Documentos de Académico
Documentos de Profesional
Documentos de Cultura
A PROJECT REPORT
CONTENT
CHAPTER-1
1.1 – INTRODUCTION
1.2 - STATEMENT OF THE PROBLEM
1.3 - OBJECTIVES OF THE STUDY
1.4 - SCOPE OF THE STUDY
1.5 - LIMITATIONS OF THE STUDY
CHAPTER-2
2.1- COMPANY PROFILE
2.2- PRODUCT PROFILE
CHAPTER-3
3.1 - RESEARCH DESIGN
3.2 - DATA COLLECTION DETAILS
3. 3 - TOOLS OF THE STUDY
3.4 - PERIOD OF STUDY
CHAPTER-4
4.1. ANALYSIS OF THE DATA
CHAPTER-5
5.1 – FINDINGS
5.2 –SUGGESTIONS
5.3- CONCLUSIONS
CHAPTER-1
1.1 - INTRODUCTION
Working Capital Management is concerned with the problems that arise in attempting to manage the
current assets, the current liabilities and the interrelationship that exists between them. The term
current assets refer to those assets which in the ordinary course of business can be, or will be,
converted into cash within one year without undergoing diminution in value and without disturbing the
operations of the firm.
Current Liabilities of are those liabilities, which are intended at their inception, to be paid in the ordinary
course of business within a year, out of the current assets or earning of the concern.
The goal of working capital management is to manage the firm’s current assets and liabilities in such a
way that a satisfactory level of working capital is maintained.
The researcher aim to find out the liquidity and profitability position of the company. This study is
concerned with problems involved in working capital like estimation of working capital and provision of
working capital at the time it is needed.
Working capital represents that part of resources of the business, which makes the business work. In the
absence of proper management of working capital it would be difficult to achieve the requirement of
bank.
To examine financial performance of company in the area of working capital during 2003-04 to 2007-
08.
Hence, an attempt should be made to analyze the size and composition of working capital and whether
such an investment will lead to increased of business ever a period of time. After determining the
requirements of current assets, one of the importance tasks of the financial manager is to select an
assortment of appropriate sources of finance for the current assets.
The efficient utilization of funds is very important in an organization. The scope of this project is to
analyze the efficiency utilization of working capital. This project document emphasizes in handling the
various techniques in articulating the glass factory’s monetary strengths and weakness and its growth
for the specific period of time. So this project will help the organization’s future by suggesting means to
metering the optimal level is working capital.
The time period taken for the study is only 5 years (2003-04 to 2007-08) which cannot be taken as a
whole fulfillment.
As ratio is the primary tool used in the analysis it suffers from its own limitations.
The working capital analysis is made for a particular organization, therefore the result are not
applicable to other organization.
Hence any change that takes place in the middle of the year will not be accounted as figure at the end
of the accounting year.
CHAPTER-2
INTRODUCTION:
AGI glaspac was established in the year 1964 under the management of Sri D. Radha Krishna Reddy,
Managing Director with a joint Venture of Andhra Pradesh Industrial Developing Corporation(APIDC)
named as Associated Glass Industries Limited. The company then manufactured products like Bottles
and Crystal Glassware like Flower Vases.Tumblers, Candle Stands etc., With a Capital base of Rs.15
crores. At that time the manpower of the company was around 1300 to 1400. The company was a Joint
venture with Andhra Pradesh Government and Hungarian Collaboration for technical know-how.
In the year 1970, company imported machinery from Hungary and USA to manufacture the Crystal Glass
and Glassware. The first production of the company was on May 2nd 1971.The company had a turnover
of about Rs.20 to Rs.25 lakhs per month during the years 1971-77. In 1979, the company became a sick
unit due to wide fluctuations in profitability. The management decided to shutdown two big
departments (HW-1/grinding section). About 350-400 workers were laid-off.
In November 1979, Management was forced to declare a lay-off for the entire organization for a period
of one and half year.
In the year 1981, the management of AGI decided to handover the factory to the Government of Andhra
Pradesh .Since the State Government had stake in the company, they started looking for buyer and
finally Somany Group could finalize a deal. After the takeover, the management invested huge amounts
for upgrading the technology and also closed down some non-profitable units like Crystal Glass Division.
The name of the company was changed to Hindustan Sanitaryware and Industries Limited in June 1981
and subsequently it has been changed as AGI glaspac.
