Finance Project on Working Capital

8/12/2019 Finance Project on Working Capital

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Summer Training project Report

PROJECT REPORT

FOR THE PARTIAL FULLFILLMENT OF THE

REQUIREMENT FOR

MASTER OF USINESS A!MINISTRATION

ON

Working Capital Management and its Appraisal

IN

Birla Corporation Limited

Su"mitte# to$% Su"mitte# "&$%

'ui#ance Name (our Name

M))A%

Co**ege Name + A##re,,

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DEX

S)N PARTICULARS PA'E NO)

- AC.NO/LE!'EMENT -

0 E1ECUTI2E SUMMAR( 0

3 IN!USTR( PROFILE%CEMENT ION!USTR( 3

4 PROCESS 5

6 TOP TEN CEMENT PLA(ER 7

5 2ARIOUS CHARTS ANAL(SIS 89

: 'O2ERNMENT ACTIOJNS + IMPACT ON IN!USTR( --

7 PEER 'ROUPS COMPARISON -0

9 COMPAN( PROFILE -3

-8 COMPAN( LO'O -4

-- E1PORT ACTI2ITIES -6-0 LOCATION AN! CAPACIT( OF CEMENT PLANTS -6

-3 MANA'EMENT -:

-4 MISSION + 2ISION -7

-6 OJECTI2E + OLI'ATION -9

-5 SHAREHOL!IN' PATTERN 08

-: CORPORATE SOCIAL RESPONSIILIT( 0-

-7 A/AR!S + ACHIE2EMENTS 03

-9 RA/ MATERIAL FOR CEMENT 06

08 PLANTS OF IRLA + FINANCIAL PERFORMANCE 38

0- S/OT ANAL(SIS 33

00 INTRO!UCTION OF /OR.IN' CAPITAL 3603 T(PES OF /OR.IN' CAPITAL 37

04 SI'NIFICANCE OF /OR.IN' CAPITAL 39

06 /OR.IN' CAPITAL RATIO 48

05 SATEMENT SHO/IN' CAHAN'E IN /)C) 4-

0: CALCULATION OF /OR.IN' CAPITAL 40

07 2ARIOUS COMPONENETS OF /OR.IN' CAPITAL 43

09 /OR.IN' CAPITAL RATIOS + ANAL(SIS 68

38 FUN! FLO/ + CASH FLO/ STATEMENTS 6:

3- CONCLUSIONS 67

30 MAJOR FIN!IN'S 69

30 ILIO'RAPH( + /ELIO'RAPH( 58

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ACKNOWLEDGEMENT

Words are indeed inadequate to convey my deep sense of gratitude to all those who have helpedme in completing this summer project to the best of my ability. Being a part of this project hascertainly been a unique and a very productive experience on my part.

I am really thankful to name of Guidance at Companyfor making all kinds of arrangements tocarry the project successfully and for guiding and helping me to solve all kinds of quarriesregarding the project work. His systematic way of working and incomparable guidance has inspiredthe pace of the project to a great extent.

I would also like to thank my mentor and project coordinator! Name of other Coordinator atcompany for assigning me a project of such a great learning experience and acquainting me with

real life project financing and appraisal.

I am very grateful to!aculty Name of College Namer" Who has given me the opportunity to dothis project in theBirla Corporation Ltd" and very thankful to all lecturers of College Name fotheir useful guidance and advise."his project would not have been successful without the help of Name of senior personnel ofcompany"

#ast but not least I would like to thank all the employeesof Company Namewho have directly orindirectly helped me with their moral support for the completion of my project.

$#$%& NAM'(

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EXECUTIVE SUMMARY

%ounded in )*)*by the visionary industrialist! +hri G"," Birla! at the outskirts of the then -olkata

Birla Manufacturing Company#td was the first company of Birla industrial conglomerate. &nderthe stewardship of his nephew! +hri M"."Birla! the company diversified and expanded its businessinterest beyond cement! jute! '() goods! steel casting and auto trims. Birla Corporation limitedis the flagship company of M"."Birlagroup. It has variety in its basket. "he core business of Birla)orporation limited is cement! generating */0of the revenue for the company! 10jute and )0from other sectors.

"he project entitled Working Capital Management and its Appraisal in BCL deals in thissegment. "he term of study was kept limited to make the title true. "he purpose of the report is toget the in depth understanding of the process of working capital management. With the growingIndian economy and the government policies for infrastructure the demand for cement is

increasing and seeing this as an opportunity is under taking many new projects for expansion ofthe production which are under implementation for increasing the capacity of the plants. Workingcapital has been analy*ed in two ways overall study of the working capital of Birla CorporationLtdand secondly! plant+wise working capital of Birla )orporation! since the company has sevenplants in different region and each plant has its own working capital.

Borrowings are an important ingredient of funding a business entity. "he lenders must feecomfortable with their clients and Birla )orporation enjoys this position among their lendersBorrowing is done for working capital requirement i.e.! to meet the day to day requirement forsmooth functioning of the production! and term loans for projects of capacity expansion. ,ajorportion of the borrowing is done from banks at better rate of interest.

"he performance of the cement division of the company during the year was satisfactory. "heproduction of cement during the year was -./ lack tones! compared to production of -.0 milliontones1 the highest ever."he 2atna unit produced 3.3 lacks tones of clinker during the year. "hecement production at 2atna and 4aebareli was lower at 5.-- lacs tones as compared to 5./6lack tones during the previous year. "he cement dispatches of 2atna and 4aebareli units where5.77 lack tones as compared to 5./8 lack tones during last year.

"he production of 'ortland 'o**olana cement $'')9 at 2atna! however! recorded on all time highlevel of 55.66 lack tones as against the previous best of 55.05 lack tones. :ute division of thecompany produced ;6883," of jute goods during the year as compared to 8/8," in the

previous year.


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of blended cement in the overall cement sales! higher realisation and effective cost contromeasures taken by the company."he profit before tax was up by 58.;6= at 4s.--5.5/ crores as against 4s.705.67 crores in theprevious year. "he profit after tax is ;8;.-/ crores as against 4s. ;0.; crores in the previousyear. >'2 was -5.55 as against 76.-5 in the previous year.

"he cash earnings of the company improved substantially to 4s.-35.;8 crores as against4s.56/.- crores in the last financial year. With increase in capacity on account of expansionprojects being undertaken by the company! it is expected that the )ompany would be in a positionto maintain the growth in future years. )ompany has recommended a dividend of 4s 7.33 pershare $73=9 on 6! 63! 3-!;76 ordinary share compared ;.-3 per share $;-=9 last year.

