LTD
Submitted to G.H.PATEL POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT VALLABH VIDYANAGAR Submitted by YUVRAJSINH GOHIL (2010-2012)
Preface To start any business, First of all we need finance and the success of that business entirely depends on the proper management of day-to-day finance and the management of this shortterm capital or finance of the business is called working capital management. Working Capital is the money used to pay for the everyday trading activities carried out by the business - stationery needs, staff salaries and wages, rent, energy bills, payments for supplies and so on. I have tried to put my best effort to complete this task on the basis of skill that I have achieved during the last one year study in the institute. I have tried to put my maximum effort to get the accurate statistical data. However I would appreciate if any mistakes are brought to me by the reader.
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Acknowledgement A work is never a work of an individual. I owe a sense of gratitude to the intelligence and cooperation of those people who had been so easy to let me understand what I needed from time to time for completion of this exclusive project. I am greatly indebted to my guides Mr. ROMESH PRAJAPATI and Mr. NIRMAL THAKKAR faculties guide for Finance (summer internship), G.H.P.I.B.M. & Mr. H.C. SHAH, CFO, Finance Department, and corporate office, ELECON Engineering Ltd, Vallabh Vidyanagar for their constant guidance, advice and help which enabled me to finish this project report properly in time. I am also grateful to Mr. H.J.JANI Director of G.H.P.I.B.M. for permitting me to undertake this study. Last but not the least, I would like to forward my gratitude to my friends & other faculty members who always endured me and stood with me and without whom I could not have completed the project.
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Index
Particular Certificate Preface Acknowledgement Industry Overview Establishment Business Profile Company Profile Clients Competitors Research Methodology Relevance of the Study Opportunities and Threats MHE Division Gear Division Internal Control System Corporate Financial Strategy Working Capital Management Conclusion Suggestions And Findings Bibliography Page No. 1 2 3 5 7 8 9 13 15 16 16 17 17 18 18 18 21 55 55 56
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Industry Overview
Engineering Sector: Market & Opportunities India's engineering industry is highly competitive with a number of players in each segment. The engineering sector has been growing, driven by growth in end user industries and the new projects being taken up in the power, railways, infrastructure development, and private sector investments fields amongst others. The industry attracted FDI inflows of US$ 1,196.7 million from August 1991-July 2006 India's exports of engineering goods are valued at US$ 27 billion during 2006-07 which represents a 6 per cent growth over the exports for 2005-06 (US$ 20 billion). The engineering sector accounted for 14 per cent of the country's total exports. It is also noteworthy that 40 per cent of India's engineering export is from the small and medium enterprises (SME) sector. According to Engineering Exports Promotion Council (EEPC), engineering exports could touch US$ 30 billion by 2008-09. In such a scenario, India, driven by the engineering sector, will emerge as a key global manufacturing hub.
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US$ 30 billion by 2008-09. In such a scenario, India, driven by the engineering sector, will emerge as a key global manufacturing hub. The nature of Indian engineering exports is also changing with time. India is fast moving from exporting low value goods to developing
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Company Profile: Name : Establishment Year: Punch Line: ELECON ENGINEERING COMPNAY LIMITED 1951 Always a step ahead in technology
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Chief Financial Officer Shri Hemendra C. Shah Secretary Shri Paresh M. Shukla
Bankers State Bank of India Bank of Boroda EXIM Bank of India Axis Bank Limited HDFC Bank Limited IDBI Bank Limited
Associate Bankers ICICI Bank Limited HDFC Bank Limited ABN AMRO Bank
Branch Offices
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Be present in all the leading & emerging markets of the world by expanding, collaborating and associating with other partners and consolidating our presence in already penetrated markets. Remain "Always A Step Ahead in Technology" by Continuously investing in research and development to cater to new applications, industries and segments as well as improvement to four existing product ranges. Empower human resources to promote entrepreneurship, team spirit leading to value enhancement for our Customers and Stakeholders. Follow environment friendly practices to protect environment and continuously review and improve products and processes throughout the supply chain. Upliftment of society at large and well being of our employees.
