A

PROJECT REPORT

ON

“A STUDY ON WORKING CAPITAL MANAGEMENT OF MAHINDRA &

MAHINDRA”

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 A

PROJECT REPORT

ON

“A STUDY ON WORKING CAPITAL MANAGEMENT OF MAHINDRA &

MAHINDRA”

Submitted To

Mr. AMIT THACKREY

For the award of degree of

Bachelor of Commerce Honours

Submitted by

MITUL BRIJWASI

Under the guidance of

Mr. AMIT THACKREY

AMRAPALI GROUP OF INSTITUTIONS.

Academic year 2021-2024

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Academic year 2021-2024

CERTIFICATE

This is to certify that MITUL BRIJWASI has submitted the project report titled “A
STUDY ON WORKING CAPITAL MANAGEMENT OF MAHINDRA &
MAHINDRA” under the guidance of Mr. AMIT THACKREY .The Dissertation
was conducted as a requirement for fulfillment of the BACHELOR OF
COMMERCE HONOURS at AMRAPALI GROUP OF
INSTITUTIONS.

Mr. AMIT THACKREY Mr. YOGESH

(Project guide) (Coordinator)

Place:
Date:

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Academic year 2021-2024

DECLARATION

I here-by declare that the project with title “A STUDY ON WORKING CAPITAL
MANAGEMENT OF MAHINDRA & MAHINDRA”, has been completed by me in
partial fulfillment of BACHELOR OF COMMERCE HONOURS degree examination as
prescribed by Mr. Amit Thackrey AMRAPALI GROUP OF INSTITUTIONS.

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ACKNOWLEDGEMENT

With immense pride and sense of gratitude, I take this golden opportunity to express
my sincere regards to Mr. AMIT THACKREY.

I am extremely thankful to my project guide Mr. Amit Thackrey for the guideline throughout
the project. I tender my sincere regards to coordinator,, for giving me outstanding guidance,
enthusiastic suggestion and invaluable encouragement which helped me in the completion of
the project.

I will fail in my duty if I do not thank the non-teaching staff of the college for their co-
operation.

I would like to thank all those who helped me in making this project complete and
successful.

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INDEX

SR. NO PARTICULARS PAGE

NO.

1. INTRODUCTION 1

2. COMPANY PROFILE 14

3. RESEARCH METHODOLOGY

23
• OBJECTIVE

• NEED OF STUDY 24

• RELEVANCE OF STUDY 25

• HYPOTHESIS 26

4. BALANCE SHEET
27

5. DATA ANALYSIS AND INTERPRETATION 28

6. LIMITATIONS 37

7. CONCLUSION 38

8. SUGGESTIONS 39

9. BIBLIOGRAPHY 40

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INTRODUCTION

“Working capital means the part of the total assets of the business that change from one form to form in

ordinary course of business operation.”

Concept of Working Capital:-

The word working capital is made of two words

1. Working

2. Capital

The word working means day to day operation of the business, whereas the word capital means monetary

value of all assets of the business.

Working capital:-

Working capital may be regarded as the life blood of business. Working capital is of major importance to

internal and external analysis because of its close relationship with the current day today operation of a

business. Every business needs funds for two purposes.

• Long term funds are required to create production facilities though purchase of fixed assets such as

plants machines, lands, buildings &etc.

• Short term funds are required for the purchase of raw materials, payment of wages, and other day-

to-day expenses. It is otherwise known as revolving or circulating capital it is nothing but the

difference between current assets and current liabilities .i.e.

WORKING CAPITAL = CURRENT ASSET – CURRENT LIABILITIES

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Businesses use capital for construction, renovation, furniture, software, equipment or machinery. It is also

commonly used to purchase inventory, or to make payroll. Capital is also used often to put a down payment

down on a piece of commercial real estate. Working capital is essential for any to succeed. It is becoming

increasingly important to have access to more working capital when we need it.

Concept of working capital

GROSS WORKING CAPITAL = TOTAL OF CURRENT ASSET

NET WORKING CAPITAL = EXCESS OF CURRENT ASSET OVER CURRENT LAIBILITY

CURRENT ASSET CUREENT LAIBILITY

• Cash in hand / at bank • Bills payable

• Bills receivable • Sundry creditors

• Sundry debtors • Outstanding expenses

• Short term loans • Accrued expenses

• Investors / stock • Bank over drafts

• Temporary investment

• Prepaid expenses

• Accrued incomes

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COMPONENTS OF WORKING CAPITAL

1. Current assets

A major component of working capital is current assets. A shortened definition of current assets is: a

company's cash plus its other resources that are expected to turn to cash within one year. However, the

following is a more complete definition: Current assets include cash (which is not restricted for a long-term

purpose) plus the company's other resources that will turn to cash or will be used up within one year (of the

date shown in the heading of the balance sheet). However, in the rare situations when a company's normal

operating cycle is longer than one year, the length of the operating cycle is used in place of one year for

determining a current asset. Examples of current assets (listed in the order they are expected to turn into

cash) include:

