A

PROJECT

ON

“STUDY OF WORKING CAPITAL MANAGEMENT OF PARLE

COMPANY WITH REFERENCE TO FINANCIAL FEASIBLE FOR THE
PERIOD FY2016-FY2020”

Submitted to

G S COLLAGE, Nagpur

In partial fulfillment of requirement of

BACHELOR OF BUSINESS ADMINISTRATION

Submitted by

MAHIMA SONSARE

Under the guidance of

Dr. GEETA NAIDU

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

1|Page
 CERTIFICATE
This is to be certify that the project entitled ““Study of working capital
management of Parle company with reference to financial feasible for
the period fy2016-2020”” prepared by “Mahima Sonsare” submitted in
partial fulfillment of BACHELOR OF BUSINESS ADMINISTRATION degree
examination, has not been submitted for any other examination and
does not form part of any other course undergone by the candidate.

It is further certified that she has completed her project as prescribed

by G S Collage,Nagpur.

Name of Project Guide Dr.. GEETA NAIDU

(Co-ordinator)

Place: Nagpur

Date: 30-06-2021

2|Page
 DECLARATION
I here-by declare that the project entitled ““Study of
working capital management of Parke company with
reference to financial feasible for the period fy2016-
2020”” has been completed by me in partial fulfillment of
BACHELOR OF BUSINESS ADMINISTRATION degree
examination as prescribed by G S Collage, Nagpur and
has not been submitted for any other examination and
does not form the part of any other course undergone by
me.

Place: Nagpur
Date:30-06-2021

3|Page
 ACKNOWLEDGEMENT
With immense pride and sense of gratitude, I take this golden
opportunity to express my sincere regards to Dr.N Y Khandait ,
Principal, G. S. College, Nagpur.
I am extremely thankful to my project guide (Dr. Afsar Sheikh)
for his/her valuable guidance throughout the project. I tender
my sincere regards to him for giving me his outstanding
guidance, suggestions and invaluable encouragement which
helped me in completion of the project. I also thank the Course
Coordinator Dr.. GEETA NAIDU for kind support.
I will fail in my duty if I do not thank the Non-Teaching staff of
the college for their Cooperation. I would like to thank all those
who helped me completing the project successfully.

Place: NAGPUR
Date: 30-06-2021
4|Page
 Contents
SR NO. PARTICULARS PAGE NO.
1. Introduction 6

2. Company Profile 25

3. Research Study 29

➢ OVERVIEW OF THE TOPIC 30

➢ PROBLEM DEFINITION 31

➢ OBJECTIVES OF THE STUDY 32

➢ HYPOTHESIS OF THE STUDY 33

➢ SCOPE OF THE STUDY 34

➢ THEORETICAL PERSPECTIVE 35

4. RESEARCH METHODOLOGY 36

5. DATA COLLECTION 42

6. DATA ANALYSIS AND INTERPRETATION 47

7. CONCLUSION 58

8. FINDINGS AND SUGGESTIONS 60

9. BIBLIOGRAPHY 63

10. ANNEXURES 65

➢ SYNOPSIS 68

5|Page
 CHAPTER 01.
INTRODUCTION

6|Page
Working capital management is significant in Financial Management due to the
fact. That it plays a pivotal role in keeping the wheels of a business enterprise
running. Working capital management is concerned with short-term financial
decisions. Shortage of funds for working capital has caused many businesses to
fail and in many cases, has retarded their growth. The need for skilled working
capital management has thus become greater in recent years. A firm invests a
part of its permanent capital in fixed assets and keeps a part of it for working
capital i.e. for meeting day to day requirements. The requirement of working
capital varies from firm to firm depending upon the nature of the business,
production policy, market condition and seasonality of its operations, conditions
of supply etc. Working capital for a company is like a blood to a human body.
Working capital management if carried out effectively, efficiently and consistently
ensures the health of the organization. A company invests its funds for long term
purposes and for short term or current assets to carry on its day to day

Operations are called as working Capital. Working capital refers to a firm's

Investment in short term assets viz. cash, short term securities, amounts
receivables and inventory of raw materials, finished goods.

Working capital is defined as the excess of current assets over current liabilities.
All elements of working capital are quick moving ion nature and therefore require
constant monitoring. Working capital is also known as circulating capital,
fluctuating capital and revolving capital. The magnitude and composition of
working capital keeps on changing continuously in course of action of the
business. If working capital is not properly managed then it results in unnecessary
blockage of scarce resources of a company. Therefore Finance Manager should
give utmost care in management of working capital.

7|Page
 Definations

’’Working capital is the amount of funds necessary to cover the cost of

operating the enterprise." -SHUBIN

"Working capital is descriptive of that capital is not fixed .but, the more
common use of working capital use of working capital is to consider it
as the difference between the book value of current asset and current
liabilities." -HOAGLAND

"Circulating capital means current asset of company that are changed in

ordinary course of business from one from other." -GERESTENBERGS

8|Page
COMPONENTS OF WORKING CAPITAL

Current Assets: Current assets are those assets which are convertible into cash
within a period of one year and are those which are required to meet the day to
day operations of the business. The working capital management, to be more
precisely the management of current assets. The current assets are cash or near
cash resource.

These include:

• Cash and bank balance.

• Temporary investments.

• Short-term advances.

• Prepaid expenses.

• Receivables.

• Inventory of raw material, stores.

• Inventory of work in progress.

• Inventory of finished goods.

Current Liabilities: Current liabilities are the claims of outsiders which expected to
mature for payment within cash resources . These include:

• Creditors for goods purchased.

• Outstanding expenses.

• Short-term borrowings.

• Advances received against sales.

• Taxes and dividends payable. Other liabilities maturing within a year.

