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Project Report
On
"Study of working capital management of JK cement”
Submitted to
Rashtrasant Tukadoji Maharaj Nagpur University
In Partial Fulfillment of degree of Bachelor of Business Administration in the faculty of
commerce Financial Management
Submitted By
Siddhi Sancheti
Under the Guidance of
CA Dr. Manish N. Shah

G H Raisoni College Of commerce, Science & Technology

Nagpur (2023-2024)
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DECLARATION

I, Siddhi Sancheti hereby declare that the project entitled "Study of working capital
management of JK cement is a record of independent research work carried out by me under
the supervision and guidance of CA Dr. Manish N. Shah. This has not been previously
submitted for the award of any Diploma/ Degree of this or any other university.

Place : Nagpur

Date :

Signature

Siddhi Sancheti
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ACKNOWLEDGEMENT

It is my pleasure to place on record my sincere gratitude towards my guide CA Dr. Manish N.

Shah, who spent her/his precious time providing innovative ideas and expert guidance to my
project work. It was his direction and encouragement at every moment and step that
motivated me to steer the research work confidently and successfully.
I am grateful to Dr. Aarti Deshpande, Officiating Principal, Dr. Jasvinder Kaur, Prof. Pankaj
Pethe HOD BBA
Department, for their encouragement, moral support and the valuable guidance and also
thankful to Teaching and Non-teaching staff for their continuous help to complete this
project.
I am also grateful to the CA Prachi Ranade, without his/her constant support and timely help
my project would never been completed.
I am indebted to my respected parents because of whose blessings, I have been able to carry
out this work successfully. I am also thankful to all those who have directly or indirectly
helped me for this project work.

Place : Nagpur
Date :
Signature
Siddhi Sancheti
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TABLE CONTENTS

Chapter No. Particulars Page on

Chapter no 1 Introduction 5

Chapter no 2 Company profile 14

Chapter no 3 Aims & Objectives 17

Chapter no 4 Research methodology 19

Chapter no 5 Data Analysis and 26

interpretation
Chapter no 6 Conclusion 41

Bibliography and references 44

Annexure 46
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INTRODUCTION
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INTRODUCTION

Working capital, also known as net working capital (NWC), is the difference between a
company's current assets, such as cash, accounts receivable (customer's unpaid bills), and
inventories of raw materials and finished goods, and its current liabilities, such as accounts
payable. NWC is a measure of a company's liquidity and refers to the difference between
operating current assets and operating current liabilities. Working capital is a measure of
company's liquidity, operational efficiency, and short term financial health. If a company has
substantial positive working capital, then it should have the potential to invest and grow.
If a company's current assets do not exceed its current liabilities, then it may have trouble
growing or paying back creditors, or even go bankrupt. To calculate working capital,
compare a company's current assets to its current liabilities. Current assets listed on a
company's balance sheet include cash, accounts receivable, inventory, and other assets that
are expected to be liquidated or turned into cash in less than one year. Current liabilities are
due within 12 months. Working capital that is in line with or higher than industry average for
a company of comparable size is generally considered acceptable. Low working capital may
indicate a risk of distress or default.
Working Capital management is a business strategy designed to ensure that a company
operates efficiently by monitoring and using its current assets and liabilities to the best effect.
Working Capital management can improve a company's earnings and profitability through
efficient use of its resources. Management of working capital includes inventory management
as well as management of accounts receivables and account payables. The objectives of
working capital management, in addition to ensuring that the company has enough cash to
cover its expense and debt, are minimizing the cost of money spent on working capital, and
maximizing the return on asset investments.

A Comprehensive Study of Working Capital Management Of

Jk CEMENT

Working capital management is a business tool that helps companies effectively make use of
current assets, helping companies to maintain sufficient cash flow to meet short term goals
and obligations. By effectively managing working capital, companies can free up cash that
would otherwise be trapped on their balance sheets.
As a result, they may be able to reduce the need for external borrowing, expand their
businesses, fund mergers or acquisitions, or invest in R&D. Working capital is essential to
the health of every business, but managing it effectively is something of a balancing act.
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Companies need to have enough cash available to cover both planned and unexpected costs,
while also making the best use of the funds available.
This is achieved by the effective management of accounts payable, accounts receivable,
inventory and cash.

Importance of Working Capital Management

Efficiently maintaining a balanced ratio between current assets and current liabilities is called
working capital management. Significance of Working Capital management ensures that the
company has enough monetary liquidity to meet short term debts.
Structuring an effective working capital management is a great way to enhance the income.
Ratio analysis and management of individual components of working capital are two primary
importance of Working Capital Management.

1 Ratio Analysis-
Process of determining and analysing numerical relationships in accordance to financial
statements like balance sheets, income statements and cash inflow statements is known as
ratio analysis. The primary purpose of ratio analysis is to appraise the operating and financial
performance of an economic activity and determine its efficiency, profitability, liquidity and
solvency. It also helps in getting a brief idea about comparative valuation by comparing ratios
of different companies in the same sector.

2 Inventory Management-
Inventory management has huge importance of working capital management, it involves
overseeing the purchase of new items and managing the existing ones. It aims to create such a
purchase plan that will ensure effective delivery of materials. Two most use inventory
management strategies are
"just-in-time" method and "Material Required Planning". In former one the firm plans to
receive items at the time of need rather than maintaining high inventory levels, and the latter
one is based sales forecasts.

3 Cash Management-
Cash management is process of collecting, managing and utilizing the cash inflow to
optimize the short-term financial stability. The key component in accomplishing this task is
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solvency as an importance of working capital management. Successful cash management is

useful when any unexpected demand for cash occurs unexpectedly.

