CHAPTER-I

1. INTRODUCTION

1.1 INTRODUCTION OF THE STUDY

Working capital is the money available to meet your current, short-term

obligations. To make sure your working capital works for you, you'll need to calculate
your current levels, project your future needs and consider ways to make sure you
always have enough cash.

Working Capital means those liquid funds, whether in the form of cash, deposits
in a bank, or either way, which an enterprise keeps to manage the day-to-day running
expenses of the business. It is a measure of a company’s liquidity, efficiency, and
financial health. It is calculated using a simple formula – “current assets (accounts
receivables, cash, inventories of unfinished goods and raw materials) MINUS current
liabilities (accounts payable, debt due in one year).”

Reasons require additional working capital

• Seasonal differences in cash flow are typical of many businesses, which may
need extra capital to gear up for a busy season or to keep the business
operating when there’s less money coming in.
• Almost all businesses will have times when additional working capital is
needed to fund obligations to suppliers, employees and the government while
waiting for payments from customers.
• Extra working capital can help improve your business in other ways, for
example: enabling you to take advantage of supplier discounts by purchasing
in bulk.
• Working capital can also be used to pay temporary employees or to cover
other project-related expenses.

Working capital, also known as net working capital (NWC), is the difference
between a company’s current assets—such as cash, accounts receivable/customers’
unpaid bills, and inventories of raw materials and finished goods—and its current
liabilities, such as accounts payable and debts. It's a commonly used measurement to
gauge the short-term health of an organization.

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Working Capital Formula

To calculate working capital, subtract a company's current liabilities from its

current assets. Both figures can found in the publicly disclosed financial statements
for public companies, though this information may not be readily available for private
companies.

Working Capital = Current Assets - Current Liabilities

Importance of Working Capital

Liquidity Management

By properly analyzing the expenses payable or to be incurred shortly, the

financial team of an enterprise would easily plan for their funds accordingly.

Out of Cash

Inappropriate prepared plans of day-to-day expenses may result in enterprise

liquidity issues. They have to postpone or arrange funds from some other sources,
which give a bad impression of an enterprise on the party.

Helps in Decision Making

By correctly analyzing the requirement of funds for day-to-day operations, the

finance team can appropriately manage the funds and decide accordingly for available
funds and availability of funds.

Addition to the Value of Business

As the management accordingly manages all day-to-day required funds that

help the authorized personnel timely pay for all the outstanding creates a value
addition or goodwill enhancement in the market.

Helps in the situation of Cash Crunches

By properly managing the liquid funds, one can help the organization not to
affect the situation of crises or cash crunches and pay for its day-to-day expenses on a
timely basis.

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Concepts of Working Capital

There are two concepts of working capital:

• Gross working capital

• Net working capital

Gross Working Capital:

Gross working capital refers to investment in all current assets - raw materials,
work-in-progress, finished goods, book debts, bank balance and cash balance. The
gross concept of working capital is significant in the context of measuring working
capital needed, measuring the size of the business, continued and smooth flow of
operations of the business and the like.

Net Working Capital:

Net working capital refers to the excess of current assets over current
liabilities. That is, value of current assets minus value of current liabilities (current
liabilities include trade creditors, bills payable, outstanding expenses such as wages,
salaries, dividend payable and tax payable, bank overdraft, etc.) The net concept of
working capital is significant in the context of financing of working capital, the short
term liquidity aspects of the business, and the like.

Classification of Working Capital

Some portion of working capital is fixed natured and some portion fluctuates for
some time. In the view point working capital classified in to 2 classes:

• Fixed or permanent working capital

• Variable or temporary working capital

Fixed or Permanent Working Capital: The fund, which is required to produce a

certain amount of goods or services at a certain period of time, is called fixed working
capital. The minimum amount of cash money, A/R, which is kept to operate the
business, is called fixed working capital.

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 Variable working capital: When extra working capital is required then a addition
to fixed working capital due to seasonal causes or increased production or sales, this
working capital is variable working capital. So, the working capital which fluctuates
with keeping the relation between production & Sales is variable working capital.

Variable Working Capital: When extra working capital is required then a

addition to fixed working capital due to seasonal causes or increased production or
sales, this working capital is variable working capital. So, the working capital which
fluctuates with keeping the relation between production & Sales is variable working
capital.

Management of working capital

Guided by the above criteria, management will use a combination of policies

and techniques for the management of working capital. The policies aim at managing
the current assets (generally cash and cash equivalents, inventories and debtors) and
the short-term financing, such that cash flows and returns are acceptable.

Cash management: Identify the cash balance which allows for the business to
meet day to day expenses, but reduces cash holding costs.

Inventory management: Identify the level of inventory which allows for

uninterrupted production but reduces the investment in raw materials—and minimizes
reordering costs—and hence increases cash flow. Besides this, the lead times in
production should be lowered to reduce Work in Process (WIP) and similarly, the
Finished Goods should be kept on as low level as possible to avoid overproduction—
see Supply chain management; Just In Time (JIT); Economic order quantity (EOQ);
Economic quantity

Debtors management: Identify the appropriate credit policy, i.e. credit terms
which will attract customers, such that any impact on cash flows and the cash
conversion cycle will be offset by increased revenue and hence Return on Capital (or
vice versa); see Discounts and allowances.

Short-term financing: Identify the appropriate source of financing, given the

cash conversion cycle: the inventory is ideally financed by credit granted by the

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supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to
"convert debtors to cash" through "factoring".

1.2 STATEMENT OF THE PROBLEM

Every business needs funds for two purpose one, for the establishment and the
other to carry out the day-to-day operations. It need some amount of working capital
to meet daily obligations. The need for working capital arises due to the time gap
between production and realization of cash from sales. Effective and efficient
working capital management of a firm has a great effect on its profitability, liquidity
and structural health of the organization, and hence it is important to study the
working Capital management of the organization.

1. INDUSTRY PROFILE

Mutual fund (MF) industry in India is maturing with broad-basing of investors

and increasing geographical spread. MFs in India have become major players in the
equity and corporate bond markets and are also providing crucial liquidity support to
the money market. Consequently, their influence on price movements in equity and
debt markets as also domestic liquidity conditions has increased over time.

While the penetration of the MF industry in India, as measured by the Assets

under Management (AUM)/GDP ratio, is still low compared with the global average,
favourable demographics, a history of high savings propensity and regulatory reforms
brighten the outlook for the industry In recent years, credit intermediation is shifting,
with the traditional dominance of the banking sector yielding ground to non-bank
intermediaries, including the asset management industry.

Within this silent transformation, the MF industry is turning out to be the

fastest growing and the most competitive segment of India’s financial sector, offering
operational flexibility and attractive returns to investors (RBI, 2017). AUM of MFs in
India has registered a compound annual growth rate (CAGR) of 25 per cent over the
last five years (2013-2018), outstripping the CAGR of only 11 per cent registered by
aggregate bank deposits of scheduled commercial banks (SCBs).

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 These investments are actively managed by professional portfolio managers
who undertake strategic transactions to take advantage of current or expected market
conditions. In the process, MFs provide a steady flow of income and capital
appreciation along with tax benefits to otherwise risk averse lay investors.

Not surprisingly, therefore, household preference for MFs over other avenues
of investment has increased dramatically since 2016. While the penetration of the MF
industry in India, as measured by the AUM/GDP ratio, is still low compared with the
global average, favourable demographics, a history of high savings propensity and
regulatory reforms brighten the outlook for the industry. The debt portfolio of MFs
mainly comprises corporate debt instruments, which include floating rate bonds
(FRBs), non-convertible debentures (NCDs) and PSU bonds.

Mutual Fund Highlights for the Month

The month end Assets under Management (AUM) of the Indian Mutual Fund
industry dropped sharply by 2.15% in May 2022 or Rs 81,673 cr m-o-m to Rs.
37,22,010 cr vs. Rs. 38,03,683 in April 2022 (AMFI data). The major fall in overall
MF AUM was attributed to strong outflows across debt funds as well as net outflows
in equity schemes. A sharp fall in the Indian equity market eroded the AUM of many
equity mutual funds categories. Global economic slowdown fuelled by a spike in
inflation numbers, more than expected interest rate hikes globally, and elevated crude
oil prices that pushed the commodities prices has affected the MF industry. Sensex
and Nifty 50 fell by 2.6% and 3.0%, respectively, during the month.

Equity mutual fund net flows saw a rise in May at Rs 18,529 cr as compared
to Rs. 15,890 cr in April. Fall in the equity market created an opportunity for investors
that resulted in gradual rise in net inflows in Equity mutual funds. Gross subscriptions
declined marginally by 3% and redemption sharply by 22% m-o-m, in May. Equity
mutual fund categories saw slow growth momentum in its fund flows.

Large cap funds saw the highest rise in net inflows of Rs. 2,485. Flexi cap
funds witnessed very high net inflow of Rs.2,939 cr in May as against an inflow of Rs
1,709 cr in April. Mid cap funds and Small cap funds recorded marginal rise in net
inflow of Rs. 1,832 cr and Rs. 1,769 cr in May as against net inflow of Rs. 1,550 cr

6
and Rs. 1,717 cr in April resp. Sectoral/Thematic funds recorded sharpest fall in net
inflows of Rs. 2,292 cr in May vs. Rs. 3,844 cr.

