A Study of Working Capital Management

in Tata Steel
Dr. Yogesh Kumar Saxena
C-4, Adarsh Nagar, Meerut, Email : [email protected]

Abstract
A business organization should determine the exact requirement of working capital and maintain the same evely
through out the operating cycle. It is worth mentioning that a firm should have neither excess nor inadeuqate working
capital as both the phenomena of over capitalization and under capitalization of working capital generate adverse
effects on the profitability and liquidity of the concerned firm. Thus, some amount of cash is blocked in raw materials,
WIP, finished goods, and sundry debtors and day to day cash requirements. However some part of current assets may
be financed by the current liabilities also. Tata Steel Limited (formerly Tata Iron and Steel Company Limited (TISCO)) is
an Indian multinational steel-making company headquartered in Mumbai and a subsidiary of the Tata Group. The
study of working capital is based on tools like Trend Analysis, Ratio Analysis, Working Capital Leverage, Operating
Cycle etc. Further the study is based on last three years’ Annual Reports of TATA STEEL Pvt. Ltd. The study has been
conducted on working capital, ratio analysis, working capital leverage, working capital components which helped the
company to manage its working capital efficiency and affectively.
Key Words: Working capital; Steel; Current ratio, Working capital turnover ratio, Current assets turnover ratio, Debt
equity ratio, Debtors turnover ratio.

1. INTRODUCTION organisation. It needs sufficient finance to carry out

Management of working capital is one of the purchase of raw material; payment of day-to-day
most important functions of corporate operational expenses including salaries and wages,
management. Every organization, whether profit repairs and maintenance expenses etc. and funds to
oriented or not, irrespective of its size and nature of meet these expenses are collectively known as
business, needs requisite amount of working capital. working capital.
The efficient working capital management is the The importance of working capital in any
most crucial factor in maintaining survival, liquidity , industry needs no special empahsis. Working capital
solvency and profitability of the concerned business is considered to be life-giving force to an economic
entity. Working capital is necessary to finance
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How to Cite This Research Paper Fundamentally, there are two concpets of working
Saxena, Yogesh Kumar. A Study of Working Capital Management capital and they are (i) Gross Working Capital and (ii)
in Tata Steel. Journal of Commerce and Trade April 2017; 12 : 1;
Pp. 37–47. Net Working Capital. Gross Working Capital refers to

Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 37
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

financial resource remaining invested in current 5 The length of sales cycle during which finished
assets and Net Working Capital represents the gulf goods are to be kept waiting for sales.
between the Gross Working Capital and Current 5 The average period of credit allowed to
Liabilities or simply it is the difference between customers
Current Assets and Current Liabilities. 5 The amount of cash required to make advance
A business organization should determine payment.
the exact requirement of working capital and
maintain the same evely through out the operating 2. NEED OF WORKING CAPITAL
cycle. It is worth mentioning that a firm should have MANAGEMENT
neither excess nor inadeuqate working capital as The objective of financial decision making is
both the phenomena of over capitalization and to maximize the shareholders wealth. To achieve
under capitalization of working capital generate this, it is necessary to generate sufficient profits can
adverse effects on the profitability and liquidity of be earned will naturally depend upon the
the concerned firm. The effective working capital magnitude of the sales among other things but sales
necessitates careful handling of current assest to cannot convert into cash. There is a need for
ensure short-term liquidity and solvency of the working capital in the form of current assets to deal
business. To be more specific, neither under- with the problem arising out of lack of immediate
stocking nor overstocking of raw materials, careful realization of cash against goods sold. Therefore,
maintenance and trade off between credit receiving sufficient working capital is necessary to sustain
period from sundry creditors and credit allowing sales activity. Technically, this refers to operating or
period to sundry debtors (generally credit period cash cycle. If the company has certain amount of
from sundry creditors should be more than credit cash, it will be required for purchasing the raw
period allowed to sundry debtors and the gulf material may be available on credit basis. Then the
between these two periods is technically known as company has to spend some amount for labour and
float of comfort), maintenance of requisite each and factory overhead to convert the raw material in
bank balance including provision for contingency work in progress, and ultimately finished goods.
and planning both the short term and long term These finished goods convert in to sales on credit
investment in appropriate manner without allowing basis in the form of sundry debtors. Sundry debtors
any Cash Bank Balance to remain idle in the are converting into cash after expiry of credit
business are strictly required to be practiced by period. Thus, some amount of cash is blocked in raw
management. materials, WIP, finished goods, and sundry debtors
Factors requiring consideration while and day to day cash requirements. However some
estimating working capital part of current assets may be financed by the
5 The average credit period expected to be current liabilities also. The amount required to be
allowed by suppliers. invested in this current assets is always higher than
the funds available from current liabilities. This is
5 Total costs incurred on material, wages.
the precise reason why the needs for working
5 The length of time for which raw material are capital arise.
to remain in stores before they are issued for
production. 3. COMPANY PROFILE
5 The length of the production cycle (or) work in Tata Steel Limited (formerly Tata Iron and
process. Steel Company Limited (TISCO) is an Indian

