(As 31 st March 2009 & As 31 st March 2008)

BINANI CEMENT LIMITED Neem Ka Thana ,Dist: Sikar,(Rajasthan)

“BINANI CEMENT SADIYON KE LIYE”

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LOVELY PROFESSIONAL UNIVERSITY JALANDHAR (PUNJAB)

TRAINING UNDER THE GUIDANCE OF :

PRAVEEN JAIN (C.A) SIGNATURE: MANAGER OF FINANCE & ACCOUNTS

BINANI CEMENT LIMITED

NEEM KA THANA

SIKAR (RAJASTHAN)

SUBMITTED TO:

LOVELY INSTITUTE OF MANAGEMENT

FACULTY SUPERVISOR: SUBMITTED BY :

NEHA TIKOO SANDEEP AGARWAL

(FACULTY OF LIM) MBA 2ND SEMISTER

REGIS.NO.:10907223

ROLL NO.:RT 1903—A 59

(LOVELY INSTITUTE OF MANAGEMENT)

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DECLARATION

I, SANDEEP AGARWAL declare that the Project Report entitled “A STUDY ON

“COMPARETIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT BY DIFFERENT

METHODES” IN BINANI CEMENT LIMITED ,NEEM KA THANA, SIKAR (RAJASTHAN)” is

an original piece of work done by me has not been submitted to any college/Institute/University in any

manner.

Signature

(SANDEEP AGARWAL)

---------------------------------

MBA IInd SEMESTER

(2010-11)

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PREFACE

The financial management is the studies about procuring and judicious use of financial resource

with a view of maximizing the profit and wealth of the company as well as its shareholders.

Working capital management is the key concept in today's manufacturing concern. A

professional Scientific approach to this era with move competence can really trigger off the

organization to reach the peak level in the industry.

Since the last few years the environment of business word completely change. The mordorn

business placed on a very complex and intricate environment, the constraints and opportunity

provid by the nature of the economy and economic system,political & legal framework, social

system, geographical & demographical facter.

Keeping all the drastic changes in mind, our recognized University, Lovely Profissional

University, Jalandhar (Punjab) , have outlined a summer training programmed to hoopla

various information from different industries. It intrduce the student the practical problems and

working culture of industry life of corporate world. It increases the skills, knowledge, team spirit,

Leadership , attitude , communication skills and above the potentiality of the students towards

the rapid growth of industrialization.

The Objective of our M.B.A. summer training is to earn much practical knowledge of industrial

life and merely from theorical study .

SANDEEP AGARWAL

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ACKNOWLEDGEMENT:

I am thankful to all the employees of BINAI CEMENT LIMITED, NEEM KA THANA As a

whole for providing me the opportunity to learn from them their systematic approach of accomplishing

the work. I am very grateful to its all employee espcially Finance Department for intending all the

help I needed and the healthy working environment they provided me during my summer training.

I express my deep sense of gratitude to Mr.Praveen Jain ( Dy. Manager Finance & Accounts)

& Mr. O.P.Saini ( Sr. Officer Accounts ) for his constant supervision during the entire project work and

without whose supervision work might not have seen the light of day.

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EXECUTIVE SUMMARY:

The trainee conducted study on topic of working capital management in organisation BINANI

CEMENT LIMITED its submitted towards partial fulfilment of award of MASTER OF BUSINESS

ADMINISTRATION (a two years fulfillment course in LOVELY PROFESSIONAL UNIVERSITY,

JALANDHAR (PUNJAB).

The aim of study is a practical exposur of working capital function carried out in distinguish organisation.

In the study trainee collected information on above mention topic in above mention organisation and gave

suggestion for improvement and their kind persual.

Trainee interacted with non technical employees.

The mothodlogy of study included primary and secondary data collected from books, annual report,

audited report, and internet.

INTRODUCTION OF TOPIC:

working capital management is the amount of fund needed to cover day to day operation. It is

the difference between current assets and current liabilities. Interpretation & presentation of

data: the data is presented by trend analysis, ratio analysis, statement of change in working

capital, and with the help of bar chart.

On the above technique and procedure adopted by trainee the conclusion and recommendation is

included here: BINANI CEMENT LIMITED should decrease its current liability and maintain

its working capital at optimum level. Company should maintain its current ratio at ideal level that

is 2:1.

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CONTENTS:

PARTICULARES PAGE NO.

1. HISTORY O BINANI CEMENT LIMITED...................................................................082. BINANI INDUSTRIES LIMITED................................................................................09

CEMENT PLANTS.3. OVERSEAS. ....................................................................................................................10

BINANI, DUBAI.BINANI,SHANGHAI.

4. MISSION..........................................................................................................................125. LAW & REGULATION...................................................................................................136. CEMENT MANUFATUREING PROCESS....................................................................157. FOCUS ON NEW MINI PLANT.....................................................................................168. UNIT PROFILE...............................................................................................................179. AWARDES , CERTIFICATES & NEWS........................................................................2010.BINANI IN THE NEWS..................................................................................................2711.BINANI POSITION IN CEMENT INDUSTRY............................................................2912.PRODUCTS......................................................................................................................3313.SCOPE OF STUDY..........................................................................................................3414.RESEARCH METHODOLOGY.....................................................................................3515.CONCEPT OF WORKING CAPITAL MANAGEMENT.......................................... ...36

GROSS WORKING CAPITAL.NET WORKING CAPITAL.KINDES OF WORKING CAPITAL.NEED & OBJECTIVE OF W.C..FACTOR DETERMINE REQUIRMENT OF W.C.FORCAST & ESTIMATE OF W.C.REQUIR.SUGGESTED PERFORMAS.FINANCING OF WORKING CAPITAL.SOURCE OF W.C.USES OF WORKING CAPITAL.TECHNIQUES OF FORCASTING W.C..

16.ANALYSIS OF WORKING CAPITAL AND MEASURING THE EFFICEANT IN THE MANAGEMENT OF WORKING CAPITAL..................................................................46

17.COMPARETIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT ON“BINANI CEMENT LIMITED”BY DIFFERENT METHODES.............................47

18.CALCULATION OF NET WORKING CAPITAL........................................................5119.COST CAPITAL...............................................................................................................5420.“SWOT ANALYSIS” OF BINANI CEMENT LINITED,NEEM KA THANA............55

21.BRAJ BINANI GROUP ANALYSIS BY DIFFERENT CHARTES...............................56

22.SHREE CEMENT LIMITED............................................................................................58

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23.COMPARISON & CONCLUSION..................................................................................6124.BIBLIOGRAPHY.............................................................................................................63

History Of “Binani Cement Limited”:

Binani Industries Limited (BIL) is all set for growth. From the time of its inception, BIL has been an ambitious organisation and this attribute has helped it grow at a fast pace.

The Braj Binani Group traces its beginning to 1872, when Seth Pragdas Binani, a trader in metal utensils, began an enterprise with his son Seth Mathuradas to engage in the import and export of metals. The enterprise continued to grow from strength to strength. The year 1941 marked an important phase in the evolution when Seth Mathuradas' son Seth Govardhandas made a bold, but significant, move from trading to manufacturing.

Binani Metal Works got rolling with a plant at Howrah. Taking on the mantle from his father, it was during the reign of son Ghanshyam Binani, that Binani Zinc was born. Leading from the front, the Company shifted its focus towards R&D thus modernising and expanding its capacity. But it was with the advent of Mr. Braj Binani and his dynamic leadership that the Company truly began to prosper and exploring uncharted horizons.

Following the restructuring of the Braj Binani Group, from 1996-2004,Binani Industries Limited (BIL) was founded to serve as the holding Company for Binani Cement Limited, Binani Zinc Limited, Goa Glass Fibre Limited & BT Composites Limited. Today, the Braj Binani Group is a multidimensional business conglomerate, with an asset value of Rs. 1968 crores, a turnover of Rs. 2302 crores and a 1750-strong work force. And with a clear focus to adapt and execute the best, the Braj Binani Group has not only attained major internationally accepted certifications for its various ventures, but also has extended its reach well beyond Indian borders - to UAE, China and is in the process of expanding into Africa and other countries.

BIL owes most of its success to its simple yet potent philosophy - honesty, transparency, efficiency and its unflinching commitment to the customers, coupled with an inherent determination to succeed. It is this vision that has dissolved all boundaries and has set BIL on the never-ending path of growth and evolution.

