A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.

LTD,

MAIN PROJECT REPORT

Submitted in partial fulfillment For the award of degree

MASTER OF BUSINESS ADMINISTRATION Of SRM UNIVERSITY, KATTANKOLOTHUR By VIPIN. K REG.NO. 3510910915 Under the guidance of MR.SURESH Assistant professor, Department Of Management Studies

CERTIFICATE This is to certify that the summer project report entitled A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD, is a bonafide record of the work done by Mr. Vipin. K, MBA student of this institute, in partial fulfillment of the requirements for the award of the degree of Master Of Business Administration of SRM University

Project guide

Dean

External Guid

DECLARATION I Vipin. K declare that the project report entitled A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD, carried out by us under the supervision of Mr. Suresh, FACULTY,SCHOOL OF MANAGEMENT, SRM UNIVERSITY, Kattankulathur is the result of the original work done by me. This work has not been previously submitted by anyone else for the award of any other degree or diploma in any other institute or university.

Place: Date:

Vipin. K reg.No.3510910915

Acknowledgement

I feel that it is my duty to thank the people who helped me in my venture, which made me, realize the fact that there is nothing better than a little inspiration to get up and do something First of all I am very thankful to the God almighty for the blessing on me for the completion of this project within the short period of time. I offer my sincere thanks to Mr. Suresh, SRM UNIVERSITY Kattankulathur-603203 for giving us an opportunity to undergo a Main project in A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD,I express my gratitude to all other faculties in School of Management for their valuable guidance, which helped me in preparing this report. I also offer my sincere thanks to Mr. Lalu.M. A,DGM Finance,PERCEPT ENGINEERING PVT.LTDfor giving us an opportunity to undergo a Summer project in A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD, I are also thankful to my friends who were a moral support for us from the very beginning of the project in all circumstances. Last but not the least; I thank the Almighty for the successful completion of this project.

Table of contents
Chapter no 1 Introduction
1.1

Title INTRODUCTION OF THE STUDY EXECUTIVE SUMMERY OBJECTIVES OF STUDY SCOPE OF THE STUDY THEORETICAL BACKGROUND

Page no 7 8 11 12 13 14 17 18 22 23 24
26 27 28 29 30 34 37 42

1.2 1.3 1.4 1.5 2

INDUSTRY PROFILE
2.1

Industry Profile 2.2 Development of methods for water proofing of 2.3 building roof 2.4 Waterproofing in India 3 Company Profile 3.1 3.2 3.3 3.4 3.5 3.6 4 5 6 Company profile Vision & Mission Company structure Policy Products Services

Chapter 4

SWOT Analysis Review of Literature Research Methodology 5.1 5.2 5.3 5.4 Research Methodology Research Design Period of study Data collection
5

45 63 64 64 64 64

A study on working capital management of percept engineering pvt.ltd

Findings suggestion And Conclusion Bibliography and Webliography

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8 9

69 81

Introduction
1.1 INTRODUCTION OF THE STUDY 1.2 EXECUTIVE SUMMERY 1.3 OBJECTIVES OF STUDY 1.4 SCOPE OF THE STUDY 1.5 THEORETICAL BACKGROUND

INTRODUCTION OF THE STUDY

FINANCE In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small needs finance to carry on its operations and to achieve its targets. In fact finance is so indispensable today that it is rightly said to be the lifeblood of an enterprise without adequate finance, no enterprise can accomplish its objectives.

Working capital
Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations.

Type of working caital

1. Grossworking capital Total or gross working capital is that working capital which is used for all the current assets. Total value of current assets will equal to gross working capital. In simple words, it is total cash and cash equivalent on hand. But remember, we do not account of current liabilities in gross working capital. 2. Net Working Capital Net working capital is the excess of current assets over current liabilities. Net Working Capital = Total Current Assets Total Current Liabilities This amount shows that if we deduct total current liabilities from total current assets, then balance amount can be used for repayment of long term debts at any time. It also measure of both a company's efficiency and its short-term financial health.
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3. Permanent Working Capital

Permanent working capital is that amount of capital which must be in cash or current assets for continuing the activities of business. It also shows the minimum amount of all current assets that is required at all times to ensure a minimum level of uninterrupted business operations. 4. Temporary Working Capital Sometime, it may possible that we have to pay fixed liabilities, at that time we need working capital which is more than permanent working capital, then this excess amount will be temporary working capital. In normal working of business, we dont need such capital.

Waterproofing
Waterproofing is a process which is designed to prevent water from penetrating a building. Waterproofing is a method by which an item is made resistant to damage by water. It is used in many areas, including clothing .Waterproofing is very essential as it help you to take care of your asset in monsoon season. There are various type of waterproofing

TYPES OF WORKING CAPITAL

WORKING CAPITAL

BASIS OF CONCEPT

BASIS OF TIME

Gross Working Capital

Net Working Capital

Permanent / Fixed WC

Temporary / Variable WC

Seasonal WC

Special WC

Regular WC

Reserve WC

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EXECUTIVE SUMMERY

The project work entitled A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD,is aimed to evaluate the effectiveness of the working capital management and proper allotment of fund for day today operations. This project work had been done in Pecept Engineering, a waterproofing company in Banguluru.Utmost care has been taken at all levels of project work right from the beginning till the analysis, findings and suggestion.

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OBJECTIVES OF STUDY
Primary Objectives To study about the working capital management in Percept Engineering and proper allotment of fund for day to day transactions. To evaluate the strategic working capital management of the company. To determine the long term and short term solvency of the company. To determine the efficiency in utilization of resources of the company.

Secondary objectives To suggest new techniques and methods to reduce the wast and proper management of working capital.

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SCOPE OF THE STUDY At the corporate level, the working capital management is essential for every management for control their fund for the operations and for their manufacturing without any delay. Working capital management helps to proper management of liquid cash in an organization. . Post sanction credit management includes

Managing the liquid asset. Managing the liquid liability. Managing the cash flow and fund flow statements, Proper allotment of funds for day to day transactions.

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THEORETICAL BACKGROUND

Working capital is the money you need to cover business expenses, meet short-term obligations, and to grow your business. Start-up capital is the money you need to start a business until it generates enough revenue to pay for itself. Start-up and working capital can come from loans, grants, investors and partners, but many business women use their personal financial resources to fund their businesses. Structure of working capital in an organization

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Objectives of working capital:

Every business needs some amount of working capital. It is needed for following purposes For the purchase of raw materials, components and spares. To pay wages and salaries. To incur day to day expenses and overhead costs such as fuel, power, and office expenses etc. To provide credit facilities to customers etc.

Factors that determine working capital:

The working capital requirement of a concern depend upon a large number of factors such as 1. Size of business 2.Nature of character of business. 3. Seasonal variations working capital cycle 4. Operating efficiency 5. Profit level. 6. Other factors.

Types of working capital:

Working capital an be divided into two categories1. Permanent working capital: It refers to that minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. 2. Temporary working capital: The amount of such working capital keeps on fluctuating from time to time on the basis of business activities.

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Advantages of working capital:

It helps the business concern in maintaining the goodwill. It can arrange loans from banks and others on easy and favorable terms. It enables a concern to face business crisis in emergencies such as depression. It creates an environment of security, confidence, and over all efficiency in a business. It helps in maintaining solvency of the business.

Disadvantages of working capital:

Rate of return on investments also fall with the shortage of working capital. Excess working capital may result into over all inefficiency in organization. Excess working capital means idle funds which earn no profits. Inadequate working capital can not pay its short term liabilities in time.

