ADVANCED FINANCIAL

ACCOUNTING

A PROJECT REPORT ON ANALYSIS OF WORKING CAPITAL

MANAGEMENT OF COMPANY

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE

AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(ACCOUNTANCY)

SUBMITTED TO

UNIVERSITY OF MUMBAI,

LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY

SAYED KHALID 15160537

SUPERVISED BY

PROF. ASHOK MAHADIK

APRIL 2017

Page | 1
 ADVANCED FINANCIAL
ACCOUNTING

A PROJECT REPORT ON ANALYSIS OF WORKING CAPITAL

MANAGEMENT OF COMPANY

SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE

AWARD OF THE M.COM DEGREE OF

MASTER IN COMMERCE
(ACCOUNTANCY)

SUBMITTED TO

UNIVERSITY OF MUMBAI,

LALA LAJPATRAI COLLEGE, MAHALAXMI, MUMBAI

SUBMITTED BY

SAYED KHALID 15160537

SUPERVISED BY

PROF. ASHOK MAHADIK

APRIL 2017

Page | 2
 ADVANCED FINANCIAL ACCOUNTING

DECLERATION

I, student of LALA LAJPATRAI COLLEGE OF COMMERCE AND ECONOMICS

OF M.COM (ACCOUNTANCY), hereby declare that I, have completed this university
project on ANALYSIS OF WORKING CAPITAL MANAGEMENT OF
COMPANY during the academic year 2016 2016.

This information submitted is true and original to the best of my knowledge.

Student Signature:

SAYED KHALID

SEAT NO: 15160537

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 CERTIFICATE

I hereby certify that the work which is being presented in the M.Com. Internal Project Report
entitled ANALYSIS OF WORKING CAPITAL MANAGEMENT OF
COMPANY, in partial fulfillment of the requirements for the award of Master In
Commerce in Accountancy and submitted to the LalaLajpatrai College of Commerce and
Economics, Mahalaxmi, Mumbai 400034 is an authentic record of my own work carried
out under the supervision of the Name & Designation of the Supervisor(s). The matter
presented in this Project Report has not been submitted by me for the award of any other
degree elsewhere.

Signature of Student:

Signature of Supervisor(s):

Internal Examiner:

External Examiner:

College Stamp Principal

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 ACKNOWLEDGEMENT

I would like to place on record my deep sense of gratitude to Prof. Ashok Mahadik, Dept. of
for her generous guidance, help and useful suggestions.

I express my sincere gratitude to Prof. Neelam Arora, for her stimulating, continuous
encouragement and supervision throughout the course for present work.

I also wish to extend mt thanks to Prof. Ashok Mahadik and the other colleagues for
attending my seminars and for their insightful comments and constructive suggestions to
improve the quality of this project work.

I am extremely thankful to the principal, Prof. Neelam Arora, for providing me infrastructural
facilities to work without which this work would not have possible.

SIGNATURE OF STUDENT(S)

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WORKING CAPITAL MANAGEMENT
INDEX
SR.NO. CONTENT PG No.
1 MEANING OF WORKING CAPITAL 1
2 TYPES OF WORKING CAPITAL 1
3 WORKING CAPITAL CYCLE 2
4 CASH COST OF WORKING CAPITAL 4
i) Methods of calculation of cash cost 5
ii) Management of working capital 6
7 VARIOUS LEVELS OF INVENTORIES 7
8 KESORAM CEMENT INDUSTRIES LIMITED 14
9 PROFILE OF THE INDUSTRY 14
10 CLASSIFICATION OF CEMENT 16
11 INDIAN CEMENT INDUSTRY PRESENT STATUS 17
12 HISTORY OF THE KESORAM 18
13 AWARDS WON BY KESORAM 20
14 CEMENT PRODUCTION WORLDWIDE 21
15 WEAKNESSES 22
16 OPPORTUNITIES 22
17 THREATS 22
18 CONCLUSION 29
19 BIBILIOGRAPHY 30

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 WORKING CAPITAL MANAGEMENT

MEANING OF WORKING CAPITAL

Working Capital is a measure of both a company's efficiency and its short-term financial
health. Working capital is calculated as:

Working Capital = Current Assets - Current Liabilities

The working capital ratio (Current Assets/Current Liabilities) indicates whether a company
has enoughshort term assets to cover its short term debt. Anything below 1 indicates negative
W/C (working capital). While anything over 2 means that the company is not investing
excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient. Also known as "net
working capital".