Conclusion:-

These importance of working capital management will assist you in maintaining optimum
inventory level. Also, you can build your strategies and techniques to clear aged inventories,
improve working capital, generate cash and much more. Your steps towards significance of
working capital management will definitely improve your brand loyalty as well as
profitability for your organization.

Objectives of Working Capital Management

Management of working capital is one of the key objectives of working capital management.
It assists the business management to properly allocate their resources in order to achieve
quarterly business goals and objectives. Applying the correct ratios will reveal the
management strategies and techniques along with some additional necessary analysis.
Controlling working capital, Managing working capital and effectively managing resources,
all this terms means the same. Some additional financial indicators have always been
considered for effective management such as turnover ratio, ratio of collection, performance
ratio, etc. All these can effectively accomplish when following best standard in the industry,
setting objectives of working capital as well as an art of working capital management.

1 Optimization of Working Capital Operating Cycle-

In simple terms, working capital cycle starts from the day raw materials are acquired and
completes when the finished products are sold. One of the major objectives of working
capital management is to ensure that there is no hindrance during the above mentioned
process. It includes collecting and processing raw materials and other initial investment in
time, placing all the essentials for production beforehand, selling finished products as soon as
possible, collecting account receivables on time and clearing all the account payable's in time.

2 Balance Working Capital-

The good net working capital is required to stay in a stable equilibrium. The ratio of current
assets and current liabilities should be optimized. Because the lower value of this ratio
implies that company is not financially stable to clear its current debts, higher value is also
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not an indication of prosperity, it suggests that company has too many inventories and they
are not investing in excess cash.

3. Minimize Cost of Capital-

Working capital management focuses on minimizing cost of capital, rate of interest in some
special cases. It is only when the cost of capital will be lesser than revenue, one can earn
profit. Utilization of long-term funds (in proper mix) is one way of minimizing capital cost.
The fundamental principle of financial management should be followed sincerely while
deciding the finance mix, always. The principle states that long term sources should finance
fixed assets and permanent assets. Also, the short-term or temporary assets should be
financed by short-term sources of finance.

4. Assists the Business to Avoid Over-borrowing-

Over-borrowing is among the quickest techniques towards business growth as well as
business failure. The objectives of working capital management out of over- borrowing leads
to mismanagement of finance as well as assets. Their business goes far beyond their financial
goals which leads towards financial failure for a business.
A proper working capital management will definitely give you a warning sign where you can
put your control towards business expansion.

5. Optimal Return on Current Asset Investment-

The return on the investment infused on short term assets must exceed the average cost of
capital to ensure wealth maximization. In other words, the rate of return earned from the
investment in short term assets should exceed the rate of interest or cost of capital. Objectives
of working capital management aims to extract maximum from an investment in current
assets to ensure higher profitability.

6. Expansion of Company's Investment-

Money you saved from effective working capital management tactics is being an inexpensive
source of finance that can be used for your business expansion, funds for existing projects or
company's investment toward expansion of their idea and vision towards growth of an
organization.

7. Healthy Relation with Suppliers / Providers-

When a business has defined objectives of working capital and engaging its best management
concerning its working capital along with other financial indicators.
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Then lenders, suppliers, non-trade creditors as well as provides will be more interested in
carrying a business with you. Their understanding of the business, management setup will
definitely boost confidence within the business as well as in the transactions of a company.

Types of Working Capital

1. Gross Working Capital:

Balance sheet reporting current assets of the firm tend to be popularly known as gross
working capital. Current assets are those short-term assets that can easily converted to cash
within one year of time-frame. The reason why asset liquidity is a problematic in nature? It is
mainly because their liabilities occurs any time and never hold off for the liquidation of
current assets and resource. This gap or mismatch produces is overcome by opting short term
financing options.

2. Net Working Capital / Working Capital:

Net working capital is a very often used types of working capital in companies .Here are the
two ways to derive net working capital. Firstly, you can find net working capital merely by
finding difference in current assets over current liabilities from the sheet of the business.
Secondly, net working capital is a subset of current assets which are informally / indirectly
financed by long-term assets. Net working capital is considered most important types of
working capital for management decisions on working capital financing.

Factors affecting Working Capital:-

1)Length of Operating Cycle
2)Nature of Business
3)Scale of Operation
4)Business Cycle Fluctuation
5)Seasonal Factors
6) Technology and Production Cycle
7)Credit Allowed
8)Credit Avail
9)Operating Efficiency
10)Availability of Raw Materials
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11)Level of Competition
12)Inflation
13)Growth Prospects

Operating Cycle Concept

Working capital is also called a circulating capital or revolving capital. That is the
money/capital which circulates in various forms of current assets in a continued manner. For
example, at a point of time, funds may be tied up in raw materials, then later converted into
semi-finished products, then into finished/ final products and when these finished products
are sold, it is converted either into account receivables or cash. This cash is reinvested in
current assets. Thus, the amount always keeps on circulating or revolving from cash to
current assets and back again to cash. That is why some people prefer to use the term
liquidity management instead of working capital management. Although this circulation takes
place at short intervals, the money is required again and again.
The American Institute of Certified Public Accountants defined the operating cycle as:
"The average time intervening between the acquisition of material or services entering the
process and the final cash realisation."
According to I. M. Pandey,
"Operating cycle is the time duration involved in the acquisition of resources, conversion of
raw materials into work- in-process into finished goods, conversion of finished goods into
sales and collection of sales."
Thus, operating cycle of a manufacturing enterprise involves three phases:
1. Acquisition of resources such as raw material, labour, power and fuel etc.
2. Manufacture of the product which includes conversion of raw material into work-in-
progress into finished goods.
3. Sale of the product either for cash or on credit. Credit sales create account receivable for
collection.
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The operating cycle or circulation flow of money can best be projected in the
following manner-
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Different forecasting method of Working Capital

1) Cash Forecasting Method

2) Balance Sheet Method
3) Profit and Loss Adjustment Method
4) Percentage of Sales Method
5) Operational Cycle Method
6) Regression Analysis Method

1)Cash Forecasting Methods:-

In this cash forecasting method, the working capital is calculated by using the closing balance
of the cash. In this case, consider the payments and receipts are made in the same period.