38 Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

multinational steel-making company headquartered billion. On 11 December 2006, Tata

in Mumbai, Maharashtra, India, and a subsidiary of preemptively upped its offer to 500 pence
the Tata Group. It has an annual crude steel capacity per share, which was within hours trumped
of 28 million tonnes, and the largest private-sector by CSN's offer of 515 pence per share,
steel company in India measured by domestic valuing the deal at £4.9 billion. The Corus
production. Tata Steel has manufacturing operations board promptly recommended both the
in 26 countries, including Australia, China, India, the revised offers to its shareholders. On 31
Netherlands, Singapore, Thailand and the United January 2007, Tata Steel won their bid for
Kingdom, and employs around 80,500 people. Its Corus after offering 608 pence per share,
largest plant is located in Jamshedpur, Jharkhand. In valuing Corus at £6.7 billion ($12 billion).
2007 Tata Steel acquired the UK-based steel maker (iv) Rolling Mill Companies In Vietnam in 2007:
Corus which was the largest international Tata Steel through its wholly owned
acquisition by an Indian company till that date. Singapore subsidiary, NatSteel Asia Pte Ltd,
It was ranked 471st in the 2013 Fortune acquired controlling stake in two rolling mill
companies located in Vietnam: Structure
Global 500 ranking of the world's biggest
Steel Engineering Pte Ltd (100 per cent
corporations. It was the seventh most valuable
stake) and Vinausteel Ltd (70 per cent stake).
Indian brand of 2013 as per Brand Finance.
The enterprise value for the acquisition was
(a) Acquisition By Tata Steel $41 million. With this acquisition, Tata Steel
(i) NatSteel in 2004: In August 2004, Tata Steel got hold of two rolling mills, a 250k tonnes
agreed to acquire the steel making per year bar/wire rod mill operated by SSE
operations of the Singapore based NatSteel Steel Ltd and a 180k tonnes per year
for S$486.4 million in cash. reinforcing bar mill operated by Vinau steel
Ltd.
(ii) Millennium Steel in 2005: Tata Steel
(b) Share Holding By Tata Steel
acquired a majority stake in the Thailand-
based steelmaker Millennium Steel for a As on 31 March 2016, Tata Group held 31.35 per
total cost of $130 million. It paid US$ 73 cent shares in Tata Steel. Over 1 million individual
shareholders hold approx. 21 per cent of its shares.
million to Siam Cement for a 40 per cent
Life Insurance Corporation of India is the largest
stake and offered to pay 1.13 baht per share
non-promoter shareholder in the company with
for another 25 per cent of the shares of
14.98 per cent shareholding.
other shareholders. Millennium Steel has
now been renamed to Tata Steel Thailand Table 1
and is headquartered in Bangkok.On March Shareholding
31, 2013, it held approx. 68 per cent shares Shareholders Shareholding
in the acquired company. Promoters : Tata Group 31.35%
(iii) Corus in 2007: On 20 October 2006, Tata companies
Steel signed a deal with Anglo-Dutch Insurance Companies 24.09%
company, Corus to buy 100 per cent stake at +Individual shareholders 21.06%
£4.3bn ($8.1 billion) at 455 pence per share. Foreign Institutional Investors 14.36%
On 19 November 2006, the Brazilian steel GDRs 01.86%
company Companhia-Siderúrgica- Nacional Others 07.28%
(CSN) launched a counter offer for Corus at Total 100.0%
475 pence per share, valuing it at £4.5
Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 39
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