Large & Mid cap funds and Focused funds saw a decent rise in inflows to Rs.
2,414 cr and Rs. 1,549 cr in May (vs. Rs. 1,550 cr and Rs. 1,278 cr inflows in April).
Multi cap funds saw fall in net inflows of Rs. 1,265 cr in May vs Rs. 1,340 cr. Open
ended equity oriented schemes AUM fell by 2.5% in May to Rs. 1,331,546 cr (AMFI
data) as equity markets corrected sharply. Debt funds witnessed huge net outflows of
Rs. 32,722 cr in May 2022 (vs. net inflows of Rs. 54,757 cr in April 2022). Money
market Funds saw the highest outflows in the debt category, recording net outflows of
Rs. 14,599 in May. The short end of the G-sec yield curve has moved up sharply in
the past few months pricing in the normalization of monetary policy by RBI.

Ultra short duration funds, Low duration funds and floater funds saw net
outflows to the tune of Rs. 7,105 cr, Rs 6,716 cr and Rs. 5,286 cr in May,
respectively. Liquid funds recorded net inflows of Rs. 1,777 cr in May (vs. net
inflows of Rs. 28,731 cr in April). Overnight funds saw highest net inflow of Rs.
15,071 cr. Short duration funds, Medium duration funds and Dynamic bond funds
recorded net outflows of Rs. 8,603 cr, Rs. 1,222 cr and Rs. 2,414 cr respectively, in
May. Corporate bond funds & Credit risk funds saw net outflow of Rs 2,147 cr and
Rs. 730 cr respectively in May. Banking and PSU bonds funds saw an outflow of Rs
1,211 cr. Debt fund AUMs fell by 2.5% in May on a MoM basis

Mutual Fund Industry Report

During the month of May-22, India’s 10yr G-sec yield remained volatile and
rose sharply by 28 bps from 7.14% as of Apr 29, 2022 to 7.42% as of May 31, 2022.
Post the surprise repo rate hike of 40 bps by RBI, 10yr G-sec yield had shot up to
~7.5% towards start of the month. Expected RBI measures to cool off bond yields led
to yield dropping to ~7.2% mark.

Globally, US 10yr bond yield fell by 9 bps from 2.94% as of Apr 29, 2022 to
2.85% as of May 31, 2022. Tracking the hike in interest rate by US Fed, 10yr treasury
yield had shot up to 3.14% in the 1st week of May-22. However, as the month

7
progressed, bond yield fell gradually led by recession fears and market expectation of
less aggressive rate hikes by US Fed.

The US Fed laid down the map to start reducing its balance sheet size (also
termed as quantitative tightening) by $ 47.5 bn on a monthly basis starting Jun-22.
The monthly pace of balance sheet reduction will be increased to $ 95 bn from Sep-22
onwards. By the end of Dec-22, Fed funds rate is expected in the range of 2.75-3.00%
range with ~57% probability. The

Shorter end of the yield curve (upto 4yr segment) has moved up sharply in the
range of 110-145 bps in response to interest rate hikes by RBI and tightening
liquidity. While on the other hand, longer end (above 10yr segment) has moved up by
only 30-60 bps as the term spreads were already on higher side on account of huge
government borrowing and inflation concerns.

India Mutual Fund Market Analysis

As a result of COVID-19-induced lockdowns, the mutual fund industry's SIP

collections fell by 4% to INR 96,000 crore in FY 2020-2021. This resulted in income
uncertainty. Many investors chose to halt their SIPs as a result of the pandemic. From
a peak of Rs 8,641 crore, the contribution fell for 11 months in a row before breaking
through to new highs.

The average assets under management (AAUM) of the Indian Mutual Fund
Industry for February 2022 stood at INR 38,56,140 crore. The industry’s AUM had
crossed the milestone of INR 10 trillion (INR 10 lakh crore) for the first time in May
2014. In around three years, the AUM increased more than twofold, and in August
2017, it crossed INR 20 trillion (INR 20 lakh crore) for the first time. The AUM size
crossed INR 30 trillion (INR 30 lakh crore) for the first time in November 2020. The
industry's AUM was INR 37.56 trillion (INR 37.56 lakh crore) as of February 28,
2022.

The rising digital penetration, smart cities, and increased data speeds also
facilitate the drift of asset shares toward smaller cities and towns. The increased retail
contribution through SIPs shows the level of digital penetration in India. The total

8
number of accounts (or folios, as per mutual fund parlance) as of February 28, 2022,
was 12.61 crore (126.1 million units)

India Mutual Fund Industry Segments

The report provides an understanding of the Indian mutual fund industry,

regulatory environment, MF companies, and their business models. The report also
provides a detailed market segmentation with the product types, current market
trends, changes in market dynamics, and growth opportunities. Furthermore, an in-
depth analysis of the market size and forecasts for the various segments are presented.

Mutual Fund SIPs Register Significant Growth

Owing to the large number of new first-time investors entering the market and
the simplicity of registering SIPs through online fintech portals, the number of SIPs
and monthly collections has increased. However, the average ticket value per SIP has
decreased. In December 2021, the average SIP ticket size fell to INR 2,303 per SIP,
down from INR 3,313 in December 2017. Monthly SIP receipts, on the other hand,
increased by 77% to INR 11,005 crore in December 2021, compared to INR 6222
crore in December 2017

Across the world, High Net-worth Individuals (HNI) are turning to specialist
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Service is the Portfolio Management division of Aditya Birla Sun Life AMC Limited
that helps you manage your wealth. This is a personalized tailor made service for
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Investment Philosophy

• Our investment philosophy is designed to seek consistent, long-term results by

adopting a research-based, methodical approach to investing.
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• Our team believes not only in making the most of your money but also in
providing you with extra-ordinary personalized service. The endeavor is to

9
 make the investment process as convenient and personalized as possible to suit
your needs.
• Aditya Birla Sun Life AMC Limited - The power behind Portfolio
Management Services.
• Portfolio Management Service is a division of Aditya Birla Sun Life AMC
Limited.
• Established in 1994, Aditya Birla Sun Life AMC Limited (ABSLAMC) is a
joint venture between Aditya Birla Group, a well-known Indian conglomerate
and Sun Life Financial Inc., leading international financial services
organization from Canada.

Investment Objective

The objective of the scheme is long term growth of capital, through investment in
equity & equity related instruments across market cap (large, mid & small) companies

Mutual Funds – A Better Way of Planning your Investments

Mutual funds are steadily making an entry into the household savings with an
increased awareness about financial planning and higher efforts towards promoting
mutual funds as an investment product. Further, the availability of a wide range of
mutual fund schemes makes it easier for you to choose the mutual fund scheme to suit
your financial goals.

Moreover, with everything becoming more expensive, investment in

traditional instruments might not live up to your expectations. This is where
investments in mutual funds can be beneficial. Whatever your goals might be, there
are mutual funds to help meet them.

MARKET NEWS
PRE SESSION MID SESSION END SESSION

Date Heading

01-Nov-21 Market may open higher; key earnings, economic data eyed

29-Oct-21 Market may open higher

10
 Date Heading

28-Oct-21 Market may open on flat note; key corporate results eyed

27-Oct-21 Market may open lower; key corporate results eyed

26-Oct-21 SGX Nifty indicates at positive start for Indian indices

25-Oct-21 Stocks may open slightly higher

22-Oct-21 Indices may open on positive note

Wealth Creation could be an ideal investment solution for investors seeking

long-term wealth generation. Schemes under this solution invest a major portion of
your capital in equity stocks, helping your money grow in the long run. If you want to
save for a specific long-term goal, such as retirement, saving for a second home, or
higher education of your children, our Wealth Creation solution could be the right
choice. You can select different equity funds for your different goals as per your
investment needs.

Benefits of Wealth Creation Solution

• Provide broad diversification

• Helps you achieve long-term financial goals
• Professional money management by the expert portfolio managers
• Flexible investment option

Who can invest in Wealth Creation Solution?

• Investors seeking long-term wealth generation

• Individuals with 5 years or longer investment horizon
• Investors with moderate to high-risk profile
• Investors seeking tax-efficient investment solutions

Choosing the right mutual fund, hence, becomes the first important step in
achieving your financial goal.

Here are some common Mutual Fund Solutions to invest in for these goals.

11
Who should invest in this fund?

An investor looking for an equity fund which would be suitable investment

proposition across market cycles and with at least 3 years investment horizon Looking
at 3-5 year investment horizon perspective

Benefits of Portfolio Management Services

• Experienced and knowledge driven guidance

• Access to research content created by a team of experienced Research
Analysts and Fund Managers
• Time tested approach which has stood the test of various market cycles
• Rigorously researched portfolio that is benchmark agnostic and focused on
wealth creation
• Offers wide array of investment products/options to choose from

Discretionary Portfolio Management Services (D-PMS) Aditya Birla Money

Core & Satellite Portfolio/ Multi Cap/ Sector Agnostic Benefit from a dual approach
to portfolio management. Strive to beat the benchmark (CNX100) using superior
stock selection (for Core Portfolio) and tactical positioning (for Satellite Portfolio).

