Usha Martin

A PROJECT REPORT ON SUMMER TRAINING
AT USHA MARTIN LTD.

TATISILWAI, RANCHI, JHARKHAND.
[Sub. –Ascertainment of Working Capital requirements for the Financial Year 2012-13]
BY: -
MANOJ KUMAR PRAMANIK.
REG. NO.:-
CUJ/1/2009/MBA/14.
CENTRE FOR BUSINESS

ADMINISTRATION.
CENTRAL UNIVERSITY OF
JHARKHAND.
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A Report on
ASCERTAINMENT OF WORKING CAPITAL REQUIREMENTS FOR
THE YEAR 2012-13 OF USHA MARTIN LTD. - RANCHI UNIT
By
MANOJ KUMAR PRAMANIK
CUJ/1/2009/MBA/14
A Report submitted in partial fulfilment

of the requirements of
MBA program of
CUJ, Ranchi
Submitted to
CA Rajiv Singh
Deputy Manager (Accounts and Commercial)
Usha Martin Limited, Ranchi
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DECLARATION
I hereby declare that this project report entitled “A PROJECT REPORT ON

ASCERTAINMENT OF WORKING CAPITAL REQUAIREMENT OF USHA MARTIN
LTD. FOR THE FINANCIAL YEAR 2012-13” have been prepared by me in partial
fulfilment of the requirement for the award of MBA.
I also declared that the best of my knowledge, this project is a result of my

own effort and it has not been submitted to any other university or institute for the
award of any professional degree.
Date:
Place: (Signature)
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Certificate of Guide
This is to certify that Mr. Manoj Kumar Pramanik, Enrol No: CUJ/01/2009/MBA/14 ,
student of the Central University of Jharkhand of MBA Program has undertaken the
project titled “A Report on ASCERTAINMENT OF WORKING CAPITAL REQUIREMENTS
FOR THE YEAR 2012-13 OF USHA MARTIN LTD. - RANCHI UNIT” under my guidance.
No portion of this project report is pu blished or submitted to any other University

or organization. This study was done for the fulfilment of the requirements of
Summer Training Project of the MBA Program.
The information in the report is genuine to the best of his knowledge and has been
collected from reliable sources, the Internet, and the annual reports of the Usha
Martin. The analysis and compilation was the original work of the student based on
secondary data.
He has completed his project satisfactorily. This certificate is being issue d for
academic purpose.
CA- Rajiv Singh
Deputy Manager (Accounts and
Commercial) Usha Martin Limited.
Tatisilwai, Ranchi
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ACKNOWLEDGEMENT
There are times when one feels a sense of accomplishment combined with a sense
of gratitude. Writing the acknowledgement page in this project is one among them.
This project would have been a distant dream without the grace of almighty. So,
first and foremost, I, profusely thank god for his blessings and grace, without which
my project would not have seen the light of the day.
I would like to say thankful to Mr. ARVIND KUMAR HR Department, Usha Martin who
has given me opportunity to do my internship in this organization.
I would like to say thank to HOD sir, Prof. TAPOSH GHOSHAL, Dean of
School of Management Sciences, Central University of Jharkhand, who provided me a
golden chance for Summer Training and my especial thanks to Mr. RAJIV SINGH,
Finance Department, Usha Martin Ltd., for his guidance and appreciative support in
spite of busy schedule at Usha
Martin Limited.
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PREFACE
Summer training is essential to get the practical orientation of theoretical knowledge

and analysis of the business realities at the corporate level. This 1 month
training procedure made us understand the working culture of the business
organization.
The summer training in this reputed Company had been a challenging and
exciting experience which brought us closer to the business organization.
My topic is Ascertainment of Working Capital Requirement of Usha Martin Limited for

the
Financial Year 2012-13(Wire Ropes and Speciality Product Division) in USHA
MARTIN LIMITED, TATISILWAI RANCHI, JHARKHAND.
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EXECUTIVE SUMMARY
The basic idea behind selection of this topic is mainly due to its nature and
importance in overall financial management of any organization.
One of the most important areas in the day to day manageme nt of the firm is
the ascertainment of working capital. Working capital Ascertainment is the functional
area of finance that covers all the current accounts of the firm. It is concerned
with management of the level of individual current assets as well as the management
of total working capital.
Primary function o f financial management is not only procurement of fund but
also their effective use with the objective maximizing the owner’s wealth. The
allocation
of funds, therefore, is an important function of financial management.
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TABLE OF CONTENTS
CONTENTS PAGE NUMBER