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BIL's epic story has been a unique compilation of the success stories of its four subsidiary companies- Binani Cement Limited, Binani Zinc Limited, Goa Glass Fibre Limited and BT Composites Limited. It is moving ahead full stream in the direction of development and these companies have indeed formed the pillars of strength of “The Braj Binani Group”.

Cement plant :

Binani Cement Limited boasts of a fully integrated cement plant, strategically located in Binanigarm, Sirohi, Rajasthan. The 1.65 mtpa facility and a 25 MW captive power plant were set up in 1997 in a record 19 months. After that there was no looking back. Following advanced R&D and de-bottlenecking efforts, the Company has achieved several milestones and certifications like the ISO 9001, ISO 14001 and OHSAS 18001, within a mere decade. Moreover, with its recent brownfield expansion at Binanigram, there has been a staggering rise in the overall annual capacity to 6.00 mpta. The abundant reserves of limestone obtained from the captive limestone mines owned by the Company, have further reinforced Binani Cement's already solid foundation.

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Overseas:

Binani,Dubai The Binani Cement Factory LLC, established in 1996, is located in the Jebel Ali Industrial Area. With its close proximity to the two ports, and a construction hub, it serves as a perfect vantage point for Binani Cement to tap into potential markets. In 2006, responding to the ever increasing demands, Binani Cement showcased its unmatched capabilities by expanding the capacity of its plant from 0.5 million tonnes to an overwhelming 1 million tonnes of OPC and GGBFS. Subsequently, in 2007, clinker grinding capacity was increased to 1.2 mtpa.

Binani,Shanghai Identifying China as a pivotal market, the Braj Binani Group acquired a 70% stake with management control for an operational 2 year old clinker plant in the Shandong province of North China, The Shandong Binani Rongon Cement Company Ltd. (SBRCCL). Along with its strategic location advantage due to its close proximity to the two ports, the plant has a current production capacity of 0.5 mtpa of clinker and 0.5 mtpa of cement annually. The clinker capacity is projected to be upgraded to 3 mtpa by 2011. It is currently running at 100% capacity with majority of its produce being exported setting aside a small quantity for the domestic markets.

Binani Cement Limited --effective from 1 st november 1997.

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Goa Glass Fibre Limited-- effected from 1st December 1999. Binani Zink Limited – efeective from 1st April 2001.

&

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NEEM KA THANA

MISSION:

• To achieve leadership status in the core sector, across the world.

• To employ frontline technologies to meet the highest global standards in products and services.

• The set benchmarks in manufacturing, while adhering to most stringent environmental rules.

• To be a customer-first, quality obsessed, socially sensitive corporate entity.

• To achieve breakthroughs in manufacturing based in intensive R&D coupled with innovative thinking.

• To assure the well-being of our people, living by such values as concern, empathy and commitment.

The Core Values of BINANI CEMENT LIMITED IS COMIT:

C- Customer Focus

O - Organizational Pride

M- Mutual Respect and Trust

I - Initiative and Speed

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T - Total Quality

LAW & REGULATIONS:

Certain other laws and regulations that may be applicable to the Company include the following:

Atomic Energy Act, 1962;Bureau of Indian Standards Act, 1986;Electricity (Supply) Act, 1948;Fiscal Laws and Regulations including the I.T. Act, Central Excise Act, 1944. The Customs Tariff Act, 1975, and the Central Sales Tax Act, 1956 including State laws and regulations related thereto. Indian Electricity Rules, 1956;Indian Electricity Rules, 1958;Petroleum Act, 1934;Rajasthan Petroleum Products (Licensing and Control) Order, 1990;Solvent, Raffinate and Slop (Acquisition, Sale, Storage and Prevention of Use in Automobiles) Order, 2000;Standards of Weights and Measures Act, 1956.The Standard of Weights and Measures (Enforcement) Act, 1985.

Labour Laws and Regulations:

Contract Labour (Regulation and Abolition) Act, 1970.Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.Employees’ State Insurance Act, 1948.Factories Act, 1948.Industrial Disputes Act, 1947 and Industrial Disputes (Central) Rules, 1957.Maternity Benefit Act, 1961.Minimum Wages Act, 1948.Payment of Bonus Act, 1965.Payment of Gratuity Act, 1972.Payment of Wages Act, 1936.Rajasthan Factories Rules, 1951.Shops and Commercial Establishments Act, 1953.Professional Tax Act (Maharashtra), 1975.Trade Union Act, 1926.Workmen’s Compensation Act, 1922.

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Environmental Laws and Regulations:

The other environmental laws and regulations that are applicable to the Company include the following:

Explosives Act, 1884.Gas Cylinder Rules, 1981.Hazardous Waste (Management and Handling) Rules, 1989.Indian Explosives Rules, 1983.Industries (Development and Regulation) Act, 1951.The Indian Boilers Act, 1923 and the Indian Boiler Regulations, 1950.

The Mining laws and regulations that may be applicable to the Company include the following:

Limestone and Dolomite Mines Labour Welfare Fund Act, 1972.Limestone and Dolomite Mines Labour Welfare Fund Rules, 1973.Metalliferous Mine Regulations, 1961.Mineral Conservation and Development Rules, 1988.Mines and Minerals (Development and Regulation) Act, 1957 (the “MMDR Act”) .Mineral Concession Rules, 1960 (the “Mineral Rules”).Mining Lease (Modification of Terms) Rules, 1956.Rajasthan Minor Minerals Concession Rules, 1986.The Mines Act, 1952 and Mines Rules, 1955.The Payment of Wages (Mines) Rules, 1956.

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Cement Manufacturing Process:

The production process for cement consists of drying, grinding and mixing limestone and silica into a powder know as a raw meal. The raw meal is then heated and burnt in a pre–heater and kiln and then cooled in an air cooling system to form a semi-finished product, known as a clinker. Clinker (95%) cooled by air and subsequently with gypsum (5%) to form OPC.

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FOCOUS ON NEW MINI PLATN

IN “NEEM KA THANA”

Binani cement limited is the subsidiary of Bnani industry.In 2005-06 the company started with a

brown field facility with railway siding and a split grinding unit at Neem Ka Thana to increase

the capacity of the cement facility to 6 mtpa and power facility to 69.6 MW.

Clinker unit and one grinding unit commenced commercial operation in October 2007 and

December 2007 respactively.The split grinding unit and one 22.3 MW power plant commenced

operation in March 2008.The company has two limestone mines,namely Amli and Thandiberi,on

a long term leases basis at a distance of 2 and 7 Km from the plant .

These mines have proven reserves of up to 195 MnT(as on April 1.2005).In the new grinding

unit the total capacity for cement production now standes at SIX Million Tonnes per annum.

It is deals with the manufacturing and sale of cement in India. The company expands its plant

capacity at that time and established a new plant unite in NEEM KA THANA,DIST. SEROHI

(RAJASTHAN).Due to the continuous growth in cement industry and demand of Binani cement

its working capital requirement is also undergoing revision from time to time while for nessesry

for optimum working capital is felt by the company to meet the augmented production capacity.

The company also wanted to explore the scope availability for better management of working

capital and adopt the requisite measure for improving the return on working capital.

BCL in Neem Ka Thana,has a wide distribution network comprising over 2,360 dealers and 68

market organisers and caters to Rajasthan ,Gujarat,Northen Capital Resion and Maharastra.The

company pioneered the cash and carry system in its markets.The company is active in the OPC

as well as the PPC markets.

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UNIT PROFILE

BINANI CEMENT LIMITED IN “NEEM KA THANA”.

2005-06 the company started with a brown field facility with railway siding and a split grinding unit at Neem Ka Thana.

GYPSUM=6.5%.FLY ASH/SLAG=25%.CLINKER= REST OF BALANCE(68.5%).1.4 MILLION TON PER ANNUM CLINKER GRINDING UNIT.

PROJECT CLINKER GRINDING UNIT.

PROMOTERS BINANI CEMENT LIMITED,

706, OM ROAD,

32, CHOURANGI ROAD,

KOLKATA-700071.

CLINKER GRINDING CAPACITY 200 TON PER HOUR.

ANNUAL PRODECTION 1.40 (MILLION TON).

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CAPACITY UTILIZATION (%)

A) 1ST YEAR 80.B) 2ND YEAR ONWARDS 100.

LOCATION: VILLAGE BHAGEGA , NEAR NEEM KA THANA, ON AHEMDABAD AJMER-RINGS-REWARI-DELHI RAILWAY LINE , TEHSIL NEEM KA THANA , DIST.SIKAR (RAJASTHAN).

