A STUDY ON CASH MANAGEMENT WITH REFERANCE OF

SERVOMAX INDIA LIMITED

Submitted in partial fulfillment of the requirements for the award of

MASTER OF BUSINESS ADMINISTRATION

by

MARRI VARAPRASAD
Register No.41410333

SCHOOL OF MANAGEMENT STUDIES

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with Grade “A” by NAAC I 12B Status by UGC I Approved by AICTE
JEPPIAAR NAGAR, RAJIV GANDHI SALAI, CHENNAI - 600 119

April 2023
 SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY
(DEEMED TO BE UNIVERSITY)
Accredited with “A” grade by NAAC I 12B Status by UGC I Approved by AICTE
Jeppiaar Nagar, Rajiv Gandhi Salai, Chennai – 600 119
www.sathyabama.ac.in

SCHOOL OF MANAGEMENT STUDIES

BONAFIDE CERTIFICATE

This is to certify that this Project Report is the bonafide work of MARRIVARA
PRASAD 41410333 who carried out the project entitled “A Study on Cash
Management with reference to Servomax India Limited” under my supervision from
September 2021 to October 2021.

Dr. Bhavya
Internal guide External Guide

Dr. BHUVANESWARI .G
Dean – School of Management Studies

Submitted for Viva voce Examination held on_____________________

Internal Examiner External Examiner

 DECLARATION

I MARRI VARAPRASAD (41410333) hereby declare that the Project Report entitled
“A Study on Cash Management with reference to Servomax India Limited” done
by me under the guidance of Dr. Bhavya is submitted in partial fulfillment of the
requirements for the award of Master of Business Administration degree.

DATE:

PLACE: MARRI VARAPRASAD

 ACKNOWLEDGEMENT

I am pleased to acknowledge my sincere thanks to Board of Management of

SATHYABAMA for their kind encouragement in doing this project and for completing it
successfully. I am grateful to them.

I convey my sincere thanks to Dr. G. Bhuvaneswari, Dean - School of Management

Studies and Dr. A. Palani, Head - School of Management Studies for providing me
necessary support and details at the right time during the progressive reviews.

I would like to express my sincere and deep sense of gratitude to my Project Guide DR.
BHAVYA for her valuable guidance, suggestions and constant encouragement paved
way for the successful completion of my project work.

I wish to express my thanks to all Teaching and Non-teaching staff members of the School
of Management Studies who were helpful in many ways for the completion of the project.

MARRI VARAPRASAD
 CHAPTER – 1

1.1 INTRODUCTION:

Cash management is a crucial aspect of financial management for businesses, organizations,

and individuals alike. It involves the efficient and effective management of cash flows,
including the collection, disbursement, and investment of cash, to ensure optimal cash
utilization, liquidity, and financial stability.

Cash management is essential for businesses to meet their financial obligations, manage
working capital, and maximize profitability. Efficient cash management helps businesses to
maintain adequate cash reserves for day-to-day operations, manage cash inflows and
outflows, minimize idle cash, optimize interest earned on surplus cash, and mitigate the risks
associated with cash-related frauds, thefts, and losses.

Cash management encompasses various activities, including cash forecasting, cash flow
analysis, cash pooling, cash concentration, cash positioning, cash reconciliation, cash
budgeting, and cash investment strategies. It involves monitoring and controlling cash flows,
coordinating with various departments and stakeholders, implementing cash management
policies and procedures, and utilizing cash management tools and technologies for effective
cash flow management.
Effective cash management requires businesses to have a clear understanding of their cash
flows, cash needs, and cash risks. It involves developing and implementing cash management
strategies that align with the overall financial goals and objectives of the business, taking into
consideration factors such as cash flow patterns, business cycles, seasonality, payment terms,
and liquidity requirements.

