PROJET REPORT

Submitted for the degree of [Link].(hens) in accounting & finance under the

University of Calcutta

TITL OF THE PROJECT

“A CASE STUDY ON WORKING CAPITAL
MANAGEMENT OF MAHINDRA MOTARS”

Submitted by:-
Name of the candidate : Sarthak anil salunke

Name of the college : Yashwantrao Chavan Arts Commerce and Science

College

CU Registration No :

CU Roll No. :

Supervised by:-
Name of the supervisor :

Name of the college :

SEP,2025

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 Supervisor’s Certificate

This is to certify that Sarthak Anil Salunke a student of [Link] 2rd year
honors in Accounting &Finance of Yashwantrao Chavan Arts Commerce and
Science College under the university of Calcutta has worked under my
supervision and guidance or his project work and prepared a project Report
with the title – WORKING CAPITAL MANAGEMENT WITH RESPECT OF
MAHINDRA MOTARS “.

The Project report, which he/she is submitting ,is his/her genuine and
original work to the best of my knowledge.

Place: vambori Signature:

Date: Name:

Designation:

Name of the College: Yashwantrao Chavan Arts Commerce and Science

College

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 STUDENT’S DEELARATION

I hereby declare that the project work with the title “ WORKING
CAPITAL MANAGEMENT WITII RESPECT OF MAHINDRA MOTARS”
submitted by me for the partial fulfillment of the degree of the
[Link] Honors’ in accounting &Finance under the University of
Calcutta is my original work and has not been submitted for any
course of study.

I also declare that no chapter of this manuscript in whole or part

has been incorporated in this report from any earlier work done by
other s or by me.

However, extracts of any literature which has been used for this
report has been duly acknowledged providing details of such
literature in the references.

Place: Vambori Signature:

Date: Name:

Roll No:

Name of college: Yashwantrao Chavan Arts Commerce and Science College

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 ACKNOWLEDGEMENT

This project on "WORKING CAPITAL MANAGEMENT WITH RESPECT

OF MAHINDRA MOTARS" could not see the light if had I not
received immense help from many persons associated directly or
indirectly with the title and conduct of the project at 3th Semester,
[Link] (Accounting & Finance) of our esteemed learning institution,
Surendranath Evening College. I am highly indebted to many
persons for the successful completion of my project. At the outset I
would like to express my heartiest thanks and gratitude to all of
them; without whose continuous support and assistance
completion of this project would not have been possible.

It is my great pleasure to express my respect and gratitude to all

esteemed faculties of Yashwantrao Chavan Arts Commerce and Science
College. I am especially grateful and thankful to my project guide
Mr. Priyanka Modal for guiding me in choosing my topic and having
the patience to clear the innumerable doubts I had while compiling
the areas of project. I am also indebted to Prof. Brenda Roy, Head
of the Department of Commerce, Surendranath Evening College. In
this occasion I would also like to thank all the non-teaching staffs of
the college for their constant support.

I would be failing in my duty if I do not acknowledge the

contributions of different authors and experts in this field. The
entire project is the outcome of the ideas gained from them. I am
grateful to all of them. Last but not the least; I would like to thank
my parents and friends for their inconsistent support for the
successful completion of my project.

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CHAPTERS CONTENT [Link]

CHAPTER1 INTRODUCTION 7-10

1.1 Background of the study 6-7
1.2 Brief review of literature 7-8
1.3 Objective of the study 8
1.4 Research methodology 8-9
1.5 Limitation of working 9
1.6 Chapter planning 9-10

CHAPTER2 CONCEPTAL FRAMEWORK 10-27

2.1 Definition of working capital 10
2.2 Types of working capital 11-12
2.3 Importance of working capital 12-13
2.4 Working capital cycle 13-14
2.5 Basic concepts of working capital 14-18
management
2.6 Factors of working capital requirement 18-19
2.7 Sours of working capital 19-21
2.8 Company profile 21-27

CHAPTER3 PRESENTATION OF DATA AND ANALYSIS OF 27-46

DATA AND FINDINGS
3.1 Working capital analysis 27-34
3.2 Working capital ratio analysis 34-45
3.3 Findings 45-46

CHAPTER4 CONCLUSLON ANDRECOMMENDATION 46-50

4.1 Conclusion 46-48
4.2 Recommendations 48-50

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SEP2025

CHAPTER 1: INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Working capital management is concerned with problems that arise

in attempting to manage the current assets, the current liabilities
and the interrelationship that exist between them. The term
current assets refers to those assets which in ordinary course of
business can be, or will be converted into cash within one year
without undergoing a diminution in value and without disrupting
the operations of the firm The major current assets are cash,
marketable securities, accounts receivable and inventory The term
current liabilities refer to those liabilities which are intended. At
their inception, to be paid in the ordinary course of business within
a year, out of current assets or earnings of the concern. The basic
current liabilities are accounts payable, bills payable, bank
overdraft and outstanding expenses. The current assets should be
large enough to cover its current liabilities in order to ensure a
reasonable margin of safety, nevertheless the level of current
assets should not be too high since in that case it will affect the
overall profitability of the firm. The interaction between current
assets and current liabilities is, therefore the main theme of
Working Capital Management. There are two concepts of Working
Capital Management i.e. Gross Working capital management and
Net working capital management. The term gross working capital,
also refers to working capital, means the total current assets. The
term Net working capital management refers to the difference
between current assets and current [Link] working capital
can alternatively be defined as that portion of current assets which
is financed with long term funds Since current liabilities represent

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of short term funds, as long as the currents assets excess the
current liabilities, the excess must be financed with on term funds.
The liquidity of a business is measured by the firm's ability to
satisfy short term obligations as they become due. The three basic
measures of a firm's overall liquidity are 1) The current ratio,2) The
acid test ratio and 3)The net working capital.

