A

PROJECT REPORT ON

WORKING

CAPITAL

MANAGEMENT

OF BEVCON WAYORS

DONE AT BEVCON WAYORS PVT.LTD UPPAL, HYDERABAD

BY: SANDIP KUMAR SINGH ENROLLMENT NO. U0910537

Summer Training Project Report Under at Bevcon Wayors private Limited Uppal, Hyderabad

Submitted in Partial Fulfillment of the Requirement for the Award of The Degree of MASTER OF BUSINESS ADMINISTRATION BY: SANDIP KUMAR SINGH Enrolment No-U0910537 Under the Supervision of: H. RAMESH BABU Sr. Manager(Finance &Accounts)

MOTILAL NEHRU ISTITUTE OF RESEARCH AND BUSINESS ADMINITRATION UNIVERSITY OF ALLAHABAD, ALLAHABAD-211002

To My Parents And my forever friends, Gaurav, Rajvir and Swapnil

CERTIFICATE

DECLARATION

I, Sandip Kumar Singh, a bonafide student of MBA(Full- Time) Programme at MONIRBA, University of Allahabad, hereby declare that I have undergone the Summer Training at BEVCON WAYORS PVT LTD under the supervision of H. Ramesh Babu on and from 19-05-2013 to 05-07-2013. I also declare that the present project report is based on the above Summer Training and is my original work. The content of this project report has not been submitted to any other University or Institute either in part or full the award of any degree, diploma or fellowship. Further, I assign the right to the University, subject to the permission from the organization concerned, to use the information and contents of this project to develop cases, case lets, case leads and papers for publication and/ or for use in teaching.

Place: Allahabad

Sandip Kumar Singh

Enrollment No. U0910537

ACKNOWLEDGMENT

The success and final outcome of this project required a lot of guidance and assistance from many people and I am extremely fortunate to have got this all along the completion of my project work. Whatever I have is only due to such guidance and assistance and I would not forget to thank them. I respect and thank Mr. K Ganeshwar Rav, AGM(Accounts & Finance) for giving me an opportunity to do the project work in Bevcon Wayors and providing us all support and guidance which made me complete the project on time. I am extremely grateful to him for providing such a nice support and guidance though he had busy schedule managing the company affairs. I owe my profound gratitude to our project guide Mr. H. Ramesh Babu( Sr. manager, Accounts & Finance) , who took keen interest on our project work and guided us all along, till the completion of our project work by providing all the necessary information for developing a good system. I would not forget to remember Mr.Sudhakar (HR) for his unlisted encouragement and more over for his timely support and guidance till the completion of our project work I would like to thank Mr. Ramesh Adappa, of Uppal Industrise Association and Mr. M. Chiddambram (AM), of HUL bakery unit for their guidance and support. I heartily thank our internal project guide, Dr. A. K. Singhal, training and placement officer for his guidance and support. I am thankful to all teaching staffs of MONIRBA and employees at BEVCON who helped us in successfully completing our project work.

Sandip Kumar Singh

ABSTRACT

Working capital management is important part in firm financial management decision. Improper management of working capital, that is, too much or too low working capital may suffer firms, so an optimal level of working capital is the key to smooth inflow of profit. To reach optimal working capital working capital management, firm manager should control the tradeoff between profitability and liquidity accurately. Working capital is expected to contribute positively to the creation of firm value. The purpose of this study is to investigate the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. Here time is not so important as in managing fixed assets. This study is based on the data of BEVCON WAYORS for the period of 2009-2012. Working capital analysis provides a significant relationship between cash conversion cycle and firm profitability. Working capital management is particularly important in the case of small and medium sized company.

CONTENTS

1. Introduction

..11 13

2. Objectives of the Study

3. Method of Data Collection 14 4. Theoretical Framework i. ii. iii. 15

Concepts of Working Capital 15 Determinants of Working Capital .16 Management of Working Capital .29

5. Limitations of the Study

23 ..24

6. An Overview of the Company i.

ii.

About the Industry 24 About Bevcon 25 (a) Mission 25 (b) Vision 26 (c) Core values 26 (d) Infrastructure 27 (e) Management 29 (f) Technology and Collaborations 34 (g) Bevcon Products 35 (h) Work Experience and Working Culture 38

7. Data Analysis and Interpretation .39 i. ii. iii. iv.

Balance Sheet ...41 Profit & Loss Account 42 Changes in Working Capital 43 Ratio Analysis .49

(a) Standards of Comparison .50

10

(b) Types of Ratios

..54

8. Findings

56 .57 .58

9. Recommendations 10. Bibliography

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INTRODUCTION

Working capital is a financial metric which represents operating liquidity available to a business. Working capital management is important part in firm financial management decision. Working capital refers to a companys current assets. Current assets are cash and equivalents, accounts receivable, and inventory. Working capital management is applying investment and financing decisions to current assets. Working capital management is a very important component of corporate finance because it directly affects the liquidity and profitability of the firm. Firms with high liquidity of working capital may have low risk then profitability & vice-versa. A firm has a greater degree of flexibility in managing current assets, as current assets can be adjusted with sales fluctuations in the short run. A company can be endowed with assets and profitability but short of liquidity if its assets can not readily be converted into cash. Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact. 1. Accounts receivable (Current assets) 2. Inventory (Current assets) 3. Accounts payable (Current liabilities)

