business, the character of their operations, the length of production cycles, the rate of stock turnover and the state of economic situation. It is not possible to rank them because all such factors are of different importance and influence of individual factor changes for a firm overtime. However, the following are important factors generally influencing the working capital requirements. Nature and character of business. Size of business\scale of operation. Production policy. Manufacturing process\length of production cycle. Seasonal variation. Working capital cycle : The working capital cycle can be defined as:

20

The period of time which elapses between the point at which cash begins to be expended on the production of a product and the collection of cash from a customer The way working capital moves around the business is modeled by the working capital cycle. This shows the cash coming into the business, what happens to it while the business has it and then where it goes. A simple working capital cycle may look something like:-

Between each stage of this working capital cycle there is a time delay. For some businesses this will be very long where it takes them a long time to make and sell the product. They will need a substantial amount of working capital to survive. Others though may receive their cash very quickly after paying out for raw materials etc. (perhaps even before they've paid their bills) - They will need less working capital. For all businesses though they need to plan how much best way of doing this is a CASH FLOW FORECAST.
cash

they are going to have. The

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IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is a life blood and nerve centre of business. Just as the circulation of blood is essential in the human bodies for maintaining life, working capital is very essential to maintain the running of business. No business can run successfully without an adequate amount of working capital.

Merits of working capital are as follows:

1. 2. 3. 4. 5. 6.

Solvency of business: Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. Goodwill: Sufficient working capital enables a business concern to make prompt payments. Easy loans: A concern having adequate working capital high solvency and good credit standing can arrange loans from banks and other on easy terms. Cash discounts: Adequate working capital also enables a concern to avail cash discounts on the purchase and hence it reduces costs. Regular supply of raw materials: Adequate working capital ensures regular and continuous supply of raw materials. Regular payments of salaries, wages & other day to day commitments: A company which has adequate working capital can make regular payments of salaries, wages & other day to day commitments with raises the morale of its employees, increase their efficiencies, reduces wastages and enhance production and profits.

7.

Ability to face crises: Adequate working capital also enables a concern to face business crises in emergencies such as depression because in such periods, generally, there is much pressure on working capital.

22

Excessive or inadequate working capital

Every business concern should have adequate working capital to run its business operations. Both excess as well as short working capital positions are bad for any business.

Disadvantages of excessive working capital

1. Excessive working capital means idle funds, which earn no profits for the business and hence business cannot earn a proper rate of return on its investment. 2. Excessive working capital implies excessive debtors. 3. It may result into overall inefficiency in the organization. 4. When there is a excessive working capital, relations with banks and other financial institutions may not be maintained. 5. The excessive working capital gives rise to speculative transactions.

Working Capital Management

Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. Working capital refers to that part of firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors, and inventories. In other words working capital is the amount of funds necessary to cover the cost of operating the enterprise.

23

In working capital management, we analyze following three points.

First Point What is the need for working capital? After study the nature of production, we can estimate the need for working capital. If Hotel available large scale of facilities and comforts, then it needs high amount of working capital.

Second Point What is optimum level of working capital in Taj Hotel? Have you achieved the optimum level of working capital which has invested in current assets? Because high amount of working capital will decrease the return on investment and low amount of working capital will increase the risk of business. So, it is very important decision to get optimum level of working capital where both profitability and risk will be balanced

Third Point What are main working capital policies of Taj Hotel? Polices are the guidelines which are helpful to direct business. Finance manager can also make working capital policies.

First working Capital Policy Liquidity policy Taj has been practicing good Corporate Governance even before Securities Exchange Board of India (SEBI) made it a mandatory requirement from 2001. At the Taj Mahal's sister hotel in New Delhi, all visitors had to pass through. It is the global crunch and India's home-grown liquidity. Under this policy, finance manager will increase the amount of liquidity for reducing the risk of business. If business has high volume of cash and bank balance then business can easily pays his dues at maturity.

24

Second working capital policy Profitability Policy Under is policy, finance manager will keep low amount of cash in business and try to invest maximum amount of cash and bank balance. It will sure that profit of business will increase due to increasing of investment in proper way but risk of business will also increase. So reported net profit of Taj Hotel in 2010 was Rs. 36.27 Crore.

ESTIMATION OF WORKING CAPITAL MANGEMENT

As discussed above a number of factors are responsible for determining the amount of working capital required by firm. Let us know discuss the various methods/ technique used in assessment of firms working capital requirements. These methods are.

Estimation of components of working capital method This method is based on the basic definition of working capitalizes, excess of current assets over the current liabilities. In other word the amount of different constituent of the working capital such as debtors, cash inventories, creditors etc are estimated separately and the total amount of working capital requirement is worked out accordingly.

Percent sales method This is the most simple and widely used method in combination with other scientific methods. According to this method a ratio is determined for estimating the future working capital requirement. This is the generally based on the past experience of management as the ratio varies from industry to industry. For example if the past experience shows that the amount of working capital has been 20% of sales and projected amount of sales for the next year is Rs 10 lakes, the required amount of working capital shall be Rs 2 lakh.

25

As seen from above the above method is merely an estimation based on past experience. Therefore a lot depends on the efficiency of decision maker, which may not be correct in all circumstances. Moreover the basic assumptions regarding linear relationship between sales and the working capital may not hold well in all the cases. Therefore this method is not dependable and not universally acceptable. At best, this method gives a rough idea about the working capital. Operating cycle approach The need of working capital arises mainly because of them gap between the production of goods and their actual realization after sales. This gap is technically referred as the operating cycle or the cash cycle of the business. If it were possible to complete the entire job instantaneously, there would be no need for current asset (working capital) but since it is not possible, every business organization is forced to have current asset and hence operating cycle. It may be divided into four stages. 1. Raw materials and stores storage space. 2. Work in process stage. 3. Finished goods inventory stage. 4. Debtors collection stage,

Duration of operating cycle The duration of the operating cycle is equal to sum of the duration of these stages less the credit period allowed by the suppliers of the firm. In symbol OC= R+W+F+DC WHERE OC= Duration of the Operating Cycle R= Raw materials and storage space periods W= work in process periods. F= finished goods storage periods 26

D= debtor collection period C= Creditors collection period.

The component of the operating cycles has already been calculated in ratio Analysis which is as follow.

R=

Average stock of raw material Average raw material consumption per day

F=

Average stock of stores Average stores consumption per day

W=

Average work in process inventory Average cost of production per day

D=

Average book debts Average credit sales per day

C=

Average trade credit Average trade credit purchase per day

27

CHAPTER -2
REVIEW OF LITERATURE
Working capital shows a companys operational efficiency. If there is any money that is used for inventory or customers accounts, it cannot be used to pay a companys bills or other liabilities. An increase in working capital means that it is negative and a firm is not being efficient in its operations and accounts receivable collections are slow. Since working capital is the current assets minus the current liabilities, it can be used by investors and other reviewers of financial statements to show that a company is having trouble paying its creditors short term. The firm may have to consider bankruptcy as a way to take care of their liabilities and hopefully regain strength in their assets (Investopedia, 2010). A positive working capital discloses that a company can pay its short term liabilities. Working capital management is how companies improve their earnings, keep sufficient An efficient Working Capital Management (WCM) has a significant effect toward the creation of a firms value. It is a fact that financial managers in the firms used to give concentration on managing long-term financial decisions, especially capital structure, investment decisions, company valuation & dividends decisions. Only little attention was given to managing the short-term assets and liabilities, managers began to realize the importance of investigating those short-term assets and liabilities since the working capital management has an important role for the firms profitability & risk and the overall value of the firm. There is no doubt about the criticality of this issue to firms as holding too much working capital is inefficient and holding too little is dangerous to the organization's survival. This study looks at some. For the successful working of any business organization, fixed and current assets play a vital role. Management of working capital is essential as it has a direct impact on profitability and liquidity. In intention to discover the relationship between efficient working capital management and firms profitability(Shin & Soenen, 1998) used net-trade cycle (NTC) as a measure of working capital management. NTC is basically equal to the CCC whereby all three 28

components are expressed as a percentage of sales. The reason by using NTC because it can be an easy device to estimate for additional financing needs with regard to working capital expressed as a function of the projected sales growth. 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, in all cases, they found, a strong negative relation between the length of the firm's nettrade cycle and its profitability. In addition, shorter NTC are associated with higher riskadjusted stock returns. In other word, (Shin & Soenen, 1998) suggest that one possible way the firm to create shareholder value is by reducing firms NTC.

The study of (Shin & Soenen, 1998) consistent with later study on the same objective that done by (Deloof, 2003) by using sample of 1009 large Belgian non-financial firms for the period of 1992-1996. However, (Deloof, 2003) used trade credit policy and inventory policy are measured by number of days accounts receivable, accounts payable and inventories, and the cash conversion cycle as a comprehensive measure of working capital management. He founds a significant negative relation between gross operating income and the number of days accounts receivable, inventories and accounts payable. Thus, he suggests that managers can create value for their shareholders by reducing the number of days accounts receivable and inventories to a reasonable minimum. He also suggests that less profitable firms wait longer to pay their bills.