1.2 BRIEF REVIEW OF LITERATURE

Different researchers have done studies in the field of working

capital management, out ofINDEXwhich three research results are
as follows:-

1) Vera (1989) examined working capital management in Mahindra

Iron and Steel Company Ltd. (TISCO), Steel Authority of India Ltd.
(SAIL) and Indian Iron and Steel Company(IISCO) during the period
from 1978-79 to 1985-86 by using the financial tools and statistical
techniques. :-

The study indicates Mahindra Iron and Steel Company Limited had
better working capital management in comparison to Steel
Authority of India Limited and Indian Iron and Steel Company.
Results also revealed that all the three firms under study had made
excessive use of bank borrowings to finance the working
capital requirements.

Majumdar (1992), in order to know the pattern of financing the

corporate working capital in India, has analyzed balance sheets of
20 companies- 10 from private sector and 10 from public sector for
the period from 1981 to 1990. For the purpose of analysis
researcher has used statistical techniques and financial tools.

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Study indicates -- Major share of working capital finance is from
borrowings and effect of cost on the selection of sources of working
capital is not at all significant.

3) Vijay Kumar and Venkatachalam (1996) have made efforts to do

in depth study of Tamil Nadu Sugar Corporation for the period of
1985-86 to 1993-94. Results indicate that the corporation has
maintained moderate level of working capital, less amount from
long term-funds has been used for meeting short term liabilities
and due to excess liquidity, profitability was affected during the
period of study.

1.3 OBJECTIVE OF THE STUDY

1) To understand the concept of the working capital management.

2) To analyze the present scenario of performing working capital

management by the company.

3) To study whether Maintenance of working capital at appropriate

level, and

4) To study the availability of ample funds as and when they are

needed.

1.4 RESEARCH METHODOLOGY

1) Area of the study

This is an analytical case study of Mahindra motors Limited’s

position of working capital, profitability & solvency.

2) Types of data used

The main source of data collected is from the website of Mahindra

motors It. The secondary data has been collected from different
websites and books.
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3) Period of study:

I have taken last 5 years for the study i.e. from 2016-17 to 2020-21.

4) Tools and technique:

Tools and techniques of analysis of the project are

graphs, charts and

1.5 LIMITATIONS OF THE STUDY

This study is conducted in partial fulfillment of the requirement for

the [Link]. So, it possesses some limitations of its own.

One of the limitations of the study is, with regard to tempera

coverage of the study to arrive any meaningful conclusions
regarding the trend in the pattern and structure of financing a time
service of fairly a long period are needed. But this project has been
covered only in one the financial year.

The other constraints of this study are as follows:-

1.5.1 Though there are many manufacturing companies, but this

study only deals with Mahindra MOTORS Ltd.

1.5.2 Being a student time and resources constraint.

1.5.3 Limited variable has been selected.

1.5.4 Simple techniques have been used in analysis.

1.5.5 The analyze is based on annual report of the company.

1.6:- CHAPTER PLANNING

CHAPTER 1: INTRODUCTION.

CHAPTER2: CONCEPTUAL FRAMEWORK.

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CHAPTER 3: PRESENTATION OF DATA, ANALYSIS AND FINDINGS.

CHAPTER 4: CONCLUSION AND RECOMMENDATIONS

CHAPTER 2: CONCEPTUAL FRAMEWORK

2.1: DEFINITION OF WORKING CAPITAL:

Working capital means the funds (I.e. capital) available and used
for day to day operation (i.e. working capital) of an enterprise. It
consists broadly of that portion of assets of a business which are
used in or related to its current operations. It refers to fund which
are used during an accounting period to generate a current income
of a type which is consistent with major purpose of a firm
existence.

1. According to Weston & Brigham--Working capital refers to a

firm's investment in short term assets, such as cash amounts
receivables, inventories tee.

2. Working capital means current assets. - Mead, Baker and MA

Lott

3. -The sum of the current assets is the working capital of the

business - J.S. Mill

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 2.2: TYPES OF WORKING CAPIT

Classification of working capital

On the Concept basis On the time basis

GROSS WORKING PERMANENT WORKING

CAPITAL CAPITAL

NET WORKING TEMPORARY WORKING

CAPITAL CAPITAL

A) CONCEPT: From the concept point of view, working capital can

be defined as Gross working capital or Net working capital.
DGROSS WORKING CAPITAL: It refers to the firm's Investment
in current

1)assets are those assets, which can be converted into cash

within an accounting year. Current assets include stock of raw
materials, working-in-progress, finished goods, trade debtors,
prepayments, cash balances, etc.

