SUMMER TRAINING PROJECT REPORT

ON
WORKING CAPITAL MANAGEMENT IN ACC LTD GAGAL
CEMENT WORKS

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF
DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
(2006-2008)

PROJECT GUIDE : SUBMITTED BY :

MR. SANJAY JOHARY ANURAG SHARMA
MANAGER FINANCE M.B.A. 2ND YEAR
GAGAL CEMENT WORKS ROLL NO :-
BARMANA (ACC LTD.) COLLAGE – 04/06
H.P.U. – 597

SESSION (2006-2008)
INSTITUTE OF ENGINEERING AND EMERGING
TECHNOLOGY
BADDI

1
 GAGAL CEMENT WORKS

P.O.BARMANA, BILASPUR
HIMACHAL PRADESH
174013

THE ASSOCIATED CEMENT COS. LTD.

INDEX
2
• ACKNOWLEDGEMENT
• UNDERTAKING
• PREFACE
• HISTORY OF INDUSTRY
• ASSOCIATED CEMENT COMPANY LIMITED
• CORPORATE PROFILE OF ACC LTD.
• ACC FOUNDATION
• ENVIRONMENTAL POLICY OF ACC LTD.
• MISSION & VISION OF ACC LTD.
• PERFORMANCE AND EVENTS
• ARTICHETS OF SUCCESS
• GAGAL CEMENT WORKS
• INTRODUCTION
• GEOGRAPHICAL DETAIL
• CONTRIBUTION TO GOVERNMENT
• QUALITY POLICY
• ENVIRONMENTAL POLICY
• PRODUCTION SYSTEM IN GAGAL
CEMENT WORKS
• MANUFACTURING PROCESS
• POWER
• CEMENT PLANT
• DEPARTMENTATION
• FINANCE DEPARTMENT
• ACCOUNTING SECTION
• COST SECTION
• ANALYSIS OF WORKING CAPITAL
• RATIO ANALYSIS
• FUND FLOW ANALYSIS
• WORKING CAPITAL BUDGET
• NEED AND OBJECTIVE OF STUDY
• RESERCH METHODOLOGY
• DESIGN OF STUDY
• BIBLIOGRAPHY

ACKNOWLEDGEMENT
3
I offer my gratitude to those who have spend their precious time,
curiosity and continued encouragement through study and for
the fulfillment of my SUMMER TRAINING IN GAGAL CEMENT
WORKS( ACC LTD.) DISTT – BILASPUR (H.P).

I would like to thanks Mr. Sanjay Johari

(Manager Finance) and Sunil Gupta ( Asst. Manager Finance) at
Barmana allowing me to undertake training in their renowned
organization and permitting to work on Analysis of Working
capital at this company.

I will indebted toward Mr.

Sunil Gupta and his staff for co-operative guidance and helping
me to find out relationship between books and its practical
application and to learn a lot about different aspects of the
company. Under their guidance I succeeded in doing my
summer training program.

ANURAG SHARMA

UNDERTAKING
4
I Anurag Sharma do here by declare that the training report on
study conducted on “Working capital analysis” in GAGAL
CEMENT WORKS Barmana submitted by me in the partial
fulfillment of M.B.A. (Master of Business Administration)
Himachal Pradesh University, Shimla is the original work.

What ever Data has been disclosed in the report are

authentic to the best of my knowledge. I have not submitted this
training report to any other university ever before.

ANURAG SHARMA
M.B.A. FINANCE
IEET (BADDI)

PREFACE

5
As a matter of Knowing how things look like in practical sense
every M.B.A. student has to undergo training in an approved
business organization for the tenure of not less than six weeks. I
got a chance to seek more and more knowledge under the
guidance of professional managers.

On the completion of M.B.A. Degree students have hand on

experience that will help for facing challenging jobs under such
competitive environment.

During the training tenure I visited various departments of

GAGAL CEMENT WORKS to study their process of functioning
& organization structure. I have completed my project
successfully in “The study of working capital analysis” under
the guidance of Mr. Sunil Gupta (Asst. Manager Finance).

During the above course tenure Mr. Narender Kumar

(Salary Officer) helped me for getting knowledge concerning
with taxation and specially I would like to thank Mr. Sanjay
Johary for allowing me to work in finance department.

HISTORY OF ACC LTD.

The history of cement industry is the story of civilization from
primitive caves of prehistoric times to the skyscrapers of the
modern age. It is said that the use of cement is from period use
of fire Egyptians utilize gypsum plaster as cementing material as
early as 3000 BC in building their monuments.
6
 Material cement has existed the roman empire joseph
Arpdin invited Portland cement in 1824 after the discovery of
hydraulic properties of time, patented his product which was call
Portland cement. Portland stone which is lime stone quarried on
Portland bill in dorsed, England. Modern cement is outcome of
effort of chemist’s technologist and architects.

Cement is binding agent having hydraulic properties,

which after hydration gives the setting properties strengthening
concrete. Intergrading, clinker, gypsum, and pozzolanic material
in a proper ratio to get protland pozzolane cement manufacture
cement.

Cement essentially made up of material containing calcium

silicon, aluminum and iron. Limestone, marl and chalk are major
source of clay shale, quartzite, bauxite iron ore provide silicon,
aluminum and components.

MAJOR COMPANIES IN THE CEMENT INDUSTRY ARE:-

 The Associated Cement Companies Ltd.

 Birla Group
 Larsen and Turbo
 J.K.Group
 India Cement
 Gujrat Ambuja

CORPORATE PROFILE OF ACC LTD.

ACC is a very fond acronym in India, often assuming
synonimity with cement . With a annual cement capacity of
over 12 million tones, the company’s operation are spread
regional marketing offices, several area offices, and a
dedicated band of people from all corners of India. Thus in

7
 industrial backdrop of India ACC stands for multi-product,
multi-unit company.

The companies various businesses are supported by a

powerful, in-house research and technology backup facility-
the only one of its kind in the Indian cement industry.

ACC has also extended its services to overseas, to the

middle East, Africa and South America, where it has provided
technical and management consultancy to a variety of
consumers, and also helps in the operational maintenance of
cement plants abroad.

In addition to its modernization and expansion, ACC has

earmarked on an all round internal improvement program
through introduction of various world class benchmarking
and total productivity maintenance practices. Through an
organization wide business process engineering, it has able
to achieve revenue enhancement and cost savings by
optimally aligning business practices with customer needs. It
would also result in further simplification of the internal
management processes and delayering and decentralization
for fast decision making purposes.

Today, ACC stands poised to enter the new millennium,

ready to seize the opportunities and face the challenges that
lie ahead. With more than six decades of experience ACC has
a rare perspective of sound business strategies, with which
ACC in poised to maintain its leadership in cement industry.

`
A GLANCE ON THE HISTORY ON SUCCESS

The Associated cement company Ltd. is known for the largest

manufacturer of cement. So it comes under the leading
companies in India for producing more than 1/4th of national
output. ACC Ltd. company was duly registered under Indian

8
companies Act 1956, having its registered office at cement
house, 121 maharishi Karv road, Mumbai-400020.

It has 14 cement plants spread all over the country and has
various subsidiaries and other overseas projects. Each business
is concerned with the objective of rising business through
customer satisfaction and continuous improvement in quality of
the product.

Initially when cement was introduced in 1914, south

India industry Ltd. started first cement plant near Madras.This
plant was closed down after a few months due to shortage of
labors and lack of knowledge in manufacturing of cement. It has
modernization and expansion projects at lakheri in Rajasthan
and Bargarh and has one project for additional capacity at new
wadi in Karnataka.

In 1936 with the effort of Mr. Dinshaw a group of

companies formed Associated companies Ltd.
In 2005 Holcim group of swizerland made take over of ACC Ltd.
and this time whole management of ACC Ltd. is in the hands of
Holcim groups chairman MR. M.L.NARULA.

