R

Austin Engineering Co. Ltd.

A
SUMMER TRANING REPORT
ON
AUSTIN ENGINEERING COMPANY
PREPARED BY: - JENIL MASHRU
ROLL NO 50
CPIMR
SUBMITTED TO:GUJARAT UNIVERSITY

ACKNOWLEDGEMENT

I believe myself so lucky that I am doing study in MBA in a reputed

institution named Chimanbahi Patel Institute of Management and
Research, Ahmedabad. Gujarat University has included Summer
Training in its syllabus. This bolsters us to have the cognizance
about the industrial workings. For the same, I heartily thank Mr.
Amit Joshi. with whose efforts and guidance, I prepared the summer
training report from AUSTIN ENGINEERING COMPANY
LIMITED

I visited AUSTIN ENGINEERING COMPANY LIMITED at

Patla village, Junagadh from 25th May, 2009 to 10th July 2009. I
completed my summer training.

Place : Junagadh
Date : 10th July 2009

PREFACE

As a student of M.B.A. it would be compulsory to have a 6 weeks

training in any industrial concern undertaking business or producing
goods and service.

I am a student of 2nd Sem. M.B.A. of Chimanbahi Patel Institute of

Management

and

Reserch,

one

of

leading

institute

of

Gujarat

University.This Summer Training is a part of our curriculum.

For the above metter I undertake the training on a Finance subject and
in Finance Working Capital in AUSTIN ENGINEERING COMPANY LTD.
at Patla for 45 days.

In this regard, I had taken training at AUSTIN ENGINEERING

COMPANY LTD and prepared the report on Industrial training. This
report is a reflection of what I observed and come to know during
my training.

INTRODUCTION
Finance is considered as the life blood for any company.
Each and every company is required to take important decisions
regarding finance. Not a single activity can be performed without
finance. Only finance is not important but it should also be
properly managed so that optimum utilization of the finance can be
ensured.

Financial management is concerned with raising and

utilizing the finance for maximizing the wealth of the shareholders
and the company.

Financial management includes various functions like:

Financing decision, Investment decision, Dividend decision, etc. If
these functions are managed properly then the company can grow
fast and expand the business.

ORGANISATION OF FINANCE
DEPARTMENT
If the finance department is organized well then it can
perform well and may lead the company to be very successful in
achieving the fast growth.

Following is the organization chart of the finance

department of Austin Engineering Company:
ORGANISATION CHART: General Manager
Finance Manager
Assist. Finance Manager
Account Manager
Assist. Accountant
7

FINANCIAL PLANNING
Financial planning is very necessary for any company for
properly managing the finance department. The financial planning
is included in the general planning made for whole organization.
On the basis of time period there are: short term planning for 6
months to 1 year, medium planning for 5 years and also long term
planning for more than 5 years.
Austin Engineering Company makes short term planning
for requirements of production department. Medium term planning
is done for the purpose of replacement of machinery increment of
working capital, etc. In long term planning they plan for expansion
of the business and modernization of the company.
This company uses capital budgeting methods for financial
planning of long term.

INTRODUCTION TO WORKING
CAPITAL

Business Capital is broadly divided into two groups, that are fixed
capital and working capital. Fixed capital refers to the funds invested in such
fixed or permanent assets like land, building, machinery etc. While working
capital refers to the funds locked in material, Work in Progress, finished
goods fund receivables and cash on hand and cash in bank.

To make continue flow of production in firm, much emphesis has

been given in a part of working capital management. Working capital is the
leading cause of portion of assets of business which are related to current
operation and related to operating cycle and cash cycle.

OBJECTIVE OF WORKING CAPITAL

MANAGEMENT

Following are main objectives of working capital management.

1. To meet daily routine expense of the firm
2. Best utilization of available short term finance.
3. To maintain optimum liquidity of firm.
4. Effective handling of operating general fund.
5. Make effective decision regarding creditors and Debtors period
6. To keep liquid assets reserved for contingency.

10

IMPORTANCE OF WORKING CAPITAL

Working Capital is the leading cause of that portion of the assets of a

business which are used in or related to current operations and represents at
any one time by the operating cycle of such items as against receivables,
inventories, etc. working capital is often referred to as circulating capital.
The use of the term circulating capital. The use of the term circulating
capital instead of working capital indicates that its flow is circular in nature.
Brown and toward, who compare it with a river which is always there but
whose water level is constantly changing.