9|Page
CLASSIFICATION AND KINDS OF WORKING CAPITAL

WORKING CAPITAL CAN BE CLASSIFIED IN TWO WAYS

On the basis of this concept, working capital is classified as gross working capital
and net walking capital. This classification is important from the point of view of
the financial manager. On the basis of time, working capital may be classified as
permanent or fixed working capital and temporary or variable working capital.

Gross working capital

The gross working capital refers to firm's investment in current assets. According
this concept working capital refers to firm's investment in current assets. The
amount of current liabilities is not deducted from the total current assets. The

10 | P a g e
amount of current liabilities is not deducted from the total of current assets. The
concept of gross working capital is advocated for the following reason

• Profits of the firm are earned by making investments of the firm in its fixed and
current assets. This suggests the part of the earning relate to investment in
current assets. Therefore, aggregate of current assets should be taken to mean
the working capital.

• The management is more concerned with the total current assets as they
constitute the total funds available for operating purposes than with the
resources from which the fund come.

An increase in the overall investment in the enterprise also brings an increase in

the working capital.

Net Working Capital:

The net working capital refers to the excess of current assets over its current
liabilities. It refers to the difference between current assets and currents
liabilities. The net working capital is the qualitative concept which indicates the
liquidity position of the firm and the extent to which working capital needs of the
firm may be financed by permanent sources of the funds. A portion of net
working capital should be financed through permanent source of fund.

Permanent and Temporary working capital Permanent working capital:

The magnitude of the investment in working capital may increase or decrease

over a period of time according to the level of production. But there is a need for
minimum level of working capital to carry its business irrespective of change in
the level of sales or production. Such minimum level of working capital is called as
the permanent working capital.

11 | P a g e
Temporary working capital:

It is also called as fluctuating -working capital It depends upon the changes in

production and sales over and above the permanent working capital. It is the
extra working capital needed to support the changing business activities.

Positive & Negative Working Capital

liabilities

Sometimes the net working capital turns to be negative when current liabilities
are exceeding the current assets. The negative working capital may adversely
affect the operations of the firm and its profitability. The chronic negative
working capital situation will lead to closure of the business and the enterprise is
said to be technically insolvent

Cash Working Capital:

It is one, which is calculated from the items appearing in the Profit and Loss
Account. It shows the real flow of money or value at a particular time and
considered to be most realistic approach in working capital management. It is the
basic of the operation cycle concept, which has assumed a great importance in
financial management in recent year. The reason is that the cash working capital
indicates the adequacy of the cash flow which is an essential pre requisite of a
business.

Principles of working capital

There are some principles of sound working capital management

1) Principle of Risk Variation:

Risk here refers to inability of a firm to meet its obligation when they become due
for payment. Large investment in current assets with less dependence on a short

12 | P a g e
term borrowing increase liquidity, reduces dependence on short term borrowing
increases liquidity, reduces risk.

On the other hand less investment in current assets and greater dependence on
debt increase the risk reduces liquidity and increases profitability. In other word
these is a definite inverse relationship between the degree of risk and
profitability.

A conservative management prefers to minimize risk by maintaining a higher level

of current assets or working capital while a liberal management should be to
establish a suitable trade off

2) Principles of cost of capital

The various sources of rising of working capital finance have different cost of
capital and the degree of risk involved. Generally higher the risk lower is the cost
and lower the risk higher is the cost..

3) Principle of Equity position:

According this principle, the amount of working capital invested in each

component should be adequately justified by a firm's equity position. Every rupee
invested in the current position.

4) Principle of maturity of payment

This principle is concerned with planning he sources of finance for working

capital.

WORKING CAPITAL CYCLE

The working capital cycle is also known as operating cycle. It refers to the
duration between the firm's payment of cash for raw material, entering into
production and inflow of cash from debtors and realization of receivables. Simply
speaking, operating cycle is the duration between the outflow of cash and inflow
of cash and this may be evidenced from the following working capital cycle.

13 | P a g e
The above and network diagram may offer a clear picture of a complete working
capital i.e. it is a cash phenomenon. In the diagram, raw material, stock refers to
material only. In work in process, components involve arc raw material, wages,
and overhead more specifically manufacturing of material, wages and overheads
inclusive of factory, office and administration and selling and distribution. Debtors
include material, wages, overheads and profits. Credit involves for the
components of raw material, etc. something a contingency margin is also given
while estimating the working capital requirement.

Cash

Working
Debtors Capital Creditprs
Cycle

Inventory

SOURCES OF WORKING CAPTAL

Mainly there are two sources of working capital:

working capital

In any concern, a part of the working capital investments are as investment in

fixed assets. This is so because there is always a minimum level of current assets,
which are copiously required by the enterprise to carry out its day-to-day
business operation and this minimum, cannot be expected to reduce at any time.

14 | P a g e
Similarly, some amount of working capital may be required to meet the seasonal
demands and some special exigencies such as rise in prices, strikes, etc. this gives
rise to short term working capital which is required for day to day transaction
also.

The fixed proportion of working capital should be generally financed from the
fixed capital sources while the temporary or variable working capital equipment
may be met from the short term sources of capital.

LONG TERM SOURCES SHORT TERM LOANS

1) Shares 1) Commercial Banks.

2) Debentures 2) Indigenous Banks.
3) Public Deposits 3) Trade Creditors.
4) Ploughing back of Profits 4) Installment Credit.
5) Loans from Financial 5) Advances.
institution 6) Account receivable.

OPERATING CYCLE CONCEPT

Working capital is the life blood of the business, without which the fixed assets
are inoperative. Working capital circulates in the business and the current assets
change from one form to another. Cash used for procurement of raw materials
and stores items and for payment of operating expenses, then converted into
work in progress, then to finished goods. When the finished goods are sold on
credit terms receivables balances are formed. When the receivables are collected,
it is again converted into cash. The need for working capital arises because of the
time gap between production of goods and their actual realisation after sales .
This time gap is called as the operating cycle or working capital cycle.