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CHAPTER 2 INDUSTRY PROFILE

Industry Profile

Development of methods for water proofing of building roof Waterproofing in India

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Industry profile
Waterproofing is a process which is designed to prevent water from penetrating a building. Usually extensive waterproofing measures are added to a building at the time of construction., to provide moisture control form the start, and waterproofing may also be don after a building is built, to address problems as they emerge or as part of a building retrofit. Waterproofing is critical , for a number if reasons, and may contractors around the world specialize in building waterproofing , providing maintenance, restoration and new construction service. From the point of view of its occupant , building waterproofing is important because it keep a building dry. It also reduce internal humidity, making a building more comfortable to work in and protecting objects inside the building from damages as a result of humidity of water exposure. However , building waterproofing is also important to the integrity of the building itself. Waterproof or water-resistant describes objects relatively unaffected by water or resisting the ingress of water under specified conditions. Such items may be used in wet environments or under water to specified depths. Waterproofing describes making an object waterproof or waterresistant (such as a camera or watch). "Water resistant" and "waterproof" often refer to penetration of liquid water. Permeation of water vapor is reported as a water vapor transmission rate. Also, water from condensation is usually separate from "water resistant". The hulls of boats and ships were once waterproofed by applying tar or pitch. Modern items may be waterproofed by applying water-repellent coatings or by sealing seams with gaskets or O-rings.

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In construction, a building or structure is waterproofed with the use of membranes and coatings to protect contents underneath or within as well as protecting structural integrity. The waterproofing of the building envelope in construction specifications is listed under '07 Thermal and Moisture Protection' within MasterFormat 2004, by the Construction Specifications Institute, and includes roofing material as well as waterproofing materials Water damage can be a serious issue in a structure. With water comes mold and a host of other problems which can undermine foundations, make conditions in the building unsafe, and damage property inside the building. Wooden buildings can suffer rapid decay from water exposure, but water penetration can also damage concrete and other building materials, especially in cold climates where water may freeze and cause cracks. Insufficient waterproofing can be a problem year round, not just during the rainy season. Some permeability in a building is desired, not least because building occupants generate humidity which must be safely vented. The goal of building waterproofing is to prevent as much water as possible from entering the building, and to provide outlets and drainage so that if water does get inside, it is not allowed to sit. Surface systems include things like clapboards to protect the walls of a house, or shingles on the roof of a building. Internal measures can include membranes inside the walls, such as barrier insulation which keeps water out. Typically, building waterproofing is done in several different ways to create multiple barriers for water so that it cannot enter a structure. Together, waterproofing measures are known as the envelope.

Evolution:
The first real need for waterproofing dates back to the days of Noahs Ark. The 40 days of incessant rain inspired people to take some course of action to prevent water from entering their habitat. In the early days people relied upon thatch, such as straw, reed, leaves and other dried vegetable matter as a barrier against water entering their home. Over time more sophisticated waterproofing materials were adopted. These included: animal skins, timber shingles, and natural stones like slate. The architectural designs of the day such as high pitched roofs helped overcome some of the shortfalls and limitations of the materials that were used. Over the centuries other waterproofing materials were used such as metals eg. copper, lead, zinc, and tin. Waterproofing has come a long way since Noah's day. The discovery of oil, coupled with the advances of chemistry saw the arrival of numerous petroleum derived waterproofing products such as bituminous, butyl rubber, neoprene rubber, hypalon etc.
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Technological improvements and breakthroughs are occurring on a daily basis. Over time today's waterproofing membranes such as polyurethanes, acrylics and polyesters will become as antiquated as leaves and animal skins are today.

When waterproofing needed

Signs of Waterproofing Problems
Commercial building waterproofing contractors can accurately detect waterproofing system failures through a comprehensive inspection. But facility managers will be able to spot waterproofing problems through these visible signs: 1. Wet basement walls and floors. A sign of continuous moisture seepage coming from above or below ground. 2. Molds and fungi growth. Microorganism colonies in certain areas of the building mean a source of moisture is feeding their growth. 3. Rot. Wooden or concrete materials are decaying, a sign that the presence of moisture is changing the room temperature and humidity. 4. Pools of water. Water brought in by foul weather disappears in time. If pools of them remain, this means there is a failure in the commercial building waterproofing system.

The Importance of Waterproofing Building operations are potentially affected by failure of the commercial building waterproofing system. The importance of waterproofing is summarized below: 1. It prevents water entry by sealing every possible way that water can enter -- roofs, walls, decks, and basements, to name a few. 2. It allows the building to "breathe". When water unavoidably enters the building, it can be channeled out using drains and ventilations. 3. It maintains air quality. The growth of water-borne and harmful microbes is prevented, which can compromise the air quality of the interior environment.

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4. It maintains comfortable interior temperature. Water is denied entry into the building, preventing temperature changes that make HVAC systems work harder to compensate. 5. It preserves structural integrity. Water cannot stay long enough to cause material rot and weakened foundations.

When is the Time to Waterproof a Building?

Here are the instances when commercial building waterproofing systems should be installed: 1. During construction, when building designers incorporate the waterproofing system to the overall building design. The barrier system is built into the building, ensuring greater moisture protection. 2. During building retrofit, soon after the building is built. 3. During regular building maintenance, when the facility conducts regular inspections, tune-ups and re-servicing of building areas and equipments to ensure their top condition. 4. During building renovation, such as when a building feature is added, or the building layout is changed. The commercial building waterproofing system has to be re-installed to accommodate the renovation. 5. When needed, or when damages occur from emergency situations such as flood, fire or major disasters.

Waterproofing for Commercial Buildings Designing a barrier system against water intrusion often means focusing on the various ways that water can possibly enter the building. In case of ground water seepage, basements and low-lying areas are the entry point. Waterproofing these areas require commercial building waterproofing contractors with basement waterproofing specialties. The barrier system will seal the inner wall and floor chambers with water-tight lining. Structural waterproofing systems are installed in other areas of the building. Multi-coat systems, concrete-based coatings, epoxies and bituminous formulations can be used in the barrier system, because of their water-repellent properties.
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Drainage systems complete the commercial building waterproofing system, where pre-formed channels are installed in walls to direct water outward.

DEVELOPMENT OF METHODS FOR WATER PROOFING OF BUILDING ROOF A method for carrying out water proofing of building roofs, having cracks and defaults resulting into water seepage has been developed using cationic bitumen emulsions of medium set and slow set grades. The following is the procedure:-

dust.

roof.

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Recent scenario In building waterproofing

Most homeowners are advised to get economical basement waterproofing these days. Many people are starting to recognize the utmost importance of making that part of the house free from flooding and leaking. No one certainly wants the hassle and mess brought about by such problems. Unfortunately, almost all builders have not been designing homes and buildings with basements that are free from accumulation of water. Such structures are also not appropriately designed to cope with leakage and moisture problems, which could happen inevitably. There is imminent danger if waterproofing is not made part of building design and construction. First, there could be a possibility that the foundation of the structure would be shifted due to presence of cracks and unlikely membranes that could occur over the course of time. Waterproofing is very much necessary especially when your building is constructed at ground level or more particularly when it is built below it. You need to waterproof your basement to effectively safeguard your entire building. A moist or wet basement could serve as a cause for the proliferation of bacteria, mildew, and mold. Such organisms could serve as threats to your familys overall health. Chronic colds and other respiratory problems could be generated by the presence of molds and mildew. Termites and rodents could come through the existing cracks right there at the foundation of the building. The entry of such pests could further bring about additional and considerable damages to the building. Such situations surely pose serious consequences on the overall health and safety of your family and of other residents or tenants in your building. They could also significantly contribute to the depreciation of the overall value of the property. This is the reason waterproofing your basement is very important. If you are anxious about the potential costs, you could be delighted to learn that there are indeed budget waterproofing services and facilities that cater to the cost-conscious home and building owners. What should you look for when finding basement waterproofing services? If you are evaluating a service provider, you should make a simple checklist of what the company must be offering. The list should include the following: sump pump installations, exterior coatings, exterior footer drain field, interior wall pins, drain down shields, sub-soil drain fields, interior cove channel system, window well and stairwell systems, wall set-back, interior grate channels, interior rough-casting, and areaway drains, among others. Hospital buildings particularly need basement waterproofing so that pollutants, spores, and other allergens that cause illnesses and infections could be effectively eliminated. Nursing facilities find it a must to get waterproofing services to ensure that a safer and cleaner environment for patients is in place.

