(As 31st March 2009 & As 31st March 2008)

BINANI CEMENT LIMITED

Neem Ka Thana ,Dist: Sikar,(Rajasthan)

“BINANI CEMENT SADIYON KE LIYE”

1
LOVELY PROFESSIONAL UNIVERSITY
JALANDHAR (PUNJAB)
TRAINING UNDER THE GUIDANCE OF :
PRAVEEN JAIN (C.A) SIGNATURE:
MANAGER OF FINANCE & ACCOUNTS

BINANI CEMENT LIMITED

NEEM KA THANA

SIKAR (RAJASTHAN)

SUBMITTED TO:
LOVELY INSTITUTE OF MANAGEMENT
FACULTY SUPERVISOR: SUBMITTED BY :

NEHA TIKOO SANDEEP AGARWAL

(FACULTY OF LIM) MBA 2ND SEMISTER

REGIS.NO.:10907223

ROLL NO.:RT 1903—A 59

(LOVELY INSTITUTE OF MANAGEMENT)

2
 DECLARATION

I, SANDEEP AGARWAL declare that the Project Report entitled “A STUDY ON

“COMPARETIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT BY DIFFERENT

METHODES” IN BINANI CEMENT LIMITED ,NEEM KA THANA, SIKAR (RAJASTHAN)” is

an original piece of work done by me has not been submitted to any college/Institute/University in any

manner.

Signature

(SANDEEP AGARWAL)

---------------------------------

MBA IInd SEMESTER

(2010-11)

3
 PREFACE
The financial management is the studies about procuring and judicious use of financial resource
with a view of maximizing the profit and wealth of the company as well as its shareholders.

Working capital management is the key concept in today's manufacturing concern. A

professional Scientific approach to this era with move competence can really trigger off the
organization to reach the peak level in the industry.

Since the last few years the environment of business word completely change. The mordorn
business placed on a very complex and intricate environment, the constraints and opportunity
provid by the nature of the economy and economic system,political & legal framework, social
system, geographical & demographical facter.

Keeping all the drastic changes in mind, our recognized University, Lovely Profissional
University, Jalandhar (Punjab) , have outlined a summer training programmed to hoopla
various information from different industries. It intrduce the student the practical problems and
working culture of industry life of corporate world. It increases the skills, knowledge, team spirit,
Leadership , attitude , communication skills and above the potentiality of the students towards the
rapid growth of industrialization.

The Objective of our M.B.A. summer training is to earn much practical knowledge of industrial
life and merely from theorical study .

SANDEEP AGARWAL

4
 ACKNOWLEDGEMENT:

I am thankful to all the employees of BINAI CEMENT LIMITED, NEEM KA THANA As a

whole for providing me the opportunity to learn from them their systematic approach of accomplishing the
work. I am very grateful to its all employee espcially Finance Department for intending all the help I
needed and the healthy working environment they provided me during my summer training.

I express my deep sense of gratitude to Mr.Praveen Jain ( Dy. Manager Finance & Accounts)
& Mr. O.P.Saini ( Sr. Officer Accounts ) for his constant supervision during the entire project work and
without whose supervision work might not have seen the light of day.

5
 EXECUTIVE SUMMARY:
The trainee conducted study on topic of working capital management in organisation BINANI
CEMENT LIMITED its submitted towards partial fulfilment of award of MASTER OF BUSINESS
ADMINISTRATION (a two years fulfillment course in LOVELY PROFESSIONAL UNIVERSITY,
JALANDHAR (PUNJAB).

The aim of study is a practical exposur of working capital function carried out in distinguish organisation.

In the study trainee collected information on above mention topic in above mention organisation and gave
suggestion for improvement and their kind persual.

Trainee interacted with non technical employees.

The mothodlogy of study included primary and secondary data collected from books, annual report,
audited report, and internet.

INTRODUCTION OF TOPIC:
working capital management is the amount of fund needed to cover day to day operation. It is
the difference between current assets and current liabilities. Interpretation & presentation of
data: the data is presented by trend analysis, ratio analysis, statement of change in working
capital, and with the help of bar chart.

On the above technique and procedure adopted by trainee the conclusion and recommendation is
included here: BINANI CEMENT LIMITED should decrease its current liability and maintain its
working capital at optimum level. Company should maintain its current ratio at ideal level that is
2:1.

6
 CONTENTS:
PARTICULARES PAGE NO.
1. HISTORY O BINANI CEMENT LIMITED...................................................................08
2. BINANI INDUSTRIES LIMITED................................................................................09
• CEMENT PLANTS.
3. OVERSEAS. ....................................................................................................................10
• BINANI, DUBAI.
• BINANI,SHANGHAI.
4. MISSION..........................................................................................................................12
5. LAW & REGULATION...................................................................................................13
6. CEMENT MANUFATUREING PROCESS....................................................................15
7. FOCUS ON NEW MINI PLANT.....................................................................................16
8. UNIT PROFILE...............................................................................................................17
9. AWARDES , CERTIFICATES & NEWS........................................................................20
10. BINANI IN THE
NEWS..................................................................................................27
11. BINANI POSITION IN CEMENT
INDUSTRY............................................................29
12. PRODUCTS...............................................................................................................
.......33
13. SCOPE OF
STUDY..........................................................................................................34
14. RESEARCH
METHODOLOGY.....................................................................................35
15. CONCEPT OF WORKING CAPITAL
MANAGEMENT.......................................... ...36
• GROSS WORKING CAPITAL.
• NET WORKING CAPITAL.
• KINDES OF WORKING CAPITAL.
• NEED & OBJECTIVE OF W.C..
• FACTOR DETERMINE REQUIRMENT OF W.C.
• FORCAST & ESTIMATE OF W.C.REQUIR.
• SUGGESTED PERFORMAS.
• FINANCING OF WORKING CAPITAL.
• SOURCE OF W.C.
• USES OF WORKING CAPITAL.
• TECHNIQUES OF FORCASTING W.C..
16. ANALYSIS OF WORKING CAPITAL AND MEASURING THE EFFICEANT
IN THE MANAGEMENT OF WORKING
CAPITAL..................................................................46

7
 17. COMPARETIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT
ON“BINANI CEMENT LIMITED”BY DIFFERENT METHODES.............................47
18. CALCULATION OF NET WORKING
CAPITAL........................................................51
19. COST
CAPITAL...............................................................................................................54
20. “SWOT ANALYSIS” OF BINANI CEMENT LINITED,NEEM KA
THANA............55

21. BRAJ BINANI GROUP ANALYSIS BY DIFFERENT

CHARTES...............................56

22. SHREE CEMENT

LIMITED............................................................................................58
23. COMPARISON &
CONCLUSION..................................................................................61
24. BIBLIOGRAPHY......................................................................................................
.......63

History Of “Binani Cement Limited”:

Binani Industries Limited (BIL) is all set for growth. From the time of its inception, BIL has been
an ambitious organisation and this attribute has helped it grow at a fast pace.

The Braj Binani Group traces its beginning to 1872, when Seth Pragdas Binani, a trader in metal
utensils, began an enterprise with his son Seth Mathuradas to engage in the import and export of
metals. The enterprise continued to grow from strength to strength. The year 1941 marked an
important phase in the evolution when Seth Mathuradas' son Seth Govardhandas made a bold, but
significant, move from trading to manufacturing.

Binani Metal Works got rolling with a plant at Howrah. Taking on the mantle from his father, it
was during the reign of son Ghanshyam Binani, that Binani Zinc was born. Leading from the
front, the Company shifted its focus towards R&D thus modernising and expanding its capacity.

8
But it was with the advent of Mr. Braj Binani and his dynamic leadership that the Company truly
began to prosper and exploring uncharted horizons.

Following the restructuring of the Braj Binani Group, from 1996-2004,Binani Industries Limited
(BIL) was founded to serve as the holding Company for Binani Cement Limited, Binani Zinc
Limited, Goa Glass Fibre Limited & BT Composites Limited. Today, the Braj Binani Group is a
multidimensional business conglomerate, with an asset value of Rs. 1968 crores, a turnover of
Rs. 2302 crores and a 1750-strong work force. And with a clear focus to adapt and execute the
best, the Braj Binani Group has not only attained major internationally accepted certifications for
its various ventures, but also has extended its reach well beyond Indian borders - to UAE, China
and is in the process of expanding into Africa and other countries.

BIL owes most of its success to its simple yet potent philosophy - honesty, transparency,
efficiency and its unflinching commitment to the customers, coupled with an inherent
determination to succeed. It is this vision that has dissolved all boundaries and has set BIL on the
never-ending path of growth and evolution.