ACC FOUNDATION
Many men of outstand initiative and foresight contributed
towords the development of cement industry in India. About 71
years ago in 1936 a number of companies belonging to the
house of Tata Khatias and Kellick, Nixon combined to from “The
Associated Cement Companies Ltd.” great industrialist and

9
patriot Mr. F.E.Dinhsaw was mainly responsible into a single
organization.

The objective of this merger was not to attain monopolistic

position but to make and deliver cement as cheaply as possible.
Mr. Dinshaw added for new factories in ACC group from 1929 to
1936. During Second World War, the cement was delivered as
essential commodities under the defenses of Indian Rule and
though under price and distribution control. The cement
industry gets further impetus under the leadership of ACC.

ENVIRONMRNTAL POLICY OF ACC LTD.

• Ensure continual improvement in environment

performance by carrying out periodic review of action plan.
• Prevent pollution and minimize fugitive emissions.
• Comply with all applicable legal and regulatory
reguirements.
• Create environmental awareness among employee and
community at large.
• Minimize the waste generation at source reutilize the work
if generated.
• Conserve energy and mineral resource.

MISSION AND VISION OF ACC LTD.

QUALITY:- To make continuous improvement in the quality of
our product and services and add some essential features for
customer satisfaction and ensure their supply at fair prices.

PROFITABILITY:- To achieve fair and reasonable return on

capital employed by making optimum utilization of available
10
resources and increasing productivity & effectiveness
throughout the company.

RESPONSIBILITY:- To fulfill our obligation to society,

specifically in the area of rural development and in
safeguarding.

LEADERSHIP:- Maintain our leadership of the Indian cement

industry through the country modernization and expansion of
our manufacturing facilities and activities and through the
establishment of a wide and efficient marketing network.

GROWTH:- Ensure a steady growth of business by

strengthening our position in the cement sector.

EQUITY:- Promote and maintain fair industrial relation and

environment for the effective involvement, welfare and
development of staff at all levels.

VISION OF ACC IS TO BE A WORLD CLASS CORPORATION

WITH DIVERSE BUSINESS BUILT AROUND ACC’sunita CORE
COMPETENCIES AND KNOWLEDGE BASE IN CEMENT
REFACTOREIES ADVANCED MATERIAL ENGINEERING
GEOLOGY MINING AND RESEARCH.

PERFORMANCE AND EVENTS

• Change of name to ACC Limited with effect from
september1,2006.
• Production and sale of cement touched an all-time high of
18.73 million tones and 18.86 million tones respectively
during the year 2006, growth of 10% and 8% respectively
as compared to the corresponding previous period.
11
• Total group income for the year 2006 at Rs.5976 crore, up
28% over the corresponding previous period.
• Profit before Exceptional items and tax for the year ended
December 31,2006 for the group was Rs1464 crore as
against Rs435 crore in the nine months period ended
December 31,2005.
• Profit after Tax for the year ended December 31,2006 for
the group was Rs 1240 crore as against Rs514 crore in the
nine months period ended December 31,2005.
• Augmentation of cement grinding capacities at Tikaria,
Kymore, Wadi, Sindri and Madukkarai.
• Modernization and expansion projects at Lakheri and
Bargarh.
• Project for additional capacity at New Wadi in Karnataka.
• Captive power generating capacities being added at
Lakheri, Kymore, Bargarh and Wadi.
• Increased focus on ready Mix Concrete business-major
growth plans finalized.
• Technical Support Services centre to achieve technical
excellence in plant operations and project management.
• ACC pledges support to the national effort against
HIV/AIDS.
• Synergies with HOLCIM further strengthened during the
year.

12
Region (North) GAGAL Region (East)

LAKHERI TIKARIA

DCW

SIND
RI
KYMORE CHAIBAS
A
BARGARH

CHANDA JAMUL

WADI Region (South West)

MADUKKARAI

ARTICHETS OF SUCCESS.
13
NO NAME OF DIRECTOR NATIONALITY

1.
MR.N.S.SEKHARIA INDIAN
(CHAIRMAN)
2. SWISS
MR.PAUL HUGENTOBLER (DEPUTY CHAIRMAN)
3. INDIAN
Mr. M.L.NARULA (MANAGING DIRECTOR)
4. INDIAN
MR.A.L.KAPUR
5. INDIAN
MR.S.M.PALIA
6. INDIAN
MR.NARESH CHANDRA
7. SWISS
MR.MARKUS AKERMAN
8. INDIAN
MR.D.K.MEHTROTRA
9. INDIAN
MR.R.A.SHAH
10. INDIAN
Dr.NIRMALYA KUMAR
11. INDIAN
MR.SHAILESH HARIBHAKTI
12. INDIAN
MR.ANIL SINGHVI
13. INDIAN
MR.A.K.JAIN (WHOLETIME DIRECTOR)

GAGAL CEMENT WORKS

INTRODUCTION
14
Gagal Cement Works implemented & obtained ISO14001
Environment System, ISO9001:2000 Quality Management
System & OHSAS18001 Occupational Health and Safety
Management System Certification.

The Gagal Cement

Works was set up in the year 1984 wit the aim to serve the
market of Himachal Pradesh, Punjab, Uttaranchal, Utter
Pradesh and Jammu & Kashmir. ACC was the first to put up
large scale industry house in a backward area of Himachal
Pradesh. Gagal-1 unit started with an annual capacity of 0.56
Million Tones(with one kiln of 1700 TPD). Gagal-11 unit of 1
Million Tone capacity (with one kiln of 3300 TPD) was installed in
1994-1995. Today Gagal Cement Works has risen to produce
3.2 million tones of blended cement and is like to increase to
4.0 Million Tones in the current financial year 2005 to
2006.Gagal Cement Works is market leader in northern region
and maintains its market share in all strategic markets.GCW is
the largest cement unit in this entire Zone. There is four other
major cement manufactures from Himachal Pradesh, Punjab and
Rajasthan who are his competitors.

ACC cement has very

strong brand image, trusted by generation for consistent and
durable cement quality, fair business and practice and long
association with dealers and customers are the principal factor
which provide us competitive advantages over the other brand.
ACC unique R & D support and business policy, differentiate it
from its competitors.

GEOGRAPHICAL DETAILS
Among the largest private sector companies, ACC is the only
company to set up a cement plant in 1982 in backward
designated area at Barmana, Distt. Bilaspur (HP) and started
production with effect from 12th March 1984.
15
 Barmana is 18 kms north to
Bilaspur. The National Highway No.21 connecting Ambala in
Haryana and Manali in H.P. passes through Gagal Cement Works
and its colony.

The colony is at latitude

31.5-degree north and 77degree East Longitude. The total land
acquired for the factory, colony and mining area is 2319.10
bighas. Factory covers 365 bighas, the colony covers 345
bighas and the mining area is about1633 bighas. The
topography of the area around the worksis mount-ainous.
Mean maximum temperature of the area goes upto 45 degree
Celsius in the month of June and the minimum temper- ature
upto 3-degree in the month of December.

The work has generated direct and

indirect employment to the scale of nearly 12000.

Near by Towns:-
Bilaspur
Sunder Nagar
Mandi

CONTRIBUTION TO GOVERNMENT
Annual contribution to center government by way of taxes,
duties is 155 crore out of which for Himachal Government is 100
16
crore. And along with this it is also helping Govt. as its social
responsibility. The company has constructed a Govt.
degree college; it is spending money on schools, hospital and
on other works of public welfare.

GAGAL CEMENT WORKS-AN UNRELENTLESS

PURSUIT TOWARDS EXCELLENCE
Gagal Cement Works is committed to deliver quality products
to the customers. Gagal Cement Works has to its credit many
a prestigious certifications like IS/ISO 9002, ISO 14001 for
environmental management system and OHSAS 18001 for
adopting high class measures in the sphere of
Occupational Health and Workers Safety in the manufacturing of
cement.