(2) NET WORKING CAPITAL: It refers to the different between

current assets and

current liabilities. Current liabilities are those claims of

outsider which are expected to mature for payment within an
accounting year. Current liabilities includes trade creditors,
accrual taxation payable, bill payable, outstanding expenses,
dividend payable and short term loans.
B) TIME:
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 From the point of view of time, the working capital can be
divided into two categories namely fixed and temporary
(i) PERMANENT WORKING CAPITAL:-
It refers to hard core working capital. It is that minimum level
of investment in the current assets that is carried by the
business at all times to carry out minimum level of its
activities.
Example: Every firm has to maintain minimum level of raw
materials, WIP and finished goods and cash balance.

(ii) TEMPORARY WORKING CAPITAL: It refers to that part of

total working capital, which is required by a business over and
above permanent working capital. It is also called variable
working capital. Since the volume of temporary working
capital keeps on fluctuating from time to time according to
the business activities it may be financed from short term
source.

2.3: IMPORTANCE OF WORKING CAPITAL:

Working capital is needed till a firm gets cash on sale of

finished products. It depends on
two factors:

1. Manufacturing cycle i.e. time required for converting the

raw material into finished product; and

ii. Credit policy i.e. credit period given to Customers and credit
period allowed by creditors. Thus, the sum total of these
times is called an Operating cycle and it consists of the
following six steps:
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 a) Conversion of cash into raw materials.
b) Conversion of raw materials into work-in-progress.

c) Conversion of work-in-progress into finished products.

d) Time for sales of finished goods-Cash sales and Credit

sales.

e) Time for realization from debtors and bills receivables

into cash.

Credit period allowed by creditors for credit purchase of

raw materials, inventory and creditors for wages and
overheads

2.4: WORKING CAPITAL CYCLE:

Cash flows in a cycle into, around and out of a business. It is

the business's life blood and every manager's primary task
is to help keep it flowing and to use the cash flow to
generate profits. If a business is operating profitably, then
it should, in theory, generate cash surpluses. If it doesn't
generate surpluses, the business will eventually run out of
cash and expire. The faster a business expands the more
cash it will need for working capital and investment. The
cheapest and best sources of cash exist as working capital
right within business. Good management of working capital
will generate cash will help improve profits and reduce
risks. Bear in mind that the cost of providing credit to

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 customers and holding stocks can represent a substantial
proportion of a firm's total profits.

There are two elements in the business cycle that absorb

cash Inventory (stocks and work-in-progress) and
Receivables (debtors owing you money). The main sources
of cash are Payables (your creditors) and Equity and Loans.

2.5: BASIC CONCEPTS OF WORKING CAPITAL

MANAGEMENT:

2.5.1 MANAGEMENT OF WORKING CAPITAL

Working Capital Management involves management of
different components of working capital such as cash,
inventories, accounts receivable, creditors etc. A brief
description follows regarding the various issues involved in
the management of each of the above components of
working capital.

2.5.2 INVENTORY MANAGEMENT; Inventory constitutes an

important item in the working capital of much business
[Link] working capital is the difference between
current assets and current liabilities. Inventory is a major
item of current assets. The term inventory refers to the
stocks of the product of a firm is offering for sale and the
components that make up the product Inventory is stores
of goods and stocks. This includes raw materialisms

work-in-process and finished goods. Raw materials consist

of those units or input which are used to manufactured

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 goods that require further processing to become finished
goods. Finished goods are products ready for sale.

The classification of inventories and the levels of the

components vary from organization to organization
depending upon the nature of business. For example steel
is a finished product for a steel industry, but raw material
for an automobile manufacturer. Thus, inventory may be
defined as -Stock of goods that is held for future sell. Since
inventories constitute about 50 to 60 percent of current
assets, the management of inventories is crucial to
successful working capital management. Working capital
requirements are influenced by inventory holding. Hence,
the need for effective and efficient management of
inventories. A good inventory management is important to
the successful operations of most organizations,
unfortunately the importance of inventory is not always
appreciated by top management.
This may be due to a failure to recognize the link between
inventories and achievement of organizational goals or due
to ignorance of the impact that inventories can have on
costs and profits. Inventory management refers to an
optimum investment in inventories. It should neither be
too low to effect the production adversely nor too high to
block the funds unnecessarily. Excess investment in
inventories is unprofitable for the business. Both excess
and inadequate investment in inventories is not desirable.
The firm should operate within the two danger points. The
purpose of inventory management is to determine and
maintain the optimum level of inventory investment.

