FINANCIAL MANAGEMENT

Financial Management is the process of managing the financial resources, including accounting and financial reporting, budgeting, collecting accounts receivable, risk management, and insurance for a business. The financial management system for a small business includes both how you are financing it as well as how you manage the money in the business. In setting up a financial management system your first decision is whether you will manage your financial records yourself or whether you will have someone else do it for you. There are a number of alternative ways you can handle this. You can manage everything yourself; hire an employee who manages it for you; keep your records inhouse, but have an accountant prepare specialized reporting such as tax returns; or have an external bookkeeping service that manages financial transactions and an accountant that handles formal reporting functions. Some accounting firms also handle bookkeeping functions. Software packages are also available for handling bookkeeping and accounting. Bookkeeping refers to the daily operation of an accounting system, recording routine transactions within the appropriate accounts. An accounting system defines the process of identifying, measuring, recording and

communicating financial information about the business. So, in a sense, the bookkeeping function is a subset of the accounting system. A bookkeeper compiles the information that goes into the system. An accountant takes the data and analyzes it in ways that give you useful information about your business. They can advise you on the systems needed for your particular business and prepare accurate reports certified by their credentials. While software packages are readily available to meet almost any accounting need, having an accountant at least review your
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records can lend credibility to your business, especially when dealing with lending institutions and government agencies. Setting up an accounting system, collecting bills, paying employees, suppliers, and taxes correctly and on time are all part of running a small business. And, unless accounting is your small business, it is often the bane of the small business owner. Setting up a system that does what you need with the minimum of maintenance can make running a small business not only more pleasant, but it can save you from problems down the road. The basis for every accounting system is a good Bookkeeping system. What is the difference between that and an accounting system? Think of accounting as the big picture of how your business runs -- income, expenses, assets, liabilities -an organized system for keeping track of how the money flows through your business, keeping track that it goes where it is supposed to go. A good bookkeeping system keeps track of the nuts and bolts -- the actual transactions that take place. The bookkeeping system provides the numbers for the accounting system. Both accounting and bookkeeping can be contracted out to external firms if you are not comfortable with managing them yourself. Even if you outsource the accounting functions, however, you will need some type of Recordkeeping Systems to manage the day-to-day operations of your business - in addition to afinancial plan and a budget to make certain you have thought through where you are headed in your business finances. And, your accounting system should be producing Financial Statements. Learning to read them is an important skill to acquire. Another area that your financial management system needs to address is risk. Any good system should minimize the risks in your business. Consider
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implementing some of these risk management strategies in your business. Certainly, insurance needs to be considered not only for your property, office, equipment, and employees, but also for loss of critical employees. Even in businesses that have a well set up system, cash flow can be a problem. There are some tried and true methods for Managing Cash Shortages that can help prevent cash flow problems and deal with them if they come up. In the worst case you may have difficulties meeting all you debt obligations. Take a look at Financial Difficulties to learn more about ways to manage situations in which you have more debt than income. It is possible you may even be at the point where you want to sell the business or simply close it and liquidate assets. There are financial issues involved for these circumstances too. So, be certain that you know what steps you need to take in order to protect yourself financially in the the long run. Clearly, financial management encompasses a number of crucial areas of your business. Take time to set them up right. It will make a significant difference in your stress levels and in the bottom line for your business.

Cash Management:
Cash is money that is easily accessible either in the bank or in the business. It is not inventory, it is not accounts receivable, and it is not property. These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not always mean more cash. Profit is the amount of money you expect to make if all customers paid on time and if your expenses were spread out evenly over the time period being measured. However, it is not your day-to-day reality. Cash is what you must have to keep the
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doors of your business open. Over time, a company's profits are of little value if they are not accompanied by positive net cash flow. You can't spend profit; you can only spend cash. Cash Flow refers to the flow of cash into and out of a business over a period of time. The outflow of cash is measured by the money you pay every month to salaries, suppliers, and creditors. The inflows are the cash you receive from customers, lenders, and investors. Positive Cash Flow If the cash coming into the business is more than the cash going out of the business, the company has a positive cash flow. A positive cash flow is very good and the only concern here is managing the excess cash prudently. Negative Cash Flow If the cash going out of the business is more than the cash coming into the business, the company has a negative cash flow. A negative cash flow can be caused by a number of problems that result in a shortage of cash, such as too much or obsolete inventory, or poor collections on accounts receivable. If the company doesn't have money in the bank or can't borrow additional cash at this point, it may be in serious trouble. A Cash Flow Statement is typically divided into three components so that you can see and understand both the internal and external sources and uses of cash. 1. Operating Cash Flow (Internal) Operating cash flow, often referred to as working capital, is the cash flow generated from internal operations. It is the cash generated from sales of the product or service of your business. Because it is generated internally, it is under your control.

2.

Investing Cash Flow (Internal) Investing cash flow is generated internally from non-operating activities. This component would include investments in plant and equipment or other fixed assets, nonrecurring gains or losses, or other sources and uses of cash outside of normal operations.

3.

Financing Cash Flow (External) Financing cash flow is the cash to and from external sources, such as lenders, investors and shareholders. A new loan, the repayment of a loan, the issuance of stock and the payment of dividend are some of the activities that would be included in this section of the cash flow statement.

Good cash management means:

Knowing when, where, and how your cash needs will occur, Knowing what the best sources are for meeting additional cash needs; and, Being prepared to meet these needs when they occur, by keeping good relationships with bankers and other creditors.

The starting point for avoiding a cash crisis is to develop a cash flow projection. Smart business owners know how to develop both short-term (weekly, monthly) cash flow projections to help them manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help them develop the necessary capital strategy to meet their business needs. They also prepare and use historical cash flow statements to gain an understanding about where all the money went.

Managing Cash Shortages:

Cash flow shortages are a challenge for many small businesses. One way to relieve the pressure for cash is through better management of company receivables. Here are some ways to tighten control of your cash.

Set your policies:

Before you make a sale, you need to set your billing policies or your customers will set them for you. If your product or service goes out the door without payment, you are essentially lending money to that customer. Are they worthy of your credit? Prevent problems by asking for credit references. Then, take the time to call those references. Are they listed in Dun & Bradstreet? Ask why they left their last vendor (perhaps they have a string of unpaid vendors ahead of you?) Be cautious and firm and follow your gut instincts about a potential customer. More than likely, your instincts are right on the mark. Trust them.

Time your invoices

Make it a policy to never let a job or product leave your business without an invoice. It may seem like an inconvenience, but your collection rate will improve dramatically. There are several reasons for this.

First, it is easier for a customer to relate the value of your product to the price you have charged. As time goes by, other needs crop up for the customer and you are no longer a priority.

Second, if your customer receives your invoice weeks after they have received your product, they may feel that there is no reason to pay quickly. In their minds, if you can afford to wait to bill them for weeks, you can also afford to wait several more weeks for them to pay.

Finally, staying on top of billing evens out your cash flow. Instead of billing once a month (or when you are desperate for cash) and waiting another month to get the money, you will have money coming in on a steady basis.

Consider a retainer, a deposit:

If a customer has proven to be a poor payer, ask for a retainer. Do not be embarrassed. They were not embarrassed about owing you money all the time. Why should you be now? You can simply say, "Based upon your past credit history with us, we will need X amount in advance and the remainder when the job is completed." Or, type up a payment agreement, have them sign it, and then give them a copy. It is harder for someone to put off paying when they have a signed agreement in their hands.

Offer discounts: You may want to offer discounts for invoices paid within a certain time frame. One common offer is a 2 percent discount if an invoice is paid within 10 days. Keep in Touch Follow up immediately on unpaid invoices. Your customers will quickly size you up as to whether or not you are someone who expects to get paid . When prioritizing their payment schedule, your customers are more likely to put you at the head of the list if you have a reputation for following up on a regular basis. It is best to set a payment date on your follow-up letter and call your customer on that date if your payment has not yet been received. Having a written script for any follow-up phone calls you may need to make may make this process easier for you. Remember that it is your business. If you let your customers dictate when you will be paid, you will always suffer a poorer cash flow than if you are clear about your payment policies. If you don't have written payment policies, write them now. Here is what you should include:
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Who will you offer credit to? How much credit will you offer? How will you determine your customers' creditworthiness? When will your bills go out? In what time frame will you expect payment? How will you follow-up if a payment is not made?

Cash Flow Statement:

The cash flow statement is used to analyze the cash income and expenditures during a designated time period. There are three major components of cash flow: operations, investing and financing. If you regularly do a monthly profit and loss (income) statement, you will be aware that there are certain items that may not affect your profit and loss statement for some time, such as:

Substantial increase in inventory purchases; Increase in accounts receivable (money owed to you by customers); Reduction of credit by suppliers; Purchase of equipment; Unrecognized obsolescence of inventory (stale items); Bank's refusal to renew or extend loan; and Lump sum payment of debt. A cash flow statement will highlight these activities in a way that an income

statement will not. And certainly your banker will want to see a cash flow statement showing how you have used the funds from a previous loan before they approve an extension or a new one. Without the cash flow statement, you will have an incomplete picture of your business.

To determine operating cash flow, you start with net income and add back expenses which did not result in inflows or outflows of cash. The most common non-cash expense is depreciation. When working with historical figures, adjusting net income with depreciation and other non-cash expenses is much simpler than determining all the revenues and expenses which require or provide funds. Next, you identify all the balance sheet accounts that are associated with operations and determine the change in the account from the end of the last period to the end of the current period. Purchasing inventory or paying salaries is an obvious use of cash. In accounts receivables when you collect from your customers, you will receive cash, so a decrease is a source of cash. The opposite is true when you increase accounts receivable; it is a decrease in cash. Growing businesses need to closely watch their inventory and receivables so they don't find themselves in a cash crunch at a time when business is booming. Operating cash flow will include all the balance sheet accounts that are a part of normal operations. Trade receivables and payables as well as accrued expenses, prepaid expenses and other current assets that are a part of day-to-day operations are included in operating cash flow. The remaining balance sheet accounts will either be investing activities or financing activities. You need to determine the change in each balance sheet account from the beginning of the period to the end of the period, and tally them up. That completes all the information that is needed to put together the cash flow statement.