15 | P a g e
Operating cycle can be ascertained as follows: (Days)

Raw material holding period XX

Work-in-progress period XX

Finished goods holding period XX

Receivables collection period XX

Gross operating cycle XX

Less: Creditors payment period XX

Net operating cycle XX

16 | P a g e
The above said period are ascertained as follows:

Average raw material stock

Average consumption of raw material/365

-in-progress period:-

Average work-in-progress

Average cost of goods sold/365

Average finished goods stock

Average cost of goods sold/365

Average receivables

Average sale/365

Average creditors

Average purchase of raw material/365

17 | P a g e
The operating cycle of Parle Company for 2016-17 is worked out as follows:

Raw material holding period Days

(51)

Work-in-progress period 13

Finished goods holding period 24

Receivables collection period 64

Gross operating cycle 152

Less: Creditors payment period 61

Less: Creditors payment period 91

In General

O-R+W+F+D-C

Where O= Operating cycle (in days)

R= Raw material holding period

W=Work-in-progress period.

F =Finished goods period.

D= Debtors collection period.

C=Creditors payment period.

18 | P a g e
 Reasons for prolonged operating cycle

• Purchase of raw materials in excess/short of requirements.

• Buying inferior defective material.

• Failure to get trade discount, cash discount.

• Inability to purchase during seasons.

• Defective inventory policy.

• Lack of production planning, coordination and control.

• Mismatch between production policy and demand.

• Use of outdated machinery and technology.

• Defective credit policy and slack collection policy.

• Inability to get credit from suppliers, employees.

• Lack of proper monitoring of external environment.

OPERATING CYCLE MANAGEMENT

The aim of every management is to reduce the length of operating cycle or to

reduce the number of opcrating cycle, only then the need tor working capital
decreases. The following remedies may be used to reduce the length of operating
cycle period.

Purchase management-

The purchase manager owes a responsibility in ensuring availability of right type

of material of right quantity of right quality at right price on right time and at right
place. This six Rs contribute greatly in improvement of length of operating cycle.
Further streamlining of credit from supplier and inventory policy also help the
management.

19 | P a g e
 Production management-

Thee production manager affects the length of operating cycle by managing and
controlling manufacturing cycle, which is a part of operating cycle and influences
directly. Longer the manufacturing cycle longer will be the operating cycle and
higher will be the firm’s requirement for working capital. The following measures
may be taken like :

ery and other infrastructural facilities.

Marketing management-

The sale and production policies should be synchronized as far as possible. Lack of
matching increases the operating cycle period. Production of qualitative products
at lower costs enhances the sales of the firm and reduces finished goods storage
period. Effective advertisement, sales promotion activities, efficient salesmanship,
use of appropriate reduce of storage of finished goods.

Credit collection policies:

Sound credit and collection policies enable the finance manager in minimising
investments in working capital in the form of book debts. The firm should be
discretionary in granting credit terms to its customers. In order to see that
receivable conversion period is not increased a firm should follow a rationalized
credit policy based on the credit standing of the customers and other relevant
factors

20 | P a g e
 External environment:

The length of operating cycle is equally influenced by external environment.

Abrupt changes in basic conditions would affect the length of operating cycle.
Fluctuations in demand, competitors, production and sales policies, government
fiscal and monetary policies, changes on export import front etc should be
evaluated carefully by management to minimise their adverse impact on the
length of operating cycle.

FACTORS DETERMINING WORKING CAPITAL REQUIREMENT

Nature of business

The working capital requirement of a firm is closely related to the nature of the
business. If we look at the balance sheet of any trading company, we find major
part of resources deployed is on current assets, particularly stock in trade. Where
as in trading organizations major part of resources are locked in fixed assets like
motor vehicle, spares and work shades and the working capital component is
negligible. The service organizations need lesser working capital than trading and
financial organizations. Therefore requirement of working capital depends upon
nature of business carried by the organization.

Manufacturing cycle

Time span required for conversion of raw materials into finished goods is a block
period. The period in reality, extends a little before and after the WIP. This cycle
determines the need of working capital. In case of industries with long
manufacturing process or production cycle, more funds are required for working
capital. The industries involved in quick conversion of raw material into finished
units or having lesser production cycle requires lesser amount of working capital.

21 | P a g e
 Production process

In case of labour intensive industries high working capital is needed. But in case of
capital intensive industries the production process is faster and it requires lesser
amount of working capital due to lesser conversion costs.

Business cycle-

This is another factor which determines the need level. Barring exceptional cases,
there are variations in the demand for goods/ services handled by any
organizations. Economic boom or recessions have their influence on the
transactions and consequently on the quantum of working capital required. More
working capital is needed during peak or boom conditions. But in case of
economic recessions or low inflationary conditions working capital requirement is
low or moderate.

Seasonal variations-

Variation apart, seasonality factor creates production or even storage problem.

Mustard and many other oil seeds are Rabi crops. These are to be purchased in a
season to ensure continuous operation of oil plant. Further there are wooden
garments which have demand during winter only. But manufacturing operation
has to be conducted during the whole year resulting in working capital blockage
during off season.

Scale of Operations

Operational level determines working capital requirement during a given a period.

Higher the scale, higher will be the need for working capital. However, pace of
sales turnover is another factor. Quick turnover calls for lesser investment in
inventory, while low turnover rate necessitates larger investment.

22 | P a g e
 Inventory Policy

The traditional production system generates more stocks of finished goods and
high levels of raw materials and WIP stocks are maintained and the stock holding
period is also more. In such cases more working capital is needed. The adoption of
JIT, supply chain management, vendor management will drastically reduce the
level of raw materials, WIP and finished goods stocks and therefore fewer
amounts of funds are invested in inventory.

Credit Policy

Credit policy of the business organization includes to whom, when and to what
extent credit may be allowed. Amount of money locked-up in account receivables
has its impact on working capital. The liberal credit period and follow-up
procedures will increase the investment in debtors' balances and simultaneously
increase the working capital requirement, than concerns restoring to strict credit
and collection procedures.

