JOHNSON

WORKING CAPITAL MANAGEMENT
SHREE DEVI INSTITUTE OF TECHNOLOGY Page 1

1. INDUSTRY PROILE
Ayurveda is the 5000 years old Indian System of medicine. The term evolvedfrom
two words Ayur life and Veda means science .This system of medicine follows aholistic approach,
diagnosing not just the disease but the whole body constitution of the patient. Today Ayurveda is
gaining global popularity .The World Health Organizationrecognizes Ayurveda as an alternative
system of alternative system of medicines usedsafest system of medicines.Rejuvenation and
therapeutic procedure are unique to Ayurveda .This comprehensive,mul t i di s c i pl i nar y s ys t em
of medi c i ne of f er s s pec i al t i es l i ke pae di at r i c s , genet i c s gynaecology,
physiotherapy and rejuvenation.Ayurveda was predominant in Kerala and most of the other parts of
the India for a long period .But newly developed fear of the side effects and long term
ill effects of allopathic medicines coupled with inefficiency to compact a large number
of diseaseshave brought the attention not only Kerala and India but whole world to the
biologically based medicines. Now it is the resurrection time of the science. A large number of
neworganizations i n India are entering i n the area of Ayurvedic medicines
manufacturing.The curiosity of the whole world is to high and research and development taking
placeall over the world in this science. Companies like Dabur and Himalaya are as strong asany
allopathic medicine company. A large number of new organizations i n India are entering
in the area of Ayurvedic medicines manufacturing. The curiosity of the wholeis too high and the
research and development taking place all over the world in the areaof this science. Companies
like Dabur and Himalaya are as strong as any allopathicmedi cine company. A large
number of allopathi c medicine manufacturing has startedincl udi ng Ayurvedic
medicines in this production l ist. Nagarj una this smal l of Keralacell Ayurveda
medicines to a tune of 20% of the total allopathic sales with number of doctors
institutions and medical shops not favourably comparable like this .The Indian system known as
Ayurveda originated as far back as 2000BC. Ayurveda literally means The science of life.
Actually it implies two connected ideas-the Science of Life and the art of living. Ayurveda is
more than a system of medicine. Its a way of life encompassing science, religion and
philosophy that enhances well being, increases longevity and ultimately brings self
realization.
Ayurveda unlike Allopathy or Homeopathy does not swear by any particular of cure.
Ayurvedic treatment covers all the principle of Allopathy, Homeopathy and Naturopathy.
Ayurveda is the original contribution of body, mind, and soul. Pancha, Thrigunas,
Thridoshas, Dhathus, Malas, Agnikoshtam, and Prakrithi are known as basics of Ayurveda.


Ayurveda= Ayur+ Veda, i.e. = (Time of Birth to Death)+ (Knowledge of learning).
According to Ayurveda, there are three basic constituent complexes in the physiological
system called as doshas .They are vayu or vata, pitta and kapha or sleshma. These terms,
though literally they mean wind, like and phlegm respectively; between them, they sustain
the whole body metabolism.
Good health implies an ideas balance between the three-doshic factors. No true mono-
doshic individual exists. It is the main predominance of any particular dosha, which marks
the constitutional type of men. On this basis human are individual into three psychosomatic
types, namely the Vatapakriti, the Pittaprakriti, and the Kaphaprakriti.
The Ayurvedic physician has to evaluate the doshic pictures of the patient and find out
what type of Tridosha predominates and set right the imbalance by prescribing drugs, diets
and practices. Ayurvedic treatment is divided into eight segments such as Kaya chikitsa
(General medicine), Bala chikitsa (Paediatricts), Graha chikitsa (Psychatry), Salya chikitsa
(Surgery), Urdwanga chikitsa (ENT, Ophthalmology), Damshtra chikitsa (Toxicology) Jara
chikitsa (Geriatrics) and Vrisha chikitsa (Aphrodisiac treatment). Ayurveda offers method of
the preservation and promotion of good health.
Ayurveda was looked upon with contempt during the 500 years of foreign domination in
India. But the spirit of this life science survived. Today Ayurveda has got attention of all
people around the world.
The major credit for renewing and spreading the message in the 20
th
century goes to
Kottakal Arya Vaidya Sala and its founder Vaidyanathan P.S.Varier who is the pioneer of
Ayurveda in the south. He is the first person in south India to recognize the treatment of
patients under the ayurvedic system. He pioneered the production of Ayurvedic medicines on
modern times and ensured that ayurveda occupied the right place among the countrys major
medical system. Ayurveda can be promoted as a complete alternative system of medicine in
the world as it is the only one which is well documented and coded and has the potential for
further development.
Ayurveda can be promoted as a complete alternative system of medicines in the world as
it is the only one which is well documented and condition and has the potential for further
development. In order to promote Ayurveda as a system, there should be adequate


infrastructure. The total herbal drug market worldwide is approximately Rs.1, 67,000 Crores
of which Indian exports account for only 0.16%.
India has the potentials to corner to substantial share of the market by promoting
Ayurveda as a system of medicine rather than a food supplement alone. The centre has
already introduced Good marketing practice for drug manufacturing. The over increasing
demand for drugs, over the counter products has compelled the centre to keep and struck vigil
on the quality of these and observes good laboratory practice. Ayurvedic medicines are
produced by several thousand of companies. In India though most of them are quite small,
numerous neighborhood pharmacies make their own remedies.
The key suppliers of Ayurveda are Dabur India Ltd, Sri Bavdyanath Ayurvedic Bhavan
Ltd, and Zandu Pharmaceutical, and all put together constitute about 85% of Indias domestic
market. The other are Himalaya Drug company, Charak pharmaceuticals, Vicco Laboratories,
Emami group Aimil Pharmaceuticals Ltd,Viswakeerthi Ayurvedic Pharmacy and soon.
Exports of Ayurvedic Medicines have reached a value of 100 million dollars a year.
(About 10% the value of the entire Ayurvedic Industry in India). About 60% of this crude
herbs (to the manufactured into products outside India) and about 30% is finished product
shipped abroad for direct sales to consumers , and the remaining 10% is partially prepared
products to be finished in the foreign countries.

2. COMPANY PROFILE
Nagarjuna Herbal Concentrates Limited established in the year 1989 Nagarjuna Herbal
Concentrates Limited has one basic mission that is restoration of Ayurveda to its original
glory. It was specifically setup with the mission to contribute to this resurgence in a creative
manner in Kerala and elsewhere. By pursuing this path with single minded devotion, the
company hopes to become the worthy inheritor of a priceless heritage. Even a casual, glance
at the track record of the company would show that company is well on its way to achieve its
mission and going beyond.
Within a short span of 20 years (commercial production commenced in 1989), Nagarjuna
has become the second largest Ayurvedic house in Kerala with a turnover of 27crores,


continuously making profit since 1991 and declaring dividend regularly for the last 16 years.
The companys loan and interest payments are so prompt that it has won the admiration of the
financial institutions that support it.
DIFFERENT PHASES OF DEVELOPEMENT
Nagarjuna Ayurvedic Group is established in the year 1989 in Kerala. The manufacturing
facilities are ISO and GMP certified and the Quality Control Laboratory and the R&D Centre
is approved by various governmental bodies like DSIR, AYUSH. Nagarjuna Ayurvedic
Group is one of the leaders in health care sector which took effective steps to restore the
importance of Ayurveda as the mainstream health management system. To succeed in its
vision to become the best solution provider in health care through Ayurveda, the group has
divided its activities into different organizations, which are follows;
Nagarjuna Herbal Concentrates Ltd:- Involved in products manufacturing and
marketing
Nagarjuna Ayurvedic centre Ltd:- Involved in providing Ayurvedic Treatment
services
Nagarjuna Research Foundation:- Involved in Research and popularization of
Ayurveda.
Nagarjuna Social Service Society:- Involved in the promotion of medicinal plant
cultivation
Nagarjuna Ayurvedic Institute:- Involved in providing Ayurvedic education and
training
Nagarjuna Ayuervedic Retreat Ltd:- Involved in providing holistic Ayurvedic
Treatments.
a. Background and inception of the company

Nagarjuna Herbal Concentrates Ltd is a public Limited company engaged in the
production and marketing as all kinds of Ayurvedic medicines and popularize in the
indigenous system of medicines in our country located at Kalayanthani near Thodupuzha in


Idukki District of Kerala. The construction of the company started in the year 1985 and the
commercial production commenced in 1989. Within short span of 10 year Nagarjuna has
become the second Ayurvedic house in Kerala with the turnover of 11.5 crores.

