INDEX

Chapter
No. Title Page No.

1 Introduction 1-5

2 Company profile 6-20

3 Literature review 21-24

Research methodology
 Problem statement
 Need of the study
4 25-30
 Objectives of the study
 Hypotheses of study
 Limitations of study

5 Data analysis & interpretation 31-44

6 Findings & suggestions 45-47

7 Conclusion 48-49

8 References 50-51
 CHAPTER I
INTRODUCTION

1
 Introduction of Working Capital:-

Working capital is the employment of current assets and current

liabilities in such a way as to increase short- term liquidity. The
requirement of working capital various from firm to firm, depending on
the nature of business, production policy, market conditions, seasonality
of operation, condition of supply etc. working capital to a company is
like a blood of human body. It is carried out effectively and efficiently,
will assure the health of an organization. No business can run
successfully without an adequate amount of working capital. Working
capital management is an important aspect of financial management.
Efficient working capital management is essential for better maintenance
of liquidity and profitability trade-off in any Enterprise.
Working capital management is concerned with short-term financial decision. Working
capital is called the life blood or heart of the any business.
Meaning of Working Capital:-

“Working capital management – defined as current assets minus current

liabilities – is a business tool that helps companies effectively make use
of current assets and maintain sufficient cash flow to meet short-term
goals and obligations.” Working capital is also known as circulating
capital & revolving capital.

2
Definition:-

“Working capital is descriptive of that capital which is not fixed. But the more
common use of working capital is to consider it as the difference between the book
value of the current assets and the current liabilities.”

Working Capital = Current Assets – Current Liabilities

Working capital = Current Assets – Current

Liabilities.
Debtors Trade
Stock Creditor
Cash Bills Payable
Investment Short-Term
Loan & Advances Loans
Taxation Dividend

3
Objective of Working Capital Management:-

Effective management of working capital is means of accomplishing the firm’s goal

of adequate liquidity. It is concerned with the administration of current assets and
current liabilities. It has the main following objectives.
To optimize the level of working capital & minimize the cost of such funds.
To maintain sufficient current assets. To maximize profit of the firm.
To protects the solvency of the firm. Minimize the rate of interest / cost of capital.

Importance of Working Capital:-

The definition of working capital itself explains significance of it in the business

that it is the amount which used to carry on day to day working business. That
means without working capital the working of business cannot be possible. The
importance of working capital can be explain as under.
The sufficient working capital ensure the payment of wages and salary to staff in
time which develop good working environment. Working capital can be described
as the funds required by an enterprise to finance its day-to-day operations.
Increase in activity levels should be backed up by suitable investment in
working capital to expand business.
It is possible to take the advantage of favorable & profitable market condition.

1 Current Assets:-

The current assets of Mahindra and Mahindra Ltd included under the board
heading are given in detail in various schedules attached to the balance sheet
in every annual report.
Current assets are assets that are expected to be converted into cash within a
period of one year. These are also known as short-term assets. In other words
4
those assets are very easily convertible into cash or are already available in the
liquid form.
❖ Examples:-

Cash in Hand Balance at Bank

2. Receivables
Advances
Deposits
Other receivables.
1) Closing Stock a) Store & spares
b) Parts & by-product

5
2) Prepaid expenses.
1.4 Current Liabilities:-
Current liabilities are short-term financial obligations that are due either in one
year or within the company’s operating cycle. Current liabilities are different
from long-term liabilities, which refer to debts or obligations that are due in
more than a year. This type of liabilities is taken to achieve the smooth
operation of the business.
• Examples :- 1) Short turn Loans
Current Liabilities & provisions Deposits
Interest Payable
A. Current Assets :-
B. Cash in Hand Balance at Bank Receivables
Types of Working Capital:-

There are two main types of working capital, They are as follows :-

1) Gross Working Capital:-

This refers to the aggregate amount of funds invested in the current assets of the
business. In other words, Gross Working Capital is the total of the current assets of
the business. These include:
Cash
Accounts Receivable
Inventory
Marketable Securities and
Short-Term Investments
2) Net Working Capital :-
Networking capital is the difference between the current assets and current
liabilities of the company. If the company’s assets are more than current
liabilities, it indicates a positive working capital, and the company is in a

6
financial position to meet its obligations.
However, if the company’s assets are less than current liabilities, it indicates a
negative working capital, and the company is facing financialdistress.
3) Permanent Working Capital:-

Also known as “fixed working capital,” this is the minimum amount of funds
that must be in cash or current assets, required to cover all current liabilities.
The amount of fixed capital a business requires
depends on the size and growth of that business. Every firm has to maintain a
minimum level of raw material, work-in-process, finished goods and cash
balance.

4) Temporary Working Capital :-

Capital that is needed by the enterprise for some specific period of a year is
termed as temporary working capital. For instance, this type of working capital
might be the need of the hour during festive season due to the increases
immediate demands of the business. This type of requirement is thus called
temporary working capital.

Need for Working Capital :-

1) Replenishment of Inventory :-

A sufficient stock of inventory is required to support the sales target of the

firm depending on the availability of resources.
2) Provision for Operating Expenses :-

7
To maintain the day-to-day operations of the firm. Working capital is required for
the following purpose.

3) Support for Credit Sales:-

Because of extended credit sales, a sufficient working capital is needed to
maintain the firm’s operations until the receivables are converted into cash.
4) Provision of a Safety Margin:-

To provide for unexpected expenditures, delays in the expected cash inflow and
possible decline in revenue.