In other study, (Lyroudi & Lazaridis, 2000) use food industry Greek to examined the cash conversion cycle (CCC) as a liquidity indicator of the firms and tries to determine its relationship with the current and the quick ratios, with its component variables, and investigates the implications of the CCC in terms of profitability, indebtness and firm size. The results of their study indicate that there is a significant positive relationship between the cash conversion cycle and the traditional liquidity measures of current and quick ratios. The cash conversion cycle also positively related to the return on assets and the net profit margin but had no linear relationship with the leverage ratios. Conversely, the current and quick ratios had negative relationship with the debt to equity ratio, and a

29

positive one with the times interest earned ratio. Finally, there is no difference between the liquidity ratios of large and small firms.

Many researchers have studied working capital from different views and in different environments. The following ones were very interesting and useful for our research: (Eljelly, 2004) elucidated that efficient liquidity management involves planning and controlling current assets and current liabilities in such a manner that eliminates the risk of inability to meet due short-term obligations and avoids excessive investment in these assets. The relation between profitability and liquidity was examined, as measured by current ratio and cash gap (cash conversion cycle) on a sample of joint stock companies in Saudi Arabia using correlation and regression analysis. The study found that the cash conversion cycle was of more importance as a measure of liquidity than the current ratio that affects profitability. The size variable was found to have significant effect on profitability at the industry level. The results were stable and had important implications for liquidity management in various Saudi companies. First, it was clear that there was a negative relationship between profitability and liquidity indicators such as current ratio and cash gap in the Saudi sample examined. Second, the study also revealed that there was great variation among industries with respect to the significant measure of liquidity.

According to Deloof, 2003:Discussed that most firms had 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 profitability of those firms. Using correlation and regression tests he found a significant negative relationship between gross operating income and the number of days accounts receivable, inventories and accounts payable of Belgian firms. On basis of these results he suggested that managers could create value for their shareholders by reducing the number of days accounts receivable and inventories to a reasonable minimum. The negative relationship between accounts payable and profitability is consistent with the view that less profitable firms wait longer to pay their bills.

30

According to Ghosh and Maji, 2003:In this paper made an attempt to examine the efficiency of working capital management of the Indian cement companies during 1992 1993 to 2001 2002. For measuring the efficiency of working capital management, performance, utilization, and overall efficiency indices were calculated instead of using some common working capital management ratios. Setting industry norms as target-efficiency levels of the individual firms, this paper also tested the speed of achieving that target level of efficiency by an individual firm during the period of study. Findings of the study indicated that the Indian Cement Industry as a whole did not perform remarkably well during this period.

According to Shin and Soenen, 1998:Highlighted that efficient Working Capital Management (WCM) was very important for creating value for the shareholders. The way working capital was managed had a significant impact on both profitability and liquidity. The relationship between the length of Net Trading Cycle, corporate profitability and risk adjusted stock return was examined using correlation and regression analysis, by industry and capital intensity. They found a strong negative relationship between lengths of the firms nettradingCycle and its profitability. In addition, shorter net trade cycles were associated with higher risk adjusted stock returns.

31

According to Smith and Begemann 1997:Emphasized that those who promoted working capital theory shared that profitability and liquidity comprised the salient goals of working capital management. The problem arose because the maximization of the firm's returns could seriously threaten its liquidity, and the pursuit of liquidity had a tendency to dilute returns. This article evaluated the association between traditional and alternative working capital measures and return on investment (ROI), specifically in industrial firms listed on the Johannesburg Stock Exchange (JSE). The problem under investigation was to establish whether the more recently developed alternative working capital concepts showed improved association with return on investment to that of traditional working capital ratios or not. Results indicated that there were no significant differences amongst the years with respect to the independent variables. The results of their stepwise regression corroborated that total current liabilities divided by funds flow accounted for most of the variability in Return on Investment (ROI). The statistical test results showed that a traditional working capital leverage ratio, current liabilities divided by funds flow, displayed the greatest associations with return on investment. Wellknown liquidity concepts such as the current and quick ratios registered insignificant associations whilst only one of the newer working capital concepts, the comprehensive liquidity index, indicated significant associations with return on investment. All the above studies provide us a solid base and give us idea regarding working capital management and its components. They also give us the results and conclusions of those researches already conducted on the same area for different countries and environment from different aspects. On basis of these researches done in different countries, we have developed our own methodology for research. According to Marc Deloof 25th APR 2003:The relation between working capital management and corporate profitablity is investigated for a sample of 1,009 large Belgian non-financial firms for the 1992-1996 period. Trade credit policy and inventory policy are measured by number of days accounts receivable, accounts payable and inventories, and the cash conversion cycle is used as a comprehensice measure of working capital management. The results suggest 32

that managers can increase corporate profitablity by reducing the number of days accounts receivable and inventories. Less profitable firms wait longer to pay their bills.

M. A., Zariyawati a, M. N., Annuar b and A.S., Abdul Rahim c a ,b & c Univeristi Putra Malaysia, Malaysia. Working capital management is important part in firm financial management decision. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The purpose of this study is to investigate the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six different economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis provide a strong negative significant relationship between Amber Collins University of Phoenix:Working Capital Management Concepts Worksheet Concept Application of Concept in the Simulation Reference to Concept in Reading Describe the firm's cash conversion cycle: Cash inflow "Most firms keep track of the average time it takes customers to pay their bills. From this they can forecast what proportion of a quarter's sales is likely to be converted into cash in that quarter and what proportion is likely to be carried over to the next quarter as accounts receivable" (Allen, Brealey, & Myers 2005). Lawrence having a positive cash balance would have help in the event of emergencies as well as unplanned outflow of money. Cash flow comes from collections on accounts receivable (Allen, Brealey, & Myers 2005). Examine the effects of credit policy on cash conversion cycle and revenue: Commitment Lawrence had a commitment to the bank, Mayo, Murray, and Gartner.

33

According to Carole Howorth and Paul Westhead March 2003:Working capital management routines of a large random sample of small companies in the UK are examined. Considerable variability in the take-up of 11 working capital management routines was detected. Principal components analysis and cluster analysis confirm the identification of four distinct types of companies with regard to patterns of working capital management. The first three types of companies focused upon cash management, stock or debtors routines respectively, whilst the fourth type were less likely to take-up any working capital management routines. Influences on the amount and focus of working capital management are discussed. Multinomial logistic regression analysis suggests that the selected independent variables successfully discriminated between the four types of companies. The results suggest that small companies focus only on areas of working capital management where they expect to improve marginal returns. The difficulties of establishing causality are highlighted and implications for academics, policy-makers and practitioners are reported. According to Maynard E. Rafuse, (1996):Argues that attempts to improve working capital by delaying payment to creditors is counter-productive to individuals and to the economy as a whole. Claims that altering debtor and creditor levels for individual tiers within a value system will rarely produce any net benefit. Proposes that stock reduction generates system-wide financial improvements and other important benefits. Urges those organizations seeking concentrated working capital reduction strategies to focus on stock management strategies based on lean supply-chain techniques.

According to James A. Gentry, Dileep R. Mehta Working capital literature is rather limited and the process of managing shortterm resources is not understood well by academicians. In contrast, corporate managers are continuously involved in the working capital decision-making process, but their perspective is limited to the practices within their firm. In order to fill this gap in the working capital literature, a study of management perceptions of the working capital 34

process was undertaken. A survey was used to collect information from a sample of marketing, production, and financial executives in large corporations in Belgium, France, India, and the United States. The study interprets management ranking of working capital objectives and indicates the need to improve financial planning models to include explicitly short-run objectives; further, predictability of cash inflows and outflows is examined and the potential factors affecting predictability are evaluated. Finally, this study examines management perceptions of long-range objectives in order to provide a proper perspective to the shortrun financial planning.

According to M.K. Kolay:The article analyses the pros and cons of different strategies to be adopted to manage and avoid working capital crisis situations in any organisation. The working capital position depends on many organisational parameters which are interrelated and interdependent, and also vary over time. In such a situation, the use of a system dynamics approach has been advocated to reflect the relevant dynamic cause-and-effect relationships for the development of appropriate long-term and short-term strategies.

According to Wang Zhuquan et al 2007:Working capital management is the main contents of corporate finance, so the study in this field should gain much attention. Compared with the rapidly development of the practice, the development of the theory has been lagged obviously since 1990's.We suggest that the study should begin from the reclassification of working capital, and then, the new framework of the theory should be set up, which is based on the supply-chain management, the channel management and the customer relationship management. Meanwhile, we should launch on the survey of working capital management of Chinese companies and promulgate the results, which can offer the data for the study and evaluation of working capital management.

35

According to James A. Gentry, Paul Newbold, David T. Whitford, (1984) The objectives of this study are to offer cash based funds flow components as an alternative to financial ratios for classifying the financial performance of companies; to test empirically the ability of funds flow components to distinguish between failed and no failed companies with special emphasis on working capital components; to analyze the empirical results and make recommendations for future study.

According to Jeffrey Ashe 2000:Working Capital is the United States' largest peer-group lending program. This article reviews what Working Capital has learned about the market, its customers, program impact, and service delivery over its ten year history. It presents a model for understanding how participating in peer lending groups develops social and economic capital in poor communities. The article then discusses how participants judge the group model as they identify the characteristics of successful groups and the impact of the group on their businesses, on themselves personally, and on the larger community. The rest of the article discusses how Working Capital evolved from a start-up operation in a single town into a multistate program and explores the advantages and limitations of rapid expansion. A checklist for choosing affiliate partners is presented, along with a list of the lessons learned about delivering services though affiliates. According to Alan P. Hamlin, David F. Heathfield 2000:Working capital is a necessary input to the production process and yet is ignored in most economic models of production. The implications of modeling the time dimension of production, and hence the working capital requirements of firms, are explored, with particular stress placed on the competitive advantage gained by firms that retain flexibility in the time structure of their production.