Manufacturing Elecon is the first company in India to have manufactured sophisticated equipment for Bulk Material Handling. Its product range includes design, engineering, manufacture, supply, erection and commission of: 1. Wagon tipplers 2. Bucket wheel stacker/reclaimers
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Fertilizer Plants : GSFC IFFCO Chambal Fertilizer WRO Gulf Shree Ram Fertilizer
Export Plants : Coal handling Plant Fertilizer Plant Torro Cement Heema Cement (Thailand) (Bangladesh) (Uganda) (Uganda)
Other Clients : Tisco KRIBHCO Raymond Ltd., A.C.C. Ltd., Balco Birla Corporation Grasim Industries Essar Steel Ltd., GACL GNFC Jindal Steel etc.
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Gear Division Your Companys reputed specialization, in this segment, is being recognized by its clients by providing good business. These results in an opportunity to look for, find and make improvements as well as cost savings changes throughout its products. Catering to the needs of almost all sectors of industry helps your Company to have balanced growth amidst unpredictable economic conditions. The impact of fluctuation in Steel and other raw material prices has been mitigated to a great extent by using various tools of hedging. Internal Control System Internal Controls are continuously evaluated by the Internal Auditors and Management. Findings from internal audits are reviewed by the Management and by the Audit Committee and corrective actions and controls have been put in place/ wherever necessary. Scope of work of Internal Auditors covers review of controls on accounting, statutory and other compliances.
Corporate Strategy
Financial Strengthening organization to manage multiple businesses with cost efficiency To become financially sound so that Company can face any severe recession
Business Benchmark against the best in all businesses Improve delivery and performance Continued thrust on modernization and upgradation of manufacturing facilities along with tie-ups resulting in higher value addition and higher profitability
Future Plans Aggressively pursuing to explore international markets and targeting to achieve export turnover to the extent of 15 to 20% High speed gears
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Prospects Increasing investments in the core sector mainly thermal power projects, steel, cement, mining and port sector would increase the prospects of MHE business, where EECL is one of the leading and established players having a wide range of product portfolio focusing on turnkey projects. EECL being the industry leader with almost 27% market share and having presence in all segments of industrial gear especially in large gear boxes where its is the sole domestic player would directly benefit from the surge in demand from the increased investment in industrial and infrastructure sector. Further, its shift to higher size/high value gears and introduction of new products will not only increase its competitiveness in the domestic industry where it is the industry leader, but also increase the opportunities in the export market. Increasing rush for non conventional energy generation by the industries, supported by government, following awareness of global warming, is expected to increase the demand of wind mills in India and in turn, gear boxes for WTGs, where EECL plans to diversify in near future. Financial Strategy:-
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Financial Instruments:The financial Instruments to be chosen should be done by taking into consideration the long term effects of the proportion and types of financing options being taken up. The bottom-line should be to get the appropriate fund with least cost of capital so that the profits can be increased. At Elecon financial instruments like shares, debentures, bonds etc is used. The financial instruments which have been used by the organization have been chosen rationally and in future also the company will ensure this decision. Modes of finance:The cheapest mode of financing options should be verified and chosen so that it does not create a hurdle in the functioning of the company and also the profits can be increased year to year. At Elecon different options like term loan, FCCBs, working capital demand loan, packing credit foreign currency loan etc is used as modes of finance. Pricing/Timing:This is important in the case when the organization is going to raise money from the public in the form of a Public Issue. The pricing of shares to be issued in the primary market should be air and justified. The timing of entry in the financial market is very crucial for the organization. The entry should not be during unfavorable times when the sentiments of the public are not so positive. Thus appropriate measures should be taken and this step should be taken after giving due consideration. In our company the money to be raised from public has already been done and the share of the company is already listed and is doing well as compared to the markets thus this decision is to be taken care in case of raising loans from banks and institutions and the sentiments and policies should be examined while raising money. Dividend Policy:The dividend is the returns which the shareholders expect in the form of a return on their shares being invested in the company. It should be ensured that enough profits are generated in the company so as to meet the high level of costs and create profits for the shareholders and giving them the returns in the form of dividend. The company has very well taken care of this decision and has distributed its part of profits from time to time in the form of dividends. This year dividend recommended was 75%.