QUALITY POLICY
• Build Quality In
• Do not Sort Bad Quality Out
• Quality Improvement is Limitless and therefore Continuous
• Concern for Quality is for Entire Organization and Not Just
for Product
• Satisfy Customer Fully and Continuously

GAGAL CEMENT WORKS- A SYSTEMATIC

APPROACH FOR CLEANER WORLD

ACC GAGAL Cement Works is the first point in Himachal

Pradesh to have EMS certificate. The Bureau of Indian
standards awarded this certificate to the works in March 1999.
The certificate has resulted in batter understanding among all
the employees, of overall environmental issues related to the
17
plant. The main feature of EMS at Gagal is total involvement of
employees.

EMS is a program of continuous environmental

improvement following a well-defined sequence of steps
drawn from the established project management practice
and routinely applied in business environment.

ENVIRONMENTAL POLICY
• Prevent pollution and minimize fugitive emissions
• Comply with all applicable legal and regulatory
requirements
• Conserve water, energy and natural resources
• Minimize waste generation and utilize the same
• Create environmental awareness and provide clean and
safe environment to employees and community at large

PRODUCTION SYSTEM IN GAGAL UNIT

Main Raw Material
• Limestone
• Quartzite
• Iron Ore
• Shale
• Gypsum
• Fly Ash

MANUFACTURING PROCESS
The Gagal Cement Works is based on the most modern process
of cement manufacturing namely a dry process suspension
preheated kiln with precalcener. The limestone is crushed in the
18
crusher. It is than grinding in Raw Mill along with Shale and Iron
Ore to fine power. The grinding material is blended to a uniform
consistency and fed to the kiln system pulverized Coal in the
kiln system to heat the material to a temperature of 1500 degree
Celsius. The material undergoes a series of chemical reaction to
form a Clinker. The clinker is cooled in the Clinker Cooler and
stored in the Clinker silos. It is extracted from the Silos and
integrated along with Gypsum and Pozzolanaic material to form
Portland Pozzoiana cement. The cement is stored in cement
silos. It is packed in 50-kg bags by automatic packing machine,
loaded in trucks by auto loaders and various consumption
center in Himachal Pradesh as well as the neighbouring states
of Punjab, Haryana and J&K.

POWER
The co. met 54% power requirement through captive generation.
Cost of captive power generation was 34% lower as compare to
grid power. In keeping with its policy of maximizing its captive
power capability. It is also the process of increasing its thermal
captive power generation capacity by another 45 MW. The
company has already achieved significant reduction in cost in
specific area like fuel, power and manpower. The drives for cost
reduction will be further insified all area of operations.

DEPARTMENTATION
QUARRY DEPARTMENT

19
The Quarry Department is mainly concerned with the
maintenance of Mines at ACC Barmana. The sub-departments
namely MINE; ELECTRICAL, GARAGE, CRUSHER, STACKER
& RECLAIMER support the Quarry department.

MINES

Gagal lime Stone Mine is captive mine of M/S ACC Ltd.,

Gagal Cement Works. The mining lease covers an
area of 265.97 hectares. Presently the mine is one of
the largest mine of northern India and is fully
mechanized by Heavy Earth Moving Equipment's.

LIME STONE AND COAL HANDLING SECTION

LIMESTONE
The crushed limestone is received from Gagal Quarry with the
help of a series of belt conveyer and stacked in stockpile with
the help of stackers.

COAL
Coal is used as a fuel for firing in the Kiln. Gagal Cement Works
receives coal from different collieries of CCC, ECL and NEC by
rail upto Kiratpur Sahib.

LABORATORY DEPARTMENT
Laboratory department in coordination with other departments
carries our regular quality control functions. Quality and
20
process control measures are exercised at each and every stage
of process. Inspection and procurement of raw materials, its
testing, quality control of input materials, intermediate products
at different level of process and final product that is cement
are done as per procedures. Inspections and Test Records are
maintained in the Laboratory as per the scheme of testing and
inspection. The departmental activities are coordinated by
Deputy Manager-QPC who reports to Manager- Production.

Gagal Works laboratory has three sections:

1. Chemical & Instrumentation laboratory
2. Physical Laboratory
3. Site Laboratory

PROCESS DEPARTMENT
The Process department guides the operations in maintaining
process parameters so that production is within the desired
range of quality parameters. The process parameters are
arrived at after discussions with the Departmental Heads of
various sections (Raw Mill, Cement Mills & Laboratory)
Manager – Production, coordinates the departmental activities.

21
 RAW MILL
Activity of Raw Mill starts from feeding Raw Material (limestone,
Quartzite and Iron Ore) to the Mills and ends at filling the Raw
Meal to Silos.

RAW MATERIAL FEEDING

Lime stone feeding to Raw Mills/Roller Mills is through the
sequence of belt conveyors to different Hoppers. Feed size of
limestone is 90 mm and Mills Scale, Shale feeding is from the
Gantry to the respective Hoppers through sequence of belt
conveyors. Shale feeding is through Reclaimed or Pay
Loader.

RAW MILL
Two close circuits two chamber Ball Mills are performing the
grinding of limestone and Additive mix. Raw Mill is a tube
construction of thick MS plate with steel lines and
compartments are separated by diaphragm for improving the
retention time and transfer of materials in second for further
grinding. Mill is charged with hyper steel balls. Raw material is
first fed to Tertiary Crusher (Single Rotor Reversible Impact
Crusher) which reduces the size of Mix. After crushing the mix
the material is fed to Ball Mill where fine grinding takes place.
The finer product is separated by Air Separator and is fed to the
blending silos and the coarse material is fed back to the Mill
Inlet.

22
 VERTICAL ROLLER MILL (VRM)
In VRM Section the material is directly fed into Mill through the
feed belt for grinding. The ground material is stored in
continuous flow silos from where it is fed to the Kiln. VRM
utilizes hot air from the kiln exhaust for drying the Raw Mix
Deputy Manager – VRM, who reports to Manager
(Maintenance) coordinates the departmental activities

KILN DEPARTMENT
Kiln Department functions are categorized under two heads,
Manager (Maintenance) is responsible for the maintenance of
all equipment and Manager (Production) is responsible for
the Clinker Production and its quality parameters. Gagal Cement
Work has two rotary kilns. Kiln no 1 is having 3 streams coupled
with 2 four stage and 1 five stage preheater with 2 precalciners,
DDF and MFC. Kilns No 2 are having twin stream 5 stage
preheater with precalciners. Pulverized coal is used as a fuel for
calcination. The Clinker is discharged to horizontal grate cooler
and is stored either in Silos or in stockpiles.

CEMENT MILLS DEPARTMENT

The basic function of the department is to grind the required
ratio of clinker and gypsum in the manufacture of OPC and
clinker, Gypsum and CCP/fly ash for the manufacture of PPC
with the help of 4 ball Mills for cement grinding.

23
 PRE GRINDING UNIT
Roller Press is the pre-grinding unit for Cement Mills 1 & 2. In
Roller Press two rollers are arranged in horizontal fashion. One
is fixed and other has a hydraulic thrust arrangement for
horizontal movement. The clinker is fed vertically down ward
between the rollers and gets crushed by the hydraulic pressure
arrangement The product, which is in flakes, is fed to the Ball
Mill with other additives for finished grinding.

FINISHED GRINDING
Finished grinding is performed in Ball Mills. Ball Mill is a
rotating shell divided into two chambers fitted with shell liners
for shell protection and charged with grinding media to the
required volume. The impact and friction between the grinding
media and material perform grinding. Out put from the ball Mills
is fed to the dynamic separator where the coarse and fines of
specific sizes are separated. The coarse is again conveyed to
the Ball Mill for further grinding. The fines are conveyed to
cement silos through a series of elevators and air slides. In
order to get the desired specific surface for cement the RPM of
separator is varied accordingly?
The departmental activities are coordinated by Dy.
Manager-Plant who reports to Manager (Maintenance).

24
ELCTRICAL AND INSTRUMENTATION
(E & I) DEPARTMENT
The primary function of the E & I department is to maintain
all E & I equipment in the plant to provide the necessary service
to ensure the smooth operation of all E 8 & I equipment.

