A PROJECT REPORT ON WORKING CAPITAL MANAGEMENT AND CONTROL

PROJECT REPORT On WORKING CAPITAL MANAGEMENT AND CONTROL A Report Submitted In Partial Fulfillment of the Requirements For The Award of the Degree of MASTER OF BUSINESS ADMINISTRATION Collaborative program of M.S.Ramaiah Management Institute with PRIST University BY SANJAY RAUTH REG.NO:- CM2091860079 Under the guidance of JAYASHREE KOWTAL PRIST UNIVERSITY Vallam, Thanjavur 2010 STUDENT’S DECLARATION I declare that the project titled “WORKING CAPITAL MANAGEMENT AND CONTROL” is an original project done by me and no part of the project is taken from any other project or materials published or otherwise or submitted earlier to any other college or university. Student’s Signature SANJAY RAUTH REG NO:- CM2091860079 CERTIFICATE BY GUIDE This to certify that the report of the project submitted is the outcome of the project work entitled “Working Capital Management and Control” carried out by Sanjay Rauth bearing Roll No: CM2091860079 Carried by under my guidance. To the best of the my knowledge the report Embodies the work of the candidate himself, Has duly been completed, Fulfils the requirement of the ordinance relating to the MBA degree of the Institute and Is up to the desired standard for the purpose of which is submitted. (Signature of the Guide) Name: Jayashree Kowtal M.S.Ramaiah Management Institute ACKNOWLEDGEMENT It has been my proud privilege to work on the project of “Working Capital Management and Control of Welspun Gujarat Stahl Rohren Limited” at Anjar (Kutch). I am highly thankful to Mr. Anuj Burakia, Mr. Shankar Mishra, General Manager (Finance) & Mr. Rajeev Yadav (Dy. General Manager-HCGA), who constantly supported me in my project in spite of their very busy schedule. I am very grateful to them for their co-operation and guidance through out the course of my project. They have given me the opportunity to make a project which would be a real time project. They have inspired me from time to time in pursuance of developing this challenging project. Their timely advice and helping attitude has put me across all the difficulties. They always gave me their valuable guidance and consent without which the project could not have come in this volume. They owe to every success of this project and pitfalls are mine. I owe my deepest gratitude and indebtedness to Mr. Bradhesh Jain, Manager (Finance). He has been a great source of inspiration to every respect. I am also highly thankful to Mr. Divyesh, Mr. Yogendra Naina,Mr. Anand Verma, Mr. Amit Patel, Mr. Tomsan Koshy, Mr. Bhasker, Mr. Nitesh, Mr. Piyush and I would like to thanks finance department for their co-operation and guidance throughout my project, I am very thankful to them for providing me all the relevant data that I need. I would like to thank all the people at WELSPUN GUJARAT STAHL ROHREN LTD, who were very co-operative during my project. At last but not least, I am very thankful to Jayashree Kowtal the faculty of, M.S RAMAIAH MANAGEMENT INSTITUTE, Bangalore, who had constantly guided me throughout my SIP and ensured that I was on the right path. TABLE OF CONTENT ,[object Object],PART-A SECTORAL ANALYSIS From a modest, but ambitious beginning in 1985 as a polyester yarn manufacturing unit, to our current position of global leader in almost all businesses, Welspun Group has evolved into a US$ 3 billion conglomerate in a short span of time. With a global leadership position in Line Pipe and Home Textiles, our marquee client list has come to include most of the Fortune 100 Companies operating in the Oil & Gas and Retail sectors. As we celebrate this significant milestone of 25 years, I would like to thank those who contributed to our growth, as well as reaffirm our unwavering commitment to excellence. Welspun Gujarat Stahl Rohren Limited (WGSRL) is a state-of-the-art pipes manufacturer. The company is principally engaged in production and coating of high grade submerged arc welded pipes and electric resistance welded pipes. Its products include LSAW (Longitudinal Submerged Arc Welded) pipes, HSAW (Helical Submerged Arc Welded) pipes and ERW (Electric Resistant Welded) pipes. WGSRL caters its services to energy transportation sector such as oil, gas, crude and water. CARE Research’s report indicates an optimistic attitude towards the potential demand for the Indian pipe sector. Replacement demand from developed nations is stronger than ever while domestic demand from the gas and oil sector remains robust. Moreover, the pipeline network in India for oil & gas transport is currently less than 17,576 kms as of April 2009 (i.e. 32% penetration level), which means that there is still significant room for growth in the pipe industry. The Indian pipe manufacturing industry is highly Raw Material (RM) intensive with RM costs accounting for more than 70% to 80% of the total costs for PVC and steel pipe companies. Additionally, pipe manufacturers depend heavily on imports and therefore many steel pipe companies have backward integration facilities to lessen dependency on imports and price volatility. Because of higher imports and exports, another key cost component is freight costs. Indian pipe manufacturing companies produce a wide range of cement, steel, and plastic pipes which are used in a range of critical and non-critical applications. Indian companies have increased their export sales over the last three to four years. CARE Research expects the positive trend in the Indian pipe industry to continue over the next three to five years as a result of a resurgence in crude oil prices, replacement demand from North American and European countries, water & sewage transport and irrigation facilities. Finally, primarily steel pipes (particularly SAW pipes) will drive growth. The 2008-09 financial crisis had a limited impact on the Indian pipe industry affecting new oil and gas exploration and production (E&P) projects worldwide due to fall in global commodity prices including crude oil resulting into reduced orders. With the worst of the financial crisis behind us, we remain optimistic regarding the potential demand for the pipe sector. The E&P projects which were earlier stalled or revoked are being given a new lease of life based on the inevitable rise in crude oil prices. Replacement demand from developed nations remains ever so strong while domestic demand from the oil and gas sector is robust. Also, with the pipeline network of India for oil & gas transport being lower at 17,576 kms as on April 2009, (32% penetration level) it represents a huge scope for growth for the pipe industry. As most of the Indian pipe manufacturers are converters, the industry is highly Raw Material (RM) intensive with the RM cost accounting for more than 70-80% of the total cost for steel and PVC pipe companies. These companies rely heavily on imports and hence many steel pipe companies have backward integration facilities to reduce dependency on imports and price volatility. Freight cost is another key cost component due to higher imports and exports. With the expected short-term increase in commodity prices and range-bound Baltic Dry Index (a barometer for shipping freight rates), pipe companies will be benefited in the coming quarters as customers will try to place advance orders at attractive rates. Indian companies produce a wide range of steel, cement and plastic pipes which are used in various critical and non-critical applications. Indian steel pipe manufacturing companies have won several certifications and accreditations from major oil & gas companies across the globe in the recent past. With the low-cost and high-quality products supplemented by various international certifications, Indian companies have augmented their export sales over the last three to four years. CARE Research expects the positive trend in the Indian pipe industry to continue for the next 3-5 years on the back of higher E&P activities due to resurgence in crude oil price, increased