SUMMER TRAINING REPORT ON

ANALYSIS OF WORKING CAPITAL

Undertaken at

SHRIRAM PISTONS & RINGS LTD

Submitted in partial fulfillment of the requirements

for the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

to
Guru Gobind Singh Indraprastha University, Delhi

Under the Guidance of Submitted by

Prof. Neha Gupta Name : Khushi Chadha
Faculty Guide BBA-V Sem, 1st Shift
Enrollment No.:02980401715

Session: 2015 -18

 ACKNOWLEDGEMENT

I feel immense pleasure and privilege to express my sincere thanks to my project guide Navneet Aggarwal
(Finance Manager) for his incessant invaluable and indispensable guidance throughout. At the same time,
I cannot forget the courtesy and timely help provided to me by the company itself.

I also express my sincere depth of gratitude to the Finance Department staff members in providing me with
all the necessary information in carrying out my project. I also extend my appreciation towards my family
who encouraged me and was by my side whenever I needed them.
 INTRODUCTION

Working Capital:
Working capital in simple terms means the amount of funds that a company requires for financing its day -
to- day operations. Working Capital includes the current assets and current liabilities areas of the balance
sheet.

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. Working Capital
Management is the process of planning and controlling the level and mix of current assets of the firm as
well as financing these assets. Analysis of working capital is of major importance to internal and external
analysis because it is closely related to the current day -to- day operations.

Concept of Working Capital:-

There are two concepts of working capitals: -

1. Gross Working capital: - It means the current assets which represent the proportion of investment that
circulates from one form to another in the ordinary conduct of business.

2. Net Working Capital: - It is the difference between current assets and current liabilities or alternatively
the portion of current assets financed with long-term funds.

Constituents of Current Assets:-

1. Cash in hand and cash at bank.

2. Bill receivables.
3. Sundry debtors.
4. Short term loans and advances.
5. Inventories.
6. Prepaid Expenses.
7. Accrued Income.
8. Marketable Securities.
Constituents of Current Liabilities:-

1. Accrued and outstanding expenses.

2. Short term loans, advances and deposits.

3. Dividends payable.

4. Bank overdraft.

5. Provision for taxation.

6. Sundry Creditors.

7. Bills payable.
The gross concept is sometimes preferred to the concept of working capital for the following reasons:

1. It enables the enterprise to correct amount of working capital at correct time.

2. Every management is more interested in total current assets with which it has to operate then the source
from where it is made available.
3. It take into consideration of the fact every increase in the funds of the enterprise would increase its
working capital. The net working capital concept, However, is also important for following reasons:
Its a qualitative concept, 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.
It is an indicator of the financial soundness of enterprise.
It suggests the need of financing a part of working capital requirement out of the permanent sources of
funds.
CLASSIFICATION OF WORKING CAPITAL

Working capital may be classified in two ways :

On the basis of concept.

 On the basis of time.

On the basis of concept working capital can be classified as :

Gross working capital

Net working capital.

On the basis of time, working capital may be classified as:

Permanent or Fixed working capital.

Temporary or variable working capital.

PERMANENT OR FIXED WORKING CAPITAL

Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of
fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum
level of raw material, work- in-process, finished goods and cash balance. This minimum level of current
assets is called permanent or fixed working capital as this part of working is permanently blocked in current
assets. As the business grow the requirements of working capital also increases due to increase in current
assets.

TEMPORARY OR VARIABLE WORKING CAPITAL

Temporary or variable working capital is the amount of working capital which is necessary to meet the
seasonal demands and some special necessities. Variable working capital can further be categorized as
seasonal working capital and special working capital. The capital necessary to meet the seasonal need of
the enterprise is called seasonal working capital. Special working capital is that part of working
capital which is required to meet special demands.

Temporary working capital differs from permanent working capital in the sense that is required for short
periods and cannot be permanently employed profitably in the business.

IMPORTANCE OF ADEQUATE WORKING CAPIATAL

SOLVENCEY OF THE BUSINESS: -

Adequate working capital helps in maintaining the solvency of the business by providing uninterrupted
of production.

GOODWILL: -
Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain
the goodwill.

EASY LOANS: -
Adequate working capital leads to high solvency and credit standing can arrange loans from banks and
other on easy and favorable terms.

CASH DISCOUNT:-
Adequate working capital also enables a concern to avail cash discounts on the purchases and hence
reduces cost.

REGULAR SUPPLY OF RAW MATERIAL: -

Sufficient working capital ensures regular supply of raw material and continuous production.