36

According to VELLANKI S.S. KUMAR, AWAD S. HANNA, TERESA ADAMS, (2000):The systematic assessment of working capital requirement in construction projects deals with the analysis of various quantitative and qualitative factors in which information is subjective and based on uncertainty. There exists an inherent difficulty in the classical approach to evaluate the impact of qualitative factors for the assessment of working capital requirement. This paper presents a methodology to incorporate linguistic variables into workable mathematical propositions for the assessment of working capital using fuzzy set theory. This article takes into consideration the uncertainty associated with many of the project resource variables and these are reflected satisfactorily in the working capital computations. A case study illustrates the application of the fuzzy set approach. The results of the case study demonstrate the superiority of the fuzzy set approach to classical methods in the assessment of realistic working capital requirements for construction projects. According to Richard Petty, James Guthrie, (2000):The rise of the new economy, one principally driven by information and knowledge, is attributed to the increased prominence of intellectual capital (IC) as a business and research topic. Intellectual capital is implicated in recent economic, managerial, technological, and sociological developments in a manner previously unknown and largely unforeseen. Whether these developments are viewed through the filter of the information society, the knowledge-based economy, the network society, or innovation, there is much to support the assertion that IC is instrumental in the determination of enterprise value and national economic performance. First, we seek to review some of the most significant extant literature on intellectual capital and its developed path. The emphasis is on important theoretical and empirical contributions relating to the measurement and reporting of intellectual capital. The second part of this paper identifies possible future research issues into the nature, impact and value of intellectual management and reporting.

37

According to Sushma Vishnani, FCA, and Finance Faculty:It is felt that there is the need to study the role of working capital management policies on profitability of a company. Conventionally, it has been seen that if a company desires to take a greater risk for bigger profits and losses, it reduces the size of its working capital in relation to its sales. If it is interested in improving its liquidity, it increases the level of its working capital. However, this policy is likely to result in a reduction of the sales volume, therefore of profitability. Hence, a company should strike a balance between liquidity and profitability. In this paper an effort has been made to make an empirical study of Indian Consumer Electronics Industry for assessing the impact of working capital policies & practices on profitability during the period 199495 to 200405. The impact of working capital policies on profitability has been examined by computing coefficient of correlation and regression analysis between profitability ratio and some key working capital policy indicator ratios. According to Charles O. Egbu, (2004):Innovation is viewed as a major source of competitive advantage and is perceived to be a pre-requisite for organizational success and survival. The ability to innovate depends largely on the way in which an organisation uses and exploits the resources available to it. The paper explores the importance of knowledge management (KM) and intellectual capital (IC) in organisations. It also considers the critical factors that lead to successful innovations and the role of KM and IC in this regard. The paper argues that effective management of knowledge assets involves a holistic approach to a host of factors. It is also suggested that there are a host of factors that combine in different ways to produce successful organizational innovations. It recommends that more is needed on the education and training of construction personnel and that these education and training programmes should reflect the nature of innovation and KM dimensions as very complex social processes.

38

According to Kenneth A. Froot and Jeremy C. Stein in 1998:We develop a framework for analyzing the capital allocation and capital structure decisions facing financial institutions. Our model incorporates two key features: (i) valuemaximizing banks have a well-founded concern with risk management; and (ii) not all the risks they face can be frictionlessly hedged in the capital market. This approach allows us to show how bank-level risk management considerations should factor into the pricing of those risks that cannot be easily hedged. We examine several applications, including: the evaluation of proprietary trading operations, and the pricing of unhedgeable derivatives positions. We also compare our approach to the RAROC methodology that has been adopted by a number of banks. According to Pradeep Singh (2008):Empirically analysed that a firms working capital consists of its investments in current assets, which includes short-term assetscash and bank balance, inventories, receivable and marketable securities. Therefore, the working capital management refers to the management of the levels of all these individual current assets. On the other hand, inventory, which is one of the important elements of current assets, reflects the investment of a firms fund. Hence, it is necessary to efficiently manage inventories in order to avoid unnecessary investments. A firm, which neglects the management of inventories, will have to face serious problems relating to long-term profitability and may fail to survive. With the help of better inventory management, a firm can reduce the levels of inventories to a considerable degree.This paper tries to evaluate the effect of the size of inventory and the impact on working capital through inventory ratios, working capital ratios, trends, computation of inventory and working capital, and liquidity ranking. Finally, it was found that the size of inventory directly affects working capital and it's management. Size of the inventory and working capital of Indian Farmers Fertilizer Cooperative Limited (IFFCO) is properly managed and controlled compared to National Fertilizer Ltd. (NFL).

39

According to Pedro Juan Garca-Teruel and Pedro Martnez-Solano (2007):Conducted research for the object of the research presented in this paper is to provide empirical evidence on the effects of working capital management on the profitability of a sample of small and medium-sized Spanish firms. The results, which are robust to the presence of endogeneity, demonstrate that managers can create value by reducing their inventories and the number of days for which their accounts are outstanding. Moreover, shortening the cash conversion cycle also improves the firms profitability. The aim is to ensure that the relationships found in the analysis carried out are due to the effects of the cash conversion cycle on corporate profitability and not vice versa.

According to Naila Iqbal (2001):Examined that for increasing shareholder's wealth a firm has to analyze the effect of fixed assets and current assets on its return and risk. Working Capital Management is related with the Management of current assets. The Management of current assets is different from fixed assets on the basis of the following points i.e Current assets are for short period while fixed assets are for more than one Year.The large holdings of current assets, especially cash, strengthens Liquidity position but also reduces overall profitability, and to maintain an optimum level of liquidity and profitability, risk return trade off is involved holding Current assets.Only Current Assets can be adjusted with sales fluctuating in the short run. Thus, the firm has greater degree of flexibility in managing current Assets. The management of Current Assets helps affirm in building a good market reputation regarding its business and economic condition.

According to Vellanki S. Kumar, Awad S.Hanna, Teresa Adams (2000):Conducted research and examined that the systematic assessment of working capital requirement in construction projects deals with the analysis of various quantitative and qualitative factors in which information is subjective and based on uncertainty. There exists an inherent difficulty in the classical approach to evaluate the impact of qualitative factors for the assessment of working capital requirement. This paper presents a methodology to incorporate linguistic variables into workable mathematical propositions 40

for the assessment of working capital using fuzzy set theory. This article takes into consideration the uncertainty associated with many of the project resource variables and these are reflected satisfactorily in the working capital computations. A case study illustrates the application of the fuzzy set approach. The results of the case study demonstrate the superiority of the fuzzy set approach to classical methods in the assessment of realistic working capital requirements for construction projects.

According to Maynard E. Rafuse (1996):Argues that attempts to improve working capital by delaying payment to creditors is counter-productive to individuals and to the economy as a whole. Claims that altering debtor and creditor levels for individual tiers within a value system will rarely produce any net benefit. Proposes that stock reduction generates system wide financial improvements and other important benefits. Urges those organizations seeking concentrated working capital reduction strategies to focus on stock management strategies based on lean supply-chain techniques.

41

CHAPTER -3
OBJECTIVES OF THE REASERCH
Following are the objectives which are being considered in my study:1. To analyze the various components of working capital of Taj Hotels. 2. To study the financing of working capital of Taj Group of Hotel. 3. To study and analyze the operating cycle of Taj Group of Hotel.

42

CHAPTER -4
RESEARCH METHODOLOGY:
The research design is a pattern or an outline of research project working. It is a statement of only essential elements of study, those that provide basic guidelines for the details of the project. The present study is being conducted followed by Descriptive Research Design. Data Collection: Primary as well as secondary data is used for the project. The research vehicle for primary data collection is unstructured interview with the managers to get information regarding all variables for working capital management. Secondary data is collected from Annual Report, relevant files & records of Taj Group of hotels. Analysis of Data: The information gathered are the policies & practices regarding management of the working capital. Analysis is done in terms of theoretical concepts. Analysis of working capital performance is done with the help of percentages by showing graphs, ratios etc.