"he objective of this project work is to focus on the working capital of the Birla Corporationandexploring its potential in the company. "he project contain the basic postulates of working capital!procedure of analysis of working capital! ratio being used to define the working capital and theimpact of working capital in the company in case of excess or inadequacy. ?lso! the project

contains analysis of estimation of working capital requirement and the procedure to estimateworking capital requirement in manufacturing and trading concern. and from the data available itcan be concluded that it holds a very strong position in the market.

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Cement Industry2

)ement industry is one of the important industries to country development in the light of the main

important basis for construction industry and also the important indicator showing domesticeconomic growth. In the past! the domestic demand of cement used to be up to ;0 million tonsBut! the severely negative effects from economic crisis in 5886 have caused real estate andconstruction industry subdued1 the domestic demand of cement has shrunk and been inoversupply atmosphere.

&ntil 33533;! the government has launched many economic actuating policies. "his hasmade real estate and construction industry recovered and the demand of cement has beenincreasing gradually from 5 million tons in 335 to - million tons and 0./ million tons in 33and 33; respectively1 and the price level is higher in line with increased production cost.

Cement Industry originated in India 3hen the first plant commenced production in )*)4 at.or5andar6 Gu7arat. "he industry has since been growing at a steady pace! but in the initial stage!particularly during the period before Independence! the growth had been very slow. 2inceindigenous production was not sufficient to meet the entire domestic demand! the @overnment hadto control its price and distribution statutorily. #arge quantities of cement had to be imported formeeting the deficit. "he industry was partially decontrolled in 58/ and this gave impetus to itspace of growth. Installed capacity increased to more than double from 6 million tones in 58/3+/5to 0 million tones in 58/8+83.

"he cement industry responded positively to liberali*ation policy and the @overnment decontrolledthe industry fully on 5st,arch 58/8. %rom 5885 onwards cement industry got the status of a priority

industry in schedule III of the industry policy statement! which made it eligible for automaticapproval for foreign investment up to -5= and also for technical collaboration on normal terms ofpayment of royalty.

?fter the globali*ation and liberali*ation of Indian economy! the cement industry has been growingrapidly at an average rate of 8 per cent. "he country is now the second largest producer of cementin the world next onlyto )hina with a total capacity of 5//.86 million tones. ?dditionally! in the lasttwo decades! the industry has undergone rapid technological up gradation and growth! and nowsome of the cement plants in India are comparable to the worldAs best operating plants in allrespects.

"ill a few years ago India was importing cement from other countries! as the production could notmeet the demand for the whole country. ow the tables have turned as India has started exportinglarge quantities of cement and clinker to Bangladesh! epal! 2ri #anka! ,aldives! ,auritius! ?frica2eychelles! Burma! &?>! and 2ingapore etc.

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Indiais today the second largest producer of cementin world with an installed capacity of close to5//.86 million tones per year. 8- = is consumed domestically and only -= is exported.


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Cement Industry IN,IA

$>er>ie3

5. Indian cement industry dates back to 5857 + first unit was set+up at 'orbandar with a capacity of5333 tones. )urrently India is ranked second in the world with an installed capacity of 5//.86 million tones.;. )urrent per capita consumption + /- kgs. as against world standard of -0 kgs7. -- + 03= of the cost of production are government controlled-. )ontinuous @rowth approximately 5.; times of the countryAs @


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By a fair estimate! there are around 55 different types of cement that are being produced in India."he production of all these cement varieties is according to the specifications of the cement.

+ome of the >arious types of cement produced in India are 2

)linker )ement rdinary 'ortland )ement

'ortland Blast %urnace 2lag )ement

'ortland 'o**olana )ement

4apid Hardening 'ortland )ement

il Well )ement

White )ement

2ulphate 4esisting 'ortland )ement

In India! the different types of cement are manufactured usingdry6 semidry6 and 3et processes"In the production of )linker )ement! a lot of energy is required. It is produced by using materialssuch as limestone! iron oxides! aluminum! and silicon oxides. ?mong the different kinds of cementproduced in India! 'ortland 'o**olana )ement! rdinary 'ortland )ement! and 'ortland Blast%urnace 2lag )ement are the most important because they account for around 88= of the totalcement production in India.

CAPACITYWISE TOP TEN PLAYERS FOR YEAR 2007-2008

$ figures in ,n."ones9

),?' )?'?)I"

H#)I, J ?)) J ?,B&:? ;/.5

@4?2I, J "4? ">)H )>,>" ;0.-

:?'>> @4&'. 8.8;

"H> I,>"2 #"> )>,>" 8.53

)>"&4 ">K"I#>2 E I" 7.;3

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'roduction E )onsumption "rend in )ementG+

@


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AllIndia a>erage cement price trend

%tili:ation >ersus cement prices2

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Go>ernment inter>ention impacts sentiment

Calendar of e>ents 9since ;anuary ?@(

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"he recent @overnment action to ban exports of cement and clinker is not likely to have any majorimpact on domestic prices as only ;.0= of total cement production is exported. However! pricingupside may be capped in coastal @ujarat and ,aharashtra. 4ising inflation had forced the Indian@overnment to play a proactive role in fixation of prices for the cement sector. ?s a result! the

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@overnment had announced a flurry of steps during recent months leading to the fury of thecement manufacturers around the country.

In :anuary! the import duty was reduced to *ero from 5.-=! and in ?pril! the countervailing dutyand additional customs duty on imported cement was reduced to nil. "his posed threat of imports

at prices lower than the local prices! but imported cement has certain entry barriers like highfreight! infrastructure bottlenecks! plus cement industry is highly localised! bulky and have just 7-days shelf life.

.eer Group Comparison 2

'articulars $4s.in crore9

Company Name +ales+alesGro3th0 &$C'0 A.A8M0 ,i> #ld0 .' '.+ Mkt Cap

5 ?)) 0;80.7; 6.// 75./ 56.5- 5./0 55.8; 06.6 5-5-0.6-

&ltra"ech )em. -7/7.;- 77./8 7.80 57.0 3.7- 55.07 60./ 5550.8

; Birla )orp. 568./7 -.7 03.0/ 5/. 5.-0 7.7 -;.35 56;.6;

7 2hree )ement 505;.57 8-.67 58.0 53.86 3.7/ 50.5 66.6- 7;06.;6

- : L )em #td 5-8.06 ;6.86 ;.;0 55.0/ .36 7.7; ;/.5- 55/.56

Compa! P"o#$%&'-

($)*o"! o# *+& ,ompa!

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"he company was founded by #ate 2hri @. ?? rating for short term debt and the proposed long termborrowing programme of the company.

La*& S+"$ MP.$"%a La*& Sm* P"$!am/aa .$"%a

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.irla Corporation Limited is a multi+ product conglomerate.