efforts by the Government of India (GoI) on infrastructure development for laying pipelines for oil & natural gas transport (e.g. the National Gas Grid project), replacement demand from North America and European countries, water & sewage transport and irrigation facilities. The growth will mainly be driven by steel pipes especially SAW pipes. The order-book position (currently equivalent to total of FY09 sales) of many steel pipe companies is sufficient for the next 9-12 months. Demand triggers for the growth are: Private players like Reliance Industries Limited (RIL), Cairn India etc have shown interest in setting up pipe infrastructure for oil & gas distribution. National gas grid will also be set up requiring an investment of Rs.210 bn. City gas pipe is currently available in 10 cities and the coverage is expected to grow to 40 cities in the next five years, entailing an investment of Rs. 250-300 bn. In addition to the above, the replacement demand from the US and European countries, having a vast pipeline infrastructure, will be huge. The GoI in its efforts to reduce crude imports has formulated the New Exploration Licensing Policy (NELP) for exploration and production of oil & gas. The GoI has awarded 256 blocks till date and the number is set to increase to 330 by 2010. For the Eleventh Five Year Plan, the GoI is aiming to add 11 mn hectares of irrigational facilities, entailing an investment of Rs.1,580 bn. The GoI increased the annual budget allocation under the Rajiv Gandhi Drinking Water Mission from Rs.65 bn to Rs.74bn in the previous Union Budget 2009-10. Market size and structure: The steel pipe industry has shown robust growth on account of strong demand from domestic and export market. The domestic pipe industry at 1.53 million tones is valued at Rs 92.1 billion in 2008-09. Oil and gas along with water supply and sanitation constitute for significant portion of the total steel pipe demand. Apart from domestic demand, pipe players are increasingly supplying to the global market. The export market has surpassed the domestic market size for steel pipes and is estimated at around 1.95 million tone and is valued at Rs 116.9 billion in 2008-09. The industry is fairly consolidated with major 5 players accounting to more than 80 per cent of the total capacity. Future growth: After slowdown in 2008-09, the domestic pipe industry is expected to witness strong growth due to huge investments in oil and gas in India. The government thrust on water supply and irrigation is also expected to contribute to the domestic demand. The demand from oil and gas segment is expected to grow by CAGR of 9-10 over the next 5 years driving the overall demand in India to grow at a CAGR of 8-9 per cent. With an established track record, proximity to key markets like the Middle East and rising international client accreditations, the industry is increasing its presence in global market. It expects exports to grow at compounded rate of 8-9 per cent over the next 5 years. The export opportunity could be further propelled by the expected emergence of replacement demand from the US and Russia. PROFILE OF THE ORGANIZATION INTRODUCTION TO WELSPUN GROUP WELSPUN GUJARAT STAHL ROHREN LIMITED, COMPANY INFORMATION: ORIGIN OF THE ORGANIZATION US$ 3000 million Welspun group is one of the fastest growing Indian conglomerates. With presence in over 50 Countries and over 20,000 employees and 50,000 shareholders, Welspun truly represent an amalgamation of expertise, resources, opportunities and engineering excellence. Welspun is considered amongst one of the premier Global Line Pipe and Home Textile Companies. The group enjoys strong relationship with marquee clients including most of the Fortune 100 Companies viz. Chevron, Exxon Mobil, Wal Mart, Target, and J. C. Penny amongst others. Welspun is also trusted by some of the largest Financial Institutions / Banks viz. Temasek (Govt. of Singapore), HSBC, Standard Chartered Bank, Deutsche Bank, ICICI venture and State Bank of India. Since its commencement in 1985 with a small textile unit, it has grown magnanimously, diversifying into various businesses, industries and regions. All Group companies are separate entities with distinct Board Structures. Welspun believes that its role is crucial as a responsible corporate citizen and thereby sincerely practices empowerment of the underprivileged and sustenance of the environment along side with nurturing employees and the society at large. Every Welspunite is guided by the six ‘E's - Enrichment of mind, Enrichment of body, Education, Empathy, Empowerment of Women and Environment sustenance. “Welspun Gujarat Stahl Rohren Limited” is the name of the Company in which “Welspun” signifies the name of the group to which it belongs, “Gujarat” is the location of the Company’s operation, “Stahl” means the “Steel”, and “Rohren” means Manufacturing. As the name of the Company defines its activity of manufacturing the Steel is the Operation of the Company, the Company prepares this Pipes and Sells not only in Indian Market but also in the foreign market also. Company is one of the largest manufactures of the Pipes in the world. Welspun Stahl Rohren Ltd (WSRL), was incorporated as a public ltd company on 26th Apr.'95, and on 12th May obtained a certificate for commencement of business, and carries on the operation from two plants, one of them is located at Bharuch (Dahej), while the other is situated at Anjar (Bhuj). The operations at both the plant are more or less same but differ to some extent in case of the manufacturing activity of preparing the pipes. The Bharuch Plant is preparing with the use of Coils as well as Plate for the manufacturing of the Pipe, while at Anjar, currently as on date of 30.11.2007 it is not possible to manufacture pipe with the use of Plate, hence only coils are used for the manufacturing at Anjar. The Pipe manufactured with the plate is known at SAW – Pipe while the Pipe manufactured with the use of Coil are known as Spiral Pipe. Currently at Anjar, the SAW manufacturing activity is not commercial in use but the plant is getting ready for the future manufacturing of the same. The process of the Company of manufacturing would be summarized in the chart which can be seen in the henceforth discussion. The Company is also receiving the benefits under the Kutch incentives Scheme for Anjar Plant, which is availed by the Company and has been discussed hereunder. Welspun Gujarat Stahl Rohren Ltd. (WGSRL), the flagship company of the US$ 3000 million Welspun Group is the 2nd Largest (Large Diameter) Pipe Producer in the World (Financial Times UK, 2008) and is the Fastest Growing Company in India (Business Today and Construction Word, 2007) . With a strong culture of ‘Engineering Excellence' WGSRL is all set to be positioned as the World's Largest Pipe Company with an increase in capacity from 1 million ton per annum to 1.75 million ton by March 2009. The company has supplied pipes for projects in the deepest of ocean (‘Independence Trail' Project, Gulf of Mexico) to the toughest of terrain (‘Rockies Project', USA). Clients include Enterprise, Kinder Morgan, Texas Gas, British Petroleum, Hunt Oil, Saudi Aramco, Elpaso, Exxon Mobil, Qatar Petro DOW and Gazprom to name a few. 982088142173 Welspun Group's interests CompanyAreas of BusinessWelspun India Ltd.Home Textiles - Terry Towels, Bed SheetsWelspun Gujarat Stahl Rohren Ltd.L-SAW, Spiral and HFIW pipe manufacturing & coatingsWelspun Syntax Ltd.Specialty Polyester Filament Yarn,Texturised & Dyed YarnsWelspun Zucchi Textiles Ltd.BathrobesWelspun Power & Steel Ltd.Ingots / Billets and TMT barsWelspun Retail LimitedHome Textiles under brands ‘Spaces Home & Beyond'and ‘Welhome'Christy UKTerry TowelsSorema , PortugalBath Rugs and Shower CurtainsWelspun Mexico deSACVDecorative beddingWelspun Tubular LLCSAW Pipes and pipe CoatingWelspun Natural Resources Ltd. QUALITY STANDARDS & CONTROL 35941091440 At Welspun, quality control does not mean certifying