ACC Cements

SUMMER TRAINING PROJECT REPORT

ON

WORKING CAPITAL MANAGEMENT IN ACC LTD GAGAL CEMENT WORKS

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION (M.B.A.)(2006-2008)

PROJECT GUIDE : SUBMITTED BY : MR. SANJAY JOHARY ANURAG SHARMAMANAGER FINANCE M.B.A. 2ND YEARGAGAL CEMENT WORKS ROLL NO :-BARMANA (ACC LTD.) COLLAGE – 04/06

H.P.U. – 597

SESSION (2006-2008) INSTITUTE OF ENGINEERING AND EMERGING

TECHNOLOGY BADDI

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GAGAL CEMENT WORKS

P.O.BARMANA, BILASPURHIMACHAL PRADESH

174013

THE ASSOCIATED CEMENT COS. LTD.

INDEX

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ACKNOWLEDGEMENTUNDERTAKINGPREFACEHISTORY OF INDUSTRYASSOCIATED CEMENT COMPANY LIMITED

CORPORATE PROFILE OF ACC LTD. ACC FOUNDATION ENVIRONMENTAL POLICY OF ACC LTD. MISSION & VISION OF ACC LTD. PERFORMANCE AND EVENTS ARTICHETS OF SUCCESS

GAGAL CEMENT WORKS INTRODUCTION GEOGRAPHICAL DETAIL CONTRIBUTION TO GOVERNMENT QUALITY POLICY ENVIRONMENTAL POLICY PRODUCTION SYSTEM IN GAGAL

CEMENT WORKS MANUFACTURING PROCESS POWER CEMENT PLANT

DEPARTMENTATIONFINANCE DEPARTMENT

ACCOUNTING SECTION COST SECTION

ANALYSIS OF WORKING CAPITAL RATIO ANALYSIS FUND FLOW ANALYSIS WORKING CAPITAL BUDGET

NEED AND OBJECTIVE OF STUDYRESERCH METHODOLOGYDESIGN OF STUDYBIBLIOGRAPHY

ACKNOWLEDGEMENT

I offer my gratitude to those who have spend their precious time, curiosity and continued encouragement through study and for

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the fulfillment of my SUMMER TRAINING IN GAGAL CEMENT WORKS( ACC LTD.) DISTT – BILASPUR (H.P).

I would like to thanks Mr. Sanjay Johari (Manager Finance) and Sunil Gupta ( Asst. Manager Finance) at Barmana allowing me to undertake training in their renowned organization and permitting to work on Analysis of Working capital at this company.

I will indebted toward Mr. Sunil Gupta and his staff for co-operative guidance and helping me to find out relationship between books and its practical application and to learn a lot about different aspects of the company. Under their guidance I succeeded in doing my summer training program.

ANURAG SHARMA

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UNDERTAKING

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I Anurag Sharma do here by declare that the training report on study conducted on “Working capital analysis” in GAGAL CEMENT WORKS Barmana submitted by me in the partial fulfillment of M.B.A. (Master of Business Administration) Himachal Pradesh University, Shimla is the original work.

What ever Data has been disclosed in the report are authentic to the best of my knowledge. I have not submitted this training report to any other university ever before.

ANURAG SHARMAM.B.A. FINANCE

IEET (BADDI)

PREFACE

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As a matter of Knowing how things look like in practical sense every M.B.A. student has to undergo training in an approved business organization for the tenure of not less than six weeks. I got a chance to seek more and more knowledge under the guidance of professional managers.

On the completion of M.B.A. Degree students have hand on experience that will help for facing challenging jobs under such competitive environment.

During the training tenure I visited various departments of GAGAL CEMENT WORKS to study their process of functioning & organization structure. I have completed my project successfully in “The study of working capital analysis” under the guidance of Mr. Sunil Gupta (Asst. Manager Finance).

During the above course tenure Mr. Narender Kumar (Salary Officer) helped me for getting knowledge concerning with taxation and specially I would like to thank Mr. Sanjay Johary for allowing me to work in finance department.

HISTORY OF ACC LTD.

The history of cement industry is the story of civilization from primitive caves of prehistoric times to the skyscrapers of the modern age. It is said that the use of cement is from period use of fire Egyptians utilize gypsum plaster as cementing material as early as 3000 BC in building their monuments.

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Material cement has existed the roman empire joseph Arpdin invited Portland cement in 1824 after the discovery of hydraulic properties of time, patented his product which was call Portland cement. Portland stone which is lime stone quarried on Portland bill in dorsed, England. Modern cement is outcome of effort of chemist’s technologist and architects.

Cement is binding agent having hydraulic properties, which after hydration gives the setting properties strengthening concrete. Intergrading, clinker, gypsum, and pozzolanic material in a proper ratio to get protland pozzolane cement manufacture cement.

Cement essentially made up of material containing calcium silicon, aluminum and iron. Limestone, marl and chalk are major source of clay shale, quartzite, bauxite iron ore provide silicon, aluminum and components.

MAJOR COMPANIES IN THE CEMENT INDUSTRY ARE:-

The Associated Cement Companies Ltd. Birla Group Larsen and Turbo J.K.Group India Cement Gujrat Ambuja

CORPORATE PROFILE OF ACC LTD.

ACC is a very fond acronym in India, often assuming synonimity with cement . With a annual cement capacity of over 12 million tones, the company’s operation are spread regional marketing offices, several area offices, and a dedicated band of people from all corners of India. Thus in industrial backdrop of India ACC stands for multi-product, multi-unit company.

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The companies various businesses are supported by a powerful, in-house research and technology backup facility-the only one of its kind in the Indian cement industry.

ACC has also extended its services to overseas, to the middle East, Africa and South America, where it has provided technical and management consultancy to a variety of consumers, and also helps in the operational maintenance of cement plants abroad.

In addition to its modernization and expansion, ACC has earmarked on an all round internal improvement program through introduction of various world class benchmarking and total productivity maintenance practices. Through an organization wide business process engineering, it has able to achieve revenue enhancement and cost savings by optimally aligning business practices with customer needs. It would also result in further simplification of the internal management processes and delayering and decentralizationfor fast decision making purposes.

Today, ACC stands poised to enter the new millennium, ready to seize the opportunities and face the challenges that lie ahead. With more than six decades of experience ACC has a rare perspective of sound business strategies, with which ACC in poised to maintain its leadership in cement industry.

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A GLANCE ON THE HISTORY ON SUCCESS

The Associated cement company Ltd. is known for the largest manufacturer of cement. So it comes under the leading companies in India for producing more than 1/4th of national output. ACC Ltd. company was duly registered under Indian companies Act 1956, having its registered office at cement house, 121 maharishi Karv road, Mumbai-400020.

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It has 14 cement plants spread all over the country and has various subsidiaries and other overseas projects. Each business is concerned with the objective of rising business through customer satisfaction and continuous improvement in quality of the product.

Initially when cement was introduced in 1914, south India industry Ltd. started first cement plant near Madras.This plant was closed down after a few months due to shortage of labors and lack of knowledge in manufacturing of cement. It has modernization and expansion projects at lakheri in Rajasthan and Bargarh and has one project for additional capacity at new wadi in Karnataka.

In 1936 with the effort of Mr. Dinshaw a group of companies formed Associated companies Ltd.In 2005 Holcim group of swizerland made take over of ACC Ltd. and this time whole management of ACC Ltd. is in the hands of Holcim groups chairman MR. M.L.NARULA.