TYPES OF WORKING CAPITAL

Gross working 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.

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.

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.

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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.

Positive Working Capital

It means current assets is more than current liabilities which implies that CL is not sufficient
enough to finance CA

Negative Working Capital

It means current liabilities more than current assets which implies that current liabilities are
sufficient enough to finance current assets.

WORKING CAPITAL CYCLE

Purchase of RM

W.I.P.

Raw Overheads
Labour
material 50 %
50 %
100 % complete
complete
complete

Finished
goods

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 Sales

Cash Credit
sales sales

Debtor +
Cash
B/R
received

Purchase of R.M.

Operating cycle concept

Maximization of share holders wealth of a firm is possible only when there are
sufficient return from the operations
Successful sales activity is necessary for earning profit sales do not convert into cash
immediately There is invisible time lap between the sale of good and receipt of cash
The time taken to convert raw material into cash is known as operating cycle
Conversion of cash into raw material
Conversion of raw material into work in progress
Conversion of Work in progress into finished goods
Conversion of finished good into Sales ( Debtors and cash)

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Treatment of undrawn profit

Particulars Ignore Add Less

Net working Capital X X X

Undrawn Profit - (+) x (-)x

Add : Res for (+) x (+) x (+) x

contingencies

Total Working capital xx Xx xx

CASH COST OF WORKING CAPITAL

Meaning

The word cash cost implies that at the time of estimating the working capital we have to
consider only those expenses which involves cash outflow that is we have to exclude the
notional expenditure normally it is depreciation as well as exclude the profit element.
Depreciation is to be excluded from the closing stock of W.I.P and finished goods as well as
debtors while profit element is to be excluded from debtors only.

When to calculate cash cost of working capital under following circumstances. We have to
calculate cash cost of working capital

When question specifically mention to calculate cash cost of working capital

When depreciation is give separately
When specific instruction is given to value debtors of cash cost
When it is given that sell price has been arised at without considering depreciation

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Methods of calculation of cash cost

Direct Method

At the time of estimating working capital exclude depreciation from closing stock of
W.I.P and finished goods as well as debtors and exclude profit element from debtors.

Indirect Method

In this method we have to calculate normal working capital including depreciation &
profit element & in the second statement find out cash cost of working capital as per
following format.

Cash cost of working capital

Particulars Rs Rs

Normal working capital as X

per first statement

Less: Depreciation

Closing stock W.I.P X

Closing stock of F. goods X

Debtors x (-) x

Less: Profit (Debtors) (-) x

Cash cost of W.capital xx

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Management of working capital

Cash management

Identify the cash balance which allows for the business to meet day to day expenses, but
reduces cash holding costs.

Inventory management.

Identify the level of inventory which allows for uninterrupted production but reduces the
investment in raw materials and minimizes reordering costs and hence increases cash
flow. Besides this, the lead times in production should be lowered to reduce Work in
Process (WIP) and similarly, the Finished Goods should be kept on as low level as
possible to avoid over production see Supply chain management; Just In
Time (JIT); Economic order quantity (EOQ); Economic quantity

Debtors management

Identify the appropriate credit policy, i.e. credit terms which will attract customers, such
that any impact on cash flows and the cash conversion cycle will be offset by increased
revenue and hence Return on Capital (or vice versa); see Discounts and allowances.

Short-term financing

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

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VARIOUS LEVELS OF INVENTORIES

Re-ordering level:

It is also known as ordering level or ordering point or ordering limit. It is a point at

which order for supply of material should be made.

This level is fixed somewhere between the maximum level and the minimum level in such a
way that the quantity of materials represented by the difference between the re-ordering level
and the minimum level will be sufficient to meet the demands of production till such time as
the materials are replenished. Reorder level depends mainly on the maximum rate of
consumption and order lead time. When this level is reached, the store keeper will initiate the
purchase requisition.