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Waterproofing in India
Waterproofing is a method by which an item is made resistant to damage by water. It is used in many areas, including clothing .Waterproofing is very essential as it help you to take care of your asset in monsoon season. There are various type of waterproofing. Basement of waterproofing. The increase in the value of your home. Waterproofing the basement will allow you to finish the basement without the possibility of ruining drywall, paneling o furniture. Waterproofing will create a healthier environment in your home by eliminating dampness .home owners mostly compliant on wet basements. There are various companies offering seals to stop leakage. Also you need to check if their no overflowing drains or gutters outside your home. To waterproofing your bare or unpainted cementation materials like poured concrete , concrete blokes or bloke wall then use good quality braded seals.

companies of building waterproofing in India

SUPREME POLYTECH PVT.LTD. THANE - 400602 INDIA Mfg.High Performance Epoxy Resins, Hardness Polyurethane Systems, Pigments &Speciality Chemicals, We Also Undertake Industrial Epoxy Flooring, Water Proofing & Surface Coatings Job Works NICE INSULATION SALES & SERVICE MUMBAI - 400078 INDIA Specialist in Hot & Cold Insulation, Sheet Metal Fabrication & All Kinds Of Ducting Work, Water Proofing Etc., PP All Fabrication & PVC, FRP Specialists, Anticrrosive& Painting Works Etc
BHARAT TRADING CO. MUMBAI - 400086
INDIA

Building Materials, Water Proofing Contractors, A.C.Sheets& Accessories, All Types Of Cement, Refractories Materials, G.I.Sheets, R.C.C. Hume Pipes, False Ceilings, Pipes & Fittings, Tiles & Sanitary

CONCRETE CARE INDIA PVT.LTD. MUMBAI - 400086 INDIA Aluminium Sheets, Building Materials, Cement Dealers, Cement Pipes, Construction Chemicals, Epoxy Coatings, False Ceiling, Flooring Tiles, Flush Doors, FRP Sheets, Galvanised Sheets, Hume Pipes, Pipes

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HINDUSTAN TRADING AGENCIES THANE - 400602 INDIA Water Proofing Contractors, Water Proofing Materials, Construction Chemicals, FRP Sheets Products, Roofing Sheets, Rafractories Materials, Pipes & Pipes Fittings, Roofing Contractors, A.C.Sheets, Galv SUPREME POLYMERS THANE - 400602 INDIA Mfg.High Performance Epoxy Resins, Hardness Polyurethane Systems, Pigments &Speciality Chemicals, We Also Undertake Industrial Epoxy Flooring, Water Proofing & Surface Coatings Job Work MARK POLYMERS INC. MUMBAI - 400071 INDIA

Mfrs.& Application Contractors Of Epoxy & Polyurethane Systems, Jointless Floors, Anti-Static Floors, Epoxy Coving, Kota Joint Fillings, Epoxy On Oil Soaked Floors, Instant Repairs To Industrial Floor PARSHVA TRADING CO. THANE - 400602 INDIA View Details House Of Industrial & Building Materials, Everest Roofing Systems, Galvalume, AL & Polycarbonate Roofing Sheets, Pipes & Figs, R.C.C.Hume Pipes & Septic Tanks, Construction Chemicals, Water Proofing MATTE & ASSOCIATES NAGPUR - 440018 INDIA View Details Specialist In Water Proofing, Diagnosis, Rehabilitation, Anti-Corrossive Treatments, Industrial Flooring HOMEGA WATER PROFING CO. NAGPUR - 440018 INDIA View Details Water Proofing Works such as Basements, Swimming Pools, Terraces, Roofs, Gardens, Overhead Tank, Underground Tanks, Bathrooms, Chhajjas& any Other Waterproofing Works

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Chapter3 Company Profile

Company profile Vision & Mission Policy Products Services

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Company profile
Percept Engineers Pvt Ltd (PEPL) are the brand owners of POLYPLUS range of waterproofing and insulation systems. PEPL is an ISO 9001-2000 certified, professionally managed waterproofing company with corporate office at Bangalore and branches all over India. As the Indian associates for M/s.HenkelPolybit Industries Ltd, a joint venture between Henkel, Germany and Polybit Industries Limited U.A.E, PEPL ensures international level of quality standards, customer satisfaction and time bound deliveries .Some of the Specialized Water Proofing Services we provide are:

Membrane Waterproofing Systems Chemical Waterproofing Systems Thermal Insulation Systems Advanced injection grouting systems. PERCEPT ENGINEERS PVT. LTD. is established in November 1992, as a partnership organisation by name Perfect Group, for supplying and applying waterproofing systems. During 1999 December, it incorporated as a Private Limited Company by name Percept Engineers Pvt.Ltd. Our association with HENKEL POLYBIT INDUSTRIES LIMITED, UAE, helps us to offer the right product to the client with correct methodology of application, by making use of the versatile product range and vast experience of M/S.HENKEL POLYBIT.HENKEL POLYBIT is one among the very few companies in the world which offers the full range of waterproofing and insulation products varying from APP Modified Bituminous Membrane to crystallisation coatings, Acrylic &Cementatious Coatings Liquid Polyurethane Coatings, self adhesive Membranes and EIFS (External Insulation Finishing Systems). We maintain a team of highly skilled engineers and applicators who got hands-on training at DUBAI in suggesting the products and in applying the same. Today PERCEPT ENGINEERS PVT. LTD. is a name closely associated with the waterproofing industry of India, with 18 years of experience in water proofing, with corporate office at Bangalore and branches in Cochin, Chennai, Delhi, Hyderabad, Mumbai, Kolkatta, Lucknow& Mohali.

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Vision
The vision of the company is to become a leader in the Indian Water proofing industry and a significant global player, by providing better quality of work and enhance customers satisfaction.

Our Mission

To offer a range of high quality services to clients in the waterproofing. To build a pre-eminent position for ourselves in India in waterproofing Contracts. To earn customer satisfaction and clients and customer confidence through fairness and professional excellence. To be deeply committed to our customers, our employees and the community in which we serve. To apply the most advanced techniques of water proofing for ensuring efficiency and high quality.

Policy
To develop and install Waterproofing & Heat Insulation Systems meeting specific requirements of the region abiding international quality standards Management system. To research and derive new solution to enable the Value addition of our products and their Application. To establish and nurture a healthy and prosperous relationship with all our clients and vendors enabling a free flow of information in realizing the synergy to excel. To motivate and guide the Percept family to aim at perfection and work towards the achievement of objectives in a safe, ethical and scientific modus operandi.

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McKinesys 7S Framework

STRUCTURE

STRETEGY SHARED VALUES

SYSTEM

SKILL

STYLE

STAFF

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Strategy: The direction and scope of the company. To be in total alignment with corporate strategy. Maintain human resource at optimum level to meet the objectives and goals of the company. Competence mapping analysis and up gradation of knowledge and skills including training retraining multi-skills etc. Create leadership with share division at various levels in the organization. Focused development of core competence in high-tech areas. Building cross functioning team. Bring company wide awareness of mission, values and organizational goals. Personnel policies in performance based criteria, ensuring growth, reward recognition and motivation.

Price reduction strategy:In PERCEPT ENGINEERS there are no many strategies used. The main strategy used in the company is price reducing strategy. The company uses economics of scales for their price reduction policy. That is the cost of the product; they are keeping bulk orders of the raw materials.

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STRUCTURE

CHAIRMAN AND MD

DIRECTOR ADMIN & COST CONTROL

DIRECTOR AUDITAND LOGISTICS

HEAD FINANCE & ADMIN

DGM SALES & CONTRACTS

HEAD CONTRACTS

QUALITY CONTROL

QUALITY SURVEYOR

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Organizational Systems: Formal and informal procedures that support the strategy and structure. ( Systems are more powerful than they are given credit) All the processes and information flows that link the organization together. The formal processes and procedure used to manage the organization including the management control systems, performance management. Measurement and reward systems planning budgeting, resource allocation systems information systems and distribution systems. There are systems existing for all the activities and are also documented. Procedures and systems exist for all the departments individually as well as interrelated.