SOURCE OF WORKING CAPITAL

1. Shares and Debentures
11

2. Retained earning and profit;.3

3. Commercial bank
4. Trade Creditors
5. Indigenous bankers and money lenders
6. Urban Co. Operative bank.
7. Public deposits.
The AUSTIN ENGINEERING COMPANY LIMITED produce its
majority fund by way of bank and reserve and surplus.

12

FACTORS OF WORKING CAPITAL

1. Nature and Volume of Business
2. Length of manufacturing cycle.
3. Business fluctuation
4. Production policy.
5. Credit policy.
6. Availability of credit
7. Growth and expansion
8. Profitabil8ity and its distribution
9. Price level and fluctuation
10. Operating efficiency.

13

MANAGEMENT OF WORKING
CAPITAL
Working capital means current assets of the
company. Currents assets are those assets which do not remain
life time with the company, but they are convertible into cash
within certain time. Generally, current assets are required for
the short period of time. It can be utilized for raw material,
work in progress, finished goods and certain expenditure such
as wage, salary etc.
Working capital is the difference between Current
Assets and Current Liabilities.
CURRENT ASSETS: Particulars

2007-08

2006-07

Inventories

284664968

202923402

Sundry Debtors

179198533

187721269

Cash & Bank Balance

17883875

7297156

Loans & Advances

63106942

53471291

14

Total

451413118

544854318

Particulars

2007-08

2006-07

Liabilities

160455232

148318214

Provisions

48556136

28050606

209011368

176368820

CURRENT LIABILITIES: -

Total

WORKING CAPITAL: =

Current Assets Current Liabilities

15

ANALYSIS OF WORKING CAPITAL

C.A.

2003-04
282783.87

2004-05
335306.61

2005-06
381972.98

2006-07
2007-08
451413.11 544854.318

C.L.

0
124665.05

7
153863.03

8
174953.23

8
176368.82 209011.368

9
Working 158118.81
Capital

2
181443.58

6
207019.75

0
275044.29 335842.950

The above figures of five years show the increasing working

capital and efficient management of working capital.

16

17

INTRODUCTION TO ORGANIZATION

Austin Engineering Company Limited (AEC) is an ISO/TS

16949:2002 certified manufacturer of widest range of ball & roller
bearings and its components in India without any foreign
collaboration, located near Junagadh in Gujarat State.
Founded by five technocrats as a partnership firm in 1973,
today the Company has developed into a Public Limited Company,
with full array of high quality and precision bearings for different
applications.
Rapid development and flexible manufacturing system along
with effective global delivery network enables us to deliver quality
products with shorter lead time and competitive prices.

18

HISTORY

19

1973
Partnership firm formed by five technocrats.
Started manufacturing needle roller cage assemblies with the
manpower of 10 and the capital investment of 3500 US
Dollars.
1974
Started manufacturing cylindrical roller bearings and deep
groove ball bearings up to 50mm diameter.
1975
Started manufacturing single row spherical roller bearings.
1978
Partnership firm converted into Private Limited Company.
Started manufacturing tapered Roller Bearing up to 100mm
diameter.
1980
Manufacturing capacity of all aforesaid bearings increased up
to 150mm diameter.
1982
Started supplying bearings for gear box application to
Premier Automobiles Limited (FIAT-Italy Collaboration) for
passenger cars.
1984
Started supplying case carburized specially heat treated
ground components (exclusive supplier) and King-pin
bearings to TELCO for light and heavy commercial vehicles.
1985
Converted into Public Limited Company and offered shares
to public.
1986
Started New Plant (Unit II) with installation of machinery
and testing/measuring equipment imported from Germany.
Started exporting bearings to developed countries such as
UK, USA, and Italy.
20
1987

NATURE OF ORGANIZATION
Austin Engineering is a private Limited company. The investment
of Austin Engineering Company Ltd. is more than 3 crores.
Moreover we can apply special feature of large scale organization
as use of manpower, electronic equipment and machinery. Thus,
we can say that Austin Engineering Co. Ltd. is a large scale
organization.

21

GOALS

Each and every activity of human life is having a goal. Business is

also a human activity and so it has some goals. A business is essentially an
organic entity which has its own infancy, childhood, adulthood and maturity.
A man like and enterprise fires works towards the objectives of survival, if
this objective is achieved, in a reasonable measure, he looks forward to
growth through and with goodwill, prestige and recognition.

