VINOD KUMER GOEL (HOD)

Sr.V.P.(FINANCE)

fawad khan (books,findlisation,fund management)

RAJESH KUMER SINGH (BANK&CASH)

RJAEEV SAXENA(COSTING)

SANJEEV SHARMA

AKILESH SRIVASTAVA (BALANCE SHEET& MIS)

B.L.SHARMA (ESTABLISHMENT)

TANVEER AHMAD (STORE A/C)

VINAY SINGH (TAXATION)

MAHESH SHARMA (TAXATION)

MANISH TIWARI (RAW MATERIAL)

SHEWETA SINGH (CONTRACTORS A/C)

SUBROTO BHATTACHARYA(SALESA /C)

Summer Internship Report

Working Capital Management of Bhilai jaypee cement Limited (BJCL).

SUBMITED BY:
1

SUSMITA SINGH

(TECNOCRATES INSTITUES OF Technology BHOPAL)

Carried out during Summer Internship Programme At BHILAI JAYPEE CEMENT LTD., BABUPUR, SATNA (M.P.), PIN: 485112.

1. DECLARATION

I, the undersigned, hereby declare that the project report enti tled WORKING CAPITAL MANAGEMENT IN JAIPRAKASH ASSOCIATES LIMITED. Written and submitted by me to the in partial fulfillment of the requirements for the award of Diploma degree of Post Graduate Diploma in Management under the guidance of Mr. FAWAD KHAN (General Manager accounting & Finance), and Mr. Rajeev Saxena (Asst. Manager Finance) is my original work and conclusions drawn therein are based on the material collected by myself.

Place:

BHOPAL
2

Date: Student: SUSMITA SINGH

CERTIFICATE OF APPROVAL
The foregoing project entitled WORKING CAPITAL MANAGEMENT IN BHILAI JAYPEE CEMANT LIMITED (BJCL), is hereby approved as a creditable study of research topic and has been presented in satisfactory manner to warrant its acceptance as prerequisite to the degree for which it is submitted.

It is understood that by this approval, the undersigned do not necessary endorse any conclusion drawn or opinion expressed therein, but approved the project for he purpose for which it is submitted.

(Internal Examiner)

(External Examiner) Shri Fawad khan General Manager (Finance &Accounting) BJCL, BABUPUR, SATNA.

ACKNOWLEDGEMENT
This project would have been difficult to complete without the invaluable contributions from some important persons. Let us take this opportunity to thank them. First of all, I would like to thank BHILAI JAYPEE CEMENT LIMITED(BJCL), for giving me such challenging projects to work upon. I hope this challenge has brought the best out of us.

I am indebted to my project guide Mr. FABAD KHAN, General Manager (Accounting and Finance), Resource Mobilization Unit, for the direction and purpose he gave to this project through his invaluable insights, which constantly inspired us to think beyond the obvious. His encouragement and co-operation helped us instill a great degree of self-confidence to deliver a good work. I am also thankful to Mr. Rajeev Saxena (Asst. Manager Finance) for taking constructive interest in our project and providing us valuable support at many points of time.

I am also thankful to all the employees of BHILAI JAYPEE CEMENT LIMITED who provided us with an environment conducive for learning during the last one month.

I hope I can build upon the experience and knowledge that we have gained here and make a valuable contribution towards this industry in the coming future.

SUSMITA SINGH

PREFACE

Practice makes more perfect

In the field of management every time there is a requirement of understanding or Practical aspect of the organization with managerial mind. There is requirement to go for practical training of any subject supplement to the theoretical knowledge and clarified concept.

It is more applicable in the field of the management especially a professional course like MBA. (College of Engineering Science & Technology Lucknow) has prescribed One month project report training during the 4th Semester as a part of MBA. Programmers
5

my training at the BHILAI JAYPEE CEMENT PLANT Works is to comply with these requirements also.

CONTENTS
Ch. No. Particulars
1

Page No.
11-28

COMPANY PROFILE
1.1 1.2 1.3 1.4 1.5 1.6 Origin, Vision, Mission, Values Historical milestone Quality policy Competitors Business activities

INTRODUCTION
2.1 2.2 2.3 2.4 2.6 2.7 2.8 Cement division About jaypee cement and jaypee group Manufacturing unit Introduction of the Bhilai Jaypee Cement Limited(BJCL) Cement manufacturing process Sail background Departmental profile

29-48

WORKING CAPITAL
3.1 Definition 3.2 Concept of working capital a. Traditional or Balance sheet concept - Gross working capital - Net working capital - Permanent working capital - Variable working capital b. Operating cycle concept 3.3 3.4 3.5 3.6 3.7 Significance of working capital Effect of excessive working capital Factors determining the working capital Advantage of adequate working capital Calculation of working capital

49-62

WORKING CAPITAL MANAGEMENT

4.1 Calculation of working capital management in JAL a. Position of inventory b. Sundry debtor analysis c. Cash and bank analysis d. Loan and advances analysis e. Current liability analysis - Position of other current liability - Provision analysis

63-102

4.2 Working capital ratio a. Receivable ratio b. Payable ratio c. Current ratio d. Quick ratio e. Working capital ratio f. Stock turnover ratio g. Debt equity ratio 4.3 Management of working capital A. Cash management - Meaning - Objective of cash management - Technique of cash management a. Cash management planning - Cash budget - Characteristics of the cash budget - Methods of cash budget b. Cash management control B. Inventory management - Supply chain management - Function of inventory management - Position of inventory in JAL - Motives of holding inventory - Types of inventory - Factors determine the optimum level of inventory - Objective of inventory management - Technique of inventory management C. Debtors management - Sundry debtors analysis - Objective of receivable - Factor of receivable management

D. Marketable securities
8

RESEARCH METHODOLOGY 5.1 5.2 5.3 5.4 Methodology Research objective Research design Sources of data - Primary data - Secondary data 5.5 Limitation of the study

103-105

CONCLUSION

106

BIBLIOGRAPHY

107

OBJECTIVE
Knowledge and awareness of the corporate environment, its components & functioning is a must for tomorrows managers. The basic objectives of the summer internship program are:

To facilitate ourselves in testing what we have learnt in all the bridge courses during
PGDM

To understand the internal functioning of the organization within finance and accounts
department.

To get an exposure to the corporate life and various interaction methods. To have an analytical overview of working capital management at Jaiprakash
association ltd (LTD) by bringing into use various theoretical tools and skill which have been studied and includes studying and analyzing various financial data over a period of three year 2006-07, 2007-08, 2008-09
9

COMPANY PROFILE
ORIGIN
With a single minded focus in mind, to achieve pioneering myriads of feat in civil engineering Shri Jaiprakash Gaur ji, the founding father of Jaiprakash Associates Limited after acquiring a Diploma in Civil Engineering in 1950 from the University of Roorkee, had a stint with Government of Uttar Pradesh and with steadfast determination to contribute in nation building, branched off on his own, to start as a civil contractor in 1958.

MISSION
The

companys solitary mission is to achieve excellence in every sector that it operates in, be it Engineering & Construction, Cement, Real Estate or Consultancy, to augment our core competencies and adopt the most comprehensive modern technology to overtake the obstacles in its path of achievement and to obtain sustainable development and simultaneously enhancing the shareholders value and fulfilling its obligations towards building a better India.

VISION
10

As a group, Jaypee group is committed to strategic business development in infrastructure,

as the key to nation building in the 21st century. The group aims to achieve perfection in everything it undertakes with a commitment to excel. It is the determination to transform every challenge into opportunity; to seize every opportunity to ensure growth and to grow with a human face.

VALUES
The Jaypee way of life can be best represented by the Indradhanush. The Indradhanush or the rainbow of seven different colours stands for seven values. Seven values that form the pillars of the entire Jaypee parivar are: 1. 2. 3. 4. 5. 6. 7. Collective Wisdom (VIOLET) Excellence in Performance (INDIGO) Credibility (BLUE) Human Face (GREEN) Conviction (YELOW) Commitment (ORANGE) Leadership by Example (RED

QUALITY POLICY

11

12

COMPETITORS
Ambuja Cements Ltd. Ultratech Cement Ltd.- a subsidiary of Grasim Industries Lafarge ACC Ltd. Birla Corporation Ltd. Prism cement Maihar cement

BUSINESS ACTIVITIES
The Jaypee Group is a well diversified infrastructural industrial conglomerate in India. Over the decades it has maintained its salience with leadership in its chosen line of businesses Engineering and Construction, Cement, Private Hydropower, Hospitality, Real Estate Development, Expressways and Highways. The group has been discharging its responsibilities to the satisfaction of all its shareholders and fellow Indians, summed by its guiding philosophy of "Growth with a Human Face".

JAL (Jaiprakash Associates Ltd.) is an acknowledge leader of river and valley dam and bridge construction including hydropower projects on turnkey basis and has been in the business for more than 3 decades. The company has unique distinction of executing simultaneously 13 hydropower projects spread over 6 states and the neighboring country of Bhutan for the generation of 10,290 MW of power.