43

CHAPTER - 5
DATA ANALYSIS
1. EARNINGS: TAJ GVK HOTELS
Quarterly Results of Taj GVK Hotels & Resorts Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Book Value 44 -------- in Rs. Cr. -------Dec '09 Sep '10 Dec '10 64.36 59.76 70.24 ---64.36 59.76 70.24 38.26 40.47 42.40 26.10 19.29 27.84 ------------------------26.10 19.29 27.84 2.75 2.99 3.00 23.31 16.28 24.81 4.89 5.01 5.28 ---18.42 11.27 19.53 6.22 3.84 6.61 12.20 7.43 12.92 -0.04 -0.03 -0.03 ----1.95 -----1.18 -----2.06 --

Equity Reserves Face Value Capital Structure (Taj GVK Hotels & Resorts)

12.54 -2.00

12.54 -2.00

12.54 -2.00

45

Period From 2009 2008 2007 2006 2005 2004 2003 2002 2000 To 2010 2009 2008 2007 2006 2005 2004 2003 2002

Instrument

Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share Equity Share

Authorized Issued Capital Capital (Rs. cr) (Rs. cr) 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54 34.1 12.54

-PAIDUPShares (nos) 62701495 62701495 62701495 62701495 62701495 12540299 12540299 12540299 12540299 Face Value Capital 2 12.54 2 12.54 2 12.54 2 12.54 2 12.54 10 12.54 10 12.54 10 12.54 10 12.54

2. CAPITAL STRUCTURE:-

46

3. BALANCE SHEET. Balance Sheet of Taj GVK Hotels & Resorts

------------------- in Rs. Cr. -------------------

Mar '06 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 12.54 12.54 0.00 0.00 139.08 0.00 151.62 70.63 15.20 85.83 237.45 Mar '06 12 mths 254.08 60.89 193.19 20.74 13.96 2.54 7.35 5.00 14.89 38.86 9.00 62.75 0.00 41.49 15.52 57.01 5.74 3.81 47

Mar '07 12 mths 12.54 12.54 0.00 0.00 173.44 0.00 185.98 68.39 5.00 73.39 259.37 Mar '07 12 mths 258.13 64.45 193.68 76.02 0.00 3.07 6.01 3.25 12.33 27.58 22.00 61.91 0.00 48.26 26.72 74.98 -13.07 2.73

Mar '08 12 mths 12.54 12.54 0.00 0.00 220.39 0.00 232.93 50.47 24.00 74.47 307.40 Mar '08 12 mths 268.61 75.86 192.75 138.64 0.00 3.91 5.37 3.82 13.10 29.69 7.50 50.29 0.00 50.00 26.10 76.10 -25.81 1.82

Mar '09 12 mths 12.54 12.54 0.00 0.00 258.49 0.00 271.03 108.99 30.00 138.99 410.02 Mar '09 12 mths 463.13 89.12 374.01 69.37 0.00 4.49 6.35 2.13 12.97 19.85 0.00 32.82 0.00 52.90 14.94 67.84 -35.02 1.66

Mar '10 12 mths 12.54 12.54 0.00 0.00 280.13 0.00 292.67 120.33 5.00 125.33 418.00 Mar '10 12 mths 482.96 107.48 375.48 84.29 0.02 4.41 6.84 2.89 14.14 22.28 0.00 36.42 0.00 62.71 16.99 79.70 -43.28 1.50

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses

Total Assets Contingent Liabilities Book Value (Rs)

237.44 17.77 24.18

259.36 46.51 29.66

307.40 28.98 37.15

410.02 13.87 43.22

418.01 34.61 46.68

48

4. PROFITS AND LOSS A/C Profit & Loss account of Taj GVK Hotels & Resorts
Mar '06 12 mths Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses 188.74 0.00 188.74 -0.30 0.00 188.44 15.28 11.49 27.81 6.81 23.58 17.05 0.00 102.02 Mar '06 12 mths 86.72 86.42 5.18 81.24 10.89 0.48 69.87 0.09 69.96 23.70 46.25 86.74 0.00 49

------------------- in Rs. Cr. -------------------

Mar '07 12 mths 242.95 0.00 242.95 0.54 0.00 243.49 19.96 13.10 31.94 8.86 29.37 23.14 0.00 126.37 Mar '07 12 mths 116.58 117.12 4.22 112.90 11.22 1.13 100.55 -0.26 100.29 35.80 64.32 106.40 0.00

Mar '08 12 mths 257.49 0.00 257.49 0.88 0.00 258.37 21.18 14.00 35.19 9.12 29.10 25.17 0.00 133.76 Mar '08 12 mths 123.73 124.61 4.43 120.18 11.48 0.92 107.78 0.53 108.31 37.87 70.42 112.58 0.00

Mar '09 12 mths 237.48 0.00 237.48 0.28 0.00 237.76 0.00 15.19 41.08 35.22 30.57 28.84 -15.38 135.52 Mar '09 12 mths 101.96 102.24 6.63 95.61 13.65 0.00 81.96 2.42 84.38 28.92 52.77 135.52 0.00

Mar '10 12 mths 228.25 0.00 228.25 0.90 0.00 229.15 0.00 18.60 30.02 38.00 28.66 26.76 0.00 142.04 Mar '10 12 mths 86.21 87.11 12.22 74.89 19.61 0.00 55.28 -0.33 54.95 18.69 36.27 142.04 0.00

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend

Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

12.54 1.76 627.01 7.38 100.00 24.18

18.81 3.20 627.01 10.26 150.00 29.66

20.06 3.41 627.01 11.23 160.00 37.15

12.54 2.13 627.01 8.42 100.00 43.22

12.54 2.08 627.01 5.78 100.00 46.68

50

5. QUARTERLY RESULT Quarterly Results of Taj GVK Hotels & Resorts

Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Book Value Equity Dec '09 64.36 -64.36 38.26 26.10 --------26.10 2.75 23.31 4.89 -18.42 6.22 12.20 -0.04 ----1.95 -12.54 51

------------------- in Rs. Cr. -------------------

Mar '10 63.34 -63.34 37.04 26.30 --------26.30 2.86 23.67 5.05 -18.62 6.44 12.18 0.23 ----1.94 -12.54

Jun '10 60.99 -60.99 38.15 22.84 --------22.84 2.64 20.20 5.05 -15.15 5.04 10.11 -----1.61 -12.54

Sep '10 59.76 -59.76 40.47 19.29 --------19.29 2.99 16.28 5.01 -11.27 3.84 7.43 -0.03 ----1.18 -12.54

Dec '10 70.24 -70.24 42.40 27.84 --------27.84 3.00 24.81 5.28 -19.53 6.61 12.92 -0.03 ----2.06 -12.54

Reserves Face Value

-2.00

-2.00

-2.00

-2.00

-2.00

52

6. HALF YEARLY RESULT

Half Yearly Results of Taj GVK Hotels & Resorts
Sep '08 Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Year Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) 6 mths 120.58 -120.58 65.46 55.12 --------55.12 1.39 53.73 5.78 -47.95 16.61 31.34 -----53
------------------- in Rs. Cr. -------------------

Mar '09 6 mths 117.63 -117.63 70.43 47.20 ------0.86 --47.20 4.77 41.57 7.84 -33.73 12.22 21.51 -0.09 -----

Sep '09 6 mths 101.55 -101.55 67.22 34.33 --------34.33 6.56 27.78 9.67 -18.11 6.22 11.89 ------

Mar '10 6 mths 127.70 -127.70 75.30 52.40 --------52.40 5.61 46.98 9.94 -37.04 12.66 24.38 0.19 -----

Sep '10 6 mths 120.75 -120.75 78.62 42.13 --------42.13 5.63 36.48 10.06 -26.42 8.88 17.54 -0.03 -----

Earnings Per Share(Rs) Book Value(Rs) Equity Reserves Face Value(Rs)

5.00 -12.54 -2.00

3.43 -12.54 258.49 2.00

1.90 -12.54 -2.00

3.89 -12.54 -2.00

2.80 -12.54 -2.00

54

7.

NINE MONTHLY RESULT

Nine Months of Taj GVK Hotels & Resorts

Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Dec '06 175.01 0.76 175.78 93.81 81.20 --------81.96 2.42 79.56 9.59 -69.97 23.70 46.27 -0.67 ----7.38 55

------------------- in Rs. Cr. -------------------

Dec '07 186.11 1.32 187.43 99.76 86.35 --------87.67 2.07 85.59 8.61 -76.98 26.60 50.38 -----8.04

Dec '08 180.62 0.64 181.27 99.90 80.72 ------0.68 --81.36 2.60 78.07 8.90 -69.17 24.23 44.94 -0.09 ----7.17

Dec '09 165.91 -165.91 105.48 60.43 --------60.43 9.30 51.08 14.56 -36.52 12.43 24.09 -0.06 ----3.84

Dec '10 190.99 -190.99 121.01 69.98 --------69.98 8.63 61.32 15.34 -45.98 15.52 30.46 -0.03 ----4.86

Book Value Equity Reserves Face Value

-12.54 -2.00

-12.54 -2.00

-12.54 -2.00

-12.54 -2.00

-12.54 -2.00

56

8. YEAR RESULT
Yearly Results of Taj GVK Hotels & Resorts
Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Mar '06 188.74 0.65 189.39 103.37 85.37 --------86.02 3.97 82.05 12.10 -69.95 23.70 46.25 -----36.88 57
------------------- in Rs. Cr. -------------------

Mar '07 242.76 1.46 244.22 127.94 114.82 --------116.28 3.14 113.14 12.35 -100.79 36.47 64.32 -----10.26

Mar '08 257.49 1.58 259.06 135.54 121.95 --------123.53 2.83 120.69 12.40 -108.29 37.87 70.42 -----11.23

Mar '09 238.21 -238.21 135.89 102.32 ------0.86 --102.32 6.16 95.22 13.61 -81.61 28.84 52.77 -0.09 ----8.42

Mar '10 229.25 -229.25 142.52 86.73 --------86.73 12.17 74.74 19.61 -55.13 18.86 36.27 0.17 ----5.78

Book Value Equity Reserves Face Value

-12.54 139.08 10.00

-12.54 -2.00

-12.54 -2.00

-12.54 258.49 2.00

-12.54 280.13 2.00

58

9. CASH FLOW
Cash Flow of Taj GVK Hotels & Resorts
Mar '06 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 69.95 57.08 -46.94 2.70 12.84 1.15 14.00
------------------- in Rs. Cr. -------------------

Mar '07 12 mths 100.79 71.67 -34.85 -25.80 11.02 14.24 25.26

Mar '08 12 mths 108.29 79.23 -73.18 -19.99 -13.94 25.26 11.32

Mar '09 12 mths 81.69 85.20 -125.75 31.37 -9.18 11.32 2.13

Mar '10 12 mths 54.96 65.47 -36.21 -28.51 0.75 2.13 2.89

59

10.