• Portfolio Features
• Multi cap strategy
• Sector agnostic Portfolio (Diversified equity portfolio)
• A focused 15 – 20 stocks ideas
• Benchmark – CNX 100

Aditya Birla Money India Consumption Portfolio / Multi cap / Thematic A

unique one of a kind portfolio, this multi cap fund strives to beat the benchmark (BSE
200) using superior stock selection

• Portfolio Features
• Multi cap strategy
• A Consumption focused portfolio with 12 – 18 stocks ideas
• Benchmark – BSE 200

Fund Positioning:

12
Value Added Products:

Systematic Investment Plan - Available Online & Offline for Direct & Regular
investors to iron out intermittent market volatility and enable long term savings

Salient features of SIP:

Step-up SIP – This facility lets investors enhance the SIP amount during
regular intervals. This allows you to make the most out of your SIP investments by
increasing your contributions towards those schemes that are performing well.
Additionally, you can also increase your investment amount when there is a hike in
your pay.

Multi Scheme SIP Facility - The Facility enables investors to subscribe under
various Schemes through SIP using a single application form and payment instruction.

Fund Details

• Fund Type - Open-Ended

• Class - Equity

• Category - Flexi Cap

• Min Investment - Rs. 100/-

• Fund Manager - Mr. Anil Shah & Mr. Vinod Bhat

• Latest NAV - 1171.44 (as on 29-Oct-2021)

Fund Performance

13
 Funds are bucketed on various parameters with respect to other funds in their
category.

*Annualized returns are displayed for 1 year and above.

Since
Fund 1 year 3 years 5 years
Inception

Aditya Birla Sun Life

59.10 % 21.15 % 14.51 % 22.80 %
Flexi Cap Fund

Aditya Birla Sun Life

Manufacturing Equity 46.11 % 16.67 % 10.92 % 10.77 %
Fund

Aditya Birla Sun Life

Special Opportunities 59.30 % - - 58.10 %
Fund

Aditya Birla Sun Life

76.46 % 20.42 % 12.29 % 22.32 %
Midcap Fund

Portfolio and Sector Holdings

% to Net
Issuer
Assets

ICICI Bank Ltd. 8.83

Infosys Ltd. 7.76

HDFC Bank Ltd. 6.8

14
 Bharti Airtel Ltd. 5.26

Dr. Reddy's Laboratories Ltd. 5.17

HCL Technologies Ltd. 4.32

Clearing Corporation Of India Ltd. 3.77

Sun Pharmaceutical Industries Ltd. 3.02

Bajaj Finance Ltd. 2.83

Kotak Mahindra Bank Ltd. 2.26

Bharti Airtel Ltd. - (Rights Entitlements (REs)) 0.08

Ultratech Cement Ltd. 0.07

Kewal Kiran Clothing Ltd. 0.04

The Phoenix Mills Ltd. 0.03

Fund Summary

The Scheme may also invest up to 50% of the portfolio (i.e. net assets
including cash) in such derivative instruments as may be introduced from time to time
subject to framework specified by SEBI, for the purpose of hedging and portfolio
balancing and other uses as may be permitted under SEBI Regulations. The
cumulative gross exposure to equity, equity related instruments, debt, money market
instruments and derivative position shall not exceed 100% of the net assets of the
Scheme.

15
Fund Investment Strategy

The Scheme may invest in Structured Obligations / Credit Enhancements not

exceeding 10% of the debt portfolio of the scheme and the group exposure in such
instruments shall not exceed 5% of the debt portfolio of the scheme. The Scheme may
invest in mutual fund units as permissible. The Scheme retains the flexibility to invest
across all the securities in the debt and money markets as permitted by SEBI / RBI
from time to time.

Aditya Birla Sun Life Flexi Cap Fund

(An open ended dynamic equity scheme investing across large cap, mid cap, small
cap stocks)

• This product is suitable for investors who are seeking

• Long term capital growth
• investments in equity and equity related securities
• We recommend investors to consult their financial advisers in case of doubt
about whether the product is suitable for them.

Highlights

• Investment in promising companies across industries

• Discipline
• Wealth creation with equity investments

16
 CHAPTER-II

2. REVIEW OF LITERATURE

Chaudhury et al (2016) - The paper read the investors' inclination for mutual funds.
Private Representatives and Government workers are discovered to be intrigued while
the most un-intrigued investors are from the horticultural area. Financial balances
fund to have mastery over mutual fund investment. Exceptional yield with okay is the
overall supposition of each investor. Yet, trust and certainty over fund supervisor,
fund plan, and resource management organizations additionally influence investment
choice. In this sense, UTI, SBI, ICICI, and Reliance offered mutual funds are liked by
the majority of the investors. Value based funds hold greatest inclination followed by
adjusted funds and afterward obligation funds. Monetary counsellors found to have a
unique job impacting investors. For the explanation, the specialists educate for the
legitimate proper preparing with respect to Individual monetary counsels. It is
likewise recommended to focus on completely fixed salaried individuals as they can
put resources into SIP on customary premise.

Dodiya (2016) - The scientist contemplated the different segment factors influencing
investment choice in mutual fund area. The investigation was done in Ahmedabad
city of Gujarat. The examination uncovers that the re-visitation of be a first concern
while mutual fund investment and adaptability were having least need. Furthermore,
straightforwardness and reasonableness additionally discovered successful in
investment. Other than age likewise matters for impacting investors on the grounds
that the examination discovered most of investors to be in age until 45 years while
over 45 years age individuals are less mutual fund investors. It shows that as an
individual develops more seasoned, their risk taking mentality decreases and
adolescents are more inclined to risk with the impetus of a better yield.

Dwivedi (2016) – The paper plans to consider the impact of 2018 financial
emergency on mutual fund investment market. It uncovered that there are essentially
five free causes which influences investor’s choice with respect to
continuation/discontinuance of mutual fund investment, for example, investors' pay,
and time viewpoint of investment, risk demeanour of investors, past returns and level
and wellspring of data. The examination found that big league salary investors
proceeded to investor in mutual fund because of the utility hypothesis. As to point of

17
view, those investors proceeded to mutual fund who didn't expect any further liquidity
emergency in their short run. The investors who are risk loath ended with mutual fund
in dread of misfortune for too high risk in capital market. Past returns of mutual fund
additionally impacts the investors as though they are exceptionally fulfilled they
proceed to mutual fund investment because of their certainty while less fulfilled
investors will promptly pull out themselves.

Renu Gosh (2017) evaluated the performance of mutual funds through risk-return
analysis, Treynor’s ratio, Sharpe’s ratio, Jensen’s measure and Fama’s measure. The
facts used in the study is daily closing NAVs of selected schemes consist of three
public-sponsored, three private-sponsored and three private (foreign)- sponsored
mutual fund schemes for the period from 1st January 2010 to 31st December 2013.
With the results of performance measures, she suggested and concluded that the
private foreign companies sponsored mutual fund scheme performance is better than
public and private companies–sponsored mutual fund schemes.

Busse, Goyal and Wahal (2017) examine active retail mutual funds and institutional
products with an authorization to invest in global equity markets between 1991 and
2009. They find little reliable evidence of alphas in the aggregate or on average after
study using global and regional factor models. The right tail of the distribution
contains some large alphas. Decomposing stock selection from country selection, they
find some evidence of superior stock picking abilities in the extreme right tail.
However, simulations suggest that they are produced just as likely by luck as by skill.
Persistence tests show little evidence of continuation in superior performance.

Deepak Agrawal (2017) in his research found that since the development of the
Indian Capital Market and regulations of the economy in 1992 there have been
structural changes in both primary and secondary markets. Mutual funds are primary
contributors to the globalization of financial markets and one of the main sources of
capital flows to emerging economies. He has analysed the Indian Mutual Fund
Industry pricing mechanism with empirical studies on its valuation and also analyse
data at both the fund-manager and fund-investor levels. His study revealed that the
performance is affected by the saving and investment habits of the people and the
second side the confidence and loyalty of the fund Manager and rewards affects the
performance of the MF industry in India.

18
Prajapati, K. P., & Patel, M. K. (2018) in their research evaluated the performance
of Indian mutual funds which is carried out through relative performance index, risk-
return analysis, Treynor's ratio, Sharp's ratio, Sharp's measure, Jensen's measure, and
Fama's measure. The data for analysis used is daily closing NAVs. The study period
was 1stJanuary 2007 to 31st December, 2011. The results of performance measures
concluded that most of the mutual funds have given positive return during 2007 to
2011. of 28 equity diversified Indian fund schemes for the period from January 2007
to June 2011. The selected equity diversified fund schemes show mixed performance.
He found that about 60% of the fund schemes were able to beat the benchmark
markets. Better performing fund schemes were exposed to higher risk but were less
afflicted to market risks

Abey (2018) – The paper contemplated the different elements impacting investment
choice in mutual fund plans. It found that age and instructive capability doesn't
influence the investment disposition. The paper shows that transient investment
period is more liked than to hang tight for exceptional yield at cost of high risk. The
paper upheld for mutual fund investments for better enhancement. Retirement pay
plans are more liked by investors relying on their assignment or pay level. The expert
management framework additionally impacts mutual fund investment choices as
investment portfolios by giving applicable monetary data.

Singh B K (2018) in an article “A study on investors’ attitude towards mutual funds

as an investment option” from International Journal of Research in Management has
reiterated the need for spreading the awareness about Mutual Funds among common
masses. There is a strong need to make people understand the unique features of
investment in Mutual Funds. From the existing investors point of view the benefits
provided by mutual funds like return potential and liquidity have been perceived to be
most attractive by the invertors’ followed by flexibility, transparency and
affordability.

