Working Capital Management At Tinplate Company Of India Limited

Working Capital Management At Tinplate Company Of India Limited

The project proposed is to study the Working Capital Management at Tinplate Company of India Limited standalone. With an aim to learn how TCIL manage his working capital. How they arrange capital for day to day operation. How much working capital required for production. A major part of working capital requirement companies get from the bank, so the bank has to follow certain norms in granting working capital finance to companies. The norms of working capital financing followed by a bank since the mid-70s. And these norms are made by some committee recommendation to strength the procedures for working capital finance by banks. Some of the major committees are Daheija, Tandon, Chore committee. The project contains the credit policy of the TCIL and inventory management system taken by the company. The study also covers how much working capital demand affect the operation and are they facing time lag to get funds.

Research Methodology Adopted

The basic type of research used to prepare this project is descriptive. The study is mainly based on secondary data which are already collected and available. These include internal sources within the company and external sources like books and periodically published annual report of TCIL. Interaction with various employees of the costing department had a major source of information. The study is limited to five financial years i.e. from 2011-2016. The data used in this study has taken from the financial statement and their related schedules of TCIL Jamshedpur. Calculation of various ratios related to working capital (like current, quick, debtor turnover, creditor turnover, cost sheet, and net operating cycle) has done in this report to know the liquidity position of the company and cash conversion cycle. Working capital requirement of TCIL for next three year also projected in this report. Estimation of working capital for the next three year is done through CAGR method and also taken care of external factors (like; expansion plan of TCIL, raw material availability and market study of the steel sector).

Major Findings

These are some major finding I got to know during the study of working capital management at Tata Steel.

1. TCIL takes working capital loan/cash credit from SBI, Union Bank of India, HSBC, and HDFC and term loan from IDBI Bank Ltd, Union Bank of India, Allahabad Bank, State Bank of Hyderabad, State Bank of
2. TCIL uses Cash-Credit/Working Capital Term Loans facility and prefers it over short- term Cash-Credit Account is a primary method in which Banks lend money against the security of commodities and debt. In TCIL, cash credit is secured by hypothecation of Raw Materials, Finished Goods, W.I.P, General stores, and Book Debts.
3. Bank follows certain norms while funding companies for working And these norms are made by committee recommendation. There are several committee reports (Tandon Committee, Daheija Committee, Chore Committee) and companies are supposed to follow one of the committee reports.
4. TCIL purchase some part of raw material from credit basis and remaining part from cash basis and they follow 45 Days creditor But sometimes it’s varying creditor to creditor. Again for debtor its vary debtor to debtor. The minimum time period is allowed by TCIL to its debtor is 30 Days.
5. TCIL do not use EOQ method for ordering raw EOQ i.e. economic order quantity is not done by the management. It is a very important part of inventory which is ignored. EOQ can give the company adequate or optimum level of inventory.
6. Company’s operating cycle/cash conversion cycle is It shows the credibility of the company. The company has a good relationship with its creditors so, that they give a huge time period to TCIL for paying them.

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