This document provides an analysis of the working capital management of Bajaj Allianz Life Insurance Company (BALIC) over four fiscal years from 2008-2009 to 2011-2012. It discusses the key components of current assets and current liabilities for BALIC, including cash and bank balances, debtors, creditors, and deposits. The working capital, current ratio, debtors turnover ratio, and other ratios are calculated and analyzed for BALIC over this period. The analysis finds that BALIC's current assets and working capital generally increased over time, while its current liabilities fluctuated, leading to changes in the current ratio from year to year.

1. Case Study on – BAJAJ ALLIANZ
Presented By-
Jahanvi Pandya - 93
Shekhar Parab -94
Harshal Pedamkar-95
Suvarna Phad - 96

2. Introduction
 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 goal of working capital management is to ensure
that the firm is able to continue its operations and that
it has sufficient cash flow to satisfy both maturing
short-term debt and upcoming operational expenses.

3. Working capital
Introduction
 Working capital typically means the firm’s holding of
current or short-term assets such as cash, receivables,
inventory and marketable securities.
 These items are also referred to as circulating capital.
 Corporate executives devote a considerable amount of
attention to the management of working capital.

4. Concept of working capital
 There are two possible interpretations of
working capital concept:
1) Gross working Capital
2) Net Working Capital

5. Gross Working Capital:-
The gross capital working capital focuses on two aspects of
current assets management:
 Optimum investment in current assets
 Financing of current assets
Net Working Capital:-
 Net working capital comprises short term net assets: stock,
debtors and cash less creditors.
 Net working capital represents the excess of total current
assets over total current liabilities.

6. Objective of Working capital:-
 Meet day to day cash flow needs.
 Pay wages and salaries when they fall due.
 Pay creditors to ensure continued suppliers of goods and
services.
 Pay government taxation and providers of cash dividends.
 Ensure the long term survival of the business entity.

7. Components of Working Capital
The working capital cycle is made up of four core components:
 Cash & Cash equivalent.
 Creditors/accounts payable.
 Inventory/stock in hand.
 Debtors/accounts receivables.

8. IMPORTANCE OF WORKING CAPITAL
Growth and Expansion Activities
Operating Efficiency
Price Level Changes
Other Factors

9. APPROACHES TO MANAGING WORKING CAPITAL
Two approaches are generally followed for the management of
working capital,
(i) conventional approach
(ii) operating cycle approach

10. Site Information and
Mobilization Expenses
Raw Materials, Components, Stores
etc.
Work-In
Process
Accounts
Payable Wages, Salaries and
Construction Costs
Cash
Marketing Costs, General
Administration & Financial Costs
Transfer of
Property in
Goods
Sundry Debtors OR Accounts
Receivable
Mobilization Advance from
Client

11. Importance of Working Capital
 It is important we work out the right level of working capital you
will need. If the working capital is too:
 High - Business has surplus funds which are not earning a return; and
 Low - May indicate that your business is facing financial difficulties.
 To Forecast the optimum working capital requirement the
following formula may be used:
 (Estimated cost of good sold x Operating cycle) + Desired cash balance.
 Operating Cycle, O = R + W + F + D – C
 Where, O = Duration of operating cycle.
R = Raw Material storage period.
W= Work-in-process period.
F = Finished Good Storage period.
D = Debtors collection period.
C = Creditors payment period.

12. BAJAJ ALLIANZ
 Bajaj Allianz Life Insurance is a union between Allianz SE, one of
the largest Insurance Company and Bajaj Finserv.
 Allianz SE is a leading insurance conglomerate globally and one
of the largest asset managers in the world, managing assets
worth over a Trillion (Over INR. 55,00,000Crores). Allianz SE has
over 119 years of financial experience and is present in over 70
countries around the world.
 At Bajaj Allianz Life Insurance, customer delight is our guiding
principle. Our business philosophy is to ensure excellent
insurance and investment solutions by offering customized
products, supported by the best technology.

13. Components of current assets:
Current assets refer those assets that are cash or can be converted into cash
within a year.
1)The composition of current assets or the main components of current
assets at BALIC are cash and bank balance, loan and advances and
government securities
2) Miscellaneous current assets are also a component of current assets.
Prepaid expenses, outstanding income like interest receivable and other
current assets are also included in miscellaneous current assets

14.  The following table shows the amount of cash and bank balance, money at call
or short notice, loan and advanced government securities and other current
assets of Bajaj Allianz Life Insurance Company Pvt. Ltd.
Source:- Annual Report of BALIC From 2008/09 to 2012/13
Fiscal Year Sundry
Debtors
Cash and Bank
balance
Loan and
advance
Other C.A Total
2008/09 639,948 3,515,993 76,970 1,148,475 5,381,386
2009/10 1,089,070 2,186,908 130,275 2,022,560 5,298,538
2010/11 1,341,359 4,285,098 147,078 2,344,020 8,217,555
2011/12 1,223,706 4,520,165 170,660 3,832,457 9,746,988

15. Assets of Company was amounted to Rs. 5,460,356 which included Rs. 3,552963 of cash
and bank balance, Rs. 76,970 of loan and advance, Rs. 1,828,423 of miscellaneous
current assets. Current assets of the company increase in all four years.