• cash and cash equivalents

• temporary investments

• accounts receivable

• inventory

• supplies

• prepaid expenses

2. Current liabilities

The other major component of working capital is current liabilities. A shortened definition of current

liabilities is: a company's obligations that will be due within one year. However, a more complete

definition is: Current liabilities are a company's obligations (that are the result of a past event) that will be

due within one year of the balance sheet's date. However, in the rare situations when a company's normal

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operating cycle is longer than one year, the length of the operating cycle is used in place of one year for

determining a current liability. Examples of current liabilities include:

• loan principal amounts that will be due within one year

• accounts payable

• wages payable

• payroll taxes withheld from employees

• Accrued expenses/liabilities (utilities, repairs, interest, etc.)

• customer deposits and deferred revenues

If there is assurance that a current liability will be replaced by a long-term liability, it should be reported as

a long-term liability. (The reason is the liability will not be requiring the use of the company's working

capital.)

3. Operating cycle

The need of working capital arrived because of time gap between production of goods and their

actual realization after sale. This time gap is called “operating cycle” or “working capital cycle”.

The operating cycle of a company consist of time period between procurement of inventory and the

collection of cash from receivables. The operating cycle is the length of time between the

companies’ outlay on raw materials, wages and other expenses and inflow of cash from sales of

goods. Operating cycle is an important concept management of cash and management of cash

working capital. The operating cycle reveals time that elapses between outlays of cash inflow of

cash. Quicker the operating cycle less amount of investment working capital needed it improves

probability. The duration of the operating cycle depends on mature of industries and efficiency

working capital management.

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OPERATING CYCLE

RAW
MATERIAL

CASH WORK IN
PROGRESS

DEBTORS
AND SH GOODS
RECEVIABLE

SALES

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WORKING CAPITAL RATIOS

Ratio analysis can be used by financial executives to check upon the efficiency with which working

capital is being used in the enterprise. The following are the important ratios to measure the efficiency

of working capital.

A. WORKING CAPITAL RATIO

The working capital ratio, also called the current ratio, is a liquidity ratio that measures a firm’s ability

to pay off its current liabilities with current assets. The working capital ratio is important to creditors

because it shows the liquidity of the company.

WORKING CAPITAL RATIO = CURRENT ASSET – CURRENT LIABILITIES

B. WORKING CAPITAL LIQUIDITY RATIO

Two key measures, the current ratio and the quick ratio, are used to assess short term liquidity.

Generally a higher ratio indicates better liquidity.

1) Current ratio

Liquidity ratios tell you about a company’s ability to meet all its financial obligations, including debt,

payroll, payments to vendors, taxes, and so on. The numbers come from the Balance Sheet. The current

ratio is one of the liquidity ratios. It measures a company’s ability to pay its short-term obligations. The

current ratio looks at current assets and current liabilities.

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𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
CURRENT RATIO = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

2) Quick ratio

The quick ratio is an indicator of a company’s short-term liquidity position and measures a company’s

ability to meet its short-term obligations with its most liquid assets. Since it indicates the company’s

ability to instantly use its near-cash assets (that is, assets that can be converted quickly to cash) to pay

down its current liabilities, it is also called the ACID TEST RATIO.

QUICK RATIO = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻−𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑻𝒀

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

4) Working capital turn over ratio

The working capital turnover ratio measures how well a company is utilizing its working capital

to support a given level of sales. Working capital is current assets minus current liabilities. A high

turnover ratio indicates that management is being extremely efficient in using a firm's short-term

assets and liabilities to support sales. Conversely, a low ratio indicates that a business is investing

in too many accounts receivable and inventory assets to support its sales, which could eventually

lead to an excessive amount of bad debts and obsolete inventory write-offs.

𝑺𝑨𝑳𝑬𝑺
WORKING CAPITAL =
𝑾𝑶𝑹𝑲𝑰𝑵𝑮 𝑪𝑨𝑷𝑰𝑻𝑨𝑳

5) The Debtors Turnover Ratio

The Debtors Turnover Ratio also called as Receivables Turnover Ratio shows how quickly the

credit sales are converted into the cash. This ratio measures the efficiency of a firm in managing and

collecting the credit issued to the customers.

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𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
DEBTORS TURNOVER RATIO =
𝑨𝑽𝑬𝑹𝑨𝑮𝑬 𝑨𝑪𝑪𝑶𝑼𝑵𝑻𝑺 𝑹𝑬𝑪𝑬𝑰𝑽𝑨𝑩𝑳𝑬

6) The Inventory turnover

The Inventory turnover is a measure of the number of times inventory is sold or used in a time period

such as a year. It is calculated to see if a business has an excessive inventory in comparison to its sales

level. The equation for inventory turnover equals the cost of goods sold divided by the

average inventory.