Systems department:
It deals with computerization of all the activities of the company System department consists of 50 PC's which are interconnected with LAN. The head of the system department monitor all the software requirements of each department with the help of executives under him. All the IT initiatives in PERPECT ENGINEERS are integrated with the overall corporate strategy.

Production planning and control: Head of the department Responsibility

Fixing monthly production target. Meeting production target. Scheduling of machine. Developing subordinates. Preparation of raw materials requirements based on monthly production target.

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Authority
Approval of leave/ overtime of subordinates. Approval of procedures and work instruction. Changes of production target. Schedulim2: of machine as per requirements. Release of purchase request.

Shift in charge Responsibility

Prepare, adjust, and issues schedules of different operations based on programs, inventories, progress of \yolk and specification. Follow up progress of work in all sections, report relevant details and assists to maintain steadily progress of work. Take physical inventories from the stores of finished goods and raw material. Maintain records of the inventories. Report shortages, rejection and delays in operations and take corrective actions. Collect and contributes production date from various sections and prepare various reports. Keep record of non-moving materials, unidentified materials, salvaged material and scrap generated, obtain disposal instructions, report follow up actions and assist to clean up materials. Ensures that no material is left over when size chances occur.

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STYLE:
Decentralized operation of the PERCERT ENGINEERS PVT LTD is concerned with decision making. The company has adopted participative style of decision making of all the department units in decision making. Style here refers to the relationship style which the company follows leadership style is the pattern of behavior which a leader adopts influencing the behavior of his followers the organizational on text. Decentralized leadership is followed in the company. In this according to my observation a manner of decentralized decision making powers in him:

Staff
Total quality people (staff to meet the organizational goals and objectives, continuous improvement in knowledge skill and competence of staff (managerial, behavioral and technical) promote a culture of achievement and excellence with emphasis on integrity, credibility and quality. Maintain a motivated workforce through empowerment of individual and team building.

DUTIES AND RESPOSIBILITIES OF STAFF:

TechnicaI staff Optimize the production. Control the quality of the product. Maintain humidity throughout the production. Supervisory staff Induce almost all the male workers in different sections of production department. To ensure proper working are reporting are done by the employees. To protect harmony between workers and management. To organize and supervise labor welfare and to see the statutory requirements with regard to working capital conditions are enforced. Clerical staff Marking of attendance.
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 Preparation of wages sheet. Distribution of wages.

SIIARLD VALUES:
Satisfaction of customer: decided to building a relationship with the customers, where they become partners in fulfilling their missions. Strives to understand its customer's needs and deliver products and services that fulfill and exceed their requirement.

Quality commitment:committed to continuous improvement of all its activities. It supplies

product to highest standards of design manufacture and reliable, maintainability and fitness for a used desired by its customers.

Cost and time conscious: company believes in striving for improvement in every activity
involved in their business by pursuing and encouraging risk taking experimental and learning at all levels, within the company with a view to achieving excellence and competitiveness.

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Products
POLYPLUS P Range of APP/SBS modified torch applied bituminous waterproofing membrane. Available in granular, sand & plain finish.Used for Water Proofing of Basements, Roofs, Retaining walls and Water resistance structures. POLYPLUS R 250 A Range of SBS modified self adhesive waterproofing membranes topped with high puncture resistant 250 GSM Polyester matt. Used for waterproofing basements and retaining walls. POLYPLUS AC Two component acrylic polymer based elastomeric cementetious waterproof coating. Used for waterproofing of wet areas like toilets, balconies etc... and as a substructure waterproofing coating. POLYPLUS ELASTOFLEX Two component, high elastomeric, acrylic polymer based elastomeric cementetious waterproof coating. Used for waterproofing for wet area and roof. POLYPLUS EC Single component acrylic enriched coloured elastomeric waterproof coating. POLYPLUS CP A cementitiouscapillary(Crystallization) waterproof coating(In depth system). Used for waterproofing of basements, swimming pools, sewage treatment plant, dams, lift pits, tunnels, underground and marine structures. POLYPLUS CP ADMIX Crystallisation admixture for waterproofing concrete structures. POLYPLUS HR Solar reflective insulation coating, enriched with ceramic micro spheres. Used for waterproofing and heat insulation. POLYPLUS UR / POLYTHANE Single component, thixotropic, Urethane rubber based moisture curing type high elastomeric waterproof coating with 500% elongation. POLYPLUS MASTIC BOARD A tough Asphaltic protection bituboard which is waterproof, weather proof, rot proof and chistle resistant, meant for protecting the waterproofing membrane from external damages.
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Our Service Includes

APP/SBS modified bituminous membrane waterproofing systems. Protection to waterproofing with Asphaltic protection boards. In Depth Crystallisation waterproofing systems. Two component acrylic cementetious waterproofing systems. Moisture curing type polyurethane waterproofing systems. Self adhesive membrane systems with various finishes and protection. Epoxy and polyurethane injection grouting systems. Spray applied liquid membrane waterproofing systems. Cementetious PU/ injection grouting systems. Spray applied PUF thermal insulation systems. Building envelop and external insulation & cladding systems. Sodium borosilicate enriched ceramic micro sphere insulation coating systems.

THE SUCCESS OF WATERPROOFING IS BASED ON TWO GOLDEN RULES. 1. Selection of waterproofing agency is the most important factor in determining the success of waterproofing, and track record,organisational strength and customer feed-back are crucial in selecting the agency. 2. All waterproofing products are good. The selection of right material for the specific application and ensuring proper application are the key factors to be considered, in consultation with experienced consultants.

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ON GOING PROJECTS
BANGALORE
SL. NO. 1 2 3 4 5 6 NAME OF PROJECT ISLAND STAR MALL PRITECH PARK II ELITA PROMONDE PRESTIGE CESSNA MANTHRI ESPANA VRTP ARCHITECT / CONSULTANT EDIFICE STERLING RSP RSP HAFIZ CONTRACTOR THOMAS ASSOCIATES CONTRACTOR MARKET CITY RESOURCES JMC SHAPORJI PALLONJI JMC PROJECTS L & T ECC JMC PROJECTS KARNATAKA POWER CORPORATION LTD B. G. SHIRKE LAKSHMINIRNAN BLK DIVYASREE NISCO VENTURES BLK BLK NITESH ESTATES VALUE 7.55 CRORES 4 CRORES 3.00 CRORES 1.65 CRORES 1.50 CRORES 1.25 CRORES 1.35 CRORES

KALINADI HYDRO ELECTRIC PROJECT WIPRO CORPORATE OFFICE PRESTIGE OASIS MANTRI ASTRA DIVYASREE TECH ELLAN NITESH LAXINGTON AVANUE PRESTIGE KHODAYS TOWER PRESTIGE GOLFSHIRE NITESH CAMP

KARNATAKA POWER CORPORATION LTD

8 9 10 11 12 13 14 15

STERLING ALAY DESIGN COLLABORATORS TEAM 2 POTENTIAL C & C/RK ASSOCIATES SUPER STRUCTURES THOMAS ACCOCIATES CHANDVAKAR
38

1 CRORES 54.00 CRORES 26.00 CRORES 55.00 CRORES 12.50 CRORES 47.00 CRORES 90.00 CRORES 09.82

DAVID VICTORY HOTEL (MINERVA) BAGMANE TECH PARK BAGMANE TECH PARK PRESTIGE SOUTH RIDGE CONVENTION HOTELS ISRO MRPL PRESTIGE WHITE MEADOWS SKL HOTELS NITESH CENTRAL PARK

