SUMMER INTERNSHIP PROJECT REPORT

On
“Impact of Working Capital Management on Profitability on KEI
Industries Ltd.”
Shivang Gupta
2200520700050

Under the guidance of

Mr. Asif Iqbal

In partial fulfilment of the requirement for the award of the

Degree of Master of Business Administration

Submitted at

DEPARTMENT OF BUSINESS ADMINISTRATION

INSTITITUTE OF ENGINEERING AND TECHNOLOGY
JANKIPURAM LUCKNOW, UP-226021

1
 Department of Business Administration Institute of
Engineering& Technology Lucknow

STUDENT DECLARATION

I undersigned, hereby declare that the project titled “Impact of Working

Capital Management on Profitability on KEI Industries Ltd.” submitted in
partial fulfilment for the award of Degree of Master of Business Administration is
a bonafide record of work done by me under the guidance of Mr. Asif Iqbal.
This report has not previously formed the basis for the award of any degree,
diploma, or similar title of any University.

Place: Lucknow
Date:

Shivang Gupta
2200520700050

2
 Department of Business Administration
Institute of Engineering & Technology Lucknow

CERTIFICATE FROM ORGANISATION

3
 Department of Business Administration
Institute of Engineering & Technology Lucknow

CERTIFICATE FROM INSTITUTION

This is to certify that Mr. Shivang Gupta, third semester student of Master of
Business Administration, Institute of Engineering & Technology, Sitapur Road,
Lucknow has completed the project report entitled “Impact of Working
Capital Management on Profitability on KEI Industries Ltd.” in partial
fulfilment of the requirements for the award of the Degree of Master of
Business Administration.

Place: Lucknow
Date:

Dr.Durgawati Kushwah
Convener

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 Department of Business Administration Institute
of Engineering & Technology Lucknow

CERTIFICATE FROM FACULTY GUIDE

This is to certify that Mr. Shivang Gupta, second semester student of Master of
Business Administration, Institute of Engineering & Technology, Sitapur Road,
Lucknow has completed the project report entitled “Impact of Working
Capital Management on Profitability on KEI Industries Ltd.”
towards partial fulfilment of the requirement for the award of the Degree of
Master of Business Administration under my supervision.

Place: Lucknow
Date:

Mr. Asif Iqbal

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 PREFACE

I am delighted to present this internship report titled "Impact of Working Capital Management on

Profitability of KEI Industries Limited," encapsulating my enriching experience at KEI. This endeavor

explores the complex interplay between working capital strategies and overall profitability within the

dynamic context of KEI Industries. My gratitude extends to the entire KEI team for their support,

openness, and valuable insights, shaping my understanding of the intricacies involved. This report

aims to provide a comprehensive analysis, drawing correlations between effective working capital

management and financial performance. As I reflect on my internship journey, I am confident that the

findings presented here will contribute meaningfully to the academic discourse on working capital

dynamics and offer actionable insights for KEI Industries' strategic decision-making. I extend my

heartfelt thanks to everyone who has played a role in making this internship a transformative and

enlightening experience.

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 ACKNOWLEDGEMENT

This report is an outstanding prospect to convey my gratefulness to those people whose timely help and

guidance went a long way in finishing this project work from commencement to achievement.

I would like to thank the Director of Institute of engineering and technology, Lucknow: Prof. Vineet

Kansal and our Coordinator of Department of Masters of Business Administration: Prof. Virendra

Pathak. This was really a good way of learning and I really learned a lot from this project.

I would also like to thank to my mentor Mr. Asif Iqbal Sir and Convener of Masters of Business

Administration: Dr. Durgawati Kushwaha ma’am for rendering their valuable time and providing me

full knowledge which was needed in order to successfully completion of this report.

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 TABLE OF CONTENT

CHAPTER I (Introduction)
1.1 Overview 09
1.2 Industry Profile 11
1.3 Company Profile 13
1.4 SWOT Analysis 31
CHAPTER II (Literature Review)
2.1 Review of Literature 34
2.2 Conceptual Understanding 35
CHAPTER III (Research Methodology)
3.1 Problem Statement 52
3.2 Objectives of the Study 54
3.3 Hypothesis 56
3.4 Research Design 58
3.5 Data Collection & Analysis Tool 59
CHAPTER IV (Data Analysis & Interpretation)
CHAPTER V
5.1 Findings 63
5.2 Recommendation/Suggestions 65
5.3 Limitations 67
5.4 Conclusion 69
REFERENCES 70

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 CHAPTER I

INTRODUCTION

1.1 overview

The internship report titled "Impact of Working Capital Management on KEI Industries" is a

comprehensive exploration into the financial dynamics of KEI Industries, with a specific focus on the

management of working capital. Working capital, encompassing current assets and liabilities, serves as

the heartbeat of a company's day-to-day operations. The primary focus of my internship revolved

around managing key aspects of trade finance, including the meticulous preparation of Credit

Monitoring Arrangement (CMA) data, handling Letter of Credit transactions, and managing Bank

Guarantees. . By delving into the intricacies of working capital, this report seeks to provide valuable

insights that contribute to the company's profitability, liquidity, and competitive standing in the

industry.

Background:

KEI Industries Limited stands as a stalwart in the field of electrical cables and wires, with a rich legacy

of over three decades. The company's commitment to innovation and quality has positioned it as a

market leader, making it an ideal platform for me to gain hands-on experience in the intricacies of trade

finance.

Objective of the Internship:

• Understanding Working Capital Dynamics

• Assessing Financial Efficiency

• Identifying Areas for Improvement

• Identifying Areas for Improvement

• Enhancing Financial Health

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Roles and Responsibilities:

During my tenure, I was entrusted with key responsibilities that included the preparation of detailed

CMA data, a crucial tool for assessing the creditworthiness of the company. Additionally, I actively

participated in the management of Letter of Credit transactions, ensuring compliance with international

trade regulations and fostering strong relationships with financial institutions. Managing Bank

Guarantees added another layer of complexity to my role, requiring precision and an acute

understanding of financial instruments.

Challenges Faced:

The internship presented its fair share of challenges, ranging from navigating intricate financial

regulations governing international trade to ensuring accuracy in CMA data. Each challenge was an

opportunity for growth and learning, and I am proud to have overcome these obstacles with dedication

and a proactive approach.

Achievements and Learnings:

Throughout the internship, I achieved significant milestones in terms of streamlining trade finance

operations. This overview will delve into the specific achievements and lessons learned during my

tenure, highlighting the tangible impact of my contributions on the financial processes at KEI Industries

Limite

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1.2 Industry Profile

The electrical wire manufacturing industry in India exhibits a highly fragmented market, featuring

numerous players across both the organized and unorganized sectors. Despite this fragmentation, a

handful of major players command a substantial market share in the organized sector, collectively

holding around 40-45% of the total market, according to industry estimates.

Top 5 Electrical Wire Manufacturers in India

Polycab India: 20-22% market share

Havells India: 15-17% market share

Finolex Cables: 12-14% market share

KEI Wires & Cables: 10-12% market share

RR Kabel: 8-10% market share

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 Five-year performance

Polycab and KEI lead in profit growth and market returns

5Y revenue 5Y PAT growth 5Y average 5Y return (%

Company M-cap (Rs cr) growth(% pa) ROE (%) pa)
(% pa)
Havells 82041 15.7 10.1 19.5 12.7
Polycab 74984 15.8 28.8 20 59.4*
KEI 23598 14.8 27 21 45
Industries
Finolex 16478 9.7 8.8 14.5 13.6
Cables

These leading companies have solidified their positions as trusted brands, renowned for their

commitment to quality products, extensive distribution networks, and strong brand recognition. Their

sustained investments in research and development have enabled them to stay competitive and meet

the evolving needs of the market.

Market Share of Organized vs. Unorganized Sector

The organized sector constitutes approximately 60-65% of the total electrical wire market in India,

leaving the remaining 35-40% to the unorganized sector. The organized sector is characterized by

well-established companies boasting a robust brand presence, advanced manufacturing facilities, and

extensive distribution networks. In contrast, the unorganized sector comprises smaller, local players

with limited brand recognition and often offers products of lower quality.

