WORKING CAPITAL MANAGEMENT AMPO POYAM VALVES

INTRODUCTION TO THE STUDY

Working Capital management is one of the important facets of a firm’s overall

financial management. It is concerned with the management of firm’s current accounts,
which include current assets and current liabilities. Its objective is to put the current assets
into optimal use by speeding up their flow to ensure that money does not stagnate any way in
any form. The management of working capital is becoming increasingly important as firms
realize that approximately half of the investments are in working capital.

Working capital sphere, therefore, throws open a welcome challenge and an

opportunity for the finance manager to play a key role for effective planning, controlling,
directing and utilizing the working funds in an enterprise. To understand the concept of
working capital it is important to know the precise meaning of current assets and current
liabilities. Current assets are those assets, which are used in the production and selling
operations of the business and can be converted into cash with in a year. They comprise
inventory, debtors, bills receivable, marketable securities, cash and bank balances.

Current liabilities are those which are intended to be paid during the accounting
period out of current assets or the income of the business. They include bank loans, loan other
than bank, bills payable and sundry creditors. Two concepts of working capital now in vogue
are found useful in the management of working capital viz., gross and net. The former
concept concerns with the quantitative approach whilst the latter deals with qualitative
approach. Another alternative definition of net working capital is that portion of firm’s
current assets which is financed with long term funds. Net working capital, thus indicates the
liquidity of the business whilst gross working capital with which the business has to operate.

GROSS WORKING CAPITAL CONCEPT

Working capital employed in business concern is equal to the total current assets
employed. This is also known as circulating capital or operating capital as these assets rotate
continuously as long as the firm exists. The gross working capital concept focuses attention
on two aspects of current assets management. They are (a) optimum investment in current
assets and (b) financing of current assets.
 To quote westion and brigham, gross working capital refers to firm’s investment in
short term assets such as cash, short term securities, accounts receivable and inventories. The
supporters of this concept like field, baker and Mallot and Mead argued that the management
is more concerned with total current assets as they constitute the total funds available for
operating purpose.

NET WORKING CAPITAL CONCEPT

The qualitative concept examines working capital as excess of current assets over
current liabilities. Working capital deficit exists if current liabilities exceed current assets.
Similar views are express by Guthmann and Dougal and McMullen Accountants Hand Book
also completely endorses the view. Gerstenberg supports it the following way:

“Any comprehensive discussion on the working capital includes the excess of current
assets over current liabilities”. Famous economists like Lincoln, Stevens and sailers fully
endorsed this concept and expressed that it helps creditors and investors judge the financial
soundness of an enterprise. Another alternative definition of net working capital is that
portion of firm’s current assets which is financed with long term funds. Net working capital,
thus indicates the liquidity of the business whilst gross working capital with which the
business has to operate.

FACTORS INFLUENCING WORKING CAPITAL

The business undertaking should plan its operations in such a way that it should have
neither too much nor too little working capital. The total working capital requirements are
determined by a variety of factors which determine the quantum of working capital in a
business undertaking is as follows.

 General nature of the business-companies which sell a service and that too for
immediate cash, require little working capital. But for a manufacturing firm which
produces a product and sells it on credit basis, working capital required is high.
 Production cycle if the production process is lengthy working capital required is
more and vice-versa.
 speed of operating cycle if the speed of operating cycle is slow working capital
needed is high.
 INTRODUCTION TO THE INDUSTRY
Valves are the predominant metal. The typical alloying elements are copper,

magnesium, manganese, silicon, tin and zinc. There are two principal classifications, namely

casting valves and wrought valves, both of which are further subdivided into the categories

heat-treatable and non-heat-treatable. About 85% of aluminium is used for wrought products,

for example rolled plate, foils and extrusions. Cast valves yield cost-effective products due to

the low melting point, although they generally have lower tensile strengths than wrought

valves.

The most important cast alloy system is Al–Si, where the high levels of silicon (4.0–

13%) contribute to give good casting characteristics. Valves are widely used in engineering

structures and components where light weight or corrosion resistance is required.Valves

composed mostly of aluminium have been very important in aerospace manufacturing since

the introduction of metal-skinned aircraft. Aluminium-magnesium valves are both lighter

than other valves and much less flammable than valves that contain a very high percentage of

magnesium.

