Deepesh

ABSTARCT
The present project is on working capital in Tecumseh share products India ltd.
The position of the company was studied data was collected he regarding growth in assets
and liabilities. Sales working capital ratio debtors on turnout ratio, current ratio and other
ratios was calculated composition current of pass five year was collected sources and
funds statement for five years was collected. Interpreted it was fund that working capital
was increasing the begging and latter on it was the declaiming it was suggested to utilize
the companies founds properly.
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CONTENTS
CHAPTER NO’S CHAPTER NAMES PAGE NO’S
CHAPTER 1 INTRODUCTION 06 – 10
CHAPTER 2 REVIEW OF LITERATURE 11 – 32
CHAPTER 3 COMPANY PROFILE 33 – 41
DATA ANALYSIS
CHAPTER 4 42 – 67
INTERPRETATIONS
CHAPTER 5 CONCLUSIONS & 68 – 70

SUGESSIONS
CHAPTER 6 BIBOLOGRAPHY 71 – 72
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CHAPTER -1
INTRODUCTION
Page 3
INTRODUCTION
The management of the working capital is of vital important to companies and

forms workload function of finance manager and accountant. The working capital of any
business is the capital required to fund its current assets. The term “current assets” refers
to those assets in which the ordinary course of business can be or will be lured into cash
within a year, without undergoing a diminishment in value and without disrupting the
operations of the firm. The major current assets are cash, marketable securities, account
receivables and inventories. Working capital management is concerned with the problems
that arise in attempting to manage the current assets, the current liabilities and the inter-
relations that exist between them. The net working capital is the difference between the
current assets and current liabilities. Current liabilities are those liabilities, which are
intended at their inception to be paid in the ordinary course of business within a year out
of the current assets or earning of the concern. The current liabilities include account-
payables, bills-payables, and bank-O/D s and outstanding expenses. Management of
working capital therefore is the management of current assets and current liabilities of the
company.
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NEED FOR THE STUDY
TRIPL (Tecumseh Products India Pvt. Ltd) is a successfully managed company as

evidenced in its financial performance. Evolution of financial performance of company is
a continues process for understanding the direction in which the company is moving so as
to decide and implement the feature course of action with a view achieves the in the
objectives in the best interest of the organization
Financial performance can be done from the point of view of various interest groups
such as owners, management, leaders, etc.; however, here it is an analysis to understand
financial performance of TRIPL by using the technique of the ratio analysis
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OBJECTIVES OF THE STUDY
The present study has been conducted to achieve the following objectives:
To analysis and portray the existing position of TRIPL:
1. To study the short term solvency position of TRIPL
2. To study the leverage position of the TRIPL.
3. Evaluate the efficiency utilization of assets of TRIPL.
4. To identify the problem, if any, in the overall performance of the TRIPL and offer
suggestions.
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METHODOLOGY OF THE STUDY
With a view to achieve the objectives data and information for the study are
collected from both.
Primary Data:
Primary and secondary sources. The stress is however more the later.
The primary data was collected from the discussions with the concerned officers and staff
of the organization.
Secondary Data:
The secondary data was gathered from published and unpublished records
and annual reports of the company further magazines and the textbooks of financial
management and also from web sites of the company and from other sources of secondary
data.
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FRAME WORK OF THE STUDY
In the project report entitled financial performance of Tecumseh Products

India Private Limited, Hyderabad, is organized in six chapters.
The first chapter contains a brief description about the Objectives of the study, frame
work of the study, need for the study, methodology of the study and Limitations of the
study.
The second chapter provides industry profile.
The Third chapter provides the profile of TRIPL, Hyderabad.
The fourth chapter carries the theoretical aspects of the working capital and ratio analysis.
The fifth chapter deals with the financial analysis of the TRIPL.
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LIMITATIONS OF THE STUDY
The study has been conducted in a systematic and comprehensive way so as

to make the project work an unable one. However, the topic under my study may not be
free from limitations due to the following factors.
• The major limitation of the project under study was time. Since it was to be
completed within a short period of time, which is not sufficient to undertake a
comprehensive study.
• Since the financial matters are sensitive in nature the same could not acquired
easily.
• The study is concerned to only the five years of TRIPL.
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CHAPTER – 2
REVIEW OF LITERATURE
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What is Working Capital?
Firms need cash to pay for all their day-to-day activities. They have to pay
wages, pay for raw materials, pay bills and so on. The money available to them to do this
is known as the firm’s working capital. The main sources of working capital are the
current assets as these are the short-term assets that the firm can use to generate cash.
However, the firm also has current liabilities and so these have to be taken account of
when working out how much working capital a firm has at its disposal.
Working capital is therefore: -
Working Capital Current Assets - Current liabilities

||
stock + debtors + cash
Working capital management means management of current assets of the firm. It
can be defined in simple terms as excess of current assets over current liabilities. In short
it is the difference between inflow and outflow of funds. Working capital includes stock
of raw material, semi finished goods including work in progress, cash in hand and bank
and debtors after deducting current liabilities i.e. sundry creditors for expenses ex: salaries
and other administration expenses, interest payable to term lending institutions and other
financial institutions with in 12 months and creditors for purchase of Raw Material and
any short term advances towards sale of goods.
The working capital is an important part of the top half of the firm's balance
sheet. It is vital to a business to have sufficient working capital to meet all its
requirements. Many businesses have gone under, not because they were unprofitable, but
because they suffered from shortages of working capital.
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Working Capital Cycle:
Cash flows in a cycle into, around and out of a business. It is the business's life
blood and every manager's primary task is to help keep it flowing and to use the cash flow
to generate profits. If a business is operating profitably, then it should, in theory, generate
cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash
and expire.
The faster a business expands the more cash it will need for working capital and
investment. The cheapest and best sources of cash exist as working capital right within
business. Good management of working capital will generate cash will help improve
profits and reduce risks. Bear in mind that the cost of providing credit to customers and
holding stocks can represent a substantial proportion of a firm's total profits.
There are two elements in the business cycle that absorb cash - Inventory (stocks
and work-in-progress) and Receivables (debtors owing you money). The main sources of
cash are Payables (your creditors) and Equity and Loans.
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Each component of working capital (namely inventory, receivables
and payables) has two dimensions: TIME and MONEY. When it comes to managing
working capital - TIME IS MONEY. If you can get money to move faster around
the cycle (e.g. collect monies due from debtors more quickly) or reduce the amount
of money tied up (e.g. reduce inventory levels relative to sales), the business will
generate more cash or it will need to borrow less money to fund working capital. As a
consequence, you could reduce the cost of bank interest or you'll have additional free
money available to support additional sales growth or investment. Similarly, if you
can negotiate improved terms with suppliers e.g. get longer credit or an increased
credit limit; you effectively create free finance to help fund future sales.
It can be tempting to pay cash, if available, for fixed assets e.g. computers,
plant, vehicles etc. If you do pay cash, remember that this is now longer available for
working capital. Therefore, if cash is tight, consider other ways of financing capital
investment - loans, equity, leasing etc. Similarly, if you pay dividends or increase
drawings, these are cash outflows and, like water flowing down a plughole, they remove
liquidity from the business.
CONCEPT OF WORKING CAPITAL:
There are three types of working capital, Gross working capital, Net
working capital and fixed working capital.
1. Gross Working Capital:
It refers to the firms investment in current assets i.e., mainly
stock, debtors, bills receivables and cash. This is also known as ‘Current capital
concept’ or ‘Circulating capital concept’. It is represented by the sum total of the
current assets of the enterprise. It is known as Circulating capital’ because current
assets of a company are changed from one form to another, for e.g. from cash to
inventories, inventories to receivable to cash.
The Gross capital concept focuses attention on two aspects of current
assets.
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Management:
A). Optimum investment in current assets and
B). Financing of current assets.
The gross capital concept takes into consideration that: every increase in the
funds of the enterprise would increase its working capital.
This concept is more useful in determining the rate of return on
investments in working capital.
2. Networking Capital:
It is Excess of Current Assets over Current Liabilities.
Alternatively it is that portion of the firm’s current assets, which is financed by
long-term funds.
Net working capital being the difference between current assets and current
liabilities is quantitative concepts.
• It indicates the liquidity position of the firm.
• Suggests the extent to which working capital needs may be financed by
permanent sources of funds.
3. Fixed Working Capital:

Every firm is required to maintain a minimum balance of cash,
inventory etc, in order to meet the business requirement even in the slack seasons.
This part of current assets is called as permanent or fixed working capital.
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Types of Working Capital:
Depending upon the nature of the funds blocked, working capital can
be of two types
1. PERMANENT OR REGULAR WORKING CAPITAL
2. VARIABLE WORKING CAPITAL
Permanent Working Capital:
The magnitude of the current assets depends upon the firms

operating cycle. The operating cycle is a continuous process and the need for current
assets is also continuously.
But the level of current assets needed is not always same. It increases or
decreases overtime. However there is always minimum level of current assets which is
continues required by a firm to carry out its business operations. The minimum level of
current assets is called permanent or fixed working capital.
It represents the minimum amount of investment in current assets that is
seemed necessary to carry on operations at time. It is also known as ‘hard core’.
It Is Of Two Kinds:
A). Initial Working Capital:
At its inception and during the formation period of its operations, a company
must have enough cash funds to meet its obligations. In the initial year it as revenues may
not be regular and adequate credit arrangements may not be available from banks,
financial institutions, etc till it has established its credit standing, credit may have to be
granted on sales to attract the customers.
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B). Regular Working Capital:
It is the amount of working capital needed for the continuous operations of

the business of the company. It refers to the excess of current assets over the current
liabilities so that the process of conversion of cash into stock, stock into sales, receivables
and collections is maintained without any breaks.
Variable Working Capital:
This working capital required over and above the permanent working
capital depends upon changes in production and sales are called fluctuating or variable
working capital or temporary working capital. There may be changes either increase or
decrease in working capital. Many the variable working capital required in season
dependent.
It represents additional assets required at different times during the

operating year to cover any change or variability from the normal operations. It can be of
two parts.
Those are:
A. Seasonal working capital

