CONTENTS

1. INTRODUCTION 2. REVIEW OF LITERATURE 3. RESEARCH METHODOLOGY 4. DATA ANALYSIS AND INTERPRETATION 5. FINDINGS, RECOMMENDATIONS AND CONCLUSION

4-20 21-34 35-39 40-73 74-77

BIBLIOGRAPHY APPENDIX

78 79-88

LIST OF TABLES
Table No. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 Title Trend Analysis of Current Assets for Five Years Trend Analysis of Current Liabilities for Five Years Trend Analysis of Working Capital Trend Analysis of net sales Trend Analysis of inventory Current Ratio of Five Years Quick Ratio of Five Years Absolute Liquid Ratio of Five Years Working Capital Turnover Ratio of Five Years Inventory Turnover Ratio of Five Years Debtors Turnover Ratio of Five Years Creditors Turnover Ratio of Five years Cost of Goods Sold Ratio of Five Years Page No.

LIST OF CHARTS
Table No. 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 4.19 4.20 4.21 Title Trend Analysis of Current Assets for Five Years Trend Analysis of Current Liabilities for Five Years Trend Analysis of Working Capital Trend Analysis of net sales Trend Analysis of inventory Current Ratio of Five Years Current assets and current liabilities Quick Ratio of Five Years Quick assets and current liabilities Absolute Liquid Ratio of Five Years Absolute liquid assets and current liabilities Working Capital Turnover Ratio of Five Years Net sales and net working capital Inventory Turnover Ratio of Five Years Cost of goods sold and average stock Debtors Turnover Ratio of Five Years Net credit sales and sundry debtors Creditors Turnover Ratio of Five years Net credit purchase and sundry creditors Cost of Goods Sold Ratio of Five Years Cost of goods sold and net sales Page No.

CHAPTER- 1

INTRODUCTION

INTRODUCTION
ABOUT THE STUDY
In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small, need finance to carry on its operations and to achieve its target. In fact, finance is so indispensable today and it is right said that it is lifeblood of an enterprise. Without adequate finance no enterprise can possibly accomplish its objectives. Finance may be defined as the provision of money at the time when it is required. Finance reface to the management of flows of money through an organization. It concerns with the applications of skills in the manipulation, use and control money. Finance is the most important of all business functions. It remains a focus of all activities. It is not possible to substitute or eliminate this, because the business will close down in the absence of finance. The need of money is continuous. It starts with the setting up of an enterprise and remains at all times. The development and expansion of business rather need more commitment for funds.

FINANCE PLAN
A financial plan is a statement estimating the amount of capital and determining its composition. The quantum of funds needed will depend upon the assets requirements of the business. The time at which funds will be needed should be carefully decided so that finances are raised at a time when these are needed. The next aspect of a financial plan is to determine the pattern of financing. There are a number of ways for raising funds. The selection of various securities should be done carefully. Issuing of capital and debentures, raising of loans, etc may raise the funds. Which source of finance should be raised and up to what amount these should be raised is very important. Once a Patten of financing is selected then it become very difficult to modify it. A financial plan also spells out the policies to be pursed for the flotation of various corporate securities, particularly regarding the time of their flotation.
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SOURCES OF FINANCE
In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small, need finance to carry on its operations and to achieve its targets. Without adequate finance, no enterprise can possible accomplish its objectives. Capital required for a business can be classified under two main categories; 1. Fixed Capital 2. Working Capital. Every business needs funds for two purposes for establishment and to carry out its dayto-day operations. Long-term funds are required to create production facilities though purchase of fixed asset such as plant, machinery, land, building, furniture, etc. Investment is these assets represent that part of firms capital that is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purpose for the purchase of raw materials, payment of wages and other day-to-day expenses, etc. These funds are known as working capital. The various source of raising long-term funds include issue of shares, debentures, plaguing back of profits and loans from financial institutions, etc. The short-term requirements of funds can be met from commercial bank, trade credit, installment credit, advances, factoring or receivable credit, accrual, deferred incomes, and commercial paper, etc.

FINANCIAL MANAGEMENT
Financial management entails planning for the future of a person or a business enterprise to ensure a positive cash flow. It includes the administration and maintenance of financial assets. Besides, financial management covers the process of identifying and managing risks. The primary concern of financial management is the assessment rather than the techniques of financial quantification. A financial manager looks at the available data to judge the performance of enterprises. Managerial finance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance. Some experts refer to financial management as the science of money management. The primary usage of this term is in the world of financing
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business activities. However, financial management is important at all levels of human existence because every entity needs to look after its finances

Levels of Financial Management

Broadly speaking, the process of financial management takes place at two levels. At the individual level, financial management involves tailoring expenses according to the financial resources of an individual. Individuals with surplus cash or access to funding invest their money to make up for the impact of taxation and inflation. Else, they spend it on discretionary items. They need to be able to take the financial decisions that are intended to benefit them in the long run and help them achieve their financial goals. From an organizational point of view, the process of financial management is associated with financial planning and financial control. Financial planning seeks to quantify various financial resources available and plan the size and timing of expenditures. Financial control refers to monitoring cash flow. Inflow is the amount of money coming into a particular company, while outflow is a record of the expenditure being made by the company. Managing this movement of funds in relation to the budget is essential for a business. At the corporate level, the main aim of the process of managing finances is to achieve the various goals a company sets at a given point of time. Businesses also seek to generate substantial amounts of profits, following a particular set of financial processes. Financial managers aim to boost the levels of resources at their disposal. Besides, they control the functioning on money put in by external investors. Providing investors with sufficient amount of returns on their investments is one of the goals that every company tries to achieve. Efficient financial management ensures that this becomes possible. Strong financial management in the business arena requires managers to be able to:
1.

Interpret financial reports including income statements, Profits and Loss or P&L, cash flow statements and balance sheet statements

2. 3.

Improve the allocation of working capital within business operations Review and fine tune financial budgeting, and revenue and cost forecasting

4.

Look at the funding options for business expansion, including both long and short term financing

5.

Review the financial health of the company or business unit using ratio analyses, such as the gearing ratio, profit per employee and weighted cost of capital

6. 7.

Understand the various techniques using in project and asset valuations Apply critical financial decision making techniques to assess whether to proceed with an investment

8.

Understand valuations frameworks for businesses, portfolios and intangible assets

In general financial management is the effective & efficient utilization of financial resources. It means creating balance among financial planning, procurement of funds, profit administration & sources of funds.

INDUSTRY PROFILE
AYURVEDA
Ayurveda aims physical, psychological, spiritual and social welfare of living being. Envisages the means of preservation of health, prevention and treatment of various ailments. Eight fold structure of Ayurveda covers the faculties of General Medicine, Pediatrics, Psychiatry, ENT & Ophthalmology, Surgery, Toxicology, Geriatrics, Science of Aphrodisiacs. According to Ayurveda, the living body is composed of five basic elemental substances i.e. Panchabhouthika Principles Viz. Prithvi, Thejas, Vayu, Akasam. These five physical elements constitute the three essential components of the controller of body which are termed as Thridosha viz. Vatha, Pitha and Kapha. Vatha the controller of body is responsible for the physical activity or the motion in the living being. The entire physico chemical phenomenon including the biochemical metabolic and endocrine functions are attributed to Pitha. The gross structure of body (sold and liquid) is constituted by Kapha. Ayurveda defines disease as the state in which body and mind are subjected to pain and misery. The equilibrium of the three humours i.e. Thridoshas results in health and their excited and imbalanced condition causes disease. Approach of Ayurveda is field oriented holistic and functional. Ayurveda utilizes wealth of nature for increasing the natural resistance of the body. Treats man as whole and uses drug as a whole. Ayurveda views that successful medical treatment depends upon four factors, the physician, drugs or diet, nurse, and patient. In principle the Ayurvedic approach to the treatment of a disease consists of two major procedures. SAMSODHANACHIKITSA- The radical treatment supposed to eradicate or eliminate the vitiated humours, thus completely preventing or curing the disease.

SAMSAMANACHIKITSA- The conservative treatment by administration of appropriate or temporarily subsiding a disease. Upholds the law of similarity and diversity in therapeutics. Ayurveda favours administration of natural raw drugs (Plant origin, Animal origin and Mineral origin) and their preparations.

Generally Ayurvedic medicines cause no toxic or side effects, no question of tolerance, resistance, and addiction. Ayurvedic medicines are produced by several thousand companies in India, but quite of them are small, including numerous neibourhood pharmacies that compound ingredients to make their own remedies. It is estimated that the total value of the products from the entire Ayurvedic production in India is on the order of one billion dollars (U.S.).The industry has been dominated by less than a dozen major companies for decades, joined recently by a few others that have followed their lead, so there are today 30 companies doing a million dollars or more per year in business to meet the growing demand for Ayurvedic Medicine. The products of these companies are included within the broad category of fast moving consumer goods (FMCG; which mainly involves foods, beverages, toiletries, cigarettes etc.).Most of the larger Ayurvedic medicine suppliers provide materials other than Ayurvedic internal medicines, particularly in the areas of foods and toiletries (soap, toothpaste, shampoo, etc.), where there may be some overlap with Ayurveda, such as having traditional herbal ingredients in the composition of toiletries.