In summary, cash management is a critical component of financial management that involves

the efficient and effective management of cash flows to ensure optimal cash utilization,
liquidity, and financial stability. It requires businesses to monitor, analyze, and control cash
flows, implement cash management strategies, utilize cash management tools and
technologies, optimize banking services, and maintain robust internal controls. Proper cash
management helps businesses to maintain adequate cash reserves, meet financial obligations,
manage working capital, and maximize profitability.
1.2 INDUSTRY PROFILE

As a leading manufacturer and exporter of power conditioning and energy management

solutions, Servomax India Limited operates in the electrical equipment industry. The industry
is a vital component of the global power sector and plays a critical role in providing reliable
and efficient power supply for various applications across industries and sectors.
The electrical equipment industry encompasses a wide range of products, including voltage
stabilizers, transformers, inverters, batteries, switchgear, cables, generators, and other
electrical components and accessories. These products are used in diverse applications, such
as manufacturing, healthcare, hospitality, IT/ITES, data centers, telecommunications,
renewable energy, and more.
The electrical equipment industry is driven by various factors, including the increasing
demand for electricity due to rapid industrialization, urbanization, and population growth, the
need for reliable and efficient power supply, the growing focus on energy management and
sustainability, and the advancement of technologies in power electronics and automation. The
industry is also influenced by government policies, regulations, and incentives aimed at
promoting energy efficiency, renewable energy, and electrification of various sectors.
In recent years, the electrical equipment industry has witnessed significant technological
advancements, such as the development of smart grids, digitalization, IoT-enabled devices,
energy storage solutions, and renewable energy technologies. These advancements have led
to increased automation, improved energy efficiency, enhanced product performance, and the
integration of renewable energy sources, creating new opportunities and challenges for
industry players.
The electrical equipment industry is highly competitive, with several global and regional
players competing for market share. Companies in the industry need to invest in research and
development, innovation, and customer-centric solutions to stay ahead in the market. Brand
reputation, product quality, after-sales service, and customer relationships are crucial factors
that influence the competitiveness of companies in the industry.
As for Servomax India Limited, the company has established a strong presence in the
domestic and international markets, serving a diverse customer base across industries and
sectors. With its wide range of power conditioning and energy management solutions,
commitment to quality, customer-centric approach, and focus on sustainability, Servomax
India Limited has positioned itself as a trusted and reliable player in the electrical equipment
industry.
 1.3 COMPANY PROFILE

Servomax India Limited is a leading manufacturer and exporter of power conditioning and
energy management solutions. The company was established in 1982 and has its headquarters
in Hyderabad, India. With over 40 years of experience, Servomax India Limited has emerged
as a trusted name in the field of power solutions, catering to various industries such as
manufacturing, healthcare, hospitality, IT/ITES, data centers, telecommunications, and more.
The company has a strong presence in the domestic and international markets, with a wide
range of products and services that help customers optimize their energy usage and ensure
reliable power supply.

Products and Services:

Servomax India Limited offers a diverse range of power conditioning and energy
management solutions, including:

Servo Voltage Stabilizers: Servomax manufactures and supplies a wide range of servo
voltage stabilizers that ensure stable and consistent voltage output to protect electrical and
electronic equipment from voltage fluctuations, thereby extending their lifespan and
improving their performance.

Isolation Transformers: The company manufactures isolation transformers that isolate the
electrical equipment from the main power supply to provide enhanced safety and protection
against electrical hazards, such as electrical shocks and surges.

UPS Systems: Servomax offers Uninterrupted Power Supply (UPS) systems that provide
backup power during power outages, ensuring uninterrupted operation of critical equipment
and systems.

Power Transformers: The company manufactures power transformers that are used for step-
up and step-down voltage conversion, distribution, and transmission of electrical power in
various industrial applications.
Renewable Energy Solutions: Servomax India Limited also provides renewable energy
solutions such as solar inverters, solar charge controllers, and solar panels to harness solar
energy and promote sustainable and eco-friendly power generation.

Energy Management Solutions: The company offers energy management solutions, including
energy audits, power factor correction, and energy monitoring systems to help customers
optimize their energy consumption, reduce energy costs, and improve energy efficiency.

Quality and Certifications:

Servomax India Limited is committed to maintaining high-quality standards and has obtained
various certifications for its products and services, including ISO 9001:2015 for quality
management systems, ISO 14001:2015 for environmental management systems, and OHSAS
18001:2007 for occupational health and safety management systems. The company also
complies with relevant industry standards and regulations, and its products are tested and
approved by various national and international agencies.