JAL is a flagship company of the Jaypee group, one of the largest business conglomerates of north India with annual revenue of over Rs 3000 crores, starting with a humble beginning in 1979 with construction activities, getting in to cement manufacturing was only a logical and natural diversification for the group in the year 1986.

Today with the work force of more than 50,000 committed professional manpower and the presence in almost all states of north India and countries like Nepal, Bhutan etc. The Jaypee group has diversified interest with the motto of building nation in activities such as-

13

EDUCATION

THERMAL/ HYDEL

INTEGRATED TOWNSHIP

INFORMATION TECHNOLOGY

JAYPRAKASH ASSOCIATES LTD.

CONSTRUCTION

HYDROPOWER CEMENT

HOTEL AND HOSPITALITY DIVISION

14

INTRODUCTION

CEMENT DIVISION
JAL-cement division (Jaypee Cement) today is the market leader in central zone of India; and on all India bases it is one of the largest players having around 5% share of the total cement market of the country. Such coveted position has been achieved through utmost endeavor cum commitment towards quality and excellence in all facets of business management. JAL cement division has been certified for the internationally acclaimed ISO 9001:2000 certificate, which further shows its commitment towards achieving total customer satisfaction and overall excellence.

Jaypee Cement with commissioned capacity of over 13.5 million tonnes per annum (MTPA) is a brand leader in its current marketing zone, consisting of Central and parts of Northern India. The Company has undertaken a bold expansion plan to achieve a 35 MTPA capacity by 2011 one of the fastest organic expansions worldwide in the cement industry. Jaypee Cement is poised to achieve a pan India presence and cement the dreams & aspirations of a billion Indians, quite like the Master Blaster himself

ABOUT JAYPEE GROUP AND JAYPEE CEMENT

The Jaypee Group is a diversified industrial conglomerate with a turnover of over Rs. 5,500 Crores. From humble beginnings in the infrastructure sector 4 decades ago, the Group today, driven by the vision of the Founder Chairman Mr. Jaiprakash Gaur, is a leader in the Engineering & Construction sector with substantial interests in Cement, Power, Expressways & Highways, Hospitality & Tourism, and Real Estate. The Jaypee Group, over the last 7 years, has executed and dedicated 8840 MW of hydro electric power to the nation. The Group was responsible for delivering 54% of the total hydro-power generation envisaged in the 10th Five Year Plan (2002 2007). In the private hydropower space, the Group has taken a pioneering initiative and is the largest player in the country 700 MW of capacity. The Group also has the unique distinction of working on 2 of
15

the largest Expressway projects of the country on a Build, Own, Operate (BOO) basis the 165 kms long Yamuna Expressway project connecting Noida to Agra and the 1,047 kms long Ganga Expressway Project connecting Greater Noida to Ballia, which is also the largest private infrastructure project in the country till date. In recent times, the Group has identified and included sports as a focus area where it would like to support the nations efforts. The Group is responsible for bringing Formula 1 (F1) racing to India and will host the first Indian Grand Prix in 2011. A state-of-art Sports arena with Formula One Grand Prix Circuit and Go-Cart track is under development. The arena will also have a 25,000 seating capacity Hockey Stadium, 100,000 seating capacity Cricket Stadium, 18-hole Golf Course and a Sports Academy. The Group has also constructed a world class Integrated Sports Complex in Greater Noida - spread over 15 acres, this complex provides facilities conforming to international standards in the all disciplines of racket sports, indoor & outdoor basketball and various track & field events. On the domestic front, the Jaypee Group has developed an 18 hole Greg Norman Signature golf course housed amidst 450 acres of premium real estate at Jaypee Greens, Greater Noida. The Cement Division of Jaiprakash Associates Ltd. (JAL) has 6 state-of-the-art, fully computerized Integrated Cement Plants (ICPs), 3 Grinding Units & 1 Blending Unit with an aggregate capacity of 13.5 million tonnes per annum (MTPA). JAL is in the process of setting up new capacities in Northern, Central, Western & Southern parts of the country and is targeting a capacity of 25 MTPA by 2010 and 35 MTPA by 2011, along with 375 MW of Captive Thermal Power Plants (CPPs). Once the expansion plans have been implemented, the Group will have 12 Integrated Cement Plants, 9 split location plants (Grinding & Blending units), 11 Railway sidings and a captive jetty across the states of Madhya Pradesh, Uttar Pradesh, Gujarat, Himachal Pradesh, Haryana, Uttarakhand, Chhatisgarh, Jharkhand and Andhra Pradesh, giving the former a panIndia presence in the cement sector and placing it in the top 3 cement companies in India and within the top 10 cement companies in the World.

MANUFACTURING UNITS
Bhilai jaypee cement ltd (BJCL) Jaypee Rewa Plant (JRP) Jaypee Bela Plant (JBP) Jaypee Cement Blending Unit (JCBU) Jaypee Ayodhya Grinding Operation (JAAGO)
16

Jaypee Himanchal Cement Plant (JHCP) Jaypee Sidhi Cement Plant (JSCP) Dalla Cement Factory (DCF) Chunar Cement Factory (CCF) Jaypee Cement Grinding Unit (JCGU-Roorkee) Jaypee Cement Grinding Unit (JCGU-Panipat) Gujarat Anjan Cement Plant (GACL)

Jaypee group is the 3rd largest cement producer in the country. The groups cement facilities are located in the Satna Cluster (U.P), which has one of the highest cement production growth rates in India. The group produces special blend of Portland Pozzolana Cement under the brand name Jaypee Cement (PPC). Its Cement Division currently operates modern, computerized process control cement plants with an aggregate capacity of 13.5 MTPA. The company is in the midst of capacity expansion of its cement business in Northern, Southern, Central, Eastern and Western parts of the country and is slated to be a 24.30 MTPA cement producer by the year 2010 and 26.80 MTPA by 2011 with Captive Thermal Power Plants totaling 327MW. Keeping pace with the advancements in the IT industry, all the 140 cement dumps are networked using TDM/TDMA VSATs along with a dedicated hub to provide 24/7 connectivity between the plants and all the 120 points of cement distribution in order to ensure track the truck initiative and provide seamless integration. This initiative is the first of its kind in the cement industry in India. In the near future, the group plans to expand its cement capacities via acquisition and Greenfield additions to maximize economies of scale and build on vision to focus on large size plants from inception.

17

INTRODUCTION
Bhilai jaypee cement limited (BJCL) is a joint venture of steel Authority of India Limited (SAIL) and Jaiprakash Associates Limited (JAL). BJCL is planning to develop a cement complex by installing new clinker plant of capacity 1.09 MTPA produced clinker and cement plant of capacity 0.6 MTPA at Babupur village, Tehsil Raghuraj nagar, District Satna, Madhya Pradesh. Project Brief The proposed green field cement plant project details are given in Table-1 TABLE DETAIL OF THE PROPOSED PROJECT Sr. No. 1 Unit Capacity Route of proposed (MTPA) Clinker Plant 6-stage pre-heater/Pre-calciner 1.09 kiln and VRMs for coal and raw material grinding Cement Plant By installing a new VRM for 0.6 cement grinding and packing Unit with truck and wagon loading Captive Limestone Mines: To open up ML-I and ML-II for A. Captive Limestone Mine ML- 0.6 feeding captive clinker plant I (ML Area-590.522 ha) B. Captive Limestone Mine 1.5 ML-II (ML Area-1033.99 ha)

The supporting installation for the proposed project includes installation of limestone crushing and storage facility at adjacent to plant and captive mines leases I & II area and new railway siding at plant site to Sakaria railway station. Size of the project

18

The project cost estimated for the proposed cement plant including utilities, offsite, auxiliary services, margin money etc is Rs 364.5 crores. The anticipated capital expenditure for the inbuilt pollution control measures is Rs. 36.0 crores. The total project cost for proposed mine leases I and II is Rs. 35 crores. The anticipated expenditure for the pollution contril measures is Rs. 0.70 crores. Location of the project The environmental setting of the cement plant complex and both the captive limestone mines area is presented in Table-2. The vicinity map of plant and mines are shown in Figure-1.

VICINNITY MAP OF PROPOSED CEMENT PLANT AND CAPTIVE MINES I & II

19

Sr. Particulars No. Location 1

Details ML I Spread over parts of Barikhurd, Putondha, Putondhi Sarwahna and Nimi villages of Raghuraj Nagar Tehsil, Satna District, and Madhya Pradesh.

