You are on page 1of 94






Guided By

For the partial fulfillment of Master of Business Administration

Working capital could be defined as the portion of assets used in current operations. The movements of the funds from capital to income and profits and back to working capital are one of the most important characteristics of the business. This cyclical operation is concerned with utilization of the funds with the hope that will return with an additional amount called income. If the operations of the company are to run smoothly, a proper relationship between fixed capital and current capital has to maintain. Sufficiently liquidity is important and must be achieved and maintained to provide that funds to pay off obligation as they arise. The adequacy of cash and other current assets together with their efficient handling, virtually determine the survival or demise of the company. A businessman should be able to judge the accurate requirement of working capital and should be quick enough to raise the enquired funds to finance he working capital needs.

No task is single mans effort. Any job in this world however trivial or tough cannot be accomplished without the assistance of others. An assignment puts the knowledge and experience of an individual to litmus test. There is always a sense of gratitude that one likes it express towards the persons who helped to change an effort in a success. The opportunity to express my indebtedness to people who have helped me to accomplish this task. I deem it a proud privilege to extend my greatest sense of gratitude to my guide MR DIPANJAN MUKHERJEE for the keen interest, inspiring guidance, continuous encouragement, valuable suggestions and constructive criticism throughout the pursuance of this report.Last but not least it would be unfair if I dont extend my indebtedness to my parents and all my friends for their active cooperation which was of great help during the course of my training project.

Table of
Chapter No. Subject Page No.

1 2 3 4 5 6 7

Introduction Company Profile Research Methodology Data Analysis &Interpretation Findings & Conclusion Suggestion & Recommendation Bibliography

5 40 58 66 89 92 94


Basic Accounting Terminologies

Every human being consciously engages himself in some meaningful activity. Although the measure of success may vary in each case one has to be careful and cautious at every stage in his life. Bookkeeping and accountancy is a science, which has attracted the attention all such human activities. Accounting enables a person to assess the risk appropriate steps. Account an account denotes a summarized record of transactions pertaining to one person, one kind of asset, or one class of income, or one class of income or loss. Assets properties of every description owned by a person will be called assets for example land and building, plant and machinery, cash balance, bank balance etc. Bad debts which are irrecoverable and written off from debtors A/C as a loss are termed as bad debts.

Casting means the totaling of the books of account casting has to be done of the ledger accounts and also of a journal. Creditor a creditor is a person to whom we owe something. He is the person to whom we have to pay. Capital the dictionary meaning of the term capital is wealth capital is the total account invested in business the capital of a business is the claim of the owner to the business is the claim of the owner to the business. Debtor is person who owes something he is the person who has to pay to other person. Drawing is the total amount withdrawn by a trader from his business for meeting personal expenses. Trader becomes a debtor of business by the amount withdrawn by him from business for private purpose. Discount it is an allowance or a concession allowed by the receiver of benefit to the giver of benefit. It is normally allowed to the customers, debtors, and retailers etc. the discount may be classified in two ways

1) Cash discount. 2) Trade discount.

Cash discount it is discount allowed to customer as an inducement to make payment immediately. Cash discount is closely related to cash receipt and cash payment. When cash is received, discount is allowed is a loss to a business while cash discount received is a gain to him.

Trade discount it is an allowance made by a wholesaler to a retailer in order to enable the retailer to sell the articles at list prices and earn a reasonable margin of profit. The amount of trade discount is deducted from the invoice; therefore, it has no connection as to the receipt and payment of cash. Hence, trade discount does not appear in the books of accounts. Entry the term entry refers to the recording of a transaction in the books of account. It is the primary record of a transaction in the books called journal or any other subsidiary journal.

Expenses the effort made by business to obtain the revenues are termed as expenses. It is the amount spent on manufacturing and selling of goods and services.

Folio it means the page number of the book of original entry or of the ledger by writing folio i.e. page number, one can easily find out on what page the original entry is made and on what page the entry is made in the main book.

Goods commodities in which a trader deals are called as goods.

Insolvent a person is said to be insolvent when his liabilities are more than asset.

Insolvency when the liabilities of a firm are greater than its assets, it is referred to as insolvency indicating the liabilities of a business to meet all its liabilities. Such a business firm is said insolvent.

Journal is the book 0f accounts in which business transaction are first recorded. It is a book of prime entry or first entry.

Liabilities debts owed by a person are called liabilities. Liabilities represent the total amount to creditors. Debts arise because, goods may be purchased out but payment may not be made at the time of purchasing the goods. Therefore the total amount payable to creditors will be the liabilities.

Narration it is a brief explanation or description on to a journal entry it is given on the line just below the journal entry within the brackets.

Posting transaction entered in the original books of entry are also to be recorded in the ledger on the basis of the entry made in the original book is called posting. Purchases the goods bought for resale or manufacture and resale are called purchases. Purchases may be classified as 1) Cash purchase 2) Credit purchase

Revenue it represent the accomplishment of the enterprise until the company has been successful in selling its products, no revenue is realized. Revenue is the amount that adds to the capital.

Sales the goods sold by a business for cash or on credit are called sales. The sales may be classified as; 1) Cash sales 2) Credit sales

Solvent a person is said to be solvent when his assets are equal to or more than his liabilities.

Stock goods unsold lying with a business on any given date is called as stocks. Transactions a transaction are an exchange of money or moneys worth between two parties. It is dealing between two parties. It is dealing between two or more persons. The transactions are classified on the basis of exchange of goods and service they may be. 1) Barter transactions. 2) Monetary transactions. Monetary transactions are classified in the two types.


1) Cash transactions. 2) Credit transactions.

Book keeping is defined as the process of analyzing, classifying and recording transaction in a systematic manner to provide the information about the financial affairs of the business concerns.