Advantages of Working Capital:-

1) Enhance Profitability:-
Proper application of working capital management strategy would enhance the
company’s profitability in the long run. The policy properly manages inventory
to avoid any operational failures.
Collection from trade receivables would be on time as receivables management
is a key part of working capital management. There would be no cases of
default in paying the trade payable on the due date because of proper
management and allocation of cash.

2) Ensures Liquidity:-
Businesses often get in trouble due to the lack of cash needed for operations and to
repay short-term debts. It happens because of an ineffective or no working capital
management policy in the enterprise. Working capital management ensures liquidity
by monitoring account

8
receivables, account payable, stock management, and debt management. It
assists in keeping sufficient liquid cash in the business at any point in time to
pay operational costs and short-term debts. Thus, it helps in allocating the
resources in an optimum manner.

3) Improves Financial Health :-

Working capital management basically deals with the management of cash in
an enterprise. It assesses the sources of cash inflows and determines cash
outflow in the best possible manner. Proper cash allocation makes a scope for
the investment of remaining cash or in repaying short-term debts. It allows the
business to be financially solvent most of the time and thus evading any legal
troubles that could have arisen due to a lack of working capital. Higher
profitability would imply a higher return on capital employed.

4) Value Addition :-
As explained earlier, working capital enhances a company’s financial health
and operational success. It makes the company stand out amongst its peers. A
sense of respect emerges in the market for the business. This all, in turn, leads
to value addition for the entity.
1.8) Disadvantages of Working Capital :-
1) Problem in Interpretation :-
Working capital management involves techniques of ratio analysis. Ratios are
just a number that allows a user to interpret the result. In most cases, it is
unclear to a user whether a particular ratio is favorable to the company or not.
2) Cash Discounts :-
As the term cannot buy its requirement in bulk due to inadequate working
capital it cannot avail of discounts etc.
9
3) Based On Data:-
Working capital management operates around data. It is the key soul of any
working capital management strategy. Data would include every minute detail
about the components of working capital.
4) Loss Reputation:-

A concern with inadequate working capital loses its reputation as it cannot pay
its short term liabilities in time.
5) Non-Situational :-
Another disadvantage of working capital management policyis that it’s not
situational in nature. The strategy does not acknowledge sudden changes in the
market conditions as it is based on past events and figures. The time taken to
respond to certain recent events is significant in impacting business operations
and profitability.

1.9 ) Factors determining of working capital management :-

The factors influencing the working capital decision of the firm may be
classified two groups, such as,
Internal factors External
factors
INTERNAL FACTORS :-

I) Nature & size of the business :-

The first factor which helps in determining the requirement of working capital
is the type of business in which the company is involved. A trading company
or a retail shop requires less working capital as the length of the operating
cycle of these types of businesses is small.

Operating Efficiency:

10
Operating efficiency means efficiently completing the various business
operations. Operating efficiency of every organization happens to be different.
Some such examples are: (i) converting raw
material into finished goods at the earliest, (ii) selling the finished goods
quickly, and (iii) quickly getting payments from the debtors
Production Policy:

A firm marketed by pronounced seasonal fluctuations in its sales may pursue a

production policy which may reduce the sharp variations in working capital
requirements. The production cycle starts with the purchase & use of raw materials
and completes with the production of finished goods.
Conditions of Supply:

The inventory of raw materials, spares and stores depends on the conditions of
supply. If the supply is prompt and adequate, the firm can manage with small
inventory. However, if the supply is unpredictable and scant, then the firm, to
ensure continuity of production would have to acquire stocks as and when they
are available and carry larger inventory on an average.
Availability of Raw Material:

Availability of raw material also influences the amount of working capital. If

the enterprise makes use of such raw material which is available easily
throughout the year, then less working capital will be
required, because there will be no need to stock it in large quantity.
II) EXTERNAL FACTORS :-
I) Taxation policy :-
The tax policy of the government will influence the working capital decision. If
the government follows regressive taxation policy i.e imposing heavy tax
burdens on business firms, they are left with very little profits for distributions
and retention purpose.
11
II) Import policy :-
Import policy of the Government may also effect the levels of
working capital of a firm since they have to arrange funds for
importing goods at specified times.
III) Changes in the technology :-
The technological changes and developments in the area of production can
have immediate effects om the need for working capital. If the firm wish to
install a new machine in the place of old system.
IV) Infrastructural facilities :-
The firm any require additional funds to minimum the levels of inventory &
other current assets, when there is good infrastructure facilities in the company
Loke, transportation and communication.
CYCLE OF WORKING CAPITAL :
An operating cycle refers to the time it takes a company to buy goods, sell them
and receive cash from the sale of said goods. In other words, it's how long it
takes a company to turn its inventories into cash.
The length of an operating cycle is dependent upon the industry.
Understanding a company's operating cycle can help determine its financial
health by giving it an idea of whether or not it'll be able to pay off any
liabilities.
Thus, the sum total of these times is called an “operating cycle” and it consists of
the following six steps:
Conversion of cash into raw materials. Conversion of raw material into work-in-
process.
Conversion of work in process into finished products. Time for sale of finished
goods- cash sales and credit sales.
Time for realization from debtors and bills receivables into cash. Credit period
allowed by creditors for credit purchase of raw materials, inventory and
12
creditors for wages and overhead.