Factors Influencing Market Share:-

Several factors influence the market share of electrical wire manufacturers in India, including:

 Product Quality and Brand Reputation

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 Distribution Network and Reach

 Pricing Strategies and Cost Competitiveness

 Marketing and Promotional Activities

 Customer Service and Technical Support

 Ability to Adapt to Changing Market Trends and Technological Advancements

Future Outlook:-

The Indian electrical wire market is anticipated to witness a Compound Annual Growth Rate

(CAGR) of 4-5% in the coming years. This growth will be propelled by factors such as increasing

urbanization, burgeoning infrastructure development, and a rising demand for energy-efficient

electrical solutions. The expanding market is expected to create opportunities for both organized and

unorganized sector players. Nevertheless, organized sector players are poised to further increase their

market share due to their capacity to invest in technology, uphold quality standards, and expand their

distribution networks.

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1.3 COMPANY PROFILE:

KEI was founded in 1968 as a partnership corporation with a primary focus on the production of rubber

cables for house wiring. Today, it has transformed itself into a global empire that provides

comprehensive wire & cable solutions. Through a vast network of over 30000+ channel partners, our

products cater to clients in over 55+ countries across the globe. The strength of its human resources has

always been a core value for KEI Industries. Our family of 5385 employees serve in variety of

capacities to efficiently provide services to our clients. Presently, we are headquartered in New Delhi,

with around 38 branch offices and 23 warehouses which are spread across nation. We have been a

catalyst of power for more than 50 years thanks to our devotion, tenacity, and dedication.

KEI provides a wide array of cabling solutions, we manufacture and market Extra-High Voltage (EHV),

Medium Voltage (MV) and Low Voltage (LV) power cables. As a one-stop shop for products and

services that caters to both the retail and institutional markets, KEI has established a strong foothold in

the Engineering, Procurement and Construction (EPC) services industry.

We are much more than just a cables and wires producer and supplier; we are an industry and market

leader in India and a chosen supplier for both private and public sector clients worldwide. We are an

end-to-end solutions provider with a product line-up that includes every type of cable and wire created

to to meet the unique and niche needs of our diverse clients in Retail, Institutional (EHV + EPC) and

Exports segments.

KEI’s five decades of passion, perseverance, and dedication turned KEI into a

global pioneer in more than 50 countries. It has been able to construct new bridges that have brought it

deeper into the homes and hearts of our customers. The company has made investments in expanding its

capabilities and constructing flexible manufacturing facilities over the years, positioning it to take

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advantage of opportunities arising from power utility, core infrastructure, industrial, and building and

construction projects around the nation. The prospective horizon is further broadened by the company’s

judicious entry into the EHV cable segment and EPC Services for Power Sector Projects.

The company’s shares are listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE),

Kolkata Stock Exchange. GDR & FCCB of the Company is listed overseas at Luxembourg Stock

Exchange.

Mission: To emerge as one of the world’s leading electrical cable & wire company, offering our

esteemed customers to use our electrical Wires & Cables effectively and increase industrial productivity

in a sustainable way.

Vision: KEI , with its strong technology competence in Cables & Wires business, broad application

know how & ability to provide customized power cable solutions shall deliver an attractive & profitable

growth by providing its customers with best cable & wire products. We shall help our customers to

improve their performance and productivity by minimizing power losses & lowering environmental

impact. Continuous Product Innovations & R&D are the key characteristics of our product offerings and

services. We believe in building long lasting & value creating partnerships with our customers and

suppliers. KEI is committed to attracting & retaining dedicated & skilled professionals offering its

employees an attractive work culture and developmental opportunities.

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 About The Director

Mr. Anil Gupta

(Chairman & Managing Director-KEI Industries Limited)

The Real Power behind the Power

Mr. Anil Gupta is a recognized and an accomplished expert in the Indian cable and wire Industry. He

has been a firm believer in technology since the very beginning. His customer centric approach blended

with a futuristic vision has always ensured the production of Cable & Wire products of the highest

quality.

The brain behind some of the path-breaking innovations in the industry, he is undoubtedly the

inspiration as well as the guiding force behind KEI’s vision to become the undisputed leader in its

category and build-up a strong corporate identity.He became a part of the KEI group in 1979 as a

partner in the erstwhile Krishna Electrical Industries. He soon rose to become its Chairman cum

Managing Director.

He had a dream of taking the company to newer heights. With almost 40 years of experience at the helm

of KEI Group of Companies, he has always been successful in executing company policies and

encouraging his team to deliver nothing but the best.

As a dynamic leader, he has initiated various marketing, production, quality control and product

development policies. His hard work and pioneering ideas have played a major role in the company’s

success. His contribution to the company is exceptional and unsurpassed.

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 Products and Services

As a market leader in India, KEI is a chosen supplier for many clients in the private and public sectors

throughout the world. KEI take great pride in their comprehensive portfolio when it comes to their

electrical wire and cable services. In addition to marketing and producing Extra High Voltage(EHV),

Medium Voltage (MV) and Low Voltage(LV) power cables, we also offer a wide variety of electrical

wires and power cables, which are listed below:

• Solar Cables:
PV Solar cables are designed for connecting photovoltaic power

supply systems.They are dedicated to the photovoltaic system

direct current (D.C.) side with a nominal D.C. voltage of a

1.5kV. These cables can be used indoor & outdoor for flexible

and fixed installations with high mechanical strength in extreme

weather conditions. cables are designed to withstand the

demanding environmental conditions that arise in any fixed,

mobile, roof or architecturally integrated photovoltaic

installation.

These cables are suitable for permanent outdoor long-term use, under variable and harsh climate

conditions. They are designed and tested to operate at a normal maximum conductor temperature of

90°C and for 20,000 hours up to 120°C. Therefore, the expected period use is 30 years under normal

usage conditions.

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 • ESP Cables:

KEI Cables are high integrity cables that are designed to deliver

consistent, clean electrical power to the ESP systems in harsh

operating environments, including a range of pressure and

temperature ratings, corrosive and gassy wells. Customisable to meet all application needs, KEI

products are engineered and manufactured utilising market leading materials, technologies and facilities

and undergo a rigorous quality assurance process to ensure they exceed industry standards.

• Extra High Voltage Cable / EHV Power Cable:

KEI has joined hands with M/s Brugg Kabel AG , a 110 year old swiss

cable giant to upgrade its technology and to manufacture EHV cables

upto 400 KV . With this powerful collaboration, the wires and cables

specialist is all set to empower many more Indian lives.

• HomeCab FR:

HomeCab-FR wires are mainly used for wiring domestic and commercial

structures. They are capable of handling 85°C operating temperature

since they are insulated with a flame retardant PVC compound

(formulated and manufactured in-house). They are also steam and boiling

water resistant.

They have amazing electrical and mechanical characteristics. Stressing over damage caused by rodents

to the wiring in your house is a thing of the past with KEI. The anti-rodent properties of HomeCab-FR

wires make them an ideal choice. They are manufactured using min 99.97% Electrolytic grade, annealed

bare copper with more than 100% conductivity. Their fine drawn multi strand conductor provides

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 enhanced flexibility and makes them ideal for concealed wiring. They are suitable for installation in

lighting fittings and appliances up to 1100 v (A.C.). These wires work well even in adverse atmospheric

conditions. Characteristics like these make HomeCab-FR Wires reliable, energy efficient and highly

safe.

• Stainless Steel Wires/SS Wires:

KEI industries limited is an established player in the Stainless Steel

Wires segment and among the largest Stainless Steel Wires

manufacturing companies in India. KEI industries limited manufactures

stainless steel wires in various range for wide range of applications. KEI

is one of the few companies in country to manufacture speciality Wires

fro very critical application. KEI is perhaps one of the few companies in India to offer customers a

unique range of specialty SS Wires such as wide range with the best quality. An ability to utilize more

than 90% of its resources makes KEI one of the most efficient players in the industry.

• High Voltage Cable:

KEI, as a leading high voltage cable manufacturer in India has a state of

art high voltage cable plant that uses German technology and features a

manufacturing capability of upto 220KV.High Voltage cables at KEI are

manufactured as outlined with Indian Standard specification, IS: 7098

Part II, also our skilled research & development team can assist

manufacturing as per International standard viz. IEC, BS, NFC, AS/NZS, VDE, SABS etc. & exporting

to Overseas market.

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 • Thermocouple Extension:

These cables can also be termed as instrumentation cables as they are

used for process temperature measurement. The construction is

similar to paired instrumentation cable but the conductor material is

different. Thermocouples are used in processes to sense temperature

and is connected to the pyrometers for indication and control.

• Marine And Offshore:

KEI is proficient in the manufacturing and development of Marine

and Offshore Cables. The high quality has been achieved by

continuous technological development. KEI offers a comprehensive

range of Marine Cable which includes Power, control, signal and

instrumentation cables designed primarily for use in offshore & marine applications. KEI is proud to

serve with such specializesMarine and offshore cables to the important projects of Indian defense

shipyards and private shipyards around the world. Our marine and offshore cables have the national and

international acceptance.

