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This project would not be possible, without the omnipresence support and help of many. I wish to profound my gratitude to a few. I extend my deepest of gratitude to, Mrs. SANGEETHA NIKKAM, my project guide, for the guidance and moral support, throughout the study.

Her constant encouragement has made a great difference, for the project commencement. I am immensely grateful to Mr. N. NALLA MURUGAN, Relationship Manager of ITIFSL who provided me with the opportunity, to conduct this study and gain the practical experience, and also gave an insight into the aspect of my research. If not for his timely help and support, the project would have not been possible. I also thank our respected Principal and, the entire teaching faculties of the Management Department, N. M. K. R. V COLLEGE FOR WOMEN, for their kind help in enabling me to conduct this project.

I also oblige to my FAMILY MEMBERS AND FRIENDS, who have been there when it mattered the most. CHAPTER – 1 INTRODUCTION INTRODUCTION TO FINANCE: Finance is one of the major elements, which activates the overall growth of the economy. Finance is the lifeblood of economic activity. The field of finance deals with the concepts of time, money and risk and shows how exactly they are inter connected. Finance is a subject which also depicts how funds are spent and budgeted. Finance is merely the practical application of economics.

The financial system is the means by which an economy allocates money to its highest value use. In general terms this is how people, business and governments raise the cash needed to carry out business. The goal of any financial system is to make sure that those with good ideas get the money necessary to implement the ideas. How this is accomplished in a market-based based economy is through stocks and bond market. People do not give money without the expectation of getting something in return. If money is given then something is expected back in return usually i more number.

The best way to get back money is to invest in firms that will put the money in appropriate use. Of course, others know this as well. As more invest in a particular organisation will ultimately increase the value of that particular firms stock MEANING OF FINANCE: Finance can be broadly referred as the activity concerned with planning, rising. Controlling and administrating of fund in a simple manner. Finance is a discipline concerned with determining value and making decisions. The finance function allocates resources, including the acquiring, investing and managing of resources.

Finance is the study of money and its effective usage. Finance considers the relationships of money to time and risk. One of the main subset of finance is the study of credit and banking, as this involves money, time and risk all together. Finance may deal with personal or corporate. DEFINITION TO FINANCE: A branch of economics concerned with resources allocation as well as resource management, acquisition and investment. Simply, finance deals with matters related to money and markets. FUNCTIONS OF FINANCE: Finance function is the most important function of a business.

Finance is closely connected with production, marketing and other various activities. In the absence of finance, all these activities come to a halt. In fact, only with finance a business activity can be commenced, continued and expanded. Finance exits everywhere, be it production, marketing, human resource development or undertaking research activity. Understanding the universality and importance of finance, and finance manager decisions regarding finance must be taken wisely. Decisions or finance functions are closely connected. All decisions of any firm mostly involve finance.

When a decision involves finance, it is a financial decision in a business firm. In all the following financial areas of decision-making, the role of financial manager is vital. We can classify the finance functions or financial decisions into four majors groups: a) Investment decision or Long term asset mix decision b) Finance decision or Capital mix decision c) Liquidity decision or Short term asset mix decision d) Dividend decision or Profit allocation decision Functions or decisions generally followed: * Raising capital to support company operations and investment. Selecting those projects based on risk and expect return that are the best use of Company resources. * Management of company cash flow and balancing the ratio of debt and equity financing to maximize company value. * Developing a company governance structure to encourage ethical behaviour and actions that serve the best interest of its stock holders. * Management of risk exposure to maintain optimum risk return trade of that maximise share holder value. ORGANISATIONS OF FINANCE FUNCTION: * Treasure * Obtaining finance * Banking * Cash management * Credit administration * Management control * Taxation Financial accounting APPROACHES TO FINANCE: There are two approaches to finance namely: * Traditional approach to finance * Modern approach to finance Traditional approach to finance: The approach to finance function was too narrow, because it confined the role of a financial manager to only increase funds. Because of too narrow interpretation of finance function, only the following exists related to the supply of finances were included in the range of financial management. 1) Financial institution or a study of capital market. Like the stock markets, the banks of commerce, specialized establishments etc. ) A study of financial documents such as various types of shares, obligations and other legal papers which are the instruments to increase funds According to this interpretation, there are some great events to which the funds are required. They are: promotion of the company, recording, reorganization, consolidation and liquidation etc. Consequently, a study of these events constituted the range of the study of financial management. The organisation of finance was the main theme of the traditional approach. Modern approach to finance: It is the practical approach with the financial function.

Its development is noted most of the time in the writings of 1950. According to the approach, the function of finance is concerned with the increasing funds and of their effective use. It underlines the two: raising of the finds and the effective use of the funds. The modern approach implies the financial management is concerned with the once required acquisition of two subjects one of the funds for businesses at minimum cost and investing the funds obtained in an optimum way so that the yield is maximized. Thus it suggests that to increase only funds is not financial management.

It should take care that increased funds are used most decisive and effective. SCOPE OF FINANCE: In modern business society the scope of finance function is not so narrow, scope of finance function is not confined simply to raising of funds for business. If we confine the scope of finance function to the process of raising funds, it cannot and does not provide answers to many problems which arise after the funds are collected like the following should a business commit capital funds for a particular purpose, various decisions regarding: 1. Acquisition of assets 2.

Specific forms of assets where money is to be invested 3. The composition of its liabilities is covered under the scope of finance function. These three questions cover almost all finance function of a first and affect the three major decision: I. Investment decision II. Financing decision III. Dividend decision NATURE OF FINANCE: Raising and managing of funds by business organisations. Such activities are usually the concern of senior managers, who must use financial forecasting to develop a long- term plan for the firm.

Short-term are then devised to meet the plans goals. When a company plans to expand, it may rely on cash reserves, expected increases in sales, or bank loans and trade credit extended by suppliers. Managers may also decide to raise long-term capital in the form of either debt (bonds) or equity (stock). The value of the company’s stock is a constant concern, and managers must decide whether to re-invest profits or to pay dividends. Other duties of financial manager include managing accounts receivable and fixing the optimum level of inventories.

When deciding how to deploy corporate assets to increase growth, financial managers must also consider the benefits of mergers and acquisitions, analysing economics of scale and the ability of the firms to compliment each other. GOALS OF FINANCE: * Finance should aim at the provision of finance for the acquisition of fixed assets as well as current assets. * Finance should aim at the provision of adequate finance for keeping production and marketing activities in full swing. * Finance should aim at the provision of finance at the required time i. e. at the time when it is needed. Finance should aim at achieving the overall objectives of the business enterprise, as finance is considered as the life blood of the entire firm. FINANCE AND ITS IMPORTANCE: The important of finance and its management in business, cannot be over emphasized. No business venture can exist without funds. After business incorporation, the business starts existing as an artificial person, in order to maintain his existing funds to acquire fixed assets, to start his business, to keep it growing viable and liquid; above all help it grow. This explains the importance and priority of place accorded by finance and its anagement in a business domain as all other business activities that is production, manpower, marketing development, research development etc. SOURCES OF FINANCE: LONGTERM SOURCES – This can be raised from the following sources * Share capital or equity share * Preference share * Retained earnings * Debentures or bonds * Loans from financial institution * Loans from state financial corporation * Loans from commercial banks * Venture capital * Asset securitization * International finance MEDIUM TERM – SOURCES OF FINANCE: * Preference share * Debentures or banks * Public deposits of fixed deposits Financial institution * State financial corporation * Lease financing or hire purchase * Foreign currency bonds SHORT TERM- SOURCES OF FINANCE: * Trade credit * Commercial banks * Fixed deposits for a period of one year * Advance received from customers * Various short term provisions INTRODUCTION TO FINANCIAL MANAGEMENT: It is the specialized function directly associated with the top management. The significance of this function is seen in the line and also in the capacity of staff, in the overall administration of the company. It has been defined differently by ARCHER & AMBROSIS – financial management is he application of planning and control functions to the finance function. It is therefore linked with general management that one cannot be separated from the other. It is integral part of general management which is directly concerned with sources and uses of funds. MEANING OF FINANCIAL MANAGEMENT: Financial management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the firm. It means applying the general management principles to financial resources of the enterprise. DEFINITION OF FINANCIAL MANAGEMENT: Financial management is defined according to Prof.

