Liquidity Position Project

A Study on LIQUIDITY POSITION
CONTENT
CHAPTER I
 INTRODUCTION
 NEED FOR THE STUDY
 OBJECTIVES OF THE STUDY
 RESEARCH METHODOLOGY
 LIMITATIONS
CHAPTER II
 INDUSTRY PROFILE
 COMPANY PROFILE
CHAPTER III
 THEORETICAL FRAME WORK OF THE STUDY
CHAPTER IV
 DATA ANALYSIS &INTERPRETATION
CHAPTER V
 SUMMARY
 SUGGESTIONS
ANNEXURE
BIBILOGRAPHY
Department of Management Studies Page 1

CHAPTER-I
 INTRODUCTION
 NEED FOR STUDY
 OBJECTIVE OF THE STUDY
 RESEARCH METHODOLOGY
 LIMITATIONS

INTRODUCTION
Liquidity is the term used to describe how easy it is to convert assets to cash.
The most liquid asset, and what everything else is compared to, is cash. This is
because it can always be used easily and immediately. Certificates of deposit
are slightly less liquid, because there is usually a penalty for converting them to
cash before their maturity date. Savings bonds are also quite liquid, since they
can be sold at a bank fairly easily. Finally, shares of stock, bonds, options and
commodities are considered fairly liquid, because they can usually be sold
readily and you can receive the cash within a few days. Each of the above can
be considered as cash or cash equivalents because they can be converted to
cash with little effort, although sometimes with a slight penalty.
Meaning and Definition:
Liquidity means how quickly an asset can be converted into cash with losing
its significance value. “The ability to an asset into cash with little risk of loss of
principle value.” – Grady and Spencer.
In accounting the term “liquidity” is defined as the ability of the company to

meet its financial obligations as they come due. “Thus the liquidity ratio is a
measure to analyze company’s ability to pay its short term debt”.
Liquidity ratio expresses a company's ability to repay short-term

creditors out of its total cash. It is the result of dividing the total cash by short-
term borrowings. It shows the number of times short-term liabilities are
covered by cash. If the value is greater than 1.00, it means fully covered.

The analysis of the liquidity position of the company and its interpretation of
financial results for a particular period of operations can be done with the help
of calculating LIQUIDITY RATIOS and WORKING CAPITAL.
Liquidity position used to determine whether or not, a business concern can
pay its current debt with its current assets.
 There are three common calculations that fall under the category of
liquidity ratios.
 The current ratio is the most liberal of the three. It is followed by the
acid ratio and cash ratio.
 These three are often grouped together by financial analysts when
attempting to accurately measure the liquidity of a company.
WORKING CAPITAL:
Working capital management examines the relationship between

short-term assets and short-term liabilities. The process oversees control
of the firm's cash, inventories, and accounts receivable/payable. The
intent of participating in working capital management is to ensure:
 operations continue
 available business cash exceeds current liabilities
 the firm can satisfy maturing short-term debt, as well as future,
operational expenses

OBJECTIVES OF THE STUDY
 The main objective of the study is to analyse how liquidity position is

carried out in the organization
 To study various LIQUIDITY RATIOS and their usage in analyzing the
liquidity position of a company
 To study various components of WORKING CAPITAL and their
management
 To evaluate liquidity management through some of the liquidity and
working capital
 To know the efficiency of the company in utilizing its current assets.
 Liquidity refers to the capacity of an institution to generate or obtain
sufficient cash or its equivalent in a timely manner at a reasonable price
to meet its commitments as they fall due and to fund new business
opportunities as part of going-concern operations.

NEED FOR THE STUDY
 Every business organization need to have an idea about their current

assets and current liabilities which are necessary for day-to-day
operations and to know whether the available current assets are enough
to meet its debt obligations. Hence there is a need for the study of
liquidity position.
 Solvency of the business: To analyze the solvency of the business.

 Good will: If the company has no idea about its current assets and
liabilities, it may become insolvent and hence the stake holders of the
company may loss its good will. Hence liquidity position is used to
protect the good will of the company.
 Easy loans: A concern having adequate working capital ,high solvency
and good credit standing can arrange loans from banks and others on
easy and favorable items
 Cash discount: And if a firm is regular in its payments it can avail the
cash discounts from its suppliers and reduces cost
 Ascertain risk of insolvency:By this study the firm can ascertain the risk
of insolvency
 Ability to face crisis:This study enables the business to face business
crisis like depression and paying high interest on the borrowed capital or
funds.

Analysis or Interpretations of Ratios
The analysis or interpretations can be done by calculating the current ratio of

the company
(a) The first step in liquidity analysis is to calculate the company’s current
ratio.
(b) Hence, the current ratio show how many times the firm can pay its current
debt obligations based on its assets.
The term liquidity position called as Working Capital.Working capital

management involves the relation between a firm’s short term assets and short
term liabilities.The goal of working capital management is to ensure that a firm
is able to continue its operation and that it has sufficient ability to satisfy both
maturing short term debt and upcoming operational expenses. The management
of working capital involves managing inventories, accounts receivable and
payable, and cash.
Working capital typically means the firm’s holdings of current, or short term
assets such as assets such as cash receivables, inventory and marketable
securities. These items are referred to as circulating assets because of their
cyclical nature. In a retail establishment, cash is initially employed to purchase
inventory ,which is in turn sold on credit and results in accounts receivables
.Once the receivables are collected ,they become cash-part of which is
reinvested in additional inventory and part going to profit or cash throw-off.

The need for working capital capital to run the day to day business activities
cannot be overemphasized.We will hardly find a business firm which does not
require any amount of working capital.Indeed,firms differ in their requirements
of te working capital.
There are two concepts of working capital ……
 Gross working capital

 Net Working capital
Gross Working Capital
Gross working capital refers to the firms investment in current assets are
the assets which can be converted into cash within an accounting year an
include cash, shortterm securities,debtors,bills receivable and stock.
Net Working Capital
Net Working capital refers to the difference between current and current
liabilities.Current liabilities are those claims of outsiders which are
expected to mature for payment within an accounting year and include
creditors,bills payable and outstanding expenses.

RESEARCH & METHODOLOGY
The study has been conducted in the organization to examine working

capital management in order to enquire into the issues like liquidity, and
material management. The study has been undertaken in the accounting
& finance departments of the organization.
METHODOLOGY
The data for the present study was obtained from both primary and secondary
data by conducting personal interviews with senior executives to secure the
first hand information and various aspects of working capital management and
the procedures and systems adopted in the company for managing working
capital.
The collection of information is done two principle sources, viz
 Primary data.
 Secondary data.

Primary Data:
It is information collected directly without any references. In this study it is too

gathered through interviews with concerned officers and staff, individually or
collectively. Some of the information were verified and supplemented through
personal observation.
The data collection includes conducting personal interviews with the

concerned officer of financial department of BHUSHAN POWER AND
STEEL LIMITED.
Secondary Data:
This secondary data was collect form already published sources such as
pamphlets of annual reports, returns and internal records.
The data collection includes collection of required data from annual

records of BHUSHAN POWER AND STEEL LIMITED and also Reference
from text books and journals relating to financial management. After the
objective has been stated clearly, the next task was to collect relevant data
regarding the research study. The data regarding the Indian steel industry were
collected from the internet. And other relevant data were also collected from
internet. Although there were some data from newspaper and magazines but
the major portion was given by the company i.e. the assistant manager of the
respective departments.