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 2.5.3 CASH MANAGEMENT:

Cash management is one of the key areas of working

capital management. Cash is the most liquid current assets.
Cash is the common denominator to which all current
assets can be reduced because the other major liquid
assets, i.e. receivable and inventory get eventually
converted into cash. This underlines the importance of cash
management. The term -Cashle with reference to
management of cash is used in two ways. In a narrow sense
cash refers coins, currency, cheques, drafts and deposits in
banks. The broader view of cash includes near cash assets
such as marketable securities and time deposits in banks.
The reason why these near cash assets are included in cash
is that they can readily be converted into cash. Usually,
excess cash is invested in marketable Securities as it
contributes to profitability, of current assets. Every firm
should have adequate cash, neither more nor less.
Inadequate cash will lead to production interruptions;
while excessive cash remains idle and will impair
profitability. Hence, the need for cash management.

2.5.4 MANAGING PAYABLES (CREDITORS);

Creditors are the businesses or people who provide goods

and services in credit terms. That is, they allow us time to
pay rather than paying in cash.

There are good reasons why we allow people to pay on

credit even though literally it doesn't make sense! If we

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 allow people time to pay their bills, they are more likely to
buy
from your business than from another business that
doesn't give credit. The length of credit period allowed is
also a factor that can help a potential customer decide
whether to buy from your business or not: the longer the
better, of course.

In spite of what we have just said, creditors will need to

optimize their credit control policies in exactly the same
way that we did when we were assessing our debtors'
turnover ratio after all, if you are my debtor I am your
creditor!

We give credit but we need to control how much we give,

how often and for how long. The formula for this ratio is:

Creditors' Turnover:
Average

Creditors (Cost of

Sales/65)

Creditors are a vital part of effective cash management and

should be managed carefully to enhance the cash position.

2.5.5 HANDLING RECEIVABLES (DEBTORS)

Cash flow can be significantly enhanced if the amounts

owing to a business are collected faster. Every business
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 needs to know who owes them money, how much is owed,
howling it is owing, for what it is owed Debtors and cost of
debtors have direct relation; cost will increase due to
increase in debtors and vice-versa. It depends on the credit
sale of concern and credit period (collection period)
allowed to customer.

Debtor management is the process of finding the balance

at which company agrees to receive its payment without
hampering or having any adverse effect on its sales and
customer agree to pay at their economical buying concept.

Sundry debtor level depends on two measure issues:

Volume of Credit sales

Credit period allowed to customers.

Following factors may be considered before allowing
credit period to the customer.-
1. Nature of product
2. Credit worthiness of the customer, which varies
from customer to customer
3. quantum of advanced received from customers
4. credit policy of company, say number of days
allowed t customer for payment to the customers
5. cost of debtors
6. manufacturing cycle time of the product etc.
2.6 :- FACTORS OF WORKING CAPITAL
REOUIREMENT.

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 1. Length of operating cycle: The amount of working
capital directed refers t the time period involved
in production. If operating cycle. Operating cycle
refers to the time period involved in production. If
operating cycle is long then more working capital
is required whereas for companies having short
operating cycle, the working capital is less.
2. Nature of business: The type of business, firm is
involved in, is the next consideration while
deciding the working capital is less. On the other
hand the manufacturing company requires Hage
amount of working capital.
3. . sealed of operations: The firms operating at large
scale need to maintain mor inventory, debtors.
More production, and more stock which means
more amount of working capital is require.
Where’s during depression period low demand,
low inventories, to be maintained, so less working
capital will be required.
4. Operational Efficiency: The firm having high
degree of operating efficiency requires less
amount of working capital as compared to firm
having low degree of efficiency which requires
more working capital.
2.7:- SOURCES OF WORKING CAPITAL.

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 1. LOANS FROM COMMERCLAL BANKS. Small scale
enterprises can raise loans from the commercial
banks with or without security. Loan can be
paid in lump sum or in parts. Hence, , it is
generally cheaper source of financing working
capital requirement of enterprise.
2. PUBLICDEPOSITS: public deposits can be invited
by offering a higher rate of interest than the
interest allowed on bank Deposits subject to a
maximum of 25% of their paid up capital and
free reserves
3. FACTORING: This is a method of raising short
term capital and known as factoring. On throne
hand. It helps the supplier companies to secure
finance against their book debts and receivables
and on the other hand it also helps I savings the
effort of collecting the book debts.

The disadvantage of factoring is that customers

who are really in genuine difficulty do not get the
opportunity of delaying payment’s which they
might have otherwise got from the supplier
company.
4. ADVANCES FROM CUSTOMER: one way of
raising for short-term requirement is to demand
for advance form one’s own customers become

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 on of the cheapest sources of raising funds for
meting working capital requirements of the
companies.
5. BANK OVERDRAFT AND CASH CREDIT: Overdraft
is a facility extended by the banks to their
current account holders for a short period
generally a week. A current account holders
allowed to withdraw form its current deposits
account up to a certain limit over the balances
with the bank
Cash credit is an arrangement whereby the
commercial banks allow borrowing money up
toa specified limit. The cash credit facility is
allowed against the security.

Arranging overdraft and cash credit with the

commercial banks has become a common
method adopted by companies for meeting
their shots term financial, or say, working
capital requirements.

2.8 :- COMPANY PROFILE :

A) Company profile of Mahindra motors LTD.