INVENTORY TURNOVER = 𝑺𝑨𝑳𝑬𝑺

I𝐍𝐕𝐄𝐍𝐓𝐎𝐑𝐘

7) Current Assets Turnover Ratio

Current Assets Turnover Ratio indicates that the current assets are turned over in the form of sales more

number of times. A high current assets turnover ratio indicates the capability of the organization to achieve

maximum sales with the minimum investment in current assets. Higher the current ratio better will be the

situation.

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
CURRENT ASSET TURNOVER RATIO=
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺

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DETERMINANTS OF WORKING CAPITAL

The amount of working capital is depends upon following factors

• NATURE OF BUSINESS

Some businesses are such due to their very nature, that their requirement of fixed capital is more

rather than working capital. These businesses sell services and not the commodities and that too on

cash basis. As such, no funds are blocked in piling inventories and also no funds are blocked in

receivables. E.g. public utility services like railways, infrastructure oriented project etc. there

requirement of working capital is less. On the other hand, there are some businesses like trading

activity, where requirement of fixed capital is less but more money is blocked in inventories and

debtors.

• LENTH OF PRODUCTION CYCLE

In some business like machine tools industry, the time gap between the acquisition of raw material

till the end of final production of finished products itself is quite high. As such amount may be

blocked either in raw material or work in progress or finished goods or even in debtors. Naturally

there need of working capital is high.

• SIZE AND GROWTH OF BUSINESS

In very small company the working capital requirement is quit high overhead, higher buying and

selling cost etc. as such medium size business positively has edge over the small companies. but if

the business start growing after certain limit, the working capital requirements may adversely affect

by the increasing size.

• BUSINESS CYCLE

If the company is the operating in the time of boom, the working capital requirement may be more

as the company may like to buy more raw material, may increase the production and sales to take

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the benefit of favourable market, due to increase in the sales, there may more and more amount of

funds blocked in stock and debtors etc. similarly in the case of depressions also, working capital

may be high as the sales terms of value and quantity may be reducing, there may be unnecessary

piling up of stack without getting sold, the receivable may not be recovered in time etc.

• TERMS OF PURCHASE AND SALES

Some time due to competition or customs, it may be necessary for the company to extend more and

more credit to consumers, as result which more and more amount is locked up in debtors or bills

receivable which increases the working capital requirements. On the other hand, in the case of

purchase, if the credit is offered by suppliers of goods and services, a part of the working capital

requirement may be financed by them, but it is necessary to purchase on cash, the working capital

requirement will be higher.

• PROFITABILITY

The profitability of the business may be vary in each and every individual case, which is in turn its

depend on numerous factors, but high profitability will positively reduce the strain on working

capital requirement of the company, because the profits to the extent that they earned in cash may

be used to meet the working capital requirement of the company.

• OPERATING EFFICIENCY

If the business is carried on more efficiently, it can operate in profit which may reduce the strain on

working capital; it may ensure proper utilization of existing resources by eliminating the waste and

improved co-ordination etc.

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NEED OF WORKING CAPITAL MANGEMENT

The need for working capital gross or current assets cannot be over emphasized. As already observed, the

object of financial decision making is to maximize the shareholder wealth. To achieve this, it is necessary

to generate sufficient profits can be earned will naturally depend upon the magnitude of the sales among

other things but sales cannot convert into cash. There is a need for working capital in the form of current

assets to deals with the problem arising out of lack of immediate realization of cash against goods sold.

Therefore sufficient working capital is necessary to sustain sales activity. Technically this is referring to

operating or cash cycle. If the company has certain amount of cash, it will be required for purchasing the

raw material may be available on credit basis. Then the company has to spend some amount for labour and

factory overhead to convert the raw material in work in progress and ultimately finished goods. These

finished goods convert in to sales on credit basis in the form of sundry debtors. Sundry debtors are

converting into cash on credit period. Thus some amount of cash is blocked in raw materials, work in

progress, finished goods, and sundry debtors and day to day cash requirement. However some part of

current assets may be financed by the current liabilities also. The amount required to be invested in this

current assets is always higher than the funds available from current liabilities. This is the precise reason

why the needs for the working capital arise.

GROSS WORKING CAPITAL AND NET WORKING CAPITAL

There are two concepts of working capital management

• GROSS WORKING CAPITAL

Gross working capital refers to the firm’s investment in current assets. Current assets are the assets

which can be convert in to cash within year includes cash, short term securities, debtors, bills

receivable and inventory.

