WC sharan patil

A

Project Report

on

WORKING CAPITAL MANAGEMENT

(RAJASHREE CEMENT, MALKHED)

A Project Report Submitted To The “ ” In Partial

Fulfillment For The Award Of

Degree In

Master of Business Administration

Submitted By

Reg. No.

UNDER THE GUIDANCE OF

Internal Guide External Guide

Mr.R. Annadurai, B.Com., FICWA,

Manager (Accounts)

Rajashree Cement, Malkhed.

Institute/University Name:

2010-11

ACKNOWLEDGEMENT

It is my privilege to express my gratitude to Mr. P.K. Jain, Joint Executive President - HR for

giving me an opportunity to carry out my project work in Rajashree Cement.

I would like to extend my sincere thanks to Mr. V.A. Yaligar, GM - HR for providing all the help

to complete my project work.

My sincere thanks to Mr. R. Annadurai, Manager (Accounts) for his continuous support and

guidance in completion of my Project.

My special thanks to Mr. Basavraj Kalligudd, Dy. Manager - HR for his continuous guidance

to complete my project.

I would like to thank my faculty for his guidance to get this placement.

I am extremely grateful to all the staff of HR Dept, Accounts Dept and Time Office for their

valuable insight and suggestion and sparing their precious time to interact with me.

Finally, I would like to thank my family and friends who have encouraged me throughout my

Project Work.

INTRODUCTION

Finance is a key factor and the same is so essential to the business just like blood

circulation required for human body to maintain the life smoothly.

Financial management involves managerial activities concerned with the acquisition and

running of the business. Finance function does with procurement of money taking into

consideration of today as well as future needs as it is required for purchase of

machinery, raw materials, to pay salaries and wages and also for day to day expenses.

Working capital is the process of planning and controlling the level of mix of the current

assets of the firm as well as financing of these assets. Specifically, working capital

management requires the financial manager to decide what quantum of cash & bank,

other liquid assets, debtors and inventories of the firm are required to be held at any

point of time. In addition, the finance manager must decide how these current assets

are to be financed

The finance manager has to analyze the following before taking the decision.

• How should the firm manage its cash?

• To whom should the firm grant credit?

• How much inventory should the firm keep?

• What should be the composition of the firm’s current debt?

1.2. Statement of the Problem:

Working capital management is an important function of finance department of the

organization while managing current assets for two important factors of liquidity and

profitability. The excess working capital results in deterioration in profits and inadequate

working capital results in illiquidity risk so this study is undertaken to know what extent

the Grasim Industries Limited is successful in trade off liquidity and Profitability.

1.3. Objectives of the Study:

To study and interpret the financial statement of Rajashree Cement which is a Unit

of Grasim Industries Limited.

• To interpret the inventory statement.

• To study the existing system of working capital management.

• To study overall sources and applications of working capital fund

• To know the strengths and weakness of Grasim Industries Limited.

• To suggest if necessary the methods by which future improvement may be made

in its management of working capital.

• To calculate the working capital ratio of Rajashree Cement.

1.4. Scope of the Study

The role of working capital management in industry indicates the effective utilization and

control of net current assets. Proper maintenance of working capital in industry is very

important. Finally the management of working capital has become a great recognition

as the most important function of every modern business enterprise.

Financial decision includes

• Inventory decision

• Financing decision

• Liquidity decision (Working Capital Management)

So an attempt has been made to identify the optimum working capital requirements for

Rajashree Cement and it has been observed that the manners in which they utilize the

current assets are in a better way.

1.5. Research methodology:

Design of the Study

The study was descriptive in nature so no attempt was made to test any hypothesis.

Quantitative data’s were used from verifying the assumptions and bringing this study on

working capital management.

Data Collection Sources

The major source of information for this study is secondary data, the information were

collected through various Journals, books, Internet and magazines, also various

literatures were reviewed for capitalizing them for the project report.

During my in plant training, I have visited Accounts Department and HR Department and

have had interactions with the executives and staff. The impression carried out during

the discussion and observation have helped a lot in understanding the manufacturing

system of cement. The quantitative data generated was then used to present a study in

comprehensive manner.

To gather information on the topic a study on working capital management and various

ratios were used. For this purpose, Balance Sheet, Profit & Loss Account and Financial

Statement were analyzed.

1.6. Tools and Technique:

Here certain statistical tools and techniques are used to draw conclusion on working

capital management.

The main techniques that are used in the study are

• Working Capital Ratio

• Efficiency Ratio

• Structure and Health Ratio

• Working Capital Leverage

• Comparative Analysis and

• Regression Analysis Method

1.7. Limitation of the Study:

The first limitation of the study was the time constraint. It was not possible to make

an extensive study with in the available time to cover period of past five financial

years.

• Figures for the analysis are taken from the annual reports. So all the limitations

of these statements will apply to the study.

• Major part of the work is concerned with financial data adequate data could not

be collected because of time constrain.

• The study does not attempt to make a comparative analysis with any

benchmarked industry norms.

• The study reveals the finding of the past and not reflecting the future.

2. THEORETICAL BACKGROUND OF WORKING CAPITAL MANAGEMENT

Financial Management:

Financial management is concerned with the overall decision making in general and

with the management of economic resources in particular. In other words it can be

defined as the management of cash and fund flow which deals with financial decision

making of firm.

Working capital management is concerned with the problems that arises to manage the

current assets, current liabilities and interrelation that exists between them. Current

assets refer to those assets which can be converted into cash within one year. The

major current assets are cash, inventories, bill receivable, and debtors.

Current liabilities refer to those liabilities which have to be paid within one year. The

major current liabilities are bills payable, creditors, outstanding expenses, bank over

draft etc.

The goal of working capital is to manage the current assets and current liabilities in a

better way. If a firm is not in a position to manage the current assets and current

liabilities, it may become insolvent and may be even forced into either for bankruptcy or

for even closure.

Introduction of Working Capital Management

A business unit or an industrial establishment require two types of finance namely, long

term finance and short term finance. Long term finance required to meet capital

expenditure requirements. Short term finance or funds are needed to meet the day to

day requirements of a business unit. The exploitation of capital assets can be had only

by working capital.

It lubricates the wheel of fixed assets. This facilitates the industrial units to have

sustained business. Working capital may be regarded as the life blood of a business.

Its effective provision can do much to ensure the success of a business while its in-

efficient management can lead not only to loss but also to ultimate down fall of what

otherwise might be considered as a promising concern.

Meaning and Definitions:

Working capital management or administration of all aspects or working capital, which

manages the current assets and current liabilities in such a way that a satisfactory level

of working capital is maintained. Net working capital is commonly defined as the

difference between current assets and current liabilities.

Net working capital can be alternatively defined as the part of the current assets which

are financed with long term funds since current assets exceeds the current liabilities, the

excess must be financed with long term funds.

According to Smith

“Working capital management is concerned with the problems that arise in attempting to

manage the current assets and liabilities; and the inter relationship that exist between

them”.

According to Weston and Brigham

“Working capital refers to a firm’s investment in short term assets – cash, short term

securities accounts receivables and inventories”.

Basic Objective of Working Capital Management

These basic objectives of working capital management the firms working capital in such

a way that a satisfactory level of working capital (it neither excessive nor inadequate

working capital) is maintained.