13
 Purchase Production
Raw materials process

Work in
Cash
process

Realization Production
of Income
process

Debt Finished
collection/credit
policy goods

Sales
Operating Cycle of a Business

Principles of Working Capital Management:-

The following are the general principles of a sound working capital management
policy.

1) Principle of Optimization:-

14
The level of working capital must be so kept that the rate of return on
investment is optimized. In other words, the working capital should be
maintained at an optimum level. This is the point at which the
increase in cost due to decline in working capital is equal to the increase in the
gain associated with it.
2) Principle of Maturity of Payment:-

This principle states that the working capital should be so raised from different
sources that the firm is able to repay them on maturity out of its inflows of
funds. Otherwise the firm would fail to repay on maturity and ultimately, it
would find itself into liquidation though it is earning huge profits.
3) Principle of Cost of Capital:-

Each source of working capital has different cost of capital. The degree of risk
also differs from one source to another. The type of capital used to finance
working capital directly affects the amount of risk that a firm assumes as well
as the opportunity for gain or loss and cost of capital.
4) Principle of Equity Position:-

According to this principle, the amount of working capital invested in each

component should be adequately justified by a firm’s equity position. Every
rupee invested in the working capital should contribute to the net worth of the
firm.
1.12) Forecasting Techniques of Working Capital :-
The forecast of working capital recruitments of a concern is not an easy task.
The concept of working capital is closely related to the current assets. So some
experts of finance suggest that in estimations, of the working capital
recruitments that title current assets recruitment should be forecast.
There are three popular methods available for forecasting working capital
requirements.
1. Cash Forecasting Method :-
15
Total cash receipts and cash disbursement for a particular period are taken into
consideration linder cash forecasting method. Cash receipts may be estimated
cash sales, cash collected from debtors, and bills receivables, other
miscellaneous cash receipts and sale of fixed assets and investments. Delay in
cash receipts is taken into consideration.
2. Balance Sheet Method :-

A balance sheet is prepared by adjusting the anticipated transactions for the

ensuring year in the opening balances. The closing balances of all accounts are
arrived other than cash and bank balances. The accountant has confirmed that
all the assets and liabilities are

16
 CHAPTER NO. II
COMPANY PROFILE

17
 Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive
manufacturing corporation headquartered in Mumbai. It was established in 1945 as
Mahindra & Mohammed and later renamed as Mahindra & Mahindra. Part of the
Mahindra Group, M&M is one of the largest vehicle manufacturers by production in
India. Its subsidiary Mahindra Tractor Company is the largest manufacturer of tractors
inthe world by volume. It was ranked 17th on a list of top companies in India by
Fortune India 500 in 2018. Its major competitors in the Indian market include Maruti
Suzuki and Tata Motors. Recently Mahindra tractor company has launched TREM IV
pollution norms tractors, which have common rail direct injection technology.
Mahindra has launched total 6 tractors with CRDI technology one of these is Arjun
Novo 605 DI PP which is with common rail direct injection technology and provides
different power output with different modes i.e. tractor has 3 modes.
Mahindra & Mahindra Ltd traded as BSE:500520 NSE: M&M BSE SENSEX
Constituent NSE NIFTY 50 Constituent And ISIN is INE101A01026. It is a type of
industry is automative and it founded on
2 october 1945; 77 years ago jassowal, Ludhiana,
Punjab, India. The Founder of Mahindra & Mahindra Ltd is J.C. Mahindra,
K.C.Mahindra,
M.G. Muhammad. Headquarters at Mumbai, Maharashtra, India

In 1948, the company changed its name to Mahindra & Mahindra. They
eventually saw a business opportunity in expanding into manufacturing and selling
larger MUVsand started assembling under license of the Willys Jeep in India. Soon,
M&M was established as the Jeep manufacturer in India, later commenced
manufacturing light commercial vehicles (LCVs) and agricultural tractors.

Jeep was bought by American Motors Corporation in 1970 and thereafter Jeeps
continued to be built under license from AMC, and in turn under Chrysler after
18
Chrysler bought AMC in 1987.

In 1999, Mahindra purchased 100% of Gujarat Tractors from the Government of

Gujarat and in 2017 Mahindra renamed it as Gromax Agri Equipment Limited, as
part of new brand strategy and the models continue to be sold as Trakstar.

In 2007, M&M acquired Punjab Tractor Limited (PTL) making it the world's
largest tractor manufacturer. Subsequent to this take-over, the former PTL was
merged into M&M and transformed as Swaraj division of Mahindra & Mahindra
in the year 2009.

Over the past few years, the company has taken interest in new

industries and in foreign markets. In 2008, they entered the two- wheeler
industry by taking over Kinetic Motors in India.

In 2010, M&M took a 55% stake in the REVA Electric Car Company and in 2016,
they renamed it Mahindra Electric Mobility Ltd after taking 100% ownership.