2 3 4 5

6 7

8 9

240 36 33" to 240 38 25" North Longitude 800 54 21" to 800 56 58" East Current status Industrial use of land Elevation Plain land of about 292- Plain land of about above Mean 313 m above mean sea 292-313 m above Sea Level Level (MSL) mean sea Level (MSL) Nearest NH -75, 5.6 km (S) NH 75, 3.5 km Highway (S) Nearest Satna R.S, 9.8 km, SW Satna R.S, 9.1 km, Railway direction SW direction Station Nearest Khajuraho, 100 km NW Khajuraho, 100 km Airport NW Reserved/Pro 1) Jumori R.F, 1.2 Jumori R.F, 0.6 km, tected Forest km, SE, SE, within 10-km 2) Naro P.F, 10.5 Naro P.F, 8.4 km, S Latitude

ML II Spread over parts of Ramasthan, khamariya (Tiwarian), Jamorhi, Atrahara, Mohana, Sakaria, Sarwahana, Barera, Lohora, Bharpurwa and khamariya (Payasian) Villages of Raghuraj Nagar Tehsil, Satna District, Madhya Pradesh. 240 35 20" to 240 37 28" North 800 54 23" to 800 57 48" East Industrial use

Cement Plant Babupur

240 36 01" to 240 36 52" North 800 53 55" to 800 54 37" East Industrial use Plain land of about 292-313 m above mean sea Level (MSL) 4.3 km, S 8.3 km, SW

Khajuraho, 100 km NW Jumori R.F, 4.6 km, E, Naro P.F, 9.5 km, S
20

10

radius Nearest Township Rivers/Lakes

km, S Satna, 9.3 km, SW

Satna, 8.3 km, SW

Satna, 7.3 km, SW

11

12

Tamas or Tonnes River, 3.5 km, SSE Simarawal Nadi, 8.8 km, NE Seismic Zone Zone-II as per IS-1893 Zone-II as per IS- Zone-II as per IS(Part-1)-2002 1893 (Part-1)-2002 1893 (Part-1)2002

Tamas or Tonnes River, 2.9 km, SE Simarawal Nadi, 5.1 km, NE

Tamas or Tonnes River, 1.3 km, SE Simarawal Nadi, 4.8 km, NE

PROJECT DESCRIPTION Details Proposed Plant Facilities The cement and clinker manufacturing in the plant is proposed through dry process. The proposed project details are given in Table-3 TABLE-3 DETAILS OF THE PROJECT Sr. No. 1 2 3 4 Parameter Description

Clinker production 1.09-MTPA Cement production 0.6- MTPA Cement Lime stone ML I : 0.6 MTPA production details ML II: 1.5 MTPA Mineral reserves ML I Lime stone : 37.37 MT Overburden: 12.18 Million m3 Top Soil : 0.18 Million m3 Mineable reserve: 23.32 MT

5 6

Process Land requirement

ML II Lime stone : 154.84 MT Overburden: 54.07 Million m3 Top Soil : 19.82 Million 3 m Mineable reserve: 69.56 MT 6 stage preheater/precalciner kiln for calcinations VRMs for coal and raw material grinding Cement plant : 87.45 ha
21

Water requirement and source

Raw material requirement for cement plant

Power requirement and source

10

Main details

equipment

11

Pollution control

12

Storage capacities

13

Total manpower requirement

ML I : 590.522 ha ML II : 1033.99 ha Water requirement and entire cement plant complex : 1400 m3/day Water requirement for plant Activity :1200 m3/day Water requirement for Mine Activity (ML I & ML II) : 200 m3/day Water source : Ground water resources initially and thereafter from Reservoir created in mined out area Limestone : 2.1 MTPA Laterite : 0.07 MTPA Coal : 0.18 MTPA Gypsum : 0.05 MTPA Slag : 0.20 MTPA 22 MW (Including Plant and township) 1 MW for Mine Activity Source: Madhya Pradesh State Electricity Board (MPSEB) grid Standby DG set for emergency Purposes : 10 MW Raw mill: 1 300 tph (Vertical Roller Mill) Pyro process : 3300 tpd (dry process twin string 6 stage) Coal Mill: 30 ph (Vertical Roller Mill) Clinker silo : 1 25,000 t Limestone crusher : 750 tph (impactor with pre & post screening) Plant: Bag dust collectors (emission below 50 mg/Nm3) Mines: Dust Suppression and Green belt development with in the Mine Lease Area Finished product (Clinker): 1 25,000 t RCC Silo Blending Silo : 12,000 t RCC Silo Limestone : Stockpile : 2 3000 t, covered Coal: 1 10,000 t, linear 581 persons for entire plant complex, Additional contract labor required for auxiliary services like loading and unloading of materials, general cleaning work and security

Land requirement An area of 87.45 ha including railway siding has been earmarked for the cement plant project. The land use of proposed plant is given in Table 4
22

TABLE 4 LAND USE OF PROPOSED PLANT SITE

Sr. No. 1 2 3 4 5 6 Total

Land use Plant area Administrative building, etc. Railway siding Landscaping and greenbelt area Truk parking Raw material storage

Area (hectares) 45.10 0.63 5.76 27.00 1.00 7.96 87.45

Raw Material Requirement and Transportation Details The major raw materials used in the manufacturing of the clinker are limestone, laterite and black coal. The raw material like limestone and laterite will be transported to site through roadway by dumpers. The outflow of finished products from plant will be 1.09 MTPA clinker and 0.60 MTPA cement. The lime stone wil be transported through dumpers from crusher to plant. The detail of raw material requirement and transportation are given in Table-5 TABLE 5 LAND MATERIAL REQUIREMENT & TRANSPORTATION

Sr. No. 1

Material Limestone

Quantity (MTPA) 2.1

Source

2 3

Laterite Coal

0.07 0.18

Mode of Quantity store transport at site (tones) Captive limestone Road dumpers Stockpile: 2 Quarry, adjoining to 36,000 t, linear the plant site Katni, Madhya Road 13000 t, covered Pradesh Central coal fields Covered 110,000 t, linear rail/truks
23

Water requirement The break-up of water requirement for different units for the proposed project is given in Table-6 TABLE-6 WATER REQUIREMENT

Sr. No. 1 2 3

Water Consumption Cement Plant Township Greenbelt development (Re-circulated from STP) Total

Quantity (m3/day) 1100 100 80 1200

Water is required for equipment cooling and for domestic purpose. The total fresh water requirement of proposed plant to meet the requirement of cooling of equipment and domestic purpose is about 1200-m3/day. The water requirement will be met from ground water sources. Power requirement The power requirement of the proposed clinker plant and mining activities will be about 22 MW and 1 MW respectively. The power will be sourced for Manpower The total manpower requirement for the proposed project during construction phase is 2000 nos. including skilled and unskilled workers. About 393 people will be employed during operation of cement plant. Contract labour shall be employed for auxiliary services like loading of cement bags, unloading of stores & miscellaneous materials and general cleaning work. Township A full-fledged township will be developed to accommodate plant, mines and security personnel and supporting staff. Other amenities such as community center, guest house,
24

health center, shopping complex, post office, bank etc. will be established. The location of township is in the NE direction to the plant and also adjacent to the ML I boundary.

Details of Captive Limestone Mines The salient features of the captive limestone mining areas are presented in Table-7 TABLE-7 SALIENT FEATURES OF LIMESTONE MINE LEASES

Sr. Description No. Name of the Mine lease 1 Extent of Mine lease (ML) 2 area Type of ML area 3 Method of mining 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Details ML I 590.522 ML II 1033.99 ha

Non forest land Non forest land Fully mechanized opencast Fully mechanized opencast Rated capacity of mine 0.6 MTPA limestone 1.5 MTPA limestone production production Expected life of mine 39 years 47 Date of expiry of ML 31.10.2021 3.01.2027 Average stripping ratio 1 : 0.94 1:1 Geological reserves 37.37 Million Tonnes 154.825 Millions (15094378m3) Recoverable reserves 74.0. Millions Mineable reserves 23.32 Million Tonnes 69.56 Millions 3 Mineable overburden 12.18 million m 67.07 Millions m3 Average no. of working days 330 days/annum 330 days/annum Number of shifts per day 3 shifts/day 3 shifts/day Working hours per day 8 hrs 8 hrs Mining blocks 1 1 No. of benches 2 2 Average Bench height for 1.0 m 0 1.5 m top soil Average Bench height for 1 6 m 1.5 8.0 m over burden (OB)
25

20 21

Bench height for limestone Ultimate depth of mine

68m 6.0 8.0 m 25 m below GL (approx. 313 m above MSL (15 313 m above MSL) 25 m BGL) About 2.5 lakh tones in 5 6.0 lakh tones in 5 years years 18.36 Million m3 54.07 million m3 No separate Over burden dump planned 1 MW (Including ML I ) 125 m3/day 22/35 t capacity dumper 35 t/50 t capacity dumper Clinker plant is adjacent to the ML II and from mine crushing plant

22 23 24 25 26 27 28 29

Topsoil to be generated during entire life of mine Overburden to generated during entire life of mine No. of waste dumps planned

Nil (temporary dump will be maintained Power requirement 1 MW (Including ML II ) form power grid Water requirement 75 m3/day from mine sump Transport of OB Dumpers of capacity 22 to 32 T Transport of limestone from Dumpers of capacity 22 to mine face to crushing plant 32 T Distance to mine face to user Crusher is located at a point distance of 3 km from the working face within ML area

Method of Mining The choice of mining method has been considered as opencast mining for quarrying the limestone from the mines. The mining operation will be fully mechanized. The sequence of operation in quarrying will be drilling, blasting, loading and transportation. All the rock types occurring within the area are fully exposed. There is hardly any top soil that occurs on the surface and hence separate dozing of top soil would not be required. Drilling and blasting will be carried out for excavation of OB and limestone. For OB, 115 mm size drills will be used for drilling and shovel combination with 32/22 tone capacity dumper will be used to transport the OB blasted material from the face to dump area.