Reordering level is calculated with the following formula:

Re-order level =Maximum Rate of consumption x maximum lead time

(b) Maximum Level:

Maximum level is the level above whichstockshould never reach. It is also known as

maximum limit or maximum stock. The function of maximum level is essential to avoid

unnecessary blocking up of capital in inventories, losses on account of deterioration and

obsolescence of materials, extra overheads and temptation to thefts etc. This level can be
determined with the following formula. Maximum Stock level = Reordering level +
Reordering quantity (Minimum Consumption x Minimum re-ordering period

(c) Minimum Level:

It represents the lowest quantity of a particular material below whichSTOCK should not be

allowed to fall. This level must be maintained at every time so that production is not held up
due to shortage of any material.

It is that level of inventories of which a fresh order must be placed to replenish the stock.
This level is usually determined through the following formula:

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Minimum Level = Re-ordering level (Normal rate of consumption x Normal delivery
period)

(d) Average Stock Level:

Average stock level is determined by averaging the minimum and maximum level of stock.

The formula for determination of the level is as follows:

Average level =1/2 (Minimum stock level + Maximum stock level)

This may also be expressed by minimum level + 1/2 of Re-ordering Quantity.

(e) Danger Level:

Danger level is that level below which the stock should under no circumstances be allowed to

fall. Danger level is slightly below the minimum level and therefore the purchases manager
should make special efforts to acquire required materials and stores.

This level can be calculated with the help of following formula:

Danger Level =Average rate of consumption x Emergency supply time.

Economic Order Quantity (E.O.Q.):

One of the most important problems faced by the purchasing department is how much to
order at a time. Purchasing in large quantities involve lesser purchasing cost. But cost of

carrying them tends to be higher. Likewise if purchases are made in smaller quantities,
holding costs are lower while purchasing costs tend to be higher.

Hence, the most economic buying quantity or the optimum quantity should be determined by

the purchase department by considering the factors such as cost of ordering, holding or
carrying.

This can be calculated by the following formula:

Q = 2AS/I

where Q stands for quantity per order ;

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A stands for annual requirements of an item in terms of rupees;

S stands for cost of placement of an order in rupees; and

I stand for inventory carrying cost per unit per year in rupees.

Preparation of Inventory Budgets:

Organisations having huge material requirement normally prepare purchase budgets. The

purchase budget should be prepared well in advance. The budget for production and
consumable material and for capital and maintenance material should be separately prepared.

Sales budget generally provide the basis for preparation of production plans. Therefore, the
first step in the preparation of a purchase budget is the establishment of sales budget.

As per the production plan, material schedule is prepared depending upon the amount and

return contained in the plan. To determine the net quantities to be procured, necessary
adjustments for thestock already held is to be made.

They are valued as standard rate or currentmarket. In this way, material procurement budget

is prepared. The budget so prepared should be communicated to all departments concerned so

that the actual purchase commitments can be regulated as per budgets.

At periodical intervals actuals are compared with the budgeted figures and reported to
management which provide a suitable basis for controlling the purchase of materials,

Maintaining Perpetual Inventory System:

This is another technique to exercise control over inventory. It is also known as automatic

inventory system. The basic objective of this system is to make available details about the

quantity and value of stock of each item at all times. Thus, this system provides a rigid

control over stock of materials as physical stock can be regularly verified with the stock
records kept in the stores and the cost office.

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Establishing Proper Purchase Procedures:
A proper purchase procedure has to be established and adopted to ensure necessary inventory
control. The following steps are involved.

(a) Purchase Requisition:

It is the requisition made by the various departmental heads or storekeeper for their various

material requirements. The initiation of purchase begins with the receipts of a purchase
requisition by the purchase department.

(b) Inviting Quotations:

The purchase department will invite quotations for supply of goods on the receipt of purchase
requisition.

(c) Schedule of Quotations:

The schedule of quotations will be prepared by the purchase department on the basis of
quotations received.

(d) Approving the supplier:

The schedule of quotations is put before the purchase committee who selects the supplier by
considering factors like price, quality of materials, terms of payment, delivery schedule etc.

(e) Purchase Order:

It is the last step and the purchase order is prepared by the purchase department. It is a written

authorisation to the supplier to supply a specified quality and quantity of material at the
specified time and place mentioned at the stipulated terms.

