Research Paper on Working Capital Management

12125 words 49 pages
International Research Journal of Finance and Economics ISSN 1450-2887 Issue 46 (2010) © EuroJournals Publishing, Inc. 2010 http://www.eurojournals.com/finance.htm

Working Capital Management in Indian Tyre Industry
Jasmine Kaur Assistant Professor in Guru Arjan Dev Institute of Management & Technology, New Delhi E-mail: jasmine.rus@gmail.com Tel: (91) 9811160007; (91)9811669777; (91) (011) 25133012 Abstract The management of Working Capital is one of the most important and challenging aspect of the overall financial management. Merely more effective and efficient management of working capital can ensure survival of a business enterprise. Working Capital Management is concerned with the problems that arise in attempting to manage the
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Exhibit 1:
Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Apollo 3.82 5.30 6.12 5.75 5.67 5.29 5.75 J.K. 3.86 7.17 -7.54 7.62 7 5.5 Ceat 3.83 4.34 5.76 6.16 7 7 8.76 MRF 3.23 2.94 3.67 3.92 4.25 4.69 5.9

International Research Journal of Finance and Economics - Issue 46 (2010)

9

Comparative Inventory Turnover Ratio
10 9 8 7 6 5 4 3 2 1 0 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Apollo J.K. Ceat MRF



The raw material holding period identifies the number of days the raw material stays in the company before being put into the production process. The raw material holding period of Ceat is quite reasonable but Apollo and J.K. Tyres have to reduce the number of holding days.
Exhibit 2: Comparative Raw Material holding days of Apollo, J.K. Ceat and MRF (in days)
Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 Apollo 34 27 30 32 38 38 30 J.K. 33 61 -57 54 34 30 Ceat -21 14 23 26 10 15 MRF 22 27 25 25 21 25 25

Comparative Raw Material holding day
70 60 50 40 30 20 10 0 200001 200102 200203 200304 200405 200506 200607
Apollo J.K. Ceat MRF

• • •

J.K .tyres has already started taking the initiative to reduce the number of holding days from 61 days to 30 days. This can be done by avoiding stocking up of raw materials. The finished goods holding period of

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