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Working Capital Management in Bajaj Allianz Life Insurance

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Text of Working Capital Management in Bajaj Allianz Life Insurance

  • A PROJECT REPORT ON EVALUATION OF WORKING CAPITAL MANAGEMENT IN BAJAJ ALLIANZ LIFE INSURANCE SUBMITTED TO UNIVERSITY OF PUNE IN PARTIAL FULLFILMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY SURESH KUMAR UNDER THE GUIDANCE OF PROF. SHALAKA SAKHREKAR S.K.N. SINHGAD SCHOOL OF BUSINESS MANAGEMENT, AMBEGAON (BK.), PUNE-411041 2012-14
  • ACKNOWLEDGEMENT I owe a great many thanks to a great many people who helped and supported me during the completion of project. My deep sense of gratitude to Mr.Santosh Singh Chief Branch Manager for support and guidance. Thanks and appreciation to the helpful people at BAJAJ ALLIANZ LIFE INSURANCE, for their support. I would like to take this opportunity as privilege to express my deep senseof gratitude to Professor M. N. Navale, Honorable Founder President, and Dr. (Mrs.) Sunanda. M. Navale, Secretary, Sinhgad Technical Education Society, Pune &Dr.RajashreeShinde, Director S.K.N. Sinhgad School of Business Management,Ambegaon (BK), Pune for their continuous encouragement, invaluable guidance and help for completing the present research work. They have been a source of inspiration to means I am indebted to them for initiating me in the field of research. My deepest thanks to Mrs. YogitaKadam, Mrs. SadhanaOgale and Mrs. ShalakaSakhrekar the guide of the project for guiding and correcting various documents of mine with attention and care.She has taken pain to go through the project and make necessary correction as and when needed. I would also thanks my institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well wishers. PLACE: PUNESURESH KUMAR
  • DECLARATION I here by declare that the project work entitled EVALUATION OF WORKING CAPITAL MANAGEMENT IN BAJAJ ALLIANZ LIFE INSURANCE submitted to the Pune university, is a record of an original work done by me under the guidance of SHALAKA SAKHREKAR, faculty member, from SKN SINHGAD SCHOOL OF BUSINESS MANAGEMENT, PUNE I further declare that this project is the result of my own efforts. Place: Pune Date: SURESH KUMAR
  • INDEX
  • Chapter No. Particulars Page No. Executive Summary 1. Introduction 1-3 2. Profile of the organization 4-8 3. Research Methodology 9 4. Conceptual Background 10-24 5. Data presentation and interpretation 25-39 6. Finding, Suggestions and conclusion 40-42 Limitations 43 7. Bibliography Appendix
  • EXECUTIVE SUMMARY
  • Executive Summary: Working Capital is the required for maintenance of day to day business operations. The present day competitive market environment calls for an efficient management of working capital. The reason for this is attributed to the fact that an ineffective working capital management mat force the form to stop its business operations, may even lead to bankruptcy. Hence the goal of working capital management is not just concerned with the management of current assets and current liabilities but also in maintaining a satisfactory level of working capital. Holding current assets in substantial amount strengthens the liquidity position and reduces the riskiness but only at the expense of profitability. Therefore achieving risk-return tradeoff is significant in holding of current assets. While cash outflows are predictable it runs contrary in case of case of cash inflows. Sales program of any business concern does not bring back cash immediately. There is a time lag that exists between sale of goods of services and sales realization. The capital requirement during this time lag is maintained by the operating cycle concept. This study gives in detail the working capital management practices in BALIC. Management of each current asset, namely cash management, accounts receivable management is studied permanent to BALIC. Similarly management of accounts payable, deposit are studied to understand the managing of current liabilities. A part from this concept of operating cycle is studied. The research methodology adopted for this study is mainly from secondary source of data which include annual reports of BALIC, and website of the company. The use of primary sources is limited to interviews with few of the employees in credit department. The study of working capital management has shown that BALIC has a strong working capital position. The Company is also enjoying reasonable profits.
  • INTRODUCTION The overall success of the company depends upon its working capital position. So it should be handled properly because it shows the efficiency & financial strength of a company. WCM is highly important in firms as it is used to generate further returns for the stakeholders. Working Capital Management is a very important fact of financialmanagement due to: Investments in current assets represent a substantial portion of total investment. Investment in current assets & the level of current liabilities have tobe geared quickly to change sales. The working capital is the life blood & nerve center of a business firm. The importance of working capital in any industry needs no special emphasis. No business can run effectively without a sufficient quantity of working capital. It is crucial to retain right level of working capital. WCM is one of the most important functions of corporate management. A business enterprises with ample working capital is always in a position to avail advantages of any favorable opportunity either to buy raw material or to implement a special order or to wait for enhanced market status. Working capital can be utilized for operating costs that are involved in the everyday life of business. Even very successful business owners may need working capital funds when the unexpected circumstances arise. WCM is highly important in firms as it is used to generate further return for the stakeholders. When working capital is managed improperly, allocating more than enough of it will render management non-efficient & reduce the benefits of short term investments. On the other hand, if working capital is too low, the company may miss a lot of profitable investment opportunities or suffer short term liquidity crises, leading to degradation of company credit, as it cannot respond effectively to temporary capital requirements. 1
  • Some the points to be studied under this topic are: How much cash should a firm hold? What should be the firms credit policy? How to & when to pay the creditors of the firm? OBJECTIVES The objectives of project on evaluation of working capital are as follows: 1. To study concept of working capital & components of working capital. 2. To study change of working capital. 3. To analyze profitability, liquidity & working capital position of the company. SCOPE The management of working capital helps us to maintain the working capital at asatisfactory level by managing the current assets and current liabilities. It also helps tomaintain proper balance between profitability, risk and liquidity of the businesssignificantly. By managing the working capital, current liabilities are paid in time. If the firm makespayment to it creditors for raw material in time, it can have the availability of rawmaterial regularly, which does not cause any obstacles in production process. Adequateworking capital increases paying capacity of the business but the excess working capitalcauses more inventory, increases the possibility of delay in realization of 2
  • debts.On the other hand, absence of adequate working capital leads to decrease in return oninvestment. The goodwill of the firm is also adversely affected due to the inability to paycurrent liabilities in time. Hence, the management of working capital helps to manage all the factors affecting theworking capital in the most profitable manner. Limitation of the study: The scope of the present study has been limited interns of period of study as well as sources and nature of data. The period covered by the study extends over 5 years from F.Y 2008/9 to 2011/12. At the time of study, the data could be available up to 2011/12. The limitations of this study are as follows: 1. The study is mainly on secondary data. It is cone mostly on the basis of and published financial documents, like balance sheet, profit and loss account and other related journals, magazines and books etc. 2. The study follows with specific tools financial ratio analysis. 3. The lack of sufficient time and resources is another limitation of the study. The study is fully based on the students financial resources and is to be completed within limited time. The report has taken only 5-years data for the study from year 2008/09 to 2012/13. 4. The study is limited from the point of view of submission on partial fulfillment of the requirement for the Master degree in Business Administration(MBA). 3
  • BAJAJ ALLIANZ LIFE INSURANCE Name and location of the Company: Name: Bajaj Allianz Life Insurance Company Address: GE Plaza, Airport Road, Yerawada, Pune 411006 Tel: +91 020 66026777 Fax E-mail : +91 020 66026789 : [email protected] Introduction: 4
  • Bajaj Allianz Life Insurance is a union between Allianz SE, one of