STATUS OF AYURVEDA IN INDIA

The Indian government and non-government organizations have been collecting statistics on the Ayurvedic system in India and these data about the manpower and institutional aspects of Ayurveda have emerged:

Number of registered medical practitioners: 366,812 Number of dispensaries: 22,100 Number of hospitals: 2,189 Number of hospital beds: 33,145 Number of teaching institutions (undergraduate): 187 Number of upgraded postgraduate departments: 51 Number of specialties in postgraduate medical training: 16 Number of pharmacies manufacturing Ayurvedic medicines: 8,400

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In India, 60% of registered physicians are involved in non-allopathic systems of medicine. In addition to the nearly 400,000 Ayurvedic practitioners, there are over 170,000 homeopathic physicians; India has about 500,000 medical doctors (similar to the number in the U.S., but serving nearly 4 times as many people). Reliance on Ayurvedic medicine is heavy in certain regions of India, such as Kerala in the Southwest. Many ayurvedic practitioners in small villages are not registered.

ORGANIZATION PROFILE
OUSHADHI
The Pharmaceutical Corporation (I.M) Kerala limited, Thrissur popularly known as OUSHADHI is an Ayurvedic medicine manufacturing company fully owned by Government of Kerala. Directly controlled by Health and Family Welfare Department of Kerala State Government. Governed by a Board of Directors, appointed by the Government of Kerala. Oushadhi is the largest producer of Ayurveda medicines in public sector in India. This is the one among the few public sector companies, consistently making profit and paying dividend Govt.of Kerala since 1999. Oushadhi supplies medicines to Govt. of Kerala for the distribution to common man through ISM Depts, produces 450 Ayurvedic formulations-both classical and proprietary. Oushadhi is the sole supplier of medicines to Govt. Ayurveda Hospitals and Dispensaries in Kerala. And also this firm is the supplier of Ayurvedic Medicines to Govt. Hospitals and Dispensaries of other states like Madhya Pradesh, Chattisgarh, Pondichery, Rajasthan, Orissa, New Delhi etc. It caters to the need of public through a vast network of 610 agencies spread all over the nation. Currently Oushadhi manufactures more than 450 Ayurvedic formulations as per ancient classical texts, rare combinations of expert, experienced Keralite authorities and special combinations developed in the Research wing. Oushadhi upholds ancient traditional methods of manufacturing along with modern Machinery and technology under strict quality control measures. The whole manufacturing activities are under the direct and expert supervision by qualified Ayurvedic Physicians. Quality medicines are made available to the public at reasonable
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prices. It meets the entire medicine requirements of Government Ayurvedic Hospitals and Dispensaries under the Department of Indian Systems of Medicines, Kerala. Oushadhi Fulfils the demands from Directorate of I.S.M. Bhopal, Jaipur National Institute of Ayurveda, Government Hospitals and Dispensaries under Central Government Health Schemes ,Employees State Insurance Medical Services, Government Ayurveda Colleges, Tribal Welfare Department, Govt. Ayurvedic Mental Hospital, Kottakkal, Government of Kerala ICDS Cell programmes. It meets public demands through a network of 500 exclusive Oushadhi Dealers and Agents. It undertakes the Implementation of health care projects from Local bodies. Propagation of Ayurveda by establishing specific clinical practices all over India. It also undertake medicinal plants cultivation programme linked with local bodies and entrepreneurs under buy-back arrangement. Nursery development for the production of quality seedlings

VISION
A leading world class Ayurveda industry in the country by 2020.

OBJECTIVES OF THE ORGANISATION

Manufacturing and Marketing of high quality Ayurvedic medicines. Research and Developmental studies on Ayurvedic formulations. Maintenance of Medicinal plants' Herbarium . Promotional activities on medicinal plants Cultivation. Health Care through Panchakarma therapy and Clinical Research Implementation of Govt. of Kerala Health Care Programmes. Propagation of Ayurveda and connected systems all over the world. Implementation of Community Development Programmes with special reference to women and child development. Programme.

MILESTONES
1941: Commenced by His Highness, the Maharaja of Cochin as Sree Kerala Varma Ayurveda Pharmacy.
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1959: Converted into Co-operative Society viz. Sree Kerala Varma Ayurveda Pharmacy and Stores Ltd. 1975: Registered as a company under Indian Companies Act and renamed as The Pharmaceutical Corporation (Indian Medicines) Kerala Limited Thrissur. 1991: Commissioned modern manufacturing unit at Kuttanellur and shifted the factory to the new premises. 2004: Started a new Panchakarma Hospital and Research Institute at Thrissur. 2007: The entire office shifted to the Factory premises at Kuttanellur. 2008: Commenced full-fledged R&D Centre at Kuttanellur and regional distribution unit at Kannur.

FUNCTIONAL DEPARTMENTS
Administration Human Resources Finance & Accounts Purchase Production Marketing Quality Control, Research & Development Maintenance

ADMINISTRATION DEPARTMENT
The administration Department is responsible for the efficient execution of all administrative works, general policies, legal matters, personal affairs, security, company campus, purchase and distribution of stationery, future and initiating proper action on disciplinary proceeding etc. the responsibilities to provide welfare facilities and other amentias to the workers are particularly vested on the section. Actually this section is carrying out the company and formulating companys personal policies. The section maintaining proceedings for the recruitment and administration of personal in accordance with the companys policies. Personal
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records of all employees including confidential files are also maintained in the section. The department ensures that the companys personal policies are effectively carried out through out the organization.

HUMAN RESOURCE DEPARTMENT

Human resource management is the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and reproduction of human resources, to the end that individual, organizational and societal objectives are established. TOTAL MANPOWER STRENGTH OF OUSHADHI Category Executives Doctors Middle Level Executives Clerks & Other Office Staff Drivers Maintenance Staff Production Supervisors Security Field Marketing Officer Hospital Workers Workers Total Permanent 11 7 10 18 9 6 15 5 Nil Nil 34 115 Others Nil 5 11 16 4 13 5 12 5 8 373 452 Total 11 12 21 34 13 19 20 17 5 8 407 567

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FINANCE & ACCOUNTS DEPARTMENT

All day to day matters relating to routine working of the factory is carried out by the department. The section is ultimately responsible for the financial properties of the various transactions and for the avoidance of loss etc. The responsibilities of maintaining and supervising all the accounts of the company including internal audit and costing is vested on the section. It is responsibility of the finance department the negotiations and dealings with the banks, financial institutions, government etc. and maintaining banking and accounting for all money received including foreign currency, bill of exchange and petty cash book etc.

PURCHASE DEPARTMENT
Purchase department is an important department of every organization. There are different types of purchasing through tender and direct purchase also. Purchase of raw material, containers & packing materials are done through tender. Other than tender there are many raw materials and containers & packing materials purchasing through direct purchase from the open market. Purchases more than 600 varities of raw materials through open tender. In Oushadhi there is a standardized procedure to verify the variety of raw materials. In those more than 60% raw materials comes from the forest. Annual purchase of Oushadhi Pharmaceuticals is comes around 7-9 crores. For all purchases the firm is maintaining a data base of raw materials.

PRODUCTION DEPARTMENT
This section deals with the overall production and management of the livestock. The requirements of raw materials for the factory is maintain by the section. It is ensured by the section the safety and health measures of the employees to achieve the daily targeted output and to efficient utilization of manpower requirements. Up-to-date registers relating to production and livestock and to co-ordinate the marketing wing is maintained in the section. The stock in process, products, tools and accessories in production are also maintained.

MARKETING DEPARTMENT
Marketing deals with identifying and meeting human and social needs. Marketing is defined in as marketing needs profitably. Marketing is formally defined by the American
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Marketing is formally defined by the American Marketing Association as follows, marketing is an organizational function and a set of process of creating, communicating and delivering value to customer and for managing customer relationship in ways that benefit the organization and its stake holders. Coping with exchange processes calls for a considerable amount of work and skill. Oushadhi has a marketing department to handle the marketing activities. The marketing section ensures that proper inventory of finished products, prompt collection of sales proceeds, setting of due etc.

QUALITY CONTROL AND RESEARCH & DEVELOPMENT DEPARTMENT

Product Innovation Process Innovation Stage wise quality examination Research on substitute raw drugs Development of standards for drugs & products. Training programmes for Ayurveda MD, B.Phams, BAMS, and Biotechnology students.

ACTIVITIES
Product development and related works like experimental and clinical trials. Innovation practices in processes and products to present ancient pharmaceutical forms in user friendly mode. Preparation and implementation of various projects for standardization prototype development, process trouble shoots etc. Preparation of database for raw materials, process, and formulations. Extension activities like awareness classes, seminars etc.

MAINTENANCE DEPARTMENT
Oushadhi maintaining the maximum quality production at lower cost with optimum safety. The firm is identifying and implementing cost reduction procedure and also providing accurate equipment maintenance records/ information. Procurement of plant & machinery
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Upkeep and maintenance of all plant and machinery Construction of civil work Power & water supply Effluent treatment Maintenance of campus

FUTURE PLANS
Modernization of existing unit to improve quality and to meet the market requirement. Establish branches in neighboring states to promote Oushadhi. Establishment of export oriented production unit for selected high demand items. Computerization of entire business. Establishment of new processing and value addition units. Strengthening of quality control and drug testing laboratory. Development of new drugs in Neutraceutical, cosmetic and baby products segments. Promote medical plant cultivation and conservation. Purchase of raw materials raised by farmers through Oushadhi agents spread all over the state through an effective buy back arrangement to encourage medicinal plant cultivation by farmers.