(c) Major Competitor too few currents assets may incur shortages and
Tata Steel's major competitors include Arcelor difficulties in maintaining smooth operations.
Mittal, Essar Steel, JSW Steel, SAIL and VISA Steel. 5. FINDINGS
Table 2
4. RESEARCH METHODOLOGY
Statement Showing Changes in Working Capital
Data can be defined as the quantitative or Statement 2013 - 2014
qualitative values of a variable. Data is plural of Particular Mar 31st Mar 31st Working Capital
Datum which literally means to give or something 2013 2014 INC DEC
given. Data is thought to be the lowest unit of (in crore) (in crore)
information from which other measurements and Current Asset:
analysis can be done. Data can be numbers, images, Sundry Debtors 11512.44 14816.28 3303.84
Cash & Bank 6815.11 10892.66 4077.55 -
words, figures, facts or ideas. Data in itself cannot Balance 7.63 9.83 2.2 -
be understood and to get information from the data Interest 1715.11 1847.58 132.47 -
one must interpret it into meaningful information. Accrued On 16971.53 22213.66 5242.13 -
There are various methods of interpreting data. Investment -
Stores & Spare
Data sources are broadly classified into primary and
Parts
secondary data. Stock–in– trade
(a) Objectives of the Study TOTAL
CURRENT ASSET 37021.82 49780.01 12758.19 -
Study of the working capital management is
Current
important because unless the working capital is Liability:
managed effectively, monitored efficiently, planed Current Liability 23392.49 26671.06 3278.57 -
properly and reviewed periodically at regular Provisions 6594.16 7089.92 495.76 -
intervals to remove bottlenecks if any the company TOTAL
can not earn profits and increase its turnover. With CURRENT 29956.65 33760.98
this primary objective of the study, the following LIABILITY
further objectives are framed for a depth analysis. Working Capital 7065.17 16019.03 8953.86
Increase In
1. To study the working capital management of Working Capital 8953.86 8953.86
TATA STEEL Pvt. Ltd. TOTAL 16019.03 16019.03 8953.86
2. To study the liquidity position through various
Figure 1
working capital related ratios.
Current Assets & Current Liabilities for the Year
3. To study the way and means of working capital 2013-2014
finance of the of TATA STEEL Pvt. Ltd.
(b) Rationale of the Study 18000 16019.03

Working capital management implicates the 16000

administration of current assets as well as current 14000

liabilities. The scope of the study is identified after 12000

7065.17
and during the study is conducted. The study of 10000

8000
working capital is based on tools like trend Analysis,
6000
Ratio Analysis, working capital leverage, operating 4000
cycle etc. 2000

Further the study is based on last 3 years 0

2013
Annual Reports of TATA STEEL Pvt. Ltd. Even factors
2014
like competitor's analysis, industry analysis were not Working Capital
considered while preparing this project. Firms with
40 Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Interpretation (Figure 1) Interpretation (Figure 2)