Accounting is a wider concept, which includes book keeping accounting, is involved not only maintaining records, but also balancing of accounts, interrupting the balances, preparation of summaries, drawing conclusions from the summaries knowing the results of financial transactions etc. Classification of accounts. Accounts are classified in to four types 1) Personal accounts. 2) Real accounts. 3) Nominal accounts. Personal accounts GIVER DEBIT THE RECIVER AND CREDIT THE


Real accounts GOES OUT



Journal is derived from the French word jour which means a day journal is the book of original entry or primary entry. It is a book of daily record first of all the business transactions are recorded in the journal and subsequently they are posted in the ledger. Ledger a group of accounts is known as ledger a ledger is the principle book of account a journal is meant for passing the entries of business transaction. A ledger is a bound book. It contains many pages, which are called folios. These pages are consecutively numbered. For each account a separate page is kept. Every ledger has an index. It is generally an alphabetic index one page is allotted for each alphabet. All the accounts commencing with that particular alphabet are indicated on that particular page only. The page number on which the particular account appears is shown in the index.


Ledger posting After the transaction has been analyzed into its debit and credit elements in a journal, each such debit and credit elements must be transferred in a journal accounts. The process of transfer of entries from journal to ledger account is called ledger posting.

Trial balance After posting the transaction to respective ledger accounts they are balanced and then a trial balance is drawn. A trial balance is a statement, which shows the list of accounts showing debit balances and list of accounts showing credit balance. If double entry principles are strictly followed the total of the entire debit balances must agree with the total of all the credit balance. Trade discount The amount of trade discount is deducted from the bill itself. Therefore, a trade discount does not appear in the books of accounts. If a trade discount is given in the transaction, the amount of such a trade discount is deducted from the gross value of purchase and only the net value (arrived at after allowing a trade discount) is recorded in the purchase books.


Debit note A debit note is sent to the supplier when the goods purchased from him are returned. A debit note is a statement sent by the buyer to the supplier stating the full details of the good returned. It is sent along with the goods. It intimates the supplier that his account has been debited by the value of the good returned to him.

Credit note A credit note is sent to the customers when we receive goods returned from them. It gives the full details of the good returned by the customer. Credit notes are generally is printed in red ink. Transaction is recorded in this book on the basis of credit notes.

Trial balance The dictionary for accountants written is a list or abstract of the balance or of total debits and total credits of the accounts in a ledger, the purpose being to determine the equality of posted debits and credits and to establish a basic summary for financial statements.


Subsidiary books (sub division of journal) If all the business transaction were recorded in one and the same journal, the journal would be bulky and cumbersome. It would be very difficult to make clerks to work on the same journal at one and the same time. Instead of recording all the transaction in on and the same journal, they are recorded in separate journals meant for the purpose. Therefore, in order to meet the requirements of modern business, the original journal is divided into the following Purchase book Sales book Purchase return book Sales return book Cash book Bills receivable book. Bills payable book. Journal proper.


Final accounts

The final accounts are prepared to find out the profit or loss and to know the financial position of the business. These account consist of The trading account The profit and loss account Balance sheet
Trading account

A trading account is prepared to find out the gross profit or gross loss in the business done during the year. The gross profit is the difference between the cost of goods sold and the sale proceed without any deduction of indirect expenses. Hence, in the trading account it is necessary to include all items of expenses directly affecting the cost of goods sold. The cost of goods sold includes the purchase price of the good sold plus buying and bringing expenses and the expenses of conversion of raw material into saleable finished goods.
Profit and loss account

Profit and loss account is another summary account, which is prepared after preparation of trading account. Trading account does not disclose the net income or loss. There are other expenses in order to ascertain the profit or not loss.


Balance sheet

A balance sheet is a statement of the financial position of a business on a given date. It is a snapshot of the financial condition of the business. The balance sheet is not account; it is only a statement showing asset and liabilities of the business. It is important to note that the balance sheet always balances. The total value of the assets is always equal to the capital and liabilities. We can define balance sheet as a statement of financial position of any economics unit as at a given moment of time, its assets, at cost, depreciated cost or another indicated value, its liabilities and its ownership equities Introduction Of Working Capital Meaning: Working capital could be defined as the portion of assets used in current operations. The movements of the funds from capital to income and profits and back to working capital are one of the most important characteristics of the business. This cyclical operation is concerned with utilization of the funds with the hope that will return with an additional amount called income. If the operations of the company are to run


smoothly, a proper relationship between fixed capital and current capital has to maintain. Sufficiently liquidity is important and must be achieved and maintained to provide that funds to pay off obligation as they arise. The adequacy of cash and other current assets together with their efficient handling, virtually determine the survival or demise of the company. A businessman should be able to judge the accurate requirement of working capital and should be quick enough to raise the enquired funds to finance he working capital needs. Working capital is also called as net current assets, it is the excess of current assets over current liabilities. All organization has to carry working capital. It is important from the point of view of both liquidity and profitability. Poor management of working capital means that funds that unnecessarily tied up in idle assets hence educing liquidity and also reducing ability to invest in productive assets such as plant and machinery. So affecting profitability.


The term working capital refers to current assets, which may be defined as: i) Those which are convertible into cash or equivalents with the period of one year and ii) Those which are required to meet day to day operations,

The fixed as well as current assets, both requires investment of Funds. So the management of working capital and fixed assets apparently seem to involve it type of consideration but it is no so. The management of working capital involve different concept and methodology than the techniques used in fixed assets management. Objective behind the Study Of Working Capital

Working capital management is very important in modern business. The analysis of working capital is also very useful for short-term management of funds. The following are objective of study: 1) To make Items wise analysis of the elements or component of working capital to identify the items responsible for change in working capital. 2) To calculate working capital for the particular time period.


Scope & Limitation of the Study 1. The Study is limited to certain years projected performance of the Company. 2. The data used in this study have been given commercial Manager. As per the requirement and necessary some data are grouped and sub grouped. 3. For making a clear-cut opinion, Ratio technique of financial management has been used. Types of working capital The type, kinds of a thing are depending upon the different utilization of working capital. It prominently works in the direction of performing different functions in different situation and in the context of divergent variables. So following are some important types of working capital.


Net Working Capital

Negative Working Capital Types of Working Cash Working Capital Capital

Gross Working Capital

Permanent Working capital

Balance Sheet Working Capital

Temporary Working Capital

1) Net Working Capital: Term Net working capital can be define in two way i) It is the difference between current assets and current liabilities. ii) Amount left for operational requirement.


2) Gross Working Capital: Gross working capital means the total current assets.