RAW MATERIAL:

REQUIRMENTS : MIXING RATIO(%)

PPC OPC

1. CLINKER 71 932. FLY ASH 22 OR -

3. GYPSUM 7 7

SOURCE:

1. CLINKER : BINANI CEMENT LIMITED, PINDWARA, DIST.SIROHI ( RAJAS. )

2. GYPSUM: BIKANER (RAJASTHAN).

3. FLY ASH: THERMAL POWER STATION, DADRI & PANIPATH(HARYANA), AND SURATGAR (RAJASTHAN)

LAND REQUIREMENT: 28 Ha.

UTILITIES:

1. POWER 9.0 MW.2. WATER 55 M (3/day).

PROCESS : CLINKER /ADDITIVES GRINDING IN BALL MILL (CCBM).

MAJOR PLANT AND MACHINERY: CLINKER UNLOADING STORAGE,MATERIAL HANDELING, BALL MILL,MULTI COMPARTMENT SILO,FEEDING AND EXTRACTION SYSTEM,PACKING AND LOADING.

PROJECT SCHDULE: 12 MONTHS FROM LAND ACQUISITION.

MAN POWER: 72.

FINANCIAL ASPECTS:

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CAPITAL OUT LAY Rs.97.90 CRORES.

MARKETS,WHERE GOODS DELIVERE:

Binani Cement Limited in Neem Ka Thana . study indecates the economy of clinker grindeing close to market,Rajasthan has surplus cement producing unit , while harayana,west U P,Delhi are deficient states.

SYSTEM DETAILS :

SN. EQUIPMENT / STORAGE UNIT NO. RECOMMENDATION

1. Ball mill tph 1 2002. Gypsum crusher tph 1 60

3. Gypsum storage silo t 1 3,000

4. Cement storage t 2 7,500

5. Clinker storage t 1 40,000

6. Fly ash storage t 1 5,000

7. Packing plant tph 1 2*240(1 later)

EMPLOYMENT POTENTIAL: MANPOWER SUMMRY (MAY 2010)

SI. NO PARTICULAR M2 M3 M6 M7 M8 M9 S1 S2 GET PGT/GT TOTAL

1 VP(WORKS) 1 1

2 GM WORKS 1 1

3 MECHANICAL 1 4 3 8

4 WAGON TIPPIER 1 1

5 ELECTRICAL & INSTRUE. 1 4 1 6

6 PRODUCTION 1 1 3 5

7 QC 1 6 2 9

8 ENVIRONMENT 0 0

9 PACKING PLANT 1 2 3

10 H R & A 1 1 1 3

11 SECURITY 1 1 1 2 5

12 IT & S 1 1 2

13 MATERIAL & STORE 1 3 4 8

14 ACCOUNTS 1 2 1 1 1 6

15 CIVIL 1 1

16 LIASON 1 1

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17 ELECTRICAL (PROJECT) 1 1 2

18 CIVIL (PROJECT) 1 1

19 LOGISTICS 1 2 2 1 3 9

TOTAL 1 1 1 10 7 16 9 25 2 72

AWARDS & CERTIFICATES:

The Company has won numerous awards for the safety, energy conservation and excellence:

As pioneers in globalizing operations, Binani has bagged a number of awards for its meritorious performance. The awards endorse its indigenous attempts at energy conservation, pollution control endeavours, productivity performance, export potential and sustained growth over a period of time.

Milestones of the past six decades:

1940's

Binani Metal Works Limited founded on the 25th of February, 1941 near Howrah, in Kolkata by the Founder Chairman Late Seth Govardhandas Binani.

The company entered into collaboration with Metal Distributors Limited and its trading activities in India expanded and got stronger.

1950's

Metal Distributors Limited established in London, UK, for international trading, indenting of non-ferrous metals, investments, leasing and other activities.

The company went public, for the first time, in 1953.

Binani earned recognition as the largest importer and distributor of non-ferrous metals in the country.

1960's

In 1962 Binani entered into a technical and financial collaboration with Cominco Limited Canada, to form Cominco Binani Zinc Limited and created history becoming the first Indian Company to manufacture primary high grade electrolytic zinc in India in 1967.

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It was the first Indian company to manufacture of high grade electrolytic zinc at Binanipuram, Kerala in 1967.

1970's

By leveraging technology and keeping up with a burgeoning market, Binani Zinc Limited successfully met the steady increase in capacity from 12 kty to 20 kty.

1980's

Binani Zinc Limited further upgraded technology at par with the latest in the world with assistance from M/s. Lurgi, Germany.

Binani Zinc Limited, commenced production of special high grade electrolytic zinc ingots with 99.995% purity.

An enviable track record...

1990's

Cominco Limited carted off its financial support from its operations in alignment with their world policy. Cominco Binani Zinc was rechristened as Binani Zinc Limited on 3rd March 1991.

Diversification was necessary for growth and hence two sectors were identified - Glass Fibre and Cement.

Two Public Issues, one in Feburary 1994 and the other in Feburary 1995, were undertaken to raise funds for the implementation of new projects. Both the issues were oversubscribed.

The company was re-christened as Binani Industries Limited, reflecting its status as a multi-divisional, multiproduct and multilocational company having metropolitan population and fully managed by outstanding technology and professionals in the country.

In 1995 Binani Zinc entered into collaboration with M/s U.M. Engineering Limited to adopt its state-of-the-art technology and increased its capacity to 30 kty

The commitment of Binani Zinc towards environmental protection and it's pollution control efforts are rewarded by the 'Kerala State Pollution Control Board' in 1990.

1991

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Binani Zinc awarded with a 'Certificate of Merit' by the 'Kerala State Pollution Control Board' for achieving the Second place among large scale industries, in making substantial and sustained efforts in Pollution Control.

1993

Binani Zinc awarded with a Certificate of Merit by the 'Kerala State Pollution Control Board' for achieving the first place among large scale industries in making substantial and sustained efforts in Pollution Control.

Binani Zinc is the proud recipient of the 'Energy Conversation Award' for five consecutive years from 1993 onwards.

1994

Binani Zinc been awarded the second 'Jawaharlal Nehru Memorial National Award' by International Greenland Society for excellence in Indian Industries in Energy Conservation.

1995

Binani Zinc been awarded the 'Certificate of Merit' by Govt. of Kerala in appreciation of its best effort in the field of Energy Conservation.

The Glass Fibre Division of Binani Industries Limited commenced commercial production at Colvale, Goa in March 1996 and was then the single largest glass fibre plant in India.

Binani Cement Limited commenced commercial production in July, 1997 at Pindwara, Rajasthan.

1996

Binani Zinc awarded the 'Certificate of Merit' by Govt. of Kerala in appreciation of its best effort in the field of Energy Conservation.

1998

Binani Zinc receives the 'Industrial Safety Award' from the National Safety Council of India for having the second lowest frequency rate of accidents recorded in Scheme III.

The systematic and scientific approach throughout operations has earned Binani's Glass Fibre plant, an ISO 9002 accreditation from Bureau Veritas Quality International, (BVQI), UK.

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Binani Zinc receives the 'Industry Excellence Award' instituted by The Institution of Engineers, India, Cochin Local Chapter, the first prize for excellence in Energy Conservation, and R&D efforts.

1999

Being a major foreign exchange earner in the country, Goa Glass Fibre Ltd. bags the 'Certificate of Export Recognition' from Chemicals and Allied Products Export

Promotion Council (CAPEXIL) for 1998-99.

Goa Glass Fibre Limited receives the prestigious 'National Exports Awards Certificate of Merit' for it's meritorious performance in exports during the year 1998-99.

1999-2000

Binani Cement Limited made a noteworthy improvement in the production costs, along with power and coal consumption for which it has won a 'National Award for Energy Consumption'.

Binani Cement Limited receives the National Award for its excellence in 'Thermal Energy Performance' for two consecutive years 1999, 2000.

Binani Cement Limited receives ISO 9002 and ISO 14001 Certification from KPMG in January 1999 and October 1999 respectively.

2000

Binani Zinc receives the prestigious international accreditions, 'ISO 14001' and 'ISO 9001:2000' Certification from Bureau Veritas Quality International for its Environment Management System and Quality Management System.

