Pinky Project Bba 4 Sam

8/20/2019 Pinky Project Bba 4 Sam

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TRAINING REPORTON

“ CASH FLOW ANALYSIS AND WORKING CAPITALOF YARN DIVISION”

Submitted to

GAUAHATI UNIVERSITY,GUWAHATIin partial fulfillment of the requirements

for the award of the Degree of

BECHULAR O BUS!"ESS AD#!"!S$RA$!O"%!"DUS$R& !"$E'RA$ED (

%!) Semester(

Submitted B ! "ame * +in,-'.U. Registration "o.* "##$%##$"&Bat/h* 012130124

ACADE'Y OF TECHNOLOGY 'ANAGE'ENT

(ELC CODE! )BUILDING NO*"%, DEEP CENTRAL 'ARKET,

ASHOK VIHAR, PHASE I DELHI$+%


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CERTIFICATE

$his is to /ertif- that PINKY 5 a student of the 'auhatiuni6ersit-5'uwahati has prepared his $raining report entitled7“CASH FLOW ANALYSIS AND WORKING CAPITAL OF YARN

DIVISION” at SATISH KUMAR MITTAL &CO. . under m- guidan/e.She has fulfilled all requirements leading to award of the degree ofBBA %!ndustr- !ntegrated (. $his report is the re/ord of bonafidetraining underta,en b- his and no part of it has been submitted toan- other Uni6ersit- or Edu/ational !nstitution for award of an-other degree.

! wish his all su//ess in life.

Prof.Shameena GuptaDirector


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STUDENTS DECLARATION

! hereb- de/lare that the $raining Report /ondu/ted at

SATISH KUMAR MITTAL &CO.

Under the super6ision of

'R*BRI ESH SAINI

Submitted in +artial fulfillment of the requirements for theDegree of

BECHULAR O BUS!"ESS AD#!"!S$RA$!O"%!ndustr- !ntegrated(

$O

GAUHATI UNIVERSITY, GUWAHATI

!s m- original wor, and the same has not been submittedfor the award of another Degree8diploma8fellowship

or other similar titles or pri9es.

+la/e* +in,-Date* Reg. "o.*211301132:


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ACKNOWLEDGE'ENT

irstl-5 ! would li,e to than, 'R*BRI ESH SAINI ( A--.u/t'0/01e2 ) and a sin/ere than,s to all other staff members of S0ti34Kum02 'itt05 6C.m*

. who ha6e helped me dire/tl- or indire/tl- inm- diffi/ulties.! wish to e;press m- deepest and most sin/ere than,s to m-

a/ult- 'uide5 Prof. SHAMEENA GUPTA for their in6aluableguidan/e < support throughout the /ompletion of m- pro=e/t.Last but not least5 ! am than,ful to all m- famil- for /ooperatingwith me at e6er- stage of the pro=e/t. $he- a/ted as a /ontinuoussour/e of inspiration and moti6ated me throughout the duration of the pro=e/t helping me a lot in /ompleting this pro=e/t.

+in,-

CONTENTS


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CHAPTER " INTRODUCTION

2.2 'eneral !ntrodu/tion about the se/tor

2.0 !ndustr- profile

a( Origin and de6elopment of the industr-

b( 'rowth and present status of the industr-

/( uture of industr-

CHAPTER % PROFILE OF THE ORGANI7ATION

0.2 Origin of the Organi9ation

0.0'rowth and de6elopment of the Organi9ation

0.4 +resent status of the Organi9ation

0.> un/tional Departments of the Organi9ation

C408te2 9 Di3-u33i./ ./ T20i/i/1

4.2 Student?s wor, profile %Role and responsibilities(5 tools and $e/hniques used

4.0 @e- learning?s

C408te2 : Stud .; Se5e-ted Re3e02-4 P2.b5em

>.2 Statement of resear/h problem

>.0 Statement of resear/h ob=e/ti6es

>.4 Resear/h design and #ethodolog-

C408te2 + A/05 3 .2 Anal-sis of data

C408te2 < Summ02 0/d C./-5u3i./

.2 Summar- of Learning E;perien/e

.0 Con/lusions and Re/ommendations

Bibliograph-

CHAPTER "

INTRODUCTION


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W40t I3 A C034 F5.= St0teme/t>

Complementing the balan/e sheet and in/ome statement 5 the /ash flow

statement %C S(5 a mandator- part of a /ompan-?s finan/ial reports sin/e

2 :5 re/ords the amounts of /ash and /ash equi6alents entering and lea6ing a

/ompan-. $he C S allows in6estors to understand how a /ompan-?soperations are running5 where its mone- is /oming from5 and how it is being

spent. Here -ou will learn how the C S is stru/tured and how to use it as part

of -our anal-sis of a /ompan-

T4e St2u-tu2e .; t4e CFS

$he /ash flow statement is distin/t from the in/ome statement and balan/e

sheet be/ause it does not in/lude the amount of future in/oming and outgoing/ash that has been re/orded on /redit . $herefore5 /ash is not the same as net

in/ome 5 whi/h5 on the in/ome statement and balan/e sheet5 in/ludes /ash sales

A"D sales made on /redit.

Cash flow is determined b- loo,ing at three /omponents b- whi/h /ash enters

and lea6es a /ompan-* /ore operations5 in6esting and finan/ing5

O8e20ti./3

#easuring the /ash inflows and outflows /aused b- /ore business operations5

the operations /omponent of /ash flow refle/ts how mu/h /ash is generated

from a /ompan-?s produ/ts or ser6i/es. 'enerall-5 /hanges made in /ash5

a//ounts re/ei6able 5 depre/iation 5 in6entor- and a//ounts pa-able are

refle/ted in /ash from operations.

Cash flow is /al/ulated b- ma,ing /ertain ad=ustments to net in/ome b-

adding or subtra/ting differen/es in re6enue 5 e;penses and /redit transa/tions%appearing on the balan/e sheet and in/ome statement( resulting from

transa/tions that o//ur from one period to the ne;t. $hese ad=ustments are

made be/ause non3/ash items are /al/ulated into net in/ome %in/ome

statement( and total assets and liabilities %balan/e sheet(. So5 be/ause not all

transa/tions in6ol6e a/tual /ash items5 man- items ha6e to be re3e6aluated

when /al/ulating /ash flow from operations.

or e;ample5 depre/iation is not reall- a /ash e;pense it is an amount that is

http://www.investopedia.com/terms/b/balancesheet.asphttp://www.investopedia.com/terms/i/incomestatement.asphttp://www.investopedia.com/terms/i/incomestatement.asphttp://www.investopedia.com/terms/c/cashflow.asphttp://www.investopedia.com/terms/c/cashflow.asphttp://www.investopedia.com/terms/c/credit.asphttp://www.investopedia.com/terms/c/credit.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/a/accountsreceivable.asphttp://www.investopedia.com/terms/d/depreciation.asphttp://www.investopedia.com/terms/d/depreciation.asphttp://www.investopedia.com/terms/i/inventory.asphttp://www.investopedia.com/terms/i/inventory.asphttp://www.investopedia.com/terms/a/accountspayable.asphttp://www.investopedia.com/terms/a/accountspayable.asphttp://www.investopedia.com/terms/r/revenue.asphttp://www.investopedia.com/terms/a/asset.asphttp://www.investopedia.com/terms/a/asset.asphttp://www.investopedia.com/terms/l/liability.asphttp://www.investopedia.com/terms/l/liability.asphttp://www.investopedia.com/terms/b/balancesheet.asphttp://www.investopedia.com/terms/i/incomestatement.asphttp://www.investopedia.com/terms/c/cashflow.asphttp://www.investopedia.com/terms/c/credit.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/n/netincome.asphttp://www.investopedia.com/terms/a/accountsreceivable.asphttp://www.investopedia.com/terms/d/depreciation.asphttp://www.investopedia.com/terms/i/inventory.asphttp://www.investopedia.com/terms/a/accountspayable.asphttp://www.investopedia.com/terms/r/revenue.asphttp://www.investopedia.com/terms/a/asset.asphttp://www.investopedia.com/terms/l/liability.asp


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dedu/ted from the total 6alue of an asset that has pre6iousl- been a//ounted

for. $hat is wh- it is added ba/, into U for /al/ulating /ash flow. $he onl-

time in/ome from an asset is a//ounted for in C S /al/ulations is when the

asset is sold.

