A Summer Training Project Report

A Summer Training Project Report On Working capital analysis of UltraTech Cement Ltd Jharsuguda Cement Work (JCW) Submitted in the partial fulfillment of the requirement for two year Post Graduate Diploma in Management Programme Session-2008-10 Under

the Supervision of: Submitted by:

R.K Prusty

Submitted to:

Sachidananda Sahoo

Account Officer Student (PGDM-III)

Dr. Mohd. Zohair

Lecturer

Roll No: PG/14/096 SCHOOL OF MANAGEMENT SCIENCES, VARANASI (Approved by AICTE, Ministry of HRD, Govt. of India) A Summer Training Project Report On Working capital analysis of UltraTech cement ltd Jharsuguda cement work (JCW)

Under the Supervision of: Submitted to: R.K Prusty Account Officer

Submitted by:

Sachidananda Sahoo Roll No: PG/14/096

Dr. Mohd. Zohair Lecturer

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DECLARATION

DECLARATION I, Sachidananda Sahoo, PGDM-III student of School Of Management Sciences ,

Varanasi hereby declare that this project report titled Working Capital Analysis of UltraTech Cement Ltd. (JCW) is the record of authentic work carried out by me th th during the period from 18 May 2009 to 28 June 2009. The project report has not been submitted to any other University or Institute for the award of any degree/ diploma etc.















CERTIFICATE FROM THE COMPANY/ORGANISATION This is to certify that Sachidananda Sahoo has prepared his summer training Project report titled WORK ING CAPITAL ANALYSIS of UltraTech Cement Limited at th th Jharsuguda unit under my supervision and guidance from 18 May 2009 to 28 June 2009. The work is original and has been done independently by the student. I further confirm that Mr. M. Sachidananda Sahoo bears a good moral character.

Mr. R. K. Prusty (External Guide)

ACKNOWLEDGEMENT















ACKNOWLEDGEMENT

I would like to thank Prof.P.N.Jha Director School of Management Sciences, Varanasi for giving me an opportunity for the summer training project in such an esteemed organization. I also express my deep sense of gratitude and obligation to my guide Mr. R.K.Prusty (ACCOUNTS OFFICER) of Ultra tech tec h Cement Limited, Jharsuguda. His enduring patience, encouragement, constant, inspiration, scholastic guidance has made the project a success. A million of words could say I feel indebted to Md. Joher Sir. I deeply grateful his affection and suggestion without which this work would not have seen the light of the day. I would also like to thank School of management Sciences Varanasi for its sincere help and encouragement in this context for providing me with an industrial exposure during the academic session 2008-2010. I express my hearty thanks to the office staff of Ultra tech Cement Limited for their goodwill and sincere help. I am highly obliged to help rendered by Mr. B.M. Sahoo (Head HR & Admn.) & Mr. Shantimaya Dash for his kind co-operation and help during the course of this summer project. I am very much thankful to my family fami ly and friends for their cooperation and help. Nothing can express their profound affection and inspiration. My heart seems inadequate to express the eternal blessing and love that is bestowed upon me by my parents. I shall remain indebted for ever to my m y family members for their love, affection and constant inspiration. Lastly I bow before god, the benevolent savior s avior whose blessings have given me this t his hour of glory to celebrate. Sachidananda Sahoo

PREFACE















PREFACE The underlying aim of the summer training in UltraTech cement ltd. Jharsuguda cement work is a sincere attempt to analyze its Working Management by making use of different financial appraisal techniques. The data for the studies were obtained from the published annual reports of the company. Among all the problems of financial management, the problems of working capital management have probably been recognized as the most crucial one. It is because of the fact that working capital always helps a business concern to gain vitality and life strength. The objective of this study is to critically evaluate working capital management as practiced in ultra tech cement ltd. Jharsuguda. In this study, a sincere attempt has been made to analyze the working of ultra tech cement ltd. Jharsuguda making use of different financial appraisal techniques like ratio analysis, trend analysis, common-size ana lysis etc. The period of study was 3year from 2006-07 to 2008-09. The data for the studies were obtained from the published annual reports of the company. An effort has been made to appraise the overall financial performance and efficiency of management, but the scope and depth of study remained limited due to the limiting factors of time, and resources. However, it is expected that the study will provide useful information for better and easier understanding of the financial results of the company. This study has been divided into six chapters. The first chapter has been devoted to the introduction and last to the summary of conclusion and suggestion. The second chapter deals with the objectives. Third chapter takes care of introduction to financial analysis. In addition to this fourth chapter deals with significance of working capital, whereas fifth chapter deals with the analysis aspects of working capital. The main source of data has been the annual reports of the company.