Amli Limestone Mine at the Binani Cement Limited bags the first place for the 'Mines Award' at the Mines Environment And Mineral Conservation Week, organized by the Controller of Mines (NZ) and the Indian Bureau of Mines, Ajmer.

Focused training inputs on a variety of knowledge and skill upgradation attempted. Achieved . . . . mandays per employee per year.

2001

BVQI also certified Binani Zinc to be qualified for Social Accountability Management system, SA 8000:1997 as well as OHSAS 18001:1999. Occupational Health and Safety Assessment Series.

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Binani Zinc becomes the first Indian company to have been certified under the four international accreditions, besides also following the '5s' housekeeping as a management practice.

Binani Zinc focused knowledge abnd skill upgradation and achieved a record of 3 mandays per employee per year.

2000 - 2001

Binani Zinc received an ISO 14001 and an ISO 9001:2000 Certification from Bureau Veritas Quality International for their Environment Management System and Quality Management System respectively.

Binani Zinc adopted the '5s' housekeeping management practice and tagged it with the international accredition ISO 14001:1996. In april 2001, voluntary commitment to quality was demonstrated by getting the international accredition on quality, ISO 9001:2000. Leveraging the people potential, Binani Zinc became the first company in the manufacturing sector to go for international.

 

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2008—2009

The company received this award during 2008 as well whereby it became the first Indian Cement company to receive this prestigious award. 

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Greentech   Environment Excellence   Gold Award 2009 - BCL received this award consecutively in a row for 2008 & 2009 in recognition of its exemplary initiatives in Environment Management.

National Award for   Excellence in Water Management   2009 - BCL was rated as the ‘Excellent Water Efficient Unit’ to have been conferred this prestigious national award instituted by the CII Soharabji Godrej Green Business Centre, Hyderabad.

National award for   Excellence in Energy Management   2009 – BCL was rated as the ‘Energy Efficient Unit’ on being conferred this annual award instituted by the CII Godrej Green Business Centre, Hyderabad. The award was conferred by the Director General, Bureau of Energy Efficiency, Ministry of Power, New Delhi in a function held at Chennai Trade Centre in Chennai on November 20th, 2009.

  Certificate of Merit for 2007-08 for   Productivity Improvements - The award which

has been instituted by the Rajasthan State Productivity Council, Jaipur was conferred to BCL in recognition of company’s sustained initiatives towards productivity improvements.

Certificate of Excellence –   Best Employer   Award Competition 2008 - this award was conferred to BCL in recognition of company’s excellence towards maintaining good Employee-Employer Relationship for the year 2008.

Udyog Bharati Award 2009 & Indian Achievers Award for Quality Excellence   - These awards have been instituted by the All India Business & Community Foundation (AIBCF) for entrepreneurship development leading to economic growth that greatly contributes to generate long term opportunities for the communities. 

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BINANI in the News:

Binani Cement Limited inks MOU with Gujarat Government

Ahmedabad - January 13, 2009: Binani Cement Limited, one of the trusted quality brands of India, has signed a memorandum of understanding (MOU) with Gujarat State Government today to set up a Greenfield cement plant

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of 2.5 MTPA capacity in Gujarat. The MOU was signed by Mr. Vinod Juneja, Managing Director, Braj Binani Group, on behalf of Binani Cement Ltd and by Mr. Raj Gopal, Commissioner – Mines & Geology on behalf of the Gujarat State Government.

Mr. R. H. Joshi, Executive Vice President, Binani Cement Ltd were also present. The capacity of this Greenfield cement plant is 2.5 MTPA. The proposed plant location will be at Lodhva village in Sutrapada District of Junagadh. The land requirement for proposed plant is 188 hectares and for mining 1532 hectares. The plant will manufacture ordinary Portland cement , Pozzolona Portland cement (PPC) in various grades and the production of OPC to PPC will be ordinarily 50:50. This strategically located plant will be mechanically completed by December 2010 and the commercial production will commence from April 2011.  This association between the Binani Cement Ltd and Gujarat State Government will help in upliftment of social infrastructure, general standard of living of people in Gujarat and development of area and employment generation in the state of Gujarat.  The project is estimated to cost Rs. 825cr. The excise duty and the Sales tax for the plant is estimated to Rs. 66cr and Rs. 78cr respectively, at 100% capacity utilization per annum. Binani would also be required to the pay Rs 17cr per annum as the Royalty & Cess on Limestone to the Gujarat Government. Limestone, the primary raw material will be outsourced from proposed captive mines located around the villages Lodhava, Singsar, Barevala JTiardi and other adjoining villages, contiguous and within a distance of 3-5 km. The reserves are estimated at about 120-160 MT possible category and would be adequate for the proposed plant for 30 years. Other raw materials like Sandstone, Latertic Iron Ore, Gypsum and Fly Ash are available locally. The power requirement by the plant will be met with a captive power plant of 30 MVA.  The Cement from this Binani plant will be supplied to the markets in Gujarat, Maharashtra and Middle East.

Binani Cement Conquests Accolades for Its Excellency in Various AreasMumbai, January 18, 2010:

Binani Cement Limited (BCL), the flagship company of Braj Binani Group, has earned the proud distinction of being the one winning 11 prestigious Awards and Certificates. The company has successfully excelled over its competitors and has made significant achievements in energy conservation, quality excellence, sustainability, environment excellence, and water & energy management.

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Binani Cement has bagged the two prestigious National Awards for Energy Efficiency in Indian Cement Industries in recognition of the Best Electrical Energy as well as the Best Thermal Energy Performance for the year 2007-08.

Ministry of Industries & Commerce, Government of India, has also acknowledged company’s commendable efforts for demonstrating excellence in energy utilization and conservations through implementation of systematic, planned and strategic initiatives. The company has also received the NCB’s Best Thermal Energy Performance in the years 1998-99, 1999-00 & 2003-04 & also the Certificates of Merit for Energy Conservation in 2001 & 2006 from the Ministry of Power, Government of India.

Binani Cement also bagged the prestigious National Quality Excellence Award 2008-09 in Indian Cement Industries in recognition towards its Best Quality excellence measured against the excellence model designed to examine an organization’s leadership, capabilities and performance leading to excellent management of the business processes in all areas of operation by NCCBM.

Other awards won by Binani cement in the year 2009, in the areas of sustainability, environmental excellence natural resource management, productivity and quality excellence are as follows:

ITC CII   Sustainability   Award 2009 – the award is conferred on Binani Cement for its significant contribution in the field of sustainable development encompassing environment, society and economics — the three pillars of triple bottom line.

BCL bagged the award among the large business organizations. BCL was a worthy winner after undergoing a rigorous two-stage assessment including site visit by 3 of the assessors nominated by CII, followed by scrutiny by the Awards Jury. The award was conferred by the Union Minister of states for Environment & Forests (independent charge) Mr. Jayaram Ramesh during the valedictory function of the CII Sustainability Summit held at the India Habitat Centre, New Delhi on 26.11.2009.

BINANI POSITION IN CEMENT INDUSTRY:

29

India is the world's second largest producer of cement after China with industry capacity of over 200 million tonnes (MT). With the boost given by the government to various infrastructure projects, road networks and housing facilities, growth in the cement consumption is anticipated in the coming years.

The modern Indian cement plants are state-of-the-art plants and amongst the best in the world. The cement industry comprises of 134 large cement plants with an installed capacity of 173.08 million tonnes and more than 350 operating mini-cement plants, with an estimated capacity of 11.10 million tonnes per annum, making a total installed capacity of 184.18 million tonnes in the last fiscal, as per the Department of Industrial Policy and Promotion's latest data.

In order to meet the expanding demand, cement companies are fast developing new plants. The cement industry is poised to add 111 MT of annual capacity by the end of 2009–10 (FY 2010), riding on the back of approximately 141 outstanding cement projects.

According to a report by the ICRA Industry Monitor, the installed capacity is expected to increase to 241 MTPA by FY 2010-end. India's cement industry is likely to record an annual growth of 10 per cent in the coming years with higher domestic demand resulting in increased capacity utilisation.

New Investments

30

Binani Cement has signed a memorandum of understanding with the Gujarat Government to set up a 2.5 MTPA greenfield cement plant in Gujarat at a cost of US$ 169.40 million. Commercial production will commence in April 2011. Binani Cement has also initiated talks with a few foreign institutional investors (FIIs) to raise US$ 307.99 million for its new projects.

Power sector giant, NTPC, is contemplating to enter into manufacturing of fly ash-based cement and ash-based products from ash generated at its power stations.

