The study was conducted at Parisons Roller Flour Mills Private Limited with an attempt to analyses working capital management of the company for a period of 5 years (2005 – 2009) and How to improve better performance of Working Capital Management in the company.
In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small, needs finance to carry on its operations and to achieve its targets. In fact, business is so indispensable today that it is rightly said to be the lifeblood of an enterprise. Different authorities have interpreted the term ‘finance’ differently. However there are three main approaches to the term finance:
So, in short, the main aims of the finance function are:
Acquiring sufficient funds.
Ensuring effective utilization of the funds.
Increasing profitability.
Working capital is vital to a business. They have to have funds available to pay their day to day bills, wages and so on. The working capital is made up of the current assets net of the current liabilities. It is very important to a company to manage its working capital carefully. This is particularly true where there is a substantial time lag between making the product and receiving the money for it. In this situation the company has paid out all the costs associated with making the product (labour, raw materials and so on) but not yet got any money for it. They must therefore ensure they have enough cash to do this.
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Working capital is how much in liquid assets that a company has on hand. Working capital is needed to pay for planned and unexpected expenses, meet the short-term obligations of the business, and to build the business. The accounting formula used to calculate the available working capital of a business is:-
Current Assets – Current Liabilities = Working Capital
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AIM AND OBJECTIVES OF THE STUDY
The study has covered the working capital at the Parisons Roller Flour Mills Private Limited from 2005 to 2009 years.
This study will help for applying the various methods for reducing working capital.
We can reduce the rate of working capital.
The study has conducted at Parisons Roller Flour Mills Private Limited a unit of under SSI. It covers the pattern of the working capital, the sources which bring down the rate of absenteeism in company.
The main objective of the study was to find out the overall working capital management of the company. The study can be helpful for the company to get a clear cut idea about the performance of the working capital, and can be make necessary changes to improve the working capital.
Parisons, a legacy of trust envisioned by late Janab A.V.Kunhipari in the 1950’s.From its humble beginnings in a small hamlet to a leading corporate entity in south India; the group recorded a phenomenal growth over the years. Thanks to the farsighted vision of the founder and the commitment of the younger generation to carry forward this glorious legacy.
The Parisons Group with their corporate base in Calicut Kerala is the largest manufacturers and marketers of two basic food commodities, Wheat Flour and Edible Oils in South India. Started in a humble way, PARISONS has reached a stage that it has grown into a formidable Omni-presence at every phase of the Agri Business cycle including Production, Processing and Distribution. Having made their presence felt in the food commodities market, Parisons diversified their activities into Rubber, Tea Plantations and Infrastructure Leasing.
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Financial management practices can be considered as providing a sound framework for asset management. Investment in fixed asset is an area of management focus and research activity. This situation can be contrasted with working capital management which until recently received relatively little attention from researchers. At the same time, the efficient management of working capital is likely to yield significant result and its neglect can be highly problematic. The literature on corporate failure contains a rich set of evidence, linking poor working capital management as an important factor in corporate collapse. Altman’s (1968) multivariate predictor model based on US companies includes working capital as one of the model components. Taffler (1977) using data drawn from the UK companies developed a four-variable model of failure prediction.
All the four variables include a variant on working capital as component. Parosh and Tamari (1978) developed a predictor model for Israeli companies and include the current ratio as one of the variables of the mode. Deloof (2004) also found that the way of working capital is managed as significant impact on the profitability of businesses.
Working capital management is also important from the perspective of sources and use of funds. We describe working capital as a spontaneous source and use of funds as it arises from trading activities based on a significant number of business transactions. In many companies the amount of funds committed to current asset can often exceed that of fixed assets.
Decisions relating to working capital and short-term financing are referred to as working capital management. These involve the relationship between a firm’s short-term assets and its short-term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses. A business can fail because of lack of cash than for want of profit. If a business is operating profitably, then it should generate cash surpluses. If it does not generate cash surpluses, then the business will eventually run out of cash and close down.
The Parisons Group is already a brand presence in South India, especially Kerala with an established market, distribution network and high brand equity for its products coming from its existing units namely:
Parisons Roller Flour Mills Private Limited
Yenkey Roller Flour Mills
Khemka Flour Mills Private Limited
Kodandaram Roller Flour Mills Private Limited
Parisons Milling Company Private Limited
Parisons Roller Flour Mills Pvt. Ltd was set up at West Hill, Calicut. Established in October 1992, the Mill began operations with an installed capacity of 80 MT per Day. The capacity was enhanced to 100MT and then to 120 MT per day as part of step-by-step expansion plans in 1995 and 1997 respectively.
This Rs.350 million companies located at West Hill, Calicut, with state-of-the-art facility, is presently producing 30,000 TPA of high quality wheat products like Maida, Sooji and Atta, Marketed under the premium brand name of ‘Parisons Liberty’, also dispensed in consumer packs, packed with high-tech automated packing facility. We at PARISONS believe that quality is of paramount importance in customer satisfaction. Their range of products is tested and quality checked by their in-house Labs pr