BIL's epic story has been a unique compilation of the success stories of its four subsidiary
companies- Binani Cement Limited, Binani Zinc Limited, Goa Glass Fibre Limited and BT
Composites Limited. It is moving ahead full stream in the direction of development and these
companies have indeed formed the pillars of strength of “The Braj Binani Group”.

Cement plant :

Binani Cement Limited boasts of a fully integrated cement plant, strategically located in

9
Binanigarm, Sirohi, Rajasthan. The 1.65 mtpa facility and a 25 MW captive power plant were set
up in 1997 in a record 19 months. After that there was no looking back. Following advanced
R&D and de-bottlenecking efforts, the Company has achieved several milestones and
certifications like the ISO 9001, ISO 14001 and OHSAS 18001, within a mere decade. Moreover,
with its recent brownfield expansion at Binanigram, there has been a staggering rise in the overall
annual capacity to 6.00 mpta. The abundant reserves of limestone obtained from the captive
limestone mines owned by the Company, have further reinforced Binani Cement's already solid
foundation.

Overseas:

Binani,Dubai
The Binani Cement Factory LLC, established in 1996, is located in the Jebel Ali Industrial Area.
With its close proximity to the two ports, and a construction hub, it serves as a perfect vantage
point for Binani Cement to tap into potential markets. In 2006, responding to the ever increasing
demands, Binani Cement showcased its unmatched capabilities by expanding the capacity of its
plant from 0.5 million tonnes to an overwhelming 1 million tonnes of OPC and GGBFS.
Subsequently, in 2007, clinker grinding capacity was increased to 1.2 mtpa.

Binani,Shanghai
Identifying China as a pivotal market, the Braj Binani Group acquired a 70% stake with

10
management control for an operational 2 year old clinker plant in the Shandong province of
North China, The Shandong Binani Rongon Cement Company Ltd. (SBRCCL). Along with
its strategic location advantage due to its close proximity to the two ports, the plant has a current
production capacity of 0.5 mtpa of clinker and 0.5 mtpa of cement annually. The clinker capacity
is projected to be upgraded to 3 mtpa by 2011. It is currently running at 100% capacity with
majority of its produce being exported setting aside a small quantity for the domestic markets.

• Binani Cement Limited --effective from 1 st november 1997.

• Goa Glass Fibre Limited-- effected from 1st December 1999.

• Binani Zink Limited – efeective from 1st April 2001.

11
 &
NEEM KA THANA

12
 MISSION:

• To achieve leadership status in the core sector, across the world.

• To employ frontline technologies to meet the highest global standards in products and services.

• The set benchmarks in manufacturing, while adhering to most stringent environmental rules.

• To be a customer-first, quality obsessed, socially sensitive corporate entity.

• To achieve breakthroughs in manufacturing based in intensive R&D coupled with innovative

thinking.

• To assure the well-being of our people, living by such values as concern, empathy and
commitment.

The Core Values of BINANI CEMENT LIMITED IS COMIT:

C- Customer Focus

O - Organizational Pride

M- Mutual Respect and Trust

I - Initiative and Speed

T - Total Quality

13
 LAW & REGULATIONS:

Certain other laws and regulations that may be applicable to the Company include the following:

• Atomic Energy Act, 1962;

• Bureau of Indian Standards Act, 1986;
• Electricity (Supply) Act, 1948;
• Fiscal Laws and Regulations including the I.T. Act, Central Excise Act, 1944.
• The Customs Tariff Act, 1975, and the Central Sales Tax Act, 1956 including State laws
and regulations related thereto.
• Indian Electricity Rules, 1956;
• Indian Electricity Rules, 1958;
• Petroleum Act, 1934;
• Rajasthan Petroleum Products (Licensing and Control) Order, 1990;
• Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in
Automobiles) Order, 2000;
• Standards of Weights and Measures Act, 1956.
• The Standard of Weights and Measures (Enforcement) Act, 1985.

Labour Laws and Regulations:

• Contract Labour (Regulation and Abolition) Act, 1970.

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• Employees’ State Insurance Act, 1948.
• Factories Act, 1948.
• Industrial Disputes Act, 1947 and Industrial Disputes (Central) Rules, 1957.
• Maternity Benefit Act, 1961.
• Minimum Wages Act, 1948.
• Payment of Bonus Act, 1965.
• Payment of Gratuity Act, 1972.
• Payment of Wages Act, 1936.
• Rajasthan Factories Rules, 1951.
• Shops and Commercial Establishments Act, 1953.
• Professional Tax Act (Maharashtra), 1975.
• Trade Union Act, 1926.
• Workmen’s Compensation Act, 1922.

14
 Environmental Laws and Regulations:

The other environmental laws and regulations that are applicable to the Company include
the following:

• Explosives Act, 1884.

• Gas Cylinder Rules, 1981.
• Hazardous Waste (Management and Handling) Rules, 1989.
• Indian Explosives Rules, 1983.
• Industries (Development and Regulation) Act, 1951.
• The Indian Boilers Act, 1923 and the Indian Boiler Regulations, 1950.

The Mining laws and regulations that may be applicable to the Company include the following:

• Limestone and Dolomite Mines Labour Welfare Fund Act, 1972.

• Limestone and Dolomite Mines Labour Welfare Fund Rules, 1973.
• Metalliferous Mine Regulations, 1961.
• Mineral Conservation and Development Rules, 1988.
• Mines and Minerals (Development and Regulation) Act, 1957 (the “MMDR Act”) .
• Mineral Concession Rules, 1960 (the “Mineral Rules”).
• Mining Lease (Modification of Terms) Rules, 1956.
• Rajasthan Minor Minerals Concession Rules, 1986.
• The Mines Act, 1952 and Mines Rules, 1955.
• The Payment of Wages (Mines) Rules, 1956.

15
 Cement Manufacturing Process:

The production process for cement consists of drying, grinding and mixing limestone and silica
into a powder know as a raw meal. The raw meal is then heated and burnt in a pre–heater and
kiln and then cooled in an air cooling system to form a semi-finished product, known as a clinker.
Clinker (95%) cooled by air and subsequently with gypsum (5%) to form OPC.

16
 FOCOUS ON NEW MINI PLATN
IN “NEEM KA THANA”

Binani cement limited is the subsidiary of Bnani industry.In 2005-06 the company started with a
brown field facility with railway siding and a split grinding unit at Neem Ka Thana to increase
the capacity of the cement facility to 6 mtpa and power facility to 69.6 MW.

Clinker unit and one grinding unit commenced commercial operation in October 2007 and
December 2007 respactively.The split grinding unit and one 22.3 MW power plant commenced
operation in March 2008.The company has two limestone mines,namely Amli and Thandiberi,on
a long term leases basis at a distance of 2 and 7 Km from the plant .

These mines have proven reserves of up to 195 MnT(as on April 1.2005).In the new grinding unit
the total capacity for cement production now standes at SIX Million Tonnes per annum.

It is deals with the manufacturing and sale of cement in India. The company expands its plant
capacity at that time and established a new plant unite in NEEM KA THANA,DIST. SEROHI
(RAJASTHAN).Due to the continuous growth in cement industry and demand of Binani cement
its working capital requirement is also undergoing revision from time to time while for nessesry
for optimum working capital is felt by the company to meet the augmented production capacity.
The company also wanted to explore the scope availability for better management of working
capital and adopt the requisite measure for improving the return on working capital.

BCL in Neem Ka Thana,has a wide distribution network comprising over 2,360 dealers and 68
market organisers and caters to Rajasthan ,Gujarat,Northen Capital Resion and Maharastra.The
company pioneered the cash and carry system in its markets.The company is active in the OPC as
well as the PPC markets.

17
 UNIT PROFILE
BINANI CEMENT LIMITED IN “NEEM KA THANA”.
2005-06 the company started with a brown field facility with railway siding and a split grinding
unit at Neem Ka Thana.

• GYPSUM=6.5%.

• FLY ASH/SLAG=25%.

• CLINKER= REST OF BALANCE(68.5%).

• 1.4 MILLION TON PER ANNUM CLINKER GRINDING UNIT.

PROJECT CLINKER GRINDING UNIT.

PROMOTERS BINANI CEMENT LIMITED,

706, OM ROAD,

32, CHOURANGI ROAD,

KOLKATA-700071.

CLINKER GRINDING CAPACITY 200 TON PER HOUR.

ANNUAL PRODECTION 1.40 (MILLION TON).

18
CAPACITY UTILIZATION (%)

A) 1ST YEAR 80.

B) 2ND YEAR ONWARDS 100.

