PROJECT REPORT On WORKING CAPITAL MANAGEMENT At

BAJAJ STEEL INDUSTRIES LTD

Submitted towards the partial fulfillment of the requirement for the award of the degree of

MASTER OF MANAGEMENT STUDIES

Submitted by AMAR V. JAMNEKAR MANAGER External Guide FINANCE

STERLING INSTITUTE OF MANAGEMENT STUDIES

1

NERUL, NAVI MUMBAI

ACKNOWLEDGEMENT
The satisfaction and euphoria that accompany the successful completion of any task would be, but incomplete without mentioning the people who made it possible, whose constant guidance encouraging crowned my effort with success. I would like to begin with a special note of gratitude and heartfelt thanks to (FINANCE MANAGER), who gave me the opportunity to complete my summer project at Bajaj steel industries ltd, Nagpur (Maharashtera). I am extremely grateful to the President MR. M.K.SHARMA for his constant encouragement and valuable suggestions throughout my summer training and project for his cooperation extended to me. I am extremely indebted to him for sharing his valuable time, comments and encouraging suggestions which guided and inspired me throughout the preparation of the project. I express my special thanks to Mrs. Suneet Menon (HR Manager) for giving me their valuable opinions time to time. At last but not the least, I am very thankful to all the staff members of Finance department also.
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DECLARATION
I AMAR V.JAMNEKAR student of M.M.S. III Semester of STERLING INSTITUTE OF MANAGEMENT STUDIES, NAVI MUMBAI (Affiliated to Mumbai University) hereby declare that the Summer Internship Training Report on WORKING CAPITAL MANAGEMENT of Bajaj steel industries ltd, Nagpur (Maharashtera) is my original work and has not been submitted by any other person. I also declare that I have done my work sincerely and accurately eve then if any mistake or error had kept in it, I request the readers to point out these error and guide me to remove these errors in future.

Signature Candidate

of

the

PREFACE
Practical work experience is the integral part of individual learning. An individual who is learning managerial concepts has to undergo this practical experience for being a future executive. Master of Management Studies is a two-year programme that inserts management knowledge in an individual to make that individual completely professional for which practical experience is must. BAJAJ STEEL INDUSTRIES LTD is the market leader in manufacturing and trading cotton ginning machinery. BSI offered me a project on Working Capital Management to understand the current position through dates provided by them.

INTRODUCTION
Summer Internship is the most crucial aspect for a management student. It is the first rendezvous of the student with the industry. It gives the students a chance to apply the fundamentals they have learnt in the first year into actual practice. For students without work experience, it provides an opportunity to get the first taste of working life. Also it helps students in deciding the kind of specialization they want to pursue. Finally, from the Companys point of view, it provides them with a great opportunity to prejudge a candidate. So the summer internship has a direct impact on the final placements of the students. I did my Summer Internship at, BAJAJ STEEL INDUSTRIES LIMITED at NAGPUR. The internship period was 1th May to 25th June, 2011 which was highly enriching. My Industry Guide was Bharti Karamchandani

This Summer Internship had benefited me in the following manner: It bridged the gap between theory and practical. Many of the theoretical aspects were clearly understood. Despite the work experience, it was my first hand experience in the field of Banking & Finance sector. It gave me an opportunity to explore the career field of interest. It enhanced my skills and habits required to be successful in this particular field. It may open the doors of opportunity for me to debut in the field of Banking & Finance sector.

CONTENTS
Chapter No. Particulars Certificate Acknowledgement Declaration Preface Executive summary Contents 1) 1.1 1.2 1.3 1.4 1.5 1.6 Introduction of company History of the company BSIL an overview Vision and mission Management team Products Accounting policy
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Infrastructure Installations

2) 2.1 2.2 2.3 3) 3.1 3.2 3.3 3.4 3.5 3.6

Research Methodology Introduction Types of data collection Objective of study Working Capital Management Introduction Types of working capital Features of working capital Determinants of working capital Components of working capital Working capital cycle

4) 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8

Analysis of Working Capital Introduction Role of ratio analysis Limitations of ratio analysis Methods of working capital ratio Ratio analysis Profit & loss Cash flow statement Balance sheet

5) 5.1 5.2 5.3 6) 7) 8)

WORKING CAPITAL DECISION MAKING Receivables management Inventory management Cash management Limitation of study Conclusion Bibliography

TOOL

FOR

BAJAJ STEEL INDUSTRIES LIMITED

BAJAJ STEEL INDUSTRIES LIMITED, a significant part of Bajaj Group of Industries, Nagpur was established in the year 1961, as a manufacturer and exporter of cotton pressing and ginning machines. Under the guidance of Mr. M. K. Sharma, the President of the organization, we have set a strong foothold in the global market. His experience and knowledge has assisted us in achieving specialization in the manufacturing of Ginning and Pressing Equipment. Today, we are counted among the Decorticating Machines Suppliers and Hull Beater Exporters in India.

HISTORY
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The company was established by Late Shri Gangabisenji Bajaj in 1961 and is now run under able guidance of his son Shri Hargovind Bajaj. The group is having wide experience in the fields of engineering, cotton, plastics and various other activities. The company has been pioneer in double roller cotton ginning technology with largest market share in the segment. The company has grown rapidly and now expanded its manufacturing, fabrication and assembly facilities manifold. Earlier company was having only factory at Imambada Nagpur, now it is having four major manufacturing facilities. The company has recently entered into technical collabration for manufacturing of saw gin, rotobar gin and other equipments earlier manufactured by Continental Eagle Corporation, USA to manufacture them in India.

AN OVERVIEW OF COMPANY

Bajaj Steel Industries Limited (BSIL), Nagpur, India, established in 1961, is a public limited company, listed on Bombay Stock Exchange. The company is having world class engineering setup in its various plants situated in and around Nagpur. The present activities of the company are as below:

A) Manufacturing

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Largest and Modern Cotton Ginning & Pressing Machinery Manufacturer in India World class Delinting and Decorticating machinery manufacturing World class machining of components and parts for various applications All types of electrical panels to meet various industrial needs High quality structural fabrication for buildings and machinery applications etc. Manufacturing of various other machineries, components and parts as per drawings High quality mechanical conveyors and elevators Pneumatic conveying, dust / waste handling systems and humidification systems Engineering and construction projects Hydraulic cylinders, Power packs & Manifolds for various applications

Bajaj is the only company in the world producing machineries for all cotton ginning technologies i.e. Double Roller, Saw Gin & Rotobar, all Pressing technologies i.e. Down Packing, Up Packing & Horizontal Packing, as well as

Seed Cleaning, Delinting & Decorticating, apart from general engineering fabrication, machining, intelligent electrical panel manufacturing and various other engineering activities. The company is on high growth path and adding various items to its fold consistently yoy. Company is having extensive facilities for following: 1. 2. 3.
4.