1. Company Profile 9-11
2. Board of Directors 11
3. Organizational Structure 12
4. Products 13
5. Vision, Mission and Quality Policy 14
6. Milestone 15-17
7. Manufacturing Process 17
8. Best Practices at Usha Martin 18-21
9. Corporate Social Responsibility 21
10. SWOT Analysis 22-24
11. Core Competence 24
12. Achievement 25-31
13. Financial Analysis 31-39
- Shareholding Pattern
- Cash Management
- Debtors Management
- Inventory Management
14. Ascertaining of Working Capital 39-47
- About Working Capital
- Objective of the Study
- Research Methodology
- Working Capital Cycle
- Working Capital Management
15. P/L Account & Working Capital Analysis 48-72
- Problem Formulation
- Analysis of P/L Account
- Ascertaining of Working Capital
16. Recommendation 73
17. Conclusions and My Learning 74
18. Bibliography 75
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1. COMPANY PROFILE:-
Usha Martin Limited, together with its subsidiaries, engages in the manufacture and
sale of steel products in India and internationally. The company offers steel wire rods,
rolled products, billets, pig iron, and allied products; wire and wire ropes products,
such as steel wires, strands, wire ropes, cords, and bright bars; and related
accessories, including wire drawing and allied machines, as well as jelly filled
telecommun ication cables. It provides coil and bar products for wire rods and
straight length applications; ropes for aerial, crane, elevator, engineering, fishing,
mining, titan oil field, shipping, structural, and flexi and fancy fence applications;
and wire and s trands for power, construction, automobile, general engineering, and
binding/stationary applications. The company also offers structural products for
suspension bridges, cable stayed bridges, tower guy strands, suspended roof
structure, boom pendants, and architectural applications, as well as track ropes
for bulk material handling systems, and fine and conveyor cords. In addition, it
provides general engineering slings, sugar slings, pendant lines, grommet slings, cable
laid slings, structural slings, deco rative slings, mooring lines, multi legged slings,
stainless slings, flemish eye slings, and hand spliced slings, as well as slings with
mechanical splicing with ferrule and steel sleeves. The company was founded in 1961
and is based in Kolkata, India. Ush a Martin Limited is a part of the Usha Martin Group.
Inc eption of
business
Started in 1961 in Ranchi, Jharkhand as a wire rope manufacturing company, today

the Usha Martin Group is a USD 1 billion conglomerate with a global presence. The
group has set new standards in the manufacture of wire rods, bright bars, steel
wires, speciality wires, wire ropes, strand, conveyor cord, wire drawing and cable
machinery. With continuous growth in both the domestic and international markets,
Usha Martin,
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the Group’s flagship company has emerged as India’s largest and the world’s second
largest steel wire rope manufacturer.
For Usha Martin, the path to sustainable growth was long; the management
constantly tried out innovative business practices. With initiative to diversify the
customer base by venturing into the international markets, moving up the value
chain and fully integrating its business process to maximize stakeholder value.
Thinking globa l
In 1979, the company set up a steel plant with wire r od rolling mill at Jamshedpur,
to benefit from business integration. This ensured a steady supply of steel for
the manufacture of value added products. Today, the Jamshedpur unit has a truly
integrated speciality steel manufacturing facility of 700,000 MT per annum. Out of
which, about
35% is consumed internally by its plant in Ranchi, Hoshiarpur & Bangkok, producing
steel wire, steel strand, steel cords, bright bar and steel wire ropes. All its
manufacturing facilities are ISO 9000 certified and the stee l plant was India’s first
to receive the TPM Excellence Award from JIPM, Japan.
Going Global
With local success come global aspirations. Currently, the company has
overseas manufacturing operations in Thailand, UK and Dubai. Besides a vast
network of distribution centres and marketing offices spread across the globe to
support an ever growing worldwide customer base. The company exports over 60%
of the wire rope output and about 20% of the total wire rods produced.
Looking Forwa rd
Usha Martin’s future plans are focused on its operation in Jharkhand – a state rich in
mineral resources. Future priorities include product mix enrichment, cost reduction
and infrastructural improvements. Already flourishing in its recent foray into mining
operations, the company is planning to invest in its iron ore and coal mines, sinter
plant, pellet plant, power plants, while also enhancing its steel making and value added
products capacity with an investment of Rs 2,100 crore.
Building Bridges
But what set Usha Martin apart is its unwavering commitment to social responsibility.
For over three decades the company has invested ample man -hours and capital on
community development projects for integrated prosperity in rural Jharkhand,
through
a CSR arm, Krishi Gram Vikas Kendra (KGVK).
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This NGO undertakes various development initiatives, following a model of Total
Village Management (TVM). Focusing on key areas like Watershed development,
agricultural productivity, better health practices, education, empowering women and
enco uraging micro enterprise. In recognition to its effort Usha Martin has been
awarded the prestigious TERI Award for Corporate Social Responsibility in 2006.
2. BOARD OF DIRECTORS: -
1. Mr. Prashant jhawar (chairman)
2. B K jhawar (chairman-Emeritus)
3. Brij k jhawar (Director)
4. N J jhawar (Director)
5. A K choudhari (Director)
6. Mr Ashok basu (Director)
7. Mr Salil singhal (Director)
8. Mrs Ramni nirula (director)
9. G n bajpai (Director)
10. Mr Nripendra mishra (Director)
11. Rajiv Jhawar (MD)
12. P Bhattacharya (JT MD)
13. Dr Vijay sharma (Ex Director & CE,steel business)
14. P K Jain (Ex Director & CE, wire & Wire rope)
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3. ORGANIZATIONAL STRUCTURE: -
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PRESENCE: -
• Headquartered in Kolkata, India;