Alloy surfaces will develop a white, protective layer of aluminium oxide if left

unprotected by anodizing and/or correct painting procedures. In a wet environment, galvanic

corrosion can occur when an alloy is placed in electrical contact with other metals with more

positive corrosion potentials than aluminium, and an electrolyte is present that allows ion

exchange. Referred to as dissimilar-metal corrosion, this process can occur as exfoliation or

as intergranular corrosion. Valves can be improperly heat treated. This causes internal

element separation, and the metal then corrodes from the inside out. Aircraft mechanics deal

daily with alloy corrosion.

 Alloy compositions are registered with The Aluminum Association. Many

organizations publish more specific standards for the manufacture of alloy, including the

Society of Automotive Engineers standards organization, specifically its aerospace standards

subgroups, and ASTM International.Aluminium's intolerance to high temperatures has not

precluded its use in rocketry; even for use in constructing combustion chambers where gases

can reach 3500 K.

The Agena upper stage engine used a regeneratively cooled aluminium design for

some parts of the nozzle, including the thermally critical throat region; in fact the extremely

high thermal conductivity of aluminium prevented the throat from reaching the melting point

even under massive heat flux, resulting in a reliable, lightweight component.

Household wiring

Because of its high conductivity and relatively low price compared with copper in the

1960s, aluminium was introduced at that time for household electrical wiring in North

America, even though many fixtures had not been designed to accept aluminium wire. But

the new use brought some problems:

 The greater coefficient of thermal expansion of aluminium causes the wire to expand

and contract relative to the dissimilar metal screw connection, eventually loosening

the connection. Pure aluminium has a tendency to creep under steady sustained

pressure (to a greater degree as the temperature rises), again loosening the connection.

 Galvanic corrosion from the dissimilar metals increases the electrical resistance of the

connection.All of this resulted in overheated and loose connections, and this in turn

resulted in some fires. Builders then became wary of using the wire, and many

jurisdictions outlawed its use in very small sizes, in new construction.

 Yet newer fixtures eventually were introduced with connections designed to avoid

loosening and overheating. At first they were marked "Al/Cu", but they now bear a

"CO/ALR" coding.Another way to forestall the heating problem is to crimp the aluminium

wire to a short "pigtail" of copper wire. A properly done high-pressure crimp by the proper

tool is tight enough to reduce any thermal expansion of the aluminium. Today, new valves,

designs, and methods are used for aluminium wiring in combination with aluminium

terminations.

Alloy designations

Wrought and cast valves use different identification systems. Wrought aluminium is

identified with a four digit number which identifies the alloying elements.Cast valves use a

four to five digit number with a decimal point. The digit in the hundreds place indicates the

alloying elements, while the digit after the decimal point indicates the form (cast shape or

ingot).

Temper designation

The temper designation follows the cast or wrought designation number with a dash, a

letter, and potentially a one to three digit number.

Cast valves

The Aluminum Association (AA) has adopted a nomenclature similar to that of

wrought valves. British Standard and DIN have different designations. In the AA system, the

second two digits reveal the minimum percentage of aluminium, e.g. 150.x correspond to a

minimum of 99.50% aluminium. The digit after the decimal point takes a value of 0 or 1,

denoting casting and ingot respectively.

 INTRODUCTION TO THE ORGANIZATION

Ampo poyam Valves Private Limited offers castings up to a gross weight of 2200 kgs.

At present with an installed capacity of 2400 MT/year their core strength lies in their well

qualified and skilled technical team who has vast experience in the industry with combined

experience over and above 100 years. They can produce castings in all grades of carbon steel,

stainless steel, low and high alloy steel and also Duplex Steel.

With their optimum design in exploiting the benefits of modern casting technology

and simulations they can apply the principals of TQM to achieve continual improvement of

all their products, processes and systems. Their products strictly confirms to ASTM, DIN and

other applicable international standards. Formerly the company was started in the year 2004

with a capacity of 1200 MT per annum.

Subsequently after 7 years of business, from 05.10.2010, Ampo poyam Valves Private

Limited was taken over by M/s Swelect Energy Systems Ltd, Chennai as its subsidiary unit.