AGI glaspac is now dedicated to manufacture high quality glass containers to meet the stringent and
demanding quality standards for packaging needs of food, pharmaceuticals, beverage, soft drinks,
liquor, cosmetic and other industries. The factory is located in south –central India, close to raw material
sources and fast growing markets, AGI is the largest manufacturer of Container Glass in south India and
is the third largest in the country.
It has a pioneering role in development of Glass containers for many critical packaging applications. Over
the past 30 years of operation the company has built up an excellent reputation for quality and caters to
a huge and demanding customer base with a product range covering Flint, Amber and Green containers.
.
The manufacturing facilities are among the most modern available in the country to achieve high levels
of productivity and quality.
The company is certified for ISO 9001 Quality Systems and ISO 14001 Environmental systems. The
combined possession of these two certificates is a rare distinction not only in India but even
internationally. These certifications reflect upon the company’s commitment to supply quality products
under stringent environmental controls.
The container glass industry requires high capital investment, close monitoring, controls of operations
and continuous investment in modernization and up gradation to meet increasingly higher quality
expectations of its customers.
The following sections describe the various subunits in the manufacturing unit.
BATCH HOUSE
Sourcing of quality raw materials, their processing and mixing are critical to production of quality glass
containers. The handling and processing equipment has to be accurate, reliable and consistent in their
operations. AGI has an excellent supply source for its inputs and has also modernized the critical parts of
process. This enabled the company to control the operations in storage, transport, mixing and charging
into furnace continuously.
FURNACE
Furnace is the “back bone” of any glass Industry. In AGI there are two types of furnace, which are New
Hollowware-II(HW-II) and Hollowware-III(HW-II). The capacities of furnaces are 250 MT per day (Flint)
and 90 MT (Amber) per day. The Amber furnace can be converted as Green Furnace based on the
requirements.
Furnace number NHW-II at the AGI glaspac factory is a medium sized end fired regenerative unit with a
Deep Refiner designed to melt up to 250 tones per day (tpd) of flint soda lime container glass.
Glass conditioning is provided by a SORG Percon, working end and 5force hearths, of which 4 are SORG
AMC units, whilst the other is of local design.
DESCRIPTION: Furnace number NHW-II at AGI Glaspac is a 93 square meter end-fired melter with a
SORG Deep Refiner. The furnace is designed for a maximum melting load of 250 tpd of flint container
glass. The furnace is conventional in design, albeit including the Deep refiner; and features two
doghouses each provide with a pusher type batch charger. The main fuel oil, with 3 SORG® oil burners
installed per port.
This furnace supplies to the five production lines, which are specified for a range of tonnages, from a
minimum of 8 tpd on the smallest line to a maximum of 106 tpd on the largest line. This range
underlines the extent to which the operation has to be flexible to serve the market.
The glass melting furnaces, especially flint furnace is the state of art designed and built by SORG,
Germany, the world leaders in glass furnace technology with many patents such as deep refiner to their
credit. The optimum range if temperature is1550°C-1600C and that is in the conditioning areas is
1100°C-1200°C. This is controlled in the range of +/-1C to homogeneous, clear and consistent glass
quality. The level of glass in the melter, holding about 300 tons of glass is controlled within +/-30 micros
(.03mm) variation, for close control in container weights consistency of quality. The furnace is computer
controlled and is continuously monitored.
I.S. MACHINES:
.
The key is automatic bottle making machines are also completely computer controlled. They are used to
impart high level of reliability, accuracy and consistency to machine operation and bottle quality. These
machines are versatile to make both press and blow operations and blow and blow operations in single
gob and double gob configuration. They are capable of controlling the container weights to close
tolerance and hence provide containers with consistent volume, a key quality parameter required for
high speed filling time operations.
INSPECTION MACHINES
Large high volume bottle making lines are provided with automatic Inspection Machines imported from
reputed manufacturers in the US. These machines reject bottles automatically with even a minute crack
in critical areas of the bottle. It also ensures consistency of top sealing surface and bore size to close
tolerances.
AGI is distinguished for designing and producing for some of its key customers in a short period of about
a week from concept to bulk supply. This is possible due to its state of the art CAD/CAM facilities and
highly skilled designers and dedicated product development engineers and technicians.