2)Balance Sheet Method:-

In the balance sheet method, the forecasting is made on the basis of difference between assets
and liabilities of the firm. This will show the cash surplus or cash deficiency of the
organization.

3)Profit and Loss Adjustment Method:-

This method is used to determine the forecasted profit and loss statement of the firm. The
cash loss will be adjusted with more cash supply.

4)Percentage of Sales Method:-

This method has simple procedures which are easy to understand. To determine the
percentage of sales, the firm requires its past statistics of sales.

5)Operational Cycle Method:-

The total operational cycle of an organization consists of several processes. To calculate the
operational cycle of an organization, the working capital of purchase of raw material to its
conversion into cash is considered. Each of this activity is evaluated in terms of numbers of
days and required amount of investment. The total of each stage of investment is the overall
working capital of the firm.
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COMPANY PROFILE
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COMPANY PROFILE

JK Cement Ltd. stands tall as one of India's premier cement manufacturers, renowned for its
production of both Grey Cement and White Cement. Its products play a vital role in
constructing essential infrastructure throughout the nation. The company's journey began in
1975 with the commencement of operations at its flagship grey cement unit in Nimbahera,
Rajasthan. Over the years, JK Cement has grown in stature and is now counted among the top
cement manufacturers in India, boasting an impressive installed capacity of 20.7 million tons
of Grey Cement. The reach of JK Cement's Grey Cement business spans across 15 states,
with a significant presence in regions like Uttar Pradesh and Madhya Pradesh, where its
products are highly sought after. Additionally, the company has ventured into the production
of White Cement, a premium variety that finds global appeal. With a total White Cement
capacity of 1.48 million tons and Wall Putty capacity of 1.33 million tons, JK White Cement
is making its mark in 36 countries worldwide, making it an exceptional success story in the
international market.

To cater to global demands effectively, JK Cement has strategically established subsidiaries

like JK Cement Works Fujairah FZC and JK White Cement (Africa) Ltd., bolstering its
international presence. These subsidiaries exemplify the company's commitment to delivering
high-quality products and services on a global scale.

JK Cement's success can be attributed to its unwavering focus on maintaining product

excellence, prioritizing customer satisfaction, and consistently adopting cutting-edge
technology. By staying ahead of the curve, the company remains at the forefront of the
cement manufacturing industry, offering products that meet the highest standards.

With a rich legacy built on trust and innovation, JK Cement Ltd. continues to be a trailblazer
in the cement sector. As India continues to develop and expand its infrastructure, JK Cement
stands as a reliable partner, contributing significantly to the nation's growth and progress.
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Founded 1918; 106 years ago
Founder Lala Juggilal Singhania & Lala
Kamlapat Singhania
Headquarters New Delhi
Key People Bharat Hari Singhania (President)
Products Cement, Tyres, Paper, Biotech,
Chemicals, Dairy products, Seeds,
Engineering equipment
Revenue ₹32,000 crore (US$4.0 billion)
Ownership Public
Office location Gurgaon,gurugram,new delhi,Kanpur
Type of company Corporate
Nature of business B2C,B2B
WEBSITE Jkcement.com
Number of Employees 40,000
Subsidiaries • JK Tyre & industries
• JK Lakshmi cement
• JK Cement
• JK Diary
• JK Risk Managers and Insurance
Brokers
• JK Paper
• JK Fenner
• JK Agri Genetics (JK seeds)
• JK Pharma-Chem
• JK Sugar
• CliniRx Research
• Delopt
• Global Strategic Technologies
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AIMS AND OBJECTIVES

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AIMS AND OBJECTIVES

AIM

The aim of this project was to get knowledge of working capital and working capital
managements, and how it plays a vital role in any firm as well as how it beneficial to know
about how efficiently any firm is operating and how financially stable it is in the short term.

OBJECTIVES

As the research was done with the help of secondary data, objectives were to study the
working capital of JK Cement of 5 years. After the study acknowledged that working capital
is the money used to cover all of a company's short-term expenses, including inventory,
payments on short-term debt, and day-to-day expenses called operating expenses. Working
capital is critical since it is used to keep a business operating smoothly and meet all its
financial obligations within the coming year.
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RESEARCH METHODOLOGY
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RESEARCH METHODOLOGY

Research may be defined as a systematic and objective analysis and recording of controlled
observations that may lead to the development of generalization of principles or theories
resulting in prediction and possibly ultimate control of events.
Methodology is often used in a narrow sense to refer to methods, technology or tools
employed for the collection data as well as it's processing. This is also used something to
designate data collected to arrive at the conclusion.
Research methodology simply refers to the practical "how" of any given piece of research.
More specifically, it's about how a researcher systematically designs a study to ensure valid
and reliable results that address the research aims and objectives.
The methodology chapter should justify the design choices, by showing that the chosen
methods and techniques are the best fit for the research aims and objectives, and will provide
valid and reliable results. A good research methodology provides scientifically sound
findings, whereas a poor methodology doesn't.

Why do we need Research?

Research is a careful and detailed study of a particular problem or concern, using scientific
methods. An in-depth analysis of information creates space for generating new questions,
concepts and understandings. The main objective of research is to explore the unknown and
unlock new possibilities. It's an essential component of success.

1) Expands Your Knowledge Base:-

One of the greatest benefits of research is to learn and gain a deeper understanding.
The deeper you dig into a topic, the more well-versed you are. Furthermore, research
has the power to help you build on any personal experience you have on the subject.

