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WORKING CAPITAL MANAGEMENT AT BHARAT COKING COAL LIMITED, DHANBAD

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ABSTRACT SYNOPSIS
Bharat Coking Coal Limited (BCCL) is a Public Sector Undertaking engaged in mining of coal and allied activities. It occupies an important place in as much as it produces bulk of the coking coal mined in the country. BCCL meets almost 50% of the total prime coking coal requirement of the integrated steel sector. BCCL was incorporated in January, 1972 to operate coking coal mines (214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th Oct,1971 to ensure planned development of the scarce coking coal resources in the country. 01.04.2010. The Company also runs 6 coking coal washeries, 2 non-coking coal washeries. The mines are grouped into 13 areas for administrative convenience. Working capital management is concerned with the problems arise inattempting to manage the current assets, the current liabilities and the interrelationship that exist between them. The term current assets refers to thoseassets which in ordinary course of business can be, or, will be, turned in to cashwithin one year without undergoing a diminution in value and withoutdisrupting the operation of the firm. The major current assets are cash,marketable securities, account receivable and inventory. Current liabilities warethose liabilities which intended at their inception to be paid in ordinary courseof business, within a year, out of the current assets or earnings of the concern.The basic current liabilities are account payable, bill payable, bank over-draft and outstanding expenses. The need for working capital gross or current assets cannot be over emphasized.As already observed, the objective of financial decision making is to maximizethe shareholders wealth. To
MBA K C COLLEGE OF ENGINEERING & IT NAWANSHAHR (PB)(PTU KAPURTHALA)

WORKING CAPITAL MANAGEMENT AT BHARAT COKING COAL LIMITED, DHANBAD

201 2

achieve this, it is necessary to generate sufficientprofits can be earned will naturally depend upon the magnitude of the salesamong other things but sales cannot convert into cash. There is a need forworking capital in the form of current assets to deal with the problem arisingout of lack of immediate realization of cash against goods sold. Thereforesufficient working capital is necessary to sustain sales activity. There are two concepts of working capital management
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Gross working capital:-Gross working capital refers to the firms investment I current assets. Currentassets are the assets which can be convert in to cash within year includes cash,short term securities, debtors, bills receivable and inventory. Net working capital: -Net working capital refers to the difference between current assets and currentliabilities. Current liabilities are those claims of outsiders which are expected tomature for payment within an accounting year and include creditors, billspayable and outstanding expenses. Net working capital can be positive or negative efficient working capital management requires that firms should operate withsome amount of net working capital, the exact amount varying from firm tofirm and depending, among other things; on the nature of industries.net working capital is necessary because the cash outflows and inflows do not coincide.The cash outflows resulting from payment of current liabilities are relativelypredictable. The cash inflow are however difficult to predict. The morepredictable the cash inflows are, the less net working capital will be required. The scope of the study is identified after and during the study is conducted. Study of working capital is based on tools like trend Analysis, Ratio Analysis,working capital leverage, operating cycle etc. Further the study is based on last 5 years Annual Reports of BCCL and even factors like

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MBA K C COLLEGE OF ENGINEERING & IT NAWANSHAHR (PB)(PTU KAPURTHALA)

WORKING CAPITAL MANAGEMENT AT BHARAT COKING COAL LIMITED, DHANBAD

201 2

competitors analysis, industry analysis were not considered while preparing this project.

MBA K C COLLEGE OF ENGINEERING & IT NAWANSHAHR (PB)(PTU KAPURTHALA)