3) Permanent Working Capital: It is the minimum amount of the current assets, which are needs to conduct the business even during the dullest season of the year. This amount varies from year to year depending upon the growth of a company and stage of the business cycle in which it operates. It is the amount of funds required to produce the goods and services, which are necessary to satisfy demand at a particular point. It represents the current assets, which are required on a continuing basis over the year. It is maintain as the medium to carry on operation at any time. Permanent working capital has following features: i) ii) iii) It is classified on the basis of the time factor. Its size increase with the growth of the business. It constantly shifted from one asset to another and continues to remain in the business process.


4) Temporary Working Capital: It represents the additional assets, which are required at different times during the operating year. Seasonal working capital is the additional amount of current assets particularly cash, receivables, and inventory which is required during the more active business seasons of the year. It is the temporary investment in the current assets and possesses the following features: a) It is not always gainfully employed, though is May also shift from one asset to another as permanent working capital does. b) It is particularly suited to business of seasonal on cyclical nature.

5) Balance Sheet Working Capital: The balance sheet working capital is one, which is calculated from the items appearing in the balance sheet. Gross working capital, which is represented by the excess of current assets over current liabilities, is example of the balance sheet working capital.

6) Cash Working Capital: It is one, which is calculated from the items appearing in the Profit and Loss Account. It shows the real flow of money or value at a particular time and considered to be most realistic approach in


working capital management. It is the basic of the operation cycle concept, which has assumed a great importance in financial management in recent year. The reason is that the cash working capital indicates he adequacy of the cash flow which is an essential pre-requisite of a business.

7) Negative Working Capital: It emerges when current liabilities exceeds current assets, such a situation is absolutely theoretical and occurs when a firm is nearing a crisis of some magnitude.

Principles of Working Capital Management: There are some principles of sound working capital management policy. They are as follows: 1) Principle of Risk Variation: Risk here refers to inability of a firm to meet its obligation when they become due for payment. Large investment in current assets with less dependence on a short term borrowing increase liquidity, reduces dependence on short term borrowing increases liquidity, reduces risk.


2) Principle of Cost of Capital: The various sources of rising of working capital finance have different cost of capital and the degree of risk involved. A sound working capital management should always try to achieve a proper balance between these two. 3) Principle of Equity position: According this principle, the amount of working capital invested in each component should be adequately justified by a firms equity position. Every rupee invested in the current assets should contribute to the net worth of the firm.

4) Principle of Maturity of Payment: This principle is concerned with planning he sources of finance for working capital. According to this principle, a firm should make every efforts related to maturity of payment & its flow of internally generated funds. Maturity pattern of various current obligations is an impotent factor in risk assumptions and risk assessment.


Factors determining working capital

1) Nature or character of Business: The working capital requirement of a firm basically depends upon the nature of its business. Public utility undertaking like Electricity, Water Supply, and Railways need very limited working capital because they offer cash sales only and supply services, not products and as such no funds are tied up in inventories and receivables. On the other hand trading and financial firms require less investment in fixed assets but they have to invest large amount in current assets like inventories, receivables and cash. So they need large amount of working capital. 2) Production cycle: Another factor, which has a bearing on the quantum of working capital, is the production cycle. The term production or manufacturing cycle refers to the time involved in the manufacturing of goods. It covers the time span between the procurement of raw material and the completion of the manufacturing process leading to the production of finished goods.


In other words, there is sometime gap before raw material becomes finished goods. To sustain such activities that need for working capital is obvious. The longer time span (production cycle) the large will be the tied up funds and therefore, larger is working capital need and vice versa.

3) Production Policy: In certain industry the demand is subject to wide fluctuations due to seasonal variations. The requirement of working capital in such case, depend upon the production policy. The production can be either kept steady by accumulating inventories during slack period with a view to meet high demand during peak season of the production could be curtailed during the slack season and increased during the peak season. If policy is to keep production steady by accumulating inventories it will require higher working capital. 4) Credit Policy: The credit terms granted to customers have a bearing in the magnitude of working capital by determining the level of book debts. The credit sales result in higher book debs. Higher book debts mean more working


capital. On the other hand, if liberal credit terms are available from the supplies of goods trade needs less working capital. The working capital requirement of a business are thus, affected by term of purchase and sale, and the ole given to credit by a company in its dealing with creditors and debtors. 5) Growth and Expansion: The working capital requirement of concern increases with the growth and expansion of its business activities. Although, it is difficult to determine the relationship between the growth in the volume of business and the growth in the working capital of a business, yet it may be concluded that for normal rate of expansion in the volume of business. We may have retained profits to provide for me working capital but in fast growing concern, we shall require lager amount of working capital. 6) Seasonal Variation: In certain industry raw material is no available throughout the year. They have to buy raw material in bulk during the season to ensure uninterrupted flow and process them during the entire year. So a huge amount is blocked in form of row material during the peak season, which gives more requirements for working capital and less requirement during the slack season.


7) Earning Capacity: Some firm have more earning capacity than others due to quality of the products, monopoly condition etc. Such firms with high earning capacity may generate cash profits from operations and contribute to their working capital. 8) Dividend Policy: The dividend policy of a concern influences on the requirement of the working capital. A firm that maintains a steady high rate of cash dividend irrespective of its profits level needs more working capital than the firm that retains large part of its profits and does not pay at high rate of cash dividend. 9) Other Factors: Certain other factors such as operating efficiency, management ability, irregularities in supply, import policy, assets structure, importance of labour, banking facilities etc., also influence the requirement of working capital.


Sources of Working Capital Mainly there are two sources of working capital: i. Permanent or Fixed working capital ii. Temporary or variables working capital In any concern, a part of the working capital investments are as investment in fixed assets. This is so because there is always a minimum level of current assets, which are continuously required by the enterprise to carry out its day-to-day business operation and this minimum, cannot be expected to reduce at any time. This minimum level of current assets need long term working capital, which is permanently blocked. Similarly, some amount of working capital may be required to meet the seasonal demands and some special exigencies such as rise in prices, strikes, etc. this gives rise to short term working capital which is required for day to day transaction also.

The fixed proportion of working capital should be generally financed from the fixed capital sources while the temporary or variable working capital equipment may be met from the short term sources of capital.


