A STUDY ON WORKING CAPITAL

MANAGEMENT AT TRACO CABLE COMPANY

LIMITED, IRIMPANAM

A PROJECT REPORT
SUBMITTED TO KANNUR UNIVERSITY

in partial fulfilment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

Mr. ANUDEEP E C
Reg. No. C0GMBA3011

Under the guidance of

Mrs. RESHMI THOMAS

ASSISTANT PROFESSOR

VIMAL JYOTHI
INSTITUTE OF MANAGEMENT &
RESEARCHCHEMPERI, KANNUR-670632
2020-2022
 DECLARATION

I, Mr. Anudeep E C, fourth semester MBA student of Vimal Jyothi Institute

of Management & Research (VJIM) Chemperi, Kannur hereby declare that the

report titled “A STUDY ON WORKING CAPITAL MANAGEMENT AT

TRACO CABLE COMPANY LIMITED,IRIMPANAM, ERANAKULAM”

has been prepared by me under the guidance and supervision of Mrs. Reshmi

Thomas Assistant professor, VJIM and submitted to Kannur University, in partial

fulfillment of the requirement for the award of the degree of Master of Business

Administration.

I further declare that this report has not been previously submitted

to any institute or University for the award of any Degree/Diploma, Fellowship

or other similar title.

Place: Chemperi Mr. ANUDEEP E C

Date: 30/07/2022 Reg No.: C0GMBA3011

 ACKNOWLEDGEMENT

First and foremost, I thank the God for his substantial blessings and mercy

at all stages in completion of the project.

I express my sincere gratitude to Fr. Genimon V Joseph, Principal, Vimal

Jyothi Institute of management and research (VJIM) who has motivated me a lot in

taking up this venture.

My hearty thanks to my college guide Mrs. Reshmi Thomas , Asst.

Professor, Vimal Jyothi Institute of Management & Research for all the

encouragement and helping hand extended to me for the project study

I would like to acknowledge my deep sense of gratitude towards Traco Cable

company limited, Irimpanam for permitting me to do the project in their

organization. I express my sincere gratitude towards Mrs. Deepa Merin Jacob , the unit

head, for granting me the permission, valuable advice and cooperation.

I am also thankful Vimal Jyothi Institute of Management & Research,

Chemperi for providing me a platform to enhance my skills and explore my

knowledge through this project

I express my thanks to my classmates, friends, and other teaching and non-

teaching staff, who were helpful to me during my work. I wish to thank all my family

members for the moral support provided to me during my studies.

Mr. ANUDEEP E C
 TABLE OF CONTENTS

CHAPTER PAGE
TITLE
NO. NO.
INTRODUCTION 1-12
1.1 Introduction to the Study 1
1.2 Theoretical Aspects 2

1 1.3 Statement of the Research Problem 9

1.4 Significance of the Study 9
1.5 Objectives of the Study 9
1.6 Methodology of the Study 10
1.7 Chapter Scheme 12
1.8 Limitations of the Study 12
2 REVIEW OF RELATED LITERATURE 13-23

PROFILE OF THE INDUSTRY 24-44

AND ORGANIZATION
3.1 Profile of the Industry 24
3 3.2 Profile of the Organization 34
3.3 Product Profile 41
3.4 Organisational Structure 43

4 DATA ANALYSIS AND 45-104

INTERPRETATION

FINDINGS, RECOMMENDATIONS AND 105-107

CONCLUSION
5
5.1 Findings 105
5.2 Recommendations 106
5.3 Conclusion 107

ANNEXURES
Balance Sheets
Bibliography
 LIST OF TABLES

TABLE PAGE
TITLE
NO. NO.
4.1 Gross Working Capital 45
4.2 Net Working Capital 47
4.3 Ratio of Gross Working Capital 49
4.4 Current Asset Turnover Ratio 51
4.5 Working Capital Turnover Ratio 53
4.6 Current Ratio 55
4.7 Quick Ratio 57
4.8 Absolute Liquidity Ratio 59
4.9 Cash as a Percentage of Current Assets 61
4.10 Cash Turnover Ratio 63
4.11 Cash Holding Period 65
4.12 Inventory to Sale 67
4.13 Stock Turnover Ratio 69
4.14 Stock Holding Period 71
4.15 Receivable as a Percentage of Sale 73
4.16 Debtors Turnover Ratio 75
4.17 Debtors Collection Period 77
4.18 Creditors Turnover Ratio 79
4.19 Credit Payment Period 81
4.20 Return on Total Asset 83
4.21 Net Profit 85
4.22 Fixed Asset Turnover Ratio 87
4.23 Trend Analysis of Working Capital 89
4.24 Trend Analysis of Sales 91
4.25 Trend Analysis of Current Assets 93
4.26 Trend Analysis of Current Liabilities 95
Comparitive Statement for Working Capital for the
4.27 97
Year 2014-2015
Comparitive Statement for Working Capital for the
4.28 98
Year 2015-2016
Comparitive Statement for Working Capital for the
4.29 99
Year 2016-2017
Comparitive Statement for Working Capital for the
4.30 100
Year 2017-2018
Comparitive Statement for Working Capital for the
4.31 101
Year 2018-2019
Comparitive Statement for Working Capital for the
4.32 102
Year 2019-2020
Comparitive Statement for Working Capital for the
4.33 103
Year 2020-2021
 LIST OF FIGURES

FIGURE TITLE PAGE

NO. NO.
1.1 Concept of Working Capital 3

3.1 Organisational Structure 43

4.1 Gross Working Capital 46

4.2 Net Working Capital 48

4.3 Ratio of Gross Working Capital 50

4.4 Current Asset Turnover Ratio 52

4.5 Working Capital Turnover Ratio 54

4.6 Current Ratio 56

4.7 Quick Ratio 58

4.8 Absolute Liquidity Ratio 60

4.9 Cash as a Percentage of Current Assets 62

4.10 Cash Turnover Ratio 64

4.11 Cash Holding Period 66

4.12 Inventory to Sale 68

4.13 Stock Turnover Ratio 70

4.14 Stock Holding Period 72

4.15 Receivable as a Percentage of Sale 74

4.16 Debtors Turnover Ratio 76

4.17 Debtors Collection Period 78

4.18 Creditors Turnover Ratio 80

4.19 Credit Payment Period 82

4.20 Return on Total Asset 84

4.21 Net Profit 86

4.22 Fixed Asset Turnover Ratio 88

4.23 Trend Percentage of Working Capital 90

4.24 Trend Percentage of Sales 92

4.25 Trend Percentage of Current Assets 94

4.26 Trend Percentage of Current Liabilities 96

 EXECUTIVE SUMMARY

The study of working capital management is important as it considers the current and

day-to-day operations of an organisation. The project entitled “A Study On

Working Capital Management at Traco Cable Company Limited, Irimpanam,

Eranakulam” helps to know the working capital of the organisation, The working

capital requirement of a business is the sum of current asset or the amount of

funds necessary to cover the cost of operating expenses of business. The main

components of working capital are current assets and current liabilities and the

excess of current assets over current liabilities is called working capital.

The secondary data were collected from 7 years financial statements,

annual reports, company website and were analysed with Ratio Analysis, Trend

Analysis etc.

From this analysis it is learned that the cash balance of the company is required

to be improved in order to have immediate liquidity position. The working capital

position of Traco Cable Company Limited is overall not satisfactory. The working

capital of the company shows a decreasing trend which is the sign of minimal

utilization of working capital for production and generating sales. During the study

period the net profit exhibit an decreasing trend which is a bad sign.
 CHAPTER-1

INTRODUCTION
 CHAPTER-1
INTRODUCTION

1.1. INTRODUCTION TO THE STUDY

Working capital refers to that part of the firm's capital which is required for

financing short term or current assets such as cash, marketable securities, debtors

and inventors. Funds, thus invested in current assets keep revolving fast and are

being constantly converted in to cash and these cash flows out again in exchange

other current assets. Hence, it is also known as revolving or circulating capital

or short term capital. Working capital is the amount of fund necessary to cover the

cost of operating the enterprise. It is that part of firm's capital which is invested in

current assets. It is called circulating capital because of its continuous conversion

process. Working capital is the administration of both current asset and current

liabilities. Working capital requirements are generally financed through outside

sources. So continuous care is utilizing them in the best way. The main

objectives of the study are to analyze the access the impact of working capital on

profitability.

Traco Cable company Limited (TCCL) is one of the public sector undertaking in

the state of Kerala-South India and is an ISO 9001 certified company, established

in 1964. The study helps to know the working capital of the organisation, its

determinants and the problems in the working capital management and its

solutions. The purpose of working capital management is to deal with current assets

and current liabilities of the company in a way that an adequate level of working

capital is maintained. The current assets must be handled efficiency to maintain the
 Traco Cable Company Limited, Irimpanam

firms liquidity, and at the same time they should not be maintained at very high

level. Thus working capital management deals with arranging short-term

financing, negotiating favourable terms of credit, controlling cash movements,

administering accounts receivables, inventory management etc.

1.2. THEORETICAL ASPECTS

The management of working capital is very significant and should be efficient to

keep the business going smoothly. Working capital management is the

management of current assets and current liabilities. That is working capital is

equal to the value of raw materials, work-in-progress, finished goods, inventories

and accounts receivables less accounts payables. The aim of working capital

management is to achieve balance between having sufficient working capital to

ensure that the business is liquid but not too much that level of working capital

reduced profitability.

The goal of working capital management is to ensure that the firm is able to

continue its operations and that it has sufficient cash flow to satisfy both maturing

short term debt and upcoming operational expenses. For this purpose the firms

requires a positive working capital. An increase in working capital indicates that

the business has either increased current assets (that is received cash or other current

asset) or has decreased current liabilities

1.2.1. Definition

The most widely accepted observation is that “Working Capital represents the

excess of current assets over current liabilities.”

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1.2.2. Concept of Working Capital

In an ordinary sense, working capital denotes the amount of funds needed for

meeting day to day operations of a concern. Working capital or circular flow of

cash is a sort of a revolving fund starting with cash used to pay for raw

materials, labor and operating expenses and when finished products are ready

for sale, the cash is recovered through sale of these goods. Thus, the

working capital, capital can be explained through two angles

Working Capital

On the basis of value On the basis of time

Gross Net Permanent Temporary

Net working capital: It represents the excess of current assets over total current

liabilities. It is a quantitative concept indicating the soundness of current financial

position.

Net working capital = Current assets- Current liabilities

Gross working capital: It is also called the circulating capital. It is equal to the

total sum of the current assets only and it may be represent both owned capital as

well as loan capital used for financing the current assets. Thus, the gross working

capital is the capital invested in the total current asset of the business.

Permanent working capital: Permanent working capital refers to the base working

capital, which is the minimum level of investment in the current assets that is

carried by the entity at all times to carry its day to day activities.

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Temporary working capital: Temporary or fluctuating working capital refers to

that part of working capital, which is required by an entity in addition to the

permanent working capital which is used to finance the short term working capital

requirements which arises due to fluctuations in sale volume.

1.2.3. Objective of Working Capital

Smooth operating cycle: It means the cycle should never stop for the lack of liquidity

whether it is for buying raw material, salaries, tax payments etc.

Lowest working capital: This may be achieved by favourable credit terms with

accounts payable and receivable both, faster production cycle, effective inventory

management etc.

Minimize rate of interest or cost of capital: It is important to understand that the

interest of cost of capital is one of the major costs in any firm. The management

of the firm should negotiate well with financial institutions, select the right mode

of finance, maintain optimal capital structure etc.

Optimal return on current asset investment: At the time of excess liquidity, the

management should have good short-term investment avenue to take benefit of the idle

funds.

1.2.4. Determinants of Working Capital

• General type of business

• Size of the business unit

• Terms of purchase and terms of sales

• Turnover of inventories

• Process of manufacture

• Importance of labour

• Proportion of raw material to total costs

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 Traco Cable Company Limited, Irimpanam

• Cash requirements

• Seasonal variations

• Banking connections

• Dividend policy

• Taxation policy

1.2.5. Circulation System Working Capital

Working capital is also known as “Circulating Capital” or “Current Capital”. The

funds in a business are obtained from the issue of shares, debentures other long

term arrangement and operations of business. A huge part of generated funds is

used to acquire fixed assets viz plant and machinery, land and building and some

other fixed assets, while the remaining part of the generated funds is used for day

to day operation of the business i.e. to pay wages and overhead expenses for the

raw materials processed. This makes possible the stocking of finished goods by

whose sales either accounts receivables are created or cash is received. In thus

process profits are generated. A part of the profit is used to pay tax, interest and

dividends, while the remaining part is ploughed back in the business. This cycle

goes on constantly throughout life of the business.

1.2.6. Operating Cycle

The duration of time required to complete sequence of events right from purchase of

raw materials for cash to the realization of sales in cash is called the operating cycle,

working capital, or cash cycle. In the words O.M. Joy “the operating cycle refers

to the length of time necessary to complete the following cycle of events”.

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 Traco Cable Company Limited, Irimpanam

• Conversion of cash into raw materials

• Conversion of raw materials into work-in-progress

• Conversion of work-in-progress into finished goods

• Conversion of finished goods into debtors or bills receivable through sales.

• Conversion of debtors or bills receivables into cash

“Operating cycle is the time duration required to convert sales, after the

conversion of resources into inventories, into cash” says I.M Pandey. The

operating cycle of a manufacturing company involves three phases. It

includes acquisition of resources- such as raw materials, labours, power and fuel

etc. Manufacture of the product which includes conversion of raw materials into

finished goods. And sale of the product- either for cash or credit. The cycle

will again and again over the period depending upon the type of the product

produced.

1.2.7. Advantages of Adequate Working Capital

• It helps for continuous supply of raw materials which leads for uninterrupted
production.