PRODUCTION
Oushadhi produces 450 different varieties of medicines. Qualified and experienced doctors are appointed to supervise productions. Productions of medicines are done as per GMP norms. Quality control measures have been set up to ensure quality of raw materials & finished goods. Modern dosage forms like, Tablet, Ointment, Granules and Syrup were introduced by Oushadhi.

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Formulations (433 Classic and 17 Patents) Sl.No. 1 2 3 4 5 6 7 8 Asavams & Arishtams Medicated Oils (Thylam) Lehyams and Ghrithams Gulika and Tablets Liquid Kashayams Kashayachoornam & Sooshmachoornam Bhasma Sindooram Patent and Proprietary Total Category Nos. 38 112 59 52 49 112 13 17 450

PRODUCT RANGE
1) Important Classical Products Sivagulika Haridrakhandam Gandhathylam Aswagandhadi Lehyam Amruthaprasam Saraswatharishtam Dasamoolarishtam Kottanchukkathi Agasthyarasayanam Bhramikritham
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Thalispathrathi Rasneradi Rasneradi Liquor

2) Important Patent Products Pramehoushadhi Burncure Ointment Rheumajith Ointment Murivenna Ointment Bliss Balm Psorset Oil Hair Tone Oushadhi Chavanaprasam Thenginpookkulamrutham Oushadhi Toothpowder Oushadhi Dahasamani Diabetic Drinks Ashtachoornam Syrup Oushadhi Cough Syrup Sudarsanamm Tab Shaddharanam Vigor Plus

SCOPE OF THE STUDY

The study will provide adequate information about the working capital position of the company. This will help to know the solvency position and liquidity position of Oushadhi Pharmaceuticals. So that they can make appropriate decisions to improve the working capital position of the company.

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SCHEME OF THE STUDY

The study has been arranged in 7 chapters. The first chapter gives introduction, research methodology and limitations of the study. The second chapter covers industry profile. Organization profile is given in third chapter. Fourth chapter covers product profile. Fifth chapter deals with analysis and interpretation of the data. Findings and suggestions are given in chapter six and the last chapter gives conclusion of the study.

LIMITATIONS OF THE STUDY

1) This study is done mainly with the help of the financial statement which are subjected to many limitations. So many of ratios are not able to calculate. Ratios are also subjected to many limitations like financial biases. 2) In this study qualitative factors which may generally influence the conclusions derived are ignored while computing ratio because for calculating ratios we will take only quantitative factors. 3) The non availability of certain data in the limited time is also one of the major limitations of study.

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CHAPTER- 2

REVIEW OF LITERATURE

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WORKING CAPITAL MANAGEMENT

In business point of view working capital is money or money value is used in business regardless of the source of obtaining it. The term working means the circulation of capital in one from or another during the day-to-day operations of business. Working capital is defined in the annual survey of the industries to include stock of material, stores, fuel, semi-finished goods including working progress and finished by products, cash in hand and algebraic sum of sundry creditors. Every business needs funds for two purposes- for its establishment and to carry out its day- today operations. Long- term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land, building, furniture, etc. Funds are also needed for short- term purposes for the purchase of raw materials, payment of wages and other day- to- day expenses, etc. These funds are known as working capital. Working capital refers to that part of the firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors and inventories. DEFINITION Capital invested in the Working or current asset with in the business. It is called circulating capital or revolving capital. Working capital stands for the part of the capital, which is required for the financial or Working or current need of the company. Generally the term working capital means funds required for the day today operations of the enterprise. Working capital is defined as the funds required covering the cost of operating an enterprise. There are two broad types of working capital, namely, permanent working capital management and temporary working capital management. a) Permanent Working Capital: - It represents the minimum amount of working capital required to ensure effective utilization of fixed assets and support the normal operation of the business. It is the minimum amount to be kept for maintaining a normal level of stock of raw materials, work-in progress and finished goods and for regular payment of wages, salaries rent etc. Permanent working capital classified into two.

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 Initial working Capital Regular Working capital b) Temporary Working Capital: - It is the working capital which varies with volume of business. It is the additional working capital to meet seasonal and special needs. It is required for short periods. It is also called variable working capital. This can be again classified as Seasonal Working Capital Special Working Capital

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital: Gross working capital Net working capital The gross working capital is the capital invested in the total current assets of the enterprise. Net working capital is the excess of current assets over current liabilities Net working capital= current assets- current liabilities The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. These two concepts of the working capital are not exclusive; rather both have their own merits. Both, gross and net, concepts of the working capital are important aspects of working capital management. The net concept of working capital may be suitable only for proprietary form of organizations such as sole- trader or partnership firms. But the gross concept is very suitable to the company form of organization where there is a divorce between ownership, management and control. As per the general practice, net working capital is referred to simply as working capital.

NEEDS OF ADEQUATE WORKING CAPITAL

Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantages of maintaining adequate working capital are

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Solvency of the business: - Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. Goodwill: - Sufficient working capital enables a business concern to make prompt payments and hence helps in creating and maintaining goodwill. Easy loans: - A concern having adequate working capital, high solvency and good credit standing can arrange loans from banks and others on easy and favorable terms. Cash discounts:-Adequate working capital also enables a concern to avail cash discounts on the purchases. And hence it reduces costs. Regular supply of the raw materials: - Sufficient working capital ensures regular supply of raw materials and continuous production. Regular payment of salaries, wages etc:- A company which has ample working capital can make regular payment of salaries ,wages and other day-to-day commitments which raises the morale of its employees, increases their efficiency, reduces wastages and costs and enhances production and profits.

Exploitation of favorable market conditions: - Only concerns with adequate working capital can exploit favorable market conditions such as purchasing its requirements in bulk when the prices are lower and by holding its inventories for higher prices.

Ability to face crisis: - Adequate working capital enables concern to face business crisis in emergencies such as depression because during such periods, generally there is much pressure on working capital.

Quick and regular return on the investments: - Every investor wants quick and regular return on his investments. Sufficiently of working capital enables a concern to pay quickly much and regular dividends to its investors as there may not be much pressure to plough back profits. This gains the confidence of its investors and creates a favorable market to raise additional funds in future.

High morale: - Adequacy of working capital creates an environment of security, confidence, and high morale and creates overall efficiency in a business.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT

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It is necessary for any organization to provide adequate working capital in order to run successfully the major thrust of working capital management of current assets, as it is understandable, that current liabilities arise the context of current asset. If the size of such asset is relatively large, the liquidity position will improve and profitability will be adversely affected, as funds will remain idle. Conversely if holding of such asset are small the overall profitability will no doubt increase. But it will have an adverse effect on the liquidity position and make the firm more risky. If the firm cannot maintain a satisfactory level of working capital it is likely to become insolvent. The area of working capital management intimately links the functioning of every department in a business concern. The policy governing the working capital has got a snow-ball effect on other department like personnel, production, marketing and so on. That it can be deducted that working capital management has a crucial role to play in the survival of any business unit and working capital management is an integral part of the overall corporate management. The importance of maintaining adequate amount of working capital is as follows: 1. Solvency of the business 2. Goodwill 3. Easy loans 4. Cash discounts 5. Regular supply of Raw-materials 6. Regular payment of salaries, wages and other day-to-day commitments 7. Exploitation of favorable market conditions 8. Ability to face crisis 9. Quick and regular return on investments
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10. High morale

OBJECTIVES OF WORKING CAPITAL

The need for working capital cannot be over emphasized. Every business need some amount of working capital arises due to the time gap between production and realization of cash from sales. For the purchase of raw material, components and spares. To pay wages and salaries. To incur day-to-day expenses and overheads. Costs such a fuel, power and office expenses etc., To meet the selling costs as packing, advertising, etc., To provide credit facilities to the customer. To maintain the inventories of raw material work in-progress, stores and finished stock.

TYPES OF WORKING CAPITAL

Working capital can be divided in to two categories on the basis of time. They are as follows; a) Permanent working capital. b) Variable working capital. PERMENENT WORKING CAPITAL Permanent or regular working capital is the minimum amount which is required to ensure the effective utilization of current asset. It represents the hard core of working capital. The amount of permanent working capital increases with the increase in fixed assets over a long period.