This is necessary because if the working capital is excessive or large the liquidity

position adversely affected, as funds would not doubt, improve, but its profitability would

be adversely effected, as funds would remain idle. Conversely if the working capital is

too small, the profitability of the firm may improve but the liquidity position of the firm

would be adversely affected.

Need for Working Capital

Every business requires some amount of working capital. The necessity of working

capital arises because of the time gap between the production and realization of cash

from sales. Working capital is needed for the following purposes:

• For the purchase of raw materials, components and spares.

• To pay wages and salaries

• To incur day to day expenses

• To provide credit facilities to the customers.

• To maintain the inventories of raw materials, work in progress and finished stock.

Concept of Working Capital

There are two concepts of working capital. They are

• Gross Working Capital

• Net Working Capital

1. Gross Working Capital:

Refers to the firm’s investment in current assets. Current Assets are the assets, which

can be converted into cash within a short period say an accounting year or operating

cycle and includes cash, short term securities, debtors (accounts receivables or book

debts) bills receivable and stock (inventory). Gross working capital points to the

arranging of funds to finance current assets.

2. Net Working Capital:

Refers to the difference between current assets and current liabilities, current liabilities

are those claims of outsiders, which are expected to mature for payment within

accounting years and include creditors (accounts payable), bills payable and

outstanding expenses. Net working capital can be positive or negative. A positive

networking capital will arise when current assets exceed current liabilities.

Sources of Working Capital

Among the various sources available for financing working capital needs, finance

manager has to select the best suitable source depending on working capital need of

company.

Long Term Sources:

• By issue of shares

• By issue of debentures

• Ploughing back of profits

• Long term loan

Short Term Sources:

They are classified into

Internal

• Withdrawing the depreciation fund.

• Using the renouncement for taxation

• Postponement of payment accrued expenses.

External

• Bank Loan

• Trade Credit

• Bills of Exchange

• Government Assistance

• Public deposits (Short Term)

The need of working capital is increased because of rise in prices of relative inputs. On

the other hand, the government and monetary authorities play their own role to curd the

malice in period of inflation. The control measures often take the firm of dear money

policy and restrictions credit.

Financing of additional working capital in such an amusement becomes a real problem

to finance manager of a concerned unit. Commercial banks play the most significant

role in providing working capital finance, particularly in Indians context.

In view of mounting inflation, RBI has been taking up certain social measures to check

the money supply in the economy. The balancing need has to be managed either by

long term borrowings or by issuing equity or by earning sufficient profits and retaining

the same of coping with the additional need on working capital requirements. The first

choice before a finance manager is banks that can provide a part of additional working

capital so as to take the long term sources of finance.

Measures to be adopted for a sound Working Capital Management

For a sound management of working capital, a concern should adopt the following

measures;

• Budget its cash flow

• Control its debtors

• Control its creditors

• Control its stock

• Avoid over borrowing

• Avoid over investment in fixed assets

• Determine the financing mix

CASH MANAGEMENT

Cash management is one of the key areas of working capital management as cash is

both beginning and the end of the working capital cycle – cash, inventories, receivables

and cash.

Nature:Cash is the medium of exchange for purchase of goods and services, and for discharging liabilities. Cash has been used in two senses.

• Narrow Sense: Cash covers currency and generally accepted equivalents of

cash. E.g.: Cheques, demand drafts and bank demand deposits.

• Broad Sense: It includes Bank time deposits and marketable securities

Objectives of Cash Management

Inadequate cash balance will affect the liquidity of the firm. Hence there is need to

maintain balance between profitability and liquidity. So there should not be excess cash

or inadequate cash

• To meet cash payment needs

• To maintain minimum cash balance

Possible motives for holding cash

• Transaction motive

• Precautionary motive and

• Speculative motive

Aspects of cash management can be examined under these

• Cash inflows

• Cash outflows

• Cash flow within the firm and

• Cash balance held at the point of time.

Facets of Cash Management Strategies:

• Cash planning

• Cash flows management

• Determination of optimum cash balance, and

• Investment of surplus

3. COMPANY PROFILE

INTRODUCTION TO GRASIM INDUSTRIES LIMITED

The Aditya Birla Group is India’s first multinational company. Global in vision, rooted in

Indian values, the group is driven by a performance ethic pegged on value creation for

its multiple stakeholders. A US$ 29.2 billion conglomerate, with a market capitalization

of US$31.5 billion, it is anchored by an extraordinary force of 130000 employees

belonging to over 25 different nationalities. Over 24 percent of its revenues flow from its

operations across the world. The Group’s products and services offer distinctive

customer solutions. Its 74 state of the art manufacturing units and sect oral services

span India, Thailand, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China,

USA, UK, Germany and Hungary.

A premium conglomerate, the Aditya Birla Group is a dominant player in all of the

sectors in which it operates. Among these are viscose staple fiber, non ferrous metals,

cement, viscose filament yarn, branded apparel, carbon black, chemicals, fertilizers,

sponge iron, insulators, financial services, telecom, BPO and IT services.

The ADITYA BIRLA Group is a dominant player in the entire sector in which it operates

such as,

• Worlds most cost efficient aluminum and copper producers

• No.1 in viscose staple fiber

• The worlds largest single location palm oil producer

• The 3rd largest producer of insulator

• The 4th largest producer of carbon black.

• The 11th largest cement producer and the 2nd largest in India.

• Among the worlds top 15 BPO cos. & among India’s top 3

• A non ferrous metals powerhouse and among the worlds most cost efficient

producers of aluminum and copper

• The worlds No.1 in insulators with its joint venture with NGK of Japan

• Globally, the fifth largest producer of carbon black

• Best Employer in India

• The best employer among the top 20 in Asia

• The worlds eighth largest producer of cement, and the largest in a single

geography

• India’s premier branded garments player

• Among worlds best energy efficient fertilizer plants

• India’s second largest producer of viscose filament yarn

• The No.2 private sector insurance company, and the fourth largest asset

management company in India

• Among the top 5 telephony companies.

RAJASHREE CEMENT PLANT

GRASIM BUSINESS DIVISION

Grasim ventured into cement production in the mid of 1980s, setting up its first cement

plant at Jawed in Madhya Pradesh and since then it has grown to become cement

major with the acquisition of the L & T cement business, it has become the worlds

eighth largest cement producers, and the largest in a single geography, with a combined

capacity of 45.65 Million Tones per annum.

Grasim’s cement operations today span the length and breadth of India, with 11

composite plants, 7 split grinding units, 4 bulk terminals and 7 ready mix concrete

plants. All the plants are located close to sizeable limestone mines and are fully

automated to ensure consistent quality. All units use state of the art equipment and

technology and are certified with ISO 9001 for quality systems and ISO 14001 for

environment management systems.

Leveraging the strong equity and goodwill of the house mark, the company has

repositioned its portfolio cement brands under the Aditya Birla Group Logo. There

include national brands such as Birla Super, Birla Plus, Birla White and Birla Ready Mix,

while also nurturing some regional brands like Vikram Cement and Rajashree Cement.

Grasim is also the largest producer of white cement in India, with a capacity of 400000

tonnes per annum. Branded as Birla White, this division manufactures world class white

cement in a variety of textures and finishes. It has applications in floorings and exterior

wall finishes, apart from other innovative uses.