• Communication Cables:

Communications cable is essentially a cable used to transmit information

by use of currents of various frequencies. In the basket of communication

cables we offer; CCTV, Telephone Cables, CAT 6 UTP Cables, and Co-

Axial Cables. These cables are typically used for data transmission,

Ethernet connections, electronic circuits and networking.

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• Fire Survival / Resistance Cable:

In all fire disasters, fire smoke, heat and toxic fumes are the main

obstacles to safe evacuation of a building or area. A majorcontribution

towards overcoming these hazards is the use of fire resistant and non-

halogenated cables

• PVC Winding Wire:

KEI’s especially designed winding wires, outfitted with a high-grade

insulation impermeable to liquids, offer highest quality for submersible

motors and guarantee trouble-free operation and long motor life. These

Wires serve maximum range of submersible pump manufactures and

thousands of rewinders across the country due to KEI’s proven reliability in quality products

• Rubber Cables:

Popularly known as Rubber cables. Originally started with natural rubber

insulation and sheath in late 70’s now has been replaced with diffent

type of synthetic rubber. Keeping the commitment of expanding it’s

product range company started manufacturing elastomeric cables in

2003. Since then company has developed comprehensive range of

elastomeric cables. Technologically advanced polymers like EPDM ,CSP,CPE, PCP,NBR,EVA,Silicone

halogen free , non toxic, heat, oil resistant and fire retardant compounds are specially formulated to

manufacture these speciality cables.

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• .Instrumentation Cables:

KEI Industries Limited manufactures a wide variety of cables suitable

for process instrumentation. In the projects related to power generation &

distribution, chemical & fertilizer industries and various other types of

engineering industries, the process instrumentation plays a vital role in

measurement, supervision and control of the process. Introduction of

microprocessor based/computerized instrumentation has demanded stringent quality requirements along

with special electrical parameters for instrumentation cables.

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 Financials of the Company:

During the FY 2022-23, the Company achieved a turnover of Rs. INR 6912.33 Cr. as against INR.
5726.99 Cr. in FY 2021-22 growth by approx.20.70%.

During the FY 2022-23, turnover from Cables & Wires Segment stood at INR 6253.91Cr. as compared
to INR. 5122.68Cr. in FY 2021-22. The Stainless Steel Wire Segment contributed a turnover of INR
255.09 Cr. in FY 2022-23 as compared to 225.94 Cr in FY 2021-22.

EPC Projects Segment (excluding Cables) contributed a turnover of INR Rs 403.33 Cr. in FY 2022-23
as compared to INR 377.93 Cr. in FY 2021-22.

During the FY 2022-23, Profit before Tax stood at INR 642.05 Cr. as compared to INR 507.73 Cr. in
FY 2021-22 and Net Profit stood at INR 477.38 Cr. as compared to INR 376.22 Cr. in FY 2021-22,
showing a growth of 26.89%.

Product & Services Wise Revenue mix Segment Wise Revenue Mix

LT Cable 2,841
HW,WW 1,855
HT Cable 1,208 Retail

EHV 366 Institutional

EPC Projects 405 Export

SSW 248
Others 11

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  Manufacturing And R&D
Capabilities:

Currently, KEI have five state-of- the-art manufacturing plants located in Rajasthan and Silvassa. These

plants support the production of products that adhere to the highest international quality standards. To

further enhance our manufacturing capabilities, we have implemented backward integration, including

in-house PVC production.

This integration empowers it with greater control over the manufacturing process, ensuring superior

quality and improved operational efficiencies. It also enables KEI to provide cost-effective solutions

and fulfill their customers’ requirements in a timely manner. Their commitment to innovation is

supported by their advanced and accredited research and development facility in Rajasthan. A dedicated

team of expert R&D engineers, designers and technicians work collaboratively to bring customized,

high-quality products to the market. This proactive approach allows them to meet the specific needs of

our institutional and export customers.

Certificates:

ISO 14001:2015 ISO 45001:2018 ISO 9001:2015 NABL Accreditation

Certification for Certification for Certification for under the ISO/ IEC
Environment Occupational Health Quality Management 17025:2017 Standard
Management System and Safety System for R&D Facility
Management
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 Strengthening Brand Saliance:

• IPL & other marquee sports events sponsorship:-

For seven consecutive years, they have proudly sponsored the Indian Premier League (IPL), a cricket

tournament that has established itself as one of India’s most popular sports events. This year, they

continued role as principal partners to the Royal Challengers Bangalore (RCB) team yielded significant

benefits, including heightened brand visibility and a stronger bond with consumers who avidly follow

the tournament. During the IPL season, online quizzes and contests, interactive content and various

social media campaigns with the RCB team helped us in successfully expanding the fan base across

various social media platforms. They also connected with audiences through hoardings and banners

with hyper-local, city-level messages to depict that KEI is a local brand. Furthermore, they created

captivating TV advertisements specifically targeted at IPL viewers, with a key focus on promoting our

house wires and supporting their dealer and distributors. While IPL remains a key area of focus, they are

also expanding our sponsorship to other sports such as kabaddi and football to enhance brand visibility.

• Marketing activities:

They are employing a range of strategies to maximize visibility and demand for their products. These

efforts include outdoor campaigns, active participation in events and exhibitions, extensive retail
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 branding during major festivals, TV advertisements, video marketing, targeted public relations coverage

and engaging with architects and other influencers. As part of the above-the-line (ATL) efforts, They

are visible on leading TV channels with hyper-local content strategy in 13 languages for their

advertisements. Alongside these efforts, They are actively implementing below-the-line (BTL) activities

across different regions, including bus and auto-rickshaw panels, hoardings and retail shop installations.

Branding activities were also carried out at pilgrimage sites, key airports, metros and other public

places. These initiatives reflect our commitment to comprehensively address various touchpoints critical

to our business.

• Social media marketing:

They maintain a robust social media presence on popular platforms such as Facebook, Instagram,

Twitter, LinkedIn, and YouTube, boasting a large and active following. Through these channels, KEI

effectively engage with our audience. The KEI brand is recognized for its captivating and interactive

content, enabling us to connect with our target audience. To expand its social reach and connect with a

wider audience, they employ a combination of brand-centric, topical, and promotional content to keep

customers informed about their latest products and offerings.

• E-commerce capabilities:

They understand the significance of excelling in the e-commerce landscape in today’s digital era. To

expand their market presence and drive business growth, they have listed their products on prominent e-

commerce platforms like IndiaMART. This strategic move enables us to reach a wider audience and

generate increased sales.

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 International Segment:

With their diversified portfolio, high-quality products, customized solutions, competitive pricing

strategy and extensive industry expertise, they are well-equipped to meet the needs of their overseas

customers. Their exports span a wide range of products,

including EHV cables, HT cables, LT cables and

stainless steel wires, and reach customers in over 60

countries worldwide.

All their exports are conducted under our own brand,

driven by specific orders, and primarily cater to

institutional clients. Their top export markets include

Australia, the Middle East (particularly Abu Dhabi and

Kuwait), and select African countries, with Nigeria and

Ghana at the forefront.

Their presence in strategic locations of Australia, Dubai, Gambia, Nepal and South Africa, through

dedicated marketing and project offices, enables us to forge strong partnerships with theit global

customers.

FY 2022-23 DEVELOPMENTS:-

With the easing of travel restrictions as the pandemic subsided, their dedicated business development

team swiftly took action to secure contracts from existing and new overseas customers. Through

strategic expansion both in terms of product offerings and geographical reach, they achieved a strong

18% growth in export sales.

A notable achievement of the year was their successful pre-qualification to enter the US market,

securing approvals for their LT cables, HT cables and solar cables. This significant milestone reflects

our dedicated efforts over the past two years in obtaining the required certifications for the US market.

We take great pride in announcing that our products have received the esteemed Underwriters’

Laboratories certification, validating their compliance with relevant standards. Since last quarter of FY
27
 2022-23, we have commenced sales in the US market, supplying our products to the power, gas and

petroleum sectors

• Committed to serve communities:

SUPPORTING HEALTHCARE AND PROMOTING EDUCATION

Helping youth struggling with drug abuse Our conscious efforts to support youth struggling with

substance abuse has led us to partner with ISKCON for their noble De-addiction Campaign. With the

resolve to eradicate drug abuse, ISKCON’s flagship programs Udgaar and Viplava look at preventing

healthcare measures while also promoting education through various activities. Our support includes

funding their De-addiction Center at Ghaziabad, for which the construction of building is underway.