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• NET WORKING CAPITAL

Net working capital refers to the difference between current assets and current liabilities, Current

liabilities are those claims of outsiders which are expected to mature for payment within an

accounting year and include creditors, bills payable and outstanding expenses. Net working capital

can be positive or negative efficient working capital management requires that firms should operate

with amount of net working capital, the exact Amount varying from firm to firm and depending,

among other things; on nature of industries. Net working capital is necessary because the cash

outflow and inflow do not coincide. The cash outflow resulting from payment of current liabilities

is relatively predictable. The cash inflow is however difficult to predict. The more predictable the

cash inflows are, the less net working capital will be required; the concept of working capital was,

first evolved by Karl Marx. Marx used the term variable capital' means outlays for payrolls

advanced to workers before the completion work. He compared this with 'constant capital' which

according to him is nothing but 'dead labour'. This 'variable capital' is nothing wage fund which

remains blocked in terms of financial management, in working-process along with other operating

expenses until it is released through sale of finished goods. Although Marx did not mentioned that

workers also gave credit to the firm by accepting periodical payment of wages which funded a

portioned of work in progress the concept of working capital, as we understand today was

embedded in his ‘variable capital’.

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TYPES OF WORKING CAPITAL

TYPES OF
WORKING
CAPITAL

ON THE ON THE
BASIS OF BASIS OF
VALUE TIME

GROSS NET REGULAR TEMPORARY

WORKING WORKING WORKING WORKING
CAPITAL CAPITAL CAPITAL CAPITAL

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 COMPANY PROFILE

MAHINDRA & MAHINDRA LIMITED

TYPE - PUBLIC

INDUSTRY - AUTOMOTIVE

TRADED AS - BSE: 500520

NSE: M&M

BSE SENSEX CONSTITUENT

FOUNDED - 02 OCTOBER 1945 (74 year ago)

FOUNDERS - J.C.MAHINDRA

K.C. MAHINDRA

M.G. MAHINDRA

HEADQUARTERS - MUMBAI, MAHARASHTRA, INDIA

KEY PEOPLE - ANAND MAHINDRA (Chairman)

PAWAN KUMAR GOENKA (MD)

PRODUCTS - AUTOMOBILES,

COMMERCIAL VEHICLES,

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 TWO-WHEELERS

PARENT - MAHINDRA GROUP

WEBSITE - www.mahindra.com

HISTORY OF MAHINDRA & MAHINDRA

Mahindra & Mahindra Limited is an Indian multinational car manufacturing corporation headquartered

in Mumbai, Maharashtra, India. Mahindra & Mahindra was founded as a steel trading company on October

2, 1945 in Ludhiana as Mahindra & Muhammed by brothers Harikrishnan and Jayakrishnan and Jagdish

Chandra Mahindra along with Malik Ghulam Muhammad. Anand Mahindra, the present Chairman of

Mahindra Group, is the grandson of Jagdish Chandra Mahindra. After India

gained independence and Pakistan was formed, Muhammad immigrated to Pakistan. Muhammad acquired

Pakistani citizenship and settled in Lahore, and in 1948 become Pakistan's first finance minister.

Thereafter, the company changed its name to Mahindra & Mahindra in 1948. It eventually saw a business

opportunity in expanding into manufacturing and selling larger MUVs, starting with the assembly under

licence of the Willys Jeep in India. Soon established as the Jeep manufacturers of India, the company later

commenced manufacturing light commercial vehicles (LCVs) and agricultural tractors.

Over the past few years, the company has taken interest in new industries and in foreign markets. They

entered the two wheeler industry by taking over kinetic motors in India. M&M also has a controlling stake

in the reva electric car company and acquired South Korea’s ssang yong motor company in 2011. In 2010-

2011 M&M entered in micro drip irrigation with the takeover of EPC industries ltd in Nashik.

In October 2014, Mahindra and Mahindra acquired a 51% controlling stake in Peugeot Motocycles and

acquired a 100% controlling stake in October 2019.

In December 2015, Mahindra and Mahindra Ltd and affiliate Tech Mahindra Ltd, through a special

purpose vehicle (SPV), have agreed to buy a 76.06% stake in Italian car designer Pininfarina SpA, for

€25.3 million (around Rs.186.7 crore).

In January 2017, Mahindra and Mahindra Ltd (M&M) acquired a 75.1 equity stake in Hisarlar Makina

Sanayi ve Ticaret Anonym Şirketi (Hisarlar), a farm equipment company, marking its entry into Turkey.
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In September 2017 Mahindra and Mahindra Ltd acquired Erkunt Traktor Sanayii AS, a Turkish tractor

maker and its foundry business for 800 crore. Its major competitors in the Indian market include Maruti

Suzuki and Tata Motors

SHARE HOLDING

SHAREHOLDERS SHAREHOLDING

PROMOTERS 19.84%

MUTUAL FUNDS 9.59%

FOREIGN INSTITUTIONAL INVESTOR 34.22%

OTHER INSTITUTIONS 18.46%

PUBLIC 13.49%

OTHER 4.4%

TOTAL 100.0%

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 RESEARCH METHODOLOGY

• Research methodology is a way to systematically solve the research problem.