EXECUTIVE SUMMERY The management management of the t he working capital is an integral part of management analysis due to risk involved with it and return on investment of the concern is based on how will the working wor king capital is properly managed. The ability to gain insight through the study of financial statement is vital to sound financial decision making. The basic data with which analyst must work are found in financial statement. So the ability to understand, interpret and use this information is the basic to an understanding of finance. Various stake holders of business are keenly interested to know regarding the financial position of the firm. To know the financial health of the company/business, analysis of financial statement is a necessary. Fixed assets are essential for running of the business where as current assets plays a very vital role in meeting day to day operations. Hence the t he scope of managing the current assets increases as the business operation increases. Here the question of WORK ING CAPITAL MANAGEMENT rises. With the help of tools & technique of financial statement st atement analysis, one can know the liquidity, solvency and profitability position of the company. The present study is an attempt to find out soundness of Working Capital Management at UltraTech Cement Limited and to study how far it handles the financial resources particularly current assets i.e. Paying capacity of short term obligations. For this, every possible effort has been made and adequate data has been collected to have a better conclusion over the study.

















CONTENTS

CONTENTS CHAPTER  I

i. Introduction

Page No. 15

ii. Introduction to working capital management

16

iii. Research Objectives

17-18

iv. Methodology

19-21

CHAPTER  II Company Profile

i. About Aditya Birla Group

22-55

















CHAPTER  IV

i. Findings

91-98

ii. Suggestions iii.Conclusions Annexure Bibliography INTRODUCTION TO THE TOPIC Working capital is the life blood and controlling nerve center of a business. The organization has to make available of funds to pay their day to day bills, wages, and so on. The working capital is made up of the net current curr ent assets net of the current liabilities. It is very important for a company to manage the working capital carefully. This is particularly true where there is substantial time lag between making the product and receiving the money for it. In this situation the company has paid out of all the costs associated with making the product (raw material, labour and so on) but not yet got any money for it. They must therefore ensure they have enough cash to do this. This shows the cash coming into the business, what happens to it while the business has it and then it goes. Between each stage of this working capital cycle there is a time lag for some business this will be very long time to make and sale the product. They will need a substantial amount of working capital to survive. Others through throu gh may receive their cash very quickly after paying out for raw material mater ial etc. perhaps even before they have

















The above information about the working capital may influence me for making a project on working capital management of UltraTech Cements ltd. Introduction

to the working capital:-

The management of current assets is similar to that of fixed assets in the sense that in both case that a firm analyses their effects on its return and a nd risk. The management of fixed and current assets, however, differs in three important ways: first, in managing fixed assets, time is a very important factor; consequently, discounting and compounding techniques play a significant role in capital ca pital budgeting and a minor one in the management of current assets. Second, the large holding of current assets, especially cash, strengthens the firm¶s liquidity position (and reduces r iskiness), but also reduces the overall profitability. Thus a risk-return trade off is involved in holding current assets. Third, levels of fixed as well as current assets depend upon expected sales, but it is only current curr ent assets which can be adjusted with sales fluctuations in the short run. Thus, the firm has a greater degree of flexibility in managing currents. y

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Working Capital is a life blood and controlling nerve center of a business´, various aspects of working capital determine the health and growth of an organization. Working capital refers to excess of current assets over current liabilities Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, ne gative, depending on how much debt the company is carrying. In general companies that have a lot of working capital will be more successful since they can expand and improve their operations of companies. COMPONENT OF W.C

CURRENT ASSETS

CURRENT LIABILITIES

















RESEACH OBJECTIVES

RESEACH OBJECTIVES y

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To know the components working capital Management in ultra tech cement ltd.(JCW) To assertion management of working capital and to calculate various ratios relating to working capital. To study the liquidity position of the organization by analyzing the important components of working capital To know the financial stability of a business. To study the past performance of the working capital management in the company, its present and future prospect considering the change in working capital

















METHODOLOGY

METHODOLOGY RESEARCH DESIGN

The design chosen for this study is descriptive research design. The rationale behind using the descriptive research design is that the study was carried on working capital management for which the source is annual reports and cost report etc. The financial analysis is done keeping special emphasis on balance sheet , profit & loss account, cost report and analysis. The data are collected from the following sources:



















reports etc.