Most of the data and figures were collected from the record of the company. In
fact the above collected data was not enough so there was need of primary
source of data. So the primary data involved data collected from the guide at
the company. Apart from that we had also gone through the record of the
company. The data collection from the above includes:
1. Data regarding BHUSHAN POWER AND STEEL LIMITED.
2. Data regarding the contribution of each product toward sales.
3. Data regarding total sales and market shares of BHUSHAN POWER AND
STEEL LIMITED.
4. Data regarding effect of promotional activity done by BHUSHAN POWER

AND STEEL LIMITED.
LIMITATIONS:
Though our project is completed successfully a few limitations may be there:
1. Since the procedure and policies of the company will not allow
disclosing confidential financial information, the project has to be
completed within the available data given to us.
2. The major data collected from secondary source.
3. Unwillingness of the company to provide the required information

about the project in order to maintain some company secrecy.

4. They have provided data regarding 5years only.
5. The study is carried basing on the information and documents

provided by the organization and based on the interaction with the
various employees of the respective departments.
LIMITATIONS OF THE STUDY
 The study is based on the information available in the balance

sheet of the company, these balance sheets suffers a few
limitations
 The study is based on the liquidity position analysis only
 The study is done only through the secondary source of data.
Normally this will not facilitate to undertake a deeper study on the
subject taken into consideration
 The study is limited to a period of five years for analyzing the data
 Analysis of information is based on the ratios. The study is limited
only to quantitative analysis, quality aspect of BHUSHAN
POWER AND STEEL LIMITED doesn’t reflect the study
 The study evaluation is based on the sum of the related working
capital ratios
 Lack of knowledge, some of the lack full-fledged knowledge of
the concept and it’s difficult to collect a specific opinion from
them.

Advantages of Liquidity Position Analysis
Liquidity analysis is necessary to establish the relationship between two

accounting figures to highlight the significant information to the management
or users who can analyze the business situation and to monitor their
performance in a meaningful way. The following are the advantages of
liquidity analysis:
(1) It facilitates the accounting information to be summarized and simplified in

a required form.
(2) It highlights the inter-relationship between the facts and figures sof various
segments of business.
(3) Liquidity analysis helps to remove all type of wastages and inefficiencies.
(4) It provides necessary information to the management to take prompt

decision relating to business.
(5) It helps to the management for effectively discharge its functions such as
planning, organizing, controlling, directing and forecasting.
(6) Liquidity analysis reveals profitable and unprofitable activities. Thus, the
management is able to concentrate on unprofitable activities and consider to
improve the efficiency.

The users of the liquidity analysis have definite objectives to analysis and
interpret. The certain specific and common objectives are-
 To study the functioning

 To increase the knowledge about the profile of steel industry and to
analyze the BHUSHAN &POWER STEEL LIMITED.
 To examine the liquidity analysis methods at the BHUSHAN &POWER
STEEL LIMITED.
 To determine future positional of the concern.
 To offer useful suggestions and to bring about improvement.

CHAPTERIZATION:
The following is the complete format of the chapterization of the

complete project:
 First chapter deals with introduction of Ratio analysis regarding the

company details.
 Second chapter deals with industry profile and company profile of steel
and industry with special focus on Ratio analysis.
 Third chapter deals with theoretical frame work of Ratio analysis with
their advantages and limitations.
 Fourth chapter deals with data analysis and interpretation
Regarding the ratio calculated.
 Fifth chapter deals with summary, findings and suggestions.
There ends the complete chapterization of the project.

CHAPTER-II
INDUSTRY PROFILE & COMPANY PROFILE
 Industry Profile
 Company Profile

INDUSTRY PROFILE:
Steels are a large family of metals. All of them are alloys in which iron is
mixed with carbon and other elements. Steels are described as mild, medium-
or high-carbon steels according to the percentage of carbon they contain,
although this is never greater than about 1.5%. There are three types of steels
like mild steel, medium carbon steel, high carbon steel with carbon percentages
of 0.25%,
0.25% -0.45%, 0.45-1.50% respectively.
Change in the government at the

center has wired message of growth in the manufacturing sector which was
slowed down over the years. Government has put its priority to bring the
industry on path of growth and generate employment steel, power and
infrastructure industries and expecting the policies to be growth oriented .The
present GDP is 4.7% p.a. in 2013-14 is expected to grow upto 5.5-5.6% p.a. in
2014-2015. Reserve Bank of India constantly taking steps to keep the foreign
exchange fluctuations under control and strength the Indian currency. Mining
policies are expected to be growth oriented where the Government is steering
for more mineable reserve to the industry. Government is also giving a thought
to amend the existing MMDRA to facilitate the quick disposal and smooth
operation of mines. Simultaneously the land acquisition act is also i=on the
government to consider and amend in the larger interest of the industry.
Steel is an alloy of iron usually containing less than 1% carbon is a versatile

material with multitude of useful properties used most frequently in the

automotive and construction industries. Steel can be cast into bar strips, sheets,
nails, spikes, wires, rods or pipes as needed by the intended user.
The consumption of steel is regarded as the index of industrialization and the

economic maturity any country has attained.
The development of steel industry in India should be viewed in conjunction

with the type and system of government that had been ruling the country. The
production of steel in significant quantity started after 1990. The growth of
steel industry can be conveniently started by dividing the period of pre-
independence, steel production was 1.5, million tons per year, which was
raised o 9 million tones of target. This is the result of the bold steps taken by
the government to develop this sector.
The following information is regarding with the total growth of the steel
industry. The data has been completely data that has been provided by the steel
industries website which give a complete information regarding the growth of
steel industry before and after independence to the country.

GROWTH OF STEEL INDUSTRY:
PRE-INDEPENDENCE:
1830 Josiah Marshall Health constructed the first manufacturing

plant at Port Move in Madras presidency.
1874 James Ersk founded the Bengal iron works.
1899 Jamshedji Tata initiated the scheme for an integrated steel

plant.
1906 Formation if TISCO.
1911 Tata iron and steel company started production.
1916 TISCO was founded

POST-INDEPENDENCE:
1951-56-First Five Year Plan  No new steel plant came up. The Hindustan
steel Ltd. Was born on 19th January, 1954 with
the decision of setting up three steel plants each
with one million ton input steel per year in at
Rourkela, Bhilai and Durgapur, TISCO stated
expansion program.
1956-66-Second Five Year Plan  A bold decision was taken up to increase the
ingot steel output India to 6 million tons per
year & production at Rourkela, Bhilai and
Durgapur steel plant started.
1961-66-Third Five Year Plan  During the third five year plan the three steel
plants under HSL, TISCO, & HSCO were
expanded as shown. In January 1964 Bokaro
Steel Plant came into existence.
1966-69-Recession Period  The entire expansion programme was actively
executed during this period.
1969-74-Fourth Five Year Plan  Licenses were given for setting up of many mini
steel plants and rerolling mills.
 Government of India accepted setting up two
more steel plants in South. One each at

Visakhapatnam and Hospet (Karnataka).

 SEIL was formed during this period on 24th
January 1973. The total installed capacity from
6 integrated plants was 106 meters empty.
1979-Annual Plan  The erstwhile Soviet Union agreed to help in

setting up the Visakhapatnam steel plant.
1980-85-Sixth Five Year Plan  Scheme for modernization of Bhilai steel plant,
Rourkela, Durgapur, TISCO were initiated.
1985-91-Seventh Five Year Plan  Expansion work of Bhilai and Bokaro steel
plants completed.
 Progress on Visakhapatnam steel plant picked
up and rationalized concept has been introduced
to commission the plant with 3.0 mt liquid steel
capacity by1990.
1991-96-Eight Five Year Plan  Visakhapatnam steel plant started its

production.
 Modernization of other steel plants is also duty
envisaged
1997-2002-Ninth Five Year Plan  Visakhapatnam steel plant had foreseen a 7%

growth during the plan period.