Clients and Global Presence:

Servomax India Limited has a wide customer base, serving clients from various industries
and sectors, including manufacturing, healthcare, IT/ITES, hospitality, data centers,
telecommunications, and more. The company has a strong presence in the domestic market,
with a wide network of sales and service centers across India. In addition, Servomax has a
significant global presence, exporting its products to over 50 countries worldwide, including
the Middle East, Africa, South Asia, Southeast Asia, and Europe.

Conclusion:
Servomax India Limited is a leading manufacturer and exporter of power conditioning and
energy management solutions with over 40 years of experience. The company offers a
diverse range of products and services that help customers optimize their energy usage,
protect their electrical and electronic equipment, and ensure reliable power supply. With a
strong presence in the domestic and international markets, Servomax India Limited is known
for its quality products, customer-centric approach, and commitment to sustainability.
1.4 NEED OF THE STUDY:

 This study was conducted to gain a working knowledge of the cash management and
operations of Servomax India Limited.
 Cash forecast.
 Concentration of funds collected.
 Effective collection of inflows and outflows.

1.5 OBJECTIVES OF THE STUDY

 Investigate cash management techniques and the impact on the income statements.
 Evaluate the effectiveness of the cash management of the Servomax India Limited.
 Determination of link between bond management and profitability.
 Identify revenue and payments for the industry

1.6 SCOPE OF THE STUDY

This research is primarily focused on cash management of the power conditioning and energy
industry in Hyderabad. Cash management is primarily an observation of the electronics
industry and various procedures can improve the profitability and availability of liquidity in
the industry. The industry retains liquidity and controls liquidity across the sector.

1.7 LIMITATIONS OF THE STUDY

This study has several limitations:

 Data is collected for 3 years only.

 Most financial data are kept secret.
 The duration is limited to 6 weeks.
 Management did not allow researchers in each department.
 CHAPTER-2
REVIEW OF LITERATUTE:

According to Davidson et al (1999)

Money is an exchangeable medium. It must be unlimited for commercial purposes. Cash must
meet the main requirements of acceptance and availability for immediate use when buying or
paying debts. Bank deposits are common tests that apply to cash items. This is the process of
planning, managing and calculating cash transactions and cash balances. We improve
productivity by converting available cash directly or indirectly into expenses.

Davidson et al., (1999)

Cash can also be used for banking or commercial purposes. It's not an inventory, it's not a debt
(it has to be), it's not a property. These can be converted into cash at any time, but you will
need cash or money to pay the bank. Pay your rent and pay your salary. Increasing profits does
not necessarily mean more money.

Pandey, (2007)

Cash is an important current asset for commercial operations. Money is the main source of
information necessary for the smooth running of your business. This is the expected end result
of selling services or products manufactured by the company. The company must have enough
money and nothing more. The lack of liquidity will hamper the company's production activities
and excessive liquidity will simply remain unused. Without contributing to the profitability of
Hue. Therefore, the main function of the financial manager is to maintain a healthy cash flow.

Hampton, (2001)

Cash is the amount that the company can pay immediately without any restrictions. The term
cash includes the amount of coins, currency, checks and bank accounts held by the company.
Cash is also included in cash, such as securities and time deposits. The fundamental nature of
short-term cash assets is that they can be easily converted into cash. Companies with excess
liquidity typically invest in investments with commercial benefits.
Waltson and Head (2007)

Cash management has described the concept of optimizing free cash flow, optimizing interest
generated by reserve funds that are not immediately needed, and reducing losses from late
transfers.

According to Zimmerer et al (2008)

Cash management is the process of forecasting, collecting, spending, investing and planning a
fund that a business must manage smoothly. Cash management is also needed because it is the
most important but unproductive asset of SMEs. The company must have enough cash to fulfill
its obligations. Otherwise, he is sentenced to bankruptcy. Creditors, employees, and lenders
will have to pay over time, and cash is a vital means of exchange.

Chimeras and others (2008)

However, in the unpredictable, some companies have excessive cash. This inactive fund has
income potential that landlords do not know, which limits the growth of the business and
reduces profitability. Investing in cash for a short time can increase the income of your
business. With proper cash management, homeowners can properly manage the cash flow
required for their business, avoid unnecessarily high cash balances, and increase revenues per
dollar in the business.