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The increase in fixed asset leads to increase in sales turn over which in turn leads to increase in permanent working capital. VARIABLE OR TEMPERORY WORKING CAPITAL It is the amount of working capital which is required to meet the seasonal demand and some special exigencies. These seasonal demands are subject to fluctuations. Difference between permanent and Temporary Working Capital The difference between the permanent or fixed working capital and temporary or variable working capital is graphically or diagrammatically as represented below;

And;

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 Significance of Working Capital These are the significance of working capital in a firm arises on account of the following reasons; a) Solvency of business b) Goodwill of the firm c) Easy loan d) Cash discount e) Regular supply of raw material f) Regular payment of salaries, wages and other day to day expenses g) Quick and regular return on investment h) Ability to face crisis i) High morale
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FACTORS DETERMINING WORKING CAPITAL REQUIREMENTS

The working capital requirements of a concern depend on the following important factors; a) Nature of Business: The quantum of working capital requirement in a concern basically depends on the nature of its business. As the public utility concerns like Railway and Electricity provide cash sales only, they need a very limited working capital. On the other hand, trading and financial concerns require very less investments in fixed assets but have to invest huge amount in current assets. b) Size of Business: The working capital requirements of a concern are directly influenced by the size of its business. The greater the size of the business unit, the larger will be the amount of working capital. c) Manufacturing Process: The level of working capital depends upon the time required to manufacture goods. The longer the processing period of manufacture, the larger will be the amount of working capital. d) Volume of Sales: Volume of sales is a unique factor depends upon the time required to manufacture goods. The volume of sales and size of the working capital are directly related to each other. When the volume of sales increases, the investment of working capital also increase. e) Production Policy: In certain industries, the demand is subject to wide fluctuations due to seasonal variation. In such a case, the requirement of working capital depends on the production policy. f) Credit Policy: A concern which buys raw material on credit and sells the product on cash requires less amount of investment in inventory. Thus the working capital will be low. g) Turnover of Working Capital: Turnover means the speed with which the working capital converted in to cash by the sale of goods. The speedier the turnover, the smaller will be the amount of working capital required. h) Seasonal Variations: Since in certain industrial concerns, raw material is not available throughout the year, they have to buy these materials during the season to ensure uninterrupted flow of production. In such cases a large amount of working capital is required. i) Production Cycle: it is the time required to convert raw materials in to finished goods. The longer the operating cycle, the larger will be the amount of working capital requirements.

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j) Business Cycle: more working capital is required during the periods of prosperity and less during the period of depression. k) Earning capacity and Dividend policy: The earning capacity and dividend policy of a concern also influences the requirements of its working capital. Firms which have high earning capacity may generate cash profits from operations and contribute to their working capital. A firm that maintains a steady high rate of cash dividend irrespective of its generation of profit requires a large sum as working capital. l) Price Level Changes: The price level changes also influence the working capital requirements of a concern. Usually, a firm will have to maintain the same current assets. Adequacy of Working Capital Working capital is an investment in current assets. Like other investment, its costs money. Thus, the working capital position of a concern should be neither excess nor inadequate. In other words, every concern should have adequate working capital to run its operations. The adequacy of working capital arises on account of the following reasons: a) It helps to enjoy the advantage of cash discounts. b) It helps the company to It helps the company to pay all the current obligations in time. c) It helps the company withstand the period of depression. d) It helps the company to extend favorable credit terms to customers. e) It enables the company to operate its business efficiently as there is no delay in obtaining materials. f) It protests the company from the unfavorable effects of shrinkage in the values of current assets. g) It helps the company to a larger extent to maintain its credit. Dangers of Redundant Working Capital A concern which has excess working capital should face the following problems: a) Overtrading. b) Improper rate of return on investment.
30

c) Big inventories. d) Imbalance between liquidity and profitability. e) Fall in value of shares. f) Speculative transactions. g) Overall inefficiency in the organization. Dangers of Inadequate working capital A concern which has inadequate working capital cannot: a) Pay its short-term liabilities in time. b) Exploit favorable market conditions and undertake profitable projects. c) Buy its requirements in bulk. d) Pay day to day expenses of its operations. e) Utilize the fixed assets efficiently due to non- availability of liquid funds f) Enjoy the advantage of cash discount facilities

MEASURES TO IMPROVE WORKING CAPITAL MANAGEMENT

i. The essence of effective working capital management is proper cash flow forecasting. This should take into account the impact of unforeseen events, market cycles, loss of a prime customers, and actions by competitors. The effect of unforeseen demands on working capital should be factored in. ii. It pays to have contingency plans to tide over unexpected events. While market leaders can manage uncertainty better, other companies must have risk management procedures. These must be based on an objective and realistic view of the role of working capital. iii. Addressing the issue of working capital on a corporate wide basis has certain advantages. Cash generated at one location can well be utilized at another. For this to happen, information access, efficient banking channels, good linkage between production and billing, internal system to move cash and treasury practices should be in place. iv. An innovative approach, combining operational and financial skills and an all encompassing view of the companys operations will help in identifying and implementing strategies that generate short term cash. This can be achieved by having the right set of executives who are
31

responsible for setting targets and performance levels. They are then held accountable for delivering. They are also encouraged to be enterprising and to act as change agent. v. Effective dispute management procedures in relation to customers will go along way in freeing up cash otherwise locked in due to disputes. It will also improve customer service and free up time for legitimate activities like sales, order entry, and cash collection. Overall, efficiency will increase due to reduced operating costs. vi. Collaborating with your customers instead of being focused only on your own operations will also yield good result. If feasible, them to plan their inventory requirements efficiently to match your productions with their consumptions will help reduce inventory levels. This can be done with supplier also. Working capital management is an important yardstick to measure a companys operational and financial efficiency. This aspect must from part of the companys strategic and operational thinking. Efforts should constantly be made to improve the working capital positions. This will be yield greater efficiency and improve customer satisfactions.

INVENTORY MANAGEMENT
Inventories have an important role working capital management. Every enterprise need inventory for smooth running of its activities. It serves between the link between production and distribution process. There is generally, a time lag between recognition of need and its fulfillment. The greater time lag the higher the requirement of the inventory. The unforeseen fluctuation in demand and supply of goods also necessitate the need for inventory it also provides cushion for future price fluctuations. The term inventory refers to the assets which will be sold in the normal course of business operations. The term inventory includes raw materials, work in progress and finished goods.

Purpose of Holding Inventory

Every business enterprise has to maintain a certain level of inventories to facilitate uninterrupted production and smooth running of business. In the absence of inventories of a firm will have to make purchase as soon as it receives orders. It will mean loss of time and delay in execution of order, which some time may cause loss of customers and business. A firm also needed to
32

maintain inventories to reduce ordering cost and avail quantity discount, etc. generally, there are main purpose or motives of holding inventories. The transaction motive:- which facilitates continuous production and timely execution of sales orders. The production motive:which necessitates the holding of inventories for meeting

unpredictable changes in demand and supply materials. The speculative motive:- which includes keeping inventories for taking advantages of price fluctuations, saving in recording costs and quantity discount etc.

Objectives of Inventory management

The main objectives of inventory management are operational and financial. The operational objectives mean that materials should be available in sufficient quantity so that work is not disrupted for a want of inventory. The following are the objectives of inventory management; 1. To ensure continuous supply of materials spares and finished goods so that the production should not suffer any time and the customer demand should met. 2. To avoid both the over stocking and the under stocking of inventory. 3. To maintain investment in inventories at the optimum level by and operational and sales activities. 4. To keep material cost under control so that they contribute in reducing cost.

Factors influencing inventory management

The main factors, which are influencing the inventory management, are as follows; 1. Lead Time 2. Cost of Holding Inventory a) Material Costs b) Ordering Costs c) Carrying Costs d) Cost of tying-up of Funds
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e) Cost of Under stocking

f) Cost of Overstocking
3. Stock Levels a. Reorder Level b. Maximum Level c. Minimum Level d. Safety Level / Danger Level. 4. Variety Reduction 5. Materials Planning 6. Service Levels 7. Obsolete Inventory and Scrap 8. Quantity Discounts

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CHAPTER- 3

RESEARCH METHODOLOGY

35

TITLE OF THE PROJECT

An Exploratory Study on Working Capital Management At Oushadhi Pharmaceuticals Corporation (IM) Kerala Ltd.

OBJETIVES OF THE STUDY

The main objective of the study is to make an exploratory study in Working Capital Management at Oushadhi Pharmaceuticals Corporation (IM) Kerala Ltd. The other objectives are as follows. To analyze the working capital management of the company. To ascertain different sources and applications of working capital. To analyze the solvency position of the company. To study the liquidity position of the organization.

METHODOLOGY:
1) Data Collection: - The data can be classified as a) Primary Data- Primary data is the data which are personal contacts or face to face interaction. b) Secondary Data- Secondary data is the data collected through reports, books, journals, news paper etc. Secondary data has to be collected for this study. It is collected through the annual reports, journals and books of accounts of the company. 2) Tools for Analysis:-The tools/ techniques which are used for the analysis of the data are a) Ratio analysis b) Working capital analysis c) Trend analysis d) Charts and tables
36

directly collected through

RESEARCH DESIGN It is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. This study follows the analytical research. In analytical research the available information or data are analyzed and critical evaluations are made to solve the problems.