TABLE 2.1.1
CUSTOMER BASE NO. OF. CUSTOMERS NO. OF.PRODUCTS
Pharmaceuticals 208 92
Soft Drinks 101
Liquor 50 35
Beer 5 5
Cosmetic& Others 6 6
LOCATION
The Hindustan Sanitaryware and Industries Limited is operating totally four units (three sanitaryware
units and one glass unit).
Ceramic Division at bahadurgarh, Ceramic Division at Biwinagar, A.P., Raasi Division near patancheru and
the AGI Glaspac, which is located at varadanagar, BoraBanda, Kukatpally Municipality, Hyderabad, in 33
acres, manufacturing different types of container glassware. The day-to-day functions of Procurement,
Production, Marketing &Administration are being carried out in the factory premises.
REGISTERED OFFICE:
MARKETING OFFICES:
The company’s Marketing Offices, each headed by a Regional Manager, are situated in the following
cities
1) Delhi
2) Bangalore
3) Kolkata
4) Mumbai
5) Chennai
1) Flint Glass:
a) Sand e) Feldspar
b) Soda Ash f) Barites
c) Lime Stone g) Sodium
d) Dolomite h) Selenium
2) Amber Glass:
a) Sand f) Petroleum
b) Soda Ash g) Barites
c) Lime Stone h) Iron Oxide
d) Dolomite i) Slag
e) Feldspar j) Pyrites
3) Green Glass:
a) Sand
e) Dolomite
b) Soda Ash
f) Feldspar
c) Broken glass
g) Barite
d) Lime stone
MANUFACTURING PROCESS
PROCESS:
Bulk raw materials like Sand, Soda Ash, Limestone, Dolomite, Feldspar are treated cullet (broken glass)
are mixed together in the mixer and stored in the bunker. This mixer is known as a Batch
The glass is made in the furnace by feeding the batch through a doghouse and melting the same by
means of producer gas at about 1500°c.
The molten glass is then taken to the conditioning zone called the fore hearths, which is heated by
LPG/LDO.
Through the feeder mechanism glass is then fed in accurately cut and proportioned gobs to blank
moulds present in the IS forming machines.
Bottles are formed either by “blow and blow process” or by “press and blow process” on six and eight
sections, single or double gob machines.
After the bottle has been formed, it is automatically transferred to the conveyor and then to the
stacking equipment, which pushes off bottles in the annealing lehr. This is a stress relieving process,
which releases stress, which are developed daring the forming process.
The bottles are annealed at a temperature of 450°c-500°c. All the bottles coming out of the lehr are
inspected and immediately packed for dispatch or sent to the Applied Color Lab(ACL) Department,
where color printing is done.
These printed bottles are again heated in the lehr to ensure durability of color prints. These are re-
inspected again and then packed for dispatch.
PRESENT SCENARIO
There is a heavy competition among the manufacturers of glassware throughout India. To meet the
requirements of the customers and to standout against the competitors, the management achieved the
ISO 9001 and ISO 14001 certification.
QUALITY POLICY
Achieve customer satisfaction by being a quality conscious organization through sound systems and
practices total employee involvements
ENVIRONMENTAL POLICY
3) Establish objectives and targets for environmental performance review regularly and reverse policy, if
required.
4) Promote increased environmental awareness among the
people on company and interested parties.
YEAR
TURNOVER IN CRORES
1996-1997 45.30 Crores
1997-1998 48.58 Crores
1998-1999 61.48 Crores
1999-2000 61.00 Crores
2000-2001 67.00 Crores
2001-2002 85.00 Crores
2002-2003 118.00 Crores
2003-2004 147.00 Crores
2004-2005 142.00 Crores
2005-2006 182.00 Crores
2006-07 230.00 Crores
2007-2008 240.00 Crores
TABLE: 2.2.2
CATEGORY
MAN-POWER
Managers
33
Officers
201
Staff
50
Workers
327
Total:
611
CHAPTER-3
METHODOLOGY
Research Methodology is a way to systematically solve the research problem. It may be understood as a
science how research is done scientifically. It has many dimensions and research methods to constitute
a part of the research methodology.
The research design for this study is descriptive. In this design, the researcher has no control over the
variables. He can only report what is happening. The research can only discover causes but cannot
control the variable. This is also called as “Expert facts research”.
The analysis was done by considering the past five years data i.e. from 2003-04 to 2007-08. The study
was conducted for four month.