2002-2007-Tenth Five Year Plan  Steel industry registers the growth 9.9%
Visakhapatnam
 Steel plant high regime targets achieved the best
of them.
2007-12-Eleventh Five Year Plan  Cost of schemes or projects original approved
by government of India is rs.9, 569.18 crores.
THE MAJOR STEEL AND RELATED COMPANIES IN INDIA:
1. Bharat Refectories Ltd.
2. Hindustan Steel Works Construction Ltd.
3. Jindal Steel and Power Ltd.
4. Tata Iron Steel Company Metal Scrap Trade Corporation Ltd.
5. Metallurgical and Engineering Consultants India Ltd.
6. National Mineral Development Corporation Ltd.
7. Rastriya Ispat Nigam Ltd.
8. Sponge Iron India Ltd.
9. Steel Authority India Ltd.
The global steel industry has witnessed several revolutionary changes during
the last century. The changes have been in the realms of both technology &

business strategy. The ultimate object of all these changes is to remain

competitive and global market.
The Indian steel industry is growing rigorously with the major procedures like
SAIL, RINL, TISCO, JVL and many others. Our steel industry has amply
demonstrated its ability of adapt to the changing scenario adopt to the changing
scenario and to survive in possible to a large extent due to the adoption of
innovative operating practices and modern technologies.
Industrial Development in India has reached a high degree of self-reliance, and

the steel industry occupies a primary place in the strategy for future
development of the industry. It is now being proposed that Indian steel industry
should gear up to achieve a production level of about 100 Mt by the year 2000.
Global scenarios:-
 In March’ 2005 world Crude steel output was 928 Mt when compared to
march 2004 (872 Mt), the change in percentage was 6.5%.
 China remained the world largest crude steel procedure in 2005 also
(275 Mt) followed by Japan (96 Mt) and USA (81 Mt). India occupied
8” position (42 Mt).
 USA remained the largest importer of semi finished and finished
products in 2002 followed by China and Germany.
 Japan remained the largest exporter of semi finished and finished steel
products in 2002 followed by Russia and Ukraine.
 Other significant recent developments in the global steel scenario have
been: Under the auspicious of the OECD (Organization for Economic

Co-operation & Development) the negotiations among the major steel

producing countries for a steel subsidy agreement (SSA) held in 2003
with the objective to agree on a complete negotiating test for the SSA by
the middle of 2004. It also set subsidies for the steel industry of a ceiling
of 0.5% of the value of production to be used exclusively for Research &
Development.
Market Scenarios:-
The year 2004-05 was a remarkable one for the steel industry with the
world crude steel production crossing the one billion mark for the first
time in the history of the steel industry. The world GDP growth about
4% lends supports to the expectations the steel market is all set for
strong revival after prolonged period of depression. The Indian economy
also become robust with annual growth rates of 7-8% this will provide a
major boost the steel industry. With the nations focus on Infrastructure
development coupled with the growth in the manufacturing sector, the
Indian steel industry all set for north ward movement. The draft national
steel police envisage production of 60 Mt by 2012 and 110 Mt by 2020,
and annual growth rate of 6-7%. All this should therefore argue well for
the Indian steel industry.
Production Scenarios:-
 Steel industry was de-licensed and decontrolled in 1991 & 1992
respectively.
 India is the 8” largest producer of steel in the world.

 In 2003-04 finished steel production was 36.193 ML r Pig iron in 2003-

04 was 5.221 Mt.
 Sponge iron production was 80.85 Mt during the year 2003-04
 The annual growth rate of crude steel production in 2002-03 was 8% .
The last first year production performance is as under:-
DEMAND-AVAILABILITY PROJECTION:
 Demand-Availability of iron and steel in the country is projected by

ministry of steel annually.
 Gaps in availability are met mostly through imports.
 Interface with consumers by way of Steel Consumer Councils exists,
which is conducted on regular basis.
 Interface helps in redressing availability problems, complaints related to
quality.
PRICING AND DISTRIBUTION:
 Price regulation of iron & steel was abolished on 16-01-1992.

 Distribution controls on iron & steel removed except 5 priority sectors,
viz.Defense, Railways, Small Scale Industries Corporations, Exporters
of Engineering Goods and North Eastern region.
 Allocation to priority sectors is made by Ministry of steel.
 Government has no control over prices of iron & steel.
 Open market prices are generally on rise.
 Price increases of late have taken place mostly in long products than Flat
Products.

COMPANY PROFILE:
Bhushan Power & Steel Limited (BPSL), is a fully integrated 3.5 Million TPA
Steel Making Company having turnover of INR 11,288 Crores (USD 1,858
Million) FY14.
The Company is certified to ISO 9001:2008 & TS-16949 Quality Standards

and ISO 14001:2004 Environment Management Standards.
BPSL is a leading manufacturer of flat and long products and have state-ofthe-
art plants at Chandigarh, Derabassi, Kolkata and Orissa in India. These plants
manufacture value added products covering entire steel value chain right from
Coal Mining to manufacturing Pig Iron, DRI, Billets, HR Coils, CR Coils,
GP/GC Sheets, Precision Tubes, Black Pipe/GI Pipe, Cable Tapes, Tor Steel,
Carbon and Special Alloy Steel Wire Rods and Rounds conforming to IS and
international standards.
The Company have successfully commissioned a 3.5 Million TPA Greenfield

Steel and Power Plant in Orissa with HR Coil making facility - First in Private
Sector in the State of Orissa. For this plant, technology and equipments were
sourced from leading world-renowned companies viz., Lurgi, ABB Ltd., SMS
Siemag, SMS Meer Danieli, LOI Tenova, Kocks etc. BPSL has a wide
marketing network in both India (comprising 35 sales offices) and abroad for
selling its value added product range.

The rock-solid foundation combined with continuous upgradation and

innovation has enabled the Company to surpass its goals constantly. BPSL's
end-to-end portfolio has enabled it to offer a wide spectrum of products at
superior quality consistently surpassing customers' specifications. In addition
to export thrust, BPSL cater to the domestic steel requirements of fast-growing
sectors like automotive, white goods, construction / infrastructure, furniture,
fasteners, telecommunication, power etc.
With a view to make its presence in a big way in Special Alloy Steel Long
Product business, BPSL has commissioned a most modern state of the art Wire
Rod-cum-Bar Mill and is commissioning a host of down stream finishing
facilities viz., Heat Treatment facilities, Bright Bar manufacture etc.
Vision:
To create a competitive advantage for all stakeholders through effective people

management.
Mission:
To attain one million ton finished steel capacity adopting upgraded

technologies and capacity expansion with state of art technological processes.
Our Commitments
 To improve the quality of our products and complete integration of

various stages of production.

 To be conscious towards quality and pricing of our products. We strive

by continuous research and development to make our products world
class,
 having distinct identity and uniqueness. Our customers get best value for
their money.
 To run the company profitably year after year.
 A workforce motivated, skilled and well looked after.
 A workplace safe, secure and hygienic.
 To make our Environment Clean, Healthy and Hospitable
Values:
Quality - To be the best in quality. We aim and achieve excellence.
Technology - State of the art technology and product enrichment by continuous

Research and Development.
Customer Friendly - Our products are world class and more and more clients
are appreciating and using our products. We also undertake customized
products with values addition and enhancement.
Corporate Governance - We comply with all applicable laws and regulations.

We believe in maintaining clean environment and conservation of natural
resources. We contribute towards betterment of our staff and provide them with
best of facilities.