It plays significant roles in the Cement6 ;ute6 .C floor Co>ering6 Auto 8rim and +teel

casting industries"

8he concentric around the triangle represents this >ery multidimensional nature"

8he apeD of the triangle is a >isual representation of the force that dri>es the entire

corporation E the unifying force in search of eDcellence"

8he circle represents the inspiration to eDplore ne3 frontiers of gro3th"

,i>ision Wise 'Dport 8urno>er &s in crore

.articular F@@ @ 0 F@@1 @ 0Cement /H"F/ 4H"4H )@"@ F)"F

;ute 4)") H/"/ /*"F1 "/)

$ther @"H @"F @"F )"4F

8otal "H) )@@"@@ H@" )@@"@@

CEMENT DIVISION'-

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)ement is the primary product of the company and accounts for around 83= of the turnover of thecompany. "he company has seven cement plants at four locations! namely! 2atna )ement Works $2)W 9 and Birla (ikas )ement $ B() 9 at 2atna $,adhya 'radesh 9! )handeria )ement Works$ ))W 9 and Birla )ement Works $ B)W 9 at )handeria $ 4ajasthan 9!


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AUTO TRIM DIVISION

?uto "rim xecutive fficer!2hri B.4.ahar who is assisted by a team of highly qualified professional persons.

Chairman

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2hri 4.2. #odha

', C'$

2hri B.4.ahar

Board of ,irectors

2hri .L. Lejriwal

2mt andini opany

2hri Harsh (. #odha

2hri 'racheta ,ajumdar

2hri (ikram 2warup

2hri ?nand Bordia

2hri B.B. "andon

2hri


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"o achieve international standards of excellence in all aspect of division and diversified

business with focus on customer delight through value of product! 2ervices! cost andreduction.

"o maximi*e creation for wealth and satisfaction for the stakeholder.

"o foster a culture of participation and innovation of employee growth and contribution.

"o cultivate high standards of business ethics and total Nuality ,anagement.

"o provide technology and service through sustained research and development.

"o attain leadership in developing! adopting and assimilating state+of+art technology for

competitive advantage.

ffered full opportunities and challenges to develop individually enabling career growth.

>ncouraged to acquire knowledge to meet the challenges of new technologies and business

needs in the changing scenario.

>ducated and guided to inculcate and practise right values as are nurtured by the

organi*ation.

ision2

A major diversified! transnational! integrated company with leadership and a strong

environment conscience playing a national role in cement! :ute! ?uto trim! (enolium andpublic distribution.

$B;'C8I'+ $BLIGA8I$N+

$57ecti>es2

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"o serve the national interests in the 'roduct and related sectors in accordance and

consistent with @overnment policies.

"o earn a reasonable ate of on interest.

"o maximi*e utili*ation of the existing facilities in order to improve efficiency and increase

productivity.

"o work towards the achievement of self+sufficiency in the field of cement market by setting

up adequate capacity and to build up expertise in lying of crude.

"o further enhance distribution network for providing assured service to customers

throughout the country through expansion of reseller network as per ,arketing 'lanJ@overnment approval.

$5ligations2

"owards )ustomers and mployees2


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"he shareholding pattern of the company as on ;5st,arch! 336 is as underG

+I"N$ ,'+C&I.8I$N 0

I .romoters6 Associates ,irectors 1F"*@II Mutual !unds %8I 1"/@

III Banks6 !inancial Institution Insurance Companies "H

I !oreign Institutional In>estor "H4

.ri>ate Corporate Bodies H"F1

I Indian .u5lic "H

II N&Is $BCs @"H

8$8AL

)@@"@@

)orporate 2ocial 4esponsibilitiesG+

>ducational ?ctivitiesG+

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2outh 'oint 2chool! Lolkata! West Bengal

,.'. Birla %oundation Higher 2econdary 2chool! Lolkata! West Bengal

,.'. Birla 2hiksha Bhawan! ?llahabad! &ttar 'radesh

,.'. Birla Industrial "raining Institute! 4ewa! ,adhya 'radesh

Birlapur (idyalaya! West Bengal

Birla (ikas (idyalaya! 2atna! ,adhya 'radesh

2chool at )hittorgarh! 4ajasthan

2arada Lanya (idyapith! Barrackpore! West Bengal

,.'. Birla %oundation (eda 2anskrit 'athshala! Bangalore! Larnataka

,edical ?ctivities G+

Bombay Hospital! ,umbai! ,aharashtra

Belle (ue )linic! Lolkata! West Bengal

,.'. Birla ,edical 4esearch )entre at Birlapur! West Bengal and 2atna

,adhya 'radesh

Birla (ikas Hospital! 2atna! ,adhya 'radesh

Birlapur Hospital! Birlapur! West Bengal


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,.'. Birla 'lanetarium! Lolkata! West Bengal

>xpress


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CA.'KIL +pecial 'Dport A3ard e>ery year6 since )**@

I2 833 certification for 2atna )ement Works! Birla (ikas )ement and nergy 'erformanceF in 58/0+/6.

FBest in >nergy 'erformanceF for 2atna )ement Works in 588;+87! 5887+8-! 588-+80!5886+8/.

FBest improvement in "hermal >nergy 'erformanceF recognition from )B for Birla )ementWorks in 588+8; and )handeria )ement Works in 588;+87.

.

FBhama 2hah 2ammanF from the 4ajasthan @overnment for >ducational ?ctivities for Birla)ement Works in 5880+86.

F>xcellence in Improving ,achinery Health )onditionF in 5886.

,inistry of #abour! @overnment of India! for Birla )ement Works E )handeria )ementWorks in 588/+88 and again in 335+3.

F#al Bahadur 2hastri ,emorial ational ?wardF for >xcellent 'ollution )ontrolImplementation by )handeria )ement Works in 33+3;.

Co*"$3*$o *o Na*$oa% E4,+&53&" #o" *+& !&a" && 2007-2008

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DUTY STRUCTURE FOR T(E YEAR 20007-08

'?4"I)?42

>K)I2>


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deposits of limestone. "he estimated total reserves of cement+grade limestone are 8- billiontonnes. "here is a concentration of about 6; per cent of the total reserves in five 2tates! namely

?ndhra 'radesh! Larnataka! @ujarat! 4ajasthan and ,adhya 'radesh. ot surprisingly these -states account for more than --= cement production in the whole country. "here are otherindustries such as Iron E 2teel! %ertili*ers and )hemicals! which also use limestone as raw

material! but the cement industry is the largest consumer accounting for about 6-+/3= of totallimestone production.

Gypsum2@ypsum is another raw materials used mainly as a retarding agent along with clinkerduring the manufacture of cement. It is used during the grinding stage of clinker. )onsumption ofgypsum varies from to 0 per cent in different plants depending upon the quality of clinker. ?t thepresent level of production! the annual requirement of gypsum is estimated at about -.3 milliontonnes. India has good reserves of natural gypsum! which are mainly concentrated in three 2tates!namely! 4ajasthan! @ujarat and "amil adu.