Bradley as “financial management is the area of business management, devoted to a judicious use of capital and a careful selection of sources of capital, in order to enable a spending unit to more in the direction of reaching its goal” EVOLUTION OF FINANCIAL MANAGEMENT: The transitional phase begins around the early forties and continues through the early fifties. Through the nature of financial management during this phase was similar to that of the traditional phase, greater emphasis was placed on the day to day problem faced by the finance managers in the area of funds analysis, planning and control.

The modern phase begin in mid 50’s and has witnessed an accelerated pace of development with the infusion of ideas from economics theories and applications of quantitative methods of analysis. Since the beginning of the modern phase many significant and seminal development have occurred in the field of capital budgeting, capital structure theory, efficient market theory, optional pricing budgeting, agency theory, arbitrage pricing theory, valuation models, dividend policy, working capital management, financial modelling and behavioural finance.

Many more exciting developments are in the offering making finance a fascinating and challenging field. * Traditional phase (1920-1950) * Procurement of funds; market instruments, legal and accounting aspects. * Focus on episodic events; formation, expansion, merger, re-organisation and liquidation. * Outsider looking in approach. * Traditional phase (1950-1960) * Weakness identified. * Only sources of funds considered. * Day to day financial management ignored. * Internal decision making ignored. * Modern phase (1960-till now) * Rational matching of sources and uses of funds. Insider looking out approach. * Short-term financial management given due importance. * More analytical and quantitative. FEATURES OF FINANCIAL MANAGEMENT: On the basis of above definitions, the following are the main characteristics of financial management: * analytical thinking: Under financial management financial problems are analysed and considered. Study of trend and actual figures is made and ratio analysis is done. * Continuous process: Previously financial management was required rarely but now the financial manager remains busy throughout the year. * Basis of managerial decision:

All managerial decisions relating to finance are taken after considering the report prepared by the finance manager. The financial management is the base of managerial decision. * Maintaining balance between risk and profitability: Larger the risk in the business larger is the expectation of profits. Financial management maintains balance between the risk and profitability. * Coordination between process: There is always a coordination between various process involved in a business enterprise. TYPES OF FINANCIAL MANAGEMENT: OVERDRAFT A popular form of finance because it has the advantage of availability, convenience and flexibility.

However because interest rates are high, it should only be used for short term requirements such as funding working capital. BANK TERM LOANS These provide fixed term finance for longer period. They are often secured by a change against company assets and are required to be legally stamped or signed. ASSET-BASED FUND This describes financing an asset over its estimated life span using the asset as security for the loan. It can be structured so that the borrower has the sole right to use the asset and ownership transfers to the borrower at the end of the loan period. RECEIVABLEA FINANCE

This form of finance uses outstanding customer invoices as security. INVOICE DISCOUNTING Similar to receivables finance, this is usually offered to larger companies with strong credit management system. ANGEL FUNDING It is the investment made by an individual or a group of individual in a particular company in return for shares of that firm. VENTURE CAPITAL They are organisation which specialize in investing in unquoted companies which they believe will offer high returns to investors. There is strong competition for this kind of finance and they are advised to be considered only after assessing all the alternatives.

PERSONAL RESOURCES These include personal savings, money borrowed from family and friends, or profits generated from the business. IMPORTANCE OF FINANCIAL MANAGEMENT * Ensures there are adequate funds available to acquire the resources need to help the financial management. * Supports the Organisation to achieves its objective. * Ensures costs are controlled. * Establish and controls profitability levels. * Accounting and reporting to management. * To analyse the performance of finance. INTRODUCTION TO WORKING CAPITAL

Every business needs funds for two purposes – for its establishment and to carry out its day to day transaction. Long term funds are required to create production facilities through purchase of fixed assets which represents the firm’s capital which is blocked on a permanent or fixed basis and is called as fixed capital. Funds invested in current assets keep revolving fast and being constantly converted into in exchange for current assets. Hence it is called as revolving capital or circulating capital or short term capital. Capital required for business can be classified under two heads i. . fixed capital and working capital. Every business needs funds for its establishment purpose as well as for its day to day operations. Long term funds are required to create production facilities through purchase of fixed assets. Funds are also needed for short term purposes for the purchase of raw material, payment of wages and other day to day expenses. These funds are known as working capital. In simple words working capital is that part of firm’s capital, which is required for financing short term or current assets such as cash, marketable securities, debtors etc.

Working capital management involves the relationship between the firms short term assets and its short term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short term debt and upcoming operational expenses. The management of working capital involves managing of accounts, cash receivable and cash payable. Decisions’ relating to working capital and short term financing is referred to as working capital management.

These involve managing the relationship between a firms short term assets and its short term liabilities. The aim of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient cash flow to satisfy the upcoming debt and expenses. Maintaining adequate working capital is not just important in the short run of the business. Sufficient liquidity must be maintained in order to ensure the survival of the business in the long run as well. Even a profitable business may fail if it does not have adequate cash flow to meet its liabilities as and when they fall due.

Therefore, when a firm makes investment the decisions must not only consider the financial outlay involved. For example: with acquiring the new machine or a new building etc, but must also take into account the additional current assets that are usually involved with any expansion of activities. Increased production tends to engender a need to hold additional stocks of raw materials and work in progress. Increased sales usually mean that the level of debtors will increase. A general increase in the firms scale of operations tend to imply a need for greater levels of cash. ORIGIN OF WORKING CAPITAL:

The concept of working capital was first evolved by Karl Marx. Marx used the term ‘variable capital’ means outlays for payrolls advanced to workers before the completion of work. He compared this with ‘constant capital’ which according to him is dead labour. This variable capital is nothing but the wage fund which remains blocked in terms of financial management. The concept of working capital as we understand today was embedded in this variable capital. MEANING Working capital (also known as net working capital) is a financial metric which represents the amount of day by day operating liquidity available to a business.

Along with fixed assets such as plant and equipment, working capital is considered as a part of operating capital. It is calculated as current assets minus current liabilities. A company can be endowed with assets and profitability, but short of liquidity, if these assets cannot readily be converted into cash. Working capital measures how much liquid assets are available in a company to build its business. The number can be in positive or negative, depending on how much debt a company is carrying.

In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary needs for growth. A company can be endowed with assets and profitability but short of liquidity depicts that the assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short term debts and upcoming operational expenses.

INTRODUCTION TO WORKING CAPITAL MANAGEMENT: MEANING: Working capital management is concerned with the problems which arise in attempting to manage the current assets, the current liabilities and the inter relationships that exists between them. The term current assets refers to those assets which in ordinary course of business can be, or will be turned into cash within one year without undergoing a diminution in value and without disrupting the operations of the firm. The major current assets are cash, marketable securities, accounts receivable and inventory.

Current liabilities are those liabilities which intended at their inception to be paid in ordinary course of business, within a year, out of the current assets or earnings of the concern. The basic current liabilities are accounts payable, bills payable, bank over draft and outstanding expenses. The goal of working capital management is to manage the firma current assets and current liabilities in such a way that the satisfactory level of working capital is mentioned. Current assets should be larger enough to cover the current liabilities in order to ensure reasonable margin of safety.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT Working capital management is significant facet of financial management. Its importance stems from two reasons * Investment in current assets represents a substantial portion of total investment. * Investments in current assets and the level of current liabilities have to be geared quickly to changes in sales. To be sure, fixed assets investment and long term financing are responsive to variation and sales. However, this relationship is not as close and direct as it is in case of working capital components.