Changes in a//ounts re/ei6able on the balan/e sheet from one a//ounting

period to the ne;t must also be refle/ted in /ash flow. !f a//ounts re/ei6able

de/reases5 this implies that more /ash has entered the /ompan- from

/ustomers pa-ing off their /redit a//ounts 3 the amount b- whi/h AR has

de/reased is then added to net sales. !f a//ounts re/ei6able in/rease from one

a//ounting period to the ne;t5 the amount of the in/rease must be dedu/ted

from net sales be/ause5 although the amounts represented in AR are re6enue5

the- are not /ash.

An in/rease in in6entor-5 on the other hand5 signals that a /ompan- has spent

more mone- to pur/hase more raw materials. !f the in6entor- was paid with

/ash5 the in/rease in the 6alue of in6entor- is dedu/ted from net sales. A

de/rease in in6entor- would be added to net sales. !f in6entor- was pur/hased

on /redit5 an in/rease in a//ounts pa-able would o//ur on the balan/e sheet5

and the amount of the in/rease from one -ear to the other would be added

to net sales.$he same logi/ holds true for ta;es pa-able5 salaries pa-able and prepaid

insuran/e. !f something has been paid off5 then the differen/e in the 6alue

owed from one -ear to the ne;t has to be subtra/ted from net in/ome. !f there

is an amount that is still owed5 then an- differen/es will ha6e to be added to

net earnings.

INVESTING Changes in equipment5 assets or in6estments relate to /ash from in6esting.

Usuall- /ash /hanges from in6esting are a F/ash outF item5 be/ause /ash is

used to bu- new equipment5 buildings or short3term assets su/h as mar,etable

se/urities. Howe6er5 when a /ompan- di6ests of an asset5 the transa/tion is

/onsidered F/ash inF for /al/ulating /ash from in6esting.

http://www.investopedia.com/terms/n/netsales.asphttp://www.investopedia.com/terms/n/netsales.asp


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FINANCING

Changes in debt5 loans or di6idends are a//ounted for in /ash from finan/ing.

Changes in /ash from finan/ing are F/ash inF when /apital is raised5 and

the-?re F/ash outF when di6idends are paid. $hus5 if a /ompan- issues a bond

to the publi/5 the /ompan- re/ei6es /ash finan/ing howe6er5 when interest is

paid to bondholders5 the /ompan- is redu/ing its /ash.

A/05 ?i/1 0/ E@0m85e .; 0 CFS

Let?s ta,e a loo, at this C S sample*

rom this C S5 we /an see that the /ash flow for & 0114 was G25 005111.

$he bul, of the positi6e /ash flow stems from /ash earned from operations5

whi/h is a good sign for in6estors. !t means that /ore operations are generating

business and that there is enough mone- to bu- new in6entor-. $he pur/hasing

of new equipment shows that the /ompan- has /ash to in6est in in6entor- for

growth. inall-5 the amount of /ash a6ailable to the /ompan- should ease

in6estors? minds regarding the notes pa-able5 as /ash is plentiful to /o6er that

future loan e;pense.

http://www.investopedia.com/terms/d/dividend.asphttp://www.investopedia.com/terms/d/dividend.asp


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Of /ourse5 not all /ash flow statements loo, this health-5 or e;hibit a positi6e

/ash flow. But a negati6e /ash flow should not automati/all- raise a red flag

without some further anal-sis. Sometimes5 a negati6e /ash flow is a result of a

/ompan-?s de/ision to e;pand its business at a /ertain point in time5 whi/h

would be a good thing for the future. $his is wh- anal-9ing /hanges in /ash

flow from one period to the ne;t gi6es the in6estor a better idea of how the

/ompan- is performing5 and whether or not a /ompan- ma- be on the brin, of

ban,rupt/- or su//ess.

T i/1 t4e CFS =it4 t4e B050/-e S4eet 0/d I/-.me St0teme/t

As we ha6e alread- dis/ussed5 the /ash flow statement is deri6ed from the

in/ome statement and the balan/e sheet. "et earnings from the in/ome

statement is the figure from whi/h the information on the C S is dedu/ed. As

for the balan/e sheet5 the net /ash flow in the C S from one -ear to the ne;t

should equal the in/rease or de/rease of /ash between the two /onse/uti6e

balan/e sheets that appl- to the period that the /ash flow statement /o6ers.

C./-5u3i./

A /ompan- /an use a /ash flow statement to predi/t future /ash flow5 whi/h

helps with matters in budgeting. or in6estors5 the /ash flow refle/ts a

/ompan-?s finan/ial health* basi/all-5 the more /ash a6ailable for business

operations5 the better. Howe6er5 this is not a hard and fast rule. Sometimes a

negati6e /ash flow results from a /ompan-?s growth strateg- in the form of

e;panding its operations.

B- ad=usting earnings5 re6enues5 assets and liabilities5 the in6estor /an get a

6er- /lear pi/ture of what some people /onsider the most important aspe/t of a

/ompan-* how mu/h /ash it generates and5 parti/ularl-5 how mu/h of that /ashstems from /ore operations.

CASH FLOW STATE'ENT CAN BE PREPARED BY THE

FOLLOWING 'ETHODS

0) Di2e-t met4.d

b) I/di2e-t met4.d (AS$9)


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Di2e-t met4.d

") P2.;it 0/d 5.33 0882.82i0ti./3 0--.u/t (;.2m0t)

Date +arti/ulars Amount Date +arti

/ulars

Amount

T. b050/-e b d %last -ears

debit balan/e if an-(

$o transfer to

2. general reser6e

0. sin,ing fund

4. /apital

redemption

reser6e

>. debenture

redemption

reser6e

. di6idend

equali9ation

fund

to interim di6idend paid

to proposed di6idend

to pro6ision for in/ome

ta;

to bonus to equit-

shareholders a8/

to loss on sale of fi;ed

B b050/-e

b d %last

-ears /redit

balan/e if

an-(

B 10i/ ./

305e .; ;i@ed

033et3

B FFO

(funds ;2.m

.8e20ti./3)


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assets

to goodwill written off

to depre/iation

to preliminar- e;penseswritten off

to L O %5.33 from

operations(

W.2 i/1 5ed1e23 2e ui2ed

") P50/t 0/d m0-4i/e2 0 -

%) P2. i3i./ ;.2 de82e-i0ti./ 0 -

9) P2. i3i./ ;.2 t0@ 0 -

F.2m0t3 .; =.2 i/1 5ed1e23

") P50/t 0/d m0-4i/e2 0 -

Date +arti/ulars amount Date parti/ulars amount

$o balan/e b8d

$o +8L a8/

% profit on sale(

B- depre/iation

B- +8L a8/ %loss

on sale(

B- ban, a8/ %sale(


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$o ban,

%pur/hase(

B- balan/e /8d

%) P2. i3i./ ;.2 de82e-i0ti./ 0 -


$o plant a8/

$o balan/e /8d

B- balan/e b8d

B- profit and

loss a8/

9) P2. i3i./ ;.2 t0@ 0 -


$o ban, a8/%ta;

paid(

$o balan/e /8d

B- balan/e b8d

B- profit andloss a8/

0( Cal/ulation of /ash from operations %C O(


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unds from operations

De/rease in /urrent assets %e;/ept /ash and ban,(

!n/rease in /urrent liabilit-

3 !n/rease in /urrent assets %e;/ept /ash and ban,(

3 De/rease in /urrent liabilit-

I Cash from operations

9) C034 ;5.= 3t0teme/t (;.2m0t)

Sour/es of funds Amounts Appli/ations of funds Amounts

!ssue of shares

Re/eipts of loans

Sale of assets

+ur/hase of assets

+a-ment of loans

+a-ment of ta;


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C O % CASH RO#

O+ERA$!O"S(

+a-ment of di6idend

+ur/hase of goodwill

Redemption of

preferen/e shares

I/di2e-t met4.d (AS$9)

$his in/ludes three a/ti6ities namel-

2. Operating a/ti6ities

0. !n6estment a/ti6ities

4. inan/ing a/ti6ities

Statement under this /an be shown as follows*

O8e20ti/1 0-ti it !