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Corporate Governance:The Ethics Policy of the organization should be developed to ensure that the work is conducted in adherence with high ethical and legal principles and sets standards of professionalism and integrity for all employees and operations. Appropriate ethical behavior continues to be reviewed as part of the Group's internal control process on an ongoing basis. The company tries to follow the norms and its processes and procedures are designed in such a way that they conform to the legal aspects of the business. In line with global practices, the company is committed to maintain the highest standards of corporate governance, reinforcing the relationship between the company and its shareholders.
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Current Liabilities Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year. Constituents of Current Liabilities:
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Determinants of Working Capital Working capital requirements of a concern depends on number of factors, each of which should be considering carefully for determining the proper amount of working capital. It maybe however be added that these factors affect differently to the different units and these keeps varying from time to time. In general, the determinants of working capital which are common to all organizations can be summarized as under: 1. Nature of Business: Need for working capital is highly depends on what type of business, the firm in. there are trading firms, which needs to invest a lot in stocks, ills receivables, liquid cash etc. public utilities like railways, electricity, etc., need much less inventories and cash. Manufacturing concerns stands in between these two extends. Working capital requirement for manufacturing concerns depends on various factors like the products, technologies, marketing policies. 2. Production Policies: Production policies of the organization are effects working capital requirements very highly. Seasonal industries, which producesonly in specific season require more working capital. Some industries which produce round the year but sale mainly done income special seasons are also need to keep more working capital. 3. Size of Business: Size of business is another factor to determines the need for working capital 4. Length of Operating Cycle:
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Average Raw Material / Raw Material Conversion Period 2010 Average raw material = opening stock of raw material + closing stock of raw material / 2 =9,420.77 + 14,317.94 / 2 =11869.35 Raw Material Consumption = 57,859.71 / 365 =163.99 RMCP = 11869.35 / 163.99 =72 day 2009 Average raw material = opening stock of raw material + closing stock of raw material / 2 = 14,317.94 + 10,226.30 / 2 = 12272.12 Raw Material Consumption = 58,655.28 / 365 = 160.69 RMCP = 12272.12 / 160.69 = 76 day
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Average Work in Progress / Cost of Production per Day 2010 Average Work In Progress = Op. Stock of Work In Progress + Closing Stock of Work In Progress / 2 =21,378.85+19,064.99/2 =20,221.92 Cost of Pro. Per Day = Sales - Transaction Cost/365 =103,497.02 233.94/365 =282.91 WICP= 20,221.92 / 282.91 =71 day 2009 Average Work In Progress = Op. Stock of Work In Progress + Closing Stock of Work In Progress / 2 = 12,282.45 + 21,378.85 / 2 = 16830.65 Cost of Pro. Per Day = Sales - Transaction Cost/365 = 86,538.48 - 158.40/365 = 236.65 WICP=16830.65 / 236.65
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2009 Average Creditors = 28,167.81 + 27,526.23 / 2 =27847.02 Credit Purchase = 73747.68 CCP = (27847.02 / 73747.68) 365 = 135 days 2008 Average Creditors=27,526.23 + 20,395.53 / 2 =23960.88 Credit Purchase =59906.12 CCP =(23960.88 / 59906.12) 365 =145 days
Time and Money concept in Working Capital Cycle Each component of working capital (namely inventory, receivables and payables) has two dimensions. TIME and MONEY, when they come to manage it will call working capital. Time is Money: If we can get money to move faster around the cycle (e.g. collect money due from debtors more quickly) or reduce the amount of money tied up (e.g. reduce inventory levels relative to sales), the business will generate more cash or it will need to borrow less money to fund working capital. As a consequence, we can reduce the cost of bank interest or will have additional free money available to support additional sales growth or investment. Similarly,
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On the basis of Concept 1. Gross working capital: The gross working capital refers to the firms investment in all the assets taken together. The total of investment in all the individual current assets is the gross working capital. For example: if a firm has a cash balance of Rs. 50,000,debtors of Rs.70,000 and inventory of raw material and finished goods has been assessed at Rs.1,00,000,then the gross working capital of the firm is Rs.2,20,000 (i.e. ,Rs50,000 + Rs.70,000 + Rs.1,00,000). 2. Net Working Capital:
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A financial manager must consider both (gross and net working capital) because they provide different interpretation. The gross working capital denotes the total working capital or the total investment in current assets. This will help avoiding 1. The unnecessarily stoppage of work or chance of liquidation due to insufficient working capital, and 2. Effects on profitability (overflowing working capital implies cost). 3. The gross working capital also gives an idea of total funds required for maintaining current assets. On the other hand, net working capital refers to the amount of funds that must be invested by firm; more or less are regularly in current assets. The net working capital also denotes the net liquidity being maintained by the firm.