ELECTRICAL
Electrical equipment mainly comprising transformers, HT/LT
motors, DC Motors, switch gears, power distributor system and
factory and residential colony lighting
Besides the above E & I department is also responsible for the
maintenance if the electrical installations of the colony. The
department CO-ordinates with the other relevant departments
for proper utilization of the Grid & DG power.

INSTRUMENTATION
Instrumentation system can be effectively termed as the nervous
system of the plant. With the recent advanced in technology
instrumentation has become one of the most important aspect
of cement manufacturing industry. Almost all the monitoring and
controlling parameters are now available I the Central Control
Room (CCR) for operators to run the plant efficiently. Accuracy
and degree of control has increased manifold due to the latest
instrumentation control systems.
Dy. Manager (Electrical) and Dy. Manager (Instrumentation)
report to Manager (E & I) for electrical and instrumentation
activities.
25
 WORK SHOP
Following activities are carried out in the workshop department:
1. Departmental maintenance Activities
2. Maintenance of Gear Boxes
3. Compressors & PD Blowers
4. Water Pumps
5. Various equipment at Rambagh Pump House, Filter and
Sewage Water Treatment plants.
The departmental activities are coordinated by Dy. Manager
(Plant) who reports to Manager (Maintenance).

COMMERCIAL DEPARTMENT
Procurement Section
This section looks after that equipment, tools and other requisite
items are made available to different departments in time.
Deputy Manager-Purchase who reports to Sr. Manager-
Commercial coordinates the departmental activities.

26
 Packing House Department
Packing plant is the place where cement is packed & dispatched
to various locations. Gagal Cement Works packing
department has six silos with total storage capacity of
35200 tonnes. There are three Rotary Packer in Gagal I
packing plant with a capacity of 100m TPH each and two
electronic rotary packers in Gagal II packing pant with a
capacity of 180 TPM each. All the packers have truck-
loading facility because the cement form Gagal works to
different locations by road.
The various varieties of cement handled are
33 Grade Ordinary Portland Cement (OPC)
43 Grade Ordinary Portland Cement (OPC)
PPC (Portland Pozzolona Cement)
Assistant Manager-Plant reports to Manager Commercial for
Packing Plant Activities.

27
 Cement Dispatch Section

Cement dispatch section receives dispatch instruction for

Regional Marketing Office, Chandigarh and also from Shimla.
The trucks registered with authorized transporters enter the
factory gate with Loading Advice cum gate Pass. The Truck’s
Gross weight is taken at the Exit Gate by electronic
weighbridge and finally an Excise Invoice is issued to the
truck driver.
The departmental head reports to Manager Commercial.

THE CIVIL DEPARTMENT

In cement industry the maintenance and applications of
Refractories in kiln and its auxiliary units are one of the most
important job. It is the refractory, which is subject to all sort of,
processes and operational conditions like high temperature,
abrasion, alkalis, chemicals, thermal shocks, mechanical shocks
etc. And protects the metallic body of the units. Due to this fact
a strict adherence with the quality of the refractory at every step
from receipt to its application is of paramount importance. In
the organization the civil department does the complete dealing
with the refractory and is also responsible for all civil related
jobs in the factory and colony.
Deputy Manager-Civil who reports to Manager-Maintenance
coordinates the departmental activities.

28
MAINTENANCE INSPECTION PLANNING
& SYSTEMS (MIPS)
As the name suggests the main function of the department is
preparing and planning for carrying out various inspection,
maintenance job and top record and update the inspection
results. Inspection/Maintenance planning is based upon the
diagnosis of change in behavior pattern of sound, temperature,
heat, vibration, viscosity etc.

MIPS department also coordinates in planning the maintenance

activities of various departments so as to get optimum
utilization of stoppage duration. MIPS also carries out the down
tile analysis of main equipment.

GENERAL STORES
The general stores is the department which is involved in
making the balanced and timely flow of materials, spares, tools
and equipment. General Stores also arranges for the disposal of
the scrap and unwanted materials.
Deputy Manager who reports to Works Manager
coordinates the activities of the department.

29
INFORMATION SYSTEM
DEPARTMENT
The functions of Information System Department is to:
1.Transformation of EDP to Decision Support System
2. Optimize End User Computing to increase the Individual
Productivity
3. Capture Processing and Sharing of Information from the Net
4. In House Development & Deployment of Application
Packages
5. Database Maintenance & Administration
Hardware Setup
• UNIX based RISC Server.
• Win-NT based Intel Servers
• Microsoft Exchange Server
P I, P II, P III & P IV PCs :

Software Setup
Operating System: UNIX SVR 4, Win - NT 4.0, Win – 95 & Win - 98
Oracle 8 I, Developer 2000, Microsoft Exchange 5.5. MS-OFFICE
– 97
Office XP

Intra-plant Connectivity
All plants, RMOs, Head Office is connected through INSAT- 3B
services provided by TataNet. Connectivity to the external
World is through IIS, Head Office.
30
 MARKETING
ACC Range of cement and blended cements are marketed
through a network of 12 regional marketing offices, several area
offices and warehouses. A countrywide network of about 11,000
stock lists who, in turn, are assisted by the sub- dealer's back
this. Such an all-pervasive marketing network has an enabled
ACC to consolidate itself with a national presence. And the
customer is assured of being able to get quality ACC products
when and where he wants them.
Complementing this is a unique customer services
cell comprising qualified civil engineers, which assist and
advice customers with prior and post sales services. This
service begins with selection of type and grade of cement
(where applicable) to trouble - shooting and on site assistance.
Keeping pace with changing times, and an ever- growing
need for specialized services, ACC has been offering its
marketing expertise and distribution facilities to other producers
in cement and related areas. However, a precondition of all such
agreement is quality control supervision to be carried out by an
ACC expert located at the franchisee's plant. Currently, ACC has
franchising agreements for cement marketing with Alcon
Cement Company, Goa and Cochin cement Ltd., Cochin.
ACC also exports cement to SAARC Nations, especially
Nepal and Bangladesh on a regular basis.

31
 HUMAN RESOURCES DEPARTMENT
The basic object of setting up Human Resource Department is to
provide inputs to the employees for his optimum level of
efficiency. It includes looking after various HR related functions
such as training & development, performance and potential
appraisal, planning and allocation of manpower, industrial
relations including negotiations and dealing with staff functions
such as transfer, promotion, disciplinary action, grievance
handling etc. Department is also responsible for providing
welfare amenities/facilities to employees, dealing with land
matters, community development, colony administration etc.
Various details of personnel policies are readily available with
HR department. Manager-HR & Admn. Coordinates the activities
of the department.

Manager-HR & Admn. Coordinates the activities of the

department.

32
 FINANCE DEPARTMENT
Introduction:
Finance department plays a major role in the
working of any organization as for all-purpose, money is
required, which is arranged, procured and disbursed as the
finance department. They only make budget go for cost control
and maintain to optimum balance of cash for smooth operations.
As such the finance department in Gagal cement works is
looking after only some of the aspects like payment for
rawmaterial purchased, cost control and insurance aspects of
the unit. All receipts for cement sold is received by Regional
office at Chandigarh and fund financed by unit for different
payment from its R.O.
Hierarchy of the finance department:
It is a line organization having a full-fledged
department to manage the finance budget, costing and other
matter of this department. The ACC Gagal cement works
president has to manage two departments mainly i.e. works and
Finance
President

Manager Finance

Assistant Manager

Senior Officer Senior Officer Senior Officer

(Cost) (Assets) (Cash)

Clerks

Fixed Asset Cost Employee salary Transportation

33
 FINANCE DEPARTMENT

Account Section

The accounts section deals all the general accounting, employee

payroll, billing and matter related to taxation etc. The department
activities are coordinate by Assistant Manager-Accounts that
report to Manager-Finance.
Cost Section
The Cost Section does Accounting relating to preparation of
Monthly Cost Data and Bill Provisioning.Assistant Manager-Cost
coordinates the departmental activities and reports to Manager-
Finance.
GEERAL OR ACCOUNTS SECTION
Accounting Procedure
The accounting procedure of ACC Gagal cement works is
not a new complicated one. They follow a standardized rule of
making entries in there books of accounts or posting or making
their trial balance, Gagal cement works unit make its Trial
Balance in the monthly basis transaction and rent it to the Head
Office. Head Office prepares final accounts for all units not
individual unit.