ACC FOUNDATION

Many men of outstand initiative and foresight contributed towords the development of cement industry in India. About 71 years ago in 1936 a number of companies belonging to the house of Tata Khatias and Kellick, Nixon combined to from “The Associated Cement Companies Ltd.” great industrialist and patriot Mr. F.E.Dinhsaw was mainly responsible into a single organization.

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The objective of this merger was not to attain monopolistic position but to make and deliver cement as cheaply as possible. Mr. Dinshaw added for new factories in ACC group from 1929 to 1936. During Second World War, the cement was delivered as essential commodities under the defenses of Indian Rule and though under price and distribution control. The cement industry gets further impetus under the leadership of ACC.

ENVIRONMRNTAL POLICY OF ACC LTD.

Ensure continual improvement in environment performance by carrying out periodic review of action plan.

Prevent pollution and minimize fugitive emissions. Comply with all applicable legal and regulatory

reguirements. Create environmental awareness among employee and

community at large. Minimize the waste generation at source reutilize the work

if generated. Conserve energy and mineral resource.

MISSION AND VISION OF ACC LTD.

QUALITY:- To make continuous improvement in the quality of our product and services and add some essential features for customer satisfaction and ensure their supply at fair prices.

PROFITABILITY:- To achieve fair and reasonable return on capital employed by making optimum utilization of available resources and increasing productivity & effectiveness throughout the company.

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RESPONSIBILITY:- To fulfill our obligation to society, specifically in the area of rural development and in safeguarding.

LEADERSHIP:- Maintain our leadership of the Indian cement industry through the country modernization and expansion of our manufacturing facilities and activities and through the establishment of a wide and efficient marketing network.

GROWTH:- Ensure a steady growth of business by strengthening our position in the cement sector.

EQUITY:- Promote and maintain fair industrial relation and environment for the effective involvement, welfare and development of staff at all levels.

VISION OF ACC IS TO BE A WORLD CLASS CORPORATION WITH DIVERSE BUSINESS BUILT AROUND ACC’sunita CORE COMPETENCIES AND KNOWLEDGE BASE IN CEMENT REFACTOREIES ADVANCED MATERIAL ENGINEERING GEOLOGY MINING AND RESEARCH.

PERFORMANCE AND EVENTS

Change of name to ACC Limited with effect from september1,2006.

Production and sale of cement touched an all-time high of 18.73 million tones and 18.86 million tones respectively during the year 2006, growth of 10% and 8% respectively as compared to the corresponding previous period.

Total group income for the year 2006 at Rs.5976 crore, up 28% over the corresponding previous period.

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Profit before Exceptional items and tax for the year ended December 31,2006 for the group was Rs1464 crore as against Rs435 crore in the nine months period ended December 31,2005.

Profit after Tax for the year ended December 31,2006 for the group was Rs 1240 crore as against Rs514 crore in the nine months period ended December 31,2005.

Augmentation of cement grinding capacities at Tikaria, Kymore, Wadi, Sindri and Madukkarai.

Modernization and expansion projects at Lakheri and Bargarh.

Project for additional capacity at New Wadi in Karnataka. Captive power generating capacities being added at

Lakheri, Kymore, Bargarh and Wadi. Increased focus on ready Mix Concrete business-major

growth plans finalized. Technical Support Services centre to achieve technical

excellence in plant operations and project management. ACC pledges support to the national effort against

HIV/AIDS. Synergies with HOLCIM further strengthened during the

year.

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ARTICHETS OF SUCCESS .

Region (South West)Region (South West)

Region (East)Region (East)Region (North)Region (North)

GAGALGAGAL

TIKARIATIKARIA

LAKHERILAKHERI

KYMOREKYMORE

JAMULJAMUL

CHAIBASA

CHAIBASA

SINDRI

SINDRI

DCWDCW

BARGARHBARGARH

CHANDACHANDA

WADIWADI

MADUKKARAIMADUKKARAI

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NO NAME OF DIRECTOR NATIONALITY

1.MR.N.S.SEKHARIA (CHAIRMAN)

INDIAN

2.MR.PAUL HUGENTOBLER (DEPUTY CHAIRMAN)

SWISS

3.Mr. M.L.NARULA (MANAGING DIRECTOR)

INDIAN

4.MR.A.L.KAPUR

INDIAN

5.MR.S.M.PALIA

INDIAN

6.MR.NARESH CHANDRA

INDIAN

7.MR.MARKUS AKERMAN

SWISS

8.MR.D.K.MEHTROTRA

INDIAN

9.MR.R.A.SHAH

INDIAN

10.Dr.NIRMALYA KUMAR

INDIAN

11.MR.SHAILESH HARIBHAKTI

INDIAN

12.MR.ANIL SINGHVI

INDIAN

13.MR.A.K.JAIN (WHOLETIME DIRECTOR)

INDIAN

GAGAL CEMENT WORKS

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INTRODUCTION Gagal Cement Works implemented & obtained ISO14001 Environment System, ISO9001:2000 Quality Management System & OHSAS18001 Occupational Health and Safety Management System Certification. The Gagal Cement Works was set up in the year 1984 wit the aim to serve the market of Himachal Pradesh, Punjab, Uttaranchal, Utter Pradesh and Jammu & Kashmir. ACC was the first to put up large scale industry house in a backward area of Himachal Pradesh. Gagal-1 unit started with an annual capacity of 0.56 Million Tones(with one kiln of 1700 TPD). Gagal-11 unit of 1 Million Tone capacity (with one kiln of 3300 TPD) was installed in 1994-1995. Today Gagal Cement Works has risen to produce 3.2 million tones of blended cement and is like to increase to 4.0 Million Tones in the current financial year 2005 to 2006.Gagal Cement Works is market leader in northern region and maintains its market share in all strategic markets.GCW is the largest cement unit in this entire Zone. There is four other major cement manufactures from Himachal Pradesh, Punjab and Rajasthan who are his competitors. ACC cement has very strong brand image, trusted by generation for consistent and durable cement quality, fair business and practice and long association with dealers and customers are the principal factor which provide us competitive advantages over the other brand. ACC unique R & D support and business policy, differentiate it from its competitors.

GEOGRAPHICAL DETAILS

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Among the largest private sector companies, ACC is the only company to set up a cement plant in 1982 in backward designated area at Barmana, Distt. Bilaspur (HP) and started production with effect from 12th March 1984.

Barmana is 18 kms north to Bilaspur. The National Highway No.21 connecting Ambala in Haryana and Manali in H.P. passes through Gagal Cement Works and its colony.

The colony is at latitude 31.5-degree north and 77degree East Longitude. The total land acquired for the factory, colony and mining area is 2319.10 bighas. Factory covers 365 bighas, the colony covers 345 bighas and the mining area is about1633 bighas. The topography of the area around the worksis mount-ainous. Mean maximum temperature of the area goes upto 45 degree Celsius in the month of June and the minimum temper- ature upto 3-degree in the month of December.

The work has generated direct and indirect employment to the scale of nearly 12000.

Near by Towns:- BilaspurSunder NagarMandi

CONTRIBUTION TO GOVERNMENT16

Annual contribution to center government by way of taxes, duties is 155 crore out of which for Himachal Government is 100 crore. And along with this it is also helping Govt. as its social responsibility. The company has constructed a Govt. degree college; it is spending money on schools, hospital and on other works of public welfare.

GAGAL CEMENT WORKS-AN UNRELENTLESS PURSUIT TOWARDS EXCELLENCE

Gagal Cement Works is committed to deliver quality products to the customers. Gagal Cement Works has to its credit many a prestigious certifications like IS/ISO 9002, ISO 14001 for environmental management system and OHSAS 18001 for adopting high class measures in the sphere of Occupational Health and Workers Safety in the manufacturing of cement.