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 Mahindra motors Limited is an automobile
company. The company is engaged in the
business of automobile products consisting of
all types of commercial and passenger vehicles,
including financing of vehicles sold by the
company. Its operating segments include
automotive operations and all other operations,
its automotive segment operations include all
activities relating to the development, design,
manufacture, assembly ad sale of vehicles,
including vehicle financing, as well as sale of
related parts and accessories. Its automotive
operations are further subdivided into
Mahindra and other brand vehicles ( including
vehicle financing) and jaguar Land Rover. It’s all
other operations segment includes information
technology services, and machine tools and
factory automation solutions. Its commercial
and passenger
vehicles are marketed in countries in Europe,
Africa, the Middle East, South East Asia, South
Asia, South America, Australia, Commonwealth
of Independent States and Russia.

B) ETHICAL OBJECTIVES

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 Mahindra group had never compromised on
ethics, it last year edited Whistle blower policy
for the benefits of the company & society
The Company believes in the conduct of the
affairs of its Constituents in a fair and
transparent manner by adopting highest
Standards of professionalism, honesty, integrity
and ethical Behaviour.

C) MARKET SHARE & FUTURE PLANNING

Mahindra said that the initial target production

volume would be 250,000cars per annum on
two shifts, expandable to 350,000 per annum
on three shifts. Consumer focus
Die Welt reports that the car conforms with
environmental protection, and will have the
lowest emissions in India.
D) PRODUCT FOCUS
Model versions
The basic Mahindra Nano Std priced at 123,000
Rupees has no extras;

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 The deluxe Mahindra Nano CX at 151,000
Rupees has air conditioning;
The luxury Mahindra Nano LX at 172,000
Rupees has air conditioning, power Windows,
fabric seats and central locking.
Mahindra Motors will offer a version of the
Nano with these safety-features, Including an
airbag system in its electric version. The Nano
has an all Sheet-metal body made from
Japanese and Korean steel, with safety features
such as crumple zones, intrusion-resistant
doors, seat-belts, strong seats and anchorages,
and the rear tailgate glass bonded to the body.
Tires are tubeless.
E) SOCIAL RESPONSIBILITY
Green Matters: Mahindra Motors, a Company
that cares about the future...
Mahindra Motors concern is manifested by a
dual approach -
1) Reduction of environmental pollution and
regular pollution control drives
2) Restoration of ecological balance.
F) REDUCING POLLUTION

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 Mahindra Motors has been at the forefront of
the Indian automobile industry's anti-pollution
efforts by introducing cleaner engines. It is the
first Indian Company to introduce vehicles with
Euro norms well ahead of the mandated dates.
G) RESTORING ECOLOGICAL BALANCE:
Mahindra Motors has set up effluent treatment
facilities in its plants, to avoid release of
polluted water into the ecosystem. In Pune, the
treated water is conserved in lakes attracting
various species of birds from around the world
thus turning the space into a green belt.
Mahindra Motors is committed in letter and
spirit to Corporate Social Responsibility. It is a
signatory to the United Nations Global
Compact, and is engaged in community and
social initiatives on labour and environment
standards in compliance with the principles of
the Global Compact.
H) SOME OTHER SOCIAL RESPONSIBILITIES ARE
Community Development
Health & Sanitation
Employment Generation
Community Centres

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 E)OVERCOME COMPETITION
Mahindra initially targeted the vehicle as "the
least expensive production car in the world
aiming for a starting price of 100,000 rupees or
approximately US$2000 Rival car makers
including Bajaj Auto, Fiat, General Motors, Ford
Motor, Hyundai. And Toyota Motor have all
expressed interest in building a small car that is
affordable to more middle-class consumers
in emerging markets. The bulk of demand there
is for small cars because people are much more
sensitive to fuel prices. Honda and Toyota are
leading the way on so called cleaner gasoline-
electric hybrids, and some environmentalists
argue getting prices down on these
technologies is where efforts should be
concentrated. Inexpensive and eco-friendly
electric-cars like Tara Tiny, Oreva Super (both
reportedly even cheaper than Mahindra Nano)
and REVA pose even more significant danger to
Nano. There are also rumours of Maruti Suzuki
introducing a lower priced version of Alto to
counter mandioca.

MAHINDRA MOTORS
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 CHAPTER 3: PRESENTATION OF DATA AND ANALYSIS OF
DATA AND EINDINGS
3.1 WORKING CAPITAL,ANALYSIS
1. WORKING CAPITAL ,TREND ANAL,YSIS:
TEBLE1 =SIZE OF WORKING CAPITAL:
Particulars MAR,21 MAR,20 MAR,19 MAR,18 MAR,17
(A)Current
Assets
Inventories 6,352.04 5,553.01 5,117.92 4,802.08 3,862,53
Sundry 3,479.81 2,128.00 2,045.58 1.114.48 1,216.70
debtors
Cashback 795.42 326.61 788.42 944.75 226.15
balance
Lonn’s 140.27 215.96 484.42 1,574.41 1,223.77
&Advances
Total of A 10.767.54 8.223.58 8.436.36 8.435.72 6.529.15
(gores W.c)