Nagarjuna Herbal Concentrates Ltd is also first corporate house in Ayurvedic sector in
Kerala, providing employment to over 1500 person directly or indirectly. Its products
numbering over 500 are distributed all over Kerala through a network of 650 franchisees and
hundreds of stockiest. With the help of these, the medicines of Nagarjuna are available at
every corner of the state. For Nagarjuna, traditional values and strict adherence to ancient
Ayurvedic texts is the law. And at its the same time production facilities are streamlined to
incorporate modern technology to have the benefits of its accuracy, hygiene and speeding
mass production supervised by experts in Ayurvedic wisdom as well as by knowledgeable
engineers. An innovative research and development division with Rs. 70 lacks Research
Laboratory and ever vigilant quality control section ensure that Nagarjuna products are good
and true to the Ayurvedic stipulation.

The production facilities are also streamlined to incorporate modern technology to have
the benefits of its accuracy, hygiene and speed in mass production supervised by experts in
Ayuervedic wisdom as well as by acknowledgeable Engineers.

It spread over its franchisees to outside Kerala, Southern States like Karnataka, Andhra
Pradesh, Tamil Nadu and the city of Mumbai. Nearly 20 franchisees with services of doctors
and quality medicines are already operation Mumbai suburbs. Last years they started to
export their products to countries such as UAE, UK, Malaysia and Hungary.

Ayurveda treatment is another area, to which Nagarjuna has paid special attention.
Ayurveda is healthy for rejuvenation and the care for the risk.

Presently company is working in three shifts. Once the working hours are 8 am to 4 pm
(first shift), 4 pm to 12 am (second shift), and 12 am to 8 pm (third shift) at present there are
350 direct employee and 1000 indirect employees. The industrial development Bank of India,
Kerala Financial Corporation and Kerala State Industrial Development Corporation has
financial interest in the company.



b. Nature of the business carried
The company is mainly dealing with Ayurvedic products and services. Manufacturing of
various Ayurvedic products and development of new medicines and treatment methods which
are suitable and without any side effects to the costumers. The company provides assistance
to all its group institutions and the institutions in the same field with its products and other
services.
c. VISION, MISSION AND QUALITY POLICY

Corporate vision
To be the best solution provider in the health care through Ayurveda.
Take actions that strengthen the company and inspire the best in other ( by setting
an example in relationships, integrity, honesty, humility and hard work

Quality policy
Committed to quality of the product
Restore Ayurveda as a mainstream health management system. Achieve a
sustained organizational growth.
Corporate Mission
Restoration of Ayurveda to its original glory.
d. Product/service profile

Nagarjuna is an oldest follower of the Ayurvedic tradition. But modern technology has its
own contributions to be made by way of hygiene, accuracy and speed. So the company
manufacturing operations has been mechanized to a large extend supervision of doctors and
health scientists and also Nagarjuna made a determined in to the area of patent formulations.

Now the company manufactures over 500 traditional Ayurvedic drugs, and more than 65
patented medicines. Nagarjuna categorized their products into 3 groups;
General


General medicines are sold by the agencies such as Kashayam, Arishtam, Thailom,
Kuzhambu
Ethical property medicines
Ethical property medicines are prescribed by the allopathic doctors and sold by
dealers. Such as allergen Granules, gas on syrups, natural tablets etc.
Over the counter
Over the counter medicines can be used without the prescription of the doctors such
as Chyavanaprasham, Honey, Hair oil etc
General
In general, the main categories of medicines are;
Arishtams
Asavams
Choornam
Gulikas
Kashayam
Kuzhambu
Lehyam
Lepam
Thailam
Keram
Avarthy
A) ARISHTAMS
These are fermented doctors in medicines prepared adding honey, jaggery, Sugar, and
the power of some medicines including spices. The preparation have alcohol content within a
range of 6-10% which a generated because of fermentation itself. Some of the arishtams area

1) Abhayarishtam
2) Amrutharishtam


3) Ashokarishtam
4) Balarishtam
5) Dasamoolarishtam
6) Devadaarrarishtam
7) Draaksharishtam
8) Jeerakaadyaarishtam
9) Paarthadhyarishtam
10) Vausaarushtam
B) ASAVAMS
These are fine powders of herbal medicines. These types are manufactured only for
internal use. Some of the examples are;
1) Asha Choornam
2) Aripathi Choornam
3) Daaimaashtakan Choornam
4) Awieuthara Choornam
5) Karpooradi Choornam
6) Rasnadi Choornam etc
C) GHRUTHAMS
Ghruthams are medicated ghee. Ghee in medicated by adding decoction, powder, juice
etc, and in processed till the ghee become medicated and water free.
1) Amruthaprasa Ghruthams
2) Asoka Ghrutham
3) Brahmi Ghrutham
4) Guluguluthikathak Ghrutham
5) Jaathyaadi Ghrutham
6) Soornadi Ghrutham
7) Sakha Prasavada Ghrutham
D) GULIKAS (TABLETS)


These are pills or tablets common mode use. Grind and mix the tablets in suitable kashaya
or any other additive

1) Dhanwantharam Gulika
2) Gopichandanaadi Gulika
3) Kaanchanaarayulgulu Gulika
4) Marma Gulika
5) Siva Gulika
6) Vaayu Gulika etc
E) KASHAYAMS
Disintegrated drays concentrated and extracted in to water. The drugs are boiled in water
and are concentrated.

1) Amruthotharan Kashayam
2) Ashtaragan Kashayam
3) Bakjeerakkadi Kashayam
4) Dasanoola Kadothrayan Kashayam
5) Dhanwantharam Kashayam
6) Rasonaadi Kashayam
7) Solomaaram Kashayam
F) KUZHAMBU
There are only for external application, unique to Kerala, Oil base of medicines for
external application in substitutes by a mixture of same oil, ghee and castor oil.
1) Dhanwantharam Kuzhambu
2) Kottamchukkadi Kuzhambu
3) Pinda Kuzhambu
4) Sahacharaadi Kuzhambu etc
G) LEHYAM


Lehyams are semisolid preparation of drugs prepared with the addition of jaggery or
sugar candy and boiled with the prescribed liquid and five powder of drugs, till the cored
consistence in obtained:
1) Agasthyarasayanam
2) Ajamamsarasayanam
3) Chyaranaprasam
4) Brahmarasayanam
5) Kastooryaadi lehyam
6) Sokumaralehyam
H) LEPAMS
1) Kumkumadi lepam
2) Rasothammadi lepam
3) Mahathikthaka lepam
4) Elaneerkuzhambo
I) THAILAMS
These are medicated oil; decoction juice, milk etc are added to oil line same oil,
coconut oil, or castor oil and heated with powdered raw drugs, until the process, the
medicinal extracts of the raw drugs make the oil medicated.

1) Asanavilwaadi Thailam
2) Balaa Thailam
3) Balaaswagundhaadi Thailam
4) Brahmi Thailam
5) Chandannadi Thailam
6) Neelibhrugaadi Thailam
7) Narraayana Thailam

J) KERAM

These are medicated oil.