• Iron ore mine (Barajamda) and captive coal mines (Daltonganj) in the state of
Jharkhand, India;
• Steel manufacturing facilities located in Jamshedpur and Agra;
• Wire and wire rope manufacturing facilities located in Ranchi (Jharkhand)

and Hoshiarpur (Punjab) in India, Bangkok (Thailand), Dubai (the UAE)
and Nottinghamshire (the UK);
• High–value wire and conveyor cord manufacturing facilities at Ranchi;
• Machinery manufacturing and engineering application canters in Ranchi and

Bangalore;
• Manufacturing units for bright bars in Ranchi and Sriperumbudur (Tamil

Nadu); Rigging shops in the Netherlands and the UK.
• Telecommunication cables manufacture at Silvassa (India).
Wide global network of marketing and distribution warehouses in Singap ore,
4. PRODUCTS: -
Following are the products manufactured by the company.
1. Coils and Bars.

2. Bright and Bars.
3. Ropes.
4. Wire and Strand.
5. Structural.
6. Silings.
7. Cord.
8. Machinery.
9. Telecables.
Use of Ropes:-
1. Arial rope.
2. Crane rope.
3. Elevator rope.
4. Engineering rope.
5. Fishing rope.
6. Mining rope.
7. Structural rope.
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Use of Wire and Strand:-
1. Power.
2. Construction.
3. Automobile.
4. General engineering.
PRODUCT QUALITY /TESTING FACILITIES:-
1. ISO-9001 ANAB.
2. ISO-9001 UKAS.
3. ISO-14001.
4. TPM certificate.
5. API-certificate.
6. ABS-manufacturing Assessment.
7. ABS-API9A.
8. DNV -certificate.
9. Lloyd’s-certificate.
10. Inmetro-certificate.
5. VISION, MISSION AND QUALITY POLICY:
Vision:-
To be a respected, world class & leadership in business, in quality,
productivity, profitability & customer satisfaction.
Mission:-
 To be a customer and shareholder observed factory.
 To enhance value to shareholders and services to all stake holders.
 To develop highly motive team with a sense of satisfaction.
 To excel as a value driven organization.
 To create the value in case of quality.
 To expand its area of its operation& utilize the raw material efficiently.
Quality policy:-
 Providing product & services that meet customer expectation.
 Continual improvement to our quality management system and process.
 Continues enrichment of the skills and knowledge through training and training.
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 Compliance to all applicable statutory and regulatory.
 Fostering the professional development of our employee.
 Our suppliers and customers are our partner in progress.
6. MILESTONES:-
The Company is a part of the Usha Martin Group, which was formed in India in the
early
1960s with the establishment of Usha Martin Industries Limited (UMIL), engaged in
the manufacture of steel wires, wire ropes and other related products. The group
was promoted by Mr. B. K. Jhawar, who is the Chairman of the Company. Usha
Beltron Limited was incorporated on 21 May, 1986 as a joint venture between
Usha Martin Industries Limited, Bihar State Electronics Development Corporation
Limited, AEG Kabel, Germany (now Kabelrhydt and a member of the Alcatel
group) and DEG, Germany, to manufacture Jelly Filled Telephone Cables (JFTC).
Pursuant to the Orders of the Hon'ble High Court of Kolkata and Patna( Ranchi
Bench) Usha Martin Industries Limited merged with Usha Beltron Limited with effect
from 15th May, 1998. Thereafter the registered office was shifted from Tatisilwai,
Ranchi, Jharkhand to Kolkata in the State of West Bengal in the year 2000. The name
of Usha Beltron Limited was changed to Usha Martin Limited with effect from 1st May,
2003.
Group Companies
USSIL
Usha Siam Steel Industries (“USSIL") was incorporated in
1980 as a joint venture between Usha Martin Industries,
India and Leading Industrialists in Thailand - Promoted by
Board of Investment ("BOI") for production of Steel Wires
and Ropes.
USSIL became a Public Company Limited in 1997 and