Installed capacity:

The cement industry in India has added a whopping 46 MT capacity in just a little over three years, taking the total installed capacity to 206.96 MT as on December 31, 2008. This includes India Cements Ltd's new grinding unit at Vallur, Tamil Nadu with an installed capacity of 1.10 MT, and UltraTech's plant at Ginigera, Karnataka with an installed capacity of 1.30 MT.

The industry added over 30 MT to its installed capacity in just one yearduring previous fiscal (April 2007–March 2008).

Almost all players of the industry, small to medium to large, have added capacity ranging between a minimum of 200,000 tonnes and a maximum of 3 MT in the last three years (April 2005 to March 2008), effecting a total addition of 45 MT to the installed capacity by setting up greenfield projects, and expanding and upgrading the existing plants.

Simultaneously, with almost total capacity utilisation levels in the industry, cement dispatches continued to maintain a 10 per cent growth rate. Total despatches grew to 170 MT during 2007–08, as against 155 MT in 2006–07.

The continuous increase in the infrastructure projects along with the rise in construction activity has ensured rising demand levels for the cement industry. Consequently, as per latest figures released by the Cement Manufacturers' Association of India (CMAI) cement despatches (including exports) were 16.01 MT in December 2008, an increase of 12.11 per cent as compared to 14.28 MT in December 2007. Total despatches during April-December 2008-09 went up to 130.69 MT as compared to 121.59 MT during the corresponding period in 2007-08. The cement production was 15.82 MT, registering a growth of 11.96 per cent as compared to 14.13 MT in December 2007. Total production has touched 131.20 MT during April–December 2008–09 as compared to 122.33 during the corresponding period of 2007-08, an increase of nearly 7 per cent.

Technological change

31

Continuous technological upgrading and assimilation of latest technology has been going on in the cement industry. Presently, 93 per cent of the total capacity in the industry is based on modern and environment-friendly dry process technology and only 7 per cent of the capacity is based on old wet and semi-dry process technology. There is tremendous scope for waste heat recovery in cement plants and thereby reduction in emission level. One project for co-generation of power utilising waste heat in an Indian cement plant is being implemented with Japanese assistance under the Green Aid Plan. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially.

India is also producing different varieties of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFC), Oil Well Cement, Rapid Hardening Portland Cement, etc. Production of these varieties of cement conform to the BIS Specifications. Between April to November 2008, 25 per cent of all cement produced was OPC, 67 per cent was PPC and 8 per cent was PBFC.

RMC Business

Ready-mix concrete (RMC) is sometime preferred to on-site concrete mixing because of the precision of the mixture and reduced worksite confusion. The Indian RMC business is growing by 25 per cent every year. In India only 2–3 per cent cement consumption by cement industry goes through RMC, as against 60 per cent in developed markets. At present, India has 200 RMC plants across the country.

Binani Cement, Shree Cement and Dalmia Cement are among the new players who have plans to get into the RMC business in the next five years.

Government Initiatives

Government initiatives in the infrastructure sector, coupled with the housing sector boom and urban development, continue being the main drivers of growth for the Indian cement industry.

Increased infrastructure spending has been a key focus area over the last five years indicating good times ahead for cement manufacturers.

The government has increased budgetary allocation for roads under National Highways Development Project (NHDP). This coupled with government's initiatives on the infrastructure and housing sector fronts would continue to remain the key drivers.

Appointing a coal regulator is looked upon as a positive move as it will facilitate timely and proper allocation of coal (a key raw material) blocks to the core sectors, cement being one of them.

Keeping in mind the global meltdown which is impacting the cement companies in India, the government reimposed the counter veiling duty (CVD) and special CVD on imported cement in January. This is likely to provide a level playing field to domestic companies.

32

Exchange rate used: 1 USD = 48.6998 INR

Products:The Company's product portfolio includes Ordinary Portland Cement and Pozzolana Portland

33

Cement. Marketed under the premium ‘Binani Cement’ brand name, it has become a name synonymous with cement in India. And with subsidiaries in Dubai, China and many other potential international markets, Binani Cement is well and truly set on the path of becoming a brand the world builds with.

Produces cement of two. : • Grade 43 • Grade 53• PPC (Portland Pozzolana Cement)

PRODUCT SPECIFICATIONS:

  BIS BS ASTM GERMANY JAPANBINANI CEMENT

Specifications43 Grade

53 Grade

BS-12

C-150 T-1

OPC-IOPC-II

 43 Grade

53 Grade

LOI (%) max 5.00 4.00 3.00 3.00 5.00 5.00 3.00 2.30 2.10IR (%) max 3.00 3.00 1.50 0.75 3.00 3.00 - 2.10 2.00SO3 (%) max 3.00 3.00 3.50 3.00 3.50 3.50 3.00 2.10 2.00MgO (%) max 6.00 6.00 4.00 6.00 5.00 5.00 5.00 1.98 1.98Blaine (M2 / kg) max

225 225 275 280 220 220 250 300 320

Setting Time (Mins)

                 

- Initial (Minimum) 30 30 45 45 60 60 60 125 120- Final (Minimum) 600 600 600 375 720 720 600 175 170Soundness                  - Le-Chatelier (mm)  Maximum

10 10 10 - - - - 1.00 1.00

- Auto Clave (%)  Maximum

0.80 0.80 - 0.80 - - - 0.10 0.10

CompressiveStrength (MPa)

                 

- 3 days min 23.0 27.0 25.0 12.7 - - 7.0 42.0 41.0- 7 days min 33.0 37.0 - 19.70 18.4 - 15.0 52.0 53.0

- 28 days min 43.0 53.042.5 -62.5

28.235.7 - 56.1

35.7 -56.1

30.0 62.0 65.0

34

SCOPE OF STUDY

The scope of study will cover all the component of current assets and current liability. The

ascertainment of working capital gap critical examination of financial statement, return on

investment and the best and optimum sources of financing the working capital.

OBJECTIVE OF STUDY

To analyze the trend projection of the current assets and liability.

To identified the requirement and change in working capital.

To analyze the cost of financing working capital.

To analyze the financial strength and weakness of company.

35

RESEARCH METHODOLOGY

As levers of financial management go, none bear more weight than working capital. The visibility of

every business activity rest on daily change in reacreible, inventory, and payable. It is the lifeblood of

business, and every manager’s primary task is to maintain optimum level of working capital

management.To carry out the study on working capital management of BINANI CEMENT LIMITED the

following data were relied upon for appropriate analysis and for making finding.

SOURCES OF DATA

Secondary data

Annual report of last 2 year.Red herring prospectus.Audited balance sheet & p/l account 2008 and 2009.Binani news jouranl March –April 2010.Man power summary (May 2010).

Primary data

Through the direct interview of different managers of different department such as sales, purchase, logistic, finance , production and H.R.&A.Binani cement web sites.

Tools used for analysis:

Assessment of working capital requirement based on estimation of component of working capital method.Trend analysis. Statement of change in working capital.Analysis of cost of sources of finance for working capital.Analysis the position of binani cement by different charts.SWOT analysis.Comparesion.

36

CONCEPTS OF WORKING CAPITAL MANAGEMENT:

There are two concepts of working capital:-

Gross Working Capital.

Net Working Capital.

GROSS WORKING CAPITAL: -

The gross working capital is the capital invested in the total current assets of the enterprise. Current assets are those assets which in the ordinary course of business can be converted into cash within a short period of normally one accounting year.

Example:-

CONSTITUENTS OF CURRENT ASSETS

1. Cash in hand and bank balances

2. Bills receivable

3. Sundry debtors

4. Short term loans and advances

5. Inventories of stock, as

(a) Raw materials

(b) Work-in-process

(c) Stores and spares

(d) Finished goods

6. Temporary investments of surplus funds

7. Prepaid expenses

8. Accrued incomes

37

NET WORKING CAPITAL: -

Net working capital is the excess of current assets over current liabilities, or say:

38

Net working capital may be positive or negative. When the current assets exceed current

liabilities the working capital is positive and the negative working capital results when the

current liabilities are more then current assets. Current liabilities are those liabilities which are

intended to be paid in the ordinary course of business within a short period of normally one

accounting year out of the current assets or the income of the business.