For limestone, 115 mm size drills will be used for drilling. Crawler mounted hydraulic excavator with bucket capacity of 3.8 m3 and 4.1 m3 capacity will be used for loading
26

and in combination with 32/22 tones capacity dumpers shall be used to transport the blasted material from the mines leases.

Mining Equipment There are four types of equipment systems available for open cast mining Bucket wheel excavator mining; Draggling mining; Shovel dumper combination; and Surface miners.

The mining machinery will be placed in a phased manner till the operations continue at the same rate of production in this mine. The machinery will be shifted gradually to the other captive mine lease of ML II the detail of the proposed major mining machineries are given in Table 8

TABLE 8 DETAIL OF MINING MACHINERY

Sr. No 1 2 3 4

Description

No of size/Capa Units city 1 1 1 6 4"/6" dia 3.8 to 4.2 m3 22 to 32

Make

Motive power Diesel Diesel Diesel Diesel

H.P

Bull Dozer 4"/6" dia drill Hydraulic excavator Dumpers

BEML IG/Atlas Komatsu/L Volvo/Tata

400 180 to 400 295 to335 -

Site Services Lime crusher and ancillary facilities The limestone crushing plant and ancillary facilities are mainly consists of 750 TPH capacity jaw crusher, 800 TPH capacity hamper crusher, stacker and declaimer.
27

CEMENT MANUFACTURING PROCESS

MINING The cement manufacturing process starts from the mining of limestone, which is the main raw material for making cement. Limestone is excavated from open cast mines after drilling and blasting and loaded on to dumpers, which transport the material and unload into hoppers of the limestone crushers. CRUSHING STACKING & RECLAIMING OF LIMESTONE The Limestone (LS) Crushers crush the limestone to 80 mm size and discharge the material onto a belt conveyor which takes it to the stacker via the Bulk material analyzer. The material is stacked in longitudinal stockpiles. Limestone is extracted transversely from the stockpiles by the reclaimers and conveyed to the Raw Mill hoppers for grinding. CRUSHING STACKING & RECLAIMING OF COAL The process of making cement clinker requires heat. Coal is used as the fuel for providing heat. Raw Coal received from the collieries is stored in a coal yard. Raw Coal is dropped on a belt conveyor from a hopper and is taken to and crushed in a crusher. Crushed coal discharged from the Coal Crusher is stored in a longitudinal stockpile from where it is reclaimed by a reclaimer and taken to the coal mill hoppers for grinding of fine coal. RAW MEAL DRYING / GRINDING & HOMOGENIZATION Reclaimed limestone along with some laterite stored in their respective hoppers is fed to the Raw Mill for fine grinding. The hot gasses coming from the clinkerisation section are used in the raw mill for drying and transport of the ground raw meal to the Electrostatic Precipitator / Bag House where it is collected and then stored and homogenized in the concrete silo. Raw Meal extracted from the silo (now called Kiln feed) is fed to the top of the pre-heater for pre-processing. CLINKERIZATION Cement Clinker is made by pre-processing of Kiln feed in the pre-heater and the rotary kiln. The limestone is heated at 1400 C into furnace, fine coal is fired as fuel to provide the necessary heat in the kiln and the precalciner located at the bottom of the 5/6 stage preheater. Hot clinker discharged from the Kiln drops on the grate cooler and gets cooled. The cooler discharges the clinker onto the pan / bucket conveyor and it is transported to the clinker stockpiles / silos. The clinker is taken from the stockpile /
28

silo to the ball mill hoppers for cement grinding. At the end of each sampling process there is a sampling procedure by the quality control lab every 2 hours, the report is send to the CCR which varies the process parameters depending upon the sampling feedback. CEMENT GRINDING AND STORAGE Clinker and Gypsum (for OPC) and also Pozzolona (for PPC) are extracted from their respective hoppers and fed to the Cement Mills. These Ball Mills grind the feed to a fine powder and the Mill discharge is fed to an elevator, which takes the material to a separator, which separates fine product and the coarse. The latter is sent to the mill inlet for regrinding and the fine product is stored in concrete silos. Its capacity is about 14000 tones. PACKING Cement extracted from silos is conveyed to the automatic electronic packers where it is packed in 50 Kgs polythene bags and dispatched in trucks or rail. ELECTRICAL POWER For total power requirement of 90 MW (Jaypee Rewa Plant and Jaypee Bela Plant) they have three CPPs and four DG sets to provide an emergency backup. CPP CPP CPP 1 2 3 25.0 MW 25.0 MW 38.5 MW

BJCL proposes to set up a Greenfield cement plant in joint venture with SAIL at Satna with a clinker capacity 1.09 mio tpa along with a split grinding unit with capacity 2.2 mio tpa at Bhilai of Chhattisgarh.

29

SAIL BACKGROUND:STEEL AUTHORITY OF INDIA LTD

Is a major player in the business of Steel Manufacturing? The blast furnace slag generated by the Integrated Steel Plant of SAIL at Bhilai is granulated, which forms a major constituent for manufacture of Slag Cement (Portland Slag Cement). SAIL, with an objective of using this waste by-product generated in their Bhilai Steel Plant (BSP) at Bhilai and utilizing limestone of their mines at Satna, opted for tendering route way back in the first quarter of 2006. They invited Bidders for participating in a proposed Joint Venture with SAIL to set up a cement plant.

JAIPRAKASH ASSOCIATION LTD

A major player of the cement industry became a successful bidder in the Bid submitted by various cement players on 31st March, 2006. Thereafter various agreements were discussed and formulated between the two corporate SAIL and JAL over a year. Jaiprakash Associates Limited (JAL) and Steel Authority of India Limited (SAIL) have signed a Share Holders Agreement on the 21st March 2007. It is the Biggest Joint Venture of SAIL with a Private Corporate till date. SAIL shall contribute 26% of the total equity, while the balance 74% shall be contributed by JAL. The new JV Company formed in the name of Bhilai Jaypee Cement Limited (BJCL) was incorporated on 11th April 2007. Bhilai Jaypee Cement Limited is setting up split -location cement project, with the clinkerisation cum grinding unit to be set up near the limestone deposit, Ispat Limestone Quarry (ILQ) mine in Village Babupur at Satna in the state of
30

Madhya Pradesh, called the Bhilai Jaypee Cement Plant and a Grinding Unit located within the Bhilai Steel Plant premises to be set up at Bhilai in Chhattisgarh, called the Bhilai Jaypee Grinding Plant. BJCL shall mainly produce Portland Slag Cement (PSC) at Bhilai. Clinker shall be transported from Satna to Bhilai for producing PSC at Bhilai. Railway sidings are proposed to be set up at both the plant locations to ensure smooth transport of inter-alia clinker between the two split-located units.

DEPARTMENTAL PROFILE
The finance and accounts department works as judicious manager in distribution of available funds in an optimal manner for the organization as a whole on daily, monthly and annual basis and also a conscious book-keeper for the company going through every transaction having financial implication with complete thoroughness before acceptance of liability. It looks after the information requirements of the company and various statutory authorities in compliance of the applicable statutory provisions. The bonus of ensuring companies various assets adequately insured is also with this department. For effective and efficient management of finances, there are adequate teams for finance and accounts activities in the plant location.