Coal2)oal is an important input in the manufacture of cement both as a fuel and as a feed+stock.

?s a fuel its heal value provides thermal energy for the operation of cement kiln and as a feed+stock its mineral content $silica9 acts as a constituent in clinker. %or every tone of clinker! around33+3 kg of coal is consumed! which accounts for 5-+3= of total cement production cost.)ement accounts for around 7.-= of IndiaAs coal demand. But in recent years due to deterioratingquality of Indian coal with increasing prices! cement industry has started importing coal and usingalternative fuel such as lignite or pet coke.

.o3er2 )ement companies use power mainly for three purposes! which are raw meal grinding!Liln rotation and clinker grinding. >ach stage roughly accounts for one third of the total power)onsumption. )ement industry requires an average of 553+53 units of power per tones of cementproduced which accounts for 5-+3= of the variable cost of cement manufacturing.


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modern power plants and gypsum. "his 'ortland 'o**olana )ement $'')9 brand has all theadvantages of -;+@rade )ement.

.ortland cementG+

'ortland cement is a blend of finely pulveri*ed clinker! produced by burning at high temperaturematerials containing lime! alumina! iron and silica in pre+determined proportion to give the desiredend properties. ormally! @ypsum or its derivatives are added during grinding stage for set control.When mixed with water alone or in combination with sand and stone! it has the property ofcombining slowly with water to form hard mass.

4aw ,aterials used in the manufacture of 'ortland cementG+

"he two principal raw materials used in the manufacture of 'ortland )ement are calcareousmaterial such as limestone! chalk! shells or marl and argillaceous materials such as clay and

shale$rich in silica9.

'ortland )ement manufacturing processG+

"he raw materials! i.e. calcareous and argillaceous with correctives are finely ground andintimately blended and fired in a rotary kiln at high temperature of 57-3+5-333). "he materialwhich emerges from kiln is called )linker. "he clinker is cooled and ground to fine power along withsmall quantity of gypsum $7+-=9 to give 'ortland cement.

'o**olonaG

'o**olona are amorphous alliaceous and aluminous materials which by itself have nocementations properties but in presence of )alcium Hydroxide liberated by hydration of is cooledand ground to fine power along with small quantity of gypsum $7+-=9 to give 'ortland )ement.') reacts chemically with it at ordinary temperatures to form compounds possessingcementations properties.

'ortland 'o**olona )ement has two most trusted brands belong to this categoryG

Birla )ement 2amrat

Birla )ement 2amrat 'remium

2pecial featuresG

ed 3orka5ility

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&esistance to alkaliaggregate reaction

Lo3 heat of ed resistance to sulphate attack

er $.C

+egregation free cohesi>e miD for eDcellent finish

Lo3er chloride content to minimi:e corrosion

+lagG

2lag is a non+metallic product consisting essentially of gases containing silicates! aluminosilicatenof lime and other bases and is obtained as a byproduct with iron in blast furnace or electric pig ironfurnace.@ranulated slag is used in the manufacture of 'ortland 2lag )ement.

%ses of +lag Cement2

2lag )ement can be used for all plain and reinforced concrete construction! mass concretingstructures such as dams! reservoirs! swimming pools! river embankment! canal piers! etc. wherelow heat of hydration and resistance to alkali silica reaction are desired! structure in aggressiveenvironments where chemical and mildly acidic water are encountered $where ') cannot used9!marine construction! dykes! wharves! etc. where sulphatic water is present.

.ortland +lag Cement has three 5randsG

Birla )ement 2amrat

Birla 'remium )ementBirla )ement

+pecial featuresG+Higher )ompressive 2trength#ow Water ?bsorptionIncreased Workability#ow 2hrinkage2ulphate 4esistance


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BrandsG5. Birla )ement Lhajurao!

. Birla )ement )hetak

+pecial properties of these 5rands2

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,oderate sulphate resistance.(ery low chloride content to avoid corrosion in steel.Nuicker rate of strength development.Improved workability.Better surface finish.

Birla Cement -ha7uraho ChetakH/ Grade $rdinary .ortland Cement2

're+stressed grinders and electric poles.%or ready+mix concrete., - and above concrete.4oads! runways! industrial building! 4)) bridges tunnels and high rise buildings.

?ll types of general constructions.

Birla Cement -ha7urahoChetak4/ Grade $rdinary .ortland cement2

Brick and stone masonry.'lastering and flooring.%or ready+ mix concrete.'lain and reinforced cement concrete.'re+cast and pre+stressed concrete.4)) bridges! high+rise buildings and concrete roads.

?ll types of general constructions.

.lants 3here it is manufactured2

2atna )ement Works and Birla (ikas )ement! 2atna.Birla )ement Works and )handeria )ement Works! )handeria.

+pecial features of cement manufactured 5y BCL are 2

Ideal for mass concreting.4educed thermal cracks.Increased water tightness of concrete.Ideal for plastering.@reater resistance to sulphate and other aggressive environments.@reater resistance to alkali+ aggressive reaction.Increased durability.

.lants $f Birla Corporation Limited !or Cement .roduction2

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+atna .lants2

8otal capacity2 )H6H@6@@@ tones.

Chanderia .lants2

8otal capacity2 F@6 @@6@@@ tonnes.

,urgapur .lantG

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Capacity2 16 @@6@@@ tonnes

A ne3 cement plant is esta5lished in ,urgapur6 3hich is ,urgapur


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9 &s" In crores (

.A&8IC%LA&+ F@@H@1 F@@1@

F@@@)"8$8AL INC$M' )FF"1) )H*/"4) )1/"@H

F"8$8AL 'K.'N,I8%&' )@/1"4 )@/"4* ))4*"/

/"$.'&A8ING .&$!I8 )*)" H)*"*F 1)/"1

4"IN8&'+8 )/"1F )"H/ F)"@H

H".&$!I8 A!8'& IN8&'+8 B%8

B'!$&' ,'.&'CA8I$N 8AK )"FH H@)"/* H*F"1F

1",'.&'CA8I$N /4")1 /*"1H 4)"44

".!$!I8 B'!$&' 8AK )44"@* 41)"4 HH)")

".&$!I8 A!8'& 8AK )FH"1 /F1"F/ /*/"H

!uture of the Cement Industry2

@overnment policies have affected the growth of cement plants in India in various stages. "hecontrol on cement for a long time and then partial decontrol and then total decontrol hascontributed to the gradual opening up of the market for cement producers. "he consumption ofcement is determined by factors influencing the level of housing and industrial constructionirrigation projects! and roads and laying of water supply and drainage pipes etc. "he level andgrowth of @


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+trengths2

)" 8he industry is likely to maintain its gro3th momentum and continue gro3ing at

a5out * E )@0 in the foreseea5le future"