Accessibility to credit

Creditworthiness is the precondition for assured accessibility to credit.

Accessibility in banks depends on the floe of credit Le., the level of working
capital.

Business standing

In case of newly established concerns the materials are required to be purchased

in cash and sales are to be made on credit basis Such new concerns require high
levels of working capital. But the established companies can negotiate for credit
terms with suppliers and sell products at lesser credit period to customers.
Therefore it requires less working capital than concerns with lesser business
standing.

23 | P a g e
Growth of Business

Growth and diversification of business call for larger volume of working fund. The
need for increased working capital does not follow the growth of business
operations but precedes it. Working capital needs is in fact assessed in advance in
reference to the business plan.

Market Condition

In a buyer's market i.e., the market with fierce competition, the companies are
forced to sell on credit, with liberal credit and collection policies. This increases
the level of investment in working capital due to increased debtors balances and
its administration costs. But if seller’s market prevails, the quick disposals of
stocks high percentage of cash sales, strict credit and collection policies He
reduces the need of working capital.

Supply situation

ln easy and stable supply situation, no contingency plan is necessary wd

precautionary steps in inventory investment can be avoided. But in case of supply
uncertainties, lead time may be longer necessitating larger basic inventory, higher
carrying cost and working capital need for the purpose. Aggressive approach
cannot be adopted in such situation.

Environment factors

Political stability brings in stability in money market and trading world. Things
mostly go smooth. Risk ventures are possible with enhanced need for working
capital finance. Similarly, availability of local infrastructural facilities like road,
transport, storage and market etc influence business and working capital need as
well.

24 | P a g e
 CHAPTER 02.
COMPANY PROFILE

25 | P a g e
26 | P a g e
 Parle Products company was founded in 1929 in
British India by the Chauhan family of Vile Parle,
Bombay. Parle began manufacturing biscuits in 1939. In
1947, when India became independent, the company
launched an ad campaign showcasing its Gluco biscuits
as an Indian alternative to the British biscuits. The Parle
brand became well known in India following the success
of products such as the Parle-G biscuits and cold
beverages like Gold Spot, Thums Up and Frooti.
Type:- Private limited
Traded as:- Unlisted
Industry:- Food
Founded:- 1929
Founder:- Chauhan family
Headquarters:- Vile Parle (East), Mumbai,
Maharashtra, India
Products:- Parle-G, 20-20 Cookies, Happy Happy,
Hide & Seek, Krackjack, Magix Creme, Milano,
Monaco
Owner:- Vijay Chauhan, Sharad Chauhan & Raj
Chauhan
Number of employees:- 50,500
Website:- www.parleproducts.com

27 | P a g e
Parle Products Private Limited is a Non-govt company,
incorporated on 09 Dec, 1950. It's a private unlisted
company and is classified as 'company limited by shares'.

Company's authorized capital stands at Rs 372.9 lakhs

and has 52.05149% paid-up capital which is Rs 194.1
lakhs. Parle Products Private Limited last annual general
meet (AGM) happened on 28 Sep, 2016. The company
last updated its financials on 31 Mar, 2016 as per Ministry
of Corporate Affairs (MCA).

Parle Products Private Limited is majorly in Manufacturing

(Food stuffs) business from last 71 years and currently,
company operations are active. Current board members &
directors are VIJAY KANTILAL CHAUHAN, SHARAD
PITAMBER CHAUHAN, ARUP SHARAD CHAUHAN,
AJAY VIJAY CHAUHAN, SAMAR SHARAD CHAUHAN
and RAJ KANTILAL CHAUHAN .

Company is registered in Mumbai (Maharashtra) Registrar

Office. Parle Products Private Limited registered address
is NORTH LEVEL CROSSING, VILE PARLE EAST
MUMBAI MH 400057 IN.

28 | P a g e
 CHAPTER 03.
RESEARCH STUDY

29 | P a g e
 OVERVIEW OF THE TOPIC
Managing human resources in today’s dynamic
environment is becoming more & more complex as
well as important recognition of people as a valuable
resource in the organisation has led to increase trend
in employees maintainance , job security , etc. My
research Project deals with

“STUDY OF WORKING CAPITAL

MANAGEMENT OF PARLE COMPANY
WITH REFERENCE TO FINANCIAL
FEASIBLE”

In this report , I have studies & evaluated the

performance appraisal process as it is carried out in
the company.

30 | P a g e
 PROBLEM OF DEFINATION




Working capital is the fund invested by a firm in current
assets. The competitive era where each firm competes
with each other to increase their production and sales. The
problem is, less attention paid to the area of short-term
finance in particular that of working capital management.
Effective working capital management has a crucial role
to play in enhancing the profitability and growth of the
firm. The success of a company involves with the
management of the current assets and the current
liabilities. If the resources are optimized in efficient
manner this will enable to increase the profitability of the
concern and the firm could be able to meet its current
obligation. The proper working capital management
requires both the medium term planning and the
immediate to changes arising due to fluctuation in
operating levels of the
company. The management of working capital of a
company, those raw materials is convertible into cash or
cash equivalents within a period of one year because
there is a time lack between the sale of a product and
the realization of cash

31 | P a g e
 OBJECTIVES OF THE STUDY


o To study concept of working capital management
of Parle Company.
o To study the short term liabilities and short term
assets of the Parle Company.
o To study the impact of working capital,
calculation method used by company for its
requirement.
o To study the working capital management of
Parle Company
o To study about utilization of current assets and
current liabilities.
o To access the efficiency of working capital
management by applying ratio analysis

32 | P a g e
HYPOTHESIS OF THE STUDY
1. To find out relation of company’s profile with its
working capital management.
2. To analyze the effect of market structure.
3. To check whether the markets are efficient when
any news about company is received.
4. To determine the appropriate probability
distribution and select the appropriate option
available.
5. To check flexibility in work arrangements.
6. There is a significant difference in preference of
customers towards
7. There is a significant difference in preference of
customers towards resale
8. To find out relation of company’s profile with its
working capital management.
9. To find out any relation between different
inventories methods
10. To analyze the effect of inventory management
decisions in terms of creating abnormality in the
price and volume of the company.