The importance of working capital management is reflected in the fact that financial managers spend a great deal of time in managing current assets and current liabilities. Arranging short term financing, negotiating favourable credit terms, controlling the Movement of cash, administrating accounts receivable, and investing short term surplus funds consume a great deal of time of financial managers. Working capital management is divided into six sections: * Characteristics of current assets. * Factors influencing working capital requirements. * Level of current assets. * Current assets financing policy. Operating cycle WORKING CAPITAL CONCEPT There are two concepts of working capital: * Gross working capital * Net working capital 1. Gross working capital: Refers to the capital invested in the total current assets of the firm. Current assets refer to those assets which can be converted into cash within a short period. 2. Net working capital: The concept of net working capital is an accounting concept net working capital means net current assets, i. e. the excess of current assets over current liability. For this reason the net working capital is also known as net current assets.

It can be noted that the term “working capital” is generally used as net working capital. NEED FOR WORKING CAPITAL The need for working capital finance is over emphasized. Every business needs some amount of working capital. The need for working capital arises due to the time gap between the production and realization of cash. These are time gaps between purchase of raw materials, production and sales and realization of cash. Thus, working capital is needed for the following purpose: * For the purpose of raw materials. * To pay wages and salary. * To incur day to day expenses . * To meet the selling, advertisement cost etc. To provide credit facility to the customers. TYPES OF WORKING CAPITAL PERMANENT WORKING CAPITAL: Permanent or fixed working capital is the minimum amount, which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. The investment of a permanent type and as the size of the firm expands the requirements of the working capital also increases. TEMPORARY WORKING CAPITAL: This is also referred as fluctuating or variable working capital, which varies according to the problem and sales happening in a firm. It is the capital in addition to the working capital existing in a firm.

NET WORKING CAPITAL: It nothing but the difference between the current assets and the current liabilities. It is the excess of current assets over current liabilities. This concept enables a firm to determine for operational requirements. GROSS WORKING CAPITAL: It refers to the total current assets involved in the business. It is also called as circulating capital, because the current assets in the firm keep rotating in their own nature. NEGATIVE WORKING CAPITAL: This occurs when the current liabilities exceeds current assets, then such working capital is called as negative working capital.

FACTORS INFLUENCING WORKING CAPITAL NATURE OF BUSINESS: The working capital requirement of a firm basically depends upon the nature of its business. Public utility undertakings like electricity, water supply and railways need very little working capital because they offer cash sales only and supply services, not products and such as no funds are tied up in inventories and receivable. SIZE OF BUSINES The working capital requirement of a concern is directly influenced by the size of its business, which may be measured in terms of scales of operations.

Greater the size of the business unit, larger will be the requirement of working capital. PRODUCTION CAPACITY In certain industries the demand is subject to wide fluctuations due to seasonal variations. The requirement of working capital in such cases depend on the production policy MANUFACTURING PROCESS In a manufacturing business the requirement of working capital increases in direct proportion to the length of manufacturing or producing process. In short it says longer the manufacturing process, larger id the amount of working capital. RATE OF STOCK TURNOVER

There is a high degree of inverse correlation ship between the quantum of working capital and velocity or speed with which the sales are affected. A firm having a high rate of stock turnover will need lower amount of working capital as compared to a firm having a low rate of turnover. CREDIT POLICY The credit policy of a concern in its dealings with debtors and creditors influences considerably the requirements of working capital. A firm enjoying liberal credit facilities from its suppliers or creditors will need lower working capital than a firm that does not enjoy liberal credit facilities.

GROWTH OF BUSINESS The working capital requirements of a concern or entity increases with the growth and expansion of its business activities SEASONALITY OF OPERATIONS Firms which have seasonal operation have highly fluctuating working capital requirements. To illustrate, consider a firm manufacturing ceiling fans. The sale of ceiling fans reaches a peak during the summer months and drops sharply during the winter period. The working capital need of such a firm is likely to increase in summer and decrease significantly during winter.

CHAPTER -2 RESEARCH DESIGN “A STUDY ON WORKING CAPITAL MANAGEMENT OF ITI FINANCIAL SERVICES LIMITED” MEANING OF RESEARCH DESIGN: A research design is a logical and systematic plan prepared for directing a research study. It specifies the objectives of the study, the methodology and the techniques to be adopted for achieving the objectives. A research design is the program that guides the investigator in the process of collecting, analysing and interpreting observations. DEFINITION OF RESEARCH DESIGN:

Research design is a purposeful scheme of action proposed to be carried out in sequence during the process of research focusing on the management problem to be tackled. It is only a guide line for the researcher to enable him to keep track of his actions and to know whether he/she was moving in the right direction in order to achieve its goal. STATEMENT OF THE PROBLEM: Change in the financial performance of the company could be due to several reasons like change in profits, change in operating efficiency, change in quality of debtors, employee morale, most important the working capital management i. e. he daily expenses relating to business in day-to-day work and many other. The financial position of the firm cannot be stationary, but is dynamic in nature owing to the shift in its financial position with regards to various financial parameters. Analysis of the financial performance tries out the reasons for the shift in the position and tries to establish a tend to the directions in which the business is moving in. Therefore using general terminology, the statement of problem could be generalized as a detection of reasons for variation in the financial position of the firm. OBJECTIVES OF THE STUDY To study the working capital requirements and trends of managing working capital. * To ensure that every business carries out some amount of working capital. * To study the sources of working capital finance. * To analyse the effectiveness of management of receivables and management of cash. * To understand the practical difficulties faced by the manager in managing the working capital. * To offer suggestions for the improvement of the working capital management. * To understand the financial position of the firm. * The need for working capital arises due to the time gap between production and realization. There are time gap between purchasing of raw materials and production, sales and realization of cash. SCOPE OF THE STUDY The study mainly deals with the working capital management of ITI FINANCIAL SERVICES LIMITED located in Bangalore, handling 120 subsidiaries across India. The scope of the study is to identify the areas of control over various components of working capital. How exactly working capital takes place in stock market, working capital based on NSE,BSE, NSDL, CDSL etc. METHODOLOGY: PRIMARY DATA: Data is primarily collected by observing the functions of ITI FINANCIAL SERVICES LIMITED.

Looking into their strengths and weaknesses and also by interacting with the finance manager has helped me knowing the strategies and techniques they apply to improve their working capital and have an optimum flow of cash in the business. SECONDARY DATA: Secondary data is collected from various sources which include: media i. e. nothing but television channels like ETNOW and CNBC, internet, magazines and various websites. LIMITATION OF THE STUDY: * Data collected through secondary sources is confined to particular time period only. * Time was major limited factor to the study and cost constraints too. Few facts and figures need to be kept confidential by the company authorities and are not easily available. * Current assets and liabilities involved in the business are to be administered by qualified or skilled personnel. * Managing working capital is not an easy task. * Inadequate working capital may become difficult for a finance manager to implement operating plans and achieve firm’s target. OVER VIEW OF THE CHAPTERS: CHAPTER 1: INTRODUCTION Deals with the introduction to working capital management and contains the background of the subject. CHAPTER 2: RESEARCH DESIGN

Deals with the research methods used in the study. It also throws light on objective, scope, limitation of study. CHAPTER 3: COMPANY PROFILE This chapter gives the insight details about the origin, past and present status of the origin. CHAPTER 4: ANALYSIS AND INTERPRETATION OF THE DATA It includes the analysis of the data collected in accordance with the objective, can be explained with diagrams and charts. CHAPTER 5: SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSIONS This chapter provides a summary of findings based on the study and conclusions are drawn from the findings.

Chapter – 3 COMPANY PROFILE ITI FSL is emerging as one of the top most wealth management companies in India with a presence of over 120 branches across the country. It was commenced in the year 1964, B. PRASAD RAO is the chairman of the company, and now its a part of Sharyans Group. Headquartered in Chennai, ITIFSL has a growing network of offices across several states to ensure easy accessibility to our clients wherever they are. The offices are spread across the country to offer better reach and service to the investor.