F" Go>ernment initiati>e in the infrastructure sector such as the commencement of thesecond phase of the National elopment pro7ect6 freight carriers6 ruralroads and de>elopment of the housing sector6 are likely to 5e the main dri>ers ofgro3th"

/" Measures initiated 5y the Go>ernment to3ards pu5licpri>ate partnership for remo>ing5ottleneck in the de>elopment of infrastructure in the country6 augurs 3ell for theindustry"

4" In the coming fe3 years the demand for the cement 3ill increase 3hich 3ill 5e5ooming ne3s for cement manufactures"

H" !or the purpose of the packing of essential item6 7ute products 3hich are en>ironmentfriendly and 5iodegrada5le characteristic are considered as 5est option"

Weaknesses

6 estment cost for each and e>ery pro7ect"

2 8he compleD 'Dcise ,uty structure 5ased on the category of 5uyer and end use of thecement has caused at lot of confusion in the industry"

8he recent 5an on eDport of cement clinker 3ould increase the a>aila5ility of cement inthe domestic market6 3hich in turn 3ould put pressure on cement prices"

8he ma7or concern for the industry are 2

Continuous increase in la5our cost"

+hortage of skilled la5ourers"

Appreciation of rupees against foreign currencies"

.rocuring of limestone mines at economical price an entry 5arrier"

$pportunities

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)" Adeuate support from the Go>ernment is >ery essential to promote 5usinessacti>ities"

F" Increase in the production and sell of cement at different plants ha>e increased the

turno>er of the company"

/" It 3ould 5e in the interest of 5oth the go>ernment and the industry to 3ork together3ith aim to streamline the indirect taD regime and keep the prices of the inputs such ascoal under control so that the cement price can 5e maintained at reasona5le le>els"

4" ,espite slightly lo3er economic gro3th6 the construction and infrastructure sector iseDpected to record healthy gro3th6 3hich augurs 3ell for cement industry"

H" 8he moderni:ation6 producti>ity impro>ement and cost control measures 3ill impro>ethe performance of the di>ision in times to come"

8hreats

8he recent mo>es 5y the Central Go>ernment in making the import of the cement total

duty free6 is a cause of for the Indian cement industry"

!urther recent changes in the Central 'Dcise ,uty structure 5y 3ay of introduction of

multiple sla5s of 'Dcise ,uty is also a cause of 3orry for the industry"

Almost all the ma7or players in the industry ha>e announced su5stantial increase in the

capacity and the possi5ility of o>er supply situation cannot 5e ruled out"

Increased rail3ay freight6 coal prices and dispatch 5ottlenecks on account of truck

Loading restrictions imposed 5y >arious +tate Go>ernments

+carcity of good uality Coal are some other factors 3hich are cause of concern for

the industry"

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A I*"o3,*$o To Wo"9$: Cap$*a% Maa:&m&*

CWorking capital means the part of the total assets of the 5usiness that change from one foto another form in the ordinary course of 5usiness operations"

Concept of 3orking capital2

"he word working capital is made of two words ).Working and F" )apital"he word working means day to day operation of the business! whereas the word capital meamonetary value of all assets of the business.

Working capital 2

Working capital may be regarded as the life blood of business. Working capital is of majorimportance to internal and external analysis because of its close relationship with the current day+to+day operations of a business. >very business needs funds for two purposes.

O #ong term funds are required to create production facilities through purchase of fixed assetssuch as plants! machineries! lands! buildings E etc

O 2hort term funds are required for the purchase of raw materials! payment of wages! and otherday+to+day expenses.. It is other wise known as revolving or circulating capital

It is nothing but the difference between current assets and current liabilities. i.e.

Working )apital P )urrent ?sset )urrent #iability.Businesses use capital for construction! renovation! furniture! software! equipment! or machinery. Itis also commonly used to purchase inventory! or to make payroll. )apital is also used often bybusinesses to put a down payment down on a piece of commercial real estate. Working capital isessential for any business to succeed. It is becoming increasingly important to have access tomore working capital when we need it.

Concept of 3orking capital

@ross Working )apital P "otal of )urrent ?sset

et Working )apital P >xcess of )urrent ?sset over )urrent #iability

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Current Assets Current Lia5ilities

)ash in hand J at bank

Bills 4eceivable

2undry alentsG + "his most liquid form of working capital requires constant supervision.? good cash budgeting and forecasting system provides answers to key questions such asG Is thecash level adequate to meet current expenses as they come dueQ What is the timing relationshipbetween cash inflow and outflowQ When will peak cash needs occurQ When and how much bankborrowing will be needed to meet any cash shortfallsQ When will repayment be expected and willthe cash flow cover itQ

F" Accounts recei>a5le2 ,any businesses extend credit to their customers. If you do! is theamount of accounts receivable reasonable relative to salesQ How rapidly are receivables beingcollectedQ Which customers are slow to pay and what should be done about themQ

/" In>entory2 Inventory is often as much as -3 percent of a firmRs current assets! so naturally itrequires continual scrutiny. Is the inventory level reasonable compared with sales and the nature ofyour businessQ WhatRs the rate of inventory turnover compared with other companies in your typeof businessQ4" Accounts paya5le2 %inancing by suppliers is common in small business1 it is one of the majorsources of funds for entrepreneurs. Is the amount of money owed suppliers reasonable relative towhat you purchaseQ What is your firmRs payment policy doing to enhance or detract from yourcredit ratingQ

H" Accrued eDpenses and taDes paya5le2 "hese are obligations of your company at any giventime and represent a future outflow of cash.

83o different concepts of 3orking capital areG+

Balance sheet or 8raditional concept

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$perating cycle concept"

Balance sheet or 8raditional concept2+ It shows the position of the firm at certain pointime. It is calculated in the basis of balance sheet prepared at a specific date. In this method there two type of working capitalG+

@ross working capital et working capital

Gross 3orking capitalG+ It refers to the firmAs investment in current assets. "he sum of the currassets is the working capital of the business. "he sum of the current assets is a quantitative aspecworking capital. Which emphasi*es more on quantity than its quality! but it fails to reveal the tfinancial position of the firm because every increase in current liabilities will decrease the grworking capital.

Net 3orking capital2+ It is the difference between current assets and current liabilities or the excof total current assets over total current liabilities.

Working capital current assets current lia5ilities"

Net 3orking capital2 + It is also can defined as that part of a firmAs current assets whichfinanced with long term funds. It may be either positive or negative. When the current assets exce

the current liability! the working capital is positive and vice versa.

$perating cycle conceptG+ "he duration or time required to complete the sequence of eventsright from purchase of raw material for cash to the reali*ation of sales in cash is called theoperating cycle or working capital cycle.