In 2011 Mahindra and Mahindra acquired South Korea's SsangYong Motor

Company.

In October 2014, Mahindra and Mahindra acquired a 51% controlling stakein

Peugeot Motocycles and progressed to acquire a 100% controlling stake in
October 2019.

In May 2015 Mahindra acquired a 33.33% stake in Japanese tractor manufacturer

Mitsubishi Agricultural Machinery (MAM), a subsidiary of the Mitsubishi Heavy
Industries. In December 2015, Mahindra and Mahindra Ltd and affiliate Tech
Mahindra Ltd, through a special purpose vehicle (SPV), have agreed to buy a
76.06% stake in Italian car designer Pininfarina SpA, for €25.3 million (around
Rs.186.7 crore).

19
In March 2016, Mahindra acquired 35% in Finland-based Sampo Rosenlew,
entering the combine harvester business, subsequently increasing its stake in the
company to 49.04% in December 2019.

In January 2017, Mahindra and Mahindra Ltd acquired a 75.1 equity stake in
Hisarlar Makina Sanayi ve Ticaret Anonym Şirketi (Hisarlar), a farm equipment
company, marking its entry into Turkey and in September 2017 acquired another
Turkish tractor and foundry business
Erkunt Traktor Sanayii AS for ₹800 crore.

In November 2017, Mahindra signed a memorandum of understanding (MOU)

agreement with Belgium-based Dewulf, a supplier of a full line of potato and root
crop machinery. Under the agreement, Mahindra will manufacture and market
potato planting equipment in India, for which the co-branded planter is developed.
In January 2018, Mahindra announced its foray into the sprayers business through
the acquisition of a 26% equity stake in M.I.T.R.A. Agro Equipments Pvt Ltd, a
Maharashtra-based AgTech company (MITRA). In March 2020, Mahindra further
increased its stake in the company to 39%.
In February 2018, Mahindra acquired a minority stake of 22.9% percent in Carnot

Technologies. Carnot Technologies owns and operates smart car solutions firm
CarSense.

In May 2018, Mahindra signed a share subscription agreement to acquire up to

10% share capital of Canada's IT firm Resson Aerospace Corporation. Resson is
focussedon providing technology solutions for agriculture. It has developed a
system that capturesand interprets images to give farmers information about the
state of their fields and crops.

In June 2019, Mahindra purchased an 11.25% stake in Switzerland-based agro

technology firm Gamaya SA. The acquisition enabled Mahindra to further develop
and deploy next-generation farming capabilities such as

20
precision agriculture and digital farming technologies.[34][35]

In October 2019, Mahindra entered into a joint venture with Ford by establishing
Ford India in which Mahindra & Mahindra acquired a controlling 51% stake. In
January 2021, Mahindra ended its collaboration with Ford owing to global
economic and business conditions caused by the pandemic.

In April 2020, the company ended its joint venture with Renault, with Mahindra &
Mahindra buying out Renault's stake. Renault continues to license and supply key
components such as engines and transmissions to Mahindra & Mahindra.

21
 CHAPTER III
LITERATURE REVIEW

22
1. Impact of Working Capital Management on the Profitability of
Automobile Industry in India-
Author Name: Syed Noorul Shajar
Year: 1, June 2016 CONCLSION
The study has analyzed impact of profitability on working capital
management of some selected Indian automobile companies. For this
purpose ROCE is used as a dependent proxy variable for profitability
where as CR, ITR & DTR is used as
independent proxy variable for working capital. The companies taken are
Maruti Suzuki India ltd., Tata motors ltd & Mahindra and Mahindra ltd. Based
on the above analysis it is found that only debtors turnover ratio in case of
Maruti Suzuki India limited and current ratio in case of Tata motors limited are
positively related with the profitability and their impact is also found to be
significant. And the remaining independent proxy variable in each company
are found to be positively but less correlated with the dependent proxy variable
of profitability (ROCE).it is also found that rate of inventory turnover is very
low in all the companies.

2. Impact of Working Capital Management Practices of

Automobile Firms on their Profitability: An Example of
Mahindra & Mahindra Ltd.
Author Name: Dr. Gitika Mayank*
Year: 8, February 2014 Conclusion:
Working capital management practices at Ranbaxy its impact on profitability
has exhibited relationships on the negative as well as the positive dimensions.
For a company like Mahindra and Mahindra Ltd the current assets composition
is almost equitably distributed among inventory, debtors, cash and loans and
advances. Out of the 13 variable initially selected it was observed that the
variables related to the operational efficiency of the firm played the most
significant role and had the highest impact on Return on Assets (ROA) i.e the
working capital turnover ratio, inventory turnover ratio and receivables
turnover ratio. For further investigation of the association, Multiple Regression
Analysis was carried out. The results of this analysis explored that the
developed model is a good fit and explains as high as 99% of the variation in
the dependent variable.

3 Relationship between Working Capital Management and Profitability of

Indian Automobile Manufacturers
Author Name: Abdul Rahman
Years: 9 Aug 2022

CONCLSIONS: The relationship between working capital management and

profitability of Indian vehicle manufacturers is
23
examined in this article for the period 2006–2020. The research is essential for
investors, competitors, policymakers, and companies at the time since that
operates as a growth direction. Thus, it is believed that a well-designed and
managed working capital management system would contribute favorably to
the profitability and value of the business. Efficient working capital
management is crucial for every company organization's existence, liquidity,
solvency, and profitability. Additionally, effective working capital management
adds value to any business.