+rofit after ta;es

proposed di6idend

pro6ision for ta;

goodwill written off

preliminar- e;penses written off

premium paid on redmption of preferen/e shares

transfer to general reser6e

depre/iation


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interim di6idends

loss on sale of fi;ed assets

3 profit on sale of fi;ed assets

I profit before wor,ing /apital /hange

de/rease in /urrent assets

in/rease in /urrent liabilit-

3 in/rease in /urrent assets

3 de/rease in /urrent liabilit-

I operating profit

3 pa-ment of ta;es

I /ash flow from %used( operating a/ti6it- A

I/ e3tme/t 0-ti itie3

Sale of fi;ed assets

Sale of in6estments

%+ur/hase of fi;ed assets(

%+ur/hase of in6estments(

I /ash flow from %used( in6esting a/ti6it- B

Fi/0/-i/1 0-ti itie3

!ssue of equit- shares

%Redemption of debentures(

%Redemption of preferen/e shares(

issue of debentures


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issue of preferen/e shares

re/eipt of term loans

repa-ment of term loans

pa-ment of di6idends

pa-ment of interim di6idends

I /ash flow from %used( finan/ing a/ti6it- C

A B C /et i/-2e03e .2 de-2e03e i/ -034 0/d

-034 e ui 05e/t3

.8e/i/1 -034 0/d -034 e ui 05e/t3

-5.3i/1 -034 0/d -034 e ui 05e/t3

WORKING CAPITAL

INTRODUCTION TO WORKING CAPITAL

Jor,ing Capital is life blood and ner6e /entre of a business. Kust as /ir/ulation

of blood is essential for the sur6i6al of the human being similarl- wor,ing

/apital is ne/essar- for the sur6i6al of e6er- business organi9ation5 whether it

is a small organi9ation or a big organi9ation.

E6er- business needs funds for two purposes3for the establishment and to

/arr- out its da- to da- operations. Long terms funds are required to /reate

produ/tion fa/ilities through pur/hase of fi;ed assets su/h as plant <

ma/hiner-5 land < building5 furniture < fi;tures et/. !n6estments in these

assets the present that part of the firm s /apital5 whi/h is blo/,ed on a

permanent or fi;ed basis and is /alled fi;ed /apital. unds are also needed for


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short3term purposes as for the pur/hase of raw material5 pa-ment of wages <

other da- to da- e;penses et/. these funds are ,nown as wor,ing /apital.

Before dis/ussing about the wor,ing /apital management of )ARDH#A"

$EM$!LES L!#!$ED5 we should ,now the meaning5 definition and different

/on/epts of wor,ing /apital.

'EANING OF WORKING CAPITAL

!n simple words5 wor,ing /apital refers to that part of the firm s /apital whi/h

is required for finan/ing short term or /urrent assets su/h as5 /ash5 mar,etable

se/urities5 debtors5 and in6entories or in other words the wor,ing /apital is the

e;/ess of /urrent assets o6er /urrent liabilities.

CLASSIFICATON OR KINDS OF WORKING CAPITAL

Jor,ing /apital ma- be /lassified in two wa-s*

a) On the basis of concept

b) On the basis of time

O/ T4e B03i3 O; C./-e8t

On the basis of /on/ept5 wor,ing /apital is /lassified as gross wor,ing /apital

and net wor,ing /apital. $his /lassifi/ation is important from the point of 6iew

of the finan/ial manager.

G2.33 =.2 i/1 -08it05 * 3

1. Cash in hand and Bank

2. Bill Receivables

3. Sundry ebtors

!. Short "erm #oan $ %dvances

&. 'nventory of Stock

(. repaid e*penses

Gross Working Capital = Total Current


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ON THE ASIS OF TIME! WORKING CAPITAL MAY E CLASSIFIED

AS"

ermanent or fi*ed +orkin, capital

"emporary or variable +orkin, capital

PER'ANENT OR FI ED WORKING CAPITAL!

TE'PORARY OR VARIABLE WORKING CAPIAL!

FACTORS DETER'INING THE WORKING CAPITAL

-ature and character of business.

Si e of business/scale of operation.

roduction policy.

0anufacturin, process/len,th of production cycle.

Seasonal variation.

orkin, capital cycle.

Rate of stock turnover.

Credit policy

Business cycle.

Rate of ,ro+th of business.

arnin, capacity and dividend policy.

rice level chan,es.

I'POTANCE OF ADEJUATE WORKING CAPITAL


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Jor,ing Capital is the blood and the ner6e /entre of business. Kust as the

blood /ir/ulation is essential in the human bodies for maintaining life5 wor,ing

/apital is 6er- important to maintain the running of business. "o business /an

run su//essfull- without an adequate amount of wor,ing /apital.

T4e 0d 0/t01e3 02e 03 ;.55.=3!

So#$% ' of *% +,- %--. Adequate wor,ing /apital helps in

maintaining sol6en/- of the business b- pro6iding uninterrupted flow

of produ/tion.

Goo/0 ## * Suffi/ient wor,ing /apital enables a business /on/ern to

ma,e prompt pa-ments.

E1- #o1 . A /on/ern ha6ing adequate wor,ing /apital high sol6en/-

and good /redit standing /an arrange loans from ban,s and others on

eas- terms.

C1-* / -'o, - . Adequate wor,ing /apital also enables a /on/ern to

a6ail /ash dis/ounts on the pur/hase and hen/e it redu/es /osts.

R%2,#1r 31 4% - of -1#1r %-! 012%- 1 / o *%r /1 o /1

'o44 4% - * A /ompan- whi/h has adequate wor,ing /apital /an

ma,e regular pa-ments of salaries5 wages and other da- to da-

/ommitments with raises the morale of its emplo-ees5 in/reases their

effi/ien/-5 redu/es wastages and enhan/es produ/tion and profits.

E53#o 1 o of f1$or1+#% 41r6% 'o / o -. Onl- /on/erns with

adequate wor,ing /apital /an e;ploit fa6orable mar,et /onditions su/h

as pur/hasing its requirement in bul, when the pri/es are lower and

holding its in6entor- for higher pri/es.

A+ # o f1'% 'r -%-. Adequate wor,ing /apital enables the /on/ern

fa/e business /rises in emergen/ies su/h as depression be/ause during

su/h periods5 generall-5 there is mu/h pressure on wor,ing /apital

THE NEED OF WORKING CAPITAL


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=.2 i/1 -08it05 i3 /eeded ;.2 t4e ;.55.=i/1 8u28.3e3!

or the purchase of ra+ materials4 components and spares.

"o pay +a,es and salaries.

"o incur day5to5day e*penses and overhead costs such as fuel4 po+er

and office e*penses etc.

"o meet the sellin, costs as packin,4 advertisin,4 etc.

"o maintain the inventories of ra+ material4 +ork5in5pro,ress4 stores

and spares and finish stock.

"o provide credit facilities to the customers.