2) Keeps You Up to Date:-

Research encourages you to discover the most recent information available. Updated
information prevents you from falling behind and helps you present accurate
information.
You're better equipped to develop ideas or talk about a topic when you're armed with the
latest inputs.
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3) Builds Your Credibility:-

Research provides you with a good foundation upon which you can develop your
thoughts and ideas. People take you more seriously when your suggestions are backed
by research .You can speak with greater confidence because you know that the
information is accurate.

4) Sparks Connections:-

Take any leading non- profit organization, you'll see how they have a strong research
arm supported by real-life stories. Research also becomes the base upon which real-
life connections and impact can be made. It even helps you communicate better with
others and conveys why you're pursuing something.

5) Encourages Curiosity:-

As we've already established, research is mostly about using existing information to

create new ideas and opinions. In the process, it sparks curiosity as you're encouraged
to explore and gain deeper insights into a subject. Curiosity leads to higher levels of
positivity and lower levels of anxiety.

Objectives of Research

Well-defined objectives of research are an essential component of successful research

engagement. If you want to drive all aspects of your research methodology such as data
collection, design, analysis and recommendation, you need to lay down the objectives of
research methodology. In other words, the objectives of research should address the
underlying purpose of investigation and analysis. It should outline the steps you'd take to
achieve desirable outcomes. Research objectives help you stay focused and adjust your
expectations as you progress. The objectives of research should be closely related to the
problem statement, giving way to specific and achievable goals.
Here are the four types of research objectives for you to explore:

General Objectives:-

Also known as secondary objectives, general objectives provide a detailed view of the aim of
a study. In other words, you get a general overview of what you want to achieve by the end of
your study. For example, if you want to study an organization's contribution to environmental
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sustainability, your general objective could be: a study of sustainable practices and the use of
renewable energy by the organization.

Specific Objectives:-

Specific objectives define the primary aim of the study. Typically, general objectives provide
the foundation for identifying specific objectives. In other words, when general objectives are
broken down into smaller and logically connected objectives, they're known as specific
objectives. They help define the who, what, why, when and how aspects of your project.
Once you identify the main objective of research, it's easier to develop and pursue a plan of
action.

Types of Research

1)Theoretical Research:-

Theoretical research, also referred to as pure or basic research, focuses on generating

knowledge, regardless of its practical application. Here, data collection is used to generate
new general concepts for a better understanding of a particular field or to answer a theoretical
research question. Results of this kind are usually oriented towards the formulation of
theories and are usually based on documentary analysis, the development of mathematical
formulas and the reflection of high-level researchers.

2)Applied Research:-

The goal is to find strategies that can be used to address a specific research problem. Applied
research draws on theory to generate practical scientific knowledge, and its use is very
common in STEM fields such as engineering, computer science and medicine.
This type of research is subdivided into two types:
A)Technological applied research :-
looks towards improving efficiency in a particular productive sector through the
improvement of processes or machinery related to said productive processes.

b)Scientific applied research:

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has predictive purposes. Through this type of research design, we can measure certain
variables to predict behaviours useful to the goods and services sector, such as consumption
patterns and viability of commercial projects.
c) Exploratory Research:
Exploratory research is used for the preliminary investigation of a subject that is not yet well
understood or sufficiently researched. It serves to establish a frame of reference and a
hypothesis from which an in-depth study can be developed that will enable conclusive results
to be generated. Because exploratory research is based on the study of little-studied
phenomena, it relies less on theory and more on the collection of data to identify patterns that
explain these phenomena.
d) Correlational Research:
The purpose of this type of scientific research is to identify the relationship between two or
more variables. A correlational study aims to determine whether a variable change, how
much the other elements of the observed system change.
e) Research Process:
All research endeavours share a common goal of furthering our understanding of the problem
and thus all traverse through certain basic stages, forming a process called the research
process.
a) Formulating the research problem-

The researcher must choose the problem he wants to study and decide the area of
interest and subject matter to be enquired about.

b) Extensive literature survey-

After choosing the research problem, an extensive literature survey is done and a brief
summary of the problem is formulated.

c) Development of a working hypothesis-

A working hypothesis must be stated in clear terms.

d)Preparing the research design-
The research is designed depending upon its utility and appropriateness for a particular
research problem. Accuracy, reliability and validity of data must be ensured.
d) Determining sample design-
Sampling can be either probability sampling or non-probability sampling. The
researcher must carefully select a sampling procedure and sample size.

e) Collecting data-
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There is a need to collect reliable data to carry out an efficient research. It may be
done using methods like observation, interview, questionnaires, schedules, etc.

f) Analysis of data
Analysis of data involves the application of many tools and techniques to the raw
data to make meaningful and useful interpretations.

b) Hypothesis testing-

After the analysis of data, the researcher tests the hypothesis formulated by him/her in earlier
stages.
I )Generalizations and interpretations-
The hypothesis testing may be favourable Or unfavourable . The researcher arrives at
generalizations based on the result of the hypothesis testing.
j) Preparation of the research report-
It contains a detailed report of the study or research along with the conclusion of the study.
There are 2 methods of research: -
Primary research
Secondary research.

Primary Research:-
Primary research is defined as a methodology used by researchers to collect data directly,
rather than depending on data collected from previously done research. Technically, they
"own the data, Primary research is solely carried out to address a certain problem, which
requires in-depth analysis. Primary Research can be both Qualitative and quantitative.
Qualitative primary research:
Qualitative primary research involves gathering information from open-ended interviews
which include questions that cannot be answered with yes or no.
You can get a lot of information from such interviews and also find out about the dislikes,
likes, requirement, and trends.
Quantitative primary research:
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Quantitative primary research involves the collection of numerical information from surveys.
This information is then analysed.

