Working Capital Management

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  • Topic: Inventory, Working capital, Cash conversion cycle
  • Pages : 34 (9719 words )
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  • Published : July 17, 2011
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A REPORT
ON

AT
CADILA HEALTHCARE LTD

Submitted By:
GURDIT SINGH KHALSA
10BSPHH010260
IBS HYDERABAD

A REPORT
ON
“THE STUDY OF WORKING CAPITAL MANAGEMENT”
By
GURDIT SINGH KHALSA
10BSPHH010260

A Report submitted in partial fulfillment of the requirements of MBA Program of the IBS Hyderabad

Distribution List:
Mr. Mukesh Savai : Deputy General Manager, CADILA HEALTHCARE LTD. Mr. T.Koti Reddy : Professor, IBS HYDERABAD

CADILA HEALTHCARE LTD.
13TH MAY 2011

Table of Contents
S No. PARTICULARS| PAGE NO.|
Executive summary| Iii|
1.Introduction| |
1.1 Purpose and scope of the project| 6|
1.2 Methodology| 7|
1.3 Limitation of study| 8|
1.4 Literature Review| 8|
2.Industry profile| |
2.1 The Global Pharma market| 9|
2.2 The Indian Pharma market| 9|
3.Ratio Analysis| 11|
4.Working capital management| 12|
5.Phase І : Net Operating Cycle| |
5.1 Operating cycle Ankleshwar unit| 13|
5.2 Operating cycle Dhabasa unit | 15|
5.3 Major API Companies| 16|
5.4 Operating cycle of API companies| 20|
6.Phase II : Inventory Management| 22|
6.1 Procurement Cycle| 24|
7.Phase III : Recievables Management| 25|
7.1 Distribution system| 26|
7.2 Credit Control Policy Cadila| 27|
8.Phase IV : Cash Management| 28|
8.1 Collection System| 29|
8.2 Fund Transfer System| 30|
9.Learnings| 34|
10.Recommendation| 35|
11.Conclusion| 35|
12.References| 36|
| |
ANNEXURE| |
13.Projected operating cycle ankleshwar| 30|
14.Balance sheet| 32|
15.Projected cost of equity| 31|
16.Projected WACC| 33|

LIST OF ILLUSTRATION
S.NO. PARTICULARS| PAGE NO.|
6. Procurement cycle| 25|
8. Distribution Channel| 27|
12. Procedure after collection| 29|

ABSTRACT

Working capital management refers to all management decisions and actions that ordinarily influence the size and effectiveness of the working capital. It is concerned with the most effective choice of working capital sources and the determination of the appropriate levels of the current assets and their use.The management of working capital involves managing inventories, accounts receivable and payable and cash. Working capital management entails short term decisions - generally, relating to the next one year period - which is "reversible". These decisions are therefore based on cash flows and / or profitability.

Cash conversion cycle as a management tool makes the inter-relatedness of decisions relating to inventories, accounts receivable and payable and cash explicitly. Because this number effectively corresponds to the time that the firm's cash is tied up in operations and unavailable for other activities, management generally aims at a low net count.

EXECUTIVE SUMMARY:-

Financial analysis is an aspect of the overall business finance function that involves examining historical data to gain information about the current and future and financial health of a company. The financial function in business organizations involves evaluating economic trends, setting financial policy and creating long range plans for business activities. For the smooth functioning of all the above functions, proper handling of cash is of utmost importance. So we can say that cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM). So the project undertaken by me at CADILA HEALTHCARE LIMITED is “THE STUDY OF WORKING CAPITAL MANAGEMENT” for the duration of 14 weeks. Working capital management refers to all management...
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