the final product. Instead it refers to the continuous monitoring of each and every stage of the cycle to get the well finished Welspun SAW pipes. Total Quality Management (TQM) is incorporated at each level of not only the manufacturing process, but also the administrative process at each end of production supported by SAP 6 enabled processes. Right from selection of input materials, to the final finished product, care is taken to see that at each step the exact process and techniques are followed, to give the perfect well tested product. Welspun is amongst the few companies which has filed patents in the United States for the new welding processes and has also attained level 3 automation in the Plate Mill supported by digital controls. Highly skilled professionals with strong in-house training and world class practices primarily from Germany, ensures highest quality of products. With its own lignite based 43 megawatt captive power project, Welspun has its energy needs secured. Each manufacturing facilities are audited by The American Petroleum Institute (API) besides our prestigious clients. It is noteworthy that for the first time in the world, Edge Miller was developed in the plate mill to achieve better efficiency and eventually better product quality for the customer. INTRODUCTION TO CAPITALIZATION The Company is using the SAP system and the Capitalization is done as the requirement of AS – 10 prescribed by the Institute of Chartered accountants of India, 1949. Basically the capitalization is started in two parts – one part of the capitalization is related to the Purchase Order and its execution while the other is related with the Work Order which is part of one Internal Order. It may be understood as; Internal Order Purchase OrderWork Order Main MachineryStores & Spares Other Receipts Civil Construction Other Services MOTTO We just don't create products, we engineer satisfaction. Welspun Group has been the numerous undo Group in India that has deployed exceeding resources to ensure the optimum quality of its products. Within Welspun, quality of the products and services is of paramount importance. The endless tests, the microscopic examination ensures that all Welspun products are of world-class quality and nothing less. We treat each and every project as a challenge, every achievement as a reason to set new goals. This strategy has enabled Welspun to have satisfied customers in the most developed and knowledgeable markets. We dare to commit and deliver on our promises MISSION We endeavor to reach the leadership position in each Segment / Sector of our Product / Service. We are committed to satisfy our customers by providing such Quality Product / Service, which gives highest value for money. We believe that employees are our most important asset through which we can reach the top in each category of our Product / Service. Therefore, we will emphasize on their continuous improvement through up gradation of relevant knowledge and training. We commit ourselves to continuous growth, so as to fulfill the aspirations of our Customers, Employees and Shareholders. VISION We aim to… Emerged as a global leader… Preferred by every home Serve…with passion Grow…@speed Innovate… with quality Excel… with ethics Delighting all stake holders… We are….WELSPUN WGSRL SHARE CAPITAL MEMBERSHIP The share capital of the society stood Rs. 69.92 Crs as on 31st march 2007 against Rs. 86.53 Cr. as on 31st march 2006. Table Showing Share Capital Pattern CATEGORYPERCENTAGE (%)Foreign Holdings21.02Govt. / Financial Institutions16.01Corporate Bodies(not covered above)9.59Directors and their Relatives41.9Other including Indian Public11.49 COMPANY’S GLOBAL PRESENCE GROWTH & HIGHLIGHTS Manufactures high grade line pipes-Submerged Arc Welded (both spiral and longitudinal), branch pipes (Electric Resistant Welded Pipes-ERW) and coating. Manufactures the widest range starting from 1/2 inch to 100 inch of outer diameter. Caters to the global requirement of Welded Tubes and Pipes. Manufacturing facilities located in Gujarat in western India , in proximity to the National Highway and Seaports Manufacturing facility being set up in Little Rock, Arkansas, USA with a production capacity of 300,000 tons of pipes annually. Backward integration – 1.5 MT Plate cum coil Mill set up to manufacture Steel plates of up to 4 ½ meter wide and coils up to 2.8 meter wide. Incorporates the very best technology across the globe with Capello Tubi Italy and SMS Meer Germany (Mannesmann Demag) and EUPEC, Germany. Accredited with ISO 9001, ISO 14001 and OHSAS 18001 certifications. Approved by more than 40 Oil & Gas majors across the globe. Supplied pipes for World's Deepest Gas Pipeline in Gulf of Mexico, US. WELSPUN GUJARAT STAHL ROHREN LTD. YEARAWARD / RECOGNITIONBEST OWED BY20082nd Largest Steel Pipe Producer in the World (Large Diameter)Financial Times2007Fastest Growing CompanyBusiness Today2007Fastest Growing Steel Products CompanyConstruction World NICMAR2007Amongst the top 3 SAW Pipe Company in the WorldCLSA Asia Pacific Market Research2007Amongst the 20 Companies to watch out for in 2008Business Today2007Amongst top 100 Corporates in IndiaStandard & Poor's2006Award for the highest export - Iron and Steel based product - non SSIEngineering Export Promotion Council (EEPC)2004Fastest Growing Steel Products CompanyConstruction World NICMAR2001-03Export performance AwardsEngineering Export promotion council (EEPC) ,[object Object],BOARD EXECUTIVE DIRECTOR DIRECTOR DIRECTOR DIRECTOR OF DIRECTOR OF OF FINANCE POLICY PROGRAMMING COMMUNICATION FINANCE STAFF FUND RAISINGPOLICYREGIONAL DESIGN PUBLIC STAFFSTAFFSTAFF STAFFRELATIONS PRODUCT PROTFOLIO WGSRL strongly believes that a wide range in the manufacturing of pipe sector is the parameter to prove its capabilities and today, the company is proud of its range. There are only a handful of players who can compete with the range of pipes (starting with diameter as small as 1 inch and as large as 100 inch), maintain the quality and technology that WGSRL produce 1. H-SAW PIPES: The manufacturing of a pipe starts with the loading of HR Coils on the coil car having capacity of 50MT,which feeds it to the de-coiler. The cone type de-coiler uncoils the strip with the strip opener and feeds it to the first pinch roll and leveler having heavy-duty hydraulic cylinders and mechanically driven screw jacks.The feeding is done by passing the strip between two large diameter rolls and the leveler flattens the strip.Further, the front and rear ends of the coil at the cross cutting and milling station are cut and beveled to prepare a correct welding joint. At the stationary cross seam welder the two coil ends are welded by SAW welding which makes the coil continuous. The welding bead is ground by a grinding machine at the ends and sides. The welded strip is fed to an independent pinch roll having hydraulic jacks, which push the strip further to the strip looper section, which consists of strip supporting trolleys and a large diameter drum. The function of this drum is to accumulate a maximum 180 meters of coil so that the mill never stops for the strip joining process. The strip from the drum is further supported on a number of rollers and passes through a pinch roll that maintains the tension of the strip in the looper section. From this pinch roll the strip is saw welded on the second side at the fly welding station. This welding is done while the strip is moving during the pipe forming process. After completion of welding, the pipe is cleaned of the flux from inside and inspected visually. An auto plasma cutting machine removes the tabs at the ends. The weld seam of the pipe is checked at an Intermediate ultrasonic testing machine to ensure defect free pipe. Any defects are confirmed at the fluoroscopy station. 