The common objectives that generally a business firm is having

which AUSTIN also accepts are as under:

Profit maximization
Optimum use of resources
Creation of customers
Innovation
Supply of the desired quality of goods
Providing employment
Fair deal to employees

22

 Create healthy society

Development of regional area
Export development

Moreover, AUSTIN accepts the goal of continues improvement and

effective utilization of available resources. A very important thing about it is
that it is versatile to adapt change.

These various goals show that the company is improving day by

day and can achieve higher and higher place in its field.

23

MANAGEMENT PROFILE
Mr. N. C. Vadgama

: Chairman & Executive Director

Mr. S. N. Thanki

: Managing Director

Mr. R. N. Bambhania

: Joint Managing Director

Mr. J. R. Bhogayat

: Executive Director

Mr. S. V. Vaishnav

: Non-Executive Director

Mr. Dr. B. R. Sureja

: Non-Executive Director

Mr. K. J. Mehta

: Non-Executive Director

Mr. D. B. Nakum

: Non-Execution Director

24

ORGANIZATION STRUCTURE
In any business organization form of organization structure
plays an important role.Organisation structure is an indispensable,
means for good business performance, so it require the
organization

relationship

among

different

department

and

individual working, consequently, among accomplishment of

desired goals. Thats why known expert said IF MANAGER IS
THE BRAIN OF THE BUSINESS, THEN ORGANISATION IS
THE PHYSICAL STRUCTURE OF THE BUSINESS

There are six types of organization which are as follows:

Line Organization
Line and Staff Organization
Function Organization
Committee Organization
Project Organization
Matrix Organization
25

In Austin Engineering Company Ltd. the authority and

responsibility flows to bottom i.e. Board of director to workers.
This system is fit under the line and staff organization which is
easy to understand and it is modern form and largest form of
organization. In this specialists or expert personnels are attached
to line managers to advice them in a concerned matter.

26

PRODUCT PROFILE

AEC ltd. now-a-days is engaged in producing near about

2000 varieties of baring products.

The main products of AEC ltd. are:

1. Needle Roller
2. Cylindrical Roller
3. Spherical Roller
4. Tapper Roller
5. Ball Bearing
27

Besides that there are many other products also.

Single and Double row deep ball bearings

Single and Double row angular contact ball bearings
Precision class flash ground bearings
Thrust ball bearings
Cylindrical roller thrust bearings
Thrust spherical roller bearings
Tapered roller bearing single row
Flexible roller bearing
Needle roller bearings and cage assembles
Special purpose bearings
Life clutch release ball bearings
Roll-neck & Back-up roll bearings for Steel Mills
High precision spindle bearings for Machine Tools
28

The companys special bearing range includes-

1. Steel Plant bearings

2. Heavy duty bearings for Railways
3. Mining Equipment
4. Material handling equipment
5. Bearings for cement, sugar, paper and other
continuous process industry
6. Special bearings for high speed heavy duty turbines
(used in power plants)
7. Oilfield applications

29

MARKET PROFILE
MARKET means the place where buyers and sellers meet
with each other and create selling activities. Marketing is social
and managerial process. That involves identifying unsatisfied
needs and wants of the consumers. To satisfy them producer start
producing goods and service to satisfy those needs and wants with
appropriate price promotion and distribution and maintain relations
with market, which is called marketing.

Thus, marketing management is concerned with directing

purposeful activity for the achievement of sales objectives.

There are two concepts of Marketing Management.

1. Old Concept (Product Oriented)
2. Modern Concept (Customer Oriented)

30

According to the American Marketing Association,

Marketing may be define as the performance of business
activity that direct the flow of goods and services for the
customers. In old concept, the marketing was considered as
only the activity in which ownership of product was
transferred and nothing else. But in modern concept, the
marketing is considered as the total system of business design
to plan, promote and distribute the product and services from
producer to consumers. Marketing Management has a separate
identity in every organization, because organization producing
any item has to be sold in the market. This comes to a
conclusion that the main objective of marketing is to give
knowledge of product and make it available to ultimate
consumer.