WORKING CAPITAL MANAGEMENT

INTRODUCTION
Every business needs funds for two purposes- for its establishment and to carry out its day-to-day operations. Long-term funds are required to create production facilities through purchase of fixed assets such as plant and machinery, land, building, furniture etc... Investments in these assets represent that part firms capital which is blocked on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw materials, payment of wages and other day-to-day expenses, etc. These funds are known as working capital. In simple words, working capital refers to that part of the firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors and inventories. Funds, thus, invested in current Assets keep revolving fast and are being constantly converted into cash and this cash flow out again in exchange for other Current Assets. Hence, it is also known as Revolving or Circulating Capital or Short term Capital.. Working Capital is one of the most fundamental measures of companys financial strength. If a company possesses a significant value of liquid assets it can easily fund its day to day business obligations. If, however a company is under cash crunch, whether by way of lack of cash, trouble in collecting its account receivables or a dearth of inventory, it may face difficulties keeping up with demand for its products or services. Working capital is significant fact of financial management working capital reflected in the fact that he Financial Management of any organization spends their substantial time to plan and manage the adequate and appropriate working capital in the company. The importance of great deal of time in the managing current assets and current liabilities in Arranging short-term financing, negotiating
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favourable, and monitoring the investments in inventories consume a great deal of time of financial managers. Working capital management or short-term financial management is concerned with decisions relating to current assets and current liabilities. In simple terms, it is the amount of funds, which a business concerns to finance its day to day operations. Working capital is the lifeblood and nerve center of any business. Every business needs funds for its establishment and to carry its day to day operations. Long term funds are enquired to create production facilities through purchase of fixed assets such as plant, machinery, land , building, furniture etc, investment in these assets represents that part of firms capital, which is blocked on a permanent/fixed basis and is called fixed capital. Funds are also needed for shortterm purposes for the purchase of raw materials, payment of wages and other day to day expenses etc., known as working capital. In simple words, working capital refers to that part of current assets i.e., cash, marketable securities, debtors and inventories.

DEFINITIONS:
According to Gene Stenberg, Circulating capital means current assets of a company that are changed in the ordinary course of business from one form to another, as for example, from cash to inventories, inventories to receivables, receivables into cash. In the words of Shubin, Working Capital is the amount of funds necessary to cover the cost of operating the enterprise In simple terms, Working Capital refers to the cash a company requires in order to finance its day to day business operations or in other words, Working Capital refers to the amount of capital which readily available to an organisation.
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OBJECTIVES:
The main objective and goal of working capital management is to manage the firms current assets and liabilities in such a way that a satisfactory level of working capital is maintained. This is so because if the firm cannot maintain a satisfactory level of working capital. It is likely to become insolvent and may become bankruptcy. The current should be large enough to cover its current liabilities to ensure a reasonable margin of safety. The interaction between current assets and current liabilities is, therefore, the subject matter of theory of working capital management. The effective management of any business among others factors, depends up on the manner in which its working capital is the life blood of business. Working capital management is concerned with management of the firms current assets and liabilities. Thus the working capital management is one of the most important aspects of the firms overall financial management. The importance of working capital management in an industrial under taking needs no emphasis. How working capital is managed in an industrial unit .What are the practices adopted? What are the problems faced? This questions call for an empirical study. Finance function is the most important of all business functions. It remains a focus of all Activities. It starts with the setting up of an enterprise and continues till the end of the organization.

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AUTOMOBILE INDUSTRY
The Indian auto ancillary industry has come a long way since it had its small beginnings in the 1940s. If the evolution of the industry is traced in India, it can be classified in to three distinct phases namely: period prior to the entry of Maruthi Udhyog Ltd, period after the entry of Maruthi Udhyog Ltd was characterized by small number of auto majors like Hindustan Motors, premier Automobiles, Telco, Bajaj and Mahindra, low technology and assured for most of the auto-component manufactures The automobile industry in India is one of the largest in the world and one of the fastest growing globally. India's passenger car and commercial vehicle manufacturing industry is the sixth largest in the world, with an annual production of more than 3.7 million units in 2010. According to recent reports, India is set to overtake Brazil to become the sixth largest passenger vehicle producer in the world, growing 16-18 per cent to sell around three million units in the course of 2011-12. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind Japan, South Korea, and Thailand. In 2010, India reached as Asia's third largest exporter of passenger cars, behind Japan and South

Korea beating Thailand. As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second fastest growing automobile market in the world. According to the Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 5 million by 2015 and more than 9 million by 2020. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.

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The majority of India's car manufacturing industry is based around three clusters in the south, west and north. The southern cluster near Chennai is the biggest with 40% of the revenue share. The western hub near Maharashtra is 33% of the market. The northern cluster is primarily Haryana with 32%. Chennai, is also referred to as the "Detroit of India" with the India operations

of Ford, Hyundai, Renault and Nissan headquartered in the city and BMW having an assembly plant on the outskirts. Chennai accounts for 60% of the country's automotive exports. Gurgaon and Manesarin Haryana form the northern cluster where the country's largest car manufacturer, Maruti Suzuki, is based. The Chakan corridor near Pune, Maharashtra is the western cluster with companies like General Motors,Volkswagen, Skoda, Mahindra and Mahindra, Tata Motors, Mercedes Benz, Land Rover, Fiat and Force Motors having assembly plants in the area. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is in the state of Gujarat with manufacturing facility of General Motors in Halol and further planned for Tata Nano at Sanand. Ford, Maruti Suzuki and Peugeot-Citroen plants are also set to comeup in Gujarat. Kolkatta with Hindustan Motors, some of the other Noida with automotive

Honda and Bangalore with Toyota are manufacturing regions around the country.

OVERVIEW:
The Indian Automobile Industry manufactures over 11 million vehicles and exports about 1.5 million each year. The dominant products of the industry are two-wheelers with a market share of over 75% and passenger cars with a market share of about 16%. Commercial vehicles and three-wheelers share about 9% of the market between them. About 91% of the vehicles sold are used by households and only about 9% for commercial purposes. The industry has a turnover of more
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than USD $35 billion and provides direct and indirect employment to over 13 million people. The supply chain is similar to the supply chain of the automotive industry in Europe and America. Interestingly, the level of trade exports in this sector in India has been medium and imports have been low. However, this is rapidly changing and both exports and imports are increasing. The demand determinants of the industry are factors like affordability, product innovation, infrastructure and price of fuel. Also, the basis of competition in the sector is high and increasing, and its life cycle stage is growth. With a rapidly growing middle class, all the advantages of this sector in India are yet to be leveraged. With a high cost of developing production facilities, limited accessibility to new technology, and increasing competition, the barriers to enter the Indian Automotive sector are high. On the other hand, India has a well-developed tax structure. The power to levy taxes and duties is distributed among the three tiers of Government. The cost structure of the industry is fairly traditional, but the profitability of motor vehicle manufacturers has been rising over the past five years. Major players, like Tata Motors and Maruti Suzukihave material cost of about 80% but are recording profits after tax of about 6% to 11%. The level of technology change in the Motor vehicle Industry has been high but, the rate of change in technology has been medium. Investment in the technology by the producers has been high. System-suppliers of integrated components and sub-systems have become the order of the day. However, further investment in new technologies will help the industry be more competitive. Over the past few years, the industry has been volatile. Currently, India's increasing per

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capita disposable income which is expected to rise by 106% by 2015 and growth in exports is playing a major role in the rise and competitiveness of the industry. Tata Motors is leading the commercial vehicle segment with a market share of about 64%. Maruti Suzuki is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero MotoCorp is occupying over 41% and sharing 26% of the two-wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three-wheeler market. Consumers are very important of the survival of the Motor Vehicle manufacturing industry. In 2008-09, customer sentiment dropped, which burned on the augmentation in demand of cars. Steel is the major input used by manufacturers and the rise in price of steel is putting a cost pressure on manufacturers and cost is getting transferred to the end consumer. The price of oil and petrol affect the driving habits of consumers and the type of car they buy. The key to success in the industry is to improve labour productivity, labour flexibility, and capital efficiency. Having quality manpower,

infrastructure improvements, and raw material availability also play a major role. Access to latest and most efficient technology and techniques will bring competitive advantage to the major players. Utilizing manufacturing plants to optimum level and understanding implications from the government policies are the essentials in the Automotive Industry of India. Both, Industry and Indian Government are obligated to intervene the Indian Automotive industry. The Indian government should facilitate infrastructure creation, create favorable and predictable business environment, attract investment and promote research and development. The role of Industry will primarily be in
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designing and manufacturing products of world-class quality establishing cost competitiveness and improving productivity in labour and in capital. With a combined effort, the Indian Automotive industry will emerge as the destination of choice in the world for design and manufacturing of automobiles. Driving the most luxurious car has been made possible by the stiff competition in the automobile industry in India, with overseas players gathering the same momentum as the domestic participants. Every other day, we have been hearing about some new launches, some low cost cars - all customized in a manner such that the common man is not left behind. In 2009, the automobile industry is expected to see a growth rate of around 9%, with the disclaimer that the auto industry in India has been hit badly by the ongoing global financial crisis. The automobile industry in India happens to be the ninth largest in the world. Following Japan, South Korea and Thailand, in 2009, India emerged as the fourth largest exporter of automobiles. Several Indian automobile manufacturers have spread their operations globally as well, asking for more investments in the Indian automobile sector by the MNCs. Potential of the Automobile industry In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similar plans are for General Motors

Segmentation of market share of automobile industry in India

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Passenger Vehicle: 15.96% Commercial Vehicle: 3.95% Three wheelers: 3.60% Two wheelers: 76.49%

INDUSTRY BASIC
The Rs.127bn worth domestic auto ancillary industry is highly fragmented, with hardly any global scale capacities. Capital costs for production of most components is not steep and technology though a key factor, relatively stable. In the price conscious replacement market, small scale unorganized sector is well entrenched, despite its low quality. OEMS (Original Equipment Manufacturers) are mainly catered to by organized sector. The Industry prospects are again linked to the domestic auto sector including replacement market.