REGULAR PAYMENT OF SALARIES, WAGES AND OTHER DAY TO DAY

COMMITMENTS: -
It leads to the satisfaction of the employees and raises the morale of its employees, increases their
efficiency, reduces wastage and costs and enhances production and profits.

EXPLOITATION OF FAVORABLE MARKET CONDITIONS: -

If a firm is having adequate working capital then it can exploit the favorable market conditions such as
purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher
prices.
 ABILITY TO FACE CRISES: -
A concern can face the situation during the depression.

QUICK AND REGULAR RETURN ON INVESTMENTS: -

Sufficient working capital enables a concern to pay quick and regular of dividends to its investors and
gains confidence of the investors and can raise more funds in future.

HIGH MORALE: -
Adequate working capital brings an environment of securities, confidence, high morale which results in
overall efficiency in a business.

DISADVANTAGES OF EXCESSIVE WORKING CAPITAL

1. Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn
the required rate of return on its investments.
2. Redundant working capital leads to unnecessary purchasing and accumulation of inventories
3. Excessive working capital implies excessive debtors and defective credit policy which causes higher
incidence of bad debts.
4. It may reduce the overall efficiency of the business.
5. If a firm is having excessive working capital then the relations with banks and other financial institution
may not be maintained
6. Due to lower rate of return n investments, the values of shares may also fall.
7. The redundant working capital gives rise to speculative transactions.

WORKING CAPITAL IS NEEDED FOR THE FOLLOWING PURPOSES: -

For the purpose of raw material, components and spares.
To pay wages and salaries.
To incur day-to-day expenses and overload costs such as office expenses.
To meet the selling costs as packing, advertising, etc.
To provide credit facilities to the customer.
To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock.
FACTORS DETERMINING THE
WORKING CAPITAL REQUIREMENTS

1. NATURE OF BUSINESS: -
The requirements of working is very
limited in public utility undertakings
such as electricity, water supply and
railways because they offer cash sale
only and supply services not products,
and no funds are tied up in inventories
and receivables. On the other hand the
trading and financial firms requires less
OPERATING CYCLE

investment in fixed assets but have to invest large amt. of working capital along with fixed
investments.

2. SIZE OF THE BUSINESS: - Greater the size of the business, greater is the requirement of working
capital.

3. PRODUCTION POLICY: - If the policy is to keep production steady by accumulating inventories it

will require higher working capital.

4. SEASONALS VARIATIONS: - Generally, during the busy season, a firm requires larger working
capital than in slack season.
5. WORKING CAPITAL CYCLE: - The speed with which the working cycle completes one cycle
determines the requirements of working capital. Longer the cycle larger is the requirement of working
capital.
6. LENGTH OF PRODUCTION CYCLE: - The longer the manufacturing time the raw material and
other supplies have to be carried for a longer in the process with progressive increment of labor and
service costs before the final product is obtained. So working capital is directly proportional to the length
of the manufacturing process.
7. RATE OF STOCK TURNOVER: - There is an inverse co-relationship between the question of working
capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock
turnover will needs lower amt. of working capital as compared to a firm having a low rate of turnover.
8. CREDIT POLICY: - A concern that purchases its requirements on credit and sales its product / services
on cash requires lesser amt. of working capital and vice-versa.

9. BUSINESS CYCLE: - In period of boom, when the business is prosperous, there is need for larger amt.
of working capital due to rise in sales, rise in prices, optimistic expansion of business, etc. On the contrary
in time of depression, the business contracts, sales decline, difficulties are faced in collection from debtor
and the firm may have a large amt. of working capital.

10. RATE OF GROWTH OF BUSINESS: - In faster growing concern, we shall require large amt. of
working capital

11. EARNING CAPACITY AND DIVIDEND POLICY: - Some firms have more earning capacity than
other due to quality of their products, monopoly conditions, etc. Such firms may generate cash profits from
operations and contribute to their working capital. The dividend policy also affects the requirement of
working capital.

12. PRICE LEVEL CHANGES: - Changes in the price level also affect the working capital requirements.
Generally rise in prices leads to increase in working capital

MANAGEMENT OF WORKING CAPITAL

Management of working capital is concerned with the problem that arises in attempting to manage the
current assets, 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 adequate nor excessive as both the situations are bad for any firm. There should be no
shortage of funds and also no working capital should be ideal.