subsequently become a wholly owned subsidiary of the Usha
Martin Limited, India.
USSIL is among the largest integrated Steel Wires, Industrial

Strands, Control Cables and Wire ropes Plants based in the
ASEAN region with an annual manufacturing capacity of
36,000 MT.
UM Singapore
Established in 2000, is a wholly owned subsidiary of Usha
Martin Limited, India. It has been operational as a
distribution center for Usha Martin Group’s core business
of steel wire ropes and related products in South East
Asia. It also has
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distribution set up in Australia, Vietnam & Indonesia.
BWWR
Established in 2003, Brunton Wolf Wire Ropes FZCO is a
joint venture between Usha Martin Limited of India and
Gustav Wolf of Germany.
BWWR is the first wire rope factory set up in the middle

east, situated in Jebel Ali Free Zone Enterprise (FZE) with an
annual capacity of 12,000 MT. The product range includes
general engineering rope, elevator rope, crane
rope, off -shore application rope, etc.
UM Cables
A wholly owned subsidiary of Usha Martin Limited, located
at Silvassa, Western India, manufactures PIJF Copper
Telecom cables and Optical Fibre Cables and has an annual
capacity of
2.9 MCKM and 35000 RKM respectively.
UMIL
Established in 1997, Usha Martin International Limited is
a wholly owned subsidiary of Usha Martin Limited, formed
to facilitate distribution & marketing of the group’s wire &
wire rope products in Europe. The company also acquired in
2001 a Nottinghamshire based Wire Rope manufacturing c
ompany “Brunton Shaw UK” with an annual capacity of
6,000 MT. It also specialises in providing services to oil
drilling and offshore exploration activities thru its
arm European Management & Marine
Corporation having offices in Aberdeen (UK).
UM America
A wholly owned subsidiary of Usha Martin Limited, India. It
has been operational as a distribution center for Usha
Martin Group’s core business of steel wire ropes and related
products in United States of America.
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7. MANUFACTURING PROCESS: -
(Wire & Strands)
a) The wire rod is sent for surface treatment for cleaning and then for drawing.
After this it’s packed and despatched as direct drawn wire.
b) The drawn wire is patented and again drawn. Then it’s packed and despatched
as
ungalvanised wire.
c) The drawn wire is galvanised and then it’s packed and despatched as galvanised
steel wire.
d) The drawn wire is stranded & then packed and despatched as galvanised
steel wire.
The drawn wire is again stranded and sent for induced heating and then it packed
and despatched as P C Strand.
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(Ropes)
a) First the wire rod is sent for surface treatment for cleaning of the rod.
b) Then the cleaned rod is sent for drawing.
c) The drawn rod is sent for patenting and further for galvanisation.
d) After galvanisation the rod is again drawn and strands are
formed. e) The strands are coiled to form the “wire rope”.
8. BEST PRACTICES AT USHA MARTIN
A. Business Drivers: - ( PQCDSM).
1. Productivity.
2. Quality.
3. Cost-effective.
4. Delivery.
5. Safety.
6. Moral.
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B. 5 S Framework:-
1. Sort. (To find out necessary as per value.)
2. Set in order. (For reducing searching time.)
3. Shine. (Remove dirt and dust.)
4. Standardisation.
5. Sustain.(Self -discipline).
TPM ( Total Produc tive Ma intena nc e) polic y:-
Productivity
5S
Speed
Framework
Cost Quality
TPM pillars
Innovation. Motivation
Deliver
y
McKinsey 7’ S Framework
The model is most often used as a tool to assess and monitor changes in the
internal situation of an organization.
The model is based on the theory that, for an organization to perform well, these
seven elements need to be aligned and mutually reinforcing. So, the model can be used
to help identify what needs to be realigned to improve performance, or to maintain
alignment (and performance) during other types of change.
Whatever the type of change – restructuring, new processes, organizational