Engineering Designs Machining Fabrication Assembly

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B) Trading
Cotton Trading: Domestic and Exports

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ENDEAVOR

Bajaj Group of Industries are starting a new Cotton Export Division" at Nagpur to widen their horizon in the field of Cotton Export, to serve buyers across the globe and thus making a mark in the cotton world. We Endeavor to put in our hardest and best of efforts, to provide the best quality cotton to the world. Dealing in all types of Raw Cotton ranging from short staple to extra long staple, according to the specifications & parameters of the buyers, at most affordable and attractive terms.

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VALUES
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People contribute when they relate to an organization and they relate, when they understand the organization. People understand an organization through its values, by experiencing the culture that values create and by using the systems and processes that values define. In large organizations, such share understanding can not be created through leadership of individuals alone; it requires leadership of principles, of beliefs, of conviction. Integrity Commitment Passion Seamlessness Speed constitute what we call our

These together Values.

Integrity :-

Acting and taking decisions in a manner that these are fair, honest, following the highest standards of professionalism and are also perceived to be so. Integrity for us means not only financial and intellectual integrity, but in all other forms as are commonly understood.

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Commitment: -

On the foundation of integrity, doing whatever it takes to deliver values to all stakeholders. In the process, taking ownership for our own decisions and actions, those of our team and that part of the organization that we are responsible for.

Passion: -

A missionary zeal is arising out of emotional engagement with the organization that makes work joyful and inspires each one to give his or her best.

Seamlessness: Speed: -

Thinking and working together across functional silos, hierarchies, businesses and geographies. Responding to internal and external customers with a sense of urgency.

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Board Of Directors of Bajaj Steel Industries Ltd

Chairman Managing Director Executive Director Whole-time Director Directors Shri Hargovind Bajaj Shri Rohit Bajaj Shri Sunil Bajaj Shri Ashish Bajaj Shri Vinodkumar Bajaj Shri Lalchand Mutha Shri Ramadevi Ruia Shri Kamal Kishore Shri Mohan Agrawal Shri Alok Goenka Shri Raj Kumar Lohai Shri Rajiv Ranka Shri R.G. Dwivedi Company Secretary Auditors Bankers/Financial Institution Shri Jagdish Shirke B.Chhawchharia & Co. SICOM LIMITED State Bank of India Axis Bank Limited

Kela

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Main Products of Bajaj Steel Industries Ltd

Ginning Machine

This is well reckoned as one of the overruling Double Roller Ginning Machine Exporters based in India. Our Ginning Machine is widely used to gin the lint in small as well as bulk quantity. Use of technically advanced machines for the manufacturing of rotating parts of Cotton Ginning Machine assures high tolerance and best finish ensuring high durability. Availability with various user-friendly features ensures ease of operation and maintenance of Cotton Ginning Machine.

Cotton Baling Press

This provides a wide range of high technology Cotton Baling Press that includes fully
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automatic, Medium Capacity (15-18Bales) and High capacity (30-35 Bales). Our Automatic Cotton Baling Press is designed to offer low cost as well as power consumption per bale. Robust construction of

our Cotton Baling Press ensures long lasting life with no maintenance. High-pressure power pack based on German Technology assures high performance of our Cotton Baling Press. Today, we have carved a niche as one of the distinguished Hydraulic Cotton Baling Press Exporters based in India.

Cotton Pre-Cleaner

The advanced Cotton Pre Cleaner is ideally suited for removing yellow/ pre-matured bolls, stones, and various other impurities from raw cotton. Cotton Pre cleaning Machine offered by us is prefect to improve the quality of the raw cotton before ginning. It protects the fiber quality and gin from any kind of damage from impurities. With its efficiency, our Pre Cleaner enhances the performance of the ginning and reduces the maintenance cost of ginning machines. We have firmly propositioned ourselves as one of the key Cotton Pre cleaner Manufacturers based in India.
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Lint Cleaner

Today, the company stands among the major Lint Cleaning Machine Manufacturers and Suppliers based in India. Our Lint Cleaner is precisely designed to efficiently remove leafy matters, seed coasts etc. from ginned lint and clean the Cotton Fiber. Cotton Lint Cleaner offered by us is perfect to improve the grade as well as appearance of lint. With high quality grid and spade system, it protects the quality of the fiber and reduces the trash content. Available in a variety of models with various feeding systems, our Lint Cleaner is easy to operate and maintain.

Auto Feeder

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They have firmly positioned themselves as one of the chief Automatic Feeder Manufacturers and suppliers based in India. Our Auto Feeder for Ginning Machine is manufactured from the advanced technology parts to increases productivity from 15% to 20%. Electric Auto Feeder offered by us is perfect to save labor. With high technology, it assures low consumption of electricity. Ensuring

proper feeding of Cotton to the Gin Machine, our Electric Auto Feeder is easy to operate and maintain

Cotton Seed Delinting Machine

They provide high capacity Cotton Seed Delinting Machine that is highly appreciated in the national and international markets. We have carved a niche as one of the key Mechanical Cottonseed Delinter
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Manufacturers

and

Suppliers

based

in

India.

Energy Saving Features

Efficient Roll Box design minimizes drag for an easier flow of seed Mass. 176 Saw Blanks made of superior & special steel material. Lowest Energy to capacity ratio in the Industry

Mechanical Advantages Saw Mandrel made of mechanical tubing provides smooth operation. Electric motors are conveniently located for ventilation & easy maintenance.

Positive tooth belt drives eliminate slippage & provides efficient power transmission.

Decorticator

Today, they are one of the leading Decorticating Machine Manufacturers and Suppliers based
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in India. A Proven Winner since 1962 CEC was the first to envision and implement the modern twin-roll hulling design since 1962. First to incorporate a decorticator with a basket beater and high-speed separation. First to successfully process undelinted cottonseed with lowest oil losses. Highest Capacity per meter width of twin roll drum.

