A Study on Working Capital Management in Premier Plasmotec Private Limited, Hosur
J K Anit Vinsiga1, G. Arumugasamy2
1Assistant Professor, Department of Management Studies, Stella Mary’s College of Engineering Aruthenganvilai, Kalluketti Junction, Azhikkal Road, Nagercoil, 629 202, Kanya Kumari District, Tamil Nadu.
1Professor & Head in Management Studies, Ponjesly College of Engineering Parvathipuram, Nagercoil 629 003, Kanya Kumari District, Tamil Nadu.
*Corresponding Author E-mail: vinsigajohn@gmail.com, g.arumugasamy74@gmail.com
ABSTRACT:
The research was intended to assess working capital management. It was carried out in premier plasmotec private limited as the case study with following Objective, to study and analyze the working capital position in premier plasmotec private Ltd, the study reviewed literature related to working capital management giving emphasis on the methods used to manage working capital. The research design was Analytical research. The Sample size was last five years financial statements. Data was collected from secondary sources which include annual reports of premier plasmotec private limited. The study used tables and figures to present the collected data while percentage provided the basis upon which analysis and interpretation was based. The period considered for the study is five years. This project tries to evaluate how the management of working capital is done in The Kanyakumari District Central Cooperative Bank through Ratio analysis, Comparative statement analysis, Common size statement and Trend analysis. The study of working capital management has shown that The Kanyakumari District Central Cooperative Bank Ltd has a fairly strong working capital position. Bank is utilizing working capital effectively this is good for the bank. It has to maintain it further.
KEYWORDS: Working Capital, Assets, Liability, Liquidity, Solvency, Finance.
1. INTRODUCTION:
Working capital management is a business strategy designed to ensure that a company operates efficiently by monitoring and using its current assets and liabilities to their most effective use1.
Working capital management is the most important and challenging task for financial managers since they are among the decision-makers who improve the financial position of firms2.
This can be difficult for managers, but it is crucial because a business needs to make sure that it is running in an organized and advantageous way3. If a firm has to little current assets compared to its current liabilities, this will affect the company’s growth and profitability4. Thus, the importance of working capital policies cannot be overemphasized in corporate finance since it directly affects the firm’s performance.
· Working capital management requires monitoring a company's assets and liabilities to maintain sufficient cash flow to meet its short-term operating costs and short-term debt obligations.4.
· Working capital management involves tracking various ratios, including the working capital ratio, the collection ratio, and the inventory ratio5.
· Working capital management can improve a company's cash flow management and earnings quality by using its resources efficiently6.
2. INDUSTRY PROFILE:
Automotive industry comprise a wide range of companies and organization involved in design, development, manufacturing, marketing and selling of motor vehicles5. It is one of the world’s largest industries by revenue (from 16% such as in France up to 40% to countries like Slovakia). It is also the industry with the highest spending on research and development per firm6. The word automotive comes from the Greek autos (self) and Latin motives (of motion), referring to any form of self-powered vehicle7. This term, as proposed by Elmer Sperry (1860- 1930), first came into use with reference to automobiles in 1898.8 The industry’s principal products are passenger automobile and light trucks, including pick up vans and sport utility vehicles. Automotive engines are described in gasoline engine and diesel engine.9
3. COMPANY PROFILE:
Ever since our company was established in 1979, Premier have been proud of its reputation of manufacturing plastic components of the very highest quality. Throughout the history of the company kept pace with innovation and technology to ensure our production methods meet the stringent standards for client demand.Premier approach to new production introduction (NPI) is unique to the business. It gives customers a complete programme of service which can make a big difference to their product development process.Premier offer project management, product design, rapid prototyping and tool making services on-site, in addition to molding and assembly service.
4. STUDY OBJECTIVES:
To study the working capital position in Premier Plasmotec Private Limited, Hosur.
1. To evaluate the financial performance of the company.
2. To analyze the profitability position of the company.
3. To analyze the liquidity and solvency position of the company.
4. To find out the changes in working capital position of the company.
4.1 Methodology of Data Collection:
The methodology of data collection pertains to information to how the data is collected i.e. either from primary sources or secondary sources. It explains the methods utilized and the instruments used in data collection.
4.2 Sources of Data:
The sources of data can be classified in two categories:
· Primary sources
· Secondary sources
Primary Sources:
The primary data are collected by the through and detailed discussion was conducted with the Assistant General Manager-Finance and accounts. And the discussion.
Secondary Sources
I used secondary sources also for collecting the data. They are:
· Information from the text sources
· Information from the internet sources
· Information from the materials provided by the concern
4.3 Limitations of the study:
· The study is confined only to a period of 5 years.