FINANCE AND ACCOUNTS DEPARTMENT

FINANCE ACCOUNTS

SALES GENERAL

INSURANCE

M.I.S

RAW MATERIAL AND STORE ACCOUNTING

PERSONNEL ACCOUNTING

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FINANCE CELL The long, medium short term financial planning and assessment is done in context of the set objectives and targets for the current year and projected years, considering various factors such as Capacity expansion Technology up gradation Manpower training New machineries Tools and Equipments Addition in infrastructure

ACCOUNTS CELL The cement industry is one of the industries prescribed for COST-AUDIT under the companies act. It casts a statutory obligation on the company to get the final accounts statement audited by statutory financial and cost authorities. The entire operation of the plant is divided into various cost centers based on the processes involved, in addition to the accounts codes for accounts heads. The accounts function is totally computerized with well proven in house established accounts package, catering to the needs of the company. ERP-PACKAGE is broadly used. The base data of each transaction is entered only once with relevant account code and cost code with both quantitative and financial information making the financial and cost records updated at the same time in the system. This cell has following sections:

a) GENERAL ACCOUNTS Is sub divided in to two subsections to take care of accounting related to two vital resources of organization: Raw material & Stores accounting Personnel accounting.
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b) SALES ACCOUNTS The sales accounts department is one of the most important departments of any company. It has the main function to handle sales accounting of the company. The department performs its functions through following divisions: 1. 2. 3. 4. Invoicing Collections Stock Records Freight

INVOICING: Under invoicing first of all Price Feeding is done then it is cross checked with the challan being approved. Then FEG i.e. Financial Entry Generation and G/L i.e. General Ledger is prepared.

COLLECTIONS: Collection is related to the receivables from the various Sales Promoters and Traders. All the payments are majorly obtained in form of Demand Drafts and handled by Punjab National Bank.

STOCK RECORDS: Stock Records are being maintained in company on daily basis.

FREIGHT: Freight is charged according to the contract made between company and the customers. The freight if paid by the company then TDS is also calculated.

c) INSURANCE Companies associated with Jaypee are: ICICI Lombard. IFFCO TOKYO Bajaj Allianz United India Insurance Oriental Insurance

33

d) MIS AND BUDGET This section is responsible for collecting the data from various departments and analyzing them and then reproducing them as per the requirement in the form of reports. The most significant part is the preparation of cash budget Monthly budget Annual budget Weekly actual against monthly budget

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WORKING CAPITAL
WORKING CAPITAL is the amount of fund necessary to cover the cost of operating the enterprise. Working capital is the part of firms capital which is required for financing short term or current assets such as inventories, debtors, marketable securities and cash. Funds invested in these current assets keep revolving with relative rapidly. Hence is also known as circulating or revolving capital or short term capital or liquid capital.

Every running business needs working capital. Even a business which is fully equipped with all types of fixed assets required are bound to collapsed without-

i) ii) iii) iv)

Adequate supply of raw material for processing. Cash to pay for wages, power and other costs. Creating stock of finished goods to feed the market demand regularly. The ability to grant credit to its customers.

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CONCEPT OF WORKING CAPITAL

There is a lot of difference of opinion among accountants, financial experts, entrepreneur and economists.

1) TRADITIONAL AND BALANCE SHEET CONCETSAccording to this concept working capital depicts the position of the firm at certain point of time. With this point of view working capital is of two types-

TYPES OF WORKING CAPITAL ON THE BASIS OF B/S CONCEPT GROSS WORKING CAPITAL ON THE BASIS OF TIME REGULAR WORKING CAPITAL TEMPORARY WORKING CAPITAL SEASONAL WORKING CAPITAL SPECIFIC WORKING CAPITAL

NET WORKING CAPITAL

A) GROSS WORKING CAPITAL

The gross working capital is financial or going concern concept. According to this concept all the current assets of the business financed by long term funds or short term funds form the working capital of the firm. The following arguments are placed in favour of this concept1) It enables the enterprise to provide correct amount of working capital at the right time. 2) Every management is more interested in the total current asset with which it has to operate rather than the sources from it is financed.
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3) The gross concept of working capital takes into consideration that every increase in the funds of the enterprise would increase the working capital. 4) The concept of gross working capital is more useful in determining the rate of return on investment.

B) NET WORKING CAPITALNet working capital is the difference between CURENT ASSETS & CURENT LIABILITY. A part of funds required to maintain CURENT ASSETS is provided by CURENT LIABILITY & the balance is provided by long term funds. Therefore net working capital may also be defined as that part of firms CURENT ASSETS which is financed with long terms funds. The following arguments are put in favour of this concept. 1) Excess of CURENT ASSETS over CURENT LIABILITY is an indicator of financial soundness and the ability to face depression and contingencies. 2) It indicates the margin of protection available to the short term creditor that is the excess of CURENT ASSETS over CURENT LIABILITY. 3) It is an indicator of the financial soundness of the enterprise. 4) It suggests the need to financing a part of the working capital requirements out of the permanent sources of funds. In the company, in year 2007-2008 the current assets are Rs 563676 lacks and current liability is Rs 365514 lacks, and in year 2008-2009 the current assets are Rs 848017 lacks and current liabilities are Rs 503670 lacks, this shows that in both the year current assets are more than current liabilities, which shows positive move in company position and the net working capital ratio in year 2007-2008 is 1.54:1 and in year 2008-2009 ratio is 1.68:1. Suggested ratio by chore and tendon committee is 1.33:1.

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C)

PERMANENT OR FIXED WORKING CAPITAL

A minimum level of current assets, which is continuously required by a firm to carry on its business operations, is referred to as permanent or fixed working capital.

D) VARIABLE OR FLUCTUATING WORKING CAPITAL The extra working capital needed to support the changing production and sales activities of the firm is referred to as fluctuating or variable working capital.

STATEMENT SHOWING CHANGES IN WORKING CAPITAL IN JAL

PARTICULARS 06-07 07-08 08-09 INC. (IN0607 TO 07-08) DEC. (IN 0607 TO 07-08) INC. (IN 0708 TO 08-09) DEC. (IN 0708 TO 08-09)

CURRENT ASSTES INVENTORIES SUNDRY DEBTOR CASH & BANK BALANCE OTHER CURRENT ASSTES LOANS AND ADVANCES TOTAL (A) CURRENT LIABILITIES CURRENT LIABILITY PROVISIONS TOTAL (B) CA-CL (A-B)

80616 45205 142981 1253

98130 58618 181544 3190

122862 102204 290859 1282

17514 13413 38563 1937

24734 43586 109315 1908

109850 379899

222194 563676

330810 848017

112344

108616

202624 30407 233031 146868

334909 30605 365514 198162

455439 48231 503670 344347

132285 198

120530 17626

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INTERPRETATION By analyzing the data from 2006-2007 TO 2007-2008 we come to the conclusion that the difference between current assets and current liabilities in year 06-07 TO 07-08 is from 146868 to 198162, which shows that working capital is increases in year 07-08. The increase in working capital indicates that the company position is improved than previous year. The reason for this improvement is the value of inventory, debtors, cash and balance, other current assets, loans and advances increase from the previous year which indicates that all the assets are properly utilized in the company. By analyzing the data from 2007-2008 TO 2008-2009 we come to the conclusion that the different between current assets and current liabilities more increases in the comparison of previous year which indicates that the position of the company is more improving from the previous year. The reason for such improvement is company also properly utilized the all assets in the company in the year 2008-2009.

2) OPERATING CYCLE CONCEPT The working capital requirement of firm depends, to a greater extent upon the operating cycle of the firm. The duration of time required to complete the sequence of events right from purchase of raw material/goods for cash to the realization of sales in cash is called working capital cycle or operating cycle.

DETERMINING THE OPERATING CYCLE FOR THE YEAR 2009 AMOUNT RAW MATERIAL WORK IN PROGRESS DIRECT EXPENSE FINISHED GOODS SALES PROFIT BEFORE TAX DEBTORS CREDITORS RAW MATERIAL CONSUMED OPENING BAL. 37931 43418 3215 614793 35397 102204 70102 306640 58618 88063 CLOSING BAL. 51497 50238 3733

198858

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RAW MATERIALSTORAGE PERIOD(R) = AVERAGE STOCK OF RAW MATERIALS AVERAGE COST OF PRODUCTION PER DAY = 44714 840 =53DAYS

= (37931+51497)/2 (201140/365)

WORK IN PROGRESS (W) = AVERAGE WORK IN PROGRESS INVENTORY AVERAGE COST OF PRODUCTION PER DAY (50238+43418)/2 = 46828 (50238+198858)/365 682 =68 DAYS

FINISHED GOODS STORAGE PERIOD (F) = AVERAGE STOCK OF FINISHED GOODS AVERAGE COST OF GOODS SOLD PER DAY = (3215+3733)/2 (614793-35397)/365 = 3474 1587 =2DAYS

DEBTORS COLLECTION PERIOD (D) = AVERAGE BOOK DEBTS AVERAGE CREDIT SALES PER DAY = (58618+102204)/2 (427389/365) = 80411 1684 = 48DAYS

CREDITORS PERIOD AVAILED (C) = AVERAGE TRADE CREDITORS AVERAGE CREDIT PURCHASES PER DAY = (70102+88063)/2 = 79082.50 (306640+122862-98130)/365 907.9 = 87 DAYS

NET OPERATING CYCLE PERIOD OC= M+W+F+D-C = 53+ 68+ 2+ 48- 87 = 84

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DETAILS 1) The data required for the calculation of operating cycle period has been extracted from annual report for the year 2009. 2) Number of days is taken as 365 days. 3) The figure of average daily consumption is taken as raw material consumed divided by number of days. 4) The figure of cost of goods sold is obtained from profit and loss account COGS=SALES- PROFIT BEFORE TAX 5) As the credit sales figure is not given so the figure of sales is taken. 6) The figure of credit purchase is calculated asCREDIT PURCHASE= RAW MATERIAL+CLOSING STOCK-OPENING STOCK

INTERPRETATION From the above calculation it has been found that the net operating cycle period is 89days, which indicate that the finished goods take 89days to be converted into cash. The operating cycle indicates the minimum number of days for realization of cash. If the period of operating cycle is lesser then it will make the business more effective.