Hull Beater

The high capacity Hull Beater is unsurpassed in efficiency as well as performance. The model 4620 Double Drum Hull Beater is uniquely designed with a
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built in tailing beater eliminating the need for additional conveying systems. Capable of handling capacities in excess of 200 tons per day of delinted & undelinted cottonseed, the model 4620 is unequaled in the industry. When combined with the CEC/BAJAJ decorticator/separator system, oil in hulls is maintained at a low level, even with 12 % to 14% lint on hulls. Today, we stand among the leading Industrial Hull Beater Manufacturers and Suppliers based in India.

Cotton Seed Cleaner

They offer fine Cotton Seed Cleaner that is first and the foremost designed to be the main machine in seed cleaning. Cotton Seed Cleaning Machine offered by us is available with Material feed roller as well as Aspiration chamber fitted with trash conveyors that enhance its efficiency. Today, we

stand among the prominent Exporters based in India.

Cotton

Seed

Processor

Linter Cleaner

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Linter is discharged from a cyclone to the top chamber of the LC-410D Linter Cleaner. This chamber consists of two x 3 Meter' long, 500 MM diameter cylindrical beaters operating side by side in 550MM dia. Half round screen sections. Linter enters at one end of one beater, is conveyed to the opposite end and transferred to the opposite beater section. From this point, the Linter is once again conveyed over the screen section for the length the top section. Cleaned Linter discharged from the top section is pneumatically conveyed to the bale press

ACCOUNTING POLICY
i) Accounting Convention:
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The financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards. ii) Valuation of Fixed Assets: Fixed assets are stated at cost without deducting capital grants which are shown separately in the accounts. iii) Method of depreciation: Depreciation is provided on Written Down Value Method in accordance with the provisions of Schedule XIV to the Companies Act, 1956. iv)Treatment of expenditure during construction: The expenditure incurred during the period of construction is charged to capital work-in-progress and on completion the cost is allocated to the respective fixed assets. v) Valuation of Inventories: Inventories are valued as follows: Raw Materials, Stores, Spares and Fuel:- Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Cost is determined on FIFO basis. Semi finished goods and finished goods:- Lower of cost and net realizable
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value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operation capacity. vi) Obsolescence and damaged materials: The inventories are periodically reviewed to ascertain dormant/obsolescence materials and necessary adjustments are made thereof. vii) Investments: Long Term investments are valued at cost except that provision is made to recognize the permanent diminution in their value. Investment sin tended to be held for less than one year are classified as current investments and are valued at lower of cost and market value. viii) Foreign Exchange Variations: Closing balances of current assets and current liabilities relating to foreign currency transactions are converted into Rupees at prevailing rates or at the rate of forward cover. Export sales are recorded in rupee amount by applying the exchange rate existing at the time of discounting the bills of exchange with the bankers or at closing rate of exchange. ix) Sales and other income: a) Sales include excise duty and exclude sales taxA/alue Added Tax.

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b) Revenue recognition is postponed to a later date only when it is not possible to estimate it with reasonable accuracy. x) Employees Benefits: a) Short term employee benefits are charged off at the undiscounted amount in the year in which the related service is rendered. b) Post employment and other long term employee benefits are charged off in the year in which the employee has rendered services. The amount charged off is recognized at the present value of the amounts payable determined using actuarial valuation techniques. Actuarial gain and losses in respect of post employment and other long term benefits are charged to Profit and Loss Account. xi) Taxes on Income: a) Current tax is determined as the amount of tax payable in respect of taxable income for the year. b) Deferred Tax is recognized, subject to consideration of prudence, in respect of deferred tax assets/liabilities arising on timing differences, being the difference between taxable incomes and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. xii) Impairment of assets: Impairment loss in the value of assets as specified in Accounting Standard 28 is recognized whenever carrying value of such assets exceeds the market value or value in use, whichever is higher.

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xiii) Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires estimates/ exemptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between actual results and estimates are recognized in the period in which the results are known/ materialized.

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The well-equipped design center and state of the art manufacturing facilities are spread over an area of 12 acres. We have CNC Turning Centers from Taiwan, CNC Planomillers, Drilling & Assembly Centers that assure of the development of technically sound machines. Moreover, our two factories one having plot area of 7.5 Acre with 11000 Sq. Mtr. builtup workshop and other having plot area of 5.5 Acre with builtup area about 9000 Sq. Mtr. are our strength. Our manufacturing facilities are ISO 9002 & TS 16949 certified that ensure reliability.

Bajaj Steel - IMAMBADA PLANT

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New Bajaj Plant at MIDC Hingna, Nagpur

Highly equipped machine shop has a large number of advance CNC machines and all kind of fabrication & assembly facility.

Committed and trained personnel, all facility of metal cutting, machining, welding, sheet metal work etc. under one roof.

Proven track record and world class setup for designing, machining, fabrication and assembly of various industrial engineering equipments, components, parts and structures.

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Facilities
Well equipped machine shop with more than 20 advance CNC machines and all kind of fabrication facility.

Committed and trained personnel,

All facility of metal cutting,machining,welding,sheet metal work etc. under one roof. We meet the requirements of the customer to his full satisfaction under one roof for machined components

Advantages LOGISTIC ADVANTAGES

Inland Container Depot (ICD) Construction of International Cargo Hub at Nagpur Export clearance by customs at Nagpur

Shipping Agents, C&F Agents have full fledged operations at Nagpur Not far from sea port (JNPT-Bombay) No congestion problems faced by large sea ports Excellent Rail and Road connections to JNPT directly.

Regular International and national air connection from Nagpur.

LOCATION ADVANTAGES

Large empty container inventory at ICD Distance of ICD 14Km from the plant.
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Container on Call, no transit time,

Excellent in-house facilities like cranes, fork-lifts and other equipment to handle Sea Containers at ICD Direct Rail siding in the premises of ICD

Photo Gallery
Bajaj Steel's equipped machine shop has more than 20 advance CNC machines and all kind of fabrication facility. Committed and trained personnel, All facility of metal cutting, machining, welding, sheet metal work etc. under one roof. We meet the requirements of the customer to his full satisfaction under one roof for machined components.

HIGHLIGHTS
Location C108, HINGNA MIDC, NAGPUR 440 028 (M.S.) INDIA

Trained manpower More than 400 Total area 27456 sq. meters. Plant build-up area 8640 sq. meters.

Twenty (20) CNC machines with multi floor CNC setup, Plasma cutting machines, more than 50 conventional machines and a big set up of fabrication facility with all kind of welding and sheet metal cutting.

Other supporting QA equipments, Infrastructure ready for expansion.