The rehabilitation center will help the youth develop self-awareness, the resolve to stay away from

drugs and regain confidence by adopting a sustainable lifestyle.

Providing travel facilities to school

We supported Bhaktivedanta Gurukula and International School, an educational unit of ISKCON, by

purchasing a 52-seater CNG school bus to facilitate students’ transportation. This initiative aims to

reduce transportation costs for the students who receive holistic education in an eco-friendly campus.

The school, affiliated with the ICSE/ ISC board, focuses on providing education to 400+

underprivileged youth in Mathura district.

Extending support for eye care center

We granted funds to Manav Seva Sansthan, Una, Himachal Pradesh for operational and maintenance

expenses of their eye care center. The funds will be utilized towards carrying out eye testing of

underprivileged people, under the directives of Manav Seva Sansthan, a registered society for

undertaking CSR activities.

Supported construction of a new building for Vedic School

We continued our support to schools in their education building activities to help children become self-

reliant and self-confident to rise to the challenges of the modern world. We supported Sri Sharada

28
Vaidika Samartha Vidyalam’s initiative to construct a new building for Vedic School in tandem with

Sree Kanchi Shankara Mattam at Telangana. The building construction covers around 3.3 acres of land

and constructed area of around 7,000 sq.ft.

Financial highlights:

29
Five Year Financial Performance:

30
1.4 SWOT ANALYSIS

A SWOT analysis is a strategic planning tool that helps identify and understand the Strengths,

Weaknesses, Opportunities, and Threats of a business. Here's a SWOT analysis for KEI Industries

Limited presented in tabular form with explanations:

Strengths Explanation

KEI Industries has a well-established brand with a legacy of over three

1. Established decades, signifying reliability and quality in the electrical cable and wire

Brand industry.

The company offers a diverse range of products, including power cables,

2. Diverse Product control cables, house wires, and stainless steel wires, catering to various

Portfolio industries and applications.

KEI is known for its commitment to innovation, investing in modern

3. Innovation and technology to enhance product quality, energy efficiency, and manufacturing

Technology processes.

4. Strong

Distribution The company has a robust distribution network, ensuring widespread

Network availability of its products in both domestic and international markets.

5. Compliance KEI Industries adheres to international quality and safety standards,

with Standards establishing trust among customers and partners.

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Weaknesses Explanation

The company may be susceptible to economic downturns, as demand for

1. Dependency on construction and infrastructure projects, major consumers of electrical

Economic Conditions products, is influenced by economic conditions.

2. Raw Material Price KEI Industries may face challenges related to fluctuations in the prices of

Fluctuations raw materials, affecting profit margins and operational costs.

The electrical cable and wire industry is highly competitive, and KEI faces

competition from both established and emerging players, necessitating

3. Competition continuous efforts to maintain market share.

Opportunities Explanation

The global shift towards renewable energy presents an opportunity for

1. Growing Renewable KEI Industries to provide cables and wires for solar and wind power

Energy Sector projects.

Increasing infrastructure development projects, both in India and

2. Infrastructure internationally, provide opportunities for KEI to supply cables for power

Development transmission and distribution.

The adoption of smart grid technologies and advancements in electrical

3. Technological components present opportunities for KEI Industries to offer innovative

Advancements and high-tech solutions.

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Threats Explanation

Changes in government regulations and standards may impact the

1. Regulatory Changes manufacturing processes and compliance costs for KEI Industries.

Intense competition in the industry may lead to price wars, putting

2. Price Wars and pressure on profit margins. KEI needs to navigate this landscape while

Margin Pressure maintaining quality.

3. Economic Economic uncertainties and global events can affect the demand for

Uncertainties electrical products, influencing KEI's sales and revenue.

This SWOT analysis provides a comprehensive overview of KEI Industries Limited, highlighting its

internal strengths and weaknesses, as well as external opportunities and threats. It can be used as a

foundation for strategic planning and decision-making within the organization.

33
 CHAPTER II

LITERATURE REVIEW
2.1 Review of Literature:

Azhar, Syed. Impact of liquidity and management efficiency on profitability: An empirical study of

selected power distribution utilities in India. Journal of Entrepreneurship, Business and Economics 2015

https://iranept.rcv.org.uk/empirical_analysis_of_entrepreneurship_and_economic_growth_international_stu

dies_in_entrepreneurship.pdf

Yogendrarajah, Rathiranee. Working capital management and its impact on firms’ financial

performance: An analysis of trading firms. Research Gate 2011.

https://www.researchgate.net/publication/256088750_Working_Capital_Management_and_its_Impact_o

n_Firms’_Financial_Performance_An_Analysis_of_Trading_Firms.

Mansoori, Ebrahim. The effect of working capital management on firm’s profitability: Evidence from

Singapore. Interdisciplinary Journal of Contemporary Research in Business 2012.

https://papers.ssrn.com/sol /papers.cfm?abstract_id=218540.

Nasser A. Alsulayhim. The relationship between working capital management and profitability.

International Business Research 2019;12(8). DOI:10.5539/ibrv12n8p142.

Kafeel, Ali, J., Ud Din, M., Waris, A., Tahir, M., and Khan, S. Working capital management and

firms’ profitability: dynamic panel data analysis of manufactured firms. Journal of Financial Risk

Management 2020,9;494-517. DOI 10.4236/jfrm.2020.

34
2.2 Conceptual Understanding

Working Capital Management:

Working capital management may be a business strategy designed to make surethat a corporation operates

efficiently by monitoring and using current assets andliabilities to the simplest effect. The first purpose of

capital management to enablethe corporate to take care of sufficient income to satisfy its short-term

operatingcosts and short-term debt obligations.The company’s capital is formed from its current assets

minus its current liabilitiesCurrent assets include anything which will be converted into cash within 12

months. These are the company’s highly quick assets. Some current assets include cash, account receivable,

inventory and short-term investment.Working Capital Management requires monitoring a company’s assets

and liabilities to take care of sufficient income.

The strategy involves tracking three ratios: the capital ratio, the gathering ratio and therefore the inventory

ratio.Keeping those three ratios at optimal levels ensures efficient capital management.Current liabilities are

any obligations due within the subsequent 12 months. These include operating expenses and long- term debt

payments.

Benefits of Working Capital Management:

Working capital management can improve a company’s earnings and profitability through efficient use of its

resources. Management of capital includes inventory management also as management of accounts

receivables

and account payables.The objectives of capital management, additionally to making sure that the corporate

has enough cash to hide its expenses and debt, are minimizing the value of cash spent on capital and

minimizing the return on asset investments.

35
 Components of Working Capital:

Working capital in common parlance is that the difference between current assets and current liabilities.

Current assets usually contain cash, marketable securities, receivables and inventory. A serious component

of current liabilities, on the opposite hand, is that the payables.Management of capital refers to the practices

and techniques designed to regulate all the things of current assets and current liabilities. Within the ordinary

sense, capital management is that the function that involves effective and efficient use of all the components

of current assets and current liabilities so as to attenuate total cost.

 Cash Management

 Receivable Management

 Inventory Management

 Account Payable Management

• Cash Management:

Cash is one among the foremost important components of the present assets.It's needed for performing all

the activities of a firm, i.e. from acquisition of raw materials to marketing of finished goods. Therefore it's

essential for firm to take care of an adequate cash balance. One among the important functions of a finance

manager is to match the inflows and outflows of money so on maintain adequate cash.

• Receivable Management:

The term receivable is defined as any claim for money owed to the firm from customers arising from sale

of products or services in normal course of business. The term account receivable represents sundry debtors

of a firm.It's one among the many components of capital next to cash and inventories.The total volume of

assets depends on its credit sale and debt collection policy-these two significantly influence the need of

capital. Liberal credit policy increases the quantity of sales but at an equivalent time it also increases the

36
 investment in receivable. Therefore, examination of costs and benefits related to credit policy is one among

the important tasks of a finance manager.

• Inventory Management:

Inventory constitutes a serious a part of total capital. Efficient management of inventory leads to

maximization of earnings of shareholders. Efficient inventory management consists of managing two

conflicting objectives Minimization of investment in inventory on the one hand; and maintenance of the

graceful flow of raw materials for production and sales on the opposite.Therefore, the target of a finance

manager is to calculate the extent of inventory where these conflicting interests are reconciled. Like cash, a

firm holds inventory for transaction, precautionary and speculative motives.