34
Gagal cement works follows the following procedure

Step1: The quotations are called for acquiring or procuring the

particular assets, raw material fuel etc.

Step2: After then estimate decide/fixed through CESS.

(CAPITAL EXPENDITURE SECTION SCHEME)
Step3: After then allocation of budget for different requirements.

Step4: Then order re place, R.M/Assets be procured, inspected

(G.R.No) by the concerned department.

Step5: Then GR No. After quality check etc. is sent to finance

department where the cashier makes the payment.

Step6: The ledger department debits this in the books.

Step7: Finally at the wish of finance department assets is

charged and
declared free.

35
 FINANCE MANAGER
Finance Manager is totally responsible for all activities to
payment/receipts of cash and fund Management of the unit. His
decision on payment will be final as personal manual, account
manual directives laid by the organization. Under Finance
Manager the financial activities is disciplined in the manner as
per smooth functionary of all activities of payment such as
salary and wages, payment to sundry creditors which include all
pretty payments to local contractors, repurations, workers and
officers of all grade in working unit.
In detail it can be said that under finance manager their
will be payment of salary and wages, allocation of various
financial activities such as disbursement of cash by cashier, the
payment like contractors bill, local bill, raw material bill, stores
and spares payment of raw material and packing material,
traveling bills, outstation allowances. All the various mislenious
payments sanctioned are being made.
The financial activities are on summation of inputs information
system department (I.S.D.) provides various financial, cosying
outputs available on daily report, weakly report and monthly
reports. It also provides information like cash payment, voucher,
cash receipt voucher, and various types of bills also. Various
type inventory output summary of transaction bills of output
(local, contractor,raw material etc.) various type of finance
ledgers of the month and monthly trial balance.
Account staff to routs all payment in account department:-
To section the payment to staff,officer,mgt & to verify correction

36
FINANCIAL MANAGEMENT PREPAPER

 Payroll of employee.
 Accounting of sales.
 Financial accounts.
 Supply bills.
 Material Accounting.

COST SECTION
The Cost Section is a branch of accounting and has been
developed due to limitations of financial accounting. Financial
accounting is primarily concerned with record keeping directed
towards the preparation of profit and loss account and balance
sheet. It provides information regarding the profit and loss that
the business enterprise is making and also its financial position
on a particular date. The information concerning the business
enterprise is helpful to the management to control in a general
way the major function of business viz., finance, administration,
production and distribution but details regarding operating
efficiency of these divisions are lacking. Infect, the development
in the field of cost accounting is so quick and fields covered by
it are expanding so much in magnitude that it becomes difficult
for the management to lay down management policies, to guide
the management decisions or evaluate operating management
performance with the information provided by financial
accounting.
.
37
SUMMARY OF
WORKING
CAPITAL
ANALYSIS
UNDER
RATIO ANALYSIS

FUND FLOW ANALYSIS

WORKING CAPITAL BUDGET

38
39
It is stated in the diagram how company
has spent its earning during 2006:-

The diagram contains the following items:-

1. COAL AND OIL :- It is treated under direct expenses and

its cost is all about Rs.541.68 crore and it is 8.02% of the total
cost and shown in TRADING A/C.

2. TAXES AND DUTIES :- It includes various taxes like

corporate tax, sale tax etc. and duties like custom duty, excise
duty etc. and its cost is all about Rs.1263.04 crore and it is
18.70% of the total cost and being an indirect expenses is
treated under PROFIT AND LOSS A/C.

3. EMPLOYEE COST:- A company has to bear cost in

account of services rendered by its employee is called
employee cost. Employee costs are in form of wages, salary,
provident fund and other perks and allowances and these cost
are all about 318.02 crore. it is 4.71% of the total cost and treated
under TRADING AND PROFIT & LOSS A/C.

4. TRADING PURCHASE :- Trading purchase includes raw

material purchased by the company and is used for getting
output of the company. its cost is all about 53.42 crore and it is
0.79% of the total cost of the company.

5. REPAIR AND MAINTANANCE:- A company has to bear

repair and maintenance cost of machinery, building, furniture,
tools and equipments. It is treated as indirect expenses and
shown in PROFIT AND LOSS A/C. its cost is all about 265.48
crore. It is 3.93% of total cost of the company.

40
6. DIVIDEND:- A company has to pay dividend to equity and
preference shareholders for their amount invested in the
company. Company has paid Rs 322.04 crore as dividend in
2006 and it is 4.76% of total cost. It is shown in PROFIT AND
LOSS A/C.

7. POWER COST:- Electricity which is consumed for the

purpose production called power cost. A company has to bear
power cost at about 430.98 crore and it is 6.38% of the total cost.
It is treated as direct expenses and shown in TRADING A/C.

8. FREIGHT AND TRANSPORTATION AND OTHER

CHARGES:- A company has to bear cost of carrying goods
from one place to another place and loading and unloading the
goods called freight and transportation and other charges. It is
treated as indirect expanses and shown in PROFIT AND LOSS
A/C. its cost 983.39 crore and it is 14.56% of the total cost.

9. DEPRECIATION :- It is gradual decrease in the value of

fixed assets like machinery, building, furniture, tools and
equipments etc.it is treated as an indirect expanses and shown
in PROFIT AND LOSS A/C. it’s cost is all about 254.25 crore and
it is 3.76% of the total cost.

10. INTEREST ON BORROWING:- A company has to pay

interest on borrowing for long term and short term basis. It is
treated as an indirect expanses and shown in PROFIT & LOSS
A/C. it’s cost is all about 52.03 crore and it is 0.77% of the total
cost.

11. RETAINED PROFIT:- Some times a company adopts a

policy of ploughing back of profit for further investment called
retained profit. It is shown in the liabilities side of balance sheet.
Its cost is all about 909.80 crore and it is 13.47% of the total cost.

41
12. SELLING EXPENSES AND OTHER CHARGES :-
Those expenses are related with the sale of output in the market
called selling expanses and these are treated as an indirect
expenses and shown in PROFIT AND LOSS A/C. these cost are
all about 368.13 crore and it is 5.45% of the total cost.

13. MANUFACTURING AND OTHER EXPANSES:- Those

expanses which are related with production of commodity it is
treated as direct expanses and shown in TRADING A/C. it cost is
all about 318.50 crore and it is 4.71 % of total cost.

42
 COMPOSITE BALANCE SHEET OF ACC
LTD. AS ON 31-12-2005 & 31-12-2006
LIABILITIES 2005 2006 ASSETS 2005 2006
SHARE CAPITAL 187.76 185.54 FIXED ASSETS 4816.25 4628.64
LESS: - -
RESERVES & 2955.16 1951.21 DEPRECIATION 1893.76 1722.29
SURPLUSES NET BLOCK 2922.49 2906.35

LOAN FUND 771.16 1071.42 CAPITAL WORK IN 473.42 215.68

PROGRESS
DEPOSITS 144.82 104.75
INVESTMENT 503.54 293.75
DEFFERRED (LONG TERM)
TAX LIABILITIES 320.72 300.38
INVENTORIES 624.13 600.95
CURRENT
LIABILITIES 1024.73 913.28 SUNDRY DEBTORS 213.96 199.17

CASH & BANK 620.17 102.79

PROVISIONS 502.28 316.77 BALANCES

OTHER CURRENT 16.13 31.49

ASSETS

LOAN’S AND 631.85 486.76

ADVANCES

MISC. 0.94 6.41

EXPENDITURE
TOTAL 5906.63 4843.35 TOTAL 5906.63 4843.35

43
WORKING CAPITAL ANALYSIS CAN
BE STUDIED UNDER THE
FOLLOWING THREE HEADS:-

1. RATIO ANALYSIS :- Under the ratio

analysis It is urgent to find out short
term ratios that will effect working
capital of every company

2. FUND FLOW ANALYSIS :- Under the

fund flow analysis it is urgent to find out
changing in working capital and its
operation and sources and application of
funds.