Inventory Turnover Ratio:

These are calculated to minimise the inventory by the use of the following formula:
Inventory Turnover Ratio

= Cost of goods consumed/sold during the period/Average inventory held during the period

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The ratio indicates how quickly the inventory is used for production. Higher the ratio, shorter

will be the duration of inventory at the factory. It is the index of efficiency of material
management.

The comparison of various inventory turnover ratios at different items with those of

previous years may reveal the following four types of inventories:

(a) Slow moving Inventories:
These inventories have a very low turnover ratio. Management should take all possible steps
to keep such inventories at the lowest levels.

(b) Dormant Inventories:

These inventories have no demand. The finance manager has to take a decision whether such
inventories should be retained or scrapped based upon the current market price, conditions
etc.

(c) Obsolete Inventories:

These inventories are no longer in demand due to their becoming out of demand. Such
inventories should be immediately scrapped.

(d) Fast moving inventories:

These inventories are in hot demand. Proper and special care should be taken in respect of

these inventories so that the manufacturing process does not suffer due to shortage of such
inventories.

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Perpetual inventory control system:
In a large b essential to have information about continuous availability of different types of

materials and stores purchased, issued and their balance in hand. The perpetual inventory
control

system enables the manufacturer to know about the availability of these materials and stores
without undergoing the cumbersome process of physicalSTOCK taking.

Under this method, proper information relating to receipt, issue and materials in hand is kept.

The main objective of this system is to have accurate information about the stock level of
every item at any time.

Perpetual inventory control system cannot-be successful unless and until it is accompanied by

a system of continuous stock taking i.e., checking the total stock of the concern 3/4 times a

year by picking 10/15 items daily (as against physical stock taking which takes place once a
year).

The items are taken in rotation. In order to have more effective control, the process of

continuousstock taking is usually undertaken by a person other than the storekeeper. This will
check the functioning of storekeeper also.

The items may be selected at random to have a surprise check. The success of the system of

perpetual inventory control depends upon the proper implementation of the system of
continuous stock taking.

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6. ABC analysis:
In order to exercise effective control over materials, A.B.C. (Always Better Control) method

is of immense use. Under this method materials are classified into three categories in

accordance with their respective values. Group A constitutes costly items which may be
only 10 to 20% of the total items but account for about 50% of the total value of the stores.

A greater degree of control is exercised to preserve these items. Group B consists of items

which constitutes 20 to 30% of the store items and represent about 30% of the total value of
stores.

A reasonable degree of care may be taken in order to control these items. In the last category
i.e. group Q about 70 to 80% of the items is covered costing about 20% of the total value.

This can be referred to as residuary category. A routine type of care may be taken in the case
of third category.

This method is also known as stock control according to value method, selective value
approach and proportional parts value approach.

If this method is applied with care, it ensures considerable reduction in the storage expenses
and it is also greatly helpful in preserving costly items.

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KESORAM CEMENT INDUSTRIES LIMITED
PROFILE OF THE INDUSTRY:

The 85-year old Indian cement industry is one of the cardinal and basic infrastructure
industries which enjoys core sector status and played crucial role in the economic
development and growth of a country. Being a core sector this industry was subject to price
and distribution controls almost uninterruptedly from world war-II.

When government of India announced the partial decontrol manufacturing cement became
increasingly attractive and the industry experienced substantial expansion. As the supply in
response to the 1982 partial decontrol was significant in March 1989, price and distribution
control were finally dispensed with .It was one of the first Major industries in the country to
be so deregulated.

OVERVIEW OF THE INDUSTRY:

The word cement means any substance applied for sticking things. But cement is most
vital and important material for modem construction as a binding agent .In the ancient times
,clay ,bricks and stones have been used for construction work.

The Romans were using a binding or a cementing material that would harden under
water. The first systematic effort was made by SMEATION who under took the erection of a
new lighthouse in 1756.he observed that the production Obtained by burning limestone was
the best cementing material for work under water.

After eighty years branch chemist produced hydraulic cement by

burning finely ground delay used in the form of paste .cement invented by
JOSEPH ASPDIN in 1824. Since hardened Cement paste resembled Portland stone
found in England be named it a s Portland cement A name that has ensured even
Portland cement was list manufactured in USA in 1975 In Portland cement was produced
for the rust time in 1940. By south India industries limited Madras. This unit had
capacity of 30 tonnes per day.