1) Asanelaadi Keram
2) Chempuruthyaadi Keram
3) Durwaadi Keram
4) Elaadi Keram
5) Jaathyaadi Keram etc

K) AVARTHY

These are also comes under the category of medicated oil. Here the selected quantity
of oil is being medicated by adding medicines repeatedly. The process of medication is
repeated to 7, 14, 21, 41, of 101 times. This enhances the potency of oil.

1) Dhanwantharam Avarthy
2) Ksheerabala Avarthy
3) Sahacharaadi Avarthy

Patents Proprietary Medicines
Nagarjuna developed a basket of proprietary/patented products. These products are in
convenient modern forms such as capsules, tablets, syrups and ointments.
1) Cardostab Tablets
Effective in hypertension and associated symptoms
2) Halin Drops
Effective in common cold, nasal congestion, sinusitis
3) Haematone Syrup
Effective in anemia and other deficiency condition
4) Gason Syrup


Effective in Flatulence, Indigestion
5) Natural Tablets
Effective in acidity and associated problem
6) Nagarjuna Eladasamoola Lehyam
For all kinds of cough, sore throat and dyspnoea.
7) Smrithi Granules
It improve the normal brain function, excellent in improving memory, grasping power,
intelligence thinking power especially in children
8) Thalees Pathraadi Tablets
Effective for cough, distaste, spruce

OTC (Over the Counter)
TABLE NO: 1
Name Packing
Ayurvedic Tooth Powder 50g
Chyavanaprasam 250,500,1kg
Dandruff Hair Oil 100 ml
Digest Drops 25ml
Kerapookuladi Lehyam 75,15g
Kids Oil 100ml


Nagarjuna Agmark Honey 50,100,200,gm
Nagarjuna Ayurvedic Soap
Nagarjuna Dahasamani 50g
Nagarjuna Snana Choornam 50g
Nagarjuna Thalipodi 50g
Neelibhringaddi Keram 100ml
Special Eladasamoola Lehyam
(40gm*21)
1 jar
Tusker Balm 10gm

e. Areas of operation
World scenario
Ayurveda gained recognition in the western world as medical scholars researched.
The united states of American expands some of its $123 million budget on Ayurvedic
medicine research. National institute of Ayurvedic Medicine, established by Dr. Scott
Gerson, is an example of a research institute carried out research into Ayurvedic practices.
The Chinese pilgrim Fa Hsian wrote about the health care system of the Gupta Empire
(320-550CE) and in the process described the institutional approach of Indian medicine
which is also visible in the works of Charaka, mentions a clinic. Madhava (700 CE), Sar
Indian scenario
Ayurveda is one of the greatest gifts of the sages of ancient India to Mankind. Ayurveda
aims at the physical, mental and spiritual well being, mind and soul. India is known
worldwide for its ayurveda treatment. There are various centers across the Country, which
gives an authentic ayurveda treatment. Ayurveda traces its origins to the Vedas the
Atharvaveda in particular is connected to religion and mythology.
Vedas are the earliest literature available in India. Ayurveda is considered a branch of
adharvaveda, one among the four Vedas, Rig, Yajur, Sama, and dharma. In 1970, the Indian
Medical Central Act was passed by the Parliament of India, which aims to standardize


qualifications for Ayurveda and provide institutions for its study and research centers. In
India over 100 colleges offers degrees in traditional Ayurvedic medicine.
Ayuevedic treatment is divided into eight segments such as Kaya Chikista (general
medicine), Bala chikitsa (pediatrics), Graham chikistsa (psychiatry), salya Chikitsa (surgery)
urdgwanga (ENT), Damshtra chikitsa (toxicology),Jara Chikista (geriatrics).Ayurvdea
promotes good health of a human body.
State scenario
State is the most famous destination for Ayurvedic treatment in India. So many tourists
are treated in this medicine. Then this treatment mainly comprises of powders, tablets, oil etc.
These Medicines prepared from natural herbs, plants and minerals. Panchkarma therapy is
also used as a treatment in many diseases.
The major credit for renewing and spreading the message in the 20
th
century goes to the
Kottakal Arya Vaidya Sala and its founder Vaidyanathan P.S Varier called the Pioneer of
Ayurveda in the south. He is the first man in south India to organize the Ayurvedic
Treatments.
So many centers are created in this purpose maintained, should be adequate Infrastructure
for research and development, and new product development ensuring good quality products.
Then Ayurvedic treatment provided good health of a human body and most useful & helpful.

f. Ownership pattern
Authorized share capital - Rs. 50000000
Issued, subscribed & paid up Capital - Rs. 26480000
Earnings per share - Rs. 1.68
Reserves and surplus - Rs. 30218000(Of the above shares 180772 shares has been issued
as fully paid up bonus shares)
Key personnel:


Managing director- V.G. Devdas Namboodiripad
Directors - P.S.Vijayakumar
- P.P.Namboodiri
- Leena Devdas
- V.G.Jathaveedan
- K. Rajan
- Vaidyabhooshanam K. Raghavan Thirumulpad
Bankers - State Bank of Travancore,
SME Branch Kalamassery
g. Competitors information
The major competitors of Nagarjuna Ayurvedic group are the following
companies:-
I. Kottakkal aryavaidysala
II. Ashtavaidyan Thaikkattu mooss Vaidyaratnam Oushadhasala
III. Pankaja Kasthuri herbal India limited

IV. Dhanwanthari vaidyasala
V. SD Pharmacy
VI. Oushadi

h. Infrastructural facilities
The company is set up in about 8 acres of land. There are three blocks of building to
run the business. It does not have its own medical plans garden. But they provided necessary
seeds to the local people and let them grow the plants in their own garden and producing
from them. It has various types of plant & machines to process the various medicines. The
various types of machines and tools that are used to develop the products are:


Pulp razor
Drug boiler
Pans open pans and close pans
Fermentation tanks
Filling machines
Evaporator
Pressing machines
Tablet ting and capsuling machine

i. Achievements/Awards
Nagarjuna Herbal Concentrates Ltd is also the first corporate house in the Ayurvedic
sector in Kerala. It also has the certification of ISO 9007:2000 and the GMP (Goods
manufacturing Practices) certification. It has also got The Green Channel Award from the
Tourism department
Canteen: The canteen facility is provided to employees. The canteen runs on contract basis
with the required terms and conditions. All the employees are provided with free canteen
facility and for this purpose there are some charges which they have to pay per year.
Health: The premises of the company are kept clean. Accumulation of dirt and refuse is
removed daily. All the machines and equipment used are cleaned regularly.
Ventilation and temperature: The Company is well ventilated and free circulation of free
and fresh air ensured. There are measuring instruments to measure the temperature as most of
the part performed with the help of heat.
Lighting: Every part of the work place is provided with lighting and artificial lighting is
present.
Drinking water: Clean and cool drinking water is provided to employees of the company.
The water provided is purified only.
Toilet facilities: Latrine and urinal accommodation is provided and maintained cleanly and
provided separate latrines for men and women.



j. Work flow model
FIGURE NO: 1

Procurement of Raw material
Powdering
Warehousing


k. Future growth and prospects
Company will continue to focus more into providing quality Ayurvedic Treatment.
The infrastructure and other are being modernized to meet the changing demands. The
demand for quality Ayurvedic Treatment is increased and the most interesting factor is that,
people from abroad is showing involving in Ayurvedic Treatment .Company is taking well
efforts to capitalize this Global Interest in Ayurvedic by providing quality Treatments. This
will help the company to grow both in terms of turnover and profits. The company may also
introduce certain quality products such products are developed by the Research and
Development Section of the company .The company may introduce highly promotional
strategy in Ayurveda. It will influence the more consumers in the world wide. The company
may develop various activities like advertisement, free medical camp, seminars etc. The
company has the following plans to be implemented for the future growth and prospectus:-
1) Continuation of new product development and form change of existing products
2) Standardization of quality parameters of existing range of products
3) Development of new products range for selected diseases and general healthcare
4) Collaborative research with renowned institutions
Processing
Quality certificate from controller
Packing
Dispatching