On The Basis Of Time 1. Permanent /Fixed Working Capital: Permanent working capital may be defined as the minimum level of current assets, which is required by a firm to carry on its business operations. Every firm has to maintain a minimum level of raw materials, work-in-progress, finished goods and cash balances. For example-extra inventory of finished goods will have to be maintained to support the peak periods of sale. Permanent working capital is permanently needed for the business and therefore, it should be financed out of long term funds.
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Sources of Working Capital The company can choose to finance its current assets by 1. Long term sources 2. Short term sources 3. A combination of them. Long term sources of permanent working capital include equity and preference shares, retained earnings, debentures and other long term debts from public deposits and financial institution. The long term working capital needs should meet through long term means of financing. Financing through long term means provides stability, reduces risk or payment and increases liquidity of the business concern. Various types of long term sources of working capital are summarized as follow: 1. Issue of Shares: It is the primary and most important sources of regular or permanent working capital. Issuing equity shares as it does not create and burden on the income of the concern. Nor the concern is obliged to refund capital should preferably raise permanent working capital. 2. Retained Earnings: Retain earning accumulated profits are a permanent sources of regular working capital. It is regular and cheapest. It creates not charge on future profits of the enterprises. 3. Issue of Debentures:
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Short Term Sources of Temporary Working Capital Temporary working capital is required to meet the day to day business expenditures. The variable working capital would finance from short term sources of funds. And only the period needed. It has the benefits of, low cost and establishes closer relationships with banker. Some sources of temporary working capital are given below: 1. Commercial Bank: A commercial bank constitutes significant sources for short term or temporary working capital. This will be in the form of short term loans, cash credit, and overdraft and though discounting the bills of exchanges. 2. Public Deposits: Most of the companies in recent years depend on this source to meet their short term working capital requirements ranging from six month to three years. 3. Various credits: Trade credit, business credit papers and customer credit are other sources of short term working capital. Credit from suppliers, advances from customers, bills of exchanges, etc. helps to raise temporary working capital. 4. Reserves and Other Funds:
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STATEMENT SHOWING WORKING CAPITAL REQUIREMENT (RS IN laces) PARTICULARS (A) CURRENT ASSETS [I]Stock of Stores, Loose Tools, Dies Mechanical, Electrical and Electronic Spares (as taken, valued and certified by the Management) at lower of cost or net realizable value [II]Stock-in-Trade (as taken, valued and Certified by the Management) (i)Raw Materials (at lower of cost or net realizable value) (ii)Semi-Finished Goods (at lower of cost or net realizable value) (iii) Finished Goods (at lower of cost or net realizable value) (iv)Goods-in-Transit (at Cost) [III] Sundry Debtors(Un secured, 14,317.9 4 21,378.8 5 2,758.11 158.40 10,226.3 0 12,282.4 5 1,193.30 1,461.36 1,272.71 1,185.70 760.21 2009-10 2008-09 2007-08 2006-07 2005-06