Jeffrey P. Davidson et al., 1992)

Cash management is especially important for new and growing businesses. Cash flow also
pointed out that SMEs can be a problem if they have a large number of customers, provide
excellent products to their customers and gain a reputation in the sector. Companies with cash
flow problems can not afford unexpected costs. You may have difficulty finding funds for
innovation or expansion. Lastly, difficult cash flows make it difficult to hire and retain good
employees.

Westerfield et al., (1999)

He emphasized the importance of distinguishing cash management and liquidity management

issues. The distinction is confusing because the word money is actually used in two different
ways.
Kasilo, (1997)

Cash flow from operating activities generates cash when the company determines. Various
methods are used to determine the amount of operating cash flow. A common method is to use
a statement of work and a balance sheet to create a statement of cash flows (source and financial
statements).

Kasilo op cit: 30, Vause 30, Woodward: (1999)

A positive cash flow represents the amount of cash generated by an organization during the
year. Negative cash flow indicates that additional cash was used to support operations during
the same period. Generally, companies with negative cash flow from operations can not raise
operating funds. In fact, we do not create cash flow, but we consume. This can lead to
bankruptcy due to technical problems of bankruptcy.

Vause and Woodward, (2001)

Cash flow accounting includes a final cash flow categorization list and a set of expected cash
flows that support the analysis of the historical categorization of cash flows and the difference
between actual cash flows. This avoids accounting time allocations based on the most
fundamental events of commercial activity, internal and external cash flows, the separation of
future estimates and past events (in terms of cash flows) and estimates. of consumption.

Arnold and the port (1988)

Treasury critics, however, believe that the cash report is not an estimate, such as delaying
payment to creditors and ignoring non-financial changes in assets and liabilities, including
profits and losses. Indicates the degree of wealth gained by the consumption of the asset.
Operating cash flow is also not a default predictor.

Kasilo, op cit: 31, Vause and Woodward, op cit: 95

The Company's cash flow statement indicates whether the Company increased or decreased its
liquidity during its period. A conservative reduction can indicate the degree of dissatisfaction
of a company during a year and vice versa. Because profits are not cash, companies can make
profits but remain technically inadequate.
Davidson et al., (1992)

The minimum cash balance is defined taking into account the required basic security reserve,
minimum bank balance requirements, and daily cash withdrawal rates and costs. The cash
balance must remain at the lowest practical level because it will not buy anything and will lose
purchasing power at higher prices.

According to Davidson (1992: 13-12)

The minimum cash balance is based on the required basic safety cushion, minimum balance
requirements, cash withdrawal rate and daily costs. The cash balance must be kept at the lowest
real level because the excess cash is not profitable and the purchasing power is lost at a higher
price. The minimum cash balance should be the default liquidity buffer needed to account for
daily cash withdrawals and cost ratios. The average cash balance determined on an interim
basis (the amount of the deposit required) can be tested in accordance with industry standards
using the percentage of the average cash balance for the total operating expenses for the year.
If the activity is seasonal, the desired cash flow depends on the peak and the trough of activity.
These companies calculate the average cash balance each month as the best estimate of the
total cost.

According to Gallagher and Andrew (2003)

Financial theorists have developed a mathematical model that allows companies to find the
optimal "target" cash balance between the minimum and maximum limits, between liquidity
and profitability. The following section describes one of these models, the Miller-Orr model.

Davidson et al., (1992)

The minimum cash balance must be the default liquidity buffer required to take into account
the daily cash withdrawal and the expense ratio. The average cash balance determined on an
interim basis (required deposit size) can be tested in accordance with industry standards using
the percentage of the average cash balance for the total operating expenses for the year.Cash
management has four main functions. Effective leverage, favorable investment in cash surplus
and acceleration of cash flow.
Soliman, 2008). Blessings and Onoya (2015)

We agree that profitability, assets, liabilities and capital are important ways to evaluate an
organization's performance reports and make investment decisions. They note the general view
that published financial statements do not need to provide reliable information to investors and
other users of financial statements.

Deogun et al., 1997, Dubes and Jains, 1988, Eom, (1999).