Example:-

CONSTITUENTS OF CURRENT LIABLITIES

1. Bills payable

2. Sundry creditor or account payable

3. Accrued or outstanding expenses

4. Short term loans, advances and deposits

5. Dividend payable

6. Bank overdraft

7. Provision for taxation

39

Net working capital=Current assets – Current liabilities

CLASSIFICATION OR KINDS OF WORKING CAPITAL

Working capital may be classified in two ways:-

a) On the basis of concept

1. Gross working capital

2. Net working capital

b) On the basis of time

1. Permanent or fixed working capital

2. Temporary or variable working capital

40

THE NEED OR OBJECTIVE OF WORKING CAPITAL

1. For the purchase of raw material, Components and spares.

2. To pay wages and salaries.

3. To incur day-to-day expenses and overhead costs such as fuel, power and office

expenses, etc.

4. To meet the selling expenses such as packing, advertising, etc.

5. To provide credit facilities to the customers.

6. To maintain the inventories of raw materials, work-in-progress, stores and spares and

finished stock.

FACTORS DETERMINING THE REQUIREMENT OF WORKING CAPITAL

Nature or Character of business

Size of business/Scale of operations

Production policy

Manufacturing process/Length of production

Seasonal variations

Working capital cycle

Rate of stock turnover

Earning capacity and Dividend policy

Price level changes

Other factors

41

FORECAST / ESTIMATE OF WORKING CAPITAL REQURIEMENT

“Working capital is the life blood of and controlling nerve center of a business.” No business can

be successfully run without an adequate amount of working capital. To avoid the shortage of

working capital at once, an estimate of working capital requirement should be made in advance

so that arrangement can be made to procure adequate working capital. But estimation of working

capital requirement is not and easy task and a large number of factors have to be considered

before starting this exercise. For a manufacturing organization, the following factors have to be

taken into consideration while making an estimation of working capital requirements:

FACTORS REQUIRING CONSIDERATION WHILE ESTIMATING WORKING CAPITAL

1. Total costs incurred on material, wages and overhead.

2. The length of time for which raw materials are to remain in stores before they are issued

for production.

3. The length of the production cycle is work-in-progress, i.e., the time taken for conversion

of raw material into finished goods.

4. The length of sales cycle during which finished good are to be kept waiting for sales.

5. The average period of credit allow to customers.

6. The amount of cash required to pay day –to-day expenses of business.

7. The average amount of cash required making advance payments, if any.

8. Average credit period expected to be allowed by suppliers

9. Time-lag in the payment of wages and other expenses.

42

Suggested Performa’s for estimation of working capital requirements are given as follows:

1. For a Trading Concern: Performa

STATEMENT OF WORKING CAPITAL REQURIMENTS AMOUNT

CURRENT ASSETS:

I. CashII. Debtors or Receivable (for….month’s sales )

III. Stocks (for….month’s sales )IV. Advanced payment, if any

V. Others

Less: Current Liabilities:

I. Creditors (For…. month’s purchase).II. Lag in payment of expenses . ………

(Outstanding expenses, if any)

Working Capital (C.A.-C.L.) _______

Add : Provision/ margin for contingencies

Net working Capital Required

(Rs.)

…………..

…………..

…………..

…………..

…………..

43

2. For a manufacturing Concern

STATEMENT OF WORKING CAPITAL REQURIMENTSAMOUNT

Current Assets :

I. Stock of the material (For….month’s consumption )II. Work-in-Process (For….month’s)

a) Raw materialsb) Direct labourc) Overheads

III. Stock of finished goods (For….month’s of sales)a) Raw materialsb) Direct labourc) Overheads

IV. Sundry debtors or receivables (For….month’s of sales)

a) Raw materialsb) Direct labourc) Overheads

V. Payment in advance (if any)VI. Balance of cash (Required to meet day-to-day)

VII. Any other (if any)

Less: Current Liabilities :

I. Creditors (for.. month’s purchase of raw material)

II. Lag in payment of expenses (Outstanding expenses….month’s)

III. Others (if any)

Working capital (C.A.-C.L.)

Add : Provision/Margin for Contingencies

Net Working Capital Required

Rs.

44

FINANCING OF WORKING CAPITAL

The working capital requirements of a concern can be classified as:

A. Permanent or fixed working capital .

B. Temporary or variable working capital .

The working capital investments are as permanent investments in fixed assets. This is so because

there is always a minimum level of current assets which are continuously required by the

enterprise to carry out its day to day business operations and this minimum can not be expected

to reduce at any time. This minimum level of current assets gives rise to permanent or fixed

working capital as this part of working is permanently blocked in current assets.

Similarly, sum amount of working capital may be required to meet seasonal demands

and some special exigencies such as rise in prices, strikes, etc, this proportion of working capital

gives rise to temporary or variable working capital which can not be permanently employed

gainfully in business.

“The fixed proportion of working capital should be generally financed from the

fixed capital sources while temporary or variable working capital requirements of a concern

may be met from the short term sources of capital”.

Source of working capital:

The working capital requirements should be met both from short-term as well as long term

source of funds. The financing of working capital through short term source of funds has the

benefits of lower cost and establishing close relationship with the banks.

Financing of working capital from long term resources provides the following benefits:

1. Reduce the risk, since the need to repay loans at frequent intervals is eliminated.

45

2. It increases liquidity since the firm has not to work about the payment of these funds in

the near future.

3. The finance manager has to make use of both long term and short term sources of funds

in a way that the over all lost of working capital is the lowest and the funds are available

on time and for the period they are really needed.

Source of working capital

Permanent or Fixed Temporary or variable

1. Shares. 1. Commercial Banks.

2. Debentures . 2. Indigenous Bankers.

3. Public deposit . 3. Trade Creditors.

4. Plugging back of profits . 4. Installments Credit.

5. Loans from financial intuitions. 5. Advances.

USES OF WORKING CAPITAL

The typical uses of working capital are as follows:

Adjusted net loss from operations.

Purchase of noncurrent assets .

Purchase of long term investment like shares, bonds/debentures etc.

Purchase of tangible fixed assets, like land, building, plant, machinery, equipment etc.

Purchase of intangible fixed assets, like goodwill, patents, copyright and etc.

Repayment of long-term debt (debenture or bonds) and short-term debt (bank

borrowings).

Redemption of redeemable preference shares.

46

Payment of cash dividend.

TECHNIQUES OF FORECASTING WORKING CAPITAL

1. Cash Forecasting Method: - Under it the position of cash at the end of the period is shown

after considering the receipt and payments to be made during this period. It is more or less a

summary of cash book. It shows the deficiency or surplus of the definite point of time.

2. Balance Sheet Method:- Under it forecast is made of the various assets and liabilities of the

business. The difference between assets and liabilities indicates either cash surplus or cash

deficiency.

3. Adjusted Profit and Loss Account Method:- Under it the forecasted profits are adjusted

after adding the cash inflows and deducting the cash outflows in order to adjust the estimated

profit on cash basis.

4. Percent of sales Method: - It assumes that certain balance sheet items vary directly with

sales. Thus the ratio of a given balance sheet item to sales remains constant. The firm’s needs in

terms of the percentage of annual sales envisaged in each individual balance sheet items are

expressed. This relationship between sales and working capital may be expressed in the

following three ways:

(i) As number of days of sales.

(ii) As turnover .

(iii) As percentage of sales.

5. Operating Cycle Method: - Operating cycle is the period that a business enterprise takes in

converting cash back into sales. It has the following four stages:-

(i) The raw materials and store inventory stage.

(ii) The semi- finished goods or work-in-progress stage.

(iii) The finished goods inventory stage.

(iv)The accounts receivable or book debts stage.

47

ANALYSIS OF WORKING CAPITAL AND MEASURING THE EFFICIANT

IN THE MANAGEMENT OF WORKING CAPITAL:-

The working capital magnitude of a concern should neither be too inadequate nor too excessive

as compared to its requirement. Maintaining adequate level of working capital ensures the

improvement in profitability. Thus, financial manager all time strive to strike a balance between

working capital requirement and the working capital magnitude. This is done by analyzing and

examines the changes in individual components of working capital. For such an analysis, the

following techniques are used:-

1. Schedule of change in working capital.

2. Fund statement.

Schedule of change in working capital:

This technique is based on current items, i.e., current assets and current liabilities only. As we

know that working capital is the excess of current assets over current liabilities.

Note:-

Increase in Current Assets brings increase in working capital.Decrease in Current Assets brings Decrease in working capital.Increase in current liabilities brings Decrease in working capital.Decrease in Current Liabilities brings increase in working capital.