16. Component of Current Liabilities
Current liabilities is a short-term obligation which is payable within a year.
 The composition of current liabilities or the main components of current liabilities. Tax
provision, staff bonus, proposed dividend payable and other liabilities are included in other
current liabilities
In the above table, the component of current liabilities which consists deposits.Source
annual report of company
Fiscal Year Creditors Deposit Bills Payable Other C.L Total
2008/09 2,249,357 3,318,900 87,607 2,396,492 8,052,356
2009/10 3,701,079 4,129,900 196,168 2,491,564 10,518711
2010/11 3,281,079 4,430,900 98,372 1,690,564 9,500,915
2011/12 4,246,449 4,142,491 97,087 2,368,827 10,654,854

17. 0
1000000
2000000
3000000
4000000
5000000
6000000
2008/09 2009/10 2010/11 2011/12
Current Liabilities
Deposits Other C.L Total

18. Working capital of BALIC
Fiscal Year Total C.A Total C.L WC= CA-CL
2008/09 5,381,386 8,052,356 4,470,970
2009/10 5,298,538 9,500,915 4,202,377
2010/11 8,217,555 10,518,711 2,301,156
2011/12 9,746,988 10,654,854 907,866

19. Current Ratio
Current assets (CA)
Current liabilities (CL)
Fiscal Year Total CA Total CL Current ratio
2008/09 5,381,386 8,052,356 0.67
2009/10 5,298,538 10,518,711 0.50
2010/11 8,217,555 9,500,915 0.86
2011/12 9,746,988 10,654,854 0.91
Average=0.74

20. Debtors Turnover Ratio
Year Credit sales Average Debtors Ratio
2008/09 102,199,181 19,080,194 5.35
2009/10 132,858,985 27,192,101 4.88
2010/11 171,671,451 36,302,837 4.72
2011/12 221,246,824 42,584,634 5.19

21.  Creditors Turnover Ratio = Net Credit Purchases
Average creditors
Year Credit Purchases Average Creditors Ratio
2008/09 96,724,469 82,074,994 1.17
2009/10 127,553,879 112,554,635 1.13
2010/11 165,680,148 146,617,013 1.13
2011/12 213,323,185 189,501,666 1.12

22.  WORKING CAPITAL TURNOVER RATIO = Net Sales
Net Working Capital
Year Net Sales Net Working Capital Ratio
2008/09 102,199,181 20,229,751 5.05
2009/10 132,858,985 23,244,807 5.72
2010/11 171,671,451 36,879,727 4.65
2011/12 221,246,824 32,265,850 6.86

23. Statement of changes in working Capital for the year 2010/11
Particulars 31-3-2010 31-3-2011 Increase Decrease
Current assets
Sundry debtors 1,089,070 1,341,359 298,850
Cash& bank balance 2,186,908 4,285,098 2,198,190
Loan& advance 130,275 147,078 16,803
Other C.A 2,022,560 2,344,020 468,538
Total 5,298,538 8,217,555 2,982,381
Current Liabilities
Sundry creditors 3,701,079 3,281,079 420,000
Deposit 4,129,900 4,430,900 301,000
Bills Payable 196,168 98,372 97,796
Other C.L 2,491,564 1,690,564 801,000
Total 10,518,711 9,500,915 301,000 1,318,796

24. Particulars 31-3-2011 31-3-2012 Increase Decrease
Current assets
Sundry debtors 1,341,359 1,223,706 117,653
Cash& bank balance 4,285,098 4,520,165 235,067
Loan& advance 147,078 170,660 23,582
Other C.A 2,344,020 3,832,457 1,488,437
Total 8,217,555 9,746,988 1,747,086 117,653
Current liabilities
Sundry creditors 3,281,079 4,246,449 765,370
Deposit 4,430,900 4,142,491 - 288,409
Bills payable 98,372 97,087 1,285
Other C.L 1,690,564 2,368,827 678,263
Total 9,500,915 10,654,854 1,443,633 289,694

25. Findings
 Current assets for the year 2009/10 is decreases and its application for the company and current liabilities of the
company is increased by 2,466,355.and by putting formula (W.C= C.A- C.L)working capital of the company for
year 2009/10 is 4,470,970.
 Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of
the company is decreased by 1,017,796 that’s shows the working capital of the company is increased. Here
debtors increased means cash balance of company decreased.
 Current assets for the year 2009/10 is increases and it is good condition for the company and current liabilities of
the company is increased by 1,153,939 that’s shows working capital of company decreased. Here debtors
decreased that’s good for company it shows cash of company increased.
 Current ratio (C.R) of fiscal year 2008/09 to 2011/12 showed slightly increase i.e. 0.67 to 0.91. But in fiscal year
2009/10 C.R decreased comparatively in deposits and in fiscal year 2010/11 C.R is again increase 0.86 due to
increase in factors which influence it.
 Cash and Bank balance to current assets ratio of the company is in 2009/10 decreased and in 2010/11 it increased
and again in 2011/12 is decreased.
 The above figure depicts that the cash and bank balance to total deposit of BALIC has been slightly decreasing
in FY 2009/10, 2010/11, 2011/12.
 Net profit to total asset ratio in 2008/09 1.05 and it increasing slightly in financial year 2009/10, 2010/11 and
2011/12.

26. SUGGESTION
 On the basis of the analysis and observation an attempt made to present some
suggestions.
 In the year 2009-2010 the current assets of the company has declined and
current liability of the company has increases therefore the net working capital
declined. There for the current ratio has declined. The net working capital of
the company has increased remaining year.
 The company has able to repay the liability of the creditors because the profit of
the company has increased every year.
 Because of the current assets has declined in the year 2010-2011 but profit of the
company has increased in the year 2008-2009. There for the return on current
assets is high.
 Company has able to full fill the standard level of current ratio i.e. 2:1 .There for
the company has able to repay the liability and loan of company.

27. THANK YOU