The statement shows increase in working The statement shows decrease in working
capital which enables a firm to avail cash discount capital which signifies that company has to rely less
facilities offer to it by the suppliers. It also enables a on cash credit limit to be taken from the bank for the
firm to make prompt payment. Making prompt purpose of meeting its working capital requirements.
payment is a base to create and maintain goodwill. Table 4
Table 3 Statement Showing Changes in Working Capital
Statement Showing Changes in Working Capital Statement 2015-16
Statement 2014-15 Particular Mar 31st Mar 31st Working Capital
Particular Mar 31st Mar 31st Working Capital 2015 2016 INC DEC
2014 2015 (in crore) (crore)
INC DEC
(in crore) (in crore) Current Asset:
Current Asset: Current investment 1398.37 760.29 - 638.08
Current Cash & Bank Balance 9859.67 10798..81 939.14 -
3159.28 1398.37 - 1760.91
Other current assets 417.25 1478.50 1061.25 -
investments 10859.05 10801.58 - 57.47
Loan & Advances 3717.42 4060.54 343.12 -
Cash & Bank 14811.92 14878.48 66.56 - Inventories 25598.00 24091.19 - 15068.81
Balance 3547.18 3868.73 321.55 - Trade receivable 14878.48 13993.96 880.52
Trade receviable 10591.30 8538.08 - 2053.22 TOTAL CURRENT
Short term Loan 56.29 32.74 23.55 ASSET 55869.19 55183.29
& Advances
Current Liability:
Inventories
Current Liability 18779.01 19942.36 1163.35 -
Other current
assets Provisions 3476.19 2943.29 - 532.9
Short term 4699.08 8114.56 3415.48 -
TOTAL CURRENT 43025.02 39517.98 borrowings 20528.55 21778.84 1250.28 -
ASSET Trade payable
Current Liability: TOTAL CURRENT 47482.83 52779.05
Current Liability 15001.22 18860.99 3859.77 - LIABILITY
Provisions 3395.25 3370.05 - 25.2
Working Capital 8386.36 2404.24
Short term 3794.44 4699.08 904.64 -
borrowings Decrease In Working 5982.12 5982.12 -
18547.48 20617.86 2070.38 -
Capital
Trade payable
TOTAL 8386.36 8386.36 5982.12
TOTAL CURRENT
LIABILITY 40738.4 47547.98
Figure 3
Working Capital 2286.63 8030 5743.37
Current Assets & Current Liabilities for the
Increse In
Working Capital 5743.37 Year 2015-2016
TOTAL 8030 8030 5743.37
52779.05
Figure 2 53000

Current Assets & Current Liabilities 52000

for the Year 2014-2015 51000

9000 8030
50000

8000 49000 47482.83

7000
48000
6000

5000 47000

4000 2 2 8 6 .6 3
46000
3000
45000
2000

1000 44000

0 2015
2014
2016
2015
W orki ng Ca pi ta l Working Capital

Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 41
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Interpretation (Figure 3) Stock –in– trade 22213.66

Sundry Debtors 14816.28
The statement shows increase in working
Cash & Bank 10892.66 10801.58 10798..81
capital which enables a firm to avail cash discount
Other Current Assets 14878.48 1478.50
facilities offer to it by the suppliers. It also enables a
Stores & Spare Parts 1847.58
firm to make prompt payment. Making prompt
payment is a base to create and maintain goodwill. Current Investment 760.29
Table 5 Loan & Advances 3868.73 4060.54
Comparison Of Working Capital for the Year Interest Accrued 9.83
2014 - 2016 On Investment
Trade Receivable 14878.48 13993.96
2014 2015 2016 Total Current Assets 49780.01 39517.98 55183.29
W.C. INC/ W.C. INC/ % W.C. INC % Current Liability
DEC DEC /DEC Current Liability 26671.06 18860.99 19942.36
16019.03 - 8030 5743.37 1.39 8386.36 5982.12 1.39 Provisions 7089.92 3370.05 2943.29
Short term borrowing 8114.56 8114.56
Figure 4 Trade Payable 21778.84 21778.84
Comparison of Working Capital Total Current Liability 33760.98 47547.98 52779.05
for the Year 2014-2016 Working Capital 16019.03 -47547.98 12872.30