48

PROFIT RISK NWCCurrent assets +

-

-

+

-

+

+

-

Current liabilities +

-

+

-

+

-

-

+

COMPARETIVE ANALYSIS OF WORKING CAPITAL MANAGEMENT ON “BINANI CEMENT LIMITED”

BY DIFFERENT METHODES.

CALCULATION OF GROSS WORKING CAPITAL (Rs . Lakhs)

PARTICULARS As at As at 31st March, 2009 31st March, 2008

CURRENT ASSETS, LOANS AND ADVANCES

CURRENT ASSETS :

INVENTORIES

(as taken, valued & certified by the Management)Stores, Spare Parts and Fuel______________________________________ 10,801.52 14,488.83Loose Tools __________________________________________________ 12.49 5.00Raw Material and Packing Material _______________________________ 734.43 329.11Work - In - Process ____________________________________________ 24.48 42.78Finished Goods _______________________________________________ 9,681.03 6,878.72

SUNDRY DEBTORS (UNSECURED AND CONSIDEREDGOOD,UNLESS OTHERWISE STATED) :Other debts __________________________________________________________ - 0.53

Cash and Bank Balances

Cash In Hand_______________________________________________ 5.65 7.60Remittances in transit and cheques in hand________________________ 12.08 86.88Balance with Scheduled Banks :Current Accounts ___________ _______________________________ 3,916.73 1,862.05Collection Accounts _________________________________________ 3,159.69 2,371.49Deposit Accounts (Including Rs. 1.83 Lakhs______________________ 1,627.31 5,264.85(Previous year Rs. 1,316.81 lakhs) in margin accounts)

Loans and Advances (Unsecured, considered good,unless otherwise stated)

Due from Holding Company__________________________________ 8,557.65 8,046.62(Refer Note 26 of Schedule 15)Advances recoverable in cashor in kind or for value to be received____________________________ 7,015.31 6,911.17Fringe Benefit Tax (Net)_____________________________________ 5.20 9.47Other Deposits ____________________________________________ 708.54 818.44Balance with Excise, Customs and VAT Authorities ______________ 2,159.30 3,067.73(including for Service Tax Rs. 156.15 lakhs,Previous Year Rs. 2.42 lakhs)Assets held for disposal _____________________________________ 33.31 19.42GROSS WORKING CAPITAL ________________________ 48,454.72 50,210.69

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Interpretation:

There should be investment for short term.As compare to FY 2008 the company’s current assets has decrieas in FY 2009.Company should use the cash in hand and cash at bank for some investment .Company should maintain proper utilisation of the deposits.Company’s closing stock in FY 2009 increase.

50

TOTAL CURRENT LIABILITIES: (Rs.Lakhs)

PARTICULARS As at As at 31st March, 2009 31st March, 2008

CURRENT LIABILITIES AND PROVISIONSCURRENT LIABILITIES:

Acceptances_____________________________ 469.93 –Sundry CreditorsFor Trade :– Total outstanding dues of creditors other than microenterprises and small enterprises_ ___________ 27,070.51 21,836.87(includes creditors for capital projects Rs. 4,294.91 lakhs (Previous Year Rs. 5,546.27 lakhs))

– For Expenses___________________________ 5,546.75 2,050.40Other Liabilities __________________________ 13,123.15 7,750.87Advances from customers__________________ 4,779.82 3,204.26Investor Education and Protection Fund shall be creditedby the following– Unclaimed dividend ______________________ 6.04 2.83Interest accrued but not due on loans__________ 95.58 47.93 PROVISIONS

For Current Income Tax (net of Advance Tax)___ 1,883.82 2,157.79For Proposed Dividend _____________________ 4,265.13 5,077.53For Tax on Dividend _______________________ 724.86 862.93For Gratuity_______________________________ – 14.37For Leave Encash__________________________ 106.36 119.13

TOTAL CURRENT LIABILTIES__________ 58,071.95 43,124.91

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INTERPRETATION:

Current liabilities has increase 34.65 % in FY 2009 its big responseblity to full fill by current assets.Company should maintain the outstanding expenses in FY 2009 its increase 23.96%.Other liability has incerase 69.31%.it should be maintain by the company.

52

CALCULATION OF NET WORKING CAPITAL:

Net working capital=Current assets – Current liabilities. (Rs. Lakhs)

As 31st March 2009 As 31st March 2008

Total Current Assets______________________________ 48,454.72 50,210.69

LESS:

Total Current Liabilites___________________________ (58,071.95) (43,124.91)

Net working capital requirment (9617.23) 7085.78

INTERPRETATION:

According this figure the net working capital in FY 2009 requir Rs 9617.23 lakhs.The position of current assetes is not able to recover the current liability in FY 2009.Working capital ratio=annual net sale / average working capital.Current ratio= current assests / current liability.

FY 2008 : CR=50210.69 /43124.91 =1.16 :1

FY 2009: CR=48454.72/58071.95 = 0.834:1

Company good current ratio = 2:1, So, Company should maintain the Current assets and Current liabilies.

53

Statement of Change in Working Capital of Binani Cement Ltd.

As on 31st March 2009 (Rs. in Lakh)

Particulars 31st March 2009 31st March 2008 Increase Decreast

Current Assets:-

Inventories

Sundry Debtors

Cash & Bank

Loans & Advances

Total of Current Assets (Gross Working Capital)

Current Liabilities:-

Creditors :-

Total o/s dues of creditores other then micro enterprises and

small scale industries

21253.95

21,744.44

-- 490.49

-- .53 -- .53

8721.46 9592.87 -- 871.41

18479.31 18872.85 -- 1301

48454.72 50210.69

27070.51 21836.87 -- 5233.64

Liabilities for expenses 5546.75 2050.40 -- 3496.35

Other Liabilities 13123.15 7750.87 -- 5372.28

Advances from customer 4779.82 3204.26 -- 1575.56

Interest accrued but not due on loans 95.58 47.93 -- 47.65

Provision for current income tax 1883.82 2157.79 659 --

Provision for proposed dividend 4265.13 5077.53 812.40 --

Provision for Tax of Dividend 724.86 862.93 138.07 --

Provision of Gravity -- 14.37 14.37 --

Provision for leave encashment 106.36 119.13 12.77 --

Total Current Liabilities 58071.95 43124.91

Net working capital (9617.23) 7085.78

Change in working capital (Decreasing) 16,752.00

18388.91 18388.91

54

PARTICULARS CALCULATIONFY 2009

CALCULATIONFY 2008

As 31ST March 2009

As 31ST March 2008

RAW MATERIALCOVERSION PERIOD(RMCP)=RMI/(RMC/360)

=9681.02/(7952.68/360)

=6878.72/(6044.46/360)

=438.23 DAYS

=409.69DAYS

FINISHED GOODS CONVERSION PERIOD(FGCP)=FGI/(CGI/360)

=9681.02/(66713.53/360)

=6878.72/(29211.98/360)

=52.24DAYS

=84.77DAYS

55

COST CAPITAL:

The capital cost envisagedfor establishiing the clinker grinding unit is :

S.NO. PARTICULARS Rs in Lakhs.

1. land and site development 336

2. Building and & structures 2681

3. Plat and Machinery 5489

4. Other cost 1284

TOTAL 9790__

56

“SWOT ANALYSIS” OF BINANI CEMENT LINITED, ‘NEEM KA THANA’:

STRENGTH:

1.4 MILLION TON PER ANNUM CLINKER GRINDING UNIT WHICH IS HELP TO MAXIMUM OUT PUT AND DELIVER GOODS ON DEMAND WITH IN TIME OF REQUIRMENT.ALL MACHINARY HAS CONTROLED BY COMPUTER CONTROL SYSTEM, ONLY 1 EMPLOYEE CAN HANDLE VERY WELL AND RUN THE MACHINARY. SAVING THE COST OF EMPLOYEE SALARY AND SAVING TIME.

RAILWAY LINE VERY STRONG POINT TO BRING THE CLINKER WHOLE 59 COACHS.THERE IS A MACHIN WHO UNLOAD 1-BY-1 COACH AND WITH IN 7 TO 8 HOURES ITS COMPLITLY UNLODED ALL 59 COACH FROM GOODS TARIN.BINANI INCREASES THE EMPLOYEE INCRIMENT WITH IN 18 MONTH.GOOD JOB SATISFACTION FOR EMPLOYEE.GOOD PROFIT EARN.THINK ABOUT SOCIAL RESPONSIBILITY.