9,420.77
6,784.72
6,643.15
19,064.99
8,136.52
5,980.13
1,605.46 233.94
1,304.87 174.04
740.80 48.00
1,926.75 1,080.36
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7.00 3,195.54
11.47 4,503.31
17.08 3,671.86
15.73 3117.02
14.86 2255.11
1,938.34 1,038.67 100845.9 28,167.8 1 12,569.4 9 32.59 97.16 680.58 1,392.92 236.73 43,177.2 8 57,668.6
1,834.06 196.48 80963.68 27,526.2 3 5,185.15 20.56 162.85 479.20 1,392.92 236.73 35,003.6 4 45,960.0
830.88 ----------60933.87 20,395.5 3 4,544.00 19.53 57.19 ----------4 63.86 78.83 25,558.9 4 35,374.9
792.41 ----------43342.18
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(Sources - Annual Report 2010) Interpretation: The sales of Material handling equipment from different industries, the highest sales in the Power sector (55.83%), Steel (20.80%) and the lowest sales in wind mill (1.72%) industries. Gear Sales Industry Wise
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Inventories: PARTICULARS (i)Raw Materials (at lower of cost or net realizable value) (ii)Semi-Finished Goods (at lower of cost or net realizable value) (iii) Finished Goods (at lower of cost or net realizable value) (iv)Goods-in-Transit (at Cost) TOTAL 2009-10 9,420.77 19,064.9 9 1,605.46 233.94 30,325.1 6 2008-09 14,317.9 4 21,378.8 5 2,758.11 158.40 38,613.2 9 2007-08 10,226.3 0 12,282.4 5 2006-07 6,784.72 2005-06 6,643.15
8,136.52
5,980.13
Interpretation: In the first category, raw materials, an inventory increase can be caused by over purchasing by a company, the elimination of a finished good that used to require specific raw materials, or deliberate over purchasing by a company because of a very low level of inventory accuracy that requires a company to keep excessive stocks on hand in order to avoid stockout problems. By analyzing 5 year data we can about inventories we can say that the levels of inventories are increasing year by year. There is an increasing trend in the inventory level. As compare d to last year the level of inventory has been increased by 60 % which indicates the growth of the company in engineering sector. It is fact that the company uses more inventories when there is demand in the market and Elecon is having in great demand when quality comes first than other things. From other point of view we can say that the liquidity of the firm is blocked in inventories but proper inventory on other side is good due to uncertainty of availability of raw material in time.
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Current Assets: PARTICULARS CURRENT ASSETS [I]Stock of Stores, Loose Tools, Dies Mechanical, Electrical and Electronic valued and Spares (as taken, by the certified 1,193.30 1,461.36 1,272.71 1,185.70 760.21 2009-10 2008-09 2007-08 2006-07 2005-06
valued and Certified by the Management) (i)Raw Materials (at lower of cost or net realizable value) (ii)Semi-Finished Goods (at
14,317.94
10,226.30 12,282.45
6,784.72
6,643.15
lower of cost or net realizable value) (iii) Finished Goods (at lower of cost or net realizable value) (iv)Goods-in-Transit (at Cost) [III] Sundry Debtors(Un secured, Considered Good (i)Outstanding for a period Exceeding six month (ii)Others [IV] Cash and Bank Balances (i) Cash on Hand (ii) Balance with Scheduled Banks (1)In Current Account (2) Bank Deposit (3) Unpaid Dividend Account TOTAL Interpretation:
21,378.85
8,136.52
5,980.13
2,758.11 158.40
1,304.87 174.04
740.80 48.00
1,926.75 1,080.36
Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses and depending on the nature of the business.