Sharyans Group has an impressive portfolio of businesses under its fold which mainly falls under the Chairman and M. D of the firm. It was originally promoted by Investment Trust of India, real estate and financial services categories. The prominent subsidiaries of the group are PREBONE YAMANE (country’s largest debt broking company). INTIME SPECTRUM COMMODITIES PVT LTD, ITI SECURITIES LTD ( formally known as intime spectrum), ITI CAPITAL HOLDINGS PVT LTD, ITI WEALTH MANAGEMENT PRIVATE LIMITED (formerly known as Sharyans Wealth Management Pvt. Ltd. ), ITAI INVESTMENT ADVISORY SERVICES PVT. LTD. AND COLLIN STEWART INDIA LTD. Under the banner of sharyans group, ITITFSL will soon touch the pinnacles of success in the financial service industry, by being the dominant force in the broking as well as distribution area. With an unblemished and reputed track record, ITIFSL is all set to become an imposing wealth management firm in the country by giving the best to its clients and ensuring customer delight. With the objective to tap the growing potential in our capital markets, ITIFSL has been set up to engage in: * Stock Broking * Institutional Broking * Derivatives including Currency Derivatives * Depository Services Distribution of Investment Products * Distribution of Insurance * Commodities Broking * Spot Broking Forex The company currently marks its presence in the following regions: 1. Andhra Pradesh 2. Delhi 3. Gujarat 4. Maharashtra 5. Karnataka 6. Madhya Pradesh 7. Tamil nadu 8. Pondicherry 9. West Bengal 10. Kerala ITIFSL’s mission is to deliver value with commitment. Emerging as one of the front-line Brokerage Houses and a dominant force in the Distribution arena, we are continuously engaged in the assessment of market conditions to balance risk and reward so as to optimize returns to our investors.

The firm’s vision “To be the most Preferred Financial Advisor, Creator, Wealth Manager and to deliver the Highest Standards of Service to customers and be Prominent in the horde of Finance Companies offering similar services”. STAFF: ITIFSL recognizes that its people are the source of its strength and competitiveness. The company has more than 3000 employee strength in the year 2010. The people in organization very dedicated and work towards the improvement of the organization. The skill levels of the worker are work oriented and they are specialized in their respective field of work.

Most of the worker are well experienced and well trained. The company will aim at fairness and transparency in its dealings with its employees and create an atmosphere of openness, mutual trust and teamwork. The company will develop the potential of its employee’s through training, provide opportunities to display their creative talent and encourage them to maximize productivity. The company will encourage employees to take on higher responsibilities and provide opportunities for their growth and will positively differentiate employees on the basis of performance, leadership potential and alignment with core values.

The company will pursue management practices to enrich the quality of life of its employees. 7. SHARED VALUES: VALUES FOLLOWED AT ITI Financial Services Limited: 1. Honesty, Integrity & Fairness 2. People as a source of our strength 3. Passion of excellence 4. Fostering Team work 5. Encouraging flexibility and innovation 6. Trusting and respecting individual. A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths or weaknesses, and those external to the firm can be classified as opportunities or threats.

This analysis provides information that is helpful in matching the firm’s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how analysis fits into an environmental scan: ITIFSL Framework: Environmental Scan| |            | Internal Analysis   |    External Analysis| |            | Strengths   Weaknesses   |    Opportunities   Threats| | | STRENGTHS: 1. The main strength of the firm is its brand name and its top position in industrial ceramic field. . ITIFSL has wide range of portfolios. 3. Company has a wide network all over India. 4. Highly dedicated employees 5. Customer satisfaction is the strength of the ITI. 6. Company’s continues and larger stability. WEAKNESSES 1. Influence of trade union in management functioning 2. Lack of land for further expansion 3. Lack of proper training facility OPPORTUNUTIES: 1. Customers willingness to make a higher range of purchases 2. Growth in stock market 3. Lack of new entrants to the industry 4. Arrival of new technologies 5. New projects with reputed organizations

THREATS: 1. Company compelling to reduce it stock price due to high tent competition. 2. Lack of buyers. 3. Increased trade barriers 4. Employees demand for higher remuneration Company details: ITIFSL is a stock brokerage entity. It deals with Stock broking instruments such as: * IPO’s (Initial Public Offering) * Equity * Derivative * Currency derivative * Insurance * Mutual fund * Depository services * FOREX * Commodity STOCK BROKER: An agent that charges a fee or commission for executing buying and selling orders submitted by an investor.

It used to be that only the wealthy could afford a broker and have access to the stock market. With the internet came the explosion of discount brokers that let you trade at a smaller fee, but don’t provide personalized advice. Because of discount brokers, nearly anybody can afford to invest in the market now. In other words: A broker who buys or sells securities specifically for large institutional investors such as banking institutions or mutual funds. Because of the large volumes of securities they trade, institutional brokers typically charge lower commission fees than retail brokers. IPO:

An initial public offering, or IPO, is the first sale of stock by a company to the public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, it’s known as an IPO. Companies fall into two broad categories, private and public. A privately held company has fewer shareholders and its owners don’t have to disclose much information about the company. Anybody can go out and incorporate a company, just put in some money, files the right legal documents and follows the reporting rules of your jurisdiction. Most small businesses are privately held.

But large companies can be private too. It usually isn’t possible to buy shares in a private company. You can approach the owners about investing, but they’re not obligated to sell you anything. Public companies, on the other hand, have sold at least a portion of themselves to the public and trade on a stock exchange. This is why doing an IPO is also referred to as “going public. ” Public companies have thousands of shareholders and are subject to strict rules and regulations. They must have a board of directors and they must report financial information every quarter.

From an investor’s standpoint, the most exciting thing about a public company is that the stock is traded in the open market, like any other commodity. If you have the cash, you can invest. ” BASICS OF AN IPO: * An initial public offering (IPO) is the first sale of stock by a company to the public. * Broadly speaking, companies are either private or public. Going public means a company is switching from private ownership to public ownership * Going public raises cash and provides many benefits for a company * Getting in on a hot IPO is very difficult, if not impossible. The process of underwriting involves raising money from investors by issuing new securities. * Companies hire investment banks to underwrite an IPO. * An IPO company is difficult to analyze because there isn’t a lot of historical info. * Lock-up periods prevent insiders from selling their shares for a certain period of time. The end of the lockup period can put strong downward pressure on a stock. * Flipping may get you blacklisted from future offerings. EQUITIES: Equity and derivatives go hand in hand as they help maximize return and minimize risk at the same time!

ITI clients are assisted in protecting the downside risk to their portfolio using appropriate combination of options. Our advisory is skilled to help you in maximizing your gains from your existing corpus using numerous strategies based on the direction and intensity of the views. ITI ensures that you get the one of the finest trading experiences through: * An experienced and qualified team of Equity professionals offering unbiased advice on equity investment decisions. * All members having immense experience and each of them being professionally certified by the National Stock Exchange. A high level of personalized and confidential service. * Constant monitoring of client portfolio so that the returns are maximized and the risks are minimized. * Secure, integrated broking system. * Powerful Research & Analytics ITI has a great retail network, with its presence through more than 150 branches across more than 10 states. This means, you can walk into any of these branches and get in touch with our highly skilled and dedicated staff to get the best services DERIVATIVES: A derivative is a financial instrument whose value is based on one or more underlying assets.

In practice, it is a contract between two parties that specifies conditions (especially the dates, resulting values of the underlying variables, and notional amounts) under which payments are to be made between the parties. The most common types of derivatives are: forwards, futures, options, and swaps. The most common underlying assets include: commodities, stocks, bonds, interest rates and currencies. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline.