33 | P a g e
SCOPE OF STYDY



The study is restricted to the several of working
capital
Management at PARLE COMPANYS ltd in
Nagpur city.
The accuracy of the data are doubtful as the
respondents were
Ignorant & hesitant toward their response.
The chance of biased response can’t be
eliminated through all
necessary steps were taken to avoid the same.

34 | P a g e
 THEORETICAL PERSPECTIVE

Working capital is that capital which is involved in

the current assets of the business. Basically it is the
capital which is required to meet the day to day
expenses of the business. These involve managing
the relationship between firm’s short-term assets
and its short-term liabilities. The goal of working
capital management is to ensure that the firm is
able to continue its operations and it has sufficient
cash flow to satisfy both maturing short-term debt
and upcoming operational expenses. Working
capital management policies of a firm have a great
effect on its profitability, liquidity and structural
health of the organization

35 | P a g e
 CHAPTER 4
RESEARCH METHODOLOGY

36 | P a g e
RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem, as to
how research is done scientifically. It consists of the different that generally
adopted by researcher to study his research problem along with logic behind them.
It is necessary for the researcher to develop certain test.
The research methodology is surely and simply the framework of plan for
collection and analysis of data. A good methodology is very important to carry out
research. It concluded research design. research approach and research instrument
and sampling.
Collection of information about product and its shares. Consultation were carried
out with stockiest and retailer of Nagpur districts.
Marketing research calls for developing an efficient plan for gathering the needed
information. Designing research plan calls for decision on the at source research
instrument research approaches sampling plan and contact method the table below
shows this.

RESEARCH DESIGN

Research design is a pre-planned sketch for the explanation of a problem. It is the

first step to take and the whole research. Study will conduct on the basis of this
research design. It gives us a due that how the further process would be taking
place and how would be the research study carry into classification, interpretation
and suggestions. This is a guideline for the whole work.

37 | P a g e
TYPES OF RESEARCH
The basic types of research are as follows:

[1] DESCRITPTIVE VS. ANALYTICAL

Descriptive research includes survey and fact-finding enquiries of different kinds.

The major purpose of descriptive research is description of the state of affairs as it
exists at present. In social science and business research we quite often use the
term Ex post facto research for descriptive research studies. Example, frequency of
shopping, preferences of people, or similar data. Ex post facto studies also include
attempts by researchers to discover causes ever when they cannot control the
variable. The methods of research utilized in descriptive research are survey
methods of all kinds, including comparative and correlation methods

[2] APPLIED VS. FUNDAMENTAL

Research can either be applied (or action) research or fundamental (to basic or
pure) research. Applied research aims at finding a solution for an immediate
problem facing a society or an industrial/business organization, whereas
fundamental research is mainly concerned with generalization and with the
formulation of a theory. “Gathering knowledge for knowledge’s sake is termed
‘pure’ or ‘basic’ research. 4 Research concerning some natural phenomenon or
relating to pure mathematics are example off fundamental research. Similarly,
research studies, concerning human behaviour carried on with a view to make
generalization about human behaviour, are also example off fundamental research,
but research aimed at certain conclusions (say, a solution) facing a concrete social
or business problem in an example of applied research.

[3] CONCEPTUAL VS. EMPIRICAL

Conceptual research is that related to some abstract ideas or theory. It is generally

used by philosophers and thinkers to develop new concepts or tore interpret
existing ones. On the other hand, empirical research relies on experience or
observation alone, often without due regard for system and theory. It is data-based
research, coming up with conclusions which are capable of being verified by
observation or experiment.

38 | P a g e
We can also call it as experimental type of research. He then sets up experimental
designs which he thinks will manipulate the persons or the materials concerned so
as bring forth the desired information.

[4] SOME OTHER TYPES OF RESEARCH

All the types of research are variation of one or more of the above stated
approaches, based on either the purpose of research, or the time required to
accomplish research, on the environment in which research is done, or on the basic
of some other similar factor.

RESEARCH TECHNIQUE:
A researcher is using descriptive research for the research.

TYPES OF RESEARCH METHOD

QUANTITATIVE VS. QUALITATIVE

Quantitative research is based on the measurement of qualitative or amount. It is

applicable to phenomena that can be expressed in teams of qualitative. Quantitative
research, on the other hand, is concerned with qualitative phenomena relating to or
involving quality or kind. for instance, in investigating the reasons for humans
behaviour, we quite often talk of motivation research an important type of
qualitative research. This type of research aims at discovering of such research are
word association tests, sentence completion test, story completion tests and similar
other projective techniques.

RESEARCH METHOD
A researcher is using quantitative research method for the research.

SAMPLE DESIGN
A sample design is made up of two elements. Sampling method refers to the rules
and procedure by which some elements of the population are included in the
sample. Some common sampling methods are simple random sampling, stratified
sampling,

39 | P a g e
TYPES OF SAMPLING METHODS

Sample designs are basically divided into two types

PROBABILITY SAMPLING
NON-PROBABILITY SAMPLING

[1] PROBABILITY SAMPLING:

The method in which all units of the universe is given equal chance of being
selected in the sample, is known as probability sampling. There is an assurance of
the result in terms lies of probability that are obtained through probability or
random sampling.

TYPES OF PROBABILITY SAMPLING:

Simple Random Sampling Stratified Random Sampling Systematic Sampling

Cluster Sampling
Multi-stage Sampling Area Sampling

[2] NON-PROBABILITY SAMPLING:

Non-probability sampling is that type of sampling procedure which does not have
any ground for estimating the probability that whether or not each item in the
population has been included in the sample is known as non-probability sampling.