RATIO ANALY SIS

1. CURRENT RATIO 2. L IQ UID RATIO 3. INVENTORYTURN OVER RATIO 4. DEBT TUR N OVER RATIO 5. WORKING CAPITAL TURN OVER RATIO 6. CREDITOR TURN OVER RATIO 7. OPERATING CYCLE, GRAPHICAL TOOLS 1. TABLES



















COMPANY PROFILE About Aditya Birla:-

The Aditya Birla Group is Indias first multinational corporation. Global in vision , rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders. st akeholders. Currently a US $24 billion conglomerate c onglomerate, with a market capitalization of US $ 23 billion, it is anchored by an extraordinary force of 100 ,000 employees belonging to over 25 different nationalities. Over 50 per cent of its revenues flow from its operations across the world. The Groups products and services offer distinctive customer solutions. Its 74 state-of-the-art manufacturing units and sectoral services



















IN INDIA, THE GROUP IS:y

A Premier branded garments player

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The Second largest player viscose filament yarn.

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Among the first five mobile telephony players. p layers.

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Leading player in life Insurance & Assets management.

GROUP COMPANIES:y

Grasim Industries Ltd.

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UltraTech Cement Ltd.

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Hindalco Industries Ltd.

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Aditya Birla Nuvo Ltd.



















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Indo Phil Textiles Ltd. (Philippines)

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Indo Phil Cotton Ltd. (Philippines)

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PT Indo Bharat Rayon (Indonesia)

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PT Elegant Textile Industry (Indonesia)

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Alexander Carbon Black Company (Egypt)

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Liaoning Birla Carbon (China)

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A V Cell Industry (Canada)

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A V Nackawic Industry (Canada)

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Aditya Birla Minerals Ltd.(Australia)

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Birla Laos Pulp and Paper Plantation Company (Laos)

JOINT y

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VENTURES:-

Birla Sun Life Insurance Birla Sun Life Asset Management Company Ltd.



















Globally the Aditya Birla Group is: :: A metals powerhouse, among the world's most cost-efficient aluminium and copper producers. Hindalco Hindalco-- Novelis Novelis is the largest aluminium rolling company. It is one of the three biggest producers of primary aluminium in Asia, with the largest single location copper smelter :: No.1 :: No.1 in viscose staple fibre :: The fourth largest producer of insulators of insulators :: The fourth largest producer of carbon of carbon black :: The 11th largest cement producer globally, the seventh largest in Asia and the second largest in India :: Among the world's top 15 BPO companies and among India's top four :: Among the best energy efficient fertiliser fertiliser plants plants In India: :: :: :: :: :: ::

A premier branded branded garments player The second largest player in viscose filament yarn The second largest in the chlor-alkali sector Among the top five mobile telephony companies A leading player in life insurance and asset management Among the top three supermarket chains in the retail business





















Cement manufactures and markets Ordinary Portland Cement, Portland Blast Furnace Slag Cement and Portland Pozzolana Cement. It is the country¶s largest exporter of cement clinker. Its export market includes countries around the Indian Ocean, Africa, Europe and the Middle East. GRASIM INDUSTR IES LIMITED is the flagship company of Aditya Birla Group. Grasim

Itself is a multi-product company with cement being the major area of focus. Now a day the cement division of the Grasim industries Limited works under the banner of the Ultratech Cement limited (UTCL). In August 1998, Grasim acquired the wellknown Dharani Cements Ltd situatedat Reddipalayam, Redd ipalayam, Perambalur District. Soon after the acquisition, acquisition, Grasim embarked on a mostprestigious project of one million top capacity cement plant at the existing locations.





















care to make sure it is perfect both ways ² proportion wise and handling wise. To ensure quality, each and every sample of concrete passes through stringent tests in fresh and hardened state to ensure strength, durability and performance. How does UltraTech¶s Concrete make good concrete better?

Right from selecting the raw materials to batching and mixing, transportation, placing of concrete till testing of concrete ² UltraTech¶s ensures flawless operation in every stage. Clearly, it's all about putting together the right ingredients for that perfect recipe. Cement

Fresh cement, protected from weathering conditions and influence of external





















raw mix design (cement: sand : coarse co arse aggregate : water : admixture) and quantities of raw materials are weighed automatically as per the t he design mix. The water-cement ratio, very important to satisfy the strengthened durability criteria of concrete, is pre-designed throu gh a scientific mix design as per the BISstandards and kept k ept constant throughout to maintain the consistency in quality for a particular part icular mix. mix. Mixing is generally done through high h igh efficiency pan mixers (machine mixers / turbo mixer) to ensure uniform and consistent quality concrete. Transportation