Sources of Working Capital

Long term Sources

Short Term sources

1) Shares 2) Debentures 3) Public Deposits 4) Plugging back of Profits 5) Loans from Financial institution

1) Commercial Banks 2) Indigenous Banks 3) Trade Creditors 4) Installment Credit 5) Advances 6) Account receivable 7) Credit 8) Accrued Expenses 9) Differed Income 10) Commercial Paper


Methods of Calculation of Required Working Capital The methods of calculation of required working capital are as follows: Working Capital Cycle: The working capital cycle is also known as operating cycle. It refers to the duration between the firms payment of cash for raw material, entering into production and inflow of cash from debtors and realization of receivables. Simply speaking, operating cycle is the duration between the outflow of cash and inflow of cash and this may be evidenced from the following working capital cycle.


Ca sh

Finished Goods

Raw Material

Work In Process


The above and network diagram may offer a clear picture of a complete working capital i.e. it is a cash phenomenon. In the diagram, raw material, stock refers to material only. In work in process, components involve are raw material, wages, and overhead more specifically manufacturing overheads. Finished stock consist

components of material, wages and overheads inclusive of factory, office and administration and selling and distribution. Debtors include material, wages, overheads and profits. Credit involves for the components of raw material, etc. something a contingency margin is also given while estimating the working capital requirement.

The operating cycle consists of him following events, which continues throughout his life of a firm remaining engaged in commercial activities.


Avg. Stock of Raw Material 1) Raw Material Holding Period = Avg.Cost of Consumption per day

Avg. Stock of Work in Process 2) Work in Process Holding Period = Avg. Cost of Production per day

Avg. Stock of Finished Goods 3) Finished Goods Holding Period = Avg. Cost of Goods Sold per day

Avg. Book Debt 4) Receivables Collection Period = Avg. Credit Sales per day

Avg. Trade Creditors 5) Creditors Collection Period = Avg. Credit Purchased per day


In the form of a simple equation working capital cycle or operating cycle can be represented as bellow: O = R+W+F+D-C Where, O = Operating Cycle (In Days)
R = Raw Materials Holding Period W = Work in Process Holding Period F = Finished Goods Holding Period D = Receivables Collection Period C = Creditors Collection Period.

Total Operating Cost Working Capital Required = Number of Operating Cycle


Components of Working Capital:

Current Assets:



Stock of Raw Material (formonth consumption)



Work In Process (forMonth) a) Raw Materials b) Direct Labour c) Overheads



Stock of Finished Goods (formonth sales)



Sundry Debtors or Receivables (formonth sales) -------


Payments in Advance (if any)



Balance of Cash (required to meet day-to-day Expenses)



Any Other (if any)


Less: Current Liabilities: i) Creditors (formonth purchase of raw materials)


------ii) Outstanding Expenses (for month) ------iii) Others (if any)

Working Capital (CA CL) -----Add: Provision/ Margin for contingencies -----Net Working Capital Required ------



Management of working capital: Working capital, in general practice, refers to him excess of current assets over current liabilities. Management of working capital therefore, is concerned with problems that arise in attempting to mange him current assets, current liabilities, and interrelationship that exists between them. In other word it refers to all aspects of administration of both current assets and current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such way that a satisfactory level of working capital is maintained, i.e. neither inadequate nor excessive. This is so because both inadequate as well as excessive working capital position is bad for the business. Inadequacy of working capital, may lead the firm insolvency and excessive working capital implies idle funds, which earn no profit for the business. Working capital management policies of the firm have a great effect on Its profitability, liquidity and structural health of the organization. In this context, working capital management is three-dimensional nature:


1) Dimension I is concerned with the formulation of the policy with regard to profitability, risk and liquidity. 2) Dimension II is concerned with the decision about his composition and level of current assets. 3) Dimension III is concerned with the decision about his composition and level of current liabilities.


Chapter 2 Company Profile

Polytech Insulation (India) Pvt Ltd lives in the present age of ever increasing cost of fuels, which in turn leads to increased cost of production and end productions. In this context of rapid growth of energy intensive industries in our country and overseas, updating thermal insulation standards, development of superior materials and evolution of speedier manufacturing techniques are the need of the hour.

This Company has taken up the challenge of producing complete range of insulation products, as per Indian and International Standards. The company has set up a 14400 MTPA capacity plant at Barakpore Industrial Area, North 24 Pgs, with ultra modern facilities and sophisticated infra structures.

The company is spread all over India with Head Office at Kolkata and Regional Sales Offices at Delhi, Pune, Hyderabad and Chennai.


Mission and Vision of Company To maintain leadership in Fibre cement products industry and develop complementary products and services to strengthen the core business of building products.

Fulfillment of market needs with cost effective solutions for enduring and enhanced customer satisfaction. Striving for excellence in all the area of companys operation. Innovative solutions to create world class products and services fostering collective wisdom and commitment of employees to create corporate and group culture and values which they are proud to be part of. Maintain equitable balance between development and

environmental needs of the society.


Quality Policy

Provide products and services that adequately and consistently meet specified and identified needs of customers by

Continues upgrade of product value and by Building customer responsive environment In making and deliverance of the products and services.

Research & Development. Research and Development Center of Company is fully equipped with latest state-of-art technology, equipment and test facilities including Pilot Plants situated in ultra modern spacious building covering an area of about 11000 sft of main Building and about 16000 sft area of Pilot Plant. HIL, R & D center is recognized by Department of Science and Technology Government of India. Dedicated team of scientists and engineers are constantly working for product up gradation, optimum utilization of raw materials, development of substitute materials, new products and new product


applications, saving substantial amount of foreign exchange for the country. The R & D Division has contributed in the following specific areas.

Philosophy This Company is committed to good Corporate Governance. The Company has been following good principles of business over the years by following all the laws and regulations of the land with an emphasis on accountability, trusteeship, and integrity. It is our responsibility to ensure that the organization is managed in a manner that protects and furthers the interests of our stakeholders.









General Manager (Works)

Manager Industrial Relations Jr. Manager Establishment Sr. Officer HR

Security Time Office Assistants

The managing human resource in the organization is an important task. Human resource department is doing the management of human resource in the organization. This Company follows a system in HR


department that each authority coming under the General Manager (works) has to report directly to General Manager (Works) in the hierarchy. This will helps to speed up the communication flow in the organization.