B. Special Working Capital
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A. Seasonal working capital:
The amount to be blocked due to seasonal nature of industry. Examples are
package tours and summer tours. Obviously it refers to financial requirement that cope up
during that particular season. Beyond their initial and regular circulating capital most
business will require at stated intervals a large amount of current assets to fill the demands
of the seasonal busy periods.
B. Special Working Capital:

Extra funds are needed to meet contingencies, festivals, and special
occasions.
All business enterprises have to be prepared to meet unforeseen eventualities
that may arise in the course of their operations. Therefore, they must have extra funds at
‘Unstated Periods’ to meet contingencies.
Composition of Working Capital:
Working capital consists of
Current Assets
Current Liabilities
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Current Assets:
Current Assets are those, which can be converted into cash with one year
without affecting the operations of the firm.
In the management of working capital, two characteristics of current assets must be borne
in mind:
1. Short life span
2. Swift transformation into other asset forms.
The life span of current assets depends upon the time required in the activities
of procurement, production, and sales.
List of Current Assets:

• Cash and Bank Balances
Investments:
a) Government and Other Trustee Securities
b) Fixed deposits with Banks
• Receivables arising out of Sales
• Instalments of Deferred receivable due within a year
• Raw Material and components used in the process of manufacture
including those in transit
• Stock in Process including semi-finished goods
• Other consumable spares
• Advance payment of tax
• Advance for purchase of raw materials, components and consumable
stores
• Prepaid Expenses
• Deposits kept with public bodies for the business operations.
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Current Liabilities:
Current Liabilities are those, which are expected to fall due or mature
for payment in a short period not exceeding a year and represent short term sources of
funds.
List of Current Liabilities:

• Short term Borrowings (including bills purchased and discounted) from
a) Banks and
b) Others
• Unsecured Loans
• Public deposits maturing in one year
• Sundry creditors for raw materials and consumable stores and spares
• Interest and other charges accrued but not due for payment
• Deposits from Dealers, Sellers agents, etc
• Instalments of term Loans, Deferred payments, Credits, Debentures, Redeemable
preference shares and long term deposits, payable within on
• Statutory Liabilities
a) P F dues
b) Provision for taxation
c) Sales tax and excise tax
d) Obligations towards workers considered statutory
e) Others
• Miscellaneous Current Liabilities
a) Dividends
b) Liabilities for expenses
c) Gratuity payable within one year
d) Other provisions
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e) Any other payment due within one year
Objectives of Working Capital:
The main aim of Working Capital Management is to attain a Trade-off

between Profitability and Risk. Here Risk refers to profitability that a firm will become
technically insolvent. Risk is commonly measured by using the amount of net working
capital or the current ratio. Thus, more the new working capital, the more liquid the firm
and therefore less likely it is to become technically insolvent. On the other hand, Lower
levels of liquidity are associated with increasing levels of Risk. To increase the amount of
profits, a firm, may sacrifice solvency i.e. taking risk of technical insolvency and
maintain relatively low levels of current assets. When the firm does so, its profitability
would improve but would be exposed to greater risk of technical insolvency. Thus, if a
firm wants to increase profitability it must also increase its risk and if it wants to decrease
risk, it must decrease profitability. Therefore, Working capital management involves a
Trade-off between Risk and Profitability.
Factors Determining Working Capital:
There are no hard and past rules for determining working capital of the
firm. There are several factors which influence working capital need of the firm and the
factors may change from time to time. The following are the factors that generally
influence the working capital requirement of firm.
a. Nature & size of the business
b. Trading & service orient firms have very small investment in fixed assets,
but require a large sum of money to be invested in working capital.
Manufacturing business requires much working capital but it also depends
nature of business.
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Revenue Growth:
The working capital requirement of the firm increase as it revenue
grow. But to establish a direct relationship between volume of revenue and
working capital requires is difficult. Practically current assets will have to employ
before revenue growth takes place. It is therefore necessary to make advance
planning of working capital requirement for a firm on a continuous basis.
Demand Condition:
Many firms are seasonal in nature and cyclical fluctuations in
demand for their products and services. These business variations effect the
working capital requirement i.e., temporary requirement of working capital of the
firm. Under the boom conditions the firm requires more working capital. As they
will invest huge funds infixed assets. Seasonal fluctuations i.e., peek season
demand in more resources a in production, in certain month, will also effect
working capital requirement. Therefore financial arrangements for seasonal
working capital requirement can be made in advance. The financial plan should be
flexible enough to take care of some abrupt seasonal fluctuation.
Operating Efficiency and Performance:
The operating efficiency and performance of the firm relates to the

optimum utilization of resources at minimum cost. If the firm can efficiently
controlling operating costs then it can effectively contributing to its working
capital. Better utilization of resources includes profitability and internal cash profit
can be utilized as a part of working capital. The availability of cash generated will
be available for working capital depends upon taxation, dividend, retention policy
and depreciation policy of firm.
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Firm Credit Policy:
Every firm must allowed credit to its customers. The credit period
depends upon the norms of the industry and market conditions. Effect the credit
policy i.e. credit to customers allowed after properly accessing the credit worthily
ness of the customers and firms collections will maintain the level of book debts
which anti effect the working capital of the company.
Ratios Relating To Working Capital:

To evaluate the financial condition and the purpose of a firm the financial
analyst needs certain yardsticks frequently use are a ratio relating two pieces of financial
data to each other. Different types of ratios relating to working capital management are
11 CURRENT RATIO:
The current ratio is calculated by dividing current assets by current

liabilities.
“Current ratio =Current assets /Current liabilities”
Current Assets include cash and those assets, which can be converted into cash
within a year, such as marketable securities, debtors, and inventories. Prepaid expenses
are also included in current assets as they represent the payments that will not be made by
the firm in the future. All obligations maturing within a year are included in current
liabilities. Current liabilities include creditors, bills payable accrued expenses, short-term
bank loan, income tax liability, long-term debt5, maturing in the current year.
The current ratio is a measure of firm’s short-term solvency. it indicates the availability
of current assets in rupees for every one rupee of current liability. A ratio of greater that
one means that the firm has more current assets than current claims against them.
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11 Quick Ratio:
It establishment 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, which
are considered to be relatively liquid and included in quick assets, are considered to be
relatively liquid and included in quick assets, are debtor’s bills receivables marketable
securities (temporary quoted investments). Inventories are considered to be less liquid.
Inventories normally require some time to rely into cash; their value also has a tendency
to fluctuate. The quick ratio is found out dividing quick assets by current liabilities.
“Quick ratio = Current assets – inventories / Current liabilities.”
Generally, a quick ratio of 1 to 1 is considered to represent a satisfactory

current financial position. Although quick ratio is more penetrating test of liquidity than
the current ratio, yet it should be used cautiously. A quick ratio of 1 to 1 or more does not
necessarily imply sound liquidity position. A company with a high value of quick ratio
can suffer from shortage of funds if it has slow paying its current obligation in time if it
has been turning over its inventories efficiency, nevertheless, the quick ratio remains an
important indeed of the firm’s liquidity.
11 Inventory Turnover Ratio:
This ratio expresses the relation between the cost of goods sold during a
given period and the average amount of inventory outstanding during a period. The
formula for these ratios is as follows:
“Inventory Turnover Ratio = cost of goods sold/Avg. Inventory at cost”