Divya K. (2019) in the article “A Comparative study on evaluation of Selected

Mutual Funds in India” from International Journal of Marketing and Technology has
suggested that the investment managers whose performance is below benchmark
index should have a relook at their investment strategy and asset allocation. Investing
styles should be redesigned according to up & down swings of the market to generate

19
superior performance. To increase the efficiency and popularity of mutual funds, the
regulator should set the standard criteria of benchmarks which will be helpful to asset
management companies.

Santhi N.S. and Gurunathan K. (2019) in the article “The growth of Mutual Funds
and Regulatory Challenges” from Indian Journal of Applied Research have mentioned
that as mutual fund industry has grown tremendously over past few years, Regulators
are keeping close watch on any potential impact of mutual fund products on financial
stability and market volatility. The growth of mutual funds has been accompanied by
innovative products and servicing methods. Regulators will have to do balancing act
by carefully managing risks and not imposing unnecessary regulation.

Sharma R and Pandya N K (2019) in the article “Investing in Mutual Fund: An

overview” from Asian Research Journal of Business Management mentioned that still
number of people are not clear about functioning of Mutual Funds, as a result so far
they have not made a firm opinion about investment in mutual funds. As far existing
investors, return potential and liquidity have been perceived to be most attractive
there is a lot of scope for the growth of mutual funds in India. People should take
decision based on performance of Mutual fund rather than considering

Ravikumar R (2020) in an article “Analysis of the Risk and Return relationship of

Equity based Mutual Fund in India” from International Journal of Advancements in
Research & Technology have mentioned that their study investigated the performance
of Equity based mutual fund schemes using Capital Asset Pricing Model (CAPM). In
the long run private and public sector mutual funds have performed well. But while
comparing the performance over last 15 years it is found that private sector mutual
funds have outperformed the Sector mutual funds. The schemes of private sector
mutual funds not only performed better than those of public sector mutual funds but
were also found to be less risky.

Aizenmanetal (2020) – The scientist contemplates the impact of efficient risk on the
exhibition of worldwide mutual fund investments. The forthcoming outpouring of
funds has a lower orderly risk as it decreases fund size. During emergency time of the
monetary market, this impact might be proportionately enormous. With more surge of
fund size, the fund administrators become more cautious in holding more fluid
resources lessening the fund-explicit risk. The paper considers that there is a non-

20
direct connection between the imminent progression of funds and precise risk
commitment.

Alameluetal (2020) - The analysts firmly contended the idea of Systematic

Investment Plan (SIP) for retail investors as a cutting edge and unrivalled investment
road. The paper proposed risk taker investors to go for a little and mid-cap value fund.
Additionally, value mutual fund plans are appropriate for such investors who can
contribute just with a low sum. It has been discovered that enormous cap value
development funds give less return in long haul when contrasted with little and mid-
cap, Tax saving fund plans. Because of less risk, the funds get back to be low. During
their investigation, ICICI, Reliance, and UTI offered value plans are found to give
preferable returns over different funds.

Dodiya (2021) - The scientist contemplated the different segment factors influencing
investment choice in mutual fund area. The investigation was done in Ahmedabad
city of Gujarat. The examination uncovers that the re-visitation of be a first concern
while mutual fund investment and adaptability were having least need. Furthermore,
straightforwardness and reasonableness additionally discovered successful in
investment. Pay level is additionally significant determinant to affect mutual fund area
as the investigation reports that most extreme investors hold fine pay level while low-
pay level people fears to enter to mutual fund risk because of their less discretionary
cash flow. However, the paper has likewise discovered that independent of any
instructive capability, an individual is prepared to put resources into mutual fund
industry in the event that they have great pay and with a special case of a sound
return.

Dwivedi (2021) – The paper plans to consider the impact of 2008 financial
emergency on mutual fund investment market. It uncovered that there are essentially
five free causes which influences investors choice with respect to
continuation/discontinuance of mutual fund investment, for example, investors' pay,
time viewpoint of investment, risk demeanor of investors, past returns and level and
wellspring of data. The examination found that big league salary investors proceeded
to investor in mutual fund because of the utility hypothesis.

Sehdev R and Ranjan P (2021) in the article “A study on Investor’s perception

towards mutual fund investment” from Scholars Journal of Economics, Business and

21
Management have mentioned that mostly people prefer balanced funds and debt
funds. After that people look for Equity diversified and Sector funds. The factors
responsible for investors’ preference for mutual funds as an investment option are
benefits and transparency, returns, redemption period, Liquidity and Institutional
Investor’s activity. For information on mutual funds people are mostly depending on
internet rather than any other media channel.

Prabhu G and Vechalekar N.M. (2022) in the article “Perception of Indian Investor
towards investment in mutual funds with special reference to MIP Funds” from
Journal of Economics and Finance have mentioned that most of the investors are
aware of various schemes of mutual funds. The mutual fund investors mainly belong
to the age group from 19 years to 55 years. The investors fall in the income group of
Rs 30,000 to Rs 70,000 and above. Investors prefer mutual funds due to
diversification of portfolio and tax benefits. Consistent returns given by funds have
been the reason of investors’ interest in MIP fund

Dr. K. Veeraiah and Dr. A. Kishore Kumar (Jan 2022), conducted a research on
Comparative Performance Analysis of Indian Mutual Fund Schemes. This study
analyzes the performance of owned mutual funds and compares their performance.
The performance of these funds was analyzed using a five year NAVs and portfolio
allocation. Findings of the study reveals that, mutual funds out perform naïve
investment. Mutual funds as a medium-to-long term investment option are preferred
as a suitable investment option by investors.

Goel et al (2022) - The paper mirrored an outline of Indian mutual fund area and its
new patterns. There is the consideration of numerous unfamiliar mutual funds in the
Indian market. Numerous consolidations and acquisitions have been confirmed.
Indian mutual fund industry is developing at CAGR of 15%. The quantities of mutual
fund records and exchanges have likewise expanded. In any case, the commitment of
AUM towards GDP is just 5% - 6% which is altogether lower than numerous
economies. The development of obligation funds is discovered to be above then pay,
adjusted, ETF, and Overseas funds. On this premise, the specialists close degree that
obligation securities in the capital market are consumed by mutual fund area, to a
huge degree. The paper likewise focuses at certain difficulties like absence of
monetary instruction and mindfulness and so on For better and compelling

22
dissemination channel, banks and IFAs are being recommended. An administrative
routineness system is likewise being recommended to set up.

23
 CHAPTER-III

3. RESEARCH METHODOLOGY

3.1 OBJECTIVES OF THE STUDY

• To evaluate the liquidity and working capital efficiency of the concern.

• Analysis of different elements of working capital such as cash, receivables and
inventory.
• To suggest suitable measure so as to improve the working capital position.
• To study the need and importance of working capital.

3.2 RESEARCH DESIGN:

The methodology used in this study is descriptive in nature where the

researcher has to use facts (or) information already available and study the
characteristics of a particular group respectively and there by analyse to make a
critical evaluation of the study.

PERIOD OF THE STUDY:

The financial data for a period five years of Aditya Birla Mutual fund analysed
for the study.

3.3 SOURCE OF DATA:

The secondary data is used for the study and are collected from the annual
reports of the company.

3.4 TOOLS USED FOR ANALYSIS DATA

The collection data were tabulated and presented in appropriate places of

various chapters. The performance of the business was evaluated by analysing and
interpreting the working capital of Aditya Birla Mutual fund.

• Ratio analysis
• Trend analysis
24
 • Comparative balance sheet

RATIO ANALYSIS

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain

a quick indication of a firm's financial performance in several key areas. The ratios
are categorized as Short-term Solvency Ratios Debt Management Ratios, Asset
Management Ratios, Profitability Ratios, and Market Value Ratios.

Ratio Analysis as a tool possesses several important features. The data, which
are provided by financial statements, are readily available. The computation of ratios
facilitates the comparison of firms which differ in size. Ratios can be used to compare
a firm's financial performance with industry averages. In addition, ratios can be used
in a form of trend analysis to identify areas where performance has improved or
deteriorated over time.

TREND ANALYSIS

Trend analysis is the process of comparing business data over time to identify
any consistent results or trends. You can then develop a strategy to respond to these
trends in line with your business goals. Trend analysis helps you understand how your
business has performed and predict where current business operations and practices
will take you.

You can use trend analysis to help improve your business by:

• identifying areas where your business is performing well so you can duplicate
success
• identifying areas where your business is underperforming
• Providing evidence to inform your decision making.

25
COMPARATIVE BALANCE SHEET

A comparative balance sheet usually has two columns of amounts that appear
to the right of the account titles or other descriptions such as Cash and Cash
Equivalents, Accounts Receivable, Accounts Payable, etc. The first column of
amounts contains the amounts as of a recent moment or point in time. Providing the
amounts from an earlier date gives the reader of the balance sheet a point of
reference—something to which the recent amounts can be compared.

3.5 SCOPE OF THE STUDY

The analysis is mainly carried out to find out the working capital management of
Plant fashions. Clothing industry is a seasonal agricultural based industry in which the
working capital management plays an important role. Study is conducted to review
the performance of the working capital management of the company for a period of
five years. It also provides suitable suggestions and conclusions based on the
findings.