About Product: At Advanced Insulating undergo that in the activity there are a lot of people with strong opinions about insulation.

Product: Loose Mineral: Loose Mineral Wool is a high temperature insulating fibers processed from natural Rocks of selected quality. The Loose Mineral Wool having exceptionally long fibers and superior technical properties essential to meet severe service condition. Loose Mineral Wool can be used for insulating equipments, tanks, pipelines, ovens, furnaces, and buildings. The properties of Loose Mineral Wool includes in combustibility, water repellent, odorless, non-corrosive, non-settling, fire resistant, heat resistant and sound absorption.


The Loose Mineral Wool is felted uniformly in required thickness and density, laminated with both side G.I. wire nettings which are used for insulating industrial environment, large vessels, hot and cold air ducts, heat exchangers etc.

Product Specification IS3677 Size of Loose Wool Mattresses Thickness

1640mm x 1220mm

25mm to 100mm G.I. Hexagonal wire netting of size 3/424G. Other sizes on request Loose Mineral Wool packed in HDPE bags of 40 kg. each and Mattress in HDPE Covers.

Metal Facing

Standard Packing


Loose Mineral Wool

Rookwoll Slab:

The uniformity of fiber distribution, the diameter of fibers, and the fiber lay pattern and bulk density is some special features of Resin bonded slab consists of long fine fibers spun from molten natural rocks and bonded with a thermosetting resin slabs have the best combination of thermal insulation, fire protection and sound absorption properties.


Rookwoll Slab


Rockwool Slabs are designed for a wide range of applications, at both high and low service temperatures. It can be used on flat or slightly curved surfaces for thermal and acoustic insulation. They are also suitable for thermal insulation of ducts, large vessels, cavity wall, curtain wall and sandwich panels
SERVICE TEMPERATURE -50 to + 750 DEGREE CENTI GRADE AVAILABILITY Standard Dimensions Thickness - MM 1 X 0.500 & 1.220 X 0.750 M 25,30,35,40,45,50,55,60,65,70,75,80,90,100


Density (Kg/M3) Group / Grade Specification

48,64,96,144 I,II,III,IV

As per IS:8183

As per IS:3144 Test Method

Max Temperature



THERMAL CODUCTIVITY Thermal conductivity varies with the Temperature and Density of insulation as shown in the graph.



Slabs provide excellent acoustical and noise reduction Co-efficient. Due to high noise reduction co-efficient, they are used in acoustic insulation work for auditoria, theatres, public place and industrial areas where noise reduction is required.


Incombustible when tested as per IS : 3144. Melting point of fibre is above 1000 C (1825 F). Complying with BS - 476 Part 4 and ASTM E -136.



Excellent sound absorption by virtue of its scientific fibre lay pattern which ensures controlled dispersion of air pockets and precise air flow resistance.

Slabs are available with, Reinforced aluminum foil, Kraft paper


Rockwool Slab are good resistant to vapor, most common salts and chemicals. It is moisture resistant and do not absorb moisture from atmosphere.
LRB Mattress:

Rock wool lightly resin bonded mattresses (LRB) consists of fine fibers spun from selected rocks melted at high temperature and bonded with a thermosetting resin. They are Machine laid fiber lay pattern and are baked to form mattresses of predetermined density and thickness.


Mattresses are then slit and stitched to specified dimensions . It has controlled thickness and density resulting in predictable heat losses.

SHREEROCK mattresses manufactured from selected rocks to State of the Art Specification fully conform to national and international standards such as IS : 8183 - 1993 BS : 3958 Part - 3 ASTM:C592 80

LRB Mattress


LRB mattresses are used for Hot & Cold insulation to conserve energy It is used in the thermal insulation of large vessels, boilers, , equipment, ducts, flanges, valves and plants operating at high temperatures.


SERVICE TEMPERATURE -50 to + 750 DEGREE CENTI GRADE AVAILABILITY Standard Dimensions Thickness - MM Density (Kg/M3) Wire Netting Specification Test Method 1.640 X 1.220 M 25,40,50,60,65,75,100 100, 120, 128, 144, 150 1/2"X22G, 3/4"X24G, 1"X20G As per IS:8183 As per IS:3144

Max Service Temperature 750c


Mattress has extremely low K values for wide range of temperature. Typical thermal conductivity values for various densities and mean temperature are shown in the graph.



LRB Mattresses are available with wired mesh on one or both sides in SS or GI.

Non-hygroscopic, non-capillary and does not absorb any moisture from the air. Moisture has no effect on the stability of the mattresses.


Non-combustible when tested in accordance with BS - 476 part - 4 and ASTM E - 136. Class1 when tested in accordance with BS - 476 part 7, (ASTM E- 84).



SHREEROCK LRB MATTS mattresses are packed in HDPE bags.


Mattresses do not cause, initiate or promote any kind of corrosion


Mattresses are very flexible. They will essentially retain thickness while conforming to any irregular shape. Retention of fibers by wire mesh prevents cracking or breaking of mattresses.

Pipe Insulation: Pipe Insulation is precisely engineered Resin Bonded Fibrous Insulation to offer maximum resistance to heat passage.

SHREEROCK fibres are spun from selected rocks, melted at 1600 celsius and blended to a carefully adjusted chemical composition. Their centrifugally spun fibres have a diameter 1/20th that of human hair. These are felted using State of the Art Technology into bonded and cured pipe sections to optimum density and resilience


Pipe Insulation


Sectional Pipe Insulations are used for hot and cold air, water, steam, pipelines in industrial, housing and commercial complexes.
Product Specification Size of Pipe Nominal Bore Thickness Density Standard Packing IS 9842 : 1994 1000mm 21.3mm to 355.6mm 25mm to 100mm 144 Kg./Cu. M Cardboard Boxes



Sectional Pipe Insulation are good resistant to water vapor, most common salts and chemicals. When tested as per IS, BS and ASTM standards. The material exhibits resistance to moisture absorption.

Sectional Pipe Insulations do not cause, initiate or promote any kind of corrosion.

Incombustible when tested as per IS: 3144{Melting point of fibers is above 1000c (1825F).