&THACKER / PRASAD CONSULTANTS PRASAD CONSULTANTS SUPER STRUCTURES SUPER STRUCTURES

PROJECTS PVT. LTD. JMC CICON NCCL TEAM UNITED ENGINEERS

CRORES 30.00 CRORES 40.00 CRORES 30.00 CRORES 40.00 CRORES 1.40 CRORES 16.00 CRORES 18.00 CRORES 35.00 CRORES 26.00 CRORES 47.13 CRORES

16 17 18 19 20 21 22 23 24

JLLM ISRO MRPL STERLING VKRTS CHANDAVAKAR & THACKER / FRISCHMANN PRABHU VENTKITARAMANA ASSOCIATES / CHETANA CONSULTANTS STERLING

BLK Direct Direct JMC GINA NITESH ESTATES PROJECTS PVT. LTD

25

26

PRESTIGE NOTTING HILL PRESTIGE WHITE MEADOWS

LAKSHMINIRMAN

44.00 CRORES 35.00 CRORES

27

JMC

39

HYDERABAD
1 2 3 4 5 6 7 8 9 10 CONTINENTAL HOSPITAL CITIZEN HOSPITAL DIVYASHREE NSL PHONEX INFOCITY COMPUTER ASSOCIATES DIVYASHREE OMEGA II CAPGEMINI HOTEL LEMON TREE MRF DIVYASREE RAIDURGAM POTENTIAL DLF MY HOME SYNERGY WESTRON POTENTIAL RSP POTENTIAL THE GUILD OF ARCHITECHS VASCON APARNA JMC PHONEX APARNA INFRASTRUCTURE CCCL GOEL INFRASTRUCTURES SHAPOORJI PALLONJI NCC J.M.C 89.00 LAKHS 87.00 LAKHS 45.00 LAKHS 36.00 LAKHS 35.00 LAKHS 63.00 LAKHS 18.00 LAKHS 25.00 LAKHS 17.00 LAKHS 30.00 LAKHS

COCHIN
1 2 3 4 5 6 7 8 IIST (ISRO) NAVAL ACADEMY PURVA MOONREACH PRESTIGES COURTYARD MILITARY ENGINEER SERVICES GARRISON ENGINEER (I) NAVAL BASE CHOICE PRADISE PURVA GRANBAY STUP CONSULTANTS PVT. LTD. SATNAM NAMITHA KUMAR GROUP THOMAS CPG MES MES ASSOCIATED SHAPOORJI PALLONJI & CO. NEC/IVRCL&RDS SHAPOORJI PALLONJI & CO CEMEX KAP PVT. LTD DIRECT DIRECT KUNNEL 1.96 LAKHS 1.28 LAKHS 1.08 LAKHS 71.00 LAKHS 70.00 LAKHS 46.00 LAKHS 35.37 LAKHS 34.00 LAKHS

40

9 10 11

DLF RIVERSIDE CSEZ COCHIN

STERLING HAFIZ CONTRACTOR KITCO

KUNNEL DLF LAING O ROURKE KITCO

30.00 LAKHS 24.00 LAKHS 6.00 LAKHS

MUMBAI
1 MARKET CITY MALL P. G. PATKI MARKET CITY 5.60 CRORES

GOA
1 HOLIDAY INN CALANGUTE DESIGNTREE CONVENTION HOTELS 31.55 LAKHS

PUNJAB
1 DBTCC SIKKA C&C CONSTRUCTION 98.00 LAKHS

LUCKNOW
1 LDA (GREEN WOOD APARTMENTS) NCC 90.00 LAKHS

CHENNAI
1 2 3 4 5 6 CLASSIC MALL METRO ZONE METRO ZONE PURVA SWANS LAKE T. N. ASSEMBLY (P II) PRESTIGE POLGON SEKHAR PATKI POTENTIAL POTENTIAL RSP T. N. ASSEMBLY CPG JMC VALACHA SPCL RAMKY VASCON BLK 2.89 CRORES 60.00 LAKSH 65.00 LAKSH 54.00 LAKHS 25.00 LAKHS 32.00 LAKHS

41

Chapter 4 SWOT Analysis

42

STRENGHTS: PEPL is the 1st ISO certified company in the waterproofing industry. It has its own brand name POLYPLUS. Have collaborations with HENKEL POLYBIT. They are suppliers for major and big undertakings like L$T etc. They are suppliers for major government sectors like railway industries, BEML, KPCL, etc. Very highly skilled engineers. They not only undertake high cost projects but also low cost projects. Implementing SAP. They not only deal with execution but also works contract.

WEAKNESS: The infrastructural facilities are not that satisfactory, they should have enough space to carry on the business. The company does not plan well before executing its task. The company is facing some financial problems which acts as a hindrance in carrying on their business. The company does have proper advertising policies. The company has a longer warranty period. There is no proper co-ordination among the employees which leads to a lot of communication gap between them.

43

THREATS: Long term market instability may damage the opportunities and prevent the expansion of the business. Current economic situation may have adverse impact on construction industry which in turn will have a adverse effects on waterproofing industry. Infrastructure safety is a challenging task in the water proof industry Lack of political willingness and support on promotion new Natural abnormal causalities such as earth quakes and floods are uncertain and prevent the water proofing industry from boom. Inefficient accessibility in planning and concern the infrastructure and signs. Political and security conditions in the region and late legislative enforcement measures are always threats to any industry in India.

OPPORTUNITIES: Continuous private sector boom in construction industry will create more waterproofing opportunities. Public sector projects through private sector partnerships will bring further opportunities. More flexible training and delivering techniques are now available. Financial supports like loan and insurance is in support of waterproofing industry. The company at present has their business only in India; it has its opportunities to expand its business abroad. The company need not only company concentrate on waterproofing, but it can even concentrate on its relative products in the waterproofing industry.

44

Chapter5 Review of Literature

45

working capital
Working capital is the money you need to cover business expenses, meet short-term obligations, and to grow your business. Start-up capital is the money you need to start a business until it generates enough revenue to pay for itself. Start-up and working capital can come from loans, grants, investors and partners, but many business women use their personal financial resources to fund their businesses. Accounting Formula to Determine a Business Working Capital? The accounting formula used to calculate the available working capital of a business is: Current Assets - Current Liabilities = Working Capital Working capital can be reflected as a positive or negative number depending on how much debt the business is carrying. Sources of working capital The working capital requirements should be met both from short term as well as long term sources of funds. 1. Financing of working capital through short term sources of funds has the benefits of lower cost and establishing close relationship with banks. 2. Financing of working capital through long term sources provides the benefits of reduces risk and increases liquidity

From an accounting standpoint, working capital comes from:

Net income; Long-term loans (non-current liabilities); Sale of capital (non-current) assets; and Funds contributed by the owners and investors (stockholders).

46

Working capital investment

The size and nature of investment in current assets is a function of different factors such as type of products manufactured, the length of operating cycle, the sales level, inventory policies, unexpected demand and unanticipated delays in obtaining new inventories, credit policies and current assets.

Three alternative working capital investment policies

Sales ($)

Policy C

Policy B Current Assets ($) Sales ($)

47

Policy A

Policy C represents conservative approach Policy A represents aggressive approach Policy B represents a moderate approach Optimal level of working capital investment Risk of long-term versus short-term debt

PRINCIPLES OF WORKING CAPITAL MANAGEMENT / POLICY

PRINCIPLES OF WORKING CAPITAL MANAGEMENT

Principle of Risk Variation

Principle of Cost of Capital

Principle of Equity Position

Principle of Maturity of Payment

48

Accounts Payable

Value Addition

Raw Materials

WIP

THE WORKING CAPITAL CYCLE (OPERATING CYCLE) Cash Finished Goods

Accounts Receivable

SALES

49

Financing Working Capital

Now let us understand the means to finance the working capital. Working capital or current assets are those assets, which unlike fixed assets change their forms rapidly. Due to this nature, they need to be financed through short-term funds. Short-term funds are also called current liabilities. The following are the major sources of raising short-term funds:

i. Suppliers Credit
At times, business gets raw material on credit from the suppliers. The cost of raw material is paid after some time, i.e. upon completion of the credit period. Thus, without having an outflow of cash the business is in a position to use raw material and continue the activities. The credit given by the suppliers of raw materials is for a short period and is considered current liabilities. These funds should be used for creating current assets like stock of raw material, work in process, finished goods, etc.

ii. Bank Loan for Working Capital

This is a major source for raising short-term funds. Banks extend loans to businesses to help them create necessary current assets so as to achieve the required business level. The loans are available for creating the following current assets: Stock of Raw Materials Stock of Work in Process Stock of Finished Goods Debtors Banks give short-term loans against these assets, keeping some security margin. The advances given by banks against current assets are short-term in nature and banks have the right to ask for immediate repayment if they consider doing so. Thus bank loans for creation of current assets are also current liabilities.