· Time constraint.
· The study is used on secondary data such as annual report of the Premier plasmotec Private limited
4.4 Sampling Design:
Sampling Unit: Financial statement
Sampling Size: Last 5 years financial statements
4.5 Tools used for analysis of Data:
The data were analyzed using the following financial tools. They are:
· Ratio analysis
· Statement of changes in working capital
· Common size statement
· Trend analysis
5. DATA ANALYSIS AND INTERPRETATION:
5.1 Working Capital Turnover Ratio:
It is taken as one of the primary indicators of the short-term solvency of the business. It establishes their relationship with the net sales. This ratio represents the number of times the working capital is turned over in course of a year i.e. it measures the efficiency with which the working capital is being used by the firm.
Working capital turnover ratio = Revenue / Working Capital
Table: 1 Working Capital Turnover Ratio.
|
Year |
Revenue |
Working capital |
Working capital Turnover ratio |
|
2017-2018 |
1,28,56,60,344 |
-8,58,61,608 |
-14.97 |
|
2018-2019 |
13,20,54,587 |
-1,86,67,330 |
-7.07 |
|
2019-2020 |
29,58,64,700 |
-4,93,89,153 |
-5.99 |
|
2020-2021 |
43,44,36,257 |
-4,08,52,473 |
-10.63 |
|
2021-2022 |
63,67,65,000 |
78,79,000 |
80.8 |
Source: Primary data
Figure :1 Chart: Working Capital Turnover Ratio
The table 5 1 shows that the Working Capital Turnover Ratio of Premier Plasmotec Private Limited. Working capital turnover measures how effective a business is at generating sales for every dollar of working capital put to use. The Working Capital Turnover Ratio maximum in the year 2021-2022 in 80.80 and minimum in the year 2019-2020 in 5.99.
Table 2: Statement of changes in working capital for the year 2019 -2020 to 2020-2021
|
Particular |
2019-2020 |
2021-2021 |
Increase |
Decrease |
|
Current Asset |
- |
- |
- |
- |
|
Cash |
107872498 |
69789418 |
|
38083080 |
|
Balance with other banks |
277568977 |
464630493 |
187061516 |
|
|
Loans& Advances |
7412394134 |
8662800699 |
1250406565 |
|
|
Interest receivable |
56617326 |
55612118 |
|
1005208 |
|
Total(A) |
7854452935 |
9252832728 |
1437486081 |
39088288 |
|
Particular |
2018-2019 |
2019-2020 |
Increase |
Decrease |
|
Current liabilities |
- |
- |
- |
- |
|
Borrowings |
1755227494 |
2344862120 |
589634626 |
|
|
Overdue interest reserve |
2522027 |
4052388 |
1530361 |
|
|
Interest payable |
170872810 |
191787199 |
20914390 |
|
|
Total (B) |
1928622331 |
2540701707 |
799140893 |
39088288 |
|
Net working capital (A-B) |
5925830604 |
6712131021 |
786300417 |
|
|
Increase in working capital |
- |
786300417 |
|
|
|
Total |
5925830604 |
6712131021 |
786300417 |
0 |
Source: Secondary Data
7. FINDINGS:
The current ratio of Premier Plasmotec Private Limited is 0.76 in the year of 2017- 2018. It has decreased to 0.13 in the year of 2018-2019 and it has increased to 1.13 in the year of 2021-2022.
· The quick ratio of Premier Plasmotec Private Limited is 0.69 in the year of 2017-2018. It has increased to 0.99 in the year of 2021-2022 and it has decreased to 0.13 in the year of 2018-2019.
· The absolute liquidity ratio of Premier Plasmotec Private Limited is increased to 0.081 in the year of 2017-2018 and it has decreased to 0.001 in the year of 2020-2021.
· The debt ratio of Premier Plasmotec Private Limited has decreased to 0.1427 in the year of 2020-2021 and increased to 0.8086 in the year of 2017-2018.
· The working capital turnover ratio of Premier Plasmotec Private Limited is -14.97 in the year of 2017-2018. It has decreased to -5.99 in the year of 2019-2020 and it has increased to 80.8 in the year of 2021-2022.
· The assets turnover ratio of Premier Plasmotec Private Limited is 9.19 in the year of 2017-2018. It has decreased to 0.94 in the year of 2018-2019 and it has increased to 19.78 in the year of 2019-2020.
· The net profit margin ratio of Premier Plasmotec Private Limited is 6.80 in the year 2017-2018. It has increased to 11.29 in the year of 2018-2019 and it has decreased to 3.60 in the year of 2020-2021.