• It may be understood as a science of studying now research is done systematically.

• In that various steps, those are generally adopted by a researcher in studying his problem along with

the logic behind them.

• It is important for research to know not only the research method but also know methodology.

• “The procedures by which researchers go about their work of describing, explaining and predicting

phenomenon are called methodology”.

• All this means that it is necessary for the researcher to design his methodology for his problem as

the same may differ from problem to problem.

• Data collection is important step in any project and success of any project will be largely depend

upon now much accurate you will be able to collect and how much time, money and effort will be

required to collect that necessary data, this is also important step.

• Data collection plays an important role in research work. Without proper data available for analysis

you cannot do the research work accurately.

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 DATA COLLECTION

TYPES OF DATA COLLECTION

Data can be defined as the quantitative or qualitative values of a variable. Data is plural of datum which

literally means to give or something given. Data is thought to be the lowest unit of information from which

other measurements and analysis can be done. Data can be numbers, images, words figures, facts or ideas.

Data in itself cannot be understood and to get information from the data one must interpret it into

meaningful information. There are various methods of interpreting data. Data sources are broadly classified

into primary and secondary data.

IMPORTANCE OF DATA AND DATA COLLECTION

Data is one of the most important and vital aspect of any research studies. Researchers conducted in

different fields of study can be different in methodology but every research is based on data which is

analyzed and interpreted to get information.

Data is the basis unit in statistical studies. Statistical information like census, population variables, health

statistics, and road accidents records are all developed from data.

Data is important in computer science. Numbers, images and figures in computer are all data.

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 TYPES OF DATA

PRIMARY DATA

Primary data is information collected directly from the first-hand experience. This is the information that

you gather for the purpose of a particular research project. Primary data collection is a direct approach that

fits to specific company needs. It can be a long process but does provide important first-hand information

in many business cases. Primary data is original data – from the first source. It is like raw material.

Most popular examples of primary data sources are:

• Interview (personal interview, telephone, e-mail)

• Self-administered surveys and questionnaires

• Field observation

• Experiments

• Life histories

• Action research

• Case studies

• Diary entries, letters, and other correspondence

• Eyewitness accounts

• Ethnographic research

• Personal narratives, memoirs.

Advantages of primary data:

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 • Resolve specific research issues

Performing your own research allows you to address and resolve issues specific to your own

business situation. The collected information is the exact information that the researcher wants to

know and he reports it in a way that benefits the specific situation in an organization. Marketers and

researchers are asked to find data regarding specific market instead of finding data for the mass

market. This is the main difference from secondary data.

• Better accuracy

Primary data is much more accurate because it is directly collected from a given population.

• Higher level of control

the marketer can control easily the research design and method. In addition, you have a higher level

of control over how the information is gathered.

• Up-to-date information

the primary market research is a great source of latest and up-to-date information as you collect it

directly from the field in real time. Usually, secondary data is not so up-to-date and recent.

• You are the owner of the information

Information collected by the researcher is their own and is typically not shared with others. Thus,

the information can remain hidden from other current and potential competitors.

Disadvantages:

• More expensive – it could be very expensive to obtain primary data collection because the

marketer or the research team has to start from the beginning. It means they have to follow

the whole study procedure, organizing materials, process and etc.

• Time consuming – it is am matter of a lot of time to conduct the research from the beginning to the

end. Often it is much longer in comparison with the time needed to collect secondary data.

• Can have a lot of limits - Primary data is limited to the specific time, place or number of

participants and etc. To compare, secondary data can come from a variety of sources to give

more details

What is secondary data?

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Secondary data is the data that have been already collected for another purpose but has some relevance to

your research needs. In addition, the data is collected by someone else instead of the researcher himself.

Secondary data is second-hand information. It is not used for the first time. That is why it is called

secondary. Secondary data sources provide valuable interpretations and analysis based on primary

sources. They may explain in details primary sources and often uses them to support a specific thesis or a

point of view.

Most common examples of secondary data sources are:

• Previous research

• Mass media products

• Government reports

• Official statistics

• Web information

• Historical data

• Journal articles

• Biography

• Research analysis

• Financial sources such as profit and loss statements balance sheets, inventory records, sales

records and etc.

Advantages of Secondary Data:

Time and Cost Effective

Generally, the secondary data can be collected very easily where researchers have to find the source

of that data and then collect it at all. Besides, the time and cost required to collect this type of data is very

lesser as compared to that of primary data. Hence, it can be said that it is primary advantage of secondary

data. This thing helps the researchers to collect the data easily and without spending much time and

financial resources.