Chapter-3 RESEARCH METHODOLOGY The procedure adopted for conducting the research requires a lot of attention as it has direct bearing on accuracy, reliability and adequacy of results obtained. It is due to this reason that research methodology, which we used at the time of conducting the research, needs to be elaborated upon. Research Methodology is a way to systematically study and solve the research problems. If a researcher wants to claim his study as a good study, he must clearly state the methodology adapted in conducting the research the research so that it way be judged by the reader whether the methodology of work done is sound or not. The Research Methodology here includes. 1. Meaning of Research. 2. Research Problem. 3. Research Design. 4. Sampling Design. 5. Data Collection method. 6. Analysis and interpretation of Data.


Meaning of Research: Research is defined as a scientific and systematic search for pertinent information on a specific topic. Research is an art of scientific investigation. Research is a systematized effort to gain now knowledge. It is a careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research is an academic activity and this term should be used in a technical sense. Research comprises defining and redefining problems, formulating hypothesis or suggested solutions. Making deductions and reaching conclusions to determine whether they if the formulating hypothesis. Research is thus, an original contribution to the existing stock of knowledge making for its advancement. The search for knowledge through objective and systematic method of finding solutions to a problem is research.

Research Problem The first step while conducting research is careful definition of Research Problem. To ERR IS THE HUMAN is a proverb which indicates that no one is perfect in this world. Every researcher has to face many problems which conducting any research thats why problem statement


is defined to know which type of problems a researcher has to face while conducting any study. It is said that, Problem well defined is problem half solved. Basically, a problem statement refers to some difficulty, which researcher experiences in the context of either a theoretical or practical situation and wants to obtain the solution for the same.

Research Design A research designs is the arrangement of conditions for collection and analysis data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research Design is the conceptual structure with in which research in conducted. It constitutes the blueprint for the collection measurement and analysis of data. Research Design includes an outline of what the researcher will do form writing the hypothesis and it operational implication to the final analysis of data. A research design is a framework for the study and is used as guide in collection and analyzing the data. It is a strategy specifying which approach will be used for gathering and analyzing the data. It also include the time and cost budget since most studies are done under these two cost budget since most studies are done under theses tow constraints.


The design is such studies must be rigid and not flexible and most focus attention on the following.

1. What is the study about? 2. Why is the study being made? 3. Where will the study be carried out? 4. What type of data is required? 5. Where can be required data be found? 6. What period of time will the study include? 7. What will be sample design? 8. What techniques of data collection will be used? 9. How will the data be analyzed? 10. In what style will the report be prepared?



Exploratory Research Design: This research design is preferred when researcher has a vague idea about the problem the researcher has to explore the subject. Experimental Research Design The research design is used to provide a strong basis for the existence of casual relationship between two or more variables.

Descriptive Research Design It seeks to determine the answers to who, what, where, when and how questions. It is based on some previous understanding of the matter.

Diagnostic Research Design It determines the frequency with which something occurs or its association with something else.


Research Design Used in this Project Research Design chosen for this study is Descriptive Research Design. Descriptive study is based on some previous understanding of the topic. Research has got a very specific objective and clear cut data requirements.

Sampling Design Sampling is necessary because it is almost impossible to examine the entire parent population (i.e. the entire universe) various factors such as time available cost, purpose of study etc. make it necessary for the researchers to choose a sample. It should neither be too small nor too big. It should be manageable.


DATA COLLECTIONS The process of data collection begins after a research problem has been defined and research design has been chalked out. There are two types of data


PRIMARY DATA It is first hand data, which is collected by researcher itself. Primary data is collected by various approaches so as to get a precise, accurate, realistic and relevant data. The main tool in gathering primary data was investigation and observation. It was achieved by a direct approach and observation from the officials of the company.


SECONDARY DATA - it is the data which is already collected by someone else. Researcher has to analyze the data and interprets the results. It has always been important for the completion of any report. It provides reliable, suitable, adequate and specific knowledge. I took data comprise annual reports and post records the valuable cooperation extended by staff members contributed a lot to fulfill the requirements in the collection of data in order to complete the project. Various statistical tools are applied depending on the research problem. In this study ratio analysis, comparative financial statements analysis, common size statements and Trend Analysis has been used for analyzing and interpreting the result.





2008 2009 2010

3154.55 3761.28 4215.97

Sales Revenue
4215.97 3154.55 2008 2009 3761.28 2010

Analysis-The above table shows the trend of sales from 2008 to 2010 is continuously increasing so from this angle I can say that the company is


able to increase their productions to meet up the increased market demand. FINANCIAL PERFORMANCE OF THE COMPANY 1.1 TABLE SHOWING FINANCIAL REULTS IN 08-2010 Operating Profit 470.03 550.40 894.29 Profit after Operating Tax 244.37 297.37 541.01 Margin 15% 15% 21%

Year 2008 2009 2010

Turnover 3154.55 3761.28 4215.97

Operating margin
15% 2008 2009 15% 2010



Analysis: The above table shows almost increasing trend of operating margin during our study period.

CASH MANAGEMENT Cash is the important current asset for the operations of the business. Cash is the basic input needed to keep the business running on a continuous basis it is also the ultimate output expected to be realised by selling the service or product manufactured by the firm. Cash management is concerned with managing of: i) ii) iii) Cash flows in and out of the firm Cash flows within the firm Cash balances held by the firm at a point of time by financing deficit or inverting surplus cash. 1. Cash Planning: - Cash inflows and cash outflows should be planned to project cash surplus or deficit for each period of the planning period. Cash budget should prepare for this purpose.


2. Managing the cash flows: - The flow of cash should be properly managed. The cash inflows should be accelerated while, as far as possible decelerating the cash outflows.

3. Optimum cash level: - The firm should decide about the appropriate level of cash balances. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances. 4. Investing surplus cash: - The surplus cash balance should be properly invested to earn profits. The firm should decide about the division of such cash balance between bank deposits, marketable securities and inter corporate lending. The ideal Cash Management system will depend on the firms products, organisation structure, competition, culture and options available. The task is complex and decision taken can affect important areas of the firm.


Functions of Cash Management:

Use of techniques of cash mobilization to reduce operating requirement of cash.