merger, new systems, change of leadership, and so on – the model can be used to
understand
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how the organizational elements are interrelated, and so ensure that the wider
impact of changes made in one area is taken into consideration.
When it comes to asking the right questions, the website, Mind Tools
(mindtools.com), has developed a checklist and a matrix to keep track of how the
seven element s align with each other.
OBJECTIVE OF THE MODEL (To analyze how well an organization is positioned

to achieve its intended objective
Usage
 Improve the performance of a company

 Examine the likely effects of future changes within a company
 Align departments and processes during a merger or acquisition
 Determine how best to implement a proposed strategy
The Seven Interdependent Elements
 The basic premise of the model is that there are seven internal aspects of
an organization that need to be aligned if it is to be successful
Hard Elements
 Strategy
 Structure
 Systems
Soft Elements
 Shared Values
 Skills
 Style
 Staff
WORLD’S LARGEST ARCH BRIDGE IN DUBAI
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WIRE AND WIRE ROPE DIVISION
The Usha Martin Ltd. is produce 100,000 MT / annum manufacturing facilities at

Ranchi (Eastern India) is amongst the top four wire rope producers in the world. Since
its inception, the division has continuously developed and expanded its range of
product offerings and is considered a pioneer in certa in classes of products in India.
Steel wire ropes manufactured by the division find wide applications in oil
exploration, mining, elevators, Crane, fishing, construction, load transportation and
general engineering sectors.
HOWRAH BRIDGE & INCHEON BRIDGE NEW SONGDO CITY, KOREA
9. CORPORATE SOCIAL RESPONSIBILITY:-
 Usha Martin has strongly believed in its social responsibility being an

important part of business philosophy. The company has promoted Krishi
Gram Vikas Kendra (KGVK), as its’ social arms to take appropriate initiative in
various areas which affect health, social life and economic well being of people
for a period of over 35 years. Presently, KGVK reaches out to about one lack
household of tribal people and weaker sections of society in over 700 villages
across 6 districts in the State of Jharkhand.
 KGVK has been taking on various activities in basic health, hygiene and
sanitation, education, women empowerment, community development,
agriculture, integrated watershed development, micro enterprise
development, capacity building and need based training to generate self
employment and
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sustainable income for weaker section of society. It has successfully completed
many projects and earned and earned recognition, appr eciation and
accolades from wide section of NGOs, government and semi government
agencies at state, national and international levels.
 KGVK has been getting active support from, and through alliance and
partnerships with, reputed national and international agencies such as US-
AID, CEDPA, FUTURE, CARE, CAPART, ICICI Bank, NFI, IRH, Georgetown
University, IFC Washington, World Bank funded SWA-Shakti, CINI,
JTDS, National Foundation of Indian, Goal India, Partners in Change, BAU,
ISRO, ICAR Palandu, NABARD, SIDBI, Lac Research Institute, Govt. of Indian,
Govt. of Jharkhand and local NGO’s.
10. SWOT ANALYSIS:-
Strength:
1. Business model: The Company is extensively integrated from iron ore and
coal block mines to captive power to the manufacture of steel, wires a nd wire
ropes.
2. Proximity: The Company’s iron ore mines and coal mines are 160 km and 250
km respectively from downstream consuming centres, saving logistic
costs.
3. Geographic mix: The Company’s revenues are drawn from India (76%) and the
rest of the world (24%). Global revenues are drawn from 14 countries.
4. Product mix: The Company’s product portfolio comprises rolled products, steel
wire rods, wires, strands, wire ropes, cords and cables, among others.
5. Presence: The Company enjoys an Indian and glo bal presence. Ten
manufacturing units are located within India and three abroad. The
Company’s customers are pan- India and pan-global, serviced by a large
number of dealers, stock points and representatives.
6. Certifications: The Company’s manufacturing units are ISO 9000- certified.

The Company was accredited with TERI award and TPM Excellence award in
2006 and 2008 respectively.
7. Financials: The Company enjoyed a gearing of 1.02, a sub -7% average cost
of debt as on 31 st March, 2010 and interest cover of 3.94 times for 2009 -10.
8. Customisation: The Company manufactures customised products resulting

in value-addition, repeat business and enduring client relationships.
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9. Engineering skills: The Company’s decades of engineering knowledge related
to the manufacture of wire and cable–making machines helped optimise plant,
equipment and production facilities.
10. Technology: The Company invested in cutting-edge technologies across

its manufacturing units; it deployed an advanced ERP solution for
operational support.
11. Social responsibility: The Company’s social initiative arm, an NGO namely
Krishi Gram Vikas Kendra (KGVK) earned trust and respect for undertaking
activities like education, natural resource management, health, trade
facilitation, dairy, farming and livelihood, among others, across 350 villages
Technology:
Weakness:
1. Machine & tools have become old & obsolete