• It helps for prompt payment of wages, salaries, and other day to day expenses,
and it also increases the goodwill of the firm.

• It helps to utilize the favourable market conditions.i.e, by purchasing in bulk at

cheaper price.

• It helps for reduction of cost.i.e; purchase at a cheaper rate reduces the cost of
production.

• It helps for maintaining the solvency of the business.

• It also helps for prompt payment of dividend, results in maintaining or increasing

the market value of the shares, and makes raising additional capacity easy.

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 Traco Cable Company Limited, Irimpanam

• It also helps for prompt supply of finished goods by which the brand loyal
customers can be maintained.

• It helps raising short term loans especially banks.

• It creates high morale and provides job security for employees.

1.2.8. Disadvantage of Inadequate Working Capital

• It stagnates growth of the business

• Implementation of operating plans becomes difficult.

• Operating inefficiencies creep in when it becomes difficult even to meet

day today commitments.

• The firm loses its reputation when if it is not in opposition to meet its short-
term obligations.

1.2.9. Dangers of Excess Working Capital

• It results in unnecessary stock accumulation. Thus, the chance of

inventory mishandling, Waste etc increases.

• It is an indication of defective credit policy collection period

• Excessive working capital makes over spending, which degenerates

into managerial inefficiency.

1.2.10. Need for Working Capital

• To pay for wages and salaries

• To pay for day-to-day expenses and overhead cost

• To meet selling cost

• To provide credit facilities to customers

• To maintain inventories of raw materials, works-in-progress and

finished goods.

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 Traco Cable Company Limited, Irimpanam

1.2.11. Management of Working Capital

The working capital is required for the smooth functioning of the business of an

entity as of this may interrupt the ordinary activities. Hence, the working capital

needs adequate attention and efficient management. The scope of working capital

management can be grouped into two broad areas.

Liquidity and profitability: For uninterrupted and smooth functioning of the day

to day business of an entity it is important to maintain liquidity of funds evenly.

While maintaining the liquidity the cost aspects needs to be borne in mind.

Unnecessary tying up of funds in idle assets not only reduce the liquidity but also

reducing the opportunity to earn better return from productive asset. Hence, a trade-

off is required between the liquidity and profitability which increase the

profitability without disturbing the day to day functioning

Investment financing: The working capital is a function of two decisions, first

investment in working capital and the second is financing of the investment in the

current assets. It gives the answer of “ how much” fund to be tied into achieve the

organisation objectives. The level of investment depends on the various factors

such as nature of the industry, types of products, manufacturing Vs trading Vs

services, volume of sales and credit policy.

Financing decision concerned with the arrangement of funds to finance the

working capital. It gives the answer “where from” funds to be sourced at lowest cost as

possible.

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 Traco Cable Company Limited, Irimpanam

1.3. STATEMENT OF THE RESEARCH PROBLEM

The working capital is the life blood and nerve center of a business firm. The

significance of working capital in any industry needs no special emphasis. No

business can run effectively without a sufficient quantity of working capital. The

goal of working capital management is to ensure that the firm is able to continue

its operation and that it has sufficient cash flow to satisfy both maturing short term

debt and upcoming operational expenses. Thus working capital management is an

important function of a company. With this backdrop, the present study examines the

working capital management of Traco cable company Ltd. for the period 2012-2019.

1.4. SIGNIFICANCE OF THE STUDY

Today, financial soundness and profitability of business enterprises largely

depend upon the working capital management by the company. If there is

shortage of working capital, it affects the day to day operations of the business

firm. If there is excess of working capital, fund become idle and also affects the

financial soundness of the company. In this perspective, there is need for

effective working capital management in any business. The purpose of the study

is to analyze the working capital management of Traco cable company Ltd.

1.5. OBJECTIVES OF THE STUDY

• To review the effect of working capital management in the overall

functioning of Traco cable company limited

• To study the effect of working capital management of the company with

respect to cash management, inventory management receivable

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 Traco Cable Company Limited, Irimpanam

• To perform the trend and ratio analysis to study the company's financial
performance.

• To suggest suitable measures for the improvement of working capital.

1.6. METHODOLOGY OF THE STUDY

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

Research is a scientific and systematic search for pertinent information on a

specific topic and it is an art of scientific investigation.

1.6.1. Research Design

The research design is the overall plan for relating the conceptual research

problem to relevant and practicable empirical research. Research design is a

master plan specifying the methods and procedures for collections and analyzing

the needed information. There are four major type of research design;

exploratory, inductive, casual, and descriptive.

In this study analytical research design is used. In analytical research, the researcher

has to use facts or information already available, and analyze these to make a critical

evaluation of the material.

1.6.2. Data Collection

The data is collected from both primary and secondary sources

Primary Data: Primary data is collected by discussions with the company

officials and other staff in the office as well as in the factory. This is further

followed up with the observation recording of necessary information and their

analysis and interpretation

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 Traco Cable Company Limited, Irimpanam

Secondary Data: Secondary data is collected through published materials like

journals, periodicals etc. The statistical figures and company polices etc pertaining to

“Traco Cable Ltd” is compiled from annual report.

1.6.3. Tools and Technique Used

• Ratio Analysis

• Trend Analysis

• Comparative Analysis

Ratio analysis is a form of financial statement that is used to obtain a quick

indication of a firm's financial performance in several key areas. This is a

simple This is a simple

arithmetic view of the relationship between numbers. It is used to measure the

short- term liquidity of the firm. Ratio analysis is defined as “the indicated

quotient of to mathematical expressions”. Thus, the analysis of the financial

statements and interpretations of financial results of a particular period of operations

with the help of ‘ratio' is termed as ‘ratio analysis'. It is used to determine the

financial soundness of a business concern.

Ratio are relative form of financial data and are very useful technique to check upon

the efficiency of a firm. Some ratio indicates the trend, progress, or downfall of the

firm. There are different ratios indicate the trend, progress, or downfall of the firm.

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 Traco Cable Company Limited, Irimpanam

1.7. CHAPTER.SCHEME

Chapter- 1 Introduction

This chapter contains introduction to the study, theoretical aspects, statement of

the research problem, significance of the study, objective of the study, hypothesis,

methodology, chapter scheme, limitation of the study

Chapter-2 Review of Related Literature

Literature review on working capital management

Chapter -3 Profile of the Industry and Organisation

This chapter covers the profile of the industry, organisation and product.

Chapter-4 Data Analysis and Interpretation

This chapter contains data analysis and interpretation. It is done with the help of

ratioanalysis, trend analysis and comparative statement.

Chapter-5 Findings, Recommendations and Conclusion

This contains findings, recommendations and conclusion

1.8. LIMITATIONS OF THE STUDY

• The study is restricted for the short period.

• Entire Study depend upon the secondary data (Annual Reports).

• The reliability and accuracy of calculations and interpretations depends on

the information supplied in the form of annual reports and other record.

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 CHAPTER-2

REVIEW OF RELATED LITERATURE

 CHAPTER-2

REVIEW OF RELATED LITERATURE

Gerald Munyoro and Atanasius Nghipangelwa Shaningwa (2021) The study

focused on the significance of working capital management in enhancing liquidity

and profitability in the electricity distribution sector in Namibia because the

electricity distribution sector has deteriorated sharply as the sector continues to be

troubled by heavy gearing that has also been aggravated by mounting debts

resulting in financial stress. In this study positivism philosophy was adopted as

well as case study design. In addition, questionnaires were used to collect the

data. Descriptive statistics analysis was done using the measures of central

tendency and measures of variability namely such as arithmetic means, variances

and standard deviations. The study establishes that working capital

management is significant to the electricity distribution sector as it is pivotal to

the health, performance and value enhancement of all business enterprises. In

addition, it highlighted that growth effect of working capital management is

particularly important in the Namibian electricity distribution sector where

demand is continually outstripping supply. Thus, the overall benefits of working

capital management that are linked to improved liquidity, profitability and

enhanced value creation and growth are indispensable to the electricity

distribution sector in Namibia, as they enable the sector to make critical

infrastructural and technological investments to contain the surging demand, and

also to attract more investors in this highly capital intensive sector. In addition, it
 Traco Cable Company Limited, Irimpanam

was established that profit maximisation through working capital management

enables a company to realise its ultimate objective of maximizing shareholders

wealth by so doing attracting more investors in order to make further capital

investments that will enable the sector to contain the rising demand in electricity.

Pinku Paul(2019) Working capital is one of the important measures of a firm's

efficiency and represents the total liquid assets available with a firm. It reflects a

firms' ability to meet day-to-day operating expenses and also acts as an indicator

of a firm's short-term financial health. So a firm has to plan the effective

utilisation of its working capital in order to maintain equilibrium between

liquidity and profitability of the business. Therefore, the present article tries to

examine the impact of working capital management on profitability of the firms

of Indian steel industry. The study has taken into consideration four independent

variables, that is, Current ratio, Quick ratio, Debtors turnover ratio and Finished

goods turnover ratio which act as the indicators of working capital use in the

industry. Return on total assets represents the profitability of the industry and acts

as a dependent variable to develop an empirical model in order to establish

relationship between working capital management and profitability of the steel

industry in India by using panel data regression. The period of study is 17 years,

that is, 2000–2016. The result of the study indicates that the impact of working

capital management on profitability of the firms of Indian steel industry has been

significant.

Choudhary (2007) has studied in relation to performance of the common stocks

under alternative investment strategies by examining the relationship between

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 Traco Cable Company Limited, Irimpanam

investment performance of equity securities and alternative investment strategies

based on their market capitalization, P/E ratio and earnings per share for the

period January 1997 to December 2005. He has concluded the analysis, the low

market capitalization, P/E ratio, and earnings per share portfolios on average

earned higher absolute rate of return than the high market capitalization, P/V ratio,

and earnings per share portfolios respectively. He has observed that among the

three investment strategies the low market capitalization investment strategy was

found superior to both low P/E ratio and low earning per share investment

strategies in terms of absolute and risk adjusted rate of return. He has mentioned

in the study the efficient market hypothesis denies the possibility of earning

abnormal returns, the fundamental analysts assert that investment strategies

based on the accounting numbers may be indicators of feature investment

performance.

Patra (2005) has studied about the impact of liquidity on profitability by using

current ratio, acid test ratio. Current assets to total assets ratio, inventory turnover

ratio, working capital ratio, receivable turnover ratio, cash turnover ratio of

selected two company's viz., Tata Iron & Steel Company Limited for the period

1999 to 2005. Using mean, standard deviation, co-efficient variation, correlation

and co- efficient of relation. He has concluded that Out of seven liquidity ratios

selected for this study, four ratios namely current ratio, acid test ratio, current

assets to total assets ratio and inventory turnover ratio showed negative

correlation with profitability ratio. Whereas The remaining three ratios namely

working capital turnover ratio, receivable turnover ratio and cash turnover ratio

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 Traco Cable Company Limited, Irimpanam

have shown positive association with the profitability ratio, all of which are

statistically significant at 5% level of significance. He found that the impact of

liquidity ratios on profitability showed both negative and positive association.

However, these correlation co- efficient were not statistically significant. The

result showed that all the correlation co-efficient is as desirable except correlation

co-efficient between inventory turnover ratio 38 and ROI while undesirable sign

between ITR and ROI was not supported by the multiple regression analysis,

which indicated the positive association between these two variables. He

mentioned that growing of profitability which was depends upon many factors

including liquidity. RBI Bulletin (2005) Finance of Foreign Direct Investment

companies has made studied on financial performance analysis using profit

margin ratio, return on net worth ratio of selected 490 non-governments non-financial

foreign direct investment (FDI) companies for the period 2000 -2003 based on their

audited annual accounts. This study concluded that the financial results of the

selected company should improve performance in terms of higher growth in sales,

value of production, manufacturing expenses and gross profit during 2002-03

compared with the respective growth rates in the previous year. It also revealed that

profitability ratios like profit margin return on network increased during the year

under Review Company having major portion of FDF from UK, USA, Switzerland

and Mauritius registered net flow of foreign companies in all the three years.

Petia (2004) discussed in his study about performance of India's non-financial

corporate sector since 1989, by using firm level data and evaluated its financial

vulnerabilities. He has found that promising trends in liquidity, profitability and

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 Traco Cable Company Limited, Irimpanam

leverage of the sector emerged in the early 1990s; he has experienced a reversal

after 1996. Nevertheless, most indicators were still at comfortable levels, and there

was evidence of improvement in 2002. The study also revealed that a number

of firms still face problems servicing their debt obligations, posing a risk to

lenders. He has concluded that aggregate interest 37 coverage of the corporate

sector indicated that potential non-performing loans of the corporate sector

remain high and this underscores the need of the corporate sector remain high. He

suggested this underscores the need for close monitoring of the corporate

Kakani, Saha& Reddy (2003) have studied about an empirical validation of the

widely held existing theories on the determinants of firm performance in the Indian

context. In their study they have used financial statements and capital market data of

566 large Indian firms over a time frame of eight years divided into two sub-

periods (1992-96 and 1996-2000) and to analyse Indian firm's financial

performance across various dimensions viz., shareholder value, accounting

profitability and its components, growth and risk of the sample firms. They have

found that size, marketing expenditure and international diversification had a

positive relation with a firm's market evaluation. They have also concluded that a

firm's ownership compositions, particularly the level of equity ownership by

domestic financial institution and dispersed public shareholders, and the leverage

of the firm were important factors affecting its financial performance.

sector in the future.

Bosworth & Loundes (2002) have studied about the Dynamic performance of

Australian Enterprises investigate the interaction of discretionary investments,

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 Traco Cable Company Limited, Irimpanam

innovation, productivity and profitability within a dynamic framework of firm

performance. They have set up a dynamic and closed model for firm performance

and the result empirical model was tested as a series of recursive equations by

using a four-year balanced panel data set of Australian firms drawn from the

Business Longitudinal Survey. After comparatively analysis, they found that the

current economic profit has an important role to play in enabling firms to invest.