QUALITY POLICY

Build Quality InDo not Sort Bad Quality OutQuality Improvement is Limitless and therefore ContinuousConcern for Quality is for Entire Organization and Not Just for ProductSatisfy Customer Fully and Continuously

GAGAL CEMENT WORKS- A SYSTEMATIC APPROACH FOR CLEANER WORLD

ACC GAGAL Cement Works is the first point in Himachal Pradesh to have EMS certificate. The Bureau of Indian

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standards awarded this certificate to the works in March 1999. The certificate has resulted in batter understanding among all the employees, of overall environmental issues related to the plant. The main feature of EMS at Gagal is total involvement of employees.

EMS is a program of continuous environmental improvement following a well-defined sequence of steps drawn from the established project management practice and routinely applied in business environment.

ENVIRONMENTAL POLICY

Prevent pollution and minimize fugitive emissionsComply with all applicable legal and regulatory requirementsConserve water, energy and natural resourcesMinimize waste generation and utilize the sameCreate environmental awareness and provide clean and safe environment to employees and community at large

PRODUCTION SYSTEM IN GAGAL UNIT Main Raw Material

LimestoneQuartziteIron OreShaleGypsumFly Ash

MANUFACTURING PROCESSThe Gagal Cement Works is based on the most modern process

of cement manufacturing namely a dry process suspension 18

preheated kiln with precalcener. The limestone is crushed in the

crusher. It is than grinding in Raw Mill along with Shale and Iron

Ore to fine power. The grinding material is blended to a uniform

consistency and fed to the kiln system pulverized Coal in the

kiln system to heat the material to a temperature of 1500 degree

Celsius. The material undergoes a series of chemical reaction to

form a Clinker. The clinker is cooled in the Clinker Cooler and

stored in the Clinker silos. It is extracted from the Silos and

integrated along with Gypsum and Pozzolanaic material to form

Portland Pozzoiana cement. The cement is stored in cement

silos. It is packed in 50-kg bags by automatic packing machine,

loaded in trucks by auto loaders and various consumption

center in Himachal Pradesh as well as the neighbouring states

of Punjab, Haryana and J&K.

POWERThe co. met 54% power requirement through captive generation.

Cost of captive power generation was 34% lower as compare to

grid power. In keeping with its policy of maximizing its captive

power capability. It is also the process of increasing its thermal

captive power generation capacity by another 45 MW. The

company has already achieved significant reduction in cost in

specific area like fuel, power and manpower. The drives for cost

reduction will be further insified all area of operations.

DEPARTMENTATION

QUARRY DEPARTMENT

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The Quarry Department is mainly concerned with the

maintenance of Mines at ACC Barmana. The sub-departments

namely MINE; ELECTRICAL, GARAGE, CRUSHER, STACKER

& RECLAIMER support the Quarry department.

MINES

Gagal lime Stone Mine is captive mine of M/S ACC Ltd.,

Gagal Cement Works. The mining lease covers an area

of 265.97 hectares. Presently the mine is one of the

largest mine of northern India and is fully mechanized

by Heavy Earth Moving Equipment's.

LIME STONE AND COAL HANDLING SECTION

LIMESTONE

The crushed limestone is received from Gagal Quarry with the

help of a series of belt conveyer and stacked in stockpile with

the help of stackers.

COAL

Coal is used as a fuel for firing in the Kiln. Gagal Cement Works

receives coal from different collieries of CCC, ECL and NEC by

rail upto Kiratpur Sahib.

LABORATORY DEPARTMENT Laboratory department in coordination with other departments

carries our regular quality control functions. Quality and

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process control measures are exercised at each and every stage

of process. Inspection and procurement of raw materials, its

testing, quality control of input materials, intermediate products

at different level of process and final product that is cement

are done as per procedures. Inspections and Test Records are

maintained in the Laboratory as per the scheme of testing and

inspection. The departmental activities are coordinated by

Deputy Manager-QPC who reports to Manager- Production.

Gagal Works laboratory has three sections:

1. Chemical & Instrumentation laboratory

2. Physical Laboratory

3. Site Laboratory

PROCESS DEPARTMENT

The Process department guides the operations in maintaining

process parameters so that production is within the desired

range of quality parameters. The process parameters are

arrived at after discussions with the Departmental Heads of

various sections (Raw Mill, Cement Mills & Laboratory)

Manager – Production, coordinates the departmental activities.

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RAW MILL

Activity of Raw Mill starts from feeding Raw Material (limestone,

Quartzite and Iron Ore) to the Mills and ends at filling the Raw

Meal to Silos.

RAW MATERIAL FEEDING

Lime stone feeding to Raw Mills/Roller Mills is through the

sequence of belt conveyors to different Hoppers. Feed size of

limestone is 90 mm and Mills Scale, Shale feeding is from the

Gantry to the respective Hoppers through sequence of belt

conveyors. Shale feeding is through Reclaimed or Pay

Loader.

RAW MILL

Two close circuits two chamber Ball Mills are performing the

grinding of limestone and Additive mix. Raw Mill is a tube

construction of thick MS plate with steel lines and

compartments are separated by diaphragm for improving the

retention time and transfer of materials in second for further

grinding. Mill is charged with hyper steel balls. Raw material is

first fed to Tertiary Crusher (Single Rotor Reversible Impact

Crusher) which reduces the size of Mix. After crushing the mix

the material is fed to Ball Mill where fine grinding takes place.

The finer product is separated by Air Separator and is fed to the

blending silos and the coarse material is fed back to the Mill

Inlet.

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VERTICAL ROLLER MILL (VRM)

In VRM Section the material is directly fed into Mill through the

feed belt for grinding. The ground material is stored in

continuous flow silos from where it is fed to the Kiln. VRM

utilizes hot air from the kiln exhaust for drying the Raw Mix

Deputy Manager – VRM, who reports to Manager

(Maintenance) coordinates the departmental activities

KILN DEPARTMENT

Kiln Department functions are categorized under two heads,

Manager (Maintenance) is responsible for the maintenance of

all equipment and Manager (Production) is responsible for

the Clinker Production and its quality parameters. Gagal Cement

Work has two rotary kilns. Kiln no 1 is having 3 streams coupled

with 2 four stage and 1 five stage preheater with 2 precalciners,

DDF and MFC. Kilns No 2 are having twin stream 5 stage

preheater with precalciners. Pulverized coal is used as a fuel for

calcination. The Clinker is discharged to horizontal grate cooler

and is stored either in Silos or in stockpiles.

CEMENT MILLS DEPARTMENT

The basic function of the department is to grind the required

ratio of clinker and gypsum in the manufacture of OPC and

clinker, Gypsum and CCP/fly ash for the manufacture of PPC

with the help of 4 ball Mills for cement grinding.

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PRE GRINDING UNIT

Roller Press is the pre-grinding unit for Cement Mills 1 & 2. In

Roller Press two rollers are arranged in horizontal fashion. One

is fixed and other has a hydraulic thrust arrangement for

horizontal movement. The clinker is fed vertically down ward

between the rollers and gets crushed by the hydraulic pressure

arrangement The product, which is in flakes, is fed to the Ball

Mill with other additives for finished grinding.

FINISHED GRINDING

Finished grinding is performed in Ball Mills. Ball Mill is a

rotating shell divided into two chambers fitted with shell liners

for shell protection and charged with grinding media to the

required volume. The impact and friction between the grinding

media and material perform grinding. Out put from the ball Mills

is fed to the dynamic separator where the coarse and fines of

specific sizes are separated. The coarse is again conveyed to

the Ball Mill for further grinding. The fines are conveyed to

cement silos through a series of elevators and air slides. In

order to get the desired specific surface for cement the RPM of

separator is varied accordingly?