A. BACKGROUND AND INCEPTION OF THE COMPANY

Rajashree cement, a unit of Grasim Industries Ltd, established in 1983, with a capacity

of 0.50 MTPA at Malkhed in Gulbarga District of Karnataka State and now it has

enhanced its capacity to 4.20 MTPA. On the Hyderabad – Mumbai BG line at a strategic

location with regard to its market base. It is well connected by rail with major cities of

Hyderabad, Bangalore, Mumbai and Chennai.

The salient facts about Rajashree Cement are;

• Coal based thermal power plant with a 58.2 MW capacity

• Modern dry process technology form KHD, Germany with a state of the art

process control system

• The only cement plant in Indian with a captive coal washers

• First in India to achiever certification of ISO 9001:2001 by DNV, Netherlands

2001

• Cement varieties catering to different segments, Rajashree Cement for

residential and commercial construction; Birla Super cement for multistoried

buildings, dams and bridges, Birla Plus for mass concrete laying and non

structural applications, Birla Coastal for foundation work and for use in coastal

areas as well as sugar and fertilizer plants, and OPC 53 S (Sleeper Grade

Cement)

The plant consists of 3 units

Unit Commissioned Cement Capacity

UNIT – I 1984

Rajashree Cement

Birla Plus

Birla Super Cement

3200 Tonnes / day

UNIT – II 1990

Rajashree Cement

Birla Plus

Birla Super Cement 4100 Tonnes /day

UNIT – III 1995

Birla Plus

Birla Super Cement

IRST – 40

5200 Tonnes /day

The plant has been under going the continuous expansion and modernization

programmed right from the inception of the first unit. The present installed cement

production capacity of the plant is 4.2 million tones per annum. It also has a captive

power plant of 58.2 MW. It is one of the largest cement plants, at a single location, in the

country. It is worlds 11th largest cement producers.

MILESTOINES:

1984 : Production was commenced in Unit –I with a capacity of 1500 TPD.

1989 : The capacity of Unit-I was increased from 1500 TDP to 2200 TDP.

1990 : Unit II commenced its production with a capacity of 3200 TPD.

The roller press was installed in Unit-I Raw Mill that was

first of its kind in India.

A six stage pre heater was installed with two strings for

lower heat Consumption in Unit-II.

1991 : First in India to manufacture 53 Grade (Birla Super)

Cement .

1992 : Installed ESP’s in coal mill and cooler for better efficiency

and dust Control. Installed 16 MW Thermal Power Plant.

1993 : Installed Roller Press in Cement Mill in Unit –I.

Received Rajiv Gandhi National Quality Award from

Bureau of Indian Standards (BIS), New Delhi.

1994 : Launch of Birla Star – Portland Pozzolona Cement.

Obtained ISO 9002 Quality System Certification.

1995 : Commencement of production in Unit III with a

capacity of 5000 TPD.

Attained revised IS – ISO- 9002 – 94 certified from BIS.

Unit III plant erected in record time of 15 months with

existing Manpower.

First in India to install V separator in Raw Mill and KHD

type.

Pyrostep Cooler and project in Kiln of Unit III.

Constructed pre heater tower of 99 meters height in

record time of 8 months.

Installed Thermal Power Plant II of 20 MW Capacities.

Installed split grinding unit at Hotgi in record time of 12

months.

1996 : Installed coal washery for getting consistent coal ash of

30%.

Installed additional boiler – III of capacity 95 TPD.

1998 : EMS 14001 certification.

Bulk cement rail loading terminal with 3 rakes of

special bulk Cement wagons.

1999 : SAP, ERP package implemented for modules PM,

MM, FI, CO, PP, PI, PS, DM and AM.

2001 : Up gradation of Unit I pre heater to six stages from V

stages.

2002 : Unit III kiln capacity enhanced to 4650 TPD from

4250 TPD (IST Phase up-gradation).

First in country in installing Omega Plate in cooler

and Triplet Cyclone in Pre-Heater. Unit- I Pyro

Process up-gradation and Installation of Omega

plate in Cooler to enhance clinker capacity

From 2500-2900 TPD Installation of V- Separator in

Unit I Raw Mill.

2003 : U-III, II phase up gradation by modification of pre

heater cyclone of both kiln and pyro string enhanced

clinker capacity to 4900

TPD. Installation of Triplet ion Pre heater and

Omega plate in cooler of Unit II clinker capacity

enhanced from 3400 TPD to 3600 TPD.

B. NATURE OF BUSINESS CARRIED

Rajashree Cement (A unit of Grasim Industries Ltd) is a cement manufacturing

company (Grey Cement) consists of three manufacturing units with production capacity

of 4.2 Million Tonnes per annum producing a wide variety of products catering to

different segments of customers in western and southern regions of the country.

Apart from carrying business activity with profit motive, simultaneously it also

concentrates on corporate social responsibility and environment management.

Corporate social responsibility is delivered through Kagina Jan Seva Trust (KJST) for

rural and social development and environment management by following ISO

Standards, a forestation in and around the unit and village, by using effective pollution

control devices in the unit, establishing and maintaining greenery in the company

premises and by effective waste management through MUDA.

C. VISION, MISSION AND QUALITY POLICY

RAJASHREE CEMENT VISION

Our vision is to be a market leader in cement business and recognized as the

benchmark for;

• Customization

• Quality consistency

• Product range

Cost competitiveness

• Employee empowerment

RAJASHREE CEMENT MISSION

• To become the best cement unit in the country through human and technical

excellence.

• To foster the culture of involvement, participation, team work and innovation

• To achieve excellence ion all effort and activities by each one of us

• To produce a premium quality cement and extend best service to its customer

• To establish a neat clean and pollution free environment

• Community should perceive us a progressive well professional organization.

QUALITY POLICY

Rajashree Cement is committed to serve their customers with timely supply of cement

of quality and quantity as per mutually agreed terms.

In order to improve the total quality management and performance of the organization,

the international quality rating system (IPRS) has been adopted and attained level 6 in

the year 1999. Further in this direction six sigma concepts has also been initiated to

improve the process efficiencies.

D. PRODUCT PROFILE

The Rajashree Cement manufactures a wide range of premium brands of cement,

catering to different needs of customers.

Types of Cement Brand Name

Ordinary Portland Cement 43 Grade Rajashree Cement

Ordinary Portland Cement 53 Grade Birla Plus

Premium Composite Cement Birla Plus Rajashree IRST-40

IRST – 40 Cement IRST – 40

RAJASHREE CEMENT:

Rajashree cement is OPC 43 grade cement, which has end strength of 63 MPA. It is

positioned in the middle market segment. The product has been used extensively for

construction activities in the southern Maharashtra and Karnataka. It enjoys a reputation

of giving value for money.

BIRLA SUPER:

Birla super is OPC 53 grade cement, is the company’s ‘Up-Market’ product. Birla super

has a 28 days compressive strength of 70 MPA. This is one of the finest cements

available in the country. It can produce concrete up to M70 grade with ease. It has been

observed that, savings up to 10% in steel and up to 20% in cement consumption (in civil

construction) can be realized by using Birla Super Cement.

BIRLA PLUS:

Birla plus is a Pozzolona Cement that has chloride resistant properties. The product is

used all over the world for making mass concrete and in irrigation projects. In India, it is

mainly used in non structural applications market. It is equivalent to the 53 grade

cement and has similar properties excepting that it has a marginally slower setting time.