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By 1913 however three units started their operations with a combined
installed capacity Of 75000 tones per annum. In 1914 indigenous production fees
for short of domestic demand necessitating an import of 1,65,723 tones .Shipment
difficulties and foreign Trade during the first world war acted as a catalyst
for the development of indigenous Industry and by 1924 the total installed
capacity grew to 5,59,800 tones per annum.

In 1963 all the cement companies with the exception of SONE VALLEY PORTLAND
CEMENT COMPANY LIMITED merged to form the ASSOCIATED CEMENT
COMPANIES LIMITED. This has more facilitated a cost reduction as well as
uniformly in quality. By 1947 the installed capacity of the industry raised to
2.2million tones per annum. After partition 5 of the cement producing units
in the country went to Pakistan And total installed capacity of 18 units that
remained in India was 1.5 million tonnes per Annum .

This is increased to 3.8million tones by 1950-51. In the three decades

between 1950-1980 the capacity expansion was between 7-8 million tonnes per
decade the target set in respect of additional capacity generation was released
with impetus given by the partial decontrol announced in 1982. Several units
locked up project for expansion of capacity and modernization which contributed
towards increased production.

DEFINITION OF CEMENT:

Cement may is defined as a mixture of calcium sulfate and aluminates which

have the property of setting and hardening under water .The amount of silica which
is present on each crust are sufficient to combine with calcium oxide to form the
corresponding calcium silicate and aluminates

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CLASSIFICATION OF CEMENT:
Cement is of 3 types
1. Puzzolantic cement
2. Nature cement and
3. Portland cement

Puzzolantic cement:

It consists of mixture of silicate of calcium and aluminum .it shows the hydraulic properties
when it is in the form of powder and being mixed with suitable proportions of suitable
Proportion of lime
The rate of hardening is much slower and the comprehensive strength developed is about
half of Portland cement .it is found more resistant to the chemical action than others.

Natural cement:
This is nature occurring material it is obtained from cement rocks these cement
rocks are claying lime stones containing silicates and aluminates of calcium the
Selling property of this cement is more than the Portland cement but the
comprehensive is half of it.

Portland cement:
This is of various kinds
1. ordinary Portland cement
2. rapid hardening Portland cement
3. low heat cement
4. white colored cement
5. water proof Portland cement
6. Portland slang cement
7. port land puzzling cement
8. sulfate resisting

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INDIAN CEMENT INDUSTRY PRESENT STATUS

After the dealing of the industry in July 1991 it reacted positively to the
policy changes new capacities created and the volume of production increased
from a situation of importing cement the country started exploring due
to high quality and cost effectiveness after liberalization the black market
in cement also disappeared currently India stands second largest in the cement
production worldwide after china on the other hand per capita consumption in
India is only books as compared To the world average of 260kgs the industry has
S9 companies owning 11S plants in the matters of exports the government
considers cement as a extreme Focus area.

However Indian cement in the global market is not very competitive

Due to high power and full costs. in order to improve its position in the international
market technological up gradation is essential in terms of process
Product diversification cost reduction quality control and energy saying.

ABOUT THE INDUSTRY

This chapter examines a profile of cement industries ltd. i.e. .its history location
organization structures etc.

LOCATION
Kesoram cement industry is one of the leading manufacturer of cement in India it is
a day process cement plant the plant capacity is 8.25 lakh tones per annum .it is
located at basanthnagar in karimnagar district of Andhra Pradesh Basanthnagar is
8km away from the Ramagundam railway station linking madras to new Delhi.
The chairman of the company is syt.B.K.Birla.

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HISTORY OF THE KESORAM

The first unit at Basantnagar with a capacity or 2.1 lakh tons per annum in corresponding
suspension-preheated system was commissioned during the year of 1969 the second unit
Was setup in year 1971 with a capacity of 2.1 tones per annum and the third unit with a
capacity of 2.5lakh tons per annum went on stream in the year 1978 the coal for
this company is being supplied iron singareni collories and the power is obtained from
APSEB the power demand for the factory is about 21MW kesoram has got 2DG sets of
4MW each installed in the year 1987.