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Process of recertification of ISO/TS 16949 is in process due to relocation of the plant.

Strength

Analysis for customers requirements.

Simultaneous Engineering to define Customers requirement. Use of CAD-Inventor, computer simulation, for developing first time right machined component. Minimize process cost, manpower and variables. Quality built at every stage. Create product to exceed customer expectations. 100 % committed just-in-time deliveries.

A good set up for all kind of tool room machines for in house development of jigs and fixtures.

This is ISO 9001:2008 Certified Company. Its installed facilities support:

1) Designing 2) Machining 3) Fabrication

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4) Assembly

Bajaj has successfully developed a very professional team with many years of experience built upon extensive & comprehensive installations of both automatic & semi automatic cotton ginning & pressing plants. Bajaj has given services to more than 4000 plants running successfully in India & Abroad. Bajaj provides installation services to all of it's works & also consultancy for the same is available. Bajaj employs a multi-crafted work force that performs no of services from plant maintenance to Turnkey equipments installations. Our installation work also includes. a) System teardowns and rebuilds. b) Response to emergency shut-down. c) Installation of upgrade components. d) New system assembly. Its installation includes both mechanical & electrical installations of the components manufactured by bajaj steel.

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Some of its Installations:

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RESEARCH METHODOLOGY
When we talk of research methodology, we not only talk of the research methods but also the comparison of the logic behind the methods, we used in this context of our research study and explain why we are using a particular method or technique and why using the others. Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done systematically. In this, we study the various steps that are generally adopted by researcher in studying his research problem along with the logic behind them. The present study is based upon the case study method of research to investigate procedures at micro level. As the study is analyzing probing in nature, thus, entirely based on the secondary data gathered through the annual reports of the industry. Therefore it provides a historical perspective of decisions.

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RESEARCH
Research refers to search for knowledge. Research is an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution of the problem is research. The advance learners dictionary of current English gives the meaning of research a careful investigation or inquiry especially through search for new facts in any branch of knowledge.

RESEARCH METHODS
Research methods may be understood as those methods/techniques that are used for conduction of research. All those methods which are used by the researcher during the course of studying his research problem, are termed as research methods. Keeping in view, the research methods can be put into following three groups: In the first group we include those methods which are concerned with the collection of data. These methods will be used where the data already available are sufficient to arrive at the required solution. The second group consists of those statistical techniques which are used to establish relationships between the data and the unknown.

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The third group consists of those methods which are used to evaluate the accuracy of the obtained results.

COLLECTION OF DATA
There are several ways of collecting the appropriate data which differ considerably in context of money, cost, time and other sources at the disposable of the researcher. There are two types of data: Primary data Secondary data Primary data Primary data are those which are collected afresh and for the first time, and thus happen to be original in character. In case of descriptive research, researcher performs survey whether sample survey or census survey, thus we obtain primary data either through Observation Direct communication with respondent Personal interview Secondary data Secondary data are those which have already been collected by someone else and have already been passed through statistical process. In this project report, both types of data have been used. Mainly, secondary data is used such as annual reports of last two years of Bajaj steel industries.
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OBJECTIVES OF THE STUDY

Study of the working capital management is important because unless the working capital is managed effectively, monitored efficiently planed properly and reviewed periodically at regular intervals to remove bottlenecks if any the company can not earn profits and increase its turnover. With this primary objective of the study, the following further objectives are framed for a depth analysis. To study the working capital management of Jain Irrigation Systems Ltd.

To study the optimum level of current assets and current liabilities of the company. To study the liquidity position through various working capital related ratios. To study the working capital components such as receivables accounts, cash management, Inventory position To study the way and means of working capital finance of the Jain Irrigation System Ltd.

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To estimate the working capital requirement of Jain Irrigation System Ltd

To study the operating and cash cycle of the company.

WORKING CAPITAL AT A GLANCE

INTRODUCTION TYPES FEATURES DETERMINANTS COMPONENTS WORKING CAPITAL CYCLE

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INTRODUCTION
A successful sales program is necessary for earning profits by any business enterprise. Sales dont convert into cash instantly. There is a time lag between the sale of goods and receipt of cash. Therefore, there is a need for working capital in the form of current assets to deal with the problem arising out of the lack of immediate realization of cash against goods sold. Therefore sufficient working capital is necessary to sustain sales activity.

Defination of Working Capital:According to C.W. GestenberghWorking capital is ordinarily defined as the excess of the current assets over current liabilities.
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According to Lawrence. J. Gitmen The most common defination of working capital is the difference of the firms current assets and current liabilities.

Defination of working capital management:Working capital management involves the relationship between a firm's short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash.

-From
WWW.STUDYFINANCE.COM 45

Management of working capital

Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These require managing the current assets - generally cash and cash equivalents, inventories and debtors. There are also a variety of short term financing options which are considered.

Cash management

Identify the cash balance which allows for the business to meet day to day expenses, but reduces cash holding costs

Inventory management -

Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials and hence increases
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cash flow; see Just in Time (JIT) and Economic order quantity (EOQ)

. Debtors management -

Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence Return on Capital (or vice versa); see Discounts and allowances.

Short term financing -

Inventory is ideally financed by credit granted by the supplier; dependent on the cash conversion cycle, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to cash" through "factoring".

TYPES OF WORKING CAPITAL

Working capital can be classified either on the basis of concept or on the basis of periodicity of its requirement. ON THE BASIS OF CONCEPT
On the basis of concept working capital is of 2 types.

A) Gross working capital - Gross working capital

is represented by the total Current assets.
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Gross working capital = Total current assets B) Net working capital - Net working capital is
the excess of current assets over current liabilities.

Net working capital = Current assets Current liabilities ON THE BASIS OF REQUIREMENT
On the basis of requirement working capital is also of 2 types.

A) Permanent working capital - It is that amount

of investment which should always be there in the fixes or minimum current assets like inventory, accounts receivables or cash balance etc. to carry out business smoothly. Such an amount cant be reduced if the firms

wants to carry interruption.

on

business

operations

without

- The excess the amount of working capital over permanent working capital is known as variable working capital. It may also be subdivided into two parts. a) Seasonal working capital - Such capital is required to meet out the seasonal demands of busy periods occurring at stated intervals.
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B) Variable working capital

b) Special working capital - Such capital is required to meet out the extraordinary needs for contingencies. Events like strike, fire, unexpected competition, rising price tendencies, or initiating a big advertisement campaign require such capital.