This fly ash based cement is used for high raise construction, as it can be pumped with

care and has convenient workability.

IRST – 40:

Rajashree OPC 53 S is a special cement used for making railway sleepers. It is a

special category of cement that has very high blains. It helps in producing most durable

concrete.

Packing Design

• High Density Polythene (HDP)

• Paper

Weight

• 50 Kg Net per Bag

Quality

• Specification bureau of international standard as per quality system of ISO –

9001:2000

E. AREA OF OPERATION

Area of Operation & Production

One of the main reasons for tremendous success of Rajashree Cement (A Unit of

Grasim Industries Ltd) in the Indian market is the spread of business across the six

highly industrialized states in both western and southern regions.

• Karnataka

• Maharashra

• Andhra Pradesh

• Goa

F. OWNERSHIP PATTERN

The Rajashree Cement (A unit of Grasim Industries Ltd) is owned and executed by

Aditya Birla Groups under the chairmanship of Mr. Kumar Mangalam Birla.

BOARD OF DIRECTORS:

• Mr. Kumar Mangalam Birla (Chairman)

• Mrs. Rajashree Birla

• Mr. M.L. Apte

• Mr. B.V. Bhargava

• Mr. R.C. Bhargava

• Mr. S.B. Mathur

• Mr. Cyril Shroff

• Mr. S.G. Subramanyam

• Mr. Shailendra K. Jain (Whole Time Director)

• Mr. D.D. Rathi (Whole Time Director & CFO)

G. COMPETITORS INFORMATION

Rajashree cement is facing competition from the following cement manufacturing

companies;

• ACC Limited, Wadi

• Gujarat Ambhuja

• Shree Cements

• JP Revas

• Other MNC’s (Lafarge Cement)

RAJASHREE CEMENT

1989-1994: State and Regional level Mines Safety award for

five consecutive years from 1989-1994.

1990 : National award from NCBM, for Meritorious

Performance in Electrical Energy Efficiency in 1989-90.

1991 : Conservationist Award in recognition of outstanding

achievement in the conservation of energy and metal

resources by EWAC Institute and Larsen & Tourbo Ltd.

1993 : Award for outstanding contribution towards the – Growth

of Industry by Hyderabad Karnataka Chambers of

Commerce.

1993 : Rajiv Gandhi National Quality Award – Commendation

certificate for efforts and commitment to quality in the

field of Chemical Industry.

1993 : ISO – 9002 Certification.

1994 : Jawaharlal Nehru memorial national award for

energy conservation for effective implementation of

energy conservation methods during 1993-94.

1995 : Jamaal Bajaj Uchit Vyavahar Puraskar Trophy from

Council of Fair Business Practices, for addressing

customer’s complaints quickly and achieving

customer satisfaction.

1997 : NCQC: Quality Circle Award.

1998 : Aditya Birla award for technical excellence and

innovation.

2nd AV Birla Planet Award for Technological

Innovation (Alteration in Raw Mix).

Environmental Management System (EMS) – ISO –

14001.

International Quality Rating System (IQRS) Level - 5

Certification

1999 : Ramakrishna Bajaj National Quality Award –

Commendation. Certificate International Quality

Rating System (IQRS) Level -6 Certification.

2000 : Chairman’s award for manufacturing excellence

(WCM) – Commendation Certificate.

2001 : NCBM’s Quality Excellence Award

2002 : Chairman’s Award for Manufacturing Excellence

(WCM) – Bronze Medal.

Quality Management System - ISO 9001:2000

Certificate.

2003 : Greentech Award for Environment Management

System.

NIPM Award for People Involvement.

NCBM Quality Excellence Award.

Greentech Safety Award.

2004 : OHSAS 18001 Certification. Social Accountability SA

8000 Certification.

The Cement Manufacturing Process

The technology adopted by the company for manufacture of cement is the dry process

with suspension mainly because of low fuel consumption, lesser requirement of water

and high in production capacity.

Raw Material used;

• Limestone

• Iron Ore/Hemadite

• Alumnus Literate

• Coal

• Fly Ash

• Chemical Gypsum

Stage- I: Mining and Crushing:

The limestone is extracted form the earth’s crust by the process of blasting. After

blasting limestone boulders are transported to the crushing chit and crushed to the

required size. The crushed limestone is then transported through belt conveyor to the

stacker/reclaimer section.

Stage-II: Stacker / Reclaimer:

The stacker reclaimer is used for pre blending of crushed limestone. Reclaimer picks up

the required quantity of crushed limestone from the stock pile and feeds into the raw mill

hopper through belt conveyor.

Stage-III: Raw Mix Grinding:

There are different hoppers for the storage of crushed limestone, iron ore and Aluminum

Late rite. The stored raw materials from the hopper are proportioned and fed to roller

press and subsequently to mill for fine grinding of required fineness. The mix containing

93-98% Limestone 3-4% aluminum late rite, 2-3% Hematite and 1-3% fly ash. The

output of the mill grinding is stored in raw meal silo.

Stage-IV: Coal Crushing and Grinding:

The coal is fed into the coal crusher from where the crushed coal is stored in the coal

stocker and reclaimer. This coal (used as fuel for burning) is crushed, pulverized in

vertical roller mill (ball mill and fed into the kiln along with primary on through burner

pipe).

Stage-V: Clinkerization:

From the raw mill silo the material is extracted and conveyed to the pre heater section.

The powdered homogenized raw mill from the silo is fed to the kiln passes through pre

heaters where raw mill gets partly cocainized and converted into clinker at a

temperature of about 1300 – 14000C in the sintering zone of the kiln. The material is

cocainized and heated in pre heater and cocainized by utilizing kiln waste gases and

additional coal finding. This partially cocainized material enters into the kiln where the

remaining 8% of the calcinations and clinkerization takes place in the kiln and clinker is

discharged into the cooler.

Stage-VI: Clinker Cooling / Storage:

The clinker from the kiln is cooled in the cooler section and is transported to the clinker

stockpile by Deep Pan Conveyor (DPC) from the clinker stock pile, the clinker is

transported to cement mill hopper though Deep Bucket Conveyor (DBC).

Stage-VII: Cements Grinding:

The clinker and gypsum are stored in the respective hopper. The clinker and gypsum

are proportioned and fed to roller press subsequently to ball mill for fine grinding of

required fineness. The proportion contains 97-98% of clinker and 2.3% gypsum. The

fine ground material is as cement.

Stage-VIII: Packing and Dispatch:

The cement from the mill is transported to storage silo and from there the cement is

conveyed to packing plant and is packed in 50kgs bags by rotary packing machine and

then directly loaded into trucks/rail rakes and transported to different locations in the

country.

FUTURE GROWTH AND PROSPECTS

• Annual Rural Sports and cultural meet Smooth functioning of Kasturba Gandhi

Balika Vidyalaya, Sedam with 100 drop out girls.

• Cleft lip palate screening and surgical camp

• Artificial limb camp for physically challenged people

• Self help group members training for income generation activities

• Completion of world bank sponsored Jal Nirmal Scheme in villages covering 2

Gram Panchayuat on or before March 2007

• Plans to set up new plant to boost of the production

The swot analysis provides information that is helpful in marketing the firm’s resources

and capabilities to the competitive environments in which it operates as such, it is

environmental in strategy formulation and selection and it also provides a scale of the

internal and external environment of the strategic planning process.

