Project On Working Capital Management On Cement Industries

A STUDY ON THE IMPACT OF WORKING
CAPITAL MANAGEMENT ON PROFITABILITY
IN CEMENT COMPANIES IN INDIA
Project report submitted in partial fulfillment of the requirements for the
award of the degree of
MASTER OF BUSINESS ADMINISTRATION
of
BENGALURU NORTH UNIVERSITY
By
Jofin Jose
Reg. No. 19MG502064
School of Management
KRISTU JAYANTI COLLEGE, AUTONOMOUS
Bengaluru - 560077
2020-2021
This is to certify that Jofin Jose(19MG502064), II Year MBA, School of
Management, Kristu Jayanti College, Autonomous, Bengaluru has undergone
internship from 15th September, 2020 to 15th November, 2020 in our organization. He
also undertook a project titled “A STUDY ON THE IMPACT OF THE WORKING
CAPITAL MANAGEMENT ON PROFITABILITY IN CEMENT INDUSTRIES
IN INDIA” during his internship. We understand it is submitted in partial fulfilment of
the requirements for the award of the Master's Degree in Business Administration.
Signature
Manoj Singh
Managing Director
SCHOOL OF MANAGEMENT
CERTIFICATE OF ORIGINALITY
This is to certify that the project titled (Title of the project report) is an original study
carried out by (Name of the student with register number) and is being submitted in
partial fulfillment of the requirements for the award of the Master's Degree in Business
Administration of Bengaluru North University and approved by AICTE. The Report
has not been submitted earlier either to this University / Institution or any other body
for the fulfillment of the requirement of a course of study.
Signature Signature Signature
Dr. Joseph Charles D Dr. M K Baby, Rev.Fr. Augustine
George
Internal Guide Head, School of Management Principal
Bengaluru
Date:
CERTIFICATE OF PLAGIARISM CHECK
1. Name of the Student Jofin Jose
2. Programme MBA
3. Register Number 19MG502064
4. Title of the Project A Study on impact of the Working Capital
Management on profitability in Cement
companies in India
5. Name of the Guide Dr. D Joseph Charles
6. Department School of Management
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DECLARATION
I, Jofin Jose 19MG502064 hereby declare that the project work entitled “A Study on
the impact of the Working Capital Management on profitability in cement companies
in India” is an original study carried out by me, under the guidance of Dr. D Joseph
Charles. D. This project report has not been submitted earlier either to this University /
Institution or any other body for the fulfillment of the requirement of a course of study.
Signature
Name of the student
Bengaluru
Date:
Table of Contents
Chapter Particulars Page No.

number
1 1.1 Introduction to Finance 01
1.2 Working Capital Management 02
1.2.1 Two major concepts of working capital 04
1.3 Limitations of inadequate WCM 06
1.4 Indian Cement Industry 06
2 2.1 Model on working capital control effect on 10
profitability
2.2 Review of literature 11
2.3 Definition of variable 13
2.4 Statement of Problem 17
2.5 Objective of the study 17
2.6 Research hypothesis 18
2.7 Methodology 18
2.8 Scope and limitations 20
2.9 Limitations 21
2.10 Chapter scheme 22
3 3.1 Idea 24
3.2 About Agora 24
3.3 Organizational structure 25
3.4 Operational structure 26
3.5 Major players in consumer electronics 27
3.6 Competitors 29
3.7 Goals and Strategy 30
3.8 Business Verticals 31
3.9 Customer Benefit 32
3.10 Product Portfolio 32
3.11 Business Strategies 34
3.12 USP 35
3.13 Growth Divers 36
3.14 Key Product Performance 37
3.15 Growth Strategy 38
3.16 SWOC Analysis 38
4 4.1 Dependent Variable 41
4.2 Regression Analysis 52
4.3 Pearson’s Correlation Analysis 56
5 5.1 Summary of findings and Conclusion 61
5.2 Scope of further study 62
LIST OF TABLES
Table No. Title Page No.

3.7 List of Selected Indian Cement Companies for the study 39
4.1 Comparison of NPM of ACC cements in different years 41
4.1.1 The Working Capital Management Components of ACC 41
Cements for the FY 2014-2015
4.1.2 The Working Capital Management Components of ACC 42
4.1.3 the Working Capital Management Components of ACC 42
4.2 Comparison of NPM of Ambuja cements in different 43
years
4.2.1 The Working Capital Management Components of 43
Ambuja Cements for the FY 2014-2015
4.2.3 the Working Capital Management Components of 44
4.3 Comparison of NPM of India cements in different years 45
4.3.1 The Working Capital Management Components of India 46
4.3.2 The Working Capital Management Components of India 46
4.3.3 the Working Capital Management Components of India 46
4.4 Comparison of NPM of J.K cements in different years 47
4.4.1 The Working Capital Management Components of J.K 48
4.4.2 The Working Capital Management Components of J.K 48
4.4.3 the Working Capital Management Components of J.K 48
4.5 Comparison of NPM of UltraTech cements in different 49
years
UltraTech Cements for the FY 2014-2015
4.6 Regression Model Summary 52
4.7 Improved Regression Model Summary 52
4.8 ANOVA result for Regression 53
4.9 Improved ANOVA result for Regression 53
4.10 Regression Coefficient Table 54
4.11 Pearson’s Correlation results for all variables 56

ABSTRACT
The main purpose of the study is to identify the impact of working capital management
components on profitability of selected cement companies from financial year 2014-15
to 2018-19. By these significance value we can conclude that Working Capital
Investment Policy (0.039) and Working Capital Financing Policy (0.056) null
hypothesis is rejected because its significance value is less than 0.05, and Days Sales
Outstanding (0.369), Days Payable Outstanding (0) and Days Inventory Outstanding
(0.076) null hypothesis is accepted because its significance value is more than
0.05.Results says that WCIP and WCFP has an impact on Net Profit Margin and DSO,
DIO and DWC has impact no on Net Profit Margin. The results suggest that managers
can increase profitability of manufacturing firms by reducing their investment in short
term and long-term assets.
Keywords: DSO, DIO, DPO, DWC, CR, WCIP, WCFP