5) GLP accreditation

MCKINSEYS 7S FRAMEWORK WITH SPECIAL REFERENCE TO
ORGANIZATIONAL STUDY
Its all very well devising a strategy, but you have to be able to implement if its to do
any good. The seven S frame works first appeared in The Art of Japanese management by
Richard Pascal and Antony Athos in 1981. They had been looking at how Japanese industry
had been so successful, at around the same time that Tom Peters and Robert waterman were
exploring what made a company excellent. The Seven S model was born at a meeting of the
four authors in 1978. It went on to appear in In search of excellence by Peters and
Waterman, and was taken up as a basic tool by the global management consultancy
Mckensey: Its sometimes known as the Mckensys 7Smodel.
FIGURE NO: 2


SOFT Ss
The 4Ss across the bottom of the model are less tangible, more cultural in nature, and
were termed as soft Ss by Mckensey:
Skills: The capabilities and competencies that exist within the company.
Shared values: The values and beliefs the company has. Ultimately they will guide
employees towards valued behavior.
Staff: The companys human resources and how they are developed, trained and motivated.
Style: The leadership approach of top management and the companys overall operating
approach.
HARD Ss
The three Ss across the top of the model are described as Hard Ss: The directions
and scope of the company over the long term
Strategy: The directions and scope of the company over the long term
Structure: The basic organization of the company, its departments, reporting lines, areas of
expertise and responsibility and how they are inter- related.
Systems: The Formal and informal procedures that govern daily activities covering
everything from management information system to the systems at the point of contact with
the customers.
Skill:


A skill is the ability, knowledge and understanding to accomplish a task. Skills may be
defined as what the company does best that distinctive capabilities and competencies that
reside in the organization. The major skill that the employees in the organization required is
experience. The workers should have reasonable theoretical as well as practical knowledge in
the specified fields
Style:
The company has various departments for their functioning. The activities of marketing
departments are de-centralized manner whereas distribution is through various depots which
consist of 2-3 districts of the state. Rest of all the departments activities is centralized. The
employees in the process of manufacturing are skilled to their own operation. The supervisors
in the various levels and field are having high attitude to motivate the employees to achieve
the organizational goals. The middle level and the top level management are highly dedicated
and they can coordinate the various functions. The styles used by the NHCL area) Top down
approach b) Authoritarian approach
a) Top down approach
It is a style of decision making where all the decisions flow from top management to
lower level workers. In this mill each and every decision is taken by management only. The
worker should not be involved in taking decisions. The decision taken by the top
management in day-to-day operation of the mill is: Salary increment, infrastructure facilities,
uniform decision etc. In certain rare cases management using bottom-up style. The workers
can give their suggestions.
b) Authoritarian approach
The NHCL follows the authoritarian style of management. The management is all
powerful in the mill. The centralized decision making process follows in the mill
o Conducting of the meeting
o Mills rules and regulation
o Deciding of auditor
Strategy:


The company has various strategies which are formulated on the basis of the vision,
mission of the company. The main strategy is to carry on the business in such a way where
the customers and employees are kept as the supreme and satisfied. NHCLs strategy is to
attain total competence in their quality products has served as the building block for creating
a good brand. NHCL is focusing on the well relationship with the employees. The route the
organization has to choose for its future growth, a plan that the organization formulates to
gain a substantial competitive advantage. The management is not only targeting the Indian
market but also the foreign market. They are also thinking of increasing the sales within the
country. Strategies are introduced to compete with the new upcoming competitions because
of the globalization. New marketing strategies are being introduced by them
o Cost cutting strategies
o Operational excellence
o Product innovation
o Customer intimacy
System:
All the departments in the company have their own information systems and are fully
computerized. Each and every department has its own systems and the company have a
common management information system. The company has a separate IT department for
setting up new and effective information system for different levels
Structure:
FIGURE NO: 3

CHIEF EXECUTIVE
OFFICER
DIRECTOR
MANAGING DIRECTOR
ASST.GENERAL MANAGER
(FINANCE)
F
SR.OFFICER (LEGAL)
DEPUTY MANAGER
(R&D)
DEPUTY MANAGER
(AGRL)



Staff:
The company has around 500 workers which are employed to carry out the various
works of the company. Out of these 500 around 200 people is management staff an direst of
them are lower level workers. The company has got a lot number of dedicated workers and
they have been provided with attractive salary packages. In general, the average salary
package is Rs. 10,000 for administrative staff and Rs.8500 for lower level workers.
Shared values:
Nagarjuna herbals concentrate limited has got its own prestige and status among its
customers and competitors. Nagarjuna group stands the second largest company in Kerala in
the field of Ayurvedic products. The company has got a very nice picture among the
costumers. It makes the advantage of the market leader and social beneficiary for the state. It
SR.OFFICER (P&AL)
PURCHASE MANAGER
QA MANAGER
SR. DEPUTY. M ANAGER (PL)
MAINTANENCE
OFFICER
DEPUTY MANAGER
(AY)
R.S.M (GENERIC)
EXPORTS MANAGER
ETHICAL MANAGER
OFFICER (QSM)
ASST. MANAGER
(CS)
ASST. SALES MANAGER
(OTC)
ASST. GENERAL MANAGER
(SALES)


has its own contribution in helping Kerala in the promotion of the tourism. The workers are
more loyal to the company. The basic philosophy of Corporate Governance at NHCL is to
achieve business excellence and to create and enhance the value for its Customers,
Employees and Business Associates and thereby to make a significant contribution to the
Economy. The company endeavors to achieve the highest level of transparency,
accountability, integrity and responsibility by following the best practices in corporate
Governance

SWOT ANALYSIS
Strength:
o Since Nagarjuna products are manufactured as per strict guidelines, they are able to
make high quality products.
o Company has a policy of continuous development and innovation in products that
enables it to maintain high marketing share.
o Frequent meeting between the owners and employers helps to build a good employer-
employee relationship.
o Efficient R&D departments to develop new and efficient products.
o Excellent brand image and good costumer relationship
o Wide variety of products


o Good relationship between management and trade union
o Good customer satisfaction index
Weakness:
o Lack of enough advertisement
o Low number of production and manufacturing units
o Lack of enough medicinal gardens
Opportunities:
o Growing market demand.
o Expanding its distribution area
o Link with tourism area
o Development of its own medicinal plants garden
o Scope for innovation of Research & Development
Threats:
o Transportation problems.
o Entry of duplicates
o Scarcity of raw materials
o Cut throat Competition (e.g.: Kottakkal, Oushadhi, Dhanwandhari)
o Customers may substitute other products
FINANCIAL STATEMENTS
TABLE NO: 2
Balance sheets of NHCL for the period of 2007-08 to 2010-11
Particulars 2007 2008 2009 2010 2011
Sources of fund:-
1. Shareholders fund
Share capital

26480000

26480000

26480000

26480000

26480000


2. Reserves& surplus 30217881 28522954 20927322 23003964 27388432
3. Loan funds:-
Secured loan
Unsecured loan

59813088
10241000

77842137
10192000

896361876
11623000

85666296
9363000

82571540
12947000
4. Tax liability 5450000 3405000 1080000 512700 3360800
Total 132201914 146442091 149746509 145025960 152747772
Application of funds
1. Fixed assets:-
Gross block