The departmental activities are coordinated by Dy.

Manager-Plant who reports to Manager (Maintenance).

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ELCTRICAL AND INSTRUMENTATION

(E & I) DEPARTMENT

The primary function of the E & I department is to maintain

all E & I equipment in the plant to provide the necessary service

to ensure the smooth operation of all E 8 & I equipment.

ELECTRICAL

Electrical equipment mainly comprising transformers, HT/LT

motors, DC Motors, switch gears, power distributor system and

factory and residential colony lighting

Besides the above E & I department is also responsible for the

maintenance if the electrical installations of the colony. The

department CO-ordinates with the other relevant departments

for proper utilization of the Grid & DG power.

INSTRUMENTATION

Instrumentation system can be effectively termed as the nervous

system of the plant. With the recent advanced in technology

instrumentation has become one of the most important aspect

of cement manufacturing industry. Almost all the monitoring and

controlling parameters are now available I the Central Control

Room (CCR) for operators to run the plant efficiently. Accuracy

and degree of control has increased manifold due to the latest

instrumentation control systems.

Dy. Manager (Electrical) and Dy. Manager (Instrumentation)

report to Manager (E & I) for electrical and instrumentation

activities.

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WORK SHOP

Following activities are carried out in the workshop department:

1. Departmental maintenance Activities

2. Maintenance of Gear Boxes

3. Compressors & PD Blowers

4. Water Pumps

5. Various equipment at Rambagh Pump House, Filter and

Sewage Water Treatment plants.

The departmental activities are coordinated by Dy. Manager

(Plant) who reports to Manager (Maintenance).

COMMERCIAL DEPARTMENT

Procurement Section

This section looks after that equipment, tools and other requisite

items are made available to different departments in time.

Deputy Manager-Purchase who reports to Sr. Manager-

Commercial coordinates the departmental activities.

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Packing House DepartmentPacking plant is the place where cement is packed & dispatched

to various locations. Gagal Cement Works packing department

has six silos with total storage capacity of 35200 tonnes. There

are three Rotary Packer in Gagal I packing plant with a capacity

of 100m TPH each and two electronic rotary packers in Gagal II

packing pant with a capacity of 180 TPM each. All the packers

have truck-loading facility because the cement form Gagal

works to different locations by road.

The various varieties of cement handled are

33 Grade Ordinary Portland Cement (OPC)

43 Grade Ordinary Portland Cement (OPC)

PPC (Portland Pozzolona Cement)

Assistant Manager-Plant reports to Manager Commercial for

Packing Plant Activities.

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Cement Dispatch Section

Cement dispatch section receives dispatch instruction for

Regional Marketing Office, Chandigarh and also from Shimla.

The trucks registered with authorized transporters enter the

factory gate with Loading Advice cum gate Pass. The Truck’s

Gross weight is taken at the Exit Gate by electronic weighbridge

and finally an Excise Invoice is issued to the truck driver.

The departmental head reports to Manager Commercial.

THE CIVIL DEPARTMENTIn cement industry the maintenance and applications of

Refractories in kiln and its auxiliary units are one of the most

important job. It is the refractory, which is subject to all sort of,

processes and operational conditions like high temperature,

abrasion, alkalis, chemicals, thermal shocks, mechanical shocks

etc. And protects the metallic body of the units. Due to this fact

a strict adherence with the quality of the refractory at every step

from receipt to its application is of paramount importance. In

the organization the civil department does the complete dealing

with the refractory and is also responsible for all civil related

jobs in the factory and colony.

Deputy Manager-Civil who reports to Manager-Maintenance

coordinates the departmental activities.

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MAINTENANCE INSPECTION PLANNING

& SYSTEMS (MIPS)As the name suggests the main function of the department is

preparing and planning for carrying out various inspection,

maintenance job and top record and update the inspection

results. Inspection/Maintenance planning is based upon the

diagnosis of change in behavior pattern of sound, temperature,

heat, vibration, viscosity etc.

MIPS department also coordinates in planning the maintenance

activities of various departments so as to get optimum

utilization of stoppage duration. MIPS also carries out the down

tile analysis of main equipment.

GENERAL STORES

The general stores is the department which is involved in

making the balanced and timely flow of materials, spares, tools

and equipment. General Stores also arranges for the disposal of

the scrap and unwanted materials.

Deputy Manager who reports to Works Manager

coordinates the activities of the department.

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INFORMATION SYSTEM

DEPARTMENT

The functions of Information System Department is to:

1.Transformation of EDP to Decision Support System

2. Optimize End User Computing to increase the Individual

Productivity

3. Capture Processing and Sharing of Information from the Net

4. In House Development & Deployment of Application

Packages

5. Database Maintenance & Administration

Hardware Setup

UNIX based RISC Server.

Win-NT based Intel Servers

Microsoft Exchange Server

P I, P II, P III & P IV PCs :

Software Setup

Operating System: UNIX SVR 4, Win - NT 4.0, Win – 95 & Win - 98

Oracle 8 I, Developer 2000, Microsoft Exchange 5.5. MS-OFFICE

– 97

Office XP

Intra-plant Connectivity

All plants, RMOs, Head Office is connected through INSAT- 3B

services provided by TataNet. Connectivity to the external

World is through IIS, Head Office.

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MARKETING

ACC Range of cement and blended cements are marketed

through a network of 12 regional marketing offices, several area

offices and warehouses. A countrywide network of about 11,000

stock lists who, in turn, are assisted by the sub- dealer's back

this. Such an all-pervasive marketing network has an enabled

ACC to consolidate itself with a national presence. And the

customer is assured of being able to get quality ACC products

when and where he wants them.

Complementing this is a unique customer services

cell comprising qualified civil engineers, which assist and

advice customers with prior and post sales services. This

service begins with selection of type and grade of cement

(where applicable) to trouble - shooting and on site assistance.

Keeping pace with changing times, and an ever- growing

need for specialized services, ACC has been offering its

marketing expertise and distribution facilities to other producers

in cement and related areas. However, a precondition of all such

agreement is quality control supervision to be carried out by an

ACC expert located at the franchisee's plant. Currently, ACC has

franchising agreements for cement marketing with Alcon

Cement Company, Goa and Cochin cement Ltd., Cochin.

ACC also exports cement to SAARC Nations, especially

Nepal and Bangladesh on a regular basis.

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HUMAN RESOURCES DEPARTMENT

The basic object of setting up Human Resource Department is to

provide inputs to the employees for his optimum level of

efficiency. It includes looking after various HR related functions

such as training & development, performance and potential

appraisal, planning and allocation of manpower, industrial

relations including negotiations and dealing with staff functions

such as transfer, promotion, disciplinary action, grievance

handling etc. Department is also responsible for providing

welfare amenities/facilities to employees, dealing with land

matters, community development, colony administration etc.

Various details of personnel policies are readily available with

HR department. Manager-HR & Admn. Coordinates the activities

of the department.

Manager-HR & Admn. Coordinates the activities of the

department.

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FINANCE DEPARTMENTIntroduction:

Finance department plays a major role in the

working of any organization as for all-purpose, money is

required, which is arranged, procured and disbursed as the

finance department. They only make budget go for cost control

and maintain to optimum balance of cash for smooth operations.

As such the finance department in Gagal cement works is

looking after only some of the aspects like payment for

rawmaterial purchased, cost control and insurance aspects of

the unit. All receipts for cement sold is received by Regional

office at Chandigarh and fund financed by unit for different

payment from its R.O.