They mentioned in the findings regarding investments complements and also

substitutes. They concluded from analysis the impact of these discretionary

investments on innovation and total factor productivity performance. Finally, the

impact of past discretionary investments both directly and indirectly (that is, via

innovation and productivity performance) on current profitability was examined.

They also revealed that the past values of these investments have a significant

influence on current profit, effectively closing the model.

Mulla (2002) discussed in his paper about the ‘Use of ‘Z' score analysis for

evaluation of financial health of various production houses - A case study' has

been made an insight into the financial health of Shri Venkatesh Co-operative

production houses., Arunageri of Dharwad District. For the purpose of analysis,

the ‘Z' score analysis has been applied to evaluate the general trend in financial

health of a firm over a period by using many of the accounting ratios. From the

analysis he was concluded that the various production houses under study was

just on the verge of financial falls down and on the one hand, current assets

declined because of the negative profitability performance, whereas on the other

hand, the current liabilities were on the increase because of poor liquidity

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performance of production houses.

Wolfgang Aussenegg & Jelic (2002) examined about operating performance of

154 Polish, Hungarian and Czech companies that were fully or partially

privatized between January 1990 and December 1998. They have revealed that

privatized firms in the sample did not manage to increase profitability, and 36

considerably reduced efficiency and output in the post privatization period. They

concluded that the enterprises privatized through mass privatization programs

(Czech SOEs) achieved lower profitability in the post-privatization period

compared to their counterparts privatized through case-by-case method. After

comparative analysis they came to know the Czech companies have also

maintained much higher bank borrowings after privatizations than their polish

and Hungarian counterparts. The study further revealed that private sector IPOs

underperforms their privatization complements in terms of profitability,

efficiency, capital investments and output. Finally, they concluded that firm's size

did not seem to influence key performance measures in selected countries.

Aggarwal &Singla (2001) have studied about developed a single index of financial

performance through the technique of Multiple Discriminate Analysis (MDA), by

selecting 11 ratios and selected ratios used as inputs. For the purpose of analysis they

selected only those ratios, which was relevant in distinguish between profit

making units and loss making units in Indian paper industry. They concluded that,

the model has correctly classified 82.14 percent of units selected as profit making

and loss marking. They mentioned in their study the inventory turnover ratio,

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interest coverage ratio, net profit to total assets and earnings per share are the most

important indicators of financial performance. Also they suggested suggests that the

results of Multiple Discriminate Analysis could be used as predictor of future

profitability / sickness.

Aggarwal &Singla (2001) have studied about developed a single index of financial

performance through the technique of Multiple Discriminate Analysis (MDA), by

selecting 11 ratios and selected ratios used as inputs. For the purpose of analysis they

selected only those ratios, which was relevant in distinguish between profit

making units and loss making units in Indian paper industry. They concluded that,

the model has correctly classified 82.14 percent of units selected as profit making

and loss marking. They mentioned in their study the inventory turnover ratio,

interest coverage ratio, net profit to total assets and earnings per share are the most

important indicators of financial performance. Also they suggested suggests that the

results of Multiple Discriminate Analysis could be used as predictor of future

profitability / sickness.

Rajeswari (2000) studied about the Liquidity Management of Tamil Nadu Steel

industries pvt Ltd. Alangulam-A Case Study. She concluded from the analysis;

the liquidity position of Steel industries pvt Ltd was not stable. After the

comparative

analysis regarding liquidity ratios, she has found there was too much of liquidity

in the first two years of the study period and also a very high degree of liquidity

was also bad as idle assets earn nothing and affects profitability. In short, she

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concluded that the liquidity management of Steel industries pvt Ltd is poor and is

not satisfactory.

D'Souza & Megginson (1999) have studied concerning the financial and operating

performance of privatized firms during the 1990s. They made comparison about

the pre and post privatization financial and operating performance of 85 companies

from 28 industrialized countries that were 32 privatized through public share

offerings for the period from 1990 to 1996. They have noticed that the significant

increases in profitability, output, operating efficiency, dividend payments and

significant decreases in leverage ratios for the full sample of firms after

privatization. They have also concluded that the capital expenditures increase

significantly in absolute terms, but not relative to sales and Employment declines,

but insignificantly. As per findings, they strongly recommended that

privatization yields significant performance improvements.

Dhankar (1998) has studied about the criteria of performance measurement for

business enterprises in India study of public sector undertakings. The author gives a

new model for measuring the performance of a business enterprise in India,

wherein, the basis is to compare its actual rate of return with its expected risk adjusted

rate of return. Realizing the importance and controversy of public sector in India,

an attempt was made to measure the performance of all public sector undertakings,

which were started up to 1964 and were in operation until 1983. It is shocking to

know that half of them on an average want to talk of making excess returns, have

not been able to earn equal to their cost of capital.

Loundes (1998) studied on his research paper regarding “performance of Australian

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Government Trading Enterprises: An overview”. He has provided 31 an overview

of GTE performance over the 5 years to 1996 using the IBIS Enterprise Database,

following the method of analyzing firm performance as outlined by the steering

committee (1998). He has made comparative analysis and its results indicate that

there are large differences in performance across firms, and more particularly,

across the industries. Assessing the performance of Government Trading

Enterprises (GTEs) has become increasingly important in the context of the push

towards privatization.

Vijayakumar A. (1996) has studied about ‘Assessment of Corporate Liquidity - a

discriminate analysis approach' in this research he has revealed that the growth

rate of sales, leverage, current ratio, operating expenses to sales and vertical

integration was the important variables which determine the profitability of

companies in the sugar industry. Also he has studied the short-term liquidity

position in twenty-eight selected sugar factories in co-operative and private

sectors. In research a discriminate analysis has been used by the researcher, to

undertaken to distinguish the good risk companies from poor risk companies

based on current and liquidity ratios. In this study discriminating ‘Z' scores have

been calculated with the help of discriminate function and according to the ‘Z'

scores the companies are ranked in the order of liquidity.

Pai, Vadivel & Kamala (1995) have studied about the diversified companies and

financial performance. Main purpose of research was found out the relationship

between diversified firms and their financial performance. For the purpose of

research, they have selected seven large firms and analysed those firm which having

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different products-both related and otherwise-in their portfolio and operating in

diverse industries. In this study, a set of performance measures / ratios was

employed to determine the level of financial performance and variation in

performance from one firm to another has been observed and statistically

established. They revealed that the diversified firms studied have been healthy

financial.performance.

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 CHAPTER-3

PROFILE OF THE INDUSTRY AND ORGANISATION

 CHAPTER-3

PROFILE OF THE INDUSTRY AND ORGANISATION

3.1 PROFILE OF THE INDUSTRY

The wire and cable industry has moved from being a small industry to a very large

industry over the last decade. Although it is a volume driven product, it has a lot of

quality and technical particulars. Over a period of time, the industry has moved

from the unorganised to the organised sector. However, about 35% of this industry

is still in the unorganised sector. Requirements like brand and quality perception

are key in this Rs 15,000 core industry. The wire and cables industry predominantly

provides challenging opportunities in the field of manufacturing, supply chain,

procurement,marketing and HR.

This industry is currently undergoing a major change and portends huge

opportunity for upcoming professionals and will give them a first hand experience on

subjects like techno-marketing, brand building, Six-Sigma , just-in- time

manufacturing etc.

A cable is two or more wires or rope running side and bonded, twisted or braided

together to form a single assembly. In mechanics, cables are used for lifting and

hauling; in electricity they are used to carry electrical currents. An optical cable

contains one or more optical fibers. Mechanical cable is more specifically called wire

rope. Rope made of multiple strands of natural fibers such as hemp; sisal; manila

and cotton have been used for millennia for hosting hauling. By 19 th century,

deepening of mines and construction of large ship increased demand

 Traco Cable Company Limited, Irimpanam

for stronger cables. Invention of improved steel making techniques made high

quality steel available at lower cost, and so wire ropes became common in mining

and other industrial applications. By the middle of 19th century manufacture of

large submarine telegraph cables was done using machines similar to that used

for manufacture of mechanical cables.

History of cables: There are many things that are essential to transfer things from

one place to another place. Without transfer, it is difficult to operate some things.

One such thing is the power that is important to life. So, for transferring power

from one place to another one need cables that can easily supply power to

different parts of the universe.In 19th century and early 20th century, electrical

cable was often insulated using cloth rubber and paper. Plastic materials are

generally used today, except for high reliability power cables.

Electrical cables wires may be made flexible by stranding the wires. In this

process, smaller individual wires are twisted or braided together to produce

larger wires that are more flexible than solid wires of similar size. Bunching

small wires before concentric stranding adds the most flexibility. Copper wires in

may be bare, or they may be coated with a thin layer of another material; most

often tin but sometimes gold, silver or some other material. Tin, gold and silver

are much less prone to oxidization than copper, which may length wire life, and

makes soldering easier. Tight lays during stranding makes the cable extensible

(CBA-as in telephone handset cords)Cables can be securely fastened and

organized, such as using cable trees with the aid of cable ties or cable lacing.

Continuous-flex or flexible cables used in moving applications cable carries can

be secured using strain relief devices or cable. Power cables: A power cable is an

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assembly of two or more electrical conductors, usually held together with an

overall sheath. The assembly is used for transmission of electrical power. Power

cables may be insulated as permanent wiring with in

buildings, buried in the ground, run overhead or exposed. Flexible power cables

are used for portable devices, mobile tools and machinery. At high frequencies,

current tends to run along the surface of the conductor and avoid the core. This is

known as the skin effect. It may change the relative desirability of solid versus

stranded wires. Power cables: A power cable is an assembly of two or more

electrical conductors, usually held together with an overall sheath. The assembly is

used for transmission of electrical power. Power cables may be insulated as

permanent wiring with in buildings, buried in the ground, run overhead or

exposed. Flexible power cables are used for portable devices, mobile tools and

machinery.

Early telegraph systems used the first forms of electrical cabling, transmitting small

amounts of power. Gutta-percha insulation used on the first submarine cables was

unsuitable for building wiring use since it deteriorated rapidly when exposed to air.

The first power distribution system used copper rods, wrapped in jute and placed

in rigid pipes filled with a bituminous compound. Although vulcanized rubber had

been patented by Charles good year in 1884, it was not applied to cable insulation

until the 1880s, when it was used for lighting circuits. Rubber insulated cable was

used for 11000 volt circuits in 1897 installed for the Niagara Falls power project.

Oil impregnated paper insulated high voltage cables were commercially practical

by 1895. During the world war second several varieties of synthetic rubber and

polyethylene insulation were applied to cables.

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Modern power cables come in a variety of sizes, materials and types, each

particularly adapted to uses. Large single insulated conductors are also some times

called power cables in the country. Cables for direct burial or exposed installations

may also include metal armour in the form of wires spiraled around the cable, or a

corrugated tape wrapped around it. The armour may be made of steel or

aluminium and although connected to earth ground is not intended to carry current

during normal operation.

Power cables used stranded copper or aluminium conductors, although small

power cables may use solid conductors. The cable may be include un insulated

conductors used for circuit neutral or for ground (earth) connection.

Flexible cables: All electrical cables are somewhat flexible, allowing them to be

shipped to installation sites wound on reels or drums. Where applications require a

cable to be moved repeatedly, such as for portable equipment, more flexible cables

called "cords" or "flex" are used. Flexible cords contain fine stranded conductors, not

solid core conductors, and have insulation and sheaths to withstand the forces of

repeated flexing and abrasion. Heavy duty flexible power cords such as those

feeding a mine face cutting machine are carefully engineered-their life is measured in

weeks. Very flexible power cables are used in automated machinery, robotics, and

machine tools. See power cord and extension cable for further description of flexible

power cables. Other type of flexible cable include twisted pair, extensible, coaxial,

shielded, and communication cable.

Electrical cables: Electrical cables may be made more flexible by stranding the

wires. In this process smaller individual wires are twisted or braided together to

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produce larger wires that are more flexible than wires of small size. Bunching small

wire before concentric stranding adds the most flexibility. Copper wires in a cable

may be bare, or they may be placed with a thin layer of another mental, most often tin

but sometimes gold, silver or some other material. Tin gold and silver are much

less prone to oxidization than copper, which may lengthen wire life, and makes

soldering easier. Tinning is also used to provide lubrication between strands make the

cable extensible (CAB)-as in telephone hand set codes. Cables can be securely

fastened and organised, such as by using trucking, cable trays, cable ties or

cablelacing. Continuous-flex or flexible cables used in moving application with in

cable carries can be secured using strain relief devices or cable ties. At high

frequencies current tends to run along the surface of the conductor. This is known as

the skin effect.

Quality of cables: Believe it or not a brand of cable can be critical ,example: some

of our clients moved in to a new building the telephone guy also pulled the

network cable and did the work station jacks and he did a good enough job of it. The

problem was he pulled two brands of category-5 cables, and one brand was in

computable with the network cards and the cost of figuring out why the old ones did

not work anymore. In a couple of other pre-pulled cases we found the wire so

brittle we had trouble terminating in without breaking it. Again this increased the

client's expense. For this reason we prefer to supply the cables regardless of who is

going to pull it.

Key success factor: Product of the companies like ACSR cables weather proof

cables and power cables are used by several departments in India so they are

manufactured to meet Indian standard specification. With stringent

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quality methods, the cables are of excellent quality and have been acclaimed as one

of the best in the country, the signalling cable are made of railway specification are

functioning all over India. This is because Traco never compromise on quality.

More over the company has undertaken expansion and modernization projects,

which would double the overall products capacity of power conductors. This would

substantially help to improve the probability years.