77774727

79249335

80374535

81802052

87828405
(-) Depreciation 35525954 38171804 41201025 43599657 47143910

Net block 42248773 41077531 39173510 38202395 40684495
Capital work in
progress
25918 0 0 0 0
2. Investments 11916930 16953930 17903930 8258930 8558930
3. Current assets
Inventories

58367007

72201967

69700906

78115480

80553958


Sundry debtors 47066018 56413916 52637084 51803016 58887402
Cash & bank balance 1984628 7412543 10109729 10421207 11103117
Other current assets 105976 121941 65925 30899 206512
Loans & advances 19199141 16948715 20127654 11901515 11873679
126722770 153099083 152641298 155872097 162630668
(-) Current liabilities
Liabilities

46159644

57482054

54066794

22577021

53070626
Provisions 2552833 7206399 5905434 1730441 6055698
48712477 64688453 59972229 57307462 59126321
Net current assets 78010293 88410630 92669069 98564634 103505347
Total 132201914 146442091 149746509 145025960 152747772

TABLE NO: 3 (P&L account of NHCL for the period of 2007-08 & 2010-11)
Particulars 2007 2008 2009 2010 2011


1.Income:

Sales

22,42,43,415

26,57,64,540

26,50,42,554

28,50,29,616

33,34,07,605
(-)Excise
duty

91,72,324

78,61,918

33,77,305

26,37,331

32,61,459

21,50,71,
091
25,79,02,
622
26,16,65,
249
28,23,92,
285
33,01,46,
146
Stock
Differential

3,84,938

42,67,738

(18,15,207)

83,23,395

98,650
Other
income

11,16,036

34,31,790

6,70,684

50,75,114

10,04,794
2.Expenditu
re:
Materials
consumed

10,14,24,
087

13,45,14,
685

14,52,63,
987

16,28,33,
707

17,14,53,
476
Manufacturi
ng,
administrative&
selling expense

9,84,78,752

11,91,37,
508

11,08,55,
399

11,50,85,
065

13,38,96,
830
Excise duty
(7,059)

2,14,133

(4,89,664)

1,88,886

3,06,278
Financial
charge

69,67,816

76,71,560

1,09,78,563

1,21,42,737

1,28,90,106
20,68,63,
596
26,15,37,
886
26,66,08,
285
29,02,50,
395
31,85,46,
690


P&L before
depreciation

97,08,469

40,64,264

(60,87,559)

55,40,399

1,27,02,900
Depreciatio
n

32,58,169

30,58,278

33,83,583

35,71,001

35,66,637
Operating
profit

64,50,300

10,05,985

(94,71,142)

19,69,398

91,36,263
Prior
period expense

0

7,23,315

0

0

0
Profit/Loss
before tax

64,50,300

2,82,670

(94,71,142)

19,69,398

91,36,263
Less
provision for
tax :-
Current tax



12,50,000

4,00,000

0

4,22,094

19,07,295
Differed tax

4,10,000

(11,00,648)

(23,25,000)

(5,67,300)

28,48,100
Prior period
tax

21,314

51,444

(511)

37,963

3,600
Transfer to
general reserve

47,68,986

9,31,874

71,45,631

20,76,642

43,84,468
Earnings
per share-fully
paid up shares

1.68

0.16

(2.87)
0.78 1.66

LEARNING EXPERIANCE
During the project, I understand how it works practically from start point to end point.
Before that I have only theoretical idea of working capital management.


It is a great experience to see these entire things happen in front of eyes. It enhances
my practical knowledge from one level to another level.
The company has got a very good quality control section which provides me the
important information regarding the quality assurance in the product development.
During my project in Nagarjuna herbal concentrates limited, was a very good
experience all together. I learnt so many things about the company like how the things
are done in a company and how people work in teams. It is a company where, even
the plant manager sits down with workmen to work on machine. I got to know how
the bottle necks come when everything is going right in the production and how to
approach their remedies.
I learnt the problems faced by a manager when he is leading a team of workers. He
has to understand the capabilities of each and every member of the team and assign
work according to it. Plant manager is responsible for every process through which
production happens in a plant.
I could view a friendly atmosphere in the office premises among all both in horizontal
level as well as vertical. It makes the employees feel relaxed and will not go through a
stress at the time of their work. This boosts the morale of the employees and promotes
a sense of responsibility, co-operative attitudes and good relationships and most
importantly it improves the quality.

GENERAL INTRODUCTION
Investment in fixed asset is not only sufficient to run the business. Working capital or
investment in current asset how so ever small it is must for the purchase of raw materials and


meeting day to day expenses and maintaining fixed asset. Working capital is just like heart of
the industry if it is weak the business cant prosper and survive, although there is large body
of fixed asset but only is the existence of the working capital must for the industry but it also
adequate also . Adequate working capital no progress is possible
Working capital is regarded as one of the conditioning factors in long run operations of a
firm which is often inclined to treat it as an issue of short run analysis and decision making. It
is not only influence earning capacity of the business under taking but also determined
largely their scope and content of operations. The management of working capital is
concerned with the management of the firms current accounts, which include current asset
and current liabilities.
The basic goal of working capital is to manage the current assets and current liabilities of
a firm in such a way that a satisfactory level of working capital is maintained in business. The
problem of regarding investment in various assets with an objective of maintaining the
liquidity of funds of the firm to meet its obligation promptly and efficiently.
FACTORS DETERMINING THE WORKING CAPITAL
Operating cycles: - in the case of trading concern operating cycle is the time required to
turn cash into inventories, inventories into amount receivable and into cash. In the case of
financing firm the operating cycle include the length of time taken for the conversation of
cash into debtors and conversion of debtors into cash
Sales volume: - this is another important factor that affects or influences the amount of
working capital requirements. Adequate stocks are required to meet the operational activities
of the business. The more the sales volume, the more would be the size of working capital.
Seasonal factors: - these are seasonal factors like fluctuation in demand for their
products. Certain industries manufacture and sell goods only during certain seasons. Such
concern require large amount of working capital during the season. For almost all firms the
fluctuation affects the level of working capital to be maintained
Policies of the firm: - the policies of the firm affect working capital requirements. In case
of firm decides to grant two months credit to their client instead of existing one month credit,
it leads to higher level of investments and working capital. Working capital requirements also
influenced by the policies relating to depreciation, dividends etc.


Technological changes: - technological changes are also cause for changes in the level of
working capital. If a new process emerges as a result of technological developments, which
shortens the operating cycle. It need for working capital and vice versa.
Operating efficiency: - the operating efficiency of the management is also an important
determinant of the level of working capital. The management can also contribute to a sound
working capital position through its operating efficiency; though the management cannot
control the rise in prices it can ensure the efficient utilization of resources.
Price level changes: - changes in the price level also affect the requirement of working
capital. Rising price necessities the use of more funds for maintaining an existing level of
activity. The effect of rising prices is that a higher level of working capital is needed
Credit policy: - the credit policy retains to sales and purchases also affect the working
capital. The credit policy influences the requirement of working capital in two ways:
Through credit terms granted by the firm to its consumer/buyer of the goods
Credit terms available to the firm from its creditors.
The credit terms grants to customers have bearing on the magnitude of working
capital by determining the level of book debts. The credit sale results in higher book debts. A
higher book debt means working capital.