Major efforts to increase the precision and reliability of cash forecasting.

Maximum effort to define and quantify the liquidity reserve needs of the firm.

Development of explicit alternative sources of liquidity.

Aggressive search for relatively more productive uses for surplus money assets.

There are four primary motives for maintaining cash balances: 1. Transaction motive 2 .Precautionary motive 3. Speculative motive 4. Compensating motive


OBJECTIVES The Basic objective of cash management is twofold: (a) To meet the cash disbursement needs (payment schedule); (b) To minimize funds committed to cash balances. These are

conflicting and mutually contradictory and the task of cash management is to reconcile them.

EVALUATION OF CASH MANAGEMENT PERFORMANCES To assess the cash management performance this phase is divided as follows: a) Size of Cash b) Liquidity and Adequacy of cash c) Control of cash A) Size of cash: The quantum of cash held by company during the study period is presented in the table. The trend percentage also calculated and shown in the table:


Cash flow
Mar ' 10 Profit before tax Net cashflow-operating activity Net cash used in investing activity Netcash used in fin. activity Net inc/dec in cash and equivalent Cash and equivalent begin of year Cash and equivalent end of year 810.59 523.84 -769.15 214.48 -30.83 33.71 2.88 Mar ' 09 435.39 504.73 -318.88 -153.82 32.03 1.68 33.71 Mar ' 08 374.33 180.45 -291.59 111.40 0.26 1.42 1.68

profit before tax

374.33 2008 810.59 435.39 2009 2010



From the above graph we get a clear picture about net profit before tax. In the year 2008 company earn 374.33(Crore) profit. In the year 20092010 it goes up to 435.39 &810.59. So the trend of PBT from 2008 to 2010 shows favourable to the company.

600 400 180.45 200 0 2008 -200 -400 -600 -800 -291.59 111.4



214.48 net cash flow in operating activity 2009 -153.82 -318.88 2010 Net cash used in investing activity Net cash used in fin. Activity


Interpretation: the above table shows the flows of Operating, Investing and Financing activities. During our study period flows of operating activities continuously increases but the other two activities shows either fluctuating or decreasing.


Total Opening & Closing Balance of Cash

35 30 25 20 15 10 5 0 2008 2009 2010 1.42 1.68 1.68 2.88 Opening cash balance Closing cash balance 33.71 33.71

Interpretation: The above chart shows the opening and closing balance of cash from 2008 to 2010. The chart shows the closing balance of cash is so fluctuating compare to opening balance of cash.


Size of cash balance (Rs) Year 2008 2009 2010 Source: Annual report

Cash (In Crore) 1.68 33.71 2.88

Trend 100 1906.54 71.42




Trend Cash



100 0 1.68 2008

33.71 2009

71.42 2.88 2010

Analysis: The trend shows so fluctuating. During the year of 2009 the balance is so high compare to the other years.


Size of sales (Rs. in Lacs) Sales Year 2008 2009 2010 1354.55 3761.28 4215.97 100 177.67 211.24 Trend

Source Annual Reports

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2008 2009 2010 100 1354.55 3761.28 177.67 Trend Sales 211.24 4215.97

Analysis: Sales of the product is increased in every year. Trend shows positive impact as per time to time.


(B) Liquidity and Adequacy of Cash: One of the most important jobs of the Finance Manager is to maintain sufficient liquidity to enable the firm to pay off its obligations when they fall due. To test a firms liquidity and solvency we commonly use current and quick ratios. Traditionally 2:1 current ratio and 1:1 quick ratio are taken as satisfactory standards for the purpose. The former indicates the extent of the soundness of the current financial position of a firm and the degree of safety provided to the creditors, the later signifies the ability of a firm to settle all its current obligations on a particular date. Liquidity refers to the ability of a firm to meet its short-term (usually up to 1 year) obligations. The ratios, which indicate the liquidity of a company, are Current ratio, Quick/Acid-Test ratio, and Cash ratio





2008 888.08

2009 765.84

2010 919.19









1.46 1.44 1.42 1.4 1.38 1.38 1.36 1.34 1.32 1.3 2008 2009 2010 1.35 Current Ratio Column2 Column1 1.45


Interpretation: A relatively high current ratio is an indication that the firm is liquid and has ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. Current ratio has moved down from 1.35 to 1.38 in the year 2008 to 2009 which indicate increasing liquidity position. In the year 2010 liquidity position was increased up to 1.45 which indicate good liquidity position of the company. NOTE DURING CALUCALATION FRACTION FIGURES ARE ROUNDED OFF Control of Cash: One of the major objectives of cash management from the stand point of increasing return on investment is to economize on the cash holding without impairing the overall liquidity requirements of the firms. This is possible by effecting tighter controls over cash flows. The following ratio has been applied to assess the efficiency of cash control:


Cash to Current Assets ratio Cash turnover ratio Cash to current liabilities ratio

Cash to Current assets ratio Year 2008 2009 2010 Cash(Cr) 1.55 17.659 18.29 Current Assets 888.08 765.84 919.19 Cash to CA Ratio 0.0017 0.0230 0.0198


0.023 0.0198




0.005 0.0017 0 2008 2009 2010


Conclusion: It can be inferred from the above table that cash to current assets ratio is increasing which shows good position of liquidity, which ultimately affect the operational efficiency of the firm. Cash to Current Liability Ratio Year Cash Current Liabilities 2008 2009 2010 1.55 17.659 18.29 632.68 551.80 659.24 0.00244 0.03200 0.0277 Cash to CL Ratio

Source: Annual Reports

0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 2008 2009 2010 0.032 0.0277



Conclusion: Cash to current liability ratio shows the cash balance maintained by company at a certain point of time for meeting its current liabilities. The lesser the ratio, proves the efficiency of the company for maintaining liquidity at a minimum level of cash balance. Overall Conclusion: The analysis of financial data reveals that the company has very sound position regarding liquidity and solvency as shown by the current and quick ratios. The cash to current liabilities ratio is nearly on decreasing trend shows the efficiency of operations.