2. L- SAW PIPES : Plates are separated and fed into the manufacturing sequence by means of vacuum lifting and turning equipment. In the first instance, plates are checked for conformity to the specifications of the product range and then examined with regard to thickness, laminations, laps and inside and outside defects, before feeding. Plates of required width and thickness are loaded on a conveyor table which takes the plates to the edge milling set up. The longitudinal edge on one side of the plate is milled and also crimped. The plate is turned and the other side is also edge milled and crimped. The machined and crimped plate is placed on the feeding table of the pipe forming press by the vacuum lifting and turning equipment. On the forming press, the plate gradually moves along the width where the movement of the plate is controlled by CNC controls and gradual forming takes place by applying hydraulic pressure. The plate is formed into an open-seam pipe by several bending steps in J-C-O process.This tack welded pipe is taken through a conveyor to the inside welding station. The pipe is held on a moving trolley and the welding head is stationary. Inside welding takes place under submerged conditions, where the pipe moves and the arc is stationary. After the inside welding the pipe is cleaned for any remaining flux and slag and is subsequently taken to the outside welding station through a conveyor. Here the pipe is positioned on a moving trolley, where the head is stationary. The pipe is welded from outside under submerged conditions. 3. ERW LINE PIPES : Electric Resistance Welded (ERW) Line Pipe is manufactured by the welding of adjoining edges of the strip without the use of a filler metal.HR Coil is the raw material for making this type of pipe. The HR coil is first de-coiled and slit to precise width and is then fed into the mill. The coil passes through leveler and rolls over a series of rollers, wherein the coil is given the required profile depending on the diameter of the pipe to be produced. The adjoining longitudinal edges are heated using electric resistance and then pressed together to form the complete pipe. After forming and resistance welding, the weld seam is annealed and the pipe is cut on-line to required length. Once the pipe length is ejected from the main forming-cum-welding line, it undergoes end-facing operation and is then subjected to required tests as per specification requirement such as a hydrostatic test, ultrasonic test and offline mechanical testing. On the final quality control line, the pipe is visually and dimensionally inspected for any process and handling irregularities and is then stenciled with the required data and taken to the storage area for coating dispatch. 4. COATING: The dual layer fusion bond epoxy coating on steel pipes is used to protect the steel from corrosion in gas and oil transportation segment. This coating is known as dual layers due to the use of two layers of coating materials, that is, fusion bonding epoxy and polymer adhesive. It is applied on the steel pipe after shot blasting the pipe. This coating has the excellent property of adhesion in peel and shear strength, which prevents the pipeline from damage, high long-term electrical resistively and excellent resistance to water permeation, which ensures the excellent performance under cathodic protection. It has a mechanical resistance whilst maintaining the integrity of coating in acidic and alkaline soil media from temperatures of -40 degree C to 80 degree C. 5. PLATE CUM COIL MILL: Plate Mill Plates can only be produced with a single stand. Hot slabs from the furnace are taken through a conveyor rollers table to the mill stand and are passed through the mill stand several times by reversing and forwarding in the roller table and mill stand until the final size is achieved. After achieving the final size of the plate, the plate is transferred to the cooling bed area. Steckel Mill The process is the same as a plate mill but it also has two coilers at either side of the mill stand. The process uses a single stand as well as two stands. In the case of two stands, the first stand is the roughing mill. Hot slab is transferred from the furnace to the mill stand and up to a certain thickness it is rolled by the same process as in the plate mill. It is then transferred to the second stand, the finishing mill. Further rolling is done at this stand to achieve the required thickness by reverse and forward operations of the mill and roller table. In this mill the plate is coiled in hot coiler to keep it hot and tensile in order to achieve a longer and thicker size. When the required thickness of the plate is achieved, it is finally transferred to the down coiler to wrap the plate in hot conditions to make HR Coil. If the coils are not required, the material can be taken down to a shearer to cut the material to the required length. 6. SPIRALS: There are three Spiral Plants at Anjar; two of them are working in routine while third plant is not ready for the operations. The Spiral Plant uses the Coils as there raw material in its manufacturing. Pipes of two specifications are made, namely Pipe prepared as per API standards (American standard) and as per ISP (Indian Standard). The process of the manufacturing of the spiral pipe is demonstrated with the help of the chart given below; Coils are imported or purchased from the local supplier and same is loaded on the machinery to straighten the coils which is in the spiral form while reaching the Stores of the Plant. Once the Pipe is straighten, the edges of the coils are being cut off and the pipe is moved forward to be processed further The cut edged pipe moves with the machine when it gets into the circled machinery when the shape is given to the machinery of the desired size. The angle required to be set for the desired size can be arrived by the formulae which is referred by the plant person The Pipe is then folded in the shape of the spiral and welded at the same time. This welding is further checked by the engineer manually for any type of unwelded part still prevailing at the edge of the pipe where the mechanical welding has been done. Once the engineer is quiet certain about the welding of the pipe the same is forwarded for the X-Ray checking in which real time systems are installed where the person would be looking on the screen for any type of minor defects present in the welding of the pipe. The same is welded again if the X-Ray checking was not satisfactorily done. Once the X-Ray checking is over the pipe is forwarded for the hydro testing where the force of water is being checked on the pipe for checking the capacity of the pipe to hold on the force. Once the hydro test is over the pipe can’t be welded again, if the hydro test shows the efficiency on the lower side then required then the same is sold in the local market for the use of water supply and so on. These slightly lower efficient pipes are sold as per ISP standards while the one that clears the entire test perfectly would be sold as per API standards. Once the hydro test is over the pipe is checked with the TPI (Third Party Inspector) and once he approves the particular pipe the same is tamped on and is made ready for either dispatched or would be further coated of specification is received from the customer. DIFFERENTS PLANT OF THE COMPANY EWR 2Spiral 2Spiral 3Spiral 1Spiral PlantERW PlantL- SawCoating PlantPlate MillPipe MillSpiral pipe manufacturingSaw ManufactureBharuchAnjarWGSRL EWR 1 THE CUSTOMERS ,[object Object]