LOCATION: VILLAGE BHAGEGA , NEAR NEEM KA THANA, ON AHEMDABAD AJMER-

RINGS-REWARI-DELHI RAILWAY LINE , TEHSIL NEEM KA THANA , DIST.SIKAR
(RAJASTHAN).

RAW MATERIAL:

• REQUIRMENTS : MIXING RATIO(%)

PPC OPC

1. CLINKER 71 93
2. FLY ASH 22 OR -
3. GYPSUM 7 7

• SOURCE:

1. CLINKER : BINANI CEMENT LIMITED, PINDWARA, DIST.SIROHI ( RAJAS. )

2. GYPSUM: BIKANER (RAJASTHAN).
3. FLY ASH: THERMAL POWER STATION, DADRI & PANIPATH(HARYANA),
AND SURATGAR (RAJASTHAN)

LAND REQUIREMENT: 28 Ha.

UTILITIES:

1. POWER 9.0 MW.

2. WATER 55 M (3/day).

PROCESS : CLINKER /ADDITIVES GRINDING IN BALL MILL (CCBM).

MAJOR PLANT AND MACHINERY: CLINKER UNLOADING STORAGE,MATERIAL

HANDELING, BALL MILL,MULTI COMPARTMENT SILO,FEEDING AND EXTRACTION
SYSTEM,PACKING AND LOADING.

PROJECT SCHDULE: 12 MONTHS FROM LAND ACQUISITION.

MAN POWER: 72.

19
FINANCIAL ASPECTS:

• CAPITAL OUT LAY Rs.97.90 CRORES.

MARKETS,WHERE GOODS DELIVERE:

Binani Cement Limited in Neem Ka Thana . study indecates the economy of clinker grindeing
close to market,Rajasthan has surplus cement producing unit , while harayana,west U P,Delhi are
deficient states.

SYSTEM DETAILS :

SN. EQUIPMENT / STORAGE UNIT NO. RECOMMENDATION

1. Ball mill tph 1 200

2. Gypsum crusher tph 1 60
3. Gypsum storage silo t 1 3,000
4. Cement storage t 2 7,500
5. Clinker storage t 1 40,000
6. Fly ash storage t 1 5,000
7. Packing plant tph 1 2*240(1 later)

EMPLOYMENT POTENTIAL: MANPOWER SUMMRY (MAY 2010)

SI. NO PARTICULAR M2 M3 M6 M7 M8 M9 S1 S2 GET PGT/GT TOTAL

1 VP(WORKS) 1 1
2 GM WORKS 1 1
3 MECHANICAL 1 4 3 8
4 WAGON TIPPIER 1 1
5 ELECTRICAL & INSTRUE. 1 4 1 6
6 PRODUCTION 1 1 3 5
7 QC 1 6 2 9
8 ENVIRONMENT 0 0
9 PACKING PLANT 1 2 3
10 HR&A 1 1 1 3
11 SECURITY 1 1 1 2 5
12 IT & S 1 1 2
13 MATERIAL & STORE 1 3 4 8
14 ACCOUNTS 1 2 1 1 1 6
15 CIVIL 1 1
16 LIASON 1 1
17 ELECTRICAL (PROJECT) 1 1 2
18 CIVIL (PROJECT) 1 1
19 LOGISTICS 1 2 2 1 3 9

20
 TOTAL 1 1 1 10 7 16 9 25 2 72

AWARDS & CERTIFICATES:

The Company has won numerous awards for the safety, energy
conservation and excellence:
As pioneers in globalizing operations, Binani has bagged a number of awards for its meritorious
performance. The awards endorse its indigenous attempts at energy conservation, pollution
control endeavours, productivity performance, export potential and sustained growth over a
period of time.

Milestones of the past six decades:

1940's

• Binani Metal Works Limited founded on the 25th of February, 1941

near Howrah, in Kolkata by the Founder Chairman Late Seth
Govardhandas Binani.

• The company entered into collaboration with Metal Distributors Limited and its trading
activities in India expanded and got stronger.

1950's

• Metal Distributors Limited established in London, UK, for international trading, indenting
of non-ferrous metals, investments, leasing and other activities.

• The company went public, for the first time, in 1953.

• Binani earned recognition as the largest importer and distributor of non-ferrous metals in
the country.

1960's

• In 1962 Binani entered into a technical and financial collaboration with Cominco Limited
Canada, to form Cominco Binani Zinc Limited and created history becoming the first
Indian Company to manufacture primary high grade electrolytic zinc in India in 1967.

• It was the first Indian company to manufacture of high grade electrolytic zinc at
Binanipuram, Kerala in 1967.

1970's

21
 • By leveraging technology and keeping up with a burgeoning market, Binani Zinc Limited
successfully met the steady increase in capacity from 12 kty to 20 kty.

1980's

• Binani Zinc Limited further upgraded technology at par with the latest in the world with
assistance from M/s. Lurgi, Germany.

• Binani Zinc Limited, commenced production of special high grade electrolytic zinc ingots
with 99.995% purity.

An enviable track record...

1990's

• Cominco Limited carted off its financial support from its operations in
alignment with their world policy. Cominco Binani Zinc was
rechristened as Binani Zinc Limited on 3rd March 1991.
• Diversification was necessary for growth and hence two sectors were
identified - Glass Fibre and Cement.
• Two Public Issues, one in Feburary 1994 and the other in Feburary 1995, were undertaken
to raise funds for the implementation of new projects. Both the issues were
oversubscribed.
• The company was re-christened as Binani Industries Limited, reflecting its status as a
multi-divisional, multiproduct and multilocational company having metropolitan
population and fully managed by outstanding technology and professionals in the country.
• In 1995 Binani Zinc entered into collaboration with M/s U.M. Engineering Limited to
adopt its state-of-the-art technology and increased its capacity to 30 kty
• The commitment of Binani Zinc towards environmental protection and it's pollution control
efforts are rewarded by the 'Kerala State Pollution Control Board' in 1990.

1991

• Binani Zinc awarded with a 'Certificate of Merit' by the 'Kerala State Pollution Control Board' for
achieving the Second place among large scale industries, in making substantial and sustained
efforts in Pollution Control.

1993

• Binani Zinc awarded with a Certificate of Merit by the 'Kerala State Pollution
Control Board' for achieving the first place among large scale industries in
making substantial and sustained efforts in Pollution Control.

22
 • Binani Zinc is the proud recipient of the 'Energy Conversation Award' for five consecutive years
from 1993 onwards.

1994

• Binani Zinc been awarded the second 'Jawaharlal Nehru Memorial National Award' by
International Greenland Society for excellence in Indian Industries in Energy
Conservation.

1995

• Binani Zinc been awarded the 'Certificate of Merit' by Govt. of Kerala in appreciation of
its best effort in the field of Energy Conservation.
• The Glass Fibre Division of Binani Industries Limited commenced commercial
production at Colvale, Goa in March 1996 and was then the single largest glass fibre plant
in India.
• Binani Cement Limited commenced commercial production in July, 1997 at Pindwara,
Rajasthan.

1996

• Binani Zinc awarded the 'Certificate of Merit' by Govt. of Kerala in appreciation of its
best effort in the field of Energy Conservation.

1998

• Binani Zinc receives the 'Industrial Safety Award' from the National
Safety Council of India for having the second lowest frequency rate of
accidents recorded in Scheme III.

• The systematic and scientific approach throughout operations has

earned Binani's Glass Fibre plant, an ISO 9002 accreditation from
Bureau Veritas Quality International, (BVQI), UK.

• Binani Zinc receives the 'Industry Excellence Award' instituted by

The Institution of Engineers, India, Cochin Local Chapter, the first
prize for excellence in Energy Conservation, and R&D efforts.

1999

• Being a major foreign exchange earner in the country, Goa Glass

Fibre Ltd. bags the 'Certificate of Export Recognition' from
Chemicals and Allied Products Export

• Promotion Council (CAPEXIL) for 1998-99.

23
 • Goa Glass Fibre Limited receives the prestigious 'National Exports Awards Certificate of
Merit' for it's meritorious performance in exports during the year 1998-99.

1999-2000

• Binani Cement Limited made a noteworthy improvement in the production costs, along
with power and coal consumption for which it has won a 'National Award for Energy
Consumption'.

• Binani Cement Limited receives the National Award for its excellence
in 'Thermal Energy Performance' for two consecutive years 1999,
2000.

• Binani Cement Limited receives ISO 9002 and ISO 14001

Certification from KPMG in January 1999 and October 1999
respectively.

2000

• Binani Zinc receives the prestigious international accreditions, 'ISO 14001' and 'ISO
9001:2000' Certification from Bureau Veritas Quality International for its Environment
Management System and Quality Management System.