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OBJECTIVES OF THE STUDY

The present study is expected to contribute to better understand the factors that shape up the working capital requirements of Bevcon Wayors. The current study investigates the relationship between working capital management and firm profitability, and shows the working capital changes from 2009-2012 in Bevcon Wayors. This project work provides me the practical knowledge of what I have studied theoretically. This study provides me An appreciation of the importance of working capital in ensuring the profitability and liquidity of a company. The ability to describe the cash conversion cycle and its significance to working capital management. An understanding of the need of working capital policies concerning the level and financing of current assets.

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METHOD OF DATA COLLECTION

Data Collection is very crucial for any project work/study. There are two types of data1. Primary data: The data collected by one self for the first time through observation or some other techniques. All the data collection process has been carried out through the constitutions with the staff members concerned in the department of finance in the organization.

Direct interactions with the manager, The accountants and the related staff concern helped me in gathering of the required data.

Took the help of the management from the other departments and the guidance from the internal guide.

2. Secondary data: The data collected by someone other than the user. It saves time & it can be re-used. My project work is basically based on the secondary data, which involves the gathering and/or use of existing data for purpose other than those for which they are originally collected. These secondary data are obtained from many sources like Auditors report, News paper articles, magazines, broachers, internet etc.

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THEORETICAL FRAMEWORK

Concepts of Working Capital: There are two concepts of working capital.

1. Gross Working Capital: It refers to the firms investment in current assets. Current assets are the assets which can be converted into cash within an accounting year and include Cash, Short-term Securities, Debtors (accounts receivable or book debts), bills receivable and Stock (inventory). 2. Net Working Capital: It 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 an accounting year and include Creditors (accounts payable), bills payable and outstanding expenses. Net working capital can be positive or negative. A positive net working capital arises when current assets exceed current liabilities. The two concepts of working capital- gross and net- are not exclusive; rather, they have equal significance from the management view point.

Another classification is Permanent working capital Variable working capital Permanent working capital: There is always a minimum level of current assets which is continuously required by a firm to carry on its business operations. It is permanent in the same way as the fixed assets are. Depending upon the changes in production and sales, the need for working capital, over and above the permanent working capital will fluctuate. Variable working capital: It is the extra working capital needed to support the changing production and sales activities of the firm.

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DETERMINANTS OF WORKING CAPITAL

There are no set rules to determine the working capital requirements of firms. A large number of factors, each having a different importance, influence working capital needs of the firms.

Nature of Business: The working capital requirements of an enterprise

basically depend upon the nature of its business and operating cycle of the business. Trading and financial firms have a very small investment in fixed assets, but require a large sum of money to be invested in working capital. A trading concern, for instance, requires large amount of working capital for investment in stocks, receivables and cash etc.

Size of the Business: The amount of working capital needed depends upon
the scale of operation of the business. The larger the size of the business unit, generally the larger is the requirement of working capital and vice- versa.

Market and Demand Conditions: The working capital needs of a firm are
related to its sales. In practice, current assets will have to be employed before growth takes place.

Length of Period of Manufacture: The production process such as

building, heavy armaments etc requires a large amount of working capital to meet the manufacturing expenses until the payment is received for the finished products. Longer the manufacturing cycle, larger will be the firms working capital requirements.

Methods of purchase and Sale of Commodities: If a business is able to

purchase the raw material and other allied products on credit and is able to sell the manufactured goods on cash it will need less amount of working capital.

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Operating Cycle in a Trading Firm:

Cash

Inventory of finished goods

Receivables

Operating Cycle in a Manufacturing Firm:

Cash

Inventory of Raw Materials

Inventory Of work in progress

Inventory of Finished Goods Receivables

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Converting Working Assets into Cash: If the assets of a business

have liquidity i.e. they are readily saleable for cash then fewer amounts will be set aside for working capital.

Seasonal Variations in Business: There are certain industries which

purchase raw materials in the production season such as cotton, rubber and consume the material in the off season for the manufacturing of products. These industries require large amount of working capital to purchase the raw material in the production season.

Risk in Business: A business like the oil exploration involves great risk.
The business may or may not be able to find out the oil by digging wells. The business needs huge amount of working capital in such risky enterprises.

Size of Labour Force: If the size of labour force employed in the

manufacture of a product is fairly large (labour intensive), the business will need a greater amount of working capital. In capital intensive industries lesser amount of working capital is required.

Price-Level Changes: If the prices are rising very rapidly in the country,
the business will require greater amount of working capital to maintain the same current assets & vice-versa.

Rate of Turnover: If in a business, the sale is faster i.e. a business has

rapid turnover then the amount of working capital required may be small as cash is realized from sales.

Business Policy: If a business sets aside funds at the end of each year for
the depreciation, payment of loans and ploughing back of profits in the business, it requires less amount of working capital.

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MANAGEMENT OF WORKING CAPITAL

Decisions related to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm short -term assets and its short term liabilities.