OPERATING CYCLE OF SATISH KU'AR 'ITTAL 6 CO'*

$he operating /-/le refers to the length of the length of time between the firms

pa-ing the /ash for the material5 entering into the produ/tion pro/essNsto/, and

the inflow of /ash from debtors. $here is a /omplete /-/le from /ash to /ash

where in /ash gets /on6erted into raw material5 wor,3in3progress5 finished

goods debtors and finall- in /ash. Short3term funds are required to meet the

requirements of the funds during this time period this time period depends on

the length of time within whi/h the original /ash gets /on6erted into /ash

again. $he determination of wor,ing /apital /-/le helps in the fore/ast5 /ontrol

and management of wor,ing /apital. !t indi/ates the total time lag and the

relati6e signifi/an/e of /onstituent parts.

FINIS !D G""DS


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THE OPERATING CYCLE CONSISTS OF FOLLOWING EVENTS,

WHICH CONTINUES THROUGHOUT THE LIFE OF BUSINESS*

Con6ersion of /ash to raw material.

Con6ersion of raw material to wor, in progress.

Con6ersion of wor, in progress into finished goods.

Con6ersion of finished goods into a//ounts re/ei6able.

Con6ersion of a//ounts re/ei6able into /ash.

FINANCING BY THE WORKING CAPITAL REJUIR'ENTS BY

BANKS

$he ban, /redit is the primar- institutional sour/e of wor,ing /apital finan/e.

$he ban, pro6ides finan/e through loan agreements5 o6erdrafts5 /ash /redit5

pur/hasing of bills5 and term loans. Ban,s ha6e been /ertain norms in granting

wor,ing /apital finan/e to /ompanies. $hese norms ha6e been greatl-

influen/ed b- the re/ommendation of 6arious /ommittee appointed b-

RESER)E BA"@ O !"D!A from time to time.

SA$!SH @U#AR #!$$AL< CO#. finan/e his wor,ing /apital from the

different ban,s li,e ICICI BANK, STATE BANK OF INDIA,

WORK-IN-PROGRES DEBTORS

CASH RAW MATERIAL


22/64

ALLAHABAD BANK,PUN AB NATIONAL BANK . Compan- finan/es

the amount a//ording to its need a//ording to its need of wor,ing /apital

requirement.

NET WORKING CAPITAL

"et wor,ing /apital is the differen/e between the /urrent assets and the /urrent

liabilities. $herefore it is /alled net wor,ing /apital. Jhen /urrent assets

e;/eed /urrent liabilities then the wor,ing /apital is positi6e otherwise

negati6e. E;amples of /urrent liabilities.

Bill ayable

Sundry creditors

Outstandin, e*penses

Short term loans

ividend payable

Bank overdraft


23/64

CHAPTER % PROFILE OF THE ORAGNI7ATION

Satish ,umar mittal < /om is a ma=or integrated te;tile produ/er in !ndia. $he 'roup was

setup in 2 at Ludhiana5 "orthern !ndia. Sin/e then5 the 'roup has e;panded manifold and

is toda-5 one of the largest te;tile /onglomerates in !ndia. $he 'roup portfolio in/ludes

#anufa/turing and mar,eting of &arns5 abri/s5 Sewing $hreads5 iber and Allo- Steel. $he

group started its /orporate =ourne- with an installed /apa/it- of 111 spindles in 2 under

the flagship /ompan- Satish ,umar mittal < /om Spinning < 'eneral #ills Limited %now

,nown as Satish ,umar mittal < /om Holdings Limited and is an in6estment arm of the

'roup( in Ludhiana. O6er the -ears the group has e;panded its spinning /apa/ities besides

adding new businesses. $he group has also di6ersified into -arn pro/essing5 wea6ing5 And

Sewing $hread5 fabri/ pro/essing5 a/r-li/ fiber manufa/turing and into spe/ial8 allo- steels.

$oda-5 /lose to 015111 people are the Organi9ation is most important asset its human /apital

T4e S0ti34 um02 mitt05 6 -.m* -.m82i3e3 .; t42ee 5i3ted 0/d t=. u/5i3ted -.m80/ie3$

Li3ted -.m80/ie3

Satish ,umar mittal < /om $e;tiles Limited %formerl- #aha6ir Spinning #ills

Limited(

Satish ,umar mittal < /om A/r-li/s Limited

Satish ,umar mittal < /om Holdings Limited2 %formerl- Satish ,umar mittal < /om

Spinning < 'eneral #ills Limited(

Unlisted Companies

)#$ Spinning Compan- Limited

Satish ,umar mittal < /om $hreads Limited


24/64

LOGO OF SATISH KU'AR 'ITTAL 6 CO' .

$he 7 lame signifies growth i.e. growth of the /ompan- along with the growth of ea/h and

e6er- indi6idual asso/iated with it whether he8she is a wor,er 5 a white /ollar emplo-ee5 a

shareholder or a /ustomer.

$he 7Sti/, s-mboli9es /otton that is the basi/ raw material of the /ore produ/t of . $he 7 S

stands for the Satish ,umar mittal < /om

HISTORY

$he industrial /it- of Ludhiana5 lo/ated in fertile #alwa region of /entral +un=ab is ,nown as

the 7#A"CHES$ER O !"D!A . Jithin the pre/in/ts of the /it- is lo/ated

$he /orporate head quarters of Satish ,umar mittal < /om.5 A household name in northern

!ndia. $he Satish ,umar mittal < /om. 5 born in 2 under the entrepreneurship of late Lala

Rattan Chand Oswal has toda- blossoms into the one of the larger te;tile business houses in!ndia .

At its in/eption5 satish ,umar mittal < /omhas installed /apa/it- of 2>111 spindles. $oda-* its

/apa/it- has in/rease multifold to o6er . la/s spindles. !n 2 0 the group enters sewing

threads mar,et in /ompan-5 whi/h was the forward integration of business. !n 2 15 it

undertoo, -et another di6ersifi/ation P this time into the wea6ing business. $he gre- fabri/

wea6ing unit at Baddi5 /ommissioned in 2 1 with a /apa/it- of 015111 meters per da- 5 has


25/64

alread- made its mar, as a qualit- produ/er of gre- poplin5 sheeting5 shirting in the domesti/

as well as foreign mar,et . $his was followed b- entr- into fabri/ pro/essing b- setting up of

AURO $EM$!LES at BADD!5 whi/h /urrentl- has a pro/essing of 25115111 meters per da-.

!n the -ear 2 5 the group has added -et another feather to its /ap with a setting of SA$!SH

@U#AR #!$$AL < CO# ACR&L!CS L$D in. $he /ompan- also has a strong presen/e in

the mar,ets of KA+A"5 HO"' @O"'5 @OREA5 and U@ < EURO+E in addition to the

domesti/ mar,et. Adheren/e to s-stems < true dedi/ation to qualit- has resulted in obtaining

the /o6eted !SO 1108!SO 2>110 qualit- awards whi/h is the first in te;tileindustr-.


26/64

PHILOSHOPHY

aith in bright future of !ndian te;tile industr- < hen/e /ontinues e;pansion areas 7whi/h we,now best .

$otal /ustomer fo/us in all operational areas

+rodu/ts to be of best a6ailable qualit- for premium mar,et segments through $Q# < ERO

DE EC$ implementation in all fun/tional areas.

'lobal orientation targeting3 at least 01 produ/tion for e;ports.

!ntegrated di6ersifi/ation8 produ/t range e;pansion

Jorld /lass manufa/turing fa/ilities with most modern R


27/64

'ISSION

SA$!SH @U#AR #!$$AL < CO#aims to be a JORLD CLASS $EM$!LE organi9ation produ/ing di6erse range of produ/ts for the global te;tile mar,et. SA$!SH @U#AR #!$$AL <

CO# see,s to a/hie6e /ustomer delight through e;/ellen/e in manufa/turing < /ustomer

ser6i/e based on /reati6e /ombination of state3 of P the3 art te/hnolog- < human resour/es.