Hierarchy of the finance department:

It is a line organization having a full-fledged department to manage the finance budget, costing and other matter of this department. The ACC Gagal cement works president has to manage two departments mainly i.e. works and Finance

President

Manager Finance

Assistant Manager Senior Officer Senior Officer Senior Officer (Cost) (Assets) (Cash)

Clerks

Fixed Asset Cost Employee salary Transportation

33

FINANCE DEPARTMENT

Account Section

The accounts section deals all the general accounting, employee

payroll, billing and matter related to taxation etc. The department

activities are coordinate by Assistant Manager-Accounts that

report to Manager-Finance.

Cost Section

The Cost Section does Accounting relating to preparation of

Monthly Cost Data and Bill Provisioning.Assistant Manager-Cost

coordinates the departmental activities and reports to Manager-

Finance.

GEERAL OR ACCOUNTS SECTION

Accounting Procedure

The accounting procedure of ACC Gagal cement works is

not a new complicated one. They follow a standardized rule of

making entries in there books of accounts or posting or making

their trial balance, Gagal cement works unit make its Trial

Balance in the monthly basis transaction and rent it to the Head

Office. Head Office prepares final accounts for all units not

individual unit.

34

Gagal cement works follows the following procedure

Step1: The quotations are called for acquiring or procuring the

particular assets, raw material fuel etc.

Step2: After then estimate decide/fixed through CESS.

(CAPITAL EXPENDITURE SECTION SCHEME)

Step3: After then allocation of budget for different requirements.

Step4: Then order re place, R.M/Assets be procured, inspected

(G.R.No) by the concerned department.

Step5: Then GR No. After quality check etc. is sent to finance

department where the cashier makes the payment.

Step6: The ledger department debits this in the books.

Step7: Finally at the wish of finance department assets is

charged and

declared free.

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FINANCE MANAGER Finance Manager is totally responsible for all activities to

payment/receipts of cash and fund Management of the unit. His

decision on payment will be final as personal manual, account

manual directives laid by the organization. Under Finance

Manager the financial activities is disciplined in the manner as

per smooth functionary of all activities of payment such as

salary and wages, payment to sundry creditors which include all

pretty payments to local contractors, repurations, workers and

officers of all grade in working unit.

In detail it can be said that under finance manager their

will be payment of salary and wages, allocation of various

financial activities such as disbursement of cash by cashier, the

payment like contractors bill, local bill, raw material bill, stores

and spares payment of raw material and packing material,

traveling bills, outstation allowances. All the various mislenious

payments sanctioned are being made.

The financial activities are on summation of inputs information

system department (I.S.D.) provides various financial, cosying

outputs available on daily report, weakly report and monthly

reports. It also provides information like cash payment, voucher,

cash receipt voucher, and various types of bills also. Various

type inventory output summary of transaction bills of output

(local, contractor,raw material etc.) various type of finance

ledgers of the month and monthly trial balance.

Account staff to routs all payment in account department:-

To section the payment to staff,officer,mgt & to verify correction

36

FINANCIAL MANAGEMENT PREPAPER

Payroll of employee.

Accounting of sales.

Financial accounts.

Supply bills.

Material Accounting.

COST SECTION

The Cost Section is a branch of accounting and has been

developed due to limitations of financial accounting. Financial

accounting is primarily concerned with record keeping directed

towards the preparation of profit and loss account and balance

sheet. It provides information regarding the profit and loss that

the business enterprise is making and also its financial position

on a particular date. The information concerning the business

enterprise is helpful to the management to control in a general

way the major function of business viz., finance, administration,

production and distribution but details regarding operating

efficiency of these divisions are lacking. Infect, the development

in the field of cost accounting is so quick and fields covered by

it are expanding so much in magnitude that it becomes difficult

for the management to lay down management policies, to guide

the management decisions or evaluate operating management

performance with the information provided by financial

accounting.

.

37

SUMMARY OF WORKING CAPITAL ANALYSIS UNDERRATIO ANALYSIS

FUND FLOW ANALYSIS

WORKING CAPITAL BUDGET

38

39

It is stated in the diagram how company has spent its earning during 2006:-

The diagram contains the following items:-

1. COAL AND OIL :- It is treated under direct expenses and its cost is all about Rs.541.68 crore and it is 8.02% of the total cost and shown in TRADING A/C.

2. TAXES AND DUTIES :- It includes various taxes like corporate tax, sale tax etc. and duties like custom duty, excise duty etc. and its cost is all about Rs.1263.04 crore and it is 18.70% of the total cost and being an indirect expenses is treated under PROFIT AND LOSS A/C.

3. EMPLOYEE COST:- A company has to bear cost in account of services rendered by its employee is called employee cost. Employee costs are in form of wages, salary, provident fund and other perks and allowances and these cost are all about 318.02 crore. it is 4.71% of the total cost and treated under TRADING AND PROFIT & LOSS A/C.

4. TRADING PURCHASE :- Trading purchase includes raw material purchased by the company and is used for getting output of the company. its cost is all about 53.42 crore and it is 0.79% of the total cost of the company.

5. REPAIR AND MAINTANANCE:- A company has to bear repair and maintenance cost of machinery, building, furniture, tools and equipments. It is treated as indirect expenses and shown in PROFIT AND LOSS A/C. its cost is all about 265.48 crore. It is 3.93% of total cost of the company.

40

6. DIVIDEND:- A company has to pay dividend to equity and preference shareholders for their amount invested in the company. Company has paid Rs 322.04 crore as dividend in 2006 and it is 4.76% of total cost. It is shown in PROFIT AND LOSS A/C.

7. POWER COST:- Electricity which is consumed for the purpose production called power cost. A company has to bear power cost at about 430.98 crore and it is 6.38% of the total cost. It is treated as direct expenses and shown in TRADING A/C.

8. FREIGHT AND TRANSPORTATION AND OTHER CHARGES:- A company has to bear cost of carrying goods from one place to another place and loading and unloading the goods called freight and transportation and other charges. It is treated as indirect expanses and shown in PROFIT AND LOSS A/C. its cost 983.39 crore and it is 14.56% of the total cost.

9. DEPRECIATION :- It is gradual decrease in the value of fixed assets like machinery, building, furniture, tools and equipments etc.it is treated as an indirect expanses and shown in PROFIT AND LOSS A/C. it’s cost is all about 254.25 crore and it is 3.76% of the total cost.

10. INTEREST ON BORROWING:- A company has to pay interest on borrowing for long term and short term basis. It is treated as an indirect expanses and shown in PROFIT & LOSS A/C. it’s cost is all about 52.03 crore and it is 0.77% of the total cost.

11. RETAINED PROFIT:- Some times a company adopts a policy of ploughing back of profit for further investment called retained profit. It is shown in the liabilities side of balance sheet. Its cost is all about 909.80 crore and it is 13.47% of the total cost.

41

12. SELLING EXPENSES AND OTHER CHARGES :- Those expenses are related with the sale of output in the market called selling expanses and these are treated as an indirect expenses and shown in PROFIT AND LOSS A/C. these cost are all about 368.13 crore and it is 5.45% of the total cost.

13. MANUFACTURING AND OTHER EXPANSES:- Those expanses which are related with production of commodity it is treated as direct expanses and shown in TRADING A/C. it cost is all about 318.50 crore and it is 4.71 % of total cost.