Cash Management: Identify the cash balance which allows for the
business to meet day to day expenses. It is concerned with the managing of;

Cash flows into and out of the firm. Cash flows within the firm. Cash balances held by the firm at a point of time by financing deficit or
investing surplus cash.

It can be represented by a cash conversion cycle.

Business Operations

Cash Collections

Deficit Information and Control Surplus

Borrow

Invest

Cash Payments

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Inventory Management: Inventories constitute the most significant part

of current assets. There are three forms of inventories. Raw materials, Work-in-Progress, Finished Goods

For transactions, precautionary & speculative motive, we need to hold inventories. There are two conflicting needs regarding inventories. 1.To maintain a large size of inventories of raw material and work in process for efficient and smooth production and of finished goods for uninterrupted sales operations. 2. To maintain a minimum investment in inventories to maximize profitability.

Both excessive and inadequate inventories are not desirable. The firm should always avoid a situation of over investment or under investment in inventories. There are some good techniques for inventory management. Economic Order Quantity (EOQ) ABC Inventory Control System Just-in-Time (JIT) Systems Outsourcing Computerized Inventory Control System

Receivables Management: Trade credit happens when a firm sells its products or services on credit and does not receive cash immediately. Trade credit creates accounts receivable.

Why Do Companies Grant Credit?

Companies feel the necessity of granting credit for several reasons. Competition Companys bargaining power Buyers requirements Buyers status Relationship with dealers Marketing tool Industry practice Transit delays

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Collection Efforts:
The firm should follow a well laid-down collection policy and procedure to collect dues from its customers. When the normal credit period granted to a customer is over, the firm should send a polite letter to him, reminding that the account is overdue. If the customer does not respond, letter may be followed by telephone, telegram and personal visit of the firms representatives. If the payment is still not made, the firm may initiate a legal action, but before this the firm should examine the customers financial condition. If it is weak, legal against him will simply hasten his insolvency. Under such situation, it is better to be patient and wait, or accept reduced payment in the settlement of the account.

Cash Conversion Cycle

Operating Cycle: It is the time duration required to convert sales, after the
conversion of resources into inventories, into cash. The operating cycle of a manufacturing firm involves three phases. 1. Acquisition of resources 2. Manufacture of the product 3. Sale of the product

Gross Operating Cycle (GOC):

Gross operating Cycle (GOC) =Inventory conversion Period (ICP) + Debtors Conversion Period (DCP)

GOC = ICP + DCP

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Cash Conversion Cycle

Cash conversion cycle (or Net Operating cycle) = Gross operating cycle Creditors deferral period

NOC = GOC - CDP

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LIMITATIONS OF THE STUDY

There are some limitations of the present study. As no person is perfect in this world, in the same way no study can be considered as fully reliable at one glance. There are a number of uncontrollable factors acting as limitations in conducting the study. The present project report is primarily based on the secondary data and therefore reliability of the project depends upon the reliability of the secondary data. Direct observation of inventory and other factors constituting working capital is not possible within this small period of the study.

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AN OVERVIEW OF THE COMPANY

About the Industry:

Bulk material handling is a field comprising the development of systems to move, process, and package bulk materials like ores, grain, and so forth. It involves a variety of activities, from developing systems to transport bulk materials to designing safety protocols to reduce the risks of contamination during the handling process. Engineers play a major role in bulk material handling, working with companies at every step of a supply chain, from the source to the end destination, to develop streamlined and effective systems for managing bulk materials. Such systems include heavy equipment, often movable and configurable, to move bulk materials around a site. Conveyor belts, hoppers, trucks, and similar equipment provides a means for getting bulk materials from the source to where they need to go. With grain, for example, this can include the development of rail cars to transport bulk grain, grain elevators to move grain into silos, and so forth. Some considerations with bulk materials handling include the composition of materials, how companies use them, and where they need to go. Many bulk goods need to go by truck, train, and boat at various points in their journey. Containerization makes it possible to streamline this process by moving materials in containers, rather than loading and unloading in bulk at each stop. Cranes to shift containers are necessary, along with equipment like conveyors for unloading at final destinations. Bulk material handling is an engineering field that is centered around the design of equipment used for the handling of dry materials such as ores, coal, cereals, wood chips, sand, gravel and stone in loose bulk form. It can also relate to the handling of mixed wastes. Bulk material handling systems are typically composed of stationary machinery such as conveyor belts, screw conveyors, stackers, reclaimers, bucket elevators, truck dumpers, railcar dumpers or wagon tipplers, ship loaders, hoppers and diverters and various mobile equipment such as loaders, various shuttles, combined with storage facilities such as stockyards, storage silos or stockpiles. Advanced bulk material handling systems feature integrated bulk storage, conveying, and discharge. The purpose of a bulk material handling facility may be to transport material from one of several locations (i.e. a source) to an ultimate destination or to process material such as ore in concentrating and smelting or handling materials for manufacturing such as logs, wood chips and sawdust at sawmills and paper mills. Other industries using bulk materials handling include flour mills and coal fired utility boilers.