CHAPTER-4
DATA ANALYSIS & INTERPRETATIONS
SALES
NET WORKING CAPITAL = --------------
WORKING CAPITAL
IMPORTANT OBSERVATIONS:
In the year 2003-04 Sales have been increased by 26% but Inventory has
decreased by -45% and Sundry Debtors have gone down by -18%.
In the year 2004-05 Sales have been decreased by more than three times but Inventory and Sundry
Debtors have been increased by 63% and 40% respectively.
In the year 2005-06 Sales have been increased by 26% but Inventory and Sundry Debtors have been
decreased by 52% and 37% respectively.
In the year 2006-07 Sales have been increased by 27% but Inventory and Sundry Debtors have been
decreased by -20% and -23% respectively.
In the year 2007-08 Sales have been decreased to 5.2%, Inventory has decreased to -2.4% and Sundry
Debtors have been increased by 27%.
IMPORTANT OBSERVATIONS:
Except in the year 2003-04 & 2006-07 the percentage of working capital is more than of Sales. It shows
that the firm is concentrating more on increase in working capital
After computing the period of operating cycle the total number of operating cycles that can be
completed during a year can be computed by dividing 365 days with a No. of operating days in a cycle.
The total operating expenditure in the year when divide by the No. of operating cycles ion a year will
give average amount of the working capital requirements.
TABLE NO- 4.1.6
(Rupees in Crores)
ITEMS Year Year Year Year Year
2007-08 2006-07 2005-06 2004-05 2003-04
1) Raw Materials Holding Period:
a) Raw Materials Consumption 62.72 60.74 37.04 52.19 30.23
b) Raw Materials Consumption Per Day 0.17 0.17 0.10 0.14 0.08
c) Raw Materials Stock 21.82 35.17 20.00 8.08 2.05
d) Raw Materials Holding Days 126.98 211.34 197.08 56.51 24.75
2) Work-in-Progress Holding Period:
a) Cost of Production 239.59 216.05 178.96 159.85 123.71
b) Cost of Production Per Day 0.66 0.59 0.49 0.44 0.34
c) Work-in-Progress Holding Period 0.49 0.44 0.43 0.38 0.24
d) Work-in-Progress Holding Days 0.75 0.74 0.88 0.87 0.71
3) Finished Goods Holding Period:
a) Cost of Goods Sold 241.11 229.40 163.84 148.32 140.45
b) Cost of Goods Per Day 0.66 0.63 0.45 0.41 0.38
c) Finished Goods Inventory 19.86 21.38 34.73 19.61 8.08
d) Finished Goods Inventory Holding Days 30.06 34.02 77.37 48.26 21.00
4) Collection Period:
a) Credit Sales 272.80 260.00 162.10 204.70 168.00
b) Sales Per Day 0.75 0.71 0.44 0.56 0.46
c) Book Debts 55.51 43.76 56.55 41.24 29.41
d) Book Debts Outstanding Days 74.27 61.43 127.33 73.53 63.90
5) Payment Deferral Period:
a) Credit Purchases 239.59 216.05 178.96 159.85 123.77
b) Purchases Per Day 0.66 0.59 0.49 0.44 0.34
c) Creditors 30.00 25.74 24.06 23.00 18.04
d) Creditors Outstanding Days 45.70 43.49 49.07 52.52 53.20
SOURCE: Balance sheet
(Rupees in Crores)
(Rupees in Crores)
PARTICULARS No.of Days
Year Year Year Year Year
2007-08 2006-07 2005-06 2004-05 2003-04
R 126.98 211.34 197.08 56.51 24.75
W 0.75 0.74 0.88 0.87 0.71
F 30.06 34.02 77.37 48.26 21.00
D 74.27 61.43 127.33 73.53 63.90
C 45.70 43.49 49.07 52.52 53.20
Current Ratio (Current Assets / Current Liabilities) (along with acid test ratio to supplement it) has
traditionally been considered the best indicator of the working capital situation. It has been stated by
many accountants that a current ration of 2 (two) for a manufacturing firm implies that the firm has an
optimum amount of working capital. Thus, if the Current Assets are twice the amount of Current
Liabilities, a manufacturing concern is supposed to be having an adequate amount of working capital.