Nature of business: The post and telegram department recognised Traco Company to

manufacture petroleum jelly filled cables incorporating the latest technology in the

production and testing of such cables by recommending the latest technology in the

production and testing of such cables by recommending to the Government of India

to grant the license to Traco for manufacture of 5000 lakhs KM Jelly filled cables

and on the fact that Jelly filled cables are cheaper compared to conventional.

The telecommunication department of government of India has decided to

discontinue progressing the manufacture and use of paper insulated lead sheared

cables and to use only petroleum jelly cables for subscriber lines in future.

3.1.1. Global Scenario

The wires and cables market size was estimated at USD 164.94 billion in 2018

and is expected to expand at a CAGR of 4.9% over the forecast period. Increasing

urbanization and rapidly growing building infrastructure are the major factors

driving the growth. These have impacted the energy and power demand in residential,

commercial, and industrial sectors. Increased investments in smart grids and

upgrading power transmission and distribution systems are expected to further

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drive the market. Adoption of smart grid technology has fulfilled the rising need for

grid interconnections, significantly resulting in rising investments in the new

submarine and underground cables. In addition, growing offshore wind farms, high

voltage direct current links, and grid interconnections are projected to fuel the growth

of the market.

Smart grid is an electric grid, which consists of controls, computers, automation,

and new technologies and equipment which functions together and provides efficient

transmission of electricity. Rising population is leading to increasing demand for

power. To reduce the frequency and duration of power outages, storm impacts, and to

restore service faster after outages, it is necessary to make the grid smarter and

technologically advanced. Smart grid helps provide more reliable power, generating

efficient renewable power, using a mix of energy sources, working with smart

devices and smart homes, reducing carbon print and encouraging the use of

electric vehicles.

Increased energy needs in Asia Pacific, Middle East, and South America has

resulted in rising investments in smart grids in these regions, further driving the

demand for low voltage cables. Growth in the power distribution sector, power

generation from renewable energy sources, and demand from automotive and

non-automotive industries are the other factors projected to positively influence

the demand for low voltage cables.

Urbanization is one of the major reasons for the overall growth of the wires and

cables market. The need for power grid interconnections in densely populated

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areas is creating a demand for submarine and underground cables. The underground

cables reduce space required and offer reliable transmission of electricity.

Environmental regulations that observe the impact of electrical cables on the

environment, the safety of electrical installations, implications for the health of the

materials used for cable manufacturing have led to various innovation and new

product development. These regulations have encouraged the introduction of new

products such as halogen-free flame retardant compounds and implement new

processes with low energy consumption and efficient use of raw materials.

3.1.2 Indian Scenario

Indian power cable manufacturers have attained maturity in terms of technology for

HV cable up to 220 kV and have been found competitive in the global scenario,

despite having higher local costs, as well as local taxes and duties being paid on their

products. Some manufacturers have established a world class technology platform in

EHV cables up to 400 kV, either through technical collaboration or through joint

ventures. However, due to inappropriate policies of many utilities which promote

import rather than investment in local industry, the country is still importing

cables of even 66kV and above voltage grades. Further, accessories of higher

voltages above 33 kV are also being imported in a big way, in the absence of

technology in this segment. The domestic manufacturers must therefore explore the

possibility of manufacturing these items to meet likely demand. There is a burning

need for standardization of specifications across this segment, which would lead to

improved efficiencies in this segment and also reliability and replace ability of

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products. With increasing focus on renewable, the industry is now looking forward

to supply cables for solar and wind power applications in addition to oil and gas,

railways and other specialized segments. In India most of the communication is being

made possible through cable communication. The cable pays on important role in the

field of communication. India is not for behind most of the developed countries in

the field of communication. India is making its headway. Due to the lack of

latest technology in the field of cable manufacturing, India has to depend in money

may be spend on the import cables from the foreign countries. As a result India has

no:1 only achieved self-sufficiency in the field of cable manufacturing but is this

made a big head in to the international market

The Government has triggered the entire project relating of the setting up of cable

manufacturing in India. As a result the central Government has allowed to import the

machinery required for the manufacture of high quality cables. both power cables

as well as jelly Filled telephone cables and has allowed considerable rate of

concession of these machinery as well as raw materials mainly coppers.

3.1.3 State Scenario

The manufacture of telephone cables are mainly reserved for public sector. The

only unit till 1974 was Hindustan cables Ltd Government of India undertaking.

Trco was the first state sector to manufacture telephone cables in India it started its

commercial production in the year of 1974. It is evident that there is a scope of

establishing the facility for manufacturing of 5000 lakhs KM Jelly filled telephone

cables by Traco in Kerala.

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3.1.4 Pioneers of Cable Industry

The jelly Filled telephone cable and Electrical cable industry in an area where

there are only very few players as compared to other related industrial products. This

is mainly due to the fact that the only customers for the product is Bharath Sanchar

Nigam Ltd (BSNL) and Kerala State Electricity Board (KSEB)are the main factor to

fixing the piece of the product. There are 27 important players in the field. The major

players are Hindustan cables, Tamil Nadu telecom, Sterlite, T X cable, Finolex

cables, R P G etc. Traco cable Ltd is the major supplier for southern region. BSNL

and KSEB calls for sealed tenders when requirements come up. The tenders are

scrutinized and price is fixed by BSNL and KSEB according to certain parameters of

ranking of the manufactures. One parameters is having earlier supply experience,

another being ISO certification for good quality product and internationality accepted

method of production.

Vision International, Ahmedabad: Supplying and wholesale exporting a range

of jelly filled telephone cables. Also export of LT cables, HT cables, house wiring

cables, coaxial cables, thermocouple cables and submersible cables. Uniflex

Cables Limited:Exporters of jelly filled telephone cables, unfilled telephone cables,

aerial cables, self supported aerial cables, drop wires, switch board wires and buried

service wires. Also manufacture power cables, LT power cables and elastomeric

cables.

U M Cables Limited:Manufacturer, exporter and supplier of copper cables,

telephone cables, jelly filled copper cables, jelly filled telephone cables, jelly filled

aerial copper cable, jelly filled copper cable, armoured copper cable and duct copper

cable. Siechem Technologies Private Limited: Engaged in export of jelly filled

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telephone cables, heat shrinkable cables, control cables, jelly filled cables,

instrumentation cables, power cables, aerial bunched cable, building wires, flexible

cords cable and automotive wires.

Alankar Sales Corporation, Ghaziabad: Manufacturer, exporter and supplier of jelly

filled telephone cables, PVC jelly filled telephone cables, PVC jelly filled armored

telephone cables, PVC jelly filled unarmored telephone cables and copper PVC jelly

filled telephone cables.

Sudarshan Telecom: Engaged in wholesale manufacture and exports of jelly filled

communications such as duct cables, aerial cables, duct burial cables and 50 pair

jelly filled telephone cables.

Miracle Cables India Private Limited: Suppliers and manufacturers of telephone

cables, jelly filled telephone cables, telecom cables, telecommunication cables,

armoured telephone cables, multicore telephone cables etc.

Birla Ericsson Optical Limited: Manufacturer of jelly filled telephone cables, fibre

optic cables, switch board cables and data communication cables.

Mayfair Machine Kraft Pvt. Ltd.: Manufacturers and exporters of cable making

machinery for jelly filled telephone cables and power cables including caterpillar

unit, rotating die holder, construction machine, pay off device and sector sensing

unit.

3.2 PROFILE OF THE ORGANISATION

The profile of the organisation is mentioned below

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3.2.2 History of Traco Cable Company

Traco Cable Company is a Kerala Government company; incorporated in the year

1960 and manufacture high quality cable wires. Since then Traco has been in the

forefront in meeting requirement cables wires in India specially the needs of

public sector undertaking in India like railways electricity boards supplying

AAC/AAAC/ACSR(low tension and high tension ranges) wires/ PISF telephone

cables, control cable, power and signaling cables. With the up gradation in cables

technology, Traco has upgraded with the state of the art plant and machinery

testing equipment's and other infrastructure facilities. The products are

manufactures not allow to stringent Indian standard but also to international

standards. Traco's cable carry power (power cables/ACSR Wires) actual signals

(signalling cables) and help to connect people in far flung areas

telecommunication in the vast subcontinent that is India, with its quality products

which are superior but any standard of construction installation and service. The

superiority of Traco cables is the result of better know- how to combined with

latest sophisticated machinery and equipment employed in their manufacture

rigorous quality control maintained at every stage of manufacture, which ensures

only products better than prescribed standards are allowed to go out to the market.

Traco cables have thus earned a name for themselves in Indian markets for

dependability and quality under any circumstances.

The company's first manufacturing unit was setup in God's own country in Kerala

state at Eranakulam district and commenced production in the year 1964,

manufacturing power cables, control cables, signalling cable and bare conductors

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 Traco Cable Company Limited, Irimpanam

with the technical collaboration of Ws Kelsey Engineering Company Canada. The

machinery and testing equipment where improved from USA and Hun gray,

Indigenous machinery were produced from M/s Madhya pradesh Industries and

"Renasur" industries. The company as part of product diversification entered in to

the manufacture of telephone cables in the year 1974 at the existing Irimpanam

unit. Owing to the huge demand for telephone cables at Thiruvalla in

Pathanamthitta district in Kerala state itself with the technical collaborations with

Ws General cables included USA. The testing equipment's from Ws Philips-MEA,

Germany. Indigenous machines were produced from WsAlind, M/s Usha Martin

Industries. Jelly Filled Telephone cables are manufactured ranging from 5 pairs to

1600 pairs armoured (steel tape covering) or unarmoured as per BSNL

specification. The company doubled the manufacturing capacity by induction of

new machines are Thiruvalla unit for the manufacture of power cables and bare

conductors and its commercial production commenced by February 2007. Traco

has set up a building wiring cable unit at Pinarayi, Thalassery in Kannur District

in the year 2012. The unit is for exclusive production of building wiring cables

for the sizes ranging from 1 sq. mm to 10 sq.mm.

3.2.2. Fortunners in the Field

Other of the India's most sought after paper Insulated Lead Sheathed

Telecommunication Cables were produced by Traco in collection with

Hindustan cables, West Bengal under an agreement signed in 1974 until the

liberalization of licensing policy in the only one in the whole south India.

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3.2.3 Keeping Track with Time

With the progress in cable technology, paper insulated lead cables gave way to the

much more sophisticated jelly Filled telephone cables which are superbly suited for

communications. Traco was one among the first perceived the opportunities

inherent in this new development. It soon went into technical collaboration with

General cables, USA, world leaders in the communication cable field and

manufactured them in India to exacting standards.

3.2.4 Growing to Eminence

Traco now truly enjoys and enviable positions in the field of cables being the only

cable manufacture of its kind with the capability to produce both power cables and

telecommunication cables in the entire south India. We are the only manufacture that

can make electrical and communication cable not only stringent India standards but

also to international standards, in south India. Always playing its humble role in the

process of nation building, Traco cables carry energy, actuate signals and help to

connect people in far flung areas in this vast subcontinent, that India with its quality

products. This polyethylene insulated jelly filled telephone cables erase the

conventional ones from the scene. Highest clarity, minimum disturbances,

resistance to high cold, and water logging conditions in an assurance of percentage

reliable communication and make it an obvious choice for digital communication,

television,railways.and.defence.purposes.

3.2.5. Traco Vision

We will be a national player as the deliverer of cables and conductors through

continual improvement on the R&D and Quality

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3.2.6. Traco Mission

To achieve 250 Crore turnover by 2022 Meeting the customer's requirements with

quality products Continuously adopting the state of the art technology in the Industry

Providing the products at affordable prices.

3.2.7. Market of Traco Cables

The main customers for ACSR cables are electricity board of various states and

railway department. In the case of telephone cables main market was BSNL and

other telephone companies. Company enjoys a good market as there is no straight

competitor for the products offered. Since there is no advertisement for the

products of the company, the company mainly goes for accepting quotation given

in newspaper internet and other publication or bulletin.

3.2.8. Quality Policy

Traco cable company limited shall strive for continuous improvement in

performance, by meeting the needs of internal and external customers complying

with regulations through the involvement of all its employees.

Environment policy: Traco cable company shall strive for continuous

improvement in its performance in preventing environment pollution, to conserve

resources and comply with relevant environmental regulations.

Plant and equipments: The Cochin plant is having all facilities for manufacture

and testing of cables and conductors. The Thiruvalla plant is having all the

facilities for the manufacture of jelly filled telephone cables and power conductors

, power cables, control cables and signaling cables.

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 Traco Cable Company Limited, Irimpanam

3.2.9. Competitors of Traco Cables

• Hindustan cables

• Telecom sterile

• Finolex cables

• RPG

3.2.10. Infrastructural Facilities

The Thiruvalla unit has around 6000 sq.meters covered area (factory; 4750 sq. meter

Laboratory; 1250 sq.meters ) with in 14 acres of land and is located within municipal

limits of thiruvalla .The Kerala State Electricity Board has exclusively set up a 66

KV / 11 substations for 'Thiruvalla unit within the company compound for

uninterrupted power supply. Apart from this the company has two captive Diesel

Power generating sets each of 500 KVA capacities to ensure uninterrupted

activities in the unit. The unit is having own captive water resources for continuous

water supply.

The cochin unit has around 8000sq.meters covered area (factory;7000

sq.meter+1000sq.meters of laboratories) with in 36 acres of land. This unit is

availing of 11KV incoming feeder from Kerala State Electricity Board (KSEB)

for continuous power supply. The company is having its own ground water

sources, including an pond for uninterrupted supply of water.

Testing facilities: The Cochin Unit has all testing facilities for testing
bare

conductors such as Tensile Strength, Elongation, Electrical resistance etc. for testing

facilities s per IS: 1554 is occupied.