RATIO
------------------- in Rs. Cr. -------------------

Key Financial Ratios of Taj GVK Hotels & Resorts

Mar '06 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio 2.00 2.00 13.83 30.10 15.61 -45.94 40.06 43.99 30.19 30.82 24.43 24.81 31.94 30.50 31.77 15.71 15.71 31.94 1.10 1.06 0.57 0.57 19.11 0.57 16.82 12.11 60

Mar '07 2.00 3.00 18.57 38.75 21.26 -47.91 43.16 46.78 31.00 31.65 26.39 26.58 40.39 34.58 35.34 29.23 29.23 40.44 0.82 0.78 0.39 0.39 33.38 0.39 27.78 19.19

Mar '08 2.00 3.20 19.73 41.07 28.90 -48.04 43.44 43.58 31.84 31.84 27.25 27.25 36.49 30.47 30.23 36.86 36.86 38.27 0.54 0.61 0.32 0.26 39.60 0.32 28.09 19.68

Mar '09 2.00 2.00 16.26 37.88 35.43 -42.93 37.01 37.18 28.29 28.29 22.11 22.11 21.80 19.58 19.99 42.96 42.96 22.43 0.38 0.42 0.51 0.47 13.49 0.51 15.55 11.02

Mar '10 2.00 2.00 13.75 36.40 38.90 -37.77 29.04 29.18 24.57 24.57 15.81 15.81 16.18 12.45 12.61 46.44 46.44 16.22 0.45 0.39 0.43 0.42 5.54 0.43 7.14 5.57

Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times Earnings Per Share Book Value

74.48 34.48 80.84 0.96 0.79 0.74 --10.95 8.09 -3.65 41.68 30.91 24.81 69.56 75.50 1.47 Mar '06 7.38 24.18

79.39 36.37 86.57 1.00 0.94 0.94 ---19.35 8.21 -3.43 41.45 34.21 28.70 66.03 71.47 0.95 Mar '07 10.26 29.66

71.84 45.22 71.84 0.96 0.84 0.96 ---36.08 8.22 -3.42 35.03 33.33 28.34 66.41 71.47 0.91 Mar '08 11.23 37.15

96.36 40.49 96.36 0.51 0.58 0.51 ---53.08 --3.61 28.09 27.80 22.09 72.77 78.27 2.06 Mar '09 8.42 43.22

87.42 34.60 87.42 0.47 0.55 0.47 ---68.28 --3.95 27.10 40.31 26.16 60.21 74.06 2.22 Mar '10 5.78 46.68

61

11.MARKET CAPITALISATION:- HOTELS

Company Name Indian Hotels EIH Mahindra Holida Hotel Leela Taj GVK Hotels Oriental Hotels Asian Hotels Sterling Holida Asian Hotel (E) EIH Assoc Hotel Bhagwati Banque Asian Hotel (W) Graviss Hosp Blue Coast Sinclair Hotels Sayaji Hotels Royal Orchid Advani Hotels Viceroy Hotels Fomento Resorts Mac Charles Kamat Hotels UP Hotels Country Club (I CHL Gandhinagar Hot Benares Hotels Tulip StarHotel Vedant Hotels James Hotels Savera Ind Guj Hotels Best Eastern Ho Jindal Hotels Royale Manor Lakeland Hotels Velan Hotels HS India Polo Hotels Ras Resorts Howard Hotels Cindrella Hotel Last Price 81.55 104.50 351.25 38.95 106.65 29.50 235.70 69.95 295.15 162.65 98.60 220.80 27.20 231.85 320.00 110.50 63.70 35.50 37.65 92.50 223.10 83.70 227.85 12.12 80.00 96.15 475.15 105.35 9.83 58.85 38.00 115.15 135.00 37.20 13.07 16.75 23.15 8.88 37.50 28.90 9.31 20.80 % Chg -0.73 -1.37 -1.57 -0.64 -1.89 -5.45 -0.90 -1.27 -0.71 -6.74 -0.10 5.07 0.00 -4.98 0.00 -4.58 -2.00 -5.33 -1.95 0.00 -2.15 0.48 3.80 -4.11 0.00 -4.99 0.02 -5.98 -1.99 -0.93 -8.10 0.00 0.00 -4.62 -0.91 -11.61 -3.94 -7.69 0.00 1.05 -3.22 5.00 62 52 wk 52 wk High Low 118.35 76.10 180.80 90.00 574.00 330.00 58.70 34.10 178.50 96.10 45.20 27.50 700.30 212.05 111.70 67.00 494.00 10.00 250.80 115.90 198.00 69.70 499.00 195.10 40.90 20.00 271.00 130.50 330.00 168.00 144.00 75.45 94.00 55.00 64.80 32.00 60.00 26.05 155.65 92.50 318.55 197.00 167.50 64.50 380.10 209.00 26.70 10.42 150.00 77.30 270.00 59.95 562.00 368.00 216.95 97.65 12.93 7.31 167.65 39.00 63.00 25.00 158.80 60.20 175.30 88.85 81.30 33.60 25.70 12.00 30.95 14.40 67.40 19.20 13.34 7.55 63.90 18.65 48.30 23.10 18.31 7.63 31.60 13.65 Market Cap (Rs. cr) 6,193.50 4,106.37 2,958.57 1,510.58 668.71 526.87 458.51 342.26 336.52 318.58 288.76 251.75 235.13 205.53 194.09 193.57 173.48 164.08 159.66 148.00 146.14 130.82 123.04 103.16 87.71 65.14 61.77 48.57 48.25 47.08 45.33 43.61 22.75 22.32 22.13 18.45 17.94 14.42 12.74 10.98 8.48 7.49

12. SECTORWISE PRICE PERFORMANCE

Company Name Advani Hotels 1 Year 50.20 -29.28% 401.65 -26.52% 421.30 -47.59% 555.90 -57.60% 369.95 28.44% 82.40 19.66% 137.60 68.50% 23.50 -11.49% 18.10 -33.04% 123.85 -15.62% 114.65 41.87% 69.10 39.15% 30.00 -9.33% 46.40 -16.06% 13.48 -30.93% 9 6 3 1 2 1 Last Month Month Month Month Week Week Price 42.10 45.75 39.20 37.00 37.75 33.75 35.50 -9.44% -4.05% -5.96% 5.19% 15.68% 22.40% 401.65 360.95 403.10 324.10 300.65 282.05 295.15 -8.93% -1.83% 4.64% 26.52% 18.23% 26.78% 421.30 323.10 230.00 216.00 212.65 203.25 220.80 -4.00% 2.22% 3.83% 8.63% 47.59% 31.66% 421.80 452.50 291.20 237.25 233.25 223.00 235.70 -0.65% 1.05% 5.70% 44.12% 47.91% 19.06% 381.65 490.00 486.00 480.00 464.00 461.05 475.15 24.50% -3.03% -2.23% -1.01% 2.40% 3.06% 126.20 170.85 112.80 76.55 101.00 96.85 98.60 28.80% -2.38% 1.81% 21.87% 42.29% 12.59% 149.90 166.70 169.90 237.50 254.90 245.00 231.85 54.67% 39.08% 36.46% -2.38% -9.04% -5.37% 23.20 22.70 23.00 17.20 15.75 18.04 20.80 -8.37% -9.57% 20.93% 32.06% 15.30% 10.34% 21.15 18.60 17.50 13.95 13.01 11.58 12.12 -6.84% 4.66% 42.70% 34.84% 30.74% 13.12% 121.30 134.15 119.65 106.25 103.10 93.50 104.50 -1.65% 1.36% 11.76% 13.85% 22.10% 12.66% 185.65 140.00 140.95 170.30 180.00 144.00 162.65 16.18% 15.40% -4.49% -9.64% 12.95% 12.39% 203.85 237.05 170.60 143.50 116.55 77.40 96.15 24.22% 52.83% 59.44% 43.64% 33.00% 17.50% 31.95 30.25 30.00 26.90 29.75 23.90 27.20 -9.33% 1.12% -8.57% 13.81% 14.87% 10.08% 50.70 50.40 47.85 43.45 41.05 37.00 38.95 -5.12% 5.27% 23.18% 22.72% 18.60% 10.36% 13.96 14.59 12.23 10.25 10.14 10.39 9.31 -9.17% -8.19% 63

Asian Hotel (E)

Asian Hotel (W)