3.6 LIMITATIONS OF THE STUDY

• Financial analysis is based upon monetary information. As the financial

statements are prepared on the basis of a going concern, it does not give exact
position.
• The accounting concepts and conversion cause a serious limitation to financial
analysis.

26
 CHAPTER- IV

4. DATA ANALYSIS AND INTERPRETATION

ANALYSIS OF DATA

The analysis of data requires a number of closely related operations such as

establishment of categories, the application of these categories to raw data through
coding, tabulation and then drawing inferences. The unwieldy data should necessarily
condense into a manageable groups and tables for further analysis.

Thus, researcher should classify the raw data into some purposeful and usable
categories. Analysis work after tabulation is generally based on the computation of
various percentages, coefficients, etc., by applying various well defined statistical
formulae.

INTERPRETATION OF DATA

The real value of research lies in its ability to arrive at certain generalizations.
If the researcher had no hypothesis to start with, he might seek to explain his findings
on the basis of some theory. It is known as interpretation. The process of
interpretation may quite often trigger off new questions which in turn may lead
further researches.

I. RATIO ANALYSIS

TURNOVER RATIOS

The turnover ratios or activity ratios indicate the efficiency with which the
capital employed is rotated in the business. The overall profitability of the business
depends on two factors: (i) the rate of return of capital employed; and (ii) the
turnover, i.e., the speed at which the capital employed in the business rotates.

27
4.1 WORKING CAPTIAL TURNOVER RATIO

Working capital of a concern is directly related to sales (i.e.) the current assets
like debtors, bills receivables, cash, stock etc., and change with the increase (or)
decrease in sales.

Working capital =Current assets-Current liabilities

This excess of current assets over current liabilities is referred to as net

working capital. Working capital turnover ratio indicated the velocity of the
utilization of net working capital. This ratio indicated the number of times the
working capital is turned over in the course of a year. A higher ratio indicates
efficient utilization of working capital and a low ratio indicated otherwise.

Sales
WORKING CAPITAL TURNOVER RATIO = --------------------------
Working capital

TABLE: 4.1

WORKING CAPITAL TURNOVER RATIO

Year Sales Networking capital Ratio

2017-18 1216.07 -21.47 -56.64

2018-19 1384.52 18.71 74.00

2019-20 1213.82 -71.33 -17.02

2020-21 1040.68 -149.15 -6.98

2021-22 1263.47 -63.20 -2-.00

Sources: Secondary data

INTERPRETATION:

28
 From the above table shows that the working capital turnover ratio is -56.64 in
2017-18 and increased to 74.00 in 2018-19 and then decreased to -17.02 in 2019-
20.then last year decreased to -2.00. This shows working capital turnover ratio is
decrease level.

CHART –- 4.1

WORKING CAPITAL TURNOVER RATIO

80

60

40 74

20
RATIO

0 -6.98 -2
-17.02
2017-18 2018-19 2019-20 2020-21 2021-22
-20
-56.64
-40

-60
YEAR

29
4.2 FIXED ASSET RATIO

The ratio establishes the relationship between fixed assets and long-term
funds. The objective of calculating this ratio is to ascertain the proportion of long-
term funds invested in fixed assets. The ratio is calculated as given below:

Formula

Fixed assets

Fixed assets ratio = ----------------------------

Long – term funds

The ratio should not generally be more than ‘1’. If the ratio is less than one it
indicates that a portion of working capital has been financed by long – term funds. It
is desirable in that part of working capital is core working capital and it is more or
less a fixed item.

An ideal fixed assets ratio is 0.67

TABLE NO 4.2

FIXED ASSETS RATIO

Year Fixed Assets Long Term Funds Ratio

2017-18 25.01 1072.60 0.02

2018-19 29.85 1263.17 0.02

2019-20 84.05 1346.08 0.06

2020-21 75.97 1723.18 0.04

2021-22 70.89 2200.61 0.03

Source: secondary data

30
INTERPRETATION

Table - 4.2 shows the fixed assets ratio during the period 2017-18 to 2021-22.
The table indicates that the company has 0.02 in the year of 2017-18. Then next year
maintain same level in 2018-19. Then next year of 2019-20 ratio was increased to
0.06. The last year decreased 0.03 in the year of 2021-22. The Fixed asset ratio is
fluctuating trend.

CHART NO 4.2

FIXED ASSETS RATIO

0.06

0.05

0.04
RATIO

0.03 0.06

0.02 0.04
0.03
0.01 0.02 0.02

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

31
4.3 DEBTORS TURNOVER RATIO

The liquidity position of a concern to pay its short term obligations in time
depends upon the quality of its debtors. Debtors turn ratio indicates the velocity of
debtors collection firm (i.e.) it indicates the number of times average debtors are
turned over during a year.

Sales
DEBTORS TURN OVER RATIO = ---------------------------------------------------
Average Debtors + Bills Receivable

TABLE: 4.3

DEBTORS TURNOVER RATIO

Year Sales Average Debtors Ratio

2017-18 1216.07 29.52 41.19

2018-19 1384.52 30.84 44.89

2019-20 1213.82 28.33 42.84

2020-21 1040.68 29.69 35.05

2021-22 1263.47 22.16 57.01

Sources: Secondary data

INTERPRETATION:

From the above table shows that the Debtors turnover ratio lies within its Higher
limit. The ratio shows lowest as 35.05 at 2020-21 and shows highest as 57.01 at 2021-
22 and there is no standard norm for Debtors turnover ratio. Debtors turnover ratio is
Increasing trend.

32
 CHART – 4.3

DEBTORS TURNOVER RATIO

60

50

40
RATIO

30 57.01
41.19 44.89 42.84
20 35.05

10

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

33
4.4 GROSS PROFIT RATIO

The gross profit ratio is also known as gross margin ratio, trading margin ratio
etc., it is expressed as a “percent ratio”. The different between net sales and cost of
goods sold is known as gross profit.

Gross profit / Loss

GROSS PROFIT RATIO = -------------------------------------
Net Sales

TABLE – 4.4

GROSS PROFIT RATIO

Year Gross Profit / Loss Net Sales Ratio

2017-18 484.32 1216.07 0.40

2018-19 648.01 1384.52 0.47

2019-20 657.59 1213.82 0.54

2020-21 690.93 1040.68 0.66

2021-22 887.11 1263.47 0.70

Sources: Secondary data

INTERPRETATION:

The above table shows that the gross profit ratio. This ratio is an indicator
of the firm’s ability to meet its current obligations. The lowest ratio (0.40) was
obtained during the period 2017-18 and the highest ratio (0.70) value obtained during
the period 2021-22. The gross profit ratio is increasing trend.

34
 CHART – 4.4

GROSS PROFIT RATIO

0.8
0.7
0.6
0.5
RATIO

0.4
0.66 0.7
0.3
0.54
0.47
0.2 0.4
0.1
0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

35
4.5 NET PROFIT RATIO

It establishes a relationship between net profit (after tax) and sales. It is

determined by dividing the net income after tax to the sales for the period and
measures the profit per rupee of sales.

Net profit / Loss

NET PROFIT RATIO =-------------------------------------------------- X 100
Net Sale

TABLE – 4.5

NET PROFIT RATIO

Year Net Profit / Loss Net Sales Ratio (%)

2017-18 322.00 1216.07 26.48

2018-19 448.87 1384.52 32.42

2019-20 485.90 1213.82 40.03

2020-21 515.84 1040.68 49.57

2021-22 660.36 1263.47 52.26

Sources: Secondary data

INTERPRETATION:

The above table shows that the Net profit ratio from 2017-18 to 2021-22. The
ratio shows that 26.48 at 2017-18 and increased to 32.42 at 2018-19 and then it was
increased to -40.03 in 2019-20 and then increase to 52.26 in 2021-22. So the Net
profit ratio is increasing trend.

36
 CHART – 4.5

NET PROFIT RATIO

60

50

40
RATIO

30 52.26
49.57
20 40.03
32.42
26.48
10

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

37
4.6 CURRENT RATIO

Current ratio is the most common ratio for measuring liquidity. The current
ratio is the ratio of total current assets to total current liabilities. Current ratio of
affirm measures its term solvency i.e. ability to meet short term obligations. Current
assets mean assets that will either be used up or converted into cash within a year’s
time or during the normal operating cycle of the business, whichever is longer.

Current assets

Current assets = ------------------------------

Current liabilities

TABLE – 4.6

CURRENT RATIO

Year Current Assets Current liabilities Ratio

2017-18 267.47 288.94 0.92

2018-19 224.01 205.31 1.09

2019-20 176.01 247.34 0.71

2020-21 125.12 274.27 0.46

2021-22 170.50 233.70 0.73

Sources: Secondary data

INTERPRETATION:

The above table shows that the current ratio is an indicator of the firm’s
ability to meet its current obligations. The lowest ratio 0.46 was obtained during the
period 2020-2021 and the highest ratio 1.09 value obtained during the period 2018-
2019. The current asset ratio is above than the decreased in year by year. Therefore
the current ratio is considered not satisfactory.