Secondary Research:-
Secondary research or desk research is a research method that involves using already existing
data. Existing data is summarized and collated to increase the overall effectiveness of
research. Secondary research includes research material published in research reports and
similar documents. These documents can be made available by public libraries, websites, data
obtained from already filled in surveys etc. Some government and non- government agencies
also store data, that can be used for research purposes and can be retrieved from them.
Secondary research is much more cost-effective than primary research, as it makes use of
already existing data, unlike primary research where data is collected first hand by
organizations or businesses or they can employ a third party to collect data on their behalf.

Research Methodology used for study:

For the completion of this study the research methodology used is the Analytical research.
Moreover, the data collected and compiled for the purpose of this study is secondary data
collected from books, websites and webpage

Limitations
When you lack working capital, you can't pay your bills. This can cause legal problems,
including the seizure and closure of your business. It's important to make sure that you have
credit sources ready to help you out whenever you run out of cash.
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DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION

The analysis of Working Capital Management of JK CEMENT is completely based on

Balance Sheet and Profit and Loss Account. The analysis is done with the help of Annual
Reports of five years i.e., from 2019-2023.
Balance Sheet:-A balance sheet is a financial statement that reports a company's assets,
liabilities and shareholders' equity at a specific point in time, and provides a basis for
computing rates of return and evaluating its capital structure. It is a financial statement that
provides a snapshot of what a company owns and owes, as well as the amount invested by
shareholders.
Profit and Loss Account:-The profit and loss (P&L) statement is a financial statement that
summarizes the revenues, costs, and expenses incurred during a specified period, usually a
fiscal quarter or year. The P&L statement is synonymous with the income statement. These
records provide information about a company's ability or inability to generate profit by
increasing revenue, reducing costs, or both. Some refer to the P&L statement as a statement
of profit and loss, income statement, statement of operations, statement of financial results or
income, earnings statement ,or expense statement.

Types of ratios
Management is interested in evaluating every aspects of firms performance.in view of the
requirement of the various users of ratios ,we may classify them into following four
important ,categories;-
A) Liquidity ratios
B) Solvency ratios
C) Efficiency/turnover ratios
D) Profitability ratios

LIQUIDITY RATIOS

1. Current Ratio:-

The Current Ratio is a liquidity ratio that measures a company's ability to pay off its
short-term obligations using its current assets. Current ratio is the proportion of
current assets to current liabilities. A current asset is an asset that is expected to be
converted into cash within a year, and current liabilities are obligations that are due
within a year. It is calculated as follows:

Current Ratio = Current Assets

Current Liabilities
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Years Current Ratio

2018-2019 1.25
2019-2020 1.22
2020-2021 1.54
2021-2022 1.32
2022-2023 1.27

Current Ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Current Ratio is a liquidity ratio that measures a company's ability to pay off its short-
term liabilities using its current assets. A higher current ratio indicates that the company has a
higher ability to meet its short-term obligations.
We can see that the current ratio for the company has fluctuated over the years. The table
above shows the Current ratio for the last five financial years. The highest Current ratio is for
the year 2020-2021 which is 1.54 and the lowest is for the year 2019-2020 which is 1.22. The
average Current ratio is 1.32.
Overall, the trend in the current ratio suggests that the company's current ratio has improved
over the years which indicates that the company has sufficient current assets to meet its short-
term obligations. Improvement in Current ratio also implies that the company's liquidity
position has also improved over the years. This is a positive sign as it indicates that the
company has a strong ability to meet its short-term financial obligations.

2 Quick Ratio:-
The Quick Ratio, also known as the Acid-Test Ratio, measures a company's ability to meet its
short-term obligations using its quick assets, which are current assets that can be easily
converted into cash. Cash is the most liquid asset. Other assets that are considered to be
relatively liquid and included in quick assets are debtors and bills receivables and marketable
securities (temporary quoted investments). It is considered a more conservative measure than
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the current ratio since it excludes inventory, which may be difficult to sell in the short term.
Inventories normally require some time for realizing into cash. It is calculated as follows:

Quick Ratio= Quick Assets

Current Liabilities

Years Quick Ratio

2018-2019 0.90
2019-2020 0.85
2020-2021 1.23
2021-2022 0.88
2022-2023 0.94

Quick Ratio
1.4

1.2

0.8

0.6

0.4

0.2

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Quick Ratio, also known as the Acid-Test Ratio, is a liquidity ratio that measures a
company's ability to pay off its short-term liabilities using its quick assets, which include cash
and cash equivalents, marketable securities, and accounts receivable. The Quick Ratio is a
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more conservative measure of a company's liquidity than the Current Ratio because it
excludes inventory, which is not always easily convertible to cash.
We can see that the Quick Ratio for the company has also fluctuated over the years. The table
above shows the Quick ratio for the last five financial years. The highest absolute liquid ratio
is for the year 2020-2021 which is 1.23 and the lowest is for the year 2019-2020 which is
0.85. The Average Quick ratio is 0.96.
Overall, the trend in the Quick Ratio also suggests that the company's Quick ratio has been
improving over the years, indicating that the company has enough quick assets to cover its
current liabilities. Improvement in Quick ratio also implies that the company's liquidity
position has also improved over the years. This is a positive sign as it indicates that the
company has a strong ability to meet its short-term financial obligations.