Asian Hotels Benares Hotels Bhagwati Banque Blue Coast Cindrella Hotel

Country Club (I

EIH

EIH Assoc Hotel

Gandhinagar Hot

Graviss Hosp

Hotel Leela Howard Hotels

HS India

9.00 -1.33% 89.75 -9.14% 93.50 -37.06% 46.65 -20.26% 65.75 27.30% 2.10 -41.90% 20.65 -18.89% 198.95 12.14% 439.20 -20.03% 26.07 13.16% 25.90 11.58% 79.30 -19.67% 19.35 -32.45% 23.55 61.36% 74.45 48.42%

Indian Hotels

James Hotels

Jindal Hotels

Kamat Hotels

Khyati Multimed

Lakeland Hotels

Mac Charles

Mahindra Holida

Oriental Hotels

Ras Resorts

Royal Orchid

Royale Manor

Savera Ind

Sayaji Hotels

10.39% 33.31% 36.19% 23.88% 10.35 10.74 10.16 9.23 8.78 7.74 8.88 -3.79% 1.14% 14.73% 14.20% 17.32% 12.60% 114.50 108.75 99.95 98.25 92.45 81.10 81.55 0.55% 28.78% 25.01% 18.41% 17.00% 11.79% 76.05 66.90 48.45 59.15 62.50 56.70 58.85 21.47% -0.51% -5.84% 3.79% 22.62% 12.03% 63.75 62.75 53.40 40.80 39.65 34.50 37.20 -8.82% -6.18% 7.83% 41.65% 40.72% 30.34% 117.10 113.80 125.10 96.45 88.95 76.70 83.70 -5.90% 9.13% 28.52% 26.45% 33.09% 13.22% 1.60 1.52 1.51 1.25 1.03 1.16 1.22 -2.40% 18.45% 5.17% 23.75% 19.74% 19.21% 22.10 22.70 24.00 19.10 18.35 17.00 16.75 -8.72% -1.47% 24.21% 26.21% 30.21% 12.30% 262.00 257.15 227.60 222.50 212.05 222.15 223.10 -1.98% 0.27% 5.21% 0.43% 14.85% 13.24% 486.00 474.95 366.15 367.85 356.90 352.55 351.25 -4.07% -4.51% -1.58% -0.37% 27.73% 26.04% 39.40 36.90 28.78 30.40 30.40 28.00 29.50 2.50% -2.96% -2.96% 5.36% 25.13% 20.05% 39.50 42.75 42.30 36.05 28.50 27.70 28.90 1.40% 4.33% 26.84% 32.40% 31.68% 19.83% 76.00 82.00 75.55 71.25 67.60 60.60 63.70 -5.77% 5.12% 16.18% 22.32% 15.68% 10.60% 21.90 19.15 17.05 14.60 13.69 12.58 13.07 -4.53% 3.90% 40.32% 31.75% 23.34% 10.48% 49.70 29.18 29.38 39.95 40.50 33.95 38.00 30.23% 29.34% -4.88% -6.17% 11.93% 23.54% 126.35 119.80 106.30 122.00 116.00 112.30 110.50 -7.76% 3.95% -9.43% -4.74% -1.60% 12.54% 64

Sterling Green

17.70 -9.60% 69.40 0.79% 148.20 -28.04% 105.00 0.33% 207.35 9.89% 9.48 3.69% 59.00 -60.76% 44.50 -15.39%

Sterling Holida

Taj GVK Hotels

Tulip StarHotel

UP Hotels Vedant Hotels Velan Hotels

Viceroy Hotels

20.80 18.35 19.80 15.70 16.95 15.75 16.00 1.91% -5.60% 1.59% 23.08% 12.81% 19.19% 80.30 97.55 90.30 85.70 82.30 68.15 69.95 2.64% 12.89% 28.29% 22.54% 18.38% 15.01% 159.40 162.95 133.90 121.35 113.75 101.45 106.65 -6.24% 5.13% 33.09% 34.55% 20.35% 12.11% 185.95 176.00 132.20 119.65 117.95 111.85 105.35 -5.81% 43.34% 40.14% 20.31% 11.95% 10.68% 290.55 212.10 222.65 225.00 218.00 219.60 227.85 7.43% 2.34% 1.27% 4.52% 3.76% 21.58% 8.26 9.53 10.76 9.50 9.51 9.78 9.83 19.01% 3.15% -8.64% 3.47% 3.36% 0.51% 25.80 26.15 23.15 23.20 23.00 22.20 23.15 -0.22% 0.65% 4.28% 10.27% 11.47% 41.85 52.25 44.80 37.65 32.30 33.90 37.65 16.56% 11.06% 10.04% 27.94% 15.96%

65

13.

NET SALES OF HOTELS

Net Sales as per the latest Profit & Loss Account available:Company Name Indian Hotels EIH Mahindra Holida Hotel Leela Taj GVK Hotels Country Club (I Oriental Hotels EIH Assoc Hotel Asian Hotels Kamat Hotels Blue Coast Sayaji Hotels Royal Orchid CHL Bhagwati Banque Graviss Hosp Asian Hotel (W) UP Hotels Viceroy Hotels Mac Charles Asian Hotel (E) Fomento Resorts Savera Ind Advani Hotels Sterling Holida Benares Hotels Royale Manor Jindal Hotels HS India Sinclair Hotels Velan Hotels Lakeland Hotels Howard Hotels Sterling Green Gandhinagar Hot Ras Resorts Lords Ishwar Vedant Hotels Best Eastern Ho Cindrella Hotel Last Price 81.55 104.50 351.25 38.95 106.65 12.12 29.50 162.65 235.70 83.70 231.85 110.50 63.70 80.00 98.60 27.20 220.80 227.85 37.65 223.10 295.15 92.50 38.00 35.50 69.95 475.15 13.07 37.20 8.88 320.00 23.15 16.75 9.31 16.00 96.15 28.90 9.13 9.83 135.00 20.80 66 Change -0.60 -1.45 -5.60 -0.25 -2.05 -0.52 -1.70 -11.75 -2.15 0.40 -12.15 -5.30 -1.30 0.00 -0.10 0.00 10.65 8.35 -0.75 -4.90 -2.10 0.00 -3.35 -2.00 -0.90 0.10 -0.12 -1.80 -0.74 0.00 -0.95 -2.20 -0.31 0.10 -5.05 0.30 0.00 -0.20 0.00 0.99 % Change -0.73 -1.37 -1.57 -0.64 -1.89 -4.11 -5.45 -6.74 -0.90 0.48 -4.98 -4.58 -2.00 0.00 -0.10 0.00 5.07 3.80 -1.95 -2.15 -0.71 0.00 -8.10 -5.33 -1.27 0.02 -0.91 -4.62 -7.69 0.00 -3.94 -11.61 -3.22 0.63 -4.99 1.05 0.00 -1.99 0.00 5.00 Net Sales (Rs. cr) 1,473.29 774.13 468.75 430.12 228.25 212.44 192.77 147.94 144.96 102.81 87.19 82.19 77.83 70.37 63.81 61.92 60.18 58.80 57.25 43.53 41.22 40.41 34.78 31.64 30.59 23.08 19.89 19.12 14.56 13.50 12.68 11.37 8.62 7.59 6.50 5.67 5.51 4.10 3.99 3.24

14.

NET PROFIT

Net Profit as per the latest Profit & Loss Account available Company Name Indian Hotels Mahindra Holida EIH Hotel Leela Taj GVK Hotels Asian Hotels Mac Charles Oriental Hotels Country Club (I Asian Hotel (E) CHL UP Hotels Asian Hotel (W) Bhagwati Banque Royal Orchid Fomento Resorts Blue Coast EIH Assoc Hotel Sayaji Hotels Benares Hotels Sinclair Hotels Graviss Hosp Savera Ind Guj Hotels HS India Jindal Hotels Lakeland Hotels Kamat Hotels Royale Manor Velan Hotels Howard Hotels Advani Hotels Lords Ishwar Best Eastern Ho Sterling Green Ras Resorts Gandhinagar Hot Cindrella Hotel Polo Hotels Last Price 81.55 351.25 104.50 38.95 106.65 235.70 223.10 29.50 12.12 295.15 80.00 227.85 220.80 98.60 63.70 92.50 231.85 162.65 110.50 475.15 320.00 27.20 38.00 115.15 8.88 37.20 16.75 83.70 13.07 23.15 9.31 35.50 9.13 135.00 16.00 28.90 96.15 20.80 37.50 Change -0.60 -5.60 -1.45 -0.25 -2.05 -2.15 -4.90 -1.70 -0.52 -2.10 0.00 8.35 10.65 -0.10 -1.30 0.00 -12.15 -11.75 -5.30 0.10 0.00 0.00 -3.35 0.00 -0.74 -1.80 -2.20 0.40 -0.12 -0.95 -0.31 -2.00 0.00 0.00 0.10 0.30 -5.05 0.99 0.00 % Change -0.73 -1.57 -1.37 -0.64 -1.89 -0.90 -2.15 -5.45 -4.11 -0.71 0.00 3.80 5.07 -0.10 -2.00 0.00 -4.98 -6.74 -4.58 0.02 0.00 0.00 -8.10 0.00 -7.69 -4.62 -11.61 0.48 -0.91 -3.94 -3.22 -5.33 0.00 0.00 0.63 1.05 -4.99 5.00 0.00 Net Profit (Rs. cr) 153.10 117.84 57.23 41.02 36.27 26.88 25.25 23.15 17.96 14.28 11.42 10.74 9.98 9.61 8.28 6.98 6.87 5.29 5.18 3.77 3.43 3.07 3.07 2.50 2.32 1.87 1.72 1.39 1.22 1.12 0.95 0.77 0.75 0.56 0.55 0.45 0.45 0.16 0.15