CHAPTER-1
INTRODUCTION
1.0 INTRODUCTION TO FINANCE
1.1 DEFINITION OF FINANCE
According to Guttmann and Doug all: “Business finance can be broadly defined as the activity
concerned with the planning, raising, controlling and administering the funds used in the
business”.
Finance is the allotment of resources and liabilities over the long run under states of assurance
and vulnerability. A central issue in finance is the time estimation of cash, which expresses that
a unit of money today is worth more than a similar unit of money tomorrow. Money intends to
value resources dependent on their danger level, and anticipated pace of return. Money can be
broken into three diverse sub classes: public account, corporate money and individual budget.
➢ The first approach views finance as to providing of funds needed by a business on most
suitable terms. This methodology limits account to the raising of assets and to the investigation
of monetary foundation and instruments from where assets can be secured.
➢ The second approach related finance to cash.
➢ The third approach view finance as being concerned with rising of funds and their
effective utilization.
➢ Finance is rightly been labeled as ‘MASTER KEY’ providing accrete to are sources
required for running business activities. Finance is the vital thing to be drawn
concentration in the business organization irrespective of the size of the organization.
The requirement of the amount of finance to any organization depends on its size and nature.
➢ The financial activities cannot be replaced by any other factors of production. Finance
draws a central attention in any business organization with its indispensable functions.
➢ In general finance may be defined as the provision of money at the time and place where
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it is wanted corporate finance emerged as a distance field at the turn of the century. Its
evolution may be categorized into 2 approaches they are:
1. Traditional approach is constituted only about raising and administration of funds, but
not on allocation of funds.
2. Modern approach is concerned with both acquisition of funds and as well as their
allocation and views the term financial management in a broad sense. It means the
central issue of finance, is the wide use of the funds the rational and potential uses
against act, to achieve the broad financial goals which an enterprise set for itself.
Following are some of the avenues where, finance is developed to meet the firm’s objectives.
1. To fund the establishment of an organization, this includes the acquisition of necessary
assets of running business.
2. Acquisition and management of current assets for managing day to day operations.
3. Managing mergers, re-organization and expansion and diversification.
4. To meet the expectation of the stake holders.
1.2 WORKING CAPITAL MANAGEMENT
Capital is the thing that represents the deciding moment a business, and no business can
run effectively without enough money to cover both short-and long run needs. Keeping
up adequate degrees of transient capital is a continually continuous test, and in the
present violent budgetary business sectors and questionable business atmosphere outer
financing has gotten both harder and all the more exorbitant to get. Organizations are
consequently progressively moving ceaselessly from customary wellsprings of outer
financing and turning their eyes towards their own associations for methods of
improving liquidity. One proficient yet frequently over looked method of doing so is to
diminish the measure of capital tied-up in activities, that is, to improve the working
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capital administration of the organization.
Working capital is an operational liquidity monetary metric that portrays the measure
of money tied up in tasks and decides an association's momentary circumstance. For
the persistent running of the movement of a business, for example to pay transient
obligation commitments and to cover working costs, a positive working capital position
is required. With its current resources, a company with a negative working capital
equilibrium can't cover its momentary liabilities.
Working capital is a common measurement for the proficiency, liquidity and in general
soundness of an organization. The requirement for working capital change from
industry to industry and can even fluctuate among comparative organizations. The
executives of working capital incorporate stock administration and the board of records
receivables and records payables. The principle targets of working capital
administration incorporate keeping up the working capital working cycle and
guaranteeing its arranged activity, limiting the expense of capital spent on the working
capital, and amplifying the profit for current resource speculations. Working capital
management in any business is determined by: Nature of Business or Industry, Size of
Business or Scale of Operations, Growth prospects, Business Cycle, Manufacturing
Cycle, Operating Cycle and Rapidity of Turnover, Operating Efficiency, Profit Margin,
Profit Appropriation and Depreciation Policy, Taxation Policy, Dividend Strategy and
Government Guidelines. The upkeep of inordinate degrees of current resources without
much of a stretch give an outcome in an unacceptable profit for a company's venture.
In any case, firms with lacking degrees of current resources may cause deficiencies and
experience issues in easily keeping up everyday tasks. Assets tied up in working capital
can be viewed as concealed stores that can be utilized to support development
procedures, for example, capital extension. Incomes secured stock and receivables can
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be opened up by understanding the determinants of working capital. Numerous
associations that have procured benefits throughout the years have demonstrated the
effective administration of working capital.
The working capital is a significant measuring stick to quantify the organization's
operational and monetary proficiency. Any organization ought to have a perfect
measure of money and credit extensions for its business needs consistently.
Working capital is required to meet day to day operating expenses and for holding
stocks of raw material, spare parts, consumables, work in progress and finished goods
and book debts (i.e., debtors balances and bills receivables). More specifically, working
capital is needed:
• To hold the load of crude materials for such a period to encourage a continuous
gracefully of crude material to creation measure;
• To hold the load of work in advancement for measure period (i.e., the time length
expected to change over the crude materials into completed items).
• To award credit to its clients for advertising and serious reasons;
• To hold money adjusts to meet the assembling, office and managerial, selling and
appropriation costs, charges and so forth;
• To hold the load of completed merchandise for such a period to satisfy the needs of
clients on consistent premise and unexpected interest from certain clients.
1.2.1 There are two major concepts of working capital
A. Balance sheet Approach