“Avg. Inventory = opening stock + closing stock / 2”
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Inventory turnover ratio may also be calculated by making use of the
following formulation.
“Inventory turnover ratio = net sales / Avg. inventory at selling price”
Inventory turnover indicates the velocity with which goods move through
the business. It gives the rate at which inventories are converted into sales and then into
cash. Thus it helps to measure the liquidity of the firm. A high ratio indicates quick
movement of inventories and the efficiency of inventory control. A low ratio, on the other
hand, indicates existence of slow moving and obsolete stocks.
11 Debtors Turnover Ratio:
This ratio express the relationship between net credit sales of affirm and its
trade debtor’s bills receivable there by indicates the rate at which book debts are
converted into cash. In other words, it shows how many days credit is outstanding by
debtors or the time taken to collect the debts.
"Debtors turnover ratio = Net credit sales / Avgas, debtors”
To calculate the debt collection period just to following:
“Debt collection period = Number of working days in a year /debtors turnover ratio”
Usually the number of working days in a year is taken as 365.
The debtor’s turnover ratio or the average collection period should be compared
with the period of credit allowed to judge the efficiency of the collection department. As a
rule of thumb, the average collection period should no exceed 11/2 times the credit
period.
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Sources of Working Capital:
Out of the total current requirement of funds some portion of

current funds is more of permanent nature and its refers to fixed working capital. Balance
portion of funds cyclical and its refers to variable working capital. Every industrial
enterprise as to maintaining a minimum stock of raw material, work-in-progress, finished
goods. Loose tools and spare parts. it always requires money for the payment of wages
and salaries throughout the year. Funds require for these is known as fixed or permanent
working capital. Depending upon the size and volume of the business, additional working
capital is required for buying materials and for meeting the current operational expenses.
This is the variable part of the working capital. the fixed working capital should be
financed from long-term sources and variables working capital should be financed from
short-term sources.
Sources of Regular Working Capital:
Issue of Share:
Rising of funds by issue of shares has certain distinct edges over others
sources, especially borrowed capital. Once procure it is not refundable except in cash of
liquidation and does not create any changes on the assets of the company .so it is
advantages for affirm to finance its fixed working capital out of proceeds of the issuing of
shares.
Issue of Debenture or Long Term Borrowing:
Debentures are fixed interest-bearing securities, besides being

redeemable at the option of the company. The entire surplus after payment of debentures
interest goes to the credit of equity shareholders either in the form of interest goes to the
credit of equity shareholders either in the form of increased rates of dividend or in the
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form of increased relation. Similar advantages are also accrued if working capital is
financed by long term borrowing.
Retention:
Retention in the form of general reserve and or credit balance of profit and loss
account may also be used to finance fixed working capital.
Sources of Seasonal or Variable Working Capital:
For firms, which are in seasonal character in their business a large amount of
working capital, is required for holding inventory in peak period. But as soon as peak
period is over, their working capital becomes idle. So such firms may not prefer to finance
working capital from long-term sources. They may find it convenient to meet working
capital from short-term sources may find it convenient to meet their working capital from
short-term sources as follows
Cash Credit:
This represents the overdraft facilities as the hypothecation of inventories and

bad debts. The cash credit system is unique to the Indian banking system. Such as flexible
system of bank finance is nowhere in the world.
Discount of Bills:
Banks discount the bills raised on the buyers of companies’ goods. This
facility helps in realizing funds without wasting for the credit period to get over.
Bank Guarantees:
A Banks Issues specific guarantee to facilities business transaction between

various parts is, including government agencies.
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Determination of Working Capital:
The factors, which usually influence working capital needs in manufacturing

undertaking, cover;
1. The nature of and size of business.
2. Manufacturing process, technology and facilities.
3. Competitive forces.
4. Speed of operating cycle.
5. Growth and expansion activities
6. Credit terms
7. Dividend policy
8. Production policy
9. Attitude towards policy
10. Inventory procedures, depreciation policy, business cycle management attitude

etc.
11. Infrastructure the abysmal economic and physical infrastructure in India also
effects to working capital needs adversely prolonging the operating cycle
Working capital management is an integral part of overall corporate

management. The effective management of working capital like other areas of
management requires a clear statement of goals to be pursed and responsibility to be
allocated. Cash management and short-term loans along with the level of debtors are
the responsibility of financial executives. Inventory and credit control are managed in
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the other departments these division of responsibilities makes a coordinate approach
to working capital management.
Profitability and liquidity are the twin objectives of working capital

management. Profitability and liquidity frequently conflict with each other. Attempts
to procedure maximum profitability and out of various elements of working capital do
create severe liquidity problems. At the same time, over concentration on liquidity
does dilute profits. Management of working capital establish the best possible credit
off.
Between the profitability of net current assets employed and the ability to pay
current liabilities as there fall due. Working capital management includes
1. Cash management
2. Receivable management
3. Inventory management
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INDUSTRIES PROFILE
REFRIGERATIONCOMPRESSOR
Refrigeration compressor is the heart of any refrigeration system. The

compressor can be: reciprocating, rotary, centrifugal, screw or an axial flow type, based
on the principle of compression. Depending upon the location of the drive, compressors
are classified as hermetic, semi-hermetic and open type. Reciprocating and rotary
compressors, which have the compressing element and drive motor sealed in a single,
welded-housing, are called hermetically sealed compressors. Instead of single, welded-
housing, if the enclosure is bolted together, then the assembly becomes semi-hermetic. In
this type, in addition to reciprocating and rotary types, screw and centrifugal compressors
are also manufactured. However, if the compressors and drive units are not in single
housing, the compressors are called open type. Compressors manufactured in India are
mostly the reciprocating type. Centrifugal compressors are characterised by large
capacity, suitable for extremely low temperatures and ability to carry varying loads.
Rotary compressor is a hermetic type compressor where the mechanical structure
And motor assembly is directly fitted in the same shell, and where the shell is
sealed by means of welding. Rolling piston and sliding vane are the main types of rotary
compressors.
In reciprocating compressors, a connecting rod is used to convert the rotary
movement of the crankshaft to the reciprocating movement of the piston. The piston
slides, in a cylinder to compress the refrigerant gas. When the difference between
condensing temperature and evaporating temperature is high, the pressure ratio for
compression also becomes high and conducting compression in two stages becomes
desirable. A screw compressor is a positive displacement rotary machine. Depending
upon mountings, there are two types viz. vertical and horizontal screw compressors.
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Depending upon the number of screws, there are mono- screw and twin-screw
compressors.
Application of refrigeration compressors can be: for refrigerators, deep-

freezers, water coolers, bottle coolers, room air-conditioners, packaged air-conditioners,
water chillers, self-contained A/Cs, bus/train/ship air-conditioning, refrigerated vans and
cold-storages. End-uses of refrigeration compressors can be in: domestic, commercial and
industrial sectors. In domestic sectors, the end- uses are for preserving and storing food
and for comfort air-conditioning. In the commercial sector, the end-uses are: in central
air-conditioning, water coolers, and commercial refrigerators. End-uses in the industrial
sector include preservation of food, fruit juice concentrates, and alcoholic drinks;
preserving systems for meat, fish, poultry and dairy products. Other applications of
refrigeration compressors are process refrigeration such as in the drugs and
pharmaceutical industry; textile industry, rubber industry and thermal power generation.
Historical Development of Compressors:

For refrigeration compressors, development of technology started
around the year 1865. In the period 1865 to 1875, a few types of refrigeration
compressors were made each year. These were massive steam-engine driven machines
with their weights in tons, considerably in excess of their capacity in tons of refrigeration.
Before 1900, some compressors were equipped with cylinder by-pass valves for capacity
control. Electric motor belted-drives also started to make their appearance. Rare use of
sulphur dioxide as refrigerant was made. In the period from 1900 to 1925, rotating seals
were tried in small compressors. Automatic capacity controls were developed. Operating
speed increased to 800 rpm. Compressors came to be directly driven by synchronous
motors. During the period 1925 to 1950, reed valves began to appear. The 2-pole electric
motors at 3500 rpm were used for drive. Freon refrigerants such as R-ll, R-114, and R-22
were invented. During the period 1950 to 1975, the refrigerant R-22 was used in place of
R-12 and 2-pole motors in place of 4-pole motors were used. The ozone depleting effects
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of chlorofluorocarbons (CFCs) have resulted in a large number of countries signing the
Montreal Convention, according to which the developed countries have to phase out use
of R-ll, R-12, R-113, R-114, R-115, R-13, R-lll, R-112, R- 211, R-212, R-213, R-214, R-
215, R-216 and R-217 by the year 2000, and developing countries by the year 2015.,
The uses of new CFCs which are ozone friendly and are under development
at present necessitate modifications in compressor designs in some cases. They may also
affect the energy efficiency of compressors also. As regards the compressor type wise
development; the reciprocating compressors were the pioneers, followed by, centrifugal,
rotary and screw compressors. Among these types, the reciprocating compressors have
almost reached their technological development limits. Regarding the future trend, scroll
and eccentric cam compressors are being developed in advanced countries.
Structure of the Refrigeration Compressor Industry:

a) Manufacturers:
The manufacture of the refrigeration compressors started in India around the
year 1960 for small hermetic compressors for refrigerators as well as the larger capacity
open type compressors. Today, a wide variety of compressors are produced in India with
the capacity as high as 700 HP. The industry is composed of both organized sector of
medium and large-scale manufacturers and an unorganized sector of small-scale units.
The small units produce slow-speed compressor models, which are still used in India for
limited purposes. There are 14 manufacturers in the organized sector. They are:
i) Sanden Vikas (India) Ltd., Faridabad (Haryana) - A/C compressor for motor cars.
ii) Kirloskar Brothers Ltd., Karad (Maharashtra) – Hermetic compressors.
iii) Shriram Refrigeration Industries Ltd., Hyderabad (A.P.) Hermetic compressors.
iv) Godrej & Boyce Mfg, Co, Private Ltd Bombay – Hermetic
compressors.
v) Kelvinator of India Ltd., Faridabad (Haryana) – Hermetic compressors.
vi) Hyderabad Allwyn Ltd., Hyderabad (A.P.) – Hermetic compressors.
Page 31
vii) Voltas Ltd., Bombay & Warora (Maharashtra) - Hermetic, Semi- hermetic and
Open type compressors.
viii) Kirloskar Pneumatic Co. Ltd., Pune (Maharashtra) – Open type compressors.
ix) Vulcan Laval Ltd., Satara (Maharashtra) - Open type compressors.
x) Frick India Ltd., Faridabad (Haryana) - Open type compressors.
xi) Air Control & Chemical Engineering Co. Ltd., Nandej (Gujarat) - Open type
compressors.
xii) Utility Engineers (India) Ltd., Dharuhera (Haryana) – Open type and Semi-
hermetic compressors.
xiii) Blue Star Ltd., Bombay (Maharashtra) - Open type compressors.
xiv) Batliboi & Co., Udhna (Gujarat) compressors.Semi-hermetic
b) Import and Export:

Refrigeration compressors are imported in India as part of initial import in the
phased production programme under the collaboration agreements or some special types
or capacities, which are not manufactured in the country. Some compressors are also
imported as part of projects awarded to foreign companies. Export of compressors is
usually as a part of an end-project or a part of an air-conditioning or refrigeration project.
The export performance of the industry is not very encouraging.
The main reasons for this are:
Price The international prices are at least 40% cheaper than the Indian export prices.
Quality The quality of products of advanced countries is superior and more
reliable.
Models The advanced countries do continuous product improvement and
are able to bring new models every year in the market.
Marketing The marketing and after sale service is not properly undertaken by
the Indian manufacturers, barring a few exceptions. The Indian
manufacturers will have to improve on all these disadvantages with
appropriate help from the Government.
Page 32
c) Installed Capacity and Its Utilization:
At present, the total licensed capacity of these companies is 13,87,250
Nos. per annum, whereas the total installed capacity is 10,22,170 Nos. As regards the
utilization of installed capacity, the industry presents an unbalanced picture for different
types of compressors as shown in the following table.
Utilization of capacity
(In Numbers)
Total
Total
Installed Capacity
Compressor type Production
capacity Utilization
(1985-86)
(1985-86)
Air-conditioning
compressors for 10,000 25,000 40%
automobile
Hermetic
7,78,614 8,81,000 88.4%
Compressors
Open type and
Semi hermetic
2,444 15,440 15.8%
compressors
(all varieties)
Page 33
d) Financial Status and Scale of Operation:
Most manufacturers are multi-product companies producing compressors as
one of their products: hence the data of separate investment and costs for compressors vis-
a-vis income is not available. The financial health of a company as a whole has, therefore,
been studied. It was observed that all companies, except ACCEL, are making profit.
ACCEL had been making losses for some years and it has been taken over by Best &
Crompton Ltd., since 1986 and is under rehabilitation. Amongst the companies, Frick
India Ltd., Vulcan Laval Ltd., Blue Star Ltd., and Kelvinator of India show sound
financial health with the return on capital employed is consistently above 10% and return
on share capital above 35%.
Page 34
TECHNOLOGICAL STATUS OF INDIAN INDUSTRY
a) Sources of Technology:
Since the beginning of the refrigeration industry in India, refrigeration
compressors have been manufactured with foreign technical collaboration. Even today,
most of the established manufacturers continue to enter into fresh foreign collaborations
for producing new types of compressors or for updating and expanding the present range.
The only notable exception in this regard is Godrej & Boyce Mfg. Co. Ltd. which has
developed a hermetic compressor for its refrigerator entirely with its own research and
development. .
There is no example of technology transfer among Indian manufacturers.
Moreover, collaborations with the same foreign companies have been concluded at
different times for updating or manufacturing new types of compressors. All this goes to
show that there is hardly any original design and development work undertaken in India;
or, whatever has been attempted so far has not met with much success. The R&D effort in
India is mainly aimed at indigenization of the compressors as per the collaborator's
specifications and according to the phased manufacturing program.
b) Selection of Foreign Collaborator:

The selection of foreign collaborator was found to be based on many
factors such as:
i) Quality of products
ii) Financial participation of collaborator
iii) Willingness of collaborator
Page 35
iv) Previous trading relations i.e. the Indian company importing the collaborator's
compressor for use in own products or projects
v) Availability of collaborator for collaboration in India.
There are three companies, namely, Sanden Vikas (India) Ltd., Kelvinator of
India Ltd. and Frick India Ltd., in which there is a financial participation of the
collaborator in addition to technical collaboration
c) Restrictive Clauses in Collaboration Agreements:

The restrictive clauses pertain to export, use of collaborator's brand name
and transfer of technology to other Indian manufacturers. Regarding exports, most
collaborators have barred the Indian manufacturers to export to countries where the
collaborators have their own licensing arrangements or trade interests.
Regarding the use of collaborator's brand-name, in most cases the words "manufactured
under license of." etc., can be used during the period of agreement.
The transfer of technology has not been allowed during the tenure of agreement in the
case of any company. After the tenure is over, the Indian company is free to transfer
technology to others.
d) Technical Support of Collaborator:

In all the collaborations, the collaborator has agreed to give all technical
support for indigenization of the compressor. Adequate training in collaborator's plant as
well as in Indian company's plant is provided.
e) Research and Development Activities:

The research and development carried out by the Indian manufacturers is of
applied nature. The main effort is to indigenize the collaborator's design within the
agreement period. Once this is achieved, many manufacturers have done development in
compressor components by way of change of material, little modification in design and
such other improvements. Some have developed compressor models of intermediate
Page 36
capacities in the range by making suitable dimensional changes. No manufacturer has
designed a compressor on his own except Godrej & Boyce.
The reasons for this state of affairs are:
i) The low volume of turnover of business does not permit sizeable investment in
original research.
ii) It is faster to update technology through collaboration than through own research
Page 37
CHAPTER-3
COMPANY PROFILE
Page 38
PROFILE OF TECUMSEH PRODUCTS INDIA
PRIVATE LIMITED, HYD
Organization Profile:
Tecumseh Products India private Limited is an ISO 14001 and 9001
certified American based multination company, with as core expertise in manufacturing
hermitically sealed compressors. Tecumseh India is a 100% subsidiary to Tecumseh
Products Company (TPC) USA, which the world’s only full line independent
manufacturer of compressors. TPC has 29 manufacturing locations in four continents. In
India the company has 20 sales offices and in extensive networks of over 200 dealers and
more than 600 registered small-scale manufacturers.
Tecumseh India is the preferred supplier to the who’s who of the AC &
R Industry in India and in the Middle Ease, SAARC courtiers. The company was
originally established and registered in 1963 under the name of the Usha Refrigeration
Industries Limited (URIL) started in 1963. URIL manufactured compressors for water
coolers, air coolers and air conditioners, Lala Charath Ramji who was from a renowned
industrial family of DC and Ceremonial Group of Companies started URIL.
In 1970 the URIL was changed to C. Shriram Refrigerations Ltd., and
the business was also diversified towards manufacturing of diesel engines and water
coolers. Sriram Industries played a great role in the field and captured more than 50%
markets shares in India. Shriram Industries also kept its hands in international trade and
were successful in exporting their products to the neighboring countries, Nepal and
Bangladesh.
In 1980 Lala Charath Ramji son Mr. Siddharth C Shriram became the
chairman cum Managing Director of the Company. The period was sea change in
industrial policy, which resulted in a great change in the industrial sector.
Page 39
In the process for survival, Shriram went to Tech collaboration with
Westing House US and was named as Siel Compressors. Siel compressors were the first
Indian company to manufacture compressor. Later Westing House stopped manufacturing
compressors and Siel went into technological collaboration with Tecumseh Products
Company USA in1988. Tecumseh means ‘Crouching Panther’ derived from chief of the
Shawnee Tribe (1768 – 1813). It started its operations to offer new state of AW series to
Indian customer. Subsequently Tecumseh Products Company took over Siel group in
1997 and Siel Group became 100% subsidiary to Tecumseh Products Company. As soon
as Tecumseh took over the company its stopped manufacturing water coolers restricted its
products to CFA / hermitically sealed compressors.
Tecumseh Products Company invested $80 million in Indian operation
known as Tecumseh Products India Pvt. Ltd (TRIPL). TRIPL has two states of art
manufacturing facilities at Hyderabad, Andhra Pradesh and Ballabgarh, Haryana with a
CADEM Center at the Hyderabad plant to meet global engineering needs.
TRIPL has gained core expertise in Research and Development, AW
assembly as a AW machine shop such that it acquired a lion’s share of the Indian
compressor market by gaining a 50% share.
Hyderabad Plant:
The Hyderabad plant is on a sprawling 54-acre land at the Balanagar
Industrial belt 15 km. Away from Hyderabad city on the highway line going towards
HMT Ltd Nassau road. At Hyderabad plant TRIPL manufacturers Air conditioners, from
1200 BTU to 60000 BTU and compressors for deep freezers, bottle cooler and water
coolers which are considered to be world’s No. 1 in the 150 million compressor market a
year.
The Hyderabad Plant has a capacity of manufacturing more than 3000
units per day. The Hyderabad has a technology development center with full Research and
Page 40
Development facility. The plant is also supported by two service vendors: AW service
center and Mc Service center.
The Hyderabad plant has 6 regional offices among which four offices are
at the Metro cities; Delhi, Mumbai, Kolkata and Chennai and remaining two are at
Ahmedabad and Secunderabad. Besides these there are branch offices and depots
located in prime cities across the country. The Hyderabad plant also has a network of
about 177 dealers across the nation and are proffered Suppliers to key original equipment
manufacturers (OEM’s) like LG, Voltas, Bluster, Gore, Videocon, Fodders, Matrix,
Hitachi, etc.,
TRIPL, Hyderabad plant was successful in getting the ISO 9001
certification for maintaining quality of the compressors in 1994 and for the Eco friendly
environment maintenance the company has got ISO 14001 certification
The Management has started development activities in the following areas:
• Effluent treatment plant
• Tree Plantation
• Rain Water Harvesting is to increase the ground water level and TRIPL has the
distinction of being the first organization in thus record.
• Vermi Culture is the process of utilizing the canteen food wastage for converting
into natural manner.
Page 41
Department of TRIPL:
• Human Resource Management
• Accounts Department
• Attendance and Pay Office (A&PO)
• Export Oriented Unit (AK Kit)
• Technology Development Centre (TDC)
• Maintenance and Engineering Department
• Quality Development of A W assembly
• A W Press Shop
• A W Machine Shop
• Service Center
• Dispensary
• Chemical and technological laboratorie
TRIPL Has a Total of 766 Permanent Employees as On Which Include:

• 172 officers
Page 42
• 232 staff
• 362 workers
Ballabgarh Plants:
At Ballabgarh, Haryana TRIPL has invested Rs. 200 crores for manufacturing
if Non – CFC Compressors. The Ballabgarh Plant is one of the best compressors
manufacturing unit in Asia. The plant is extended on 21 – acre land on the Delhi – Matura
National high way. The plant has a capacity to manufacture 25000 units per month.
5 – S Philosophies:
Tecumseh encourages its employees to follow these philosophies, which is the
Japanese way of working.
1) SERI(Sorting Out):
a. Look around your work area and ask yourself “Is it really necessary for all items
to be there? “
b. Separate items “O. K” re-workable a rejected items
c. Re-work there – workable items and dispose off the rejected items
2) SEITION (Systematic Arrangement):
a. Items must be place in prefixed locations so that they are accessible and can be
easily use
b. Items should be clearly identified by labeling them properly
Page 43
3) SEISO (Spic and Span):
a. Clean the work place yourself
b. Clean all the equipment including table etc. yourself
4) SEIKETSU (Serene Atmosphere):
a. A clean work place properly selected with a proper arrangement will soon become
dirty if SEIRI, SEITON and SEISO are not practiced regularly
b. To achieve serene atmosphere the three steps of SEIRI, SEITON and SEISO
should be continuously repeated
c. We would keep our area of work neat and clean including your own attire
5) SHITSHUKE (Stick to Self Discipline):
a. Follow rules and regulation strictly
b. Adhere to timings and respect time.
c. Confirm to standards while working
d. Follow the prescribed operational standards
The company pays a incentives of Rs.75 per month to its employee for
following these 5 – S philosophies.
ADVANTAGES OF 5’S:
By thoroughly enforcing 5-8 in each work area.
• Operations can be performed without error proceeding in, well-regulated fashion,
resulting in fewer defective items. Thereby increasing the overall quality of
product.
Page 44
• Operations can be performed safely and comfortably, reducing the chances of
accidents.
• Machinery and equipment can be carefully maintained, reducing the number of
breakdowns.
• Operations can be performed efficiently, eliminating waste thereby
increasing the efficiency and productivity.
How to Achieve 5’s:

Every employee can achieve ‘5-S’ easily by having a close look at his/her
work place. He/she is to ensure that
• No rejected /unwanted items are lying at his/her work place.

• All items are kept in proper locations/order.
• Everybody should co-operative in keeping his/her and other’s area and the
Machines clean.
• Follow the rules and regulations and maintain required standards.
Strategies and Process of TRIPL:
• Work place improvements (5 – S philosophies)
• Creativity club
• KRA’s (improvements / suggestions)
• Variable earnings – Sharing of value addition
• Agreement process – organization needs
• Non – conformance reporting / audits
Page 45
• Open / House communication meetings
• Team Assessments and feedback
• Changing life style
TRIPL’S VISION AND MISSION
VISION:
It is our goal to be the global leader in all of the markets in which we choose to
participate. We will pursue disruptive technologies to redefine our products.
MISSION:
• We will leverage our global expertise in mechanical, electrical, fluid handling,
related components and services to provide comprehensive solutions for our
customers needs – compressors, engines, electric motors, pumps, electronics, and
controls.
• We will be best in class and the most effective producer by utilizing the principles
of TQM, 6 sigma and lean.
• Our organization will modify itself in response to change in environment at a pace
and amount of change that can be made without eliminating or impeding our
ongoing effectiveness.
• Incisive, continuous strategic thinking will be well communicated and shared by
the organization.
Awards and Recognitions:
Page 46
• Hyderabad plant was awarded the commendation in safety, health & SHE
conducted by CII Chennai.
• Hyderabad plant achieved the GREENTECH ENVIRONMENT
EXCELLENCE GOLD AWARD in the countrywide competition among the
engineering achievement in environment management.
Products and Services:

With a widely used range of Reciprocating, Rotary and Scroll
compressors for varied applications, Tecumseh caters to the entire spectrum of cooling
needs for Air Conditioning, Refrigeration, and Commercial Refrigeration Application.
The superior technology that is built into these compressors ensures that they operate with
high-energy efficiency and at low noise levels. Compressors manufactured in India are
trivialized to suit the exacting Indian conditions. Which means that they with stand wide
voltage fluctuations and perform well even under extreme weather conditions.
The range includes the energy efficient AW Series, super silent AWQ Series, and the
study, reliable and eco-friendly MLA series of compressors.
Product Range:
 Refrigerator Compressors.
 Commercial Refrigeration Compressors.
 Air-Conditioning Compressors.
 Commercial Air-conditioning Compressors.
 Condensing units.
Page 47
Competitors Analysis:
In India TRIPL has four man competitors viz., Kirloskar, Volts,
Bluestar and Carrier Air Con Ltd. TRIPL is the market leader with an overall 50% market
share impressed in terms of valued. In this segment of Air-condition compressor, it has
stiff competition with Kirloskar Copeland. The other manufacturers i.e., Carrier Air con is
looking for divestment of their compressor division as a part of their comeback strategy
they have been on a downside since 1999 it has also delisted its share during their period.
Tecumseh Refrigeration and air condition products have concerned a large

chunk of the Indian market as its clients include most of the OEM’s Tecumseh has a 40%
of market share of the domestic Air-condition and 30% of the refrigerator compressor
market.
Kirloskar is 51:49 joint between Kirloskar brother and Copeland Corporation, a

global competitor of TPC, USA. The joint venture company took over the compressors
manufacturing and sell business of hermitic compressors division at Karadand a title of
Kirloskar brother limited started, production, of hermetic compressor way back in 1996,
at Kirloskar Wadi, it was then with a technical collaboration with TPC,USA, Which had
not yet entered India, Kirloskar Copeland as part of their strategy to increase their sales
have started manufacturing of condensers, which are mainly used in dairies, cold storage,
Page 48
industrial chillers and water coolers. The estimated market size in India being RS.25
Crores.
CHAPTER - 4
DATA ANALYSIS
Page 49
DATA & DATA ANALYSIS
Size and growth of current assets and liabilities and Net working capital
of TRIPL during the period 2005-2006 to 2009-2010.
(All amounts are in thousands)
Year Current Growth Current Growth Net W.C Growth

Assets Rate (%) Liabilities Rate (%) of
W.C (%)
2006 1500977 100 862668 100 638301 100
2007 1688733 112.5 1029208 119 659525 103
2008 2307604 153.74 1155154 134 1152450 180
Page 50
2009 2150110 143.24 1359165 157 790945 123
2010 2011272 133.99 1470284 170 540988 84
Asset,libilities And Working Capital

2500000
2000000
1500000
100Rs 1000000 Year
Current Assets
500000 Current Liabilities
0
2005-2009 Years
Working Capital Turnover Ratio:
Page 51
Capital Ratio Graph:
Networking
Year Sales Ratio
Capital
2005-06 4225506 1152450 3.69
2006-07 2648791 638309 4.15
2007-08 3423153 659525 5.15
2008-09 3901375 790945 4.93
2009-10 4748354 540988 8.77
Page 52
Sales To Working CapitalRatio
10
9
8
7
6
5
4
s R
tio
a
3 Ratio
2
1
0
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
years
Interpretation:
From the above table, it is observed that the TRIPL’s debtor’s turnover ratio
shows a good sign. The company noted a maximum ratio of 8.77 in the year 2009 – 2010
and the minimum ratio of 3.69 in the year of 2007 -08.
Turnover Ratio:
Debtors Turnover Ratio expresses the relationship between debtors and sales.
A high Debtors Turnover Ratio or low Debt collection period is indicative of sound credit
management policy.
Table shows Debtors Turnover Ratio of TRIPL during the period
Page 53
2005-2006 to 2009-2010
Year Net Credit Sales Avg. Debt Ratio
2005 – 2006 2648791 567931 4.67
2006 – 2007 3043448 682289 4.46
2007 – 2008 3925325 612590 6.24
2008 – 2009 3614471 442498 8.17
2009 – 2010 4417677 47842 9.34
Debtors Turnover Ratio:
Page 54
10
9
8
7
6
Ratio
5 Ratio
4
3
2
1
0
2005-06 2006-07 2007-08 2008-09 2009-10
years
Interpretation:
From the above table, it is observed that the TRIPL’s debtor’s turnover ratio
shows a good sign. The company noted a maximum ratio of 9.34 in the year 2009 – 2010
and the minimum ratio of 4.46 in the year of 2006 -07.
If we observed the above table the ratio is increasing from 4.46 in the year
2006-2007 to 9.34 in the year 2009-10 in the year but it is decreased to 4.46 in the year
2006-2007. It shows a good sign for the company.
Page 55
Current Ratio:
It is the ratio of the current assets current liabilities this ratio is used to know the
company’s ability to meet its current obligations. The standard norm for the current ratio
is 2:1
“Current ratio = current Assets / Current liabilities.”
Table showing current ratio of TRIPL during the period