SOLVENCY RATIOS
1 Debt-to-Equity Ratio:-
Debt-to-Equity Ratio is a financial ratio that measures a company's leverage or the proportion
of debt to equity financing. It indicates the degree to which a company is funded by debt
compared to equity. It is calculated as follows:

Debt-to-Equity Ratio = Long terms Debts

Total Equity

Years Debt-to-equity Ratio

2018-2019 0.99
2019-2020 0.95
2020-2021 0.84
2021-2022 0.89
2022-2023 1.07
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Debt-to-equity Ratio
1.2

0.8

0.6

0.4

0.2

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Debt Equity Ratio measures the proportion of a company's long-term debts to its equity,
which represents the shareholders' funds invested in the company. A higher Debt Equity
Ratio indicates that the company is relying more on debt to finance its operations, while a
lower Debt Equity Ratio indicates that the company is relying more on equity financing.
We can see that the Debt Equity Ratio for the company has been flucutating over the years.
The table above shows the Debt to equity ratio for the last five financial years. The highest
Debt to equity ratio is for the year 2022-2023 which is 1.07 and the lowest is for the year
2020-2021 which is 0.84. The average Debt to equity ratio is 0.95.
Overall, the trend in the Debt Equity Ratio suggests that the company has been relying less
on debt financing and more on equity financing over the years. This is a positive sign for the
company's financial health, as it reduces the risk of default on debt obligations and provides a
stronger equity base for the company's operations.
2 Interest Coverage Ratio:-
The Interest Coverage Ratio is a financial ratio that measures a company's ability to pay its
interest expenses on its debt obligations using its operating income. It indicates the extent to
which a company's operating income can cover its interest payments. It helps to evaluate a
company's ability to meet its debt obligations. It is calculated as follows:

Interest Coverage Ratio = PBIT

Interest Expenses
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Years Interest Coverage Ratio

2018-2019 2.58
2019-2020 3.66
2020-2021 5.32
2021-2022 4.76
2022-2023 3.02

Interest Coverage Ratio

6

0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATIONS:
The Interest Coverage Ratio measures the company's ability to pay the interest on its
outstanding debt using its earnings before interest and taxes (EBIT), also known as Profit
Before Interest and Taxes (PBIT). A higher Interest Coverage Ratio indicates that the
company has a higher ability to service its debt.
We can see that the Interest Coverage Ratio for the company has been flucutating over the
years. The table above shows the Interest Coverage ratio for the last five financial years. The
highest Interest Coverage ratio is for the year 2020-2021 which is 5.32 and the lowest is for
the year 2018-2019 which is 2.58. The average Interest Coverage ratio is 3.87.
Overall, the trend in the Interest Coverage Ratio suggests that the company's ability to service
its debt has been improving over the years, which is a positive sign for the company's
financial health. A higher Interest Coverage Ratio indicates that the company is more capable
of paying off its debt and is less likely to default on its obligations.

PROFITABILITY RATIO
1 Gross Profit Ratio:-
The Gross Profit Ratio is a financial ratio that measures a company's ability to generate gross
profit as a percentage of its net sales revenue. It is also known as gross profit margin. It
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indicates the amount of profit a company generates after deducting the cost of goods sold
(COGS) from its net sales revenue. It is calculated as follows 𝑎𝑠:

Gross Profit Ratio = Gross Profit × 100

Net Sales

Years Gross Profit Ratio

2018-2019 11.27%
2019-2020 15.95%
2020-2021 18.65%
2021-2022 14.26%
2022-2023 8.80%

Gross Profit Ratio

20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION: The Gross Profit Ratio, also known as Gross Margin Ratio, is the ratio
of gross profit to net sales, expressed as a percentage. It measures how much of each rupee of
net sales is left over after deducting the cost of goods sold to cover operating expenses and
generate a profit.
Looking at the table above, we can see that the Gross Profit Ratio has been fluctuating years.
The table above shows the Gross Profit ratio for the last five financial years. The highest Gross
Profit ratio is for the year 2020-2021 which is 18.65% and the lowest is for the year 2022-2023
which is 8.80%. The average Gross Profit ratio is 13.79%.
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Overall, the company's gross profit ratio has remained relatively stable/ consistent over the past
five years,
This indicates that the company has been able to effectively manage its cost of goods sold and
generate a strong profit margin on its sales. The stable gross profit ratio is a positive sign for
the company's financial health as it suggests that the company has a good handle on its pricing
strategy and has been able to manage its cost of goods sold and maintain a consistent level of
profitability.
2 Operating Profit Ratio:-
Operating Profit Ratio, also known as Operating Margin Ratio, is a financial ratio that measures
a company's operating profitability as a percentage of its net sales or revenue. It indicates the
efficiency of a company in generating profits from its core business operations. It is calculated
as follows:

Operating Profit Ratio = Operating Profit × 100

Net Sales

Years Operating Profit Ratio

2018-2019 15.9%
2019-2020 20.9%
2020-2021 23.3%
2021-2022 18.5%
2022-2023 13.3%
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Operating Profit Ratio

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Operating Profit Ratio is a profitability ratio that measures the percentage of operating
profit generated from net sales. It indicates how efficiently a company is generating profit
from its operations.
We can see that the Operating Profit Ratio for the company has been fluctuating over the
years. The table above shows the Operating Profit ratio for the last five financial years. The
highest Operating Profit ratio is for the year 2020-2021 which is 23.3% and the lowest is for
the year 2022-2023 which is 13.3%. The average Operating Profit ratio is 18.38%.
Overall, the trend in the Operating Profit Margin suggests that the company's profitability has
been improving over the years, with a significant improvement in his indicates that the
company's has been able to generate more profits from its core operations. The improving
trend in operating profit margin is a positive sign for the company's financial health as it
indicates that the company is becoming more efficient in managing its expenses and is able to
generate consistent profits from its operations.

