Autoparts India Pvt. LTD, Standalone. With An Aim To Learn How Wonjin Manage Their

1.
1 Introduction
The project proposed is to study the Working Capital Management at Wonjin
Autoparts India Pvt. Ltd, standalone. With an aim to learn how Wonjin manage their
working capital. How they arrange capital for day to day operation. How much
working capital required for production. Major part of working capital requirement
companies get from bank, so bank have to follow certain norms in granting working
capital finance to companies. The norms of working capital financing followed by bank
since mid-70s. And these norms are made by some committee recommendation to
strength the procedures for working capital finance by banks. Some of major
committees are Daheija, Tandon, Chore committee. Project contains the credit policy
of Wonjin Autoparts and their inventory management system. The study is also covers
how much working capital demand affect the operation and are they facing time lag to
get funds.
1.2 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 Wonjin Autoparts. Interaction with various
employees of costing department had a major source of information. The study is
limited to five financial year i.e. from 2012-2017. The data used in this study has taken
from the financial statement and their related schedules of Wonjin Autoparts Chennai.
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 Wonjin Autoparts for next three year also projected in this
report. Estimation of working capital for next three year is done through CAGR
method and also taken care of external factors (like expansion plan of Wonjin
Autoparts, raw material availability and market study of aluminium sector).
1.3 Major Findings

1. Wonjin Autoprts takes working capital loan/cash credit from IOB, Shinhan
Bank, HSBC, and HDFC and term loan from IDBI Bank Ltd, Union Bank of India.
2. Wonjin Autoparts uses Cash-Credit/Working Capital Term Loans facility and

prefers it over short term loan. Cash-Credit Account is a primary method in
which Banks lend money against the security of commodities and debt. In
Wonjin Autoparts, 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 capital. And
these norms are made by committee recommendation. There are several
committee report (Tandon Committee, Daheija Committee, Chore Committee)
and companies are supposed to follow one of the committee report.
4. Wonjin Autoparts purchase some part of raw material from credit basis and
remaining part from cash basis and they follow 45 Days creditor policy. But
some time it’s varying creditor to creditor. Again for debt its vary from debtor
to debtor. The minimum time period is allowed by Wonjin Autoparts to its
debtor is 30 Days.
5. Wonjin Autoparts do not use EOQ method for ordering raw material. 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 26days. It shows the

credibility of company. Company has a good relationship with its creditors so,
that they give a huge time period to Wonjin Autoparts for paying them.
1.4 Conclusion
Working capital is a vital part for keep running the production. And it’s important for
all manufacturing companies. And a company should maintain positive working
capital, so that will be able to pay off its current liabilities at any time. Last four year
Wonjin Autoparts does not maintain idle ratio because the lots of loan but this year
Wonjin Autoparts maintaining an idle ratio of working capital. Because they pay the
entire loan and the reducing raw material price. Wonjin Autoparts cash conversion
cycle is only 26 days, which is very less as compared to its competitor.

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1.

1.2 Research Methodology Adopted

1.3 Major Findings

2. Wonjin Autoparts uses Cash-Credit/Working Capital Term Loans facility and

6. Company’s operating cycle/cash conversion cycle is 26days. It shows the

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