Environment Protection and Practice - We are adopting and implementing

pollution control measures as a matter of policy. Please read our thrust
anddirections on this subject by (All our efforts are in accordance with the laid
down norms of Central Pollution Control Board for Industrial and Mixed use
areas).
The Company has successfully implemented 2.3 million tpa Integrated Steel
and Power Plant in Orrisa comprising 8 DRI Kilns of 500 TPD, 376 MW
Power Plant, Coal Washery, two CSP Plant, Blast Furnace, Coke Oven Plant,
Sinter Plant, Oxygen Plant, Steel Making and Lime & Dolomite Plant, Cold
Rolling Mill, Galvanizing and Galvalume.
The iron and steel industry is one of the most important fundamental sectors
of the economy of country, one of the significant indicators of the economic
power and comprehensive strength. Not only does it make enormous
contributors to construction and development but it fully meets the demands
brought about by the rapid economic and social growth. The industry plays an
irreplaceable and crucially important role in overall technological innovation
and upgradation. It is vital in promoting employment and boosting economic
prosperity, and serves as the pillar of economic development and social
stability.

Power Plant
Power plant was setup to meet present and future electricity needs of all
production units. 376 MW Power Plant is operational at our Orissa Plant. The
excess power generated is being sold through state power grid.
The Company has successfully implemented 2.3 million tpa Integrated Steel and Pow
Orrisa comprising 8 DRI Kilns of 500 TPD, 376 MW Power Plant, Coal Washery, two
Blast Furnace, Coke Oven Plant, Sinter Plant, Oxygen Plant, Steel Making and Lime &
Plant, Cold Rolling Mill, Galvanizing and Galvalume.
We have also successfully implemented the Odisha Project Phase V ahead of its
implementation time, comprising Iron One Beneficiation Plant, Pellet Plant, Pickling
Rolling Mill, Precision Tube Mill, Black Pipe Plant and Bright bar Finishing Lines
commissioned 6.5 MTPA iron Ore Beneficiation Plant and 3.85 MTPA pellet plant is a s
backward integration.
PRODUCTS :
 Galvanized Coil
 Narrow HRGP
 Galvanized Plain Sheet (GP Sheets) :
 Galvanized Corrugated Sheet (GC Sheets) :
 Galvalume Profile Sheet
 Deck Profile sheets (Galvanised /Galvalume):
 Ridge and Other Accessories

PRODUCT SPECIFICATIONS:
Galvanised Coil
Galvanised as per IS 277 or equivalent grades like ASTM A 653,

Specifications:
EN10327
Thickness (mm): 0.10 to 1.6 mm ( Galvanized)
Width(mm): 760 to 1320 mm
Base metal: Cold rolled steel as per IS 513
Spangles : Regular/ Minimised /Suppressed / Zero (Skin pass).
Leveling : With or without tension leveling.
Passivation : Chromated (Trivalent / Hexavalent)
Oiling : non oiled ,oiled 100 -1000 GSM
Yield strength (MPA) : 240, 360, 550 MPa
Temper: Extra soft , Semi Hard, Full hard
Hardness (HRB) : 35 TO 90
Grades : CQ,DQ,DDQ ,EDDQ,HSLA.
Coil weight (MT): 8(Max)

Winding : Controlled /staggered (+/-5 to +/- 15 mm)
Narrow HRGP
Base material : Hot rolled , pickled coils
Thickness (mm) : 1.2 -3.0
Width(mm) : Upto 450
Minimum slitted coil width 80 mm
Yield strength (MPA) : 240 -360
Zinc coating (GSM): 120- 180.
Galvanized Plain Sheet (GP Sheets) :
Thickness (mm): 0.10 to 1.6
Widths (mm): 760, 820, 900, 1000, 1220 or as per customize width.
Lengths (mm): 1830, 2440, 2500 (or as per requirement)
Zinc coating(GSM) 80,90,120,150,180,200,275

Temper Soft ,Extra soft & Hard.
Hardness(HRB)- 35 HRB TO 99.
Galvanized Corrugated Sheet (GC Sheets) :
Widths (mm): 720, 740, 760, 780, 800, 840, 910, 1100, 1220.
Lengths (mm) 1830, 2135, 2440, 2745, 3050, 3660, 4270, 4880 or as per requirement.
Galvalume Coil
Galvalume as per IS 15965 or equivalent grades like ASTM A 792, AS

Specifications:
1397
Width(mm): 760 -1220
Coating : Acrylic coating ( Hexavalent /Trivalent)
Yield strength (MPA) : 240,340 ,550.
Temper: Soft /Hard /Extra Soft

Coil weight (MT): 10 Max
Galvalume Plain Sheet (GP Sheets) :
Widths (mm): 760-1220
Lengths (mm): 1830, 2440, 2500 (or as per requirement)
AZ coating(GSM) 70,100,120,150,185
Temper Soft ,Extra soft & Hard.
Yield Strength (MPA) : 240, 340 & 550.
Galvalume Corrugated Sheet (GC Sheets) :
Widths (mm): 720, 740, 760, 780, 800, 840, 910,1100, 1220.
Lengths (mm) 1830, 2135, 2745, 3050, 3660, 4270, 4880

Galvalume Profile Sheet
Widths (mm): 1060,1090,1100 (Eff width -975,1015 & 1018 respectively)
Lengths (mm) 500 to 12500
Deck Profile sheets (Galvanised /Galvalume):
Thickness(mm) : 0.80 to 1.2
Width(mm) 810 & 914.
Length (mm) 500 to 12500
Ridge and Other Accessories
Ridge & Flashing
Thickness(mm) : 0.13 to 0.60 (Galvanized)
Width(mm) 305, 310, 355, 406, 405, 610
Length (mm) 1800, 2440, 3050, 3660

Applications
Construction & Steel framing, False ceiling, Sanwich panels, ducting, decking ,
Infrastructures : roofing, purlin, HVAC applications.
White Goods : Refrigerators, deeps freezers, washing machines, air coolers.
Automotive: Auto internal components, Bus bodies building.
Grain silos, trunk, drum & barrels, crash guards /handrails, buckets,
Containers:
gardening cans, milk containers, animal feeding pans, fish pan etc.
The Long Product Rolling Complex consists of a most modern 0.5 million tpa
multiproduct Wire Rod and Bar Mill (18 pass Horizontal & Vertical
Continuous Mill) supplied by Danieli Morgardshammar, Italy and KOCKS,
Germany (4 pass mill).
The state of the art Wire Rod & Bar Mill, one of the most modern plants of this
type in the world, will produce:
 Straight Bars
 Bar in Coil form
 Wire rods

OBJECTIVES:
 To acquire and assimilate world class manufacturing technology,

 Strict adherence to quality standards. Rigorous application of
metallurgical analysis and statistical process control techniques to ensure
zero product nonconformity,
 Offer superior customer service for customers' delight,
 Customer focus - every customer is considered as the most important
partner in the supply chain: focusing not only on product aspects but also
on ways and means to minimize their inventory costs through reliable,
just-in-time distribution. BPSL's qualified and experienced technical
team are always available to ensure that the supplied product fits just
right or surpasses customers' specifications.
 Always endeavour for High Flexibility and Reliability in offering tailor
made / innovative solutions for the customers,
 Commitment to quality begins with investing in people skills. Therefore
identifying, training and nurturing a talent to ensure development of an
employee competent to perform his task gets priority attention.