INVENTORY MANAGEMENT Inventories are the stock of the product made for sale by the company or semi finished goods or raw materials. Inventory of finished goods which are ready for sale is required to maintain smooth marketing operation. The inventory of raw material and work in progress is required in order to maintain an unobstructed flow of material in the production line. These inventories serve as a link between the production and consumption of goods.


Ensure continuous supply of material to facilitate uninterrupted production. To maintain sufficient stocks of raw material in the periods of short supply and evident price rise. To maintain sufficient inventory of finished goods for smooth sales operation. Minimize carrying cost and time. Control investment and keep it to the optimum level.

Continue supply of materials

Maintain sufficient stock Minimize Carring Cost & Time

Control Investment


MANAGEMENT OF RECEIVABLES Trade credit, the tool which as a bridge for movement of goods through production and distribution stages to customer, is a force in the present day business and a essential device. Trade credit is granted with a motive of protecting the sale from ones, competitors and attaching more of the potential customers. Features It involves a element of risk and hence should never to be fiddled with. As credit sale leave a sum to be recovered in future and future can never be the certainty, hence it is risky. It is based on economic value, while for the buyer, the economic value in goods passes immediately at the time of purchase, while the seller expects an equivalent value to be received later on. It represents futurity. The cash payments for the goods or services received by the buyer will be made in future.



To obtain optimum value of sales To control the cost of credit and keep it to the minimum level. To maintain investment in debtors at optimum level.

CREDIT PROCEDURE Credit Information Credit Investigation Credit Limits Collection Procedure it Analysis


MANAGEMENT OF PAYABLES A substantial part of purchase of goods and services in business are on credit terms rather than against cash payment. While the supplier of goods and services tends to perceive credit as a lever for enhancing sales or as a form of non-price instrument of competition, the buyer tends to look upon it as a loaning of goods or inventory. The suppliers credit is referred to as Accounts payable, Trade Credit, Trade Bill, Trade Acceptance, commercial drafts of bills payable depending on the nature of the credit.

TYPES OF TRADE CREDITS Trade credits or Payables could be of three types : Open Accounts, Promissory notes and Bills Payables. Open Account or open credit operates as an informal arrangement wherein the supplier, after satisfying himself about the credit-worthiness of the buyer, dispatches the goods as required by the buyer and sends the invoice with particulars of quantity dispatched, the rate and the total price payable and the payment terms.


The promissory notes are a formal document signed by the buyer promising to pay the amount to the seller at fixed or determinable future times. Where the client fails to meet his obligations as per open credit on the due date, the supplier may require a formal acknowledgment of debt and a commitment of payment by a fixed date. Bills payable or commercial drafts are instrument drawn by the seller and accepted by the buyer for payment on the expiry of the specified duration. the bill or draft will indicate the banker to whom the amount is to be paid on the due date, and the goods will be delivered to the buyer against acceptance of the bill.



Current assets comprise a significant portion of total investment in assets of the company. There is fluctuating and rather increasing trend of this ratio during the period which shows management inefficiency in managing working capital in relation to total investment. Further current assets to fixed assets ratio also shows on fluctuating trend during the study period which substantiate above mentioned criterion of in-effectiveness in management of working capital by the company.

Current assets turnover ratio for the first three years of study shows fluctuating trend which is due to significant increase in sales.

The ratio used for analysis of liquidity position is current ratio and quick ratio. This ratio reveals that company has sound liquidity position throughout the period of study. Both the ratio shows fluctuating trend within reasonable limit but these ratio are higher than conventionally accepted norms i.e. 2:1 in case of current ratio & 1:1 in case of quick ratio, which shows ineffectiveness of the management in managing current/quick assets in relation to current liabilities.


The ratios used for cash management are cash to current assets ratio, cash to current liabilities ratio. Cash to current liabilities also shows decreasing trend and cash to current assets ratio also shows decreasing trend. All these ratios reveal that management has no definite cash policy.

Inventory turnover ratio depict the fluctuating trend which indicates the accumulation of inventory in turn which cause loss to the company by way of deterioration of stock, interest loss on blockage of stock etc. Further composition of inventory reveals that portion of individual element of inventory has fluctuating trend which indicates that management has no policy in respect of inventory management.


Conclusion Keeping in view of detailed analysis of our study and our findings mentioned in above paragraphs, the following suggestions shall be helpful in increasing the efficiency in working capital management. Company should make a policy in respect of investment of excess cash, if any; in marketable securities and overall cash policy should be introduced. Finance is the basic pillar on which the structure of industrial undertaking is based. This pillar should be properly placed. A good working environment and attractive incentives for the achievement of targets has obviously created ideal conditions in Exide. for the both management and workers. Not a single day of production has been lost this shows efficiency in management. Moreover, solvency position or long-term liquidity of the company was satisfactory. To conclude, any reduction in operation cost as a result of effective and efficient management of finance would improve the profitability, liquidity and solvency of the organization.


SUGGESTION & RECOMMENDATION After undergone training for a limited period in this organization, I found during my training some suggestions but these suggestions merely my own opinion. I hope these suggestions will help at least to some extent if implemented. Following are the suggestions that are based on my observations of the different departments of the company: 1. Company is having huge loans which results in the financial expenses, so proper strategies and techniques of budgeting should be used which results in the proper utilization of borrowed money. 2. Company should use Management Information System (MIS) as it provides very effective information, which ultimately helps in decision-making. This results in the proper future projections effectively. 3. Net Profits is going low. Effective efforts should be taken for this the company must reduce indirect expenses and to control unnecessary costs. 4. Company should install modernized equipments and machines in the production plants and new techniques should also be used to produce. 5. Improve co-operation and co-ordination among the departments.


6. Proper








consumers/dealers buying behavior.

7. Exide is leading company in the Indian manufacturing industry. It has the maximum market share in domestic market. But as far as international market is concerned, it exports only 5% of the total production, which is needed to increase.

8. The company needs to invest a lot in advertisements. Advertisements are the best way to enhance the sales and ultimately the revenues. The company must make attempts to use proper advertising media so as to set their brands in the minds of the consumers. It should be more consumers oriented rather than being customer oriented.




BOOKS& REFERENCES: Khan M.Y. and Jam P.K., Financial Management Banerjee, Cash Management Kulkarni P.V., Financial Management Pandey I.M. Financial Management Annual Report