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ACCOUNT RECEIVABLE (REALIZATION)

CASH (PURCHASE)

ACCOUNT RECEIVABLE (SALE)

RAW MATERIAL (PRODUCTION PROCESS)

WORK IN PROGRESS (PRODUCTION PROCESS)

OPERATING CYCLE
SIGNIFICANCE OF WORKING CAPITAL
Working capital is as essential for the smooth and efficient running of a business, as circulation of blood is essential in the human body for maintaining life. 1) IMMEDIATE PAYMENT TO SUPPLIERS Adequate working capital enables a firm to pay its suppliers immediately that ensures regular supply of raw material. In JAYPEE GROUP at the year of 2007-2008 the working capital is Rs 198162 lacks and in year 2008-2009 the working capital is Rs 344347 lacks. This shows that the capital is properly utilized in the company and which indicate the financial soundness of the company, it enables the firm to make immediate payment to its suppliers.
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2) BENEFIT OF CASH DISCOUNT The firm can avail the advantage of cash discount this will result in reducing the cost of production, where by firm can reduce its selling prices and attract more customers by allowing trade discount.

3) ADEQUATE DIVIDEND DISTRIBUTION Firm short of working capital plough back their profit in their business to make up the deficiency of working capital. In such case dividends will not be declared and the shareholders will feel dissatisfied. When a firm has enough working capital dividends can be declared and this will create satisfaction among the share holders and bring stability in the market price of shares.

4) INCREASE IN GOODWILL AND DEBT CAPACITY In business promptness in payment to third party creates goodwill and increases the debt capacity of the concerned firm. It enables the firm to raise loan whenever needed. As the company makes the proper utilization of its capital, this enables the firm to make immediate payment to its suppliers and to its share holders in the form of dividend, this increase the goodwill of the company and enable the firm to raise loan when ever needed.

5) EXPLOITATION OF GOOD OPPORTUNITIES Only company with adequate working capital can exploit good opportunities and can earn handsome profits. Example a firm can make seasonal purchase in bulk when the price are cover or can accept big supply orders.

6) MEETING UNFORSEEN CONTINGENCIES Business oscillations, legal cases, and small crises can be easily handled through adequate working capital.

7) INCREASED EFFICIENCY Adequate working capital has psychological effect on the directors and executives of the company as it motivates them to work. Moreover timely payment of wages to employees, they work with more vigor and confidence. Thus adequate working capital creates an atmosphere of security and increases overall efficiency.
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8) INCREASE IN FIXED ASSETS PRODUCTIVITY Without working capital fixed assets are like gun which cannot shoot as there are no cartages. It is there said the fate of large scale investment in fixed asset is often determined by a relatively small amount of current assets.

EFFECTS OF EXCESSIVE WORKING CAPITAL

The need to maintain adequate capital cannot be questioned but a firm must not have excessive or redundant working capital. Excess working capital refers to ideal funds which do not earn any profit for the firm.

1) UNNECESSARY STOCK PILING Surplus money may lead to unnecessary purchasing and accumulation of inventories causing more chances of mishandling of inventories, theft, waste, losses.

2) DEFECTIVE CREDIT POLICY Excessive working capital implies excessive debtors and defective credit policy. This causes higher incidence of bad debts that ultimately affects profit of the firm.

3) MANAGERIAL INEFFICIENCY It shows that the management is not interested in utilizing the resources and encouraging economy.

4) EFFECT ON PROFITABILITY Excessive working capital remains idle and earns no profits whereas interest has to be paid on it.

5) PROMOTES SPECULATION Excessive working capital promotes profits of speculation nature by stock piling. It results in liberal dividend policy which the firm may not be able to maintain in future.

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FACTORS WHICH DETERMINE THE WORKING CAPITAL

1) NATURE OF THE BUSINESS The amount of working capital is basically related to the nature and volume of the business. Firms engaged in public utility services such as railway, transport and electricity supply companies require moderate amount of working capital because they are selling services instead of products. Trading concerns or manufacturing concerns have to maintain large amount of working capital because they require current assets such as inventories, receivables and cash.

2) SIZE OF BUSINESS The size may be measured either in terms of scale of operations or in assets or sales. Large firm will require more working capital. The cement industry has witnessed an increase in the competition in the market and thus this has led to increase in working capital requirement of the firm.

3) CHANGES IN TECHNOLOGY Changes in technology may lead to improvement in processing of raw material, savings in waste, higher productivity and more speedy production. All these improvement enables the company to reduce investment in inventories. If a company decide to go for automation, if will reduce the requirement for working capital. The technological change in cement industry led to reduce investment in inventories.

4) LENGTH OF OPERATING OR WORKING CYCLE The amount of working capital depends upon the length or duration of operating cycle. The speed with which the operating cycle is completed determines the amount of working capital .The larger the period of working capital the more is the investment in bill and inventories. Normally the need for working capital funds precedes growth in business activity. As the division has witnessed an enormous growth over last few years, its working capital requirement has increased.

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5) FIRM CREDIT POLICY Credit policy of the firm also has an impact on working capital needs. A firm following liberal credit policy will require more working capital to carry book debts. On the contrary a firm that adopts strict credit policy and grants credit facility to customer with higher credit handing will require less amount of working capital as funds tied up in receivable will be realised promptly for further use.

6) TERMS OF PURCHASE AND SALES A firm buying raw materials and other services on credit and selling goods on cash will require less investment in current assets. On the other hand a firm which purchases raw material on cash basis and sells its products on credit basis will need large amount of working capital in a firm.

7) BUSINESS CYCLE In a period of boom when the business is prosperous, there is need for large amount of working capital due to increase in sales and rise in price of raw material. In times of depression when demand falls lesser amount of working capital is required.

8) WORKING CAPITAL TURNOVER This is measured by ratio of sales to current assets. When the turnover is fast the working capital required is less.

9) PROFIT MARGIN AND DIVIDEND POLICY The amount of working capital required in a firm also depends upon its profit margin and dividend policy. A high rate of profit margin due to quality products or good marketing management or monopoly power in the market reduces the working capital requirements of the firm because profit earned in cash is a source of working capital.

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ADVANTAGE OF ADEQUATE WORKING CAPITAL

1) SOLVENCY OF THE BUSINESS Adequate working capitals help in maintaining solvency by the business by providing uninterrupted flow of production.

2) GOODWIL Sufficient working capital enables a business concern to make prompt payment and hence helps in creating and maintaining goodwill.

3) EASY LOANS A concern having a adequate working capital, high solvency and good credit standing can arrange loan from banks and other uneasy and favourable terms.

4) CASH DISCOUNTS Adequate working capital can also enable a concern to avail cash discount on the purchases and hence it reduces costs.

5) REGULAR SUPPLY OF RAW MATERIAL Sufficient working capital ensures regular supply of raw material and continuous production.

6) REGULAR PAYMENT OF SALARY, WAGES AND OTHER DAY TO DAY COMMITMENTS A company which has ample working capital can make regular payment of salary, wages and other day to day commitment which raises the moral of its employees, increases there efficiency, reduce wastages and cost and enhances production and profits.

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7) EXPLOITATION OF FAVOURABLE MARKET CONDITION Only concern with adequate working capital can exploit favourable market condition such as purchasing its requirements in bulk when the prices are lower and by holding its inventories for higher prices.

8) ABILITY TO FACE CRISIS Adequate working capital enables a concern to face business crisis in emergencies such as depression because during such period, generally, there is much pressure on working capital.

APPROACHES OF WORKING CAPITAL

There are three approaches of working capital1) MATCHING APPROACH 2) CONSERVATIVE APPROACH 3) AGGRESSIVE APPROACH

MATCHING- According to this principle, the maturity of the sources of financing should match the maturity of the assets being financed. This means that fixed assets and permanent current assets should be supported by long term sources of finance, whereas fluctuating current assets must be supported by short term sources of finance. CONSERVATIVE- In conservative approach long term financing is used to meet fixed asset requirement, permanent working capital requirements and a portion of fluctuating working capital requirement. During seasonal upswings short term financing is used. During seasonal downswings surplus is invested in liquid assets. AGGRESSIVE- In aggressive approach long term financing is used to meet fixed asset requirement as well as peak working capital requirement. When the working capital requirement is less than its peak level the surplus is invested in liquid assets

48

WORKING CAPITAL MANAGEMENT

Decisions relating to working capital and short term financing are referred to as working capital management. Management of working capital therefore is concern with the problems that arise in attempting to manage the current assets; the current liability and the interrelationship that exists between them. In other word it refers to all aspect of administration of both current assets and current liability.