DIFFERENT VIEWS OF RESEARCHERS

Many researchers have studied working capital from different views and in different environments. The following ones were very interesting for our research. Debasish Sur, Joy Deep Biswas (2001):They attempted to study the association between liquidity and profitability of the Indian private sector enterprises as a case study of aluminum producing industry, Hindalco and Indal were selected as major aluminum producing units. They observed that there is very high degree of positive correlation between profitability and liquidity of these companies. They also observed that liquidity variables working capital ratio, acid test ratio, working capital to sales ,debtor turnover ratio, inventory turnover ratio, current assets to total assets jointly influence profitability. Prasad (2001):Conducted a study on the working capital management in paper industry. His sample consisted of 21 paper mills from large, medium and small scale for a period of 10 years. He reported that the chief executives properly recognized the role of efficient use of working capital is liquidity and profitability, but in practice they would not achieve it. The study also revealed that 50% of the executives followed budgetary method in planning of working capital and working capital management was inefficient due to sub optimum utilization of working capital. Reddy and Patkar :They made an attempt to study the size composition of in factory companies, evaluate liquidity management and the relationship between liquidity and profitability of factoring companies. SBI factors and Can Bank factors Ltd. Were selected for the purpose of the study was based on
37

secondary data collected from annual reports, percentage method and Spearmens Rank Correlation were used to analyze the data of the study was that sundry debtors amount due to creditors were the major components of current assets and current liabilities liquidity and profitability were found to be inversely related in factoring companies and the liquidity of Can Bank factors was found strongly related to profitability than SBI factors. Singh and Shishir Pandey: For the successful working of any business organization, fixed assets and current assets play vital role. Working capital management is essential as it has a direct impact on profitability and liquidity. An attempt has been made in this paper to study the working capital components and the impact of working capital management on profitability of Hindalco Industries Limited. The paper also makes an attempt to study the correlation between profitability, liquidity and profit before tax of Hindalco. The study is based on the secondary data collected from annual reports of Hindalco for the study period 1990 to 2007.A successful organization needs two types assets, viz., fixed assets and current assets. Fixed assets includeland, building, plant, machinery, furniture, etc. These are not only purchased for the purpose of sale, but also for the purpose of earning profit for many years. Current assets include, raw materials, work-in-progress, finished goods, sundry debtors, bills receivables, cash, bank balance, etc. These are purchased for the purpose of production and sales, like raw material into semi finished products, semi finished products into finished products, finished products into debtors and debtors transferred into cash or bills receivables. The fixed assets are used in increasing production of an organization and the current assets are used in using the fixed assets for day to day working. The management of this working capital is known as working capital management. The term working capital refers to the amount of capital which is readily available to an organization. Management of working capital deals... Rakesh Kumar Baral: To start any business, First of all we need finance and the success of that business entirely depends on the proper management of day-to-day finance and the management of this short-term capital or finance of the business is called Working Capital Management. Working Capital is the money used to pay for the everyday trading activities carried out by the business - stationery
38

needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. I have tried to put my best effort to complete this task on the basis of skill that I have achieved during the last one year study in the institute. I have tried to put my maximum effort to get the accurate statistical data. However I would appreciate if any mistakes are brought to my by the reader. Thomas M. Krueger: Firms are able to reduce financing costs and/or increase the funds available for expansion by minimizing the amount of funds tied up in current assets. We provide insights into the performance of surveyed firms across key components of working capital management by using the CFO magazines annual Working Capital Management Survey. We discover that significant differences exist between industries in working capital measures across time. In addition, we discover that these measures for working capital change significantly within industries across time. Sales are the importance of efficient working capital management (WCM) is indisputable. Working capital is the difference between resources in cash or readily convertible into cash (Current Assets) and organizational commitments for which cash will soon be required (Current Liabilities). The objective of working capital management is to maintain the optimum balance of each of the working capital components. Business viability relies on the ability to effectively manage receivables, inventory, and payables. Firms are able to reduce financing costs and/or increase the funds available for expansion by minimizing the amount of funds tied up in current assets. All the above studies provide a solid base and give idea regarding working capital managements and its components. They also give the results and conclusions of those researchers already conducted on the same area in different companies and environments from different aspects. On the basis of these studies the researchers have developed own methodology for the research development.

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CHAPTER- 4

DATA ANALYSIS AND INTERPRETATION

40

RATIO ANALYSIS
Ratio analysis is one of the most used techniques of financial analysis. It aims at making use of quantitative information for decision making. A ratio is an expression of relationship between two figures or two amounts. It is a yard stick which measures relationship between two variables. Ratios are simply a means of highlighting in arithmetical terms the relationship between figures drawn from various financial statements. A great number of ratios can be computed from the basic financial statements- Balance Sheet and Profit and Loss Account. Ratio analysis is an important method of financial analysis, because a meaningful analysis of financial statements depends on the study of relationship among various items of the statement, and the study of relationship among various items of the statement, and the relationship of one item to another can easily be expressed as a ratio. These are widely used because simple to calculate and easy to understand. Even a person, having a little knowledge of accounting, can make use of ratios.

Main Classification of Ratios

According to Statement

According to Function

According to Importance

Balance Sheet Ratios Statement Ratios Combined Ratios

Liquidity Ratios Leverage Ratios Activity Ratios Profitability Ratios

Primary Ratio Income Secondary Ratios

Since the functional classification of ratios is more useful and purposive. For the analysis of working capital management of Oushadhi, the best is to analyze the Functional Ratios.

41

Functional Ratios Liquidity Ratios Current Ratio Quick Ratio Leverage Ratios Debt-Equity Ratio Proprietary Ratio Fixed Asset to Net worth Ratio Activity Ratios Inventory Turnover Ratio Fixed Asset Turn Over Ratio Working Capital Turnover Ratio Profitability Ratios Gross Profit Ratio Net Profit Ratio Return on Capital Employed Earnings per share

42

Uses of ratio analysis 1. Ratios are helpful in judging financial performance of an enterprise over a period of time. 2. 3. 4. 5. 6. 7. Ratio facilitate inter firm comparison. Ratio analysis simplifies the comprehension of financial statements. Sometimes investment decisions are guided by certain ratios. The ratios measure the efficiency of operation of enterprise. It is possible to test the liquidity, solvency and profitability of the enterprise. Ratio analysis communicates the financial strength or weakness of a firm in a more easy and understand manner. The following are the importance of ratio analysis: Aid to measure the general efficiency. Aid to measure financial solvency. Aid in forecasting and planning. Facilitate decision making. Aid in corrective action. Helps in evaluating the efficiency. Limitation of Ratios Ratio analysis has many limitations, Limited use of a single ratio Lack of adequate standards Inherent limitations of accounting Window dressing Personal bias Incomparable Absolute figures may be distorted Ratios are not substitutes

43

Steps involved in ratio analysis Selection of relevant data from the financial statement depending upon the objective of the analysis. Calculation of appropriate ratios from the above data. Comparison the calculated ratios with the ratios of the same firm in the past or ratios developed from projected financial statements, the ratios of some other firms or the comparison with ratios of the industry to which the firm belongs. Interpretation of the ratios.

TREND ANALYSIS
Trends are usually defined as progressive changes in a particular phenomenon. If the phenomenon can be characterized by one variable over time (such as the price of some item), then a trend analysis is fairly simple. Phenomena are often characterized, however, by more than one variable at particular discrete time intervals. In such cases a trend analysis becomes more complex and ambiguous. If enough data are available, however, trends between two subsequent times can be represented by so-called transition matrices. Method of time series data (information in sequence over time) analysis involving comparison of the same item (such as monthly sales revenue figures) over a significantly long period to 1. Detect general pattern of a relationship between associated factors or variables. 2. Project the future direction of this pattern. While calculating trend percentages, the following precautions may be taken: The base year selected should be truly representative of all years involved in the analysis The financial statements used for the analysis must have been prepared applying consistent accounting principles and practices The figures of various accounting statements considered for the analysis should be adjusted for any price level changes, as compared to base year, before computing trend percentages.

44

Trend percentages should be studied along with the absolute figures on which they are based. This will enable us to know whether the change is significant or not.

Features of Trend Analysis 1. Trend Analysis Proper Allows to plot aggregated response data over time. 2. Market Basket Analysis Insight into services and product purchasing trend patterns 3. Market Segmentation Analyzes common characteristics of a consumer base 4. Customer Churn Identifying those consumers who are most likely to discontinue that service or product 5. Direct and Interactive (web-based) Marketing Predicting in advance the products or services a person is most likely to use based on past and present trends.

Trend Analysis of Current Assets for Five Years Table no: 4.1 Year 2006-2006 2006-2007 2007-2008 2008-2009 2009-2010 Current Assets (In Rs.) 101703382.00 124921150.00 163833168.00 181251875.00 200578287.00 % Changes 100 122.82 131.15 110.63 110.66

45

Figure no: 4.1

Trend Value
140 120 100 80 60 40 20 0 2005-06 2006-07 2007-08 2008-09 2009-10 Trend Value

Interpretation Current Ratio is changing differently over the years. In the year 2007-2008 the current ratio Change is 31.5%, it is the highest ratio when compared to the following years and the liquidity position is acceptable. But during the years 2008-2009 the ratio is decreased. It indicates that the companys solvency position is not satisfactory and also indicates inadequate working capital. In 2009-2010 there is a slight increase in the ratio position. Trend Analysis of Current Liabilities for Five Years Table no: 4.2 Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Current Liabilities (In Rs.) 57621110.00 68591183.00 97456151.00 114314595.00 119125363.00 % Changes 100 119.04 142.08 117.30 104.20

46

Figure no: 4.2

Trend Value
160 140 120 100 80 60 40 20 0 2005-06 2006-07 2--7-08 2008-09 2009-10 Trend Value

Interpretation The current liabilities have shown a decreasing trend from 2007-2008 to 2009-2010. During the year 2007-2008 the companies trend was is highest position5. It is highly satisfactory that company could reduce their liability to a lowest one in year 2009-2010.