BHUSHAN POWER & STEEL LTD
CORPORATE SOCIAL RESPONSIBILITY POLICY
Policy Objective
 The Objective of this Policy is to create a framework for the CSR

programs of Bhushan Power and Steel Limited. (“BPSL/The
Company”)
 BPSL fully recognizes its commitment to the environment and
community development. We have demonstrated high levels of
engagement among the communities around our operations right
from inception and have been concentrating on projects related to
rural development.
 However, with the new provisions under the Companies Act 2013
and CSR Rules 2014 there is a need to re-align the CSR strategy
in order to create meaningful and sustainable value for both
business and the community in which we operate. BPSL is
realigning its CSR focus to meet and exceed the requirements as
per Section 135 of the Companies Act 2013 and guidelines
thereof.
 BPSL’s CSR budget for the year 2014-15 is approximately Rs.
16crores (2% of average of net profit of last 3 years).
 The CSR policy document has been prepared in accordance with
section 135 of the Companies Act, 2013 and on the basis of
particulars being laid down under CSR Rules 2014. The CSR
policy, among other things, provides details on how the CSR
budget would be utilized during FY 2014-15 and what will be the

mechanisms to monitor the progress of the activities undertaken
during the year
Policy Implementers
 The cross-functional team designated for steering the CSR Committee

are the primary owner of this policy
 The CSR Committee, the Board and management of the Company.
Primary Audience .Communities and beneficiaries of the Company’s
CSR initiatives Ministry of Corporate Affairs Indian Institute of
Corporate Affairs.
Scope
 During the year 2014-15, BPSL will concentrate its CSR efforts in the
State of Orissa based on the fact that Orissa has the lowest per capita
income and GDP when compared to the other plant locations, namely
Chandigarh, Punjab and West Bengal.
 The Company has taken a conscious decision to concentrate it CSR
efforts around the Orissa plant since Orissa has the lowest per capita
income and GDP when compared to the other plant locations:
 To spend statutorily required amount which is at present 2% of the
average of the net profit of the last 3 years
 Define areas to work in, projects and allocated spends herewith.

 Define measures of success

 Define implementation schedule and targets to review
 Review performance as per stated targets regularly.

Policy Statement:
 BPSL is committed to creating a positive impact on the lives of people

and the ecology in and around the areas of its operations. In order to
achieve this,
 BPSL will follow a strategic approach to maximize the benefit to society
at large.
 During the year 2014-15, BPSL will concentrate its CSR efforts in the
State of Orissa based on the fact that Orissa has the lowest per capita
income and GDP when compared to the other plant locations, namely
Chandigarh, Punjab and West Bengal.
Programmes Identified under CSR:
 BPSL has been working extensively in the state of Orissa in various

areas. For FY 2014-15, the
 Company has identified the following areas to focus on Rural
Development, Education, Water, Environment & Ecology, Preventive
Healthcare and Women Empowerment.
 Health care support
 Convenience for villagers ,Women ,Empowerment Capacity BuildingRs
1.00 croresSurvey conducted by NGO ORRISIS Number of women
empowered
 Total Rs 16.20 Crores
Important Note:

 Monitoring process for all of the above projects will entail an Impact
Assessment study conducted by an independent agency
 Any surplus income or funds arising from any or the above activities
will be ploughed back into any of the above CSR activities as per need
and will not be considered as a part of profit by BPSL.
 The implementation of the above projectsare subject to requisite
permission/sanctions from the respective authority wherever required.
Annexure:
Reference to Supporting Materials
Section 135 of Companies Act 2013
135. (1) Every company having net worth of rupees five hundred crore or
more, or turnover of rupees one thousand crore or more or a net profit of rupees
five crore or more during any financial year shall constitute a Corporate Social
Responsibility Committee of the Board consisting of three or more directors,
out of which at least one director shall be an independent director.
(2) The Board's report under sub-section
(3) of section 134 shall disclose the composition of the Corporate Social
Responsibility Committee.
(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility

Policy which shall indicate the activities to be undertaken by the company as
specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities

referred to in clause
(a); and (c) monitor the Corporate Social Responsibility Policy of the company
from time to time.
(4) The Board of every company referred to in sub-section (1) shall,—(a) after
taking into account the recommendations made by the Corporate Social
Responsibility Committee, approve the Corporate Social Responsibility Policy
for the company and disclose contents of such Policy in its report and also
place it on the company's website, if any, in such manner as may be prescribed;
and
(b) ensure that the activities as are included in Corporate Social Responsibility
Policy of the company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that
the company spends, in every financial year, at least two per cent. of the
average net profits of the company made during the three immediately
preceding financial years, in pursuance of its Corporate Social Responsibility
Policy:
Provided that the company shall give preference to the local area and areas
around it where it operates, for spending the amount earmarked for Corporate
Social Responsibility activities

Provided further that if the company fails to spend such amount, the Board
shall, in its report made under clause (o) of sub-section (3) of section 134,
specify the reasons for not spending the amount.
(Explanation.—For the purposes of this section “average net profit” shall be

calculated in accordance with the provisions of section 198.)
Schedule VII (as of August 2014):
1.Eradicating hunger, poverty and malnutrition, promoting preventive

healthcare and sanitation and making available safe drinking water;
2.Promoting education, including special education and employment enhancing

vocational skills especially among children, women, elderly and the differently
abled and livelihood enhancement projects;
3.Promoting gender equality, empowering women, seting up homes and hostels

for women and orphans; setting up old age homes, day-care centres and such
facilities for senior citizens and measures for reducing inequalities faced by
socially and economically backward groups;
4.Ensuring environmental sustainability, ecological balance, protection of flora

and fauna, animal welfare, agro-forestry, conservation of natural resources and
maintaining quality of soil, air and water;
5.Protection of national heritage, art and culture including restoration of

buildings and sites of historical importance and works of art; setting up public
libraries; promotion and development of traditional arts and handicrafts;

6.Measures for the benefit of armed forces veterans, war widows and their
dependants;
7.Training to promote rural sports, nationally recognised sports, paralympic

sports and Olympic sports;
8.Contribution to Prime Minister’s Relief Fund or any other fund set up by the
Central Government for socio-economic development and relief and welfare of
teh Scheduled Castes, teh Scheduled Tribes, other backward classes, minorities
and women;
9.Contributions or funds provided to technology incubators located within

academic institutions which are approved by the Central Government;
10.Rural and Slum development projects.
Note : the Schemes undertaken by the Company are subject to schemes notified
by the Govt of India, Ministry of Corporate Affairs from time to time.

CHAPTER-III
THEORITICAL FRAMEWORK

INTRODUCTION
MEANING OF LIQUIDITY AND LIQUIDITY RATIO:
DEFINITION:
Liquidity:
Liquidity means how quickly an asset can be converted into cash

without losing its significance value.
Liquidity ratio :
“liquidity ratio measures a company’s ability to pay debt obligation

and its margin of safety through the calculation of metrics including the
current ratio ,quick ratio and operating cash flow ratio . cutrrent
liabilities are analysedin relation to liquid to evaluate coverage of short
term debts in an emergency. Bankcruptcy analysts and mortgage
originators use liquidity ratios to evaluate going concern issues,as
liquidity measurement ratios indicate cash flow positioning”.
SIGNIFICANCE OF LIQUIDITY RATIO:
The major benefits arising from ratio analysis are as follows:
 Liquidity ratio is a very powerful analytical tool useful for measuring

performance of an organization.
 Liquidity ratio concentrates on the interrelationship among the figures
appearing in the financial statements.

 Liq`uidity ratio make comparison easy. The said ratio is compared with the
standard ratio and this shows the degrees of efficiency utilization of assets,
etc..
 Liquidity ratio helps the management to analyze the past performance of the
firm and to make further projections.
 Liquidity ratio allows interested parties like shareholders, investors,

creditors, government and analysts to make on evaluation of certain aspects
of a firm’s performance.
LIMITATIONS OF RATIO ANALYSIS:
The following limitations must be taken in to account;
 Over use of ratios as controls on managers could be dangerous, in that

management might concentrate more on simply improving the ratio that on
dealing with the significant issues. Ex: the return on capital employed can
be improved by reducing assets rather than increasing profits.
 Ratios provide only guidelines to the management they are only the mean
however, they scratch surfaces and raise questions.

