A Comparative Study of Working Capital Management of Steel Companies in India

— For an effectualness operating of a business concern, working capital plays a vital role as a life blood of organization. I even have created efforts during this paper to review the varied assets and liabilities elements to find out the outcome of working capital management policies on profit of BSE/ NSE listed steel corporations of India. This study is predicated on secondary information collected from annual reports of various steel corporations for the year 2009 to 2016. During the study of this paper I have used ratio analysis technique to investigate and interpret the data, to spot the considerable effects of current assets and current liabilities management on the profit. The management of assets is important because it may enforce an, on the spot impact on profit and liquidity. Within the study, six private and public sector steel corporations operative in India have been hand-picked.


I. INTRODUCTION
The developing economies are typically faced with the matter of inefficient utilization of resources in the market. Capital is the scarcest productive resource in such economies and efficient utilization of these resources promotes the role of growth, cuts down the value of production and particularly improves the potency of the productivity system. Capital required by commercial enterprises is divided into 2 categories: one is fixed capital and the second is working/ functioning capital. Thus, fixed capital and working capital are the dominant contributors to the capital of a developing country. Fixe capital investment generates productive capability, whereas assets make the use of that capability potential and thereby to take care of the continuity of the cyclical flow of production and sales. Therefore, working capital /assets are understood as life blood of business. The earlier attention of financial management was a lot of on a protracted term financial decisions. Working capital management, that deals with short term financial decisions, seems to possess been comparatively neglected within the literature of finance. Leslie R Howard, justifiably points out that a deeper understanding of the importance of working capital and its satisfactory provisions will cause not solely a fabric saving within the economical use of capital, however conjointly assist in furthering the ultimately aim of business, particularly that of increasing financial outcome or return with the use of minimum quantity of resources.
A simple and enforced working capital management includes a vital role for firms' profitability also on sustains liquidity powers. The vital element of finance is functioning capital management; since it directly influences firm's profit also as liquidity in everyday activities. In any business concern, it's apparent that there should be spare assets to run day to day operation. Therefore, to perform the business activities swimmingly, working capital of firm's should be plenteous. it's obvious that, the importance of economical current assets and liabilities management is unquestionable to any or all business activities. Because, business capability depends on its ability to effectively use of current assets such as cash, inventories, and current liabilities such as creditors, bills payables etc.
Thus, working capital ought to neither too high nor too low. Excessive assets indicates an accumulation of idle current assets (resources) that don't contribute in generating financial gain (profit) for the firm throughout the operating period. On the opposite aspect, inadequate assets harm the creditors' trustworthiness of day to day activities of companies and this could cause financial breakdown (bankruptcy). Working capital is descriptive of that capital which is not fixed but, the more common use of working capital is to common use of working capital is to consider it as the difference between the book value of the current assets and current liabilities." In short, working capital is the difference between current assets and current liabilities. It suggests that if we've got one hundred fifty lacks current assets and one hundred lack current liabilities, the working capital is fifty lacks. Thus, working capital is the quantity of current assets that stay within the firm whereas firm's all liabilities are paid. It suggests that once working capital stays within the firm, firms don't have any liabilities to pay.

To establish a relationship between working capital
Management and profitability during eight years from 2009 to 2016. 3.2 To make comparative study of financial ratios of six steel corporations of India.

IV. RESEARCH METHODOLOGY
The Management of working capital is essential as it has a direct impact on profitability and liquidity.

QUICK RATIO
Quick ratio is the measure of the instant debt paying ability of the firm. Thus it is also known as Acid test ratio. This ratio establishes the relationship between quick assets and liquid liabilities. Quick ratio 0.50:1 is considered as an ideal ratio. If the quick ratio is 0.50:1, the financial position of the firm seems to be sound and good. On the other hand if the quick ratio is less than 0.50:1, the financial position of the firm is unsound.  (0.73). This present study indicates good liquidity condition of RINL, SAIL and Jindal steel companies because the current ratio of these companies are more than 1 i.e. It represents that the companies can meet the shortterm liabilities at maturity without fail.

Quick Ratio = Quick Assets/ Current Liabilities
During this study it is also observed that the solvency condition of TATA, JSW and Surya Roshni ltd. Is not as good as their average current ratio is >1 i.e. it represents that these companies can not meet their short-term liabilities at maturity. A quick ratio which is greater than 1 means that the company has sufficient quick assets to pay for its current liabilities. These Quick assets (cash and cash equivalents, marketable securities, and short-term receivables) are current assets that can be converted into cash very easily. Thus, companies having good quick ratios are favored by creditors.
In the above The ideal quick ratio depends greatly upon the industry that the company is working in. A company which is operating in an industry with a short operating cycle generally does not need a high quick ratio. Financial ratios should be compared with industry standards to determine whether such ratios are normal or deviate materially from what is expected.