Kesoram cement industry has set up a 15kw capacity power plant to facilitate for
uninterrupted power supply for manufacturing of cement starts at 24 august 2008 per hour 12
mw, actual power is 15mw.

Birla supreme in popular brand of kesoram cement from its prestigious plant of
Basantnagar in A.P which has outstanding track record in performance and
productivity serving the nation for the last two and had decades It distinction by
Bagging several national awards .It also has the distinction optimum capacity
utilization.

Kesoram offers a choice of top quality portioned cement for light heavy
constructions and allied applications quality is built every fact of the operations.
The plant layout is rational to begin with the limestone is rich in calcium carbonate a key
factor that influence the quality of final product the day process technology used in
the latest computerized monitoring overseas the manufacturing process samples are
sent regularly to the bureau of Indian standards national council of constructions and
Building material for certification of derived quality norms

Page | 24
The company has vigorously undertaking different promotional measures their
product through different media which includes the use of newspapers ,magazines
,hoardings etc

Kesoram cement industry distinguished itself among all the cement factories in India by
bagging the national productivity award consecutively for two years and the year
1985 -1987.the federation of Andhra Pradesh chamber of commerce and industries also
conferred kesoram cement an award for the best Industrial promotion expansion
efforts in the year 1981.kesoram also bagged FAPCCI Awarded for best family
planning effort in the state for the year 1987-1988.

One among the industrial giants in the country today serving the nation on the
industrial front kesoram industrials Ltd has a cheque red and eventful history dating
Back to the twenties when only a textile mill under its banner 1924 it grew from
Strength to spread and activities 10 newer fields like Rayan pulp Transport paper spun
pipes refractivites types and other products

Looking to the wide gap between the demand and supply of a vital commonly cement
Which plays UI important role in national building activity the government of India
had de-licensed the cement industry in the year 1966 with a view to attract private
entrepreneurs to augment the cement industry production kesoram rose to the occasion
And divided to setup a few cement plants in the country

Kesoram cement undertaking marketing activities extensively in the states of Andhra

Pradesh, Karnataka, Tamilnadu, kerala, Maharastraha, and Gujarat. In AP sales depots
are located in different areas like karimnagar Warangal Nizambad Vijayawada and
Nellore In other states it has opened around 10 depots.

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AWARDS WON BY KESORAM

Kesoram cement bagged prestigious awards like national awards for productivity and
technology and conservation and several state awards for year 1984 kesoram cement is
best family planning effort in the federation of Andhra Pradesh chamber of commerce
And industry and also national award for two successive years 1985-86&1986-87.It has
also bagged the national award for energy efficiency for the year 1989-90 for the
performance among all cement plants in India .thus award stall-by national council
For cement and building material in association with the government of India.

Kesoram bagged the prestigious Andhra Pradesh state productivity award in 1987-1989 also
Annexed state award for industrial management in 1988-1989.and also Best Industrial
promotion expansion efforts in the state and yajamanya ratna and best efforts an
industrial unit in the state to develop rural economy was bagged for its contribution
towards the year 1991.

it also bagged the may day award of the government of India For the best management
and the Pandit Jawaharlal Nehru silver rolling trophy for the industrial productivity effort
in the state of Andhra Pradesh by FAPCCI and also the Indira Gandhi memorial
national award of the government of Andhra Pradesh for the year 1993.

During the last 3 years the government of Andhra Pradesh has given the following
awards Best awards for the year 1994.
Best industrial relation award for 1994.

To keep the ecological balance they have also undertaken massive tree plantation in the
economy and government of India has nominated township areas and them for
VRIKSHMITHRA award Best effort of an industrial unit in March 1996.

In the year March 2008 Best management award 2008 for the best management practices in
kesoram cement industry presented by chief minister.

Page | 26
CEMENT PRODUCTION WORLDWIDE

Country 1981 1983 1986 1989 1990 World ranking

China 83 108 106 210 210 1
Japan 88 85 73 82 87 2
U.s.a 65 61 71 70 72 3
India 21 25 36 45 48 4
Italy 43 40 36 4 41 5
Germany 30 28 24 27 40 6

Today in the cement industry is producing 58.3 million tones per annum indication
surplus conditions while its demand is 56.7 million tones lies per annum Now The
cement market has become buyer market which was
A selling market till 1970s and so the quality &brand taken an upper edge for cement
marketing.