WEAKNESS:

NO DRESS COAD FOR LABOUR FOR EASY TO EDINTITYFY ,WHO IS COMPANY’S WORKER AND WHO IS OUT SIDER?ONLY 5 MEMBER IN SCURITY.

57

OPPRTUNITY:

COMPANY SHOULD ESTABLISHED MORE PLANTS FOR MANUFATURING CEMENT AND SAVE THE COST OF TRANSEPORTATION.COMPANY SHOULD DELIVER THE ORDERS BY THE GOODS TRAIN.COMPANY HAS EARND GOOD PROFITS , SURPLUS & RESURVES BUT NOT INVEST IN THAT AREA WHERE THEY WILL GET MORE PROFITS & EARNING.

THREATS:

IN BALANCE SHEET SCHEDULE -5 THE LONG TERM INVESTMENT AND SHORT TERM INVESTMENT HAS NO EFFECT .PURCHASE AND SALE OF THESE INVESTMENT RATE ARE SAME NO PROFIT AND NO LOSS.

BRAJ BINANI GROUP ANALYSIS BY DIFFERENT CHARTES:

58

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SHREE CEMENT LIMITED

Shree Cement Limited (SCL is a forward looking cement company striving to continue its leadership position in the area of energy efficiency, cost effectiveness, environmental improvements and community development, in the global cement map.

Established in the year 1979, SCL has been promoted by B G Bangur Group based at Kolkata. Today the group is a respected industrial house.

Shree Cement Ltd. manufactures 53, 43 and 33 grade Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC) with a total capacity to 2.6 MTPA.

In 2004-05, the company has produced 3.02 million tons of cement. Its workforce comprises of 1,281 individuals, including 653 staff members and 628 workers.

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Shree Cement is commissioning 1.2 MTPA greenfield capacity in the name of 'Bangur Cement' at village Ras, district Pali in Rajasthan. The estimated cost of the project is over INR 3000 million. It is expected to start production by September, 2005.

SHREE POWER (CAPTIVE POWER PLANT)

2xl8 MW captive power plant (CPP) was commissioned in April 2003 to meet the entire power requirement of the cement plant including its peak demand. This has resulted in decreasing the load on the state grid by reducing demand of Shree Cement. Thus, improving the power availability in the state in more than proportional amount. The power plant is fully automatic and is operated from a centralized control room. Distinct feature of this plant is its utilization of petroleum coke, which is a waste product of Petroleum Refineries.

The CPP ensures uninterrupted supply of electricity to the cement plant at a cost as low as INR 2.04 per kWh against the state Grid rate of INR 4.29 per kWh. Complete reliability of CPP enabled the company to discontinue the regular supply from Rajasthan power grid in the year 2003-04.

Generation of power has associated environmental impacts and Shree Cement has taken care to minimize these impacts with an attempt to make the plant eco-friendly. Fly ash generated from this plant is used as supplementary fuel, and bed ash, which also contains calcium sulphate, is utilized in cement grinding. Raw water consumption in the conventional CPP design was proposed to be 5,232 kl/day In view of conserving the precious resource of the region, capital intensive Reverse Osmosis (RO) plant (RO-I) was installed along with CPP, bringing down the water consumption to 3,600 kl/day.

Effluent generated from pretreatment unit and blow down from cooling tower and boiler is mixed with some quantity of raw water and is again treated for reuse. The effluent generated by RO-2 is utilized for ash quenching and dust suppression in fue1 handling areas at CPP. The remaining effluent is transported to cement plant for dust suppression at raw material and fuel handling areas and spray on roads. These initiatives have facilitated zero-discharge of effluent from the CPP on land. No effluent is generated from cement plant. High efficiency Electro Static Precipitators (ESP) has been installed, which has helped in maintaining Suspended Particulate Matter (SPM) emissions well below the specified norms. During various measurements taken at the two boiler stacks during the year, the emissions ranged between 57.26 and 82.1 mg/Nm3, against the statutory limit of 100 mg/Nm3•

Covered belt conveyors and water spraying at material transfer points are provided to control the fugitive dust emissions. To control the release of SOx to atmosphere, they are utilizing limestone in the boiler bed.

Shree Cement Position:

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COMPARISON & CONCLUSION:

Binani Cement Limited boasts of a fully integrated cement plant, strategically located in Binanigarm, Sirohi, Rajasthan. The 1.65 mtpa facility and a 25 MW captive power plant were set up in 1997 in a record 19 months.BCL, a split grinding unit at Neem Ka Thana to increase the capacity of the cement facility to 6 mtpa and power facility to 69.6 MW.

ACC, Ambuja Cement and Aditya Birla Group – posting a quantum jump in their dispatches.ACC managed to cut down its inventory marginally by selling 1.89 MT while its production was at 1.87 MT in January 2009. Both production and output rose 12 per cent when compared to January 2008.

Ambuja Cement output was up 4 per cent at 1.61 MT (from 1.55 MT), while sales improved 5 per cent to 1.63 MT (from 1.55 MT).The Aditya Birla Group's production in January 2009 jumped 9.76 per cent to 3 MT and dispatches were up 7.35 per cent at 3 MT.

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Shree Cement Ltd. manufactures 53, 43 and 33 grade Ordinary Portland Cement (OPC) and Portland Pozzolana Cement (PPC) with a total capacity to 2.6 MTPA.

In 2004-05, the company has produced 3.02 million tons of cement. Its workforce comprises of 1,281 individuals, including 653 staff members and 628 workers.

Shree Cement is commissioning 1.2 MTPA greenfield capacity in the name of 'Bangur Cement' at village Ras, district Pali in Rajasthan. The estimated cost of the project is over INR 3000 million. It is expected to start production by September, 2005.

Binani Cement, Shree Cement and Dalmia Cement are among the new players who have plans to get into the RMC business in the next five years.

As compared Binani cement has very good performence with his 2 units only.NAME OF THE COMAPNY

CMP(AS ON FEB.2010)

MARKET CPITAL RS. MIL.

EPS.RS.

P/EX

P/BVX

DIVIDEND%

BINANI CEMENT LTD

69.85 14186.50 14.04 4.98 2.98 21

J.K. CEMENT.LTD

168.00 11747.80 34.50 4.86 1.29 35

DALMIA CEMENTLTD

212.10 17167.20 22.15 9.58 1.42 100

THE INDIA CEMENT LTD

116.30 32864.20 14.50 8.02 1.11 20

KEY CONCERN:

The current market price of Rs.69.85, the stock trades at a P/E of 4.27x and 3.76x for FY10E and FY11E respectively.

On the basis of EV/EBDITA, the stock trades At 2.68x and 2.56x for FY10E and FY11E respectively.

The Price to Book Value of the stock is expected to be at 1.75 and 1.20 respectively for FY10E and FY11E.

Net sales of the company are expected to grow at a CAGR of 28% over 2008 to 2011E.

BCL has CAPEX plans of Rs 1700 crores to be spent over the next 2-3 years which includes Greenfield expansion in Gujarat, Grinding unit in Mauritius, Expansion in China & mine development in Nimbri Chandawatan, Rajasthan.

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The Shandong Binani Rong'An Cement Co. Ltd., China, a Subsidiary of BCL, has started implementation of its expansion project for increasing Cement manufacturing capacity from 0.50 Million MT to 3.00 Million MT. The project is expected to go into production by mid 2011.

The Extension of wagon loading belt to third loading point in both sides expected to be commissioned by March ‘ 10.

To enhance availability of packers interconnectivity with silos shall be done by March’ 10.

We recommend ‘BUY’ in this particular scrip with a target price of Rs.84.00. for Medium to Long term Gains.

BIBLIOGRAPHY:

1. WEB SITS:

http://www.binani.com http://www.shreecement.com

2. MEGAZINE:

Binani ,Bina (March & April 2010) “IMPULSE ACTION CALLS FOR SAFETY”,Binani News Journal,Vol.12 No.2 ,P.P.3 to 5 & 33.

3. REPORTS:

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Annual Report 2008 & 2009 Of Binani Cement Ltd.Annual Report 2008 & 2009 Of Shree Cement Ltd.Annual Report 2009 Of Indian Cement Industries.

4. BOOKS:

Pandey, I.M.(2008),”Working Capital Management”, Financial Management,9TH

Ed.,New Delhi: UBS Publisher Distributers Pvt Ltd , pp 579-to-584.

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