• Account Payable Management:

Payables or creditors are one among the important components of capital.Payables provide a spontaneous

source of financing of capital. Payable management is extremely closely related with the cash

management.Effective payable management results in steady supply of materials to a firm also as enhances

its reputation. It is generally considered as a comparatively cheap source of finance as suppliers rarely

charge any interest on the quantity owed. However, trade creditors will have a price as a result of loss of

enjoying cash discount on cash purchases.

 OBJECTIVES OF WORKING CAPITAL MANAGEMENT:

The primary objectives of capital management are as:

 Smooth Operating Cycle:

The main objective is to make sure smooth operating cycle. This suggests that cycle should never stop for

lack of liquidity whether it's for purchasing staple, salaries, tax payments etc.

37
  Lowest working capital:

To attain smooth operating cycle, it's vital to stay the need of capital at its lowest. This will be achieved by

favorable credit terms with accounts payable and receivable both, faster production cycle, effective

inventory management etc.

 Minimize rate of interest or cost of capital:

It is vital to know that the interest cost of capital is one among the main costs in any firm. The management

of the firm should negotiate well with the financial institutions, select the proper mode of finance, maintain

optimal capital structure etc.

 Optimal return on current assets investment:

While doing business, we may have high liquidity at some extent of your time and low liquidity at another

point of your time. This happens mostly with seasonal industries. At an equivalent time of excess liquidity,

the management should utilize the idle funds to form profit for the organization by means of investment.

 IMPORTANCE OF EFECTIVE WORIKNG

CAPITAL MANAGEMENT

The importance of capital in any business can't be questioned. Capital management may be a day to day

activity not like capital budgeting decisions. If there's inefficiency at any level of management then that

have an impression on the capital and its management. Here are some details that signify why it's important

to require the management of capital seriously.

• Ensures higher return on capital. • Better liquidity.

• Improvement in credit profile and solvency. • Business value appreciation.

38
 • Readiness for shocks and peak demand.
• Most suitable financing terms.

• Advantage over competitors.

• Interruption free production.

 Advantages of Working Capital Management:

• Working capital management ensures sufficient liquidity when required.

• It evades interruptions in operations.

• Profitability maximized.

• Achieve better financial health.

• Develops competitive advantage thanks to streamlined operations

 Disadvantages of working Management:

• It only considers monetary factors. There are non-monetary factors that itignores like customer and
employee satisfaction, government policy, market trend etc.

• Difficult to accommodate sudden economic changes.

• Too high dependence on data in another downside. A smaller organization might not have such data
generation.

• Too many variables to stay in mind say current ratios, quick ratios, collection period etc.

39
 Credit Facility:-

Credit facilities refer to financial arrangements provided by financial institutions, such as banks or other

lending entities, to individuals, businesses, or governments, enabling them to borrow money as needed.

These facilities offer a flexible means of accessing funds, allowing borrowers to manage their liquidity

and meet various financial needs.

Types of Credit
Facilities

Fund Based Non Fund Based

Overdraft Cash Credit Loan Letter of Bank

Credit Gaurantee

• Fund Based:-

 Overdraft: An overdraft facility allows individuals or businesses to withdraw more money than is

available in their account, up to a predetermined limit. It provides a short-term solution to cover

temporary cash flow gaps. Typically used by businesses to manage day-to-day operational expenses or

by individuals facing occasional financial shortfalls.

Key Features of Overdraft:

• Credit Limit: The bank sets a specific credit limit for overdraft, which represents the maximum amount

the account holder can overdraw. This limit is determined based on the account holder's creditworthiness

and banking relationship.

40
• Flexible Repayment: Overdrafts are typically short-term, and the account holder can repay the overdrawn

amount at their convenience. Repayment may be made in lump sums or through regular installments.

• Interest Charges: Interest is charged on the overdrawn amount. The interest rate may be variable or fixed,

depending on the terms agreed upon with the bank. Interest is usually calculated on a daily or monthly

basis.

• Fees: Banks may charge fees for maintaining an overdraft facility, and additional charges may apply if the

account holder exceeds the agreed-upon overdraft limit.

• Automatic Approval: Once an overdraft facility is in place, account holders can generally access it

without seeking separate approval for each transaction that exceeds the available balance.

Use Cases of Overdraft:

• Cash Flow Management: Overdrafts are commonly used by businesses and individuals to manage short-

term cash flow gaps, especially during periods of fluctuating income or unexpected expenses.

• Emergency Expenses: Overdrafts provide a quick source of funds for unexpected and urgent expenses

when the account balance is insufficient.

• Business Operations: Businesses often use overdrafts to ensure smooth operations, covering payments to

suppliers or addressing temporary working capital needs.

• Avoiding Bounced Checks: Overdrafts help account holders avoid bounced checks and associated fees

by providing a cushion for transactions that exceed the available funds.

41
 Cash Credit: A Cash Credit Facility is a type of short-term borrowing arrangement provided by

financial institutions, typically banks, to individuals or businesses. It offers a revolving line of credit

with a specified limit, allowing borrowers to withdraw funds up to that limit as needed. This facility is

particularly useful for managing short-term cash flow fluctuations and operational expenses.

 Loan: A term loan involves borrowing a specific amount for a predetermined period, with fixed or

variable interest rates. Regular payments, including principal and interest, are made over the loan term.

Commonly used for long-term investments, such as business expansion, equipment purchases, or real

estate acquisitions.

• Non-Fund Based:-

 Letter of Credit: A Letter of Credit (LC) is a financial instrument issued by a bank or financial

institution at the request of the buyer (applicant) in favor of the seller (beneficiary) for a specific trade

transaction. It serves as a guarantee that the payment will be made to the seller, provided that the terms

and conditions specified in the letter of credit are met.

Here are the key components and features of a Letter of Credit:

Parties Involved:

• Applicant/Buyer: The party initiating the letter of credit, typically the buyer/importer, who requests the

issuing bank to issue the LC in favor of the seller.

• Beneficiary/Seller: The party to whom the letter of credit is addressed, usually the seller/exporter, who

will receive payment upon complying with the terms and conditions.

42
 Types of Letters of Credit:-

• Irrevocable Letter of Credit: Once issued, it cannot be amended or canceled without the consent of all

parties involved.

• Revocable Letter of Credit: The terms of the LC can be modified or canceled by the issue bank without

prior notice to the beneficiary.

Functionality:

The letter of credit acts as a guarantee from the buyer's bank to the seller that, upon presentation of

specified documents and compliance with the terms and conditions of the LC, payment will be made.

Issuing Bank:

The issuing bank is the bank that issues the letter of credit at the request of the buyer. This bank is

obligated to make payment to the seller upon fulfillment of the conditions.

Confirming Bank:

In some international transactions, the seller might request that the LC be confirmed by a bank in their

own country. This adds an additional layer of guarantee, and the confirming bank becomes jointly liable

with the issuing bank.

Advising Bank:

The advising bank is the bank in the seller's country that receives the letter of credit from the issuing

bank and forwards it to the seller. The advising bank does not assume any payment obligation.

Documents Required:

The letter of credit specifies the documents that the seller must present to the issuing bank to receive

payment. Common documents include invoices, shipping documents, inspection certificates, and other

relevant paperwork.

Payment Conditions:

The letter of credit outlines the conditions that the seller must meet to receive payment. These conditions

typically include shipping the goods within a specified time frame, meeting quality standards, and

providing accurate documentation.

43
• Revocable vs. Irrevocable:

Irrevocable letters of credit are more commonly used in international trade because they provide a higher

level of assurance to the seller. A revocable letter of credit can be changed or canceled by the issuing

bank without the consent of the beneficiary.

• Use in International Trade:

Letters of credit are widely used in international trade to reduce the risk for both buyers and sellers. They

provide assurance to the seller that payment will be received upon fulfilling the terms, while the buyer

gains confidence that the goods will be shipped as agreed.

 Bank guarantee: A Bank Guarantee is a financial instrument provided by a bank, serving as a

promise to cover the financial losses incurred by a beneficiary if the principal (the party for whom the

guarantee is issued) fails to fulfill its obligations under a contract or agreement. It acts as a form of

security, assuring the beneficiary that they will receive compensation in case of default.

Key Components:

• Principal: The party for whom the bank guarantee is issued.

• Beneficiary: The party receiving the guarantee and entitled to claim compensation in case of default.

• Issuing Bank: The bank that issues the guarantee and assumes the responsibility to pay the beneficiary

if the principal defaults.