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About Bevcon
BULK MADE SIMPLE Bevcon Wayors offers complete Bulk Material Handling & Processing Solutions. Bevcon Wayors is the industry leader in providing high-quality, technologically advanced Bulk Material Handling Systems Crushing, Screening, Conveying, Dust Extraction, Pneumatics and Special Conveying equipment. Bevcon Wayors turnkey solutions include custom design, manufacturing, installation and servicing of bulk material handling equipment. Bevcon Wayors manufactures majority of the equipment in its own facilities. This provides Bevcons customers greater flexibility for custom designs most suitable for their needs. Bevcons key strength has been its world-class Research & Development division providing cutting edge solutions and designs of long-term value. Sale is only a part of the solution that Bevcon offers. Each sale is preceded by strategic consulting backed by more than 125 years of domain expertise of the senior management.

Mission: we are bringing in business and manufacturing experts from global players and forge new
business alliances to bring in futuristic technologies to Indian markets.

Our Mission is to create Smarter Engineering & Management Solutions evolved by a technology driven team. The Mission is achieved by the following edicts.

Strong Engineering & Management skills by Design and Quality base. Strict conformance and compliance to quality of equipment and work procedures. Excellence in service to Customers & Clients Honesty, Integrity and Transparency in all relationships. Respect for the Individual.

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Vision:

To become market leader in bulk material handling and processing solutions through dynamism, innovations, technologies, operational excellence and enhanced value for stake holders and society.

Core Values:

Excellence in service; fairness and transparency in relationships Respect for all individuals and organizations Performance driven attitude and adherence to quality standards

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INFRASTRUCTURE

In bulk material handling and processing, Bevcon Wayors capabilities include a strategic mix of in-house strengths and the expertise of its collaborators. Apart from its strong in-house manufacturing strength, Bevcon Wayors has strategically collaborated with many top-notch global engineering houses across Americas, Europe, Australia and Asia. Bevcon Wayors has a pan India presence with offices in majority of the metros of the country Hyderabad, New Delhi, Kolkata, Chennai, Pune, Jamshedpur, Raipur and Bhubaneshwar. Bevcon Wayors has 3 primary fabrication units- Cherlapally Fabrication Unit, Uppal Fabrication Unit and Cherlapally Open Arena. The Cherla pally Fabrication Unit is used to fabricate Crushers, Screens and Feeders. The Fabrication Unit at Uppal Industrial area is used primarily to fabricate Pneumatic Conveying Systems, Dust extraction Systems and Aerobelt Conveying Systems. And the open arena at Cherlapally is used for Turnkey project designing and manufacturing.

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OUR FACTORY AND OFFICE INFRASTRUCTURE

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MANAGEMENT

Y. SRINIVAs Managing Director

REDDY

Y Srinivas Reddy is responsible for driving enterprise adoption of Bevcons engineering solutions across the top of the line customers of Bevcon Wayors. Under his leadership, Bevcon achieved rapid growth and delivered enterprise class engineering solutions to Global 2000 customers. His fervour for design engineering has lead to numerous innovations in Bevcons range of products while ensuring high quality and faster turnaround times. Y Srinivas Reddy is an associate member of Association for Project Management (APM) UK. He is also serving as the President of Uppal Industries Association. YSR has contributed immensely towards social causes as Founder & MD of iBeam Foundation, a reputed and active social entrepreneurship organization. YSR holds a Bachelors Degree in Mechanical Engineering from JNTU, Hyderabad.

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Hemant Juvekar Director Marketing & Sales Hemant Juvekar has over three decades of experience in Sales, Franchisee Management & Marketing for Domestic and International Markets. Hemant drives strategic partner development, industry alliances, and new business initiatives for Bevcon. Relationships with Customers, OEMs & Consultants being his key strength, Hemant developed a lot of new applications to cover new markets both domestic & International at Bevcon. With a Bachelors degree in Mechanical Engineering, Hemant started his career at Thermax in 1977. He was instrumental in establishing franchisee networks for sales & services and for creating partnerships with McKinsey & BCG Group for Operational excellence at Thermax.

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P Lakshman Director HR & Administration P Lakshman has over five decades of experience in Operations, Sales & Marketing, Human Resources and Administration. With a Bachelors degree in Sciences, Lakshman had a long standing career of close to 40 years, at Bharat Petroleum, erstwhile Burmah Shell, where, he retired as a Divisional Manager. He was instrumental in establishing franchisee networks and partnerships for Bharat Petroleum, through its wide network of Petrol Stations, Kerosene Dealers, LPG Distributors, Lube Shoppes, besides supplying fuel and oil directly to hundreds of industries. He has expert understanding of aligning corporate goals to achievement orientation, resulting in outstanding talent and enriched organizational brand value.

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Rithvik Pasupuleti Director- Business Development Rithvik is a second generation entrepreneur succeeding his father, Late Mr. Suneel Lakshman, who is the visionary for Bevcon Wayors Pvt Ltd. Rithvik Pasupuleti, Director- Business Development, joined Bevcon Wayors Pvt Ltd on June 21, 2011 after completing B.Tech. in Mechanical Engineering from Vellore Institute of Technology. He was appointed as whole-time Director on the Board of the Company on May 12, 2012. Dynamism, creativity, professionalism and a high ethical quotient are synonymous with Rithvik. He is the quintessential entrepreneur with many successful initiatives at Bevcon Wayors and he is very dynamic in the areas of Customer Relations, Employee Relations, Marketing Communications, Vendor Relations.