Ease of Access

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In order to access good secondary data, the marketers visit libraries or the places where the secondary data

can be found easily. Besides, internet has also made the secondary data also very much easier to access and

it can be said as another advantage of the secondary data. As an example of a research study, the literature

review can be said as a secondary data which can be accessed very easily.

Disadvantages of Secondary Data

The disadvantages of the secondary data can include a number of things. Following are some of them:

• Not Specific to One’s Needs

In many forms of the secondary research data, it is not specific to the needs of a researcher.

Therefore, the researcher cannot only rely on the secondary research data and it is not of much use to him.

It can be exemplified better by stating a simple scenario. For example, a person or organization that

collected the data for it will be saved as secondary data for future researches. However, the future

researchers who will use that data as secondary data might not find it appropriate and specific to their

needs.

• Biasness

The secondarily collected data is usually collected by someone else than the one who uses it.

Hence, generally the secondary data is biased in the favour of one who collected it and might not

necessarily meet with the requirements of another researcher. In addition, biasness can also refer to the

disadvantage in terms of the researcher manipulating the secondary data.

• Lack of Availability

This can also be said as other disadvantages where the secondary data might not be available and

accessible easily. Sometimes, it can be the case that researcher may not be able to find the exactly relevant

and appropriate secondary available data. Sometimes, a researcher conducting a study on a particular topic

does not find himself in a position to find the data which addresses his research question and purpose in a

proper manner.

• Time Lag Issues

Information which is collected from secondary sources such as books and historical surveys might not sync

with the times and it can change drastically. Hence, this can emerge as another disadvantage of the
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secondary research data where the time lag issue rises and as a result, it can be highly risky for the business

or a project.

In my project report I have used secondary data for analysis of working capital management of Mahindra

& Mahindra.

OBJECTIVIES OF THE STUDY

Study of the working capital management is important because unless the working capital is

managed effectively, monitored efficiently planed properly and renewed periodically at regular intervals to

remove bottlenecks if any of the company cannot earn profits and increase its turnover. With this primary

objective of the study, the following further objectives are framed of a depth analysis.

• To study the working capital management of Mahindra & Mahindra.

• To gain familiarity with various components of working capital in Mahindra & Mahindra.

• To study the liquidity position through various working capital ratios.

• To offer suitable suggestions based on findings of the study.

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 NEED OF THE STUDY

• Well-managed working capital is crucial to the running of a healthy and successful business.

• An important part of working capital management is a company’s cost structure. Working capital

represents the liquidity available to a business.

• In this background the present study is needed to know the significance of the working capital is for

Mahindra & Mahindra, how the Mahindra & Mahindra managed the working capital for the smooth

running of the business.

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 RELEVANCE OF STUDY

A company spends most of their time and effort on day to day working capital management. Still,

due to the inability of financial mangers to properly plan and control the current assets and current

liabilities of their company, the failure of business can be attributed to the inefficient working capital

management. Inadequate working capital leads to company bankruptcy. On the other hand, too much

working capital results in wasting cash and ultimately the decrease in the profitability. A decrease in

profitability can leads to the decrease in the company share prices. So it is important to for the company to

make effective working capital for the betterment of the company.

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 HYPOTHESIS OF THE STUDY

A hypothesis is a tentative statement about the relationship between two or more variables. Remember, a

hypothesis does not have to be correct. While the hypothesis predicts what the researchers expect to see,

the goal of research is to determine whether this guess is right or wrong.

• Null Hypothesis H0:

1) the firm is facing difficulty in paying short term debt.

2) the current liabilities are increasing than current asets year by year.

• Alternative Hypothesis H1 :

1) the firm is not facing difficulty in paying short term debt.

2) the current liabilities are decreasing than current asets year by year.

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 BALANCE SHEET

PARTICULAR MARCH 19 MARCH 18 MARCH 17 MARCH 16 MARCH 15

CURRENT ASSETS

CURRENT INVESTMENT 2,983.96 3,937.49 3,606.70 2,385.98 1,765.42

Inventories 3,839.27 2,701.69 2,758.01 2,687.93 2,437.57

Trade receivables 3,946.30 3,172.98 2,938.84 2,511.64 2,558.03

Cash And Cash Equivalents 3,731.66 2,893.73 1,687.48 2,287.03 2,064.77

Short Term Loans And 673.40 975.16 506.51 486.76 773.10

Advances

Other Current Assets 2,896.47 2,793.42 1,110.46 1,276.34 529.32

TOTAL CURRENT 18,071.06 16,474.47 12,608.00 11,635.68 10,128.21

ASSETS

CURRENT LIABILITIES

Short Term Borrowings 448.54 668.47 538.88 348.13 106.25

Trade Payables 9,678.15 8,603.40 6,881.08 6,674.71 5,365.45

Other Current Liabilities 3,518.71 3,383.95 1,648.61 2,412.94 2,041.13

Short Term Provisions 688.67 667.39 565.48 408.54 1,461.44

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TOTAL CURRENT 14,334.07 13,323.21 9,634.05 9,844.32 8,974.27