4. Study the Relation between Working Capital System and

Profitability in Auto Manufacturing Industry in India Author Name:
Fatemeh Jafari
Year 2015
Conclusion:
In the analysis of working capital management and its components six India
Auto manufacturing companies have been selected. The major objective and
analysis made here was the relation between working capital management and
turnover ratios. In turnover ratio there were four ratios analyzed for working
capital, namely the inventory turnover ratio, the debtor turnover ratio, the fixed
assets turnover ratio and the total asset turnover ratio. Hero Motocorp and
Maruti Suzuki have a shortage of average inventory which may lead to decline
in their sales therefore the company needs to increase the average inventory.
Tvs Motor was marked by poor sales performance and low inventory hence
there should be improve in the sales of the company and as per the sales rose
the inventory requirements to be enhanced. Ashok Leyland has major capital
tied up in inventory, so the company needs to increase their sales and also
reconsider their inventory

5 Working Capital Management and its Impact on the

Profitability: – A Study
Author Name: Dr. Pramod Sharma
Years: March-2019
Conclusion: If we look at Ecommerce with a positive attitude, then it

24
seems to have a bright future. It is very much on customer side as then
competition will only increase which will thus offer the customer more options.
However, we should also keep in mind of all the online fraud and spam side of
this game. As the business will grow, so will the crimes. With the boost in
online business and E commerce, the bar of online frauds and illegal spam will
also be raised high. Either way, the dark side of it can be neglected if the
costumer plays the game carefully and learn about online money management
and financial education. banking is also experiencing its biggest crest in the
graph and it will only keep on increasing only.

25
 CHAPTER IV
REASEARCH METHODOLOGY

26
 The research methodology is a way to systematically solve the research problem.
It may be understood as a science of studying new research is done systematically.
In that various steps, those are generally adopted by a researcher in studying his
problem along with the logic behind them.
The procedure by which a researcher goes about their work of describing,
explaining predicting phenomenon is called methodology.
Research Design

A research design is an arrangement of condition for collection at analysis of

data in a manner that combines relevance to the research purpose with the
economy in the process.
Process of Research
Formulating the objective of the study (What the study is about and why it is
being made)
Designing the method of data collection (What technique of gathering data will
be adopted)
Selecting the sample (How much material will be needed)
Collecting the data (Where can be required data can be found and with what
time period should the data be related)

Processing and analysis the data

Reporting and finding

Sample Design

A sample design is a definite plan for obtaining a sample from a given

population. It refers to the technique or the procedure adopted in selecting
items for the sample. The main constituents of the sampling design below-

Sampling unit Sample

27
size Sampling unit

A sampling framework, i.e. developed roe the target population that will be
sampled. i.e.

Who is to be surveyed
•Sample unit taken by me - Financial statement of the company Sample
size

It is the substantial portions of the largest population that are sampled achieve
reliable results.

• Sample size - the last four years, i.e. 2017-2018 to 2021-2022

financial statements of the company.
.
Data collection

The data have been collected from two types-

Primary Data:-

The Information is collected through the primary sources like. Taking with
the employees of the department.
Getting information by observation e.g. in manufacturing processes. Discussion
with the head of the department.

Secondary Data:-

28
The data is collected through the secondary sources like. Annual
Reports of the company.

Office manuals of the department. Magazines,

Reports in the company. Policy documents of
various departments.

PROBLEM STATEMENT

In the competitive landscape of the automotive and farm equipment industry,

effective working capital management is critical for sustaining financial growth
and operational efficiency. However, there is a lack of empirical research
focused on the specific impact of working capital management on the financial
growth of Mahindra and Mahindra in Nagpur. This study aims to fill this gap
by investigating the current practices, challenges, and optimization strategies of
working capital management at Mahindra and Mahindra. By addressing these
issues, the research will provide valuable insights and actionable
recommendations to enhance the company's financial performance and growth.

29
NEED OF STUDY

 Understanding the efficiency of working capital management in

optimizing financial resources.
 Analyzing the relationship between working capital management
practices and overall financial performance.
 Identifying strategies to enhance working capital management for
sustainable financial growth.
 Assessing the impact of effective working capital management on
liquidity, profitability, and investment opportunities.

OBJECTIVES OF THE STUDY

 To study working capital methods and policy adopted by

Mahindra and Mahindra ltd.
 To analyses the concept of working capital.
 To understand working capital methods and procedures at
Mahindra and Mahindra ltd.
 To know the performance of Mahindra and Mahindra ltd by using
different ratio related to working capital.

HYPOTHESIS

H0: There is no significant relationship between Mahindra & Mahindra

working capital management and its financial performance.

H1: There is a significant relationship between Mahindra & Mahindra working

capital management and its financial performance

Limitations
 Access to Detailed Data: There may be restricted access to proprietary
30
 or detailed financial data of Mahindra & Mahindra, leading to potential
gaps in the analysis.
 Incomplete or inconsistent historical data can affect the
accuracy of trend analysis and long-term assessments.
 [Quantitative vs. Qualitative Data: Over-reliance on quantitative data
might neglect qualitative aspects of working capital management, such
as managerial expertise and employee efficiency.