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Interpretation: In the above table five years debtors information is given I which we can see that there is increase in debtors except last year. The change might be occurred due to change in collection policy, credit policy and others. A simple logic is that debtors increases only when sales increases. More and more debtors higher the chances of bad debts. When sales are increases the profit also increases. If company decreases the debtors they can use the spare money in many investment plans. Loans and Advances: PARTICULARS (I) Loans to Staff (ii) Advances recoverable in Cash or in Kind or for value to be received (iii) Balance with Collector of Custom, Port Trust, Excise etc. (iv) Advance Payment of Income Tax(Net of Provision) TOTAL 2009-10 7.00 3,195.54 1,092.35 1,172.54 5,467.43 2008-09 11.47 4,503.31 1,938.34 1,038.67 7,491.79 2007-08 17.08 3,671.86 1,834.06 196.48 5,719.48 2006-07 15.73 3117.02 830.88 ----------3963.63 2005-06 14.86 2255.11 792.41 ----------3,062.38
Interpretation: If we analyze the above table we can say that there is increase in loans and advances in more or less percentage. The company is providing loans to staff which is good symptoms. Most of the advances are given to the government for the purpose of taxes and other duties. From the
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Interpretation: The obligations are such as deferred dividend, trade credit, and unpaid taxes, arising in the normal course of a business and due for payment within a year. If we analyze the above table we can say that each and every item in the current liabilities reveals uneven trend. But at aggregate level it shows an increasing trend Elecon is charging 50 % of advance from the customer which increases the current liabilities of the company. In 2008-09 current liabilities has been increased by 24% the main reason behind that is increase in advances from the customer. It indicates change in sales policy .While in 2007-08 current liabilities has been increased because of increase in other liabilities by32%. The company having minimum liability has good prestige in the market.
Provisions PARTICULARS [I]Provision for Gratuity 2009-10 574.57 2008-09 680.58 2007-08 479.20 2006-07 ---------2005-06 98.06
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Ratio Analysis A ratio is a simple arithmetical expression one number to another. The technique of ratio analysis can be employed for measuring short-term liquidity or working capital position of a firm. The following ratios can be calculated for these purposes: 1. Current ratio. 2. Quick ratio
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It is an effective management tool to study the changes in financial position (working capital) business enterprise between beginning and ending of the financial dates. Working Capital Budget A budget is a financial and / or quantitative expression of business plans and polices to be pursued in the future period time. Working capital budget as a part of the total budgeting process of a business is prepared estimating future long term and short term working capital needs and sources to finance them, and then comparing the budgeted figures with actual performance for calculating the variances, if any, so that corrective actions may be taken in future. He objective working capital budget is to ensure availability of funds as and needed, and to ensure effective utilization of these resources. The successful implementation of working capital budget involves the preparing of separate budget for each element of working capital, such as, cash, inventories and receivables etc.
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1. Current Ratio
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Current Ratio= Current assets / Current Liability 2010 Current Assets Current Liabilities Current Ratio 92626.7 2.27 2009 2008 2007 2006
Interpretation:A conventional rule is that a current ratio of 2:1 or more is considered satisfactory. The current ratio of Elecon is more than 2:1.So it is sufficient and good for Elecon. It has more current asset then current claim so unit is able to meet current obligation in full and it can be said that its liquidity position is sound. 2. Quick Ratio Quick ratio is a more rigorous test of liquidity than current ratio. Quick ratio may be defined as the relationship between quick/liquid assets and current or liquid liabilities. An asset is said to be liquid if it can be converted into cash with a short period without loss of value. It measures the firms capacity to pay off current obligations immediately.