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(B) Current
laities
provision
Short Term 3.099.87 5.158.52 3.654.72 7.762.01 4.769.08
Borrowings
9.411.05 7.082.95 5.141.17 8.852.65 9.672.36
Other 10.845.11 8.819.71 9.455.58 3.142.88 2.463.18
current
Liabilities
Short Term 862.92 477.17 450.27 613.09 1.892.91
Provisions
Total of b 24.218.95 21.538.35 18.701.74 20.370.63 18.797.38
Net - - - - -
working 13.451.41 13.314.77 10.265.38 11.934.91 12.268.38
Capital(A-B)

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 TABLE2-WORKING CAPITAL INDICESP:
Particulars MAR,21 MAR,20 MAR,19 MAR,18 MAR,17
Net working - - - - -12.268.38
capital 13.451.41 13.314.77 10.265.38 11.934.91
Working 109.64 108.53 116.33 102.72 100
capital
indices

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 Observation: On observing the working capital of mahindra
Motors Itd. from MAR 17 to MAR 21, it is evident that
mahindra Motors Ltd. had a negative working capital
throughout the period which means their current liabilities
are more than their current assets. According to the above
information the working capital indices of T mahindra
Motors Ltd. was the highest in MAR 19.
[Link] ASSTS ANALYYSIS:
TABLE3-CURRENT ASSET SIZE :

Particulars Mar,21 MAR,20 MAR,19 MAR,18 MAR,17

Inventorice 6.352.04 2.128.01 5.117.92 4.802.08 3.862.53
Sundry 3.479.81 2,128.00 2,045.58 1,114.48 1,216.7
Debtors

Cash and 7958.42 326.61 788.42 944.75 226.15

Bank
Balance

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Loans & 140.27 215.96 484.44 1,574.41 1,223.77
Advances
Total Current 10,767.54 8,,2223.58 8,436.36 8,435.72 6,529.15
Assets

Paritculars MAR’21 MAR’20 MAR’19 MAR’18 MAR,17

Total 10,767.54 8,223.58 8,436.36 8,435.72 6,529.15
assets
Curant 164.91 125.95 123.15 129.2 100
Assets
Indices

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 Observation : The above graph shows the change in the
current assets of mahindra of mahindra motors Ltd. By
making MaR’ 17 as bas year. The current asset indices was
129. In MAR’ 18 and then deceased to 129.15. it again
incerased to 125.95 in MARI20 and to 164.91 in MAR;21.
TABLE 5-CURRENT LIABILTIES SIZE.
parttculars MAR,21 MAR,20 MAR’19 MAR’18 MAR’17
Short Term 3,099.87 5,158.52 3,654.72 7,762.01 4,769.08
Bprrpwomgs
Trade 9,411.05 7,082.95 5,141.17 8,852.65 9,672.36
payables
Other 10,845.11 8,8,819.95 9,455.58 3,142.88 2,463.18
current
liabilities
Short Term 862.92 8477.17 450.257 613.09 1,892.91
Provisions
Total 24,218.95 21,538.35 18,701.44 20,370.63 18,797.53
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liabilities

TEBEL6-CURRENT LIABILITES INDICES:-

parttculars MAR,21 MAR,20 MAR’19 MAR’18 MAR’17

Total 2421.95 21.538.35 18.701.74 20.370.00 18.797.53
current
Liabiites
Current 128.84 114.58 100.5 100.81 100
liabilies
analyeis

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Observation:
Curret liabiulites indies has been caluualted by keeping
MAR ’17 as base yar. The above graph shows that the
current liabilities indices was 100.81 in MAR; 18 and 100.5 in
MAR’19 then it to 114.58 in MAR,20 and then 128.84 in
/mar;21
3.2WORKING CAPITALRATOL ANALYSIS:-
The ratio compounded Working capital ratios means
ratios which are related with the working capital
management e.g. current assets, liquidity, profitability and
risk turnoff etc.
These ratios are classified as follows:-
[A] EFFICIENCY RATIO:-
The ratio compounded under this group indicate the
efficiency of the organization to use the various kinds of
assets by converting them the form of sale. The ratio also
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called as activity ratio or asset management ratio. As the
asset basically categorized as fixed asset and current assets
and the current assets further classified according to
individual components of current assets viz. investment or
receivables or debtors or as net current assets, the
important of efficiency ratios are as follows-
1. Working capital Turnover ratio
2. Inventory turnover ratio
3. Receivable turnover ratio
4. Current asset turnover ratio
B) LIQUIDITY RATIO:- under this group indicate the
short term position of the organization and also indicate the
efficiency with which the working capital is being used. The
most important ratio under this group are as follows:-
1. Current rate
2. Quick rate
Working capital turnover ratio
It signifies that for an amount of sales, a relative
amount of working capital is needed. If any increase in sales
contemplated, working capital should be adequate and thus
this ratio helps management to maintain the adequate level
of working capital. The ratio measures the efficiency with
which the working capital is being used by a firm.