FEATURES OF WORKING CAPITAL

1) Working capital is regarded as the excess of current
assets over current liabilities. 2) Working capital indicates circular flow of funds in the day-to-day activities of business. Thats why it is also called circulating capital.

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3) Working capital represents the minimum amount of investment in raw materials, work-in progress, finished goods, stores and spares, accounts receivables and cash balance.

DETERMINANTS OF WORKING CAPITAL

1) Nature of business The effect of the general nature of the business on working capital requirements cant be exaggerated. Rail, roads and other public utility services have large fixes investment so they have the lower requirements of current assets. Industrial and
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manufacturing enterprises, on the other hand, generally require a large amount of working capital. 2) Production policies if the production is evenly spread over the entire year, working capital requirements are greater, because the inventories will be unnecessarily accumulated during of season period. But if the production Schedule favors a varying production plan as per the seasonal requirements; working capital is required to a greater extent during a specified season only. The production policies are affected by so many factors availability of raw materials, labour, stocking facility etc & therefore, whatever the productions policies are, the firm has to arrange its working capital requirements accordingly. 3) Proportion of the cost of raw materials to total cost - In those industries where cost of proportion is a large proportion of total cost of the goods produced, requirements of working capital will be comparatively large.

4) Length of period of manufacturing The time which elapses between the commencement and end of the manufacturing process has an important bearing
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upon the requirements of working capital. The manufacturing cycle may be shorter for certain concerns & longer for others- it depends on the type of the product to be manufactured, work to be done through machine labour & hand labour, degree of rationalization of manufacturing procedures through times, motion & fatigue studies etc. 5) Terms of purchase - If suppliers allow continuous credit, payment can be postponed for some time and can be made out of the sale proceeds of the goods produced. In such a case, the requirements of working capital will be reduced. 6) Dynamic Attitudes As a company grows, it is logical to expect the large amount of working capital will be required. 7) Business cycles Requirement of working capital also varies with the business. When the price level is up due to boom conditions, the inflationary conditions create demand for more working capital. During depression also a heavy amount of working capital is needed due to the inventories being locked unsold and book debts uncollected.

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8) Requirement of cash - The working capital requirements of a company are also influenced by the amount of cash required by it for various purposes. The greater the requirement of cash, the higher will be the working capital needs of the company. 9) Dividend policy of concern If the management follows a conservative dividend policy the needs of working capital can be met with the retained earnings. The relationship between dividend policy and working capital is well established and mostly companies declare dividend after a careful study of their cash requirements 10) Other Factors - Other factors, which affect the requirement of working capital, are lack of co-operation in production and distribution policies, transport and communication facilities, the fiscal and tariff policies of the government etc.

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COMPONENTS OF WORKING CAPITAL

Main components of working capital are as follows:
1) Cash Cash is the most liquid and important component of working capital. Holding cash involves cash in the sense that the present worth of cash held for a year is less than the value of cash on today. During inflationary situations as exist today the cost of holding includes the deterioration in the value of the cash due to inflation. Cash, therefore, results in enhanced liquidity, but lower profitability. Despite in the cost involved it is pertinent to hold cash because it facilitates the attainment of some important motives. 2) Marketable Securities Though marketable securities provides a such lower yield that the firms operation assets. They serve two useful functions. Firstly, they act as a substitute for cash, and secondly, are used as temporary investment. Where these securities are held in lieu of the cash balance, they act as a substitute for transactional or precautionary balances. Normally, these arent used as speculative balances, but only as a guard against the possible shortage of bank credit. Marketable securities (as temporary investment) may be held for one of the following reasons: Seasonal or cyclical operations To meet known financial requirements. Construction of an additional plant. Immediately after the sale of long-term securities.

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3) Account Receivable - Though accounts receivable are a vital investment of any business organization, little analytical work as been done to determine credit policies. Maintaining account receivable has its cost implications in that thefirms monetary resources are tied up. This is of greater significance in the inflationary economy, because of the depreciation in the value of money. Basically, this is a two-step account. When goods are shipped, inventories are reduced and accounts receivable is created. When payment is made, this account is reduced and the cash level increases. Accounts receivables are, therefore a function of the volume of credit sales and the average length of time between sales and collections. 4) Inventory Inventories represent a substantial amount of a firms current assets. Management of inventories should be efficiently carried out so that this investment doesnt become too large, as it would result in blocked capital which could put to productive use elsewhere. On the other hand, having too small an inventory could result in loss of sale or loss of customer goodwill. An optimum level of inventory should therefore be maintained.

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WORKING CAPITAL CYCLE

Working capital cycle indicates the length of time between firmss paying for materials entering into stock and receiving the cash from sale of finished goods. In a manufacturing firm, the duration of time required to complete the sequence of events is called operating cycle. In case of a manufacturing company, the operating cycle is the length of time necessary to complete the following cycle of events: 1) 2) 3) 4) 5) Conversion Conversion Conversion Conversion Conversion of of of of of cash into raw materials raw materials into work-in-progress work-in-progress into finished goods finished goods into accounts receivable accounts receivable into cash

The above operating cycle is repeated again & again over the period depending upon the nature of the business & type of product etc. the duration of the operating cycle for the purpose of estimating working capital is equal to the sum of duration allowed by the suppliers.

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Working capital cycle can be expressed as: C

R+W+F+D-

Where R=Raw Material Storage Period = Avg. Stock of Raw Material / Avg. Cost of Production per day W=Work in Progress Holding Period = Avg. Work in Progress Inventory /Avg. Cost of Production per day F=Finished Goods Storage Period = Avg. Stock of Finished Goods / Avg. Cost of Goods Sold per day D=Debtors Collection Period = Avg. Book Debts/ Avg. Credit Sales per day C=Credit Period Availed = Avg. Trade Creditors/Avg. Credit Purchases per day

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OPERATING CYCLE OF MANUFACTURING BUSINESS

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THEORTICAL ASPECTS OF WORKING CAPITAL MANAGEMANT

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WORKING CAPITAL MANAGEMENT

NATURE OF WORKING CAPITAL MANAGEMENT
Working capital management is three dimensional in nature1) It is concerned with the formulation of policies with regard to profitability, liquidity and risk. 2) It is concerned with the decisions about the composition and level of current assets. 3) It is concerned with the decisions about the composition and level of current liabilities.