Trend Analysis of Working Capital Working Capital = Current Assets Current Liabilities

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Table no: 4.3 Current Assets Year (In Rs.) 2005-2006 101703382.00 Current Liability(In Rs.) 57621110.00 Working Capital (In Rs.) 44082272.00

% Changes

2006-2007

124921150.00

68591183.00

56329967.00

27.78

2007-2008

163833168.00

97456151.00

66377017.00

17.84

2008-2009

181251875.00

114314595.00

66937280.00

0.84

2009-2010

200578287.00

119125363.00

81452924.00

21.69

Figure no: 4.3

Trend Value
30 25 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10

Trend Value

48

Interpretation The working capital of the company is showing a increasing and decreasing trend. The decreasing trend is due to the decrease in current assets. In 2007 the portion of current assets was at very low level, but in the year 2008 company has net working capital of 8.14 (in crores). It is due to the initiative ness taken by the company in a good manner. Trend Analysis of net sales Table no: 4.4

Year

Net Sales Trend value (In Rs.) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 128251486.00 139729485.00 190257950.00 215729769.00 254799626.00 100 108.94 148.33 168.19 198.65

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Figure no: 4.4

Net sales
250

200

150

100

50

0 2005-06 2006-07 2007-08 2008-09 2009-10

Interpretation The trend analysis of net sales shows an upward moving trend in the last five years. During 2005-06 to 2009-10 the net sales of the firm is continuously increasing in a constant rate approximately which indicates a good sales performance of the company. Trend Analysis of inventory Table no: 4.5 Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Inventory 8048334.00 10139293.50 13935625.50 16809355.00 28991555.00 Trend value 100 125.98 173.15 208.85 360.21

50

Figure no: 4.5

Trend value
400 350 300 250 200 150 100 50 0 2005-06 2006-07 2007-08 2008-09 2009-10 Trend value

Interpretation The trend of inventories is an increasing trend during the last five years. There is a steady increment in inventories. In 2008-09, the trend value was 208.85 and in the very next year it increased in to its highest of 360.21.

RATIO ANLYSIS 1) Current Ratio Current ratio is the ratio of current assets to current liabilities. It is calculated by dividing current assets by current liabilities. Current Assets are those, which can be realized within a period of one year. It includes Cash in hand, Cash in bank, Bills receivable, Sundry debtors, Stock, Prepaid expenses, short term investment etc... Current liabilities are those amounts which are payable within a period of one year. In ideal situation Current ratio is 2:1. CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES

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Current Ratio of Five Years Table: 4.6

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Current Assets (In Rs.) 101703382.00 124921150.00 163833168.00 181251875.00 200578287.00

Current Liability (In Rs.) 57621110.00 68591183.00 97456151.00 114314595.00 119125363.00

Current Ratio 1.76 1.82 1.68 1.58 1.68

Figure: 4.6

Current Ratio
1.85 1.8 1.75 1.7 1.65 1.6 1.55 1.5 1.45 2005-06 2006-07 2007-08 2008-09 2009-10 Current Ratio

52

Current assets and current liabilities Figure: 4.7

250000000

200000000

150000000 current assets 100000000 current liabilities

50000000

0 2005-06 2006-07 2007-08 2008-09 2009-10

Interpretation The current ratio of the company for the last five years is presented in Table. Since the ideal current ratio is 2:1,the ratio were less than 2 in all the five years, so it can be understood that the organization do not have adequate amount of current assets. The current ratio of the company increased in the year 2006-07 to 1.82%. But in the subsequent years it was seen decreasing. Again in 2009-10 the ratio showed an increase. 2) Quick Ratio It is also called Acid Test Ratio or Liquidity Ratio. It is determined by dividing Quick Assets by Current liabilities. The term Quick asset refers to Current assets, which can be converted into cash immediately. It comprises all Current assets except stock and prepaid expenses. An Acid Test ratio of 1:1 is considered satisfactory as a firm can easily meet all its current liabilities. If the ratio is less than 1:1, then the financial position of the concern shall be deemed to be unsound. QUICK RATIO = QUICK ASSETS / CURRENT LIABILITIES
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Quick Ratio of Five Years Table: 4.7

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Quick Assets (In Rs.) 84464345.00 104503904.00 135340379.00 152928752.00 165041277.00

Current Liability (In Rs.) 57621110.00 68591183.00 97456151.00 114314595.00 119125363.00

Quick Ratio 1.46 1.52 1.38 1.33 1.38

Figure: 4.8

Quick Ratio
1.55 1.5 1.45 1.4 1.35 1.3 1.25 1.2 2005-06 2006-07 2007-08 2008-09 2009-10

54

Quick assets and current liabilities Figure: 4.9

180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 quick assets current liabilities

Interpretation The quick ratio has shown a decreasing trend from 2006-07 to 2008-09. During the year 20078-09 the liquidity position is satisfactory because it is near to 1. Even though it was decreasing it was above the standard ratio i.e. 1:1. From the above graph companys liquidity position is satisfactory 3) Absolute Liquid Ratio This ratio shows the relationship between absolute liquid asset and current liabilities. Absolute liquid assets are obtained by subtracting both the debtors, prepaid expenses and inventory from the current assets. The ideal absolute liquid ratio is 0.5:1. ABSOLUTE LIQUDITY RATIO = ABSOLUTE LIQUID ASSETS / CURRENT ASSETS

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Absolute Liquid Ratio of Five Years Table: 4.8 Absolute Year Liquid Assets(In Rs.) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 59599325.00 72310162.00 75383774.00 98326119.00 131741894.00 Liabilities(In Rs.) 57621110.00 68591183.00 97456151.00 114314595.00 119125363.00 Liquid Ratio 1.03 1.05 0.77 0.86 1.10 Current Absolute

Figure: 4.10

Absolute Liquidity Ratio

1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 Absolute Liquidity Ratio

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Absolute liquid assets and current liabilities Figure: 4.11

140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2005-06 2006-07 2007-08 2008-09 2009-10

absolute liquid assets current liabilities

Interpretation In the year 2006-07 the cash position was nearer to ideal ratio of 0.5: 1. During the subsequent period the ratios were far away from ideal ratio. So the company should keep enough cash to meet day to - day expenses. Hence the liquidity or cash position of the company is not satisfactory. 4) Working Capital Turnover Ratio This ratio is computed to test the efficiency with which the net working capital is utilized. In other words the ratio indicates whether working capital is effectively utilized in making sales. It is calculated as follows. WORKING CAPITAL TURNOVER RATIO = NET SALES / NET WORKING CAPITAL

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Working Capital Turnover Ratio of Five Years Table: 4.9

Year

Net Sales (In Rs.)

Net Working Capital (In Rs.) 44082272.00 56329967.00 66377017.00 66937280.00 81452924.00

Working Capital Turnover Ratio(In Times)

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

128251486.00 139729485.00 190257950.00 215729769.00 254799626.00

2.90 2.48 2.86 3.22 3.12

Figure: 4.12

Working Capital Turnover Ratio

3.5 3 2.5 2 Working Capital Turnover Ratio 1.5 1 0.5 0 2005-06 2006-07 2007-08 2008-09 2009-10

58

Net sales and net working capital Figure: 4.13

300000000 250000000 200000000 150000000 100000000 50000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 net sales net working capital

Interpretation The working capital turnover ratio indicates an increasing trend from 2006-07 to 2008-09 except in 2010, the higher the ratio the better because it means the company is generating more sales from its working capital. But here over the first 4 years the companys working capital turnover ratio was low and it indicates that the company has not been efficiently generating sales from its working capital. In 2010 it is 3.12 which has shown a small downfall. 5) Inventory Turnover Ratio Inventory turnover ratio also known as stock turnover ratio establishes the relationship between costs of goods sold and average inventory. Besides helps in determining the liquidity of a business concern, this ratio indicates how many times during the period the firm has turned its inventory. In other words, it shoes the rate at which inventories are converted into sales and then into cash. It is computed as follows. INVENTORY TURNOVER RATIO = COST OF GOODS SOLD / AVERAGE STOCK

59

Inventory Turnover Ratio of Five Years Table: 4.10 Cost of Goods Sold Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 (In Rs.) 68306456.00 73516313.00 97165036.00 106229389.00 133104937.00 Average Stock (In Rs.) 8048334.00 10139293.50 13935625.50 16809355.00 28991555.00 Inventory Turnover Ratio( In Times) 8.48 7.25 6.97 6.31 4.59

Figure: 4.14

Inventory Turnover Ratio

9 8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 Inventory Turnover Ratio

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Cost of goods sold and average stock Figure: 4.15

140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2005-06 2006-07 2007-08 2008-09 2009-10

cost of goods sold average stok

Interpretation The inventory turnover ratio was decreasing over the years. In 2005-06 the ratio was at maximum level. High inventory ratio was an indication of good inventory management. Inventory holding period was shorter in the year 2005-06 and longer in the year 2010. Shorter holding period is favorable to the company. But company should take necessary actions to reduce the holding period in 2011. 6) Debtors Turnover Ratio Debtors turnover ratio is also called receivables turnover ratio. It relates net credit sales to sundry debtors. It measures how fast debts are collected. It is calculated as follows. The term debtors in this ratio are the amount of debtors plus bills receivables at the end of the accounting period. DEBTORS TURNOVER RATIO = NET CREDIT SALES / DEBTORS INCLUDING BILLS RECEIVABLE
61