AUTO ANCILLARY WHAT IS DRIVING GROWTH IN INDIA:

The cars and bikes come to us as a single unit. However, to get these Machine marvels on the road, the manufacturer uses as many as 5000+ components. The total raw material cost of a manufacturing company is around 65+% of net sales. Increasing competition affects companys bottom line thereby resulting into lower profitability, declining returns in terms of net profit and capital employed.

WHY INDIAN MANUFACTURERS:

Existing Indian Scenario the Indian market is the second largest two wheeler and tractor manufacturing and fifth largest commercial vehicle manufacturer. A large domestic market has proved a base for industry to be a global player.

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Auto component industry has grown by 17% in the last five years, while exports have out performed the Indian market during the same period growing by 25%. The industry is expected to grow to US $ 2bn in the current fiscal and US $ bn by 2010. Joint ventures with existing global Auto players. In last five years many big players found synergies in Indian market and have joined hands with existing players have been exporting to parent company and earning good export revenues. Some joint ventures that took place in last decade were Sona Koyo steering Ltd and Kirloskar Toyota Motors. Major global manufacturers have set up their bases in the country to supply components to their parent. Some of them like Micro(parent company BOSCH) have already started to export components to various other plants of the world. Volvo, whose annual requirements is around Rs.50,000bn is looking at sourcing to some extent initially from countries like India and China.

CONTROL INSTRUMENTATION AND AUTOMATION IN INDUSTRY SECTOR:

The use of electronic control and instrumentation results in productivity improvement, reduced maintenances costs and quality end products and

consequently a contributes in overall development of core sectors such as steel, mining, textile, suet, paper and pulp, tool processing etc.In real time control systems, the trend is towards Open Control System (OCSs). OCSs are key to harnessing the rising tide to technological innovations, while at the same time preserving an industrys investment in existing equipment. An OCS produces numerous benefits to process industry, including the flexibility to selected best in class hardware, ATM based networks database, applications, and field deduces. Integration of control and business information
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has been a challenge for process industry, attempting to adopt sales order driven manufacturing philosophy.

COMMUNICATION AND BROADCASTING SECTOR:

Communication sector include non-public network telecom industry, twoway radio communication, user specific transmission, switching, terminal equipments broadcast and cable TV equipment. Now telecom policy being drafted to address the various bottlenecks and issues related basic telecom and collector telephony services. The production of communication and broadcasting equipment during 200102 is estimated to be of the order of Rs.4, 900 crores as compared to production of Rs. 3,950 crores in 1999-2000. Broadcast sector is undergoing technological revolution through the advent of technologies such as `Digital Video Broadcasting` (DVB) digital video compression (MPEG-2), digital storages and retrieval systems, etc.-there are already 70,000 cable operators and 2 crores cable-homes in India. The infrastructure of communication and broadcasting is fast country. The business and manufacturing activities are expected to further grown. Since up linking in phased manner by Indian broadcasters with foreign equity less than 20%. Interest Service Provides (ISP) licenses have been given to private sector and it will boost Internet and information technology, private investment and information technology. expanding in the

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COMPONENTS AND METERIALS:

Generally linked to the fortunes of the consumer electronics sector, components have reached a level of Rs. 21,500 million by 1982. After a modest growth in the seventies, components production gained in the eighties to reach its current position. In the early seventies, raw materials import was recommended till new technology was indigenously developed, especially for TV factories, MSI/LSI circuits, UHF/microwave diodes, liquid crystals etc., ICs were developed at CEERI, pilani while work on servo components was tarried out at ECIL production of components till 1974 was works worth Rs.720 million. Production of various capacitors, resistors and potentiometers increased since 1976. SSU`s also started production both passive and electronic components by 77.

PRODUCTION FROFILE:
Production of electronics equipment during the late 60s and early 70s was restricted to consumer and entertainment electronics, electronic components, and certain defence and aerospace equipment. During 1970-80, there was a marked focus on establishing indigenous R&D and production capabilities, besides selling up units in the small scale sector. In the public sector, BEL was permitted to import colour picture tube (CRTs) from RPA countries, while ECH was granted permission to manufacture small and medium-sized computers. The TDC 12 systems were completed or ECH by 1972-73 after which they started developing 32-bit computers.

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CAPACITORS:
Capacitor is a devise which can store electronic charge or energy in it. Capacitance is the capacity of the capacitor of the capacitor to store this charge. Charge is simply the electrical energy with some polarity, positive or negative. Unlike in magnetism these two opposite charge can exist independently. Anybody can be charge electrically by friction of electro static introduction whose principle states that when a charged body is brought near an uncharged body then the uncharged will develop a charge which is opposite to the charge present on the charge body.

MANUFACTURE OF CAPACITORS:
The first capacitor with considerable capacitance is Leyden jar invented by Leyden in 1745. It consisted of a glass vial containing water and plugged with a cork through which a nail passed to touch the water. The water constituted one electrode, the other provided by the hand which held the vial. The potent of this was only a small fraction of amount frequently required in present day electronic circuit. Also Leyden jars occupy very large space. A

Leyden jar of one micro farad would be as big as an office elevator. But this provided the basic concepts of capacitor and further study made it possible to have various types of capacitor to meet the circuit requirements. Since more than any other factor, the nature on condition of the dielectric determines the characteristics as capacitor; study of various dielectrics was encouraged. This study revealed that each dielectric had a factor with which it affects the capacitance for given dimensions. This factor was called dielectric constant and was measured relative to air whose dielectric of 3 could store 3 times the charge that can be stored when air is used a dielectric.
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SKILLED LABOUR AT CHEAPER COST:

Skilled labour is one of the key requirements in this industry that is available in plenty and that too at a comparatively cheaper rate. Staff expenditure is as low as Rs.100 per hour as compared to Rs.900 in USA. Consider the case of Bharat Forge, which is into manufacturing of forging, where skilled labour is the key requirements. Companys cost is less than 10% of net revenues, while companies, manufacturing forging in US spend almost 30% of sales revenue on labour.

QUALITY STANDARDS:
A manufacturing needs to meet the standards since is very critical due to inherent risk of product failure. India norms are stiff enough to restrict chain from entering the India market. Through chains market is the largest automobile market, they could cant enter the India Market. Thus Indian players have edge over the Chinese manufactures in terms of quality. Many of the Indian manufactures meet the international quality certification and also meet the global automotive standards as well. In sort the global auto manufactures requirements can source quality components from India. Why doubt that the time ahead would be golden years for auto ancillary Industry.

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CHAPTER SCHEME
Chapter I consists of information about the Automobile industry in India. Chapter II deals with the company background and company profile of kusalava international Ltd. Chapter III deals with the purpose and importance of choosing the field of study. i.e., Working Capital Management. And also deals with methodology, scope and limitations of the study. Chapter IV deals with the analysis of the data furnished from the kusalava international Ltd. Chapter V depicts Findings in the study and Suggesting some profitable measures to enhance the growth of the company.

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CONCEPTUAL BACKGROUND WORKING CAPITAL MANAGEMENT

Working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelationship between them. The term current assets refers to those assets, which in the ordinary course of business can be, or will be converted into cash with in one year with out undergoing a diminution in the value and without causing a disruption of the activities of the firm. The major current assets are cash, marketable securities, accounts receivable and inventory. Current liabilities are those liabilities, which are intended at their inception, to be paid in the ordinary course of business, within a year, out the current assets or earning of a firm. The basis current assets are accounts payable, bills payable, bank overdraft and outstanding liabilities.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital: (i) (ii) Gross Working Capital Net Working Capital

In the broad sense, the term working capital refers to the gross working capital and represents the amount of funds invested in current assets. Thus, the gross working capital is the capital invested in total current assets of the enterprise. Current Assets are those Assets which in the ordinary course of business can be converted into cash within a short period of normally one accounting year.

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Net working capital is the excess of current assets over current liabilities; Net Working Capital may be positive or negative. When the current assets exceed the current liabilities the Working Capital is positive and the negative Working Capital results when the current liabilities are more than the current assets. Net working capital = Current Assets Current Liabilities. Gross working capital concept is financial or going concern concept whereas networking capital is an accounting concept of working capital. These two concepts of working capital are not exclusive, rather both have their own merits. The gross concept is sometimes preferred to the net concept of working capital for the following reasons. It enables the enterprise to provide correct amount of working capital at the right time. Every management is more interested in the total current assets with which it has to operate than the sources from where it is made available. The gross concept takes into consideration the fact that every increase in the funds of the enterprise would increase its working capital. The gross concept of working capital is more useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for the following reasons. It is qualitative which indicates the firms ability to meet its operating expenses and short term liabilities. It indicates the margin of protection available to the short term creditors i.e. excess of current assets over current liabilities. It is an indicator of the financial soundness of an enterprise.
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 It suggests the need for financing a part of the working capital requirements out of permanent sources of funds. To conclude it may be said that both gross and net concepts of working capital are important aspects of the working capital management. The net concept of working capital may be suitable only for proprietary form of organisations such as sole trader or partnership firms but the gross concept is very suitable to the company form of organisation where there is a divorce between ownership, management and control.