CLASSIFICATION OF WORKING CAPITAL
FIGURE NO: 4

working capital


Classification of working capital
Working capital may be classified in two ways, on the basis of concept and on the basis
of time.
A. On the basis of concept
On the basis of concept working capital is classified as gross and net working capital
1. Net working capital
This is the difference between current assets and current liabilities; current liabilities are
expected to mature with in an accounting year and include creditors, bills payable and
outstanding expenses.
Working capital management no doubt significant for all firms, but its significance is
enhanced in case of small firms. A small firm has more investment in current assets than
fixed assets and current assets should be efficiently managed.
Net working capital =current assets-current liabilities
1. Gross working capital
on the basis of concept on the basis of time
Net working
capital
permanent
working capital
variable
working capital
Gross
working capital
Seasonal working Special working
Regular working Initial working


This refers to the firms investment in current assets. Current assets are the assets
which can be converted into cash within a short period say an accounting year. Current assets
include cash, debtors, bills receivables, short term securities
B. on the basis of time
Permanent working capital
Variable working capital
1. Permanent working capital

Permanent or fixed working capital is the minimum amount which is required to
ensure effective utilization of fixed facilities and for maintaining the circulation of current
assets. There is always a minimum level of current assets which is continuously required by
the enterprise to carry out its normal business operations. The permanent working capital
behaves like fixed assets which retain their form over a long period of time and never leaves
the business process. Such working capital grows as the size of the business grows. This can
be again classified into two as initial working capital and regular working capital
A. Initial working capital
At its inception and during the formative period of its operations a company must have
enough cash fund to meet its obligations. The need for initial working capital for every
company to consolidate its position
B. Regular working capital
Regular working capital is the minimum amount of liquid cash to be maintained in the
business to keep up the circulation of the flow of cash to inventories, to receivable and the
receivables back into cash. Reserve margin is the excess of working capital maintained in
addition to the regular working capital for meeting unforeseen contingencies.
2. Variable working capital
Temporary or variable working capital fund represents additional assets required at
different times during the operation year. Such working capital varies with seasonal and
cyclical variation in business. It can be further classified as seasonal and special working
capital.


A. Seasonal working capital
The amount of working capital which is required to meet the seasonal demand of busy
product is called seasonal working capital.
B. Special working capital
Special working capital is required to meet the extra ordinary needs and consequences
like strike, lock outs etc. Temporary working capital differs from permanent working capital
in the sense that it is required for short period and cannot be permanently employed in the
business.
SOURCES OF WORKING CAPITAL
1. Internal sources
2. External sources
Internal sources
a. Retained earnings
b. Sale of fixed assets
c. Depreciation fund
d. Using the recourse meant for taxation

External sources
a. Bank credit
b. Customer advances
c. Short term public deposits
d. Installment credit
e. Trade credit


f. Outstanding expenses
g. Share capital
h. Debentures

OPERATING CYCLE OF WORKING CAPITAL
It is essential that the operating cycle should be kept up continuously. Others the fixed
assets will remain idle and to the cost without bringing any reserves. So long with fixed
capital ready and adequate working capital is necessary to get the understanding successful
on a sound pedestal
FIGURE NO: 5


STATEMENT OF THE PROBLEM
The management is concerned with making use of various financial techniques and
device for administering working capital of the firm in the most effective and efficient way.
The present study attempt is to evaluate working capital management of Nagarjuna Herbal
Concentrates Ltd. The problem is started as a study on the working capital management of
Nagarjuna Herbal Concentrates Ltd.

OBJECTIVES OF THE STUDY
The study is aimed to evaluate the performance of Nagarjuna Herbal Concentrates Ltd.
With regard the working capital management. The objective includes:
a. To evaluate the working capital management of the company.
b. To assess the working capital position of the company.
c. To evaluate the cash management performance.
d. To evaluate the performance of inventory management.
Cash
Purchase raw
material
Creation of
accounts payable
Manufacturing
operation
Payment to creditors
Office selling
distribution&other
expenses
Warehousing of
finished goods
Sale of finished goods
Creation of accounts
receivables
Reciept from
debtors


e. To evaluate the management of receivables.
SCOPE OF THE STUDY
The present study of working capital management in Nagarjuna Herbal Concentrates Ltd.
Was entitled find out the strength of working capital position. The scope of the study includes
and analytical study in the management of current assets and current liabilities of Nagarjuna
Herbal Concentrates Ltd. for the period of 2006-2011.
PERIOD OF THE STUDY
The study was conducted to analysis the working capital management of Nagarjuna
Herbal Concentrates Ltd for the period 5 years from 2006
METHODOLOGY
The study is based mainly on secondary data and partly primary data. The secondary
data have been collected from audited financial statement of the company for the period
under study. This data include published annual reports, audited profit and loss a/c and
balance sheet. Whenever there is gap in secondary data it filled through primary data through
direct interview with officials of the company.
TOOLS OF ANALYSIS
The following statements are prepared in connection with the analysis and interpretation
of financial statements.

1. Statement of changes in working capital
2. Ratio analysis
1. Statement of changes in working capital


It is prepared to know the net changes in the working capital of a business between two
specified dates. It is prepared for the current assets and current liabilities of the said dates to
show the net increases or decreases in the working capital
2. Ratio analysis
It is the arithmetical expression of the relation between individual item and group item
shows in the periodical financial statement published by the firm. A ratio is only a
comparison of the numerator with denominator. It helps in forecasting, planning, decision
making, inter firm comparison etc.
LIMITATION OF THE STUDY
The study is subject to certain limitation. They are:
a. The study is entirely based on quantitative data, qualitative factors are not taken in to
consideration for the purpose of the study
b. The study is mainly limited by secondary data available from various financial
records of Nagarjuna Herbal Concentrates Ltd. All the inherent limitation of the
secondary data is applicable to this study
c. As in depth study could have been possible had there been enough time, so due to
lack of time the investigator could not go in deep to the affairs of the company

ANALYSIS OF WORKING CAPITAL OF NAGARJUNA HERBAL
CONCENTRATES LTD
Working capital means which is required for meeting the day to day expenses of
business. Working capital is very essential to maintain the smooth running of the business.


No business can run successfully without an adequate amount of working capital. It should
have either redundant or excess working neither capital nor adequate or shortage of working
capital. Both excess as well as short working capital position are bad for any business. But of
the two, it is the inadequacy of working capital which is more dangerous from the point of
view of the firm.
As the working capital is essential for the smooth running of a business it is important to
study whether the NHCL has achieved adequate amount of working capital or not. For
analyzing the working capital position of the NHCL the statistical and accounting tool like
ratio analysis, comparative statement etc are used.
CONCEPT OF NET WORKING CAPITAL
Net working capital is the excess of current assets over current liabilities. It is
important to measure to know the working capital position of the concern under study. Net
working capital may be positive or negative. A positive working capital will arise when the
current assets exceed current liabilities. A negative net working capital occurs when the
current liabilities are in excess of current assets. Net working capital shows the quantity of
the margin of safety of protection provides to the creditors

Table no: 4
Table showing the net working capital of NHCL


Year Current Assets Current Liability Net Working Capital
2006-2007 11,05,49,789 4,06,47,887 6,99,01,902
2007-2008 12,67,22,770 4,87,12,447 7,80,10,293
2008-2009 15,30,99,083 6,46,88,453 8,84,10,630
2009-2010 15,26,41,298 5,99,72,229 9,26,69,069
2010-2011 15,58,72,097 5,55,77,021 10,02,95,076

FIGURE NO: 6

INTERPRETATION: From the above table it is clear that every year current asset are much
more than current liabilities. So the company shows positive working capital during the
period of the analysis.
LIQUDITY RATIO
1. Current Ratio
0
20000000
40000000
60000000
80000000
100000000
120000000
2006-07 2007-08 2008-09 2009-10 2010-11
n
e
t

w
o
r
k
i
n
g

c
a
p
i
t
a
l

year
net working capital


Current ratio is a measure of general liquidity and is most widely used to make the
analysis of a short term financial position or liquidity of a firm. It may be used defined as the
relationship between current assets and current liabilities.
Current ratio = current asset/current liability
Table no: 5
Table showing the current ratio of NHCL

Year
Current assets Current liabilities Current ratio
2006-2007 11,05,49,789 4,06,47,887 2.72
2007-2008 12,67,22,770 4,87,12,477 2.60
2008-2009 15,30,99,083 6,46,88,453 2.37
2009-2010 15,26,41,298 5,99,72,229 2.55
2010-2011 15,58,72,097 5,55,77,021 2.80

FIGURE NO: 7


Graph showing the current ratio of the company

INTERPRETATION: As convention rule, current ratio of 2:1, i.e., current asset double the
current liability is considered to be satisfactory. The current assets of the company are able to
meet its current liabilities. The liquidity position of NHCL is good.