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8ypes of Working Capital2

RAW MATERIAL

WORK INPROGRESS

FINISH GOODSSALES

DEBTORS &

BILLSRECEIABLES

CASH

OPERATIN' C(CLE

T!PES OF

WORKINGCAPITAL

ON THE BASIS OFB"S CONCEPT

ON THE BASIS OFTIME

GROSS WORKING

CAPITAL

NET WORKING

CAPITAL

REG#LARWORKING

CAPITAL

TEMPORAR!WORKING

CAPITAL

SEASONALWORKING

CAPITAL

SPECIFIC

WORKINGCAPITAL

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+IGNI!ICANC' $! W$&-ING CA.I8AL2+

!actors reuiring consideration 3hile estimating 3orking capital"

"he average credit period expected to be allowed by suppliers. "otal costs incurred on material! wages. "he length of time for which raw material are to remain in stores before they are issued for

production. "he length of the production cycle $or9 work in process. "he length of sales cycle during which finished goods are to be kept waiting for sales. "he average period of credit allowed to customers "he amount of cash required to make adance payment

EAS! LOANFROM BANKS

INCREASEEFFECIENC$!

INCREASE INFI% ASSETS

INCREASE

DEBTCAPACIT!

DIIDEND

DISTRIB#TI$

ON

PA!MENT TO

S#PPLIERS

SIGNIFICAN$$

CE OF

WORKINGCAPITAL

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Importance of Working Capital &atios

4atio analysis can be used by financial executives to check upon the efficiency with which workingcapital is being used in the enterprise. "he following are the important ratios to measure theefficiency of working capital. "he following! easily calculated! ratios are important measures of

working capital utili*ation.

&atio !ormulae &esult Interpretation

2tock "urnover$in days9

?verage 2tock O;0-J)ost of @oods 2old

P x days n average! you turn over the value of your entire stockevery x days. ou may need to break this down intoproduct groups for effective stock management.bsolete stock! slow moving lines will extend overallstock turnover days. %aster production! fewer productlines! just in time ordering will reduce average days.

4eceivables4atio$in days9

ffective debtor management will minimi*ethe days.

'ayables 4atio$in days9

)reditors O ;0-J)ost of 2ales $or'urchases9

P x days n average! you pay your suppliers every x days. If younegotiate better credit terms this will increase. If you payearlier! say! to get a discount this will decline. If yousimply defer paying your suppliers $without agreement9this will also increase + but your reputation! the quality ofservice and any flexibility provided by your suppliers maysuffer.

)urrent 4atio "otal )urrent?ssetsJ"otal )urrent

#iabilities

P x times )urrent ?ssets are assets that you can readily turn in tocash or will do so within 5 months in the course ofbusiness. )urrent #iabilities are amount you are due to

pay within the coming 5 months. %or example! 5.- timesmeans that you should be able to lay your hands onS5.-3 for every S5.33 you owe. #ess than 5 times e.g.3.6- means that you could have liquidity problems and beunder pressure to generate sufficient cash to meetoncoming demands.

Nuick 4atio $"otal )urrent?ssets + Inventory9J"otal )urrent#iabilities

P x times 2imilar to the )urrent 4atio but takes account of the factthat it may take time to convert inventory into cash.

Working)apital 4atio

$Inventory M4eceivables +'ayables9J2ales

?s =2ales

? high percentage means that working capital needs arehigh relative to your sales.

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+tatement sho3ing change in 3orking capital for BCL2

9 &s"in lacs('articulars 36+3/ 30+36 Increase $ M 9


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CALC%LA8I$N $! W$&-ING CA.I8AL !$& +IN8'C< .&'CI+I$N.&$,%C8 LIMI8',

9&s"in lacks(

#'A& /)"@/"@ /)"@/"@ /)"@/"@*

CURRENT ASSETS

I(>"4I>2 ;-/./6 85.5; 0-;.8-2&4 )&44>" ?22>"2 /.0- /.3/ 5.88 +#?2 E ?2 -6.05 6/.67 /;.8

$$$$$$$$$$$$$$ $$$$$$$$$$$$$$ $$$$$$$$$$$$$$$""?# )&44>" ?22>2"2 6;7.6 /;.38 533/.06

$$$$$$$$$$$$$$ $$$$$$$$$$$$$$ $$$$$$$$$$$$$$$

LESS$

C%&&'N8 LIABILI8I'+ AN, .&$I+I$N+

)&44>" #I?BI#I"I>2 738.8- ;3538.;'4(I2I -3.-6 -8.3- 07.3-

++++++++++++++ ++++++++++++++ ++++++++++++++""?# )&44>" #I?BI#I"I>2 67/.// 63.65 ///.3

$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$

N'8 C%&&'N8 A++'8+ *)")) 1/"/ F41"H

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+ources of Additional Working Capital

2ources of additional working capital include the followingG

O >xisting cash reserves

O 'rofits $when you secure it as cash U9O 'ayables $credit from suppliers9O ew equity or loans from shareholdersO Bank overdrafts or lines of creditO #ong+term loans

ANAL#+I+ $! A&I$%+ C$M.$N'N8+ $! W$&-ING CA.I8AL

IN'N8$ ANAL#+I+

Inventory is total amount of goods and materials content in a store of factory at any given time.Inventory means stock of three things G+

5. 4aw materials. 2emi finished goods.;. %inished goods.

.osition of in>entory in Birla Corporation Limited $4s.in lacks9

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

2tores! 2pare 'arts etc. 56.-5 ./6 -.-62tock In trade+

F'(')*+, G--,) 5887.-/ 6;.68 ;-55.8;R./ M.+'.) 557.0- ;3;.-6 ;70.87M.+'. (,+ -+)) 5;;.-3 ;3.8/ 7373.55

$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$

53-6.;; 57-/./; 3377./$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$

Analysis through chart2

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IN8'&.&'8A8I$N2

By analy*ing the ; years data we see that the inventories are increased year by year. We arelooking increasing pattern in inventories. We can see that inventories are grown by ;7= and 73=in 30+36 and 36+3/ respectively from previous year. By this growth we can say that the company is

growing very rapidly in cement sector. ? company uses inventory when they have demand inmarket and Birla )orporation is having a great demand in infrastructure sector. "hat is biggestreason for increase in inventories. %rom other point of view we can say that the liquidity of firm isblocked in inventories but to stock is very good due to uncertainty of availability of raw material intime.

+%N, C&',I8$&+ ANAL#+I+

)reditors or an account payable is an important component of working capital and fall undercurrent liability. )reditors will arise only when credit purchases are made.