These techniques can be quite complicated and quite risky. FOREX: An over-the-counter market where buyers and sellers conduct foreign exchange transactions. The Forex market is useful because it helps enable trade and transactions between countries, and it also allows an investment opportunity for risk seeking investors who don’t mind engaging in speculation. Individuals who trade in the Forex market typically look carefully at a country’s economic and political situation, as these factors can influence the direction of its currency.

One of the unique aspects of the Forex market is that the volume of trading is so high, partially because the units exchanged are so small. It is estimated that around $4 trillion goes through the Forex market each day also called foreign exchange market. MUTUAL FUND: A mutual fund is a type of professionally-managed collective investment vehicle that pools money from many investors to purchase securities. While there is no legal definition of mutual fund, the term is most commonly applied only to those collective investment vehicles that are regulated, available to the general public and open-ended in nature.

Hedge funds are not considered a type of mutual funds. They are the corporations which pools fund by selling their own shares and reduce risks by diversification. (or) A mutual fund is a portfolio of stocks, bonds, and all other securities that is collectively owned by 100’s and 1000’s of investors and managed by a professional investment company. Impact of mutual fund: * Channelizing savings for investment * Offering wide portfolio investment * Providing better yield * Rendering expertise investment service at low cost * Providing research service * Offering tax benefit * Introducing feasible investment schedule Providing greater eligibility * Simplified record keeping * Supports capital market * Promoting industrial development INSURANCE: It means a promise of compensation for any potential future losses. It facilitates financial protection against by reimbursing losses during crisis. There are different insurance companies that offer wide range of insurance options and an insurance purchaser can select as per own convenience and preference. Several insurances provide comprehensive coverage with affordable premiums. Premiums are periodical payment and different insurers offer diverse premium options.

The periodical insurance premiums are calculated according to the total insurance amount. Mainly insurance is used as an effective tool of risk management as quantified risks of different volumes can be insured. COMMODITY: In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services. The more specific meaning of the term commodity is applied to goods only. It is used to describe a class of goods for which there demand is, but which is supplied without qualitative differentiation across a market. A commodity has full or partial http://en. ikipedia. org/wiki/Fungibilityfungibility; that is, the market treats its instances as equivalent or nearly so with no regard to who produced them. “From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist. Petroleum and copper are other examples of such commodities, their supply and demand being a part of one universal market. Items such as stereo systems, on the other hand, have many aspects of product differentiation, such as the brand, the user interface, the perceived quality, etc. And, the demand for one type of stereo may be much larger than demand on the other.

DEPOSITORY SERVICES: A Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as such with SEBI under the subsection 1A of Section 12 of the SEBI Act. As per the provisions of this Act, a DP can offer depository-related services only after obtaining a certificate of registration from SEBI.

The company has been actively associated with a wide range of clients in the area of Mergers & Acquisitions, IPO’s, Debt Syndication, Financial Restructuring, Buybacks, Joint Ventures, Project Appraisal, Management Consultancy and Entry Strategy Advisory. It has worked for clients in the field of media, entertainment, textiles, software, chemicals, pharmaceuticals etc The company is advising a few US based companies in establishing Indian operations, for capital restructuring and in areas of corporate management. Real Estate has metamorphosed from an asset category to an investment category.

Rising demand for real estate, corporatization of the sector, greater transparency, shift in the regulatory outlook have all contributed to this metamorphosis. Real estate has emerged as an attractive investment class. The fund will target investment in premium residential, commercial and retail segments. ITIFSL is generally an online trading firm; it refers to buying and selling securities via the Internet or other electronic means such as wireless access, touch-tone telephones, and other new technologies. With online trading, in most cases customers access a brokerage firm’s Web Site through their regular Internet Service Provider.

Once there, customers may consult information provided on the Web Site and log into their accounts to place orders and monitor account activity. All trades involve a brokerage firm even if a stockbroker is not used to help with the trade. Although customers may enter orders for trades via the Internet, customers do not have direct access to the securities markets and therefore must use a brokerage firm in order to execute their trades. Customers should also remember to do their homework where their investments are concerned. Internet share trading is more convenient and hassle free.

No phone calls, No paperwork, No more writing of cheques, you can trade on your own. Market position will be in front of you. You can trade while working in the office, while you are at home. If computer/Internet is not available at your place; you can go to Cyber cafe also. You can take an experience once; you will know the advantages of that. ITI offers on-line trading which has following features: *         User friendly. *         Transparency in Dealing. *         Instant Trade confirmation. *         Complete protection against fraud and hacking. *         128 bit super safe encryption – SSL (Secured Socket Layer) *         Complete assword protection. ITI FSL offers trading on both NSE-Capital Market & F&O and BSE-Capital Market. Other segments viz, commodity futures, currency derivatives, etc will be available soon. NSE (National Stock Exchange): Located in Mumbai, India. It was set up by the government of India in the year 1991 It is in the top 20 largest stock exchanges in the world. NSC’s key index is known as NIFTY. An index of 50 major stocks weighted by market capitalization. They are responsible for vast majorities of share transaction. They are owned by a set of leading financial institutions, banks, insurance companies etc. t is considered as the second largest growing stock exchange in the world. BSE (Bombay Stock Exchange): It is a stock exchange located in Mumbai, India. BSE’s key index is BSE SENSEX. Also known as BSE 30. It is taking important steps to develop retail debt market. It helps common investor to gain access to an alternative investment option, it provides greater diversification opportunities. CLIENT REGISTRATION PROCESS: To register with ITI FSL, just email at [email protected] co. in  and a kit will be sent to the clients with all required papers.

They just have to fill the same with correct and sufficient details and after their executive does in-person verification of the clients credential they will register them as their client upon execution of Member Client Agreement. As soon as the client code is generated, the same will be intimated. The trading password will be issued only on completion of all registration formalities and an email containing details about client trading id, login id and password will be sent to them. The password is generated by the system and sent to you such that not even employees of ITI FSL would know about it.

Password will be recorded in system in encrypted format To ensure complete safety and privacy the user will be forced to change his password the very first time he logs into the trading site. ITI FSL  allows Trading limits (exposure) depending upon the product selected by you at the time of opening the account & Respective balance (in terms of Stock & Ledger balance) available in your trading account. The clients can use their approved shares and securities along with initial minimum deposit. The firm will apply a haircut of exchange var margin on the valuation of the clients holding and then exposure will be provided.

List of approved shares will be announced from time to time by ITI FSL. The major operations of the company are in the field of share investment and share trading. The liquidity crunch in capital market has effected company’s operations immensely and has resulted in high profitability. The company has settle the accounts with Gujarat State Corporation and paid all the dues during the year. The company has also completed all the procedures outstanding in the income tax department and now no outstanding as on date. The company has written off the leased assets during the year.

There was no possibility of recovering any dues and unnecessary legal proceedings increased the financial burden of the company. The legal suit for own assets came in favour of the company hence adjusting the amount receivable as per the court order, the balance sheet order has been written off during the year. Thus now the company is now in a position to adopt the accounting standard 28 impairment of assets. CORPORATE GOVERNANCE: In order to enhance customer satisfaction and stake holder value, ITI continues to benchmark its corporate governance practises that are best.

The firm has compiled with the mandatory requirements of clause 49 of the listing agreement entered into with the stock exchange regarding corporate governance for the financial 2010-11 As the Members are aware that the company shares are tradable compulsorily in electronic format and it has established connectivity with the depositories with National Securities Depository Limited (NSDL), and Central Depository Services (India) Limited (CDSL). In view of enormous advantages offered by the Depository system, Members are requested to avail the facility of dematerializations of the Company’s Shares on depositories as aforesaid.

The Company is presently engaged in business of Trading, investments and dealing insecurities. In the last year it had diversified into the business of infrastructure development, but it requires a huge finance and Company could not get the required finance. The company has commenced the civil work at Greater Noida (U. P. ) and it is proposed to shift its electrical segment operations to Greater Noida from its existing location at Ludhiana (Punjab). There were no other material changes and commitments, affecting the financial position of the Company that has occurred between the end of the financial year of the Company.