SWELECT Energy Systems Limited(formerly 'Numeric Power Systems Ltd') is a leading

Power Electronics and Renewable Energy company. SWELECT brings the photovoltaic

systems, the fastest growing energy technology that can generate enough electricity to

support the entire power requirements.

SWELECT offers a wide range of products to cater to all the power needs and

provides end-to-end solutions in solar power installations. SWELECT Energy Systems

Limited provides sustainable energy solutions for a greener and healthier India. SWELECTs

focus has always been excellence in quality of products and dedication in service to provide

sustainable, innovative and cost-effective solutions to India's ever-increasing energy needs.

 With 30 years field experience and with a team of experts in Power Electronics and

Power Systems, SWELECT even today stays close to its customers and caters to their needs

through continuous technological innovation, rich expertise and customer centric approach.

SWELECT has the ability to implement solar power projects in small as well as large scales

with utmost understanding of customer requirements and customised solutions. This attribute

has made the company ‘A trusted partner for Renewable Energy Solutions’.

Their Products

Presently producing Gate valve, Globe valve, Check valve, Ball valve, Knife edge

valve, Plug valve, Butterfly valve and their allied components namely Body, Bonnet, Yoke,

Wedge, Seat ring and all other oil field and industrial valve and engineering items.

They produce almost all grades under ASTM and DIN standards with efficient and

well trained and qualified personals. Their "Team Amex" exercises all efforts to produce

castings to meet the needs of their global customers' requirement.

Mission

 Customers: Taking their business ahead through superior price-value

 Employees: Career wastage; remunerative engagement; dignified conduct

 Community: Environmentally responsible operations; sensitive community

development

 Vendors: Ethical conduct, growing volumes and timely payments

Vision

 Raw material: Strengthen mining reserves to 10 mn tonnes by 2015

 Power: Enhance power generation to 250 MW in five years

 End product: Increase downstream production capacity from 150,000 TPA to 500,000

TPA by 2015

Clients

 Audco India Ltd

 Pl Haulwel
 Virgo Engineers Ltd
 Fabtech Projects & Engineers Ltd
 Tyco Valves & Controls India Pvt Ltd
 Doosan Chennai Works Pvt Ltd
 ORGANIZATION CHART

Managing Director

Assistant
Manager

Administration Human Purchase & Finance Production & Sales

Department Resource Store Department Quality Department
Department Department Department

Manager Manager Manager Manager Manager Manager

Admin HR Incharge Accountant Production Sales

staff person

Workers Store Auditor Quality

keeper control staff

Assurance
staff
 COMPANY PROFILE

Name of the Company : Ampo poyam Valves Private Limited

Type : Public

Brand Name : Ampo poyam Valves Private Limited

Founded : 2004

Name of the Founder : Mr. T. Kayarohanam

Chairman & MD : Mr. R. Chellappan

Products : Gate valve, Globe valve, Check valve, Ball valve,

Knife edge valve, Bonnet, Yoke and Seat ring

Website : http:// www. amexvalves.com

E-mail : sales@amexvalves.com

Headquarters : Coimbatore, Tamil Nadu

Achievements : IIF- COIMBATORE 2001

Awards : Rajiv Gandhi National Quality Award 2008

THEIR PRODUCTS
GATE VALVES

Ampo poyam Gate Valves are Rising Spindle, Outside Screw & Yoke Type
construction. Ampo poyam Gate valves are provided with smooth machined full bore and full
opening of wedge eliminates additional pressure drop across the valve. Solid wedge, Flexible
wedge, Split wedge, and Parallel wedge designs offer maximum flexibility and option to
clients for their suitable selection. Specially designed seat and gland packing materials are
provided for superheated steam and high temperature Thermic fluid to trouble free service,
easy operation and longer life. Deep stuffing box is providing to assure tightness and
maximum packing life. A separate properly machined and lapped back seat facilities are
provided for replacement of Gland packing when valve is in stream under pressure.

Gate Valve

Forged Steel Gate Valve

Motorised Electrical Actuator Operated Gate Valve

GLOBE VALVES

AMPO POYAM make globe valves are meticulously designed to ensure 100%
smooth flow area to reduce pressure drop across the valve. Specially designed seat and gland
packing materials are provided for superheated steam and high temperature Thermic fluid to
trouble free service, easy operation and longer life.
 Deep stuffing box is providing to assure tightness and maximum packing life. A
separate properly machined and lapped back seat facilities are provided for replacement of
Gland packing when valve is in stream under pressure.