WORKING CAPITAL MANAGEMENT POLICES of a firm has a great on its probability, liquidity
and structural health of the organization. So working capital management is three dimensional in nature as:

1. It concerned with the formulation of policies with regard to profitability, liquidity and risk.
2. It is concerned with the decision about the composition and level of current assets.
3. It is concerned with the decision about the composition and level of current liabilities.
 OBJECTIVE OF STUDY

This project was undertaken to analyze the working capital policies, working capital management of the
company and to reduce down their problems and to find the solutions with respect to the working capital
management of the company.

The objective of the study is to provide the solutions for reducing down the duration of the operating cycle,
to analyze the working capital position of the company and the liquidity position, finding out the problems
that the company is facing in managing the working capital and showing trend of particular ratios in future
and at the same suggesting them to solve their problems. There are Two types of Objectives in this study:-

1. Primary Objective :- Primary Objectives is to do Analysis of Working Capital Management

2. Secondary Objective :- There are few secondary objectives : -

To see whether the company is prepared with enough working capital to face any kind of contingencies.

To identify the financial strength and weakness of the company

To see how the day-to-day operations of the company takes place.

To compare the performance of working capital for a particular year with previous years.

Providing suggestions to solve the problems of the company.

 COMPANY PROFILE

Shriram Piston & Rings Ltd. Develop, manufactures and sells

pistons, pistons ring, pins and engine valves for OEMs. The
company offers diesel and gasoline pistons. They also provides
replacement parts to automotive workshops, repair shops and
service stations. The products are used in automobile vehicles
and gensets.

The company was incorporated in 1972 and is headquartered

in New Delhi, India. Shriram Pistons & Rings Limited is a
subsidiary of SPR International Auto Exports Ltd. Shriram
Pistons & Rings Limited manufactures and sells automotive components in India and internationally. The
company offers pistons, piston pins, piston rings, and engine valves. Its products are used by passenger
vehicle, two/three wheeler, commercial vehicle, tractor, and industrial engine manufacturers.

SPR is recognized by almost all OEMs in India and several OEMs in Europe and Aisa, as a dependable
partner of supply of Euro III ,IV and V Pistons, Pins, Pistons Rings and engine valves.

The company has the capability to design, develop and validate and manufacture finished products for
OEMs in India at its tech centre with 50+ designs and engineering professionals trained by its technology
partners in concept design, FEA, stimulation, ring testing, prototype development, engine testing and
analysis. This is supplemented with continuous technology and application engineering support from the
technology partners including in advanced engineering and manufacturing processes.

The company deploys most modern

manufacturing equipment and processes,
using state-of-the-art technology from four
global leaders. SPR has evolved into a center
of manufacturing excellence, employing,
over 5000 motivated and multi- skilled
employees. The annual turnover is US$ 200
million. The company is the largest
manufacturer and the largest exporter of
pistons and rings from India and the largest supplier of engine valves to OEMs in India. Its products are
marketed under the brand name USHA and SPR , names that are synonymous with quality and reliability.
 What makes SPR strive for the best?

Innovation is at the core of SPRL's business strategy.

Development and manufacture of latest technology products for OEMs in Europe, USA, etc. challenges the
enterprise to hone its manufacturing processes, technology and quality to global standards. This acts as a
catalyst to transform the entire organisation. Not surprisingly, SPR is the largest exporter of Pistons and
Rings from India to discerning customers, including Ford, Honda, Kia, Renault, WABCO and has the
'Trading House' status from Government of India. SPR and USHA are also amongst the best recognized
brand names in the aftermarket abroad.
Management team

Shri A.K. Taneja - Managing Director & CEO

Shri R. Srinivasan - Joint Managing Director & Company Secretary
Shri V.K. Jayaswal - Executive Director
Shri Devendra Mishra - Executive Director
Shri Jenender Anand - Executive Director
Shri Naveen Agarwal - Dy. Executive Director
Shri Arun Shukla- Dy. Executive Director
Shri Vinod Raheja - Dy. Executive Director & CFO
Shri Rajan Nanda - Dy. Executive Director
Shri Sandeep Kalia - Dy. Executive Director

Advisors

Shri Rakesh Anand Advisor

Shri P.S. Ladiwala Advisor

Shri Anil Gadi Advisor

Bankers

UCO bank
CITI bank
Corporation bank
HDFC bank
 State Bank of Hyderabad
HSBC bank
IDBI bank
AXIS bank

Auditors

M/s Delloite Hanskins & Sells, Gurgaon, Haryana

 VISION & MISSION OF THE COMPANY

VISION OF THE COMPANY IS AS FOLLOWS:

1. Shriram Piston aims to become World Class Company that is preferred by World Class Customers

2. Motivated, Dedicated and System Oriented Employees.

3. The company envisions safe and healthy work place.

MISSION OF THE COMPANY

1. Sales & Profit Growth/Leadership

2. Strong Relationship with Collaborators

3. Preferred OE Supplier

4. Employee Development

5. Superior Returns to Stakeholders

6. Care for Environment and Society

MILESTONE

1972

Year of incorporation and sales turnover - Rs 3 million

Technical collaboration with KS KolBenschmidt Gmbh, Germany

1978

Technical collaboration with Riken Corporation , Japan

1989

Technical collaboration Honda foundry Co.Ltd , Japan

1993

Sales turnover of Rs 500 million

Technical collaboration with Fuji Oozx inc, Japan
Commencement of engine valves manufacturing
1994

Received ISO 9001 Certificate from TUV Germany

1995

Start of manufacturing steel rings

1996

Sales turnover of 1000 millions

1999

Received QS9000 certificate from TUV Germany

2001

Received ISO 14001 certificate from DNV, Netherland

Achieved production of 2 million rings per month- December 2000
Sales turnover of Rs-2000 million

2004
Received TPM excellence award from JIPM japan (first in its category to achieve this award)
Sales turnover of Rs 3000 million

2006

Established three new piston marching lines to meet the requirement from global OEMs
(Ford,Renault etc)
Achieved production of 1 million Engine valves September 2005

2007

Received TPM special award from JIPM japan (first in its category to achieve this award)
Sales turnover of Rs 5000 million

2008

Received certification of Q1 from Ford motors

 Recognition of in-house R&D by center of DSIR ( Department Of Scientific & industrial research,
Government of India.
Start of Manufacturing IP rings
Achieved production of 1 million Pistons per month January 2008
Achieved production of 5 million Rings per month February 2008

2009

Started manufacturing of large dia engine valves for railways and off road vehicles.

2010

Sales turnover of Rs 7500 million

SPR becomes the largest manufacturer of Pistons rings in india and started manufacturing CPC rings
Achieved production of 2 million engine valves per month July 2009

2011

Started production at Pathredi plant Rajasthan

2014

SPR inaugurates tech center on February 2014

SPR opens a new sales office in Chennai on 28th October 2014

2015

Became OEM supplier of JLR

2016

Achieved milestone turnover of 14100 million Rupees

 AWARDS&ACHIEVEMENTS

Awards from Maruti Suzuki

Maruti Suzuki has awarded SPRL its Certificate of
Appreciation in light of our superior performance in Design
and Development in 2016-17
.
Awards from Cummins Category Partner
In Appreciation of superior performance with a commitment to
deliver value, Cummins awarded the status of Category Partner to
Shriram Piston.

Awards from Government of India

Recognition by DSIR (Dept. of Scientific & Industrial Research- Government of
India) for "IN HOUSE R & D". "BEST FOUNDRY AWARD" from
Institute of Indian Foundry Men & World Foundry Men
Organization. Awards from Engineering Export Promotion
Council of India - "Star Performer - Engine Parts".
Award for Export Excellence - Northern Region (EEPC INDIA)
Certificate of Excellence - Star Performer (EEPC INDIA)
Award for Star Performer (EEPC INDIA)

Awards from JIPM (JAPAN)

Total Productive Maintenance (TPM) Excellence and Special Awards
TPM Special Award for Achievement (JIPM)
TPM Award for Excellence (JIPM)

Awards from Industry Associations

SPR has received following awards from Automotive Component Manufacturers Association of
India (ACMA), Excellence in Technology, Excellence in Exports, Manufacturing Excellence,
Quality, Productivity
 Awards from OEMS
SPR supplies products to almost all the OEMs within India. The company has received
many awards from various OEMs for Technology, Quality, Best Vendor, Development
support etc. (Awards received from Ashok Leyland, Bajaj Auto, Cummins, Honda Motor
Cycles & Scooters, Honda SIEL Cars, Kirloskar, Maruti Suzuki, Tata Cummins, Tata
Motors, WABCO etc.)