Environmental factors internal to the firm usually can be classified as strength or

weakness and those external to the firm can be classified as opportunities or threats

such as analysis of strategic environment is referred to as a Swot Analysis.

MCKINSEY’S 7S MODEL

These 7 S are divided as Hard ‘S’s and Soft ‘S’s

Hard ‘S’ s Soft ‘S’s

• Shared Values

• Skills

• Staffs

• Style

• Structure

• Strategy

• Systems

“Seven – S” formula is a comprehensive guide to analyze two culture and behavior of

corporations. Those seven elements are distinguished and so called as Hard S’ s and

Soft S’. The hard elements are feasible and easy to identify that they can be found in

strategy statements, corporate plans, organizational charts and other documentations.

The four Soft Ss however are hardly feasible, they are difficult to describe since

capabilities, values and elements of corporate culture are continuously developing and

changing they are highly determined by people at work in the organization, therefore it

is much more difficult to plan or to influence the characteristics of the soft elements,

although the soft factor are below the surface, they can have great impart of the hard

structures, strategies and systems of the organization. Effective organizations achieve

a for between these seven elements, it includes the policies and procedures that

governs the way in which the organization acts within and in the competitive

environment it provides the framework for relationship among different parts of

organization.

Structure:

Objective: To define roles and responsibilities of all employee in the organization.

• Career planning and successive planning of employees

• To analyze the manpower requirements for optimum utilization of human

resource

• To define hierarchy level of authority vertical and horizontal relationship.

ORGANIZATIONAL STRUCTUREUNIT HEAD

FH-CPP

FH -TechnicalFH-Mines

FH-Human Resource Personnel & Administration FH-Commercial DH-Electrical

DH-QC/R & D Environment DH-Finance & Accounts

DH-Materials

DH-MechanicalDH-HEMM Maintenance

DH-CPP Operation

DH-CPPMaintenance

DH-HR DH-Mines Operation

DH-IR & Legal DH-I T

DH-Security & AdministrationDH-Raw Material Handling

DH- Process

DH-T & D

CellCell

DH-Instrumentation

ACCOUNTS DEPARTMENTUNIT HEAD

FUNCTIONAL HEAD (F&C)

DEPARTMENT HEAD (F & A)

MIS SH- Excise, Legal, Banking & Taxation

SH- Stores & Spares & Pay Roll Accounting SH-Contracts, Raw Material & Block A/c

Support Staff – 2Support Staff – 1

CoordinatorsSupport Staff – 2Support Staff – 1

CoordinatorsSupport Staff – 2Support Staff – 1

CoordinatorsSupport Staff – 2 Support Staff – 1

Coordinators

Strategy:

Strategy means those course of action that a company plans response to or in

anticipation of its competition and changing external environment. In order to become

the first choice of customers globally the Aditya Birla Group (Cement Manufacturing

Units) is pursuing several initiatives under the generic terms “World Class

Manufacturing” to improve its performance under quality, cost, delivery innovation and

productivity leading to enhance customer satisfaction.

The WCM is all eight dimensional programmed enshrine the basic philosophic of TPM,

TQM, ISO – 9000, BPR and change initiatives.

WCM enables the companies to aim at zero abnormalities, zero defects, zero pollution,

zero losses, zero break down and zero customer complaints through a cultural

transformation program aiming to zero abnormality in all the business processes.

WCM is a structured 17 steps programmed that covers are employees, equipments and

areas under the laser if WCM, the employees are empowered to undertake the

improvement initiatives and achieve a sustainable superior performance with a focus on

quality, cost , delivery, innovation and productivity, the companies acquire competencies

that are necessary too meting the competitive. Changes of tomorrow WCM

programmed gears the individual to operate in team based structures that innovate and

improve continues.

The unit adopting WCM programmers are regularly developing and continuously

updating a deep understanding of their customer’s present and future needs this

competitive advantage also lies in having the best technology and superior processes

too designing and manufacturing selling their products at the lowest cost in these

endeavors WCM is the major deriving force.

System:

Rajashree Cement’s commitment to manufactures and supply clinker and cement of

consistent quality to customer, for their total satisfaction by implementation of

management systems of quality, environment, energy, occupational, health and safety

and ethical consideration in all their manufacturing.

a) Environment Management System: (ISO 14001: 1996)

The purpose of EMS is to meet the environment issues and to have better control over

it. It also helps to meet the government legislation, customer demand and social

pressure resulting from environment aspects.

Benefits: Control of environment problem

• Financial gains through waste management

• Improved investors

• Good regulatory compliance

Principles:

The following are the 5 principles that are to be implemented effectively for improving

EMS.

• Commitment and Policy

• Planning

• Implementation

• Measurement and Evaluation

• Review and Implementation

b) QUALITY MANAGEMENT SYSTM: ISO

International Organization for Standardization (ISO-9000)

Standards to guide and audit a company’s quality management practices. Documents

and records issued by international standards organization (ISO) in Geneva in 1987.

Purpose of ISO:

The purpose of ISO-9000 systems is to understand clearly the customer requirements

and integrate the various functional departments to ensure that the final product/service

fully meets the contractual requirements.

SA – 8000 SINCE 2004

SA – 8000 Social Accountability:

SA -8000 standard social accountability standard published by CEPAA in 1977 and

guidelines published in 1999.

(CEPAA- Council on Economic Priorities Accreditation Agency now named as Social

Accountability International)

Aims of SA 8000

• Promotes continues improvement of work place conditions

Shared Value:

Shared Value refers to a set of values and aspirations that go beyond the conventional

formal statement of corporate objectives, their goals are the fundamental basement

upon which a business is built.

Culture of an organization is usually determined by the sum of value and belief which is

followed by all the members of organization for accomplishing the goals and objectives

efficiently and effectively.

Shared Values of Rajashree Cement which is followed by all its employees are as

followers

• Integrity : Honesty in every action

• Commitment – Delivery on the promise

• Passion – Energized action

• Seamlessness – Boundaryless in letters

• Speed – one step ahead always

SWOT ANALYSIS

SWOT Analysis of Rajashree Cements:

The SWOT analysis provides information that is helpful in matching the firm’s resources

and capabilities to the competitive environment in which it operates as such, it is

instrumental in strategy formulation and selection and it also provides a scan of the

internal and external environment of the strategic planning process.

Environmental factors internal to the firm usually can be classified as strength or

weakness and those external to the

firm can be classified as opportunities or threats such an analysis of strategic

environment is referred to as SWOT Analysis.

Strength:

• Dynamic and round leadership support by highly qualified, cultivated, committed

and charged team of officers and staff with full of professional approach and

industrials work force.

• Use of state of the art equipments and technology certified with ISO 9001: for

quality systems and ISO 14001 for environment management system.

• Coal based captive power plant of capacity 58.2 MW by product of which (Fly

Ash) can be used as raw materials in cement manufacturing.

• It is only a cement plant integrated with a Captive Coal Washery System

• Manufacturing a variety of cements catering to different segments.

Rajashree Cement : Residential and Commercial construction.

Birla Super cement: Multistoried building, dams and bridges Construction.

Birla Mass: Mars concrete laying irrigation projects and

Non structural application.

IRST – 40 : Making Railway Sleeper.

• Facilitated with good logistics facility, well connected by Road and railway for

early transport of product to different locations in the country.