67

15. TOTAL ASSETS Hotels: Total Assets as per the latest Balance Sheet available Company Name Indian Hotels Hotel Leela EIH Mahindra Holida Viceroy Hotels Asian Hotels Country Club (I Asian Hotel (E) Kamat Hotels Oriental Hotels Taj GVK Hotels EIH Assoc Hotel Royal Orchid Blue Coast Asian Hotel (W) Graviss Hosp Sayaji Hotels Mac Charles Bhagwati Banque CHL James Hotels Sinclair Hotels Savera Ind UP Hotels Fomento Resorts Tulip StarHotel Advani Hotels Sterling Holida Royale Manor Vedant Hotels HS India Sterling Green Gandhinagar Hot Jindal Hotels Lakeland Hotels Benares Hotels Velan Hotels Ras Resorts UG Hotels Last Price 81.55 38.95 104.50 351.25 37.65 235.70 12.12 295.15 83.70 29.50 106.65 162.65 63.70 231.85 220.80 27.20 110.50 223.10 98.60 80.00 58.85 320.00 38.00 227.85 92.50 105.35 35.50 69.95 13.07 9.83 8.88 16.00 96.15 37.20 16.75 475.15 23.15 28.90 7.45 % Chg -0.73 -0.64 -1.37 -1.57 -1.95 -0.90 -4.11 -0.71 0.48 -5.45 -1.89 -6.74 -2.00 -4.98 5.07 0.00 -4.58 -2.15 -0.10 0.00 -0.93 0.00 -8.10 3.80 0.00 -5.98 -5.33 -1.27 -0.91 -1.99 -7.69 0.63 -4.99 -4.62 -11.61 0.02 -3.94 1.05 0.00 Gross Block 2,408.32 4,145.53 2,486.09 489.22 453.19 1,052.51 485.57 212.75 389.15 328.69 482.96 377.40 80.14 250.50 363.92 181.36 195.38 110.12 44.96 90.02 28.49 43.82 78.27 78.81 62.26 0.00 66.61 251.45 41.00 41.49 24.30 28.84 25.78 37.53 28.35 34.30 34.94 14.42 21.15 Net CWIP Block 1,561.26 370.12 3,668.67 1,221.19 1,998.04 174.46 406.73 97.87 376.42 692.47 979.55 9.90 433.14 98.38 162.98 1.58 314.44 46.03 199.69 96.80 375.48 84.29 262.68 1.71 54.83 83.76 195.76 0.00 295.22 0.00 150.64 0.00 164.83 24.68 71.13 0.08 33.33 78.74 52.45 1.21 27.19 63.88 28.52 1.82 56.09 0.00 41.24 0.05 31.15 11.79 0.00 0.00 42.12 0.04 178.10 48.56 24.21 4.43 34.88 0.72 17.38 10.44 25.47 0.04 15.71 13.26 24.66 0.63 21.23 0.82 24.17 1.04 25.45 0.32 10.02 3.52 12.56 0.00 Total Assets 5,343.87 4,932.80 2,676.63 1,254.35 1,114.57 950.35 872.64 747.08 572.52 467.21 418.00 355.11 336.17 329.15 321.05 296.39 233.75 199.34 175.21 107.85 98.95 79.36 61.00 57.22 54.84 52.20 45.02 44.94 39.57 38.60 32.57 31.51 29.04 26.47 25.40 24.92 24.26 13.23 13.11

68

Working Capital Size

Working Capital Size
Years Net W.C W.C. Indices 2005-06 16.74 100 2006-07 10.93 89.23 2007-08 10.69 89.06 (Rs. In cr.) 2008-09 13.02 96.12 2009-10 18.28 120.2

Observations:It was observed that major source of liquidity problem is the mismatch between current payments and current receipts from the Comparison of funds flow statements of AIL for five years. This two together pushed down the net working capital to the present level. The fall in working capital is a clear indication that the company is utilizing its short term resources with efficiency. In year 2005-06 the company net working capital was 16.74 and after 3 years it increasing and 2009-10 the company net working capital was 18.28

69

Current Assets
Total assets are basically classified in two parts as fixed assets and current assets. Fixed assets are in the nature of long term or life time for the organization. Current assets convert in the cash in the period of one year. It means that current assets are liquid assets or assets which can convert in to cash within a year.

Current Assets Size

Particulars Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Total C.A. Indices 53.75 100 39.91 77.99 42.79 95.26 38.86 27.58 29.69 5.00 3.25 3.82 2005-06 2.54 7.35 2006-07 3.07 6.01 2007-08 3.91 5.37

(Rs. In Cr.) 2008-09 4.49 6.35 2009-10 4.41 6.84

3.13

2.89

19.85

22.28

33.82 73.54

36.42 75.23

70

Observations:It was observed that the size of current assets is increasing with increases in the sales. The excess of current assets is showing positive liquidity position of the firm but it is not always good because excess current assets then required, it may adversely affects on profitability. Current assets include some funds investments for which company pay interest.

71

Current Liabilities
Current liabilities mean the liabilities which have to pay in current year. It includes sundry creditors means supplier whose payment is due but not paid yet, thus creditors called as current liabilities. Current liabilities also include short term loan and provision as tax provision. Current liabilities also includes bank overdraft. For some current assets like bank overdrafts and short term loan, company has to pay interest thus the management of current liabilities has importance

Current Liabilities Size

Particulars Current Liabilities Provisions Total of B Indices of C.L. 15.52 57.01 100 26.72 74.98 130.14 26.10 76.1 133.21 2005-06 41.49 2006-07 48.26 2007-08 50.00

(Rs. In Cr.) 2008-09 52.90 2009-10 62.71

14.94 67.84 120.2

16.99 79.7 140.2

72

Observations:Current liabilities show continues growth each year because company creates the credit in the market by good transaction. To get maximum credit from supplier which is profitable to the company it reduces the need of working capital of firm. As a current liability increase in the year 2009-10 by 79.9 cr., it reduce the working capital size in the same year. But company enjoyed over creditors which may include indirect cost of credit terms.

Changes in Working Capital

There are so many reasons to changes in working capital as follow

1. Changes in sales and operating expanses The changes in sales and operating expenses may be due to three reasons

There may be long run trend of change e.g. The price of row material say oil may constantly raise necessity the holding of large inventory.

Cyclical changes in economy dealing to ups and downs in business activity will influence the level of working capital both permanent and temporary.

Changes in seasonality in sales activities

2. Policy changes The second major case of changes in the level of working capital is because of policy changes initiated by management. The term current assets policy may be defined as the relationship between current assets and sales volume.

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1. Technology changes

The third major point if changes in working our business more working capital is required A change in operating expenses rise or full will have similar effects on the levels of working following working capital statement is prepared capital are changes in technology because changes in technology to install that technology in on the base of balance sheet of last two year

Changes in Working Capital

(Rs. In Cr.)

Statement of Changes in Working Capital

Particular A)Current Assets Inventories Sundry Debtors Cash and Bank Balance Loans and Advances Total A B)Current Liabilities Current Liabilities Provisions Total of B W.C (A-B) Net increase in W.C Total -35.02 52.90 14.94 67.84 -35.02 62.71 16.99 79.7 -43.28 13.94 -35.02 14.78 13.94 14.78 9.81 2.05 4.49 6.35 2.13 19.85 32.82 4.41 6.84 2.89 22.28 36.42 2.43 0.49 0.76 2008-09 2009-10 Changes in W.C

Increase Decrease
0.08

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Working Capital Turnover Ratio

It signifies that for an amount of sales, a relative amount of working capital is needed. If any increase in sales contemplated working capital should be adequate and thus this ratio helps management to maintain the adequate level of working capital. The ratio measures the efficiency with which the working capital is being used by a firm. It may thus computer net working capital turnover by dividing sales by working capital. Working Capital Turnover Ratio= ____Sales___ Net Working Capital

Working Capital Turnover

Particular Sales Net W.C W.C Turnover Ratio 2005-06 188.74 16.74 11.27 2006-07 242.95 10.93 22.22 2007-08 257.49 10.69 24.08 2008-09 237.48 13.02 18.23

(Rs. In cr.) 2009-10 228.25 18.28 12.48

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Observations:High working capital ratio indicates the capability of the organization to achieve maximum sales with the minimum investment in working capital. Company working capital ratio shows mostly more than 3, except for the year 2006-07 In the year 2009-10 the ratio was around 12.48, it indicates that the capability of the company to achieve maximum sales with the minimum investment in working capital.

Current Assets Turnover Ratio

Current assets turnover ratio is calculate to know the firms efficiency of utilizing the current assets .current assets includes the assets like inventories, sundry debtors, bills receivable, cash in hand or bank, marketable securities, prepaid expenses and short term loans and advances. This ratio includes the efficiency with which current assets turn into sales. A higher ratio implies a more efficient use of funds thus high turnover ratio indicate to reduced the lock up of funds in current assets. An analysis of this ratio over a period of time reflects working capital management of a firm.