QUICK RATIO
It is also called as acid test ratio and is a more rigorous test of liquidity than current ratio.
It is defined as the relationship between quick assets and current liabilities
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
c
u
r
r
e
n
t

r
a
t
i
o

year
Current ratio


Quick ratio = quick assets/ Current liabilities
Table no: 6
Table showing quick ratio of NHCL
Year Quick assets Current liabilities Quick ratio
2006-2007 5,39,31,648 4,06,47,887 1.33
2007-2008 6,83,55,763 4,87,12,477 1.40
2008-2009 8,08,97,116 6,46,88,453 1.25
2009-2010 8,29,40,392 5,99,72,229 1.38
2010-2011 7,77,56,637 5,55,77,021 1.39
FIGURE NO: 8
Graph showing the Quick ratio of the company

INTERPRETATION: Generally a quick ratio of 1:1 is concerned to be satisfactory. The
company achieved satisfactory quick ratio in all years. Here also it is moving conventional
rule 1:1. This shows that the company should be able to meet its short term obligation
TURNOVER RATIO
For assessing the short term solvency of the concern the following activity or turnover
ratio are solved
1.15
1.2
1.25
1.3
1.35
1.4
1.45
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
q
u
i
c
k

r
a
t
i
o

year
Quick ratio


INVENTORY TURN OVER RATIO
This ratio established as a relationship between costs of goods sold during a given period
and the large amount of inventory held during that period. Higher the ratio is better because it
shows that finished stock is rapidly turned over on the other hand low stuck turnover ratio is
not desirable because it relives the accumulation of absolute stock or the carrying of too
much stock.
Inventory turnover ratio = cost of goods sold / average inventory
Table no: 7
Table showing the inventory turnover ratio of NHCL
Year Cost of goods sold Average inventory Ratio
2006-2007 10,20,42,297 2,53,08,992 4.03
2007-2008 12,27,42,971 2,68,20,881 4.50
2008-2009 13,12,49,855 2,85,14,209 4.60
2009-2010 11,97,78,567 2,45,65,133 4.87
2010-2011 12,21,95,909 3,37,96,132 3.62



FIGURE NO: 9
Graph showing the inventory turnover ratio of the company

INTERPRETATION: This inventory turnover ratio was 4.03 in 2006-2007 increasing to
4.87 in 2009-2010. It is favorable to the concern

DEBTORS OR RECIVABLE TURNOVER RATIO
0
1
2
3
4
5
6
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
i
n
v
e
n
t
o
r
y

t
u
r
n
o
v
e
r

r
a
t
i
o

year
Ratio


This measures the account of receivable in terms of number of days of credit sales during
a particular period. It establishes relationship between credit sales average debtors. It
indicates the efficiency with which debt are collected during the year
Debtors turnover ratio = credit sales /average debtors
Table no: 8
Table showing the debtors turnover ratio of NHCL
Year Sales Average debtors Debtors
turnover
Ratio
Average collection
period (days)
2006-2007 18,30,36,578 3,21,66,423 5.69 64 days
2007-2008 22,42,43,415 4,06,81,100 5.51 66 days
2008-2009 26,57,64,540 5,17,39,967 5.14 71 days
2009-2010 26,50,42,554 5,45,35,505 4.86 75 days
2010-2011 28,50,29,616 5,22,20,050 5.45 66 days



FIGURE NO: 10
Graph showing the debtors turnover ratio of the company

INTERPRETAION: Higher the ratio is the efficiency of the conversion of debtors in cash.
In the year 2008-2009 it shows decreasing trend. But in 2010-2011 it again in an increasing
trend.

4.4
4.6
4.8
5
5.2
5.4
5.6
5.8
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
d
e
b
t
o
r
s

t
u
r
n
o
v
e
r

r
a
t
i
o

year
Debtors turnover Ratio


WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio indicates the number of times the working capital is
turned over in the course of year. This ratio measures the efficiency with working capital is
used by the firm. Excessive ratio shows overrating and lower ratio shows under trading
Working capital turnover ratio= sales / net working capital
Table no: 9
Table showing the Working capital turnover ratio
Year Net Working Capital Sales Ratio
2006-2007 6,99,01,902 18,30,36,578 2.62
2007-2008 7,80,10,293 22,42,43,415 2.87
2008-2009 8,84,10,630 26,57,64,540 3.00
2009-2010 9,26,69,069 26,50,42,554 2.86
2010-2011 9,85,64,635 28,50,29,616 2.89
FIGURE NO: 11
Graph showing the working capital turnover ratio of the company

INTERPRETATION: In the analysis of working capital turnover ratio of 3 years shows
increasing trend. But I 2009-2010 it was decreasing, but again it is in increasing trend.
2.4
2.5
2.6
2.7
2.8
2.9
3
3.1
w
o
r
k
i
n
g

c
a
p
t
a
l

t
u
r
n

o
v
e
r

r
a
t
i
o

year
Working capital turnover
Ratio


FIXED ASSET TURNOVER RATIO
Fixed assets are used in the business for producing goods to be sold. The effective
utilization of fixed assets will result in increased production and reduced cost higher ratio
indicates better performance,
Fixed asset turnover ratio = net sales/fixed assets
Table no: 10
Table showing the fixed asset turnover ratio of NHCL
Year Sales Fixed assets Fixed asset turnover Ratio
2006-2007 18,30,36,578 4,01,79,142 4.55
2007-2008 22,42,43,415 4,22,48,773 5.30
2008-2009 26,57,64,540 4,10,77,531 6.47
2009-2010 26,50,42,554 3,91,73,510 6.77
2010-2011 28,50,29,616 3,82,02,395 7.46
FIGURE NO: 12
Graph showing the fixed asset turnover ratio of the company

INTERPRETATION: In the analysis of Fixed asset turnover ratio of the all years shows an
increasing trend. The higher ratio indicates better utilization of fixed assets.
0
1
2
3
4
5
6
7
8
F
A

t
u
r
n

o
v
e
r

r
a
t
i
o

year
Fixed asset turnover Ratio


CASH AND WORKING CAPITAL
Cash is one of the most important current assets of a business and every activity in
enterprises resolves round the cash. So the proper management is necessary for the smooth
function of the concern
Cash working capital= cash/ net working capital
Table no: 11
Table showing the cash and working capital of NHCL
Year Net Working Capital Cash Ratio
2006-2007 6,99,01,902 53,54,196 0.08
2007-2008 7,80,10,293 19,84,628 0.03
2008-2009 8,84,10,630 74,12,543 0.08
2009-2010 9,26,69,069 1,01,09,729 0.10
2010-2011 9,85,64,635 1,40,21,207 0.14
FIGURE NO: 13
Graph showing the cash to working capital