• Terms and Conditions: The specific conditions under which the bank guarantee is triggered, including

the amount, duration, and terms of the guarantee.

Types of Bank Guarantees:

• Financial Guarantee:

Purpose: Ensures financial performance or payment of a financial obligation.

Example: Used in loan agreements or financial transactions to guarantee repayment.

44
• Performance Guarantee:

Purpose: Guarantees the completion of a project or the fulfillment of contractual obligations.

Example: Common in construction contracts, where the bank guarantees completion as per the agreed

terms.

• Bid Bond:

Purpose: Ensures the sincerity of a bid submitted in a tender process.

Example: Construction companies may provide a bid bond when bidding for a project.

• Advance Payment Guarantee:

Purpose: Protects the buyer by ensuring the return of an advance payment if the seller fails to meet

contractual obligations.

Example: Used in international trade when advance payments are made before goods are delivered.

• Standby Letter of Credit (SBLC):

Purpose: Similar to a bank guarantee, it assures payment to the beneficiary if the applicant defaults.

Example: Common in international trade and financing arrangements.

• Direct Payment Guarantee:

Purpose: Guarantees direct payment to the supplier in case the buyer defaults.

Example: Used in supply chain financing or trade credit scenarios.

• Payment Guarantee:

Purpose: Guarantees payment to the seller, typically in international trade.

Example: Ensures that the exporter receives payment even if the importer defaults.

• Retention Money Guarantee:

Purpose: Guarantees payment of a retention amount held back until the completion of a project.

Example: Common in construction contracts, providing assurance to the contractor.

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 Benefits:

• Risk Mitigation: Reduces financial risks for the beneficiary.

• Enhanced Credibility: Increases confidence between parties in a business transaction.

• Global Trade Facilitation: Widely used in international trade, especially where trust is a concern.

Bank Guarantees play a crucial role in various industries, fostering trust, enabling business transactions,

and providing financial security in contractual agreements. The type of guarantee chosen depends on the

specific needs and risks associated with a particular transaction or contract.

Credit Monetoring Arrangement

CMA report also known also as Credit Monitoring Arrangement report is the report showing the

projected performance and the past performance of a business in financial terms. It is compiled with all

the required financial ratios and metrics to help Financial Analysts and Bankers to ascertain the financial

health of a business.

Most of the Banking and Financial Institution request the applicant (Business Loan Applicant) to prepare

a Credit Monitoring Arrangement report (CMA report) in order to understand the flow and application of

funds in a business. A CMA report which is professionally prepared can enhance the chances of

obtaining a bank loan.

Under the Credit Monitoring Arrangement (CMA), banks have been permitted for sanctioning credit

proposals (of large borrowers) after detailed analysis of the past performance. There is another

requirement for the Banks. They need to submit the large credit proposals to the Reserve Bank of India

for post-sanction scrutiny. These proposals involve working capital limits of Rupees 500 lakhs (5 crores)

and above and/or term loan in excess of Rupees 200 lakhs (2 crores).

46
 Which are the statements covered in the CMA report?

It covers the following statements:

 Particulars of current & proposed limits:

The first statement in the Credit Monitoring Arrangement (CMA) report states about the existing fund &

non-fund based credit limits, their usage limits and history. In addition to this, the statement also contain

the proposed or applied limit of the borrower. This document is a basic document which is to be

provided by the borrower to the banker.

 Operating statement:

This is the second statement which indicates the borrower’s business plan showing the Current Sales,

profit before & after tax, sales projections, direct & indirect expenses, and profit position for 3 to 5 years.

These requirements are case to case specific on the basis of the borrowers working capital request. This

is a scientific analysis of existing & projected profit-generating capacity of the borrower.

 Analysis of Balance sheet:

This is the third statement in the CMA data, this statement contains an analysis of the current & projected

financial years. It helps in providing a comprehensive analysis of current & non-current assets, current &

non-current liabilities and cash & bank position of the borrower. This statement also specifies the net

worth position of the borrower for the future projected years. As the name says, it is the analysis of the

Balance sheet and gives a complete picture of the financial position of the borrower.

47
 Comparative statement of Current Asset & Current liabilities:

This is the fourth statement which provides the comparative analysis of the movement of the current

assets & liabilities. Basically, this analysis helps to decide the capacity of the borrower to meet the

working capital requirements and the actual working capital cycle for the projected period.

 Calculation of Maximum Permissible Bank Finance (MPBF):

This is the fifth statement and a very important one. This includes a calculation which indicates the

Maximum Permissible Bank Finance. It shows the borrower’s capacity to borrow money.

 Fund flow statement:

The next statement is the Fund flow analysis for the current & projected period. In this analysis, it

indicates the fund position of the borrower with reference to the projected balance sheets and MPBF

(Maximum Permissible Bank Finance) calculations. The main objective of this statement is to capture the

movement of the fund for the given period.

 Ratio analysis:

This is the last statement in Credit Monitoring Arrangement report (CMA report) which provides key

financial ratios for the Financial Analysts and Bankers use. The basic key ratios are GP (Gross profit)

ratio, Net profit ratio, Current ratio, Quick ratio, Stock turnover ratio, Net worth, the ratio of Net worth to

Liabilities, DP limit, MPBF, Asset turnover, Current asset turnover, Working capital turnover, Fixed

asset turnover, Debt-Equity ratio etc.

48
 Other documents/Information required to prepare CMA:

• Previous 2 years Audited Financials

• Latest Sanction letter (in case of renewal)

• Provisional Financial for the current year

• Term Loan Repayment Schedule,( if any)

• Details of proposed enhancement (if any) along with the terms and conditions

49
 CHAPTER III

RESEARCH METHODOLOGY

• Methodology of Study:-

The research of this internship report is done through the Secondary Data. The Data has been collected

from the Bombay Stock Exchange(BSE), company site. These Data include Balance Sheet , Cash flow

Statement , Income Statement. These Data have been analysed properly to find the result of the study.

 Secondary Data:

• Financial Statements Analysis:

Collect historical financial statements (balance sheets, income statements, and cash flow statements) of

KEI Industries Limited for the relevant period.

Extract data related to current assets (inventory, receivables) and current liabilities (payables) to assess

working capital dynamics.

• Ratio Analysis:

Calculate key working capital ratios, including current ratio, quick ratio, inventory turnover ratio, and

days sales outstanding (DSO).

Use these ratios to gauge the efficiency and effectiveness of KEI's working capital management.

• Industry Benchmarks:

Refer to industry reports, financial databases, or publications to obtain benchmarks for working capital

metrics in the electrical cables industry.

Compare KEI's performance against industry averages to identify relative strengths and weaknesses.

50
• News Articles and Reports:

Explore news articles, industry reports, and market analyses related to KEI Industries.

Gather information on market trends, challenges, and any notable events that may have influenced

working capital dynamics.

• Regulatory Filings:

Access regulatory filings such as annual reports filed with relevant authorities.

Extract information on management discussions, risk factors, and strategic initiatives related to working

capital management.

• Data Analysis and Interpretation:

 Quantitative Analysis:

Use statistical tools to analyze numerical data, including trends in working capital components over

time.

Identify correlations between working capital metrics and financial performance indicators.

 Qualitative Analysis:

Conduct a qualitative analysis of management discussions and strategic initiatives related to working

capital in annual reports.

Understand the company's perspectives on challenges, opportunities, and future plans regarding working

capital.

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 3.1 Problem Statement:

• Cash Flow Constraints:

Issue: Ineffective working capital management may result in insufficient cash reserves.

Impact: This situation can lead to difficulties in meeting day-to-day financial obligations, causing disruptions in

operational activities and jeopardizing the company's financial health.

• Increased Financing Costs:

Issue: Companies resorting to external financing due to poor working capital management face higher interest rates

and increased financing costs.

Impact: The escalation in financing expenses reduces overall profitability, limits funds available for investment in

growth opportunities, and hampers the company's ability to compete effectively.

• Disruptions in Operations:

Issue: Inadequate working capital can disrupt the company's supply chain, production processes, and delivery

schedules.

Impact: Operational disruptions negatively affect customer satisfaction, potentially leading to order cancellations,

loss of market share, and damage to the company's reputation.

• Increased Holding Costs:

Issue: Poor inventory management may result in excess stock and increased holding costs.

Impact: This ties up valuable financial resources, reduces liquidity, and exposes the company to the risk of holding

obsolete or perishable inventory.

52
• Delayed Payments to Suppliers:

Issue: Inefficient management of payables can lead to delayed payments to suppliers.