3 Net Profit Ratio:-

Net profit ratio is a financial ratio that measures a company's profitability by expressing its
net profit as a percentage of its net sales. It is also known as net profit margin or net margin.
Net profit ratio is an important financial ratio as it measures the company's ability to generate
profits from its operations after accounting for all expenses, including operating expenses,
interest expenses, and taxes. It indicates how much profit is earned for each dollar of sales
generated by the company. It is calculated as follows:
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Net Profit Ratio = Net Profit × 100

Net Sales

Years Net Profit Ratio

2018-2019 5.0%
2019-2020 8.3%
2020-2021 10.6%
2021-2022 8.5%
2022-2023 4.3%

Net Profit Ratio

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Net Profit Ratio measures the profitability of a company by calculating the percentage of
its net profits to its net sales. A higher Net Profit Margin indicates that the company is more
efficient in converting its sales into profits.
We can see that the Net Profit Ratio for the company has been fluctuating over the years.
The table above shows the Net Profit ratio for the last five financial years. The highest Net
Profit ratio is for the year 2020-2021 which is 10.6% and the lowest is for the year 2022-2023
which is 4.3%. The average Net Profit ratio is 7.34%.
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Overall, the trend in the Net Profit Margin suggests that the company's Net Profit Margin has
fluctuated over the years, but the company has been able to maintain a stable net profit
margin, indicating that the company has been able to manage its expenses effectively. The
stable net profit ratio is a positive sign which indicates that the company has been able to
manage its expenses effectively to generate profits.

Efficiency/turnover ratios

1 Inventory Turnover Ratio:- Inventory turnover ratio is a financial ratio that measures how
many times a company sells and replaces its inventory over a given period. It helps in
evaluating a company's inventory management and efficiency. It can also be used to identify
trends in inventory management and to evaluate the effectiveness of inventory management
policies. It is calculated as follows:

• Inventory Turnover Ratio = Costs of Goods Sold

Average Inventory

Years Inventory Turnover Ratio

2018-2019 3.87
2019-2020 3.53
2020-2021 2.02
2021-2022 2.99
2022-2023 1.45
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Inventory Turnover Ratio

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Inventory Turnover Ratio measures how efficiently a company is able to sell its
inventory and generate revenue from it. A higher Inventory Turnover Ratio indicates that the
company is selling its inventory more quickly, which is generally a positive sign.
We can see that the Inventory Turnover Ratio for the company has been fluctuating over the
years. The table above shows the Inventory Turnover ratio for the last five financial years.
The highest Inventory Turnover ratio is for the year 2018-2019 which is 3.87 and the lowest
is for the year 2022-2023 which is 1.45. The average Inventory Turnover ratio is 2.77.
Overall, the trend in the Inventory Turnover Ratio suggests that the company's Inventory
Turnover Ratio has been decreasing over the years indicating that the company is taking
longer to sell its inventory. This is negative sign/ a cause of concern as a decreasing/lower
inventory turnover ratio can lead to increased storage costs/ carrying costs and potentially
obsolete inventory.

2.Debtors Turnover Ratio:-

The Debtors Turnover Ratio is a financial ratio that measures how efficiently a company
collects its accounts receivable. Accounts receivable refer to the outstanding payments that a
company is owed by its customers for goods or services sold on credit. It also helps in
evaluating the Credit Policy of the company. It is calculated as follows:

Debtors Turnover Ratio = Net Credit Sales

Average Account Receivable
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Years Debtors Turnover Ratio

2018-2019 21.33
2019-2020 22.11
2020-2021 21.00
2021-2022 20.27
2022-2023 21.44

Debtors Turnover Ratio

22.5

22

21.5

21

20.5

20

19.5

19
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The Debtors Turnover Ratio indicates how many times a company's accounts receivable are
being converted into cash in a given period. It is a measure of the efficiency with which the
company is able to collect its credit sales. A higher Debtors Turnover Ratio indicates that the
company is collecting its accounts receivable more frequently and efficiently.
We can see that the Debtors Turnover Ratio for the company has been fluctuating over the
years. The table above shows the Debtors Turnover ratio for the last five financial years. The
highest Debtors Turnover ratio is for the year 2022-2023 which is 21.44 and the lowest is for
the year 2021-2022 which 20.27. The average Debtors Turnover ratio is 21.23.
Overall, the trend in the Receivables Turnover Ratio suggests that the Receivables Turnover
Ratio has been increasing over the years, indicating that the company is effectively collecting
payment from its customers. This is a positive sign, as it means that the company is collecting
its payments from its customers quickly.
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Cash Flow Statement:-

March 23 March 22 March 21 March 20 March 19

12 months 12 months 12 months 12 months 12 months
Net profit before tax 631.29 1012.91 1092.68 734.45 412.43
Net cash from operating 1377.08 878.46 1590.25 1371.75 703.87
activities
Net cash (use in)/from -2014.78 -996.35 -1343.69 -1476.54 -802.32
investing activities
Net cash(used in)/from 741.32 61.68 -137.46 -113.11 172.83
financing activities
Net (decrease)/increase in 148.88 -43.69 108.23 -224.56 51.73
cash and cash equivalents
Opening cash & cash 108.26 146.73 38.50 263.06 211.33
equivalents
Closing cash & cash 257.14 103.04 146.73 38.50 263.06
equivalents

INTERPRETATION-

The above table shows the cash flow position of the company for the last five years. Cash and
cash equivalents for the year 2018-2019 is the higher amount which is 263.06. Cash and cash
equivalents for the year 2019-2020 is the lowest which is 38.50.
For the financial year 2021-2022 cash and cash equivalents was 103.04. It has decreased to
38.40 in 2019-2020. But in the year 2020-2021 it has increased to 146.73 and in the year
2022-2023 it has increased to 257.14. But for the financial year 2018-2019 cash and cash
equivalents decreased to 263.06
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CONCLUSION
 Page|42

CONCLUSION

The study was conducted to evaluate the working capital management of JK CEMENT . On
the basis of secondary data collected from the annual reports of the company for five years
starting from 2018-19 to 2022-23 data was analysed using ratio Analysis, cash flow statement
and trend analysis. Through analysing this data, it is found that working capital position of
the company was fluctuating. Some ratios are up to the ideal ratio, and also most of the ratios
are fluctuating. Hence the company needs to improve its working capital position. To
conclude optimum capital is necessary for the smooth running of the Business.
The working capital management is a very important aspect. The Management need to adopt
efficient working capital policies.