Figure 5
20000 WORKING CAPITAL
Working Capital
16019.03
15000

10000
8030
8386.36 50000
5000

0
2014 0
2015 2014 2015 2016
2016
2014 2015 2016 WorkingCAPITAL
WORKING Capital

Interpretation (Figure 4)
Interpretation (Figure 5)
The working capital of the company is
The working capital of the company is
positive this is because the current assets of the
positive this is because the current assets of the
company are more than the current liabilities of the
company are more than the current liabilities of the
company. It was observed that in the year 2014
company.
working capital was 16019.03, in 2015 it was
8030.00 and in 2016 it was 8386.36. It was observed that in the year 2014
working capital was 16019.03, in 2015 it was -
Table 6
47547.98 & in 2016 it was 12872.30.
Calculation of Woking Capital for the Year
2014 - 2016 6. CALCULATION OF RATIOS
Particulars 2014 2015 2016 (a) Current Ratio :
CURRENT ASSET
Inventories 8538.08 24091.19 Current Ratio = Current Assets/Current Liabilities

42 Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Table 7 Interpretation (Figure 6)

Current Liability 2014 2015 2016 Current ratio indicates the availability of
Current Liability 26671.06 18860.99 19942.36 current assets in rupees for every rupee of current
Provisions 7089.92 3370.05 2943.29 liability. This ratio reflects the financial stability of
Short term borrowing 8114.56 8114.56
the enterprise. The standard of the normal ratio is
2:1. Now if we analyze the three years data it can be
Trade Payable 21778.84 21778.84
predicted that it holds a declining position in the
Total Current Liability 33760.98 47547.98 52779.05
year 2014-2013 And it is seen that it holds a low
position than the standard one and the company is
Table 8
required to improve its position.
Particular 2014 2015 2016
(b) Working Capital Turnover Ratio
Current assets 17119.72 13991.72 17880.82
Current liabilities 33760.98 47547.98 52779.05 Working Capital Turnover Ratio = Net Sales/Working
Capital
Current ratio 5.07times 0.29 times 0.34 times

Table 10
Table 9
Particular 2014 2015 2016
Current Assets 2014 2015 2016
Net sales 121345.75 132899.70 134711.54
Inventories 8538.08 24091.19
Working capital 16019.03 47547.98 12872.30
Stock –in– trade 22213.66 W/c turnover ratio 0.13times 0.37times 0.09times
Sundry Debtors 14816.28
Cash & Bank 10892.66 10801.58 10798..81 Figure 7
Other Current Assets 14878.48 1478.50 (Working Capital Turnover Ratio)
Stores & Spare Parts 1847.58
Current Investment 760.29 0.4
0.35
Loan & Advances 3868.73 4060.54
0.3
Interest Accrued 9.83
0.25
On Investment
0.2
Trade Receivable 14878.48 13993.96
0.15
Total current Assets 17119.72 13991.72 17880.82 0.1
0.05

Figure 6 0
2014 2015 2016
Current Ratio
Current Ratio
Interpretation (Figure 7)
6
Here we can interpret that the working
5
capital turnover ratio is increasing because current
4
assets are decreasing over the current liabilities
3 therefore working capital decreasing from 2014 to
2 2016.
1 (c) Current Assets Turnover Ratio
0
2014
Current Assets Turnover Ratio = Sales/Current
2015
2016
Assets

Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 43
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Figure 8 Table 13
Current Assets Turnover Ratio Current Assets 2014 2015 2016
Inventories 8538.08 24091.19
0.14 Stock –in– trade 22213.66

0.12
Sundry Debtors 14816.28
Cash & Bank 10892.66 10801.58 10798..81
0.1
Other Current Assets 14878.48 1478.50
0.08
Stores & Spare Parts 1847.58
0.06
Current Investment 760.29
0.04 Loan & Advances 3868.73 4060.54
0.02 Interest Accrued
On Investment 9.83
0
2014 2015 2016
Trade Receivable 14878.48 13993.96
Total current Assets 17119.72 13991.72 17880.82
Interpretation (Figure 8)
We observed that the current asset turnover Figure 9
ratio is increasing because of increase in current Current Assets
Current Assets
assets and sales in 2014-16. 18000
16000
Table 11 14000
12000
Current Assets 2014 2015 2016
10000
Inventories 8538.08 24091.19 8000
6000
Stock –in– trade 22213.66 4000
Sundry Debtors 14816.28 2000
0
Cash & Bank 10892.66 10801.58 10798..81 2014
2015
Other Current 14878.48 1478.50 2016