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 Traco Cable Company Limited, Irimpanam

3.2.11 Technology Used

The manufacturing technology for power cables, control cables and bare

conductors are from MIs General Cables in USA, DE - Angeli Industries, Italy and

MIs Philips communication Germany.

3.2.12 Corporate Governance

Traco Cable philosophy on corporate governance envisages the attainment of highest

level of transparency, accountability and equity in all factors of all its interactions

with its stakeholders, company maintain its corporate governance through value

addition, wealth maximization and efficient use of resources.

3.2.13 Traco Cables Company Limited

Traco Cable Company is a Kerala Government undertaking which started its

operation in the year of 1964 with a total capital of 61 crores. That was the time

when Kerala has been looking for the telecommunications development.Telephone

cables were the most wanted commodities for BSNL to expand their networks.

And at the right time realizing the need Government started the Traco cable company.

The company had a technical collaboration with Kelsey Engineering Company of

Canada for its high quality electric cable wires with changes in cable technology,

the company assessed the opportunities in jelly filled telephone cables (JFTC), which

has much more quality and reliability than the existing cables. The company has

been using technical know-how form general cable Inc. of USA and now is one

of the cable producing units in India out of 28 others. The Traco cable company

limited at Irimbanam has been started the production of electric cables for state

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 Traco Cable Company Limited, Irimpanam

Electricity Board and having nearly 500 employees. The company holds very

impressible track record in these years by effective

management, services and workers participation, when compared to other public

sector companies, the company has a better employee relationship and a pleasant

organizational climate.

Department of Bharath Sanchar Nigam Ltd and the Kerala State Electricity Board

is the customer who buys almost 99% of the cable that produced in this company.

Considering all the relevant aspects we are sure that the future of the company

will be a brightful one.

3.3. PRODUCT PROFILE

• All Aluminium Conductors (AAC) are manufactured as per IS: 398

(Part1)for power distribution.

• All Aluminium Alloy Conductors (AAAC) as per IS :398 (Part IV) for power
distribution

• Aluminium conductors with Steel Reinforcement (ACSR) as per IS: 398 (Part
II) for power distribution and transmission up to 61 strands.

• Power cables (copper and aluminium) conductors up to 1100 volts and control

cables /signaling cables (copper conductors up to 37 conductors) as per IS: 1554

with PVC insulation. These cables are used for railways, transmission lines.

• Weather proof cables (aluminium conductor, PVC insulated single / multi

core) for power service connection as per IS: 694 specifications

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 Traco Cable Company Limited, Irimpanam

• House wiring and flexible cables (copper conductor up to 128 strands) as per

IS: 694 specifications( 1sq.mm,1.5sqmm,2.5sqmm,4sqmm,6sqmm and

10sq.mm PVC insulated(FRLS) single core copper wires up to 1100v.

• LT/HT Aerial Bunched Cables up to the range of 11kv as per IS 14255 and IS
7098Part -II

• XLPE LT/HT/UG Cables as per IS 7098 PART I and II.up to 11kv .

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 Traco Cable Company Limited, Irimpanam

3.4 ORGANISATIONAL STRUCTURE

Board of directors

MD/CEO

Unit head Unit head Unit head Unit head

Thiruvalla Thiruvalla Thiruvalla Thiruvalla

Manager Manager Manager

(finance) (Production & Finance) (QA& Dispatch)

Asst.Manager Manager
(QA & Dispatch) (QA & Dispatch)

Asst.Manager
Asst.Manager
(QA & Dispatch)
(purchase & stores)
Officer
(finance)

Staff and workmen...(GR.I, GR.II, GR.III,Semi skilled and unskilled)

Figure 3.1: Organisational Structure

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 Traco Cable Company Limited, Irimpanam

TRACO cable ltd is registered under the Indian company Act l956. The registered

office of TRACO cable is in Panambilly at Ernakulam. The management of the

company is vested with Board of directors and it includes Managing Directors

and.other.staffs

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 CHAPTER-4

DATA ANALYSIS AND INTERPRETAION

 CHAPTER-4

DATA ANALYSIS AND INTERPRETAION

4.1 WORKING CAPITAL POSITION ANALYSIS

Working capital analysis is used to determine the liquidity and sufficiency of current

assets in comparison to current liabilities. This information is needed to determine

whether an organization needs additional long-term funding for its operations, or

whether it should plan to shift excess cash into longer-term investment vehicles. A

working capital analysis should be conducted at ongoing, regular intervals.

4.1.1 Gross Working Capital

The term gross working capital represents the amount fund invested in current assets.

Thus, gross working capital is the working invested in total assets of the enterprise.

Gross Working Capital = Receivables + Inventory + Cash and Marketable

Securities+ Short Term Investments + Any other Current Asset.

Table 4.1: Gross Working Capital

Current 2014- 2015- 2016- 2017- 2018- 2019- 2020-

Assets 2015 2016 2017 2018 2019 2020 2021

Inventories 848 628 2004 2172 2175 2084 1894

Sundry
1430 1318 4573 5893 6039 5947 4280
Debtors
Cash&
Bank 171 203 911 1667 1541 930 860
Balance
Other
Current 4.60 4.76 59.8 21.76 13.23 10.40 9.30
Assets
Loans and
508 447.8 195 262 623 865 337
Advances
Total 2962 2602 7743 10016 10391 9837 7380
(Source: Annual Report)
 Traco Cable Company Limited, Irimpanam

This table shows the component of current assets of the company, which are the

main parts of the working capital. The above bar graph shows that there is an

increase in gross working capital which means that current assets is higher.

12000

10000
Gross Working capital

8000

6000

4000

2000

Years

Figure 4.1: Gross Working Capital

4.1.2 Net Working Capital

Net working capital (NWC) is the difference between a company's current assets and

current liabilities. A positive net working capital indicates a company has

sufficient funds to meet its current financial obligations and invest in other

activities. It is used for the day to day activities of the concern.

Net Working Capital = Current Asset – Current Liability

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 Traco Cable Company Limited, Irimpanam

Table 4.2: Net Working Capital

Years Current Current Net Working

Assets Liabilities Capital

2014-2015 2961.6 4152.86 -1191.26

2015-2016 2601.56 4920.26 -2318.7

2016-2017 7743.74 9728.7 -1984.96

2017-2018 10014.35 11755.1 -1740.75

2018-2019 10391.45 13340.5 -2949.05

2019-2020 9836.4 11485.6 -1649.2

2020-2021 7380.3 10685.4 -3305.1

(Source: Annual Report)

The above table shows that the net working capital has been showing a

decreasing trend. The year 2014-2015 onwards, the current liability was more

than the current assets, so that it is a negative figure. It shows that the company

cannot meet its current obligations with the current assets; also it will be forced

to use its long term assets, or income producing assets, to pay off its current

obligations. This will cause a liquidity crunch and affect the operation of

business

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 Traco Cable Company Limited, Irimpanam

-500

-1000
Net working Capital

-1500

-2000

-2500

-3000

-3500

Years

Figure 4.2: Net Working Capital

4.1.3 Ratio of Gross Working Capital

Gross working capital refers to the firm's total investment in current assets. Current

assets which can be converted into cash within an accounting year and include

cash, short term securities, debtors (accounts receivable), bills receivable and

stock.

Gross working capital

Ratio of Gross Working Capital =
Sales

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 Traco Cable Company Limited, Irimpanam

Table 4.3: Ratio of Gross Working Capital

Gross Working
Years Sales Ratio
Capital
Networking Capital

2014-2015 2961.3 11123.54 0.26

2015-2016 2601.64 12185.18 0.21

2016-2017 7742.8 12262.89 0.63

2017-2018 10015.85 13584.26 0.74

2018-2019 10391.11 11122.56 0.93

2019-2020 9836.4 10986.23 0.89

2020-2021 7380.3 8245.24 0.89

(Source: Annual Report)

From the above table of Gross working capital to sales in 2018-2019 indicates a

position where to make Rs. 1/-sales Rs 0.93/-worth of current asset is

maintained. This is mainly due to poor sales position. The previous year it is

about Rs.1/- sales Rs0.74/- worth of current asset is maintained.

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 Traco Cable Company Limited, Irimpanam

1
0.9
Gross Working Capital ratio

0.8
0.7
0.6
Gross working capital ratio

0.5
0.4
0.3
0.2
0.1
0

Years

Figure 4.3: Gross Working Capital Ratio

4.1.4 Current Assets Turnover Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay

short- term obligations or those due within one year. It tells investors and analysts

how a company can maximize the current assets on its balance sheet to satisfy

its current debt and other payables. Current asset turnover ratio can be calculated

using the following formula

Sales
Current Asset Turnover Ratio =
Current Assets

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 Traco Cable Company Limited, Irimpanam

Table 4.4: Current Assets Turnover ratio

Current Current Asset

Years Sales Assets Turnover
Ratio

2014-2015 11123.54 2261.3 1.65

2015-2016 12185.18 2961.64 1.86

2016-2017 12262.89 7743.74 1.58

2017-2018 13584.26 10014.35 1.36

2018-2019 11122.56 10391.45 1.07

2019-2020 10986.23 9836.4 1.12

2020-2021 8245.24 7380.3 1.12

(Source: Annual Report)

From the above table, Company's current asset turnover ratio is good during the

year 2015-2016. It has gone almost to ratio 4:1. During the year 2018-19 it has

gone just above ratio 1:1.It's average ratio is at 1.58:1 This ratio is poor due to

decrease in sales. It implies that Company's current asset turnover ratio is poor.

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 Traco Cable Company Limited, Irimpanam

2
Current Asset Turnover ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0

Year

Figure 4.4: Current Assets Turnover Ratio

4.1.5 Working Capital Turnover Ratio

This ratio highlights the effective utilization of working capital with regard to

sales. This ratio represents the firm's liquidity position. It establishes the

relationship between cost of sales and net working capital.

Sales
Working Capital Turnover Ratio =
Net Working capital

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 Traco Cable Company Limited, Irimpanam

Table 4.5: Working Capital Turnover Ratio

Working
Net
Capital
Years Net Sales Working
Turnover
Capital
Ratio

2014-2015 11123.5 -1191.26 -9.33

2015-2016 12185.2 -2318.7 -5.25

2016-2017 12262.9 -1984.96 -6.18

2017-2018 13584.3 -1740.15 -7.80

2018-2019 11122.6 -2949.79 -3.77

2019-2020 10986.23 -1649.2 -6.66

2020-2021 8245.24 -3305.4 -2.49

(Source: Annual Report)

The above table shows that the working capital ratio is negative in all year.

Negative working capital implies that the firm is using short term liabilities

even for financing the fixed assets. This is good for business as it will reduce

finance cost considerably. However, it will create a very high liquidity problem

in times of a crisis. The firm will be compelled to sell off its fixed assets for

meeting its current liabilities.

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 Traco Cable Company Limited, Irimpanam

0
Working Capital Turnover rato
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10

Year

Figure 4.5: Working Capital Turnover Ratio

4.2 LIQUIDITY RATIOS

It is also termed as short-term solvency ratios. The term liquidity means the extent

of convertibility of assets into money for paying obligation of short-term nature.

Accordingly, liquidity ratios are useful in obtaining an indication of a firm's

ability to meet its current liabilities.

4.2.1 Current Ratio

Current ratio establishes the relationship between the current asset and the current

liabilities. It attempts to measure the ability of a firm to meets its current

obligations.

Current Assets
Current Ratio =
Current Liability

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 Traco Cable Company Limited, Irimpanam

Table 4.6: Current Ratio

Current Current
Years Current
Liabilities Ratio
Assets

2014-2015 6730.2 4152.86 1.09

2015-2016 6527.29 4920.26 0.90

2016-2017 7743.74 9728.7 0.80

2017-2018 10014.35 11755.1 0.85

2018-2019 10391.45 13340.5 0.78

2019-2020 9836.4 11485.6 0.86

2020-2021 7380.3 10685.4 0.69

(Source: Annual Report)

The above table shows that the current ratio remains more or less than the same

over the years under study. Generally the current ratio should be 2:1 to compensate

for the decline in the price of current assets. But in this case most of the current

ratio is <1. This implies that if there is decline in the prices of current assets, we

may not be able to meet our current liability. Thus, the short-term liquidity

position of the company is not good.

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 Traco Cable Company Limited, Irimpanam

1.2

0.8
Current Ratio

0.6

0.4

0.2

Year

Figure 4.6: Current ratio

4.2.2 Quick Ratio

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

to pay down its current liabilities, it is also called the acid test is a quick test

designed to produce instant result.

Quick Assets
Quick Ratio =
Current Liability

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 Traco Cable Company Limited, Irimpanam

Table 4.7: Quick Ratio

Current Quick Asset

Years Quick
Liabilities Ratio
Assets

2014-2015 1605.4 4152.86 0.39

2015-2016 1526.2 4920.26 0.31

2016-2017 5543.2 9728.7 0.57

2017-2018 7581.24 11755.1 0.64

2018-2019 7592.77 13340.5 0.57

2019-2020 6887.6 11485.6 0.6

2020-2021 5148.7 10685.4 0.48

(source: Annual Report)

Quick asset ratio of 1:1 is considered satisfactory as a firm can easily meet all

its current liabilities. From the above chart it is clear that the firm having quick

assets less than the current liabilities. Upto the years 2017-2018 there is an

increase in quick ratio and the rest of the years, it is fluctuating. Thus, the firm

is not safe to meet its current liabilities

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 Traco Cable Company Limited, Irimpanam

0.7

0.6

0.5
Quick ratio

0.4

0.3

0.2

0.1

Years

Figure 4.7: Quick Ratio

4.2.3 Absolute Liquidity Ratio

This ratio establishes the relationship between the absolute liquid assets and

current liabilities. Absolute liquid assets include cash in hand, cash at bank, and

marketable securities

Absolute Liquid Assets

Absolute liquidity ratio =
Current Liabilities

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 Traco Cable Company Limited, Irimpanam

Table 4.8: Absolute Liquidity Ratio

Years Cash+Marketabl Current Absolute

e Securities Liabilities Liquidity Ratio

2014-2015 4152.86 0.04

171

2015-2016 202.6 4920.26 0.04

2016-2017 910.7 9728.7 0.09

2017-2018 1667.2 11755.1 0.14

2018-2019 1541.3 13340.5 0.12

2019-2020 929.8 11455.6 0.08

2020-2021 860.1 10685.4 0.08

(Source: Annual Report)

A ratio of 1:2 is recommended for the absolute liquidity ratio to ensure

liquidity. From the graph it is clear that the highest ratio is in 2017-2018 and the

lowest ratio is in the year 2014-2015 & 2015-2016 which was nearly zero

because of the poor cash balance. There is a slight increase in the average ratio

over the years.