3. WORKING CAPITAL BUDGET :- It

helps in forecasting the short term
requirement for every company.

44
 WORKING CAPITAL
INTRODUCTION:-
Working capital refers to that part of
firms capital which is required for financing short term or
current Assets such as cash, debtors, marketable security and
inventories. Thus funds invested in current assets keep
revolving fast and are being constantly converted in cash and
this cash flows out again in exchange for other current assets. It
is also known as revolving or circulating capital or short term
capital.

CONCEPTS OF WORKING CAPITAL :-

1. BALANCE SHEET CONCEPT
2. OPERATING CYCLE CONCEPT

1.BALANCE SHEET CONCEPT:-

(a) Gross working capital:-
The capital which is
invested in total current assets of the
enterprise.current assets are those assets that
can be converted into cash with in tenure of one
year.
CURRENT ASSETS= Inventory + sundry debtors+
cash & bank balances + other current assets
+loans & advances
= 624.13 + 213.96 + 620.17 + 16.13 + 531.85
= 2006.24 crore

45
(b) Net working capital:-
Net working capital is
the excess of current assets over current
liabilities
Net working capital=current assets-current
liabilities
= 2006.24—1024.73
= 981.51 crore
( Note:- Provision is not treated as current
liability)
2. OPERATING CYCLE CONCEPT:-

46
 DEBTO
CASH
-RS

RAW
SALES MATER
-IALS

WORK
FINISH-
IN
ED
PROGR
GOODS
-ESS

WORKING CAPITAL CYCLE : CIRCULAR FLOW CAPITAL

CONVERSION PROCESS:-
It starts with purchase of
raw material and other resources and ends with the realization
of cash from the sale of finished goods. Initially a company has
to purchase raw material and it is put into process called work in
process and got result as output “stock of finished goods and
this output is ready for sale and becomes debtors and ultimately
realization of cash and this cycle continuous again from cash to
purchase of raw material and so on.

GROSS OPERATING CYCLE = RMCP + WIPCP + FGCP

47
(1)Raw material conversion period (RMCP):-
Average stock of raw material____
Raw material consumption per day
Average stock of raw material :-
= opening Raw material + Closing raw material
2
= 362.06 + 410.43
2
= 386.245 crore
Raw material consumption per day :-
Total consumption during the year
No of days in a year
= 674.87/365
= 1.85 crore

RMCP = 386.245/1.85
= 208.78 Days (App. 209 days)

(2) Work in process conversion period (WIPCP):-

Average stock of work in progress
Total cost of production per day
Average stock of work in progress :-
Opening W.I.P. + Closing W.I.P
2
=167.47 + 149.72
2
= 158.95 Crore
Total cost of production per day = Actual production / 365
= 275.56/365
= 0.75 crore
= 158.95/0.75
WIPCP = 211.93 Days

(3) Finished goods conversion period (F.G.C.P.):-

Average stock of finished goods
Total cost of sale per day
Average stock of finished goods :-
Opening F.G. + Closing F.G.
2
=71.42 + 63.98
48
 2
= 67.70 crore
Total cost of sale per day = Total cost of sale / 365
= 4415.51 / 365
= 12.09 crore
F.G.C.P. = 67.70 / 12.09
F.G.C.P. ` = 5.596 days

(4) Receivable conversion period :-

Average Accounts Receivables
Net credit sales per day
Average Accounts Receivables = opening A.R + Closing A.R
2
= 199.17 + 213.96
2
= 206.565 crore
Net credir sales per day = 5803.48/365
= 15.89 crore
R.C.P = 206.565/15.89
R.C.P = 13 days

(5) Payables deferral period:-

Average payables
Net credit purchase per day
Average payables = opening payables + closing payables
2
= 103.78 + 120.05
2
= 111.915 crore
Net credit purchase per day = Net credit purchase / 365
= 1473.37 / 365
= 4.037 crore
P.D.P = 111.915 / 4.037
P.D.P = 28 days

GROSS OPERATING CYCLE:-

RMCP + WIPCP + FGCP + R.C.P.
= 209 + 212 + 6 + 13
= 440 Days
NET OPERATING CYCLE:-
49
= GROSS OPERATING CYCLE—PAYABLES DEFFERAL PERIOD
= 440--28
= 412 Days

INTERPRETATION :-
Funds invested in current Assets keep
revolving fast and are being constantly converted into cash and
this cash flows out again in exchange for other current assets
hence it is known as revolving or circulating or operating cycle.
The whole circulating capital cycle will be finished in 412 days or
App. 14 months.

RATIO
A Ratio is a simple arithmetical expression of the relationship of
one number to another. In simple language ratio is one number
expressed in terms of another and can be worked out by
dividing one number into the others. A Ratio is known as a
symptom like blood pressure, the pulse rate or the temperature
of an individual.
Example=current assets/current liabilities
.
RATIO ANALYSES

50
A Ratio analyses is one of the most powerful tools of financial
analyses. it is used as device to analyze and interpret the
financial help of enterprise. Just like a doctor examines his
patient by recording his body temperature, blood pressure etc
before his conclusion regarding the illness and before giving
him treatment. With the help of ratio analyses one can measure
the financial condition of the firm and point out whether the
condition is strong good or poor. one can arrive at a decision of
how the performance of a firm is deteriorating and can find out
short term financial position or liquidity position and suggest
what a company must do for improving its working capital.
THE VARIOUS RATIOS THAT EFFECTS
THE WOKING CAPITAL OF A COMPANY DISCUSSED AS
BELOW:-
1.CURRENT RATIO:-
CURRENT ASSETS___
CURRENT LIABILITIES
As given:
Current assets = Inventories + sundry debtors + cash & bank
balance + other current assets
=624.13 + 213.96 + 620.17 + 16.13 + 531.85
= 2006.24 crore

Current liabilities = sundry creditors + outstanding interest +

investor education & protection fund + sundry deposits +
Employees
=854.48 + 12.94 + 11.08 + 62.76 + 17.23 + 66.24
= 1024.73 crore.
CURRENT RATIO = 2006.24/1024.73
=1.958:1

INTERPRETATION:-
The above calculated current ratio is
indicating us that the ACC Ltd. company is liquid and has the
ability to pay its current obligations in time as and when they
become due. As a convention 2:1 is considered as a banker’s
rule of thumb and current ratio of ACC Ltd. Company stands at
1.958:1 and it is near about 2 that is why company is running in
strong position. Because of ultimate ratio there may be fast
moving stocks and debtors may go up because debt collection
has become satisfactory and with the increase in cash & bank
51
balances may be used in further investment. Hence the working
capital of a company would be increased because of having
sufficient fund.

2. QUICK OR ACID TEST OR LIQUID RATIO:-

QUICK ASSETS______
CURRENT LIABILITIES

QUICK ASSETS = Current Assets – ( inventories + prepaid exp.)

= 2006.24 – ( 624.13 + 6.02 )
=1376.09 crore

CURRENT LIABILITIES = 1024.73 crore

QUICK RATIO = 1376.09/1024.73

= 1.343:1

INTERPRETATION:-
The above calculated quick ratio is
indicating us that the ACC Ltd. company is moving in the
brighter side of life in this competitive era and has got sufficient
fund to meet its current obligations. As a convention 1:1 is
considered as a rule of thumb and quick ratio of ACC Ltd.
company stands at 1.343:1 and there is an increase of about
0.343 and having a good sign for companies name, fame and
reputation. The position of quick assets like cash & bank
balance and debtors is much strong as compared to current
liabilities.