38
 CHART – 4.6

CURRENT RATIO

1.2

0.8
RATIO

0.6 1.09
0.92
0.4 0.71 0.73
0.46
0.2

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

39
4.7 CASH POSITION RATIO

The ratio of industry total cash and cash equivalents to its current liabilities.
The cash ratio is most commonly used as a measure of company liquidity. It can
therefore determine if, and how quickly, the company can repay its short-term debt. A
strong cash ratio is useful to creditors when deciding how much debt, if any, they
would be willing to extend to the asking party. An ideal cash position ratio is 0.75:1

Cash & bank balance

Cash Position Ratio =

Current liabilities

TABLE NO. 4.7

CASH POSITION RATIO

Cash & bank

Year Current liabilities Ratio
balance

2017-18 11.02 288.94 0.04

2018-19 5.19 205.31 0.02

2019-20 9.65 247.34 0.04

2020-21 10.34 274.27 0.04

2021-22 39.23 233.70 0.17

Source: Annual report

Inference:

The above table shows that the Cash position ratio of the Industry. In the year
2017-18 the cash position ratio is 0.04 and it was decrease 0.02 in the year 2018-19

40
and it was increase in the year 2019-20, 2020-21 was 0.04. In the year 2021-22 it was
up to 0.17. So the cash position ratio is increasing trend.

CHART NO.4.7

CASH POSITION RATIO

0.18
0.16
0.14
0.12
RATIO

0.1
0.17
0.08
0.06
0.04
0.02 0.04 0.04 0.04
0.02
0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

41
4.8 CURRENT ASSET TURNOVER RATIO:

The ratio between sales and the current assets is call current assets turnover
ratio.

Current Asset Turnover Ratio = Sales / Current Asset

TABLE – 4.8

CURRENT ASSET TURNOVER RATIO

Year
Sales Current asset Ratio

2017-18 1216.07 267.47 4.55

2018-19 1384.52 224.01 6.18
1216.07 1213.82 176.01 6.89
2020-21 1040.68 125.12 8.32
2021-22 1263.47 170.50 7.41
Source: Annual Report

INTERPRETATION

The above table shows that there is a increasing in current assets turnover
ratio throughout the study period range between 4.55, 6.18, 6.89, 8.32 and 7.41, even
though the fund contributed in the current assets turnover shows an increasing and
fluctuating trend.

42
 CHART – 4.8

CURRENT ASSET TURNOVER RATIO

9
8
7
6
RATIO

5
8.32
4 6.89 7.41
6.18
3
4.55
2
1
0
2017-18 2018-19 1216.07 2020-21 2021-22
YEAR

43
4.9 OPERATING PROFIT RATIO

It is ratio of profit made form operating sources to the sales, usually shown as
a percentage. It shows the operational efficiency of the firm and is a measure of the
management’s efficiency in running the routine operations of the firm.

Operating profit

Operating profit ratio = X 100

Sales

Operating expenses include administration, selling and distribution expenses.

Finance expenses are generally excluded.

44
 TABLE – 4.9

OPERATING PROFIT RATIO

Year
Operating profit Net sales Ratio

2017-18 449.25 1216.07 36.94

2018-19 654.57 1384.52 47.28

1216.07 692.60 1213.82 57.06

2020-21 589.93 1040.68 56.69

2021-22 806.12 1263.47 63.80

Source: Annual Report

INTERPRATATION

From the above table it is obvious that the operating profit ratio shows and
increasing trend in the financial year 2017-18 and 2021-22 are 36.94 to 56.69 whereas
in the last financial years 2021-22 the operating profit ratio is 63.80.

45
 CHART – 4.9

OPERATING PROFIT RATIO

70

60

50

40
RATIO

30 63.8
57.06 56.69
47.28
20 36.94
10

0
2017-18 2018-19 1216.07 2020-21 2021-22
YEAR

46
4.10 FIXED ASSETS TURNOVER RATIO

This ratio determines efficiency of utilization of fixed assets and profitability

of a business concern. Higher the ratio more is the efficiency in utilization of fixed
assets. A lower ratio is the indication of under utilization of fixed assets.

Formula

Sales

Fixed assets turnover ratio = -------------------------

Net fixed assets

Where net fixed assets = Fixed assets – Depreciation

47
 TABLE – 4.10

FIXED ASSET TURNOVER RATIO

Year Fixed asset Sales Ratio

2017-18 25.01 1216.07 0.02

2018-19 29.85 1384.52 0.02

1219.20 84.05 1213.82 0.07

2020-21 75.97 1040.68 0.07

2021-22 70.89 1263.47 0.06

Source: Annual Report

INTERPRATATION

From the above table informed that in the financial years the fixed asset
turnover ratio is 2017 -18 is 0.02 and the next year ratio is same level. The next two
year of 2019-20 and 2020-21 is 0.07 and the last year was to 0.06. So the Fixed asset
turnover ratio is fluctuating trend.

48
 CHART – 4.10

FIXED ASSET TIRNOVER RATIO

0.07

0.06

0.05

0.04
RATIO

0.07 0.07
0.03 0.06

0.02

0.01 0.02 0.02

0
2017-18 2018-19 1219.2 2020-21 2021-22
YEAR

49
4.11 TOTAL ASSETS TURNOVER RATIO:

The total assets turnover ratio measures the ability of a company to use its
assets to generate sales. This ratio indicates how much Birr in sales the company
squeezes out of Birr it has invested in assets. It considers all assets including fixed
assets, like plant and equipment, as well as inventory and accounts receivable.

It measures a company's efficiency at using its assets in generating sales or

revenue - the higher the total assets turnover ratio, the more efficient is the
management and utilization of the assets while low total assets turnover ratios are
indicative of underutilization of available resources and presence of idle capacity. The
lower the total asset turnover ratio, as compared to historical data for the firm and
industry data, the more sluggish the firm's sales. Gitman, (2004). This may indicate a
problem with one or more of the asset categories composing total assets - inventory,
receivables, or fixed assets. The company should analyze the various asset classes to
determine where the problem lies.

It also indicates pricing strategy: companies with low profit margins tend to
have high asset turnover, while those with high profit margins have low asset
turnover.

Sales
Total Asset Turnover ratio =
Total Asset

50
 TABLE - 4.11

TOTAL ASSETS TURNOVER RATIO

Year Sales Total Asset Ratio

2017-18 1216.07 1072.60 1.13

2018-19 1384.52 1263.17 1.10

2019-20 1213.82 1346.08 0.90

2020-21 1040.68 1723.18 0.60

2021-22 1263.47 2200.61 0.57

Source: secondary data

INTERPRETATION

The above table shows that the Total assets turnover ratio of the company
during the study period. It was 1.13 in the year 2017-18 and then come down 1.10
again in the next year 2019-20 onwards it decreased to 0.90. It was decreased from
the year 2021-22 is 0.57. Hence the company is maintaining its bad level position of
assets. The Total assets turnover ratio was decreasing trend.

51
 CHART - 4.11

TOTAL ASSETS TURNOVER RATIO

1.2

0.8
RATIO

0.6 1.13 1.1

0.9
0.4
0.6 0.57
0.2

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

52
4.12 CURRENT ASSETS TO WORKING CAPITAL RATIO:

Ratio shows the difference between the current assets and working capital thus
shows the position of the firm. The purpose of the ratio is to working capital
influenced in current assets.

Current Assets
Current Assets to Working Capital Ratio = ------------------------
Working Capital

53
 TABLE – 4.12

CURRENT ASSETS TO WORKING CAPITAL RATIO

Year C.A W.C Ratio

2017-18 267.47 -21.47 -12.46

2018-19 224.01 18.71 11.97

2019-20 176.01 -71.33 -2.47

2020-21 125.12 -149.15 -0.84

2021-22 170.50 -63.20 -2.70

Source: Secondary Data

INTERPRETATION:

From the above table it was clear the current assets to working capital ratio for
the year 2017-2018 the ratio was -12.46, the next year ratio is 11.97 to 2018-2019,
and the next year ratio is -2.47 to 2019-2020, the current assets to working capital
ratio is -0.84 to 2020-2021 and the last year ratio is -2.70 to 2021-2022.

54
 CHART – 4.12

CURRENT ASSETS TO WORKING CAPITAL RATIO

15

10
11.97
5
RATIO

0 -2.47 -0.84 -2.7

2017-18 2018-19 2019-20 2020-21 2021-22
-5 -12.46

-10

-15
YEAR

55
4.13 CURRENT ASSET TO TOTAL ASSET

This ratio represents the structure of assets and the amount in form of current
assets per each pound invested in assets. Current assets are important to business
because they are the assets that are used to found day-to-day operations and pay on-
going expenses and include cash, accounts receivable, inventory, marketable
securities, prepaid expenses and other liquid assets that can be readily converted to
cash.

Current assets

Current Asset to Total Asset =

Total assets

56
 TABLE 4.13

CURRENT ASSET TO TOTAL ASSET

Year Current assets Total assets Ratio

2017-18 267.47 1072.60 0.25

2018-19 224.01 1263.17 0.18

2019-20 176.01 1346.08 0.13

2020-21 125.12 1723.18 0.07

2021-22 170.50 2200.61 0.08

Source: secondary data

INTERPRETATION

The above table shows the relationship between current assets to total assets.
In the year of 2017 to 18 was 0.25 and then next year decrease to 0.18. The final year
of 2021-22 ratio was decreased to 0.08. The current asset to total assets ratio was
decreasing Trend. The company maintain bad position of asset level.