With implementation of the Environment Management System (EMS) ISO-14001:2004, the Company continues to pursue its endeavor to operate in harmony with the nature, conservation of natural resources and reduction in Global warming. The Company continues to maintain the ISO/TS:16949(2009) Quality Management Systems to ensure effectiveness of all functions. CHAPTER – 4 ANALYSIS AND INTERPRETATION OF THE DATA BEST SOURCES OF FUNDING: * Trade credit * Bank finance TRADE CREDIT: Trade credit refers to the credit that a customer gets from suppliers of the goods in the normal course of business.

The buying firms do not have to pay cash immediately for the purchases made. This deferral of payment is a short term financing called trade credit. It is considered as the major source of financing for the firm. Particularly small firms are dependent on trade credit as a source of finance since they find it difficult to raise funds from banks or other sources in the capital market. Trade credit is mostly an informal agreement, and it is granted on an open account basis. A supplier sends goods to the buyers accept, and thus, in affect agrees to pay the amount due as per sales terms in the invoice.

Trade credit may take the form of bills payable. Credit terms refers to the condition under which the supplier sells on credit to the buyer, and the buyer required for repaying the credit. Trade credit is the spontaneous sources of financing. As the volume of the firm’s purchases increase trade credit also expands. It appears to be cost free since it does not involve explicit interest charges, but in practice it involves implicit cost. The cost of credit may be transferred to the buyer through the increased price of goods supplied by him. BANK FINANCE: Banks are main institutional sources for working capital financing in India.

After trade credit, bank credit is the most important source of financing working capital in India. A bank considers the firms sale and production plan and desired levels of current assets in determining its working capital requirements. The amount approved by bank for firm’s working capital is called Credit Limit. This credit limit is the maximum funds which a firm can obtain from banking system. In practice banks do not lend 100% credit limit, they deduct margin money. Forms of bank finance: * Term loan * Overdraft * Cash credit * Purchase or discounting of bills 1. TERM LOAN:

In this case, the entire amount of assistance is distributed at one time only either in cash or company’s account. The loan may be repaid in installments. Later interest will be charged on outstanding balances. 2. OVER DRAFT: In this case, the company is allowed to withdraw in excess of the balance standing in its bank account. However, a fixed limit is stipulated by the bank beyond which the company will not be able to over draw the account. Legally. Over draft is a demand assistance given by the bank i. e. bank can ask for repayment at any point of time. 3. CASH CREDIT:

In practice, the operations in cash credit facility are similar to those of over draft facility except the fact that the company need not have a formal current account. Here also fixed limit is stipulated beyond which the company is not able to withdraw the amount. 4. BILLS PURCHASED / DISCOUNTED: This form of assistance is comparatively of recent origin. This facility enables the company to get the immediate payment against the credit bills or invoice raised by the company. The bank holds the bill as a security till the payment is made by the customer. The entire amount of bill is not paid to the company.

The company gets only the present worth of amount of bill of discount charges. On maturity, bank collects the full amount of bill from the customer. RATIOS RELATING TO LIQUIDITY OF WORKING CAPITAL Liquidity ratios: TABLE -1 TABLE SHOWING CURRENT RATIOS (Rs. in cr) year| Current assets | current liabilities| current ratios| 2008- 2009| 98. 94| 54. 33| 1. 82| 2009-2010| 76. 01| 41. 88| 1. 81| 2010-2011| 81. 18| 42. 68| 1. 90| FORMULA: CURRENT RATIO = CURRENT ASSETS/ CURRENT LIABILITIES ANALYSIS The current ratio was 1. 82 in 2008-2009. This remained quiet same as 1. 1 in 2009-2010. It further increased to 1. 90 in the next year 2010-2011 INTERPRETATION The most ideal ratio for the current ratio is 2:1. The current ratios are best during 2010-2011. But due to instability in the rate of ratios there is improvement seen in the short term solvency of the ratio. LIQUID TEST RATIO TABLE-02 TABLE SHOWING LIQUID RATIO (Rs. in cr) year| liquid assets| liquid liabilities| liquid ratio| 2008-2009| 97. 80| 54. 33| 1. 8O| 2009-2010| 74. 19| 41. 88| 1. 77| 2010-2011| 79. 28| 42. 68| 1. 97| FORMULA: QUICK RATIO= CURRENT ASSETS – INVENTORIES/ LIQUID LIABILITIES ANALYSIS

The liquid ratio for 2008-2009 was 1. 80 and has slightly decreased to 1. 77 in the year ending 2010. And in 2010-2011 it has increased to 1. 97 INTERPRETATION: The liquid ratio indicates fluctuations in the short term liquidity of the firm during 2008-2009, 2009-2010. This is mainly because the current liabilities have considerably reduced and the investment in the liquid assets has increased due to which the firm has achieved better liquidity during the year 2010-2011. RATIOS RELATING TO PRODUCTIVITY OF WORKING CAPITAL TABLE-03 CIRCULATING OF GROSS WORKING CAPITAL (Rs. n cr) year| net sales| total current assets| ratio| 2008-2009| 61. 51| 98. 94| 0. 62| 2009-2010| 20. 77| 76. 01| 0. 27| 2011-2012| 25. 85| 81. 18| 0. 31| FORMULA: RATIO= NET SALES / TOTAL CURRENT ASSETS ANALYSIS The gross working capital ratio in the year 2008-2009 was 0. 62 which fell down to 0. 27 in 2009-2010 and improved slightly to 0. 31 in 2007-2008. INTERPRETATION: It has registered declining trend and there is very less speed with which current assets are being converted to sales. The operating efficiency has come down in the second year.

And it is also showing trends of increasing in net sales in the third year. i. e. in the year 2010-2011. WORKING CAPITAL TREND ANALYSIS TABLE – 04 TABLE SHOWING WORKING CAPITAL TREND ANALYSIS (Rs. In cr) year| current assets| current liabilities| net working capital| 2008-09| 98. 94| 54. 33| 44. 61| 2009-10| 76. 01| 41. 88| 34. 13| 2010-11| 81. 81| 42. 68| 39. 13| FORMULA: NET WORKING CAPITAL = CURRENT ASSETS- CURRENT LIABILITIES ANALYSIS: The net working capital in the year 2008-09 was 44. 61 which later have decreased to 34. 13 in the next year i. e. in the year 2009-10.

But the company has improved its current assets value in the year 2010-11. This ultimately has improved the firms net working capital. INTERPRETATION: The net working capital of all three years is analysed here. This chart indicates the increase and decrease of net working capital for the past three years. In the year 2008 to 2011 the net working capital has slightly increased and decreased i. e. from 44. 61 to 34. 13. Then later in the year 2011 there is an improvement seen where in the net working capital has increased to 39. 13. PRODUCTIVITY OF NET WORKING CAPITAL TABLE-05 (Rs.

In cr) year| net sales| net working capital| productivity working capital| 2008-2009| 61. 51| 44. 61| 1. 37| 2009-2010| 20. 77| 34. 13| 0. 60| 2010-2011| 25. 85| 39. 13| 0. 97| FORMULA: PRODUCTIVITY WPRKING CAPITAL= NET SALES / NET WORKING CAPITAL ANALYSIS The net working capital ratio in the year 2008-2009 was 1. 37 which fell down to 0. 60 in 2009-2010. This further showed an increase in the year 2010-2011 (0. 76) INTERPRETATION: It has been observed that it has registered a decreasing trend productivity of net working capital, which indicates more investments in current assets and reduction in current liabilities.