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Where Quick Assets are: 1) Marketable Securities 2) Cash in hand and Cash at bank. 3) Debtors
A high ratio is an indication that the firm is liquid and has the ability to meet its current liabilities in time and on the other hand a low quick ratio represents that the firms liquidity position is not good. As a rule of thumb ratio of 1:1 is considered satisfactory. It is generally thought that if quick assets are equal to the current liabilities then the concern may be able to meet its short-term obligations. However, a firm having high quick ratio may not have a satisfactory liquidity position if it has slow paying debtors. On the other hand, a firm having a low liquidity position if it has fast moving inventories. Quick ratio = (current assets- inventory) / current liability 2010 Current Assets 92625.7 Inventory 31518.46 Current Liabilities 40881.65 Quick Ratio 1.49 2009 100845.9 40074.66 43177.28 1.41 2008 80963.7 25260.37 35003.64 1.59 2007 60933.8 16895.7 25621.5 1.71 2006 43341.3 16390.6 21670.4 1.24
Interpretation: Generally quick ratio of 1:1 is considered to represent a satisfactory to current financial condition and this ratio is sufficient. Elecon has ability to pay its current claim quickly. So, Elecon has sufficient current assets which convert in the cash immediately. B) CURRENT ASSETS MOVEMENT RATIOS Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of sales. The better the management of assets, large is the amount of sales and profits. Current assets movement ratios measure the efficiency with which a firm manages its resources. These ratios are
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Net Sales Opening Inventory Closing Inventory Average Inventory Inventory Turnover
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Interpretation: Stock is a most important component of working capital. This ratio provides guidelines to the management while framing stock policy. It measures how fast the stock is moving through the firm and generating sales. It helps to maintain a proper amount of stock to fulfill the requirements of the concern. A proper inventory turnover makes the business to earn a reasonable margin of profit. It is visible from the chart that inventory turnover ratio shows decreasing trend from 2007 to 2009, since last two years it shows sound performance. 2. Debtors Turnover Ratio Debtors turnover ratio indicates the relation between net credit sales and average accounts receivables of the year. This ratio is also known as Debtors Velocity. The ratio measures the receivables are collected, it suggest number of times amount of debtors collected during the year.This ratio indicates the efficiency of the concern to collect the amount due from debtors. Debtors turnover = Net sales / Average Debtors 2010 Net Sales Opening Debtors Closing Debtors Average Debtors Debtors Turnover Interpretation: This ratio indicates the speed with which debtors are being converted or turnover into sales the higher the values or turnover into sales. The higher the values of debtors turnover, the more efficient is the management of credit. But in the company the debtor turnover ratio is decreasing year to year. This shows that company is not utilizing its debtors efficiency. Now their credit policy becomes liberal as compare to previous years. 104637 2009 95506.48 2008 82643.5 1 38798.6 49231.6 1 44015.1 1.87 2007 72310.6 21417.6 38798.6 30108.2 2.4 2006 44248.1 11396.8 21417.6 16407.2 2.69
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Conclusion The mission of Elecon is providing best quality to customers. It is financially very sound organization. The performance of the Elecon has been reasonably good. Due to constant work on the quality, better concentration on the material usage and proper prices the Elecon could improve maximum its performance. If Elecon give emphasis on human, it will useful in increasing production. Elecon is continuously trying to maximize the wealth of shareholders. As per my knowledge Elecon is running successfully and in Asia it is on number one position in Gear division. At last I wish bright future of Elecon, and may get first rank in allover world the overall performance of Elecon Engineering Company Limited is going on good track. The turnover has been increased by15.57% while the profit is increased by 14.19%. With the increase in capacity on account of the expansion projects being undertaken by the company. The recent boom in the engineering and technology sector has coupled with continuous thrust of government on infrastructure projects is expected to sustain healthy growth of engineering products demand. Almost all major players have announced substantial increase in capacity which results into increase in sales of Elecon. An increase in tax rates, transportation charges, railway freight, and cost of coal can add worries for the company.
Suggestions And Findings Elecon is the fastest growing company in engineering world. I have taken a summer internship program for my MBA project at Elecon Engineering Ltd. I have prepared a project on Working Capital Management of Elecon. Following are some suggestions and findings of my research work: Companys main strength is its employees and company is properly taking care of that by providing safety working conditions, canteen facilities etc. Elecon is investing more and more money in subsidiary companies for its faster growth.
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Bibilograpy
Books Financial Management I.M.Pandey Financial Management Prasanna Chandra Financial Statement Analysis Dr. Anjan Bhattacharya Annual Reports of Elecon Engineering Ltd of last 5 years
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