57
 CHART 4.13

CURRENT ASSET TO TOTAL ASSET

0.25

0.2

0.15
RATIO

0.25
0.1 0.18
0.13
0.05 0.07 0.08

0
2017-18 2018-19 2019-20 2020-21 2021-22
YEAR

58
4.14 CASH TO WORKING CAPITAL RATIO

The cash to working capital ratio measure how well a company can meet its
short-term liabilities using its liquid assets such as cash and cash equivalents and
marketable securities. The ratio will also help uncover situations where the company
may be too heavily spending its cash on inventory that is not being turned into sales as
rapidly as it should be.

Cash
Cash to working capital ratio =
Working capital

59
 TABLE - 4.14

CASH TO WORKING CAPITAL RATIO

Year Cash Working capital Ratio

2017-18 11.02 -21.47 -0.51

2018-19 5.19 18.71 0.28

2019-20 9.65 -71.33 -0.13

2020-21 10.34 -149.15 -0.07

2021-22 39.23 -63.20 -0.62

Source: secondary data

INTERPRETATION

From the above table, the ratio is gradually from the year of 2017-18 to 2021-
22 performance in working capital. In the year of 2017-18 is -0.51. In the year of
2018-19 are decreased to 0.28. In the year of 2019-22 was -0.13, -0.07, -0.62.
Fluctuating cash to working capital ratio can indicate the company may be suffering
from low cash reserves, and may not be able to meet its financial obligations.

60
 CHART - 4.14

CASH TO WORKING CAPITAL RATIO

0.3
0.2
0.28
0.1
0 -0.07
-0.13
-0.1 2017-18 2018-19 2019-20 2020-21 2021-22
RATIO

-0.2 -0.51
-0.3 -0.62
-0.4
-0.5
-0.6
-0.7
YEAR

61
4.15 TREND ANALYSIS

Trend analysis is the process of comparing business data over time to identify
any consistent results or trends. You can then develop a strategy to respond to these
trends in line with your business goals.

Trend analysis helps you understand how your business has performed and
predict where current business operations and practices will take you. Done well, it
will give you ideas about how you might change things to move your business in the
right direction.

You can use trend analysis to help improve your business by:

• identifying areas where your business is performing well so you can duplicate
success
• identifying areas where your business is underperforming
• Providing evidence to inform your decision making.

This guide explains how you can use historical data to analyse trends and improve
your business.

62
 TABLE NO -4.15

TREND ANALYSIS

CURRENT
CURRENT ASSETS WORKING CAPITAL
LIABILITIES
TREND TREND TREND
YEAR AMOUNT AMOUNT AMOUNT
% % %
2018 267.47 100 288.94 100 -21.47 100
2019 224.01 83.75 205.31 71.05 18.71 -87.14
2020 176.01 65.80 247.34 85.59 -71.33 332.21
2021 125.12 46.77 274.27 94.91 -149.15 694.64
2022 170.50 63.73 233.70 80.87 -63.20 294.34
Sources: Secondary Data
INTERPRETATION

The Current assets have decreased 6.73 the Five‐years period while the current
liabilities has decreased 80.87 and the working capital have 294.34. These trend
percentages reflect an unfavorable impact on net income because costs increased at a
faster rate than sales.

63
 CHART NO -4.15

TREND ANALYSIS

694.64
700

600

500
TREND PERCENNTAGE

400 332.21
294.34 CURRENT ASSET
300 CURRENT LIABILITY
200 WORKING CAPITAL
100
100
100 83.75 85.59 94.91 63.73
80.87
71.05 65.8
100 46.77

0
2018 2019 2020 2021 2022
-100
-87.14 YEAR

64
 TABLE 4.16

CHANGES OF SHOWING WORKING CAPITAL FOR THE YEAR 2018-19

Changes

Increase/ % of
Particulars 2018 2019
Decrease Changes

Currents Assets :

Inventories 0.00 0.00 0.00 0.00

Sundry debtors 39.79 21.90 -17.89 -44.96

Cash and Bank Balance 11.02 5.19 -5.83 -52.90

Loans and advances 216.67 196.92 -19.75 -9.11

Total (A) 267.48 224.01 -43.47 -16.25

Current Liabilities and

provisions:

Current Liabilities
217.32 155.73 -61.59 -28.34
Provisions
71.63 49.58 -22.05 -30.78

Total (B) 288.95 205.31 -83.64 -28.94

Working Capital [A - B] -21.47 18.71 40.18 187.14

65
 TABLE 4.17

CHANGES OF SHOWING WORKING CAPITAL FOR THE YEAR 2019-20

Changes

Increase/ % of
Particulars 2019 2020
Decrease Changes

Currents Assets :

Inventories 0.00 0.00 0.00 0.00

Sundry debtors 21.90 34.77 12.87 37.01

Cash and Bank Balance 5.19 9.65 4.46 46.22

Loans and advances 196.92 131.60 -65.32 -33.17

Total (A) 224.01 176.02 -47.99 -21.42

Current Liabilities and

provisions:

Current Liabilities
155.73 177.37 21.64 12.20
Provisions
49.58 69.97 20.39 29.14

Total (B) 205.31 247.34 42.03 16.99

Working Capital [A - B] 18.71 -71.32 -90.03 -126.23

66
 TABLE 4.18

CHANGES OF SHOWING WORKING CAPITAL FOR THE YEAR 2020-21

Changes

Increase/ % of
Particulars 2020 2021
Decrease Changes

Currents Assets :

Inventories 0.00 0.00 0.00 0.00

Sundry debtors 34.77 24.61 -10.16 -29.22

Cash and Bank Balance 9.65 10.34 0.69 7.15

Loans and advances 131.60 90.17 -41.43 -31.48

Total (A) 176.02 125.12 -50.9 -28.92

Current Liabilities and

provisions:

Current Liabilities
177.37 180.44 3.07 1.73
Provisions
69.97 93.83 23.86 34.10

Total (B) 247.34 274.27 26.93 10.89

Working Capital [A - B] -71.32 -149.15 -77.83 109.12

67
 TABLE 4.19

CHANGES OF SHOWING WORKING CAPITAL FOR THE YEAR 2021-22

Changes

Increase/ % of
Particulars 2021 2022
Decrease Changes

Currents Assets :

Inventories 0.00 0.00 0.00 0.00

Sundry debtors 24.61 19.71 -4.9 -19.91

Cash and Bank Balance 10.34 39.23 28.89 279.40

Loans and advances 90.17 111.56 21.39 23.72

Total (A) 125.12 170.50 45.38 36.27

Current Liabilities and

provisions:

Current Liabilities
180.44 196.69 16.25 9.00
Provisions
93.83 37.01 -56.82 60.55

Total (B) 274.27 233.70 -40.57 -14.79

Working Capital [A - B] -149.15 -63.20 85.95 -57.62

68
 TABLE 4.20

COMMON SIZE BALANCE SHEET FROM 2018-2022

Particulars 2018 2019 2020 2021 2022

SOURCE OF FUNDS

Shares 18.00 18.00 18.00 18.00 144.00

Reserve and surpluses 1054.60 1245.17 1328.08 1705.18 2056.61

Loan funds 0.00 0.00 0.00 0.00 0.00

Current liability and provisions 288.94 205.31 247.34 274.27 233.70

Total 1361.59 1468.48 1593.42 1997.45 2434.31

APPLICATION OF FUNDS

Fixed assets 25.01 29.85 84.05 75.97 70.89

Investment 1068.65 1212.32 1332.38 1795.27 2190.00

Current assets, loan advances 267.47 224.01 176.01 125.12 170.50

Capital work in progress 0.41 2.29 0.98 1.09 2.92

Total 1361.54 1468.47 1593.42 1997.45 2434.31

69
4.21 COMPOUND ANNUAL GROWTH RATE - CAGR

The year-over-year growth rate of an investment over a specified period of

time. The compound annual growth rate is calculated by taking the nth root of the
total percentage growth rate, where n is the number of years in the period being
considered.

This can be written as follows:

Ending Value No of years

CAGR = ---------------- -1

Beginning Value

70
 TABLE 4.21
COMPOUND ANNUAL GROWTH RATE
YEAR WORKING CAPITAL
2018 -21.47
2019 18.71
2020 -71.33
2021 -149.15
2022 -63.20
Source: Secondary Data

-63.20 5

-21.47 -1

71
 CAGR = -0.81

INFERENCE

From the above analysis the researcher found that the compound annual
growth rate is -0.41 between the year 2018 and 2022.