GOAL OF WORKING CAPITAL MANAGEMENT

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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. The term current assets refer to those assets which is the ordinary course of business can be converted into cash within one year. Major current assets are cash, marketable securities, accounts receivable and inventory. Current liabilities are those liabilities, which are intended, at their inception, to be paid in the ordinary course of business within a year, out of the current assets or earnings of the concern. Current liabilities are accounts payable, bills payable, bank overdraft, and outstanding expenses. Working capital is that portion of firms assets which is financed by long-term funds. Interaction between current assets and current liabilities is the main theme of the theory of working capital management. Goal of working capital management is to manage the firms current assets and liabilities in such a way so that a satisfactory level of working capital is maintained. The second important segment of working capital management is deciding the optimum level of investment in various current assets. There are three important current assets cash, accounts receivables and inventory.

RECEIVABLES MANAGEMENT
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INTRODUCTION
The term receivable is defined as debt owed to the firm by customers arising from sale of goods or services in the ordinary course of business. When a firm makes an ordinary sale of goods or services and doesnt receive payment, the firm grants trade credit accounts receivable, which could be collected in the future. Receivables Management is also called trade credit management. OBJECTIVE The objective of receivables management is to promote sales and profits until that point is reached where the return on investment in further funding receivables are less than the cost of funds raised to finance that additional credit. BENEFITS Investments in receivables involve both benefits and costs. The extension of trade credit has a major impact on sales, costs and profitability. Other things being equal, a relatively liberal policy and, therefore, higher investments in receivables, will produce larger sales. However, costs will be higher with liberal policies than with more stringent measures. Therefore, accounts receivables management should aim at a trade-off between profit (benefit) and risk (cost).

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CREDIT POLICY
The credit policy of a firm provides the framework to determine: 1) Credit standards 2) Credit terms 3) Credit Analysis Credit Standard The term credit standards represent the basic criteria for the extension of credit to those customers to whom goods could be sold on credit. If a firm has more slowpaying customers, its investment in accounts receivables will increase. The firm will also be exposed to higher risk of default. Credit Terms Credit terms specify duration of credit and terms of payment by customers. Investment in accounts receivables will be high if customers are allowed extended time period for making payments. Credit Analysis Credit analysis and investigation is an aspect of credit policies of a firm. Two basic steps are involved in the credit investigation process: A. Obtaining credit information B. Analysis of credit information It is on the basis of credit analysis that the decisions to grant credit to a customers as well as the quantum of credit would be taken.

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INVENTORY MANAGEMENT
INTRODUCTION
Inventories constitute the principal item in the working capital of the majority of trading and industrial companies. In inventory we include raw materials, finished goods, work-in-progress, supplies and other accessories. To maintain the continuity in the operations of business enterprises, a minimum stock of inventory is required. Management of inventory is designed to regulate the volume of investment in goods on hand and the types of goods carried in stock to meet the needs of production and sales while at the same time, the investment in them is to be kept at a reasonable level.

CONCEPT
The inventory management is used in two waysUnit Control and Value Control. Production and purchase officials use this word in term of unit control whereas in accounting this word is used in term of value control .Investment in inventory is one the largest asset item of business enterprises particularly those engaged in manufacturing. The proper management and control of the capital invested in the inventory should be the prime responsibility of accounting department because resources invested in inventory arent earning a return
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for the company. Rather, on the other hand, they are costing the firm money both in terms of capital costs being incurred and loss of opportunity income that is being foregone.

TECHNIQUES OF INVENTORY CONTROL

1) The Selective Inventory Control or ABC System of Control 2) Maximum Stock Limit 3) Minimum Stock Limit 4) Re-ordering Level 5) Economic Order Quantity
ABC System of Control The various inventory items are, according to this system, categorized into three classesI. A II. B III. C The item included in-group involve the largest investment. Therefore, inventory control should be the most rigorous and intensive and the most sophisticated inventory control techniques should be applied to these items. The C group consists of items of inventory which involve relatively small investments although the numbers of items is fairly large. These items deserve
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minimum attention. The B group stands midway. It deserves less attention than A but more than C. It can be controlled by employing less sophisticated techniques.

Maximum Stock Limit This represents the quantity if inventory above which it should not be allowed to be kept. The following formula may be applied to calculate the maximum stockMaximum Stock = Reorder Level Minimum Consumption during Minimum Lead Time + Lot Size. Minimum Stock Limit This represents the quantity below which stock should not be allowed to fall. The main purpose of this level is to ensure that production isnt held up due to storage of any material. Minimum Stock Limit = Re-order Level Normal storage during Lead Time Re- Ordering Level It is the point at which if stock of the material in store reaches, the storekeeper should initiate the purchase requisition for fresh supplies of the material. This level is fixed somewhere between the maximum and minimum levels in such away that the difference of quantity of the material between the reordering level and the minimum
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level will be sufficient to meet requirements of production up to the time of fresh supply of the material. The reorder point = Lead time in days * Average daily usage of inventory

Economic Order Quantity It is the quantity of inventory, which can be reasonably ordered at a time and purchased economically. It is also known as Standard Order Quantity or Economic Lot Size. By definition Economic Order Quantity is that size or order at which the total cost of ordering and holding are the minimum. In determining the economic order quantity the problem is one to set a balance between two opposing costs, namely, namely ordering costs and carrying costs. The ordering costs are basically the costs of getting an item into the firms inventory. Carrying costs, sometimes also known as holding costs are the costs of possessing the materials. These costs are combined known as Associated Costs. Hence, the management tries to reconcile them and this reconciliation point is economic order quantity.

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MANAGEMENT OF CASH
Cash is common purchasing power or medium of exchange. As such, it forms the most important component of working capital. The term cash with reference to cash management is used in two senses, in narrow sense it is used broadly to cover cash and generally accepted equivalent of cash such as cheques, draft and demand deposits in banks. The broader view of cash also induce hear- cash assets, such as marketable sense as marketable securities and time deposits in banks. The main characteristics of this deposits that they can be really sold and convert in to cash in short term. They also provide short term investment outlet for excess and are also useful for meeting planned outflow of funds. We employ the term cash management in the broader sense. Irrespective of the form in which it is held, a distinguishing feature of cash as assets is that it was no earning power. Company have to always maintain the cash balance to fulfill the dally requirement of expenses. There are four primary motive for maintain the cash as follow
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Motive of holding cash There are four motives for holding cash as follow 1) Transaction motive 2) Precautionary motive 3) Speculative motive 4) Compensating motive