2. Over looked small customer.
3. Semi – Automatic planned
4. High production cost
5. Demand of elevator ropes has increased due to global infrastructure
development
6. Non effective advertising image
Opportunity:
1. UML can develop device for measuring breaking load

2. Fishing is developing in the southern coastal cities
3. Mushrooming of apartment in India & Abroad UMI can increase its profit,
its fives more emphasis on direct marketing with customer
4. Now present condition reliance has found crude oil resources in Krishna
Godavari basin in south, new opportunities present for UML to produce rope
5. UML can develop device for measuring brea king load
6. Competition are not much strong in secondary market
Threat:
1. Low price of the rivals product are a great threat for UML
2. High production cost
3. Local political instability
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Competitors:-
These are the main competitors of the company in this sector.

1. Elango Industries Ltd.
2. Inducto Steel L td.
3. Jindal Stainless L td.
4. Mahindra Ugine Steel Comp any L td.
5. Mukand Ltd.
6. Panchmahal Steel Ltd.
7. Shah Alloys L td.
11. Core Competence: -
Cost control: The vertical integration – from natural resources to wire rope –
facilitates
the adequate availability of key inputs at a significantly low cost compared
with purchases from the open market and provides a near -complete control over the
entire value chain, strengthening the Company’s competitive edge.
1. Quality products: The Company manufactures products where product

quality is of paramount importance (namely wire ropes for critical
applications). The vertically integrated model allows a stringent monitoring
of product quality across every process and ensures consistent product
quality across batches – a big competitive advantage. The Company’s wire
ropes, earned the confidence of global customers and authorities of repute
including OTIS, JIPM, ABS, API, LLOYDS and ISO, a recognition of its high
quality.
2. Delivery speed. The vertically-integrated business model facilitates red

ucing cycle time (from indent to product delivery) and allows the Company to
meet delivery schedules of clients owing to minimal dependence on external
inputs and factors. Besides, a complete control on the value chain allows the
Company
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to meet urgent client deliveries (when necessary), strengthening business
relationships
3. Product basket Integration allows the Company to create a product range

which caters to diverse applications across multiple sectors. For
example, the Company’s wire rope product basket is one of the largest globally.
This enables it to capitalise on most of the emerging opportunities in its
business space. Besides, the Company’s presence across the value chain
created multiple revenue verticals – pig iron, billets, structurals, bars, wire
rods, wires, strands, cords and wire ropes –providing diverse growth drivers.
4. Customisation. Integrated operations help customise products to suit

specialised applications for key customer requirements, enhancing
customer loyalty.
5. Profit maximisation. A footprint across the value chain allows the Company
to provide an optimum sales mix in line with the external environment
helping maximise profitability. Besides, this business model enables the
Company to protect its business profitability in adverse market conditions.
6. Capacity increase Complete control of the back-end of the value chain,

namely iron ore and coal reserves, allows the Company to expand
downstream capacities to capitalise on emerging stabilising cost opportunities
7. Cyclicality protection The Company is protected from the vagaries of price

fluctuations in key inputs, namely iron ore and coal, stabilising costs. It also
enables the Company to capture the upside in the marketplace when prices
rise (without a commensurate increase in costs).
12. ACHIEVEMENTS:-
- The company was incorporated on 22nd May, and obtained the Certificate of
Commencement of Business on 17th July, 1986. It was promoted jointly by Usha
Martin Industries Ltd. (UMI) and Bihar State Electronic Development Corporation
Ltd. (BSEDC).
- The Company undertook to set up a project for the manufacture of 5,00,000

conductor kilometres (CKM) per annum of jelly filled cables.
- The Company entered into a technical agreement with AEG Kabel of West Germany
for technical know-how and training of Indian technicians at the collaborator'splant.
1988
- The Company had developed PCM system cable used for transmission of digital
signals and supplied higher size cables upto 1600 pairs. The Company had also
developed foam
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skin type cable of size 1800 x 0.4 for the first time in India.
- 70 shares subscribed for by the signatories to the Memorandum of Association.