3.ABSOLUTE LIQUID RATIO OR CASH RATIO:-

ABSOLUTE LIQUID ASSETS

CURRENT LIABILITIES

=620.17/1024.73
=0.61:1

INTERPRETATION:-

52
 A.L.R represents conversion of some
items into cash rapidly and involves cash in hand, cash at bank
and marketable securities. The accepted norms for this ratio is
50% or 0.5:1 or 1:2 and the absolute liquid ratio of ACC Ltd.
stands at 0.61:1 which is more than 0.5. Hence it is good symbol
for company to meet its day to day expenses and to promote
saving.

4. (a) INVENTORY TURNOVER RATIO:-

COST OF GOODS SOLD
AVERAGE STOCK
C.O.G.S. = Net Sale — Gross profit
= 5803.48 – 1756.10
= 4047.38 crore
AVERAGE STOCK = Opening stock + closing stock
2
= 600.95 + 624.13
2
=612.54 crore
Inventory Turnover Ratio = 4047.38/612.54
Current year I.T.R.(2006) = 6.61 Times
Previous year I.T.R.(2005) = 5.60 Times

(b) INVENTORY CONVERSION PERIOD:-

DAYS IN A YEAR (365)________
INVENTORY TURNOVER RATIO
= 365/6.61
Current year (2006) = 55.22 DAYS (App. 55 days )
Previous year(2005) = 65.17 DAYS (App. 65 days )

INTERPRETATION:-
Inventory turnover ratio measures the
velocity of conversion of stock into sale. Usually the previous
year inventory turnover ratio was 5.60 times which is less than
current year inventory turnover ratio that is 6.61 times. Thus this
high stock velocity indicates efficient management of inventory
because more frequently the stocks are sold, the lesser amount
of money is required to finance the inventory. Sometimes a high
inventory turnover may be the result of a very low level of
inventory which results in shortage of goods in relation to
53
demand. An inventory turnover ratio should not be too high and
too low and ACC Ltd. inventory turnover ratio falls in medium
category. The current year inventory conversion period is 55
days which is less than previous year and thus a company has
converted its inventory into cash with in a short period of time.

4.(a) DEBTORS TURNOVER RATIO:-

TOTAL SALE
DEBTORS
= 5803.48/213.96
CURRENT YEAR (2006) = 27.12 times
PREVIOUS YEAR (2005) = 14.29 times

(b) AVERAGE COLLECTION PERIOD:-

DAYS IN A YEAR (365)
DEBTORS TURNOVER RATIO
= 365/27.12
CURRENT YEAR (2006) = 13.46 DAYS
PREVIOUS YEAR (2005) = 25.54 DAYS

INTERPRETATION:-
Debtors turnover ratio indicates the
number of times the debtors are turned over during a year.
Recently debtors turnover ratio has been increased from 14.29
times to 27.12 times. Thus the higher value of debtor turnover
represents sufficient management over a company and having
less chances of becoming bad debts and results to increase in
sale of commodities and received cash may be used for
production purpose and funds flows in smooth way. At
presently average collection period is 13 days which is less than
25 days of previous year. Hence the time taken by ACC Ltd. to
convert its debtors into cash has been minimized.

5. (a) CREDITORS TURNOVER RATIO :-

Net credit annual purchase
Average trade creditor
Net credit annual purchase = Purchase + raw material + packing
material
= 53.42 + 1216.55 + 203.40
= 1473.37 crore
Average trade creditor = 103.78 + 120.05
2
54
 = 111.915 crore
C.T.R. =1473.37/111.915
Current year (2006) = 13.165 Times
Previous year (2005) = 10 Times

(b) AVERAGE PAYMENT PREIOD:-

NO OF WORKING DAYS
C.T.R.
= 365/13.165
Current year (2006) = 27.73 Days
Previous year (2005) = 36 Days

INTERPRETATION:-
Those person who supply goods to
company are called creditors and they are interested in finding
out how much time the company will take in repaying its
creditors. The creditors turnover ratio has been increased from
10 to 13 times and company got itself capable of purchasing raw
material on time and on the other hand suppliers can get
payment in spite of delivering goods as fast as possible. Thus it
is a good sign for both company and suppliers. The average
payment period has been decreased from 36 days to 28 days
and this will help in running operating cycle very smoothly.

6. WORKING CAPITAL TURNOVER RATIO:-

COST OF SALE_____________
AVERAGE WORKING CAPITAL
Cost of sale = C.O.G.S. + selling & distribution expanses
= 4047.38 + 368.13
= 4415.51 crore
Average working capital = opening W.C. + closing W.C.
2
= 507.88 + 981.51
2
55
 = 744.695
Working capital turnover ratio = 4415.51/744.695
= 5.93 Times

INTERPRETATION:-
Working capital turnover ratio indicates
the velocity of the utilization of net working capital. This ratio
indicates the no. of times the working capital is turned over in
the course of a year. It measures the efficiency with which the
working capital is being used by a company. The cost incurred
on sale can be compensated by using working capital at 5.93
times by ACC LTD COMPANY.

7. WORKING CAPITAL LEVERAGE :-

% CHANGE IN RETURN ON INVESTMENT
% CHANGE IN CURRENT ASSETS
Return on investment (2006) = 38%
Return on investment (2005) = 18%

% change in ROI = 38-18

18
= 1.11%
CURRENT ASSESTS(2006) = 2006.24
CURRENT ASSESTS(2005) = 1421.16

% CHANGE IN C.A = 2006.24-1421.16

1421.16
= 0.41%
WORKING CAPITAL LEVERAGE = 1.11/ 0.41
= 2.7

INTERPRETATION :-
Working capital leverage measure the
impact of a change in current assets on change in investment.
Here % change in current assets 0.41% has been calculated
while as % change in investment is 1.11%. so company can use
amount drawn for 2.7 Times in order to reach on return on
investment.

8.RATIO OF CURRENT LIABILITIES TO TANGIBLE NET WORTH

56
 CURRENT LIABILITIES__
TANGIBLE NET WORTH
= 1024.73/3141.98
= 0.326: 1

INTERPRETATION:-
From the above calculated figure is
indicating us that a company has sufficient tangible worth for
meeting its current liabilities with out interrupting circulating
capital. Here net worth is 1/3rd of current liabilities and showing
company moving on the right direction and having different
sources of generating finance.

FUND FLOW ANALYSES

A fund flow analysis is a technical device used to study the
sources from which additional funds were derived and the use
to which these sources were put. It is an effective management
tool to study changes in the working capital of business
enterprises between beginning and ending financial statements
dates. The fund flow analysis consists of:
1. Preparing schedule of change in working capital.
2. State of sources and application of funds.

FLOW OF FUNDS ?

CURRENT ASSETS NO CURRENT LIABILITIES

YES
YES
YES YES

57
 NON-CURRENT ASSETS NON-CURRENT LIABILITIES
NO

STATEMENT OR SCHEDULE OF CHANGE IN WORKING

CAPITAL:-
Working capital means the excess of current
assets over current liabilities. There are following four rules to
kept in mind while preparing schedule of change in working
capital given as under :-
1. An increase in current assets increases working capital.
2. A decrease in current assets decreases working capital.
3. An increase in current liabilities decreases working capital.
4. A decrease in current liabilities increases working capital.