42

COMPOSITE BALANCE SHEET OF ACC LTD. AS ON 31-12-2005 & 31-12-2006

LIABILITIES 2005 2006 ASSETS 2005 2006SHARE CAPITAL

RESERVES & SURPLUSES

LOAN FUND

DEPOSITS

DEFFERRED TAX LIABILITIES

CURRENT LIABILITIES

PROVISIONS

187.76

2955.16

771.16

144.82

320.72

1024.73

502.28

185.54

1951.21

1071.42

104.75

300.38

913.28

316.77

FIXED ASSETSLESS: DEPRECIATIONNET BLOCK

CAPITAL WORK IN PROGRESS

INVESTMENT (LONG TERM)

INVENTORIES

SUNDRY DEBTORS

CASH & BANK BALANCES

OTHER CURRENT ASSETS

LOAN’S AND ADVANCES

MISC. EXPENDITURE

4816.25-1893.762922.49

473.42

503.54

624.13

213.96

620.17

16.13

631.85

0.94

4628.64-1722.292906.35

215.68

293.75

600.95

199.17

102.79

31.49

486.76

6.41

TOTAL 5906.63 4843.35 TOTAL 5906.63 4843.35

43

WORKING CAPITAL ANALYSIS CAN BE STUDIED UNDER THE FOLLOWING THREE HEADS:-

1. RATIO ANALYSIS :- Under the ratio analysis It is urgent to find out short term ratios that will effect working capital of every company

2. FUND FLOW ANALYSIS :- Under the fund flow analysis it is urgent to find out changing in working capital and its operation and sources and application of funds.

3. WORKING CAPITAL BUDGET :- It helps in forecasting the short term requirement for every company.

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WORKING CAPITAL

INTRODUCTION:- Working capital refers to that part of firms capital which is required for financing short term or current Assets such as cash, debtors, marketable security and inventories. Thus funds invested in current assets keep revolving fast and are being constantly converted in cash and this cash flows out again in exchange for other current assets. It is also known as revolving or circulating capital or short term capital.

CONCEPTS OF WORKING CAPITAL :-1. BALANCE SHEET CONCEPT 2. OPERATING CYCLE CONCEPT

1.BALANCE SHEET CONCEPT:-(a) Gross working capital:- The capital which is invested in total current assets of the enterprise.current assets are those assets that can be converted into cash with in tenure of one year.CURRENT ASSETS= Inventory + sundry debtors+ cash & bank balances + other current assets +loans & advances = 624.13 + 213.96 + 620.17 + 16.13 + 531.85= 2006.24 crore

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(b) Net working capital:- Net working capital is the excess of current assets over current liabilities Net working capital=current assets-current liabilities= 2006.24—1024.73= 981.51 crore( Note:- Provision is not treated as current liability) 2. OPERATING CYCLE CONCEPT:-

46

WORKING CAPITAL CYCLE : CIRCULAR FLOW CAPITAL CONVERSION PROCESS:-

It starts with purchase of raw material and other resources and ends with the realization of cash from the sale of finished goods. Initially a company has to purchase raw material and it is put into process called work in process and got result as output “stock of finished goods and this output is ready for sale and becomes debtors and ultimately realization of cash and this cycle continuous again from cash to purchase of raw material and so on.

GROSS OPERATING CYCLE = RMCP + WIPCP + FGCP

CASH

RAW MATER-IALS

DEBTO-RS

SALES

FINISH-ED

GOODS

WORK IN PROGR-ESS

47

(1)Raw material conversion period (RMCP):- Average stock of raw material____

Raw material consumption per dayAverage stock of raw material :- = opening Raw material + Closing raw material

2= 362.06 + 410.43

2= 386.245 crore

Raw material consumption per day :-Total consumption during the year No of days in a year= 674.87/365= 1.85 crore

RMCP = 386.245/1.85= 208.78 Days (App. 209 days)

(2) Work in process conversion period (WIPCP):-Average stock of work in progressTotal cost of production per day

Average stock of work in progress :- Opening W.I.P. + Closing W.I.P

2=167.47 + 149.72

2= 158.95 Crore

Total cost of production per day = Actual production / 365= 275.56/365= 0.75 crore= 158.95/0.75

WIPCP = 211.93 Days

(3) Finished goods conversion period (F.G.C.P.):-Average stock of finished goodsTotal cost of sale per day

Average stock of finished goods :- Opening F.G. + Closing F.G.

2=71.42 + 63.98

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2= 67.70 crore

Total cost of sale per day = Total cost of sale / 365= 4415.51 / 365= 12.09 crore

F.G.C.P. = 67.70 / 12.09F.G.C.P. ` = 5.596 days

(4) Receivable conversion period :-Average Accounts ReceivablesNet credit sales per day

Average Accounts Receivables = opening A.R + Closing A.R 2

= 199.17 + 213.962

= 206.565 croreNet credir sales per day = 5803.48/365

= 15.89 croreR.C.P = 206.565/15.89R.C.P = 13 days

(5) Payables deferral period:-Average payables Net credit purchase per day

Average payables = opening payables + closing payables2

= 103.78 + 120.052

= 111.915 croreNet credit purchase per day = Net credit purchase / 365

= 1473.37 / 365 = 4.037 crore

P.D.P = 111.915 / 4.037P.D.P = 28 days

GROSS OPERATING CYCLE:-RMCP + WIPCP + FGCP + R.C.P.= 209 + 212 + 6 + 13= 440 Days

NET OPERATING CYCLE:-49

= GROSS OPERATING CYCLE—PAYABLES DEFFERAL PERIOD= 440--28= 412 Days

INTERPRETATION :-Funds invested in current Assets keep

revolving fast and are being constantly converted into cash and this cash flows out again in exchange for other current assets hence it is known as revolving or circulating or operating cycle. The whole circulating capital cycle will be finished in 412 days or App. 14 months.

RATIO A Ratio is a simple arithmetical expression of the relationship of one number to another. In simple language ratio is one number expressed in terms of another and can be worked out by dividing one number into the others. A Ratio is known as a symptom like blood pressure, the pulse rate or the temperature of an individual.Example=current assets/current liabilities

.

RATIO ANALYSES

50

A Ratio analyses is one of the most powerful tools of financial analyses. it is used as device to analyze and interpret the financial help of enterprise. Just like a doctor examines his patient by recording his body temperature, blood pressure etc before his conclusion regarding the illness and before giving him treatment. With the help of ratio analyses one can measure the financial condition of the firm and point out whether the condition is strong good or poor. one can arrive at a decision of how the performance of a firm is deteriorating and can find out short term financial position or liquidity position and suggest what a company must do for improving its working capital.

THE VARIOUS RATIOS THAT EFFECTS THE WOKING CAPITAL OF A COMPANY DISCUSSED AS BELOW:-1.CURRENT RATIO:-

CURRENT ASSETS___CURRENT LIABILITIES

As given:Current assets = Inventories + sundry debtors + cash & bank balance + other current assets=624.13 + 213.96 + 620.17 + 16.13 + 531.85 = 2006.24 crore

Current liabilities = sundry creditors + outstanding interest + investor education & protection fund + sundry deposits + Employees =854.48 + 12.94 + 11.08 + 62.76 + 17.23 + 66.24 = 1024.73 crore.CURRENT RATIO = 2006.24/1024.73

=1.958:1

INTERPRETATION:-The above calculated current ratio is

indicating us that the ACC Ltd. company is liquid and has the ability to pay its current obligations in time as and when they become due. As a convention 2:1 is considered as a banker’s rule of thumb and current ratio of ACC Ltd. Company stands at 1.958:1 and it is near about 2 that is why company is running in strong position. Because of ultimate ratio there may be fast moving stocks and debtors may go up because debt collection has become satisfactory and with the increase in cash & bank

51

balances may be used in further investment. Hence the working capital of a company would be increased because of having sufficient fund.