70,99,930 shares were then issued at par out of which the following shares
were reserved and allotted on a firm basis:
- (i) 16,96,930 shares to Usha Martin Industries Ltd., its directors, their friends, etc.;
- (ii) 18,46,000 shares to BSEDC;
- (iii) 10,72,000 shares to AEG - Kabel of West Germany and
- (iv) 7,10,000 shares to DEG of West Bermany. Out of the remaining 17,75 ,000
shares,
3,55,000 shares were reserved for preferential allotment to employees, etc., but only
14,800 shares taken up. The balance 14,20,000 shares along with 3,40,200 shares
not taken up by employees, were offered for public subscription during April 1988
(All were taken up).
1989
- During May/June 1989, the company offered 14,20,000 rights equity shares in the
prop. 1:5 (All were taken up). Simultaneously, 71,000 No. of equity shares were
also offered to the employees on an equitable basis. Only 5,2 00 shares taken up.
Balance
65,800 shares allowed to lapse.
1994
- The Company issued 10,00,000 No. of equity shares of Rs 10 each at a premium of Rs
169 per share on preferential basis to promoters.
- During October, the Company issued 32,71,028 GDRs an d these representing

32,71,028 No. of equity shares were issued at a price of Rs 335.66 per share.
- Usha Martin Telekom Ltd., a joint venture along with Usha Martin Industries Ltd.
& Telekom, Malaysia have been providing cellular phone services in Calcutta under
the brand name "COMMAND". 1996
- The Company was closely monitoring the development in power sector and
was evaluating various options.
- Summit Usha Martin Finance Corporation Ltd. (Formerly Usha Martin Finance
Corporation Ltd.) became a 50:50 joint venture between Usha Martin Group of
Industries & Sumitomo Corporation of Japan.
26
- Other joint ventures of the company are Usha Siam Steel Industries Ltd., Usha Martin
Europe Ltd. and Usha Martin Americas Inc. 1997
- The Company decided to spin-off the Software Division into one of the subsidiaries
of the company.
- Usha Martin Industries Ltd. was merged with the company. After amalgamation
company has become a multi-divisional company, covering the manufacture of pig
iron, steel wires and wire ro ds, wire ropes and jelly-filed cables.
- 11,477,334 No. of equity shares issued to the shareholders of erstwhile Usha Martin
Industries Ltd. Pursuant to the Scheme of Amalgamation with the Company and
13,56,200 No. of equity shares of Rs 10 each held by e rstwhile Usha Martin Industries
Ltd. were canacelled due to Amalgamation with the Company.
- Ubest a division of the Usha Beltron's Ltd. has signed an agreement with Swiss
Telecom PTT to offer Indian cellular operators natel sim card application
platform (sicap) software product for immediate implementation.
- Usha Beltron Ltd. (UBL) was promoted jointly in 1986 by Usha Martin Industries
and Bihar State Electronic development Corporation in technical collaboration with
AEG Kabel, Germany to manufacture jelly filled tele-cables (JFTC).
- The company will have three major divisions -wire and wire ropes, software
and telecom.
1998
- Crisil has downgraded the outstanding ratings of Usha Beltron Ltd. (UBL) and
also removed them from rating watch.
- The Jhawars-promoted wire rope-to-jelly filed cables firm, Usha Beltron Ltd, is set
to extend its activities into telecommunications in a big way.
- Usha Beltron's telecom foray will include extending activities to different fields
of operating, maintaining and providing telecommunications services of all types
and other value-added services and to design, instal and/or erect all types of
telecommunication network systems and enter into joint venture agreement with
Indian and foreign parties.
- Usha Beltron Ltd. of the Jhawars is all set to change its name to Usha Martin Ltd this
fiscal, according to sources in the company. This is for the second time, in a span of
just
one year, that the company is going to change its name.
27
- The company has initiated moves to r estructure its international marketing
and distribution business.
- The Company embarked on creating a new cable manufacturing facility at

Silvassa with a capacity of 27 lckm through UM Cables Ltd., a wholly owned
subsidiary of the company.
1999
- The company has introduced a voluntary retirement scheme at its cable and wire
rope factories in Ranchi from last month. The scheme has been offered to workers and
officers who are of and over forty years of age and have completed 10 years of service.
- UM Cable Ltd, a wholly-owned subsidiary of Usha Beltron Ltd. belonging to the Rs.
1,000-crore plus Usha Martin Group, is being launched in Silvassa, near Mumbai,
to manufacture jelly-filled telecommunication cables.
- Usha Beltron Ltd. (UBL), the wire and wire ropes major of the Jhawar group, is
setting up a holding company to streamline its overseas distribution network.
- Usha Communications Technology, a wholly-owned subsidiary of Usha Beltron