2006-2007 to 2009 -2010
Year Current Assets Current Liabilities Ratio
2005– 2006 1500977 862668 1.74
2006 – 2007 1688733 1029208 1.64
2007 – 2008 2307604 1155154 1.99
2008 – 2009 2150110 1359165 1.54
2009 – 2010 2009547 1427828 1.40
Page 56
current ratio
2.5
1.5
tio
ra
1
Ratio
0.5
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

0
years
Interpretation:
It is observed that the TRIPL’s current ratioowing a increasing trend;
the company’s liquidity position is satisfactory
The current ratio increased slightly up to 2007. But in 2008 it declined because
of increase in current liabilities, and then it started to decrease further in2008 as 1.40. if
the company maintains to increase the ratio it can meet obligations.
Quick Ratio:
Quick ratio is relation between quick assets and current liabilities. The term
quick assets, which can be converted into cash with a short notice. This
category also includes cash bank balances short – term investments and
receivables.
“Quick ratio = Quick Assets / current liabilities”
Page 57
Table showing quick ratio of TRIPL during the period
2004 - 2005 to 2008 – 2009
Current
Year Current Assets Ratio
Liabilities
2004 – 2005 870459 862668 1.01
2005 – 2006 923353 1029208 0.89
2006 – 2007 1056852 1155154 0.91
2007 – 2008 1005863 1359165 0.74
2008 – 2009 1082902 1427828 0.76
quick Ratio
1.2
0.8
0.6 Ratio
tio
ra
0.4
0.2
0
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
years
INTERPRETION:
Page 58
It is observed from the table that the TRIPL’s Quick Ratio is satisfactory.
The company has noted a maximum ratio of 1.01 in the year of 2004 –
2005.And also the company has noted a maximum ratio of 0.74 in the year
of 2007 – 2008.
Except the 2004 year, the remaining is below the standard of the norm 1:1.
But we observed the ratio of the company, it is decreasing gradually. so it is
a bad sign for the company.
Page 59
Composition of current Assets
(all the amounts are in thousands)
Page 60
Particulars 2004 – 2005 – 2006 – 2007 – 2008 – Avg.
05 06 07 08 09
Invento
48
ry 630518 765380 1250752 1144247 926645
.16
(42%) (45.32%) (54.2%) (53.41%) (46.07%)
Sundry 30
708107 656472 568707 316288 523360
Debtors .17
(47.17%) (38.87%) (24.64%) (14.71%) (23.02%)
Cash and
56675 35502 25034 58827 17636 4.11
Bank
(3.77%) (2.1%) (1.08%) (2.74%) (2.74%)
Loans &
105677 29032 93380 192467 204545
Advances 6.38
(7.04%) (1.71%) (4.04%) (8.95%) (10.62%)
Other -- 202347 369731 438281 339086 12.94

current
Assets
1500977 1688744 2307604 2150110 2011272

Total
(100%) (100%) (100%) (100%) (100%)
Page 61
Composition Of Current Asset
4500000
4000000
3500000
3000000
2500000 Total
Other current Assets
100 Rs
2000000
Cash and Bank
1500000
Inventory
1000000
500000
-500000
2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 years
INTERPRETATION
From the above table, it is observed that the compos ion of inventory shows a
good sign. The company noted a maximum ratio of 54.2% in the year 2006 –
2007 and the minimum ratio of 42% in the year of 2004 -05.
From the above table, it is observed that the compos ion of sundry debtors
shows a good sign. The company noted a maximum ratio of 38.87% in the
year 2005 – 2006 and the minimum ratio of 14.71% in the year of 2007 -08.
Page 62
From the above table, it is observed that the compos ion of cash at bank
shows a good sign. The company noted a maximum ratio of 3.77% in the
year 2004 – 2005 and the minimum ratio of 1.08% in the year of 2006 -07.
From the above table, it is observed that the compos ion of loans and
advantages shows a good sign. The company noted a maximum ratio of
10.62% in the year 2008 – 2009 and the minimum ratio of 1.71% in the year
of 2005 -06.
From the above table, it is observed that the compos ion of other current
assets shows a good sign. The company noted a maximum ratio of 339086
in the year 2008 – 2009 and the minimum ratio of 202347 in the year of 2005
-06.
PROFIT AND LOSS ACCOUNT:
The income statement is also called as income statement, it is considered to

be the most useful of all financial statements. It prepared by a business
concern in order to know the profit earned and loss sustained during a
specified period. It explains what has happened to a business as a result of
operations between two balance sheet dates. For this purpose it matches the
revenues and cost incurred in the process of earning revenues and shows the
net profit earned or loss suffered during a particular period.
Page 63
The nature of Income which is a focus of the income statement can be well
understood if business is taken as an organization that uses “Input” to
produce “Output”. The output of the goods and services that the business
provides to its customers. The values of these outputs are the goods and
services that the business provides to its customers. The values of these
outputs art the amounts paid by the customers for them. These amounts are
called “revenues” in the accounting. The inputs are the economic resources
used by the business in providing these goods and services. These are termed
“expenses” in accounting
Statements of profit & loss for the year ended Dec 31, 2005
(All amount in thousands of rupees)
Schedul
PARTICULARS 2004 2005
e
INCOMES
sales and services

1,983,39
sales (gross) 1 3,015,714
less: excise duty 286,365 366,923
1,697,02
Net sales 6 2,648,791
Add: service Incomes 224,878 173,847
1,921,90
4 2,822,638
other incomes 13 125,693 114,172
Page 64
2,047,59
TOTAL(A) 7 2,936,810
EXPENDITURES
1,232,97
Material costs 14 1 1,737,661
decrease/increase in stock 15 (93,224) (28,949)
excise duty on stocks, scrap sales
etc., 29,236 32,655
employee costs 16 426,585 482,580
manufacturing and other expenses 17 314,637 382,604
Depreciation 157,225 143,832
Interest 18 24,758 25,793
miscellaneous expenditure written
off 5,300 2,759
2,097,48
TOTAL(B) 8 2,778,935
profit before tax(A-B) (49,891) 157,875

TAXATION ---- -----
Deferred ----- (46,315)
Net profit for the year (49,891) 111,560

Profit & loss a/c beginning of the (420,294
year ) (470,185)
(470,185
Profit & loss a/c end of the year ) (358,625)
Earnings per share basic & diluted 5.60
(All amounts in thousands of rupees)
Schedul
e
Page 65
INCOMES
sales and services

3,015,71 3,423,15
sales (gross) 4 3
2,648,79 3,043,44
Net sales 1 8
2,822,63 3,145,63
8 0
other incomes 13 114,172 258,985
2,936,81 3,404,61
TOTAL(A) 0 5
EXPENDITURES
1,737,66 2,219,60
Material costs 14 1 1
decrease/increase in stock 15 (28,949) (59,818)
excise duty on stocks, scrap sales etc., 32,655 1,933
employee costs 16 482,580 588,770
Interest 18 25,793 44,428
miscellaneous expenditure written off 2,759 ----
2,778,93 3,347,14
TOTAL(B) 5 2
Profit before tax(A-B) 157,875 57,473

TAXATION
current(Net of excess provisions of
earlier year written back rs.5086(2002
nil) ----- (86)
Deferred (46,315) (40,971)
Net profit for the year 111,560 16,588

Profit & loss a/c beginning of the year (470,185 (358,625)
Page 66
)
(358,625
Earning per share basic & diluted 5.60 0.80
Schedul
e
INCOMES
sales and services

3,423,15 4,255,50
sales (gross) 3 6
3,043,44 3,925,32
Net sales 8 5
3,145,63 3,991,99
0 3
other incomes 13 258,985 426,626
3,404,61 4,418,61
TOTAL(A) 5 9
EXPENDITURES
2,219,60 3,387,64
decrease/increase in stock 15 -59,818 -315,934
employee costs 16 588,770 668,065
Interest 18 44,428 36,532
Page 67
miscellaneous expenditure written off ----- ------
3,347,14 4,448,59
TOTAL(B) 2 3
Profit before tax(A-B) 57,473 (29,974)