CONSTITUENTS OF CURRENT ASSETS:

Cash in hand and Bank Balances Bills receivables Sundry debtors Short term loans and Advances Inventories of Stocks as a) Raw Material b) Work-in-process c) Stores and Spares d) Finished goods. Temporary Investments of surplus funds. Prepaid Expenses Accrued Incomes.

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CONSTITUENTS OF CURRENT LIABILITIES:

Bills Payable Sundry Creditors or Accounts Payable Accrued or Outstanding Expenses. Short-term loans, advances and deposits Dividends Payable Bank Overdraft Provision for taxation, if it does not amount to appropriation of profits.

COMPONENTS OF WORKING CAPITAL

Working Capital Management of different components of working capital such as cash, inventories, accounts receivables, creditors, etc. A brief description follows regarding the various Issues involved in the management of each and the above components of working capital.

MANAGEMENT OF CASH
It is duty of the Finance manager to provide adequate cash to all segments of the organization. He has also to ensure that no funds are blocked in idle cash since this will involve cost in terms of interest to the business. A sound cash management scheme, therefore, maintains the balance between the twin objectives of liquidity and cost.

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Meaning of cash
The term Cash with reference to cash management is used in two senses. In a Narrower sense it includes coins, currency notes, cheques, bank drafts held by a firm with it and the demand deposits held by it in banks. In a broader sense it also includes near-cash assets such as, marketable securities and time deposits with banks. Such securities or deposits can immediately be sold or converted into cash if the circumstances require. The term cash management is generally used for management of both cash and near-cash assets.

Motives for holding cash

The term cash with reference to cash management is used in 2 senses. In a narrow sense it used to cover currency and generally accepted equivalents of cash such as cheques, drafts and demand deposits in banks. The broad view of cash also includes near cash assets such as marketable securities and time deposits in banks. The characteristic of this is that they can be readily converted into cash. 1. Transaction Motive: This refers to holding cash to meet routine cash requirements to finance the transactions, which a firm carries out in the ordinary course of business. For instance cash payments have to be made for purchase, wages, operating expenses, financing charges etc. Similarly there is a regular inflow of cash to the firm from sales operations, returns on outside investments and so on. These receipts and payments constitute a two-way flow of cash. But the inflows and receipts do not match perfectly. At times receipts exceed outflows and vice versa. To ensure that the firm can meet its obligations when the payments exceed the receipts of cash, it must have an adequate cash balance.
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The requirement of cash balance to meet routine cash needs is known as transaction motive and such motive refers to the holding of cash to meet anticipated obligations. 2. Precautionary Motive: The cash balance held in reserve for certain random and unforeseen fluctuations in cash flows are called as Precautionary balances. In other words, precautionary motive of holding cash implies the need to hold cash to meet unforeseen obligations. Thus precautionary cash balances serves to provide a cushion to meet unexpected contingencies. 3. Compensating Motive: Yet another motive to hold cash balances is to compensate banks for providing certain services and loans. Banks provide a variety of services to business firms, such as clearance of cheques, supply of credit information, transfer of funds and so on. While for some of these services, banks charge a commission or fee, for others they seek indirect compensation. Usually clients are required to maintain a minimum balance of cash at the bank. Since the firms cannot use this balance for transitionary purpose, the banks can utilize this amount to earn a return. Such balances are compensating balances.

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RECEIVABLES MANAGEMENT:
A sound managerial control requires proper management of liquid assets and inventory. These assets are a part of Working Capital of the Business. An efficient use of financial resources is necessary to avoid financial distress. Receivables result from credit sales. A concern is required to allow credit sales in order to expand its sales volume. It is not always possible sell goods on cash basis only. Sometimes, other concerns in that line might have established a practice of selling goods on credit basis. Under these circumstances, it is not possible to avoid credit sales without adversely affecting sales. The increase in sales is also essential to increase profitability. After a certain level of sales the increase in sales will not proportionately increase production costs. The increase in sales will bring in more profits. The receivables constitute a significant portion of current assets of a firm. But, for investment in receivables, a firm has to incur certain costs. Further, these are a risk of bad debts also. It is therefore, very necessary to have a proper control and management of receivables.

MEANING OF RECEIVABLES:
Receivables represent amounts owed to the firm as a result of sale of goods or services in the ordinary course of business. These are claims of the firm against its customers and form part of its current assets. Receivables are also known as accounts receivables, trade receivables, customer receivables or book debts. The receivables are carried for the customers. The period of credit and extent of receivables depends upon the credit policy followed by the firm. The purpose of maintaining or investing in receivables is to meet competition, and to increase the sales and profits.
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OBJECTIVES OF RECEIVABLES MANAGEMENT:

Receivables management is the process of making decisions relating to investment in trade debtors. We have already stated that certain investment in receivables is necessary to increase the sales and the profits of a firm. But at the same time investment in this asset involves cost considerations also. Further, there is always a risk of bad debts too. Thus, the objective of receivables management is to take a sound decision as regards investment in debtors. In the words of Bolton, S.E., the objective of receivables management is to promote sales and profits until that point is reached where the return on investment in further funding of receivables is less than the cost of funds raised to finance that additional credit.

COSTS OF MAINTAINING RECEIVABLES:

The allowing of credit to customers means giving of funds for the customers use. The concern incurs the following costs on maintaining receivables: 1. Cost of Financing Receivables: When goods and services are provided on credit then concerns capital is allowed to be used by the customers. The receivables are financed from the funds supplied by shareholders for long term financing and through retained earnings. The concern incurs some cost for collecting funds which finance receivables. 2. Cost of Collection: A proper collection of receivables is essential for receivables management. The customers who do not pay the money during a stipulated credit period are sent reminders for early payments. Some persons may have to be sent for collecting these amounts. In some cases legal recourse may have to be taken for collecting receivables. All these costs are known as collection costs which a concern is generally required to incur.

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3. Bad Debts: Some customers may fail to pay the amounts due towards them. The amounts which the customers fail to pay are known as bad debts. Though a concern may be able to reduce bad debts through efficient collection machinery but one cannot altogether rule out this cost.

INVENTORY MANAGEMENT:
The investment in inventory is very high in most of the undertakings engaged in manufacturing, whole-sale and retail trade. The amount of investment is sometimes more in inventory than in other assets. In India, a study of 29 major industries has more revealed that the average cost of material is 64 paise and the cost of labour and overheads is 36 paise in a rupee. It is necessary for every management to give proper attention to inventory management. A proper planning of purchasing, handling, storing and accounting should form a part of inventory management. An efficient system of inventory management will determining (a) What to purchase (b) How much to purchase (c) From where to purchase (d) Where to store, etc. There are conflicting interests of different departmental heads over the issue of inventory. The finance manager will try to invest less in inventory because for him it is an idle investment, whereas production manager will emphasise to acquire more and more inventory as he does not want any interruption in production due to shortage of inventory. The purpose of inventory management is to keep the stocks in such a way that neither there is over-stocking nor under-stocking.

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MEANING:
The dictionary meaning of inventory is stock of goods, or a list of goods. The word Inventory is understood differently by various authors. In accounting language it may mean stock of finished goods only. In a manufacturing concern, it may include raw materials, work in process and stores, etc. to understand the exact meaning of the word inventory we may study it from the usage side or from the side of point of entry in the operations. Inventory includes the following things: (a) Raw Material: Raw material form a major input into the organization. They are required to carry out production activities uninterruptedly. The quantity of raw materials required will be determined by the rate of consumption and the time required for replenishing the supplies. (b) Work-in-Progress: The work-in-progress is that stage of stocks which are in between raw materials and finished goods. The raw materials enter the process of manufacture but they are yet to attain a final shape of finished goods. The quantum of work-in-progress depends upon the time taken in the manufacturing process. The greater the time taken in manufacturing, the more will be the amount of work in progress. (c) Consumables: These are the materials which are needed to smoothen the process of production. These materials do not directly enter production but they act as catalysts, etc. Consumables may be classified according to their consumption and criticality. (d) Finished goods: These are the goods which are ready for the consumers. The stock of finished goods provides a buffer between production and market. The purpose of maintaining inventory is to ensure proper supply of goods to customers.

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(e) Spares: Spares also form a part of inventory. The Consumption pattern of raw materials, consumables, finished goods are different from industry to industry. All decisions about spares are based on the financial cost of inventory on such spares and the costs that may arise due to their nonavailability.

OBJECTS OF INVENTORY MANAGEMENT:

The main objectives of inventory management are operational and financial. The operational objectives mean that the materials and spares should be available in sufficient quantity so that work is not disrupted for want of inventory. The financial objective means that investments in inventories should not remain idle and minimum working capital should be locked in it. The following are the objectives of inventory management: To ensure continuous supply of materials, spares and finished goods so that production should not suffer at any time and the customers demand should also be met. To avoid both over-stocking and under-stocking of inventory. To maintain investments in inventories at the optimum level as required by the operational and sales activities. To keep material cost under control so that they contribute in reducing cost of production and overall costs. To eliminate duplication in ordering or replenishing stocks. This is possible with the help of centralizing purchases.
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 To minimize losses through deterioration, pilferage, wastages and damages. To design proper organization for inventory management. A clear cut accountability should be fixed at various levels of the organization. To ensure perpetual inventory control so that material shown in stock ledgers should be actually lying in the stores. To ensure right quality goods at reasonable prices. Suitable quality standards will ensure proper quality of stocks. The price-analysis, the cost-analysis and value-analysis will ensure payment of proper prices. To facilitate furnishing of data for short-term and long-term planning and control of inventory.