• Amli Limestone Mine at the Binani Cement Limited bags the first place for the 'Mines
Award' at the Mines Environment And Mineral Conservation Week, organized by the
Controller of Mines (NZ) and the Indian Bureau of Mines, Ajmer.

• Focused training inputs on a variety of knowledge and skill upgradation attempted.

Achieved . . . . mandays per employee per year.
2001

• BVQI also certified Binani Zinc to be qualified for Social Accountability Management
system, SA 8000:1997 as well as OHSAS 18001:1999. Occupational Health and Safety
Assessment Series.

• Binani Zinc becomes the first Indian company to have been certified under the four
international accreditions, besides also following the '5s' housekeeping as a management
practice.

• Binani Zinc focused knowledge abnd skill upgradation and

achieved a record of 3 mandays per employee per year.

24
2000 - 2001

• Binani Zinc received an ISO 14001 and an ISO 9001:2000 Certification from Bureau
Veritas Quality International for their Environment Management System and Quality
Management System respectively.

• Binani Zinc adopted the '5s' housekeeping management practice and tagged it with the
international accredition ISO 14001:1996. In april 2001, voluntary commitment to quality
was demonstrated by getting the international accredition on quality, ISO 9001:2000.
Leveraging the people potential, Binani Zinc became the first company in the
manufacturing sector to go for international.

25
2008—2009

The company received this award during 2008 as well whereby it became the first Indian Cement
company to receive this prestigious award.

• Greentech Environment Excellence Gold Award 2009 -BCL received this award
consecutively in a row for 2008 & 2009 in recognition of its exemplary initiatives in
Environment Management.

• National Award for Excellence in Water Management 2009- BCL was rated as
the ‘Excellent Water Efficient Unit’ to have been conferred this prestigious national
award instituted by the CII Soharabji Godrej Green Business Centre, Hyderabad.

• National award for Excellence in Energy Management 2009 – BCL was rated as
the ‘Energy Efficient Unit’ on being conferred this annual award instituted by the CII
Godrej Green Business Centre, Hyderabad. The award was conferred by the Director
General, Bureau of Energy Efficiency, Ministry of Power, New Delhi in a function held at
Chennai Trade Centre in Chennai on November 20th, 2009.

• Certificate of Merit for 2007-08 for Productivity Improvements - The award which
has been instituted by the Rajasthan State Productivity Council, Jaipur was conferred to
BCL in recognition of company’s sustained initiatives towards productivity
improvements.

26
• Certificate of Excellence – Best Employer Award Competition 2008 - this award was
conferred to BCL in recognition of company’s excellence towards maintaining good
Employee-Employer Relationship for the year 2008.

• Udyog Bharati Award 2009 & Indian Achievers Award for Quality Excellence -
These awards have been instituted by the All India Business & Community Foundation
(AIBCF) for entrepreneurship development leading to economic growth that greatly
contributes to generate long term opportunities for the communities.

BINANI in the News:

27
Binani Cement Limited inks MOU with Gujarat Government

28
Ahmedabad - January 13, 2009:
Binani Cement Limited, one of the trusted quality brands of India, has signed a memorandum of
understanding (MOU) with Gujarat State Government today to set up a Greenfield cement plant
of 2.5 MTPA capacity in Gujarat. The MOU was signed by Mr. Vinod Juneja, Managing
Director, Braj Binani Group, on behalf of Binani Cement Ltd and by Mr. Raj Gopal,
Commissioner – Mines & Geology on behalf of the Gujarat State Government.

Mr. R. H. Joshi, Executive Vice President, Binani Cement Ltd were also present. The capacity
of this Greenfield cement plant is 2.5 MTPA. The proposed plant location will be at Lodhva
village in Sutrapada District of Junagadh. The land requirement for proposed plant is 188
hectares and for mining 1532 hectares. The plant will manufacture ordinary Portland cement ,
Pozzolona Portland cement (PPC) in various grades and the production of OPC to PPC will be
ordinarily 50:50. This strategically located plant will be mechanically completed by December
2010 and the commercial production will commence from April 2011.

This association between the Binani Cement Ltd and Gujarat State Government will help in
upliftment of social infrastructure, general standard of living of people in Gujarat and
development of area and employment generation in the state of Gujarat.

The project is estimated to cost Rs. 825cr. The excise duty and the Sales tax for the plant is
estimated to Rs. 66cr and Rs. 78cr respectively, at 100% capacity utilization per annum. Binani
would also be required to the pay Rs 17cr per annum as the Royalty & Cess on Limestone to the
Gujarat Government.

Limestone, the primary raw material will be outsourced from proposed captive mines located
around the villages Lodhava, Singsar, Barevala JTiardi and other adjoining villages, contiguous
and within a distance of 3-5 km. The reserves are estimated at about 120-160 MT possible
category and would be adequate for the proposed plant for 30 years. Other raw materials like
Sandstone, Latertic Iron Ore, Gypsum and Fly Ash are available locally. The power requirement
by the plant will be met with a captive power plant of 30 MVA.

The Cement from this Binani plant will be supplied to the markets in Gujarat, Maharashtra and
Middle East.

Binani Cement Conquests Accolades for Its Excellency in Various Areas

Mumbai, January 18, 2010:

Binani Cement Limited (BCL), the flagship company of Braj Binani Group, has earned the
proud distinction of being the one winning 11 prestigious Awards and Certificates. The
company has successfully excelled over its competitors and has made significant achievements

29
in energy conservation, quality excellence, sustainability, environment excellence, and water &
energy management.

Binani Cement has bagged the two prestigious National Awards for Energy Efficiency in Indian
Cement Industries in recognition of the Best Electrical Energy as well as the Best Thermal
Energy Performance for the year 2007-08.

Ministry of Industries & Commerce, Government of India, has also acknowledged company’s
commendable efforts for demonstrating excellence in energy utilization and conservations
through implementation of systematic, planned and strategic initiatives. The company has also
received the NCB’s Best Thermal Energy Performance in the years 1998-99, 1999-00 & 2003-
04 & also the Certificates of Merit for Energy Conservation in 2001 & 2006 from the Ministry
of Power, Government of India.

Binani Cement also bagged the prestigious National Quality Excellence Award 2008-09 in
Indian Cement Industries in recognition towards its Best Quality excellence measured against
the excellence model designed to examine an organization’s leadership, capabilities and
performance leading to excellent management of the business processes in all areas of operation
by NCCBM.

Other awards won by Binani cement in the year 2009, in the areas of sustainability,
environmental excellence natural resource management, productivity and quality excellence are
as follows:

ITC CII Sustainability Award 2009 – the award is conferred on Binani Cement for its significant
contribution in the field of sustainable development encompassing environment, society and
economics — the three pillars of triple bottom line.

BCL bagged the award among the large business organizations. BCL was a worthy winner after
undergoing a rigorous two-stage assessment including site visit by 3 of the assessors nominated
by CII, followed by scrutiny by the Awards Jury. The award was conferred by the Union
Minister of states for Environment & Forests (independent charge) Mr. Jayaram Ramesh during
the valedictory function of the CII Sustainability Summit held at the India Habitat Centre, New
Delhi on 26.11.2009.

BINANI POSITION IN CEMENT INDUSTRY:

30
India is the world's second largest producer of cement after China with industry capacity of over
200 million tonnes (MT). With the boost given by the government to various infrastructure
projects, road networks and housing facilities, growth in the cement consumption is anticipated
in the coming years.

The modern Indian cement plants are state-of-the-art plants and amongst the best in the world.
The cement industry comprises of 134 large cement plants with an installed capacity of 173.08
million tonnes and more than 350 operating mini-cement plants, with an estimated capacity of
11.10 million tonnes per annum, making a total installed capacity of 184.18 million tonnes in
the last fiscal, as per the Department of Industrial Policy and Promotion's latest data.

In order to meet the expanding demand, cement companies are fast developing new plants. The
cement industry is poised to add 111 MT of annual capacity by the end of 2009–10 (FY 2010),
riding on the back of approximately 141 outstanding cement projects.

According to a report by the ICRA Industry Monitor, the installed capacity is expected to
increase to 241 MTPA by FY 2010-end. India's cement industry is likely to record an annual
growth of 10 per cent in the coming years with higher domestic demand resulting in increased
capacity utilisation.

New Investments

31
 • Binani Cement has signed a memorandum of understanding with the Gujarat
Government to set up a 2.5 MTPA greenfield cement plant in Gujarat at a cost of US$
169.40 million. Commercial production will commence in April 2011. Binani Cement
has also initiated talks with a few foreign institutional investors (FIIs) to raise US$
307.99 million for its new projects.
• Power sector giant, NTPC, is contemplating to enter into manufacturing of fly ash-based
cement and ash-based products from ash generated at its power stations.