 Since ratios are calculated from past records, there are no indicators of
future.
 The change is price level due to inflation will distort the reliability of ratio
analysis.
 Ratios are calculated from financial statements which are agented by the
financial bases and policies adopted on such matters as depreciation and the
valuation of stocks.
 The analyst should have through knowledge of methods of window

dressing.
 Since ratios are calculated from past records, there are no indicators of
future.
 Ratio are based only on the quantitative information, hence qualitative

information (i.e., character, managerial ability, etc.,) puts limit on the ratios.
 Ratios are computed on the basic financial statements which are historical
in nature.

CLASSIFICATION OF RATIOS:
Classification from the point of view of financial management or objective
1. Liquidity ratios.
 Current ratio
 Quick ratio/ acid test
 Net working capital ratio
1. LIQUIDITY RATIOS:(Short term solvency)
‘Liquidity’ means ability of a firm to meet its current obligations.

The liquidity ratios, therefore, try to establish a relationship between
current liabilities, which are the obligations soon becoming due and
current assets, which presumably provide the source from which these
obligations will be meet. In other words the liquidity ratios answer the
questions:“will the company probably be able to meet its obligation
when they become due?” The following ratios are commonly used to
indicate the liquidity of business.
 Current Ratio.
 Quick Ratio.
 Absolute liquidity ratio
 Net working capital ratio

 CURRENT RATIO:
This ratio is most commonly used to perform the short-term

financial analysis. Also known as the working capital ratio, this ratio
matches the current assets of the firm to its current liabilities.
Formula:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
Current ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
CURRENT RATIO ANALYSIS:
current ratio is one of the most commonly used measures of

the liquidity of a business. It is defined as Current ratio analysis is used to
determine the liquidity of a business. The results of this Current ratio analysis
component on both sides of the current ratio must be examined to determine
the extent to which it can . There are several ways to review the outcome of the
current ratio calculation. Consider the following points: Trend line. Track the
current ratio on a trend line. If the trend is gradually declining .

Limitations of current ratio
 The ratio is only useful when two companies are compared within
industry because inter industry business operations differ substantially.
 To determine liquidity, the current ratio is not as helpful as the quick

ratio, because it includes all those assets that may not be easily
liquidated, like prepaid expenses and inventory.[
Advantages of Current Ratio:
 It measures the liquidity of the firm

 It represents the working capital position of a firm
 It represents the liquidity of a company
 It represents margin of safety
 Its tells us the short term solvency of a firm.
Disadvantages of Current Ratio:
 Its accuracy can be deterred as, pertaining to different businesses,

depending on a variant of factors
 Over-valuation of stock also contributes to its tipping accuracy
 It measures the firm liquidity on the basis of quantity and not quality,
which comes across as a crude method.

 QUICK RATIO:
This ratio is also known as acid test ratio or liquid ratio. It is a more severe test
of liquidity of a company. It shows the ability of a business to meet its
immediate financial commitments. It is used to supplement the information
given by the current ratio.
Formula:
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Quick ratio =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
Advantages of Quick Ratio:
 It tells us the liquidity position of a firm

 It is used to remove the errors of current ratio
 It is used as supplementary to the current ratio.
SIGNIFICANCE:
 Quick ratio is considered a more reliable test of short-term solvency than

current ratio because it shows the ability of the business to pay short term
debts immediately.
 Inventories and prepaid expenses are excluded from current assets for the
purpose of computing quick ratio because inventories may take long period
of time to be converted into cash and prepaid expenses cannot be used to
pay current liabilities.

 ABSOLUTE LIQUIDITY RATIO:

The relationship between the absolute liquid assets and current
liabilities is established by this ratio. Absolute Liquid Assets take into
account cash in hand, cash at bank, and marketable securities or temporary
investments.
𝑠𝑢𝑝𝑒𝑟 𝑞𝑢𝑖𝑐𝑘 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜

Absolute Liquidity Ratio =
The reason of computing absolute liquid ratio is to

eliminate accounts receivables from the list of liquid assets because there may
be some doubt about their quick collection. This ratio is useful only when used
in conjunction with current ratio and quick ratio. An absolute liquid ratio of
0.5:1 is considered ideal for most of the companies.
Although receivables, debtors and bills receivable are generally more liquid
than inventories, yet there may be doubts regarding their realization into cash
immediately or in time. Hence, some authorities are of the opinion that the
absolute liquid ratio should also be calculated together with current ratio and
acid test ratio so as to exclude even receivables from the current assets and find
out the absolute liquid assets.
Absolute Liquid Assets include cash in hand and at bank and marketable
securities or temporary investments. The acceptable norm for this ratio is 50%
or 0.5: 1 or 1: 2 i.e. Re. 1 worth absolute liquid assets are considered adequate
to pay Rs. 2 worth current liabilities in time as all the creditors are not expected
to demand cash at the same time and then cash may also be realized from
debtors and inventories.
NET WORKING CAPITAL RATIO:
WORKING CAPITAL:
Working capital is a key indicator of the health of your business. Calculated as

the sum of current assets minus current liabilities, it reflects the money your
company has available that isn’t tied up in the day-to-day cost of doing
business. Working capital can demonstrate whether or not the company can
meet all of its short-term debts, such as salaries and supplier invoices, when
they become due.
The net working capital ratio is the net amount of all

elements of working capital. It is intended to reveal whether a business has a
sufficient amount of net funds available in the short term to stay in operation.
This measurement only provides a general idea of the liquidity of a business,

for the following reasons:
 It does not relate the total amount of negative or positive outcome to the
amount of current liabilities to be paid off, as would be the case with a
real ratio.
 It does not compare the timing of when current assets are to be
liquidated to the timing of when current liabilities must be paid
off. Thus, a positive net working capital ratio could be generated in a
situation where there is not sufficient immediate liquidity in current
assets to pay off the immediate requirements of current liabilities.Use the

following formula to calculate the net working capital ratio:
Formula :
Net working capital ratio= current assets –current liabilities
 Net working capital is a financial metric a business owner should use in

order to help measure the cash and operating liquidity position of the
business. It is the sum of all current assets and current liabilities. It is a
measure of the short-term liquidity of a business, and can also indicates
the ability of company management to utilize assets in an efficient
manner.
 Net working capital can also be used to determine of a company is in a

position to grow fast.
 If the business has substantial cash in its reserves, it may have enough
to scale the business rather quickly. On the other hand if the business
has very little in cash reserves than it's highly unlikely that the company
has the resources to scale quickly.
 It is an important metric to management, vendors and general creditors

because it shows the firm's short-term liquidity and ability to pay off its
current liabilities with current assets.

 The net working capital metric is directly related to the current, or

working capital ratio, so called because if a company as more short-term
assets than liabilities it can "work". The current ratio is a liquidity and
efficiency ratio that measures a firm's ability to pay off its short-term
liabilities with its current assets. If you look at the calculation of the
current ratio, you see that you use the same balance sheet data to
calculate net working capital.