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 It may thus compute networking capita by dividing
sales by working capital. Working capital turnover
"sales/net working capital
TABLE 7-WORKING CAPITAL TURNOVER

Particular MAR,21 MAR,20 MAR,19 MAR,18 MAR,17

Sales 61182.29 50079.29 4450.74 38176.17 38121.14
Net working 13451.41 13314.77 10265.38 11934.91 12268.14
capital
Working 4.55 3.76 4.34 3.2 3.14
capital
turnover
ratio

Observation: High working capital ratio indicates the

capability of the organisation to achieve maximum sales
with the minimum investment in working capital In the
year, 2021. the ratio was around 4.55, indicates that the
capability of Mahindra motors Ltd. to achieve Maximum
sales with the minimum investment in working capital but
in the year 2018 the ratio has fallen down.
2. Inventory Turnover Ratio:-
Inventory turnover ratio indicates the efficiency of the
firm in producing and selling its products. It is calculated by
dividing the cost of goods sold by average inventory.

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 Cost Of goods sold= sales/Average Inventor
Note: Gross Profit is not given. So only sales is taken to
calculate inventory turnover ratio.
TABLE 8: INVENTORY TURNOVER RATIO:-

Particular MAR,21 MAR,20 MAR,19 MAR,18 MAR,17

Sales 61182.29 50079.25 44502.74 38176.15 38121.14
Avg. inventor 61182.29 5311.17 4852.14 4332.31 4158.78
Inventorial 10.9 9.43 9.17 8.81 9.17
Turnover
ratio

CHART5-INVENTORY TURNOVER RATIO

Observation :It was observed that inventory turnover

ratio indicates maximum sales achieved sales achieved with
the minimum infimum in the inventory. As such the general
rule high inventory Tio
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 Desirable but high inventory tum over ratio may not
necessary indicates the profitable situation. An
organization, in order to achieve a large scale volume may
sometime sacrifice on profit inventory ratio may not result
into high amount of profit. Inventory homoceratid of
Mahindra Motors. LTD. Is fluctuating every year which
indicates that inventory turnover is not steady.
3. RECCIVABLE TURNOVER RATIO
The Derivation of the ratio is made in the following way
= Gros sales
Average account receivable
Gross sales re inclusive of excise duty and scrap sales
because both may enter into receivables by credit sales.
Average receivable calculate by opening plus closing
balance divided by 2. Increasing volume of receivables
without a matching increase in sales is reflected by a low
receivable turnover ratio. It is an indication of slowing
down of the collection system or an extend line of credit
being allowed by the customer organization. The latter may
be due to the fact the firm is losing out to competition. A
credit manager engage in a task of granting credit or
monitoring receivable should take the hint from a falling
receivable turnover ratio use this market intelligence to find
out the reason behind such failing trend.
Average collection period = 665/ Receivable Turnover Ratio
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9. DEBTOR’S TURNOVER RATIO :
Observation: in the above graph debtor’s Turnover ratio of
Mahindra motors Ltd from 2016.-17 to 2020-21 was
depicted. The receivables Turnover Tatio indicates the
efficiency with which a firm collects on the credit it issues to
customers. It can be seen that the Debtor’s Turnover Ratio
for Mahindra motors Ltd. Has been the highest since 2016-
17. The year 2020.21, Receivable Turnover Ratio has fallen
down over last year’s which indicates that collection policy
has worsen.
5. Current Asset Turnover Ratio:
Current asset tum over ratio is calculated to know the firms
efficiency of utilizing the current asset. Current Asset
includes the assets like inventories, sundry debtors, bills
receivable, case in hand, marketable securities, prepaid
expenses and short-term loans and advance . The ratio
includes the efficiency with which current assets are turn
into sales. A higher ratio implies a more efficient use of
funds. Thus high turnover ratio indicate to reduce the lock
up of funds in a current assets. An analysis of this ratio over
indicate to reduce the lock up of funds in current assets. An
analysis of this ratio over a period of time reflects working
capital management of a firm.

Current asset TOR= Sales

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 Current Assets
Tabel 10 – CURRENT ASSET TURNOVER RATO:-

Particular MAR,21 MAR,20 MAR,19 MAR,18 MAR,17

Sales 61182.29 520079.25 44502.74 38176.15 38121.14

Total 10,767.54 8,223.58 8,435.72 8,435.72 6,529.15

assets
Current 5.68 6.09 5.28 4.53 5.84
Assets
Turnover
Ratio

CHART 7- CURRENT ASSET TURNOVER RATIO :

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 Observation : The current asset tum over ratio
indicates a fluctuating trend in the analysis over a period of
time. Turnover ratio was 5.48 in MAR’19 and MAR’20 being
the highest, but again fell to 5.68 in MAR’21
A) LIOUIDITY RATIO
B) 1 Current ratio
The current Tatio calculated by dividing current asset by
current liabilities.
CURRENT RATIO = Current assets
Current liabilities

Current asset include cash and those assets which can be

converted into cash within a year , such marketable
securities, debtors and inventories. All obligations within a
year are included in current liabilities. Current Liabilities
include creditors, Bills payable, accrued expenses, short
term loan, income tax liabilities and long term debt
maturing in the current year. Current ratio indicates the

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 availability of current assets in rupees for every rupee of
current liability.