INTERPRETATION: The ratio shows a fluctuating trend and the ratio was too in all the
year. In the year 2010-2011 the ratio was 0.14, this shows that the ratio is increasing
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
c
a
s
h

t
o

w
o
r
k
i
n
g

c
a
p
i
t
a
l

year
Ratio


STOCK AND WORKING CAPITAL
Every enterprises needs inventory for smooth running of its activities. The investment in
investors constitute the most significant part of current assets/working capital is the most of
the concern
Stock working capital = stock/networking capital
Table no: 12
Table showing the stock and working capital of NHCL
Year Net Working Capital Stock Ratio
2006-2007 6,99,01,902 5,66,1,141 0.81
2007-2008 7,80,10,293 5,83,67,007 0.75
2008-2009 8,84,10,630 7,22,01,967 0.82
2009-2010 9,26,69,069 6,97,00,906 0.75
2010-2011 9,85,64,634 7,81,15,460 0.79
FIGURE NO: 14
Graph showing the stock and working capital

INTERPRETATIPON: In the year 2010-2011 the ratio was 0.79. This indicates the major
portion of current asset is stock.
0.7
0.72
0.74
0.76
0.78
0.8
0.82
0.84
2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
w
o
r
k
i
n
g

c
a
p
i
t
a
l

t
u
r
n
o
v
e
r

r
a
t
i
o

year
Ratio


COMPARITIVE STATEMENT OF WORKING CAPITAL
Working capital consists of floating assets and is subject to change over the year.
Such change in working capital brings good and bad effect to the company. The following
table shows the changes in the working capital position of NHCL
Table no: 13
Table showing the comparative statement of working capital for the year
2006-2007and2007-2008
Particulars 2006-2007 2007-2008 Increase in w.c Decrease in w.c
Current assets:
Inventories
5,66,18,141 5,83,67,007 17,48,866
Debtors 3,42,96,182 4,70,66,018 1,27,69,836
Cash 53,54,196 19,84,628 33,69,568
Other current
assets
96,145 1,05,976 9,831
Loans and
advances
1,41,85,126 1,91,99,141 50,14,015
Total 11,05,49,790 12,67,22,770
Current
liabilities and
provision

4,06,47,887

4,87,12,478

80,64,591
Net working
capital
6,99,01,903 7,80,10,292
Increase or
decrease in w.c
81,08,389 81,08,389
Total 7,80,10,292 7,80,10,292 1,95,42,548 1,95,42,548



Table no: 14
2007-2008 and 2008-2009
Current assets:
Inventories
5,83,67,007 7,22,01,967 1,38,34,960
Debtors 4,70,66,018 5,64,13,916 93,47,898
Cash 19,84,628 74,12,543 54,27,915
Other current
assets
1,05,976 1,21,941 15,965
Loans and
advances
1,91,99,141 1,69,48,715 22,50,426
Total 12,67,22,770 15,30,99,082
Current
liabilities and
provision

4,87,12,478

6,46,88,453

1,59,75,975
Net working
capital
7,80,10,292 8,84,10,629
Increase or
decrease in w.c
1,04,00,337 1,04,00,337
Total 8,84,10,629 8,84,10,629 2,86,26,738 2,86,26,738



Table 15
2008-2009 and 2009-2010
Current assets:
Inventories
7,22,01,967 6,97,00,906 25,01,061
Debtors 5,64,13,916 5,26,37,084 37,76,832
Cash 74,12,543 1,01,09,729 26,97,186
Other current
assets
1,21,941 65,925 56,016
Loans and
advances
1,69,48,715 2,01,27,654 31,78,939
Total 15,30,99,082 15,26,41,298
Current
liabilities and
provision

6,46,88,453

5,99,72,229

47,16,224

Net working
capital
8,84,10,629 9,26,69,069
Increase or
decrease in w.c
42,58,440 42,58,440
Total 9,26,69,069 9,26,69,069 1,05,92,349 1,05,92,349



Table no: 16
2009-2010 and 2010-2011
Current assets:
Inventories
7,81,15,460 8,05,59,958 24,44,498
Debtors 5,18,03,016 5,88,87,402 70,84,386
Cash 1,40,21,207 1,11,03,117 29,18,090
Other current
assets
30,899 2,06,512 1,75,613
Loans and
advances
1,19,01,515 1,18,73,679 27,836
Total 15,58,72,097 16,26,30,668
Current
liabilities and
provision

5,73,07,462

5,91,26,321

18,18,859
Net working
capital
9,85,64,635 10,35,04,347
Increase or
decrease in w.c
49,39,712 49,39,712
Total 10,35,04,347 10,35,04,347 97,04,497 97,04,497



FINDINGS
1. There is a tremendous increase in the net working capital of the company for the last 5
financial years.
2. Even though there is a proportionate increase in current liabilities in accordance to
current assets for the last financial years, the company could reduce the current
liabilities; which shows the sound performance of working capital management of the
company.
3. The liquidity position of Nagarjuna is quite satisfactory because of all the liquidity
ratios shows a positive response to their pre-determined standard rate.
4. Nagarjuna shows a current ratio of more than 2:1 for the last years; which speaks
about the capability of the company to meet the current liability requirements with the
available current assets.
5. The quick ratio of the company was more than the standard norm 1:1. So NHCL can
meet its current obligation without any delay.
6. Inventory occupies a major part of the total working capital in all the financial years.
7. Even though the inventory turnover ratio is volatile in nature for the last financial
year, it is proposed as a sound ratio to the company because of the positive trends in
the ratio.
8. Even though the company has a sound liquidity position in all the financial years, the
portion of liquid cash is very less as compared to the inventory of the firm.
9. The working capital to turnover ratio shows a volatile in nature; which shows that the
working capital do not have much influence on sales.
10. The average debt collection period of the company was showing an increasing trend
till the last financial year; in the year 2010-11, it shows a decreasing trend compared
to the last financial years; however this sort of increased figures of collection period
speaks about the relaxed collection policy and flexible receivables management
policies of the organization.



RECCOMENDATIONS
Even though the company performs a sound role in their working capital management, it
is recommended the following to them for the future growth and competitive existence in the
comprehensive market.
1. It is recommended to ensure an efficient balancing proportion between various
working capital financing sources on the basis of cost-benefit analysis in order to
ensure a greater financial benefit to the firm from the part of working capital
management.
2. The company should keep sufficient cash balance in order to meet its liability
immediately.
3. Though receivables (debtors) play a major role in working capital, the firm has been
advised to change the receivables management system especially regarding to the
collection policies.
4. More effective measures can be taken to explore the credit period allowed by the
customer. So as to maintain an effective working capital.
5. It is recommended to reduce the current liabilities by the way of reducing unnecessary
expenses like higher provisions than required, etc.; so that the management can ensure
the tremendous increase in the net working capital.
6. It is recommended to efficiently utilize the working capital for the purpose of
ensuring efficient sales promotion activities and thereby to increase sales.



SUGGESTIONS
It is also suggested the following as per the observations made during the time of data
collection and analysis for the purpose of overall improvement of the company:-
1. The company should concentrates more on the promotional activity like
advertisement through television, print media etc.
2. The company should take necessary step to keep the increasing trend in sales.
3. Company can utilize the opportunities of health tourism by establishing Ayurvedic
Resort and Panchakarma Massage centres at key tourism spots of Kerala.
4. Reconstruct the HR policies in such a way that the employees are get motivated.
5. Implement advanced MIS system such as punching card system, E-commerce, online
trading etc.



CONCLUSION
The path to higher financial returns is accessible to those who are willing to apply
fresh thinking and new approaches to basic business fundamentals. There is a great potential
for value creation in this industry. To achieve better financial performance and to achieve
better returns, new ideas, new approaches and new thinking are required. The main objective
of the study is to analyze the efficiency of the working capital management of the company.
For that ratio analysis & schedule of changes in working capital are used.
The major findings emerged from the company are summarized as the net working
capital of the concerns an increasing trend for the last four years i.e. current assets of the
NHCL was more than the current liabilities. The company shows a positive working capital
during the period of analysis. So the management of working capital in the company is good.

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WORKING CAPITAL MANAGEMENT

SHREE DEVI INSTITUTE OF TECHNOLOGY Page 1

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