Installed capacity:

The cement industry in India has added a whopping 46 MT capacity in just a little over three
years, taking the total installed capacity to 206.96 MT as on December 31, 2008. This includes
India Cements Ltd's new grinding unit at Vallur, Tamil Nadu with an installed capacity of 1.10
MT, and UltraTech's plant at Ginigera, Karnataka with an installed capacity of 1.30 MT.

The industry added over 30 MT to its installed capacity in just one yearduring previous fiscal
(April 2007–March 2008).

Almost all players of the industry, small to medium to large, have added capacity ranging
between a minimum of 200,000 tonnes and a maximum of 3 MT in the last three years (April
2005 to March 2008), effecting a total addition of 45 MT to the installed capacity by setting up
greenfield projects, and expanding and upgrading the existing plants.

Simultaneously, with almost total capacity utilisation levels in the industry, cement dispatches
continued to maintain a 10 per cent growth rate. Total despatches grew to 170 MT during 2007–
08, as against 155 MT in 2006–07.

The continuous increase in the infrastructure projects along with the rise in construction activity
has ensured rising demand levels for the cement industry. Consequently, as per latest figures
released by the Cement Manufacturers' Association of India (CMAI) cement despatches
(including exports) were 16.01 MT in December 2008, an increase of 12.11 per cent as
compared to 14.28 MT in December 2007. Total despatches during April-December 2008-09
went up to 130.69 MT as compared to 121.59 MT during the corresponding period in 2007-08.
The cement production was 15.82 MT, registering a growth of 11.96 per cent as compared to
14.13 MT in December 2007. Total production has touched 131.20 MT during April–December
2008–09 as compared to 122.33 during the corresponding period of 2007-08, an increase of
nearly 7 per cent.

Technological change

32
Continuous technological upgrading and assimilation of latest technology has been going on in
the cement industry. Presently, 93 per cent of the total capacity in the industry is based on
modern and environment-friendly dry process technology and only 7 per cent of the capacity is
based on old wet and semi-dry process technology. There is tremendous scope for waste heat
recovery in cement plants and thereby reduction in emission level. One project for co-generation
of power utilising waste heat in an Indian cement plant is being implemented with Japanese
assistance under the Green Aid Plan. The induction of advanced technology has helped the
industry immensely to conserve energy and fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland Cement (OPC),
Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFC), Oil Well
Cement, Rapid Hardening Portland Cement, etc. Production of these varieties of cement
conform to the BIS Specifications. Between April to November 2008, 25 per cent of all cement
produced was OPC, 67 per cent was PPC and 8 per cent was PBFC.

RMC Business

Ready-mix concrete (RMC) is sometime preferred to on-site concrete mixing because of the
precision of the mixture and reduced worksite confusion. The Indian RMC business is growing
by 25 per cent every year. In India only 2–3 per cent cement consumption by cement industry
goes through RMC, as against 60 per cent in developed markets. At present, India has 200 RMC
plants across the country.

• Binani Cement, Shree Cement and Dalmia Cement are among the new players who have
plans to get into the RMC business in the next five years.

Government Initiatives

Government initiatives in the infrastructure sector, coupled with the housing sector boom and
urban development, continue being the main drivers of growth for the Indian cement industry.

• Increased infrastructure spending has been a key focus area over the last five years
indicating good times ahead for cement manufacturers.
• The government has increased budgetary allocation for roads under National Highways
Development Project (NHDP). This coupled with government's initiatives on the
infrastructure and housing sector fronts would continue to remain the key drivers.
• Appointing a coal regulator is looked upon as a positive move as it will facilitate timely
and proper allocation of coal (a key raw material) blocks to the core sectors, cement
being one of them.

Keeping in mind the global meltdown which is impacting the cement companies in India, the
government reimposed the counter veiling duty (CVD) and special CVD on imported cement in
January. This is likely to provide a level playing field to domestic companies.

33
Exchange rate used: 1 USD = 48.6998 INR

Products:
The Company's product portfolio includes Ordinary Portland Cement and Pozzolana Portland
Cement. Marketed under the premium ‘Binani Cement’ brand name, it has become a name

34
synonymous with cement in India. And with subsidiaries in Dubai, China and many other
potential international markets, Binani Cement is well and truly set on the path of becoming a
brand the world builds with.
Produces cement of two. :
• Grade 43
• Grade 53
• PPC (Portland Pozzolana Cement)

PRODUCT SPECIFICATIONS:

BINANI
BIS BS ASTM GERMANY JAPAN
CEMENT
43 53 BS- C-150 T- OPC- OPC- 43 53
Specifications
Grade Grade 12 1 I II Grade Grade
LOI (%) max 5.00 4.00 3.00 3.00 5.00 5.00 3.00 2.30 2.10
IR (%) max 3.00 3.00 1.50 0.75 3.00 3.00 - 2.10 2.00
SO3 (%) max 3.00 3.00 3.50 3.00 3.50 3.50 3.00 2.10 2.00
MgO (%) max 6.00 6.00 4.00 6.00 5.00 5.00 5.00 1.98 1.98
Blaine (M2 / kg)
225 225 275 280 220 220 250 300 320
max
Setting Time
(Mins)
- Initial
30 30 45 45 60 60 60 125 120
(Minimum)
- Final (Minimum) 600 600 600 375 720 720 600 175 170
Soundness
- Le-Chatelier
(mm) 10 10 10 - - - - 1.00 1.00
Maximum
- Auto Clave (%)
0.80 0.80 - 0.80 - - - 0.10 0.10
Maximum
Compressive
Strength (MPa)
- 3 days min 23.0 27.0 25.0 12.7 - - 7.0 42.0 41.0
- 7 days min 33.0 37.0 - 19.70 18.4 - 15.0 52.0 53.0
42.5 - 35.7 - 35.7 -
- 28 days min 43.0 53.0 28.2 30.0 62.0 65.0
62.5 56.1 56.1

35
 SCOPE OF STUDY

The scope of study will cover all the component of current assets and current liability. The
ascertainment of working capital gap critical examination of financial statement, return on
investment and the best and optimum sources of financing the working capital.

OBJECTIVE OF STUDY

 To analyze the trend projection of the current assets and liability.

 To identified the requirement and change in working capital.
 To analyze the cost of financing working capital.
 To analyze the financial strength and weakness of company.

36
 RESEARCH METHODOLOGY

As levers of financial management go, none bear more weight than working capital. The visibility of
every business activity rest on daily change in reacreible, inventory, and payable. It is the lifeblood of
business, and every manager’s primary task is to maintain optimum level of working capital
management.To carry out the study on working capital management of BINANI CEMENT LIMITED the
following data were relied upon for appropriate analysis and for making finding.

SOURCES OF DATA

Secondary data
• Annual report of last 2 year.
• Red herring prospectus.
• Audited balance sheet & p/l account 2008 and 2009.
• Binani news jouranl March –April 2010.
• Man power summary (May 2010).

Primary data
• Through the direct interview of different managers of different department such as sales,
purchase, logistic, finance , production and H.R.&A.
• Binani cement web sites.

Tools used for analysis:

• Assessment of working capital requirement based on estimation of component of working
capital method.
• Trend analysis.
• Statement of change in working capital.
• Analysis of cost of sources of finance for working capital.
• Analysis the position of binani cement by different charts.
• SWOT analysis.
• Comparesion.

37
 CONCEPTS OF WORKING CAPITAL MANAGEMENT:
There are two concepts of working capital:-
Gross Working Capital.
Net Working Capital.

GROSS WORKING CAPITAL: -

The gross working capital is the capital invested in the total current assets of the enterprise.
Current assets are those assets which in the ordinary course of business can be converted into
cash within a short period of normally one accounting year.

Example:-

38
 CONSTITUENTS OF CURRENT ASSETS

1. Cash in hand and bank balances

2. Bills receivable

3. Sundry debtors

4. Short term loans and advances

5. Inventories of stock, as

(a) Raw materials

(b) Work-in-process

(c) Stores and spares

(d) Finished goods

6. Temporary investments of surplus funds

7. Prepaid expenses

8. Accrued incomes

NET WORKING CAPITAL: -

Net working capital is the excess of current assets over current liabilities, or say:

39
 Net working capital=Current assets – Current liabilities

Net working capital may be positive or negative. When the current assets exceed current
liabilities the working capital is positive and the negative working capital results when the
current liabilities are more then current assets. Current liabilities are those liabilities which
are intended to be paid in the ordinary course of business within a short period of normally
one accounting year out of the current assets or the income of the business.