SA$!SH @U#AR #!$$AL < CO# is /ommitted to be responsible /orporate /iti9en

BOARD OF DIRECTORS

S0ti34 um02 mitt05 6 -.mTe@ti5e3 Limited

SH. SHR! +AUL OSJAL T Chairman < #anaging Dire/tor

S#$. A#!$A "ARA!" T %"ominee of !DB!(

SH. ARU" @U#AR +URJAR


28/64

SH. +RA ULL A"UBHA!

SH. SUBASH @HA"CHA"D B!KLA"!

SH. ASHO@ @U#AR @U"DRA

SH. DARSHA" LAL SHAR#A

SH. SHRA)A" $ALJAR

SH. SACH!$ KA!" T E;e/uti6e Dire/tor

S#$. SUCH!$A KA!" T E;e/uti6e Dire/tor

SH. "EERAK KA!" T E;e/uti6e Dire/tor

C'# % !"A"CE5 ACCOU"$S < $AMA$!O"(

SH. RAKEE) $HA+AR

CO#+A"& SECRE$AR&

SH. )!+!" 'U+$A

BA"@ERS

S$A$E BA"@ O +A$!ALA5

ALLAHABAD BA"@5

!C!C! BA"@ L$D.5

+U"KAB "A$!O"AL BA"@5

S$A$E BA"@ O !"D!A5

BA"@ O BARODA


29/64

COR+ORA$!O" BA"@5

U"!O" BA"@ O !"D!A

CA"ARA BA"@5

S$A"DARD CHAR$ERED BA"@

BA"QUE "A$!O"ALE DE +AR!S

O210/i30ti./05 4ie202-4 -402t

CHAIR'AN CU'$'ANGING DIRECTOR

CORPORATE GENERAL 'ANAGERS

VICE PRESIDENT

'ANAGERS ('"$':)

E ECUTIVES (E"$E%)

OFFICERS (O"$O%)

STAFF (S"$S:)


30/64

SUBSTAFF

AWARDS AND ACHIEVE'ENTS

Satish ,umar mittal < /om Spinning and 'eneral #ills Ltd. was the 2st te;tile /ompan- to be

awarded !SO3 110 and !SO32>110 /ertifi/ate in " 9*

't is the lar,est manufacturer and e*porter of cotton yarn from 'ndia.

't is the second lar,est producer of se+in, threads in 'ndi

't is a lar,er producer of acrylic fiber and finished fabrics

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 %##9$#:

6old trophy in O78 9 for e*port of cotton yarn

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 %##9$#:

Bron e trophy in mill fabric e*porter cate,ory

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 %##%$#9

6old "rophy in O78 9 for e*port of cotton yarn

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 " M$

Silver "rophy

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 " &$ M

Bron e "rophy


31/64

Te@ti5e [email protected] P2.m.ti./ C.u/-i5 "


32/64


33/64


34/64

BUSINESS OF SATISH KU'AR 'ITTAL 6 CO'*

Satish ,umar mittal < /om'roup /onsists of SBUs spread a/ross manufa/turing lo/ations


35/64

S$ Steel

& &arn

C Cotton &arn

abri/


36/64

S8i//i/1 Bu3i/e33 (Y)

S0ti34 um02 mitt05 6 -.mS8i//i/1 6 Ge/e205 'i553 Lud4i0/0, Pu/ 0b

Au2. S8i//i/1 B0ddi, HP

A2i40/t S8i//i/1 '05e2 .t50, Pu/ 0b

A2i34t S8i//i/1 B0ddi, HP

G03 'e2-e2i3ed Y02/ Bu3i/e33 H.34i028u2, Pu/ 0b


37/64

Au2. D ei/1 B0ddi, HP

A/0/t S8i//i/1 '0/didee8, 'P

S0ti34 um02 mitt05 6 -.mS8i//i/1 6 Ge/e205 'i553 ([email protected] O2ie/ted U/it) B0ddi, HP

V'T B0ddi, HP

S0ti34 um02 mitt05 6 -.mY02/3 S0t508u2, 'P

F0b2i- Bu3i/e33 (C)

Au2. We0 i/1 B0ddi, HP

'S'L Te@ti5e3 Di i3i./ B0ddi, HP

Au2. Te@ti5e3 B0ddi, HP

S0ti34 um02 mitt05 6 -.mF0b2i-3 Bud4/i, 'P

Se=i/1 T42e0d Bu3i/e33 (ST)

ST$I H.34i028u2, Pu/ 0b

ST$II Lud4i0/0, Pu/ 0b

ST$III Pe2u/du20i, TN

S0ti34 um02 mitt05 6 -.m T42e0d3 Limited B0ddi, HP

S0ti34 um02 mitt05 6 -.m S8e-i05 Stee53 (S) Lud4i0/0, Pu/ 0b

S0ti34 um02 mitt05 6 -.m A-2 5i-3 Limited (F) B402u-4, Gu 020t


38/64

PRODUCT RANGE

Y1r -

$he group is one of the largest spinning group of the /ountr- with a spindlier of o6er

5 15111. $he group has 20 produ/tion plants lo/ated in the states of +un=ab5 Hima/hal

+radesh and #adh-a +radesh. !n man- of the -arn mar,et segments5 Satish ,umar mittal <

/omholds the position of mar,et leader besides being a large and reliable supplier in the

/ountr-.

Satish ,umar mittal < /omis also the largest e;porter of -arn from !ndia. $he group -arn

e;ports amount to o6er USG 211 million /o6ering the most qualit- /ons/ious mar,ets in

theworld. $he total e;port of Cotton -arn of the group is about of total e;port of /otton

-arn from the /ountr-.


39/64

S%0 2 T*r%1/-

Satish ,umar mittal < /omentered the Sewing thread business in 2 0 as a forwardintegration to its -arn business. $he group had to struggle for sur6i6al being pitted against a

large multinational organi9ation. $oda- with appro;imatel- 0 metri/ tonne8per da- of sewing

thread manufa/turing /apa/it- in its plant at Hoshiarpur5 Ludhiana5 Baddi < +erundurai.

Satish ,umar mittal < /omthreads ha6e emerged as se/ond largest sewing thread brand in the

/ountr-.

Pro'%--%/ F1+r '

!n its quest for further 6alue addition Satish ,umar mittal < /omstarted fabri/ pro/essing in

2 .

Satish ,umar mittal < /omestablished a modern fabri/ pro/ess house in 2 with a /apa/it-

of 41 million meters per annum. $his /apa/it- has been e;panded to >0 meters per annum in

& 011 31 . A Satish ,umar mittal < /om fabri/ is dedi/ated to meet /ustomer demand for

top qualit- finished fabri/ through produ/t inno6ation5 world /lass qualit-5 state3of3art

te/hnolog- and e;/ellen/e in ser6i/e.


40/64

F +r%

!n 2 the group set up an A/r-li/ staple fibre plant at Bharu/h in 'u=arat in /ollaboration

with #arubeni and Kapan E;lan of Kapan. $he plant has annual /apa/it- of 2 11 metri/

tonnes per annum.

S %%#

$he steel business was setup in 2 :4 as di6ersifi/ation with a /apa/it- of 4 111 million tones

per annum. Later on group a/quired a steel plant from #ohta 'roup of !ndustries in 2 and

/on6erted this loss ma,ing unit into a profitable business in first -ear of operation with the

'roup. Subsequentl- the steel mill has been moderni9ed and e;panded to a /apa/it- of

211111 million tonnes per annum. Catering to high te/hnolog- Qualit- /ons/ious allo- steel

segment5 the unit has a reputation of being a dependable sour/e of suppl- of spe/ial and allo-

steel to !ndian8!nternational standards.

YARN


41/64

$he SA$!SH @U#AR #!$$AL < CO# range of -arn was a humble beginning. $ree de/ades

of hard wor,5 /ommitment and /onstant inno6ation ha6e resulted in well earn trust and

goodwill of our /ustomers a/ross the globe.