The competitors of WELSPUN are as follows:CompanyNet Sales Amount(in cr)SAIL183TATA STEEL610JSW STEEL1224JINDAL199BHUSHAN478WELSPUN2278 ,[object Object],ENVIRONMENT WORK CULTURE AND INTERNAL CONTROL SYSTEM The greatest strength of Welspun Gujarat Stahl Rohren Limited is its workforce. Whose are dedicated and committed. A culture of innovation prevail here- a will to achieve, a desire to accomplish. A motivated force of employees leave no stone unturned to accomplish the mission of Welspun Gujarat Stahl Rohren Limited. The company lays special emphasis on training and upgrading the skills of its employees. Regular workshops and training exercises are held to inculcate best management practices at all levels. In Welspun Gujarat Stahl Rohren Limited, Business Planning Meeting (BPM) is held every month in order to finalize the plan for next month. The company has experienced and qualified professionals, who are maintaining the growth and success and are responsible for planning, executing and monitoring of the companies policies. A qualified and independent Audit Committee of Board of Directors also reviews the internal audit reports and the adequacy of internal controls at quarterly intervals. The Company has outsourced the services of its Accounts and Finance Section to Accenture who are world leaders in this area. With the expertise of Accenture available in the company, the transparent and world’s best practices will be made available. With the induction of Accenture, the company will be benefited in maintaining internal control systems effectively and adequately. The Companies maintains proper system of internal controls. Sound financial and commercial practices are an integral part of the company’s workings. The controls are set to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly. ,[object Object],STRENGTHS: Own manufacturing capabilities.Strong reputationStrong brand nameGood QualityGood practices (Visits of clients done by head of the hotel and Institutions with sales persons. WEAKNESS: Delivery IssuesHigh lead timeLess sales forceWrong impression on clients due to high discounts available at retail outlet of the company.Priced higher as compared to other competitors OPPORTUNITIE New business of same client in different cities of the India can be tapped. New business (like any section/part customization of the hotel using BESPOKE service) can be explored with the goodwill earned & relations developed with client. Strong Demand in Middle East and Asian Markets. The huge replacement market in the US and Russia. THREATS: Loss of clients due to delivery, pricing, discounting issues. Decrease in sales and thus profit earned by the company. Volatile raw material price. Entry of Foreign Players. ,[object Object],EXECUTIVE SUMMARY Working capital management is a very significant activity that takes lots of time and efforts of all the functions in an organization. Also, for an efficient conduct of business operation, it is essential to forecast working capital requirement effectively, and for this it is necessary to manage current assets and current liabilities. An attempt was made to cover all significant aspects involved in managing working capital at WGSRL, management of various components of working capital i.e. inventory, receivables, payables, and cash. This report includes various financial analysis of the performance of WGSRL of last two years. It includes the analysis of their funds i.e. sources of funds and where they allocate their funds. Various ratios are calculated which shows the important financial indicators of the company. We have also calculating the operating cycle of the company, by comparing the raw material, work in progress, finished goods and receivable turnover days with the norms and how far WGSRL is able to fulfill the norms. Thus the basic idea behind studying and analyzing the financial terms is not only comparing their performance but finding out the scope and importance of some of the components that differently affects the working capital requirement of WGSRL. STUDY OF RESEARCH DESIGN STATEMENT OF THE PROBLEM Working capital management is concerned with the problem arise in attempting to manage the current assets, current liabilities and interrelation between both. It operational goal is to manage the smooth functioning of day-today operation of an organization. OBJECTIVE OF THE PROJECT The basic idea behind undertaking the summer project on “working capital management” at WGSRL was to understand the various issues related to working capital like its components estimating or forecasting the working capital requirement and the scope and the level of each components of working capital. The objective also included understanding how these components were managed or controlled especially receivables, which is the major activity that requires a lot staff at different places. The objective include understanding the practical considerations and ways in which the working capital was forecasted because working capital management is one of the major activity that requires a lot of attention and consideration to be taken care of not only by the finance functions but also by others also. DATA COLLECTION METHOD Types of data collection There are two types of data collection methods available. 1. Primary data collection:- The data which is collected fresh or first hand, and for first time which is original in nature. Primary data can collect through personal interview, questionnaire etc. to support the secondary data. 2. Secondary data collection:- The secondary data are those which have already collected and stored. Secondary data easily get those secondary data from records, journals, annual reports of the company etc. It will save the time, money and efforts to collect the data. Secondary data also made available through trade magazines, balance sheets, books etc. This project is based on primary data collected through personal interview of head of account department, head of SQC department and other concerned staff member of finance department. But primary data collection had limitations such as matter confidential information thus project is based on secondary information collected through five years annual report of the company, supported by various books and internet sides. The data collection was aimed at study of working capital management of the company. The data required for the study was taken from the Finance department; some of the data were also taken from the sales department and purchase department. Thus all the data collected were of secondary type and no primary data was taken and used. Some of the employees were interviewed to know about the prevailing, which helped to great extent in making decisions about the importance of the items. Data collection technique The methodology adopted to collect the primary data was Personal Interview Methods, while at the same time secondary data are taken from company magazine. Sampling Design Type of sampling: Systematic sampling to the employees Sample size: 60 Area of sampling: Finance Dept. of WGSRL Sample collection Technique: Personal Interview DATA ANALYSIS AND INTERPRETATION DEMOGRAPHIC PROFILE OF RESPONDENT Designation Managers14Executive46 63636895705 Designation Interpretation:The survey was conducted on 60 employee out of which 14 were managers and 46 were executive. Age 20 to 29430 to 391440 to 492650 to 5916 Age4452627366 Interpretation: The respondent among age group 20 to 29 are 7%, between30 to 39 are 23%, between 40 to 49 are 43% and between 50 to 59 are 16%. Gender. Male45Female15 612267254381 Gender Interpretation: In survey 75% were male respondent and 25% were female respondent WORKING CAPITAL MANAGEMENT AND CONTROL INTRODUCTION Working capital is taken to be a life blood of the business lack of working capital may lead a business to technical insolvency and ultimately to liquidation. That is why working capital management of a firm is considered to be one of the most important tasks of the financial managers working capital management decisions involves decision relating to current assets including decision about how these current assets are too be financed , what should be the volume of the current assets. DEFINITION Current assets minus current liabilities. Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative; depending upon 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. Companies with negative working capital may lack the funds necessary for the growth. Also called net current assets or current capital. WORKING CAPITAL= CURRENT ASSETS – CURRENT LIABILITIES CONCEPT OF WORKING CAPITAL There are two concepts of working capital Gross working capital It refers to the firm’s investment in current assets. Current assets, which can be converted into cash within an accounting year or operating cycle and include cash, short term securities, debtors, bills receivables and stock. Net working capital Technically it is the difference between the current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment within an accounting year and include creditors, bills payable and outstanding expenses. In short current assets have a positive relationship with working capital and current liabilities have a negative relationship with working capital. Current credit soundness is indicated by positive Net Working Capital position and is of major concern to investors and bankers. It is measured by the current ratio obtained by dividing rupee value of current assets by the rupee value of current liabilities. Larger the ratio the more solvent the firm, i.e., in the event of bankruptcy, falling prices of inflated values, the book value of current assets could shrink considerably and the firm creditors would still be assured of payment. However from management point of view, a high ratio may indicate poor planning since excessive amounts are tied up in unproductive current assets, which tend to produce a lower income. In a firm’s statement of Financial Position, these components of working capital are reported under the following headings. Current Assets Liquid Assets (cash and bank deposit) Inventory Debtor and Receivable Current Liabilities Bank Overdraft Creditors and Payables Other Short Term Liabilities WORKING CAPITAL CYCLE MANAGEMENT OF WORKING CAPITAL Working Capital is the life blood of any business big or small. However, smaller businesses might find it more trying to maintain a comfortable level of capital. Managing working capital is an important factor for them. Working Capital Management is important because maintaining a balance of income to debt can be difficult and owner must be diligent to assure that it is kept. Sometimes it takes a little assistance to maintain levels of fluidity or make major purchases. Working Capital Management involves the relationship between a firm’s short term assets and its short term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. If working capital dips too low, a business risks running out of cash. Even very profitable businesses can run into trouble if they lose the ability to meet their short-term obligations. Working Capital financing can be used as a fast cash option to cushion the periods when the flow is not ideal or readily available. Even when owners are meticulous in managing working capital, finding the right levels to remain comfortable and competitive can be difficult. Working Capital Management takes place on two levels: ,[object Object]

The individual components of working capital can be effectively managed by using various techniques and strategies.Working Capital Management is not an end in itself. It is an integral part of the department’s overall management. The needs of efficient working capital management must be considered in relation to other aspects of the department’s financial and non-financial performance. The major financial statements of a company are the Balance Sheet, Profit and Loss Account and Cash Flow Statement. These statements present an overview of the financial position of a firm to both the stakeholders and the management of the firm. But unless the information provided by these statements is analyzed and interpreted systematically, the true financial position of the firm cannot be understood. The analysis of financial statements plays an important role in determining the financial strengths and weaknesses of a company relative to that of other companies in the same industry. The analysis also reveals whether the company’s financial position has been improving or deteriorating over time. These statements are contained in a company’s annual report. An annual report also includes the chairman’s speech, the director’s report, the auditors report and accounting policy changes. To understand the financial statements here the Balance Sheet, Profit and Loss Accounts and Cash. Flow Statement of Welspun Gujarat Stahl Rohren Limited. With calculation of working capital and ratio analysis is provided. MANAGEMENT OF INVENTORY Inventory Management involves the control of assets being produced for the purpose of sale in the normal course of the company’s operations. The goal of effective inventory management is to minimize the total costs- direct and indirect- that are associated with holding inventories. However, the importance of inventory management to the company depends upon the extent of investment in inventory. Inventory management is the active control program which allows the management of sales, purchases and payments. The task of inventory planning can be highly complex in manufacturing environments. At the same time, it rests on fundamental principles. The system used for inventory must tie into the operations of the firm. Inventory planning and management must be responsive to the needs of the firm. The firm should design systems, including reports that allow it to make proper business decisions. Inventories constitute the most significant part of current assets of a large majority of companies. Inventory serves as link between the production and consumption of goods. The object of inventory management is to ensure availability of materials in sufficient quantity as and when required. Inventories represent investment of a firm’s funds. The objective of the inventory management should be the maximization of the value of the firm. The firm should therefore consider: a) Costs, b) Return, and c) Risk factors in establishing its inventory policy. IMPORTANCE OF ADEQUATE WORKING CAPITAL Solvency of the business. Goodwill. Easy loans. Cash discounts. Regular supply of raw materials. Regular payments of salaries, wages etc. Exploitation of favorable market conditions. Ability to face crisis. DETERMINANTS OF WORKING CAPITAL The Working Capital of a firm or a concern depend upon a large number of factors and each factor having a different importance which influence working capital needs of a firm’s. There are no set rules or formulae to determine working capital requirement of a firm. Some of the important factors are explained below: FACTORS DETERMINING WORKING CAPITAL REQUIREMENT1.Nature of Business2.Size of Business3.Production Policy4.Rate of Stock Turnover5.Credit Policy6.Manufacturing Process7.Other Factors 1.Nature of Business: Working capital requirement of a firm are basically influenced by the nature of its business. Trading and financial firms have a very small investment in fixed assets, but require a large sum of money to be invested in current assets like inventories, receivables and cash. Some manufacturing businesses also have to invest substantially in working capital and a nominal amount in current assets. On the other hand, public utilities have very limited needs for working capital and have to invest abundantly in fixed assets. 2.Size of Business: The Working Capital requirement of a concern are directly influenced the size of its business which may be measured in terms of scale of operations. Greater the scale of a business unit, larger will be the requirement of working capital. But, in some cases smaller concern may need more working capital due to high overhead charges, inefficient use of available resources. 3.Production Policy: In certain industries the demand is subject to wide fluctuations due to seasonal variations. The requirement of working capital in such cases depends upon the production policy. The production policy could be kept either steady that is by accumulating inventories during slack periods with a view to meet high demands during the peak season or the production could be curtailed during the slack season and increase during peak season. If the policy is to keep production steady by accumulating inventories it will require higher working capital. 