TYPES OF NON-PROBABILITY SAMPLING:

Convenience Sampling Purposive

Sampling Panel Sampling Snowball

40 | P a g e
SAMPLING METHOD
Researcher is using probability sampling for these research which is based on the
fact that every member of a population has a known & equal chance of being
selected.

SAMPLE TECHNIQUES
A Researcher is using simple random sampling technique for the research. A
sample technique is the name or other identification of the specific process by
which the entities of the sample have been selected.

SAMPLE SIZE: -
The Sample Size chosen for this study is 50 Respondent
.
SAMPLE AREA: -
Online

41 | P a g e
 CHAPTER 5
DATA COLLECTION

42 | P a g e
DATA COLLECTION
1. PRIMARY DATA
2. SECONDARY DATA
A research plan was followed for gathering primary data, secondary data or both.

PRIMARY DATA

Primary data consisted of original information gathered for the specific purpose.
Data was collected from the primary sources i.e. questionnaire was developed with
the help of which personal interview were carried out. Also along with this I
earned out personal interviews with direct users like contractor and domestic users.
Primary data is information that you collect specifically for the purpose of your
research project. An advantage of primary data is that it is specifically tailored to
your research needs. A disadvantage is that it is expensive to obtain.

Sources of Primary Data

The source of your primary data is the population sample from which you collect
the data. The first step in the process is determining your target population. For
example, if you are researching the marketability of a new washing machine, your
target population may be newlyweds that have just purchased a home within the
last 90 days.
Once you have determined you target population, you will need to decide how to
represent this population in your study. Obviously, it's impracticable to collect data
from everyone, so you will have to determine the sample size and the type of
sample. The sample should be random and a stratified random sample is often
advisable.
A stratified random sample involves dividing the population to be studied into
subpopulations of distinct characteristics and then drawing your random sample
from each subpopulation. In our washing machine example, subpopulations may
include young couples, middle-aged couples, old couples and previously married
couples.

43 | P a g e
Collection of Primary Data

You can collect data from your sample population in different ways. Some
common collection methods include:
Focus Groups
A focus group usually consists of a discussion among 8-12 people from your
sample facilitated by a moderator. The moderator tries to encourage in-depth
discussions on the product or concept that is the focus of the research. It's a flexible
means of data collection that lets you get to information not easily obtained by
other means.
Surveys
These are basically questionnaires with a set of carefully designed questions posed
to your target population. Surveys can be administered by mail, telephone or by the
Internet. Response rates are typically very low, so you will have to use a large
sample to get sufficient responses.
The data is collected from secondary data only.

SECONDARY DATA

The secondary data are collected from Nagpur city Authorized dealer of, from
broachers, from website of the company, news papers, and magazines. Secondary
data refers to data that was collected by someone other than the user. Common
sources of secondary data for social science include censuses, information
collected by government departments, organisational records and data that was
originally collected for other research purposes. Primary data, by contrast, are
collected by the investigator conducting the research.
Secondary data analysis can save time that would otherwise be spent collecting
data and, particularly in the case of quantitative data, can provide larger and
higher- quality databases that would be unfeasible for any individual researcher to
collect on their own. In addition, analysts of social and economic change consider
secondary data essential, since it is impossible to conduct a new survey that can
adequately capture past change and/or developments. However, secondary data
analysis can be less useful in marketing research, as data may be outdated or
inaccurate.

44 | P a g e
Sources of secondary data

Secondary data can be obtained from different sources:

information collected through censuses or government departments like housing,
social security, electoral statistics, tax records internet searches or libraries
progress reports

Administrative data and census Government departments and agencies routinely

collect information when registering people or carrying out transactions, or for
record keeping
– usually when delivering a service. This information is called administrative data.
It can include:
personal information such as names, dates of birth, addresses information about
schools and educational achievements information about health information about
criminal convictions or prison sentences tax records, such as income
A census is the procedure of systematically acquiring and recording information
about the members of a given population. It is a regularly occurring and official
count of a particular population. It is a type of administrative data, but it is
collected for the purpose of research at specific intervals. Most administrative data
is collected continuously and for the purpose of delivering a service to the people.

Advantages and disadvantages of secondary data

Secondary data is available from other sources and may already have been used in
previous research, making it easier to carry out further research. It is time-saving
and cost-efficient: the data was collected by someone other than the researcher.
Administrative data and census data may cover both larger and much smaller
samples of the population in detail. Information collected by the government will
also cover parts of the population that may be less likely to respond to the census
(in countries where this is optional).

A clear benefit of using secondary data is that much of the background work
needed has already been carried out, such as literature reviews or case studies. The
data may have been used in published texts and statistics elsewhere, and the data
could already be promoted in the media or bring in useful personal contacts.
Secondary data generally have a pre-established degree of validity and reliability
which need not be re-examined by the researcher who is re-using such data.

45 | P a g e
Secondary data can provide a baseline for
primary research to compare the collected
primary data results to and it can also be helpful
in research design.
However, secondary data can present problems,
too. The data may be out of date or inaccurate.
If using data collected for different research
purposes, it may not cover those samples of the
population researchers want to examine, or not
in sufficient detail administrative data, which is
not originally collected for research, may not be
available in the usual research formats or may
be difficult to get access to.