At SA$!SH @U#AR #!$$AL < CO# we mo6e with a notion that /ustomer ser6es is a wa-

of life. Je stri6e to pro6ide our /ustomers delight with 4+ ser6i/e P+RO#+$5 +OL!$E

units are dedi/ated to e;ports onl- %EOU( 5 state P of Pthe3 art te/hnolog-. De;trose

hands /apable of plain rh-thm with ma/hines sour/ed from best a6ailable around the world

has made SA$!SH @U#AR #!$$AL < CO#a galler- of 6ariet- of world CLASS -arns.


42/64

EOU3211 dedi/ated to e;port onl-

• "O" EOU P produ/e for domesti/ as well as for e;port mar,et.

YARN OPERATIONS

$he unique /ombination of man < ma/hine5 /ompeting < supplementing ea/h other with

/ontinuos in/rease in produ/ti6it- has enable SA$!SH @U#AR #!$$AL < CO#to

de;terousl- ripe the fruit of e/onomies of s/ale < pro/ess 6ariet- of raw material required for

6ariet- of end produ/ts to te;tiles. E6enness results falls in to 2 of user standards

a/hie6ed through

P2.8e2 3e5e-ti./ .; 20= m0te2i053

W.25d -5033 P2e 38i//i/1 0/d S8i//i/1 F0-i5itie3

Te-4i/-05 K/.= H.=


43/64

Hum0/ S i553

"## Ju05it A33u20/-e S 3tem

ACCOU"$!"' +RECUDURE OR CUS$O#ER COLLEC$!O" %&AR"S(

$here are three t-pes of /olle/tions

omestic collections

Collection under C0S

Collection throu,h letter of credit #8C

DOMESTIC COLLECTION

Domesti/ /olle/tion means /olle/tion5 whi/h are /olle/ted b- Ludhiana bran/h and /orporate

/entrali9ed mar,et -arns department. in this s-stem the- /olle/t the /heque or demand draft

from the -arns /ustomers and handed o6er it o6er to the /entrali9ed a//ounting /ell for the

depositing the same in to the ban, on dail- basis. After re/ei6ing all /heque on a parti/ular

da- the e /entrali9ed a//ounting /ell deposit the instruments in to the ban, for /learing.

After depositing the /olle/tions into the ban,5 the ACR se/tion a//ount for the same in

respe/ti6e /ustomer s a//ounts on basis of ad6ise sent to ban, on da- 3to 3da- basis.


44/64

CASH MANAGEMENT SERVICES

Cash management means the proper use of an entit- s /ash resour/es . it ser6es as a means to

,eep an organi9ation fun/tioning b- ma,ing th best use of /ash or liquid resour/es of the

organi9ation . at the same time the organi9ation ha6e the responsibilit- to use timel- 5 reliable

and /omprehensi6e finan/ial information s-stem .

Cash mana,ement helps the or,ani ation in:

liminatin, idle cash balances

0onitorin, e*posure and reducin, the e risk

nsurin, timely deposit of collections

roperly timely the disbursements

COLLECTION THROUGH LETTER OF CREDIT (L7C)

A letter of /redit is a do/ument issued mostl- b- finan/ial institutions whi/h usuall- pro6ides

an irre6o/able pa-ment underta,ing to a benefi/iar- against /ompl-ing do/uments as stated in

the /redit.

C408te2 9 Di3-u33i./ ./ T20i/i/1

Stude/t 3 W.2 P2.;i5e*

#- wor, profile is in SA$!SH #!$$AL< CO#.


45/64

. as !nternal Auditor and Consultant with Corporate A//ount +roblems.

W40t t4e 0/ I/te2/05 Audit.2 -0/ d.*

Jith the enlarged mandate and gi6en the s/ope5 ob=e/ti6es and fun/tions of

!AJ under the C'A s organi9ation internal audit in 'o6ernment toda- is of

/riti/al 6alue for se6eral reasons all of whi/h are well ,nown to us*• !t is potentiall- of ma=or importan/e as an effe/ti6e internal audit

s-stem leads to impro6ed a//ountabilit-5 ethi/al and professional pra/ti/es.

• !t /an impro6e the qualit- of output5 support de/ision ma,ing and

performan/e tra/,ing.

• !t has the potential to a/t as an independent and ob=e/ti6e appraisal

me/hanism within the organi9ation whose findings and re/ommendations /an

a/t as a tool enabling the ministr- or department within whi/h it fun/tions5 to

ta,e suitable /orre/ti6e a/tion with respe/t to ser6i/e deli6er- and also

pro/edures.

• !t /an be used to e;amine and e6aluate a/ti6ities5 as a ser6i/e to the

organi9ation promoting effe/ti6e /ontrol at a reasonable /ost.

• !f internal audit /an be/ome an inherent part of management reporting

b- suggesting remedies for the problem areas identified5 it /an trul- fit into the

fundamental and /riti/al area of finan/ial reform whi/h fo/uses on out/omes5

of ob=e/ti6es being a/hie6ed at a reasonable /ost. !t will integrate internal

auditing with the ongoing publi/ finan/ial management reforms.


46/64

W40t 3et3 G. e2/me/t Audit A802t>

!t is ne/essar- to bring out the differen/es that e;ist between auditing in the

go6ernment se/tor5 and auditing in the pri6ate se/tor.• $he en6ironment of the audited go6ernment organi9ation is 6astl-

different from what e;ists in the pri6ate se/tor5 and is a signifi/ant reason for

the differen/e between the two. $he go6ernment audit is /arried out in an

en6ironment determined b- legal rules and a great deal of importan/e is

atta/hed to lawful and rightful /ondu/t within the go6ernments flowing from

the need for go6ernments to a/t in a//ordan/e with laws and regulations laid

down b- the go6ernment itself

• !n the publi/ se/tor moreo6er5 the auditor s opinion ser6es the interest

of the publi/ in general and is not /onfined to onl- pro6iding a full and fair

6iew to the sta,eholders as is the /ase with the pri6ate se/tor audit.

• B- e;tension therefore5 the primar- purpose of an auditor s opinion is

to ser6e in the formal dis/harging pro/edure in the demo/rati/ pro/ess.

Effe/ti6el- then5 the sta,eholders are man- in /ase of the go6ernment audit• !t is also a fa/t that the de/ision ma,ing pro/ess in go6ernment is mu/h

more /omple; when /ompared to the pri6ate se/tor where de/isions are

predominantl- determined b- te/hni/al and s/ientifi/ fa/tors /on/erning the

primar- pro/esses of the entit- and the e/onomi/all- limiting /onditions .• !n the go6ernment arena5 su//ess /annot be translated in terms of the

bottom line of in/ome and e;penditure a//ount but rather needs other /riteria

as a measure of performan/e.

• $he auditing of the a//ounting s-stem of a go6ernment organi9ation is

important not onl- as a tra/, to the finan/ial report but also be/ause the

a//ounts /ontain important information whi/h is 6ital for the pro/ess of

de/ision ma,ing whi/h in the go6ernment se/tor5 b- its 6er- nature5 has wider

impli/ations.

• Auditing in the go6ernment se/tor therefore has a substanti6e

importan/e. Attention for the pro/esses li,e a/quisition of resour/es


47/64


48/64

Organi9ational independen/e.

A formal mandate.

Unrestri/ted a//ess.

Suffi/ient funding.

Competent leadership.

Competent staff.

Sta,eholder support.

+rofessional audit standards


49/64

CHAPTER : STUDY OF SELECTED RESEARCH

PROBLE'

OB ECTIVES OF THE PRO ECT

$o stud- the wor,ing of -arn di6ision.

Effi/ient use of resour/es.

$o stud- of inflow and outflow of /ash.

Jhat fa/tors that /onsiders their wor,ing /apital requirement.

Jor,ing Capital +oli/ies.

$o operate the wor,ing /apital /-/le of the management.