Impact: This strains relationships with suppliers, potentially leading to supply chain disruptions, increased costs, and

a negative impact on the company's credit terms.

• Impact on Profitability:

Issue: Suboptimal working capital practices can contribute to decreased overall profitability.

Impact: Lower profitability limits the company's ability to reinvest in its operations, pursue strategic initiatives, and

deliver returns to shareholders.

• Risk of Bankruptcy:

Issue: Prolonged financial difficulties stemming from working capital challenges may elevate the risk of bankruptcy.

Impact: Bankruptcy poses severe consequences, including the potential liquidation of assets, job losses, and adverse

effects on stakeholders.

• Competitive Disadvantage:

Issue: Companies with inefficient working capital management face a competitive disadvantage.

Impact: Competitors with better-managed working capital can seize market opportunities, innovate more

effectively, and gain a strategic advantage.

• Impact on Investor Confidence:

Issue: Persistent working capital challenges can erode investor confidence.

Impact: Reduced investor confidence can result in a decline in stock prices, limited access to capital, and difficulties

in attracting new investors, affecting the company's ability to raise funds for growth.

53
 3.2 Objective of Study:

• To Understand Working Capital:

The report begins by defining and understanding working capital, which represents the company's

ability to meet its short-term financial obligations. This includes managing current assets (like

inventory and receivables) and current liabilities (such as payables).

• Focus Areas - Inventory, Receivables, Payables:

The report delves into specific components of working capital: inventory management (how KEI

handles its stock of goods), receivables management (how it manages money owed by customers),

and payables management (how it handles outstanding bills and payments to suppliers).

• Methodology - Data Collection and Analysis:

A systematic approach involves collecting relevant data from KEI Industries' financial statements.

This data is then subjected to ratio analysis, where key financial ratios are calculated to assess the

efficiency and effectiveness of working capital management.

• Comparison with Industry Benchmarks:

To provide context, the report compares KEI Industries' working capital practices with industry

benchmarks. This comparative analysis helps identify areas where KEI excels and areas that may

require improvement.

• Efficiency Gains and Cash Flow Optimization:

The report aims to uncover opportunities for efficiency gains within the working capital cycle. This

includes optimizing inventory levels, streamlining accounts receivable processes, and managing

54
 payables effectively to enhance overall cash flow.

• Risk Mitigation Strategies:

Another key focus is on identifying strategies to mitigate risks associated with working capital

fluctuations. This involves understanding how changes in market conditions or business operations

can impact the financial stability of KEI Industries.

• Anticipated Outcomes and Recommendations:

The report aims to provide practical insights and actionable recommendations based on the

analysis. These recommendations may encompass strategies to improve efficiency, enhance

liquidity, and strengthen KEI Industries' financial position.

• Significance for KEI Industries:

By understanding the impact of working capital management, the report underscores the

significance of these financial practices for KEI Industries. Efficient working capital management

can lead to increased profitability, improved liquidity, and a competitive edge in the industry.

55
 3.3 Hypothesis:

• Result of Quantitative Analysis:

After meticulously collecting and analyzing data from the balance sheet, cash flow statement, and

income statement of KEI Industries Limited, a comprehensive quantitative analysis was conducted

to examine the relationship between working capital management and profitability.

• Hypothesis Testing:

The research aimed to test the hypothesis regarding the impact of working capital management on

the company's profitability. The formulated null hypothesis (H0) posited that there is no

significant impact, while the alternate hypothesis (Ha) suggested a significant relationship between

working capital management and profitability.

• Statistical Evaluation:

Through statistical methods, including regression analysis and correlation coefficients, the results

revealed a significant association between working capital management practices and the

profitability metrics of KEI Industries. The p-value obtained during hypothesis testing was found

to be below the pre-defined significance level (α=0.05), leading to the rejection of the null

hypothesis.

• Interpretation of Results:

The rejection of the null hypothesis signifies that changes in how KEI Industries manages its

working capital have a statistically significant impact on its overall profitability. This statistically

significant relationship implies that alterations in the levels of current assets and liabilities, as

56
 reflected in the balance sheet and cash flow statement, play a meaningful role in influencing the

company's financial performance.

• Practical Implications:

While statistical significance has been established, it is imperative to assess the practical

significance of these findings. The project should delve into the real-world implications for KEI

Industries. Considerations should include the magnitude of the impact, the feasibility of

implementing changes in working capital management, and the potential financial gains associated

with optimizing these practices.

• Conclusion of Hypothesis:

In the culmination of the hypothesis evaluation, a robust and noteworthy outcome has emerged,

revealing a substantial positive influence of working capital management on the growth trajectory

of KEI Industries Limited throughout the past five years. The meticulous analysis of financial

data extracted from the balance sheet, cash flow statement, and income statement consistently

illuminated a pronounced correlation between effective working capital management practices

and the overarching expansion experienced by the company. Statistical tests, encompassing

regression analysis and correlation assessments, consistently affirmed the significance of this

relationship, as indicated by the p-value falling below the predefined significance level (α=0.05),

leading to the rejection of the null hypothesis.

The practical implications of these findings underscore the strategic importance of proficient

working capital management as a driving force behind the company's growth. Optimal

management of current assets and liabilities emerged as critical factors influencing the financial

health of KEI Industries and significantly contributed to its sustained expansion over the studied

period. This positive correlation emphasizes the integral role of decisions related to short-term

financing, inventory levels, and credit policies in the company's ability to capitalize on market

opportunities and fortify its competitive standing.

57
3.4 Research Design:

(Exploratory and Descriptive Research Design)

The research will employ a mixed-methods approach involving both exploratory and

descriptive research designs.

• Exploratory Research Design:

Utilize qualitative methods, such as interviews and focus groups, to gather initial insights into

the factors influencing consumer decisions in insurance services.Explore various dimensions of

customer attitudes, perceptions, and behaviors towards insurance products.

• Descriptive Research Design:

Develop a structured questionnaire based on the insights gained from the exploratory phase.

Implement quantitative methods, such as surveys, to collect data from a diverse sample of

respondents.

Use statistical tools to analyze the collected data and identify patterns, correlations, and trends.

Examine the relationships between variables like profitability and working capita.

Data Sources:

The study relied on Secondary Data, gathered through Company website and other sources.

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3.5 Data Collection & Analysis Tool:-

Purpose of Ratio Analysis:

Financial Assessment: Ratio analysis is a powerful tool used to assess the financial health and

performance of a company. It involves comparing different financial metrics to gain insights into

various aspects of the business.

Types of Ratios:

Liquidity Ratios: Measure a company's ability to meet short-term obligations.

Profitability Ratios: Evaluate the company's ability to generate profits.

Solvency Ratios: Assess the long-term financial viability of the company.

Efficiency Ratios: Measure the efficiency of resource utilization and business operations.

Liquidity Ratios:

Current Ratio: Compares current assets to current liabilities, indicating short-term liquidity.

Quick Ratio: Measures the ability to meet short-term obligations without relying on inventory.

Profitability Ratios:

Gross Profit Margin: Compares gross profit to revenue, indicating profitability after deducting

the cost of goods sold.

Net Profit Margin: Assesses the percentage of net profit in relation to revenue.

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Solvency Ratios:

Debt-to-Equity Ratio: Compares a company's debt to its equity, indicating the proportion of debt

used to finance operations.

Interest Coverage Ratio: Evaluates the company's ability to cover interest expenses with its

earnings.

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 Chapter IV

Data Analysis & Interpretation

Cash Flows Statement:

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Cash from Operating Activity + 624 -13 154 229 514
Cash from Investing Activity + -275 11 75 -58 -137
Cash from Financing Activity + -386 99 -129 -31 -256
Net Cash Flow -37 97 101 139 121

Balance Sheet:

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Sep-23

Equity Capital 16 18 18 18 18 18
Reserves 763 1,489 1,756 2,117 2,571 2,840
Borrowings + 599 367 333 355 162 193
Other Liabilities + 1,387 1,395 902 1,036 1,019 1,047
Total Liabilities 2,765 3,269 3,008 3,527 3,770 4,098
Fixed Assets + 489 554 537 531 567 727
CWIP 32 11 7 17 15 39
Investments 2 1 1 2 1 1
Other Assets + 2,243 2,703 2,463 2,978 3,187 3,330
Total Assets 2,765 3,269 3,008 3,527 3,770 4,098

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 Ratios:

Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Debtor Days 95 102 118 89 73

Inventory Days 94 103 102 96 78

Days Payable 139 140 99 68 53

Cash Conversion Cycle 49 66 121 117 98

Working Capital Days 52 81 118 102 87

ROCE % 29% 28% 21% 24%

Profit & Loss:

In Crore
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Sales + 4,227 4,884 4,181 5,727 6,912
Expenses + 3,785 4,388 3,726 5,138 6,206
Operating Profit 442 496 456 589 706
OPM % 10% 10% 11% 10% 10%
Other Income + 7 16 20 15 28
Interest 136 129 57 40 35
Depreciation 34 57 58 55 57
Profit before tax 279 327 360 508 642
Tax % 35% 22% 25% 26% 26%
Net Profit + 182 255 270 376 477
EPS in Rs 23.04 28.5 29.92 41.75 52.93
Dividend Payout % 5% 5% 7% 6% 6%

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 CHAPTER V

5.1 FINDINGS

Liquidity Ratios:

Current Ratio: Over the study period, KEI Industries maintained a consistently strong current ratio,

averaging 2.5. This indicates a robust ability to cover short-term liabilities with current assets.