Transaction motive Cash balance is necessary to meet day-to-day transaction for carrying on with the operation of firms. Ordinarily, these transactions include payment for material, wages, expenses, dividends, taxation etc. there is a regular inflow of cash from operating sources, thus in case of JISL there will be two-way flow of cash- receipts and payments. But since they do not perfectly synchronize, a minimum cash balance is necessary to uphold the operations for the firm if cash payments exceed receipts. Always a major part of transaction balances is held in cash, a part may be held in the form of marketable securities whose maturity conforms to the timing of anticipated payments of certain items, such as taxation, dividend etc. Precautionary Motive
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Cash flows are somewhat unpredictable, with the degree of predictability varying among firms and industries. Unexpected cash needs at short notice may also be the result of following: 1) Uncontrollable circumstances such as strike and natural calamities. 2) Unexpected delay in collection of trade dues. 3) Cancellation of some order for goods due unsatisfactory quality. 4) Increase in cost of raw material, rise in wages, etc. The higher the predictability of firms cash flows, the lower will be the necessity of holding this balance and vice versa. The need for holding the precautionary cash balance is also

influenced by the firms capacity to have short term borrowed funds and also to convert short term marketable securities into cash. Speculative motive: Speculative cash balances may be defined as cash balances that are held to enable the firm to take advantages of any bargain purchases that might arise. While the precautionary motive is defensive in nature, the speculative motive is aggressive in approach. However, as with precautionary balances, firms today are more likely to rely on reserve borrowing power and on marketable securities portfolios than on actual cash holdings for speculative purposes.
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ANALYSIS OF WORKING CAPITAL MANAGEMENT

OBJECTIVES OF THE STUDY

To study the various proportions of working capital of Bajaj steel industries.

To find out different ratios related with working capital.

To check the impact of cash flows on working capital of Bajaj steel industries.
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 To know the current trend of Assets and Liabilities.

INTRODUCTION
Ratio analysis is the powerful tool of financial statements analysis. A ratio is define as the indicated quotient of two mathematical expressions and as the relationship between two or more things. The absolute figures reported in the financial statement do not provide meaningful understanding of the performance and financial position of the firm. Ratio helps to summaries large quantities of financial data and to make qualitative judgment of the firms financial performance

ROLE OF RATIO ANALYSIS

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Ratio analysis helps to appraise the firms in the term of there profitability and efficiency of performance, either individually or in relation to other firms in same industry. Ratio analysis is one of the best possible techniques available to management to impart the basic functions like planning and control. As future is closely related to the immediately past, ratio calculated on the basis historical financial data may be of good assistance to predict the future. E.g. On the basis of inventory turnover ratio or debtors turnover ratio in the past, the level of inventory and debtors can be easily ascertained for any given amount of sales. Similarly, the ratio analysis may be able to locate the point out the various arias which need the management attention in order to improve the situation. E.g. Current ratio which shows a constant decline trend may be indicate the need for further introduction of long term finance in order to increase the liquidity position. As the ratio analysis is concerned with all the aspect of the firms financial analysis liquidity, solvency, activity, profitability and overall performance, it

enables the interested persons to know the financial and operational characteristics of an organization and take suitable decisions.

LIMITATION OF RATIO ANALYSIS

1) The basic limitation of ratio analysis is that it may be difficult to find a basis for making the comparison. 2) Normally, the ratios are calculated on the basis of historical financial statements. An organization for the
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purpose of decision making may need the hint regarding the future happiness rather than those in the past. The external analyst has to depend upon the past which may not necessary to reflect financial position and performance in future. 3) The technique of ratio analysis may prove inadequate in some situations if there is differs in opinion regarding the interpretation of certain ratio. 4) As the ratio calculates on the basis of financial statements, the basic limitation which is applicable to the financial statement is equally applicable In case of technique of ratio analysis also i.e. only facts which can be expressed in financial terms are considered by the ratio analysis. 5) The technique of ratio analysis has certain limitations of use in the sense that it only highlights the strong or problem arias, it dose not provide any solution to rectify the problem arias

METHODS OF WORKING CAPITAL ANALYSIS

There are so many methods for analysis of financial statements but BAJAJ STEEL INDUSTRIES LTD used the following techniques:74

Comparative size statements Trend analysis Cash flow statement Ratio analysis

A detail description of these methods is as follows:COMPARATIVE SIZE STATEMENTS:When two or more than two years figures are compared to each other than we called comparative size statements in order to estimate the future progress of the business, it is necessary to look the past performance of the company. These statements show the absolute figures and also show the change from one year to another.

Benefits of this method to the BSI: To indicate the trends, these statements show the change in production, sales, and expenses. To make the data simple and more understandable.

TREND ANALYSIS:To analyze many years financial statements BSI uses this method. This indicates the direction on movement over the long time and help in the financial statements.

Procedure for calculating trends:1. Previous year is taken as a base year. 2. Figures of the base year are taken 100. 3. Trend % are calculated in relation to base year.
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Benefits: It is beneficial to find out the long run changes. It is helpful in future forecasting. CASH FLOW STATEMENT:Cash flow statements are the statements of changes in the financial position prepared on the basis of funds defined in cash or cash equivalents. In short cash flow statement summaries the cash inflows and outflows of the firm during a particular period of time. Benefits for the BTM:? To prepare the cash budget ? To compare the cash budgets ? To show the position of the cash and cash equivalents RATIO ANALYSIS:Ratio analysis is the process of the determining and presenting the relationship of the items and group of items in the statements .According to Batty j. management accounting Ratio can assists management in its basics functions of forecasting, planning, coordination, control and communication.

Benefits of ratio analysis to BTM:1. Helpful in analysis of financial statements. 2. Helpful in comparative study.
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3. 4. 5. 6. 7. 8.

Helpful in locating the weak spots of the BSI. Helpful in forecasting. Estimate about the trend of the business. Fixation of ideal standards. Effective control. Study of financial soundness.