RESEARCH 'ETHODOLOGY

Resear/h /omprises of defining < redefining problems5 formulating

h-pothesis or suggested solutions5 /olle/ting5 organi9ing < e6aluating data5

ma,ing dedu/tions < rea/hing /on/lusions. !n resear/h design we de/ide

about*

• $-pe of data

• rom whom to get data

• About sample si9e

• How to anal-9e data

• How to ma,e report

DATA TYPE


50/64

Data /olle/ted was both +rimar- and Se/ondar- in nature

SA'PLE SI7E

$he sample si9e for the stud- of the pro=e/t was -arn di6ision of

)ARDH#A" 'ROU+ L$D.

RESEARCH DESIGN

STEP " 3 $o stud- the balan/e sheet of -arn di6ision

STEP % P understanding 6arious methods used for anal-sis /ash flow

statement to stud- pro/edure followed for /ash flow statement in )ardhman

STEP 9 P Data Anal-sis of wor,ing /apital through Ratios

DATA COLLECTION

$he information is /olle/ted through the PRI'ARY SOURCES li,e*

$al,ing with the emplo-ees of the department.

'etting information b- obser6ations e.g. in manufa/turing pro/esses.

Dis/ussion with the head of the department.

Data was /olle/ted from following SECONDARY SOURCES li,e

2. Corporate department

a( #ar,eting department

b( inan/e department

0. ACR reports

4. #!S Department

"he collected information +as edited $ tabulated for the purpose of analysis.


51/64

TOOLS USED FOR PRO ECT

Jhile ma,ing the pro=e/t file 6arious tools were used. $hese tools helped in

doing the wor,. $hese are*3

#i/rosoft E;/el

#i/rosoft Jord

)arious anal-sis tools li,e Bar 'raphs5 +ie 'raphs5 tables

LI'ITATIONS OF STUDY

!n the due /ourse time5 the main limitation was with sear/hing the data. $he

data was not /ompleted in the main files of SA$!SH #!$$AL< CO#. $he

training period of si; wee,s was to short to stud- the organi9ation in detail. !n

some /ases budgets are a6ailable but a/tual figures are not a6ailable for

/omparison.


52/64

CHAPTER + ANALYSIS

"* FINANCIAL RESULTS!

$he inan/ial Results for the -ear are as under *3 %Rs. in Crore(

+AR$!CULARS 011 30121 011 3

011

$urno6er 05: :.00 0> .4

+BD!$ >. 4 4:2.4:

!nterest and inan/ial e;penses .:4 210.4>

+rofit before Depre/iation and $a; 1:. 0 .14

Depre/iation 001. : 01:.40

+rofit before $a; %+B$( 0 :.10 2.:2

+ro6ision for $a; 3 Current .: 1.2:

3 ringe Benefit $a; 3 1. 2

3 Deferred $a;

%"et of Ad=ustment( 2 . 2 44.0

+rofit after $a; 024.: 0:.4

+rofit on sale of dis/ontinued operations 3 3 224.>0

Add* Debenture Redemption Reser6e 3 3

Corporate Di6idend $a; written ba/, 2. 2.0

Balan/e brought forward 1. :.4>


53/64

Balan/e a6ailable for appropriation 0: .

2 .4

Appropriations*

+roposed Di6idend on*

3 Equit- shares 2:.44 22.

3 Corporate Di6idend $a; 0. 2.

01.02 24. 2

20 .11 20 .11

$ransfer to 'eneral Reser6e 242.4 1.

Surplus /arried to Balan/e Sheet 0: . 2 .4

Earnings per share %Rs.(

3 Basi/ 4:.11 0>.4:

3 Diluted 42. 4 2 .>

Di6idend per share %Rs.( 4.11 0.11

'ANAGE'ENT DISCUSSION AND ANALYSIS REPORT!

A( $e;tile Business*


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Jorld e/onom- has shown initial indi/ations of re/o6er- after a se6ere spell

of re/ession. $he world e/onom- is e;pe/ted to grow b- >.0 per/ent in 0121

and pro=e/ted to maintain the growth momentum in the ne;t -ears. Howe6er5

the /onsumer /onfiden/e in ma=or importing /ountries li,e USA and EU has

been lagging behind e/onomi/ growth pro=e/tions and ma-

ta,e some more time before showing an- /on6in/ing re6i6al. $hough some

growth has been seen in the world trade of te;tile and /lothing espe/iall- post

Sept. 011 . $he USA te;tile and /lothing imports5 whi/h de/lined b- 24

per/ent in 011 o6er 011 has in/reased b- 2 per/ent during Kan3 eb 0121.

$he partial

e;planation of in/rease in te;tile and /lothing imports ma- be attributed to the

pressure on retailers /aused b- 6er- low in6entor- le6els. !t has resulted into

/reation of demand for te;tile and /lothing produ/ts in international mar,et.

$he domesti/ mar,et is also showing some signs of impro6ement leading to

o6erall in/rease in te;tile manufa/turing in the /ountr-. $he industr- has

attra/ted in6estment to the tune of Rs. 0 la/s /rore under $U for /apa/it-

e;pansion and moderni9ation5 whi/h has started pa-ing -ield. !t is e6ident

from the in/reased te;tile manufa/turing in the /ountr- in the form of

in/reased spun -arn produ/tion. $he spun -arn produ/tion is e;pe/ted to

in/rease at about >011 mn ,g in 011 321 and e;pe/ted to grow b- about

to > 11 mn ,g in 0121322. $he domesti/ deli6eries of spun -arn has also been

growing /onsistentl- showing in/reased a/ti6ities in the entire te;tile 6alue

/hain.

B( Steel business*

Our steel business is dependent on demand for auto and other related users.

$he demand in auto industr- whi/h was suppressed be/ause of global

e/onomi/ slow down has now re6i6ed sin/e third quarter of 011 321.

Simultaneousl-5 their has been a steep rise in raw material /ost li,e shredded

s/rap5 sponge iron et/. be/ause of whi/h there is more mar,et dri6en


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pressure on pri/ing of finished steel. Howe6er5 the auto industr- is pro=e/ting

health- growth during 0121322 and it is e;pe/ted that the demand shall remain

firm enabling steel plants in !ndia to utili9e their installed /apa/it- in full. $he

Compan- is also /onsidering to stru/ture this business and ha6e appointed the

e;ternal ad6isors to help e;amine 6arious options to restru/ture the same.

C( inan/ial Anal-sis and Re6iew of Operations*

+RODUC$!O" < SALES RE)!EJ*

During the -ear under re6iew5 -our /ompan- has registered a turno6er of Rs.

05: :.00 /rore as /ompared to Rs. 05> .4 /rore showing an in/rease of

21. o6er the pre6ious -ear turno6er. $he e;port of the Compan- in/reasedfrom Rs. 0:.1> /rore to Rs. :1>.11 /rore5 showing an in/rease of 20.0:

o6er the pre6ious -ear owing to enhan/ed produ/tion and better

produ/t8mar,et penetration. $he business wise performan/e is as under*3

a(. &arn*

$he produ/tion of &arn in/reased from 22 5 #$ to 20 52> #$ during

011 30121.$he sales re6enue of -arn in/reased from Rs. 2540>.:0 /rore to Rs.

25>: . /rore during the -ear under re6iew.

b(. Steel*

During the -ear5 the produ/tion of steel ingots8billets has been 05221 #$

/ompared to 451: #$ of the pre6ious -ear and that of Rolled produ/ts has

been 5 2 #$ /ompared to 25>:2 #$ of the pre6ious -ear. $he salesre6enue of the di6ision has been Rs. 0: .4 /rore %+re6ious &ear Rs. 402.:>

/rore(.

/(. abri/*

During the -ear5 the produ/tion of pro/essed fabri/ in/reased from 2.4

million meter to 1.: million meter5 showing an in/rease of 2 .4 o6er the


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pre6ious -ear. $he sales re6enue of the pro/essed fabri/ also in/reased from

Rs. > 0.2: /rore to Rs. . 0 /rore showing an in/rease of 2 .>0 o6er the

pre6ious -ear.