.osition of +undry Creditors in +intech .recision .roduct Limited 9&s"in lacks(

#'A& /)"@/"@ /)"@/"@ /)"@/"@*

2undry )reditors 5-8.78 -0.;; ;3-.88$$$$$$$$$$$$$ $$$$$$$$$$$$$ $$$$$$$$$$$5-8.78 -0.;; ;3-.88

$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$

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IN8'&.&'8A8I$N

In the table and figure we see that there is continuous rise in the debtors of Birla )orporation

#imited in the successive years. ? simple logic is that debtors increase only when sales increaseand if sales increases it is good sign for growth. We can see 5= and 56= growth in 30+36 and36+3/ respectively from previous years.

We can say that it is a good sign as well as negative also. )ompany policy of debtors is very goodbut a risk of bad debts is always present in high debtors. when sales is increasing with a greatspeed the profit also increases. If company decreases the


49/64


IN8'&.&'8A8I$N

If we analy*e the above table and chart we find that it follows a decreasing trend. In the year 330it had maintained a huge amount of cash and bank balance which has fallen hugely in the year336 but there is slight fall between the year 336 and 33/. ?lthough companyAs cash isdecreasing but this is very good sign for company because they are not holding the cash in handbut using the cash for better projects. "he analysis shows that the fix deposits of company arerapidly fallen in last three years as 6= and 67= in 30+36 and 36+3/ respectively from previousyear. )ompany is utili*ing the fixed cash for exploding the projects that is good for growth!

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BAN- L$AN+ AN, A,ANC'+ ANAL#+I+

.osition of Bank Loans Ad>ances in Birla Corporation Limited $4s.in lacks9

#'A& /)"@/"@ /)"@/"@ /)"@/"@*

Bank #oan 87.-7 ;;0.63 ;5-.60?dvances from the customers -.;3 5/.50 -8.// $$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$

5./7 ;-7./0 ;6-.07 $$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$


IN8'&.&'8A8I$N

If we analy*e the table and the chart we can see that it follows an increasing trend which is not agood sign for the company. We can see that from the year 336 to 33/ it increased more thandouble. "he increasing pattern shows that company is taking loan for the expansion of plants andmachinerecy which is not a good sign because company depends on the external source. n theother hand! company has reduced the bank loan in 338 and increase in advances received fromthe customer! this is good sign for company.

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C%&&'N8 LIABILI8I'+ ANAL#+I+

)urrent liabilities are any liabilities that are incurred by the firm on a short term basis or currentliabilities that has to be paid by the firm with in one year.

.osition of $ther Current Lia5ilities in Birla Corporation Limited

$4s.in lacks9

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

C+( L'.'''+) S(, C+,'-) 1919575 1745914 2134532

O*+ L'.'''+) 647915 655984 864937

I(:+)- E,.'-( .(, P-+'-( ;(, 1260 1899 2935I(++) .+, (- ,+ 6571 5498 8528

$$$$$$$$$$$$$ $$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$

2575321 2409295 3010932 $$$$$$$$$$$$$ $$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$


IN8'&.&'8A8I$N

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If we analy*e the above table then we can see that it follow an uneven trend. "he important

component of current liabilities is sundry creditors and other liabilities. In 30+36 it decreased by 6=and in 36+3/ it increased by -=. In 36+3/ it was increased because of growth in other liabilities by;=."his is liability for company so this should be less. when company have minimum liabilities it

creates a better goodwill in market. High current liabilities indicate that company is using creditfacilities by creditors.

.&$I+I$N+ ANAL#+I+

.osition of $ther .ro>isions in Birla Corporation Limited 9&s"in lacks(

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

'roposed


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IN8'&.&'8A8I$N

%rom the above table we can see that provision shows an increasing trend and the huge amount isbeing kept in these provisions. "hough the profits of the company are increased income tax is also

increased which is good that company is creating goodwill in market by paying income tax in time."he income tax is increased by -//= and 535= in 30+36 and 36+3/ respectively from previousyear. ?lthough company is paying more income tax but also they are earning more. therprovisions are also for the benefit of employees and public. "his is good sign for)ompany growth.

$&-ING CA.I8AL &A8I$+ AN, I8+ IN8'&.&'8A8I$N

.osition of C%&&'N8 A++'8+ 8$ !IK', A++'8+ &A8I$ in +intech .recision .roductLimited

FORM#LA

C#RRENT ASSETS

CA TO FA RATIO < $$$$$$$$$$$$$$$$$$$$$$$$$$$$$

FI%ED ASSETS

#'A& /)"@/"@ /)"@/"@ /)"@/"@*

CA8$ !A &A8I$ )"1H F"*/ /"F)

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IN8'&.&'8A8I$N

?ssuming a constant level of fixed assets! a higher )?J%? ratio indicates a conservative currentassets policy and a lower )?J%? ratio means an aggressive current assets policy assuming other

factors to be constant. ? conservative policy i.e. higher )?J%? ratio implies greater liquidity andlower risk1 while an aggressive policy i.e. lower )?J%? ratio indicates higher risk and poor liquidity.

ow if we analy*e the three year data we find the )? " %? 4ation in increasing pattern! so wecan say that company is following the conservative policy to finance its short term capitarequirement.

.osition of .A#ABL' &A8I$ in Birla Corporation Limited

%4,? )4>


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IN8'&.&'8A8I$N

?ctually this ratio reveals the ability of the firm to avail the credit facility from the suppliersthroughout the year. @enerally a low creditors turnover ratio implies favorable since the firm enjoys

lengthy credit period ow if we analy*e the three years data we find that in the year 330 the ratio wasvery high which means that its position of creditors that year was not good! but in the next twoyears it is seen that it has followed a decreasing trend which is very good sign for the company. 2owe can say it enjoys a very good credit facility from the from the suppliers

.osition of C%&&'N8 &A8I$ in Birla Corporation Limited

%4,? ""?# )&44>" ?22>"2 )&44>" 4?"IP ++++++++++++++++++++++++++++++++++++++++++++ ""?# )&44>" #I?BI#I"I>2

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

C%&&'N8 &A8I$ )"@/ )") )")/


55


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IN8'&.&'8A8I$N

"his ratio reflects the financial stability of the enterprise. "he standard of the normal ratio is G5 butin most of companies standard is taken according to "andon )ommittee which is taken as 5.;;G5.ow if we analy*e the three years data it can be predicted that it holds a stable position allthrough out period but it is seen that it holds a low position than the standard one and the companyis required to improve its position.

.osition of O%IC- &A8I$ in Birla Corporation Limited

%4,?

""?# )&44>" ?22>"2 + I(>"4I>2 N&I)L 4?"IP +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ ""?# )&44>" #I?BI#I"I>2

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

O%IC- &A8I$ @"1 @"H @"F

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IN8'&.&'8A8I$N

It is the ratio between quick liquid assets and quick liabilities. "he normal value for such ratio istaken to be 5G5. It is used as an assessment tool for testing the liquidity position of the firm. Itindicates the relationship between strictly liquid assets whose reali*able value is almost certain onone hand and strictly liquid liabilities on the other hand. #iquid assets comprise all current assetsminus stock.