LIABILITIES

DATA ANALYSIS AND INTERPRETATION

LIQUIDITY RATIOS:-

• CURRENT ASSET:-

YEAR CURRENT ASSETS

MARCH 15 10128.21

MARCH 16 11635.68

MARCH 17 12608

MARCH 18 16474.47

MARCH 19 18071.0

INTERPRETATION

34
Current assets of the company are increasing continuously from 10128.21 to 18071 from the year march

2015 to march 2019.

• CURRENT LIABILITY:-

YEAR CURRENT LIABILITIES

MARCH 15 8974.27

MARCH 16 9844.32

MARCH 17 9634.05

MARCH 18 13323.21

MARCH 19 14334.07

INTERPRETATION

35
Current liabilities of the company are increasing continuously from 8974.27 to 14334.07 from the year

march 2015 to march 2019. When companies have minimum liabilities it creates a better goodwill in

market. High current liabilities indicate that company is using credit facilities by creators.

• CURRENT RATIO:-

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺
CURRENT RATIO = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS CURRENT LIABILITIES RATIOS

MARCH 15 10128.21 8974.27 1.13

MARCH 16 11635.68 9844.32 1.18

MARCH 17 12608 9634.05 1.31

MARCH 18 16474.47 13323.21 1.24

MARCH 19 18071.0 14334.07 1.26

INTERPRETATION

36
Current ratio of the company is increasing continuously from 1.13 to 1.31 from the year march 2015 to

march 2017. And it decreases from 1.31 to 1.24 from march 2017 to march 2018 and it further slightly

increase from 1.24 to 1.26 from march 2018 to march 2019. As the current ratio in slightly decline from

March 2017 to march 2019 the company needs to improve its position.

• QUICK RATIO:-

𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻−𝑰𝑵𝑽𝑬𝑵𝑻𝑶𝑻𝒀
QUICK RATIO = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS - CURRENT LIABILITIES RATIOS

INVENTORY

MARCH 15 7690.64 8974.27 0.86

MARCH 16 8947.75 9844.32 0.91

MARCH 17 9849.99 9634.05 1.02

MARCH 18 13772.78 13323.21 1.03

MARCH 19 14231.79 14334.07 0.99

1.05 1.03
1.02

1 0.99

0.95
0.91
0.9
0.86
0.85

0.8

0.75
2015 2016 2017 2018 2019

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INTERPRETATION

Quick ratio of the company is increasing continuously from 0.86 to 1.03 from the year march 2015 to

march 2018 but it slightly decreases from 1.03 to 0.99 from March 2018 to March 2019. A company

should have quick ratio greater than 1 so that it can pay for its current liabilities easily. The company has to

improve its quick ratio for smooth pay of current liabilities.

• WORKING CAPITAL:-

WORKING CAPITAL = 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺 – 𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑳𝑰𝑨𝑩𝑰𝑳𝑰𝑻𝑰𝑬𝑺

YEAR CURRENT ASSETS CURRENT LIABILITIES RATIOS

MARCH 15 10128.21 8974.27 1153.94

MARCH 16 11635.68 9844.32 1791.36

MARCH 17 12608 96634.05 2973.95

MARCH 18 16474.47 13323.21 3151.26

MARCH 19 18071.0 14334.07 3736.99

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INTERPRETATION

Working capital of the company is increasing continuously from 1153.94 to 3736.99 from the year march

2015 to march 2019. From this we can conclude that the current assets of the company are higher than the

current liabilities.

• INVENTORY TURNOVER RATIO:-

INVENTORY TURNOVER = 𝑺𝑨𝑳𝑬𝑺

𝐈𝐍𝐕𝐄𝐍𝐓𝐎𝐑𝐘

YEAR SALES INVENTORY RATIOS

MARCH 15 38391.31 2437.57 15.98

MARCH 16 40875.07 2687.93 15.21

MARCH 17 43785.36 2758.01 15.97

MARCH 18 48685.55 2701.69 18.02

MARCH 19 53614 3839.27 13.96

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INTERPRETATION

Inventory turnover ratio of the company is increasing from 15.98 to 18.02 from the year march 2015 to

march 2018. But in March 2018 to march 2019 it slightly decreases from 18.02 to 13.96. The company has

to improve its position so that the stocks are frequently sold and less amount of money is required to

finance the inventory.