Based on the financial ratios analysis of the company, the following conclusions can
be drawn:
Liquidity:
* Current Ratio: The current ratio, which measures the company's ability to pay off its short-
term debts with its current assets, has Fluctuating over the years. The highest Current ratio is
for the year 2020-2021 which is 1.54 and the lowest is for the year 2019-2020 which is 1.22.
The average Current ratio is 1.32. and has consistently been above 1.5, indicating that the
company has sufficient current assets to meet its short-term obligations.This is a positive sign
as it indicates that the company has a strong ability to meet its short-term financial
obligations.
* Quick Ratio: The quick ratio, which provides a more stringent measure of the company's
ability to meet its immediate obligations, has also Fluctuating over the years. The highest
absolute liquid ratio is for the year 2020-2021 which is 1.23 and the lowest is for the year
2019-2020 which is 0.85. The Average Quick ratio is 0.96 and has consistently been above 1,
indicating that the company has enough quick assets to cover its current liabilities. This is a
positive sign as it indicates that the company has a strong ability to meet its short-term
financial obligations even if it faces unexpected financial challenges.
Solvency:
* Debt-to-Equity Ratio: The company' s debt-to-equity ratio has been fluctuating over the
years The highest Debt to equity ratio is for the year 2022-2023 which is 1.07 and the lowest
is for the year 2020-2021 which is 0.84. The average Debt to equity ratio is 0.95 indicating
that the company has been relying less on long-term debt to finance its operations, and has
been increasing its equity base instead. This is a positive sign as it indicates that the company
is not overly reliant on debt financing and has a strong financial position. It also means the
company has a lower risk of financial distress or default.
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*Interest Coverage Ratio: . The highest Interest Coverage ratio is for the year 2020-2021
which is 5.32 and the lowest is for the year 2018-2019 which is 2.58. The average Interest
Coverage ratio is 3.87. A higher Interest Coverage Ratio indicates that the company is more
capable of paying off its debt and is less likely to default on its obligations.

Efficiency:
* Debtors Turnover Ratio: The highest Debtors Turnover ratio is for the year 2022-2023
which is 21.44 and the lowest is for the year 2021-2022 which 20.27. The average Debtors
Turnover ratio is 21.23. . This is a positive sign, as it means that the company is collecting its
payments from its customers quickly.
* Inventory Turnover Ratio: The inventory turnover ratio has been fluctuating over the years,
The highest Inventory Turnover ratio is for the year 2018-2019 which is 3.87 and the lowest
is for the year 2022-2023 which is 1.45. The average Inventory Turnover ratio is 2.77 ,
indicating that the company is taking longer to sell its inventory. This is negative sign/ a
cause of concern as a decreasing/lower inventory turnover ratio can lead to increased storage
costs/ carrying costs and potentially obsolete inventory. Thus, improving this ratio should be
a priority for the company.
Profitability:
* Net Profit Ratio: The net profit ratio has fluctuating over the years, . The highest Net Profit
ratio is for the year 2020-2021 which is 10.6% and the lowest is for the year 2022-2023
which is 4.3%. The average Net Profit ratio is 7.34%. But the company has been able to
maintain a stable net profit margin, indicating that the company has been able to manage its
expenses effectively. The stable net profit ratio is a positive sign which indicates that the
company has been able to manage its expenses effectively to generate profits.
* Operating Profit ratio: The highest Operating Profit ratio is for the year 2020-2021 which is
23.3% and the lowest is for the year 2022-2023 which is 13.3%. The average Operating Profit
ratio is 18.38%. The improving trend in operating profit margin is a positive sign for the
company's financial health as it indicates that the company is becoming more efficient in
managing its expenses and is able to generate consistent profits from its operations.
*Gross Profit Ratio: The highest Gross Profit ratio is for the year 2020-2021 which is 18.65%
and the lowest is for the year 2022-2023 which is 8.80%. The average Gross Profit ratio is
13.79%. The stable gross profit ratio is a positive sign for the company's financial health as it
suggests that the company has a good handle on its pricing strategy and has been able to manage
its cost of goods sold and maintain a consistent level of profitability.
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BILIOGRAPHY
 Page|45

BIBLIOGRAPHY:-

TEXT BOOKS:-

R.K Sharma & Sakshi K Gupta- Management Accounting & Business Finance 16edition
2008
M Y Khan & P K Jain- Financial Management Fourth Edition – 2006,Tata McGraw Hil
Publishing Company Limited New Delhi
P.C Tulsian’s

WEBSITES:-

https://www.jkcement.com
https://www.monetcontrol.com
https://en.m.wikipedia.org
https://in.investing.com
https://www.livemint.com
https://www.investopedia.com
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ANNEXURE
 Page|47

ANNEXURE

Consolidated Balance Sheet:-

Balance sheet for the financial year 2018-2019
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Balance sheet for the financial year 2019-2020

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Balance sheet for the financial year 2020-2021

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Balance sheet for the financial year 2021-2022

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Balance sheet for the financial year 2022-2023

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Consolidated Profit and Loss:-

Profit and Loss for the financial year 2018-2019
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Profit and Loss for the financial year 2019-2020

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Profit and Loss for the financial year 2020-2021

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Profit and Loss for the financial year 2021-2022

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Profit and Loss for the financial year 2022-2023

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