Award for Cost Competitiveness

(Honda Motorcycle & Scooter)
Award for Best Supplier - Engine Proprietary
(Swaraj Mazda)
Silver Award for Quality (Bajaj Auto)
Gold Award for Quality (Honda)
Award 2016 for Innovation
Bronze Award for Quality (Bajaj Auto)
Winner - Quality Co-Creation Competition(Mahindra &
Mahindra)
Award for Vendor Performance (Suzuki Motorcycle)
Derisking Award (Maruti Suzuki)
1st Runner Up - Quality Co-Creation Competition (Mahindra & Mahindra)
Bronze Award for Quality (Bajaj Auto)
Award for participation -VendorConference (Maruti Suzuki)
Annual Commodity Award for Engine Proprietary - Farm Division (Mahindra & Mahindra)
Award for Vendor Performance (Suzuki Motorcycle)
Silver Award for Overall Performance (Maruti
Suzuki)
Award for Best Initiative on Sustainability (Cummins)

Award for Super Performance (Maruti Suzuki)

Award for participation -VendorConference (Maruti
Suzuki)
Annual Commodity Award for Engine Proprietary - Farm
Division (Mahindra & Mahindra)
Silver Award for Overall Performance (Maruti Suzuki)
 Award for Best Initiative on Sustainability (Cummins)
Award for Super Performance (Maruti Suzuki)
Grand Award for QCDDM (Honda Motorcycle & Scooter)
Award for Human Resource Initiatives (Maruti Suzuki)
Award for Vendor Performance - Quality (Suzuki Motorcycle)
Award for Outstanding QCLDM Performance
- Engine Proprietary (Ashok Leyland)
Award for Outstanding Contribution - Supply Chain

Management (VE Commercial Vehicles)

Award for Overall Contribution - Supply (Renault
Nissan)
Award for Performance (Honda)
Award for Good Quality Performance (Wabco)
Award for Outstanding Performance (Mahindra &
Mahindra)
Award for Commendable Performance - Green Vendor Development Program (Hero MotoCorp)
MAIN PRODUCTS MANUFACTURED BY SHRIRAM PISTONS & RINGS LIMITED

1. PISTON A piston is a component of reciprocating

engines, reciprocating pumps, gas
compressors and pneumatic cylinders, among other
similar mechanisms. It is the moving component that is
contained by a cylinder and is made gas-tight by piston
rings. In an engine, its purpose is to transfer force from
expanding gas in the cylinder to the crankshaft via
a piston rod and/or connecting rod. In a pump, the function is reversed and force is transferred from
the crankshaft to the piston for the purpose of compressing or ejecting the fluid in the cylinder. In
some engines, the piston also acts as a valve by covering and uncovering ports in the cylinder wall.

2. PISTON RINGS A piston ring is a split ring that fits into

a groove on the outer diameter of a piston in a reciprocating
engine such as an internal combustion engine or steam
engine.

The three main functions of piston rings in reciprocating

engines are:

1. Sealing the combustion chamber so that there is minimal

loss of gases to the crank case.
2. Improving heat transfer from the piston to the cylinder wall.
3. Maintain the proper quantity of the oil between the piston and the cylinder wall
4. Regulating engine oil consumption by scraping oil from the cylinder walls back to the sump.The
gap in the piston ring compresses to a few thousandths of an inch when inside the cylinder bore.
Piston rings are a major factor in identifying if an engine is two stroke or four stroke. Three piston
rings suggest that it is a four stroke engine while two piston rings suggest that it is a two stroke
engine. Most piston rings are made of a very hard and somewhat brittle cast iron.
3. PISTON PINS In internal combustion engines,
the pin connects thepiston to the connecting rod and
provides a bearing for the connecting rod to pivot
upon as the piston moves. In very early engine
designs (including those driven bysteam and also
many very large stationary or marine engines), the
gudgeon pin is located in a sliding crosshead that
connects to the piston via a rod. A piston pin is a pivot or journal.

Every cylinder in an internal-

combustion engine contains one intake valve and
one exhaust valve. Both valves open and close
internal passages in the cylinder head. The
intake valve is the larger of the two valves. It
controls the flow of fuel into the combustion
chamber. A multi-valve engine design typically has
three, four, or five valves per cylinder to achieve
improved performance. Any four-stroke internal combustion engine needs at least two valves per
cylinder: one for intake of air and fuel, and another for exhaust of combustion gases.

4. ENGINE VALVES Every cylinder in an internal-combustion engine contains one

intake valve and one exhaust valve. Both valves open and close internal passages in the cylinder
head. The intake valve is the larger of the two valves. It controls the flow of fuel into the combustion
chamber. A multi-valve engine design typically has three, four, or five valves per cylinder to achieve
improved performance. Any four-stroke internal combustion engine needs at least two valves per
cylinder: one for intake of air and fuel, and another for exhaust of combustion gases.