COSTS OF HOLDING INVENTORIES:

The holding of inventories involves blocking of firms funds and incurrence of capital and other costs. It also exposes the firm to certain risks. The various costs and risks involved in holding inventories are as below: (i) Capital costs: Maintaining of inventories results in blocking of the firms financial resources. The firm has, therefore, to arrange for additional funds to meet the cost of inventories. The funds may be arranged from own resources or from outsiders. But in both the cases, the firm incurs a cost. (ii) Storage and Handling Costs: Holding of inventories also involves costs on storage as well as handling of materials. The storage costs include the rental of the go down, insurance charges etc.
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(iii)

Risk of Price Decline: There is always a risk of reduction in the prices of inventories by the suppliers in holding inventories. This may be due to increased market supplies, competition or general depression in market.

(iv)

Risk of Obsolescence: The inventories may become obsolete due to improved technology, changes in requirements, change in customers tastes, etc.

(v)

Risk Deterioration in Quality: The quality of the materials may also

deteriorate while the inventories are kept in stores. SOURCES OF WORKING CAPITAL
The following chart gives a snap shot view of various sources of working capital for a firm.
WORKING CAPITAL

LONG TERM SOURCES

SHORT TERM SOURCES

Sale of shares Sale of debentures Plugging back of profits Sale of fixed assets Long term

INTERNALL

EXTERNAL

Depreciation Fund Provision for Taxation

Trade credit Credit papers Bank credit Public deposits Customer credit Govt. assistance Loans from Directors

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Security of Employee

The working capital requirements should be met both from short-term as well as long-term sources of funds. It will be appropriate to meet at least 2/3 (if not the whole) of the permanent working capital requirements from long-term sources and only for the period needed. The financing of working capital through short-term sources of funds has the benefits of lower cost and establishing close relationship with the banks. Financing of working capital from long-term resources provides the following benefits; It reduces risk, since the need to repay loans at frequent intervals is eliminated. It increases liquidity since the firm has not to worry about the payment of these funds in the near future. The Finance Manager has to make use of the both long-term and short-term sources of funds in a way that the overall cost of working capital is the lowest and the funds are available on time and for the period they are really needed. Usually Short term funds are used to finance working capital. The most significant short term sources of funds (or) finance for working capital are:

1) Trade Credit:
The trade credit refers to the credit that a customer gets from supplier of goods in the normal course of business usually the buying firms need and have to pay cash immediately for the purchase made. This deferred payment is a short-term financing called trade credit. It may take in the form of sundry creditors and bills payable. Forms of Trade Credit: l) Accrued expense 2) Deferred income and advance payment
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2) Bank Borrowings:
Banks are main institutional sources of working capital finance. After trade credit, bank credit it is the most important requirements of firms.

MANAGEMENT OF WORKING CAPITAL:

Working Capital, In general practice, refers to the excess of current assets over current liabilities. Management of working capital therefore, is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the inter-relationship that exists between them. In other words 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 a way that a satisfactory level of working capital is maintained. i.e., it is neither inadequate nor excessive. This is so because both inadequate as well as excessive working capital positions are bad for any business. In this context, working capital management is three dimensional in nature: (i) Dimension I is concerned with the formulation of policies with regard to profitability, risk ad liquidity. (ii) Dimension II is concerned with the decisions about the Composition and level of current assets. (iii) Dimension III is concerned with the decisions about the composition and level of current liabilities. (iv)

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Excess or inadequate Working Capital:

Every business concern should have adequate working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate or shortage of working capital. Both excess as well as short working capital positions are bad for any business. However, out of the two, it is the inadequacy of the working capital which is more dangerous from the point of view of the firm.

Disadvantages of Redundant or Excessive Working Capital:

Excessive working capital means idle funds which earn no profits for the business and hence no proper return on investment. When there is a redundant working capital it leads to unnecessary purchases and accumulation of inventories. Excessive working capital implies excessive debtors and defective credit policies which may cause higher incidents of bad debts. It may result into overall inefficiency in the organization. Due to low return on investments the value of share may also falls. The redundant working capital gives rise to speculative transactions.

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Disadvantages or dangers of inadequate Working Capital:

A concern which has inadequate working capital cannot pay its short term liabilities in time. Thus it will lose its reputation and shall not be able to get good credit facilities. It cannot buy its requirements in bulk and cannot avail of discounts. It becomes difficult for the firm to exploit favorable market conditions and undertake profitable projects due to lack of working capital. It becomes impossible to utilize efficiently the fixed assets due to non availability of liquid funds.

The rate of return on investments also falls with the shortage of working capital.

FACTORS DETERMINING THE WORKING CAPITAL

The working capital requirements of a concern depend upon a large number of factors such as nature and size of business, the character of their operations the situation. The following are the important factor generally influencing the working capital requirements. Nature or character of business Size of Business/Scale of operations Production policy Manufacturing process/length of production cycle
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 Seasonal variations Working capital cycle Rate of stock turnover Credit policy Economic Factors and Government Policy Business cycles Rate of Growth of business Earning Capacity and Dividend policy Prices level changes Profit margins and profit appropriation Other factors

Principles of Working Capital Management

Principle of Risk Variation

Principle of cost of Capital

Principle of Equity Position

Principle of Maturity of Payment

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COMPANY PROFILE
Kusalava International Limited was established in the year 1964. It was earlier known as Bharat industries where it was started as a small work shop. But later the name was changed to Kusalava International Limited. Today Kusalava International Limited is one of the largest cylinder liner manufactures in INDIA. Started in 1964 as a small foundry under the visionary leadership of Mr.KUSALAVA RAO (Chairman today) KUSALAVA INTERNATIONAL LTD has transformed itself into a truly professional organization with revenues closed to 25 millions USD. Today KUSALAVA INTERNATIONAL LTD supplies critical engine components to original equipment manufactures in India, USA, and Europe. The company has established itself as the preferred supplier of cylinder liners worldwide. BRAND NAME: TIGER POWER The Tough Parts Today TIGER POWER brand is the most dynamic name in the cylinder liner manufacturing business. Kusalava International Limited has nearly 38 years of industrial manufacturing experience in the field. Nearly 50% of the production goes to original equipment. Kusalava International Limited had geared up to meet the technological changes and world standards. It also in the stood the competition in the world market which arose done to the establishment of world trade organization. Kusalava International Limited has consistently delivered quality

automotives components in line with the specific of automobile majors in India and for the aftermarket spare parts segments to various countries like U.S, Italy, New Zealand, Bangladesh, Australia, Malaysia, Thailand, Mauritius, and the Middle East.

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VISION:
To produce quality auto component products the matching best available in the world in terms of innovative design features and endues at competitive cost deliverable in time and maximize customer satisfaction to ensure constant increase in market share and global presence for the company.

MISSION:
1. To constantly strive for automation and technology up gradation of companys plant process and product to maximize customer satisfaction and efficient use of resources at companys disposal to optimize production and minimize cost . 2. to trigger higher demand for companys products both in Domestic and International Market and there by improve market share. 3. To improve both top line and Bottom Line of the company to ensure optimum returns for all stake-holders of the company. 4. To make Kusalava a true global conglomerate through professional management, corporate governance initiatives and strict adherence to regulatory compliances.

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CORPORATE STRUCTURE :

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GROUP TURNOVER (FIGURES IN MILLION DOLLARS)

46

GROUP COMPANIES

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PRODUCTS

TYPES OF CYLINDER LINERS PRODUCED BY KIL

Peugeot

Cummins

Dalton

Hino

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QUALITY INITIATIVES

QUALITY, ENVIRONMENT AND SAFETY POLICY:

We are committed for the satisfaction of all interested parties by: Supplying quality products on time By providing Clean, Green, Healthy and Safe Work Environment Complying with all applicable Legal and Other Requirements Conservation of Resources & Prevention of Pollution Continual Improvement in all the Integrated Management System Process

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TPM POLICY
Kusalava International Ltd commits their selves to maximize Overall plant Effectiveness by achieving: Zero Breakdowns Zero Accidents Zero Defects A Safe and Clean Environment and eliminate all other losses through Total Employee Involvement.

QUALITY SIX SIGMA

A method or set of techniques, Six Sigma has also become a movement focused on business process improvement. It is a quality measurement and improvement program originally developed by Motorola that focuses on the control of a process to the point of six sigma (standard deviations) from a centerline, or put another way, 3.4 defects per million items. A Six Sigma systematic quality program provides businesses with the tools to improve the capability of the business processes. Kusalava had started implementing these techniques in 2002.The company had 5 Black belts and 14 Green Belts. And it was awarded twice for its best projects. It had tangible results in terms of quality and production.

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MILE STONES IN TIGER POWER MANUFACTURING:

1964: Kusalava International Limited comes into existence as M/S Bharat Industries. Products: Brake drums during the inception year itself supplies were started to OEM, Bajaj Tempo. 1972: Started production of grey iron cylinder liners. Started supplies to major road transport corporations (STU's). 1982: Supplies to replacement market with TIGER POWER-TOUGH PARTS Brand name. 1986: Installed the first Dual Track Induction Furnace in India. 1987: Became the major source for Defense Vehicle Factory 1990: Exported its first consignment to New Zealand. 1992: Tiger Power became the major supplier of cylinder liners in After Market 1994: Emerged as the largest cylinder liner manufacturer in India. 1995: Kusalava commissions its first overseas office in Houston, Texas, and USA ISO: 9002 certified. 1996: Sales figures crossed of 1 million USD. Kusalava becomes a limited company. 1998: QS-9000 certified 1999: Started production of Ductile Iron castings. 2000: ISO/TS 16949 certified.
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2002: Turn Over crosses 10 millions USD. 2003: Introduced Six Sigma Process. Awarded by ACMA for Best Six Sigma Project in 2003 2004: Introduced Lean Manufacturing Practices. Received the best supplied award from EICHER MOTORS, for outstanding contribution to supply chain management. Awarded by ACMA for Best Six Sigma Project in 2004 again. 2005: Entered into an agreement with the Market Leader Danton Sleeves, USA for supplying High Grade Ductile iron liners to the Drag Racing Market. 2006: Total PM Kick off on July 3rd 2006. Kusalava commissions new plant at pentagram, Uttarakhand. 2007: Turn over crosses 20 million USD. Kusalava commissions new plant at Visakhapatnam, Andhra Pradesh.

NATURE OF ACTIVITY:
PRODUCT MANUFACTURED 1. Cylinder Liners Cylinder liner is a cylindrical part to be fitted into an engine block to form a cylinder. It is one of the most important functional parts to make up the interior of an engine the cylinder liner, serving as the inner wall of a cylinder, forms a sliding surface for the piston rings while retaining the lubricant with in The most important function of cylinder liners is the excellent characteristic as sliding surface and these four necessary points.

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 High anti-galling properties Less wear on the cylinder liner itself Less wear on the partner piston ring

A cylinder wall in an engine is under high temperature and high pressure, with the piston and piston rings sliding at high speeds. In particular, since longer service life is required of engines for trucks and buses, cast iron cylinders that have excellent wear-resistant properties are only used for cylinder parts. Also, with the recent trend of lighter engines, materials for engine blocks have been shifting from cast iron to aluminum alloys. However, as the sliding surface for the inner cylinder, the direct sliding motion of aluminum alloys has drawbacks in deformation during operation and wear-resistance. For that reason, cast iron cylinder liners are used in most cases.

2. Cylinder Liners for Aluminum Blocks

Global warming has started to show its adverse effects on the environment. To improve the fuel efficiency and adhere to latest Euro rams automobile manufactures are shifting towards aluminum engines. These engines have as cast cylinder liners with special surface on the outer diameter commonly referred to as spiny lock or stipple finish. To improve rigidity and high thermal conductivity properties of engine blocks, Kusalava has developed different specifications of cylinder liners that have high adherence to aluminum blocks at the time of die casting by controlling the coarseness of the outer casting surface with the special coating materials and in-process controls.
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3. Grey & Ductile Iron Piston Rings

Kusalava has developed materials with special properties in grey and ductile iron by centrifugal casting process for critical sealing applications. These rings are being supplied to Automotive, Locomotive, Marine, and Power generation, Aircraft, Aerospace and Hydrocarbon processing Applications. We also supply rough machined rings to ring manufactures around the world in ductile and grey iron materials

4. Centrifugal Castings
Centrifugal casting method was developed after the turn of the 20th century to meet the need for higher standards. Spinning molds generate centrifugal force on molten metal to position the metal within a mold. As the molten metal solidifies from the outside in, a casting with dense, close grain structure is created. As a result of close grain structure the centrifugal process offers products with better physical properties than castings made using the static casting method. Proper mold design, mold coatings, mold spinning speeds, pouring speeds, cooling rates and metal chemistry results in castings with higher yields, fewer impurities and greater strength.

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FUNCTIONS OF TOP LEVEL MANAGEMENT

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MANAGING DIRECTOR:
Prepares and monitors business and resources plan and quality and EOHS objectives. Expansion and new project. Appointing management representative to coordinate within targeted management system development. Employee motivation. Deciding business cancers. Approving quality, environment and safety policy, manual and procedure

MANAGEMENT REPRESENTATIVE:
Formation of environment occupational health and safety core team members. Interact with external agencies like certification body and interested parties. Issue and implementation of integrated policy. Setting up quality, environmental and safety objectives and targets. Establishing management programs. Identifying and investigating NCs. Integrated management system manual preparation.

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GENERAL MANAGER (MRKTG):

Responsible for customer visits, collection of order. Development of new prospectus for customer. Customer feed back to managing director. Commercial and technique negotiations with the concerned. Reviews orders, schedules and dispatches.

GENERAL MANAGER (ADMIN):

All matter related to administration and finance involving all external parties. Responsible for OE market. Coordinates with MR for integrated management system.

GENERAL MANAGER (ACCOUNTS):

Head of account department. Responsible for costing, excise, sales tax. Responsible for compliance to government regulations. Coordinates with MR for integrated management system.

GENERAL MANAGER (FOUNDARY & MACHINE DIVISION):

Head of the foundry and machine division. Authorizes monthly production plan.

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 Prepare and maintain APQP. Approves control plans, drawings, special characteristics. Decides the company level parameters. Customer complaints analysis and conclusions. Corrective and preventive action.

Product development.

EXPORTS MANAGER:
Receives enquiry quotations. Process the orders. Follow up with the factory. Pre/post shipment documentation. Payment realization. Follow up of customer complaints. Coordinates with MR for integrated management system.

SWOT ANALYSIS STRENGTHS: Automated Carousel Machines at foundry for higher quality and productivity. Automation of machining process with CNC machines to produce complex shapes with close tolerances and higher productivity.

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 Well equipped laboratory to check all incoming materials, metal charges, in process and finished components. In-House Tool Room Facility to meet Die and Tool requirements. Kusalava is complemented with a sophisticated development competence for customized solutions. Less oil consumption with enhanced engine life. A perfect cross hatch finish with plateau parameters is produced while controlling the ovality with plateau CNC Honing Machines. Expertise in developing wet type D&E microstructure on OD for corrosion resistance and Type A&B microstructure on ID for lubrication and wear resistance properties. The developmental lead time for new products is 4 to 9 weeks. Price competitive, at KUSALAVA means increasing production and reducing cost simultaneously, with its four decades of experience.

WEAKNESS:A very few drawbacks have been sorted out and they are very micro problems which can be a kind of suggestions for the company. They are: As the company is driven by a huge man power, availability of man power is large and the laurels that can be spoken of a very few. So exposure to the

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outer world and communication with the other reputed factory employees (through internet, industrial visits, guest lectures) participate in many more certifications and research which will certainly be another feather in the companys cap. Examinations on related fields on weekends will certainly keep the employees abreast with the knowledge on that field and also can recruits employees for other vacancies considering the tests. Giving away details of recent development in their respective fields in form of broachers. Availability of a provision which would help them climbs the hierarchical ladder to boost up their confidence and trust on the company regarding their future. Recreation clubs shall help them install team spirit and relaxation too.

OPPORTUNITIES:A bright future waits ahead for this company as there is lot of opportunities thronging in. The company has many warehouses and representatives all over the world. (20 ware houses and 15 representatives in USA, one representative each from Germany, France, Italy, and Spain. 47 warehouse in India). Expansion of the Kusalava Empire will be the next talk of the media if there be a good management which would lead the way. Lot of opportunities await the employees too as there

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can be deputation provision to the other ware houses in other parts of the world. As the company has multi national companies and business giants as their clients, there is a scope for further collaborations with many more companies and increase their business and expand their empire.

THREATS:Personnel management is a real challenge to take up as it is certainly dealing with man power and more the number the more are the problems. Kusalava Industries is right now driven by man power and very less involvement of automated machinery which can cause problems regarding their reputation but the installing of the automated machinery like the auto carousel machine, automated phosphate plant, short blasting machine, CNC and SPM machines solved the threat.

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PRODUCTS RANGE :

TIGER POWER TOUGH PARTS has dovetailed their process to give peak performance with best quality at affordable price a tangible result. We are proud to say now TIGER POWER TOUGH PARTS is complete Global. Most of the vehicle manufacture in the Indian domestic market has a tie-up with international manufactures like Mazda, Hino, Mercedes Benz, Mitsubishi etc.,

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Kusalava International Limited supplies their product to the bellow OEMs in India who has international collaboration.

CUSTOMERS:

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DOMESTIC AFTER MARKET:

KUSALAVA had started supplying its products to the after market under the brand name TIGER POWER since 1982. It has a dominating presence in the after market and enjoys the confidence of major engine rebuilders/reborers, OEMs and mechanics. Currently it possesses a market share of 35% in India and 30% in USA. Even Exports a major share of its production to various countries across the globe viz., Italy, U.K., France, New Zealand, Bangladesh, Australia, Malaysia, Thailand, Mauritius and the Middle East. It had wide-spread, well established networks in India, USA, Canada and Europe to serve its clients on 24x7 bases. Tiger Power offers a wide range of The Tough Parts' like Cylinder Liners/Sleeves, Valve Seat Inserts, Valve Guides, Tappets, Pistons, Piston Pins, Gaskets, Alvin Nickel Inserts, cast sleeves for aluminium blocks, cast iron/Ductile Iron Pipes, Inertia Rings. It caters to Marine, Industrial, Automotive, refrigeration, and compressors, Tractor, Aeronautical and Truck Business. It also caters to the after market requirements by indirectly supplying the liners in Bulk to Liner manufacturers.

COMPANY PRODUCT:
Kusalava manufacturers Liners/Sleeves in both cast iron and S.G.Iron, Centric cast valve seat insert and Alvin Piston inserts. As a new development Kusalava has started manufacturing the engineering items out of its own technology like 3mts. pipes for ash disposal for the thermal power plants, sugar crushers material, and motor frames for the heavy electrical motors.