In balance sheet approach there are two main method they are as follows,
1.Gross working capital
2. Net working capital
The idea of gross capital is a monetary idea though that of net idea is a bookkeeping
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idea while in this consistently changing economy it is hard for an ideal balance among
inflow and surge of money.
1) Gross working capital Concept:
It alludes to company's interest in current resources. Current resources are the resources
which can be changed over into money inside a bookkeeping year and incorporate
money, transient protections, borrowers, charge receivables and stock. As indicated by
this idea, working capital methods Gross working Capital which is the complete of all
current resources of a business. It very well may be spoken to by the accompanying
condition:
Gross Working Capital = Total Current Assets
2) Net Working Capital Concept:
Net working capital alludes to the distinction between current resources and current
liabilities. The current liabilities are those cases of outcasts which are required to
develop for installment inside a bookkeeping year and it incorporates charges payable,
leasers, extraordinary costs and so forth
Net working capital can be positive or negative, so the negative working capital will
emerge current liabilities are in overabundance of current resources while positive
working capital happens when current resources surpass current liabilities. Zero
working capital alludes to the equity between contemporary property and contemporary
liabilities consistently. To avoid overabundance financing in present day assets, firms
attempt and meet their present liabilities out of the present-day property totally on the
off chance that they notice this idea. These zero working capitals as a rule gets a top-
notch balance monetary Management.
Net Working Capital = Current Assets - Current Liabilities
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B. Operational cycle approach:
The operational cycle method refers to It is the common time intervening between the
acquisition of materials or services entering this procedure and the very last coins
realization (Fees, 1978).
1.3 LIMITATIONS OF INADEQUATE WORKING CAPITAL
• A concern which has insufficient working capital, can't pay its transient
liabilities as expected.
• It can't accept its prerequisites in mass and can't profit of limits.
• It gets hard for the firm to misuse positive economic situations.
• The firm can't pay everyday costs of its tasks and it makes failures, builds costs
and diminishes the benefits of the business.
It gets difficult to use productively the fixed resources because of non-accessibility of
fluid assets.
1.4 Indian Cement Industry
Cement is a fundamental segment of framework advancement and most significant
contribution of development industry, especially in the public authority's foundation
and lodging programs, which are vital for the nation's financial development and
improvement. It is likewise the second most devoured material on earth (WBCSD
2002). The Indian concrete industry is the second biggest maker of concrete on the
planet simply behind China, however in front of the United States and Japan. It is
assented to be a centre area representing roughly 1.3% of GDP and utilizing over 0.14
million individuals. Likewise, the business is a critical supporter of the income gathered
by both the focal and state governments through extract and deals charges.
The qualities of the Indian concrete industry should be talked about to comprehend its
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structure better. Right off the bat, it is a blend of little (in excess of 300 units) and
enormous limit concrete plants, where lion's share of the creation of concrete (94%) in
the nation is by huge plants. The customary technique for concrete assembling utilized
by enormous plants (Rotary Kiln) needs high limit, immense stores of lime stone in its
region, high capital venture and long incubation period. Subsequently little concrete
plants dependent on Vertical Shaft Kiln innovation, fitting the little stores of limestone
are getting well known. Likewise, they make less natural contamination. Against the
necessity of Rs. 3500 for every huge load of limit of enormous plants, capital expenses
for small scale concrete plants come to about Rs. 1,400 to Rs. 1,600 for every ton (ICRA
2006). The feasibility of the area assumes a significant function in the financial matters
of concrete assembling (Schumacher and Sathaye 1999). One of the other
characterizing highlights of the Indian cement industry is that the area of limestone
holds in select States has brought about it's advancing as bunches. The closeness of coal
stores establishes another significant factor in concrete assembling. Since concrete is a
high mass and low worth ware, rivalry is additionally restricted on the grounds that the
expense of transportation of concrete to far off business sectors frequently brings about
the item being uncompetitive in those business sectors. There are at present seven
bunches, where Satna (Madhya Pradesh) group is the pioneer in limit just as creation
(CMA 2007). Others are Chandrapur (North Andhra Pradesh and Maharashtra),
Gulbarga (North Karnataka and East AP), Chandaria (South Rajasthan, Jawad and
Neemuch in MP), Bilaspur (Chhattisgarh), Yerraguntla (South AP), and Nalgonda
(Central AP).
Another distinctive trademark comes from it being repeating in nature as the market
and utilization is firmly connected to the monetary and climatic cycles. In India,
concrete creation regularly tops in the long stretch of March while it is at its most
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minimal in the period of August and September. The repeating idea of this industry has
implied that simply enormous players can withstand the plunge sought after because of
their economies of scale, operational efficiencies, halfway controlled dispersion
frameworks and geological expansion. Finally, it merits referencing that concrete
industry has a huge part in the environmental change discussion and issue of reasonable
turn of events. The concrete business produces 5% of worldwide man-made carbon
dioxide, a significant gas adding to environmental change (WBCSD 2005)
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CHAPTER-2
REVIEW OF
LITERATURE &
RESEARCH
DESIGN
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2.1 Introduction
The objective of this chapter is to review past theoretical and empirical study conducted
with regard to working capital management. This chapter starts off with the brief
description on the role of working capital management (WCM), followed by optimal
WCM, theories of WCM as well as the trade-off between liquidity and profitability and
the past literature reviews in relation to the effect of WCM on profitability of firms are
taken into consideration.
There are a few investigations being completed by analysts to give experiences on the
impact of working capital administration towards the company's benefit. The monetary
administration today, in view of different complexities on the lookout and serious
business climate, thinks that it’s important to manage working capital in two sections
generally speaking administration and the executives of everything independently.
Business concerns on developing their business have to use the utmost utilization of
their available resources for the improvement and development of the business while
enabling them to increase their profits. Working Capital and change in working capital,
which is one of the components of working capital form a very important part of the
total gross-capital formation in companies. The current study endeavors to perceive at
first the significance of working capital as a piece of the complete capital and it further
objectives to perceive the components affecting the working capital, its volume, and in
the process attempt to propose healing estimates which may help in streamlining the
utilization of working capital. It likewise considers with regards to how correctly
"financing working capital" and besides what should be blend of various parts of
working capital. Proficient and the ideal usage of fixed resources is firmly identified
with the best possible administration of working capital.
Working capital management is the arranging and controlling of current resources
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likewise roundabout progression of money from money to inventories to receivables
and back to money. As indicated by Weston and Brigham-"Working Capital alludes to
an organization's interest in transient resources, for example, inventories, money sum
receivables and so forth
2.2 Review of literature
1. Lamberson (1995) The crucial subject of working capital is to give ideal harmony
between every component shaping working capital. The goal of Working Capital
Management guarantees organization's capacity to keep working with adequate money
for the installment of both developing transient obligation and the going to happen
operational costs. Additionally, working capital administration has gotten one of the
basic issues in the associations where numerous monetary heads attempt to distinguish
the fundamental working capital drivers and the fitting degree of working capital.
2. Chary, Kasturi and Kumar (2011) Working capital decision directly affects the
liquidity and benefit while the abundance of interest in working capital may bring about
helpless liquidity. He said to boost investors abundance the administration needs to
compromise among liquidity and productivity. To comprehend the impact of working
capital on benefit and to comprehend the connection between these two, factual
measures, for example, connection and relapse models can be utilized to see such
relationship. The monetary proportion investigation additionally helps in obtaining,
arranging, control and portion of monetary assets of an association to accomplish the
objectives of the association.
3. Rahman Mohammad M. (2011) Research depends on connection among working
capital and productivity. To break down the viability of working capital administration
of the chose material organizations. Finish of the investigation found that general great
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administration in working capital administration of chose material organizations and in
this way the vast majority of the organizations are productive route going on.
4. Deloof (2003) He recommended that officers can increment corporate benefit by
diminishing the quantity of day's records receivable and inventories. Less productive
firms stood by longer to take care of their tabs. There is a sentiment that if greater part
of firms had put a lot of money in working capital, it is foreseen that the administration
of working capital of the organizations would influence the productivity.
5. Brigham and Houston (2009) The liquidity ratios help the company to explain current
liability for the business commitments which are due in one or less year and to meet
their requirement.
6. Eero Lukkari (2014) Overseeing working capital is a fundamental piece of momentary
monetary administration. Long haul monetary administration frequently gets more
consideration albeit numerous specialists have indicated that momentary monetary
administration additionally clearly affects benefit of an organization. Working capital
administration can be utilized to pick up upper hand.
7. Schmidgall & Damitio (2001) Ratio analysis helps us to understand the relationship
between two figures. And these operating-ratio which helps to meet short term and
long-term obligations help management analyses the operations of a firm and the use
of such ratios as financial goals. For the ideal administration of working capital, the
organizations should take into consultation all the parts of liquidity likewise working
capital and endeavor to harmony the risk and return (Lee et. al., 2008).
8. Raheman & Nasr (2007) A study of working capital management is of foremost
significance for financial analysts for its intimate association with day by day
operations of a firm. Uncertainty in managing liquidity is to attain preferred swapping
between liquidity and profitability.
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9. Ashraf Mohammad Salem Alrojoub and Ahmad Mustafa Alrawashdesh (2012)
has examined the working capital management in cement companies. It was noticed
that selected cement companies have huge amount of cash in their accounts which could
be used for further proceedings. The working capital of these companies increased
drastically which indicated that proper working capital management should be
improved in time. The current ratio of the companies showed more than twice can be
accepted by the current assets and so the company can confidently expand their
operations, and the inventory turnover ratio for the selected cement was growing.
10. Salmi and Martikainen, (2005) When a current ratio is less than 1 then there are less
resources for paying the current liabilities.
11. Singh and Pandey, (2008) Result shave found out that liquidity ratio, current ratio,
debtors turnover ratio has a substantial effect of company’s performance.
2.3 Definition of Variables
2.3.1 Days of Working Capital (DWC)
The working capital administration productivity is estimated regarding the "days of
working capital" (DWC). It is the time span between acquisition of materials on record
from providers until the offer of completed item to the client, the assortment of the
receivables, and instalment receipts. Accordingly, it mirrors the organization's capacity
to fund its centre activities with seller credit.
Days of Working Capital (DWC) = DSO + DIO - DPO
2.3.2 Days Sales Outstanding (DSO)
Days sales outstanding (DSO) is a proportion of the normal number of days that takes
an organization to gather installment after a deal has been made. A high DSO number
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may prompt income issues in light of the long term between the hour of a deal and the
time the organization gets installment while a low DSO esteem implies that it takes an
organization less days to gather its records receivable. DSO is frequently decided on a
month to month, quarterly or yearly premise, and can be determined by partitioning the
measure of records receivable during a given period by the absolute estimation of credit