The transport of concrete from its place p lace of mixing to the delivery point is very critical, cr itical, as there impossibility impossibility of o f the concrete drying out and losing its workability workability and a nd plasticity. UltraTech¶s Concrete transports concrete from its ready mix concrete plants to the site through transit mixers. Further, the concrete is pumped to the actual point of concreting co ncreting using high efficiency concrete pumps, thus maintaining the homogeneity of the concrete throughout the





















Dr. S. Misra Mr. B.K. Singh Mr. K.K. Maheshwari Mr. Vikram Rao Mr. Ajay Srinivasan Mr. S. Misra, Managing Director

Executive President & Chief Financial Officer Mr. K.C. Mishra





















of the Board of Trade constituted by the Union Minister of Commerce & Industry, also chairman of the Ministry of Company Affairs¶ Advisory Committee. Additionally, he is on the National Council of the Confederation of Indian Industry (CII); the Apex Advisory Council of the Associated Chambers of Commerce and Industry of India, New Delhi and the Advisory Council for the Centre for Corporate Governance. He served as the chairman of Securities and Exchange Board of India¶s Committee Co mmittee on Corporate Governance, and as chairman of SEBI¶s committee on insider trading. He authored the nation¶s first report on corporate governance. On the academic front, Mr. Birla is the Chancellor of the Birla B irla Institute of Technology & Science (BITS), Pilani. He is also a director on the G.D. Birla Medical Research &























Neerja Birla, have three children, Ananyashree, Aryaman Vikram and Advaitesha.























Mr. Debu Bhattacharya Managing Director, Hindalco Industries Limited, Vice

Chairman























Mr. Bhattacharya earned a B. Tech (Hons.) in Chemical Che mical Engineering from IIT, Kharagpur, and a B.Sc. (Hons.) in Chemistry from Presidency Pr esidency College, Kolkata. Mr. K. K. Maheshwari H ead, ead, Global Chemical Business,























Mr. Maheshwari was a member of the Ahluwalia Committee on State Specific Reforms for State Electricity Boards constituted by the Ministry of Power. While in Thailand, Mr. Maheshwari served as a trustee and was a member of the Board of New International School of Thailand in Bangkok.























UltraTech Cement Limited Jharsuguda cement work, orissa



















































































































































































































































































































































































































































































SUGGESTIONS

SUGGESTIONS y

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The company should improve the cash position to meet the current liabilities immediately, when required. The quick assets condition has to be improved. As a manufacturing industry the company should show its endeavor towards decreasing the net n et operating cycle.















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Cash flow and fund flow statements should be prepared for the benefit of the company. Even the cash budget to know the cash requirement for each month. The company should invest in short term assets to meet the current liabilities. The non-moving stocks have to be removed continuously.

CONCLUSION















The plant being a small grinding plant is immediately contributing to the profitability of the company. After taken over by the Aditya Birla group the firm has increased the production capacity. Its main advantage is the location for production and distribution of the product. The company is located near to HINDALCO, another Aditya Birla Company of Aluminum, which is 70kms away from Dhutra. The Fly Ash required for the production of cement, brought from HINDALCO. The company pays only the transportation charges. As per the Working capital Analysis we saw the firm is retaining a small amount of current assets, which is good for profitability but not for the health of the company. Being a small grinding unit it depends upon the Head Office and fully fledged plant. It is advantageous for the company as it gets raw materials and money on credit when required. There is no doubt about the current assets management of the unit, it is managed aggressively. The working capital management is not that much good as concerned to the company. It is all due to the 24x7 support of the head office in every respect. The unit along with the Hirmi Cement Works and Durgapur Cement Works is the cheapest producer and top in the profitability concern.















BIBLIOGRAPHY

BIBLIOGRAPHY y

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Pandey, I.M, Financial management, 1978, Vikas Publishing House Pvt. Ltd. New Delhi Sharma, R.K. & Gupta, Shashi K, Management Accounting, 1996 kalyani Publisher, Chandra Prasanna, Financial Management, Golgotha Publishing Co. New Delhi, Jain, S.P, & Narang, K.L, Advance cost & Management Accounting, Kalyani Publisher, Ludhiana, MY Khan, P.K.Jain (1981), Financial Management,5th edition, Publisher Mc graw hill companies

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H orne orne

Wwachonicz, J.R.Bhaduri (2005), Fundamentals and Financial

management, 12th edition, Pearson publisher y

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www.adityabirla.com www.ultratech.com Search engine

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www.google.com Annual Accounts from 2006-07 to 2008-09















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A Summer Training Project Report

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