Today installed at the India cement industry is 771lakh tones But in India 106 Major
plants are producing 583lakh tones leaving the balance for exports.

INDIAS LARGEST CEMENT COMPANIES POST ACQUISITION

Company Cement capacity Cement % of

In TPA Sales

Larsen& turbo 12.0 20

ACC 11.3 93

GRASIM 9.7 28

INDIAN CEMENT 6.6 92

GUJRATHI AMBHUJA 6.5 100

Page | 27
WEAKNESSES:

The per capita consumption of the cement in India is very low

The transport costs in India are very high

The cement industry is facing with acute power shortage and raw material
problem

The industry is also facing major packaging problems

OPPORTUNITIES:

The industry has tremendous potential for growth in India

In near future cement is going to replace tar for the construction of roads

There are good prospects for export with cement export promotion council

The government polices of reduction in excise duty and exempting cement

from the just packaging may act as boon to the industry.

THREATS:

The surplus levels are increasing as the production of the cement is much greater than
the consumption.

In the present scenario of stiff competition there is a declining trend of price

The performance of the smaller unit is badly hit by major takeovers

The crisis situation in south east Asian countries may create problem to the
exports of the industry.

Page | 28
 (Hypothetical figures) Estimation of Working Capital For The Year (2015 - 2016)

Particulars Period Workings Rs Rs Rs

(Months)
(A) Current Assets
1) Closing Stock
Raw Material : Basic 2 (54,00,000 x 2/12) 9,00,000
Others 1 (32,40,000 x 1/12) 2,70,000 11,70,000

b) Work- in-progress
(100 % complete)
Basic R.M. 1 (5,40,000 x 1/12) 4,50,000
Other R.M. 1 (3,24,000 x 1/12) 2,70,000
Wages (50% 1 (14,40,000 x 1/12)x 60,000
complete)
Factory Expenses (50 1 (25,20,000 x 1/12) x 1,05,000 8,85,000
% complete)

c) Finished goods (1,26,00,000 x 1/12) 10,50,000 31,05,000

Valued at factory cost

Dealers 1 (30% x 1,80,00,000 x 4,50,000

1/12)
Wholesellers 2 (60% x 1,80,00,000 x 18,00,000 22,50,000
2/12)
Gross Working capital 5355000

LESS:(B) CURRENT
LIABILITIES
1) Creditors for R.M. 1 (5,40,000 x 1/12) 4,50,000
Other 2 (90% x 3,24,000 x2/12) 4,86,000 9,36,000

2)Creditors for
expenses
Wages 0.5 (14,40,000 x 0.5/12) 60,000
Factory Expenses 1 (25,20,000 x 1/12) 2,10,000
Selling expenses 1 (1,08,000 x 1/12 ) 90,000 3,60,000 (1,12,96000)

Net working capital 40,59000

Add: Cash Balance 4,51,000
(10 % of working
capital)

Total working capital 45,10,000

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Particulars UNITS Total
p.u.
Raw Material 30.00 54,00,000

Others 18.00 32,40,000

Wages 8.00 14,40,000

Factory Expenses 14.00 25,20,0000

Factory cost 70.00 1,26,00,000

Administrative Expenses 4.00 7,20,000

Selling Expenses 6.00 10,80,000

Total cost 80.00 11,44,00,000

(+) Profit 20.00 13,60,000

Sales 100.00 1,80,00,000

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Estimation of Working Capital for The Year (2014 - 2015)

Particulars Period Workings Rs Rs Rs

(months)
(A) CURRENT ASSETS
1) Closing stock
a) Raw Material 2 (1,80,000 x 2/12) 30,000

b) WORK-IN-PROGRESS
Raw Material (100% 1 (1,80,000 x 1/12) 15,000
complete) 1
Wages (50 % complete) 1 (30,000 x 1/12)x 1,250
Overheads (50 % complete) (57,500 x 1/12)x 2,400 18,650

c) Finished Goods 3 (2,67,500 x 3/12) 66875 1,15,525

Sundry debtors 3 (3,00,000 x 3/12) 75,000

Cash & Bank Balance -

Gross Working 1,90,525

Capital

Less: (B) CURRENT

LIABILITIES

Creditors 2 (1,80,000 x 2/12) 30,000

Creditors for expenses

Wages - - - -
Overheads - - -
Bank overdraft - - 3,025 (33,025)