deals during a similar period, and increasing the outcome by the quantity of days in the
period estimated.
𝑵𝒆𝒕 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞𝐬
Days Sales Outstanding (DSO) =
(𝐒𝐚𝐥𝐞𝐬/𝟑𝟔𝟓)
[Net Receivables - Net receivables are the amount of money consumers owe, which a
company expects them to actually pay. Such information is used to calculate an
organization's credit and collection output, and can also be included in the cash forecast
for estimating estimated cash inflows.]
[Sales - Net sales are the portion of a company's revenue which remains after deducting
allowances for any lost or defective goods, refunds, and sales discounts. In other words,
it is the remaining sales which are removed from the gross number after all returns,
discounts and allowances.]
2.3.3 Days Inventory Outstanding (DIO)
The days sales of inventory (DSI) is a monetary proportion that demonstrates the
normal time in days that an organization takes to turn its stock, including products that
are a work in advancement, into deals. It shows how rapidly the board can transform
inventories into money. When all is said in done, a diminishing in DIO is an
improvement to working capital, and an expansion is crumbling.
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒊𝒆𝒔
Days Inventory Outstanding (DIO) =
(𝑺𝒂𝒍𝒆𝒔/𝟑𝟔𝟓)
[Inventories - Inventory is the term used for the products available for sale and the raw
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materials used to produce goods for sale. Inventory is one of the company's most
important assets since inventory turnover is one of the main sources of revenue
generation]
2.3.4 Days Payable Outstanding (DPO)
It is the average number of days a company takes to pay its suppliers, trade creditors,
vendors etc. and it indicates how well the company’s cash outflows are being managed.
It also allows the company an opportunity to utilize the available cash in a better way
to maximize the benefits. DPO value varies widely across the different industry sectors,
and it is not worth comparing the value for different sector companies. It significantly
changes from year to year, firm to firm and sector to sector.
𝑷𝒂𝒚𝒂𝒃𝒍𝒆𝒔
Days Payable Outstanding (DPO) =
(𝑺𝒂𝒍𝒆𝒔/𝟑𝟔𝟓)
[Payables - Accounts payable are money owed to its suppliers (which was not paid at
the time at which it was purchased) by a business shown on a company's balance sheet
as a liability. The provider of the goods/ services are known as vendors/suppliers]
2.3.5 Current Ratio (CR)
Current Ratio is communicated as the proportion of all out current resources and current
liabilities and is a liquidity proportion. It is a customary measure utilized in learning
the capacity of an organization to meet its transient commitments. It shows how often
current resources cover current liabilities of the endeavor, for example in the event that
it would change over all current resources into the money at the given second.
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑨𝒔𝒔𝒆𝒕𝒔
Current Ratio (CR) =
𝑪𝒖𝒓𝒓𝒆𝒏𝒕 𝑳𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒚
[Current Assets – These are the assets which appear in the balance sheet and which are
expected to convert into cash within one year. Current asset is also a key component in
finding Current ratio and Working Capital]
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[Current Liability - The current liability is a debt that has to be repaid whatever is longer
within the current or next year span. In other terms, it is a short-term loan or long-term
debt that will be due in the next 12 months and will require current asset payment.]
2.3.6 Working Capital Investment Policy (WCIP)
The working capital investment policy of an organization alludes to the degree of
interest in current resources for accomplishing focused on deals. It very well may be of
three kinds viz. confined, loose, and moderate. The casual strategy has higher and
limited has lower levels of current resources though moderate spots itself among loose
and confined. An expansion in the current resources of firms proportionate to add up to
resources speaks to a moderate style of the board in the administration of current
resources. While lower working capital investment policy (WCIP) ratio in current
assets to its total assets reflects a comparatively aggressive investment policy.
According to Van Horne and Wachowicz,2004, an excessive concentration of current
assets has a negative impact on the company’s productivity, while a lower current
position of assets represents a lower liquidity position and need to deal with the risk of
inadequate stock levels, resulting in difficulty in efficiently managing business
operations.
Working Capital Investment Policy (WCIP) =
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
2.3.7 Working Capital Financing Policy (WCFP)
Working capital financing policy manages the sources and the measure of working
capital that an organization ought to keep up. It is the extent of present moment and
long-haul hotspots for financing the current resources. There are a few working capital
speculation arrangements an organization may embrace subsequent to considering the
changeability of its money inflows and outpourings and the degree of danger. The
higher usage of current liabilities influences the liquidity position of the organizations
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where the organizations are forceful in dealing with the current liabilities.
Working Capital Financing Policy (WCFP) =
𝑻𝒐𝒕𝒂𝒍 𝑨𝒔𝒔𝒆𝒕𝒔
2.4 Statement of the Problem
The business requires better financing investment and working capital is a part of
making financial decision. Working capital management can be useful in maintaining
the liquidity of the company. In addition to this, financial ratios can do the
transformational and fundamental analysis and which will help find the correlation
between different industries. The statistical analysis will also contribute to the
proﬁtability and market value of companies. Hypothesis are formulated to test whether
the contribution of working capital differs for companies from the cement sector and
comparing their financial ratios.
This research project has focused into the giants in the cement industry in India. This
study attempts to fill the gap of Working Capital Management studies by focusing on
the cement sector. Based on the problem statement the result of this study is to find out
the following:
1) The effect of Working Capital Management Components towards the company’s
profitability in cement sector in India from a period of FY 2015 -2019
2) To discover the components related to the performance of the WCM in the cement
sector.
2.5 Objectives of the Problem
2.5.1 General Objective
1) The effect of Working Capital Management Components toward the company’s
profitability in cement sector in India from a period of FY 2015-2019.
P a g e 17 | 63
2) The objectives of the study are to inspect if there was any difference between corporate
profitability and working capital management and to identify the variables that most
affect profitability.
3) To investigate the impact of working capital management on the financial performance
of cement companies.
4) To study the relationship between Working Capital Management components and Net
Profit Margin (NPM) of firms.
2.6 Research Hypothesis
• H1o: There is no significant impact of Working Capital Management components on
the Net Profit Margin (NPM) of firms.
• H1a: There is a significant impact of Working Capital Management components on
the Net Profit Margin (NPM) of firms.
• H2o: There is no significant relationship between Working Capital Management
components and Net Profit Margin (NPM) of firms.
• H2a: There is a significant relationship between Working Capital Management
2.7 Research Methodology
Research methodology is an approach to methodically tackle the exploration issue. It is
the study of concentrating how exploration is done logically failing to remember
pertinent data on a particular theme alongside the behind it. An exploration
configuration is the course of action of conditions for assortment and investigation of
information in a way that intends to joined pertinence to the examination reason with
economy in method. The exploration plan for this investigation is – ANALYTICAL
RESEARCH DESIGN.
P a g e 18 | 63
2.7.1 Research Design:
The research design for this study is based on secondary data collected from companies
in cement sector in India from year 2015 to 2019. In this study the focus is on cement
sector which is represented by manufacturing as well as retailing products sector
respectively contributing to the main GDP of the country.
In addition, a regression analysis would be done in determination of WCM toward
companies’ profitability in the cement sector in India. This also explains the
methodology used for analyzing working capital management performance efficiency
for the overall cement sector using different working capital measures during period
2015 to 2019. The dependent variable for the study refers to the company’s profitability
that is represented by Net Profit Margin (NPM), while the independent variables refer
to working capital management components that are represented by Days Sales
Outstanding (DSO), Days Payable Outstanding (DPO), Days Inventory Outstanding
(DIO), Cash Conversion Cycle (CCC) or Days Working Capital (DWC), Working
Capital Investment Policy (WCIP), Working Capital Financing Policy (WCFP) and Net
Profit Margin (NPM) represents the performance of companies. Cash Conversion Cycle
is calculated on the basis of three components DSO, DIO, and DPO. These components
of CCC help us to analyze the collection, inventory conversion and payment policy on
sectoral basis.
The variables are then evaluated to determine whether there is any significant
relationship between the dependent and independent variables through Pearson
Correlation for multicollinearity identification purposes. In this study, panel data
regression analysis was implemented based on assumptions that companies are
heterogeneous, less multicollinear problems between variables.
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2.7.2 Data collection: The analysis is based totally on secondary data gathered from
the audited Profit & Loss A/c and Balance Sheet of companies. The main source are
Annual Report of the all Companies for last 5 years. In addition, for framing theoretical
as well as analytical framework, various books and published material, Journals and
websites, newspapers, has been made used of. For analysis of working capital we used
current assets, current liabilities, gross working capital, and net working capital.
2.7.3 Period of Study: The research covers a duration of 5 years (i.e. From FY 2014-
15 to FY 2018-19). Data Presentation: Tabular representation of the data has been done
to show the working capital positions of all companies.
2.7.4 Sample Frame: The total sample size was 25 with the data taken for 5 years of 5
chosen companies.
2.7.5 Research Analysis: To do the analysis working Capital Management
Components are used as managerial tool. The statistical tools like Regression and
correlation through SPSS is been used for the deep analysis.
2.8 Scope of the Study
Working Capital is the cash used to make merchandise and draw in deals. The less
working capital used to draw in deals, the higher is probably going to be the rate of
profitability. Working Capital Management is about the business and monetary parts of
Inventory, Credit, Purchasing, Marketing and sovereignty and venture strategy. The
higher the net revenue, the lower resembles to be the degree of working capital tied up
in making and selling titles. The significance of working capital administration comes
from the two reasons viz.,
• A significant segment of complete venture is put resources into current resources.
• Level of current assets will change quickly with the difference in sales.
P a g e 20 | 63
Hence, an attempt should be made to analyze the size and composition of working
capital and whether such an investment will lead to increase of business over a period
of time. After determining the requirements of current assets, one of the importance
tasks of the financial manager is to select an assortment of appropriate sources of
finance for the current assets.
The study is based on the profitability and efficiency of company’s financial
performance.
2.9 Limitations of the study
▪ The study is confined to ten years data only, i.e. from 2015–2019, therefore, a detailed
analysis covering a lengthy period, which may give slightly different results has not
been made.
▪ The study is based on secondary data collected from the website
www.moneycontrol.com and the websites of sample companies; therefore, the quality
of the study depends purely upon the accuracy, reliability and quality of the secondary
data source. Approximation, and relative measures with respect to the data source might
impact the results.
▪ The study is based on the Cement Industry in India that are also drawn from the
companies listed in BSE. Therefore, the accuracy of results is purely based on the data
of sample units.
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2.10 Chapter scheme
• Chapter 1: This chapter consist of Introduction of working capital management,
Definitions of Working Capital Management Components, Various concept of working
capital, Circulation of Working Capital and introduction of cement sector,
• Chapter 2: This chapter consist of Review of literature, Definition of variable,
Statement of Problem, Objective of the study, Research hypothesis, Methodology,
scope and limitations, Operational definition, Limitations, Chapter scheme.
• Chapter 3: This particular section deals with organizational study, Industry Profile,
vision, award and recognition, product profile, organization structure, SWOC analysis.
• Chapter 4: It consist of Data Analysis and variable, Multiple Regression Analysis,
Correlation Analysis.
• Chapter 5: It consist of Findings and results, Conclusion, Suggestion of analysis
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CHAPTER-3
ORGANISATIONAL
STUDY
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3.1 IDEA:
Employees at agora believe that exceptional customer service is the
essence of any organization. The company understands that a great
customer service status is a powerful differentiator in a competitive
market where consumers have a lot of product/service options.
In a universe of developing commercialization, they plan to give their