• Ranks first in the country for the introduction of 53 grade Birla Super cement (up

market product) which helped in saving up to 10% in steel and up to 20% in

cement consumption (in civil construction in the country).

• Rajashree cements limestone mine is one of the largest single location mines in

India spread over all area of 1800 acres.

• Strong brand image and excellent marketing support and customer acceptance.

• Corporate social responsibility in the name of Kagina Jan Seva Trust to serve

develops the nearby villages and society.

WEAKNESS

• Stimulating and retaining young talent is a challenging task due to tremendous

opportunities in metro’s.

• Difficulty to obtain skilled workers which in turn increases cost of training for

imparting skills to workers.

OPPORTUNITIES:

Cement industry is one of the main beneficiary of the infrastructure boom, as it has a

tremendous opportunity to supply cements in southern region of country viz Karnataka,

Andhra Pradesh, Maharashtra for infrastructure development which inturn acts as a

sector to attract foreign investment.

THREATS:

• Increased transportation cost due to loading recreation and increasing fuel

prices.

• Increasing coal prices and shortage of coal in the country (estimated to be over

in million tones) which is main material for producing current in the power plant of

the cement company’s.

4. ANALYSIS AND INTERPRETATION OF DATA

CALCULATION OF RATIO’S

CURRENT RATIO:

The current ratio is the ratio of total current asset to total current liabilities. It is

calculated by dividing current assets by current liability. The standard Current Ratio is

2:1.

Current Ratio =

Current AssetsCurrent Liabilities

Amount in Crores

SL. NO. Year Current Assets Current

Liabilities

Ratio

1 2004 1496.01 1217.81 1.22

2 2005 1853.93 1238.49 1.49

3 2006 2026.76 1473.02 1.37

4 2007 2342.39 1610.26 1.45

5 2008 2959.07 2497.08 1.18

6 2009 3097.84 2876.56 1.07

(Sources Annual Report of Grasim Industries Limited)

From the table it is clears that the company is maintaining current ratios of 1.22, 1.49,

1.37, 1.45, 1.18 and 1.07 in the year 2004, 2005, 2006, 2007, 2008 and 2009

respectively.

GRAPH SHOWING CURRENT RATIO

QUICK RATIO OR ACID TEST RATIO

The usefulness of the ratio lies in the fact that it is widely accepted as the best available

test of the liquidity position of a firm. The standard ratio is 1:1.

Quick Ratio =

Quick AssetsQuick Liabilities

(Amt in Crores)

SL.NO. Year Quick Assets Current

Liabilities

Ratio

1 2004 1036.55 1217.81 0.85

2 2005 1175.34 1238.49 0.94

3 2006 1276.03 1473.02 0.86

4 2007 1518.25 1610.26 0.94

5 2008 1980.64 2497.07 0.79

6 2009 1719.6 2876.56 0.59

It is clear from the table that the acid test ratio was lower than the standard. In the year

2004, 2005, 2006, 2007 and 2008 the ratios were 0.85, 0.94, 0.86, 0.94, 0.79 and 0.59

respectively. This decrease is only because of changes in provisions.

GRAPH SHOWING QUICK RATIO OF ACID TEST

GROSS PROFIT RATIO

Gross Profit Ratio is the percentage of gross profit towards the sales. It determines

what amount of gross profit company has obtained towards its sales.

Gross Profit Ratio =

Gross Pr ofitSales

x100

(Amt in Crores)

SL. NO. Year Gross profit Sales Ratio (in %)

1 2004 1321.50 6129.95 21.55

2 2005 1682.93 7201.06 23.37

3 2006 1687.43 7607.20 22.18

4 2007 2452.79 9572.71 25.62

5 2008 3280.85 11551.56 28.40

6 2009 2712.37 12072.67 22.46

(Sources: Annual report of Grasim Industries Limited)

The table showing the gross profit ratio’s which were in the year 2004 was 21.55 and

then started rising during 2005, 2007& 2008 as 23.17, 25.62 & 28.40 and in the year

2006 the ratio fall to 22.18 from 23.37.

GRAPH SHOWING GROSS PROFIT RATIO

NET PROFIT RATIO

Net profit is the ratio of net towards sales. The net profit margin is indicative of

management’s ability to operate the business with sufficient success not only to recover

from revenue of the period the cost of the merchandise are services.

Net Profit Ratio =

Net Pr ofitSales

x 100

(Amt inCrores)

SL.NO. Year Net profit Sales Ratio (in %)

1 2004 1077.26 6129.95 17.57

2 2005 1361.36 7201.06 18.90

3 2006 1201.90 7607.20 15.73

4 2007 2189.26 9572.71 22.78

5 2008 2964.22 11551.56 25.66

6 2009 2247.84 12072.67 18.62

(Sources: Annual Report of Grasim Industries Limited)

It was found that the Net Profit Ratio were started increasing from 17.57 to 18.90 from

the year 2004 to 2005 and suddenly decreased in the year 2006 the ratio is 15.73 and

gradually increased to 22.78 in 2007 and to 25.66 in 2008. During 2009 it was 18.62.

GRAPH SHOWING NET PROFIT RATIO

INVENTORY TURNOVER RATIO

The ratio indicates how fast the inventory sold a high ratio is good from the view point of

the company’s liquidity and vice versa.

Inventory Turnover Ratio =

Cost of Goods SoldAverage Inventory

(Amt inCrores)

SL.NO. Year Cost of Goods

Sold

Average

Inventory

Ratio

1 2004 5052.69 499.71 10.11

2 2005 5839.70 569.03 10.26

3 2006 6436.51 714.66 9.00

4 2007 7100.77 787.43 9.01

5 2008 6679.65 793.65 8.42

6 2009 9360.3 823.67 11.36

(Sources: Annual Report of Grasim Industries Limited)

The inventory turnover ratio is in an increasing trend off 10:11 and 10.26 during 2004

and 2005 respectively, the company has maintained reasonable amount of stock in the

years 2006, 2007, 2008 and 2009 the ratios were 9.00, 9.01, 8.42 and 11.36

respectively.

GRAPH SHOWING INVENTORY TURNOVER RATIO

TOTAL ASSETS TO TURNOVER RATIO

(Amt in Crores)

SL.NO. Year Cost of goods

sold

Average

inventory

Ratio

1 2004 6129.25 6308.56 0.97

2 2005 7201.06 6936.19 1.03

3 2006 7638.41 7546.13 1.00

4 2007 9607.97 9764.15 0.98

5 2008 11551.56 11949.45 0.96

6 2009 12072.67 13736.90 0.88

(Source: Annual Report of Grasim Industries Limited)

The assets of the company are increasing year by year. In the year 2004, 2005, 2006,

2007, 2008 and 2009 the ratios were 0.97, 1.03, 1.00, 0.98 ,0.96 and 0.88 respectively.

In the year 2007 and 2008 the ratio has come down to some extent.

GRAPH SHOWING TOTAL ASSETS TO TURNOVER RATIO

DEBT TO EQUITY RATIO

The Debt Equity Ratio is an important tool of financial analysis to appraise the financial

structure of a firm. The debt equity ratio indicates the margin of safety to the creditors.