An investment in net working capital fluctuates from 2008 to 2011. It also indicates that there is slow conversion of net working capital into sales. CURRENTS ASSETS TURN OVER RATIOS TABLE-06 (Rs in cr) year| sales| current assets| turnover ratio| 2008-2009| 61. 51| 98. 94| 0. 62| 2009-2010| 20. 77| 76. 01| 0. 27| 2010-2011| 25. 85| 81. 18| 0. 45| FORMULA: TURNOVER RATIO= NET SALES / CURRENT ASSETS ANALYSIS The current assets turnover ratio in the year 2008-2009 was 0. 62 which fell down to 0. 27 in the year 2009-2010. But later increased to 0. 31 in 2010-2011 INTERPRETATION:

During 2008-2009 the sales were extremely high but later in the year 2009-10 and 2010-11 we can see a decline in sales which ultimately shows that there is a decline in current assets turnover ratio from past two years. The current assets have not been utilized properly to increase the sales. PROFITABILITY RATIO PROFITABILITY IN RELATION TO SALES: TABLE SHOWING GROSS PROFIT RATIO TABLE-07 (Rs in cr) year| gross profit| sales| gross profit ratio| 2008-2009| 1. 41| 61. 51| 0. 229| 2009-2010| 8. 56| 20. 77| 0. 412| 2010-2011| 10. 80| 25. 85| 0. 562| FORMULA: GROSS PROFIT RATIO= GROSS PROFIT / SALES ANALYSIS:

The gross profit ratio in the year 2008-2009 was 0. 229 which has considerably increased to 0. 412 in the next year and has further improved in the third year t 0. 562. INTERPRETATION: This shows that gross profit ratio is improving and the firm is able to generate more profits which is an indication of good operating efficiency. NET PROFIT RATIO TABLE -08 TABLE SHOWING NET PROFIT RATIO (RS in cr) year| net profit| sales| net profit ratio| 2008-2009| 1. 89| 61. 51| 3. 75%| 2009-2010| 9. 39| 20. 77| 45. 20%| 010-2011| 11. 30| 25. 80| 42. 75%| FORMULA: NET PROFIT RATIO= NET PROFIT / SALES * 100 ANALYSIS The net profit ratio in the year 2008-2009 was 3. 75% which has shown a great improvement in the next year by increasing to 45. 20%. in the year 2010-2011 we can observe that the net profit has slightly decreased to 42. 75% though there in an increase in sales when compared to the previous year. INTERPRETATION This ratio gives a net result of the total earnings from the rupee invested in the business. The higher the ratio the better the profit is. The ratio increasing in the second year is a good sign, but slightly fell down in the third year.

This indicates that the firm may improve its profits for future prospects. ACTIVITY RATIO INVENTORY TURNOVER RATIO TABLE – 09 TABLE SHOWING INVENTORY RATIO year| sales| inventories| stock turnover ratio| 2008-09| 61. 51| 1. 80| 34. 17| 2009-10| 20. 77| 1. 19| 10. 93| 2010-11| 25. 85| 2. 44| 15. 94| FORMULA: STOCK TURNOVER RATIO= SALES / INVENTORIES ANALYSIS The inventory turnover ratio in the year 2008-2009 was 34. 17 which considerably fell to 10. 93 in the next year. But sooner in the year 2010-11 there was an improvement in stock to 15. 94, INTERPRETATION

The above table shows the adequacy of the goods available in the firm which are to be sold in future in comparison to the actual sale order. Though the sales were high in the first year, we can see that the sales gradually came down. But again there is an improvement seen in the year 2010-2011. INVENTORY HOLDING PERIOD TABLE – 10 TABLE SHOWING INVENTORY HOLDING PERIOD year| inventory holding ratio| no. of days in a year| inventory holding period| 2008-09| 34. 17| 365| 10. 68| 2009-10| 10. 93| 365| 33. 39| 2010-11| 15. 94| 365| 22. 89| FORMULA: INVENTORY HOLDING PERIOD= 365/ INVENTORY TURNOVER RATIO ANALYSIS

The reciprocal of inventory turnover gives average inventory holding in percentage term. Inventory holding period in days is obtained when the number of days in a year say 365, is divided by inventory turnover ratio. The same in terms of months is obtained by dividing number of months in a year by inventory turnover ratio INTERPRETATION A high inventory holding period indicates that the firm is not using inventory effectively. The inventory holding period has decreased in the year 2010-2011. This shows that the firm has converted the inventory to sales by offering discounts, reducing sales price or by promotional sales. DEBTORS TURNOVER RATIO

TABLE – 11 TABLE SHOWING DEBTORS TURNOVER RATIO year| credit sales| debtors| debtors turnover ratio%| 2008-09| 28. 77| 53. 58| 53. 34%| 2009-10| 26. 11| 33. 91| 76. 69%| 2010-11| 29. 11| 40. 00| 72. 75%| FORMULA: DEBTORS TURNOVER RATIO = CREDIT SALES/ DEBTORS * 100 ANALYSIS The debtor turnover ratio in the year 2008-2009 was 53. 34%. This increased to 76. 69% in the following year. And later fell down by 4% in the year 2010-11. INTERPRETATION The firm has allowed the realization of debtors on a slower path shows that the company is able to sustain the competition since credit facilities are provided to debtors.

AVERAGE COLLECTION PERIOD TABLE SHOWING AVERAGE COLLECTION PERIOD TABLE – 12 year| debtor turnover ratio| average collection period| 2008-09| 53. 34%| 6. 842| 2009-10| 76. 69%| 4. 759| 2010-11| 72. 75%| 5. 01| FORMULA: AVERAGE COLLECTION PERIOD= 365 Days / DEBTORS TURNOVER RATIO ANALYSIS: The average collection period can be in terms of both days and months. It is understood that the higher the collection period, and shorter the collection period. The better is the trade credit management and the better is the liquidity of debtors. This says that short collection period imply that prompt payment on the part of debtors. INTERPRETATION

Higher credit period indicates that there is inefficiency of collection of debts. The collection period of ITI is quiet high; this again indicates that company is selling its shares partly by cash and partly by credit. The firm is also recovering the dues properly from the debtors or within the due dates. ABSOLUTE LIQUID RATIO TABLE – 13 TABLE SHOWING ABSOLUTE LIQUID RATIO year| cash and bank balance| current liabilities| absolute liquid ratio| 2008-09| 0. 50| 54. 33| 0. 920| 2009-10| 0. 36| 41. 88| 0. 859| 2010-2011| 0. 48| 42. 68| 1. 124| FORMULA: ABSOLUTE LIQUID RATIO= CASH AND BANK BALANNCE/ CURRENT LIABILITIES.

ANALYSIS The absolute liquid ratio for the year 2008 to 2009 was 0. 92 which was slightly decreased to 0. 859, and sooner an improvement is seen the following year 2010-2011. This ratio is calculated by dividing cash and cash equivalents by current liabilities. INTERPRETATION The company is able to meet the current liabilities with the liquid cash available. The company is capable of meeting the standard cash ratio. This indicates that the company is capable of solving the problem of immediate cash payments of the suppliers. CHAPTER – 5 SUMMARY OF FINDINGS AND CONCLUSIONS SUMMARY: The firm is holding fairly an equal level of current assets every year, this has resulted in better profit earning competency of the firm. * It is also an indication of lowering the wastage of raw materials and has converted the scrap into profit. * Reduction of sales in the year 2010-2011 compared to 2008-2009. If the firm had increased the sales it would have earned more profit * Better profitability of the firm has enabled the firm in terms of strength, liquidity and self sufficiency. * The working capital of company was increasing and showing positive working capital per year. This shows good liquidity position. The sizes of receivables are increasing steadily and it indicates that the company is allowing more credit year to year, but it is not bad signal because as receivables were supporting to the increase in sales. * Positive working capital indicates that the company has the ability of payments of short term liabilities. * Company’s current assets were always more than the requirements and it effects on the profitability of the company. * Current assets are more than the current liabilities indicate that the company used long term funds for short term requirements, where long term funds most costly than the short term funds. A current assets component shows that the sundry debtors were the major part in current assets and also shows inefficiency in receivables collection management. * The company follows an integrated business plan, preparation of cash flow statements and budgets like sales budget and other financial statements to estimate the working capital required and also compare the actual with projected forecast. * The company takes an efficient steps to correct the variation if arises. The lean peak periods of collection and payment are analysed and cash requirements are planned accordingly. FINDINGS and SUGGESTIONS:

The elements observed during the study on “working capital management” of ITIFSL were as follows: * The company should raise funds through short term sources for fulfilling the short term requirements of the firm, which is comparatively economical as compared to long term funds. * Company should take care on debtor’s collection period which is major part of current assets. * For effective management of credit, the firm should lay down clear cut guidelines and procedure for granting credit to individual customers and collecting individual accounts should involve the following steps: a) Credit information ) Credit investigation c) Collection procedure. * The size of the cash in the current assets of the company indicates the miss cash management of the company, so the firm should hold optimum balances of cash as it has invested in marketable securities. * The company should take effective measures to increase the size of cash and bank balance which takes only a minor part of current assets. * The operating efficiency has to be enhanced. Sales promotion measures must be adopted. The turnover of sales if increased can improve the working capital position of the firm. The company should maintain necessary current assets so that it does not affect profitability of the firm. * The company can try to maintain same amount of working capital ratio every year so as to achieve maximum sales with lesser number of customers ultimately minimum investment in working capital. * The company has good liquidity position and can do better if efforts and hard work are put together to maintain the financial position. CONCLUSION: The firm has wisely reduced its operating expenses from 2008-2010 and capitalised in its strength in delivering quality workmanship and earning capability.

The firm has ploughed back its earning in building up capital and reserve and has also created good assets which are capable of yielding better returns in coming years. The firm aims at achieving more and more and reaching the heights in nearly 2 or 3 years. It is able to sustain the competition by offering easy terms to the customers. Over all the company has good liquidity position and sufficient funds for repayment of liabilities. ITIFSL has accepted conservative financial policy and thus maintaining more current assets balances and it is running at a satisfactory level. ANNEXURES BALANCE SHEET OF ITIFSL:

Particulars| Mar 2011 (Rs. Cr)| Mar 2010 (Rs. Cr)| Mar 2009 (Rs. Cr)| SOURCES OF FUNDS 😐  |  |  | Share Capital| 3. 00| 3. 00| 3. 00| Reserves Total| 9. 55| 8. 98| 18. 37| Equity Share Warrants| 0. 00| 0. 00| 0. 00| Equity Application Money| 0. 00| 0. 00| 0. 00| Total Shareholders Funds| 12. 55| 11. 98| 21. 37| Secured Loans| 29. 11| 26. 19| 28. 77| Unsecured Loans| 0. 00| 0. 00| 0. 00| Total Debt| 29. 11| 26. 19| 28. 77| Other Liabilities| 1. 33| 1. 40| 0. 00| Total Liabilities| 42. 99| 39. 57| 50. 14| APPLICATION OF FUNDS 😐  |  |  | Gross Block| 12. 59| 13. 94| 13. 99| Less : Accumulated Depreciation| 9. 7| 9. 55| 8. 99| Less:Impairment of Assets| 0. 00| 0. 00| 0. 00| Net Block| 3. 02| 4. 39| 5. 00| Lease Adjustment| 0. 00| 0. 00| 0. 00| Capital Work in Progress| 0. 00| 0. 00| 0. 00| Producing Properties| 0. 00| 0. 00| 0. 00| Investments| 0. 00| 0. 00| 0. 00| Current Assets, Loans & Advances|  |  |  | Inventories| 2. 44| 1. 19| 1. 80| Sundry Debtors| 40. 00| 38. 91| 53. 58| Cash and Bank| 0. 48| 0. 36| 0. 50| Loans and Advances| 38. 26| 35. 55| 43. 06| Total Current Assets| 81. 18| 76. 01| 98. 94| Less : Current Liabilities and Provisions|  |  |  | Current Liabilities| 42. 68| 41. 88| 54. 33|

Provisions| 0. 00| 0. 00| 0. 00| Total Current Liabilities| 42. 68| 41. 88| 54. 33| Net Current Assets| 38. 50| 34. 13| 44. 61| Miscellaneous Expenses not written off| 0. 00| 0. 00| 0. 05| Deferred Tax Assets| 1. 14| 1. 00| 1. 13| Deferred Tax Liability| 0. 35| 0. 63| 0. 65| Net Deferred Tax| 0. 79| 0. 37| 0. 48| Other Assets| 0. 68| 0. 68| 0. 00| Total Assets| 42. 99| 39. 57| 50. 14| Contingent Liabilities| 7. 70| 4. 92| 3. 62| Profit  and Loss account| Particulars| Mar 2011 (Rs. Cr)| Mar 2010 (Rs. Cr)| Mar 2009 (Rs. Cr)| INCOME 😐  |  |  | Sales Turnover| 26. 54| 20. 81| 61. 62| Excise Duty| 0. 3| 0. 04| 0. 11| Net Sales| 25. 81| 20. 77| 61. 51| Other Income| 11. 67| 0. 01| 1. 07| Stock Adjustments| 1. 22| 0. 36| -0. 47| Total Income| 38. 70| 21. 14| 62. 11| EXPENDITURE 😐  |  |  | Raw Materials| 0. 69| 2. 07| 5. 38| Power & Fuel Cost| 0. 76| 0. 32| 0. 36| Employee Cost| 6. 13| 6. 52| 8. 78| Other Manufacturing Expenses| 16. 50| 11. 16| 29. 24| Selling and Administration Expenses| 6. 87| 3. 84| 12. 17| Miscellaneous Expenses| 1. 83| 1. 08| 3. 51| Less: Pre-operative Expenses Capitalised| 0. 00| 0. 00| 0. 00| Total Expenditure| 32. 78| 24. 99| 59. 44| Operating Profit| 5. 92| -3. 85| 2. 7| Interest| 5. 12| 4. 71| 4. 08| Gross Profit| 0. 80| -8. 56| -1. 41| Depreciation| 0. 65| 0. 72| 0. 69| Profit Before Tax| 0. 15| -9. 28| -2. 10| Tax| 0. 00| 0. 00| 0. 00| Fringe Benefit tax| 0. 00| 0. 00| 0. 00| Deferred Tax| -0. 42| 0. 11| -0. 25| Reported Net Profit| 0. 57| -9. 39| -1. 85| Extraordinary Items| 11. 58| 0. 00| 0. 04| Adjusted Net Profit| -11. 01| -9. 39| -1. 89| Adjst. below Net Profit| 0. 00| 0. 00| 0. 00| P & L Balance brought forward| 0. 00| 0. 00| 1. 14| Statutory Appropriations| 0. 00| 0. 00| 0. 00| Appropriations| 0. 00| -9. 39| -0. 71| P & L Balance carried down| 0. 7| 0. 00| 0. 00| Dividend| 0. 00| 0. 00| 0. 00| Preference Dividend| 0. 00| 0. 00| 0. 00| Equity Dividend %| 0. 00| 0. 00| 0. 00| Dividend Per Share(Rs)| 0. 00| 0. 00| 0. 00| Earnings Per Share-Unit Curr| 1. 90| 0. 00| 0. 00| Earnings Per Share(Adj)-Unit Curr| 1. 90| 0. 00| 0. 00| Book Value-Unit Curr| 41. 83| 39. 93| 71. 23| Book Value(Adj)-Unit Curr| 41. 83| 39. 93| 71. 23| | | | | BIBILOGRAPHY * Company broachers * Annual reports * Balance sheets of 2009, 2010, 2011 * Text books referred: Working capital management Financial management * Websites: www. google. com www. itifsl. in



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