31
 CHAPTER NO V
DATA ANALYSIS AND INTERPRETATION

BALANCESHEET
32
 MAHINDRA AND MAHINDRA PVT LTD ( Rs. In Cr.)
FOR THE YEAR ENDED 2017-18 2018-19 2019-20 2020-21 2021- 22
PARTICULAR MAR MAR MAR 20 MAR 19 MAR 18
S 22 21
ASSETS

NON-
CURRENT
ASSETS
Tangible Assets 12,004.3 7,872.5 7,980.7 7,614.71 6,507.95
7 9 6
Intangible Assets 2,544.2 2,306.7 2,413.8 2,467.04 1,351.46
5 6 3
Capital Work-in- 1,521.5 1,708.8 1,196.6 706.77 1,079.72
Progress 2 8 8
Other Assets 0.00 0.00 0.00 0.00 0.00

FIXED 19,566.7 15,011.51 14,404.0 12,501.5 10,988.1

ASSETS 9 5 4 2
Non-Current 17,207.7 19,576.6 17,748.4 19,032.0 16,645.4
Investments 5 0 8 7 8
Deferred Tax 0.00 0.00 0.00 0.00 0.00
Assets (Net)
Long Term
Loans And 1,652.7
960.20 138.86 37.55 43.01
2
Advances
Other Non- 3,477.8 3,035.6 3,069.1 3,054.84 3,265.67
Current Assets 2 7 8
TOTAL NON- 41,212.5 39,276.5 35,360.5 34,626.0 30,942.2
CURRENT 6 0 7 0 8
ASSETS
CURRENT
ASSETS
Current 7,902.0 4,488.4 2,189.6 2,983.96 3,937.49
Investments 6 7 5
33
Inventories 5,882.8 3,955.4 3,400.9 3,839.27 2,701.69
5 7 1
Trade 3,035.11 2,342.8 2,998.9 3,946.30 3,172.98
Receivable 5 8
Cash And Cash 3,650.5 6,255.4 4,236.5 3,731.66 2,893.73
Equivalents 3 2 1
Short Term 1,845.5 756.94 512.02 673.40 975.16
Loans And 2
Advances
Other Current 3,601.6 2,513.1 1,803.4 2,896.47 2,793.42
Assets 3 5 2
TOTAL 25,917.7 20,312.3 15,141.4 18,071.0 16,474.4
CURRENT 0 0 9 6 7
ASSETS
TOTAL 67,130.2 59,588.8 50,502.0 52,697.0 47,416.7
ASSETS 6 0 6 6 5

PARTICULARS MAR 22 MAR 21 MAR 20 MAR 19 MAR 18

EQUITIES AND
LIABILITIES
SHAREHOLDER’S
FUND
Equity Share Capital 598.30 597.39 596.80 595.80 594.97

TOTAL SHARE 598.30 597.39 596.80 595.80 594.97

CAPITAL
Reserves And 38,139.19 33,649.65 33,606.36 33,613.43 29,699.07
Surplus

TOTAL 38,139.19 33,649.65 33,606.36 33,613.4329,699.07

RESERVES AND
SURPLUS

34
TOTAL 38,960.95 34,501.92 34,467.84 34,209.2330,294.04
SHAREHOLDERS
FUNDS
NON-CURRENT
LIABILITIES
Long Term 5,678.02 7,070.03 2,032.03 2,031.78 2,195.90
Borrowings
Deferred Tax 1,700.80 1,343.15 1,408.17 634.13 277.24
Liabilities (Net)
Other Long Term 1,057.54 585.11 698.22 604.38 464.55
Liabilities
Long Term Provision 912.66 955.42 922.98 882.93 861.81

TOTAL 9,349.02 9,953.71 5,061.40 4,153.76 3,799.50

NON-
CURRENT
LIABILITIES
CURRENT
LIABILITIES
Short Term 811.93 24.74 900.00 448.54 668.47
Borrowings
Trade Payables 12,893.54 9,988.16 6,785.83 9,678.15 8,603.40

Other Current 4,661.21 4,633.79 2,691.43 3,518.71 3,383.95

Liabilities
Short Term 453.61 486.48 595.56 688.67 667.39
Provisions
TOTAL CURRENT 18,820.29 15,133.17 10,972.82 14,334.07 13,323.21
LIABILITIES
TOTAL CAPITAL
AND 67,130.26 59,588.80 50,502.06 52,697.06 47,416.75
LIABILITIES

35
 POSTIONS OF NET WORKING CAPITAL

Net Working Capital = Current Asset –

Current Liabilities

(Amt. in. Cr)

Sr.
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22
No.