Debtors Turnover Ratio of Five Years Table: 4.11 Net Credit Year Sales (In Rs.) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 128251486.00 139729485.00 190257950.00 215729769.00 254799616.00 Sundry Debtors including Bills Receivable (In Rs.) 24865020.00 32193742.00 59956605.00 54602633.00 33299383.00

Debtors Turnover Ratio ( In Times)

5.15 4.34 3.17 3.95 7.65

Figure: 4.16

Debtors Turnover Ratio

8 7 6 5 4 3 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 Debtors Turnover Ratio

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Net credit sales and sundry debtors Figure: 4.17

300000000 250000000 200000000 150000000 100000000 50000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 net credit sales sundry debtors

Interpretation The debtors turnover ratio was fluctuating over the study period. The ratio was higher during the year 2009-2010. This was an indication of efficiency of management of receivables. A high or increasing Debtors Turnover Ratio is usually a positive sign - showing the company is successfully executing its credit policies and quickly turning its Accounts Receivables/Debtors into cash. The ratio was very low during the year 2007-08. It was because sales were decreased and the credit policy was liberal. 7) Creditors Turnover Ratio Creditors turnover ratio is the ratio between net credit purchase and the amount of sundry creditors. It implies the credit period enjoyed by the firm in paying creditors. It is computed by using the following formula. The creditors turnover ratio may also be expressed in days. Then it is known as creditors payment period or creditors velocity. CREDITORS TURNOVER RATIO = NET CREDIT PURCHASE / SUNDRY CREDITORS

63

Creditors Turnover Ratio of Five years Table: 4.12 Net Credit Year Sundry Creditors including Purchases Rs.) 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 69645734.00 76358954.00 101915059.00 107226825.00 139163828.00 22515907.00 27586162.00 43498386.00 40216377.00 45012676.00 (In Bills Payable(In Rs.) ( In Times) 3.09 2.76 2.34 2.66 3.09 Creditors Turnover Ratio

Figure: 4.18

Creditors Turnover Ratio

3.5 3 2.5 2 Creditors Turnover Ratio 1.5 1 0.5 0 2005=-6 2006-07 2007-08 2008-09 2009-10

64

Net credit purchase and sundry creditors Figure: 4.19

120000000 100000000 80000000 60000000 40000000 20000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 net credit sundry creditors

Interpretation The creditors turnover ratio has indicated that there were more differences over the years. In 2009-10 the ratio was 3.09 which was highest compared to other years. This indicates delayed payment to suppliers which is not a very good policy as it may affect the reputation of the business. The lower ratio indicates that company enjoys a greater credit period to repay the liability. In 2007-08 creditors turnover ratio is the lowest with 2.34. A high ratio implies the company should re-assess its credit policies in order to ensure the timely collection of imparted credit that is not earning interest for the firm. 8) Cost of Goods Sold Ratio Cost of goods sold ratio is the ratio of relationship between the cost of goods sold and the sales of an organization. For the cost of goods sold ratio the smaller the ratio the better it is. Try to reduce the cost of goods sold and increase the net profit. Cost of goods sold ratio is calculated by using the following formula.

65

COST OF GOODS SOLD = COST OF GOODS SOLD / NET SALES *100 Cost of Goods Sold Ratio of Five Years Table: 4.13 Cost of Goods Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 Sold (In Rs.) 68306456.00 73516313.00 97165036.00 106229389.00 133104937.00 Net Sales (In Rs.) 128251486.00 139729485.00 190257950.00 215729769.00 254799616.00 Cost of Goods Sold Ratio (In %) 53.25 52.61 51.07 49.24 52.23

Figure: 4.20

Cost of Goods Sold Ratio

54 53 52 51 Cost of Goods Sold Ratio 50 49 48 47 2005-06 2006-07 2007-08 2008-09 2009-10

66

Cost of goods sold and net sales Figure: 4.21

300000000 250000000 200000000 150000000 100000000 50000000 0 2005-06 2006-07 2007-08 2008-09 2009-10 cost of goods sold net sales

Interpretation The cost of goods sold ratio in 2005-06 is 53.25.During the five years if this study that was the highest ratio. After that it comes reducing in the following years up to 2008.In 2009-10 again cost of selling increased

67

STATEMENT SHOWING CHANGES IN WORKING CAPITAL

Working capital management is concerned with the problem that arise in attempting to manage the current assets, current liabilities and the inter relationship that existing between them. The goal of working capital management is to manage the firms current assets and current liabilities in such way that the satisfactory level of working capital is mentioned. The current assets should be large enough to cover its current liabilities in order to ensure a reasonable margin of the safety. For this purpose researchers are preparing the statement of changes in working capital in order to understand previous year amount and the current year amount. Statement showing changes in working capital is an important tool to study the changes in working capital of the concern and can also throw light on cause for these changes. Working capital means the excess of current asset over current liabilities. All current assets and current liabilities are individually listed in this statement, and against each account, the figure pertaining to that account at the beginning and at the end of the accounting period is shown. The net change in its position is also added up to equal net change in working capital. As, Working Capital= Current Assets - Current Liabilities. So, 1. An increase in Current Assets increases Working Capital. 2. A decrease in current assets decreases, working capital. 3. An increase in current liabilities decreases working capital, and 4. A decrease in current liabilities increases working capital. In case a current asset in the current period is more than in the previous period, the effect is an increase in working capital and it is recorded in the increase column. But if a current liability in the current period is more than in the previous period, the effect is decrease in working capital and it is recorded in the decrease column or vice versa. how much is difference between the

68

Statement of Changes in Working Capital as on 2005-2006 Changes (In Rs.) 31st March2005

Particulars

31st March2006

Increase

Decrease

A) Current Assets Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances B) Current Liabilities Sundry Creditors Other Liabilities Provisions 21237233 26117826 8972005 22515907 26990490 8114713 --------------------------857292 1278674 872664 --------------14439911 31959809 40927691 10251534 838757 17239037 24865020 49684946 8799225 1115154 2799126 -------------8757255 -------------276397 -------------7094789 -------------1452309 ---------------

Total Increase in Working Capital=1991634 Interpretation

12690070

10698436

There is an increase in working capital in the year 2005 to 2006 by 19.91 lakhs which was due to the increase in inventory by 27.99 lakhs and increase in cash and bank balance by 87.57 lakhs. Increase in working capital is contributed to the sources of funds.

69

Statement of Changes in Working Capital as on 2006-2007 Changes (In Rs.) 31st March2006 31st March2007

Particulars

Increase

Decrease

A) Current Assets Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances B) Current Liabilities Sundry Creditors Other Liabilities Provisions 22515907 26990490 8114713 27586162 31162911 9842110 ------------------------------------------5070255 4172421 1727397 17239037 24865020 49684946 8799225 1115154 20417246 32193742 58703536 12471133 1135494 3178209 7328722 9018590 3671908 20340 -----------------------------------------------------------------------

Total Increase in Working Capital=12247696 Interpretation

23217769

10970073

There is an increase in working capital in the year 2006 to 2007 by 1.22crores which was due to the increase in inventory by 31.78 lakhs and increase in cash and bank balance by 90.18 lakhs. Increase in working capital is contributed to the sources of funds.

70

Statement of Changes in Working Capital as on 2007-2008 Changes (In Rs.) 31st March2007 31st March2008

Particulars

Increase

Decrease

A) Current Assets Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances B) Current Liabilities Sundry Creditors Other Liabilities Provisions 27586162 31162911 9842110 43498386 36582078 17375687 ------------------------------------------15912224 5419167 7533577 20417246 32193742 58703536 12471133 1135494 28492789 59956605 58137332 15516908 1729534 8075543 27762863 --------------3045775 594040 ----------------------------566204 -----------------------------

Total Increase in Working Capital=10047049 Interpretation

39478221

29431172

There is an increase in working capital in the year 2007 to 2008 by 1.004crores which was due to the increase in inventory by 80.75 lakhs and decrease in cash and bank balance by 56.62 lakhs. Increase in working capital is contributed to the sources of funds.

71

Statement of Changes in Working Capital as on 2008-09 Changes (In Rs.) 31st March2008 31st March2009

Particulars

Increase

Decrease

A) Current Assets Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances B) Current Liabilities Sundry Creditors Other Liabilities Provisions 43498386 36582078 17375687 40216377 59107935 14990283 3282009 --------------2385404 --------------22525857 --------------28492789 59956605 58137332 15516908 1729534 28323123 54602633 65993619 30589086 1743414 ----------------------------7856287 15072178 13880 169666 5353972 -------------------------------------------

Total Increase in Working Capital=560263

28609758

28049495

Interpretation There is an increase in working capital in the year 2008 to 2009 by 5.60lakhs which was due to the decrease in inventory by 1.69 lakhs and increase in cash and bank balance by 78.56 lakhs. Increase in working capital is contributed to the sources of funds.
72

Statement of Changes in Working Capital as on 2009-2010 Changes (In Rs.) 31st March2009 31st March2010

Particulars

Increase

Decrease

A) Current Assets Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances B) Current Liabilities Sundry Creditors Other Liabilities Provisions 40216377 59107935 14990283 45012676 60290932 13821755 ----------------------------1168528 4796299 1182997 --------------28323123 54602633 65993619 30589086 1743414 35537010 33299383 99601775 30606278 1533842 7213887 --------------33608156 17192 ----------------------------21303250 ----------------------------209572

Total Increase in Working Capital=14515645 Interpretation

42007763

27492118

There is an increase in working capital in the year 2009 to 2010 by 1.45 crores which was due to the increase in inventory by 72.13 lakhs and increase in cash and bank balance by 33.60 lakhs. Increase in working capital is contributed to the sources of funds.