Table 11 – CURRENT RATIO:

Particular MAR,21 MAR,20 MAR,19 MAR,18 MAR,17

Current 10.767.56 8.223.58 8.436.36 8.435.72 6.529.17
assets
Cuento 24.218.95 21538.35 18.701.74 20.370.63 18.797.53
liabilities
Cuento 0.44 0.32 0.45 0.41 0.35
ratio

Chart 8: CURRENT RATIO

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Observation : The current ratio indicates the availability of
funds to payment of current liabilities in the form of curren
assets. A higher ratio indicates that there were sufficient
assets available with the organisation which can be
converted in cash, without any reduction in the value. As
ideal current ratio is 2;1, where current ratio is more than
2;1, it indicates the unnecessary investment in the current
assets in the form of debtors and cash.

1) Quick Ratio

Quik ratio establishes the relationship between quick

or liquid assets and liabilities. An asset is liquid if it can
be converted into cash immediately or reasonably soon

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 without a loss of value. Cash is the most liquid asset.
Other assets which are considered to be relatively
liquid considered as less liquid. Inventory normally
required some time for realizing into cash. Their value
also is tendency to fluctuate.

Current Asset-Inventory

Quick Current assets-Closing stock- prepaid

expenses
RATIO=
Current liabilities -Bank Overdraft

TABLE 12: OUKCK RATIO

PARTICULAR MAR,21 MAR,20 MAR,19 MAR,18 MAR,17

Current 4415.5 2670.57 3318.44 3633.64 2666.62

Assets
Current 24,218.95 24,218.95 18,101.74 20,370.63 18,797.53
Liabilities

Quick ratio 0.18 0.12 0,18 0.18 0.14

CHART 9: QUICK RATIO TURNOVER

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Observation: Quik trio indicates that the company has
sufficient liquid balance for the payment of current
liabilities. The liquid ratio of 1:1 is supposed to be standard
or ideal, but here the ratio is not ideal.

3.3 : FINDINGS

As the project was conducted to analyse the working capital

management of Mahindra motors Ltd. For the last five
years. During calculations, analysis and making project
report I came to some major finding that are as follows:

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  Working capital shows a constant decrease every year.
 Company lack current assts to meet its current
liabilities as in all the five years the company fails to
meet the ideal standard ratio of 2:1
 The quick ratio is just above the standard ratio which is
1:1.
 Cash did not help to increase in the sales volume, as
cash is not earning asset.
 Working capital of the company is good enough to
meant its current obligations.
 Inventory turnover ratio of Mahindra motors Ltd. Is
fluctuating every year which indicates that inventory
turnover is not steady.
 Company is generating better profit on net working
capital employed every year which indicates that
inventory turnover is not steady.
 Company is generating better profit on net working
capital employed every year.

CHAPTER 4. CONCLUSIONS AND RECOMMENDATION

4.1 : CONCLUSION
Working capital managements is important aspect of
financial management of Mahindra motors Ltd. Has
revealed tat the current industry was as per the standard
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practice. The study has been conducted on working capital
ratio analysis, working capital components which helped
the company to manage its working capital efficiency. I
have concluded the following points :-

 Working capital of the company-Mahindra MOTORS

LTD.I is not increasing every year, instead it is negative
due to its bad performance in the last five years

 The current a ratio of the company is fluctuating in the

last five years, which indicates the unnecessary
investment in the current asset in the form of debtors
and cash.

 The quick ratio has also increased from MAR'17 to

MAR'21, which indicates the firm abilities to meet its
short term financial obligations on time.

 The debtor's turnover ratio has fallen down over the

past 2 years. Therefore, it indicates that collection has
policy has worsen.

 Inventory turnover ratio has increased year after year

which signifies that the company's inventory is being

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 kept within the company for a longer period before
getting converted into sales.

4.2: RECOMMENDATIONS:

Working Capital Management, there are mainly three

parts they are Cash Management, Receivables
Management and Inventory Management. For
optimum use of working capital, these three parts
should be managed properly, for that I would like to
give suggestions to -Mahindra MOTORS LTD.I they are
as follows:
Considering the cash management the company should
maintain a cash flow budget every
year, considering monthly or quarterly. During the
preparation of the cash budget the credit period
should be below 30 days allowed to the customer and
company should hold enough cash that it can meet its
creditors any time.

Considering the receivables management, certain

credit standards and policy should be established, like:

a) Establishment of policy in appointing sales recovery

force.

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 b) Cash discounts policy for cash purchases and early
payment of debts balances by customer to be
established.

Credit rating systems to be established.

Considering the inventory management, there
should be a fast movement of inventory, by taking
efforts in increment of the sales and inventories
should be maintained considering bulk purchase
discount and inflating price of raw material and
according to market forecast to make saving in cost
of raw material.
Considering the creditors the management should
set a price range for the creditors as company enjoy
good credit.
The creditors who are paid early should be given a
low price.

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 BIBLIOGRAPHY & REFERENCE

For gathering information and details on the

Mahindra MOTORSLTD.
I referred websites and some articles to present my
project in such manner.

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