286 Corporate Finance
Exhibit 14.3 Estimation of working capital at Spar (I) Limited
Spar (I) Limited (identity has been disguised) is a south Indian company engaged in granite manufacturing.
The break-up of current assets and current liabilities is as shown:
CL (Rs lac) CA (Rs lac)
Short term bank borrowings 1,070 Cash & Bank balances 311.67
Sundry creditors 405 Receivables other than exports 844.44
Export receivables 520.83
Advance payments from Inventory:
customers 120 Raw Materials:
— imported 132.0
— indigenous 191.35
Stock in progress 420.37
Finished goods 722.62
Trade goods 120.00
Consumable spares
— imported 179.00
— indigenous 178.26
Provision for taxation 50 Advance to suppliers 390.00
Dividend payable 141 Advance payment of taxes 30.00
Other statutory liabilities 8.51 Other current assets 501.72
Deposits/installments of
term loan/DPGs/ 888.74
debentures etc.
Other current liabilities
and provisions
Total 2,880.76 4,542.26
Current ratio 1.58
Computation of MPBF
- Total current assets = Rs 4,542.28 lac
- Total current liabilities = Rs 926.03 lac
(other than bank borrowings, debentures, deposit, etc.) - Working capital gap (1 – 2) = Rs 3,616.25 lac
- Minimum stipulated networking capital, i.e., 25 percent of WCG/
25 percent of total current assets depending on method of lending = 1,135.57 - Projected net working capital = 2,546.25
- (3)–(4) = 2,480.68
- (3)–(5) = 1,070.00
- MPBF (item 6 or 7 whichever is lower) = 1,070.00
APPENDIX 1: CLASSIFICATION OF WORKING CAPITAL
Fund Based
These facilities may be categorized into advances towards meeting domestic (inland) working capital
requirement of a borrower and the funding working capital required for exports. The assessed bank finance
is made available to borrowers through any one of the following facilities: