SCL Jaipur

A Summer Training Report ON
Working Capital Management
Submitted in partial fulfillment for the Award of degree of Master of Business Administration
Submitted By: PRASHANT VYAS M.B.A. 2nd year
Submitted To: Prof. Sonal Chouhan
Faculty of Management
Jodhpur National University, Jodhpur
2011-2013
ACKNOWLEDGMENT
I express my sincere thanks to my project guide, Mr. Vijay Vyas Jr. H.R. Manager, Shree Cement, Beawar (Raj.), for guiding me right from the inception till the successful completion of the project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project. I would also like to thank Prof. Sonal Chouhan, for their help and cooperation through our project. I express my gratitude to faulty of Management, Jodhpur National University, Jodhpur for providing me with this opportunity and constant guidance.
(Signature of Student)
Prashant Vyas
PREFACE
The present project is undertaken as a part of my Internship with the Shree Cement Ltd. The summer internship constitutes a very important part of the course curriculum as it gives the students a chance to learn and incorporate in them the ways of working in the corporate environment.
The increasing emphasis on branding has resulted in immense pressure and competition among the producers and as a result of which retailer has been found to important mediator to increase the market share and sale of the product. Due to this,
Companies are eager to measure the satisfaction level of the retailers towards their brands.
PROJECT
The survey guide ask me to analyze the position of Shree Cement Red Oxide Cement in terms of quality in western Rajasthan. The first two weeks of training, visited the different places and knows the views of the contractor, builders toward our product. Surprising result are that 90% builder and contractor are aware of our product and Builder are not satisfied with its quality. But 75 % builder and contractor decision are based on their contractor and retailer suggestions. Finally, Project guide (Mr. Vijay Vyas) ask me do Project on Working capital Management in Shree Cement The study basically across attention towards the market share of the Shree Cement and factor responsible for measuring the satisfaction level of the contractors, architect etc.
EXECUTIVE SUMMARY
This project deals with the assessment of satisfaction level of the retailers towards the Shree Cement Brand in terms of quality, and factor that are responsible for the satisfaction level. We have focused our research on Shree Cement due to the slow growth rate instead of having huge market possibility.
With the help of Questionnaire we have analyzed each and every factor that is responsible for the satisfaction level of the retailer toward Shree Cement. Study also included the market demand for the cement, market share, and competition analysis to know the exact position of cement in the market.
We have focused toward retailer scheme and its impact on the retailer and sale promotion of the cement.
Most important factor that are responsible are profitability margin , problem related to quality, problem related to the monetary coupon , problem related to the disbursement amount all these factor really hampering the retailers relationship with the company. We have also discussed the challenges in front of the company and its recommendation.
TABLE OF CONTENTS
S.no. 1. 2. 2.1 2.2 2.3 2.4 3. 4. 5. 6. 7.
Topic Introduction to the Industry Research Methodology Title of the Study Objective of Study Type of Research Sample Size and method of selecting sample Facts and Findings Analysis and Interpretation SWOT Conclusion Bibliography
Introduction
Fast rising Government Expenditure on Infrastructure sector in India has resulted a higher demand of cement in the country. In the same direction, participation of larger companies in the sector has increased.
For raising efficiency in the sector, the Planning Commission of India in the 10th plan has formed a 'Working Group on Cement Industry'.
There are a total number of 125 large cement plants and more than 300 small cement plants operating in India presently.
1. Indian cement industry dates back to 1914 - first unit was set-up at Porbandar with a capacity of 1000 tones. 2. Currently India is ranked second in the world with an installed capacity of 114.2 million tonnes.Industry estimated at around Rs. 18,000 crores (US $ 4185 mn) 3. Current per capita consumption - 85 kgs. as against world standard of 256 kgs. 4. Cement grade limestone in the country reported to be 89 bt. A large proportion however is unexploitable. 5. 55-60% of the cost of production are government controlled 6. Cement sales primarily through a distribution channel. Bulk sales account for < 1% of the total cement produced. 7. Ready mix concrete a relatively nascent market in India
Cement Industry : Structure

Installed capacity 114.2 mn tonnes per annum (mntpa)
Production around 87.8 mn tonnes Major cement plants

Mini cement plants

Companies : 59 Plants : 116 Typical installed capacity per plant : Above 1.5 mntpa Total installed capacity : 105 mntpa Production 98-99 : 81.6 mntpa Excise :Rs. 350/ tonne
Nearly 300 plants Located in Gujarat, Rajasthan, MP Typical capacity < 200 tpd Installed capacity around 9 mn. Tonnes
Production around : 6.2 mn tonnes Excise : Rs. 200/ tonne
All India reach through multiple plants
Mini plants were meant to tap scattered limestone reserves. However most set up in AP
Export to Bangladesh, Nepal, Sri Lanka, UAE and

Mauritius Strong marketing network, tie-ups with customers,
Most use vertical kiln technology Production cost / tonne - Rs. 1,000 to 1,400
contractors Wide spread distribution network . Sales primarily through the dealer channel
Presence of these plants limited to the state
Infrastructural facilities not the best
Cement Industry in India

Cement Industry in India is on a roll at the moment. Driven by a booming real estate sector, global demand and increased activity in infrastructure development such as state and national highways, the cement industry has witnessed tremendous growth. Production capacity has gone up and top cement companies of the world are vying to enter the Indian market, thereby sparking off a spate of mergers and acquisitions. Indian cement industry is currently ranked second in the world. The origins of Indian cement industry can be traced back to 1914 when the first unit was set-up at Porbandar with a capacity of 1000 tonnes. Today cement industry comprises of 125 large cement plants and more than 300 mini cement plants. The Cement Corporation of India, which is a Central Public Sector Undertaking, has 10 units. There are 10 large cement plants owned by various State Governments. Cement industry in India has also made tremendous strides in technological upgradation and assimilation of latest technology. Presently, 93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Indian cement industry has also acquired technical capability to produce different types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement etc. Some of the major clusters of cement industry in India are: Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh), Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan).
Cement industry in India is currently going through a consolidation phase. Some examples of consolidation in the Indian cement industry are: Gujarat Ambuja taking a stake of 14 per cent in ACC, and taking over DLF Cements and Modi Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasim's acquisition of the cement business of L&T, Indian Rayon's cement division, and Sri Digvijay Cements. Foreign cement companies are also picking up stakes in large Indian cement
companies. Swiss cement major Holcim has picked up 14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's acquisition has led to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla group through Grasim Industries and Ultratech Cement. Lafarge, the French cement major has acquired the cement plants of Raymond and Tisco. Italy based Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and German cement company Heidelberg Cement has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo-Rama Cement.
Issues concerning Cement Industry
High Transportation Cost is affecting the competitiveness of the cement industry. Freight accounts for 17% of the production cost. Road is the preferred mode for transportation for distances less than 250km. However, industry is heavily dependant on roads for longer distances too as the railway infrastructure is not adequate.
Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are controlled by the government.
There is regional imbalance in the distribution of cement industry. Limestone availability in pockets has led to uneven capacity additions.
Coal availability and quality is also affecting the production.
Outlook
Outlook for the cement industry looks quite bright. Given the sustained growth in the real estate sector, the government's emphasis on infrastructure and increased global demand, it looks as if the juggernaut of cement industry would continue to roll on the path of growth.
With the increased government expenditure on infrastructure, the demand for cement in India has increased. The first cement industry was set up in 1914 in Porbandar. The fact that India is the India is the second largest producer of cement in the world speaks volumes of the cement industry in India.
Current Status of Cement Industries in India

Cement industry is growing at a rapid rate of around 10% annually. The Indian cement industry has 130 large cement plants and 365 mini cement plants, whose total capacity is 165 MT per annum. Large cement plants nearly contribute 94% of the total capacity. Though the cement industry is developing at a fast rate, per capita consumption of cement in India is only 150 kilograms per person, which is even less than one third of China's per capita consumption.
Global Cement Companies in India
The financial performance of the cement industry has also recorded impressive growth. The growth of the Indian Cement companies has also attracted global companies to India. Top global companies such as Lafarge of France, Holcim of Switzerland, Italcementi of Italy and Heidelberg Cements of Germany have already entered in India. Their investment in the Indian cement sector is also giving a boost to the Indian economy. There are about 11 types of cement produced in India. They are Clinker Cement, Ordinary Portland Cement, Portland Blast Furnace Slag Cement, Portland Pozzolana Cement, Rapid Hardening Portland Cement, Oil Well Cement, White Cement, Sulphate Resisting Portland Cement etc.
Future of Cement Industry
It is expected that in the coming fiscal years the demand of cement is going to be around 225 MT. The government is also going to spend more on infrastructure and so it is beyond doubt that in the coming years the future of the cement industry is very bright. Some of the leading cement manufacturers of India are Binani Cement, Indian Cements Ltd, Madras Cement, Ultra tech Cement, Ambuja Cements, Prism Cements etc. Cement industry in India has been identified as one of the major air polluting industries for which the Central Pollution Control Board evolved emission regulations for different plant production capacities. The emission standards are applicable for all sections of production in cement plant, such as raw mill, kiln, coal mill, clinker cooler, cement mill etc. In order to
combat emission from these sources and comply with the standards, cement industries are installing different types of pollution control devices. In this context, it was felt necessary to undertake a study on the "cost benefit analysis of various dust control equipment in cement industry" to establish the economic viability of various dust collectors used in cement plants of varying capacities. The study was carried out by the National Council for Cement and Building Materials (NCB), Ballabhgarh in association with the Central Board. Findings of the study form the basis of this report. Dust collectors for different.sections have been recommended depending on the requirrnents of the emission regulation and their pay-back periods are also brought out in the report.
Indian Cement Industry on Growth Trajectory.
The Cement industry has continued its growth trajectory over the past seven years. Domestic cement demand growth has surpassed the economic growth rate of the country for the past couple of years. The growth rate of cement demand over the past five years at 8.37 % was higher than the rate of growth of supply at 4.84% as also the rate of growth of capacity addition during the same period. Demand for cement in the country is expected to continue its buoyant ride on the back of robust economic growth and infrastructure development in the country.
The key drivers for cement demand are real estate sector, infrastructure projects and industrial expansion projects. Among these, real estate sector is the key driver and accounted for almost 55% in FY 07.
During the period FY 03 07, capacity additions in the country (30.6 mn tonnes) were at a slower rate compared to demand growth leading to higher average capacity utilization rates from 81.3% to 93.8% during the same period. This has exerted pressure on average prices which have increased from Rs. 156 per bag in FY 03 to Rs. 216 per bag in FY 07. In December 2007, prices stood at Rs. 245 - Rs. 250 per bag.
Low capacity addition coupled with higher utilization rate also led to increase in proportion of production of blended cements in product mix. Blended cement accounted for 68% of product mix in FY 07 as compared to 49% in FY 03.
Cement is a bulky commodity and cannot be easily transported over long distances making it a regional market place, with the nation being divided into five regions. Each region is characterised by its own demand-supply dynamics. The Southern region dominated the cement consumption at 44.5 mn tonnes in FY 07, accounting for about 30% of total domestic cement consumption. During FY 03-07, Southern region has witnessed highest CAGR of cement demand growth at 10.4% followed by Northern and Eastern regions at 8.9% and 9%, respectively.
Over the past five years, cost of cement production has grown at a CAGR of 8.4%. Also, the producers have been able to pass on the hike in cost to consumers on the back of increased demand. Average realizations have increased from Rs. 1,880 per tonne in FY 03 to Rs. 3,133 per tonne in FY 07, at a CAGR of 13.6%, which has been reflected in higher profit margins of the industry.
To reduce the cost of production, the industry has focused on captive power generation. Proportion of cement production through captive power route has increased over the years. Also, cement movement by rail has increased over the years. Market share of top five players in the industry has increased from 42% in FY 02 to 56% in FY 07. In FY 07, Holcim group captured a leadership position with market share of 22.6% followed by Aditya Vikram Birla group at 19.4%.
Domestic Cement industry is highly insulated from global cement markets. Exports have been constant at about 6% of total cement demand for past few years. With GoI intervention, making cement duty free, cement is being imported from neighbouring countries. However, due to logistics issues and lack of port handling capabilities, imports of cement will remain negligible and do not pose a threat to domestic industry.
Cement demand is expected to remain buoyant driven by boost in construction sector in the country. As per estimates, investment of USD 25 bn is required in urban housing, USD 450 bn will be required in infrastructure related projects and industrial expansion projects would witness investments of USD 88 over the next five years.
We estimate domestic cement demand to grow at a CAGR of approximately 10% for the next 5 years. The current tight demand - supply situation is expected to extend up to end of calendar year 2008 owing to delays in capacity expansion programmes by various companies. We expect prices to remain firm till the end of CY2008 due to tight demand supply situation and increase in input costs. Thereafter as new capacities come in, we may witness a softening in prices in some regions.
The report elucidates facts on the Indian Cement industry, supplemented by the latest Statistics. Emphasis is laid on the following topics to accomplish the report: -Performance of the Cement industry over past five years with evaluation of trends of capacity addition, production and capacity utilisation. -Evaluation of Overall demand supply scenario in the country covering trend of domestic consumption and exports. -Regional dynamics of industry depicted by detailed analysis of demand supply situation in the five distinct regions in India. -Influence of various cement demand driving sectors like real estate, infrastructure and industrial projects covering region-wide demand drivers. -Changing scenario of product mix override of blended cements on OPC. -Cost analysis with emphasis on power & fuel cost, RM cost, Freight cost and evaluation of average cost of production, average realizations and margins of the industry. -Our perspective on region-wide future capacity addition, demand estimation and identification of deficit/surplus regions in the country. -Operating & financial performance of top players in the industry along with future outlook.
-Brief on peculiar characteristics of industry, types & applications of cement variants and cement manufacturing process. -Comprehensive database of company-wide financial & operational statistics and region-wide key operational statistics.
CHAPTER 2
Introduction of the Organization
Shree Cement Ltd. is an energy conscious & environment friendly business organization. Having 9 directors on its board under the chairmanship of Shri.B.G. Bangur, the policy decisions are taken under the guidance of Shri. H.M. Bangur, Managing Director. Shri. M.K.Singhi, Executive Director of the Company, is looking after all day-to-day affairs. The company is managed by qualified professionals with broad vision who are committed to maintain high standards of quality & leadership to serve the customers to their fullest satisfaction. The board consists of eminent persons with considerable professional expertise in industry and field such as banking, law, marketing & finance
Company History - Shree Cements

YEAR EVENTS
1979 - The Company was incorporated on 25th October, at Jaipur.
The Company was promoted by members of the Bangur family and others. Shree Digvijay Cement Co. Ltd., Graphite India, Ltd. and Fort Gloster Industries, Ltd. took active part in the promotion of manufacture's cement & cement products. the Company. The Company
SHREE CEMENT LIMITED

CODE OF CONDUCT ON CORPORATE GOVERNANCE
PHILOSOPHY
Shree Cement Ltd is a professionally managed company. The company always believes in complete transparency and discharge of the fiduciary responsibilities which has been assumed by Directors as well as by the Senior Management Executives and/or Staff. Therefore in order to ensure the continuity thereof though, not written but otherwise ingrained, the Board of Directors has approved of the following Code of Conduct for all Directors as well as for the Senior Management Executive and/or personnel and other employees.
Community And Environment

Shrees community concern extends from direct assistance to safe and dependable operations for its members and the environment. Markets classification Markets Primary States Rajasthan
Secondary Delhi, Punjab, JK, Haryana, Western U.P. and Uttaranchal
Tertiary
Gujarat, M.P. and Central U.P.
Markets
Each cement manufacturer has a primary and secondary market. The former is one, which is the closest to the production centre where it fetches the best realizations while the latter is usually at a distance where realizations are lower.
In an industry where consumer loyalties change every rupee, Shrees biggest achievement was that it built an emotional bond with its stakeholders. This transpired as a result of a number of initiatives: The company positioned its brands around longer life (durability), emphasizing product longevity. The company innovated the launch of corrosion resistant grade like Red Oxide Cement, winning innovations in a staid industry. Rajasthan is Indias largest cement producing state and Shrees is the largest single location plant in northern India. The companys northern-most positioning within Rajasthan makes it the closest among all Rajasthan manufacturers to Delhi, Haryana and some parts of Punjab, a significant cost edge. The company enjoys a market share of about 11 per cent in north India.
Challenges
Due to the nature of the product - bulky, low priced - it became increasingly difficult to sell the product across a large territory. Besides, higher realizations in distant territories did not mean that the gain would accrue to the company since the incremental freight would neutralize the price advantage. As a result, it became important to arrive at a median between realizations and distribution costs and earn a comfortable margin.
ERP implementation
Network that delivers online, real-time access to information and processes. Towards this end, the company is adopting the Oracle e-Business Suite ERP with Tata Consultancy Services as the implementation partner. Imbibing the best practices of companies worldwide, this ERP suite will impact all processes of the company, right from procurement, through operations, to sales and distribution. It involves a complete re-engineering of business processes to make them more high-performing and tuned towards the global order. building and environment, health and safety functions.
CREATING LEADERS AT EVERY LEVEL

Shree Cement emphasises that creating leaders not just at the organisational apex but at every level results in strong sense of emotional ownership. Thus the employees are delegated with responsibility and authority to adopt one Electric motor and related equipment for keeping watch and care resulting in energy conservation, thus generating multiple CEO's in the Energy Management System.
RECOGNITION AND REWARD SCHEME

The management believes in the self-actualisation of its employees by injecting the concept of Human resource Development in all its policies and strategies. By recognition and reward the employees are motivated to give their best in the interests of the organization in particular and for the society in general. So many schemes of recognition and rewards are given to boost the morale and motivate the employees. According to Managing Director of the company, morale management is considered to be more challenging than material management. According to him it is important to keep walking around and congratulating the teams for their small victories. Efforts and their success stories are disclosed to all in special functions so that other employees may take inspiration from them. Employees are rewarded for doing exemplary work in the field of reducing/ eliminating breakdown, in-house development, better house keeping, and reduction in raw material, fuel, power and wastage. Cash awards and Certificates of honour have been given in a function.
For example a scrapper chain of reclaimer II is to be replaced which takes 80 hours. The team completed this task in minimum possible time with the result that the reclaimer was put into operation in just 36.5 hours. The team was rewarded with a cash amount of Rs. 11,000/- and certificate of honour.
RAS CEMENT PROJECT

Shree Cement Limited is setting up a new green field Project at Village Ras, Tehsil Jaitaran, District Pali of Rajasthan. The capacity of the plant is 3000 Ton Per Day of clinker production with an approximate investment of about Rs. 300 Crores. The main plant & machineries would be supplied by KHD Humboldt Wedag AG - Germany & GEBR Pfeiffer AG - Germany. The plant will be based on the latest Technology available and maximum Automation would be done to keep the minimum manpower. The company is having sufficient mining lease at Ras to cater its production requirements for the upcoming 50 years.
SHREE CEMENT OTHER POLICIES We Perform Differently

Only Company in the Country Banned use of Tobacco No strike since inception. Firmly Integrated as Shree Family. Celebrates 13 Safety Day in a year (i.e. Ist Day of Every Month & one National Safety Day). The Company that is having more than100 CEOs. within Premises.
Culture & Values of Employees: Highly cohesive work Culture:- Superior acts as friend philosopher & guide to subordinates. Culture of Learning Concept of Family Development
Unique Practice :- We negotiates with all the three unions. We enters into long terms agreements with the unions. Continual increase in Distribution of Bonus & ex-gratia. We have not lost a single man day production due to either strike or Lockout ever since inception. Initiated Small group activities for self Development & Energy Conservation.
SOCIAL SECURITY MEASURES AT SHREE CEMENT 1. Employees Provident Fund Scheme 1952. 2. Shree Cement Employees Provident Fund Trust (For those who are not members of EPF) 3. Group gratuity scheme. 4. Mediclaim Policy. 5. Insurance Coverage upto 60 months Salary in case of Death in an accident. 6. Shree Cement Superannuation Scheme. 7. Death Relief Fund
Career Development Ample opportunity is accorded for career growth to the performers. Employees recruited at entry level are accorded assured career growth to a certain level. Thereafter performance, of employees is the only criteria for career growth in the organization.
RESEARCH METHODOLOGY
TITLE OF THE STUDY
: Working Capital Management in Shree

Cement
OBJECTIVE OF THE STUDY
Qualitative research on weakness of Shree Ultra Red Oxide Cement in Working Capital Management in Shree Cement As primary data collected from the company, its was being observed that Shree Cement is weak in the Working Capital Management in Shree Cement , our objective was to analyze the major reasons at the back of that, we found that quality was the major reason behind this , and decided to target the qualitative research in this direction.
1-To measure the satisfaction level of retailers, dealers, contractors, architect and ICH, in terms of quality? 2-How many satisfied retailers, dealers, contractors, architect are there in Jodhpur? 3-What Qualitative measures should be adopted to enhance the quality ? 4-What factors must be adopted to enhance Working Capital Management in Shree Cement ?
5-What are the promotional activities affecting Working Capital Management in Shree Cement ?
MEANING OF WORKING CAPITAL
Working capital refers to the management of current assets. Working capital refer to that part of total capital which is used for carrying out the routine or regular business operation. In other words, it is the amount of funds used for financing the day-to day operation. In short, it is the capital with which the business is worked over. Thus, the capital invested and locked up in various current assets , such as stocks of raw material, work in progress , stocks of finished goods account receivable and cash and bank balances constitutes the working capital.
Working capital may be regarded as life blood of a business. Its effective provision can do much to ensure the success of a business while its in provision can do much to ensure the success of a business while its in efficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concerns.
> According to shoo-in, Working Capital is the amount of funds necessary to cover the cost of operating the enterprise. Working Capital is also known as Revolving or Circulating Capital.
> According to Genesterberg, Circulating Capital means current assets of a company that are changed in the ordinary cause of business from one to another form. Example: From cash to inventory, inventories to bills receivable and bills receivable to cash.
Concept of working capital

There are five concepts of working capital :-
o Gross Working Capital o Net Working Capital o Negative working capital o Permanent working capital o Variable working capital On the basis of the components or items comprised in working capital, working capital can be classified into the following types:
Gross Working capital: Simply called as working capital, refers to the firms investment
in current assets. Current assets which can be converted in to cash with in the accounting year (or operating cycle) and includes cash, short term securities, debtors, Bills receivable and stock (inventory) .
Net Working Capital: Refers to the difference between current assets and current
liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment with in a year and include creditors, Bills payable and outsiders expenses.
Negative working capital or working capital deficit: means the excess of current
liabilities over the current assets. It accurse when the current liabilities exceed the current assets
Permanent working capital or fixed working capital: refer to the minimum

amount of investment in current assets required throughout the year for carrying out the
business. In other words , it is the amount of working capital which remains in the business permanently in one form or other.
Variable working capital or fluctuating working capital: refer to the amount of

working capital which goes on fluctuating or changing from time to time with the change in the volume of business activities.
Ratios :
The term ratio simply means one number expressed in terms of another. It describes in mathematical terms the quantitative relationship that exists between two numbers.
NEED FOR WORKING CAPITAL

Every business undertaking requires funds for two purposes, investments in fixed assets & investment in current assets.
Funds required for investing in inventory, debtors & other current assets keep changing in shape & volume. Company has some cash in the beginning; this cash may be the source of raw material, keeping the labor cost & other overheads. These three combined would generate work in progress, which will be converted into finished goods on the completion of the production process into debtors & when the debtor pay, the firm may generate cash. Working capital is needed for sustaining (i.e., maintaining) the sales activities. If adequate working capital is not maintain for this period ,the firm will not be able to sustain or maintain the sales , since it may not be in a position to purchase raw material and pay wages and other expenses ands produce the goods required for the sales.
NATURE OF WORKING CAPITAL
In ordinary parlance, Working Capital is taken to be the fund available for meeting day-today requirements of enterprises. It cannot be denied that a part of the fixed or permanent capital is invested in assets, which are kept in the business or for a long period for the purpose of earning profit. These are usually known as fixed assets viz. Land & buildings, plant & machinery, furniture & fitting & intangibles like goodwill, patents, trademarks & long-term investment.
Another part of permanent capital left in the business for supporting the day-to-day normal operation is known as the Working Capital. This Working Capital generates the important element of cost viz. Material, wages & expenses. These cost usually lead to production & sales in case of manufacturing concerns & sales alone in others. These costs occur gradually in a flow & do not come into being abruptly at a given moment.
Hence the initial investment of cash as working capital for this specific purpose has to be continued until the sales revenue commences flowing in substantially & in a regular way. From this stage the business is found to acquire a momentum of its own. The flow of revenue is expected to continue to replace the cost lost in its day-to-day out flow for the generation of the revenue mentioned above.
SOURCE OF WORKING CAPITAL

The financial manager is always interested in obtaining the working capital at the right time, at a reasonable cost and at the best possible favorable terms. A part of the working capital investment are permanent investments is fixed assets. The following is snapshot of various source of working capital. Sources of working capital divided into two
Long term Short term
Sources of long term working capital

Issue of shares Floating of debentures Ploughing back of profit Loans Public deposit
Sources of short-term working capital
Internal sources
Depreciation Taxation Accured expenses
External sources
Trade credit Credit papers Bank credit Customers credit Govt. Assistances
Loans from director Security of employees
WORKING CAPITAL CYCLE:-
The working capital of a concern goes on changing in shape and volume. For Instance, a concern may have some cash in the beginning. The cash may be used by the concern for the purpose of purchase of raw material, payment of wages and other expenses. These elements of cost or items of expenses, raw material , wages and overheads , will result in work- inprogress during the process of manufacture. On the in compilation of the production process, the work- in progress becomes finished goods.
Meaning
The length of time involved in this cycle of conversion of cash into raw material, raw material into work-in progress, work-in-progress into finished goods, finished goods into debtors and debtors into cash again is called the operating cycle or working capital cycle of the firm, in other words, it is period between the date raw material are purchased and the date the sale proceeds of finished goods are realized by concern.
INTER-DEPENDENCE AMOUNG COMPONENTS OF WORKING CAPITAL OPERATING CYCLE :
A company starting with cash purchase raw materials, components etc., on a cash or credit basis. These materials will be converted into finished goods after undergoing various stages of work-in-process. For this purpose the company has to make payments towards wages,
salaries and manufacturing costs. Payments to suppliers have to be made on purchases in the case of cash purchases and on the expiry of the credit purchases. Further, the company has to meet other operating costs such as selling and distribution costs, general administration costs and non-operating costs described as financial costs (interest on borrowed capital). In case the company sells its finished goods on cash basis, it will pass through one more stage, viz, accounts receivable and gets back cash along with profit on expiry of credit period. Once again the cash will be used for the purchase of materials and / or payments to suppliers and the whole cycle is termed as working capital or operating cycle repeats itself. This process indicates the dependents of each stage or components of working capital on its previous stage or component.
WORKING CAPITAL MANAGEMENT Introduction

Working capital management is one of the most important aspects of financial management. It forms a major function of the finance manager.
Meaning :
Working capital management means management or administrating of all aspect of working capital, i.e., currents assets and currents liabilities.
In other words of Smith, working capital management is concerned with the problems that arise in attempting to manage the current assets, the current liabilities and the interrelationship that exists between them.
BASIC OBJECTIVE OF WORKING CAPITAL MANAGEMENT :

The basic objective of working capital management is to manage the firms working capital (i.e., currents assets and currents liabilities) in such a way that a satisfactory level of working capital (i.e., neither excessive nor inadequate working capital) is maintained. This is necessary because, if the working capital is excessive or large, the liquidity position of the
firm would, no doubt, improve, but its profitability would be adversely affected, as funds would remain idle. Conversely, if the working capital is too small, the, profitability of the firm may improve, but the liquidity position of the firm would be adversely affected.
Advantages of working capital:

It helps the business concern in maintaining the goodwill. It can arrange loans from banks and others on easy and favorable terms. It enables a concern to face business crisis in emergencies such as depression. It creates an environment of security, confidence, and over all efficiency in a business. It helps in maintaining solvency of the business.
Disadvantages of working capital:

Rate of return on investments also fall with the shortage of working capital.
Excess working capital may result into over all inefficiency in organization. Excess working capital means idle funds which earn no profits. Inadequate working capital can not pay its short term liabilities in time.
OBJECTIVES OF THE PROJECT

The objectives of study
1) To identify the financial strengths & weakness of the company. 2) Through the net profit ratio & other profitability ratio, understand the profitability of the company. 3) Evaluating company s performance relating to financial statement analysis. 4) To know the liquidity position of the company with the help of current ratio. 5) To find out the utility of financial ratio in credit analysis & determinig the financial capacity of the firm.
BUSINESS POLICY
In-line with Companys Vision, Mission and values, we dedicate ourselves to sustained growth with increasing positive Economic Value Addition and Customer focussed business leadership in the Industry Sector.
CRITICAL SUCCESS FACTORS:

Increase Orders of Spares/Services to 230 Cr. Decrease Capital employed by Rs. 120 Cr. Saving in Material Cost by 16 Cr. i.e. 5%- Rs. 4 Cr. Decrease in indirect material +miscellaneous expenses by 5%- Rs. 4 Cr. Effective implementation of QTM/RCA/CTQ Strengthening Internal customer concept Development of an Incentive Scheme Reward Scheme including EXCEL Awards Effective implementation of PMS Effective Contract Management Technology Upgradation
Excellence triangle for each Critical Success Factor is now being drawn comprising improvement projects. These projects will be centrally registered under On-line Central Registration system to be developed for it. While CSF Champion will take the total stock of position in the improvement projects undertaken in his respective CSF, progress of individual projects will be reviewed by Area TQ Council (ATQC) and Functional TQ Council (FTQC).
One of the major strengths of HEEP Hardwar is its free, open and consistent work culture for making continuous improvement evident from the participation of employees in Suggestions and Quality Circles. To recognize their efforts various productivity drives and competition are organized throughout the year and Executive director awards the winners in the special Award
Distribution Functions. National Award for Excellence in Suggestion Scheme for 11 th consecutive year by INSSAN, National Award for excellence in Energy Conservation as an Energy Efficient unit by CII, CMDs Rolling Trophy for 3rd consecutive year, Well known Forge Shop by Central Boiler Board etc. are some Vir Award 2001 and 12 employees honored with Vishwakarma Rashtriya Puraskarduring 2001-02.
The journey to excellence is unending .It is a continuous search with commitment and belongings. Sky indeed is not the limit for perfection. The transition has strongly experienced a silent internalization with a blend of commitment of the existing human resource for creating benchmarks for excellence. The emergence of role models and clear-cut driving force at the top provide an anvil to unleash the potential, which remain unexplored in search of Attitude to perform. The surge has started and is being communicated down the. SHREE CEMENT today through TQM is on March towards excellence.
CHAPTER-2 RESEARCH DESIGN
General Methodology
The study was carried on an explorative basis using accounting and financial data. The procedures followed in this study consist of following steps: 1)The research includes figurative and diagrammatic interpretation for comparison. 2) Understanding of cement industry in global and domestic scenario. 3) Determining the demand and supply in near future to understand the future prospect of the industry. 4) Analysis of Government Policy toward cement industry. 5) Evaluating SHREE CEMENT , BEHWAR position in cement industry. the ease of
Research Methodology
Research methodology that is used here was purely exploratory because we know it is used when one is seeking insight in to the general nature of the problem possible decision alternatives and relevant variables that need to be considered. This resistance also help full / use full for establishing priorities among research questions and for learning about practical problems of carrying out the research.
CHAPTER -3 DATA ANALYSIS, PRESENTATION AND

INTERPRETATION
Data source
Data collection was through literature survey and expert opinion. Literature survey includes the collection of data from various sources like bank agreement and statement, handbooks as well as study material.
A part of data` s was collected from primary data and other was collected from the secondary data.
Primary sources
Information gathered by interview and discussions with the head and employees of various departments and my project guide.
Secondary sources
Company annual report. Published information on finance. Internal circulation booklets. Company Websites
DATA ANALYSIS AND INTERPRETATION
Ratio Analysis is a powerful tool o financial analysis. Alexander Hall first presented it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparison of one figure against other, which makes a ratio and the appraisal of the ratios of the ratios to make proper analysis about the strengths and weakness of the firms operations. The term ratio refers to the numerical or quantitative relationship between two accounting figures. Ratio analysis of financial statements stands for the process of determining and presenting the relationship of items and group of items in the statements.
Ratio analysis can be used both in trend analysis and static analysis. A creditor would like to know the ability of the company, to meet its current obligation and therefore would think of current and liquidity ratio and trend of receivable.
Major tool of financial are thus ratio analysis and Funds Flow analysis. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit account The financial analyst may use ratio in two ways. First he may compare a present ratio with the ratio of the past few years and project ratio of the next year or so. This will indicate the trend in relation that particular financial aspect of the enterprise. Another method of using ratios for financial analysis is to compare a financial ratio for the company with for industry as a whole, or for other, the firms ability to meet its current obligation. It measures the firms liquidity. The greater the ratio, the greater the firms liquidity and vice-versa.
A ratio can be defined as a numerical relationship between two numbers expressed in terms of (a) proportion (b) rate (c) percentage. It is also define as a financial tool to determine an interpret numerical relationship based on financial statement yardstick that provides a measure of relationship between two variable or figures.
Meaning and Importance:

Ratio analysis is concerned to be one of the important financial tools for appraisal of financial condition, efficiency and profitability of business. Here ratio analysis id useful from following objects.
1. Short term and long term planning
2. Measurement and evaluation of financial performance
3. Stud of financial trends
4. Decision making for investment and operations
5. Diagnosis of financial ills
6. Providing valuable insight into firms financial position or picture
ADVANTAGES ANALYSIS :
&
DISADVANTAGES
OF
RATIO
Advantages:
The following are the main advantages derived of ratio analysis, which are obtained from the financial statement via Profit & Loss Account and Balance Sheet.
a) The analysis helps to grasp the relationship between various items in the financial statements. b) They are useful in pointing out the trends in important items and thus help the management to forecast c) With the help of ratios, inter firm comparison made to evolve future market strategies.
d) Out of ratio analysis standard ratios are computed and comparison of actual with standards reveals the variances. This helps the management to take corrective action. e) The communication of that has happened between two accounting the dates are revealed effective Action. f) Simple assessments of liquidity, solvency profitability efficiency of the firm are indicted by ratio analysis. Ratios meet comparisons much more valid.
Disadvantages:
Ratio analysis is to calculate and easy to understand and such statistical calculation stimulation thinking and develop understanding. But there are certain drawbacks and dangers they are.
i)There is a trendy to use to ratio analysis profusely. ii)Accumulation of mass data obscured rather than clarifies relationship. iii) Wrong relationship and calculation can lead to wrong conclusion.
1. In case of inter firm comparison no two firm are similar in size, age and product unit.(for example) one firm may purchase the asset at lower price with a higher return and another firm witch purchase the asset at asset at higher price will have a lower return)
2. Both the inter period and inter firm comparison are affected by price level changes. A change in price level can affect the validity of ratios calculated for different time period.
3. Unless varies terms like group profit, operating profit, net profit, current asset, current liability etc., are properly define, comparison between two variables become meaningless. 4. Ratios are simple to understand and easy to calculate. The analyst should not take
decision should not take decision on a single ratio. He has to take several ratios into consideration.
STANDARDS OF COMPARISION:
1. Ratios calculated from the past financial statements of the same firm.
2. Ratio developed using the projected or perform financial statement of the same firm 3. Ratios of some selected firm especially the most progressive and successful, at the same point of time. 4. Ratios of the industry to which the firm belongs.
IMPORTANCE OF RATIO ANALYSIS

In the preceding discussion in the form, we have illustrated the compulsion and implication of important ratios that can be calculated from the Balance Sheet and Profit & Loss account of a firm. As a tool of financial management, they are of crucial significance. The importance of ratio analysis lies in the fact and enables the drawing of inferences regarding the performance of a firm. Ration analysis is a relevant in assessing the performance of a firm in respect of the following aspect.
CAUTION IN USING RATIOS:
1. It is difficult to decide on the proper bases of comparison.
2. The comparison rendered difficult because of difference in situation of two companies or of one-company for different years.
3. The price level change make the interpretation of ratios invalid
4. The difference in the definition of items in the balance sheet and Profit & Loss statement make the interpretation of ratios difficult.
5. The ratios calculated at a point of time are less informative and defective as they suffer from sort term changes.
6. The ratios are generally calculated from the past financial statement and thus are no indicators of future.
CURRENT RATIO : The relationship of current assets to current liabilities is known as

current ratio. It is also known as bankers ratio or working capital ratio.
1. CURRENT RATIO It is relationship between firms current assets and current liability.
Current assets Current ratio = __________________________
Current liability
TABLE 1
STATEMENT SHOWING CURRENT RATIO Rs in lakhs

YEAR CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 1.58 1.46 1.38 1.30 1.32 1032002 1442000 2002230 2833290 3244172 2005 -2006 1633078 2006-2007 2106400 2007-2008 2770400 2008-09 3690107 2009-10 4293481
SOURCE: SECONDARY DATA FROM SHREE CEMENT ANNUAL REPORTS
INTERPRETATION
The current ratio is a test of the short term solvency of the business enterprise since this ratio assumes current assets could be converted into cash to meet current liabilities.
It is often accepted that current assets should be 2times the current liabilities.
Current ratio during the year 2005-2006 was 1.58 and its come down in 1.46 at 2006-2007 and its again decreased 20072008 and 2008-09 and its slightly increased in 1.32 at 2009-10. The standard norm for this ratio is 2:1 required.
SHREE CEMENT should maintain sufficient amount of current assets in order to maintain the standard form of current ratio.
CHART 1 CURRENT RATIO
current ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2005-06 2006-07 2007-08 2008-09 2009-10 YEARS
QUICK RATIO: It establishes the relationship of a companys current assets that can be
quickly converted into cash and its current liabilities.
1. QUICK RATIO It is relationship between liquid assets and current liabilities. Liquid assets Quick ratio = _________________________
PERCENTAGE
Liquid Liabilities
TABLE 2 STATEMENT SHOWING QUICK RATIO Rs in lakhs

YEAR LIQUID ASSETS LIQUID LIABILITIES LIQUID RATIO 1.22 1.17 1.10 1.03 1.04 1032002 1442000 2002230 2833290 3244172 2005 -2006 1258640 2006-2007 1684600 2007-2008 2216978 2008-09 2906405 2009-10 3369935
INTERPRETATION
It is in fact the measure of the Instant debt paying ability of the business enterprise.
The quick ratio in the year 2005-2006 was 1.22 and its decreased 0.04% at 2006 and 2007 (1.17) and in 2007-2008 get decreased 0.06% (1.10) and 2008-2009 get decreased 0.063% (1.03) and its get increase in slightly on 2009-2010 at 0.001%(1.04). The standard norm for this ratio is 1:1, means for every 1 rupee of current liability, company must have 1 rupee of quick assets.
CHART 2 LIQUID RATIO
1.25 1.2 1.15 1.1 1.05 1 0.95 0.9 2005- 2006- 2007- 2008- 200906 07 08 09 10
YEARS
PERCENTAGE
Liqui
CASH MANAGEMENT
Introduction:
Cash management is one of the key areas of working capital management. Cash is the liquid current asset. The main duty of the finance manager is to provide adequate cash to all segments of the organization. The important reason for maintaining cash balances is the transaction motive. A firm enters into variety of transactions to accomplish its objectives which have to be paid for in the form of cash.
Meaning of cash:
The term cash with reference to cash management used in two senses. In a narrower sense it includes coins, currency notes, cheques, bank drafts held by a firm. n a broader sense it also includes near-cash assets such as marketable securities and time deposits with banks.
Objectives of cash management:
There are two basic objectives of cash management. They are-
To meet the cash disbursement needs as per the payment schedule. To minimize the amount locked up as cash balances.
Basic problems in Cash Management:
Cash management involves the following four basic problems. Controlling level of cash Controlling inflows of cash Controlling outflows of cash and Optimum investment of surplus cash. Determining safety level for cash:
The finance manager has to take into account the minimum cash balance that the firm must keep to avoid risk or cost of running out of funds. Such minimum level may be termed as safety level of cash. The finance manager determines the safety level of cash separately both for normal periods and peak periods. Under both cases he decides about two basic factors. They are-
Desired days of cash:

It means the number of days for which cash balance should be sufficient to cover payments.
Average daily cash flows:

This means average amount of disbursements which will have to be made daily.
Criteria for investment of surplus cash:

In most of the companies there are usually no formal written instructions for investing the surplus cash. It is left to the discretion and judgment of the finance manager. While exercising such judgment, he usually takes into consideration the following factors-
Security:
This can be ensured by investing money in securities whose price remains more or less stable.
Liquidity:
This can be ensured by investing money in short term securities including short term fixed deposits with banks.
Yield:
Most corporate managers give less emphasis to yield as compared to security and liquidity of investment. So they prefer short term government securities for investing surplus cash.
Maturity:
It will be advisable to select securities according to their maturities so the finance manager can maximize the yield as well as maintain the liquidity of investments.
Cash Management in SHREE CEMENT :

The cash management is carried out in seaways by CTM (Corporate Treasury Management). CTM is a commonly followed procedure in most of the companies.
Now we see the cash ratio / quick ratio in Shree Cement 1. CASH RATIO
It is relationship between cash and current liabilities. Cash Cash ratio = _______________________ Current liabilities
STATEMENT SHOWING CASH RATIO TABLE 3 Rs in lakhs

YEAR CASH CURRENT LIABILITIES CASH RATIO 0.40 0.40 0.42 0.36 0.30 2005 -2006 413398 1032002 2006-2007 580900 1442000 2007-2008 838600 2002230 2008-2009 1031467 2833290 2009-2010 979008 3244172
INTERPRETATION
The Cash ratio of SHREE CEMENT in the 2005-2010 was fluctuation in 2009-2010 it was 0.30 times and in 2005-2006 it was 0.40 times and 2007-2008 it was reduced to 0.42. The standard norms of absolute quick ratio are 0.5:1. From the above table the firms not maintain the sufficient level of quick assets because of the day-to-day expenses .It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities, Company must have 1 rupee of cash and bank balance and marketable securities.
CHART- 3
CASH RATIO
0.6 PERCENTAGE 0.4 0.2 2005 - 2006 - 2007 2008 - 2009 2006 2007 -2008 2009 2010 YEARS CASH 0
CASH
RECEIVABLES MANAGEMENT
Introduction:
Receivables constitute a significant portion of the total assets of the business. When a firm seller goods or services on credit, the payments are postponed to future dates and receivables are created. If they sell for cash no receivables created.
Meaning:
Receivable are asset accounts representing amounts owed to the firm as a result of sale of goods or services in the ordinary course of business.
Purpose of receivables:
Accounts receivables are created because of credit sales. The purpose of receivables is directly connected with the objectives of making credit sales. The objectives of credit sales are as follows-
Achieving growth in sales. Increasing profits. Meeting competition.
The main factors that affect the size of the receivables are Level of sales. Credit period.
Cash discount.
Costs of maintaining receivables:

The costs with respect to maintenance of receivables are as follows-
Capital costs:
This is because there is a time lag between the sale of goods to customers and the payment by them. The firm has, therefore to arrange for additional funds to meet its obligations.
Administrative costs:
Firm incur this cost for manufacturing accounts receivables in the form of salaries to the staff kept for maintaining accounting records relating to customers.
Collection costs:
The firm has to incur costs for collecting the payments from its credit customers.
Defaulting costs:
The firm may not able to recover the over dues because of the inability of customers. Such debts treated as bad debts.
Receivables management:
Receivables are direct result of credit sale. The main objective of receivables management is to promote sales and profits until that point is reached where the ROI in further funding of receivables is less than the cost of funds raised to finance that additional credit (i.e.; cost of capital). Increase in receivables also increases chances of bad debts. Thus, creation of receivables is beneficial as well as dangerous. Finally management of accounts receivable
means as the process of making decisions relating to investment of funds in this asset which result in maximizing the overall return on the investment of the firm.
Receivables management and Ratio Analysis:
Ratio Analysis is one of the important techniques that can be used to check the efficiency with which receivables management is being managed by a firm. The most important ratios for receivables management are as follows-
DEBTORS TURNOVER RATIO: Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a firm. The liquidity of firms receivables can be examined in two ways they are DTR and Average Collection Period. It indicates the number time debtors turned over each year. Generally the higher value of debtors turnover shows high efficiency to manage the credit management.
Total sales Debtors turnover ratio = ______________________________ Debtors
TABLE 4
STATEMENT SHOWING DEBTORS TURNOVER RATIO Rs in lakhs

YEAR TOTAL SALES DEBTORS DEBTOR TURNOVER RATIO 1.87 1.78 1.61 1.64 1.59 2005 -2006 1337403 716806 2006-2007 1723753 969582 2007-2008 1930464 1197487 2008-2009 2621233 1597550 2009-2010 3286144 2068875
INTERPRETATION
Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a firm. The liquidity of firms receivables can be examined in two ways they are DTR and Average Collection Period. .The higher the ratio, the better it is, since it would indicate that debts are being collected promptly. In the year 2009 - 2010 the debt is 1.59 comparing to the previous year came downwards.
CHART- 4
DEBTOR TURNOVER RATIO
2
PERCENTAGE
1.5 1 2005 2006 2007 2008

YEARS
2009 2010
DEBT COLLECTION PERIOD

Debtors collection period is nothing but the period required to collect the money from the customers after the credit sales. A speed collection reduces the length of operating cycle and vice versa. The more quickly the customers pay, the less risk from bad debts, the lower the expenses of collection and more liquid the nature of of this asset. It indicates the speed with which debts are collected.
DEBTORS
Days/months in a year Debt collection period = _______________________________ Debtors turnover ratio TABLE 5 Rs in lakhs
YEAR DAYS DEBT TURNOVER RATIO DEBT COLLECTION PERIOD
2005 -2006 365
2006-2007 365
2007-2008 365
2008-2009 365
2009-2010 365
1.87
1.78
1.61
1.64
1.59
195
205
227
223
230
INTERPRETATION
The debt collection period of SHREE CEMENT in the 2005-2006 was 195 days and in goes to 2009 - 2010 it was increased in (0.18%) 230 days. Standard Debt Collection
Period of a firm is less than 90 days. But, above tables consists of increased of DCP in rapidly.
CHART 5 DEBT COLLECTION PERIOD
2005 2006
2007 2008
YEARS
2009 2010
CREDITORS TURNOVER RATIO
The ratio shows on an average the number of times creditors turned over during the year.
DTCP
240 220 No. of Days 200 180 160
DTCP
Credit purchase Creditors turnover ratio = ________________________ Average creditors
TABLE 6 Rs in lakhs
YEAR CREDIT PURCHASE SUPPLIERS CREDITORS CREDITORS TURNOVER RATIO /
2005 -2006
2006-2007
2007-2008
2008-2009
2009-2010
709940
1018186
1182087
1762005
2067232
280409
353895
442400
585285
757980
2.53
2.88
2.67
3.01
2.73
INTERPRETATION
The Creditors turnover ratio of SHREE CEMENT was fluctuating during the year 2005 2010. It was upward in (2008 2009) was 3.01 times and it was downward in 2009 2010 is 2.73 times. Greater the CTR the more time firm has to pay to their creditors.
CHART -6 CREDITORS TURNOVER RATIO
3.2 3 2.8 PERCENTAGE 2.6 2.4 2.2 2005- 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010
CTR
YEARS
TABLE 7
CASH TO CURRENT ASSETS RATIO
Rs in lakhs
YEAR CASH CURRENT ASSETS CAS CURRENT ASSETS RATIO TO 0.25 0.27 0.30 0.28 0.23 2005 -2006 413398 1633078 2006-2007 580900 2106400 2007-2008 838600 2770400 2008-2009 1031467 3690107 2009-2010 979008 4293481
INTERPRETATION
The Cash to current assets turnover ratio of SHREE CEMENT was fluctuating during the year 2005 2010. It was upward in (2005 2008) was 0.25 times to 0.30 times and it was downward in 2008 2010 is 0.23 times.
CHART -7 CASH TO CURRENT ASSETS RATIO
CASH TO CURRENT ASSETS RATIO
0.3 0.2 0.1

C.C.A.R
PERCENTAGE
0 200506 200607 200708 200809 20092010
YEARS
TABLE 8 CASH TURNOVER RATIO Rs in lakhs

YEAR SALES 2005 -2006 1337403 2006-2007 1723753 2007-2008 1930464 2008-2009 2621233 2009-2010 3286144
CASH
413398
580891
838602
1031467
979008
CASH TURNOVER RATIO 3.24 2.97 2.31 2.54 3.36
INTERPRETATION The cash turnover ratio in the years 2005-2010 it was on fluctuating ratios, in the year 20092010 it was increased (0.037%) 3.36.
CHART -8 CASH TURNOVER RATIO
CASH TURNOVER RATIO

4 3 PERCENTAGE 2 1 0 2005-06 2006-07 2007-08 2008-09 2009-10 YEARS
C.T.R
INVENTORY MANAGEMENT
Introduction:
Inventories are stock of the product a company is manufacturing for sale and components. That makeup the products. The various forms in which inventories exist in a manufacturing company are: Raw-materials, work-in-process, finished goods.
Raw-Materials: - Are those basic inputs that are converted into finished products through the manufacturing process. Raw-materials inventories are those units, which have been purchased and stored for future production.
Work-In-Process inventories are semi-manufactured products. The represent products that need more work before they become finished products for sale.
Finished Goods inventories are those completely manufactured products, which are ready for sale. Stocks of raw-materials and work-in-process facilitate production which stock of finished goods is required for smooth marketing operations. These inventories serve as a link between production and consumption of goods.
Stores and spares are also maintained by some firms. This includes office and plant cleaning materials like soaps, brooms, oil, fuel, light, bulbs etc. These materials do not directly enter in production. But are necessary for production process.
Need to holding inventory
The question of managing inventories arises only when the company holds inventories. Maintaining inventories involves tying up of the company's funds and incurrence of storage and handling cost. It is expensive to maintain inventories, why does company hold inventories? There are three general motives for holding inventories.
1. Transaction Motive: - Emphasizes the need to maintain inventories to facilitate

smooth production and sales operations.
2. Precautionary motive: - Necessitates holding of inventories to guard against the risk

of unpredictable changes in demand and supply forces and other factors.
3. Speculative motive: - Influences the decision to increase or reduce inventory levels to

take advantages of price influences. A company should maintain adequate stock of materials for a continuous supply to the factory for the uninterrupted production. It is not possible for a company to procure raw materials whenever it is needed. A time lag exists between demand for materials and its supply. Also there exists uncertainty in procuring raw materials in time on many occasions. The procurement of materials may be delayed because of such factors as strike, transport disruption or short supply. Therefore, the firm should maintain sufficient stock of raw materials at a given time to stream line production.
Objective of Inventory Management

In the context of inventory management the firm is faced with the problem of meeting two conflicting needs ;
To maintain a large size of inventory for sufficient and smooth production and sales operations. To maintain a minimum investment in inventories to maximize profitability.
Both excessive and inadequate inventories are not desirable. These are two dangerous points within which the firm should operate. The objective of inventory management should be to determine and maintain optimum level of inventory investment. The optimum level of inventory will lie between the two danger points of excessive and inadequate inventories.
The firm should always avoid a situation of over investment or under investment in inventories. The major dangerous of over investment are,
Unnecessary tie-up of the firms funds losses of profit Excessive carrying cost Risk of quality
The aim of inventory management thus should be to avoid excessive and inadequate levels of inventories and to maintain sufficient inventory for smooth production and sales operations. Efforts should be made to place an order at the right time with the right source to acquire the right quantity at the right price and quality. An effective inventory management should
Ensure a continuous supply of raw materials to facilitate uninterrupted production.
Maintain sufficient stock of raw materials in periods of short supply and anticipate price changes. Maintain sufficient finished goods inventory for smooth sales operations and efficient customer service. Minimize the carrying cost and time. Control investment in inventories and keep it at an optimum level.
Inventory management techniques :

In managing inventories the firm objective should be in consonance with the shareholders' wealth maximization principle. To achieve this firm should determine the optimum level of inventory. Efficiently controlled inventories make the firm flexible. Inefficient inventory control results in unbalanced inventory and inflexibility-the firm ma sometimes run out of stock and sometimes may pileup unnecessary stocks. This increases level of investment and makes the firm unprofitable.
To manage inventories efficiency, answers should be sought to the following two questions.
1) How much should be ordered?
2) When should it be ordered?
The first question how much to order, relates to the problem of determining economic order quantity (EOQ), and is answered with an analysis of costs of manufacturing certain level of inventories. The second question when to order arise because of determining the reorder point.
When the order is placed for raw material certain raw material is in transit, such raw material is called as raw material in transit.
Example Raw material on overseas.
The raw material can be transfer from unit to another unit or from one department to another is called transfer-in transit. It is nothing but to the transfer of raw material among the inter firm units of SHREE CEMENT . The raw material, which is production process, is called work-in process. The work in process becomes finished goods inventory. The finished should not be kept for a longer time. They should be sold off to clear off the entire inventory. However, finished goods inventory is not there for SHREE CEMENT , since production is mainly done on customer order and specifications. The raw material is purchased and the whole process is repeated again which we call it as inventory cycle.
Inventory turnover Ratio:Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products. It is calculated by dividing the cost of goods sold by the average inventory. The average inventory is the average of open and closing balance of inventory.
TABLE 9
INVENTORY TURNOVER RATIO

It indicates the inventories turning into receivables through sales. Sales Inventory turnover ratio =__________________________ Inventory
Rs in lakhs
YEAR 2005 -2006 2006-2007 2007-2008 2008-2009 2009-2010
SALES
1337403
1723753
1930464
2621233
3286144
INVENTORY
374437
421767
573640
783702
923546
INVENTORYT URNOVER RATIO 3.57 4.09 3.37 3.34 3.56
SOURCE: SECONDARY DATA FROM SHREE CEMENT ANNUAL REPORT
INTERPRETATION
This ratio indicates the liquidity of the inventory, that is, how quickly, on the average, the inventory was sold during the year and consequently the significance of the inventory for the debt paying purposes.
A high stock turnover ratio is generally considered desirable because it is indicative of efficient performance since an improvement in the ratio shows hat volume of sales has been either maintained or increased without additional investment in stock.
Inventory turnover of SHREE CEMENT for 2006 2007 was 4.09. In 2007-2008 the inventory turnover ratio was high up to 3.37 and it was high in 2009-20010 at 3.56.
CHART 9
INVENTORY TURNOVER RATIO
4
3 2 1 0 ITR 2009-10 2008-09 2007-08 2006-07 2005-06
TABLE 10
INVENTORY HOLDING PERIOD

Rs in lakhs
YEAR DAYS MONTH YEAR INVENTORY TURNOVER RATIO INVENTORYH OLDING PERIOD /
2005 -2006
2006-2007
2007-2008
2008-2009
2009-2010
IN 365
365
365
365
365
3.57
4.09
3.37
3.34
3.56
102
89
108
109
103
INTERPRETATION
Inventory holding period of Shree Cement is varying on every year. In the year of 2005-06 to 200708 its increased in 0.06% (102 to 108) and 2009-10 its decreased by 0.047 %.
CHART 9
INVENTORY HOLDING PERIOD
600 500
2009-10
400 300 200 100 0 IHP
2008-09
2007-08
2006-07 2005-06
TABLE-11
WORKING CAPITAL TURNOVER RATIO
Rs in lakhs
YEAR SALES NET WORKING CAPITAL WORKING CAPITAL TURNOVER RATIO 2.23 2.59 2.45 3.06 3.13 601076 664286 788388 856817 1049309 2005 -2006 1337403 2006-2007 1723753 2007-2008 1930464 2008-2009 2621233 2009-2010 3286144
INTERPRETATION
Working capital turnover ratio for the year 2009 - 2010 was 3.13 times. It is higher when comparing the past four years. The working capital management has to improve by more concentration on collection strategies.
CHART-11 WORKING CAPITAL TURNOVER RATIO
3.5 3 2.5 PERCENTAGE 2 1.5
1 0.5
0 2005 - 2006 - 2007 - 2008 - 2009 06 07 08 09 10 YEARS
WCTR
TABLE 12
WORKING CAPITAL FOR TREND ANALYSIS
Rs in lakhs
YEAR CURRENT ASSETS CURRENT LIABILITIES WORKING CAPITAL
2005 -2006
2006-2007
2007-2008
2008-2009
2009-2010
1633078
2106297
2770472
3690107
4293481
1032002
1442011
1982084
2833290
3244172
601076
664286
788388
856817
1049309
INTERPRETATION
In this current asset is increasing during the period of study. Current liability is also increased during the period of study. And working capital is also increasing..
CHART 12 WORKING CAPITAL FOR TREND ANALYSIS

VALUES
5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 2005- 2006- 2007- 2008- 200906 07 08 09 10
YEARS
CA WC
CL
TABLE 13 ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL CURRENT ASSETS
Rs in lakhs
Particulars inventories Sundry debtors C& B balance Other assets Loans and advances Total
2005 2006
- 20062007
20072008
20082009
20092010
22.93 43.90 25.30 0.52 7.35 100
20.03 46.03 27.58
20.71 43.22 30.27
21.24 43.29 27.95 0.95 6.57 100
21.52 48.18 22.80 0.95 6.55 100
0.95 1.52 5.41 100 4.28 100
SOURCE: SECONDARY DATA
INTERPRETATION
In this period 2005 2010 Sundry debtors and other current assets was only maintained in stable for the period of study. Shree Cement must be extra care about cash and bank balance in future. In the period of 2007-2010 inventory ratios are increased. All about Shree Cement should be very care and must maintain in adequate current assets in future.
CHART 13 ANALYSIS OF VARIOUS COMPONENTS IN WORKING CAPITAL
GRAPH 13 .1 INVENTORY
1.2 1 0.8 PERCENTAGE 0.6 0.4 0.2 0 200506 200607 200708 200809 200910
INVENTORIES
YEARS
GRAPH 13 .2 SUNDRY DEBTORS
49 48 47 46 45 PERCENTAGE 44 43 42 41 40 2005-06 2006-07 2007-08 YEARS 2008-09 2009-10
GRAPH 13 .3 CASH AND BANK BALANCES

1.2 1 0.8
PERCENTAGE 0.6
0.4 0.2 0 200506 200607 200708 YEARS 200809 200910
INVENTORIES
GRAPH 13 .4 OTHER CURRENT ASSETS
2 PERCENTAGE 1 0 2005-06 2006-07 2007-08 YEARS 2008-09 2009-10 O.C.A
GRAPH 13 .5 LOANS AND ADVANCES
8 6 PERCENTAGE 4 2 0 2005-06 2006-07 2007-08 YEARS 2008-09 2009-10 LOAN & ADV.
GROSS PROFIT RATIO :

Gross profit margin shows the company can return income at the gross level. This ratio helps to control inventory usage and production performance and fixing unit price of goods.
TABLE 14
ANALYSIS OF GROSS PROFIT RATIO Rs in lakhs Particulars Gross Profit /

2005-2006 2006-2007 2007 - 2008 2008-2009 2009-2010
Profit before tax Total Sales Gross Profit ratio
256435 1337403 0.192
373607 1723753 0.217
443039 1930464 0.230
484885
659065
2621233 3286144 0.185 0.201
GRAPH 14 - GROSS PROFIT RATIOS
2009-10 20%
2005-06 19%
2008-09 18%
2006-07 21%
2007-08 22%
SOURCE: SECONDARY DATA FROM SHREE CEMENT REPORTS
ANNUAL
INTERPRETATION
In the analysis of Gross profit ratio Shree Cement must control production expenses in future. Comparison of 2007-08 to 2009-10 margin profit ratio will goes down in 2 %. Firm will be control in production cost in next coming years, such as raw material, freight and transport expenses. Otherwise, Shree Cement must increase in sales unit price.
NET PROFIT RATIO:

As every business is to earn profit, this ratio is very important because it measures the profitability of sales. A business may yield high gross income but low net income because of increasing operating and non-operating expenses. This situation can easily be detected by calculating this ratio.
The profits used for this purpose may be profits after/before tax. To obtain this ratio, the figure of net profits after tax is divided by the figure of net profits after tax is divided by the figure of sales the ratio is also known as sales margin as we can ascertain with its help the margin which the sales leave later deducting all the expenses. The unit of expression is percentage, as is the case with profitability ratios.
TABLE 15
ANALYSIS OF NET PROFIT RATIO
Rs in lakhs Particulars Net Profit Profit after tax Net Sales Net Profit ratio /
2005-2006 2006-2007 2007 - 2008 2008-2009 2009-2010
167916 1337403 0.126
241470 1723753 0.140
285934 1930464 0.148
313821
431064
2621233 3286144 0.120 0.131
GRAPH 15 NET PROFIT RATIOS

0.16 0.14 0.12 % 0.1 0.08
0.06
0.04 0.02 0 2005-06 2006-07
YEARS
2007-08
2008-09
2009-10
INTERPRETATION
In this period of research of study Net profit of the Shree Cement company goes downwards from 2008 2010 comparing previous year achievements.
Gross Profit to Net Profit Ratio:

Analysis of ratios G.P. to N.P is very important in every firm. It helps to find out the cost of expense increased in production or administrative level and other hand it helps to control in overall financial expenses.
TABLE 16 ANALYSIS OF G.P. TO N.P RATIO Rs in lakhs

2005-2006 2006-2007 2007 - 2008 2008-2009 2009-2010
Particulars
Gross Profit 256435 373607 443039 484885 659065
Net Profit 167916 241470 285934 313821 431064
G.P. - N.P. RATIO 1.53 1.55 1.55 1.55 1.53
GRAPH 16 G.P. TO N.P. RATIO
700000 600000 500000 400000 300000 200000 100000 0 2005-06
G.P. N.P.
2006-07
2007-08
2008-09
YEARS
INTERPRETATION
In this period of research of study Gross Profit and Net Profit are equal. Shree Cement control his marginal and administrative cost in his control. There is no variation and its goes to stable.
2009-10
G.P. N.P. %
TREND ANALYSIS
Particulars
2006
2007
2008
2009
2010
Current Assets : Inventories / Stock 100 112.64 153.20 209.30 246.65
Debtors 100 135.26 167.06 222.87 288.62
Cash and Bank Balances 100 140.52 202.86 249.51 236.82
Other Current Assets 100 236.33 498.33 414.45 481.48
Loans & Advances 100 95.08 98.87 201.99 234.50
Current Liabilities : Liabilities 100 135.08 188.20 265.19 318.17
Provisions 100 166.79 214.54 329.01 292.14
INTERPRETATION
Above Table Inventory and debtors goes to growth level in all the years. Loans and Advances and Other Current assets show high level of improvement in all the years. Cash and Bank balances are fluctuating ratio in the year 2008 2010. Current Liabilities are increasing in all the years and Provisions are fluctuating in the year 2010 compared to previous years.
FINDINGS
1) Standard current ratio is 2:1 and for industry it is 1.33:1. SHREE CEMENT
ratio
satisfactory.
2) Acid test ratio is more than one but it does not mean that company has excessive liquidity & firm quick ratio is declining from 2005-06 to 2009-10
3) Debtors of the company were high; they were increasing year by year, so more funds were blocked in debtors. But now recovery is becoming faster.
4) Debtors turnover ratio is fluctuating from 2005-06 to 2009-10, which means inventory is not utilized in better way so it is not a good sign for the company.
5) Inventory turnover ratio is improving from 2001-02 to 2005-06.increase in ratio is beneficial for the company because as ratio increases the number of days of collection for debtors decreases.
6) Working capital turnover ratio is continuously increasing that shows increasing needs of working capital.
7) Production capacity is not utilized to the full extent
The study is basically done to have a deep knowledge about WORKING CAPITAL of the SHREE CEMENT industries limited. SHREE CEMENT , Industries limited is having an
appropriate working capital management of the organizations. NET PROFIT growth rate is 13.10% in 2009-10, it is showing a nominal increase in net profit as compared to last year. The GROSS PROFIT of SHREE CEMENT more or less is maintaining same margin of profit. The firm DCP is rising every year which is major concern for firm as larger the DCP greater the chances of bad debts. DTR is also decreasing in 2005-06 it was 1.87times now it has drop down to 1.59times.
Current ratio is also below the standard norm. in the financial year 2005-06 it was 1.58 now it has decreased upto 1.32.The firm should maintain the adequate level of current assets in order to discharge its current liabilities.
As far as cash ratio is concerned the firms not maintain the sufficient level of quick assets because of the day-to-day expenses . It is fluctuating between the standard norms for this ratio is 1:2 means for every 2 rupees of current Liabilities.
Company must have 1 rupee of cash and bank balance and marketable securities.
SUGGESTIONS
1)It can be said that overall financial position of the company is normal but it is required to be improved from the point of view of profitability.
2) Net operating cycle is increasing that means there is a need to make Improvements in receivables/debtors management.
3) Company should stretch the credit period given by the suppliers.
4) Company should not rely on Long-term debts.
5) Company should try to increase Volume based sales so as to stand in the competition.
Since the SHREE CEMENT is a profit making company and the interests of the investors are also safe so for making more profit and for increasing the net profit as well as gross profit the organization should curtail its operating, administrative & non productive expense. Company is having good marketability, profitability and liquidity so the company can raise its fund. Company should not forget its Quality Policy i.e. we at SHREE CEMENT , should aim to achieve and sustain excellence in all our activities. We are committed to total customer satisfaction by providing producers and services which meet or exceed the customer expectation.
Modernization of the manufacturing facilities, stress on technological innovation and training of employees at all levels shall be continuous process in SHREE CEMENT .
LIMITATIONS
The study does not consider the market fluctuations in all its calculations. Analysis is very much dependent on the companies internal bulletin.
BIBLIOGRAPHY
Reports
Annual Report (2005-2010) Bonus issue bulletin 2005
Websites
www.SHREE CEMENT .com as on 20th July 2011 Books Basic corporate accounting CA Dr. Girish Ahuja, Page No. 110 Financial Management R.P Rustagi, Page No. 56

SCL Jaipur

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A Summer Training Report ON

Working Capital Management

Submitted By: PRASHANT VYAS M.B.A. 2nd year

Submitted To: Prof. Sonal Chouhan

S.no. 1. 2. 2.1 2.2 2.3 2.4 3. 4. 5. 6. 7.

Cement Industry : Structure

Production around 87.8 mn tonnes Major cement plants

Mini cement plants

Production around : 6.2 mn tonnes Excise : Rs. 200/ tonne

All India reach through multiple plants

Export to Bangladesh, Nepal, Sri Lanka, UAE and

Mauritius Strong marketing network, tie-ups with customers,

Presence of these plants limited to the state

Infrastructural facilities not the best

Cement Industry in India

Issues concerning Cement Industry

Coal availability and quality is also affecting the production.

Current Status of Cement Industries in India

Global Cement Companies in India

Future of Cement Industry

Indian Cement Industry on Growth Trajectory.

Introduction of the Organization

Company History - Shree Cements

1979 - The Company was incorporated on 25th October, at Jaipur.

SHREE CEMENT LIMITED

Community And Environment

Secondary Delhi, Punjab, JK, Haryana, Western U.P. and Uttaranchal

Gujarat, M.P. and Central U.P.

CREATING LEADERS AT EVERY LEVEL

RECOGNITION AND REWARD SCHEME

RAS CEMENT PROJECT

SHREE CEMENT OTHER POLICIES We Perform Differently

TITLE OF THE STUDY

: Working Capital Management in Shree

OBJECTIVE OF THE STUDY

MEANING OF WORKING CAPITAL

Concept of working capital

Permanent working capital or fixed working capital: refer to the minimum

Variable working capital or fluctuating working capital: refer to the amount of

NEED FOR WORKING CAPITAL

NATURE OF WORKING CAPITAL

SOURCE OF WORKING CAPITAL

Long term Short term

Sources of long term working capital

Sources of short-term working capital

Loans from director Security of employees

WORKING CAPITAL CYCLE:-

INTER-DEPENDENCE AMOUNG COMPONENTS OF WORKING CAPITAL OPERATING CYCLE :

WORKING CAPITAL MANAGEMENT Introduction

BASIC OBJECTIVE OF WORKING CAPITAL MANAGEMENT :

Advantages of working capital:

Disadvantages of working capital:

OBJECTIVES OF THE PROJECT

CRITICAL SUCCESS FACTORS:

CHAPTER-2 RESEARCH DESIGN

CHAPTER -3 DATA ANALYSIS, PRESENTATION AND

DATA ANALYSIS AND INTERPRETATION

Meaning and Importance:

1. Short term and long term planning

2. Measurement and evaluation of financial performance

3. Stud of financial trends

4. Decision making for investment and operations