4.Rate of Stock Turnover: There is a high degree of inverse co relationship between the quantum of working capital and the velocity or speed with which the sales are affected. A firm which has a high rate of stock turnover will need low amount of working capital as compared to those firms which have a low rate of return. 5.Credit Policy: The firm’s credit policy is another factor which influences working capital requirement. It depends on the nature of the business, competitions and firms desire to use it as marketing tools. The credit policy of the concern affects the working capital by influencing the level of debtors and creditors. A concern that purchases it requires lesser amount of working capital. On the other hand, a concern buying its requirements of cash and allowing credit to its customer shall need larger amount of working capital. 6.Manufacturing Process: In manufacturing business, the requirement of working capital increase in direct proportion to length of manufacturing process. When the manufacturing process is long, large amount of working capital is required. Because the raw material and supplies have to carry for longer period and it requires the increment in Labour and service costs, so shortest production process should be obtain. 7.Other Factors: Some other factors also influence the requirements of working capital such as seasonal variations, business cycle, rate of growth, earning capacity etc. TECHNIQUES OF ASSESMENT OF WORKING CAPITAL REQUIREMENTS ESTIMATION OF COMPONENTS OF WORKING CAPITAL METHOD Since working capital is the excess of current assets over current liabilities, an assessment of the working capital requirements can be made by estimating the amounts of different constituents of working capital i.e. inventories, accounts receivables, cash, accounts payables, etc. PERCENTAGE OF SALES METHOD This traditional and simple method of estimating working capital requirements. According to this method, on the basis of past experience between sales and working capital requirement, a ratio can be determined for estimating the working capital requirements in the future. OPERATING CYCLE APPROACH According to this approach, the requirements of working capital depend upon the operating cycle of the business. The operating cycle begins with the acquisitions of raw materials and ends with collections of receivables. It may be broadly classified into four stages. Raw material and stores storage stage. Work-in-progress stage. Finished goods inventory stage. Receivables collection stage. The duration of operating cycle for the purpose of estimating working capital requirements is equivalent to the sum of the duration of each of these stages less the credit period allowed by the suppliers. Symbolically the duration of the working capital cycle can be put as follows: O = R + W + F + D – C Where, O = duration of working capital R = raw materials and stores storage period W = work in progress period F = finished stock storage period D = debtors collection period C = creditors payment period After computing the period of one operating cycle, the total number of operating cycles that can be completed during a year can be computed by dividing 365 days with the number of operating cycle. The total operating expenditure in the year will give the average amount of working capital requirement. RATIO ANALYSIS Ratio analysis is powerful tool of financial analysis. A ratio is defined as the indicated measures of tow mathematical expression and as the relationship between two or more things. In financial analysis a ratio is used as benchmark for evaluating the financial position and performance of a firm. The point to note is that a ratio indicates a quantitative relationship, which can be, in turn, used to make a qualitative judgment. Such is nature of all financial ratios. TYPES OF RATIO:- There are a number of types of ratio of interest to the various stakeholders of a business. The main classification of ratio is as follows: Profitability Ratios: Measure the relationship between gross/net profit and sales, assets and capital employed. These are sometimes referred as performance ratios. Activity Ratio:- These measure how efficiently an organization uses its resources. These are sometimes referred as assets utilization ratios. Liquidity Ratio: These measure the short-term and long term financial stability of the firm by examining the relationship between assets and liabilities. These are sometime called as solvency ratios. Investment Ratios: This group of ratio is concerned with analysing the return for shareholder. These examine the relationship between the member of share issued, dividend paid , value of the shares, and company profits. For obvious reasons these are quite often categorized as shareholder ratios. Gearing : Examines the relationship between internal sources and external sources of finance. It is therefore concerned with the long-term financial position of the company. Profitability Ratios: Generally, there are two types of profitability ratios1. Profitability in relation to sales2. Profitability in relation to investment Net profit ratio Operating profit ratio Return on Investment NET PROFIT RATIO: NET PROFIT RATIO = NET PROFIT SALES/INCOME FROM SERVICES Table 1 Table is showing NET PROFIT RATIO YearNet Profit After TaxIncome From ServicesRatio2005-2006613.7218316.770.0332006-20071425.8626827.550.053 231700143274 Interpretation: The net profit ratio is the overall measure of the firm’s ability to turn each rupee of income from services in net profit. If the net margin is inadequate the firm will fail to achieve return on shareholder’s funds. High net profit ratio will help the firm service in the fall of income from services, rise in cost of production or declining demand. The net profit is increased because the income from services is increased. The increment resulted a slight increase in 2007 ratio compared with the year 2006. NET PROFIT MARGIN: NET PROFIT MARGIN = PROFIT AFTER TAX / SALES Table 2 Table is showing NET PROFIT MARGIN YearNet Profit After TaxSalesRatio2005-2006613.7219117.650.0322006-20071425.8628522.980.049 Interpretation: The table shows that in year 2005-2006 the Net Profit after tax was 613.72 and the sales was 19117.65 which gives the ratio between them 0.032 and in year 2006-2007 the Net Profit after tax was 1425.86 and the sales was 28522.98 which gives the ratio between them 0.049 which depict the clear result that in 2006-2007 there was an increase of 0.017 net profit margin. OPERATING PROFIT RATIO: OPERATING PROFIT RATIO = OPERATING PROFIT SALES/INCOME FROM SERVICES. Table 3 Table is showing OPERATING PROFIT RATIO YearOperating ProfitIncome From ServicesRatio2005-2006903.5418316.770.0492006-20072191.0826827.550.082 Interpretation: The operating profit ratio is used to measure the relationship between net profits and sales of a firm. Depending on the concept, it will decide. The operating profit ratio is increased compared with the last year. The earnings are increased due to the increase in the income from services because of Operations & Maintenance fee. So, the ratio is increased slightly compared with the previous year. RETURN ON INVESTMENT: ROI = PAT / SHARE HOLDERS FUND Table 4 Table is showing RETURN ON INVESTMENT YearProfit After TaxShare Holders FundRatio2005-2006613.724947.830.1242006-20071425.866466.830.22 Interpretation: This is the ratio between net profits and shareholders’ funds. The ratio is generally calculated as percentage multiplying with 100. The net profit is increased due to the increase in the income from services ant the shareholders funds are increased because of reserve & surplus. So, the ratio is increased in the current year. FIXED ASSETS TURNOVER RATIO: NET ASSETS TURNOVER RATIO = SALES/ INCOME FROM