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 Traco Cable Company Limited, Irimpanam

0.16
0.14
Absolute Liquidity Ratio

0.12
0.1
0.08
0.06
0.04
0.02
0

Year

Figure 4.8: Absolute Liquidity Ratio

4.3 CASH MANAGMENT

Cash is an important component of current asset. It is the most liquid asset. It is

common denominator to which all current asset can be reduced because the

other major liquid assets get eventually converted into cash.

4.3.1 Cash as a Percentage of Current Assets

Cash as a percentage of current assets can be calculated using the formula.

Cash Balance
Cash as a percentage of current assets = x 100
Current Assets

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 Traco Cable Company Limited, Irimpanam

Table 4.9: Cash as a Percentage of Current Assets

Cash Current Cash as a %

Years Balance Assets of Current
Assets

2014-2015 171 2961.6 5.8

2015-2016 202.6 2601.56 7.8

2016-2017 910.7 7743.74 11.8

2017-2018 1667.2 10014.35 16.6

2018-2019 1541.3 10391.45 14.8

2019-2020 929.8 9836.4 9.5

2020-2021 860.1 7380.3 11.7

(Source: Annual Report)

From the above table, During the year 2014-15 cash as a percentage of current asset

below 10%. During the year 2017-2018 it is very high and it is about 16.6% it

indicates the cash in current asset is high during 2017-2018 than other years.

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 Traco Cable Company Limited, Irimpanam

Cash as a Percentage of Current Assets 18

16
14
12
10
8
6
4
2
0

Year

Figure 4.9: Cash as a Percentage of Current Assets

4.3.2 Cash Turnover Ratio

This ratio explains the speed with which the cash is turned over. Higher the

turnover. Lesser the cash balance required for any given level of sales and it

shows greater efficiency in the utilization of cash.

Sales
Cash Turnover Ratio =
Average Cash

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 Traco Cable Company Limited, Irimpanam

Table 4.10 Cash Turnover Ratio

Years Net Sales Average Cash Turnover

Cash Ratio

2014-2015 11123.5 304 36.59

2015-2016 12185.2 374 32.58

2016-2017 12262.9 557 22.01

2017-2018 13584.3 1289 10.53

2018-2019 11122.6 1604 6.93

2019-2020 10986.23 1235.5 8.89

2020-2021 8245.24 895 9.21

(Source: Annual Report)

From the above table, there is a decreasing trend in the ratio from the period
2014- 20155. The cash turnover ratio shows an increasing tendency from the
year 2020-2021 to 6.93. This is due to the decrease in sales. It indicate that in
the year 2018-2019 the value ofsales was too low.

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 Traco Cable Company Limited, Irimpanam

40
35
Cash turnover ratio

30
25
20
15
10
5
0

Years

Figure 4.10: Cash Turnover Ratio

4.3.3 Cash Holding Period

Every management of the concerns might be interested to know whether cash is

being held in the concerns for a period or not. This can be estimated using the

following formula.

Average Cash Balance

Cash Holding Period = x 365
Sales

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 Traco Cable Company Limited, Irimpanam

Table 4.11:Cash Holding Period

Years Net Sales Average Cash Holding

Cash Period

2014-2015 11123.5 304 9.97

2015-2016 12185.2 374 11.20

2016-2017 12262.9 557 16.57

2017-2018 13584.3 1289 34.63

2018-2019 11122.6 1604 52.63

2019-2020 10986.23 1235.5 41.04

2020-2021 8245.24 895 39.61

(Source: Annual Report)

From the above table, in the year 2014-19 there is an increasing trend to 52.63

days. It is due to low sales value. During the year 2020-2021 the trend is high

it reaches 39.61 days. The company cash position is more or less stable but the

sales position has badly affected the cash holding period.

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 Traco Cable Company Limited, Irimpanam

1
0.9
0.8
Cash holding period

0.7
0.6
0.5
0.4
0.3
0.2
0.1
0

Years

Figure 4.11: Cash Holding Period

4.4 INVENTORY MANAGEMENT

Inventories constitute the most significant part of current asset of a large

majority of companies in India. Larger the size of inventories more is the

amount of funds invested in them. It become necessary to manage inventories

efficiently and effectively. Otherwise the firm will be jeopardise its long run

profitability and may fail ultimately.

4.4.1 Inventory to Sales

Inventory to sales indicates the relationship between closing inventory and

sales. The ratio shows the variations in the level of investment in inventories

with volume of sales

Closing Inventory
Inventories to sales = x 100
Sales

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 Traco Cable Company Limited, Irimpanam

Table 4.12: Inventory to Sale

Years Closing Net Sales Inventory to

Stock Sales

2014-2015 49.21 11123.5 0.44

2015-2016 77.89 12185.2 0.64

2016-2017 123.69 12262.9 1.00

2017-2018 7.48 13584.3 0.05

2018-2019 53.24 11122.6 0.48

2019-2020 62.86 10986.23 0.57

2020-2021 31.08 8245.24 0.37

(Source:Annual Report)

From the above table , all the value of inventory to sale is low and below 1. It

is due low stock value. There is an increase in inventory to sale during the years

from 2014-2017. The value is decreasing during 2018 to 2019 this is due to

decrease in stock and sales. .

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 Traco Cable Company Limited, Irimpanam

1.2

1
Inventory to Sales

0.8

0.6

0.4

0.2

Year

Figure 4.12: Inventory to Sales

4.4.2 Stock Turnover Ratio

This ratio is called as inventory ratio or stock velocity ratio. It is used to

measure whether the investment in stock in trade is effectively utilized or not

and reveals the relationship between sales and cost of goods sold or average

inventory at cost price or average inventory at selling price.

Cost of goods sold

Stock turnover ratio =
Average inventory

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 Traco Cable Company Limited, Irimpanam

Table 4.13: Stock Turnover Ratio

Cost of Average Stock Turnover

Years Goods Sold Inventory Ratio

2014-2015 9662.14 1599.7 6.04

2015-2016 11804.92 1646.76 7.16

2016-2017 10381.53 1918.45 5.41

2017-2018 10718.85 2088.12 5.13

2018-2019 10043.89 2173.53 4.62

2019-2020 9800.29 2129.5 4.60

2020-2021 8324.32 1991.5 4.18

(Source: Annual Report)

From the above table it can be interpreted that the stock turnover ratio is least in

theyear 2020-2021. A linear trend line is fitted in order to know the trend of the

stock holding period. This graph shows an average increase over the years. This is

good forthe firm because increase in stock turnover ratio shows an increasing of

the sales.

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 Traco Cable Company Limited, Irimpanam

8
7
Stock Turnover Ratio

6
5
4
3
2
1
0

Year

Figure 4.13: Stock Turnover Ratio

4.4.3 Stock Holding Period

A holding period is the amount of time the investment is held by an investor, or

the period between the purchase and sale of a security. The inventory holding

period shows the number of days on average that a business holds inventory. To

calculate the inventory holding period we divide inventory by cost of sales and

multiply the answer by 365 for the holding period in days, or by 12 for the

holding period in months.

365
Stock holding period =
Stock turnover ratio

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 Traco Cable Company Limited, Irimpanam

Table 4.14: Stock Holding Period

Stock Turnover Stock Holding

Years Ratio Period

2014-2015 6.04 60.43

2015-2016 7.16 50.97

2016-2017 5.41 67.46

2017-2018 5.13 71.15

2018-2019 4.62 79

2019-2020 4.60 79.34

2020-2021 4.18 87.32

(Source: Annual Report)

The above table shows increasing of stock holding period from 2015-2016 to

2020- 2021 and this is not good for the company. If the stock holding period is

high, the amount invested in the stock will be high. This will increase the firm’s

financial costs.

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 Traco Cable Company Limited, Irimpanam

100
Stock Holding Period 90
80
70
60
50
40
30
20
10
0

Year

Figure 4.14: Stock Holding Period

4.5 RECEIVABLES MANAGEMENT

Receivable management may be defined as collection of steps and procedure

required to properly weigh the costs and benefits attached with the credit

policies. The receivables management consists of matching the cost of

increasing sales (particularly credit sales) with the benefit arising out of

increased sales with the objective of maximizing the return on investment of the

firm.

4.5.1 Receivables as the Percentage of Sales

It is the relationship between receivables and sales expressed as a percentage.

Debtors
Receivable as % of sales = x 100
Sales

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 Traco Cable Company Limited, Irimpanam

Table 4.15:Receivable as the Percentage of Sales

Years Debtors Sales Receivable as

a % of Sales

2014-2015 1430.13 11123.5 12.86

2015-2016 1318.64 12185.2 10.82

2016-2017 4572.91 12262.9 37.29

2017-2018 5892.64 13584.3 43.38

2018-2019 6039.26 11122.6 54.3

2019-2020 5947.63 10986.2 54.14

2020-2021 4279.89 8245.2 51.91

(Source: Annual Report)

From the table, the receivables as percentage of sales during the year 2015-16 is

10.82%and in the last year it became 12.86% In the year 2016-17 it is increased to

37.29% in . Here the average ratio is 37.85 that means 37.85% of sales is blocked

up in receivables.

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 Traco Cable Company Limited, Irimpanam

Receivables as a percentage of sales

60

50

40

30

20

10

Year

Figure 4.15: Receivable as Percentage of Sale

4.5.2 Debtors Turnover Ratio

Debtors turnover ratio is also termed as receivable turnover ratio or debtor's

velocity. Receivables and debtors represent the uncontrolled portion of credit

sales. It indicates the numbers of times of receivables are turned over in a business

during a particular period. It represents how quickly the debtors are converted into

cash.

Net sales
Debtors’ turnover ratio =
Average accounts receivables

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 Traco Cable Company Limited, Irimpanam

Table 4.16: Debtors Turnover Ratio

Average Debtors
Years Net Sales Accounts Turnover
Receivables Ratio

2014-2015 11123.5 1896.33 5.87

2015-2016 12185.2 1374 8.87

2016-2017 12262.9 2945.5 4.16

2017-2018 13584.3 5233.02 2.60

2018-2019 11122.6 5965.62 1.86

2019-2020 10986.23 5993.23 1.83

2020-2021 8245.24 5113.5 1.61

(Source: Annual Report)

This ratio discusses the credit policy of the firm. The higher ratio the better it is, since it

would indicate that the debts are being collected promptly. The graphs shows that the

2014-2015 to 2015-2016 there is an increasing trend and from 2016-2017 to2020-2021

there is a decreasing trend, the graph slopes upward. But from 2016-2017 there is

downward trend.

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 Traco Cable Company Limited, Irimpanam

10
9
Debtors turnover ratio

8
7
6
5
4
3
2
1
0

Year

Figure 4.16: Debtors Turnover Ratio

4.5.3 Debtors Collection Period

Debtors collection period indicates the average time taken to collect trade debts.

In other words, a reducing period of time is an indicator of increasing

efficiency. It enables the enterprise to compare the real collection period with

granted/theoretical credit period.

365
Debtors collection period =
Debtors’ turnover ratio

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 Traco Cable Company Limited, Irimpanam

Table 4.17: Debtors collection Period

Years Debtors Debt Collection

Turnover Ratio Period

2014-2015 5.87 62.18

2015-2016 8.87 41.15

2016-2017 4.16 87.74

2017-2018 2.60 140.38

2018-2019 1.86 196.23

2019-2020 1.83 199.45

2020-2021 1.61 226.71

(Source: Annual Report)

Debt collection period is changing over the years. It was 62.18 days in 2014-

2015. But in the following year it is increased. The recent years data shows that the

debt collection period is increasing and that shows the inefficient debt collection

performance of the company. The collection period can be decreased by a

company with sufficient funds at their disposal, if that will increase their sales.

But in this case, the company is facing liquidity problems.

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 Traco Cable Company Limited, Irimpanam

250

200
Debt collection period

150

100

50

Year

Figure 4.17: Debt Collection Period

4.5.4 Creditors Turnover Ratio

Creditors turnover ratio is also known as accounts payable turnover ratio. It is

computed by dividing the net credit purchase by average accounts payable.

Credit turnover ratio establishes the relationship between the net credit

purchase and average trade creditors.

Net.credit.purchase
Creditors turnover ratio =
Average accounts payable

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 Traco Cable Company Limited, Irimpanam

Table 4.18: Creditors Turnover Ratio

Net Average Creditors

Years Purchase Trade Turnover
Payables Ratio

2014-2015 8200.54 1968.15 4.17

2015-2016 9972.21 2519.07 3.96

2016-2017 8377.23 2196.25 3.81

2017-2018 8546.75 2139.87 3.99

2018-2019 7873.85 2708.99 2.91

2019-2020 7749.32 2548.36 3.04

2020-2021 5423.69 1865.14 2.91

(Source: Annual Report)

The table shows a downward trend of the creditor's turnover ratio from 2014-2015 to 2016-

2017. and in 2018-2019 again it was increase up to 3.99. .This shows that company was not

able to make prompt payment of the credits

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 Traco Cable Company Limited, Irimpanam

4.5
Creditors turnover ratio

4
3.5
3
2.5
2
1.5
1
0.5
0

Year

Figure 4.18: Creditors Turnover Ratio

4.5.5 Credit Payment Period

The credit period is the number of days that a customer is allowed to wait

before paying an invoice. The concept is important because it indicates the

amount of working capital that a business is willing to invest in its accounts

receivable in order to generate sales.