50

iii. Promoters Fund

It is advisable to finance a portion of current assets from the promoters funds.They are longterm funds and, therefore do not require immediate repayment.These funds increase the liquidity of the business.

WORKING CAPITAL MANAGEMENT

Introduction:
Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully with out an adequate amount of working capital. Working capital refers to that part of firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors, and inventories. In other words working capital is the amount of funds necessary to cover the cost of operating the enterprise.

Meaning:
Working capital means the funds (i.e.; capital) available and used for day to day operations (i.e.; working) of an enterprise. It consists broadly of that portion of assets of a business which are used in or related to its current operations. It refers to funds which are used during an accounting period to generate a current income of a type which is consistent with major purpose of a firm existence.

Objectives of working capital:

For the purchase of raw materials, components and spares. To pay wages and salaries. To incur day to day expenses and overhead costs such as fuel, power, and office expenses etc. To provide credit facilities to customers etc.

51

DECISION CRITERIA
Working capital is the amount of capital which is readily available to anorganization. That is, working capital is the difference between resources in cashor readily convertible into cash (Current Assets), and cash requirements (CurrentLiabilities). As a result, the decisions relating to working capital are alwayscurrent, i.e. short term, decisions. In addition to working capital decisions differ from capital investment decisions interms of and profitability considerations; they are also "reversible" to some extent.(Considerations as to \and return targets remain identical, although someconstraints - such as those imposed by - may be more relevant here). Working capital management decisions are therefore not taken on the same basisas long term decisions, and working capital management applies different criteriain the main considerations are (1) cash flow / liquidity and (2) profitability / returnon capital (of which cash flow is probably the more important). The most widely used measure of cash flow is the net operating cycle, or. Thisrepresents the time difference between cash payment for raw materials and cashcollection for sales. The cash conversion cycle indicates the firm's ability toconvert its resources into cash. Because this number effectively corresponds to thetime that the firm's cash is tied up in operations and unavailable for other activities,management generally aims at a low net count. (Another measure is grossoperating cycle which is the same as net operating cycle except that it does not takeinto account the creditors deferral period.) In this context, the most useful measure of profitability is (ROC). The result isshown as a percentage, determined by dividing relevant income for the 12 monthsby capital employed (ROE) shows this result for the firm's shareholders. As above,firm value is enhanced when, and if, the return on capital, exceeds the. ROCmeasures are therefore useful as a management tool, in that they link short-termpolicy with long-term decision making.

52

Factors that determine working capital: 1. Small or Large Business

It is the first determinant of working capital that it is affected with the nature of business. Business may be small or large. In small business, company need high working capital because, small business is relating to trading of goods, for starting small business, you need very small fixed capital but need high working capital for paying day to day expenses. But in large business, we require more fixed capital than working capital for purchasing fixed asset.

2. Small or Large Demand

Nature of demand also absolutely affects the working capital need. Some product can be easily sold by businessman, in that business; you need small amount of working capital because your earned money from sale can easy fulfill the shortage of working capital. But, if demand is very less, it is required that you have to invest large amount of working capital because your all fixed expenses must be paid by you. For paying fixed capital you need working capital.

3. Production Policy
Production policy is also main determinant of working capital requirement. Different company may different production policy. Some companies stop or decrease the production level in off seasons, in that time, company may also reduce the number of employees or decrease the purchasing of new raw material, so, it will certainly decrease the amount of working capital but on the side, some company may continue their productions in off season, in that case, they need definitely large amount of working capital.

4. Credit Policy
Credit policy is relating to purchasing and selling of goods on credit basis. If company purchases all goods on credit and sells on cash basis or advance basis, then it is certainly company need very low amount of working capital. But if in company, goods are purchased on cash basis, and sold on credit basis, it means, our earned money will receive after sometime and we require large amount of working capital for continuing our business.

5. Dividend Policy
Dividend policy also effect working capital requirement. Company can distribute major part of net profit. But, if there is no reserve, we have to invest large amount in working capital because, lacking of reserve will affect on adversely on fulfill our liabilities. In that case, we have to yield working capital by taking short term loan for paying uncertain liability.

53

6. Working Capital Cycle

Working capital cycle shows all steps which starts from cash purchasing of raw material and then this converted into finished product, after this it is converted into sale, if it is credit sale, debtors will also the part of working capital cycle and when we gets money from our debtors, it is the final part of working capital cycle. If we receive fastly from our debtors, we need small amount working capital. Otherwise, for purchasing new raw material, we need more amount of working capital.

7. Manufacturing Cycle
Manufacturing cycle means the process of converting raw material into finished product. Long manufacturing cycle will create the situation in which we require large amount of working capital. Suppose, we have to construct the building, for constructing colony of buildings, it may consume the time more than 5 years, so according to this we need working capital.

8. Business Cycle
There are two main part of business cycle, one is boom and other is recession. In boom, we need high money or working capital for development of business but in recession, we need only low amount of working capital.

9. Price Level Changes

If there is increasing trend of products prices, we need to store high amount of working capital, because next time, it is precisely that we have to pay more for purchasing raw material or other service expenses. Inflation and deflation are two major factors which decide the next level of working capital in business.

10. Effect of External Business Environmental Factors

There are many external business environmental factors which affect the need of working capital like fiscal policy, monetary policy and bank policies and facilities.

54

Types of working capital:

Working capital an be divided into two categories1. Permanent working capital: It refers to that minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. 2. Temporary working capital: The amount of such working capital keeps on fluctuating from time to time on the basis of business activities.

Importance working capital:

It helps the business concern in maintaining the goodwill. It can arrange loans from banks and others on easy and favorable terms. It enables a concern to face business crisis in emergencies such as depression. It creates an environment of security, confidence, and over all efficiency in a business. It helps in maintaining solvency of the business.

Demerits of working capital:

Rate of return on investments also fall with the shortage of working capital. Excess working capital may result into over all inefficiency in organization. Excess working capital means idle funds which earn no profits. Inadequate working capital can not pay its short term liabilities in time.

55

Management of working capital:

A firm must have adequate working capital, i.e.; as much as needed the firm. It should be neither excessive nor inadequate. Both situations are dangerous. Excessive working capital means the firm has idle funds which earn no profits for the firm. Inadequate working capital means the firm does not have sufficient funds for running its operations. It will be interesting to understand the relationship between working capital, risk and return. The basic objective of working capital management is to manage firms current assets and current liabilities in such a way that the satisfactory level of working capital is maintained, i.e.; neither inadequate nor excessive. Working capital some times is referred to as circulating capital. Operating cycle can be said to be t the heart of the need for working capital. The flow begins with conversion of cash into raw materials which are, in turn transformed into work-in-progress and then to finished goods. With the sale finished goods turn into accounts receivable, presuming goods are sold as credit. Collection of receivables brings back the cycle to cash. The company has been effective in carrying working capital cycle with low working capital limits. It may also be observed that the PBT in absolute terms has been increasing as a year to year basis as could be seen from the above table although profit percentage turnover may be lower but in absolute terms it is increasing. In order to further increase profit margins, SSL can increase their margins by extending credit to good customers and also by paying the creditors in advance to get better rates. To manage working capital, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the general and the short term financing, such that cash flows and returns are acceptable.