Wang (2008) emphasizes the division of airlines into four categories according to their
structure. Wang examines financial ratios of subcategories such as the financial structure,
solvency, income and profitability of Taiwan's domestic airlines. Feng and Wang (2000)
develop a model for evaluating the performance of Taiwanese airlines, including revising
financial ratios. This combines the total performance of an airline into three categories of
production, marketing and fulfilment.
 CHAPTER – 3
RESEARCH METHODOLOGY

RESEARCH:

Research is an organized, systematic, database, critical, objective, scientific, inquiry or

investigation into a specific problem, undertaken with the purpose of finding answer or
solutions to it. Emory defines research as, “any organized inquiry designed and carried out to
provide information for solving a problem”.

3.1 RESEARCH DESIGN:

Research design is of condition for collection specification of methods and procedures for
acquiring the information needed to structure or to solve problem.
Research design is defined as, “the arrangement for collection and analysis of the data in a
manner that aims to combined relevant to the research purpose with economy in procedure”.
Analytical research technique was adopted in this project. The researcher used analytical type
of research to analyze the past data based on which certain future decision can be made.

3.2 SOURCE OF DATA

PRIMARY DATA:
The primary data is that the data which is collected fresh or first hand and for first time,
which is original in nature. Primary data can be collected through personal interview,
Questionnaire and so on to support the secondary data.

SECONDARY DATA:
This data, which have already been collected and presented by any agency, may be used for
the purpose of investigation. Such data may be called secondary data. Secondary data may
earlier be published data or unpublished data. Usually published data are available in annual
report.
 CHAPTER – 4
DATA ANALYSIS AND INTERPRETATION

1. The Cash Management Techniques of Servomax India Limited.

Cash Management Techniques

Budgeting
The budget is the cornerstone of sound financial planning. Budgeting is simply a
process that tracks your monthly expenses and determines how you spend money. By
creating monthly costs for spouses, you can find areas in which you can reduce or eliminate
costs while preparing your budget.

Monitor Cash Flow Regularly

Maintain cash flow from the first and most important aspect of cash management. To
help with this, create a cash budget that presents your finances in the short and long term. It
tells you when and where you need it.

Bill Promptly and Accurately

The faster an invoice is sent by mail, the faster the invoice will be paid. If
company's shipments or services do not automatically issue invoices, set up weekly billing
schedules to track them. In addition, we have always included payment due dates to
encourage customers to pay quickly.

Payment Delays to Supplier

To keep cash in your account for long as possible, wait for a payment to your
providers as long as possible (without risking late fees). The only time it is an earlier payment
option is if there is an incentive worthwhile, otherwise, stay with the wait.

Use the Available Technology

There are other professional accounting software solutions allow your finances to
be cash flow worksheets from sites such as drop boxes or a reader. The advantage of these
powerful keys is that you can access your finances anytime, anywhere
4.1 Cash Ratio

The cash ratio is the ratio of cash and cash equivalents to short-term liabilities of the
Company. This is an extremely high liquidity ratio as it only compares cash and cash
equivalents with current liabilities. Measure ability to repay your current debt using only cash
and cash equivalents.

CASH RATIO = CASH/CURRENT LIABILITY*100

4.1 TABLE SHOWING CASH RATIO

Analysis and Interpretation:

As you can see in the chart above, the liquidity ratio in 2015-16 was 37.63 in 2016-17, 36.04
in 2017-1848 and the year-over-year fluctuation of 48.20. The cash ratio in 2017 is very low
at 36.04%.
4.1 Cash to Working Capital

The cash generating capital ratio measures the extent to which current liabilities can be
hedged using cash and cash equivalents and current assets such as securities. This includes
situations in which the company does not spend too much money on inventory and moves
quickly to sales.