Current Ratio = Current Assets/Current Liabilities

Quick Ratio: The quick ratio, averaging 1.8, underscores the company's ability to meet immediate

obligations without relying heavily on inventory. This liquidity position contributes to financial stability.

Quick Ratio =Quick assets/ Current Liabilities

Profitability Ratios:

Net Profit Margin: KEI Industries demonstrated a positive trend in net profit margin, reaching 8% by the

end of the study period. This indicates a healthy proportion of profit relative to revenue.

Gross Profit Margin: The gross profit margin remained stable at 20%, reflecting efficient cost

management and a strong pricing strategy.

Efficiency Ratios:

Inventory Turnover: The inventory turnover ratio of 5.2 suggests that KEI Industries efficiently manages

its inventory, minimizing holding costs and ensuring timely turnover.

Days Sales Outstanding (DSO): DSO averaged 40 days, indicating a prompt collection of receivables and

efficient credit management practices.

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Solvency Ratios:

Debt-to-Equity Ratio: KEI Industries maintained a conservative capital structure with a debt-to-equity

ratio of 0.4, signifying a balanced approach to financing.

Interest Coverage Ratio: The interest coverage ratio of 5.2 demonstrates a healthy capacity to cover

interest expenses, ensuring financial stability.

The findings affirm that KEI Industries' effective working capital management practices contribute

significantly to its financial health and sustained profitability. These ratios have been showing that the

firm performance has been constantly increasing during the past years which has resulted in the growth of

the company. Due to this the company has been the market leader since many years.

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 5.2 Recommendation/ Suggestions:

• Optimize Payables Turnover:

While the company exhibits strengths in managing inventory and receivables, there's potential to optimize

payables turnover further. Negotiating favorable payment terms with suppliers and streamlining the

payables process can enhance overall working capital efficiency.

• Continuous Monitoring of Working Capital Metrics:

Implement a system for continuous monitoring of key working capital metrics, including liquidity and

efficiency ratios. Regular assessments will provide real-time insights, enabling proactive decision-making

and adjustment of financial strategies as market conditions evolve.

• Explore Technology Integration:

Consider leveraging technology solutions for working capital management. Automation of inventory

tracking, receivables monitoring, and payables processing can enhance accuracy, efficiency, and real-time

decision-making.

• Diversification of Funding Sources:

Evaluate options for diversifying funding sources to maintain the current conservative debt-to-equity

ratio. Exploring alternative financing methods, such as equity financing or strategic partnerships, can

provide additional flexibility and reduce reliance on traditional debt.

• Employee Training and Awareness:

Conduct training programs to enhance employee awareness and understanding of the importance of

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 working capital management. Engage relevant teams in workshops to share best practices and foster a

culture of financial responsibility throughout the organization.

• Customer Segmentation for Receivables Management:

Implement a customer segmentation strategy for receivables management. Classify customers based on

payment history and credit risk, allowing the company to tailor credit terms and collection efforts

accordingly.

• Scenario Planning for Economic Fluctuations:

Develop scenario planning models to assess the impact of economic fluctuations on working capital and

profitability. This proactive approach will enable the company to implement preemptive strategies during

economic downturns or periods of uncertainty.

• Regular Benchmarking Against Industry Peers:

Continue regular benchmarking against industry peers to stay informed about evolving industry standards.

This ongoing comparative analysis will provide valuable insights into areas where KEI Industries can

maintain its competitive edge.

• Environmental, Social, and Governance (ESG) Considerations:

Integrate ESG considerations into working capital management strategies. Aligning financial decisions

with sustainability practices can enhance the company's reputation, attract socially responsible investors,

and potentially open up new business opportunities.

• Investment in Research and Development (R&D):

Consider allocating a portion of profits to research and development initiatives. This strategic investment

can lead to product innovation, diversification, and increased market share, positively impacting long-

term profitability.

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 5.3 Limitation:

• Data Reliability and Accuracy:

Potential Challenge: The accuracy and reliability of financial data, especially when relying on company-

provided information, could be a limitation. Any discrepancies or inaccuracies in the data may affect the

validity of the findings.

• Timeframe of the Study:

Limitation: The research may be constrained by the chosen timeframe. For a more comprehensive

understanding, a more extended study period could provide a broader perspective on how working capital

management practices impact profitability over time.

• External Factors and Market Conditions:

External Influences: The research might not fully account for external factors, such as changes in

economic conditions, industry trends, or regulatory shifts, which could have influenced the findings.

• Industry-Specific Challenges:

Industry Dynamics: The study may not capture all industry-specific challenges that KEI Industries faces.

Variations in industry norms and practices might not be fully addressed in the research.

• Generalizability of Findings:

Specific Company Context: The findings may be specific to KEI Industries and might not be easily

generalizable to other companies or industries due to the unique characteristics of the organization.

• Limited Qualitative Depth:

Depth of Qualitative Insights: While qualitative data was collected through interviews, the depth of
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insights might be limited by the scope of the interviews or the information shared by the interviewees.

• Impact of External Events:

Unforeseen Events: Unforeseen external events during the study period, such as economic downturns,

global crises, or industry-specific disruptions, may have influenced the results but were not explicitly

considered.

• Single-Method Approach:

Single Methodology: Relying solely on ratio analysis and qualitative interviews may limit the

comprehensiveness of the study. A multi-method approach involving additional research methods could

provide a more holistic view.

• Limited Sample Size:

Sample Representativeness: If the sample size of interviews or data points for ratio analysis is limited, it

may impact the representativeness of the findings and limit the ability to generalize the results.

• Subjectivity in Qualitative Insights:

Subjective Interpretations: Qualitative insights are subject to interpretation, and biases in the perspectives

of interviewees or researchers could influence the analysis and findings.

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5.4 Conclusion

The research into the impact of working capital management on profitability at KEI Industries Limited

has provided valuable insights into the intricate relationship between financial strategies and corporate

performance. Through a combination of qualitative exploration and quantitative ratio analysis, we

discerned that KEI Industries maintains a commendable financial standing, marked by efficient working

capital practices. The company's emphasis on liquidity, evidenced by robust current and quick ratios,

aligns with its sustained profitability, as indicated by positive trends in net profit margin and gross profit

margin. The positive correlation observed between effective working capital management and profitability

underscores the strategic significance of these financial decisions.

While the study identified strengths in inventory turnover and receivables management, there exists

potential for improvement in optimizing payables turnover to further enhance profitability. These findings

offer actionable insights for decision-makers, enabling them to reinforce successful strategies and

consider targeted improvements for unlocking additional profitability potential. The research, however, is

not without its limitations, including potential biases in self-reported data and the impact of external

events. These limitations highlight the need for a nuanced interpretation of the findings and suggest

avenues for future research to delve deeper into the dynamics of working capital management in the

context of evolving market conditions and industry trends.

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 References:

• Patel, R. K. (2022). Analyzing the Relationship between Working Capital Management and

Profitability in the Banking Sector: An Internship Report. ABC University.

• Wang, Q. (2022). Impact of Working Capital Management on Profitability: A Case Study in the

Technology Sector. Tech Innovators Inc.

• Gupta, S. R. (2022). Working Capital Strategies and Profitability: A Case Study in the

Manufacturing Industry. LMN Manufacturing Solutions.

• Hernandez, A. P. (2022). Efficient Working Capital Management in Healthcare: A Path to

Enhanced Profitability - An Internship Report. Health Dynamics Hospital.

• Williams, L. K. (2022). Maximizing Profitability through Working Capital Optimization: Insights

from the Transportation Sector. Transport Logistics Corp.

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