Assets
Stores & Spare Parts 1847.58
Interpretation (Figure 9)
Current Investment 760.29
Here we observe that a current asset of the
Loan & Advances 3868.73 4060.54
company is decreasing in the year 2015 and
Interest Accrued
increasing in the year 2016.
On Investment 9.83
Trade Receivable 14878.48 13993.96 Table 14
Total current Assets 17119.72 13991.72 17880.82 Current Liability 2014 2015 2016
Current Liability 26671.06 18860.99 19942.36
Table 12 Provisions 7089.92 3370.05 2943.29

Particulars 2014 2015 2016 Short term borrowing 8114.56 8114.56

Sales 121345.75 132899.70 134711.54 Trade Payable 21778.84 21778.84

Current Assets 17119.72 13991.72 17880.82 Total Current liability 33760.98 47547.98 52779.05
Current Assets 0.14times 0.10times 0.13times
Turnover Ratio

44 Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Figure 10 Figure 11
Current Liabilities Debt Equity Ratio

60000
1
50000 0.9
40000 0.8

30000 0.7
0.6
20000
0.5
10000
0.4
0 0.3
2014
2015 0.2
2016 0.1
0
2014
Interpretation (Figure 10) 2015
2016
If we analyze the above table then we can
see that it follow an uneven trend. The important
component of current liabilities is sundry creditors Interpretation (Figure 11)
and other liabilities. This is liability for company so Debt equity ratio of the company is below 1
this should be less. When companies have minimum which is below the standard norms and hence the
liabilities it creates a better goodwill in market. High company has good financial position and less of
current liabilities indicate that company is using financial risk and insolvency.
credit facilities by creditors.
(e) Debtors Turnover Ratio
(d) Debt Equity Ratio :
Debtors Turnover Ratio = Credit sales/Debtor
Debt Equity Ratio = Long term liabilities/
Table 18
Shareholders fund
Particulars 2014 2015 2016
Table 15
Credit Sales 121345.75 35975.56 1,38,821.14
Particular 2014 2015 2016 Debtors 14816.28 14878.48 13,993.96
Long Term Debt 32079.04 45328.24 46857.62 Debtors Turnover 0.12times 0.14times 0.10times
Shareholder Equity 1136.74 43021.12 4172.24 Ratio
Debt Equity ratio 0.03times 0.95times 0.08times
Figure 12
Table 16 Debtors Turnover Ratio

Long term liabilities 2014 2015 2016

Unsecured loan 32079.04 45328.24 46857.62 0.14

Total 32079.04 45328.24 46857.62 0.12

0.1
Table 17
0.08

Shareholders’ Funds 2014 2015 2016

0.06
Share capital 958.54 971.41 971.41
0.04
Adv against warrents 178.20 - -
0.02
Reserves and surplus - 42049.71 33200.83
0
Total 1136.74 43021.12 4172.24 2014 2015 2016

Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 45
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