clients the most extreme shopping experience-one that is dependable
and moderate. The organization intends to accomplish this by
culminating their aptitude of giving the best items to the clients.
Every aptitude at public square is supported by research and gives a

noteworthy hint to rapidly create it over each degree of our association.
3.2 3C REPORT
3.2.1.1 About AGORA:
Agora is a set up brand and is occupied with electrical, gadgets, home machines,
instruments and equipment discount. It is a piece of the broadened combination
gathering and, oversaw by proficient venture investors from the field of account.
It is a one-stop store affix that expects to offer clients a wide scope of electrical, gadgets,
home apparatuses, instruments and equipment items under one rooftop. Every AGORA
store stocks home apparatus items – including Refrigerator, Mixer-Juicer, Air
Conditioner, Oven, Iron, Washing Machine, Led TV and then some – accessible at
serious costs that our clients appreciate. Their primary goal is to offer clients great items
at an extraordinary worth.
We are focused on the achievement of our clients and workers. Public square's prime
center is to guarantee that our clients are cheerful and easily pick the correct item from
a wide assortment of items accessible.
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We are developing our wholesales, gracefully chain business in coalition with
presumed brands in well-prepared, self-possessed sources with the cutting-edge
framework. Further, we have been effective in picking up the trust of the clients as
much as the makers in like manner.
3.3 ORGANISATIONAL STRUCTURE
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3.4 OPERATIONAL STRUCTURE
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3.5 INDIA’S MAJOR PLAYERS IN CONSUMER ELECTRONICS:
1: CROMA:
Dispatched in 2006, Croma was the first of-its sort huge organization expert retail
location that obliged all multi-brand computerized devices and home electronic
necessities in India. Over a period since its initiation, Croma has nearly become
equivalent words for all hardware requires, with its educated staff, item range, Staged
presence and the will to support clients.
2. RELIANCE DIGITAL:
Reliance Digital is a customer durables and data innovation idea from Reliance Retail.
It is an auxiliary of Reliance Retail, which is an entirely possessed auxiliary of
Reliance Industries.
Reliance Digital is a purchaser gadgets organization in India. The main Reliance
Digital Store was opened on 24 April 2007 in Delhi. At present there are around 2,000
Reliance Digital and Reliance Digital Xpress Mini Stores in around 600 urban
communities in India. Dependence Digital Stores are greater in size than the other
arrangement Digital Xpress Mini Stores.
3.EZONE
Established in 2002 Ezone is available across India as independent stores just as at
Group design stores, for example, Big Bazaar, Home Town and Central. It houses the
best of public and worldwide gadgets brands for an assortment of item classes, for
example, Audio, Accessories, Communications, Computing, Home Entertainment,
P a g e 27 | 63
Home and Kitchen Appliances, Imaging, Personal Entertainment and Gaming.
Ezone is focused on contribution way of life arrangements relying upon the
requirements of the clients and offer the best cost on the most recent items, with the
correct purchasing help. Ezoneonline.in an online expansion of the square n mortar
stores offering various reasonable installment alternatives remembering Cash for
Delivery and free home conveyance/transporting.
Further, administrations, for example, Easy Exchange, Extended Warranty, Instant
Finance, Masterclass, Data Transfer and that's just the beginning.
4. NEXT RETAIL INDIA LTD:
Next Retail India Ltd is an auxiliary of the Videocon Industries Ltd and charms in
retailing buyer hardware in India. It was established in 2003 and presently has 600
showrooms across 25 conditions of India. They are planning to open 400 new
showrooms to build its size to 1,000 odd retail locations before the finish of the
monetary year 2010–11. NEXT is a multi-brand, multi-item retail chain which stocks
a whole scope of customer durables, directly from Air-conditioners, FPDs (Flat Panel
Displays), CTVs, Washing Machines, Refrigerators, Microwaves, Home Theater
Systems to STBs (Set Top Boxes), Mobile Phones, Gaming Consoles, little home
apparatuses and substantially more.
5. VIJAY SALES:
Vijay Sales is an Indian gadgets retail chain based out of Mumbai. It is settled in
Jogeshwari, Mumbai. Vijay Sales began as a little TV showroom in Mahim by Mr.
Nanu Gupta in 1967. It right now works in excess of 100 stores over the districts of
P a g e 28 | 63
Maharashtra, Haryana, UP, Gujarat, Delhi, Andhra Pradesh, and Telangana. Vijay
Sales has more than 3,500+ Products to browse and is situated in ideal places all over
India and has 31 stores in Mumbai, 12 stores in Pune, 15 stores in Gujarat, 16 stores
in Delhi, 5 stores in Haryana, 4 stores in Uttar Pradesh, 8 stores in Andhra Pradesh
and 12 stores in Telangana.
3.6 COMPETITORS
There is a ton of rivalry that exists in the field of purchaser hardware. The couple of
contenders for Agora India Ltd are:
PAI INTERNATIONAL:
Pai International a main brand of Consumer durables and electronic merchandise
market in Karnataka began working in the year 2000 in Indira Nagar, Bangalore.
Progressively the quantity of showrooms expanded and as of now, Pai International
has 27 undeniable showrooms dispersing all over Bangalore.
GIRIAS:
Girias is a multi-city showroom brand, over forty years of value conveyance and
unparalleled help - Girias has progressed significantly and is undeniably India's
driving retailer with 85 Mega Stores. Girias have branches in the major cities. GIRIAS
has confidence in the way of thinking of giving the most recent items to clients at the
best market cost. The very reality that large number of clients return to GIRIAS for
their purchaser tough necessities demonstrates the nature of administration and
conveyance guarantee that we provide for the clients.
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CROMA:
Dispatched in 2006, Croma was the first of-its sort huge configuration expert retail
location that provided all multi-brand computerized devices and home electronic
requirements in India. Longer than 10 years since its origin, Croma has nearly become
equivalents for all hardware requires, with its well-informed staff, item range, Staged
presence and the will to support clients.
RELIANCE DIGITAL:
Reliance Digital is a shopper durables and data innovation idea from Reliance Retail.
It is an auxiliary of Reliance Retail, which is an entirely possessed auxiliary of
Reliance Industries.
Reliance Digital is a shopper hardware organization in India. The main Reliance
Digital Store was opened on 24 April 2007 in Delhi. At present there are around 2,000
Reliance Digital and Reliance Digital Xpress Mini Stores in around 600 urban areas
in India
3.7 GOALS AND STRATEGY:
3.7.1 VISION:
• Flexible solutions to all business needs.
• Ensure that no product is unobtainable with a promise to provide
more value for money.
• Assure sustainable growth to the society, employees and partners.
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3.7.2 MISSION:
• Service, Knowledge, Value and Resourcefulness.
• Aim to become the best operating chain of supplies for every
consumer requirement in the country.
• Provide total end to end solution.
3.7.3 STRATEGY:
• Provide Eco-friendly shopping experience to the customers.
• To occupy the low-cost leadership position in the market.
3.8 BUSINESS VERTICALS
1.Business Verticals: B2B Segment
o Dealing at institutional Employee Welfare Scheme, Turnkey Projects, END to END
Supply Corporate Gifting.
2.Modern Stores
o Physical stores scattered across geographical locations
o EBO & MBO and Brand Shops
3.Supply Chain Network
o Dedicated network to ensure last-mile connectivity to end-users.
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3.9 CUSTOMER BENEFITS:
1. Management
• Dedicated network to ensure the inventory never runs out
• Single point contact to resolve all Customer Queries
2. Service
• Shortest delivery time at your doorstep
3. Remote Access
• Mobile application to manage and maintain all purchases.
4. Free Membership
• Make the most of the best wholesale prices offered.
5. Rewards
• Every purchase is laced with special points added to the customer
account.
3.10 PRODUCT PORTFOLIO
➢ WHITE GOODS:
Their main focus in these goods are household and other purpose items like fridges,
AC’s and other kinds of freezers.
• Refrigerators
• Air-conditioners
• Chest Freezers
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➢ BROWN GOODS:
In this group the items that are categorized are the electronic related items.
• Wires and cables
• Mixtures and Grinders
• Switch Gear
• Geyser
➢ CONSUMER ELECTRICALS:
In this type, the items categorized are based on the consumer electricals that are of
purpose in daily life.
• Wire and cables
• Switch Gears
• Fans
• Air-Coolers
➢ ASPIRATIONAL GOODS:
In this type of goods, the products are categorized that are of different television types
etc.
• HD televisions
• Latest OLED/ULED products
• Sewing machines
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3.11 BUSINESS STRATEGIES
1. Fastly mover advantage into the vastly untapped Indian Market.
2. Association with reputed and well-established brands in India.
3. Dedicated fleet service to ensure last mile delivery.
4. Presence in MBO, EBO, B2B and B2C businesses.
5. Registered customer base for encouraging long lasting association.
6. Implementation of digital platforms like CRM for systematic resource management and
inventory control.
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3.12 UNIQUE SELLING PROPOSITION (USP):
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3.13 GROWTH DIVERS:
• HIGHER DISPOSABLE INCOME