· The trend percentage of Premier Plasmotec Private Limited revenue is 100 percent in the year of 2017-2018. It has good improvement and increase of 49.52% which was very high compared to others in the year 2022.
· The total current asset is increased in the year 2018 and the current liability is also increased in the year 2018. Hence the working capital is decreased 7,68,26,151.
· The total current asset is increased in the year 2018 and the current liability has increased in the year 2018. Hence the working capital is increased 6,71,94,278.
· The total current asset is increased in the year 2020 and the current liability is increased in the year 2020. Hence the working capital is decreased 3,07,21,823.
· The total current asset is increased in the year 2021 and the current liability is increased in the year 202. Hence the working capital is increased 85,36,680.
· The total current asset is increased in the year 2021 and the current liability is increased in the year 2021. Hence the working capital is increased 4,87,31,473.
· In the above comparative balance sheet during the year 2017 & 2018 shows the reserves and surplus has been increased by 746.18%, total non-current liabilities has been increased by 565.60%, total current liabilities has been increased by 2902.40%, total non-current assets has been increased by 834.22% and total current liabilities has been increased by 9004.12%.
· In the above comparative balance sheet during the year 2019 & 2020 shows the reserves and surplus has been increased by 144.16%, current liabilities has been increased by 509.69%, Non-current Assets has been increased by 244.17 and current assets has been increased by 568.23%.
· In the above comparative balance sheet during the year 2020 & 2021 shows the reserves and surplus has been decreased by 43.03%, long term provisions has been increased by 317.08%, current liabilities has been increased by 329.62%, non-current assets has been decreased by 113.56% and current assets has been increased by 402.83%.
· In the above comparative balance sheet during the year 2021 & 2022 shows the Reserves and surplus has been increased by 119.31%, Long term borrowings has beendecreased by 46.43%, Long term provisions has been increased by 37.12%, Current liabilities has been decreased by 36.18 and total assets has been decreased by 36.18.
· In the above common size balance sheet during the year 2017 & 2018 shows the non- current liabilities has increased by 19.42% in the year 2018, current liability has increased by 57.21% in the year 2018, non-current assets has increased by 51.10% in the year 2018 and the current assets has increased by 43.6% in the year 2018.
· In the above common size balance sheet during the year 2019& 2020 shows the current liability has increased by 190.28% in the year 2020, non-current assets has increased by 57.02% in the year 2019 and the current assets has increased by 67.39% in the year 2020.
· In the above common size balance sheet during the year 2020 & 2021 shows the current liability has increased by 107.25% in the year 2021, non-current assets has increased by 57.02% in the year 2020 and the current assets has increased by 83.59% in the year 2021.
· In the above common size balance sheet during the year 2021 & 2022 shows the current liability has increased by 107.25% in the year 2021, non-current assets has increased by 38.52% in the year 2022 and the current assets has increased by 83.59% in the year 2021.
· Premier Plasmotec Private Limited need to concentrate to maintain the current ratio and also its quick asset to get better result.
· They must improve their working capital, since it is essential to meet its day to day operations.
· As the value of working capital turnover ratio is decreased, it affects the sales position of the company and also affects the profit position of the company, hence need to increase the working capital turnover ratio.
· They may carefully handle fixed assets to shareholders funds, if it is decreasing the creditors obligations comes up, it is not faring the company.
· It can utilize the maximum long-term funds through bank and financial institution and it can utilize reserve and surplus by either capitalizing or can invest the money somewhere as investments to get benefits.
· The company has to give more importance for their financial health for getting more profit.
· They should maintain the present liquidity position of the company should takeeffective action to finance fixed asset only by mobilizing long funds.
The project titled “Working Capital Management” was carried out in Premier Plasmotec Private Limited, Hosur. A successful management of the working capital in any concern will ensure the success of business. In the analysis, working capital management is good. According to the company, working capital management is good condition. The level of profit is increasing in nature. However, to show the better business result, the management may concentrate on keeping the working capital more scientific method. Proper analysis should be made in increase of sales, sales level before changing credit policy variable, credit policy helps to retained its old customer and create new customer by coming them away from competitors. Better co-ordination between each department is very important like sales, production, purchase etc. because it helps to avoid the credit risk and it decrease the debt collection days.
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Received on 04.05.2025 Revised on 30.06.2025 Accepted on 06.08.2025 Published on 18.02.2026 Available online from February 21, 2026 Asian Journal of Management. 2026;17(1):81-85. DOI: 10.52711/2321-5763.2026.00013 ©AandV Publications All right reserved
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