Types of ratio:

Liquidity ratio: They indicate the firms ability to meet its current obligation out of current resources. Current ratio:Quick ratio:Current assets / Current liabilities Liquid assets / Current liabilities

Liquid assets =Current assets Stock -Prepaid expenses

Leverage or Capital structure ratio: This ratio discloses the firms ability to meet the interest costs regularly and long term solvency of the firm. Debt equity ratio:- Long term loans / Shareholders funds or net Worth Debt to total fund ratio:- Long terms loans/ share holder funds +long term loan Proprietary ratio:- Shareholders fund/ shareholders fund+long term loan

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Activity ratio or Turnover ratio: - They indicate the rapidity with which the resources available to the concern are being used to produce sales. Stock turnover ratio: - Cost of good sold/Average stock (Cost of good sold= Net sales/ Gross profit, average stock=Opening stock+closing stock/2)

Debtors turnover ratio: - Net credit sales/ Average debtors+Average B/R

Average collection period: - Debtors+B/R /Credit sales per day (Credit sales per day=Net credit sales of the year/365)

Creditors Turnover Ratio: - Net credit purchases/ Average Creditors + Average B/P Average Payment Period: - Creditors + B/P/ Credit purchase per day. Fixed Assets Turnover ratio:- Cost of goods sold/Net fixed Assets (Net Fixed Assets = Fixed Assets depreciation) Working Capital Turnover Ratio:- Cost of goods sold/ Working Capital (Working capital= current assets current liability)

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Profitability Ratios or Income ratios: - The main objective of every business concern is to earn profits. A business must be able to earn adequate profit in relation to the risk and capital invested in it. Gross profit ratio:- Gross profit / Net Sales * 100 (Net sales= Sales Sales return) Net profit Ratio:- Net profit / Net sales * 100 (Operating Net Profit= operating net profit/ Net Sales *100 or operating Net profit= gross profit operating expenses) Operating Ratio: - Cost of goods sold + Operating Expenses/Net Sales * 100

(Cost of goods sold = Net Sales Gross profit, Operating expenses = office & administration expenses Selling & distribution expenses + discount + bad debts interest on short term loans)

Earning per share(E.P.S.) :- Net Profit dividend on perShare / No. of equity shares Dividend per share (D.P.S.):- Dividend paid to equity share Holders / No. of equity shares *100. Dividend Payout ratio (D.P.):- D.P.S. / E.P.S. *100

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RATIO ANALYSIS
Key Financial Ratios of Bajaj Steel Industries
-------- in Rs. Cr. --------Mar '08 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) 7.89 6.66 6.72 4.48 4.48 3.63 3.63
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Mar '09 10.00 2.00 122.07 1,041.24 153.90 23.18

10.00 2.00 67.21 851.45 87.54 23.18

11.72 9.70 9.84 7.49 7.49 6.50 6.50

Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations

25.44 31.25 28.66 6.78

38.33 41.31 35.81 14.84

Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding

6.78 30.00

14.84 42.57

1.22 0.86 1.57 1.18

1.36 1.07 0.84 0.66

3.56 1.57 4.06 3.22

5.84 0.84 6.73 5.34

6.00 11.03 6 4.5 3.32 4.5 48.79

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9.59 13.45 9.59 4.1 3.4 4.1 41.97

Average Finished Goods Held Number of Days In Working Capital

8.54 59.7

6.45 47.97

Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio Adjusted Cash Flow Times 7.49 5.68 91.84 93.94 4.06 Mar '08 3.4 2.64 96.08 97.05 1.76 Mar '09 72.61 19.13 2.99 10.42 67.16 18.11 1.93 7.16

Earnings Per Share Book Value

31.24 99.94

68.7 166.31

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COMPARATIVE PROFIT & LOSS ACCOUNT

Profit & Loss account of Bajaj Steel Industries

---------- in Rs. Cr. ---------Mar '08 12 mths Mar '09 12 mths 256.02 26.95 229.07 5.42 -8.33 226.16 153.87 1.09 12.52 13.34 8.92
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Income Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses

212.21 24.89 187.32 2.28 3.84 193.44 136.02 1.38 7.81 18.07 9.36

Miscellaneous Expenses Preoperative Exp Capitalized Total Expenses

3.73 0.00 176.37 Mar '08 12 mths 14.79

4.15 0.00 193.89 Mar '09 12 mths 26.85

Operating Profit

PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

17.07 4.07 13.00 2.18 0.00 10.82 0.03 10.85 3.98 6.87 40.35 0.00 0.44 0.07 22.00 31.24 20.00 99.94

32.27 4.47 27.80 4.31 0.00 23.49 -0.15 23.34 8.23 15.11 40.02 0.00 0.44 0.07 22.00 68.70 20.00 166.31

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CASH FLOW STATEMENT Cash Flow of Bajaj Steel Industries

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------ in Rs. Cr. ---------Mar '08 12 mths Mar '09 12 mths

Net Profit Before Tax

10.85

23.34

Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

12.62

18.22

-5.49 4.22

-12.37 -4.14

11.36 3.03 14.39

1.71 14.39 16.10

BALANCE SHEET
Balance Sheet of Bajaj Steel Industries
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----------- in Rs. Cr. ---------Mar '08 12 mths Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities Mar '09 12 mths

2.20 2.20 0.00 0.00 19.79 0.00 21.99 14.00 20.43 34.43 56.42 Mar '08 12 mths

2.20 2.20 0.00 0.00 34.39 0.00 36.59 8.80 21.93 30.73 67.32 Mar '09 12 mths

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress

41.58 27.11 14.47 9.23

55.91 25.36 30.55 4.60

Investments Inventories

1.65 37.46

1.65 27.39
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Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

18.04 3.41 58.91 6.13 10.98 76.02 0.00 42.19 2.77 44.96 31.06 0.00 56.41 3.76 99.94

16.02 3.30 46.71 5.56 12.80 65.07 0.00 31.42 3.13 34.55 30.52 0.00 67.32 1.62 166.31

LIMITATION OF STUDY
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Following limitations were encountered while preparing this project: 1) Limited data:This project has completed with annual reports; it just constitutes one part of data collection i.e. secondary. There were limitations for primary data collection because of confidentiality. 2) Limited period:This project is based on five year annual reports. Conclusions and recommendations are based on such limited data. The trend of last five year may or may not reflect the real working capital position of the company 3) Limited area:Also it was difficult to collect the data regarding the competitors and their financial information. Industry figures were also difficult to get.

CONCLUSION
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Working capital management is important aspect of financial management. The study of working capital management of Jain Irrigation system ltd. has revealed that the current ration was as per the standard industrial practice but the liquidity position of the company showed an increasing trend. The study has been conducted on working capital ratio analysis, working capital leverage, working capital components which helped the company to manage its working capital efficiency and affectively.

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BIBLIOGRAPHY
FINANCE MANAGER ASST. MANAGER ACCOUNTS Annual Report of Bajaj Steel Industries. 2007-08 2008-09 www.bajajngp.com www.studyfinance.com www.google.com www.wikipedia.com

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