AMPO POYAM Globe valves are available under any Third party inspection
including IBR (Indian Boiler Regulation).

Ampo poyam Globe Valves are also available with Gear Box / Pneumatic Actuator /
Pneumatic Cylinder / Electrical Actuator operated along with accessories like Solenoid, Limit
Switch, Air Filter Regulator etc.

DIN Standerd Globe Vlave Globe Valve

Forged Steel Globe Valve

SWING CHECK VALVES

Ampo poyam Swing check valves are ideally suitable for vertical and horizontal
application. A range of Check Valves (Non-Return Valves) suitable for oil, gas, water,
refining, power and chemical applications where the prevention of flow reversal is
mandatory. Ampo poyam Check Valves are Bolted cover design up to 600# and above
pressure seal design.
 Stellited trims are provided for all above 600# as a manufacturing standard of
“AMEX” valves and in lower rating also on request.

AMPO POYAM Swing Check valves are available under any Third party inspection
including IBR (Indian Boiler Regulation). Swing Check valves can be supplied with Titling
disc design, Counter weight or Dash pot arrangement.

Swing Check Valve

BALL VALVES
Ampo poyam high performance Ball Valves advanced features such as Anti - Static
devices ensure electrical continuity between ball, Stem & body, leak proof multi seal system,
Blow out proof stem operate the valve safely even at high differential pressure, and lower
operating torques due to high spherocity & surface finish of ball. Eletroless Nickel plating
ball are also available on request. Electro-Polished, Buff Finish & Ultra clean valve can be
provided for Food & Pharmaceutical Industries.

Flange End Ball Valve | Screwed End Ball Valve

 Ampo poyam offer a Ball Valves in Single Piece, Two Piece & Three Piece design
construction to suit wide range of application and pressure rating up to 1500 class in both
regular & full port construction in difference combination of body and trims.
Ampo poyam soft-seated ball valve gives Zero Leakage, Tight Shut-off, and Easy
smooth operation at temperature ranging from -200 to +2200 C. Metal to Metal seating
offered for higher temperature services on request.

KNIFE EDGE GATE VALVES

Ampo poyam Single Cast, Rugged, Heavy Duty body provides corrosion and abrasion
resistance on the toughest liquid slurry and dry material handling application. Ampo poyam
High Performance Uni-Directional / Bi-Directional Knife Edge Gate Valve provide better
value and performance with many standard features not found in other, commodity Knife
Edge Gate Valve. Ampo poyam Knife Edge Gate Valves are available in different
combination of Body, Seat & Gate material.

BUTTERFLY VALVES

Ampo poyam Slim-Seal, Center design High Performance Butterfly Valves are
reliable, maintenance free shutoff with permanently gas-tight seal with an integrally
moulded/replaceable elastomers body liner. These butterfly valves excess other conventional
valves such as gate valve and globe valves in all aspects, especially in terms of light weight,
less number of component, no flange gaskets required and economical operation and
maintenance costs.

Butterfly Valve
OBJECTIVES OF THE STUDY

 To know the working capital of the concern through balance sheet.

 To know the liquidity position of the Ampo poyam Valves Private Limited with the

help of current ratio.

 To find the goodwill of the Ampo poyam Valves Private Limited.

 To identify and analyze the working capital components of the Ampo poyam Valves

Private Limited with the help of comparing the balance sheet.

STATEMENT OF THE PROBLEM

Working capital management or simply the management of capital invested in current

assets is the focus of study. So topic is to study working capital management of Ampo poyam
Valves Private Limited. Working capital is the fund invested by a firm in current assets. Now
in a cut throat competitive era where each firm competes with each other to increase their
production and sales, holding of sufficient current assets have become mandatory as current
assets include inventories and raw materials which are required for smooth production runs.
Holding of sufficient current assets will ensure smooth and un interrupted production but at
the same time, it will consume a lot of working capital. Here creeps the importance and need
of efficient working capital management. Working capital management aims at managing
capital assets at optimum level, the level at which it will aid smooth running of production
and also it will involve investment of nominal working capital in capital assets.