Debt Equity Ratio =

Long Term DebtShare Holders Equity

(Amt in Crores)

Sl. No. Year Long Term

Debt

Shareholders

Equity

Ratio

1 2004 2065.23 91.67 22.52

2 2005 2008.34 91.67 21.90

3 2006 1979.67 91.67 21.59

4 2007 2951.56 91.69 32.19

5 2008 3.201.87 91.69 34.92

6 2009 3394.95 91.69 37.02

(Sources: Annual report of Grasim industries Limited)

The debt equity ratios indicate the margin of safety to the creditors. In the year 2004,

2005, 2006, 2007, 2008 and 2009 the ratios were 22.52, 21.90, 21.59, 32.19, 34.92 and

37.02 respectively.

GRAPH SHOWING DEBT TO EQUITY RATIO

SALES AND CURRENT ASSETS

The sales and current assets indicate the assets of the company. When the company’s

sales are increasing the ratio of sales and current assets also increasing.

Sales and Current Assets =

SalesCurrent Assets

(Amt in Crores)

SL.NO. Year Sales Current Assets Ratio

1 2004 6129.95 1496.01 4.09

2 2005 7201.06 1853.93 3.88

3 2006 7638.41 2026.76 3.76

4 2007 9607.97 2342.39 4.10

5 2008 11551.56 2959.07 3.90

6 2009 12072.67 3097.84 3.89

The Current Assets of the company are increasing year by year. As the assets are

increasing the ratios were also increasing.

In the year 2004, 2005, 2006, 2007, 2008 and 2009 the ratio’s were also increasing

4.09, 3.88, 3.76, 4.10, 3.90 and 3.89 respectively.

GRAPH SHOWING SALES AND CURRENT ASSETS

DEBTORS TURNOVER RATIO

The debtor’s turnover ratio determines the amount of sales which is sold in credit to the

customer net credit sales consists of gross credit sales minus returns if any from

customer.

Debtors Turnover Ratio =

SalesClo singDebtors

(Amount inCrores)

SL.NO. Year Sales Closing

Debtors

Ratio

1 2004 6129.95 484.63 12.64

2 2005 7201.06 522.01 13.79

3 2006 7638.41 413.45 18.47

4 2007 9607.97 576.48 16.66

5 2008 11551.56 711.98 16.22

6 2009 12072.67 559.93 21.56

From the table it has been observed that in the year 2004 the debtors turnover ratio was

12.64 which started continuously rising up to 2006 as 13.79 & 18.47 and then it

decreased to 16.66 in 2007 and 16.22 in 2008. In 2009 it was 21.56.

GRAPH SHOWING DEBTORS TURNOVER RATIO

Changes in working capital for the year 2004-2005

(Amt in Crores)

Particulars Year

2004 2005

Current Assets

Interest accrued on Investment -- 1.09

Inventories 459.46 678.59

Sundry Debtors 484.63 522.01

Cash and Bank balance 227.48 86.70

Loan and advances 324.44 565.54

Total Current Assets 1496.01 1853.93

Current Liabilities

Liabilities 752.10 827.89

Provision 194.27 280.41

Short Term Loans and Advances 243.10 96.66

Documentary Bills discounted 28.34 33.53

Total Current Liability 1217.81 1238.49

Net Working Capital 278.20 615.44

Increase in Working Capital 337.24

Changes in working capital for the year 2005-2006

Particulars Year

2005 2006

Current Assets

Interest accrued on Investment 1.09 1.46



Cash and Bank Balance 86.70 155.58

Loan and Advances 565.54 705.54


Current Liabilities


Provision 280.41 304.22

Short term Loans and Advances 96.66 137.33

Documentary Bills Discounted 33.53 62.32



Decrease in Working Capital 61.70

Changes in Working Capital for the year 2006-2007

Particulars Year

2006 2007

Current Assets




Cash and Bank balance 155.58 116.38



Current Liabilities


Provision 304.22 183.20

Short term Loans and Advances 137.33 73.54

Documentary Bills Discounted 62.32 86.66



Increase in Working Capital 178.39

Changes in working capital for the year 2007 & 2008 & 2009

Particulars Years

2007 2008

Current Assets




Cash and Bank Balance 116.38 127.47



Current Liabilities


Provisions 183.20 540.21

Short Term Loans and Advances 73.54 190.87

Documentary bills discounted 866.66 161.83



Decrease in Working Capital -- 270.12

1. Gross Working Capital

Gross working capital represents only current assets. Current assets are those assets

which are converted into cash within a period not exceeding one year normally. Such

assets are called current assets. Gross working capital points to the arranging of funds

to finance current assets.

Structure of Gross working capital of Grasim Industries Limited

(Rs. InCrores)

Particulars 2004 2005 2006 2007 2008 2009 Avg

Interest

Accured on

Investment

459.46 1.09 1.46 0.70 0.70 0.48 0.77

Inventories 484.63 678.59 750.73 824.14 978.44 1378.24 849.12

Sundry Debtors 227.48 522.01 413.45 576.48 711.98 559.93 501.85

Cash & Bank

balance

227.48 86.70 155.58 116.38 127.47 113.38 137.83

Loan &

Advances

324.44 565.54 705.54 824.69 1140.49 1045.81 767.88

Total 1496.01 1853.93 2026.76 2342.39 2959.08 3097.84 2295.98

Size and Growth of Gross Working Capital

Particulars 2004 2005 2006 2007 2008 2009 Avg

Size of Gross

Working

Capital

1496.01 1853.93 2026.76 2342.39 2959.07 3097.84 2296

Growth of

Gross Working

Capital

0 123.92% 135.47% 156.57% 197.79% 208.05% 136.96%

Interpretations

Taking the base year as 2004 as 100% the gross working capital was maximum in the

year 2008 and the rest of the year ratio are increased from year 1853.93, 2026.76,

2342.39, 2959.07 and average ratio for five years is 2135.63.

Net Working Capital

It refers to the difference between current asset and current liabilities are those claims

of outsiders which are expected to mature for payments within accounting years and

include provision. Short term loans and advances, documentary bills discounted. Net

working capital shows positive or negative

Net Working Capital = Current Asset - Current Liabilities

GRAPH SHOWING SIZE AND GROWTH OF NET WORKING

Particulars 2004 2005 2006 2007 2008 2009

Current Assets

Interest

accrued on

Investment

- 1.09 1.46 1.70 0.70 0.48

Inventories 459.46 678.59 750.73 824.14 978.44 1378.24

Sundry

Debtors

484.63 522.01 413.45 576.48 711.98 559.93

Cash and Bank

balances

227.48 86.70 155.58 116.38 127.47 113.38

Loans and

Advances

324.44 565.54 705.54 824.69 1140.49 1045.81

Total 1496.01 1853.9

3

2026.76 2342.39 2959.07 3097.84

Current

Liabilities

Liabilities 752.10 827.89 969.15 1266.86 1604.17 1686.93

Provision 194.27 280.41 304.22 183.20 540.21 590.88

Short Term

Loans and

Advances

243.10 96.66 137.33 73.54 190.87 151.79

Documentary

Bills

discounted

28.34 33.53 62.32 86.66 161.83 28.29

Total 1217.81 1238.4

9

1473.02 1610.26 2497.07 2457.89

Size and growth of Net Working Capital

(Rs. inCrores)

Particulars 2004 2005 2006 2007 2008 2009 Avg

Current

Assets

1496.01 1853.93 2026.76 2342.39 2959.0

7

3097.84 2296

Current

Liabilities

1217.81 1238.49 1473.02 1610.26 2497.0

7

2277.81 1719

Size of NWC 278.20 615.44 553.74 732.13 462.00 820.03 576.83

Growth of

NWC

- 221.22% 199.04% 263.16% 166.06

%

292.32% 190.13

5%

Interpretations

Taking the base year as 2004 as 100% the net working capital was maximum in the

year 2007 the ratio are 263.16% and rest of the year with decreased rates 221.22%,

199.045, 166,06% average ratio for these four years ratio is 189.89%.

