Working Capital Management : A Case Study of MMTC Ltd.

Asian Resonance(P: ISSN No. 0976-8602 RNI No.UPENG/2012/42622 VOL.-V, ISSUE-I, January-2016 E: ISSN No. 2349-9443)

Abstract

 Archana Jha 

Assistant Professor, Deptt. of Finance, L.N.M. College of Business Management, Muzaffarpur

The economic development of a nation depends on the availability and utilization of financial resources .India has a rich variety of minerals and the government has sole ownership of these resources.There are a number of govt. trading companies in the business of minerals, metal, ago based products and their allied good at international as well as national level. In view of the importance given to the export of mineral ores in the country‟s five year plan, a decision was taken by Govt. of India to bifurcate the STC and establish another corporation to deal exclusively with the trade in minerals and metals. Minerals and metals trading corporation (MMTC) of India Ltd. Established with entire paid –up capital by Govt. of India. Minerals and metals trading corporation (MMTC) of India Ltd. Involved in the business (export and import) of minerals, metals, agro products and other allied products. To render high quality of services to all categories of customers with professionalism and efficiency it requires efficient management of working capital which plays a crucial role in the successful functioning of the firm. The efficiency of firm to earn profits depends largely on its working capital management. It (WCM) have a crucial effect on firm‟s liquidity and profitability. The liquidity position of firm reflect the image of working capital management. For making the analysis of liquidity- profitability relation of MMTC, ratio analysis techniques have been used. Profitability measure of amount by which a company‟s revenues exceed its relevant expanses. Liquidity as being on one endof straight line and profitability on the other end of the line. There is the trade - off between liquidity and profitability. The period of the study the liquidity position of the firm was not satisfactory. Whereas the profitability position was strong. The excess current assets helps in meeting its financial obligation within the operating cycle of the firm. Maximization of shareholder‟s wealth of a firm is possible only when there are sufficient returns from their operations. But profit can be earned will naturally depends, upon the magnitude of the sale. The working capital makes a bridge between the sale of goods and receipts of cash .So that it is able to meet its obligations timely. It facilitate the maximization of the wealth of the firm. When the profitability position was strong were as the liquidity position was not satisfactory. On the basis of this study it can be concluded that there is no significant difference between liquidity and profitability. The risk factor of the firm is high as compared to profitability. The total risk of the firm is high as compared to the ROCE.

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