A

SYNOPSIS
ON
“A STUDY OF WORKING CAPITAL MANAGEMENT IN KIRLOSKAR BROTHERS
LIMITED FOR 2017 -2022”

Submitted
to
Yashwantrao Chavan Maharashtra Open University
Nashik
As partial fulfillment for the award of
Master of Business Administration (MBA)

By: KHUSHBOO GIRDHAR DAGA

PRN:2021017001690823

Under the Guidance of

Vaibhav Dharandhikri

Through
City Premier College, YCMOU Study Centre (44234)
(2021-2023)
S.NO PARTICULAR PAGE
NO.

1 INTRODUCTION 01

2 IMPORTANCE AND SIGNIFICANCE OF THE STUDY: 02

3 COMPANY PROFILE 04

4 OBJECTIVES OF THE STUDY 04

5 HYPOTHESIS 05

5 SCOPE OF STUDY 05

6 RESEARCH METHODOLOGY 06

7 EXPECTED CONTRIBUTION 06

8 DATA COLLECTION 06

9 CHAPTERISATION 08

INDEX
 INTRODUCTION
One of the most important areas in day to day management of the firm is the management of
working capital. Working capital management is the fictional area of fiancé that covers all the
current account of the firm.

Working capital is defined as “Excess of current liabilities and provisions” it is that part of the
capital with which the business is worked over. Working capital is also called as circulating
capital. A firm invests a part of its permanent capital in fixed asset and keeps a part of it for
working i.e. for meeting the day to day requirements. We will hardly find a firm which does not
require any amount of working capital for its normal operations. The requirements of working
capital vary from firm to firm depending upon the nature of Business, Production Policy, Market
conditions. Seasonality of operations, conditions of supply etc.

In reality management of working capital has become one of the most important issues of the
organization where many financial executives are trying to identify moments of working capital
and the basic determination of optimal level of working capital (Lamberson 1995).

Most of the financial manager’s time and effort are allocated in optimizing the level current
assets and liabilities back toward optimal level.

In general, current assets are considered as one of the most important component of total asset of
the firm. A firm may be able to reduce the investment of total assets by renting or leasing plant
and machinery. whereas the same policy cannot be followed for the components of working
capital. the high level of current assets the risk of liquidity associated with the opportunity cost
of funds that may have been invested in long-term assets. the impact of working capital policies
on profitability is highly important, however a little empirical research has been carried out to
examine this relationship

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 IMPORTANCE AND SIGNIFICANCE OF THE STUDY:

Working capital is a daily necessity for businesses, as they require a regular amount of cash to
make routine payments, cover unexpected costs, and purchase basic materials used in the
production of goods. Some of the importance of working capital are:

1. Liquidity Management: By properly analyzing the expenses payable or to be incurred in

the near future the financial team of an enterprise would easily plan for their funds

accordingly.

2. Out of Cash: Inappropriate prepared plans of day-to-day expenses may result in

enterprise liquidity issues. They have to postpone or to arrange funds from some other

sources which gives a bad impression of an enterprise at the party.

3. Helps in Decision Making: By correctly analyzing the requirement of funds for day-to-

day operations the finance team can appropriately manage the funds and can decide

accordingly for available funds and for the availability of funds also.

4. Addition in the Value of Business: As the management accordingly manages all the

day-to-day required funds that help the authorized personnel to timely pay for all the

outstanding creates a value addition or goodwill enhancement in the market.

5. Helps in the Situation of Cash Crunches: By properly managing the liquid funds one

can help the organization not to affect the situation of crises or cash crunches and pay for

its day-to-day expenses on a timely basis.

6. Perfect Investments Plans: Correctly managing the funds or working capital one can

choose or plan for their investments accordingly and invest the funds to maximize the

return as per their availability.

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7. Helps in Earning Short Term Profits: Sometimes it is seen that the enterprises keep a

heavy amount of funds as working capital which is far over and above the required level

of working capital. So by correctly preparing the required working capital those extra

funds could be invested for a short span of time and could create value in the profits of

the enterprise.

8. Strengthening the Work Culture of Entity: Timely payment of all the day-to-day

expenses mainly focused on the salary of the employees creates a good environment and

a sort of motivation amongst employees to work harder and strengthen the good working

environment.

9. Improves Creditworthiness of Entity: When the enterprise has adequately planned their

working capital requirements, they will surely pay the payments to vendors and other

creditors timely which improves their creditworthiness and could help them to get the

funds as and when required easily.

10. Act as Guarantor to Other Enterprises: When an enterprise has created such a good

image in the market then the business could also help some other enterprises and in favor

gets business profits and contracts done easily.