1. Current Assets 16,474.47 18,071.06 15,141.49 20,312.30 25,917.70

2. Current 13,323.21 14,334.07 10,972.82 15,133.17 18,820.29

Liabilities
Net Working
3,151.26 3,736.99 4,168.67 5,179.13 7,097.41
Capital

30,000
.00 Net Working Capital
25,000
.00
20,000
.00
15,000
.00
10,000
.00
5,000.
00
Current Assests Current Liabilities Net Working Capital
0.00
2017-18 2018-19 2019-20 2020-21 2021-
22

36
INTERPRETATION

In the year of 2018 Net Working Capital are 3,151.26 Cr., in 2019 it is
3,736.99 Cr., in 2020 it is 4,168.67 Cr., in 2021 it is 5,179.13 Cr.,
and 2022 it is 7,097.41
WORKING CAPITAL RATIO ANALYSIS:-

Analysis of working capital management is done with the help of certain ratios.
Like a Current ratio, Quick ratio, Inventory Turnover ratio, Debtors turnover
ratio, Creditors turnover ratio, Working capital turnover ratio etc. The working
capital ratios has been calculated and mean also shown for last three years in the
company.

PURPOSE OF THE RATIO ANALYSIS:-

To study the short-term solvency of the company-liquidity of the company.

To study the long-term solvency of the company-Leverage position of the
company.
To interpret the profitability of the company-profit earning capacity of the firm.

Current Ratio:-

This is a measure of the ability of a firm to meet its short-term obligation. It is

has perhaps the best knows as measure of financial strength at a given point of
time. Too small a ratio may indicate that he firm has too many assets tied up in
current assets & is not making efficient use of them. Table no. 4 indicates
current ratio of the company.

37
CURRENT RATIO

CURRENT RATIO = CURRENT ASSETS /

CURRENT LIABILITIES

(Amt. in. Cr)

Current Current Current

Year
Assets Liabilities Ratio
2017-18 16,474.47 13,323.21 1.2

2018-19 18,071.06 14,334.07 1.2

2019-20 15,141.49 10,972.82 1.3

2020-21 20,312.30 15,133.17 1.3

2021-22 25,917.70 18,820.29 1.3

Current Ratio

Current Ratio

2.50

2.00

1.50

1.00

0.50

0.00
2017-18 2018-19 2019-20 2020-21 2021-22

Current Assets Current Liabilities Current Ratio

38
 In the year of 2018 Current Assets are 1.2 Cr., in 2019 it is 1.2 Cr., in 2020
it is 1.3 Cr., in 2021 it is 1.3 Cr., and 2022 it is 1.3 Cr.

LIQUID / QUICK / ACID TEST RATIO

LIQUID TEST RATIO = LIQUID CURRENT ASSETS / LIQUID

CURRENT LIABILITIES

(Amt.in Cr.)

Year Liquid Current Liquid Current Current

Assets Liabilities Ratio
2017-18 16,474.47 13,323.21 1.2

2018-19 18,071.06 14,334.07 1.2

2019-20 15,141.49 10,972.82 1.3

2020-21 20,312.30 15,133.17 1.3

2021-22 25,917.70 18,820.29 1.3

Liquid TestRatio
Sources :- Secondary Data
2.5
Liquid / Quick / Acid Test Ratio

1.5

0.5

0
2017-18 2018-19 2019-20 2020-21 2021-22

Liquid Current Assets Liquid Current Liabilities Current Ratio

39
INTERPRETATION:-

In the year of 2018 Liquid Test Ratio are 1.2 Cr., in 2019 it is 1.2 Cr., in
2020 it is 1.3 Cr., in 2021 it is 1.3 Cr., and 2022 it is 1.3 Cr.

WORKING CAPITAL TURNOVER RATIO :-

WORKING CAPITAL TURNOVER RATIO = SALES /

WORKING CAPITAL

(Amt.in Cr.)

Working
Year Sales Working Capital Capital
Turnover Ratio
2017-18 91,941.50 13,323.21 6.9

2018-19 103,015.23 14,334.07 7.1

2019-20 74,304.07 10,972.82 6.7

40
 2020-21 72,678.98 15,133.17 4.8

2021-22 89,353.96 18,820.29 4.7

Working Capital Turnover Ratio

Working Capital TurnoverRatio

12.
00
10.
00
8.0
0
6.0
0
4.0
0 Sales Working Capital Working Capital Turnover Ratio

2.0
0
0.0
2017-18 2018-19 2019-20 2020-21 2021-
0 22

 INTERPRETATION:-

In the year of 2018 Working Capital Turnover Ratio are 6.9 Cr., in 2019 it is 7.1
Cr., in 2020 it is 6.7 Cr., in 2021 it is 4.8 Cr., and
2022 it is 4.7 Cr.

CURRENT ASSETS TURNOVER RATIO:-

41
 SALES
CURRENT ASSETS TURNOVER -----------------------
RATIO = - CURRENT
ASSETS
(Amt.in Cr.)
Current Current Assets
Year Sales
Assets Turnover Ratio
2017-18 91,941.50 16,474.47 5.5

2018-19 103,015.23 18,071.06 5.7

2019-20 74,304.07 15,141.49 4.9

2020-21 72,678.98 20,312.30 3.5

2021-22 89,353.96 25,917.70 3.4

12.
00
10.
00
8.0 Current Asset Turnover Ratio
0
6.0
0
4.0
0
2.0
0
0.0
2017-18 2018-19 2019-20 2020-21 2021-
0 22

Sales Current Assets Current Assets Turnover Ratio

Sources: Secondary Data

Interpretation:
42
In the year of 2018 Current Assets are 5.5 Cr., in 2019 it is 5.7 Cr., in
2020 it is 4.9 Cr., in 2021 it is 3.5 Cr., and 2022 it is 3.4 Cr.