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Balaji Vangipuram Chief Operating Officer Balaji brings with him a wealth of more than 20 years of professional experience. He served in Executive Leadership role in various Organizations before joining Bevcon . A Trained Coach from Coach Inc. USA, He is engaged in the field of executive and personal Coaching for individuals from diverse professional and personal backgrounds. An accomplished leader and strong believer cum practitioner of people empowerment as the bedrock for sustaining performance excellence. He blends his expertise in various business functions together with strong people management skills to offer a balanced and realistic approach to the coaching practice. Being passionate about initiating and leading change. He is credentialed with a tailored program in Leading Change & Organizational Renewal from Harvard Business school. Balaji has a successful track record in turning around businesses and improving operating performances while re-defining the business process. Having completed PG Diploma in Sales & Marketing from Osmania university, he pursued Advanced Management Program from IIM Bangalore.

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TECHNOLOGY & COLLABORATIONS

At Bevcon, collaboration is fundamental to our strategic priorities of growing a diversified global business and delivering more products of value to our customers. Bevcon uses its experience and capabilities to deliver a diverse product portfolio of bulk material handling and processing solutions, maximizing value for its customers.

Our mission is to create technology driven smart engineering solutions that are built to last. Hence, to improve competitive capabilities of manufacturing, Bevcon has partnered with world class technology partners to provide better and qualitative business solutions to its customers.

Bevcon Wayors has strategically collaborated with many top-notch global engineering houses: Financing & Manufacturing & Know-How Ltd. (Poland), Nanjing Air conveying System Co. Ltd. (China), Friedrich Schwingtechnik (Germany), Noma Siebtechnik (Germany), Rollier (Spain), Fleximat (Austria), Dos San tos International (USA) and SBS Belting (England).

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BEVCON PRODUCTS

Bevcon provides a wide range of products like Conveyors, Screen & Crushers, Material handling equipments etc. These are listed below. 1. Special Conveyors

Cleated Belt Conveyor: The Cleated Belt Conveyor Range offered by Bevcon Wayors enables conveying of bulk materials over very steep angles up to 90 degrees. Our design provides for tight product transfers and the ability to fit into space-constrained areas

Linear Stacker & Reclaimer: Bevcon Wayors, in collaboration with Financing, Marketing & Know-How Ltd. (FMK) - Poland, designs rugged and operator-friendly stackers and reclaimers. They achieve the functional requirements such as throughput, mobility and automation and operational requirements like luffing or slewing operations etc. Sandwich Snake Belt Conveyor: Sandwich Snake Belt Conveyors of Bevcon Wayors offer the potential to convey bulk materials at angles up to 90 degrees to the horizontal. Our Sandwich Snake Belt Conveyors developed in collaboration with Dos Santos International USA offer a considerable throughput even in complex environment and space conditions. Shell Dome Stacker & Reclaimer: Bevcon Wayors Shell Dome Stacker & Reclaimer is a circular system, built in collaboration with NHI China, that comprises of a luffing/slewing stacker and a bridge-type reclaimer rotating around a central column, covering the entire area of the circular stockpile. The material will be fed to the center of the stockpile by means of an overhead belt conveyor

Dust Extraction and Pneumatics

1. Dust Extraction 2. Pneumatic conveying

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1.1 Bag Type Dust Extraction:

Bevcon Wayors Bag Type Dust Extraction Systems are one of the most efficient and cost effective types of dust collectors available today in the market place. They offer a collection efficiency of more than 99% of very fine particles.

1.2 Cartridge Type Dust Extraction: Bevcon Wayors Cartridge Type Dust Extraction Systems are one of the most efficient and cost effective types of dust collectors available today in the market place. Bevcon Wayors provides comprehensive solutions in all aspects of dust collection, separation and filtration.

2.1Dense Phase Pneumatic Conveying:

Bevcon Wayors, in collaboration with Nanjing Air Conveying System Co. Ltd. (China) An engineering company based out of China is dominated in design and manufacturing of pneumatic conveying solutions for powered and granular materials based on their technologies and experiences accumulated from there researches and practices for many years. 2.2Skid Mounted Coal Handling: Skid Mounted Coal Handling Systems from Bevcon Wayors are compact and aesthetically built. They are best suited for space constrained layouts. Their modular design and construction helps customizing its shape as per the site constraints. The design allows for the coal handling plant to be located at distance from the boiler and the modular construction allows re-orient it as per site requirements.

Crushers and Screens

1. Crushers: i. ii. iii. iv.

Hammer Mills Impactors Ring Granulators Roll Crushers

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2. Screens: i. ii. iii. iv. v. vi. vii.