TAXATION
current(Net of excess provisions of
earlier year written back rs.5086(2002
nil) (86) ------
Deferred (40,971) (3,779)
Net profit for the year 16,588 (33,753)

(358,625
Profit & loss a/c beginning of the year ) (342,037)
(342,037
Earnings per share basic & diluted 0.80 1.55
Schedul
e
INCOMES
sales and services

4,255,50 3,903,00
sales (gross) 6 5
3,925,32 3,614,47
Net sales 5 1
3,991,99 3,681,83
3 3
other incomes 13 426,626 493,559
Page 68
4,418,61 4,175,39
TOTAL(A) 9 2
EXPENDITURES
3,387,64 2,828,10
decrease/increase in stock 15 -315,934 186,135
612,4
employee costs 16 668,065 67
Interest 18 36,532 69,032
miscellaneous expenditure written off
4,448,59 4,455,12
TOTAL(B) 3 7
Profit before tax(A-B) (29,974) (279,735)

Provision for taxation
Current Tax ---- (4000)
Fringe benefit Tax ---- (8056)
Deferred (3,779) ----
Net profit for the year (33,753) (291,791)

(342,037
(375,790
Earning per share basic & diluted 1.55 13.25
Schedul
e
Page 69
INCOMES
sales and services

3,903,00
sales (gross) 5 4,748,354
3,614,47
Net sales 1 4,417,676
3,681,83
3 4,455,104
other incomes 13 493,559 386,261
4,175,39
TOTAL(A) 2 4,841,365
EXPENDITURES
2,828,10
Material costs 14 4 3,722,053
decrease/increase in stock 15 186,135 88,800
employee costs 16 612,467 685,159
Interest 18 69,032 133,955
miscellaneous expenditure written off
4,455,12
TOTAL(B) 7 5,414,600
(279,735 (573,235
Profit before tax(A-B) ) )
Provision for taxation
current taxation (4000) ----
fringe benefit tax (8056) (7,355)
(291,791
Net profit for the year ) (580,590)
Page 70
(375,790
(667,581 (1,248,171
Profit & loss a/c end of the year ) )
Earnings per share basic & diluted 13.25 26.37
Balance sheet
Balance sheet is a statement of financial position of a business at a specified

moment of time. It represents all assets own by the business at a particular
moment of time and the claim of the owners and outsiders against those
assets at that time. It in a way of the financial condition of the business at
that time.
The important distinct an income statement and balance sheet is that the
income statement is for a period while balance which is for a particular date.
Income statement is therefore a flow report, as contrasted with the balance
sheet which is a static report
Comparative Balance Sheets
The comparative balance sheet analysis is the study of the same items, group
of items and computed items in two or more balance sheets of the same
enterprise on different dates. The changes in periodic balance sheet items
reflect the conduct of a business. The changes can be observed by
comparison of the balance sheet at the beginning and at the end of a period
and these changes can help in informing an opinion about the progress of and
enterprise.
Page 71
Balance Sheet of Tecumseh Products India Pvt. Ltd.
During the year 2004- 2005

**All amounts are in thousands
Inc/D
2004 2005 ec
Amou Amou Amou
nt nt nt %
SOURCES OF FUNDS
Share Holders Funds
19905 19905
Share Capital 34 34 0 0
21864 36239 14374
Reserves and Surplus 7 4 7 66
Advance share Application Amount 7
22091 23529 14374
(A) 81 28 7
Loan Funds
16653 20090
Secured Loans 9 9 34370 25
18000 18000
Unsecured Loans 0 0 0 0
16653 38090 21437 12
(B) 9 9 0 9
23757 27338 35811
(A +B) = ( C ) 20 37 7 15
APPLICATION OF FUNDS
Fixed Assets
18946 19786
Gross block 4 28 83985 4
44631 58883 14252
LESS: Accumulated Depreciation 3 6 3 32
14483 13897 -
Net Block 30 92 58538 4
24863 21224 58
ADD: Capital Work in progress 3693 9 6 3
(including Capital Advances), Net 10
Page 72
10
Fixed Assets held for disposal 856 0 -856 0
14855 16384 15685
(D) 79 31 2 10
Investments
(E) 1040 1040 0 0
Deferred Tax Asset-Net 10
(F) 0 97432 97432 0
Current Assets, Loans and Advances
56163 63051
Inventories 0 8 68888 12
38777 70810 32033
Sundry Debtors 1 7 6 83
12
Cash and bank balances 24837 56675 31838 8
10314 10567
Loan and Advances 0 7 2537 2
other current Assets
10773 15009 42359
(G) 78 77 9 39
Less: Current Liabilities and Provisions
61449 80914 19464
Current Liabilities 8 5 7 32
Provisions 46723 53523 6800 15
66122 86266 20144
(H) 1 8 7 30
Net Current Assets 41705 63830 22125
(G - H) = (I) 3 9 6 53
10
Miscellaneous Expenditure (written off) 2759 0 -2759 0
-
Profit and Loss Account 47018 35862 11156
(J) 5 5 0 24
Total 23757 27338 35811
15
(D+E+F+I+J) 20 37 7
Interpretation (2004-2005):
Page 73
1. The comparative balance sheet of the company during the year 2004-
2005 records that the current assets have increased by 423599
thousands i.e.,39%
2. Because of increase in current assets we can say that the short – term
solvency of the company is good.
3. The current liabilities have increased by 201447 thousands i.e.,30.4%
4. Fixed assets have decreased by 153708 thousands i.e.,10%
5. The shareholders funds of the company have increased when

compared to previous year. So we can say that long-term solvency of
the company is satisfactory.
6. There is increase in working capital of 222152 thousands when

compared to the previous year. So we can say that the financial
position of the company is good.

Inc/D
2005 2006 ec
Amou Amou Amou
nt nt nt %
SOURCES OF FUNDS
Share Holders Funds
19905 21019 11146
36239 36239
Page 74
Advance share Application Amount
23529 24643 11146
(A) 28 89 1 5
Loan Funds
20090 13617 - -
18000 29310 11310
38090 42928
(B) 9 0 48371 13
27338 28936 15983
(A +B) = ( C ) 37 69 2 6
Fixed Assets
19786 24018 42325
58883 76365 17481
13897 16382 24844
Net Block 92 32 0 18
24863 19737 -
16384 18356 19715
(including Capital Advances), Net 31 06 5 12
Fixed Assets held for disposal 0 0 0
16384 18356 19717
(D) 31 06 5 12
Investments -
(E) 1040 40 -1000 96
Deferred Tax Asset-Net - -
(F) 97432 56461 40971 42
63051 76538 13486
70810 65647 -
Sundry Debtors 7 2 51635 -7
- -
Page 75
10567 23137 12570 11
other current Assets 0 0 0 0
15009 16887 18775 -
(G) 77 33 6 13
80914 90402
12518 13
Provisions 53523 3 71660 4
86266 10292 16654
(H) 8 08 0 19
Net Current Assets 63830 65952
(G - H) = (I) 9 5 21216 3
Miscellaneous Expenditure (written off)
Profit and Loss Account 35862 34203 -
(J) 5 7 16588 -5
Total 27338 28936 15983
6
(D+E+F+I+J) 37 69 2
Interpretation (2005-2006)
1. The comparative balance sheet of the company during the years 2005-
thousands i.e.,13%
3. The current liabilities have increased by 166540 thousands i.e.,19%

Page 76
6. There is an increase in working capital of 212216 thousands when
position of the company is good

Inc/D
2006 2007 ec
Amou Amou Amou
nt nt nt %
SOURCES OF FUNDS
Share Holders Funds
21019 22018
36239 36239
Reserves and Surplus 4 4 0
24643 25642
(A) 89 55 99866 4
Loan Funds
13617 32440 18822 13
29310 54987 25677
42928 87428 44500 10
(B) 0 1 1 4
28936 34385 54486
(A +B) = ( C ) 69 36 7 19
Page 77
Fixed Assets
24018 27337 33182
76365 96481 20116
16382 17688 13066
Net Block 32 92 0 8
-
19737 10977 -
18356 18564
(including Capital Advances), Net 06 93 20887 1
Fixed Assets held for disposal 0 1081 1081
18356 18575
(D) 06 74 21968 1
Investments
(E) 40 40 0 0
Deferred Tax Asset-Net
(F) 56461 52682 -3779 7
76538 12507 48537
65647 56870 - -
- -
20234 36973 16738
22
16887 23076 61887
(G) 33 04 1 37
90402 10010
12518 15407
Provisions 3 1 28888 23
(H) 10292 11551 12594 12
Page 78
08 54 6
Net Current Assets 65952 11524 49292
(G - H) = (I) 5 50 5 75
Profit and Loss Account 34203 37579
(J) 7 0 33753 10
Total 28936 34385 54486
19
(D+E+F+I+J) 69 36 7
thousands i.e.,37%
4. Fixed assets have increased by 21968 thousands.