Firstly, Bearing is not the consumer product. So,

marketing is not necessary. But out of 1200 types, 40 bearings
need advertising that includes marketing in the unit.
31

Here,

in

AUSTIN

ENGINEERING

COMPANY

LIMITED. all the elements of marketing are considered i.e.

marketing mix, promotion, price and distribution.

In AEC ltd. all these activities are organized by

marketing manager Mr. J. Krishna. And the company is
having good reputation in the market.
SECTORS SERVED BY THE COMPANY : Indian Defence Department
Steel Plants and Steel Rolling Mills
Light

and

Heavy

Engineering

Equipment

Manufacturer
Textile Machinery Manufacturers
Power Plants
Automotive Industries
Indian Railways
Process Industries

32

 State

Road

Transport

Undertakings

(STUs)

throughout India
Overseas Customers in U.S.A. , U.K. & EU countries
Replacement Market / After-Market (Automotive &
Industrial)

33

MARKET SEGMENTATION :
Market segmentation is nothing but division of market
according to consumer taste, preference income, habits,
perception and value etc. So, it is highly essential for market
to recognize this difference that exists among consumers. It is
due to the fact that the whole market has to sub-divide in order
to develop an understanding of various dimensions.

There are two types of Market Segmentation.

a) Graphical Market Segmentation or People oriented approach
b) Customer demand or Product oriented approach

In this market, AEC ltd has appointed state wise and territory
wise dealer over the country. This company targets OEM
(Original Equipment Manufacturer) on the basis of heavy
users and other various segments.

34

The market segmentation of AEC is as under:

40% - Original Equipment manufacturer

25% - Dealers
35% - Export

35

INDUSTRIAL ANALYSIS
Bearings industry in India can be divided into three main
segments namely the organized sector, unorganized sector and
imports. The organized sector primarily caters to the OEM
Segment which is pre-dominantly automotive, railway and other
industrial users. The replacement market is mainly dominated by
the unorganized sector.

Domestic market comprises of ten major players in the

organized sector and innumerable units in the unorganized sector.
Annual bearing demand in India is estimated at Rs. 6,000 Crores,
of which about on third is met imports and the rest is met through
indigenous production. The sales of organized bearing industry in
India, including exports are estimated Rs. 4,000 crores. The
bearing industry experienced an over all growth of about 19%.

36

Bearing industry covers both ball and roller bearings.

Bearings are precision products requiring sophisticated machinery
and the industry is characterized by high capital costs and intensive
technology and skill requirements. Almost all the major
international bearing manufacturers are represented in India by
way of 100% subsidiary or technical and / or financial
collaborations.

Bearing industry is subject to fluctuations in its user

industries viz. Automobiles, general engineering, railways,
electrical applications, pumps, fans and agricultural machineries.
Its growth, though, is predominantly dependant upon its major user
- automobile industry. During the year under report, there has been
a good growth in the automobile industry. The demand of
commercial vehicles was buoyant at 26% and tractor industry also
grew at 25%. The sales growth of two wheeler industry, especially
motorcycle has now stabilized. The performance of bearing
industry during the year under report has been commendable.
37

COMPANY ANALYSIS
Austin Engineering Company Limited (AEC) believe in two
things : the power of innovation and the sheer force of focus. Ever
since our inception in 1973 we have continuously upgraded our
skills, our production capacities, our infrastructure and our
services. From an outfit of 10 workers that manufactured
cylindrical roller bearings and deep groove ball bearings with an
outside diameter of up to 50 mm we are today a global force in the
bearings industry. Today we manufacture almost the entire range
of anti-friction bearings of up to an outside diameter of 1200 mm.

We understand the increasing criticality of the bearing in the

global manufacturing sector. The world today poses an
unprecedented demand for top quality, precision engineered,
extremely strong, extremely reliable bearings. And we provide the
perfect solutions for those demands - with a through knowledge of

38

all applications of our bearings, with top-of-the-line engineering in

our products and a truly effective global delivery network.

We export to the USA, the U.K. and E.U. countries. At the

core of AEC technical advancement is the involvement of the top
management

which

itself

endeavors

and

supports

new

developments. We are driven by the belief that Indian technology

has come of age and is now well on its way to taking its place
under the sun of global excellence.

We are committed to creating unshakable customer

confidence in India and abroad for AEC bearings through quick
development and turn around times, a flexible manufacturing
system, cutting edge engineering and manufacturing processes that
maximize life and optimize costs, and a continuous association
with consultants and universities involved in R&D work.