46 | P a g e
 CHAPTER 6
DATA ANALYSIS AND
INTERPRETATION

47 | P a g e
1. CURRENT RATIO :-
CURRENT ASSETS (C.A.)/CURRENT LIABLITIES (C.L.)
Rs (in cr)

PARTICULAR FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

CURRENT 1.81 19.12 17.33 22.56 24.51

ASSETS (C.A)

CURRENT 0.07 0.09 0.14 1.68 7.31

LIABLITIES
(C.L)

CURRENT 25.85 212.4 123.78 13.42 3.35

RATIO

Current Ratio
250

200

150

Current Ratio
100

50

0
FY-2016 FY-2017 FY-2018 FY-2019 FY-2020

48 | P a g e
Interpretation:

1 CURRENT RATIO:
A high ratio shows that the firm is liquid and is able to
meet its current obligations.
A low current ratio shows that the firm is not equipped
to meet its short-term obligation as and when they
become due. The ideal current ratio is 2:1, which
denotes that short term assets should be twice the
value of short term liability. This is to provide for an
expected delay and defaults. However, this measure
shouldn’t be followed blindly.
The quality as well as the quantity of the assets should
be measured for effective evaluation. A high current
ratio is considered good but at the same time, it may
also indicate stagnant inventory. current ratio may also
be high due to uncollected debts. Ideal cash and bank
balance may also cause the current ratio to be high.
Low current ratio may indicate that the business does
not have sufficient funds to honor its obligations. It
may also show that the business s trading over and
above its capacity.

49 | P a g e
2. QUICK RATIO:-
CURRENT ASSETS (-) INVENTORIES
CURRENT LIABLITIES
Rs(in cr)
PARTICULAR FY FY FY FY FY
2016 2017 2018 2019 2020

CURRENT 1.81 19.12 17.33 22.56 24.51

ASSETS (C.A)

INVENTORIES 0.00 17.23 17.23 17.97 18.18

CURRENT 0.07 0.09 0.14 1.68 7.13

LIABLITIES(C.L)

QUICK RATIO 25.85 21.00 0.71 2.73 0.88

Quick Ratio

FY-2020

FY-2019

FY-2018 Quick Ratio

FY-2017

FY-2016

0 5 10 15 20 25 30

50 | P a g e
Interpritations:
2 QUICK RATIO:

Quick ratio is considered to be a better measure of short

term liquidity than current ratio. Current ratio is
quantitative in its scope and does not adequately
address the liquidity concerns of the firms. Quick ratio,
on the other hand, is qualitative and offers a more
stringent test as it uses only cash and near-cash assets.
As a rule of thumb, quick ratio of 1:1 is considered ideal.
This ratio s widely used by banks and financial
institutions. It should be used in conjunction with
current ratio n order to assess short term solvency and
financial soundness of the firm.

51 | P a g e
3. PROPRIETARY RATIO:-
SHAREHOLDERS FUND
TOTAL ASSET
Rs(in cr)
PARTICULAR FY FY FY FY FY
2016 2017 2018 2019 2020

SHAREHOLDERS 19.71 19.75 19.76 20.71 20.76

FUND
TOTAL 1.83 19.10 19.76 23.71 20.76
ASSETS

PROPRIETARY 10.7 1.03 1.00 0.87 1.00

RATIO

Proprietary Ratio
12

10

6
Proprietary Ratio
4

0
FY-2016
FY-2017
FY-2018
FY2019
FY-2020

52 | P a g e
Interpretation:
3 PROPRIETARY RATIO:

Higher proprietary ratio shows that company

are mainly
funded using shareholders funds, which is
considered
good for the company’s long term solvency.
The ratio also shows the extent to which the
company
may lose its assets and not impact the Interest
of its
creditors.

53 | P a g e
4. DEBT TO EQUITY RATIO:-
TOTAL LIABLITIES
TOTAL SHAREHOLDERS EQUITY
Rs (in cr)
PARTICULAR FY FY FY FY FY
2016 2017 2018 2019 2020

19.71 19.75 19.76 23.71 20.76

TOTAL
LIABLITIES

14.00 14.00 14.00 14.00 14.00

TOTAL
SHAREHOLDERS
EQUITY
1.40 1.41 1.41 1.69 1.48
DEBT TO
EQUITY
RATIO

Debt to Equity Ratio

1.8
1.6
1.4
1.2
1
0.8
Debt to Equity Ratio
0.6
0.4
0.2
0
FY-2016
FY-2017
FY-2018
FY-2019
FY-2020

54 | P a g e
Interpretation:

4 DEBT EQUITY RATIO:

High debt equity ratio shows that the business is

making
more use of debt funds and thus is aggressive n its
financial decisions.
High debt financing helps the business in generating
higher magnitude of earnings than it may have
without
resource to debt funding. This benefits the
shareholders
if the business increases its earning more than its
interest commitments. Sometimes, the situation of
bankruptcy occurs when the cost of debt financing
is
more than the income generated from the raised
funds
in the business activities.

55 | P a g e
5. OPERATING PROFIT MARGIN:-
OPERATING PROFIT *100
NET SALES
Rs(in cr)
PARTICULAR FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

0.03 0.07 0.02 1.78 0.28

OPERATING
PROFIT
0.24 0.27 0.17 11.35 5.49
NET
SALES
(*100)
12.5 25.92 11.76 15.68 5.10

OPERATING
PROFIT
MARGIN

Operating Profit Margin

30

25

20

15

10

0
FY-2O16
FY-2017
FY-2018
FY-2019
FY-2020

56 | P a g e
Interpretation:
5 OPERATING PROFIT MARGIN:

Operating margin measures how much profit a

company
makes on a dollar of sales after paying for
variable costs
of production, such as wages and raw
materials, but
before paying interest and tax.

57 | P a g e
7. CONCLUSION

58 | P a g e
Current assets of Parle company mainly consist of
stock, 90% of the current assets constituted by
stock.
The quick ratio of the company from the FY-2018
to FY-2020 are satisfactory. Therefore the
company will not face any problems for availing
short term loans from any financial institute.
The long term ratios i.e., proprietary ratio and
debt to equity ratio of Parle are satisfactory,
therefore the company will not have any problem
even in availing long term loans.
Operating profit of Parle has shown a significant
decline in FY-2020 but while analyzing the
quarterly profits for FY-2020 it has comeforth that
the company has made significant improvement in
the last quarter of FY-2019. It shows the
company’s sales are improving.