6. There is increase in working capital of 492925 thousands when

position of the company is good

2007 2008 Inc/D
Page 79
ec
Amou Amou Amou
nt nt nt %
SOURCES OF FUNDS
Share Holders Funds
22018 22018
36239 36239
25642 25642
(A) 55 55 0 0
Loan Funds
32440 38450
54987 10035 45372
87428 13881 51382
(B) 1 03 2 15
34385 39523 51382
(A +B) = ( C ) 36 58 2 15
Fixed Assets
27337 34410 70731
96481 11874 22260
17688 22535 48470
Net Block 92 98 6 27
18751 11
18564
(including Capital Advances), Net 93
Fixed Assets held for disposal 1081 0 -1081 0
18575 24411 58353
(D) 74 10 6 31
Investments
(E) 40 40 40 0
Page 80
(F) 52682 52682 52682 0
-
12507 11442 10650
Inventories 52 47 5 -9
-
56870 31628 25241 -
13
19246 10
36973 43828
-
23076 21501 15749
(G) 04 10 4 -7
10010 11920 19092
15407 16715
Provisions 1 3 13082 8
11551 13591 20401
(H) 54 65 1 18
-
Net Current Assets 11524 79094 36150 -
(G - H) = (I) 50 5 5 31
(J) 0 1 1 78
Total 34385 39523 51382
15
(D+E+F+I+J) 36 58 2
Interpretation (2007-2008):
Page 81
2008 records that the current assets have decreased by 157494
thousands i.e.,7%
2. Because of decrease in current assets we can say that the short – term
solvency of the company is not good.
3. The current liabilities have increased by 204011 thousands i.e., 18%
4. Fixed assets have increased by 583536 thousands i.e.,10%

the company did not yield any increase when compared to previous
year.
6. There is an decrease in working capital of 361505 thousands compared

to the previous year.
7. Hence the financial position of the company is not satisfactory.

During the year 2008 – 2009
Inc/D
2008 2009 ec
Amou Amoun Amou
nt t nt %
SOURCES OF FUNDS
Page 82
Share Holders Funds
22018 220186
36239
25642 256425
(A) 55 5 0 0
Loan Funds
38450 -
Secured Loans 9 318621 65888 17
10035 120268 25908
13881 150130 19319
(B) 03 2 9 14
39523 414555 19319
(A +B) = ( C ) 58 6 8 5
Fixed Assets
34410 366802 22699
11874 147729 28986
22535 219073 -
Net Block 98 2 62866 -3
-
18751 11689 -
(including Capital Advances), Net
Fixed Assets held for disposal 0 0 0 0
-
24411 226135 17975
(D) 10 2 8 -7
Investments
(E) 40 40 0 0
(F) 52682 52682 0 0
Page 83
-
11442 21760 -
31628 31310
- -
-
43828 20695
-
19246
-
21501 200954 14056
(G) 10 7 3 -7
11920 122551
16715
Provisions 3 202313 35160 21
13591 141278
(H) 65 28 68663 5
-
Net Current Assets 79094 20922 -
(G - H) = (I) 5 581720 5 26
(J) 1 2 1 87
Total 39523 414555 19319
5
(D+E+F+I+J) 58 6 8
2009 records that the current assets have decreased by -157497
thousands i.e.,7%
Page 84
2. Because of decrease in current assets we can say that the short – term
solvency of the company is not good.
5. The shareholders fund of the company is decreased when compared to

previous year.
6. There is a decrease in working capital of 2029225 thousands compared

to the previous year.
7. Hence the financial position of the company is not satisfactory.
Page 85
.
1.
CHAPTER - 5
CONCLUSIONS & SUGGESTIONS
Conclusions & Suggestions
1. The TRIPL’s net working capital is satisfactory between the years

2004- 2007 since it shows increasing trend ; but after that it is in
declining position
Page 86
2. The current ratio of TRIPL is satisfactory during the period of study
2004 – 2005 to 2006-2007. It is increased from 1.74 to 1.99 but after
that it is declining.
3. The average quick ratio of TRIPL is not good though the quick ratio is
showing maximum value of 0.91 in the year 2006-07 and then it is
declining to be deal
4. Fixed assets turnover ratio of TRIPL increased from .84 times to 1.95.
The company has to maintain this.
5. Inventory turnover ratio of TRIPL is also increased gradually, without

any fit falls up to 2006-07. But in the year 2006-07 it is declined to
3.02, and again it has increased to 4.02 in the year 2008-2009. Good
inventory management is good sign for efficient management
6. Total Assets turnover ratio of TRIPL is not satisfactory because it is

always below one, except in the year 2008 – 2009 having a value of
1.03
7. Return on investment is not satisfactory. This indicates that the

company’s funds are not being utilized in a better way.
8. Return on Net worth is not satisfactory since it is decreased from 4.95

to 0.69 in the year 2005 -2006, -1.34 in the year 2006 – 2007, -11.61
in the year 2006 – 2007 and -23.1 in the year 2008 – 2009
9. The TRIPL’S Net Profit Ratio is showing negative profit in the year
2006 – 2007. These event is an expected one because since from the
previous two years it is showing the decline stage in Net Profit Ratio
Page 87
10.The TRIPL’S Gross Profit Margin of TRIPL increases in decreases
due to the increase in sales
11.Profit Margin of TRIPL is decreasing and showing negative profit

because there is increase in the price of copper
12.The TRIPL’S Net Working Capital Ratio is satisfactory.
13.The total Debt ratio is increased from 0.14 to 0.59 during the years
2002 to 2007 this means the company is borrowing money from the
banks well.
14.The TRIPL’s return on Total Assets ratio shows a negative sign in the
year 2006 – 2007
15.The Operating Ratio of TRIPL increase from 64.24 to 101.16 in the

year 2006 -07, 114.3 in the year 2007-08 and reached to 124.1 in the
year 2008-09. So the company has to reduce its operating costs.
16.The Operating Ratio of TRIPL isn’t satisfactory. Due to increase in

cost of production, this ratio is decreasing. So the has to reduce its
office administration expenses
17.Improve position funds should be utilized properly.
18.Better Awareness to increaser the sales are suggested.
19.Cost cut down mechanics can be employed.
20.Better production technique can be employed.
Page 88
Page 89
CHAPTER - 6
BIBLIOGRAPHY
Page 90
www.evanimics.com
www.damodaram.com
www.investopedia.com
www.valuebasedmanagement.net
www.nepz.org
www.Lsbn.ac.uk
www.lmu.ac.uk
www.isixsigma.com
www.tecumsehindia.com
Page 91
BOOKS
Financial Management Written By M.Y. Khan & P.K. Jain
Financial Management Written By Prasanna Chandra
Financial Management Written By I. M. Pandey
Financial Management Written By S. N. Maheswari
Page 92

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ABSTARCT

the companies founds properly.

CHAPTER NO’S CHAPTER NAMES PAGE NO’S

CHAPTER 2 REVIEW OF LITERATURE 11 – 32

CHAPTER 3 COMPANY PROFILE 33 – 41

CHAPTER 5 CONCLUSIONS & 68 – 70

The management of the working capital is of vital important to companies and

TRIPL (Tecumseh Products India Pvt. Ltd) is a successfully managed company as

1. To study the short term solvency position of TRIPL

2. To study the leverage position of the TRIPL.

3. Evaluate the efficiency utilization of assets of TRIPL.

collected from both.

In the project report entitled financial performance of Tecumseh Products

The study has been conducted in a systematic and comprehensive way so as

• The study is concerned to only the five years of TRIPL.

Working capital is therefore: -

Working Capital Current Assets - Current liabilities

CONCEPT OF WORKING CAPITAL:

3. Fixed Working Capital:

Permanent Working Capital:

The magnitude of the current assets depends upon the firms

A). Initial Working Capital:

It is the amount of working capital needed for the continuous operations of

Variable Working Capital:

It represents additional assets required at different times during the

A. Seasonal working capital

B. Special Working Capital:

Composition of Working Capital:

Working capital consists of

List of Current Assets:

List of Current Liabilities:

Objectives of Working Capital:

The main aim of Working Capital Management is to attain a Trade-off

Factors Determining Working Capital:

Operating Efficiency and Performance:

The operating efficiency and performance of the firm relates to the

Ratios Relating To Working Capital:

The current ratio is calculated by dividing current assets by current

“Current ratio =Current assets /Current liabilities”

It establishment a relationship between quick or liquid assets and

“Quick ratio = Current assets – inventories / Current liabilities.”

Generally, a quick ratio of 1 to 1 is considered to represent a satisfactory

11 Inventory Turnover Ratio:

“Inventory Turnover Ratio = cost of goods sold/Avg. Inventory at cost”

“Inventory turnover ratio = net sales / Avg. inventory at selling price”

11 Debtors Turnover Ratio:

"Debtors turnover ratio = Net credit sales / Avgas, debtors”

To calculate the debt collection period just to following:

Usually the number of working days in a year is taken as 365.

Out of the total current requirement of funds some portion of

Sources of Regular Working Capital:

Issue of Debenture or Long Term Borrowing:

Debentures are fixed interest-bearing securities, besides being

Sources of Seasonal or Variable Working Capital:

This represents the overdraft facilities as the hypothecation of inventories and

A Banks Issues specific guarantee to facilities business transaction between

The factors, which usually influence working capital needs in manufacturing

2. Manufacturing process, technology and facilities.

4. Speed of operating cycle.

5. Growth and expansion activities

9. Attitude towards policy

10. Inventory procedures, depreciation policy, business cycle management attitude