• EASY CONSUMER FINANCE CREDIT
• GROWING WORKING POPULATION
• SETTING UP TECHNOLOGY
PARKS
• LIBERALIZATION AND NEW FDI
POLICY
• NATIONAL ELECTRONICS MISSION
AND DIGITIZATION PLANS
• EXPANDING PRODUCTION AND

DISTRIBUTION FACILITIES
• GLOBAL SUPPORT TO INDIAN
PROJECTS
• INCREASED GOVT. SPENDING
ON CREATING JOBS.
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3.14 KEY PRODUCT PERFORMANCE:
a) REFRIGERATORS:
• Makes up 27% of the consumer appliances market
• Estimated market size is US$ 3.02 billion in 2017 and expected to grow
to US$ 5.34 billion by 2022
b) AIR CONDITIONERS:
• Perceived as high-end product and expected to grow at 6.7% till 2020
• Market size for air conditioning in India is around US$ 2.76 billion in
2017
c) WASHING MACHINES:
• Shift in preferences to fully automated units due to recent reduction
in prices
• Expected growth in the market is around 10-12 % TILL 2020.
d) ELECTRIC FANS:
• High rural penetration of around 70-75% in rural areas till 2020
• Domestic market increased at 13% CAGR to US$ 1.1 billion in 2017.
P a g e 37 | 63
3.15 GROWTH STRATEGY:
1. Agora aims to set up 50 new stores across several locations in the rapidly developing
areas over the country.
2. Rising disposable income, rapid urbanization and inclination towards household
electrical appliances will lead to higher demands.
3. Agora is focused on a partner with like-minded professionals to develop the local
economy to build the eco-friendly commercial space to enhance customer lifestyle.
4. Now the company is also focusing to spread out their services towards fitness segments
and have started their work to achieve it.
3.16 SWOC ANALYSIS:
1. Strengths:
1) Believed Brands accomplices like Godrej, Havells, Ewell in retail chain for
shopper durables.
2) Solid presence in Indian purchaser sturdy market
3) Alluring special proposals for mass purchasing
4) Wide reach at 4 States in India with developing clients.
5) Confided in specialist organization.
2. Weakness:
1) Still hasn't had the option to reach over all significant urban communities which
may be possible market
2) In spite of being a solid player, they face piece of the pie rivalry from
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worldwide and chaotic market
3. Opportunities:
1) Opportunity to go into different administrations like hypermarket
2) Homegrown development just as going over various states in the nation.
3) Additional promoting to build brand perceivability
4. Challenges:
1) International and homegrown players entering the market
2) Consistent improvement in innovation implies troublesome stock
administration
Table 3.17 List of Selected Indian Cement Companies for the study
Company Year of State Region
Name incorporation
ACC 1936 Maharashtra West
Ambuja Cements 1981 Gujarat West
J.K Cements 1938 Rajasthan West
India Cements 1946 Tamil Nadu South
Ultra Tech 1983 Maharashtra West
Cements
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CHAPTER-4
RESULTS,
ANALYSIS AND
DISCUSSIONS
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4.1 RESULTS, ANALYSIS AND DISCUSSIONS
4.1.A Dependent Variable
4.1.A .1 Net Profit Margin (NPM) - The net profit margin is equivalent to how much
net gain or benefit is created as a level of income. Net revenue is the proportion of net
benefits to incomes for an organization or business portion. Net revenue is regularly
communicated as a rate however can likewise be spoken to in decimal structure.
𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
Net Profit Margin = 𝑵𝒆𝒕 𝑺𝒂𝒍𝒆𝒔
Table 4.1 Comparison of Net Profit Margin of ACC CEMENTS in different years.
Year Net Profit Sales Total

2019 1,363 15,657 0.087053714
2018 1,510 14,801 0.102020134
13,285 0.068724125
2017 913
595 11,167 0.053281992

2016
2015 575 11,797 0.048741205
It shows that the Net Profit is increasing in these five years and there is an increase in
sales in the year 2019.
The resulting Working Capital Management Components of ACC Cements for

the FY 2014-2015 and the computed values are introduced in table format.
Table 4.1.1
Component FY 14-15
Days Sales Outstanding (DSO) 14.98582
Days Inventory Outstanding (DIO) 36.77537
Days Working Capital (DWC) 24.71617
Current Ratio (CR) 0.489732
Working Capital Investment Policy
0.137866
(WCIP)
Working Capital Financing Policy
0.281513
(WCFP)
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Table 4.1.2
Component FY 15-16
Days Payable Outstanding (DPO) 41.0835
0.146949
(WCIP)
0.297937
(WCFP)

Table 4.1.3
Component FY 16-17
0.321155
(WCIP)
0.355069
(WCFP)

Table 4.1.4
Component FY-17-18
41.39412
Days Inventory Outstanding (DIO)
0.345509
(WCIP)
Working Capital Financing Policy 0.332019
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(WCFP)

Table 4.1.5
Component FY 18-19
0.368105
(WCIP)
0.309501
(WCFP)
Table 4.2 Comparison of Net Profit Margin of Ambuja Cements in different years.

2019 2,763 27,103 0.101944434
2018 2,960 26,040 0.113671275
2017 1,932 23,608 0.081836666
2016 1,422 20,093 0.070770915
2014 807 9,481 0.085117604
It shows that there is effective increase in net profit until 2018 and a decline in 2019
and there is slight variation with an increase in sales in the year 2018 & 2019.
The resulting Working Capital Management Components of Ambuja cements
for FY 2014-2015 and the computed values are introduced in table format.
Table 4.2.1
Component FY 14-15
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Working Capital Investment Policy (WCIP) 0.285183
Working Capital Financing Policy (WCFP) 0.19195
Table 4.2.2
Component FY 15-16
Table 4.2.3
Component FY 16-17
Table 4.2.4
Component FY 17-18
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Table 4.2.5
Component FY 18-19
Table 4.3 Comparison of Net Profit Margin of INDIA Cements in different years.

2019 53 5,186 0.010219823
2018 25 5,770 0.004332756
2017 70 5,432 0.012886598
2016 157 5,860 0.026791809
2015 116 5,534 0.02096133
As compared to the high sales in the year 2016, 2017 & 2018 with the Net profit is
relatively low.
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The resulting Working Capital Management Components of INDIA Cements for
FY 2014-2015 and the computed values are introduced in table format.
Table 4.3.1
Component FY 14-15
Table 4.3.2
Component FY 15-16
Days Working Capital (DWC) -3.99507
Table 4.3.3
Component FY 16-17
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Table 4.3.4
Component FY 17-18
Table 4.3.5
Component FY 18-19
Table 4.4 Comparison of Net Profit Margin of J.K Cements in different years.

2019 483 5,801 0.083261507
2018 263 5,258 0.050019019
2017 285 4,853 0.058726561
2016 171 4,654 0.036742587
2015 54 4,368 0.012362637
There is an increase in the net profit in the period 2016-2018 but in 2019 the sales have
drastically increased. There is also increasing fluctuation of sales in the three years.
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The resulting Working Capital Management Components of J.K Cements for
Table 4.4.1
Component FY 14-15
Table 4.4.2
Component FY 15-16
Table 4.4.3
Component FY 16-17
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Table 4.4.4
Component FY 17-18
Table 4.4.5
Component FY 18-19
Table 4.5 Comparison of Net Profit Margin of ULTRATECH Cements in
different years.