Circular Banana Screen Circular Motion Screen Flip Flow Screen Linear motion Screen Dewatering Screen Destoner Sizer

3. Feeder:
i. ii. Vibrating Feeder Vibrating Drizzly Feeder

Material Handling Equipments

1. Conveyors:
i. ii. iii. iv. v. Belt Conveyor Drag Flow Chain Conveyor Roller Conveyor Screw Conveyor Wet Scrapper Conveyor

2. Ash Conditioners 3. Bucket Elevators 4. Rotary Air Valves

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Work Experience and Working Culture

Working culture of the Bevcon Wayors is very good. The employees and managers are hostile in nature. It is good to see the people of different states working together so well. All the employees are very disciplined and come to the office before 15 minutes to the scheduled time. The working hour of the company is from 10:00AM to 06:00 PM. First and third Saturday of every month along with the Sunday is declared as holiday. There is a biometric control system to identify and have the information about entry time of the employees. While entering the company every employee put his index finger on a machine named Pagasus, which identifies the employee from his fingerprints, and entry time is being noted down by the security guard. The HR department initiates many programs to motivate the employees, and give rewards on the basis of their performance. All the departments work in collaborative manner.

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DATA ANALYSIS AND INTREPRETATION

Balance Sheet: In financial accounting, a balance sheet is a summary of a sole
proprietorship, a business partnership, a corporation or other business organization such as Assets, Liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a snapshot of a companys financial position. The balance sheet is the only statement which applies to a single point in time of a businesss calendar year. Balance sheet comprises of Assets and Liabilities.

Assets:

Current Assets:

1. Cash and cash equivalents

2. Accounts receivable 3. Inventories 4. Prepaid expenses (for future services that will be used within a year) Non Current Assets: 1. 2. 3. 4. Property, Plant & Equipment Intangible Assets Capital work-in-progress Biological Assets

Liabilities:

Current Liabilities: 1. Short term borrowings 2. Trade payables

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3. Short term provisions 4. Other current liabilities Noncurrent liabilities: 1. Long term borrowings 2. Deferred tax liabilities(net)

Equity:
1. Share capital 2. Reserves and surplus

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BALANCE SHEET

Past three years

31-03-2009 31-03-2010 31-03-2011

Particular
1.Equity and Liabilities

Last year
31-03-2012

41,250,000 49,766,389 28,368,722 3,697,738

82,500,000 60,258,323 47,691,152 4,950,288

100,000,000 155,581,754 9,827,453 6,724,225

123,082,849

195,399,763

24,404,530 298,290,022 185,755,703 66,744,059 847,327,746

A. Share holders fund (a) share capital (b) Reserves & surplus B. Non current liabilities (a) Long term borrowings (b) Deferred tax liabilities(Net) C. Current liabilities (a) Short term borrowings (b) Trade payables (c) Other current liabilities (d) Short term provisions Total 2.Assets A. Non current Assets (a) Tangible assets (b) Capital work-inprogress (c) Other non current assets B. Current Assets (a) Inventories (b) Trade receivables (c) Cash and bank balances (d) Short term loans and advances (e) Other current assets (f) Miscellaneous expenditure not written off Total

100,000,000 261,577,570 11,422,322 9,010,261

31,439,719 457,704,536 222,966,453 78,638,505 1,172,759,365

61,219,920 -

68,567,455 -

94,611,751 3600

100,895,398 13,588,426 -

28,711,267 134,422,867 2,231,989 173,625,795 277,140,691 11,700

46,220,552 278,733,152 6,020,850 269,161,171 473,311,068 7,650

58,108,689 351,896,596 214,949,282 72,712,578 55,045,250

80,488,174 609,458,764 184,293,701 133,593,020 50,441,881

123,082,847

195,399,763

847,327,746

1,172,759,365

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PROFIT & LOSS ACCOUNT Particulars

1. Revenue from operations 2. other income 3. closing stock 4. total revenue year ending Year ending Year ending year ending 31-03-2009 31-03-2010 31-03-2011 31-03-2012
666,080,332 10,130,802 2,266,129 678,477,263 1,013,124,502 13,217,953 1,515,417,335 14,938,345 1,530,355,680 1,845,988,326 18,611,836 1,845,988,326

1,026,342,455

5. Expenses
(a) cost of material consumed (b) Employee benefit expenses (c) other operating expenses (d) Administrative expenses (e)Financial cost (f) Depreciation and amortization expenses Total expenses 6. profit before exceptional and extraordinary items and tax 7. Exceptional items 8. profit before extra ordinary items and tax 9. Extra ordinary items 10. Profit before tax
520,054,859 770,902,394 1,030,274,626 76,501,352 158,239,642 84,026,400 16,430,857 6,336,617 1,158,282,058 105,109,414 264,987,115 119,730,402 13,738,700 7,576,986

57,428,575 36,512,197 7,233,030 3,692,391

94,810,403 50,924,549 9,953,190 4,849,501

624,921,052
53,556,211

931,440,037
94,902,418

1,371,809,494
158,546,186

1,669,424,675
176,563,651

53,556,211 94,902,418 158,546,186 158,546,186

176,563,651 176,563,651

53,556,211

94,902,418

11. Tax expense

(a) Current tax (b) Deferred tax Provision for FBT Prior period adjustments 12. Profit after tax 13. Proposed dividend 14. Tax on dividend
16,717,077 1,566,510 719,291 199,959 34,353,374 4,125,000 701,044 32,155,355 1,252,550 100,492 61,394,021 8,250,000 1,402,088 52,094,895 1,773,937 104,677,354 10,000,000 1,660,900 56,659,549 2,286,036 117,618,066 10,000,000 1,622,250