Identify the cash balance which allows for the business to meet day to dayexpenses, but reduces cash holding costs. Inventory management. Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials andminimizes reordering costs - and hence increases cash flow; see (EPQ).

Debtors management. Identify the appropriate, i.e. credit terms which willattract customers, such that any impact on cash flows and the cash conversioncycle will be offset by increased revenue and hence Return on Capital (or viceversa).

Short term financing. Identify the appropriate source of financing, given thecash conversion cycle: the inventory is ideally financed by credit granted by thesupplier; however, it may be necessary to utilize a bank (or overdraft), or to"convert debtors to cash" through.
56

Working Capital Management Components CURRENT ASSETS:

In , a current asset is an on the which is expected to be sold or otherwise used upin the near future, usually within one year, or one operating cycle whichever is longer. Typical current assets include, cash Equivalents, receivable, inventory, the portion of prepaid accounts which will be used within a year, and short-term investments. Operating cycle is the average time that is required to go from cash to cash in producing revenues. On the, assets will typically be classified into current assets and This calculated by dividing total current assets by total. It is frequently used as an indicator of a companys liquidity, its ability to meet short-term obligations. A balance sheet account that represents the value of all assets that are reasonablyexpected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketablesecurities, prepaid expenses and other liquid assets that can be readily converted tocash. In personal finance, current assets are all assets that a person can readily convertto cash to pay outstanding debts and cover liabilities without having to sell fixedassets. Current assets are important to businesses because they are the assets that are usedto fund day-today operations and pay ongoing expenses. Depending on the natureof the business, current assets can range from barrels of crude oil, to baked goods,to foreign currency. In personal finance, current assets include cash on hand and in the bank, andmarketable securities that are not tied up in long-term investments. In other words,current assets are anything of value that is highly liquid.

Current Assets = Cash +Bank + Debtors + Bills Receivable + Short TermInvestment + Inventory + Prepaid Expenses

57

CURRENT LIABILITIES:
A company's debts or obligations that are due within one year. Current liabilitiesappear on the company's balance sheet and include short term debt, accountspayable, accrued liabilities and other debts.Essentially, these are bills that are due to creditors and suppliers within a shortperiod of time. Normally, companies withdraw or cash current assets in order topay their current liabilities. Analysts and creditors will often use the current ratio, (which divides current assetsby liabilities), or the quick ratio, (which divides current assets minus inventories bycurrent liabilities), to determine whether a company has the ability to pay off itscurrent liabilities.

Current Liabilities = Creditors +Bank Overdraft+ Bills payables+ Outstandingexpenses+ Accounts payables

WCM processes involve crucial decisions on multiple aspects, including the 1. 2. 3. 4. 5. 6. investment of available cash, maintaining a certain level of inventories, managing account receivables, and account payables. cash, receivables, inventory, payables management --

which will be briefly explained in this section. The purpose of cash management is to determine the optimal level of cash needed for operation and invested in marketable securities, which suitable for the nature of business operation .The challenge of cash management is to balance the appropriate level of cash and marketable securities that reduce the risk of insufficient fund for operation and opportunity cost of holding excessively high level of these resources. Thus, a companys competency to synchronize cash inflows with cash outflow, by using cash budgeting and forecasting in formulating a cash management strategy is important.

58

Inventory plays an important role to determine the activities in producing, marketing, and purchasing. Since inventory determines the level of activities in a company, managing it strategically contributes to profitability .Supplier selection process and inventory management are reciprocal to enable companies to deal with uncertainties of consumer demand. Furthermore, a companys ability to respond to demand is largely dependent on how efficient the company manages inventories and how committed its suppliers are to support a companys production lines. Accounts payable are one of the major sources of unsecured short-term financing .Utilising the value of relationship with payee is a sound objective that should be highlighted as important as having the optimal level of inventories. As a consequence, strong alliance between company and it suppliers will strategically improve production lines and strengthen credit record for future expansion. Profit may only be called real profit after the receivables are turn into cash. The management of accounts receivable is largely influence by the credit policy and collection procedure. A credit policy specifies requirements to value the worthiness of customers and a collection procedure provides guidelines to collect unpaid invoices that will reduce delays in outstanding receivables . Aligning the receivable management between cash, inventory and payable management is relatively challenging and important, and a stimulus to researchers studies to integrate the WCM components.

Techniques of calculating optimal working capital

1. Intersection of Carrying Cost and Shortage Cost: One of the important method of finding the optimum level of working capital is the point of intersaction of carrying cost and shortage cost in a graphical representation. The total cost of carrying and shortage cost is minimum at this point.

59

Intersection of Carrying Costs and Shortage Costs

60

Here, the optimum level of current assets are at the point where the shortage and carrying costs are meeting or intersecting. At this point, the total cost, as we can see, is minimum and this is why that level of current assets are considered to be optimal.

I.

Working Capital Financing Policy: Working capital can be divided into two viz.
Permanent Working Capital and Temporary Working Capital. Permanent working capital is the level of working capital which is always required and maintained. Temporary working capital is the part of working capital which keeps on fluctuating. It is high in good seasons and low in bad seasons. There are two types of financing available. They are long term financing and short term financing. Three strategies are possible with respect to financing of working capital. Efficient financing of working capital reduces carrying cost of capital.

1. Long term financing is used for both permanent and temporary WC. 2. Long term financing is used for permanent and some part of temporary WC. Remianing part of temporary WC is financed through short term financing as and when required. 3. Long term financing is used for permanent and short term financing for temporary WC. These strategies should be choosen so as to match the maturity of source of finance with the maturity of the asset.

Cash Budgeting: Cash budgeting is another important working capital management technique keep optimum level of cash in the business. Cash budgeting involves estimating the requirements of cash by estimating all the forecomingreciepts and payments. For effective management, a balance is needed between both excess and shortage of cash. It is because both ends are costly. Speeding up of collection and getting relaxed credit terms from the creditors can reduce the cash requirements.

61

II.

Inventory Management: Inventory

is an important component of working capital or current assets. Optimum level of inventory can save on costs heavily.

EOQ: Economic Order Quantity (EOQ) model is a famous model for managing the inventories. It helps the inventory manager know what is the right quantity that should be ordered considering other factors like cost of ordering, carrying costs, purchase price and annual sales. The formula used for finding EOQ is as follows:

Economic Order Quantity (EOQ) A Annual Sales O Cost per Order P Purchase price per unit C Carrying Cost

Just-in-Time: Just-in-time is another very important technique which brough about paradigm shift in the management of inventories. It did not reduce cost of inventory but it abolished it completely. Just-in-time means acquiring raw material or manufacturing product at the time when it is required by the customer. This strategy is very difficult to implement but if implemented can bring down inventory cost to minimum levels.

62

Chapter 5 Research Methodology

Research Methodology Research Design Period of study Data collection

63

Methodology
Methodology refers to the method by which the data is obtained. The information has been collected through various sources.

Sources of data collection

The data are collected mainly, from the annual reports of the company. In addition to this websites of PERCEPT ENGINEERS PVT LTD; circulars manual has also been used together various information. Only secondary data were collected for the analysis.