73

CHAPTER- 5

FINDINGS, RECOMMENDATIONS AND CONCLUSION

74

FINDINGS
Current ratio is fluctuating over the years; in 2006 2007 the current ratio is satisfactory, because the current ratio is near than the standard ratio 2:1. During the year 2007 09 the ratio shows a declining tendency this is an indication of firms inability to pay off its current liabilities fully. The quick ratio of the company is not satisfactory because it shows a declining trend

over the years and is less than the standard ratio (1:1). It is very low of 1.33 in the year 2009. Absolute liquid ratio is almost same in all years from 2006 to 2010.But in 2008 and 2009 we can see in a low level as 0.77 and 0.86. Working capital turnover ratios are in a good level. It shows in increasing level. The inventory turnover ratio shows a decreasing trend over the years. In the last year (20010) it is in the lowest level 4.59. Debtors turnover ratio started with a good range and continuing with declining form up to 2009. In 20010 it is in the highest level 7.65. Creditors turnover ratio standing in the same position in 2006 and 20010.But in between years it is fluctuating. Cost of goods sold ratio is going in decreasing range up to 2009. Again in 20010 it increased. The liquidity position of the company is weak. Because current assets and current liabilities are increasing in all the years. Hence it shows the inefficiency of the organization.

75

SUGGESTIONS
Even in 2010 current assets have increased, organization should take necessary steps to keep and increase the ratio of current assets. Even the liquidity position is satisfactory level company should concentrate on that point. As per the absolute liquid ratio of this study cash position of the company is not satisfactory. Hence company should take necessary steps. Organization should try to take adequate steps for increasing the working capital. Company should take adequate actions to reduce the inventory holding period. Organization should take measures to reduce the cost for selling the goods, which in turn increases the profit. The company has to give more importance in the utilization of all assets effectively. The company should adopt suitable policies and measure to self the scrap and by products obtained during the production process. So that it will generate an additional source of revenue. The operating expenses should be reduced as much as possible by adopting cost reducing policy in relation to office and administrative overheads and selling and distribution expenses etc. The firm must ensure that the assets of units it utilized at its maximum either by reducing idle capacity assets on by avoiding excessive investment in fixed assets. It would be advisable if the concern could maintain liquid cash in case to meet any sudden expenses. The company can plan of investing more amounts on research and development in order to develop innovative products. The company is showing a fluctuating trend, it is not advisable to be like this. So the company should concentrate more in a constant rate of growth.

76

CONCLUSION
The financial position of the company was analyzed and interpreted. The analysis and interpretation of data relating to working capital management of Oushadhi Pharmaceuticals Corporation helped me to reach a conclusion that working capital efficiency of Oushadhi Pharmaceuticals Corporation is not much better. Since the working capital amount shows an increasing trend reveals that the company is in a good position to meet its day to day obligations. The management of the company should look in to the reason for loss and put extra efforts taken for the operations of the company to obtain better financial results.

77

BIBLIOGRAPHY
Books Jain S.P and Narang K.L Advanced Accountancy 14th Revised Edition, 2004. Maheshwari S.N, Financial Management 5th Revised and Enlarged Edition, 1997. R. M Srivastava, Financial Management and Policy, Mumbai, Himalaya Publishing House. Journals Annual Reports of Oushadhi Pharmaceuticals Corporation (IM) Kerala Ltd. from 2005-2006 to 2009-2010. Oushadhi Corporate Profile Review of Literature- a) Debasish Sur and Joydeep Biswas b) Prasad c) V.V.Reddy and S.B.Patkar d) J.P.Singh and Shishir Pandey e) Rakesh Kumar Baral f) Thomas.M.Krueger Websites www.oushadhi.org

78

APPENDIX
OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD. Balance Sheet as on 31st March 2006 As on 2006(Rs.) SOURCES OF FUNDS Share Holders Fund Share Capital Advance towards Share capital Reserves & Surplus Deferred Tax Liability Total APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in Progress Current Assets, Loans & Advances Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances 17239037 24865020 49684946 8799225 1115154 101703382 Less: Current Liabilities & Provisions
79

31st

March As on 31st 2005(Rs.)

March

41759720 1000000 27827721 70587441 814883 71402324

35093720 6666000 24707577 66467297 814883 67282180

59960333 32670281 27290052 0

50567498 29570050 20997448 4140094

14439911 31959809 40927691 10251534 838757 98417702

Sundry Creditors Other liabilities Provisions

22515907 26990490 8114713 57621110

21237233 26117826 8972005 56327064 44082272 42090638

Net Current Assets Miscellaneous Expenditure to the Extent Not Written off or Adjusted Total

30000 71402324

54000 67282180

80

OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD. Balance Sheet as on 31st March 2007 As on 2007(Rs.) SOURCES OF FUNDS Share Holders Fund Share Capital Advance towards Share capital Reserves & Surplus Deferred Tax Liability Total APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in Progress Current Assets, Loans & Advances Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances 20417246 32193742 58703536 12471133 1135494 124921151 Less: Current Liabilities & Provisions Sundry Creditors Other liabilities 27586162 31162911 22515907 26990490 17239037 24865020 49684946 8799225 1115154 101703382 62923036 35993060 26929976 113210 59960333 32670281 27290052 0 45159720 2500000 34812699 82472419 915734 83388153 41759720 1000000 27827721 70587441 814883 71402324 31st march As on 2006(Rs.) 31st march

81

Provisions

9842110 68591183

8114713 57621110 56329967 44082272

Net Current Assets Miscellaneous Expenditure to the Extent Not Written off or Adjusted Total

15000 83388153

30000 71402324

82

OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD. Balance Sheet as on 31st March 2008 As on 31st march 2008(Rs.) SOURCES OF FUNDS Share Holders Fund Share Capital Advance towards Share capital Reserves & Surplus Deferred Tax Liability Total APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in Progress Current Assets, Advances Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances Loans & 28492789 59956605 58137332 15516908 1729534 163833168 Less: Current Provisions Sundry Creditors Liabilities & 43498386 27586162 20417246 32193742 58703536 12471133 1135494 124921151 70398024 39782885 30615139 9095910 62923036 35993060 26929976 113210 48359720 4000000 52404631 104764351 1323715 106088066 45159720 2500000 34812699 82472419 915734 83388153 As on 31st march 2007(Rs.)

83

Other liabilities Provisions

36582078 17375687 97456151

31162911 9842110 68591183 66377017 56329967

Net Current Assets Miscellaneous Expenditure to the Extent Not Written off or Adjusted Total

0 106088066

15000 83388153

84

OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD. Balance Sheet as on 31st March 2009 As on 2009(Rs.) SOURCES OF FUNDS Share Holders Fund Share Capital Advance towards Share capital Reserves & Surplus Deferred Tax Liability Total APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in Progress Current Assets, Advances Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances Loans & 28323123 54602633 65993619 30589086 1743414 181251875 Less: Current Provisions Sundry Creditors Liabilities & 40216377
85

31st

march As on 31st march 2008(Rs.)

48359720 12800000 61832037

48359720 4000000 122991757 52404631 1327037 124318794 104764351 1323715 106088066

84078454 45245024 38833430 18548086

70398024 39782885 30615139 9095910

28492789 59956605 58137332 15516908 1729534 163833168

43498386

Other liabilities Provisions

59107935 14990283 114314595

36582078 17375687 97456151 66937278 66377017

Net Current Assets Miscellaneous Expenditure to the Extent Not Written off or Adjusted Total

0 124318794

0 106088066

86

OUSHADHI PHARMACEUTICALS CORPORATION (IM) KERALA LTD. Balance Sheet as on 31st March 2010 As on 31st march 2010(Rs.) SOURCES OF FUNDS Share Holders Fund Share Capital Advance towards Share capital Reserves & Surplus Deferred Tax Liability Total APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work-in Progress Current Assets, Advances Inventories Sundry Debtors Cash & Bank Balances Other Current Assets Loans & Advances Loans & 35537010 33299383 99601775 30606278 1533842 200578287 Less: Current Liabilities & Provisions Sundry Creditors 45012676 40216377 28323123 54602633 65993619 30589086 1743414 181251875 90108893 51826358 38282536 23601589 84078454 45245024 38833430 18548086 61159720 0 80970291 142130011 1327037 143457048 48359720 12800000 61832037 122991757 1327037 124318794 As on 31st march 2009(Rs.)

87

Other liabilities Provisions

60290932 13821755 119125363

59107935 14990283 114314595 81452924 66937278

Net Current Assets Miscellaneous Expenditure to the Extent Not Written off or Adjusted Total

120000 143457048

0 124318794

88