2019 5,811 42,124 0.137949862
2018 2,399 41,608 0.057657181
2017 2,224 30,978 0.071792885
2016 2,713 25,374 0.10692047
2015 2,479 25,153 0.098556832
There is a small fluctuation in the net profit in the period 2016-2018 but in 2019 the net
profit has increased with the sales increasing. There is also increasing fluctuation of
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sales in the three years from 2017 to 2019.
The resulting Working Capital Management Components of Ultratech Cements
Table 4.5.1
Component FY 14-15
Table 4.5.2
Component FY 15-16
Table 4.5.3
Component FY 16-17
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Table 4.5.4
Component FY 17-18
Table 4.5.5
Component FY 18-19
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4.2 Regression Analysis
Regression Analysis is basically used to measure the relationship between dependent
and independent variables. In this study Regression analysis contains one dependent
variable and six independent variables.
4.6 Regression Model Summary
Model R R Square Adjusted R Std. Error of

Square the Estimate
1 .754a .568 .425 2.76893
The Model Summary shows, r value is 0.754 which means the variables are less
positively correlated. R square is the degree of determination, its value is 0.568, shows
that the variation in the dependent variable i.e. NPM is explained to the extent of only
56.8% by the independent variables. The regression analysis explains that the model
is not fit as the R square value is 0.425 is less than 0.6 hence few variables have been
eliminated since it is insignificant and further regression analysis is done to improve
the R and R square value.
4.7 Improved Regression Model Summary
Model R R Square Adjusted R Std. Error of

Square the Estimate
1 .750a .562 .475 2.64525
In this model summary shows that the r value is 0.750 and the R square value is
0.562, which shows the variation in the dependent variable i.e. NPM is explained to
the extent of only 56.2% by the independent variable. The regression analysis
explains that there is improvement in regression as the R square value is 0.475 is
more than 0.425 after eliminating few variables.
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Table 4.8 ANOVA result for Regression
Model Sum of df Mean Square F Sig.

Squares
Regression 181.746 6 30.291 3.951 .011b
Residual 138.006 18 7.667

1
Total 319.752 24
The ANOVA table shows P value as 0.011 hence the value is significant, and this
shows the model can be fit. 0.00 < .05 and hence the Null hypothesis is rejected.
Thus, it can be concluded that there is a significant impact of the independent factors
such as DSO, DIO, DPO, DWC, WCIP and WCFP on the dependent factor, NPM.
Even though there is significance in the model, when few variables were removed and
the regression was improved, the significance in the value also changed significantly
which shows that the model is highly significant after excluding few variables.
Table 4.9 Improved ANOVA result for Regression
Model Sum of df Mean Square F Sig.

Squares
Regression 179.805 4 44.951 6.424 .002b
1 Residual 139.947 20 6.997
Total 319.752 24
The ANOVA table shows P value as 0.002 hence the value is significant, and this
shows the model can be fit. 0.00 < .05 and hence the Null hypothesis is rejected.
Thus, it can be concluded that there is a significant impact of the independent factors
such as DIO, DPO, CR WCIP on the dependent factor, NPM.
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Table 4.10 Regression Coefficients Table
Model Unstandardized Standardized t Sig.

Coefficients Coefficients
B Std. Error Beta
DIO -.207 .110 -.613 -1.885 .076
CR -7.812 8.453 -.813 -.924 .368
WCIP 32.474 37.323 .754 .870 .039
DSO -.095 .103 -.319 -.922 .369

-17.076 38.796 -.309 -.440 .056
WCFP
DWC .041 .070 .107 .593 .560
The coefficient table shows the effect of DIO, DSO, WCFP, DWC, CR and WCIP on
NPM. It shows there is positive relationship with DWC and WCIP and negative
relationship with DIO, WCFP, DSO and CR.
The table shows if 1 unit increase in DIO will cause a decrease of 1.885 in the
probability that the NPM will decrease. The value for exp (β) of DWC shows that 1
unit increase in DWC will increase the probability of increase in NPM by 0.107. DSO
value is giving an indication that an increase of 1 unit in DTO will cause a decrease
by 0.922 units. Similarly, CR and WCFP shows that 1unit increase will cause a
decrease in NPM by 0.924 and 0.44 units. And also, it shows that 1unit increase will
cause an increase in NPM by 0.870 units. Result reveals DWC and WCIP are the
strong determinants of the WCM and highest value of WCIP shows it the most
significant determinant of WCM.
While there is negative relation with DSO, CR and WCFP which shows that increase
in DSO, CR and WCFP will significantly decrease NPM of the firm. The regression
equation is:
NPM =19.618 (Constant)+0.41(DWC) + 32.474(WCIP) – 17.076(WCFP)
P a g e 54 | 63
H1o: There is no significant impact of Working Capital Management components on
the Net Profit Margin (NPM) of the companies.
H1a: There is a significant impact of Working Capital Management components on
the Net Profit Margin (NPM) of the companies.
Based on Model, the working capital investment policy (WCIP) of the companies in
cement sector reveals a statistically positive relationship with NPM of the firms at
0.05 significance level. This result implies that there is a positive relationship between
WCIP and NPM of the companies, which means that as the WCIP ratio as reflected
by total current assets to total assets increase, there is a decrease in the degree of
aggressiveness of WCIP, which resulted in an increase in the NPM of the companies.
Hence, by adopting a non-aggressive WCIP, it has resulted in an increase in
profitability of companies in the cement sector.
Thus, based on the results reflected in the table, the null hypothesis of H1o is rejected,
in view that there is a significant positive relationship found between WCIP and NPM
of companies in cement sector during period of 2015 to 2019.
The working capital financing policy (WCFP) of the firms in cement sector reveals a
statistically negative relationship with NPM of the firms at 0.05 significance level.
This result implies that there is a negative relationship between WCFP and NPM of
the companies, which means that as the WCFP ratio as reflected by high investment
in the sources and amount of working capital maintained i.e., the proportion of short
term and long-term sources, which resulted in a decrease in the NPM of the
companies. Hence, by adopting an aggressive WCFP, it has resulted in a decrease in
profitability of companies in the cement sector.
Thus, based on the results reflected in the table, the null hypothesis of Ho is rejected,
in view that there is a significant negative relationship found between WCFP and
P a g e 55 | 63
NPM of companies in cement sector during period of 2015 to 2019,
4.3 Pearson’s Correlation Analysis
The coefficient of correlation is determined from selected working capital management
and profitability ratios derived from the selected firms ' three financial statements.
The Pearson’s correlation coefficient “r” is defined as:
𝑁∑𝑥𝑦−(∑𝑥)(∑𝑦)
(Karl Pearson’s Correlation Formula)
√(𝑁∑𝑥2−(∑𝑥)2)(𝑁∑𝑦2−(∑𝑦)2
Pearson’s Correlation analysis has been used in order to examine the relationship
amongst working capital management and profitability.
Table 4.11 Pearson Correlation results for all the variables (5 Cement companies,
2015 to 2019)
Variable 1 Variable 2 Sig Result Correlation Remarks
Coefficient
DPO DIO 0.000 H0 0.811 There is a high
Rejected positive
correlation
between DSO and
DPO
DSO DPO 0.000 H0 0.916 There is a high
Rejected positive
correlation
between DSO and
DPO
P a g e 56 | 63
NPM WCIP 0.000 H0 0.117 There is positive
Rejected correlation
between NPM and
WCIP
NPM WCFP 0.022 H0 -0.127 There is a negative
Rejected correlation
between NPM and
WCIP
DPO WCFP 0.001 H0 0.415 There is a
Rejected moderate positive
correlation
between NPM and
WCIP
H2o: There is no significant relationship between Working Capital Management
H2a: There is a significant relationship between Working Capital Management
The table shows the relationship between the Net Profit Margin and working capital
components such as Days Sales Outstanding, Days Inventory Outstanding, Days
Payable Outstanding, Current Ratio, Working Capital Investment Policy, Working
Capital Financing Policy and the Days Working Capital.
There are high correlation values observed between DWC and DIO as the correlation
is 0.916 at 5% significance level. There also exists a high correlation between DPO and
DSO as the correlation is 0.811 at 5% significance level. Also, there is high correlation
P a g e 57 | 63
between WCFP and DPO as the correlation is 0.415 at 1% level significance and
between WCFP and NPM the correlation is reported as -0.127 at 5% level significance.
The high positive correlation between Days Working Capital and Days Inventory
Outstanding where the correlation is 0.916 and the p value is less than 0.05 which
shows that there is a significant relationship between Days Working Capital and Days
Inventory Outstanding. This means that with high inventory levels, the more days a
company has of working capital, the more time it takes to convert that working
capital into sales. Thus, this means the increase in value of DIO will cause an increase
in time to convert working capital into sales. Also, it is said that the days working
capital number is indicative of an efficient company.
There is a high positive correlation between Working Capital Investment Policy and
Net Profit Margin where the correlation is 0.117 and the p value is less than 0.05
which shows that there is a significant relationship between Working Capital
Investment Policy and Net Profit Margin. This means that the high investment in
capital assets will increase the company’s profitability. Thus, this means the decrease
in value of WCIP will cause an increase in NPM of the company.
There is a moderate negative correlation between Working Capital Financing Policy
and Net Profit Margin where the correlation is -0.127 and the p value is less than 0.05
which shows that there is a significant relationship between Working Capital
Investment Policy and Net Profit Margin. This means that the high investment in the
sources and amount of working capital maintained i.e., the proportion of short term
and long-term sources will decrease the firm’s profitability. Thus, this means the
increase in value of WCFP will cause a decrease in NPM of the firm.
The disadvantage for using Pearson Correlation in analysis is its inability in identifying
the causes from its consequences (Deloof, 2003). Since Pearson Correlation did not
P a g e 58 | 63
offer a consistent indication of the relationship as the association of each variable with
other independent variables has not been taken into consideration in the evaluation of
the simple bivariate correlations.
P a g e 59 | 63
CHAPTER-5
SUMMARY OF
FINDINGS,
CONCLUSIONS AND
SUGGESTIONS
P a g e 60 | 63
5.1 SUMMARY OF FINDINGS and CONCLUSION
The present study on working capital management is an attempt to analyses the
working capital structure in such a way as to determine the performance of inventory
management, investigate the credit periods examine the utilization of cash resources,
regularly review the payment obtained before and after the due date, often manage
the inventory budgets, assess the inventory, to check the liquidity situation and to
determine the extent to which working capital financing influences the profitability
of selected cement companies.
This study aims to inquire the impact of working capital management components on
firm’s profitability. Days Sales Outstanding (DSO), Days Payable Outstanding (DPO),
Days Inventory Outstanding (DIO), Cash Conversion Cycle (CCC) or Days Working
Capital (DWC), Working Capital Investment Policy (WCIP), Working Capital
Financing Policy (WCFP) are taken as independent variables. Company’s profitability
is measured by using one dependent variable which is Net Profit Margin (NPM).
Regression Analysis is utilized to find the effect of working capital administration parts
on organization's productivity by utilizing optional information. This data is gathered
from annual reports of companies for five years from 2015-2019.
Results indicates that working capital management components have significant impact
on the profitability (NPM) of companies in cement sector therefore hypothesis is
accepted. WCIP and WCFP has a direct impact on NPM, as a non-aggressive WCIP
has resulted in an increase in profitability of companies in the cement sector and
aggressive WCFP has resulted in a decrease in profitability of companies in the
cement sector.
This study suggests that Companies in cement sector should manage working capital
efficiently because by doing this performance is increased.
P a g e 61 | 63
5.2 SCOPE FOR FURTHER STUDY
The present study was conducted for only five Indian cement companies for a period
of five years. There may be significant scope for further studies considering a greater
number of years and including more companies in the sample so that problems of
managing working capital and its solutions can be identified more efficiently. The study
can also be extended to other sectors and the results can be compared to see the
differences. Every segment in the manufacturing sector should be studied at the micro
level for efficient working capital management in order to assess which factors of
working capital management influence profitability more and how working capital
management can increase productivity and profitability in different sectors of our
country.
References
1) Ganesan, V. (2007). An analysis of working capital management efficiency in