365
Credit payment period =
Creditors turnover ratio

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 Traco Cable Company Limited, Irimpanam

Table 4.19: Credit payment period

Creditors Credit Payment

Years Turnover Period
Ratio

2014-2015 4.17 88

2015-2016 3.96 92

2016-2017 3.81 96

2017-2018 3.99 91

2018-2019 2.91 125

2019-2020 3.04 120.1

2020-2021 2.91 125.42

(Source: Annual Report)

The above table shows that the company's credit payment period increasing.

That is the company fails to make the payment without delay. This may be a

working capital management policy of the company or may be the company did

not have sufficient funds.

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 Traco Cable Company Limited, Irimpanam

140
Credit payment period 120

100

80

60

40

20

Year

Figure 4.19: Credit Payment Period

4.6 PROFITABILITY RATIO

Profitability ratios are a class of financial metrics that are used to assess a business's

ability to generate earnings relative to its revenue, operating costs, balance sheet

assets, and shareholders' equity over time, using data from a specific point in time.

4.6.1 Profitability on Total Assets

The Return on Assets ratio is an important profitability ratio because it measures

the efficiency with which the company is managing its investment in assets and

using them to generate profit.

Net profit after tax

Profitability on total assets =
Total assets

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 Traco Cable Company Limited, Irimpanam

Table 4.20: Return on Total Asset

Years Net Profit Total Return on

After Tax Assets Total Asset

2014-2015 -406.12 8399.53 -0.05

2015-2016 -960.99 8556.59 -0.11

2016-2017 -969.89 9902.14 -0.10

2017-2018 133.94 12110.73 0.01

2018-2019 -878.08 12623.53 -0.07

2019-2020 -654.64 13654.78 -0.05

2020-2021 -894.32 12986.23 -0.07

(Source: Annual Report)

The above data shows that the return on total assets in all year is a negative value

except in 2017-2018. This means the company is not able to yield sufficient returns

from the assets and to generate adequate profits. In the annual year they got a big

order from panjab (about 194 cr) that's why the sales is increased.

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 Traco Cable Company Limited, Irimpanam

0.02

Return on total asset 0

-0.02

-0.04

-0.06

-0.08

-0.1

-0.12

Year

Figure 4.20: Return on Total Asset

4.6.2 Net Profit Ratio

Net profit ratio established a relationship between net profit (After tax) and sales. It

indicates the efficiency of the management in manufacturing selling and

administrative and other activities of the firm. This ratio is very useful as if the

profit is not sufficient the firm shall not be able to achieve a satisfactory retune

on investment.

Net Profit
Net Profit
Net Profit Ratio =
Sales

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 Traco Cable Company Limited, Irimpanam

Table 4.21: Net Profit

Years Net Profit Sales Net Profit

Ratio

2014-2015 -406.12 11123.54 -3.65

2015-2016 -960.99 12185.18 -7.89

2016-2017 -969.89 12262.89 -7.91

2017-2018 133.94 13584.26 0.98

2018-2019 -878.08 11122.56 -7.89

2019-2020 -654.64 10986.23 -5.96

2020-2021 -894.32 8245.24 -10.85

(Source: Annual Report)

From the table, during the year 2017-18 the ratio was positive and rest of the

years it is negative. In the year 2017-2018 the sales is slightly increased that is

why the profit is positive because of the big order from panjab.

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 Traco Cable Company Limited, Irimpanam

0
Net profit ratio

-2

-4

-6

-8

-10

-12

Year

Figure 4.21: Net Profit Ratio

4.7 FIXED ASSET TURNOVER RATIO

This ratio indicates the efficiency of asset management. It is used to measure

the utilization of fixed assets. And also establishes the relationship between cost

of goods sold and fixed assets.

Net Sales
Fixed Asset Turnover Ratio = x 100
Fixed Asset

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 Traco Cable Company Limited, Irimpanam

Table 4.22: Fixed Asset Turnover Ratio

Net Fixed Fixed Asset

Years Sales Asset Turnover
Ratio

2014-2015 11123.5 1136.73 9.79

2015-2016 12185.2 1389.45 8.77

2016-2017 12262.9 1922 6.38

2017-2018 13584.3 1792.21 7.58

2018-2019 11122.6 1907.08 5.83

2019-2020 10986.2 2307.14 4.76

2020-2021 8245.2 2109.36 3.90

(Source: Annual Report)

The above table, there is a high increase in the fixed asset turnover ratio during

the period of 2014-2015. A high fixed asset turnover ratio is a good sign which

implies efficient utilization of resource and a low ratio will affect the

profitability and liquidity off the company inversely. In this case the ratio is

fluctuating.

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 Traco Cable Company Limited, Irimpanam

12
Fixed asset turnover ratio

10

Year

Figure 4.22: Fixed Asset Turnover Ratio

4.8 TREND ANALYSIS

Trend analysis is a technique employed by technical analyst in the financial

industry to predict the future movements of a given asset. They employ

historical data to determine the direction of the trend. The goal of this procedure

is to identify attractive investment opportunities that are currently showing an

upward trend; and of course, to identify downtrends too, so investors can get out

before losing money. Under trend analysis, fitting the linear trend by the least

– squares method is used for this study.

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 Traco Cable Company Limited, Irimpanam

4.8.1 Trend Analysis of Working Capital

Table 4.23: Trend Analysis of Working Capital

Trend
Years Net Working
Percentage
Capital

2014-2015 -1191.26 100

2015-2016 -2318.7 194.64

2016-2017 -1984.96 166.6

2017-2018 -1740.75 146.12

2018-2019 -2949.05 247.55

2019-2020 -1649.2 138.44

2020-2021 -3305.1 277.44

(Source: Annual Report)

Table shows that the forecasted value of working capital shows a increasing
trend. It is because the current year net working capital is negative and also the
rest of the net working capital also negative so this trend will affect the day-to-
day performance of the company.

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 Traco Cable Company Limited, Irimpanam

Trend percentage of Working Capital 300

250

200

150

100

50

Year

Figure 4.23: Trend Percentage of Working Capital

4.8.2 Trend Analysis of Sales

Sales trend analysis is the review of historical revenue results to detect

patterns. Sales trend analysis is a useful budgeting and financial analysis

method that can indicate the onset of changes in the near-term revenue growth

rates of a business. Trend analysis is to find patterns in data, such as ups &

downs. A “trend” is an upwards or downwards shift in a data set over time. In

retail, this analysis of past trends in sales or revenue; allows to predict the

future market. This analysis useful for budgeting and forecasting. Total sales of

any business on a trend may obtain some significant information.

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 Traco Cable Company Limited, Irimpanam

Table 4.24: Trend Analysis of Sales

Years Sales Trend

Percentage

2014-2015 11123.54 100

2015-2016 12185.18 109.54

2016-2017 12262.89 110.24

2017-2018 13584.26 122.12

2018-2019 11122.56 99.9

2019-2020 10986.23 98.76

2020-2021 8245.24 74.12

(Source: Annual Report)

Table shows that the forecasted value of working capital shows a decreasing

trend over the period 2012-2014. Then there is increasing trend from 2015-2018

but there is a decreasing trend in the previous year because of wide number of

competitors are available in the market.

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 Traco Cable Company Limited, Irimpanam

140

Trend Percentage of Sales 120

100

80

60

40

20

Year

Figure 4.24 Trend Percentage of Sales

4.8.3 Trend Analysis of Current Assets

Current asset trend analysis is the review of historical revenue results to detect

patterns. Current asset analysis is a useful budgeting and financial analysis

method that can indicate the on set of changes in the cash and other assets that

are expected to be converted to cash withi a year. Trend analysis is to find

patterns in data, such as ups & downs. A “trend” is an upwards or downwards

shift in a data set over time. This analysis useful for budgeting and forecasting.

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 Traco Cable Company Limited, Irimpanam

Table 4.25: Trend Analysis of Current Asset

Years Current Trend

Assets Percentage

2014-2015 6730.2 100

2015-2016 6527.29 96.98

2016-2017 7743.74 115.05

2017-2018 10014.35 148.79

2018-2019 10391.45 154.40

2019-2020 9836.4 146.15

2020-2021 7380.3 109.65

(Source:Annual Report)

There is an increasing trend for the current assets from the year 2012-2019. Only

in 2015-2016 period there is a small decline.

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 Traco Cable Company Limited, Irimpanam

Trend percentage of Current Asset 180

160
140
120
100
80
60
40
20
0

Year

Figure 4.25: Trend percentage of Current Assets

4.8.4 Trend Analysis of Current Liabilities

Current liabilities trend analysis is the review of historical revenue results to

detect patterns. Current asset analysis is a useful budgeting and financial

analysis method that can indicate the on set of changes in the amount due to be

paid to creditors within twelve months.

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 Traco Cable Company Limited, Irimpanam

Table 4.26: Trend percentage of Current Liabilities

Years Current Trend

liabilities percentage

2014-2015 6152.86 100

2015-2016 7220.26 117.34

2016-2017 9728.7 158.11

2017-2018 11755.1 191.05

2018-2019 13340.5 216.81

2019-2020 11455.6 186.18

2020-2021 10685.4 173.66

(Source: Annual Report )

The table shows there is an increasing trend for current liabilities . It will badly

effect the day to day operation of the firm.

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 Traco Cable Company Limited, Irimpanam

250
Trend percentage of Current Liability

200

150

100

50

Years

Figure 4.26: Trend percentage of Current Liabilities

4.9 COMPARATIVE STATEMENT ANALYSIS

Comparative Financial Statement analysis provides information to assess the

direction of change in the business. Financial statements are presented as on a

particular date for a particular period. The financial statement Balance Sheet

indicates the financial position as at the end of an accounting period and the

financial statement Income Statement shows the operating and non-operating

results for a period. But financial managers and top management are also

interested in knowing whether the business is moving in a favorable or an

unfavorable direction. For this purpose, figures of current year have to be

compared with those of the previous years. In analyzing this way, comparative

financial statements are prepared.

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 Traco Cable Company Limited, Irimpanam

Table4.27: Comparative Statement of Working Capital

for the Year 2014-2015

31st March
Changes in Working Capital
Particulars

2014 2015 Increase Decrease

Current assets(a)

Inventories 892.5 985.61 93.11

Sundry debtors 2654.56 2922.85 268.29
Cash & bank
balance 196.5 230.69 34.19
Other CA 4.66 4.99 0.33
Loans andadvances
386.38 427.42 41.04
Total (A) 4134.6 4571.56
B)current
liabilities
Short term
borrowing 547 532 15
Trade payables 466 494 28
Other current
438.26 429.18 9.08
liabilities
Short termprovisions
310.25 300.03 10.22
Total(B) 1761.51 1755.21

Working 2373.09 2816.35

capital(a-b)

Net increase(d)in
working capital -443.26 -443.26

Total 2373.09 2373.09 28 28

(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table 4.28: Comparative Statement of Working Capital

for the Year2015-2016

31st March Changes in Working Capital

Particulars

2015 2016 Increase Decrease

Current assets
(a)
Inventories 985.61 955.38 30.23
Sundry debtors 2922.85 3511.71 588.86
Cash & bank
230.69 183.06 47.63
balance
Other CA 4.99 4.44 0.55
Loans and
427.42 372.1 55.32
advances
Total (a) 4571.56 5026.69
B)current
liabilities
Short term
532 510.36 21.64
borrowing
Trade payables 494 490.2 3.8
Other current
429.18 753.1 323.92
liabilities
Short term
300.03 325.2 25.17
provisions
Total(b) 1755.21 2078.86
Working
2816.35 2947.83
capital(a-b)
Net increase(d)
in working -131.48 -131.48
capital
Total 2816.35 2816.35 482.82 482.82
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table4.29: Comparative Statement of Working Capital

for the Year 2016-2017

31st March Changes in Working Capital

Particulars

2016 2017 Increase Decrease

Current assets
(a)

Inventories 955.38 1738.48 783.48

Sundry debtors 3511.71 2874.95 636.76
Cash & bank
13.06 594.92 581.86
balance
Other CA 4.44 68.01 63.57
Loans and
372.1 87.99 284.11
advances
Total (A) 5026.69 5364.35 1428.91 920.87
B)current
liabilities
Short term
510.36 2418.30 1907.94
borrowing
Trade payables 490.2 1264.98 774.78
Other current
753.1 1969.33 1216.23
liabilities
Short term
325.2 519.38 194.18
provisions
Total(B) 2078.86 6171.99 4093
Working
2947.83 -806.65 -2664.09 920.87
capital(a-
b)
Net increase(d)
in working -3754.5 -3584.87
capital
Total -806.65 -806.65 -2664.09 -2664.09
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table 4.30: Comparative Statement of Working Capital

for the Year 2017-2018

31st March Changes in Working Capital

Particulars
2017 2018 Increase Decrease

Current assets
(a)

Inventories 1738.48 1460.93 277.55

Sundry debtors 2874.95 3214.68 339.73
Cash & bank
594.92 1747.47
balance 1152.55
Other CA 68.01 50.07 17.94
Loans and
87.99 257.05 169.06
advances
Total (A) 5364.35 6730.2 1661.34 295.49
B)curren
t
liabilities
Short term
2418.30 1860.95 557.35
borrowing
Trade payables 1264.98 2672.16 1407.18
Other current
1969.33 1128.09 841.24
liabilities
Short term
519.38 491.66 27.72
provisions
Total(B) 6171.99 6152.86