Current Assets Turnover Ratio= ____Sales_____ Current Assets

Calculation of Current Assets Turnover Ratio

(Rs. In Cr.)
Particular Sales Current Assets Current Assets Turn over Ratio 2005-06 188.74 14.89 12.67 2006-07 242.95 12.33 19.70 2007-08 257.49 13.10 19.65 2008-09 237.48 12.97 18.65 2009-10 228.25 14.14 16.14

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Observations
It was observed that current assets turnover ratio does not indicate any trend over the period of time. Turnover ratio was 12.67 in the year 2000-06 and increase to 19.70 in the year 2006-07. Company increased its sales with increased investment in current assets, thus current assets turnover ratio increased to 16.14 in the year 2009-10.

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Current Ratio
The current is calculated by dividing current assets by current liabilities:

Current Ratio = ___Current assets__ Current liabilities

Current assets include cash and those assets which can be converted in to cash within a year, such marketable securities, debtors and inventories. All obligations within a year are include in current liabilities. Current liabilities include creditors, bills payable accrued expenses, short term bank loan income tax liabilities and long term debt maturing in the current year. Current ratio indicates the availability of current assets in rupees for every rupee of current liability.

Current Ratio
( Rs. In Cr.) Particular 2005-06 2006-07 2007-08 2008-09 2009-10

Current Assets
Current Liabilities Current Ratio

53.75

39.91

42.79

33.82

36.42

41.49

48.26

50.00

52.90

62.71

1.29:1

0.82

0.85

0.63

0.58

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Observations:
The current ratio indicates the availability of funds to payment of current liabilities in the form of current assets. A higher ratio indicates that there were sufficient assets available with the organization which can be converted in cash, without any reduction in the value. It is very high 1.29 in 2005-06, but regularly decreases. In 2009-10 it comes at 10.58.

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Quick Ratio
Quick ratio is also known as acid test ratio or liquid ratios it is more rigorous test of liquidity than the current ratio. It establishes relationship between liquid assets & current liabilities. An asset is said to be liquid if it can be converted into cash within a shorter period without loss of value. Quick ratio = Quick assets current liabilities

Particular

2005-06

2006-07

200708

200809 29.33

200910 32.01

Quick Assets
Current Liabilities Quick Ratio

51.21

36.84

38.88

41.49

48.26

50.00

52.90

62.71

1.23:1

0.76

0.77

0.55

0.51

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Observations:Quick ratio indicates that the company has sufficient liquid balance for the payment of current liabilities. The liquid ratio of 1:1 is suppose to be standard or ideal but here ratio is more than 1:1 over the period of time, it indicates that the firm maintains the over liquid assets than actual requirement of such assets.

Debtors Turnover Ratio

Debtor Turnover Ratio=________365___________ Receivable Turnover Ratio

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Calculation of Debtors Turnover Ratio

( Rs. In Cr.) Particular 2005-06 2006-07 2007-08 2008-09 2009-10

Gross Sales

188.74

242.95

257.49

237.48

228.25

Average Debtors Receivable Turnover Ratio

7.35

6.01

5.37

6.35

6.84

34.48

36.37

45.22

40.49

34.60

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Observations
It was observed from receivable turnover ratio that receivables turned around the sales were less than 4 times. The actual collection period was more than normal collection period allowed to customer. It concludes that over investment in the debtors which adversely affect on requirement of the working capital finance and cost of such finance.

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CHAPTER -6
CONCLUSION AND MAJOR FINDS Conclusion
Working capital management is important aspect of financial management. The study of working capital management of Taj Hotel has revealed that the Net Working Capital was improving regularly from 16.74 in 2005-06 to 18.28 in 2009-10 which is as per standard industrial practice. The current Assets of the company showed an increasing Rs. 12.67 Cr. in year 2005-06 but in 2000-010 it stable at Rs.16.14 cr. The study has been conducted on working capital ratio analysis, current ratio, and Change the working capital components which helped the company to manage its working capital efficiency and affectively.

1. Working capital of the company was increasing from year 2005-06 Rs.16.74 cr. to Rs. 13.02 cr. in 2007-08 and come down to Rs.18.28 Million in 200910. It is showing positive working capital per year. It shows good liquidity position. 2. Positive working capital indicates that company has the ability of payments of short terms liabilities. 3. Working capital increased because of increment in the current assets. Companys current assets were always more than requirement it affect on profitability of the company. 4. In the year 2007-08 and 2008-09 working capital decreased because increased of expenses as manufacturing expenses and increase the price of raw material. 5. The size of the cash in the current assets of the company indicates the miss cash management of the company. The cash balance in the year 2006-07 was extremely increased. Company failed to proper investment of available cash.

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Major Findings
Statement Showing Difference from Previous year:-

Particular

2006-07

2007-08

2008-09

2009-10

Investments Inventories Sundry Debtors Cash & Bank Balance Current Liabilities Reserve

0.00 3.07 6.01 3.25 48.26 173.44

0.00 3.91 5.37 3.821 50.00 220.39

0.00 4.49 6.35 2.131 52.90 258.49

0.02 4.41 6.84 2.89 62.71 280.13

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CHAPTER -7
RECOMMENDATION AND LIMITATION Limitations:[

Even though every effort will be taken to minimize the variation and present a factual picture with the help of statistical methods, but still there are some limitations, which are as follows: The preparation and interpretation of data may not be 100% free from errors and may be affected by the Respondents biased mindset to some extent. Sampling size of the targeted employees of Taj Hotels is small, because nonreachable due to their busy schedule. The study will be based on the balance sheet of the company and depends directly on balance sheet and annual reports of the company.

Recommendation:Recommendation can be use by the firm for the betterment increased of the firm after study and analysis of project report on study and analysis of working capital. I would like to recommend.

1. Company should reduce the inventory holding period. It is the major part of working capital of company. 2. Company has to take control on cash balance because cash is non earning assets and increase cost of funds. 3. Company should give consideration on foreign exchanges losses and take required step to minimize it in future. 86

4. Company should raise it fund through short term sources for short term requirement of funds.

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CHAPTER -8
REFERENCES
[1] Afza, T. and M. S. Nazir, (2007). Working Capital Management Policies of Firms: Empirical Evidence from Pakistan. Conference Proceedings of 9th South Asian Management Forum (SAMF) on February 24-25, North South University, Dhaka, Bangladesh.

[2] Afza, T. and M. S. Nazir, (2008). Working Capital Approaches and Firms Returns. Pakistan Journal of Commerce and Social Sciences. 1(1), 25-36.

[3] Baltagi, B. H. (2001). Econometric Analysis of Panel Data. 2nd Edition, John Wiley & Sons. Chichester.

[4] Blinder, A. S. and L. Macinni, (1991). Taking Stock: A critical Assessment of Recent Research on Inventories. Journal of Economic Perspectives. 5(1), 73-96.

[5] Czyzewski, A.B., and D.W. Hicks, (1992). Hold Onto Your Cash. Management Accounting. 27-30.

[6] Deloof, M. (2003). Does Working Capital Management Affects profitability of Belgian Firms? Journal of Business Finance & Accounting. 30(3) & (4), 0306-686X.

[7] Eljelly, M.A. (2004). Liquidity Profitability Tradeoff: An empirical investigation in an emerging market. International Journal of Commerce & Management. 14(2).

[8] Filbeck, G. and T. M. Krueger, (2005). An Analysis of Working Capital Management results across Industries. American Journal of Business. 20(2), 11-18.

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[9] Garcia-Teruel, P.J. and Martinez-Solano, P. (2007). Effects of Working Capital Management on SME Profitability. International Journal of Managerial Finance. 3(2), 164-177.

[10] Gitman, L.J. (1991). Principles of Managerial Finance. Collins Publishers Inc. Harper. New York.

[11] Hausman, J.A. (1978), Specification Tests in Econometrics. Econometrica. 46, 1251-71.

[12] Jose, M. L., C. Lancaster, and J. L. Stevens, (1996). Corporate Returns and Cash Conversion Cycles. Journal of Economics and Finance. 20(1), 33-46.

[13] Kargar, J. and R. A. Blumenthal, (1994). Leverage Impact of Working Capital in Small Businesses. TMA Journal. 14(6), 46-53.

[14] Lazaridis, I. and D. Tryfonidis, (2006). Relationship between Working Capital Management and Profitability of Listed Companies in the Athens Stock Exchange. Journal of Financial Management and Analysis. 19 (1), 26 35.

[15] Mukhopadhyay, D. (2004). Working Capital Management in Heavy Engineering FirmsA Case Study. Accessed from myicwai.com/knowledgebank/fm48.

[16] Padachi, K. (2006). Trends in Working Capital Management and its Impact on Firms Performance: An Analysis of Mauritian Small Manufacturing Firms. International Review of Business Research Papers. 2(2), 45 - 58.

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Reference of Books
1. Management Accounting and Business Finance-By R.K. Sharma and Shashi K Gupta-16th Edition 2008 2. Working Capital Management- By B. Murali Krishna 2010 3. Financial Management: Theory & Practice-By Prasanna Chandra 2004 4. Managing Finance: A Socially Responsible Approach-By David Crowther 2004

Reference of Web Pages

5. http://www.answers.com/topic/cash-management 6. http://www.tridentindia.com/Investor 7. www.google.co.in

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