Example:-

CONSTITUENTS OF CURRENT LIABLITIES

1. Bills payable

2. Sundry creditor or account payable

3. Accrued or outstanding expenses

4. Short term loans, advances and deposits

5. Dividend payable

6. Bank overdraft

7. Provision for taxation

40
 CLASSIFICATION OR KINDS OF WORKING CAPITAL
Working capital may be classified in two ways:-
On the basis of concept
Gross working capital
Net working capital
On the basis of time
Permanent or fixed working capital
Temporary or variable working capital

THE NEED OR OBJECTIVE OF WORKING CAPITAL

41
1. For the purchase of raw material, Components and spares.
2. To pay wages and salaries.
3. To incur day-to-day expenses and overhead costs such as fuel, power and office expenses,
etc.
4. To meet the selling expenses such as packing, advertising, etc.
5. To provide credit facilities to the customers.
6. To maintain the inventories of raw materials, work-in-progress, stores and spares and
finished stock.

FACTORS DETERMINING THE REQUIREMENT OF WORKING

CAPITAL
• Nature or Character of business
• Size of business/Scale of operations
• Production policy
• Manufacturing process/Length of production
• Seasonal variations
• Working capital cycle
• Rate of stock turnover
• Earning capacity and Dividend policy
• Price level changes
• Other factors

42
 FORECAST / ESTIMATE OF WORKING CAPITAL REQURIEMENT

“Working capital is the life blood of and controlling nerve center of a business.” No business can
be successfully run without an adequate amount of working capital. To avoid the shortage of
working capital at once, an estimate of working capital requirement should be made in advance
so that arrangement can be made to procure adequate working capital. But estimation of working
capital requirement is not and easy task and a large number of factors have to be considered
before starting this exercise. For a manufacturing organization, the following factors have to be
taken into consideration while making an estimation of working capital requirements:

FACTORS REQUIRING CONSIDERATION WHILE ESTIMATING WORKING CAPITAL

1. Total costs incurred on material, wages and overhead.
2. The length of time for which raw materials are to remain in stores before they are issued
for production.
3. The length of the production cycle is work-in-progress, i.e., the time taken for conversion
of raw material into finished goods.
4. The length of sales cycle during which finished good are to be kept waiting for sales.

5. The average period of credit allow to customers.

6. The amount of cash required to pay day –to-day expenses of business.
7. The average amount of cash required making advance payments, if any.
8. Average credit period expected to be allowed by suppliers
9. Time-lag in the payment of wages and other expenses.

Suggested Performa’s for estimation of working capital requirements are given as follows:

1. For a Trading Concern: Performa

43
STATEMENT OF WORKING CAPITAL REQURIMENTS AMOUNT
(Rs.)

CURRENT ASSETS:

I. Cash
II. Debtors or Receivable (for….month’s sales )
III. Stocks (for….month’s sales )
IV. Advanced payment, if any …………..
V. Others
…………..
Less: Current Liabilities:
…………..
I. Creditors (For…. month’s purchase).
II. Lag in payment of expenses . ……… …………..

(Outstanding expenses, if any) …………..

Working Capital (C.A.-C.L.) _______

Add : Provision/ margin for contingencies

Net working Capital Required

2. For a manufacturing Concern

STATEMENT OF WORKING CAPITAL REQURIMENTS

44
 AMOUNT
Current Assets : Rs.
I. Stock of the material (For….month’s consumption )
II. Work-in-Process (For….month’s)
a) Raw materials
b) Direct labour
c) Overheads
III. Stock of finished goods (For….month’s of sales)
a) Raw materials
b) Direct labour
c) Overheads
IV. Sundry debtors or receivables (For….month’s of
sales)
a) Raw materials
b) Direct labour
c) Overheads
V. Payment in advance (if any)
VI. Balance of cash (Required to meet day-to-day)
VII. Any other (if any)

Less: Current Liabilities :

I. Creditors (for.. month’s purchase of raw material)

II. Lag in payment of expenses (Outstanding

expenses….month’s)

III. Others (if any)

Working capital (C.A.-C.L.)

Add : Provision/Margin for Contingencies

Net Working Capital Required

FINANCING OF WORKING CAPITAL

The working capital requirements of a concern can be classified as:

45
 A. Permanent or fixed working capital .
B. Temporary or variable working capital .

The working capital investments are as permanent investments in fixed assets. This is so because
there is always a minimum level of current assets which are continuously required by the
enterprise to carry out its day to day business operations and this minimum can not be expected
to reduce at any time. This minimum level of current assets gives rise to permanent or fixed
working capital as this part of working is permanently blocked in current assets.

Similarly, sum amount of working capital may be required to meet seasonal demands
and some special exigencies such as rise in prices, strikes, etc, this proportion of working capital
gives rise to temporary or variable working capital which can not be permanently employed
gainfully in business.

“The fixed proportion of working capital should be generally financed from the
fixed capital sources while temporary or variable working capital requirements of a concern
may be met from the short term sources of capital”.

Source of working capital:

The working capital requirements should be met both from short-term as well as long term source
of funds. The financing of working capital through short term source of funds has the benefits of
lower cost and establishing close relationship with the banks.

Financing of working capital from long term resources provides the following benefits:

1. Reduce the risk, since the need to repay loans at frequent intervals is eliminated.
2. It increases liquidity since the firm has not to work about the payment of these funds in
the near future.
3. The finance manager has to make use of both long term and short term sources of funds in
a way that the over all lost of working capital is the lowest and the funds are available on
time and for the period they are really needed.

46
 Source of working capital

Permanent or Fixed Temporary or variable

1. Shares. 1. Commercial Banks.

2. Debentures . 2. Indigenous Bankers.
3. Public deposit . 3. Trade Creditors.
4. Plugging back of profits . 4. Installments Credit.
5. Loans from financial intuitions. 5. Advances.

USES OF WORKING CAPITAL

The typical uses of working capital are as follows:

• Adjusted net loss from operations.

• Purchase of noncurrent assets .
• Purchase of long term investment like shares, bonds/debentures etc.
• Purchase of tangible fixed assets, like land, building, plant, machinery, equipment etc.
• Purchase of intangible fixed assets, like goodwill, patents, copyright and etc.
• Repayment of long-term debt (debenture or bonds) and short-term debt (bank
borrowings).
• Redemption of redeemable preference shares.
• Payment of cash dividend.

TECHNIQUES OF FORECASTING WORKING CAPITAL

47
1. Cash Forecasting Method: - Under it the position of cash at the end of the period is shown
after considering the receipt and payments to be made during this period. It is more or less a
summary of cash book. It shows the deficiency or surplus of the definite point of time.

2. Balance Sheet Method:- Under it forecast is made of the various assets and liabilities of the
business. The difference between assets and liabilities indicates either cash surplus or cash
deficiency.

3. Adjusted Profit and Loss Account Method:- Under it the forecasted profits are adjusted after
adding the cash inflows and deducting the cash outflows in order to adjust the estimated profit on
cash basis.

4. Percent of sales Method: - It assumes that certain balance sheet items vary directly with sales.
Thus the ratio of a given balance sheet item to sales remains constant. The firm’s needs in terms
of the percentage of annual sales envisaged in each individual balance sheet items are expressed.
This relationship between sales and working capital may be expressed in the following three
ways:

(i) As number of days of sales.

(ii) As turnover .

(iii) As percentage of sales.

5. Operating Cycle Method: - Operating cycle is the period that a business enterprise takes in
converting cash back into sales. It has the following four stages:-
(i) The raw materials and store inventory stage.
(ii) The semi- finished goods or work-in-progress stage.
(iii) The finished goods inventory stage.
(iv)The accounts receivable or book debts stage.

ANALYSIS OF WORKING CAPITAL AND MEASURING THE EFFICIANT IN

THE MANAGEMENT OF WORKING CAPITAL:-

48
The working capital magnitude of a concern should neither be too inadequate nor too excessive
as compared to its requirement. Maintaining adequate level of working capital ensures the
improvement in profitability. Thus, financial manager all time strive to strike a balance between
working capital requirement and the working capital magnitude. This is done by analyzing and
examines the changes in individual components of working capital. For such an analysis, the
following techniques are used:-

1. Schedule of change in working capital.

2. Fund statement.

Schedule of change in working capital:

This technique is based on current items, i.e., current assets and current liabilities only. As we
know that working capital is the excess of current assets over current liabilities.

Note:-

• Increase in Current Assets brings increase in working capital.

• Decrease in Current Assets brings Decrease in working capital.
• Increase in current liabilities brings Decrease in working capital.
• Decrease in Current Liabilities brings increase in working capital.