Working -807.64 578.2 254.16 -1130.82

capital(a-
b)

Net increase(d)
in working +1385.8 +1384.98
capital
Total 578.2 578.2 254.16 254.16
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table 4.31: Comparative Statement of Working Capital

for the Year 2018-2019

31st March Changes in Working

Particulars Capital
2018 2019 Increase Decrease

Current assets
(a)

Inventories 1832.58 2004.32 171.74

Sundry debtors 3132.20 4573.04 1440.84
Cash &
1111.35 911.42 199.93
bank
balance
Other CA 50.27 59.79 9.52
Loans and
400.89 195.17 205.75
advances
Total (A) 6527.29 7743.74 1612.58 415.2
B)curren
t
liabilities
Short term
2363.73 3443.17 1079.44
borrowing
Trade payables 2365.98 2026.51 339.47
Other current
1941.15 3604.15 1663
liabilities
Short term
provisions 549.40 654.87 105.47
Total(B) 8981.77 9728.7

Working -2454.5 -1984.9 533.14 -1277.54

capital(a-
b)

Net increase(d) 469.6

in working +1810.68
capital
Total -1984.9 -1984.9 533.14 533.14
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table4.32: Comparative Statement of Working Capital

for the Year 2019-2020

31st March Changes in Working

Particulars Capital
2019 2020 Increase Decrea
se

Current assets
(a)

Inventories 2004.32 2171.91 167.59

Sundry debtors 4573.04 5892.99 1319.95
Cash & bank
911.42 1666.67
balance 755.25
Other CA 59.79 21.76 38.03
Loans and
195.17 261.02 65.85
advances
Total (A) 7743.74 10014.35 2308.64 38.03
B)current
liabilities
Short term
3443.17 4001.95 558.78
borrowing
Trade payables 2026.51 2253.23 226.72
Other current
3604.15 4716.16 1112.01
liabilities
Short term
654.87 783.76 128.89
provisions
Total(B) 9728.7 11755.1

Working -1986.9 -1740.7 282.24 38

capital(a-b)

Net increase(d)
in working -246.2 244.24
capital
Total -1986.9 -1986.9 282.24 288.24
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Table 4.33: Comparative Statement of Working Capital

for the Year 2020-2021

31st March Changes in Working Capital

Particulars
2020 2021 Increase Decrease

Current assets
(a)

Inventories 2171.91 2175.15 3.2

4
Sundry debtors 5892.99 6039.23 146.24
Cash & bank
1666.67 1541.11 125.56
balance
Other CA 21.76 13.23 8.53
Loans and
261.02 622.73 361.71
advances
Total (A) 10014.35 10391.45
B)current
liabilities
Short term
4001.95 4174.53 172.58
borrowing
Trade payables 2253.23 3164.74 911.51
Other current
4716.16 5416.91 700.75
liabilities
Short term
783.76 585.06 198.7
provisions
Total(B) 11755.1 13341.24

Working -1740.75 -2949.79

capital(a-b)

Net -1209.04
increase(d) in -1337.51
working
capital
Total -2949.79 -2949.79 -1272.9 -1272.9
(Source: Annual Report)

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 Traco Cable Company Limited, Irimpanam

Incremental working capital in the year 2012-2013 shows a positive sign under the

study. Because these two years the working capital is positive balance. But

comparing to base year in 2012 shows that a small increase in working capital.

That is the positive working capital is good for the company the efficiency is

increased as compared to other past years. So the company needs to follow more

measures.

Under the analysis statement of working capital in the year 2013-2014 shows a

positive trend. In the base year, there is no working that is a negative balance. It

shows the company use short term borrowings as working capital. So it is clear that

the incremental working capital is increased. From this analysis, comparison the

working capital shows a good symbol to the company. So the company needs to

follow the same in the coming years, for that the company has to increase the sales

and also decrease the cost of production. Under the analysis, statement of working

capital in the year 2017-2018 shows a negative trend.. So it is clear that the

incremental working capital is decreased. It is not good for the company the

efficiency is decreased as compared to other past years. So the company needs to

follow better measures.Under the analysis, statement of working capital in the year

2018-2019 shows a negative trend. In the base year,. So it is clear that the

incremental working capital is decreased. From the past year, comparison the

working capital shows a less. So the company needs to follow better measures.

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 CHAPTER-5

FINDINGS, RECOMMENDATION AND CONCLUSION

 CHAPTER-5

FINDINGS, RECOMMENDATION AND CONCLUSION

5.1 FINDINGS

• Working Capital turnover is negative and a fluctuating trend.

• Negative working capital implies that the company has been using the short
term borrowings for financing the fixed assets.

• Company's current asset turnover ratio is very poor. Average is <1 this
ratio is poor due to decrease in sales.

• Working capital turnover ratio is poor. This indicates the company's inability
to generate sufficient revenue from the investment made in working capital.

• The cash turnover ratio shows a declining tendency from the year 2016-

2017 company cash position is more or less stable but the sales has badly

affected the cash holding period.

• Debtors Turnover Ratio shows fluctuating tendency

• Net profit ratio shows a decreasing tendency from 2014-15, because of

decrease in sales. But there is increase in the profit during the period

2017-2018 it is due the increase in the sales because there was a big order

from Punjab.

• The inventory to sales value is decreasing from 2015 to 2017 this is due
to decrease in stock and sales.

• The stock holding period is high, the amount invested in the stock will be
high. This will increases the firms financial costs.

• Here the average ratio is 42.54 that means 42.54% of sales is blocked up
in.receivables
 Traco cable company Limited, Irimpanam

5.2 RECOMMENDATION

• The net working capital is negative and fluctuating every year, so the

company has to seek additional capital to increase the net working capital

• The company can try to maintain a certain amount as permanent working

capital to provide a buffer and sufficient short term solvency.

• Steps can be taken to sell off the slow moving items. This will helps the

organization to reduce the inventories tied up in the current assets for long

period.

• The company have to increase the percentage of cash and marketable

securities in current assets so as to meet its current liabilities.

• The main problem of the-company is less sales. This can be solved by

adopting new technology for developing more durable and compactable
cables.

• For better debtor turnover ratio offer clients discounts or rewards for early
payment of invoice

• The company must take up more promotion activities for their business
development.

• For increasing inventory to sales value better forecasting method is

necessary.

• To avoid blocking up of funds in debtors the company can reduce the

debt collection period.

• The unnecessary blocking up of funds in inventory can be reduced by

adopting new sales promotion activities so that it can be used to meet the
current expense efficiently.

Vimal Jyothi Institute of Management and Research Chemperi, Page | 106

Kannur
 Traco cable company Limited, Irimpanam

5.3 CONCLUSION

The study was undertaken in Traco Cables Company Ltd on the working capital

management. This study provides an insight into the working of Traco Cable

Company. For the study of working capital management secondary source of

data and various analysis are used. As result of financial analysis net profit

ratio, working capital turnover ratios are not at the satisfactory level. So the

company should take more concentration to increase profit. The net working

capital of the company is decreasing over the years. The company should invest

more funds to increase the quantum of net working capital. The management of

inventory also indicates bad sign. The performance of the company or the last

years is not good. Company is running under loss due to decrease in sales. In the

modern world, the technology is upgrading day by day. The cables and wires are

becoming obsolete with introduction of the Bluetooth, optical fibers etc. Thus, the

company should take efforts for better strategies. Working capital management

may help to control the cost of the components of working capital. This will help

the company in cost reduction and can lead cost leadership

Vimal Jyothi Institute of Management and Research Chemperi, Page | 107

Kannur
ANNEXURES
 BALANCE SHEET

TRACO CABLE COMPANY LIMITED

BALANCE SHEET AS AT 31.3.2021

As at 31.03.2021 As at 31.03.2020
EQUITY AND
Amount Rs Amount Rs
LIABILITIES
Shareholder's Funds
Share Capital 5721.82 5721.82
Reserves and Surplus -7375.90 -6497.82
Non Current Liabilities
Long Term Borrowings 936 .37 1131.63
Current Liabilities
Short-term borrowing 4174.53 4001.95
Trade payables 3164.74 2253.23
Other Current Liabilities 5416.91 4716.16
Short Term Provisions 585.06 783.76

TOTAL 12623.53 12110.73

ASSETS
Non -Current Assets
A. Fixed assets
i)Tangible Assets 1635.64 1738.76
ii)Intangible Assets 0.16 0.16
iii)Capital work in progress 271.28 53.29
B.Non current investments 0.02 0.02
C.Long Term Loans and
Advances
324.98 304.15
Current Assets
Inventories 2175.15 2171.91
Trade Receivables 6039.23 5892.99
Cash and Bank Balances 1541.11 1666.67
Short Term Loans and
Advances 622.73 261.02
Other Current Assets 13.23 21.76
TOTAL 126623.53 12110.73
 TRACO CABLE COMPANY LIMITED
BALANCE SHEET AS AT 31.3.2019

As at 31.03.2019 As at 31.03.2017
EQUITY AND
LIABILITIES Amount Rs Amount Rs
Shareholder's Funds
Share Capital 5721.82 5721.82
Reserves and Surplus -6631.76 -5661.87
Non-Current Liabilities
Long Term Borrowings 1038.38 1276.38
Current Liabilities
Short-term borrowing 3443.17 2363.73
Trade payables 2026.51 2365.98
Other Current Liabilities 3604.15 1941.15
Short Term Provisions 654.87 549.40

TOTAL 9902.14 8556.59

ASSETS
Non -Current Assets
A. Fixed assets
i)Tangible Assets 1818.04 1089.22
ii)Capital work in 103.96 300.23
progress
B.Non current 0.02 0.02
investments
C.Long Term Loans and
Advances 236.38 639.83
Current Assets
Inventories 2004.32 1832.58
Trade Receivables 4573.04 3132.20
Cash and Bank Balances 911.42 1111.35
Short Term Loans and
Advances 195.17 400.89
Other Current Assets 59.79 50.27
TOTAL 9902.14 8556.59
 TRACO CABLE COMPANY LIMITED
BALANCE SHEET AS AT 31.3.2017

As at 31.03.2017 As at 31.03.2016
EQUITY AND
LIABILITIES Amount Rs Amount Rs
Shareholder's Funds
Share Capital 5721.82 1301.81
Reserves and Surplus -4858.28 -4452.17
Share application money 0.00 2705.65
Non Current Liabilities
Long Term Borrowings 1383.13 955.30
Current Liabilities
Short-term borrowing 1860.95 2418.30
Trade payables 2672.16 1264.98
Other Current Liabilities 1128.09 1969.33
Short Term Provisions 491.66 519.38

TOTAL 8399.53 6682.58

ASSETS
Non -Current Assets
A. Fixed assets
i)Tangible Assets 1062.33 1166.85
iii)Capital work in progress 74.40 0.14
B.Non current investments 0.02 151.22
C.Long Term Loans and
Advances 532.58 151.22
Current Assets
Inventories 1460.93 1738.48
Trade Receivables 3214.68 2874.95
Cash and Bank Balances 1747.47 594.92
Short Term Loans and
Advances 257.05 87.99
Other Current Assets 50.07 68.01
TOTAL 8399.53 6682.58
 TRACO CABLE COMPANY LIMITED
BALANCE SHEET AS AT 31.3.2015

As at 31.03.2015 As at 31.03.2014
EQUITY AND
LIABILITIES Amount Rs Amount Rs
Share Capital 1301.81 1301.81
Share application money 2705.65 2705.65
Reserves and Surplus 15 15
Borrowings
a)Short term 2418.30 1131.36
b)long term 955.30 740.40
Current Liabilities 3234.31 2249.26
Provisions 519.38 391.32

TOTAL 11149.75 8534.80

ASSETS
Gross block 6425.66 5598.84
Depreciation 5258.81 5148.42
Net block 1166.85 450.02
Capital work in progress 0.14 847.97
Long Term Loans and
Advances 151.22 111.07
Investments 0.02 0.02
Current Assets 5364.35 3432.49
Profit & loss account 4467.17 3693.24
TOTAL 11149.75 8534.80
 TRACO CABLE COMPANY LIMITED
BALANCE SHEET AS AT 31.3.2014

As at 31.03.2013 As at 31.03.2014

EQUITY AND
LIABILITIES Amount Rs Amount Rs
Share Capital 4007.46 1301.81
Share application money 2705.65
Reserves and Surplus 15 15
Borrowings
a)Short term 602.51 1131.36
b)long term 2370.19 740.40
Current Liabilities 1892.74 2249.26
Provisions 236.23 391.32

TOTAL 9124.13 8534.80

ASSETS
Gross block 5586.73 5598.84
Depreciation 5099.78 5148.42
Net block 486.95 450.02
Capital work in progress 617.96 847.97
Long Term Loans and
Advances 111.07
Investments 0.02 0.02
Current Assets 4605.34 3432.49
Profit & loss account 3413.86 3693.24
TOTAL 9124.13 8534.80
 BIBLIOGRAPHY

Books

• Ben-Nasar. (2016). State and foreign ownership and value of

working capital managment. Journal of Corporate finance

• H, B. (2019). Working Capital Managment and Financial Performance.

• R K Sharma, S. K. (1997). Managment Accounting. Kalyani publishers.

• Bhattacharyya, D. (1900). Management Accounting. West

Bangal: Pearson Education India.

• Jain, S. P., & Narang, K. L. (2000). Accounting and Analysis. New

Delhi: Kalyani Publishers.

• N, D. M. (2005). Accounting and Financial Management. New Delhi:

Sulthan Chand & Son's.

Annual Report

• Final reports of Traco cables from 2013-2014 to 2020 to 2021.

Website

• www.tracocables.com

• www.wirecable.in

• www.prnewswire.com

• www.grandviewresearch.com