The basic goal of working capital management is to manage the current assets and current liability of the firm in such a way that a satisfactory level of working capital is maintained, that is, it is neither inadequate nor excessive.

CALCULATION OF WORKING CAPITAL IN JAL

From above details THE NET WORKING CAPITAL FOR the following years are given belowYEARS 06-07 146868 07-08 198162 08-09 344347

ANALYSIS THROUGH CHART

INTERPRETATION
By analyzing three year data we come to a conclusion that net working capital is more in 2008 than 2007 that increment also in 2009. It continuous increases in the net working capital indicate that the position of the company is growing continuously.
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ANALYSIS OF VARIOUS COMPONENTS OF WORKING CAPITAL INVENTORY ANALYSIS

Inventory is total amount of goods and materials content in a store of factory at any given time. Inventory means stock of three things: Raw materials Semi finished goods. Finished goods.

POSITION OF INVENTORY IN JAL

(SUB TO) For analysis point of view major item of inventories are considered. YEAR STORE, SPARE PARTS etc. RAW MATERIAL FINISHED GOODS STOCK IN PROCESS WORK IN PROCESS TOTAL 31.03.07 29311 641 2377 756 39598 72683 31.03.08 34761 905 2653 3006 43418 84743 31.03.09 44150 707 3169 2324 50238 100588

ANALYSIS THROUGH CHART:

50

INTERPRETATION By analyzing the 3 years data we see that the inventories are increased year by year. We are looking increasing pattern in inventories. We can see that inventories are growing in 07-08 and 08-09 respectively from previous year. By this growth we can say that the company is growing very rapidly in cement sector. A company uses inventory when they have demand in market and JAL is having a great demand in infrastructure sector. That is biggest reason for increase in inventories. From other point of view we can say that the liquidity of firm is blocked in inventories but to stock is very good due to uncertainty of availability of raw material in time.

SUNDRY DEBTORS ANALYSIS

Debtors or an account receivable is an important component of working capital and fall under current assets. Debtors will arise only when credit sales are made. POSITION OF SUNDRY DEBTOR IN JAL YEAR DEBT OUTSTANDING FOR A PERIOD EXCEEDING 6 MONTHS i. FROM OVERSEAS WORK ii. FROM OTHERS Less: PROVISION FOR BAD DEBT OTHER BAD DEBTS TOTAL ANALYSIS THROUGH CHART 31.03.07 31.03.08 31.03.09

10163 15279 (140) 19903 45205

10163 17434 (139) 31160 58618

10163 20760 (155) 71281 102049

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INTERPRETATION In the table and figure we see that there is continuous rise in the debtors of JAL in the successive years. A simple logic is that debtors increase only when sales increase and if sales increases it is good sign for growth. We can see 30% growth in 2008 in comparison with 2007 and there is 74% growth in year 2009 while comparing with previous year. We can say that it is a good sign as well as negative also. Company policy of debtors is very good but a risk of bad debts is always present in high debtors. When sales are increasing with a great speed the profit also increases. If company decreases the Debtors they can use the money in many investment plans. Increase in debtors also result in strong working capital ratio. But the company should regularly monitor the debtors to avoid loss as bad debts.

CASH AND BANK BALANCE ANALYSIS

Cash is called the most liquid asset and vital current assets; it is an important component of working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a broader sense it includes near cash assets such as marketable securities and time deposits with bank.

POSITION OF CASH AND BANK BALANCE IN JAL

YEAR

31.03.07

31.03.08

31.03.09
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CASH IN HAND BALANCE SCHEDULED BANK BALANCE WITH SCHEDULED BANK TOTAL

9162 WITH 133707 NON 112 142981

5858 175627 59 181544

30818 259542 499 290859

ANLYSIS THROUGH CHART:

INTERPRETATION If we analyze the above table and chart we find that in year 2008 it increases from the previous year and comparing between 2008 and 2009 then we analyze that in 2008 it increases more from the previous year. Company is utilizing the fixed cash for exploding the projects that is good for growth. Cash requirement of any company should be there to provide for its requirement when it needs, so holding excess cash is not good for any company.

LOANS AND ADVANCES ANALYSIS

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Loans and Advances here refers to any to amount given to different parties, company, employees for a specific period of time and in return they will be liable to make timely repayment of that amount in addition to interest on that loan. POSITION OF LOAN AND ADVANCES IN JAL

YEAR ADVANCES TO SUPPLIERS STAFF IMPREST AND ADVANCES CLAIMS AND REFUND RECEIVABLE PREPAID EXPENCES DEPOSIT WITH GOVT. a) Govt. dept. b) Others ADVANCES & INCOME TAX DEDUCTION AT SOURCE SALES TAX RECEIVABLE TOTAL

31.03.07 53013 333 8592 4645 14794 849 24875 2705 109850

31.03.08 74690 525 20363 3550 17519 82596 21493 1458 222194

31.03.09 99930 592 42383 12901 21119 112779 4358 36748 330810

ANLYSIS THROUGH CHART

54

INTERPRETATION If we analyze the table and the chart we can see that it follows an increasing trend which is a good sign for the company. We can see that from the year 2007 to 2008 it increased and in year 2009 the increase is more than the previous two years. The increasing pattern shows that company is giving advances for the expansion of plants and machinery which is good sign for better production of cement and other goods. Although companys cash is blocked but this is good that company is doing modernization of plants in time to compete with other competitors in market.

CURRENT LIABILITIES ANALYSIS Current liabilities are any liabilities that are incurred by the firm on a short term basis or current liabilities that has to be paid by the firm with in one year.

POSITION OF OTHER CURRENT LIABILITIES IN JAL

(SUBJECT TO) For analysis point of view major item of current liabilities are considered. YEAR SUNDRY CREDITORS a) Due to micro, small & medium enterprise b) Others ADVANCES FROM CUSTOMER DUE TO STAFF DUE TO DIRECTORS ADJUSTABLE RECEIPT AGAINST CONTRACTS a) Interest bearing b) Non interest bearing 31.03.07 5 48312 42140 900 2 31.03.08 70102 69367 1229 2 31.03.09 88063 138305 5320 37

21217

22347

21283

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i) From subsidiaries ii) From others OTHER LIABILITY INT. ACCRUED BUT NOT DUE ON LOANS INVESTORS EDU. & PROTECTION FUND TOTAL

61430 7106 14127 6983 402 202624

140620 5160 16872 8567 643 334909

159559 5182 25147 11892 651 455439

ANALYSIS THROUGH CHART:

INTERPRETATION If we analyze the above table then we can see that there is an increasing trend in liabilities. The important component of current liabilities is sundry creditors and other liabilities. In 2007-2008 the percentage is 65% and in year 2008-2009 it increases by 35% which shows a decreasing trend, which is good for the company as it indicate that the company is using less
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credit facilities by creditors. When company has minimum liabilities it creates a better goodwill in market. PROVISIONS ANALYSIS POSITION OF OTHER PROVISION IN JAL YEAR FOR TAXATION FOR GRATUITY FOR PROVIDENT FUND FOR LEAVE ENCASHMENT FOR SECOND INTERIM DIVIDEND FOR TAX ON SECOND INTERIM DEVIDEND FOR PROPOSED FINAL DIVIDENT FOR TAX ON PROPOSED FINAL DIVIDEND TOTAL 31.03.07 23291 1981 270 761 3508 596 30407 31.03.08 20647 2915 339 1222 4686 796 30605 31.03.09 30758 4055 517 2186 3551 604 5607 953 48321

ANALYSIS THROUGH CHART:

INTERPRETATION
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From the above table we can see that provision shows an increasing trend and the huge amount is being kept in these provisions. The increase in provision indicates that the expenditure on the company increases and the profit decreases. The increase in provision does not affect company wealth. It shows for the liability which the company will have to incur in future for which profit have been kept in advance.