telecommunication equipment industry. Rivier academic journal, 3(2), 1-10.
2) Shubita, M. F. (2013). Working capital management and profitability: a case of industrial

Jordanian companies. International Journal of Business and Social Science, 4(8).
3) Vallalnathan, N., & Joriye, G. (2013). Impact of working capital management on the profitability
of cooperative unions in East Showa, Ethiopia. Greener Journal of Bussiness and Management
Studies, 3, 251-269.
4) Ahmed, I. IMPACT OF WORKING CAPITAL MANAGEMENT ON PERFORMANCE.
5) Hailu, A. Y., & Venkateswarlu, P. (2016). Effect of working capital management on firms
profitability evidence from manufacturing companies in eastern, Ethiopia. IJAR, 2(1), 643-647.
6) Aregbeyen, O. (2013). The effects of working capital management on the profitability of

Nigerian manufacturing firms. Journal of Business Economics and Management, 14(3), 520-
534.
P a g e 62 | 63
7) Burange, L.G. and Yamini, S., “Performance of Indian Cement Industry: The Competitive
Landscape”, working paper UDE(CAS), University of Mumbai, April 2008.
Websites
1) Will Kenton [(Sep19, 2019) Working Capital (NWC)]
https://www.investopedia.com/terms/w/workingcapital.asp
2) Trisha [Working Capital Investment Policies]

http://www.yourarticlelibrary.com/financial-management/working-
capital/working-capital-investment-policies-explained-with-diagram/44102
3) www.moneycontrol.com
4) Corporate Finance & Accounting Financial Statements [Definition net

income (ni)]
https://www.investopedia.com/terms/n/netincome.asp
P a g e 63 | 63

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A STUDY ON THE IMPACT OF WORKING

CAPITAL MANAGEMENT ON PROFITABILITY

IN CEMENT COMPANIES IN INDIA

Project report submitted in partial fulfillment of the requirements for the

award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BENGALURU NORTH UNIVERSITY

Reg. No. 19MG502064

KRISTU JAYANTI COLLEGE, AUTONOMOUS

Management, Kristu Jayanti College, Autonomous, Bengaluru has undergone

also undertook a project titled “A STUDY ON THE IMPACT OF THE WORKING

CAPITAL MANAGEMENT ON PROFITABILITY IN CEMENT INDUSTRIES

IN INDIA” during his internship. We understand it is submitted in partial fulfilment of

Administration of Bengaluru North University and approved by AICTE. The Report

for the fulfillment of the requirement of a course of study.

Signature Signature Signature

Dr. Joseph Charles D Dr. M K Baby, Rev.Fr. Augustine

Internal Guide Head, School of Management Principal

1. Name of the Student Jofin Jose

3. Register Number 19MG502064

4. Title of the Project A Study on impact of the Working Capital

Management on profitability in Cement

5. Name of the Guide Dr. D Joseph Charles

6. Department School of Management

7. Acceptable Maximum Similarity 25%

8. Similarity of Content Observed 25%

9. Software Plagiarism Checker X

10. Date of Plagiarism Check 04-12-2020

Signature of the Student Signature of the Guide

the impact of the Working Capital Management on profitability in cement companies

Name of the student

Chapter Particulars Page No.

Table No. Title Page No.

4.11 Pearson’s Correlation results for all variables 56

components on profitability of selected cement companies from financial year 2014-15

to 2018-19. By these significance value we can conclude that Working Capital

can increase profitability of manufacturing firms by reducing their investment in short

term and long-term assets.

Keywords: DSO, DIO, DPO, DWC, CR, WCIP, WCFP

1.1 DEFINITION OF FINANCE

of monetary foundation and instruments from where assets can be secured.

➢ The second approach related finance to cash.

concentration in the business organization irrespective of the size of the organization.

evolution may be categorized into 2 approaches they are:

not on allocation of funds.

1. To fund the establishment of an organization, this includes the acquisition of necessary

assets of running business.

3. Managing mergers, re-organization and expansion and diversification.

4. To meet the expectation of the stake holders.

1.2 WORKING CAPITAL MANAGEMENT

up adequate degrees of transient capital is a continually continuous test, and in the

consequently progressively moving ceaselessly from customary wellsprings of outer

of money tied up in tasks and decides an association's momentary circumstance. For

equilibrium can't cover its momentary liabilities.

soundness of an organization. The requirement for working capital change from

receivables and records payables. The principle targets of working capital

administration incorporate keeping up the working capital working cycle and

management in any business is determined by: Nature of Business or Industry, Size of

Business or Scale of Operations, Growth prospects, Business Cycle, Manufacturing