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15. Net profit

29,527,331

51,741,934

93,016,454

105,995,816

CHANGES IN WORKING CAPITAL

Statement of Changes in the working capital for the year ended 2009-2010

Particulars Current Assets Cash in hand & bank Bills receivables Stock or inventories Loans and advances Total Current Liabilities Total Changes in working capital Total increase or decrease

2009

2010

Increase

Decrease

2,231,989 134,422,867 28,711,267 173,625,795

6,020,850 278,733,152 46,220,552 269,161,171

3,788,861 144,310,285 17509285 95535376 261,143,807

338,991,918
277,140,691

600,135,725
473,311,068

196,170,377 196,170,377

277,140,691
61,851,227

473,311,068
126,824,657

64,973,430

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140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2009 2010

Changes in working capital

Inferences: The above chart clearly shows a significant increase in working capital for the year 2009 to 2010. There is increase in all the Current assets from the year 2009 to 2010. There is a net increase of rs 64973430.

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Statement of Changes in Working Capital for the Year 2010- 2011 Particulars Current assets Cash in hand & bank Bills receivables Stock or inventories Loans and advances Other current assets Total Current liabilities Total Changes in working capital Net increase or decrease
6,020,850 278,733,152 46,220,552 269,161,171 214,949,282 351,896,596 58,108,689 72,712,578 55,045,250 752,712,395 55,045,250 8,928,432 73,163,444 11,888,137 196,448,593

2010

2011

Increase

Decrease

600,135,725

473,311,068 473,311,068 126,824,657

574,194,314 574,194,314 178,518,081

100,883,246

51,693,424

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200000000 180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 2010 2011

Changes in Working Capital

Inferences: The chart clearly shows an increase in working capital for the year 2010 to 2011. There is an increase in the entire current assets except loans and advances, and also increase in current liabilities. There is net increase of rs 51,693,424

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Statement of Changes in working capital for the year ended 2011-2012

Particulars Current assets

Cash in hand &bank Bills Receivables Stock or Inventories Loans and Advances Other current assets

2011

2012

Increase

Decrease

214,949,282 351,896,596 58,108,689 72,712,578 55,045,250

184,293,701 609,458,764 80,488,174 133,593,020 50,441,881

30655581 257562168 22379485 60880442 4603369

Total Current Liabilities

Short term borrowings Trade payables Other current liabilities Short term borrowings

752712395

1058275540

24,404,530 298,290,022 185,755,703 66,744,059

31,439,719 457,704,536 222,966,453 78,638,505

Total

574,194,314

790,749,213 267,526,327 89,008,246

Changes in 178,518,081 working capital Net increase or decrease

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Changes in working capital

300000000 250000000 200000000 150000000 100000000 50000000 0 2011 2012

Inferences: The above chart shows an increase in the working capital for the year 2011to 2012. There is increase in all the current assets except cash in hand & bank and other current assets. All current liabilities are in increasing pattern. There is net increase in working capital of rs 89,008,246.

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RATIO ANALYSIS

Ratio analysis is a powerful tool of financial analysis. A ratio is defined as the indicated quotient of two mathematical expressions. and as the relationship between two or more things. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of the performance and financial position of the firm. An accounting figure conveys meaning when it is related to some other relevant information. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. Ratios help to summarize large quantities of financial data and to make qualitative judgment about the firms financial performance.

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Standards of Comparison

A single ratio in itself does not indicate favourable or unfavourable condition. It should be compared with some standards. Standard of comparison may consist of-

Past Ratios: Ratios calculated from the past financial statements of the same firm. Competitors Ratio: ratios of some selected firms, especially the most progressive and successful competitor, at the same point in time.

Industry Ratio: Ratios of the industry to which the firm belongs. Projected Ratio: Ratios developed using the projected, or pro forma, financial statements of the same firm.

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Types of Ratios

The parties interested in financial analysis are short- and long- term creditors, owners and management. Short- term creditors main interest is in the liquidity position or the short- term solvency of the firm. Long- term creditors, on the other hand, are more interested in the long term solvency and profitability of the firm. Management is interested in evaluating every aspect of the firms performance. They have to protect the interests of all parties and see that the firm grows profitably. In view of the requirements of the various users of ratios, we may classify them into the following four important categories.

Liquidity ratios Leverage ratios Activity ratios Profitability ratios

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Liquidity Ratios

Liquidity ratios measure the ability of the firm to meet its current obligations (liabilities). A firm should ensure that it does not suffer from lack of liquidity, and also that it does not have excess liquidity. The failure of a company to meet its obligations due to lack of sufficient liquidity will result in a poor credit worthiness, loss of creditors confidence or even in legal tangles resulting in the closure of the company. It is necessary to strike a proper balance between high liquidity and lack of liquidity. The most common ratios, which indicate the extent of liquidity or lack of it, are; i. Current ratio Quick ratio

ii.