INVENTORY TURNOVER RATIO:-

(INVENTORY TURNOVER RATIO = SALES / AVERAGE

INVENTORY)

(Amt.in Cr.)

Inventory
Year Sales Average Inventory
Turnover Ratio
2017-18 91,941.50 2,701.69 3.4

2018-19 103,015.23 3,839.27 2.6

2019-20 74,304.07 3,400.91 2.1

2020-21 72,678.98 3,955.47 1.8

2021-22 89,353.96 5,882.85 1.5

Inventory Turnover Ratio

Inventory Turnover Ratio

Sales 43
Average Inventory Inventory Turnover Ratio
  INTERPRETATION:-

In the year of 2018 Inventory Turnover Ratio are 3.4 Cr., in

2019 it is 2.6 Cr., in 2020 it is 2.1 Cr., in 2021 it is 1.8 Cr., and
2022 it is 1.5 Cr.

PROPRIETARY RATIO

Shareholder’s Funds
Proprietary Ratio =--------------------------------------------------Total
Assets

(Amt.in Cr.)

Shareholder’s Proprietary
Year Total Assets Ratio
Fund

2017-18 38,960.95 16,474.47 1.8

2018-19 34,501.92 18,071.06 1.7

2019-20 34,467.84 15,141.49 2.9

2020-21 34,209.23 20,312.30 2.4

2021-22 30,294.04 25,917.70 2.1

44
 Proprietary Ratio

Proprietary Ratio

4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
2017-18 2018-19 2019-20 2020-21 2021-22

Shareholder’s Fund Total Assets Creditors Turnover Ratio

 INTERPRETATION:-

In the year of 2018 Proprietary Ratio are 1.8 Cr., in 2019 it is 1.7 Cr., in
2020 it is 2.9 Cr., in 2021 it is 2.4 Cr., and 2022 it is 2.1 Cr.

45
 CHAPTER NO. VI
FINDING & SUGGESTION

46
Net Working Capital :-
There is Increase in net working capital of company during all 5 years from 2018 to
2022.
Due to increase in current asset there is also increasing working capital.
1. Current Asset :-

The current assets are increasing for all five years

2. Current Liabilities :-

From above chart it is observed that short term borrowing is decreased in

2020-21 is 24.74 Cr.
3. Total Current Assets :-

From above chart it is observed that current liabilities is decreased in 2019-20

by 10,972.82 Cr.
4. Total Current Liabilities:-
Following the above chart 2017-18 & 2018-19 is increases by 16,474.47
and 18,071.06 but in 2019-20 is decreases by 15,141.49 then in 2020-21 &
2022 is also increase by 20,312.30 & 25,917.70

5. Current Ratio:-

From the above chart current ratio is stable in the year 2018 and 2019 is 1:2,
Then in the year 2020 To 2022 is increases by 1:3
6. Liquid / Quick / Acid Test Ratio :-

From the above chart Liquid Test Ratio is stable in the year 2018 and 2019 is
1:2, Then in the year 2020 To 2022 is increases by 1:3
7. Working Capital Turnover Ratio :-

The working capital turnover ratio in 2018, 2019, 2020, 2021 and
2022 is 6:9, 7:1, 6:7, 4:8 and 4:7 respectively. In year 2018 is stable but in year
2019 is increasing, then in year 2020 to 2022 is decreases.

47
SUGGESTIONS
1) Working Capital:-

The company need to continue the trend of increase in working capital

throughout in the future to meet its current liabilities.

2) Current Assets :-

The current assets increasing trend is good throughout the all five years.
The company can continue the plan for increase the current assets in the
future.

3) Current Liabilities :-

The most of the portion of current liabilities is covered by the trade payables. The
company need to decrease the trade payables in future.

4) Total Current Assets :-

The total current assets of the company are increasing throughout years of
study i.e. 2018 to 2022. The company need to stable the increase in current
assets of the company in future.

48
CHAPTER NO. VII
CONCLUSION

49
 CONCLUSION

The study on Working Capital Management conducted in Mahindra And

Mahindra Ltd. To analysis the financial position of the company. The
company's financial position is analyzed by using the tool of annual reports
from 2018 to 2022. The financial status of Mahindra And Mahindra Ltd is good.
In this project the various ratios are calculated are an indicator as to the fact that
the profitability of the firm. As of now, the company has maintain good
financial position by controlling the current liabilities & other expenses it has
suggested that the companyshould maintain the same performance in the future.
Companies working capital condition is very lowful because current assets
exceeds current liability. It is not satisfied. So I suggest company maintain the
balance between current assets & current liabilities

In conclusion of hypothesis the

(H0) null hypothesis is rejected as there is no significant relationship between
Mahindra & Mahindra working capital management and its financial
performance, Whereas
(H1) Alternative hypothesis is Accepted as There is a significant relationship
between Mahindra & Mahindra working capital management and its financial
performance.

50
CHAPTER VII
REFERENCES

51
52