Table 19 Conclusions and recommendations are based on such

Abstract of Funds Flow ( 2013-14) limited data. The trend of last three year may or may
Sources of funds Amount Application of funds Amount not reflect the real working capital position of the
Increase in Working 8953.86 company
Capital (c) Limited Area
Also it was difficult to collect the data regarding the
Observation (Table 19) competitors and their financial information. Industry
The above shows that there has been figures were also difficult to get.
increase in working capital in the year 2013-14 (d) Type Data Used
because sources are increasing over uses of funds. This paper is completely based on secondary data
Table 20 collected from various sources like internet, books
Abstract of Funds Flow (2014 - 2015) etc.
Sources of funds Amount Application of funds Amount
8. CONCLUSION
Increase in 5743.37
Working Capital Working capital management is important
aspect of financial management. The study of
working capital management of TATA STEEL Pvt. Ltd.
Observation (Table 20)
has revealed that the current ratio was as per the
The above shows that there has been standard industrial practice but the liquidity position
increase in working capital in the year 2014 - 2015 of the company showed an increasing trend. The
because sources are decreasing over uses of funds. study has been conducted on working capital ratio
Table 21 analysis, working capital leverage, working capital
Abstract of Funds Flow ( 2015 - 2016) components which helped the company to manage
its working capital efficiency and affectively.
Sources of funds Amount Application of funds Amount
Decrease in Working 5982.12 (i) Working capital of the company was
Capital increasing and showing positive Working
capital per year. It shows good liquidity
Observation (Table 21) position.

The above shows that there has been (ii) Positive working capital indicates that
increase in working capital in the year 2015 -2016 company has the ability of payments of short
because sources are decreasing over uses of funds. terms liabilities.
(iii) Working capital increased because of
7. LIMITATIONS OF THE STUDY increment in the current assets is more than
Following limitations were encountered increase in the current liabilities.
while preparing this project:
(iv) Company's current assets were always more
(a) Limited Data than requirement it affect on profitability of
This paper has completed with annual reports; it just the company.
constitutes one part of data collection i.e. secondary.
(v) Current assets are more than current
There were limitations for primary data collection
liabilities indicate that company used long
because of confidentiality.
term funds for short term requirement, where
(b) Limited Period long term funds are most costly then short
This paper is based on three year annual reports. term funds.
46 Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687
 Dr. Yogesh Kumar Saxena : A Study of ... in Tata Steel

(vi) Current assets components shows sundry analysis of paper on study and analysis of working
debtors were the major part in current assets capital. Following are some suggestions that may be
it shows that the inefficient receivables put forth :
collection management. (i) Company should raise funds through short
(vii) In the year 2013-14 working capital increased term sources for short term requirement of
because decreased the expenses as funds, which comparatively economical as
manufacturing expenses and decrease the compare to long term funds.
price of raw material as increased in the (ii) Company should take control on debtor's
inflation rate. collection period which is major part of
current assets.
9. SUGGESTIONS
(iii) Company has to take control on cash balance
Suggestion can be use by the firm for the because cash is non earning assets and
betterment increased of the firm after study and increasing cost of funds.
l

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7. Gitman, Lawrence J., “Principles of Managerial Finance”, Harper & Row Publishers, New York.
8. Husband, Williams, H. and Dockeray, James, C., “Modern Corporation Finance”, Richard D. Irwin, Illiionis.
9. Man Mohan and Geol, S.N., “Principles of Management Accounting”, Sahitya Bhawan, Agra, 2000.
10. Mishra, R.K., “Problems of Working Capital (with Special Reference to Selected Public Undertakings in India)”,
Somaiya Publications Private Ltd., New Delhi.
11. Pandey, I.M., “Financial Management”, Vikas Publishing House Pvt. Ltd., Delhi.
12. Ramesh Gupta, “Inflation Accounting”, Tata McGraw Hill Publishing Co. Ltd., New Delhi.
13. S.K. Mishra, V.K. Puri, “Indian Economy”, Himalya Publishing House, Delhi.
14. Walker, E.W. and Baughn, W.H., “Financial Management and Policy”, New Delhi.
15. Yasaswy, N.J. “Finance for Non-Financial Executives”, Allied Publishers Pvt. Ltd., New Delhi.
PERIODICALS
v Annual Reports of TISCO
v Annual Reports of SAIL
v The Management Accountant-ICWAI
v The Chartered Accountant-ICAI
v The Chartered Secretary-ICSI

Journal of Commerce and Trade | April 2017 | Vol. XII | No. 1 | UGC Approved Journal No. 48687 47