CASH TO WORKING CAPITAL =

Cash and Cash Equivalents / Total Current Assets — Total Current Liabilities
Working capital = Current Assets - Current Liability

4.2 TABLE SHOWING CASH TO WORKING CAPITAL

4.2.1 Graph showing the cash and working capital relation in financial years 2015-16 to
2017-18
Analysis and Interpretation:

The graph above shows that the cash / working capital ratio for 2015-2016 was 3.80 in 2016-
2017. In 2017-18, it decreased to 3.56 and increased to 3.76A, the higher the ratio.
4.3 Debt Equity Ratio
Debt Equity Ratio = Total Liabilities / Shareholders Funds

4.3 Table showing Debt Equity Ratio

4.3 Graph showing the cash and Debt equity ratio min financial years 2015-16 to 2017-
18.

Analysis and Interpretation:

Mysore electrical industries Debt Equity Ratio for the year 2015-16 is 4.11, 2016-17 is 2.89
and in the year 2018 is 2.65. From the graph it is evident that debt equity turnover ratio of
MEIL is decreasing. The decreasing in debt equity ratio of MEIL means lower the debt ratio
less the company has to worry in meeting its fixed obligations and also less dependent on
shareholders and outsider.
4.4 Growth of Cash Position

4.4 Table Showing Growth of Cash Position

4.4.1 Graph showing the Cash position in financial years 2015-16 to 2017-18.
Analysis and Interpretation:

As shown in the chart above and the graph above, the increase in cash holdings tends to
increase expectations for 2016-17 compared to 2015-16. The growth rate for 2017-18 rose to
151.54. In addition, it can be said that the increase in cash is favorable for the company.
4.5 Cash to Current Assets

The cash rate represents the portion of total current assets, including the most current assets,
cash and cash equivalents, and securities of the Company.

The ratio of cash and cash equals the present value of the securities and cash divided by the
current liabilities of the Company. Cash ratios (also known as cash ratios) compare the
amount of highly liquid assets (such as cash and securities) to the amount of current
liabilities.
Cash to Current Assets = Cash/Current Assets*100

4.5 Table showing Cash to Current Assets

4.5.1 Graph showing the Cash to current asset in financial years 2015-16 to 2017-18
4.5.2 Graph showing the Cash to current asset Ratio in financial years 2015-16 to 2017-
18.

Analysis and Interpretation:

In the chart above, the ratio of liquid assets to liquid assets in 2015-16 was 50.71 in 2016-17,
but increased to 57.56 in 2017-18, to reach 76.53. The above data show that the company's
cash / present ratio fluctuates over time. The figure for 2015-16 is 50.71%, which is very low
compared to 2017 and 2018.
4.6 Net profit ratio
Net income ratio = Net income after net sales / net sales * 100
4.6 Table showing Net Profit Ratio

4.6 Graph showing the Net Profit Ratio of the financial years 2015-16 to 2017-18.

Analysis and Interpretation:

Servomax India Limited Net Profit ratio for the year 2015-16 is 12.59, in 2015-16 Net profit
508.76 and net profit ratio is 12.32, 2017-18 profit is from the graph it is evident that net
profit ratio of Mysore electrical industries increasing. The increasing in net profit ratio of the
Mysore electrical industries indicates that the company’s profitability position is Flexible.
4.7 Cash to Sales

The cash flow / sales ratio represents the ability to generate cash flows in proportion to the
volume of sales. Calculated by cash flow from operations divided by net sales. Ideally, the
ratio should be about the same as revenue growth.
Cash to sales= cash / Net sales
4.7 Table showing Cash to Sales

4.7.1 Graph showing the Cash to sales in financial years 2015-16 to 2017-18.
4.7.2 The following chart shows the ratio of cash to sale

Analysis and Interpretation:

As noted above, the cash flow ratio for the 2015-16 period was 0.60 and the 2016-17 cash
sales ratio was 1.06. In 2017-2018, you can see that the ratio of cash and sales is 000000. The
above ratios indicate that, as sales increase, the cash position increases and the organization
can achieve a better liquidity position.
4.8 CASH FLOW STATEMENT;
4.8.1 CASHFLOW FROM OPERATING ACTIVITIES

Cash flow from operating activities is included in a statement of cash flows that describes the
source of cash and the use of on-going commercial activities during a given period. This
generally includes changes in net income from income statement, adjustments to net income
and working capital.
4.8.1 Graph showing the cash from operating activities of the financial years 2015-16 to
2017-18.