PROFIT RISK NWC

Current assets + - - +

- + + -

Current liabilities + + -
+
- - +
-

COMPARETIVE ANALYSIS OF WORKING CAPITAL

MANAGEMENT ON “BINANI CEMENT LIMITED”

49
 BY DIFFERENT METHODES.
CALCULATION OF GROSS WORKING CAPITAL (Rs . Lakhs)

PARTICULARS As at As at
31st March, 2009 31st March, 2008

CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS :

INVENTORIES

(as taken, valued & certified by the Management)

Stores, Spare Parts and Fuel______________________________________ 10,801.52 14,488.83
Loose Tools __________________________________________________ 12.49 5.00
Raw Material and Packing Material _______________________________ 734.43 329.11
Work - In - Process ____________________________________________ 24.48 42.78
Finished Goods _______________________________________________ 9,681.03 6,878.72

SUNDRY DEBTORS (UNSECURED AND CONSIDERED

GOOD,UNLESS OTHERWISE STATED) :
Other debts __________________________________________________________ - 0.53

Cash and Bank Balances

Cash In Hand_______________________________________________ 5.65 7.60

Remittances in transit and cheques in hand________________________ 12.08 86.88
Balance with Scheduled Banks :
Current Accounts ___________ _______________________________ 3,916.73 1,862.05
Collection Accounts _________________________________________ 3,159.69 2,371.49
Deposit Accounts (Including Rs. 1.83 Lakhs______________________ 1,627.31 5,264.85
(Previous year Rs. 1,316.81 lakhs) in margin accounts)

Loans and Advances (Unsecured, considered good,

unless otherwise stated)

Due from Holding Company__________________________________ 8,557.65 8,046.62

(Refer Note 26 of Schedule 15)
Advances recoverable in cash
or in kind or for value to be received____________________________ 7,015.31 6,911.17
Fringe Benefit Tax (Net)_____________________________________ 5.20 9.47
Other Deposits ____________________________________________ 708.54 818.44
Balance with Excise, Customs and VAT Authorities ______________ 2,159.30 3,067.73
(including for Service Tax Rs. 156.15 lakhs,
Previous Year Rs. 2.42 lakhs)
Assets held for disposal _____________________________________ 33.31 19.42
GROSS WORKING CAPITAL ________________________ 48,454.72 50,210.69

50
Interpretation:
• There should be investment for short term.As compare to FY 2008 the company’s current
assets has decrieas in FY 2009.

• Company should use the cash in hand and cash at bank for some investment .

• Company should maintain proper utilisation of the deposits.

• Company’s closing stock in FY 2009 increase.

51
 TOTAL CURRENT LIABILITIES:
(Rs.Lakhs)

PARTICULARS As at As at
31st March, 2009 31st March, 2008

CURRENT LIABILITIES AND PROVISIONS

CURRENT LIABILITIES:

Acceptances_____________________________ 469.93 –
Sundry Creditors
For Trade :
– Total outstanding dues of creditors other than micro
enterprises and small enterprises_ ___________ 27,070.51 21,836.87
(includes creditors for capital projects Rs. 4,294.91 lakhs
(Previous Year Rs. 5,546.27 lakhs))

– For Expenses___________________________ 5,546.75 2,050.40

Other Liabilities __________________________ 13,123.15 7,750.87
Advances from customers__________________ 4,779.82 3,204.26
Investor Education and Protection Fund shall be credited
by the following
– Unclaimed dividend ______________________ 6.04 2.83
Interest accrued but not due on loans__________ 95.58 47.93

PROVISIONS

For Current Income Tax (net of Advance Tax)___ 1,883.82 2,157.79

For Proposed Dividend _____________________ 4,265.13 5,077.53
For Tax on Dividend _______________________ 724.86 862.93
For Gratuity_______________________________ – 14.37
For Leave Encash__________________________ 106.36 119.13

TOTAL CURRENT LIABILTIES__________ 58,071.95 43,124.91

52
INTERPRETATION:

• Current liabilities has increase 34.65 % in FY 2009 its big responseblity to full fill by
current assets.

• Company should maintain the outstanding expenses in FY 2009 its increase 23.96%.

• Other liability has incerase 69.31%.it should be maintain by the company.

53
 CALCULATION OF NET WORKING CAPITAL:
Net working capital=Current assets – Current liabilities. (Rs. Lakhs)

As 31st March 2009 As 31st March 2008

Total Current Assets______________________________ 48,454.72 50,210.69

LESS:

Total Current Liabilites___________________________ (58,071.95) (43,124.91)

Net working capital requirment (9617.23) 7085.78

INTERPRETATION:

• According this figure the net working capital in FY 2009 requir Rs 9617.23 lakhs.

• The position of current assetes is not able to recover the current liability in FY 2009.

• Working capital ratio=annual net sale / average working capital.

• Current ratio= current assests / current liability.

FY 2008 : CR=50210.69 /43124.91 =1.16 :1

FY 2009: CR=48454.72/58071.95 = 0.834:1

54
 • Company good current ratio = 2:1, So, Company should maintain the Current assets and
Current liabilies.

Statement of Change in Working Capital of Binani Cement Ltd.

As on 31st March 2009 (Rs. in Lakh)

Particulars 31st March 2009 31st March 2008 Increase Decreast

Current Assets:-
21253.95 21,744.4 -- 490.49
Inventories 4

Sundry Debtors -- .53 -- .53

8721.46 9592.87 -- 871.41

Cash & Bank
18479.31 18872.85 -- 1301
Loans & Advances
48454.72 50210.69

Total of Current Assets (Gross Working Capital)

Current Liabilities:-

Creditors :-
27070.51 21836.87 -- 5233.64
Total o/s dues of creditores other then micro enterprises and
small scale industries

Liabilities for expenses 5546.75 2050.40 -- 3496.35

Other Liabilities 13123.15 7750.87 -- 5372.28

Advances from customer 4779.82 3204.26 -- 1575.56

Interest accrued but not due on loans 95.58 47.93 -- 47.65

Provision for current income tax 1883.82 2157.79 659 --

Provision for proposed dividend 4265.13 5077.53 812.40 --

Provision for Tax of Dividend 724.86 862.93 138.07 --

Provision of Gravity -- 14.37 14.37 --

Provision for leave encashment 106.36 119.13 12.77 --

Total Current Liabilities 58071.95 43124.91

Net working capital (9617.23) 7085.78

Change in working capital (Decreasing) 16,752.00

18388.91 18388.91

55
PARTICULARS CALCULATION CALCULATION As 31ST As 31ST
FY 2009 FY 2008 March March
2009 2008
RAW =9681.02/(7952.68/ =6878.72/(6044.46/ =438.23 =409.69
MATERIALCOVERSION 360) 360) DAYS DAYS
PERIOD
(RMCP)=RMI/(RMC/360)

FINISHED GOODS =9681.02/(66713.53/ =6878.72/(29211.98/ =52.24 =84.77

CONVERSION PERIOD 360) 360) DAYS DAYS
(FGCP)=FGI/(CGI/360)

56
 COST CAPITAL:

The capital cost envisagedfor establishiing the clinker grinding unit is :

S.NO. PARTICULARS Rs in Lakhs.

1. land and site development 336

2. Building and & structures 2681

3. Plat and Machinery 5489

4. Other cost 1284

TOTAL 9790__

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 “SWOT ANALYSIS” OF BINANI CEMENT LINITED, ‘NEEM
KA THANA’:
STRENGTH:
• 1.4 MILLION TON PER ANNUM CLINKER GRINDING UNIT WHICH IS HELP TO
MAXIMUM OUT PUT AND DELIVER GOODS ON DEMAND WITH IN TIME OF
REQUIRMENT.

• ALL MACHINARY HAS CONTROLED BY COMPUTER CONTROL SYSTEM, ONLY 1

EMPLOYEE CAN HANDLE VERY WELL AND RUN THE MACHINARY. SAVING THE
COST OF EMPLOYEE SALARY AND SAVING TIME.

• RAILWAY LINE VERY STRONG POINT TO BRING THE CLINKER WHOLE 59

COACHS.

• THERE IS A MACHIN WHO UNLOAD 1-BY-1 COACH AND WITH IN 7 TO 8

HOURES ITS COMPLITLY UNLODED ALL 59 COACH FROM GOODS TARIN.

• BINANI INCREASES THE EMPLOYEE INCRIMENT WITH IN 18 MONTH.

• GOOD JOB SATISFACTION FOR EMPLOYEE.

• GOOD PROFIT EARN.

• THINK ABOUT SOCIAL RESPONSIBILITY.