39

CAPITAL STRUCTURE
Capital structure refers to various sources of capital i.e. equity shares,
preference shares, debentures etc. capital structure means security mix. In
capital structure there is existence of more than one security.
Capital structure is the permanent finance of the firm represent by
long term debt, preference shares, stock & net worth.
It is necessary that the proportion of security must be maintained
because the capital structure directly affects to the earning per share of the
company.

There are basically three patterns of capital structure.

Equity Share

Equity & Preference Share

Equity, Preference & Debenture

40

The capital structure of AUSTIN ENGINEERING COMPANY

LTD. is very simple. There are only equity shares. They have not issued
debenture or preference share. The company has taken loan from financial
institution. The capital structure of AUSTIN is as under.

Particulars (2009)

Amt.

Capital Structure
Share Capital
Reserve & Surplus

35113000
304198000
------------307711000

41

RATIO ANALYSIS
1. Gross Profit Ratio:
Gross Profit
Gross Profit = ---------------- 100
Net Sales
92945565
Gross Profit = ---------------- 100
729950074
Gross Profit = 12.73%
We can infer from the gross profit ratio that the companys
profit is low and the company needs to improve the situation.
2. Net Profit Ratio:
Net Profit
Net Profit Ratio = ---------------- 100
Net Sales
65061293
Net Profit Ratio = --------------- 100
729950074
Net Profit Ratio = 8.91%

42

Net profit ratio is even low so company should take care and
improve the margin and reduce expense so that profitability can be
improved.

3. Current Ratio :
Current Assets
Current Ratio = ----------------------Current Liabilities
544854318
Current Ratio = --------------209011368
Current Ratio = 2.61 : 1
The current ratio shows the assets in compare to liabilities.
He re the ratio is 2.61 : 1 so company is in very good position. But
it also shows that companys fund is blocked in inventories and
debtors.
4. Return on Shareholders Fund :
Net Profit
Return on Shareholders fund = ------------------------- 100
Shareholders Fund

43

Return on Shareholders fund =

Return on Shareholders fund =

65061293
---------------- 100
302270564
21.52%

The company is giving reasonable dividend to their share

holders.
5. Debtors Ratio:
Debtors + No. of days in year
Debtors Ratio = -------------------------------------- 100
Sales
Debtors Ratio =

179198533
---------------- 100
729950074

Debtors Ratio = 90 days

Company is giving 90 days credit to its debtors
therefore the companys money is blocked in debtors till 90days.
Company needs to reduce the credit period so that it can better
utilize working captal.s
6. Return on capital employed:
Net Profit
Return on Capital Employed = ------------------------ 100
Capital Employed

44

Return on Capital Employed =

124039320
---------------- 100
474182555

Return on Capital Employed = 26.16%

This ratio shows that company is gaining reasonable
return on the capital employed by the investors according to
industry type.

45

COMPETITIVE POSITION IN
INDUSTRY

The company has good position as far as bearing market of

India is concern. AECL has 1st rank as far as variety of products
and customization is concern. No other company in even whole
ASIA provide such a vary range of product in the bearing segment.
Company supplies the goods to

The unit have been awarded by TV-Rhineland of Germany.

Copy enclosed for your reference. Unit is well equipped with
manufacturing and quality assurance facilities imported from
Germany, U.K. and Japan.

Our last year's sales was Rs. 77 crores INR, out of which
50% was export to developed Nations such as, the U.S.A. and

46

European Union Nations. 30% was direct supply to OEMs and

actual users such as :

Indian defense,
Automotive manufacturers,
Steel rolling mills,
Gearbox manufacturers,
Rolling mill machinery
Pumps manufacturers,
manufacturers,
Material handling equipment
Paper and pulp industries,
manufacturers,
Construction equipment
Mining industries,
manufacturers,
State owned public transport
Power generation plants,
services (STU's),
On rate contract with U.P. Sugar
Co-op.& Corpn.
And the rest was to Indian replacement (after market).
The Company is of the view that one should always, improve
continuously, utilize resources in most efficient way, be versatile
to adapt to changes and serve society in the most efficient way.
This belief has led us to serve customers most efficiently and
economically.

The companys share is approximately 1% in World Market.

47

OBSERVATION

48