Net working 1,57,000

capital

Page | 31
Estimated Profit & Loss A/c For the year (2014 - 2015)

Particulars Per Unit Total

A) Sales (100 %) 5.00 3,00,000

Less : B) Cost of goods sold

Raw material (60 %) 3.00 1,80,000

Wages (10 %) 0.50 30,000

Overheads 57,500

Total cost (Excluding Interest) 2,67,500

Add: Interest on debenture (5% of 50,000 2,500

B) Total cost 2,70,000

Profit A-B 30,000

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Estimates Vertical Balance Sheet for the year 2014- 2015

Particulars Rs Rs Rs
(A) SOURCES OF FUNDS

Shareholders funds

Issued & paid up capital 2,00,000

Add: Reserves & surplus 30,000

2,30,000

Less: Miscellaneous expenditure Nil 2,30,000

(B) BORROWED FUNDS

Secured Loans 5 % Debentures 50,000

Add: Outstanding Interest on debenture 2,500 52,500

Unsecured loans Nil 52,500

Total Funds available (a+b) 2,82,500

B) APPLICATIONS OF FUNDS
a) Fixed Assets 12,50,000

b) Investments Nil
c) Working Capital
Current Assets : Closing stock
Raw Material 30,000
Work-in-progress 18,650
Finised goods 66,875
1,15,525
Debtors 75,000
Cash - 1,90,525
Less: Current liabilities & bank (3,025)
overdraft (30,000) 1,57,500
Creditors
Total Funds applied 2,82,500

Page | 33
Particulars Period Workings Rs Rs Rs
(Months)
(A) Current Assets
1) Closing Stock
Raw Material 4 (1,08,000 x 80x 4/52)
(1,04,000 + 4000) 6,64,615

b) Work- in-progress
(100 % complete)
Basic R.M. - (4,000 x 80) 3,20,000

Wages(50% complete) - (4,000 x 30) x 6,00,000

Overheads(50% - (4,000 x 60) x 1,20,000 5,00,000

complete)

c) Finished goods - (8,000 x 170) 13,60,000 25,24,615

Debtors 8 (1,04,000 x 200 x 8/52) 32,00,000

Cash & bank balance - - 25,000

Gross Working capital 57,49,615

LESS:(B) CURRENT
LIABILITIES
1) Creditors for R.M. 4 (1,08,000 x 80x 4/52) 6,64,615

2)Creditors for
expenses
1.5 (1,06,000 x 30 x1.5/52) 91,370
Wages
- (1,04,000 x 50% of - (7,56,345)
Overheads 4,000)

Net working capital 49,93,270

Page | 34
CONCLUSION

a. Every organization has predetermined set of objectives and goals, but reaching their
objectives and goals by proper planning and executing of these plans economically.

b. The kesoram cement industries Limited objectives of planning and organizing

promoting an integrated development of Cement Company.

c. The corporation machine of kesoram cement industries is to make available and

quickly cement in increasingly small quantities, the company will spear head the
process of accelerated development of cement sector by expeditiously.

d. The organization needs the capable personalities as management makes the plans and
implement of these plans are expressed in terms of working capital.

e. The kesoram cement Industries Limited two finance long term finance and short term
finance. In this case the industry which are generally used for financing the permanent
investments in the form of fixed asset. On the other hand short term finance is that part
were industry requires for day-to-day activities. It is the basic requirement of the
industry for long term survival. Therefore a lot of care is required at the time of
estimation of capital.

f. The Kesoram cement industries is to make efficient utilization of its resources and
implementation of sophisticated technology to produce available and quality cement
and also creating ambience of collective working of its employees.

Page | 35
 BIBILIOGRAPHY

WEBSITES:

Web site of a companywww.kesoram.com

Web site for cement industrywww.kesoram
Websiteforcementindustrywww.kesoramcement.com
Websiteofacompanywww.kesocorp.com

NEWS PAPERS:

Economic times
The Hindu
Business Standard

MAGAZINES:

Business Today
Business World
Business India

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