72
 CHAPTER – V

5. FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 FINDINGS

➢ Working capital turnover ratio is -56.64 in 2017-18 and increased to 74.00 in

2018-19 and then decreased to -17.02 in 2019-20. Then last year decreased to
-2.00. This shows working capital turnover ratio is decrease level.
➢ The last year decreased 0.03 in the year of 2021-22. The Fixed asset ratio is
fluctuating trend.
➢ Debtor’s turnover ratio lies within its higher limit. The ratio shows lowest as
35.05 at 2020-21 and shows highest as 57.01 at 2021-22 and there is no
standard norm for Debtors turnover ratio. Debtor’s turnover ratio is Increasing
trend.
➢ The lowest ratio (0.40) was obtained during the period 2017-18 and the
highest ratio (0.70) value obtained during the period 2021-22. The gross profit
ratio is increasing trend.
➢ The net profit ratio that 26.48 at 2017-18 and increased to 32.42 at 2018-19
and then it was increased to -40.03 in 2019-20 and then increase to 52.26 in
2021-22. So the Net profit ratio is increasing trend.
➢ The lowest ratio 0.46 was obtained during the period 2020-2021 and the
highest ratio 1.09 value obtained during the period 2018 -2019. The current
asset ratio is above than the decreased in year by year. Therefore the current
ratio is considered not satisfactory.
➢ In the year 2017-18 the cash position ratio is 0.04 and it was decrease 0.02 in
the year 2018-19 and it was increase in the year 2019-20, 2020-21 was 0.04.
In the year 2021-22 it was up to 0.17. So the cash position ratio is increasing
trend.
➢ Increasing in current assets turnover ratio throughout the study period range
between 4.55, 6.18, 6.89, 8.32 and 7.41, even though the fund contributed in
the current assets turnover shows an increasing and fluctuating trend.
➢ Operating profit ratio shows and increasing trend in the financial year 2017-18
and 2021-22 are 36.94 to 56.69 whereas in the last financial years 2021-22 the
operating profit ratio is 63.80.

73
➢ So the Fixed asset turnover ratio is fluctuating trend.
➢ Hence the company is maintaining its bad level position of assets. The Total
assets turnover ratio was decreasing trend.
➢ Current assets to working capital ratio for the year 2017-2018 the ratio was -
12.46, the next year ratio is 11.97 to 2018-2019, and the next year ratio is -
2.47 to 2019-2020, the current assets to working capital ratio is -0.84 to 2020-
2021 and the last year ratio is -2.70 to 2021-2022.
➢ The current asset to total assets ratio was decreasing Trend. The company
maintains bad position of asset level.
➢ Fluctuating cash to working capital ratio can indicate the company may be
suffering from low cash reserves, and may not be able to meet its financial
obligations.

74
5.2 SUGGESTIONS

Further research should be undertaken to find out why Mutual fund does not
have a statistically significant effect on financial performance of selected Aditya Birla
despite the fact that past literature is suggesting otherwise. Further research should
also be undertaken on the effect of regulation and supervision on loan performance in
microfinance in Chennai. Further research should also be done on the relationship
between debt management and non-performing loans on Aditya Birla industries and
the reasons behind loan default in organizations from the clients’ perspective.

75
 CHAPTER - VI

6. CONCLUSION

The provisions of the effect of credit approval procedure practices on growth

impacted on the hire purchase sector for Aditya Birla positively. The above
observations proved that proper records were kept and control exercised in most of
the business enterprises, although there were certain areas that were not satisfactory.
This resulted in some hire purchase sector for SMEs incurring losses because they had
not kept proper accounting records of their previous customers by updating the old
records. The summary showed that most of hire purchase sector for mutual fund
approve credit customers before credit allowance and append with proper valid timing
practices. This made the hire purchase sector for more cautious in managing the
liquidity. Moreover, the approval procedures were used in all the four companies in
depth and that could mean low credit pending factors from a majority of customers
who had a straight record.

76
 BIBLIOGRAPHY

1. A Study of Mutual Funds, House Report #2247 [August, 19621, Report of the
Committee on Interstate and Foreign Commerce. Ackermann, C., R.
McEnally, and D. Ravenscraft, 2016,

2. "The Performance of Hedge Funds: Risk, Return and Incentives," The Journal
of Finance, 54, 833-874. Ahmed, P., 2017,

3. "Forecasting Correlation among Equity Mutual Funds," Journal of Banking

and Finance, 26, 1187-1208.

4. Ahmed, P., P. Gangopadhyay and S. Nanda, 2018, "Investing in Emerging

Market Mutual Funds," Journal of Business and Economic Perspectives, 29, 5-
15.

5. Alexander, G., J. Jones, and P. Nigro, 2019, "Mutual Fund Shareholders:

Characteristics, Investor Knowledge, and Sources of Information," Financial
Services Review, 7, 301-316.

6. Blake, C., E. Elton and M. Gruber, 2020, "The Performance of Bond Mutual
Funds," The Journal of Business, 66, 371-403. Bogle, J., 1998,

7. "The Implications of Style Analysis for Mutual Fund Performance

Evaluation," The Journal of Portfolio Management,

8. "Mutual Fund Portfolio Activity, Performance, and Market Impact," The

Journal of Finance, 18,377-391.

9. Brown, K., W. Harlow and L. Starks, 2021, "Of Tournaments and

Temptations: An Analysis of Managerial Incentives in the Mutual Fund
Industry," The Journal of Finance, 5l, 85-110.

10. Brown, S. and W. Goetzmann, 2022, "Performance Persistence," The Journal

of Finance, 50, 679-698. "Mutual Fund Styles," Journal of Financial
Economics, 43, 373-399.

77
WEBSITE

https://mutualfund.adityabirlacapital.com/

ANNEXURE

PROFIT AND LOSS ACCOUNT OF ADITYA BIRLA MUTUAL FUND AS ON

MARCH 2018-2022

Profit & Loss Mar'22 Mar'21 Mar'20 Mar'19 Mar'18

12Months 12Months 12Months 12Months 12Months

INCOME:

Sales Turnover 1263.47 1040.68 1213.82 1384.52 1216.07

Excise Duty .00 .00 .00 .00 .00

NET SALES 1263.47 1040.68 1213.82 1384.52 1216.07

Other Income 115.5553 137.3221 0.9272 6.4728 44.9053

TOTAL INCOME 1379.03 1178.01 1214.75 1390.99 1260.97

EXPENDITURE:

Manufacturing Expenses 19.76 47.06 151.53 317.28 399.59

Material Consumed .00 .00 .00 .00 .00

Personal Expenses 238.18 224.72 229.47 261.48 218.70

Selling Expenses .00 .00 .00 .00 .00

Administrative Expenses 199.41 178.98 140.22 151.19 148.52

78
 Expenses Capitalised .00 .00 .00 .00 .00

Provisions Made .00 .00 .00 .00 .00

TOTAL EXPENDITURE 457.35 450.75 521.22 729.95 766.81

Operating Profit 806.12 589.93 692.60 654.57 449.25

EBITDA 921.68 727.25 693.53 661.04 494.16

Depreciation 34.57 36.32 35.94 13.04 9.84

Other Write-offs .00 .00 .00 .00 .00

EBIT 887.11 690.93 657.59 648.01 484.32

Interest 4.82 5.50 5.40 .00 .00

EBT 882.28 685.43 652.19 648.01 484.32

Taxes 221.92 169.59 166.28 199.14 162.32

Profit and Loss for the Year 660.36 515.84 485.90 448.87 322.00

Non Recurring Items .63 1.27 -2.26 -.36 .00

Other Non Cash Adjustments .00 .00 .00 .00 .00

Other Adjustments -.63 -1.27 2.26 .36 .00

REPORTED PAT 660.36 515.84 485.90 448.87 322.00

KEY ITEMS

Preference Dividend .00 .00 .00 .00 .00

Equity Dividend 231.84 140.00 262.17 239.43 159.13

Equity Dividend (%) 161.00 777.80 1456.49 1330.14 884.03

79
 Shares in Issue (Lakhs) 2880.00 180.00 180.00 180.00 180.00

EPS - Annualised (Rs) 22.93 286.58 269.95 249.37 178.89

BALANCE SHEETS OF ADITYA BIRLA MUTUAL FUND AS ON MARCH

2018-2022

Particulars Mar'22 Mar'21 Mar'20 Mar'19 Mar'18

12 12 12 12 12
Liabilities Months Months Months Months Months

Share Capital 144.00 18.00 18.00 18.00 18.00

Reserves & Surplus 2056.61 1705.18 1328.08 1245.17 1054.60

Net Worth 2200.61 1723.18 1346.08 1263.17 1072.60

Secured Loan .00 .00 .00 .00 .00

Unsecured Loan .00 .00 .00 .00 .00

TOTAL LIABILITIES 2200.61 1723.18 1346.08 1263.17 1072.60

Assets

Gross Block 110.12 110.85 110.69 46.52 67.34

(-) Acc. Depreciation 39.23 34.88 26.64 16.66 42.34

Net Block 70.89 75.97 84.05 29.85 25.01

Capital Work in Progress 2.92 1.09 .98 2.29 .41

80
 Investments 2190.00 1795.27 1332.38 1212.32 1068.65

Inventories .00 .00 .00 .00 .00

Sundry Debtors 19.71 24.61 34.77 21.90 39.79

Cash and Bank 39.23 10.34 9.65 5.19 11.02

Loans and Advances 111.56 90.17 131.60 196.92 216.67

Total Current Assets 170.50 125.12 176.01 224.01 267.47

Current Liabilities 196.69 180.44 177.37 155.73 217.32

Provisions 37.01 93.83 69.97 49.58 71.63

Total Current Liabilities 233.70 274.27 247.34 205.31 288.94

NET CURRENT ASSETS -63.20 -149.15 -71.33 18.71 -21.47

Misc. Expenses .00 .00 .00 .00 .00

TOTAL
ASSETS(A+B+C+D+E) 2200.61 1723.18 1346.08 1263.17 1072.60

81