WEAKNESS:
• NO DRESS COAD FOR LABOUR FOR EASY TO EDINTITYFY ,WHO IS
COMPANY’S WORKER AND WHO IS OUT SIDER?

• ONLY 5 MEMBER IN SCURITY.

OPPRTUNITY:
• COMPANY SHOULD ESTABLISHED MORE PLANTS FOR MANUFATURING
CEMENT AND SAVE THE COST OF TRANSEPORTATION.

• COMPANY SHOULD DELIVER THE ORDERS BY THE GOODS TRAIN.

• COMPANY HAS EARND GOOD PROFITS , SURPLUS & RESURVES BUT NOT
INVEST IN THAT AREA WHERE THEY WILL GET MORE PROFITS &
EARNING.

THREATS:

58
• IN BALANCE SHEET SCHEDULE -5 THE LONG TERM INVESTMENT AND
SHORT TERM INVESTMENT HAS NO EFFECT .PURCHASE AND SALE OF
THESE INVESTMENT RATE ARE SAME NO PROFIT AND NO LOSS.

BRAJ BINANI GROUP ANALYSIS BY DIFFERENT CHARTES:

59
60
 SHREE CEMENT LIMITED
Shree Cement Limited (SCL is a forward looking cement company striving to continue its
leadership position in the area of energy efficiency, cost effectiveness, environmental
improvements and community development, in the global cement map.

Established in the year 1979, SCL has been promoted by B G Bangur Group based at Kolkata.
Today the group is a respected industrial house.

Shree Cement Ltd. manufactures 53, 43 and 33 grade Ordinary Portland Cement (OPC) and
Portland Pozzolana Cement (PPC) with a total capacity to 2.6 MTPA.

In 2004-05, the company has produced 3.02 million tons of cement. Its workforce comprises of
1,281 individuals, including 653 staff members and 628 workers.

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Shree Cement is commissioning 1.2 MTPA greenfield capacity in the name of 'Bangur Cement'
at village Ras, district Pali in Rajasthan. The estimated cost of the project is over INR 3000
million. It is expected to start production by September, 2005.

SHREE POWER (CAPTIVE POWER PLANT)

2xl8 MW captive power plant (CPP) was commissioned in April 2003 to meet the entire power
requirement of the cement plant including its peak demand. This has resulted in decreasing the
load on the state grid by reducing demand of Shree Cement. Thus, improving the power
availability in the state in more than proportional amount. The power plant is fully automatic and
is operated from a centralized control room. Distinct feature of this plant is its utilization of
petroleum coke, which is a waste product of Petroleum Refineries.

The CPP ensures uninterrupted supply of electricity to the cement plant at a cost as low as INR
2.04 per kWh against the state Grid rate of INR 4.29 per kWh. Complete reliability of CPP
enabled the company to discontinue the regular supply from Rajasthan power grid in the year
2003-04.

Generation of power has associated environmental impacts and Shree Cement has taken care to
minimize these impacts with an attempt to make the plant eco-friendly. Fly ash generated from
this plant is used as supplementary fuel, and bed ash, which also contains calcium sulphate, is
utilized in cement grinding. Raw water consumption in the conventional CPP design was
proposed to be 5,232 kl/day In view of conserving the precious resource of the region, capital
intensive Reverse Osmosis (RO) plant (RO-I) was installed along with CPP, bringing down the
water consumption to 3,600 kl/day.

Effluent generated from pretreatment unit and blow down from cooling tower and boiler is mixed
with some quantity of raw water and is again treated for reuse. The effluent generated by RO-2 is
utilized for ash quenching and dust suppression in fue1 handling areas at CPP. The remaining
effluent is transported to cement plant for dust suppression at raw material and fuel handling
areas and spray on roads. These initiatives have facilitated zero-discharge of effluent from the
CPP on land. No effluent is generated from cement plant. High efficiency Electro Static
Precipitators (ESP) has been installed, which has helped in maintaining Suspended Particulate
Matter (SPM) emissions well below the specified norms. During various measurements taken at
the two boiler stacks during the year, the emissions ranged between 57.26 and 82.1 mg/Nm3,
against the statutory limit of 100 mg/Nm3•

Covered belt conveyors and water spraying at material transfer points are provided to control the
fugitive dust emissions. To control the release of SOx to atmosphere, they are utilizing limestone
in the boiler bed.

Shree Cement Position:

62
63
 COMPARISON & CONCLUSION:
• Binani Cement Limited boasts of a fully integrated cement plant, strategically located in
Binanigarm, Sirohi, Rajasthan. The 1.65 mtpa facility and a 25 MW captive power plant
were set up in 1997 in a record 19 months.BCL, a split grinding unit at Neem Ka Thana to
increase the capacity of the cement facility to 6 mtpa and power facility to 69.6 MW.

• ACC, Ambuja Cement and Aditya Birla Group – posting a quantum jump in their
dispatches.ACC managed to cut down its inventory marginally by selling 1.89 MT while
its production was at 1.87 MT in January 2009. Both production and output rose 12 per
cent when compared to January 2008.

• Ambuja Cement output was up 4 per cent at 1.61 MT (from 1.55 MT), while sales
improved 5 per cent to 1.63 MT (from 1.55 MT).The Aditya Birla Group's production in
January 2009 jumped 9.76 per cent to 3 MT and dispatches were up 7.35 per cent at 3
MT.

64
 • Shree Cement Ltd. manufactures 53, 43 and 33 grade Ordinary Portland Cement (OPC)
and Portland Pozzolana Cement (PPC) with a total capacity to 2.6 MTPA.

• In 2004-05, the company has produced 3.02 million tons of cement. Its workforce
comprises of 1,281 individuals, including 653 staff members and 628 workers.

• Shree Cement is commissioning 1.2 MTPA greenfield capacity in the name of 'Bangur
Cement' at village Ras, district Pali in Rajasthan. The estimated cost of the project is over
INR 3000 million. It is expected to start production by September, 2005.

• Binani Cement, Shree Cement and Dalmia Cement are among the new players who have
plans to get into the RMC business in the next five years.

• As compared Binani cement has very good performence with his 2 units only.
NAME OF THE CMP( MARKE EPS. P/E P/BV DIVIDEND
COMAPNY AS ON T RS. X X %
FEB.20 CPITAL
10) RS. MIL.
BINANI 69.85 14186.50 14.04 4.98 2.98 21
CEMENT LTD
J.K. CEMENT. 168.00 11747.80 34.50 4.86 1.29 35
LTD
DALMIA 212.10 17167.20 22.15 9.58 1.42 100
CEMENT
LTD
THE INDIA 116.30 32864.20 14.50 8.02 1.11 20
CEMENT LTD

KEY CONCERN:

• The current market price of Rs.69.85, the stock trades at a P/E of 4.27x and 3.76x for
FY10E and FY11E respectively.

• On the basis of EV/EBDITA, the stock trades At 2.68x and 2.56x for FY10E and FY11E
respectively.

• The Price to Book Value of the stock is expected to be at 1.75 and 1.20 respectively for
FY10E and FY11E.

• Net sales of the company are expected to grow at a CAGR of 28% over 2008 to 2011E.

• BCL has CAPEX plans of Rs 1700 crores to be spent over the next 2-3 years which
includes Greenfield expansion in Gujarat, Grinding unit in Mauritius, Expansion in China
& mine development in Nimbri Chandawatan, Rajasthan.

65
 • The Shandong Binani Rong'An Cement Co. Ltd., China, a Subsidiary of BCL, has started
implementation of its expansion project for increasing Cement manufacturing capacity
from 0.50 Million MT to 3.00 Million MT. The project is expected to go into production
by mid 2011.

• The Extension of wagon loading belt to third loading point in both sides expected to be
commissioned by March ‘ 10.

• To enhance availability of packers interconnectivity with silos shall be done by March’

10.

• We recommend ‘BUY’ in this particular scrip with a target price of Rs.84.00. for Medium
to Long term Gains.

BIBLIOGRAPHY:
1. WEB SITS:

• http://www.binani.com

• http://www.shreecement.com

2. MEGAZINE:

Binani ,Bina (March & April 2010) “IMPULSE ACTION CALLS FOR
SAFETY”,Binani News Journal,Vol.12 No.2 ,P.P.3 to 5 & 33.

66
3. REPORTS:

• Annual Report 2008 & 2009 Of Binani Cement Ltd.

• Annual Report 2008 & 2009 Of Shree Cement Ltd.

• Annual Report 2009 Of Indian Cement Industries.

4. BOOKS:

Pandey, I.M.(2008),”Working Capital Management”, Financial Management,9TH Ed.,New

Delhi: UBS Publisher Distributers Pvt Ltd , pp 579-to-584.

67