By analy*ing the three years data it can be said that its position was weak in the year 330 but itimproved significantly in the next two years and was stable during that year. But it is to be said thatit does not meet with the standard but in the year 336 E 33/ it was very close to the standardand it can be said that its liquidity position on an average is stable.

.osition of W$&-ING CA.I8AL &A8I$ in Birla Corporation Limited

%4,?

I(>"4 M 4>)I(>?B#> + '??B#> W4LI@ )?I"?# 4?"IP +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

$?2 = % 2?#>29 2?#>2

#'A& /)"@/"@1 /)"@/"@ /)"@/"@

W$&-ING CA.I8AL &A8I$ H"*H "@ )@"F)

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IN8'&.&'8A8I$N

"his ratio indicates whether the investments in current assets or net current assets $ i.e.! workingcapital 9 have been properly utili*ed. In order words it shows the relationship between sales andworking capital. Higher the ratio lower is the investment in working capital and higher is theprofitability. But too high ratio indicates over trading.

"his ratio is an important indicator about the working capital position. ow if we analy*e the threeyears data! we find that it follows an increasing trend which means that its investment in workingcapital is lower and the company is utili*ing more of its profit. But we find that ratio is increasing ata very fast rate which is not a good sign for the company and the company is required to look into

these matters closely.

.osition of IN'N8$ 8%&N$'& &A8I$ in Birla Corporation Limited

%4,?

?(>4?@> 2")L

2")L "&4 (>4 4?"I $ I


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IN8'&.&'8A8I$N

"his ratio tells the story by which stock is converted into sales. ? high stock turnover ratio revealsthe liquidity of the inventory i.e.! how many times on an average! inventory is turned over or soldduring the year. If a firm maintains a minimum stock level in order to maximi*e sales by quickrotation of inventory and the holding cost of inventory will be minimum. ? low stock turn over ratioreveals undesirable accumulation of obsolete stock.

By analy*ing the three year data it seen that it follows an increasing trend. We see that from theyear 330 to 336 it is more or less double which has been rectified in the year 33/. But it is need

less to say that ratio the company maintains is very high and the company is required to takemeasures to lower down this ratio as it affects the working capital cycle of company and the flow ofcash in the company.

.osition of ,e5t'uity &A8I$ in Birla Corporation Limited

!ormula ,e5t 'uity

Calculation of de5teuity ratio at BCL2

.articulars F@@H@1 F@@1@ F@@@

Long 8erm ,e5t )F)H*"@ *4 )1"*

Net Worth /4F/"H1 11H)"/ )@@4*"H/

,' &atio @"/F2) @")42) @"@2)

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InterpretationWhen a company has lower dJe ratio! it means that company is utili*ing its ownfunds and reserves rather than taking loans from outsiders. B)# have a decreasingtrend in dJe ratio so we can say that B)# is using its funds and not taking loans frombanks. >quity is more than debt that shows a very strong position in whole market.

!und flo3 +tatement of Birla Corporation Limited2

+"N" +ources of !unds @@ @1@ @H@1 @4@H @/@4 @F@/

)" @eneration fromperationsa. 2urplusJ$deficit9 after

taxes

;8;-6 ;0; 5-60 /0/6 7;35 758

b.


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capital4" ity /*4"@* F*H"*) F)/"H4 )@"@ ))4"@4

Net Cash %sed In In>esting Acti>ity //4"4) F*)"* ))"4/ )FF"*4 "@*

Net Cash %sed in !in" Acti>ity 1F") F"H )"*1 @"FF )"1/

Net Inc,ec In Cash And 'ui>alent /"@4 F4"/ /@")H )H"1H FH"/F

Cash And 'ui>alent Begin of #ear /4"/* H*"F/ F*"@ 44"F )*"4@

Cash And 'ui>alent 'nd $f #ear /)"/1 /4"/* H*"F/ F*"@ 44"F

Conclusion2

"he overall performance of Birla )orporation #imited is getting on a good track."he total turnoverof the company has registered a growth of 55.6= where as the operating profits for the year werehigher by 5/.3;= mainly on the accounts of increase in the volume or blended cement in the

overall cement sales! higher reali*ation and effective cost control measures taken by the company."he profit before tax was up by 58.;6= at 4s. --5.5/ crores at against 4s. 705.67 crores in theprevious year. "he cash earning of the company improved substantially to 4s. -35.;8 crores asagainst 4s.568.- crores in the last financial year. With the increase in capacity on account ofexpansion projects being undertaken by the company! it is expected that the company would be ina position to maintain the growth in future years.

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)ompany has parked its surplus fund in the various debt schemes of mutual fund. "here is anincrease of 573= in investment from the previous year. )ompany is cash rich but as there areexpansion and diversification plans under the pipeline! company is not utili*ing these funds. %ormeeting the working capital needs and capacity expansion needs it has borrowed from banks.

"he recent boom in the housing! construction and retail sector in India coupled with continuedthrust of the @overnment on infrastructure projects is expected to sustain healthy growth of cementdemand. estments F441")H 5y )4@0

F)/*F"14 5y H)0

In>entories /11"H 5y /H0

HH"** 5y 4@0

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+undry ,e5tors 44"FH 5y F)0

44" 5y )10

Cash Bank F4/")P 5y 4F0

/@/"P 5y *0

Current Lia5ilities )11@"F1

P 5y 1"440

1@)1"/

5y FH0General reser>e )H@@

5y F//0)@@@@

5y 4@0

)" BCL?s N.A8 is increasing day 5y day from last three years and the gro3th isremarka5le"

F" BCL has sho3n that it is >ery strong competitor in cement sector of India"

/" Cement can 5e said as true fruitful 5usiness for BCL from last many years"

4" $>erall all ratios of the company are good and company need to 3ork 3ith moreefficiency"

H" 8he additional capacity of cement production at ,urgapur 3ill create ne3 milestonesfor the BCL"

1" Lack of ad>ertisement can 5e said as 3eak point of the BCL"

" BCL?s in>estment policies are >ery much relia5le"

" .osition of the stock is increasing per year that is good sign to face the competitioncoming ahead"

*" er net profit of &s" /*/"H crores

)@"er di>idend pay out of &s" /1"@4 crores

Bibliography & Webliography

333"5irlacorporation"com

63
http://www.birlacorporation.com/http://www.birlacorporation.com/


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!inancial Management E I"M".andey

!inancial +tatement Analysis E ,r" An7an Bhattacharya

!inancial Management E +"N"Mahesh3ari

Annual &eports of BCL @1@ @@"

333"cma"com

333")1anna"com

Finance Project on Working Capital

Documents

Transcript of Finance Project on Working Capital