59 | P a g e
8. FINDINGS &
Recommendation

60 | P a g e
Working capital of parle
company was increasing and
showing positive changes each
year.
The Parle company has
higher current and quick
ratio . So the company’s
liquidity positions is good . It
shows that it is able to meet its
current obligations .

61 | P a g e
Working capital of the company has
increasing every year . Profit also
increasing every year this a good sign
for the company . It has to maintain it
further , to run the business long term.

The current and quick ratios are

almost up to the standard
requirement. So the WCM of Parle
company is satisfactory and it has to
maintain it further.

62 | P a g e
9. BIBLOGRAPHY

63 | P a g e
BOOKS

• Khan M.Y. and Jam P.K., Financial Management

• Banerjee, Cash Management
• Kulkarni P.V., Financial Management
• Pandey I.M. Financial Management
• T S Grewal Financial Management
• H R Kulkarni Financial Management

WEBSITES

a. www.parle.com
b. www.capitalmarket.com
c. www.moneycontrol.com
d. www.harvestcfo.com
e. www.economictimes.com
f. http://www.studyfinance.com

64 | P a g e
CHAPTER 10
APPENDICES

65 | P a g e
BALANCE SHEET

66 | P a g e
PROFIT & LOSS STATEMENT

67 | P a g e
 SYNOPSIS
“A study on Working capital management of
Parle with reference to financial feasibility.”
Affiliated to

Rashtrasant Tukadoji Maharaj Nagpur University,Nagpur

In partial fulfillment of the award of the degree of

Bachelor of Business Administration

Submitted by:

Mahima Sonsare

Under the guidance of:

Prof. Dr. Afsar Sheikh

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

68 | P a g e
 Index
1) Introduction

2) Company Profile

3) Objective of the study / research

4) Research methodology

5) Hypothesis

6) Plan of work

7) Bibliography

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions
Academic Year 2020-21

69 | P a g e
 Working Capital Management
Introduction :
Working capital management is a business tool that helps companies
effectively make use of current assets, helping companies to
maintain sufficient cash flow to meet short term goals and
obligations. By effectively managing working capital, companies can
free up cash that would otherwise be trapped on their balance
sheets. As a result, they may be able to reduce the need for external
borrowing, expand their businesses, fund mergers or acquisitions, or
invest in R&D.

Cash

Working
Debtors Capital Creditprs
Cycle

Inventory

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

70 | P a g e
 Company Profile
Parle Products company was founded in 1929 in British
India by the Chauhan family of Vile Parle, Bombay. Parle
began manufacturing biscuits in 1939. In 1947, when India
became independent, the company launched an ad campaign
showcasing its Gluco biscuits as an Indian alternative to the
British biscuits. The Parle brand became well known in India
following the success of products such as the Parle-G biscuits
and cold beverages like Gold Spot, Thums Up and Frooti.
Type:- Private limited
Traded as:- Unlisted
Industry:- Food
Founded:- 1929
Founder:- Chauhan family
Headquarters:- Vile Parle (East), Mumbai, Maharashtra,
India
Products:- Parle-G, 20-20 Cookies, Happy Happy, Hide &
Seek, Krackjack, Magix Creme, Milano, Monaco
Owner:- Vijay Chauhan, Sharad Chauhan & Raj Chauhan
Number of employees:- 50,500
Website:- www.parleproducts.com
G.S. college of commerce & Economics , Nagpur
NAAC Re -Accredited "A" Grade Autonomous Institutions

71 | P a g e
 G.S. college of commerce & Economics , Nagpur
NAAC Re -Accredited "A" Grade Autonomous Institutions

72 | P a g e
 Objective of study /Research
•To assess the working capital need of the company.

•To know the various working capital finance provided by the bank.

•To analyse in detail the procedure of assessment of working

capital finance extended by the bank.

•To apply these procedures at a practical level with the help of case
study.

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

73 | P a g e
 Research methodology:
What is Research…?
Research means search for facts in order to find answers to certain
questions or to find solutions to certain problems. It is often referred
to as ‘scientific inquiry’ or ‘scientific investigation’ into a specific
problem or situation

There are two types of data:-

 Primary Data
 Secondary Data

The present study is based on secondary data which is collected using

company website .
 Research design (Method,data collection)

Primary data
The primary data is that data which is collected fresh and first
hand and for first time which is original in nature.
But in this project we are collecting data from secondary data
The secondary data are those data which are collected by web
based , publication in the newspaper , magazines and information
available in the internet.
Various tools and techniques have been used to graph and pie
charts we are collecting from company website

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

74 | P a g e
 Hypothesis
A hypothesis (plural hypotheses) is a precise, testable statement
of what the researcher(s) predict will be the outcome of the study.
Types of Hypothesis

1)Research Hypothesis:-
2)Statistical Hypothesis:-
I] Null Hypothesis:-
II] Alternative Hypothesis:-

Here, in the present case study

Null Hypothesis i.e., H0 : µ = X (i.e., the bank will permit our

working capital to full requirement)

Here , X = amount of working capital

Alternative Hypothesis i.e., H1 = µ0

Here the alternative hypothesis could be

a) H1: µ ≠ µ0
b)H1 : µ > µ0 , or,
c)H1 : µ < µ0
G.S. college of commerce & Economics , Nagpur
NAAC Re -Accredited "A" Grade Autonomous Institutions

75 | P a g e
 Plan of work:
- Literature review ( 5 days )

- Data collection and analysis (15-20 days )

- Writing of research project ( 10 days )

- Printing and binding ( soft copy ) because of Covid

Bibliography :
www.google.com
www.parle.com
www.wikipedia.com

G.S. college of commerce & Economics , Nagpur

NAAC Re -Accredited "A" Grade Autonomous Institutions

76 | P a g e
THANK YOU

77 | P a g e