2. QUICK OR ACID TEST OR LIQUID RATIO:-

QUICK ASSETS______CURRENT LIABILITIES

QUICK ASSETS = Current Assets – ( inventories + prepaid exp.)= 2006.24 – ( 624.13 + 6.02 )=1376.09 crore

CURRENT LIABILITIES = 1024.73 crore

QUICK RATIO = 1376.09/1024.73 = 1.343:1

INTERPRETATION:-The above calculated quick ratio is

indicating us that the ACC Ltd. company is moving in the brighter side of life in this competitive era and has got sufficient fund to meet its current obligations. As a convention 1:1 is considered as a rule of thumb and quick ratio of ACC Ltd. company stands at 1.343:1 and there is an increase of about 0.343 and having a good sign for companies name, fame and reputation. The position of quick assets like cash & bank balance and debtors is much strong as compared to current liabilities.

3.ABSOLUTE LIQUID RATIO OR CASH RATIO:-

ABSOLUTE LIQUID ASSETSCURRENT LIABILITIES

=620.17/1024.73=0.61:1

INTERPRETATION:-

52

A.L.R represents conversion of some items into cash rapidly and involves cash in hand, cash at bank and marketable securities. The accepted norms for this ratio is 50% or 0.5:1 or 1:2 and the absolute liquid ratio of ACC Ltd. stands at 0.61:1 which is more than 0.5. Hence it is good symbol for company to meet its day to day expenses and to promote saving.

4. (a) INVENTORY TURNOVER RATIO:-COST OF GOODS SOLD AVERAGE STOCK

C.O.G.S. = Net Sale — Gross profit = 5803.48 – 1756.10 = 4047.38 crore

AVERAGE STOCK = Opening stock + closing stock 2

= 600.95 + 624.13 2

=612.54 croreInventory Turnover Ratio = 4047.38/612.54Current year I.T.R.(2006) = 6.61 Times Previous year I.T.R.(2005) = 5.60 Times (b) INVENTORY CONVERSION PERIOD:-

DAYS IN A YEAR (365)________INVENTORY TURNOVER RATIO

= 365/6.61Current year (2006) = 55.22 DAYS (App. 55 days )Previous year(2005) = 65.17 DAYS (App. 65 days )

INTERPRETATION:-Inventory turnover ratio measures the

velocity of conversion of stock into sale. Usually the previous year inventory turnover ratio was 5.60 times which is less than current year inventory turnover ratio that is 6.61 times. Thus this high stock velocity indicates efficient management of inventory because more frequently the stocks are sold, the lesser amount of money is required to finance the inventory. Sometimes a high inventory turnover may be the result of a very low level of inventory which results in shortage of goods in relation to

53

demand. An inventory turnover ratio should not be too high and too low and ACC Ltd. inventory turnover ratio falls in medium category. The current year inventory conversion period is 55 days which is less than previous year and thus a company has converted its inventory into cash with in a short period of time.

4.(a) DEBTORS TURNOVER RATIO:- TOTAL SALE

DEBTORS = 5803.48/213.96

CURRENT YEAR (2006) = 27.12 timesPREVIOUS YEAR (2005) = 14.29 times

(b) AVERAGE COLLECTION PERIOD:-DAYS IN A YEAR (365) DEBTORS TURNOVER RATIO= 365/27.12

CURRENT YEAR (2006) = 13.46 DAYSPREVIOUS YEAR (2005) = 25.54 DAYS

INTERPRETATION:- Debtors turnover ratio indicates the

number of times the debtors are turned over during a year. Recently debtors turnover ratio has been increased from 14.29 times to 27.12 times. Thus the higher value of debtor turnover represents sufficient management over a company and having less chances of becoming bad debts and results to increase in sale of commodities and received cash may be used for production purpose and funds flows in smooth way. At presently average collection period is 13 days which is less than 25 days of previous year. Hence the time taken by ACC Ltd. to convert its debtors into cash has been minimized.

5. (a) CREDITORS TURNOVER RATIO :- Net credit annual purchaseAverage trade creditor

Net credit annual purchase = Purchase + raw material + packing material = 53.42 + 1216.55 + 203.40= 1473.37 croreAverage trade creditor = 103.78 + 120.05

254

= 111.915 croreC.T.R. =1473.37/111.915Current year (2006) = 13.165 TimesPrevious year (2005) = 10 Times

(b) AVERAGE PAYMENT PREIOD:-NO OF WORKING DAYS

C.T.R.= 365/13.165

Current year (2006) = 27.73 DaysPrevious year (2005) = 36 Days

INTERPRETATION:- Those person who supply goods to company are called creditors and they are interested in finding out how much time the company will take in repaying its creditors. The creditors turnover ratio has been increased from 10 to 13 times and company got itself capable of purchasing raw material on time and on the other hand suppliers can get payment in spite of delivering goods as fast as possible. Thus it is a good sign for both company and suppliers. The average payment period has been decreased from 36 days to 28 days and this will help in running operating cycle very smoothly.

6. WORKING CAPITAL TURNOVER RATIO:-COST OF SALE_____________ AVERAGE WORKING CAPITAL

Cost of sale = C.O.G.S. + selling & distribution expanses = 4047.38 + 368.13 = 4415.51 crore

Average working capital = opening W.C. + closing W.C. 2

= 507.88 + 981.512

55

= 744.695Working capital turnover ratio = 4415.51/744.695

= 5.93 Times

INTERPRETATION:- Working capital turnover ratio indicates the velocity of the utilization of net working capital. This ratio indicates the no. of times the working capital is turned over in the course of a year. It measures the efficiency with which the working capital is being used by a company. The cost incurred on sale can be compensated by using working capital at 5.93 times by ACC LTD COMPANY.

7. WORKING CAPITAL LEVERAGE :-% CHANGE IN RETURN ON INVESTMENT% CHANGE IN CURRENT ASSETS

Return on investment (2006) = 38%Return on investment (2005) = 18%

% change in ROI = 38-18 18 = 1.11%CURRENT ASSESTS(2006) = 2006.24CURRENT ASSESTS(2005) = 1421.16

% CHANGE IN C.A = 2006.24-1421.16 1421.16

= 0.41%WORKING CAPITAL LEVERAGE = 1.11/ 0.41 = 2.7

INTERPRETATION :-Working capital leverage measure the

impact of a change in current assets on change in investment. Here % change in current assets 0.41% has been calculated while as % change in investment is 1.11%. so company can use amount drawn for 2.7 Times in order to reach on return on investment.

8.RATIO OF CURRENT LIABILITIES TO TANGIBLE NET WORTH

56

CURRENT LIABILITIES__ TANGIBLE NET WORTH = 1024.73/3141.98 = 0.326: 1

INTERPRETATION:-From the above calculated figure is

indicating us that a company has sufficient tangible worth for meeting its current liabilities with out interrupting circulating capital. Here net worth is 1/3rd of current liabilities and showing company moving on the right direction and having different sources of generating finance.

FUND FLOW ANALYSES

A fund flow analysis is a technical device used to study the sources from which additional funds were derived and the use to which these sources were put. It is an effective management tool to study changes in the working capital of business enterprises between beginning and ending financial statements dates. The fund flow analysis consists of:

1. Preparing schedule of change in working capital.2. State of sources and application of funds.

FLOW OF FUNDS ?