• WORKING CAPITAL TURNOVER RATIO :-

𝑺𝑨𝑳𝑬𝑺
WORKING CAPITAL =
𝑾𝑶𝑹𝑲𝑰𝑵𝑮 𝑪𝑨𝑷𝑰𝑻𝑨𝑳

YEAR NET SALES WORKING CAPITAL RATIOS

MARCH 15 38391.31 1153.94 33.27

MARCH 16 40875.07 1791.36 22.81

MARCH 17 43785.36 2973.95 14.72

MARCH 18 48685.55 3151.26 15.45

MARCH 19 53614 3736.99 14.35

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INTERPRETATION

Working capital turnover ratio of the company is decreasing continuously from 33.27 to 14.35 from the

year march 2015 to march 2019. This is because the current liabilities are increasing therefore the working

capital turnover ratio is decreasing.

• CURRENT ASSET TURNOVER RATIO:

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
CURRENT ASSET TURNOVER RATIO=
𝑪𝑼𝑹𝑹𝑬𝑵𝑻 𝑨𝑺𝑺𝑬𝑻𝑺

YEAR NET SALES CURRENT ASSETS RATIOS

MARCH 15 38391.31 10128.21 4.06

MARCH 16 40875.07 11635.68 3.75

MARCH 17 43785.36 12608 3.76

MARCH 18 48685.55 16474.47 3.00

MARCH 19 53614 18071.0 2.97

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INTERPRETATION

Current assets turnover ratio of the company is decreasing continuously from 4.06 to 2.97 from the year

march 2015 to march 2019. High current assets indicate the capability of the organisation to achieve

maximum sales with the minimum investment in current assets. But the current asset turnover ratio is

decreasing so the company needs more source of finance.

• DEBETORS TURNOVER RATIO:-

𝑵𝑬𝑻 𝑺𝑨𝑳𝑬𝑺
Debtors Turnover Ratio =
𝑨𝑽𝑬𝑹𝑨𝑮𝑬 𝑨𝑪𝑪𝑶𝑼𝑵𝑻𝑺 𝑹𝑬𝑪𝑬𝑰𝑽𝑨𝑩𝑳𝑬

YEAR RATIO

MARCH 15 15.37

MARCH 16 16.13

MARCH 17 16.17

MARCH 18 15.93

MARCH 19 15.06

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INTERPRETATION

Debtor’s turnover ratio of the company is increasing continuously from 15.37 to 16.17 from the year march

2015 to march 2017. But it decreases from 16.17 to 15.06 from March 2017 to March 2019. This means

that the average collection is taking longer time.

LIMITATIONS OF THE STUDY

• This project has completed with the annual reports; it just constitutes one part of data collection
i.e secondary data.

• This project is based on 5 years annual report. Conculsion and recommendation are based on such

limited data. The trend of last 5 years may or may not reflect the real working capital position of

the company.

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• Many facts and data are such that they are not to be disclosed because of the confidential nature

of the same.

• There may be some fractional differences in the calculated ratios.

• Also this project is completely based on secondary data collected from various sources like

internet, books, etc.

CONCLUSION

• Working capital of the company is increasing and showing positive working capital per year.

It shows goods liquidity position.

• Positive working capital indicates that company has the ability of payment of short term debts.

• Working capital of the company increases because the current assets of the company are more

than the current liabilities of the company.

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• Current ratio of the company is increasing which means company has the ability to pay the

short terms debts.

• Quick ratio is less than 1 in march 2019 which means the company may not able to fully pay off

its current liabilities.

• Current assets turnover ratio of the company is decreasing means the company needs more finance.

• Debtor’s turnover ratio is decreasing means the average collection is taking longer time.

• Testing of hypothesis H1

• Alternative Hypothesis H1 :

1) the firm is not facing difficulty in paying short term debt.

2) the current liabilities are decreasing than current asets year by year.

• From the analysis it is proven that the firm is not facing difficulty in paying the short term debt .

Hence we accept the alternative hypothesis.

• From the analysis it is proven that the firm current liability is decreasing than current assets year

by year. Hence we accept the alternative hypothesis.

SUGGESTIONS

• The company should follow the present working capital.

• The company should maintain the same current ratio.

• The company should increase its quick ratio so that it is able to pay off its current liabilities.

• The company should increase its current assets turnover ratio.

• Debtor’s turnover ratio should be increase.

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 BIBLIOGRAPHY

Book preferred:-

• FINANCIAL MANAGEMENT-BY.KHAN&JAIN

Magazine:-

• Business Today

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 • Business world

Newspapers:-

➢ The Time of India

➢ Economics Times

Web Site

✓ www.scribd.com

✓ www.google.com

✓ www.wikipedia.com

✓ www.mahindra&mahindra.com

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