This is supplemented by Acid Test Ratio (Quick Assets/Current Liabilities) which should be at least 1
(one). As a thumb rule, this may be quite adequate. Thus, in a company where the inventories are easily
saleable and the sundry debtors are as good as liquid cash, the current ratio may be lower than 2 and
yet firm may be sound. An optimum working Capital ratio is dependent upon the business situation as
such and the nature and composition of various current assets.
From the above table we can observe that the current ratio is above the standard norm as the minimum
recommend ratio is 1.33, which is followed by the Commercial Banks. It indicates excess investment in
current assets, which should be avoided as it, impairs the firm’s profitability.
The Quick Ratio, which is 1.80, 1.45, 1.91, 1.62, 1.84, satisfies the current ratio, which should be 1:1 as
per the Rule of Thumb. Therefore the company shows their efficient management.
The Super Quick Ratio as indicated in the above table has been 0.10, 0.16, 0.12, 0.08, 0.14 indicates the
improvement in the level of the company.
INVENTORY TURNOVER OF AGI glaspac FOR 5 YEARS
IMPORTANT OBSERVATIONS:
From the given data the trend line of Inventory has increased, except in the year 2004-05.
The higher the turnover of inventory the better it is from the point of view of efficiency in Working
Capital Management.
TABLE NO- 4.1.1.4
Rupees in Crores
Particulars Year Year Year Year Year
2003-04 2004-05 2005-06 2006-07 2007-08
Sales 26% -3.47% 26% 27% 5.18%
Inventories -45% 63% 52% -20% -2.4%
SOURCE: Balance sheet
IMPORTANT OBSERVATIONS:
It can be observed that in the year 2004-05 and 2005-06 inventories has increased more than that of the
percentage of sales. But in the year 2003-04, 2006-07 & 2007-08 percentage of inventory has decreased
and it is less than percentage increase in sales.
Inventory level is generally adequate in the company, as the inventory is less than sales during the
current year.
IMPORTANT OBSERVATIONS:
If the average collection period is found to be consistently higher than the net credit period extended by
the company to its customers, then the collection efforts has to be more effective as cash is locked up
for a period more than what is warranted by the credit terms extended.
CHAPTER-5
5- RESULTS AND DISCUSSIONS
5.1 – FINDINGS
• It is observed that except in the year 2003-04 & 2006-07 the percentage of working capital is more
than of Sales. It shows that the firm is concentrating more on increase in working capital.
• Current Ratio (Current Assets / Current Liabilities) (along with acid test ratio to supplement it) has
traditionally been considered the best indicator of the working capital situation. It has been stated by
many accountants that a current ration of 2 (two) for a manufacturing firm implies that the firm has an
optimum amount of working capital. Thus, if the Current Assets are twice the amount of Current
Liabilities, a manufacturing concern is supposed to be having an adequate amount of working capital.
• This is supplemented by Acid Test Ratio (Quick Assets/Current Liabilities) which should be at least 1
(one). As a thumb rule, this may be quite adequate. Thus, in a company where the inventories are easily
saleable and the sundry debtors are as good as liquid cash, the current ratio may be lower than 2 and
yet firm may be sound. An optimum working Capital ratio is dependent upon the business situation as
such and the nature and composition of various current assets.
• From the given data it is observe that the current ratio is above the standard norm as the minimum
recommend ratio is 1.33, which is followed by the Commercial Banks. It indicates excess investment in
current assets, which should be avoided as it, impairs the firm’s profitability.
• The Quick Ratio, which is 1.80, 1.45, 1.91, 1.62, 1.84, satisfies the current ratio, which should be 1:1 as
per the Rule of Thumb. Therefore the company shows their efficient management.
• The Super Quick Ratio as indicated in the above table has been 0.10, 0.16, 0.12, 0.08, 0.14 indicates
the improvement in the level of the company.
• From the given data the trend line of Inventory has increased, except in the year 2004-05. The higher
the turnover of inventory the better it is from the point of view of efficiency in Working Capital
Management.
• It can be observed that in the year 2004-05 and 2005-06 inventories has increased more than that of
the percentage of sales. But in the year 2003-04, 2006-07 & 2007-08 percentage of inventory has
decreased and it is less than percentage increase in sales.
• Inventory level is generally adequate in the company, as the inventory is less than sales during the
year 2007-08.
• If the average collection period is found to be consistently higher than the net credit period extended
by the company to its customers, then the collection efforts has to be more effective as cash is locked up
for a period more than what is warranted by the credit terms extended.