+RO !$AB!L!$&*

$he Compan- earned profit before depre/iation5 interest and ta; of Rs. >. 4

/rore as against Rs. 4:2.4: /rore in the pre6ious -ear. After pro6iding for

depre/iation of Rs. 001. : /rore5 %+re6ious -ear Rs. 01:.40 /rore(5 interest of

Rs. .:4 %+re6ious &ear 210.4> /rore(5 pro6ision for /urrent ta; Rs. .:

/rore %+re6ious -ear Rs. 1.2: /rore(5 pro6ision for deferred ta; %net of

ad=ustments(5 Rs. 2 . 2 /rore %pre6ious -ear Rs. 44.0 /rore(5 and pro6ision

for ringe Benefit $a; of Rs "!L %+re6ious &ear Rs. 1. 2 /rore( the net profit

from operations wor,ed out to Rs. 024.: /rore as /ompared to Rs. 0:.4

/rore in the pre6ious -ear.

RESOURCES U$!L!SA$!O"*

a(. i;ed Assets*

$he gross fi;ed assets %in/luding wor,3in3progress( as at 42st

#ar/h5 0121were Rs. 45 22. /rore as /ompared to Rs. 45>2>.0: /rore in the pre6ious

-ear.

b(. Current Assets*

Debtors outstanding for more than si; months were Rs. 24.11 /rore as

/ompared to Rs. 00. : /rore in the pre6ious -ear. $he net /urrent assets as on

42 st #ar/h5 0121 were Rs. 25: . 0 /rore as against Rs. 24:1.41 /rore in the

pre6ious -ear. !n6entor-

le6el was at Rs. 2521:.> /rore as /ompared to the pre6ious -ear le6el of Rs.

01.21 /rore.

!"A"C!AL CO"D!$!O"S < L!QU!D!$&*

$he Compan- en=o-s a rating of FAA3F with stable outloo, and F+2 F from

Credit Rating !nformation Ser6i/es of !ndia %CR!S!L( for long term and short


57/64

term borrowings respe/ti6el-. #anagement belie6es that the Compan-?s

liquidit- and /apital resour/es should be suffi/ient to meet its e;pe/ted

wor,ing /apital needs and other anti/ipated /ash requirements.

$he position of liquidit- and /apital resour/es of the Compan- is gi6en

below*3

%Rs. in /rore(

011 30121 011 3011

Cash and Cash equi6alents*Beginning of the -ear 4 :.02

0.:1

End of the -ear 000.1:

4 :.02

"et /ash pro6ided %used( b-*

Operating A/ti6ities %: .:0(

>>:.1>!n6esting A/ti6ities % :.1 (

%20 . 4(

inan/ial A/ti6ities >2. >

%0 . (

Satish ,umar mittal < /om &arns < $hreads Limited

$his subsidiar- of the Compan- whi/h is a Koint )enture with Ameri/an <

Effird !n/. %A is engaged in the

business of $hreads #anufa/turing and Distribution. During the -ear under


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re6iew5 the gross sales of this Compan- were Rs. 4::.2 /rore and the +rofit

after ta; was Rs. >2.4: /rore.

D!)!DE"D*

$he Board of Dire/tors of -our Compan- has re/ommended a di6idend of Rs.

483 per share on the ull- +aid3up Equit- Shares of the Compan-.

LI'ITATIONS

Jor,ing /apital is powerful tool of determining /ompan- s strength and

wea,ness. But the anal-sis is based on the information a6ailable in the

finan/ial statements5 whi/h are as follows*

't is only a study of interim report.

orkin, capital study is only based upon monetary information and

non5monetary factors are i,nored.

't does not consider chan,e in price level.

%s +orkin, capital is prepared on the basis of ,oin, concern4 it does

not ,ive e*tract position. "hus accountin, concept and conventions

causes a serious limitation to financial analysis.

%nalysis is only a mean and not an end in itself. "he analyst has to

make interpretation and dra+ his8her conclusion. ifferent people may

interpret the same analysis in different +ays.


59/64

.


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CHAPTER < SU''ARY AND CONCLUSION

CONCLUSION

$he sale of SA$!SH @U#AR #!$$AL


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SUGGESTIONS

$he pri/es should be less to re3establish the mar,et for &arn.

Sin/e the /ustomer is 6er- spe/ifi/ in terms of 6alue so the /ompan- /an

introdu/e new and alternati6e produ/ts whene6er possible b- ad=usting

the raw3material mi;ing as a result a/hie6e better profitabilit-.

As far as a//ounting is /on/erned5 although the entire s-stem is

/omputeri9ed5 but there still in6ol6es lots of paperwor,. So this should be minimi9ed b a/quiring more ad6an/ed a//ounting software

"ot onl- for -arn /ustomers but for other produ/t /ustomer dealing

under letter of /redit should done

L8C period should also in/reased

Compan- should put more efforts to impro6e its liquidit- position

Compan- should stret/h the /redit period gi6en b- the suppliers.

Compan- should impro6e the inflow and outflow of /ash.

Compan- should use the /apital in effi/ient manner.


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St2e/1t43

• +ositi6e Attitude

• le;ibilit-.

• Hard wor, with smartness.

• 'ood in Computer wor,.

• @nowledge of A//outs and inan/e.

We0 /e33e3

• Emotional Beha6iour.• La,e of Con/entrate.• Change of pla/e.

O88.2tu/itie3

• 'rowing Se/tor

• Learning Opportunities.

• !mpro6e @nowledge of inan/e.

T42e0t3

• La,e in ,nowledge of inan/e

• )er- Big inan/e Se/tor


63/64

BIBLIOGRAPHY

• REFERENCE TO A BOOK

'upta @ Shashi 5 Sharma R.@ %0 114(5 0ana,ement %ccountin, %nd

business inance 5 @al-ani +ublishers 5"ew Delhi

•

REFERENCE FOR ARTICLES

2. Bergami Robert5 %011 (5 7Jill the UC+ 11 +ro6ide Solutions to

Letter of Credit $ransa/tionsV ” 'nternational Revie+ of Business

Research apers ,)ol.4 "o.05 Kune 011:5 +p. >2 3 4

0. Dolan Kohn5 %011 (5 $HE LAJ O LE$$ERS O CRED!$

"he ayne State 7niversity #a+ School #e,al Studies Research4

)ol 25 April 011:5 p2>

4. +ada/hi @esse6en5 %011 (5 7$rends in Jor,ing Capital

#anagement and its !mpa/t on irms +erforman/e* An Anal-sis

of #auritian Small #anufa/turing irms 5 'nternational Revie+

of Business Research apers )ol.0 "o. 0. O/tober 011 5 +p. >3

>. @lien Carter5 %011 (5 QUsing Letters of Credit to Se/ure Lease

Obligations 5 #a+ ;ournal -e+sletter 5)ol 2 5 "o > 5 September

011 5 p.


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. La9aridis Dr !oannis5 $r-fonidis Dimitrios5 %011 (5 7$he

relationship between wor,ing /apital management and

profitabilit- of listed /ompanies in the Athens Sto/, E;/hange 4

7niversity of 0acedonia 46reece4 )ol 0 5 "o: 5O/tober 5

pp2124.

. S/helin Kohan %011 (5QLetter of /redit and do/trine of stri/t

/omplian/e 5 Uni6ersit- of Uppsala5 )ol. >5 "o. 455 Kanuar-5 pp

0: P 4>

:. Shelton red %011>(5 7Jor,ing /apital and /onstru/tions

industr- 5 ;ournal of construction accountin, and ta*ation 5

De/ember5 pp. > 3 .

. Jeinraub Herbert5 )iss/her Sue %0111(5 7!ndustr- pra/ti/es

relating to aggressi6e /onser6ati6e wor,ing /apital poli/ies 5

.

. #ills 'eofre- %0112(5 7$he !mpa/t of inflation on /apital

budgeting and wor,ing /apital 5

Pinky Project Bba 4 Sam

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