STATEMENT OF SCHDULE OF CHANGE IN WORKING CAPITAL

OF ACC LTD COMPANY

58
 PARTICULARS PREVIOUS YEAR CURRENT YEAR INCREASE DECREASE
CURRENT ASSETS:-
CASH IN HAND 0.7 2.48 1.78
CASH AT BANK 102.09 617.69 515.6
SUNDRY DEBTORS 199.17 213.96 14.79
LOAN & ADVANCES:-
PREPAID EXPENSES 8.61 6.02 2.59
OTHER ADVANCES 478.15 525.83 47.68
OTHER CURRENT ASSETS:-
ACCRUED INTEREST 1.5 7.5 6
OTHER 29.99 8.63 21.36
INVENTORY 600.95 624.13
TOTAL CURRENT ASSETS 1421.16 2006.23 23.18

CURRENT LIABILITIES:-
SUNDRY LIABILITIES 913.28 1024.73 111.45
PROVISIONS 316.77 502.28 185.51
TOTAL CURRENT LIABILITIES 1230.05 1527.01
WORKING CAPITAL 191.11 479.23
NET INCREASE IN WORKING CAPITAL 288.12 288.12
479.23 479.23 609.03 609.12

INTERPRETATION:-
Statement of changes in
working capital is prepared to show the changes in the working
capital between the two balance sheet dates. The difference is
recorded for each individual current assets & current liabilities.
If we talk about current assets like cash & bank balances,
sundry debtors, inventory and other current assets have left
positive effect on working capital except only prepaid expenses.
On the other hand all current liabilities have shown increase in
balances with comparing from the previous balances. The ACC
working capital has been increased from 191.11 crore to 479.23
crore, hence company has found net increase in working capital
as amount as 288.12 crore. It is good sign for companies’ short
term financial health.

CALCULATION OF FUNDS FROM OPERATION

RESERVE IN THE BEGINNING ( 1-1-2006) 1951.21

RESERVE AT THE END ( 31-12-2006) 2955.16

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 PROFIT FOR THE YEAR(2955.16-1951.21) 1003.95
ADD : DEPRICIATION ( 1893.76-1722.29) 171.47
ADD : TO WRITTEN OFF MISC. EXPENCES 5.47

FUNDS FROM OPERATION 1180.89

INTERPRETATION:-
After finding out changes in working
capital a company is required to find out funds from operation
for which all items that are already debited in profit & loss
account must be added in the net difference of reserve &
surpluses of current & previous year because these all items
are treated as loss for company and on the other hand those
items are credited in profit & loss account must be deducted
in the net difference of reserve & surpluses. From the above
calculations it is found that profit for the year is 1003.95 crore
and change in deprecation is 171.47 crore and written off
misc. expenses is 5.47 hence company has derived funds
from its operation near about to 1180.89 crore.

NOTES:-

CALCULATION OF REPAYMENT OF LOAN

LOAN FUNDS IN THE BEGINNING OF 2006 = 1071.42

LOAN FUNDS IN THE END OF 2006 = 771.16

REPAYMENT OF LOAN DURING THE YEAR = 300.26

( 1071.42-771.16)

FUND FLOW STATEMENT OF ACC L.T.D. COMPANY

AS ON 31-12-2006
FUNDS FROM OPERATION 1180.89 REPAYMENT OF LOAN 300.26
ISSUE OF SHARE CAPITAL 2.22 PURCHASE OF FIXED ASSETS 187.61

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CASH RECEIVED FROM 40.07 NET INCREASE IN WORKING 288.12
DEPOSITS CAPITAL
NET DEFFERED TAX LIABILITIES 20.34 PURCHASE OF INVESTMENT 209.79
CAPITAL WORK IN PROGRESS 257.74

TOTAL 1243.52 TOTAL 1243.52

INTERPRETATION:-
The fund flow statement is a statement
which shows the movement of funds and is a report of the
financial operations of a company. It indicates various means by
which funds were obtained during the particular period and the
ways in which these funds were employed. Flow of funds is not
possible when both accounts are current or non current (fixed)
because current assets remain same as current liabilities but
when one account is current and other is non current than there
is perfect flow of funds. From the above prepared fund flow
statement o9f ACC company it is find out that the company has
issued further share capital of about 2.22 crore and treated as
soures of company because it will generate funds for company.
Company has minimized its long term funds that will treated as
repayment of loan it is indicating out flow of funds for company
and shown on application side of fund flow statement. Company
has generate funds from its operations and treated as sources.
The company has received cash from its deposits near about to
40.07 crore. And deferred tax liability amounted to 20.34 crore is
our source. Company has made additional purchase of fixed
assets amounting to 187.61 crore it is out flow of cash for
company and increase in working capital & capital work in
progress should be treated as out going of funds.

WORKING CAPITAL BUDGET

A Budget is a financial or quantitative expression of business
plans and policies to be persuade in the future period of time.
Working capital budget is a process of estimating working
capital needs and the sources to finance them and then
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 comparing the budgeted figure with the actual performance and
if necessary to take corrective actions in future and its objective
to ensure effective utilization of resources.

STATEMENT SHOWING NET WORKING CAPITAL REQUIREMENT AMOUNT

CURRENT ASSETS:-

Stock of raw material (4104300000 * 209/365) 2350133424.00

Stock of work in progress (1497200000 * 212/365) 869606575.00

Stock of finished goods ( 639800000 * 6/365) 10517260.00

Amount blocked in debtors at sale ( 2139600000 * 13/365) 76204932.00

3306462191.00
LESS : CURRENT LIABILITIES :-

Sundry Creditors (8544800000 * 28/365) 655491507.00

Net working capital required (C.A – C.L) 2650970684.00

INTERPRETATION:-
By preparing working capital
budget it is find out that total working capital required should be
near about to 265.09 crore for ACC LTD. Company in
forthcoming year and net increase in working capital is 288.12
crore has been calculated by preparing schedule of change in
working capital with comparing current figures with previous
figures.

NEEDS OF STUDY

The study in itself a problem of how best to manage capital of a

company i.e. ACC Ltd. Therefore, needs for conducting the
study are as follows:-
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 1. Due to time between production and sales, every
company has maintain a substantial portion of working
capital to run its operation smoothly.
2. In case of manufacturing companies it is required to
maintain about 40% - 50% of their capital as current and
remaining in the forma of fixed assets for the large scale
production of product. So, every manufacturing
company needs to arrange required working capital.
3. investment in current assets represents a substantial
portion of total investment.
4. investment in current assets and the level of current
liabilities have to be geared quickly to change in sales,
to be sure, fixed asets investment and long term
financial position are also responsive to variation in
sales.

OBJECTIVE OF THE STUDY

The objectives aim is to highlight the reasons how important is

the financial system and financial statement for an organization
or company. There are various objectives of the study are as
follows:
1. To study liquidity of the firm.
2. To study smoothly flow of funds and its application
3. To estimate working capital requirement in future
4. To study short term financial position

RESEARCH METHODOLOGY
Our research project has a specified framework for collecting
the data in an effective manner. Such framework is called

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“Research Design”. The research process which was followed
by our consisted of following steps:

Defining the problem & Research Objectives:- The definition of

problem includes the study of financial system in ACC Ltd.
GAGAL CEMENT WORKS.

Developing The Research Plan:- It is very important to research

anything we must know about the it’s main sources where we
get the main information regarding the research plan the
development of research plan has following steps:-

Data Sources:- There are two types of data were taken into
consideration i.e. Secondary data and primary data. The
secondary data has been used to make the analysis because we
have no much sufficient time and resources to collect the
primary data.

Secondary data:- secondary data is that data which is collected

for other purpose. This is indirect collection of data from
sources containing past or recent past information like annual
report, balance sheet, books, newspapers and magazines etc.

Collecting the information:-For this research methodology, we

were collecting information with the help annual reports,
balance sheet and other companies publications.

Analyse the information :- In this research methodology the

next step is to extract the pertinent finding from the collected
data. We tabulated this collected dada and develop the means of
analyzing the data. There are so many tools for financial
analysis but we mainly concentrate on the RATIO analysis and
supportive information taken from the other means i.e.
comparative financial statement with its major components viz.
common size statement, comparative financial statement.

BIBLIOGRAPHY
• 71ST ANNUAL REPORT (ACC LTD.) 2004-2005
2005-2006
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• FINANCIAL MANAGEMENT SHASHI. K. GUPTA
I.M. PANDEY
• MANAGEMENT ACCOUNTING SHARMA & GUPTA
• WEBSITE www.accltd.com

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