WORKING CAPITAL RATIO AND ITS INTERPRETATION

POSITION OF RECEIVABLE RATIO IN JAL FORMULA DEBTORS RECEIVABLE RATIO = ---------------- * 365 SALES

31.03.07 RECEIVABLE RATIO (IN DAYS) 46.14

31.03.08

31.03.09

50.06

60.68

ANALYSIS THROUGH CHART:

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INTERPRETATION While analyzing the three years data it shows an increasing trend, as in year 2008 it increases from 2007 and again in year 2009 it increase from 2008. The increase in receivable ratio indicates that there is increase in credit sales, but the increase in receivable ratio has no affect on working capital management and it affects the liquidity position of the firm. POSITION OF PAYABLE RATIO IN JAL FORMULA CREDITORS PAYABLE RATIO= ----------------------------COST OF SALES

YEAR PAYABLE RATIO (IN DAYS)

31.03.07

31.03.08

31.03.09

0.14

0.17

0.15

ANALYSIS THROUGH CHART:

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INTERPRETATION Actually this ratio reveals the ability of the firm to avail the credit facility from the suppliers. Generally a low creditors turnover ratio implies favorable since the firm enjoys lengthy credit period Now if we analyze the three years data we find that, it follows an increasing trend, in year 2007 and 2008. But firm manage the payable ratio in 2009 which good sign for the firm. The decreasing in payable ratio indicates that there is proper management of fund. POSITION OF CURRENT RATIO IN JAL FORMULA TOTAL CURRENT ASSETS CURRENT RATIO= -------------------------------------------TOTAL CURRENT LIABILITIES

31.03.07 CURRENT RATIO 1.84

31.03.08 1.64

31.03.09 1.81

ANALYSIS THROUGH CHART:-

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INTERPRETATION This ratio reflects the financial stability of the enterprise. The standard of the normal ratio is 2:1 but in most of companies standard is taken according to Tandon Committee which is taken as 1.33:1. Now if we analyze the three years data in 2007 it is at the high position but in the 2008 it is at the low label as it follows a decreasing trend but in the 2009 it again reach at the high position and it is seen that it holds a high position than the standard one and the company is improving its position but more improvement is required to come to the standard position. POSITION OF QUICK RATIO IN JAL FORMULA TOTAL CURRENT ASSETS - INVENTORIES QUICK RATIO= ----------------------------------------------------------------TOTAL CURRENT LIABILITIES 31.03.07 QUICK RATIO 1.28 31.03.08 1.27 31.03.09 1.43

ANALYSIS THROUGH CHART:

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INTERPRETATION It is the ratio between quick liquid assets and quick liabilities. The normal value for such ratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the firm. It indicates the relationship between strictly liquid assets whose realizable value is almost certain on one hand and strictly liquid liabilities on the other hand. Liquid assets comprise all current assets minus stock. By analyzing the three years data it can be said that its position was good in the year 2007 & 2008 but in the year 2009 its position is weak.

POSITION OF WORKING CAPITAL RATIO IN JAL FORMULA INVENTORY + RECIVEABLE - PAYABLE WORKING CAPITAL RATIO= --------------------------------------------------------(AS % OF SALES) SALES

31.03.07 WORKING

31.03.08

31.03.09

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CAPITAL RATIO

0.21

0.20

0.18

ANALYSIS THROUGH CHART:

INTERPRETATION While analyzing the three year data, in year 2007 the working capital ratio is more than the year 2008 and 2009. The working capital ratio follows a decreasing trend. The ideal ratio is 2:1, but the company ratio is not ideal which indicates that the position of the company is not good.

POSITION OF INVENTORY TURNOVER RATIO IN BJCL

FORMULA COST OF GOODS SOLD STOCK TURN OVER RATIO (IN DAYS) = --------------------------------------- * 365 AVERAGE STOCK

YEAR STOCK

31.03.10 46.07

31.03.11 50.01

31.03.12 56.06
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TURNOVER RATIO

ANALYSIS THROUGH CHART:

INTERPRETATION While analyzing the three year data we analyze that there is increase in stock turn over ratio from year 2007 to 2008 and in year 2009. The increase in stock turn over ratio is not a good sign for the company because increase in this ratio indicates that the stock is not easily been converted into cash it takes more number of days. POSITION OF DEBT-EQUITY RATIO IN JAL Formula = Debt / Equity Calculation of debt-equity ratio at JAL:Particulars Long Debt Net Worth D/E Ratio 2006-07 2007-08 8974 66581.37 0.14:1 2008-09 7176.98 100497.53 0.07:1
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Term 12159.08 38423.56 0.32:1

ANALYSIS THROUGH CHART:

INTERPRETATION When a company has lower debt equity ratio, it means that company is utilizing its own funds and reserves rather than taking loans from outsiders. The ideal debt equity ratio is 2:1. JAL have a decreasing trend in debt equity ratio so we can say that JAL is using its funds and not taking loans from banks. Equity is more than debt that shows a very strong position in whole market and if debt is increasing the shareholders expectation increases.

MANAGEMENT OF WORKING CAPITAL

Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, so that cash flows and returns are acceptable. 1) 2) 3) 4) CASH MANAGEMENT INVENTORY MANAGEMENT DEBTORS MANAGEMENT SHORT TERM INVESTMENT
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RESEARCH METHODOLOGY
METHODOLOGY:
The efficiency of working capital management in Jaiprakash Associates Ltd. (Cement division) over the years has been analyzed with the help of following techniques and approaches

1) OPERATING CYCLE APPROACH:

The normal operations of a manufacturing and trading company start with cash, go through the successive segments of the operating cycle, viz, raw material storage period, conversion period, finished goods storage period and average collection period before getting back cash along with profits. The shorter the duration of the operating cycle period, the locking up of funds in current assets is for a relatively short duration. Thus, operating cycle period has been calculated for four years and the operating cycle period for the current year has been compared with the previous years to know whether the period has increased or decreased over the years. To provide a better view, each segment of operating cycle period is compared over the years to get a picture of management of working capital management in the division.

2) RATIO ANALYSIS
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Despite the usual limitations associated with ratios, ratio analysis is still popular for analyzing the financial statements of business entities. This is mainly attributable to the simplicity in calculation and indication of the direction in which the entity is moving. Thus various working capital ratios have been calculated for the various years and compared to gauge the efficiency of working capital management in the Cement division of Jaiprakash Associates Ltd.

RESEARCH OBJECTIVE

1) The research objective of working capital management is to ensure that the

firm is able to continue its operation and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

2) The objective of working capital is to find the amount of fund necessary to

cover the cost of operating the enterprise.

3) The

research objective of Working capital is that it indicates financial soundness of the enterprise.

4) The objective of determining the working capital is to minimize the level of

risk arising in the business. RESEARCH DESIGN: Research design is a frame work or plan for a study that guides the collection and
analysis of the data. The controlling plan for a marketing research study in which the methods and procedures for collecting and analyzing the information to be collected is specified. A plan for collecting and utilizing data so that desired information can be obtained with sufficient precision or so that a hypothesis can be tested properly.

SOURCES OF DATA:

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PRIMARY DATA Primary data refers to the data which is collected for the first time from the origin. It is the first hand information. The inputs related to inventory management has been obtained from the inventory stores located at cement plant (Jaypee group). Some data and information related to working capital management has been obtained from the finance and accounts department of the division. The data so received are also collected from the management. SECONDARY DATA Secondary data refers to the data which are already in existence. These are second hand information. The data required for making a comparative study are collected from annual reports available on internet and published sources. The data required for the application of quantitative tools and techniques for monitoring the efficiency of working capital management has been extracted from the annual report presented in year 2006-2007, 20072008 and 2008-2009.

LIMITATIONS OF THE STUDY

The period for the application of quantitative techniques and approaches for analyzing the efficiency of working capital management in the division is restricted to three years. Some of the aspects related to working capital management being internal matters of finance were not accessible.

The time factor also plays as a limitation for the study of working capital management

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CONCLUSION

An attempt has been made in the project to study and analyze various aspects of working capital management in BHILAI JAYPEE CEMENT LTD. All the division are efficiently managing its working capital especially in the recent two years, there have been a lot of improvement in the management of working capital. A careful attention has been given by the executives in enhancing the efficiency in working capital management.

The company has adequate sources of finance to meet its short term obligations. The combined interpretation of liquidity ratios indicate that interest of short term creditors is well protected by adequate solvency and liquidity in the firm.

The shortening of operating cycle during the period of study indicates not only efficiency in the management of working capital but also efficiency in production and distribution system, logistic and delivery system prevailing in the organization.

In the context of the present highly competitive market it is necessary that the division keeps on identifying new areas and work on it for improvement in working capital management.
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More advanced and efficient method of managing different component of current asset should be worked upon.

BIBLIOGRAPHY

i)
ii) iii) iv) v) vi)

I.M PANDEY,

financial management, vikash publishing house,

New Delhi.
PRASANNA CHANDRA, financial management, theory and practice, 3rd edition, Tata McGraw hill, New Delhi. BHATTACHARYA, H, total management by ratios, New Delhi, sage publication India pvt. Ltd. YADAV, R. A, working capital management- a parametric approach, the chartered accountant. PRASAD, R. 5, working capital management in paper industry finance India volume XV. NO. 1, March 2001. Financial management and policy, J.C. VAN HORNE, PHI.

vii) Research methodology by C.R.KOTHARI.

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viii) www.jalindia.co.in ix) x) www.google.com www.altavista.com

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