Tools used for analysis

The tools and techniques used in the study are:Ratio analysis Trend analysis Du punt analysis Comparative balance sheet analysis

Limitations
The main limitations of the study are:Study was conducted with the help of annual report provided by the company, so there are chances of errors. Time factor was a major constraint Lack of experience an knowledge of the researcher

64

Chapter 6
A STUDY ON WORKING CAPITAL MANAGEMENT OF PERCEPT ENGINEERING PVT.LTD

65

Balance sheet Of Percept Engineering Pvt.Ltd for the year of 2010

Particulars SOURCE OF FUND

1. SHAREHOLDERS FUND A SHARE CAPITAL B RESERVES&SURPLUS 2. LOAN FUNDS A SECURED LOANS B UNSECURED LOANS A B

Schedule

Current year(2010)
4800000.00 15762764.33

C D

27324795.87 5969240.50

TOTAL

53856800.70

APPLICATION OF FUND
1. FIXED ASSETS GROSS BLOCK LESS:DEPRECIATION NET BLOCK E 9847080.19 391057.58 9456022.61

2. INVESTMENTS

300000.00

3. CURRENT ASSET & ADVANCES DEPOSITS INVENTORIES SUNDRY DEBTORS CASH & BANK BALANCE LOANS & ADVANCES OTHERS TOTAL

G 18115484.86 6995535.52 48389830.50 3447044.58 4372123.92 10132855.01 91452874.39

66

4. CURRENT LIABILITY& PROVISION CURRENT LIABILITIES PROVISION

H 46175835.63 1305067.97

TOTAL

47480903.54

5. NET CURRENT ASSETS 6. DEFFERED TAX ASSET

43971979.85

128807.24

TOTAL

53856800.70

67

Calculation of working capital for the year 2010

Current ration= Current asset Current liability Current asset= 91452874.39 (balance sheet figure) Current liability= 47480903.54 (balance sheet figure) = 91452874.39/47480903.54 =1.93 Working capital= current asset- Current liability Current asset= 91452874.39 Current liability= 47480903.54 Working capital=91452874.39- 47480903.54 =43971970.35 Calculations of elements of working capital(in percentage) Stock working capital ratio= Inventory Working capital Inventory= 6995535.52 Working capital= 43971970.35 Stock working capital ratio= (6995535.52/43971970.35)*100 =15.91

68

Chapter 7 Findings suggestion And Conclusion

69

Conclusion of the study

The company in the great height of profits. It has utilized the profits made from the previous year(2008-2009) and has expanded its business by opening two more branches around India. For this purpose the company is utilized the existing funds and have increased in their working capital expenditure. Compared to the previous year the profits have come down.

Profits decreased compared to the previous year The company expanded two more branches Working capital requirements increases as the expansion of the company. There is an adverse relation between profit and working capital. If working capital requirement increases the profit of the succeeding year will fall down.

70

Findings
The necessity for a well defined working capital management in the organization.

CONSEQUENCES OF UNDER ASSESSMENT OF WORKING CAPITAL

Growth may be stunted. It may become difficult for the enterprise

to undertake profitable projects due to non-availability of working capital. Implementation of operating plans may become difficult and consequently the profit goals may not be achieved. Cash crisis may emerge due to paucity of working funds. Optimum capacity utilisation of fixed assets may not be achieved due

to non-availability of the working capital. The business may fail to honour its commitment in time, thereby

adversely affecting its credibility. This situation may lead to business closure.

The business may be compelled to buy raw materials on credit and sell

finished goods on cash. In the process it may end up with increasing cost of purchases and reducing selling prices by offering discounts. Both these situations would affect profitability adversely.

Non-availability of stocks due to non-availability of funds may result

in production stoppage. While underassessment of working capital has disastrous implications on business, overassessment of working capital also has its own

dangers.

71

CONSEQUENCES OF OVER ASSESSMENT OFWORKING CAPITAL

Excess of working capital may result in unnecessary accumulation of

inventories. It may lead to offer too liberal credit terms to buyers and very poor

recovery system and cash management. It may make management complacent leading to its inefficiency. Over-investment in working capital makes capital less productive and

may reduce return on investment. Working capital is very essential for success of a business and, therefore,needs efficient management and control. Each of the components of the working capital needs proper management to optimise profit.

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Suggestions
How to reduce working capital for optimum production and increase impact
Eliminating excess working capital can also boost earnings by reducing related infrastructure, labor, and financing costs Action Earnings impact

Reduce accounts receivable Reduce bad debt through accelerated collections Lower labor costs as receivables become more current (collections, terminations, etc.) Lower interest expense as cash flow increases Reduce/optimize inventory Decrease warehouse space Reduce obsolete inventory Lower staffing levels Lower interest expense and depreciation Optimize price/terms/discounts tradeoff Lower potential interest expense as payment terms are renegotiated

Extend accounts payable

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Starting point for active working capital management

A prerequisite for a permanent reduction in working capital is systematic analysis and identification of structural drivers and causes of the high levels of working capital. They can be found in: A businesss processes and structures (such as decentralised inventory management, poor incentives) Corporate strategy and culture Monitoring and control systems (e.g., the failure to use ratios in relation to working capital)

Objective

Significant factors (examples) Effects (examples)

Effect on

Cash ow Reduction in receivables Terms of payment Invoicing Credit control Cash management Increase in operating cash ow through reduction in terms of payment and effective collection procedures Reduction in losses on receivables through systematic credit control Reduction in personnel costs through more efficient credit control and collection Increase in operating cash ow through lower inventories and lower replenishment Lower write-offs and scrapping costs
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Profitability

Reduction in inventories

Variety of goods Standardisation Consignment inventory Supply chain management

through reduction in excess and obsolete inventories Lower space costs through the reduction in warehouse space needed Terms of payment Payment procedures Payment processes Optimising discounts

Raising accounts payable

Increase in operating cash ow through longer credit from suppliers

Working capital management and external project support

A permanent improvement in working capital management requires the process to be integrated into the organization and institutionalized. Outside support can often be of critical importance to the success of a working capital project, both at the conceptual stage (bought-in xpertise) and in terms of resources (additional capacity during implementation). Calling in an outside consultant to help implement a working capital management project has numerous advantages.

Getting the ball rolling Involving an external consultant gives theproject additional momentum: the employeesinvolved are more committed and give theproject higher priority.

Bought-in experience Based on the accumulated experience of many other working capital projects, the consultant recognizes the stumbling blocks and success factors and can give them the necessary attention

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Bought-in expertise The external consultant comes equipped with the tools and relevant expertise in the individual specializations (e.g., supply chain management) which remain with the organization after the project is finished Guaranteed resources The external consultant compensates for any scarcity of resources that may emerge (e.g., in data analysis) and provides support in managing the project, thus relieving managers of responsibility and giving them more time to concentrate on day-to-day operations.

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CHAPTER 8 LEARNING EXPERIENCE:-

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LEARNING EXPERIENCE:-

I had a wonderfuI experience during the period of my summer project training as framed to give an exposure towards how an organization works aria now theories learned in class rooms relates with actual events happening in an organization. Although I came to know lot of similarities between the theory and the practical situation in the company and also there were ninny differences in their working style. There were three levels in the organization namely top management, middle management, lower level workers, instead of taking the strategic decision the managing director was seen to be more involved in activities of the organization. I was fortunate enough to learn production department where in I was explained about the work flow of various productions the production units and also briefed about inventory control systems, how the stocks are maintained for the production process and also supplier of raw materials. During my in plant training I have gained awareness about how department functions and help to achieve the vision and mission of the company. I have also learnt about how the 4 M's i.e. Men, Material, Machine and Money are crucial for the company. I have also learnt about the different strategies adopted by the company to overcome the tough competition and how to handle every resources of the company. I learnt that the employees in the company work like one big huge family. I also got to learn how to work in a fast environment. The company gives high value for time, money, facilities, material and human resources. The company gives more importance to responsibility, self esteem, sociability, self management, integrity and honesty.

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Coming to the structure of the company, the company has clearly defined the process of responsibility and authority of all the department heads and who should report to whom and how the communication flows in the organization between organizations. Overall I had a great experience while undergoing summer project training in this company. The experience gained will stay with me for a lifetime. I have gained valuable international perspectives that will surely be a great advantage to me in future. So to conclude I had deeply involved in studying the organizational work culture in practical. Finally I would like to tell that "every experience gained is never an experience lost. I will always be able to apply somewhere."

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Chapter 9 Bibliography and Webliography

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Bibliography G/L and P/L statement of Percept Engineers pvt. ltd Financial Management: I MPanday, 9th edition Credit management, ICFAI Mr. Lalu .M.A, DGM Finance Webliography www.percept engineers..com www.google.com www.wikipedia.com www.yahoo.com www.indiacom.com

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