GRASIM CEMENT INDUSTRIES LIMITED

PROFIT AND LOSS A/C LAST FOUR YEARS

(Rs. In crores)

Particulars 2006-07 2007-08 2008-09 2009-10 2010-11

Income

Sales 9607.97 10215.0

5

10804.01 4290.63 13209.91

Interest and

Dividend Income

113.27 165.77 159.04 10.88 122.34

Other Income 168.49 212.07 191.38 39.07 164.33

Increase / Decrease

in Stock

(16.44) 130.22 33.54 48.39 61.84

Total 9873.29 10723.11 11187.97 4388.97 13558.42

Expenditures

Raw Materials

Consumption

2219.32 2828.93 3064.25 535.61 1805.33

Manufacturing

Expenses

1744.33 2196.85 2735.80 1245.18 4547.98

Purchase of

Finished and other

product

321.16 97.40 65.94 53.14 122.18

Payment to and

Provision for

Employees

459.4 550.07 598.17 198.62 666.50

Selling, Distribution,

Administration and

other expenses

1505.69 1701.73 1920.29 1120.97 3597.91

Excise Duty 1004.38 ----------- ------------- --------------------

-

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

Interest 111.84 107.00 142.14 87.06 277.11

Depreciation 317.91 353.27 456.97 213.12 765.73

Net Profit 2189.26 2964.22 2247.84

Total 9873.29 10723.11 11231.4 4388.97 13558.42

BALANCE SHEET LAST FOUR YEARS(Rs. InCrores)

Particulars 2006-07 2007-08 2008-09 2009-10 2010-11LiabilitiesShareholder FundsShare Capital 91.69 91.69 91.69 85.00 274.04

Share Capital Suspense

0.02 4.90 10.45 45.84 -------

Reserve and Surplus 6138.35 8044.12 9375.44 4452.56 10387.22Loan FundSecured Loans 2206.31 2350.40 2205 1835.31 2789.76Unsecured Loan 658.59 851.47 1189.95 707.51 1354.84Documentary Bills discounted with banks

86.66 28.29

Deferred Payment Credit

-- -- -- -- --

Deferred Tax Liabilities

582.55 606.87 864.37 918.01 1730.05

Total 9764.15 11949.45 13765.1 8046.75 16540.69

Application of Fund -- -- -- -- --Fixed Assets -- -- -- -- --Gross Block 6770.97 6770.90 11060.82 9038.70 17942.27Less Depreciation 3380.53 3380.53 3972.54 2585.19 6542.02Net Block 3390.44 3390.44 7088.28 6453.51 11400.25Capital Work in Progress

1192.35 1192.35 1218.64 392.95 1105.32

Fixed Asset held for Disposal

14.33 4.14 0.85 ---------- 1.22

Investment 4274.7 4080.79 4609.10 1238.64 3730.32Current Assets, Loans and Advances

-- -- -- -- --

Interest Accrued on Investment

0.7 0.70 0.48

Inventories 824.12 978.44 1378.24 772.31 1956.52Sundry Debtors 576.48 711.98 559.93 241.52 602.29Cash and Bank balances

116.38 127.47 113.38 90.95 144.79

Loans and Advances 824.69 1140.49 1045.81 611.25 1053.88Total (2342.39 (2959.08) 3097.84 1716.03 3758.70LessCurrent Liabilities and ProvisionLiabilities 1266.86 1604.17 1686.93 1505.07 2880.41Provision 183.20 540.21 590.88 249.31 573.49Total (1450.06) 2144.38 2277.81 1754.38 3453.90Net Current Asset 892.33 814.70 820.03 (38.35) 304.80Total 7964.15 11949.45 13736.9 8046.75 16540.69

LEARNING EXPERIENCE

Studying Mkinsey’s 7S model with respect to Rajashree Cement gave me a great

exposure to learn about the company. I learned about the working of the company

during my project.

It was my privilege to be there and learn different things about the company. The

Executives and Staff of the company were very much cooperative in helping me out in

my project as well as in updating the developments.

I also gained knowledge about the cement manufacturing operations of the company

though it was not a part of the project. The HR and Accounts officials were very

cooperative and helpful in every aspect. Here I came to get a close view of the working

environment of the corporate world.

My In-plant training in Rajashree Cement was a wonderful and knowledgeable

experience in my life. During my in plant training I understand how the top level

management works with participation of lower level management.

At the time of training I came to know

• How managerial functions work in an organization.

• What is the importance of maintaining the relationship with the workers.

• How theoretical concepts are applied in organization practically.

• How planning, organizing, staffing, leading, controlling, all this management

functions in an organization

5. FINDINGS, SUGGESTIONS AND CONCLUSION

5.1. FINDINGS:

• It is observed that the company is able to maintain a proper working capital. If

any increase in sales is contemplated working capital was thus, made available

which means it is able to maintain the adequate level of working capital.

• It is observed that the company is able to maintain a proper proportion of working

capital.

• The company is able to maintain high current ratio as per Indian Bench mark i.e.,

1.33

• The gross profit ratio shows the organization gross profit is increasing year by

year.

• Fixed assets turnover ratio has been increasing year to year which is a welcome

sign.

• It was found that the inventory turnover ratio is on increasing trend seeing the

ideal ratio of the company has maintained reasonable amount of stock in the

years.

5.2. SUGGESTIONS

• The company has been following few methods like liquidity ratio, debt equity ratio

etc., and the researcher has suggested to have more new techniques to estimate

and manage working capital through regression analysis.

• It is clear from the inventory turnover ratio that major parts of funds have been

invested in stores and spares. It is suggested to have minimum inventory and

thus can reduce the Working Capital Cost.

• The sales of company are increasing year by year. Though there is a cut throat

competition, the sales are in an increasing trend. It is because of good quality of

products at reasonable prices and customer satisfaction. It is suggested to keep

and adopt the same policy in future too.

5. CONCLUSION

Working capital management plays a vital role in keeping the business enterprise

running and it is concerned with short term financial decision. Lack of efficient and

effective utilization of working capital leads to earn not only low rate of return on capital

employed but also will lead to even sustain losses which in turn will compel foe even

closure of business.

BIBLIOGRAPHY

BOOKS:

• Financial Management

Year 1999

By Khan and P.K.Jain, 3rd Edition, Tata Mc. Graw Hill, New Delhi.

Page No: 4.1-4.18; 15.2-15.4; 16.1-16.6


Year 2003

By Prasanna Chandra, 6th Edition Tata Mc. Graw Hill, New Delhi

Page No:18.2-18.7


Year 2003

By A.M.Pandey, Eighth Edition, Vikas Publishing House Pvt Ltd.,

Page No: 809, 817-819

WEBSITES:

• www.grasim.com

• www.adithyabirla.com

• Google search

• Wikepedia

SOURCES: Annual Reports of Grasim Industries Limited.

WC sharan patil

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