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TECHNICAL HIGHLIGHTS:
Having a Track record of 45 years Equipped with the latest technology (in houses) in the industry to manufacture any variety of Cylinder Liners as per Customer requirements meeting international standards Highly automated with state of the art technology having the complete manufacturing facilities in house Continuous R&D in house to have an edge over the competition TS 16949 Certified Company Good brand image Major supplier to domestic OEMs like Tata Motors limited, Ashok Leyland Ltd, Either Motors Ltd, Bajaj Tempo Ltd, Swaraj Mazda Ltd, VST Tiller Ltd and International OEMs as Tier 2 Good Distribution Network all over India in the aftermarket and USA Wide spread Customer segmentation TECHNOLOGY UP GRADATION: Kusalava has developed the basic technical requirement for the manufacturing of their products, and in line to develop the technical strength hires experts from Germany for upgrading the foundry technology in line to the International practices. Till Kusalava has taken 3 rounds of experts views to validate their process and to fine tune their existing process for better productivity. Most significantly, Kusalava deputes their technical managerial personal for the training in different institutes for betterment of their knowledge and practices.

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Mr. Prasad R.K Chukkapalli, Managing Director of the company has visited Japan under AOTS programmed for 15days technical training in Quality Systems during the first week of October02. ERP Software: Kusalava has in house software development Center, and presently implementing self developed ERP System of Konini integrating Finance, Manufacturing, Distribution and HR Activities across INDIA and USA offices. At K On line, we understand the strategic role supply management must play in a corporation today and the significant impact a supply chain management strategy can have on earnings. Supply chain management solutions help companies transform supply strategy into a competitive advantage. We combine expertise, technology and information to help you bring immediate value and profit your companys bottom line. FUNCTIONS OF DIFFERENT DEPARTMENTS: PERSONNEL DEPARTMENT: The department looks after the recruitment of employees, conduction interview, selection of employees and also preparation of wages chart, payment of provident fund, payment of ESI, payment of income tax and granting leaves. Also takes care of the maintenance of standing orders, renewal of trade workers, and renewal of welfare fund.

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HRD DEPARTMENT: The department looks after training development program to employees, plan monthly schedule for training classes, conduct safety awareness program. Explains about savings plan and human services to employees. FINANCE DEPARTMENT: The department makes economic plans which are needed to the organization, takes loans from banks, prepares annual reports and calculates the net profits to send them to the management. MATERIAL DEPARTMENT: The department purchases raw materials on the parameters like good quality, on time delivery, credit facility. It ensures the raw material cost variation and plans accordingly. PRODUCTION DEPARTMENT: The department takes raw materials from the material department and shapes them in the furnace. The production engineer does 8-10 operations according to the liner drawing and then sends it to the quality department to check the perfection . QUALITY DEPARTMENT: This department checks the finished products in all parameters as per the drawing of liner model and then sends it to dispatch section.

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MARKETING: Marketing departments sells the products through marketing representatives, sales offices and distributors. This department gets the orders from the customers through the representatives, sales officers and distributors. R & D DEPARTMENT: The departments develop the schemes according to the customer drawing and send to the production department. It develops all parameters of the company, makes research plans to decrease the cost of production and improve the productivity TURNOVER: The turn over as per the 2008 report depicts that it has crossed the 20 million us dollars mark. The recent objective is to achieve a turnover of rupees 1200 core and cost reduction by rupees 6 core.
100 90 80 70 60 50 40 30 20 10 0 2005-06 2006-07 2007-08 2008-09 2009-10

KUSALAVA INTERNATIONAL LTD TURNOVER (IN CRORES)

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RESEARCH METHODOLOGY
SIGNIFICANCE OF STUDY:
The world in which real firms function is not perfect. It is characterizes by the firms considerable uncertainty regarding the demand, market price quality and availability of its own products and those of suppliers. These real, world circumstances introduce problems to the firm must deal. While the firm has many strategies available to address these circumstances, strategies that utilize investment or financing with working capital accounts often offer a substantial advantage over the other techniques. The importance of working capital management is reflected in the fact that financial managers spend a great deal of time in managing current assets and current liabilities like. Types of working capital: Working capital can be classified into two categories i.e. 1. Permanent working capital 2. Temporary or variable working capital Permanent working capital: It is the minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. Tendon committee has reserved to his type of working capital as core current assets Variable working capital: The amount of working capital over permanent over permanent working capital is known as variable working capital. The amount of such working capital
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keeps on fluctuating form time to time on the business activities. It may again be subdivided into seasonal working capital and special working capital. Seasonal working capital is required to meet the seasonal demands of busy periods occurring at stated intervals on the other hand, special working capital is required to meet extraordinary need for contingencies. Even like strikes, fire unexpected completion; rising price tendencies or initiating a big advertisement campaign require such capital.

OBJECTIVES OF THE STUDY:

The purpose of current study is to analyze the financial performance of KUSALAVA INTERNATIONAL LTD and to know he present financial position. Accordingly the preset work is the modest attempt in this direction to appraise the financial performance of KUSALAVA INTERNATIONAL LTD., by adopting various tools of financial analysis, funds flow statements and other performance statements. 1. To analyze the effectiveness of working capital management 2. To analyze the effectiveness of cash management 3. To analyze the current assets position in the company. 4. To analyze the effectiveness of the management of receivables 5. To analyze the receivable position of the company. 6. To find out the effectiveness of the management of inventory management. 7. To analyze inventory turnover. 8. To analyze the liquidity position. We know that a firm should aim at a maximizing the wealth of its next worth in the Endeavour to do so, a firm should earn sufficient return from its operations. Earning a steady amount of profit requires sufficient sales
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activity. The firm has to invest enough funds in current assets for generating sales current assets are needed because sales do no convert into cash immediately. There is always an operating cycle involved in the conversation of sales into cash. METHODOLOGY OF THE STUDY: Methodology is an intensive and purposeful search for knowledge and for the understanding of social and physical phenomenon. It is the method for the discovery of true values in a scientific way. There are two sources of data, i) ii) Primary sources and Secondary sources

The data collected from primary source is called primary data. The data collected from secondary sources is called secondary data. In other words, the primary data are those data which are collected a fresh and for the first time. Primary data happened to be original in character. On the other hand secondary data are those data which have been already collected by some one and which have already being passed through the statistical process. For the study of all objectives the following methodology is adopted. The data was collected from already published sources. a) b) Annual reports of the company Text books relating to the financial management.

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SCOPE OF THE STUDY:

The study is limited to Kusalava International Limited, Krishna district. It is limited to a span of 5 years i.e. 2005-06 to 2009-10. The study is based on the quantitative data available. The study was carried in Kusalava International Limited for a period of 6 weeks. LIMITATIONS OF THE STUDY: Despite completion of project work to the satisfaction, the objectives could not be achieved due to the following limitations. The duration of the project is limited to a period of 6 weeks. The reliability of the study depends upon the available information furnished by the officials. Financial accounting doesnt take into account the price level charges. The study is conducted with the available data from the annual reports, internal reports etc. Figures wherever appearing are rounded to the nearest numerical. Due to unavailability of data, information pertaining to four financial years was only considered.

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DATA ANALYSIS AND INTERPRETATION

This chapter presents conceptual analysis and an attempt is made to analyse certain facts of overall Working Capital Management followed in kusalava International Limited. The Working Capital has to maintain an appropriate level, i.e., enough current assets to pay off current liabilities, neither excess not less. Because excessive working capital leads to unproductive use of scarce resources and inadequate working capital leads to an interruption in the smooth functioning of the business concern and then such an organization runs with risk and insolvency. For this purpose, an analysis is made to study the Working Capital requirements for the period of 2005-2006, 2006-2007, 2007-2008, 2008-2009, which helps in identifying future working capital requirements in better ways for improving management of Working Capital if any.

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Schedule of changes in working capital for the year ended2005-06 Particulars (A)Current assets Inventories Cash & Bank balance Trade Debtors Sundry debtors Loans and advances 683.52 61.59 1180.60 422.42 185.66 673.52 59.85 1483.40 536.65 327.49 ------------302.8 114.23 141.83 10 1.74 ------------------31-3-2005 31-3-2006 Increase Decrease

Total(A)

2533.79

3080.91

(B) Current Liabilities Creditors for goods Sundry creditors Advances Creditors for expenses 254.69 220.83 9.17 111.80 449.83 187.83 15.13 121.40 ------33 -----------195.14 ------5.96 9.6

Total(B)

569.49

774.19

(A-B)

1937.3

2306.72

Increase in w/c

369.42

-------

369.42

2306.72

2306.72

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Graphical representation of increase and decrease of working capital in current assets

1600 1400 1200 1000 800 600 400 200 0 Inventories cash& Bank balance Trade Debtors 31-3-2006 Sundry Debtors Loans & advances 185.66 61.59 59.85 683.52673.52 536.65 422.42 327.49 1180.6 1483.4

31-3-2005

Graphical representation of increase and decrease of working capital in current liabilities

500 450 400 350 300 250 200 150 100 50 0 Current Liabilites Sundry creditors 31-3-2005 advances 31-3-2006 creditors for expenses 9.17 15.13 254.69 220.83 187.83 111.8 121.4 449.83

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INTERPRETATION
The balance sheet for the year 2005-06 shows the current assets have increased Rs. 2533.79 to 3080.91lakhs, and the current liabilities have increased Rs. 569.49 to 774.19 lakhs. The current assets are more than the current liabilities (31-3-2005,1937.3 31-3-2006,2306.72). The liquidity position of the company is good as it is maintain a good working capital. The increasing working capital is 369.42 lakhs.