SERVICES NET FIXED ASSETS Table 5 Table is showing FIXED ASSETS TURNOVER RATIO YearIncome From ServicesNet Fixed AssetsRatio2005-200618316.7710112.811.8112006-200726827.5516448.301.631 Interpretation: Fixed assets are used in the business for producing the goods to be sold. This ratio shows the firm’s ability in generating sales from all financial resources committed to total assets. The ratio indicates the account of one rupee investment in fixed assets. The income from services is increased in the current year due to the increase in the Operations & Maintenance fee due to the increase in extra invoice and the net fixed assets are reduced because of the increased charge of depreciation. Finally, that affected a huge increase in the ratio compared with the previous year’s ratio. TOTAL ASSETS TURNOVER RATIO : TOTAL ASSETS TURNOVER RATIO = SALES / TOTAL ASSETS Table 6 Table is showing TOTAL ASSETS TURNOVER RATIO YearSalesTotal AssetsRatio2005-200619117.6513744.171.3902006-200728522.9822475.471.270 Interpretation: CURRENT ASSETS TURNOVER RATIO: CURRENT ASSETS TURNOVER RATIO = SALES / CURRENT ASSETS Table 7 Table is showing CURRENT ASSETS TURNOVER RATIO YearSalesCurrent AssetsRatio2005-200619117.6512787.761.4942006-200728522.9816329.301.748 Interpretation: CAPITAL TURN OVER RATIO: CTO = SALES OR INCOME FROM SERVICES/CAPITAL EMPLOYED Table 8 Table is showing CAPITAL TURN OVER RATIO YearIncome From ServicesCapital EmployedRatio2005-200618316.774947.833.7022006-200726827.556466.844.148 Interpretation: This is another ratio to judge the efficiency and effectiveness of the company like profitability ratio. The income from services is greater increased compared with the previous year and the total capital employed includes capital and reserves & surplus. Due to huge increase in the net profit the capital employed is also increased along with income from services. Both are effected in the increment of the ratio of current year. WORKING CAPITAL TURNOVER RATIO: WCT RATIO = SALES OR INCOME FROM SERVICES/NET WORKING CAPITAL Table 9 Table is showing WORKING CAPITAL TURNOVER RATIO YearIncome From ServicesWorking CapitalRatio2005-200618316.773756.744.8762006-200726827.556239.524.300 Interpretation: Income from services is greatly increased due to the extra invoice for Operations & Maintenance fee and the working capital is also increased greater due to the increase in from services because the huge increase in current assets. The income from services is raised and the current assets are also raised together resulted in the decrease of the ratio of 2007 compared with 2006. Current ratio Quick ratio Absolute liquidity ratio CURRENT RATIO:- Table 10 Table is showing CURRENT RATIO YearCurrent AssetsCurrent LiabilitiesRatio2005-200612787.769031.021.4162006-200716329.3010089.781.618 . Interpretation: As a rule, the current ratio with 2:1 (or) more is considered as satisfactory position of the firm. When compared with 2006, there is an increase in the provision for tax, because the debtors are raised and for that the provision is created. . In the year 2006, the cash and bank balance is reduced because that is used for payment of dividends. In the year 2007, the loans and advances include majorly the advances to employees and deposits to government. The loans and advances reduced because the employees set off their claims. The other current assets include the interest attained from the deposits. The deposits reduced due to the declaration of dividends. So the other current assets decreased. The huge increase in sundry debtors resulted an increase in the ratio, which is above the benchmark level of 2:1 which shows the comfortable position of the firm. QUICK RATIO: QUICK RATIO = CURRENT ASSETS-INVENTORIES/CURRENT LIABILITIES Table 11 Table is showing QUICK RATIO YearQuick AssetsCurrent LiabilitiesRatio2005-20068315.309031.020.9202006-200717340.3210089.781.719 Interpretation: Quick assets are those assets which can be converted into cash within a short period of time, say to six months. So, here the sundry debtors which are with the long period does not include in the quick assets. Compare with 2006, the Quick ratio is increased because the sundry debtors are increased due to the increase in the corporate tax and for that the provision created is also increased. So, the ratio is also increased with the 2006. CASH RATIO: CASH RATIO=CASH RATIO / CURRENT LIABILITIES Table 12 Table is showing CASH RATIO YearCash balanceCurrent LiabilitiesRatio2005-20063066.559031.020.3392006-20073433.9010089.780.340 Interpretation: The cash ratio of the year 2006-2007 is 0.340 but in the year 2005-2006 is 0.339.The cash ratio shows the sound position of the company, as compared to year 2005-2006 it increased by 1.0. This is because of increase in cash and bank balance. NET WORKING CAPITAL RATIO: NET WORKING CAPITAL RATIO = NET WORKING CAPITAL / NET ASSETS Table No 13 Table is showing NET WORKING CAPITAL RATIO YearNET WORKING CAPITALNET ASSETSRatio2005-20063756.7412787.760.3392006-20076239.5216329.300.340 Interpretation: In the year 2006, the net assets in the deposits and the current liabilities are also reduced because of the payment of dividend. That causes a slight increase in the net working capital ratio. OTHER DEBT RATIOS: OTHER DEBT RATIOS = TOTAL LIABILITIES / TOTAL ASSETS Table No 14 Table is showing OTHER DEBT RATIOS YearTOTAL LIABILITIESTOTAL ASSETSRatio2005-20069031.0212787.760.7062006-200710089.7816329.300.618 Interpretation: Total Liabilities are generally excluded from the computation from leverage ratios, to asses the proportion of total funds-short and long term-provided by outsiders to finance total assets. ,[object Object],The company should develop norms foe individual item of current assets, like Tandon committee approach emphasizes these aspects. Norms should de attainable with efficient performance. Variations between standard or norms and actual achievement should be documented and measures instituted for corrective action. At WGSRL the working capital requirements are estimated through projection method. This method does not provide any way of checking the validity of the line and is to that extent defective, for the purpose, one has to rely on the statistical method called regression analysis, therefore the company should take into consideration the percentage of the sales method. Also, because this method has useful application in forecasting relatively short-term changes in the financial needs. Inventories should be managed properly and the company must try to increase the turnover if finished goods by opening their co-operative stores. CONCLUSION At the end I would like to conclude that the overall accounting policies of the company are well structured. The background of the company is strong enough to resist the imbalances of the markets as well as the economy. They have been able to manage working capital components efficiently. Against the background of a very challenging business and economic scenario of the country, WGSRL concluded yet another year of satisfying results by improving operating margins significantly. The results of the year 2007-08 shoes that the society is stronger and more efficient and the further shoes a consistent trend towards growth and cost efficiency. During the current year the sales reached the new milestone. Even in some of the quantitative measures like better sourcing of raw materials, productivity or cost of financing, WGSRL created new landmarks and the list is growing further. BIBLIOGRAPHY BOOKS Financial Management-I. M. Pandey Financial Management-Prasanna Chandra Cash & WC Management-Gopalkrishnan Inventory & WCM-S. Srinivasan WC Mangt. & Control-Satish B. Mathur WEBSITES www.welspun.com www.workingcapital.com www.12manage.com www.moneypore.com www.economictimes.com ANNEXURE -467360-29210 -588010291465PROFIT AND LOSS ACCOUNT

A PROJECT REPORT ON WORKING CAPITAL MANAGEMENT AND CONTROL

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