CHAPTER- IV
DATA ANALYSIS & INTERPRETATION

LIQUIDITY RATIO ANALYSIS:
4.1 CURRENT RATIO:
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
Current ratio =
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
This ratio is most commonly used to perform the short-term financial analysis.
Also known as the working capital ratio, this ratio matches the current assets of
the firm to its current liabilities
Current ratio analysis:
Table: 4.1.1
YEAR CURRENT CURRENT CURRENT

ASSETS LIABILITIES RATIO
2009-10 3,05,061.81 1,13,056.59 1.685
2010-11 1,95,944.69 4,70,152.50 1.379
2011-12 5,32,733.10 5,97,699.26 0.891
2012-13 631681.22 809062.05 0.780
2013-14 6,67,403.39 8,85,923.86 1.327

The following graph shows the current Ratio during the period 2009-14:
current ratio
1.8
1.6
1.4
1.2
0.8 current ratio
0.6
0.4
0.2
0
2009-10 2010-11 2011-12 2012-13 2013-14
INTERPRETATION:
Here from the above data we came to know that the current for the years from
2010-2014 in the year the ratio came to some decreased level from the
calculation of current ratio by deducting from current ratios to current
liabilities.BPSLhad improving their liquidity from this analysis representation.

4.2 QUICK RATIO/ACID TEST:
Formula:
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
Quick ratio =
Table :4.2.1
YEAR CURRENT CURRENT INVENTORY QUICK

ASSET LIABILITIES RATIO
/ACID
RATIO
2009-10 3,05,061.81 1,13,056.59 1,05,891.04 0.748
2010-11 1,95,944.69 4,70,152.50 2,34,628.40 0.182
2011-12 5,32,733.10 5,97,699.26 1,76,482.81 0.596
2012-13 631681.22 809062.05 199271.45 0.534
2013-14 6,67,403.39 8,85,923.86 3,18,211.29 0.394

The following graph shows the quick Ratio during the period 2009-14:
Quickratio
0.8
0.7
0.6
0.5
0.4
Quickratio
0.3
0.2
0.1
0
2009-10 2010-11 2011-12 2012-13 2013-14
INTERPRETATION:
From the above graphical representation i came to know that the ratios are
raised at first and then had high decrease the next year and from raised the
level and then by then decreasing shows the fluctuations of the company.
Bpsl has its current liabilities more than current assets as from the analysis
of the particular company , interpreting the ratio of the company by their
current assets and current liabilities.

4.3 ABSOLUTE LIQUIDITY RATIO:
Formula:
𝑠𝑢𝑝𝑒𝑟 𝑞𝑢𝑖𝑐𝑘 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜

Absolute Liquidity Ratio =
Table :4.3.1
YEAR SUPER QUICK QUICK LIABILITIES ABSOLUTE LIQUID

CURRENT RATIO RATIO
2011-2012 362 801 0.148

2012-2013 298 794 0.369
2013-2014 386 105 0.283
2014-2015 118 880 0.486
2015-2016 325 114 0.317

The following graph shows the quick Ratio during the period 2009-14:
Absolute liquid ratio

0.6
0.5
0.4
0.3
Absolute liquid ratio
0.2
0.1
0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014
INTERPRETATION:
Here from the above graphical representation by

calculating the net working capital from current assets and current liabilities ,
current liabilities are more than current assets so, here the net working capital
has decreased while it has low current assets it has less cash reserves to run the
remaining process in the company.

4.4 NET WORKING CAPITAL FOR THE YEAR 2010-2011
Table :4.4.1
PARTICULARS 2009-2010 2010-2011 CHANGES IN WORKING

CAPITAL
INCREASE DECREASE
CURRENT ASSETS
INVENTORIES 1,05,891.04 2,34,628.40 128737.36
CASH&BANK BALANCES 48,143.84 45,106.72 3037.12
SHORT TERM LOANS &ADVANCES 71,191.21 1,04,137.64 32946.43

OTHER CURRENT ASSETS 79,835.72 86,279.74 6444.02
TOTAL CURRENT ASSETS(A) 3,05,061.81 4,70,152.50 165090.69
CURRENT LIABILITIES
CURRENT IABILITIES&PROVISIONS 1,14,519.18 1,99,765.03 85245.85

TOTAL CURRENT LIABILITIES(B) 1,14,519.18 1,99,765.03 85245.85
NETWORKING CAPITAL(A-B) 190542.63 270387.47 3120154.2

The following graph shows the net working capital during the period 2011-12
500000
450000
400000
350000
300000
250000 2009-2010
200000 2010-11
150000
100000
50000
0
TOTAL CURRENT ASSETS TOTAL CURRENT NET WORKING CAPITAL
LIABILITIES
INTERPRETATION:
From the above data analysed the net working capital for the year 2010-2011,
by total current assets and current liabilities here we can see that current assets
are more than current liabities then the liquidity position of the company Here
from the above graphical representation by calculating the net working capital
from current assets and current liabilities , current liabilities are more than
current assets so, here the net working capital has decreased whilhas low
current assets it has less cash reserves to run the remaining process in the
company.
NET WORKING CAPITAL FOR THE YEAR 2011-2012:
Table :4.4.2

CAPITAL
INCREASE DECREASE
CURRENT ASSETS
INVENTORIES 234628.40 176482.81 22788.64
CASH&BANK BALANCES 45106.72 86044.96 12679.64
SHORT TERM LOANS 104137.64 154766.15 30315.63
&ADVANCES
OTHER CURRENT ASSETS 86279.74 4537.87 2415.81
TOTAL CURRENT ASSETS(A) 470152.5 532733.1
CURRENT LIABILITIES
CURRENT 137829.5 231837.82 94008.32

IABILITIES&PROVISIONS
SHORT TERM BORROWINGS 3,64,949.83 4,86,033.14 121083.31
TRADE PAYABLES 94,919.93 91,191.09 3728.84
TOTAL CURRENT 5,97,699.26 809062.05 211362.79
LIABILITIES(B)
NETWORKING CAPITAL(A-B) -64966.16 -177380.83 242346.99

1000000
800000
600000
400000
2009-10
2010-11
200000
0
TOTAL CURRENT ASSETS TOTAL CURRENT NET WORKING CAPITAL
LIABILITIES
-200000
-400000
INTERPRETATION:
Here from the above graphical representation by calculating the net

working capital from current assets and current liabilities , current liabilities are
more than current assets so, here the net working capital has decreased while it
has low current assets it has less cash reserves to run the remaining process in
the company. From the above data analysed the net working capital for the year
2010-2011, by total current assets and current liabilities here we can see that
current assets are more than current liabities then the liquidity position of the
company

NET WORKING CAPITAL FOR THE YEAR 2012-2013
Table : 4.4.3

CAPITAL
INCREASE DECREASE
CURRENT ASSETS
INVENTORIES 176482.81 199271.45 22788.64
TRADE RECEIVABLES 110901.81 171840.61 60938.8

SHORT TERM LOANS 154766.15 185081.78 30314.93
&ADVANCES
TOTAL CURRENT ASSETS(A) 532733.10 631681.22 103448.12
CURRENT LIABILITIES
CURRENT 137829.5 228947.11 91117.61

SHORT TERM BORROWINGS 364949.83 486033.14 121083.31
TRADE PAYABLES 94919.93 94081.80 838.13
TOTAL CURRENT 597699.26 809062.05 211362.79
LIABILITIES(B)

1000000
800000
600000
400000
2011-12
2012-13
200000
0
Total current assets Total current liabilities Net working capital
-200000
-400000
INTERPRETATION:
Here from the above graphical representation of the year 2011-2012 by

calculating the net working capital from current assets and current liabilities ,
current liabilities are more than current assets so, here the net working capital
has decreased while it has low current assets it has less cash reserves to run the
remaining process in the company.