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Schedule of changes in Working Capital for the year ended 2006-07. Particulars (A)Current assets Inventories Cash & Bank balance Trade Debtors Sundry debtors Loans and advances 673.52 59.85 1483.40 536.65 327.49 977.61 46.84 1418.10 394.18 305.40 304.09 ------------------------------13.01 65.3 142.48 22.07 31-3-2006 31-3-2007 Increase Decrease

Total(A)

3080.91

3142.13

(B) Current Liabilities Creditors for goods Sundry creditors Advances Creditors for expenses 449.83 187.83 15.13 121.40 718.38 85.35 16.08 110.07 ------102.48 ------11.33 268.55 ------0.95 -------

Total(B)

774.19

929.88

(A-B)

2306.72

2212.25

Decrease in w/c

94.47

94.47

-------

2306.72

2306.72

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Graphical representation of increase and decrease of working capital in current assets

1600 1400 1200 1000 800 600 400 200 0 inventories cash & Bank balalance Trade Debtors 31-3-2007 Sundry debtors Loans and advances 59.85 46.84 673.52 536.65 394.18 327.49 305.4 977.61 1483.4 1418.1

31-3-2006

Graphical representation of increase and decrease of working capital in current liabilities

800 700 600 500 400 300 200 100 0 Current Liabilities Sundry creditors 31-3-2006 Advances 31-3-2007 Creditors for expenses 187.83 85.35 15.13 16.08 121.4 110.07 449.83 718.38

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INTERPRETATION
The comparative balance sheet for the year 2006-07 reveals. The current assets have increased 3080.91 to 3142.13 and the current liabilities have increased Rs. 774.19 to 929.88 lakhs. The increasing current liabilities is more than the current assets in this period (2006, 2306.72 to 2007, 2212.25). company working capital position is come down. The Decrease in working capital is 94.47 lakhs.

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Schedule of changes in working capital for the year ended 2007-08 Particulars (A)Current assets Inventories Cash & Bank balance Trade Debtors Sundry debtors Loans and advances 998.26 46.84 1418.11 394.18 305.4 1234.01 57.14 1438.57 710.58 351.68 235.75 10.3 20.46 316.4 46.28 ------------------------------31-3-2007 31-3-2008 Increase Decrease

Total(A)

3162.79

3791.98

(B) Current Liabilities Creditors for goods Sundry creditors Advances Creditors for expense 718.38 85.35 16.08 110.07 911.89 122.84 21.94 138.47 ------------------------193 37.49 5.86 28.4

Total(B)

929.88

1195.14

(A-B) Increase in working

2232.91 363.93

2596.84 ------363.93

2596.84

2596.84

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Graphical representation of increase and decrease of working capital in current assets

1600 1400 1200 1000 800 600 400 200 0 Inventories Cash & Bank balance Trade Debtors 31-3-2008 Sundry debtors Loans and advances 46.84 57.14 394.18 305.4 351.68 998.26 710.58 1234.01 1438.57 1418.11

31-3-2007

Graphical representation of increase and decrease of working capital in current liabilities

1000 900 800 700 600 500 400 300 200 100 0 Creditors Sundry creditors 31-3-2007 Advances 31-3-2008 Creditors for Expense 85.35 122.84 16.08 21.94 110.07 138.47 718.38 911.89

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INTERPRETATION
Comparative balance sheet as on 31-3-2007, 31-3-2008. During the period 2007-08 the current assets have increased Rs. 3162.79 to 3791.98 lakhs. Increasing current assets is more than liquidity position is good and maintains a good working capital. Increasing working capital is 363.91 lakhs.

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Schedule of changes in working capital for the year ended2008-09 Particulars (A)Current assets Inventories Cash & Bank balance Trade Debtors Sundry debtors Loans and advances 1234.01 57.14 1438.57 710.58 351.68 1347.07 105.29 1667.42 640.67 315.63 113.06 48.15 228.85 ------------------------------69.91 0.05 31-3-2008 31-3-2009 Increase Decrease

Total(A)

3791.98

4076.08

(B) Current Liabilities Creditors for goods Sundry creditors Advances Creditors for expense 911.89 122.84 21.94 138.47 787.47 107.03 19.03 182.34 ------------------43.87 124.42 15.81 2.91 -------

Total(B)

1195.14

1095.87

(A-B) Increase in w/c

2596.84 383.37

2980.21 ------383.37

2980.21

2980.21

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Graphical representation of increase and decrease of working capital in current assets

1800 1600 1400 1200 1000 800 600 400 200 0 Inventories Cash & Bank balance 31-3-2008 Trade Debtors Sundry debtors 31-3-2009 57.14 105.29 710.58 640.67 1347.07 1234.01 1667.42 1438.57

Graphical representation of increase and decrease of working capital in current liabilities

1000 900 800 700 600 500 400 300 200 100 0 Creditors for goods Sundry creditors 31-3-2008 Advances 31-3-2009 Creditors for expense 122.84 107.03 21.94 19.03 138.47 182.34 787.47 911.89

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INTERPRETATION
The analysis of the comparative balance sheet of Kusalava International Ltd. For the year 2008-09 reveals that the current assets have increased 3791.98 to 4076.08 lakhs. And the current liabilities have increased Rs. 1195.14 to 1095.87 lakhs. The liquidity position of the company is good. The working capital positon of the company is also good.

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Schedule of changes in working capital for the year ended2009-10 Particulars (A)Current assets Inventories Cash & Bank balance Trade Debtors Sundry debtors Loans and advances 1347.07 277.72 1667.42 640.67 299.81 2131.42 121.11 1606.36 541.51 730.23 784.35 ------------------430.42 ------156.61 61.06 99.16 ------31-3-2009 31-3-2010 Increase Decrease

Total(A)

4232.69

5130.63

(B) Current Liabilities Creditors for goods Sundry creditors Advances Creditors for expense 787.47 107.03 19.03 182.34 958.44 129.69 28.76 190.52 ------------------170.91 22.66 9.73 8.18

Total(B)

1095.87

1307.41

(A-B) Increase in w/c

3136.82 686.4

3823.22 ------686.4

3823.22

3823.22

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Graphical representation of increase and decrease of working capital in current assets

2500 2131.42 2000 1606.36 1500 1347.07

1000 640.67 541.51 500 277.72 121.11 Inventories Cash & Bank balance 166.42

730.23 299.81

0 Trade Debtors 31-3-2010 Sundry debtors Loans and advances

31-3-2009

Graphical representation of increase and decrease of working capital in current liabilities

1200 1000 800 600 400 200 0 Creditors for goods Creditors for goods 31-3-2009 Advances 31-3-2010 Creditors for expense 107.03 129.69 19.03 28.76 182.34 190.52 787.47 958.44

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INTERPRETATION
The analysis of the comparative balance sheet of Kusalava International Ltd. reveals during the year 2009-10. The current assets of the company increased and more particularly there is substantial increase in stock the current asset have increased Rs. 4232.69 to 5130.63 lakhs and the current liabilities have increased1095.87 to 1307.41 lakhs. The working capital position of the company is good due to substantial increase in stock the companys liquidity position may be affected in future.

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FINDINGS AND SUGGESTIONS FINDINGS:

It was observed that the Kusalava International ltd company current assets position was increasing over the period of time. In the same way the company current liabilities position was increasing over the period of time from year 2005 to year 2010. The percentage of increasing current assets is more than the increasing percentage in current liabilities. It tells that the firm maintaining a good working capital and having the good liquidity position. The Kusalava International Ltd Company decreasing the term liabilities component in its capital structure which can be better by its decreasing term liabilities in its capital structure the company reducing its financial risk. The Kusalava International Ltd maintaining the constant fixed assets percentage in its total assets till the year 2009 and the fixed assets percentage is coming down in year 2010. The net profit of the company is increasing from year 2006 to year 2007 because the company controlling selling & administrative expenses. And the net profit percentage decreasing from the period 2007 to 2009 because increasing selling & administrative expenses and tax and interest. In the year 2010 net profit was increasing. The proportion of the share holders in total liabilities was increasing on the year on year basis of because the increment in reserves & surplus. The company increasing share capital in year 2006 and in year 2008.
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 The company maintained good fixed assets turnover ratio in all of the years it has the highest fixed turnover ratio in the year 2009-2010. The working capital turnover of the company is found to be satisfactory in all the years. The company maintained the good current ratio year all the observed years from 2006 to 2010.

SUGGESTIONS:
The study observers that the current assets and current liabilities has been increased observation period it is suggested to the company to take necessary steps for maintaining proper balance in between current assets and current liabilities. As the study observed the current assets position was increased all the five years it is suggested to the company to maintain proper current assets for better short term fund management. The company decreasing the term liabilities component in its capital structure. It is suggested to the company to maintain a trade off between the term liabilities and equity. It is suggested to the company to invest more funds to its fixed assets to generate sales by utilizing them. The net profit of the company has been fluctuated over the over the observation period. It is suggested to the company to control the selling & administrative expenses for to improve the net profit.

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 The share holders fund has been increased year on year basis. Because the increment in reserves & surplus. It is a satisfactory position. It is suggested to maintain the same levels. The fixed assets turnover ratio is in a satisfactory position it is suggested to the company to improve the fixed assets turnover ratio for effective utilization of the fixed assets. The working capital turnover ratio is in satisfactory position. It is suggested to the company to improve the ratio. As the current ratio was observed satisfactory and it is meet to the standard norms so it is advisable to take necessary steps to maintain in the same future also. The gross profit ratio of the company is not satisfactory position it has been come down year on year it is suggestible to improve the gross profit margin by reducing the cost of production cost.

CONCLUSION:
The working capital position has been increased during the five years from year 2006 to 2010, the working capital position is good. The comparative balance sheet position is improved over the period of time. The common size balance sheet of company is very high and the comparative income statement position is also needed to be increased to certain extent. The company maintain the good current ratio for all years. The company tried to improving its gross profit ratio and net profit ratio. Significantly in year on year basis.

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