1. Current ratio: Current ratio is calculated by dividing current assets by current

liabilities: Current ratio = Current assets/Current liabilities The current ratio is a measure of the firms short- term solvency. It indicates the availability of current assets in rupees for every one rupee of current liability. A ratio of greater than one means that the firm has more current assets than current claims against them.

Year Current assets Current laibilities

2009 338,991,918 227,140,691

2010 600,135,725 473,311,068

2011 752,712,295 575,194,314

2012 1,058,275,540 790,749,213

Year Ratio

2009 1.492

2010 1.267

2011 1.308

2012 1.338

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Quick ratio:
It is also known as acid-test ratio, it establishes a relationship between quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without a loss of value. Cash is the most liquid asset. Other assets that are considered to be relatively liquid and included in quick assets are debtors and bills receivable, and marketable securities. Inventories are considered to be less liquid.

Quick ratio = (Current assets Inventories)/ Current liabilities

Year Ratio

2009 1.366

2010 1.170

2011 1.207

2012 1.236

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Inventory Turnover Ratio

Inventory turnover is the ratio of cost of goods sold by a business to its average inventory during a given accounting period. It is an activity ratio measuring the number of times per period, a business sells and replaces its entire batch of inventory again.

Formula
Inventory turnover ratio is calculated using the following formula:
Cost of Goods Sold Inventory Turnover = Average Inventory

Cost of goods sold figure is obtained from the income statement of a business whereas average inventory is calculated as the sum of the inventory at the beginning and at the end of the period divided by 2. The values of beginning and ending inventory are obtained from the balance sheets at the start and at the end of the accounting period.

Analysis
Inventory turnover ratio is used to measure the inventory management efficiency of a business. In general, a higher value of inventory turnover indicates better performance and lower value means inefficiency in controlling inventory levels. A lower inventory turnover ratio may be an indication of over-stocking which may pose risk of obsolescence and increased inventory holding costs. However, a very high value of this ratio may be accompanied by loss of sales due to inventory shortage. Inventory turnover is different for different industries. Businesses which trade perishable goods have very higher turnover compared to those dealing in durables. Hence a comparison would only be fair if made between businesses of same industry.

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Average Collection Period

In order to understand the concept of the average collection period formula, one must first look at the accounts receivables turnover formula of

The average collection period formula can be rewritten as the numerator, 365 days, times the inverse of the denominator. This would result in the formula

The 2nd portion of this formula is essentially the % of sales that is awaiting payment. The % of sales awaiting payment is then used as the % of time awaiting payment throughout the period. From here, the % of time awaiting payment is converted into actual days by multiplying by 365. It is important to consider that a company that has seasonal sales will affect the outcome when using this formula. For example, a company that sales mostly at the beginning of the period may show none or very little payments awaiting receipt. Also, a company who sales mostly towards the end of the period may show a very high amount of receivables. Alterations of the formula may be required to adjust for each company.

Particular Sales revenue

2009 666,080,332

2010 1,013,124,502 206,578,009 4.904 74

2011 1,515,417,335 315,314,874 4.806 75

2012 1,827,376,490 480,677,680 3.800 96

Avg account 134,422,867 receivables Receivables 4.955 turnover Avg collection 73 Period (days)

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FINDINGS

The performance of the company has been very good since past four
years. The working capital management of the company is good and the amount of working capital is fluctuating, generally increasing year by year. The turnover on year ended 31st March 2012 is 18,273.76 lakhs, which is 20% more than the previous year.

The company has increased the manufacturing facilities and quality

assurance facilities at its Cherlapally plant, Hyderabad. The company is maintaining proper records of inventory. The current financial position of the company is good, as there is increase in working capital. The current ratio of the company is increasing year by year. The quick ratio is fluctuating every year.

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RECOMMENDATIONS

BEVCON WAYORS PVT. LTD. Should take steps to increase the level of
current assets to current liabilities. Doing this, BEVCON WAYORS can get more credit from its suppliers, as suppliers look into the ability of the firm to pay.

The

cash level maintained by the company is quite weak. BEVCON WAYORS should take steps to strengthen the relationship with its bankers and suppliers to meet its contingencies. Avoid late payments from customers by managing your debtors

The company should take steps to reduce the inventory, as it constitutes a

major part of the current assets. The company should apply the computerized inventory control system or JIT (just in time) system for inventory management. Do not purchase fixed assets (e.g. plant, building) with short-term loans. You won't be able to convert fixed assets into cash immediately to pay your shortterm loans and this will affect your working capital. BEVCON WAYORS should improve its credit grants by the suppliers, this will help in reducing the working capital

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BIBLIOGRAPHY

Annual report of Bevcon Wayors Wikipedia Financial Management

By: I. M. Pandey

Working Capital Management

By: Krish Rangarajan, Anil Mishra http://www.allprojectreports.com/MBA-Projects/Finance-ProjectReport/working_capital_management Financial Management By: Khan and Jain Financial Management theory and practice By: Prassanna Chandra

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