CURRENT ASSETS NO CURRENT LIABILITIES

YES YES YES YES

57

NON-CURRENT ASSETS NON-CURRENT LIABILITIES

NO

STATEMENT OR SCHEDULE OF CHANGE IN WORKING CAPITAL:- Working capital means the excess of current assets over current liabilities. There are following four rules to kept in mind while preparing schedule of change in working capital given as under :-

1. An increase in current assets increases working capital.2. A decrease in current assets decreases working capital.3. An increase in current liabilities decreases working capital.4. A decrease in current liabilities increases working capital.

STATEMENT OF SCHDULE OF CHANGE IN WORKING CAPITAL OF ACC LTD COMPANY

58

INTERPRETATION:- Statement of changes in working capital is prepared to show the changes in the working capital between the two balance sheet dates. The difference is recorded for each individual current assets & current liabilities. If we talk about current assets like cash & bank balances, sundry debtors, inventory and other current assets have left positive effect on working capital except only prepaid expenses. On the other hand all current liabilities have shown increase in balances with comparing from the previous balances. The ACC working capital has been increased from 191.11 crore to 479.23 crore, hence company has found net increase in working capital as amount as 288.12 crore. It is good sign for companies’ short term financial health.

CALCULATION OF FUNDS FROM OPERATION

RESERVE IN THE BEGINNING ( 1-1-2006) 1951.21RESERVE AT THE END ( 31-12-2006) 2955.16

59

PROFIT FOR THE YEAR(2955.16-1951.21) 1003.95ADD : DEPRICIATION ( 1893.76-1722.29) 171.47ADD : TO WRITTEN OFF MISC. EXPENCES 5.47

FUNDS FROM OPERATION 1180.89

INTERPRETATION:-After finding out changes in working

capital a company is required to find out funds from operation for which all items that are already debited in profit & loss account must be added in the net difference of reserve & surpluses of current & previous year because these all items are treated as loss for company and on the other hand those items are credited in profit & loss account must be deducted in the net difference of reserve & surpluses. From the above calculations it is found that profit for the year is 1003.95 crore and change in deprecation is 171.47 crore and written off misc. expenses is 5.47 hence company has derived funds from its operation near about to 1180.89 crore.

NOTES:-

CALCULATION OF REPAYMENT OF LOAN LOAN FUNDS IN THE BEGINNING OF 2006 = 1071.42

LOAN FUNDS IN THE END OF 2006 = 771.16 REPAYMENT OF LOAN DURING THE YEAR = 300.26 ( 1071.42-771.16)

FUND FLOW STATEMENT OF ACC L.T.D. COMPANY AS ON 31-12-2006

FUNDS FROM OPERATION 1180.89 REPAYMENT OF LOAN 300.26ISSUE OF SHARE CAPITAL 2.22 PURCHASE OF FIXED ASSETS 187.61

60

CASH RECEIVED FROM DEPOSITS

40.07 NET INCREASE IN WORKING CAPITAL

288.12

NET DEFFERED TAX LIABILITIES 20.34 PURCHASE OF INVESTMENT 209.79CAPITAL WORK IN PROGRESS 257.74

TOTAL 1243.52 TOTAL 1243.52

INTERPRETATION:-The fund flow statement is a statement

which shows the movement of funds and is a report of the financial operations of a company. It indicates various means by which funds were obtained during the particular period and the ways in which these funds were employed. Flow of funds is not possible when both accounts are current or non current (fixed) because current assets remain same as current liabilities but when one account is current and other is non current than there is perfect flow of funds. From the above prepared fund flow statement o9f ACC company it is find out that the company has issued further share capital of about 2.22 crore and treated as soures of company because it will generate funds for company. Company has minimized its long term funds that will treated as repayment of loan it is indicating out flow of funds for company and shown on application side of fund flow statement. Company has generate funds from its operations and treated as sources. The company has received cash from its deposits near about to 40.07 crore. And deferred tax liability amounted to 20.34 crore is our source. Company has made additional purchase of fixed assets amounting to 187.61 crore it is out flow of cash for company and increase in working capital & capital work in progress should be treated as out going of funds.

WORKING CAPITAL BUDGETA Budget is a financial or quantitative expression of business plans and policies to be persuade in the future period of time. Working capital budget is a process of estimating working capital needs and the sources to finance them and then

61

comparing the budgeted figure with the actual performance and if necessary to take corrective actions in future and its objective to ensure effective utilization of resources.

STATEMENT SHOWING NET WORKING CAPITAL REQUIREMENT AMOUNT

CURRENT ASSETS:-

Stock of raw material (4104300000 * 209/365)

Stock of work in progress (1497200000 * 212/365)

Stock of finished goods ( 639800000 * 6/365)

Amount blocked in debtors at sale ( 2139600000 * 13/365)

LESS : CURRENT LIABILITIES :-

Sundry Creditors (8544800000 * 28/365)

Net working capital required (C.A – C.L)

2350133424.00

869606575.00

10517260.00

76204932.003306462191.00

655491507.00

2650970684.00

INTERPRETATION:-By preparing working capital

budget it is find out that total working capital required should be near about to 265.09 crore for ACC LTD. Company in forthcoming year and net increase in working capital is 288.12 crore has been calculated by preparing schedule of change in working capital with comparing current figures with previous figures.

NEEDS OF STUDY

The study in itself a problem of how best to manage capital of a company i.e. ACC Ltd. Therefore, needs for conducting the study are as follows:-

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1. Due to time between production and sales, every company has maintain a substantial portion of working capital to run its operation smoothly.

2. In case of manufacturing companies it is required to maintain about 40% - 50% of their capital as current and remaining in the forma of fixed assets for the large scale production of product. So, every manufacturing company needs to arrange required working capital.

3. investment in current assets represents a substantial portion of total investment.

4. investment in current assets and the level of current liabilities have to be geared quickly to change in sales, to be sure, fixed asets investment and long term financial position are also responsive to variation in sales.

OBJECTIVE OF THE STUDY The objectives aim is to highlight the reasons how important is the financial system and financial statement for an organization or company. There are various objectives of the study are as follows:

1. To study liquidity of the firm.2. To study smoothly flow of funds and its application3. To estimate working capital requirement in future4. To study short term financial position

RESEARCH METHODOLOGY

Our research project has a specified framework for collecting the data in an effective manner. Such framework is called

63

“Research Design”. The research process which was followed by our consisted of following steps:

Defining the problem & Research Objectives:- The definition of problem includes the study of financial system in ACC Ltd. GAGAL CEMENT WORKS.

Developing The Research Plan:- It is very important to research anything we must know about the it’s main sources where we get the main information regarding the research plan the development of research plan has following steps:-

Data Sources:- There are two types of data were taken into consideration i.e. Secondary data and primary data. The secondary data has been used to make the analysis because we have no much sufficient time and resources to collect the primary data.

Secondary data:- secondary data is that data which is collected for other purpose. This is indirect collection of data from sources containing past or recent past information like annual report, balance sheet, books, newspapers and magazines etc.

Collecting the information:-For this research methodology, we were collecting information with the help annual reports, balance sheet and other companies publications.

Analyse the information :- In this research methodology the next step is to extract the pertinent finding from the collected data. We tabulated this collected dada and develop the means of analyzing the data. There are so many tools for financial analysis but we mainly concentrate on the RATIO analysis and supportive information taken from the other means i.e. comparative financial statement with its major components viz. common size statement, comparative financial statement.

BIBLIOGRAPHY

71ST ANNUAL REPORT (ACC LTD.) 2004-20052005-2006

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FINANCIAL MANAGEMENT SHASHI. K. GUPTAI.M. PANDEY

MANAGEMENT ACCOUNTING SHARMA & GUPTAWEBSITE www.accltd.com

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