Management of Working Capital in Cement Industry

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MANAGEMENT OFWORKING CAPITAL IN

CEMENT INDUSTRY

PRESENTED BYARPIT GARG


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INTRODUCTION

Concept of working capital is very importantin the field of financial management. Forgrowth and profitability of a firm workingcapital management is vital.

Net Working Capital = Current Asset Current

Liabilities

working capital is the life blood andcontrolling nerve center of a business


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CONTINUE

The term net working capital can be defined in two

ways:

The most common definition of net working capital

(NWC) is the difference between current asset and currentliabilities

Net working capital is NWC is that portion of current assetswhich is financed by long term funds


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CONSTITUENTS OF CURRENT

ASSETS Cash in hand and cash at bank Bills receivables

Sundry debtors

Short term loans and advances.

Inventories of stock as: Raw material, Work inprocess

Stores and spares,Finished goods

Temporary investment of surplus funds.

Prepaid expenses


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ADVANTAGE OF ADEQUATE

WORKING CAPITALSOLVENCY OF THE BUSINESS

Goodwill

Easy loans

Cash Discounts

Regular Supply of Raw Material

Regular Payment Of Salaries

Exploitation Of Favorable Market Conditions

Ability To Face Crises

Quick And Re ular Return On Investments


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CURRENT RATIO =

CURRENT ASSETS /CURRENT

LIABILITESQUICK RATIO =

QUICK ASSETS/CURRENTLIABILITES

(Marketable Securities, Cash in hand and Cash at bank,Debtors)

Absolute liquid ratio =

absolute liquid assets/CURRENT LIABILITES


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Determinants of

Working CapitalNature of industryNature of industry

Demand of creditors

Cash requirements

General nature of businessTime

Volume of salesNature of industry

Demand of creditorsCash requirements

General nature of business


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Excessive working

capitalExcessive working capital means ideal funds

which earn no profit for the firm and businesscannot earn the required rate of return on its

investments.

Redundant working capital leads tounnecessary purchasing and accumulation of

inventories.Excessive working capital implies excessive

debtors and defective credit policy whichcauses higher incidence of bad debts.

It may reduce the overall efficiency of the


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CEMENT INDUSRTY IN INDIA

India is the second largest producer of cementon the globe after China.

In total, India manufactures 251.2 MillionTones of cement per year.

Estimates state that the production in thesector will touch 262.61 MT in FY12.

Major players alone account for about 70percent of the total volume of cementproduced in India


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Scope and Purpose

The efficiency of the working capitalmanagement and its components

Efficiency and effectiveness of managementImportance of taking care of current assets

and current liabilities

Optimize the use of available resources

Checking out the risk and profitability

Liquidity and Profitability

Fluctuation


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Problems of Cement

industryShortage of capital

Power shortage

Locational problems

Shortage of coal

Non-availability of railway wagons

Defective method of transport

Negligible share in world trade

Technological obsolescence


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Future Ahead of Indian

Cement IndustryThe annual demand for cement in India is

consistently growing at 8-10%.

Demand for cement in the country isexpected to increase to 244.82 million tonnesby 2012

The demand will be at 311.37 million tonnes if

the projections of the road and housingsegments are met in reality

Government is also taking certain measure foravail transport , coal and crude oil availabilityto


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COMPANIES

Gujarat Ambuja Cement

Managalam Cement Limited

India Cement Company Ltd.


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Gujarat Ambuja Cement

The company was incorporated on 20thOctober, 1981 as Ambuja Cements Pvt.Ltd

Public limited company on 19th March 1983

Latest technology adopted by company

Collabrations with foreign companies

In 2011 it has capacity of producing 25 milliontonnes of cement.

Its stock also performing well in 2011analyst(ashwani gujral) recommend to buy


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Continue


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India Cement Company Ltd.

It was established in 1946 and the first plantwas set up at Sankarnagar in Tamil Nadu in1949

It has about seven cement manufacturingplants spread over Southern India catering tomajor markets in South India andMaharashtra.

India Cements Ltd. also owns Indian PremierLeague's Chennai franchise, Chennai SuperKings.

Its capacity is 15.5 million tonnes in 2011


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Continue.

The Company's plants are well spread withthree in Tamilnadu and four in Andhra Pradeshwhich cater to all major markets in South India

and Maharashtra.

The Company is the market leader with amarket share of 28% in the South. It aims toachieve a 35% market share in the nearfuture. The Company has access to hugelimestone resources and plans to expandcapacity by de-bottlenecking and optimisationof existing plants as well as by acquisitions.

LIQUIDI


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LIQUIDITY

RATIO

MANGALAMCEMENT

AMBUJACEMENT


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ES OF

FUND

MANGALAMCEMENT


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NGCAPITAL

MANGALAMCEMENT


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REFRENCES

8_dp_singh_review_article_june_2011

http://money.rediff.com/companies/india-cements-lt

http://money.rediff.com/companies/ambuja-cement

http://money.rediff.com/companies/mangalam-cement-ltd/11510022
http://money.rediff.com/companies/india-cements-ltd/11510006http://money.rediff.com/companies/ambuja-cements-ltd/11510005http://money.rediff.com/companies/ambuja-cements-ltd/11510005http://money.rediff.com/companies/india-cements-ltd/11510006


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Thank you

Documents

Management of Working Capital in Cement Industry