NET WORKING CAPITAL FOR THE YEAR 2013-2014:

CAPITAL
INCREASE DECREASE
CURRENT ASSETS
INVENTORIES 199271.45 318211.29 118939.84
TRADE RECEIVABLES 171840.61 162436.69 9403.92

SHORT TERM LOANS 185081.78 168105.30 16976.48
&ADVANCES
TOTAL CURRENT ASSETS(A) 631681.22 667403.39 35722.17
CURRENT LIABILITIES
CURRENT 228947.11 252688.11 23741

SHORT TERM BORROWINGS 486033.14 498542.40 12509.26
TRADE PAYABLES 94081.80 134693.35 40611.55
TOTAL CURRENT 809062.05 885923.86 76861.81
LIABILITIES(B)
Table :4.4.4

1000000
800000
600000
400000
2012-13
2013-14
200000
0
Total current assets Total current liabilities Net working capital
-200000
-400000
INTERPRETATION:
Here from the above graphical representation of the year

2013-2014 by calculating the net working capital from current assets and
current liabilities , current liabilities are more than current assets so, here the
net working capital has decreased while it has low current assets it has less
cash reserves to run the remaining process in the company. The liabilities of
the company are more than current assets in this year so the operations of the
company may go with the liabilities.

CHAPTER-V
 FINDINGS
 SUMMARY
 SUGGESTIONS
 BIBILOGRAPHY
 ANNEXURE
 CONCLUSION

SUMMARY
FINANCE:
Finance is a field that deals with the study of investments. It includes the
dynamics of assets and liabilities over time under conditions of different
degrees of uncertainty and risk. Finance can also be defined as the science of
money management. Finance aims to price assets based on their risk level and
their expected rate of return. Finance can be broken into three different sub-
categories: public finance, corporate finance and personal finance.
INDUSTRY:
The rate of production of steel in India has been going up at a

steady rate in the last few years. In the recent times, Orissa and Jharkhand
have been identified as the potential steel destinations of India – the ones
that would provide the Indian steel industry with its necessary raw material.
There are also several steel companies in India like Tata and
ArcelorMittal that are either coming up or have established them as
prominent forces in the world steel scenario. The Indian steel industry is
among the upcoming industries of the world. It has a number of iron ores,
which means that it has plenty of resources for which to draw its raw
material.

COMPANY:
BHUSHAN POWER AND STEEL LTD is an India-based company.

The company operates in six divisions, namely trading division, steel
melting division, rolling division, pyxis software division and sponge iron
division.BHUSHAN POWER AND STEEL was incorporated in the year
1970 as a public limited company. Steel Exchange India Ltd acquired a
well-established steel specific vertical B2B portal www.bpsl.com.
LIQUIDITY POSITION:
The liquidity position is the difference between the sum of liquid assets and
incoming cash flows on one side and outgoing cash flows resulting from
commitments on the other side, measured over a defined period, being the
measure of the liquidity risk. It is a powerful tool to in the interpretation of
the accounts and can discover issues and problems not immediately evident
from the accounts and financial information provided in the annual report.
Stakeholders may use ratios to support their decision making. Employees
and creditors can use liquidity ratios to evaluate whether debts will be
repaid.

FINDINGS
The below are the findings that we could observe form the data analysis
made above:
 It is found that the quick ratio of this company is not very much
satisfying due to its accumulations of inventory in huge quantities.
 It is found that the current ratio of bhushan power and steel is below the
acceptable level because of the decrease in its current assets and current
liabilities.
 It is keenly seen that BPSL has borrowed more money rather than
bifurcating ownership.
 It is found that the inventory is less liquid and this tells its inefficiency on
control of stock.
 The BPSL is collecting its bills very firmly and possess the ability to pay
it debts in time.
 It is found in BPSL by calculating its gross profit ratio that BPSL has no
issues in performing its day to day operations.

SUGGESTIONS
The following are the suggestions that are taken based upon the data
analysis:
 BPSL should improve its current ratio as it is seen below the accepted rate,
this can be done by increasing its amount of current assets to its current
liabilities.
 According to the study BPSL Can be suggested to start improving the

quick ratio by reducing the amount of inventory it keeps in hold.
 The company whose capital structure is built through funds form debts and
this should be reduced as they are seen to be risky.
 BPSL is promptly colleting from its debtors for every 3 months in a year
but on the other hand it is seen that BPSL is paying its debts only once in a
year this may effects the company in borrowing any further.
 The management should try investing wisely on its fixed and current assets
through which returns will be increased and a greater life span of company
can be assured.

BIBLIOGRAPHY
BOOKS:
1. Financial Management: Theory & Practice
Author: IM Pandey & Koontz
2. Financial Management
Author: M.Y.Khan & Jain
WEBSITES:
 http://www.bpsl.co.in
 Bhushan Power and Steel Ltd profile
 Company’s Annual Reports

COINCLUSION:
It Is found that the current ratio of Bhushan power and steel is

below the acceptable level because of the decrease in its current assets and
current liabilities The BPSL is collecting its bills very firmly and possess the
ability to pay it debts in time. It is found that the quick ratio of this company is
not very much satisfying due to its accumulations of inventory in huge
quantities. It is keenly seen that BPSL has borrowed more money rather than
bifurcating ownership. BPSL should improve its current ratio as it is seen
below the accepted rate, this can be done by increasing its amount of current
assets to its current liabilities. According to the study BPSL Can be suggested
to start improving the quick ratio by reducing the amount of inventory it keeps
in hold.

ANNEXURE





Liquidity Position Project

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A Study on LIQUIDITY POSITION

 NEED FOR THE STUDY

 OBJECTIVES OF THE STUDY

Department of Management Studies Page 1

 NEED FOR STUDY

 OBJECTIVE OF THE STUDY

Department of Management Studies Page 2

Meaning and Definition:

In accounting the term “liquidity” is defined as the ability of the company to

Liquidity ratio expresses a company's ability to repay short-term

Department of Management Studies Page 3

Working capital management examines the relationship between

Department of Management Studies Page 4

OBJECTIVES OF THE STUDY

 The main objective of the study is to analyse how liquidity position is

Department of Management Studies Page 5

NEED FOR THE STUDY

 Every business organization need to have an idea about their current

 Solvency of the business: To analyze the solvency of the business.

Department of Management Studies Page 6

Analysis or Interpretations of Ratios

The analysis or interpretations can be done by calculating the current ratio of

The term liquidity position called as Working Capital.Working capital

Department of Management Studies Page 7

There are two concepts of working capital ……

 Gross working capital

Gross Working Capital

Net Working Capital

Department of Management Studies Page 8

RESEARCH & METHODOLOGY

The study has been conducted in the organization to examine working

The collection of information is done two principle sources, viz

Department of Management Studies Page 9

It is information collected directly without any references. In this study it is too

The data collection includes conducting personal interviews with the

The data collection includes collection of required data from annual

Department of Management Studies Page 10

1. Data regarding BHUSHAN POWER AND STEEL LIMITED.

2. Data regarding the contribution of each product toward sales.

4. Data regarding effect of promotional activity done by BHUSHAN POWER

Though our project is completed successfully a few limitations may be there:

2. The major data collected from secondary source.

3. Unwillingness of the company to provide the required information

Department of Management Studies Page 11

4. They have provided data regarding 5years only.

5. The study is carried basing on the information and documents

LIMITATIONS OF THE STUDY

 The study is based on the information available in the balance

Department of Management Studies Page 12

Advantages of Liquidity Position Analysis

Liquidity analysis is necessary to establish the relationship between two

(1) It facilitates the accounting information to be summarized and simplified in

(4) It provides necessary information to the management to take prompt

Department of Management Studies Page 13

 To study the functioning

Department of Management Studies Page 14

The following is the complete format of the chapterization of the

 First chapter deals with introduction of Ratio analysis regarding the

 Fourth chapter deals with data analysis and interpretation

Regarding the ratio calculated.

 Fifth chapter deals with summary, findings and suggestions.

There ends the complete chapterization of the project.

Department of Management Studies Page 15

INDUSTRY PROFILE & COMPANY PROFILE