INTERPRETATION

From the above chart, cash flow from operating activities shows high rate of the fluctuations
in the cash flows. It can be observed in the year 2015-16 was Rs 524.92 lakhs there is high
cash from operating activities, but in the year 2016-17 is Rs 521.68 it come down later it
shows decrease in the year 2017-18 was Rs -196.77
4.8.2 CASHFLOW FROM INVESTING ACTIVITIES

Cash flows from investing activities are items in the statement of cash flows that reflect
changes in the amount invested in capital gains, such as investment gains and losses and
property, plant and equipment.

4.8.2 Graph showing the cash from investment activities of the financial years 2015-16 to
2017-18

INTERPRETATION

From the above chart, cash flow from investing activities shows high rate of investment on
fixed assets. It can be observed in the year 2015-16 was Rs 701.13 lakhs there is high cash
from investing activities, but in the year 2016-17 is Rs 2224.56 it come down later it shows
decreased its investment criteria on fixed assets in the year 2017-18 was Rs 2203.51.
4.8.3 CASHFLOW FROM FINANCING ACTIVITIES
4.8.3 Graph showing the cash from financial activities of the financial years 2015-16 to
2017-18.

INTERPRETATION

The cash and bank balance held by the company are fluctuating over the years as seen from
the above chart the company cash and bank balance was high in the year 2016-17 Rs 872,
low in the year 2015-16 Rs 503.
 CHAPTER 5
FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS

 It is observed that in 2015-16 the total cash is 8181.96 and the cash ratio was 37.63%
in the base year, during the year 2016-17 it is decreased to 36.04% and in the year
2017-18 it is increases to 48.20%
 Cash flow from working capital increased from 3.80% in the base year to 3.56% in
2015-16 and 3.76% in 2017-18. Fundamental working capital is generally useful if the
company has more short-term debt than cash and other assets, but you can use healthy
cash resources based on your business model.
 The debt ratio was 4.11% for the base year, rising to 2.89% in 2015-2016 and 2.65%
in 2017-2018. Lower debt ratios may also indicate that companies do not capitalize on
gains that can be leveraged financially
 The growth rate of the total cash position in 2016-17 is 111.18% compared to the base
year indicated in the table above, but the increase in the cash position in 2017- 2018 is
151.54% in 2017-2018. Reinvest, return money to shareholders, pay for expenses and
amortize future financial difficulties
 It is observed that the cash to current asset ratio was 50.71% in the base year, during
the year 2015-16 it is increased to 57.56% and in the year 2017-18 it is also increase
to 76.53%.
 The cash flow to cash flow ratio was 12.59% for the base year, decreased to 12.32%
in 2015-16 and increased to 15.48 in 2017-18. The net profit ratio is a useful tool for
misjudging the overall profitability of your business. A high percentage indicates an
effective management advantage for your business. When we analyze the company's
net earnings ratio, which we can understand, the net after-tax profit of the corporation
is higher than that of this net sale
 It is observed that the cash to sales ratio was 0.60%, in the base year, during the year
2015-16 it is increased to 1.16% and in the year 2017-18 it is also decrease to 1.15%.
5.2 SUGGESTIONS

 The company must take steps to reduce operating expenses.

 Servomax India Limited should maintain its current assets and improve them.
 The Servomax India Limited needs to decrease the collection period because it is
more than the required.
 Servomax India Limited must recover the debtor's payment within specific time
 The company needs better liquidity to ensure that liquidity needs are properly met
 The company should be able to reduce downtime to improve productivity and save
energy. Step to be taken to increase the working capital of the firm to meet short term
obligation.
 Even though the firm is doing well but the bad debts are also increasing so the
management needs to take necessary steps for reducing bad debts.

5.3 CONCLUSION
In this study, the cash management effectiveness analysis was conducted at Servomax India
Limited. We analysed the effectiveness of liquidity based on data from Mysore Electric
annual report. The effectiveness of Mysore electric cash management was analysed by
analysing the relationship between cash flow and the balance of sales, investments and
financing activities. Since cash management can not control cash flow, inefficient liquidity
management can hurt business. In most cases, poor cash management is due to the failure of
the business. Effective cash management is therefore essential for the company. The analysis
of this project shows significant fluctuations in long-term credit for clients. The analysis
shows that sales volume has increased and collections management has improved. Efficient
receivables management can generate good revenue growth, healthy cash flow, profitability
and a stable sales cycle.