3
 COMPANY PROFILE:

Kirloskar Group, is an Indian conglomerate headquartered in Pune, Maharashtra, India. The

company exports to over 70 countries over most of Africa, Southeast Asia and Europe. The

flagship & holding company, Kirloskar Brothers Ltd established in 1888, is India's largest maker

of pumps and valves. Kirloskar Brothers Limited (KBL) is a pump manufacturing company

involved in engineering and manufacture of systems for fluid management. The market leader in

fluid management, KBL provides fluid management solutions for large infrastructure projects in

the areas of water supply, power plants, irrigation, oil & gas and marine & defense. The

company engineers and manufactures industrial & petrochemical, agriculture & domestic pumps,

valves and hydro turbines.

OBJECTIVES OF THE STUDY:

 To examine the effectiveness of working capital management polices with the help of

accounting ratio.

 To understand the concept of Working Capital Management.

 To study the components of Working Capital Management.

 To analyze the efficiency of working capital management in Kirloskar Brothers Ltd.

using Intra Firm Ratio Analysis.

 To find out the changes in working capital of Kirloskar Brothers Ltd using Comparative

Financial Statement Analysis.

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 HYPOTHESIS OF THE STUDY:
Hypothesis has definite utility and important place in social research. The formulation of
hypothesis is pre-requisite of any successful research. one of the most important areas in the day-
to-day management of the firm is the management of working capital.

 There is a positive relationship between efficient working capital management and

profitability of the company.
 The different components of the working capital have a major effect on the management
of the working capital in the company.
 The Current Ratio shows that the company’s liquidity position is not ideal as per the
standard ratio 2:1 but still it is greater than 1 which indicates the company’s ability to pay
off its current obligations.
 There are no major deficiencies in the management of working capital, however, there is
a need for improvement in some ratios like Receivables and Working Capital Turnover in
order to enhance the liquidity and profitability position to the greater level.

SCOPES OF THE STUDY:

 This project is helpful in knowing the company's position of funds maintenance and
setting the standards for working capital inventory levels, quick ratio current amount
turnover level and web torn turnover level.
 This project is also useful as it companies the present year data with the previous year
data and thereby it shows the trend analysis i.e. increasing fund or decreasing fund.
 The period of study is restricted to 5 years.
 This Project report tries to evaluate how the management of working capital is carried out
in Kirloskar Brothers Limited, Pune.
 Ratio Analysis and Comparative Statement Analysis will be used for analysis of the data.
The data will be presented using various graphs and charts.

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 RESEARCH METHODOLOGY:

In today’s competitive world maintaining financial strength on a day to day basis has become a
challenge. Every firm wants to see themselves financially sound. The financial attributes like
liquidity, solvency and profitability can be improved by effective implementation of the working
capital management. Working capital supports the day to day operations of the firm. As it
includes items like cash, inventory, receivables, payables etc. the working capital shows the
activities of the companies. Empirical studies have shown that ineffective management of
working capital as one of the major cause of industrial sickness. So, efficient management of
working capital is one of the important indicators of financial soundness. This Project report tries
to evaluate how the management of working capital is carried out in Kirloskar Brothers Limited,
Pune.

EXPECTED CONTRIBUTION:

The Project Report is initiated with the objective to study the working capital management in
Kirloskar Brothers Limited. We will study that the company’s profitability over the years. The
Ratios of the company will be studied and also whether if the company enjoys a balance of
liquidity and profitability. On the basis of the analysis, we can further find that if the overall
management of working capital is sound.

DATA COLLECTION:

The collection of essential information to prove their hypothesis is a significant and distinctive
stage of research in any science.

The sources of information are generally classified as primary data and secondary data.

PRIMARY DATA:
 Primary data has been obtained through personal discussions with managers and
senior
officials of the organization.

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  The sample for the study has been selected a company named Kirloskar Brothers
Ltd, Pune which is one of the market leader in fluid management.

SECONDARY DATA:
 The study is based on secondary data which is collected from the annual reports and other
proprietary reports of Kirloskar Brothers Ltd.
 The period of study is restricted to 5 years.
 Annual report for the year.2017-2018
 Annual report for the year.2018-2019
 Annual report for the year 2019-2020
 Annual report for the year.2020-2021
 Annual report for the year.2021-2022

REFERENCES:
 Financial Management, Theory and Practice 10th Edition by Prasanna Chandra.
 http://www.moneycontrol.com/
 Annual Report of the companies, Year 2017-018 to 2021-22.
 Articles issued by the Companies

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 CHAPTERIZATION

1. Introduction to topic
2. Company profile
3. Theoretical background/ Literature Review
4. Research Methodology
5. Data Analysis and Interpretation
6. Conclusion
7. Finding & Suggestion
8. Bibliography
9. Annexure

Sign of Research Candidate Sign of Research Supervisor