Ltd, and Compaq Computer Corporation singed a comprehensive worldwide
solution development marketing agreement on May 7 at Portland, Oregon, the US.
- UBL recently entered into an agreement with American Express Bank for funding
worth $15 million. "The rest of the $10 million will be through equity expansion
and bringing in a joint venture partner."
- Usha Beltron Limited, the flagship of the city-based Usha Martin Group, is setting up
a joint venture with an Australian firm to produce leaded steels.
- Usha Beltron Limited (UBL) of the Calcutta-based Jhawars have acquired 10 per
cent equity control in its Thai ropes and wire making joint venture -- Usha Siam
Limited.
- Umicor, UK, a joint venture between Usha Beltron Ltd. (UBL) and Exim Bank, has
acquired EMMC UK, a firm specialising in providing services and solutio ns for the
wire rope industry, for $3.5 million.
- While software companies are making a beeline for India, Usha Beltron Ltd. of the
Jhawars is setting up a holding company - Usha Communications Technology -
for software development in the United Kingdom.
28
- The new company is being set up in collaboration with Entryline Holdings Ltd, a
Pentire group company of the UK.
- Usha Beltron Limited (UBL), the city-based Jhawar group's flagship, has decided to
enter into a 50:50 joint venture with Martin Bright o f Australia to set up a Rs 40-
crore special steel manufacturing facility in Jamshedpur.
- The Usha Beltron Group of the Jhawars has flagged off a major restructuring
exercise for its global software activities by initiating the process to set up a new hol
ding company in the United States by January 2000, which is likely to be named
UBEST America.
2000
- Usha Beltron is all set to joint the big league of corporates flourishing on growth
opportunities inknowledge-based sectors such as infotech and telecom. The
company has set up technical training centres.
- The Company has approved a Scheme of Arrangement proposed to be made

between company and Usha Martin Infotech Ltd, (UMIL) and their respective
shareholders.
- Usha Beltron Ltd, the flagship of the Calcutta-based Jhawars, will issue
global depository receipts (GDRs) in a couple of months.
- Calcutta-based Usha Beltron has acquired the wire rope business of Brunton Shaw
of the UK, a subsidiary of the 180-million Carclo, UK.
- The Company issued 35,00,000 Global Depository Receipts (each GDR represented
by one equity share of Rs 10 each) at a price of US$3.25 per GDR.
2001
- Mr Pradip P. Shah, Director has resigned from the board effective from 24th January.
2002
-Ties up with Gustav Wolf of Germany to manufacture steel cords in India.
-Board approves in setting up of a Direct Reduced Iron (DRI) Plant with the capacity of
100 KT per annum.
29
-Usha Beltron Ltd announces the change in management as follows:
1. Mr Biswajit Choudhuri appointed as a nominee of Unit Trust of India on the Board

of the Company in place of Mr S K Saha
2. Mr Dilip Mondal appointed as a nominee of Industrial Development Bank of India

on the Board of the Company.
-Board approves for the issue and allotment of securites on preferential basis: 1)
53,45,455 equity shares of Rs.5/- each of the company at a price of Rs.33/ - per share
(inclusive of premium of Rs.28/- per share) being the price which is in accordance
with chapter X111 of SEBI (Disclosure and Investor Protection) G uidelines to
International Finance Corporation, Washington. 2) 53,45,455 equity shares of Rs.5/ -
each of the company at a price of Rs.33/- per share (inclusive of premium of Rs.28/ -
per share) being the price which is in accordance with chapter X111 (Guide lines for
preferential issues) of SEBI ( Disclosure and Investor Protection) Guidelines to
Promoters, Promoter Group, Directors, their relatives and associates. 3) The BOD have
also decided to
convene an EGM on July 18, 2002 to consider the above matters.
-IFC signs agreement with UBL to invest Rs.120.5cr in the company.
-UMIL acquires 30,00,000 shares amounting to 9.45% voting rights on

preferential allotment basis.
2003
- DEG financed Rs.50cr to UBL and the debt cost stands at Libor plus 275 basis
points with 11 years time span.
-Purchases a wire rope plant in Dubai
-Acquisition of 49.55% stake in Usha Martin International Ltd, UK (UMIL)
-Ministry of coal alloted captive coal block in Jharkhand having a reserve of more than
30 MN T and contains Grade A & B coal, which would be required by the company for
its
Sponge Iron (DRI Project) Plant expansion.
-Mr. T K Banerjee, Nominee of Life Insurance Corporation of India resigned from the
Board of Directors of the Company.
2005
-Usha Martin executes a Business Transfer Agreement with JCT
30
2007 - Usha Martin Ltd has appointed Mr. Suresh Neotia and Mr. Ashok Basu,
as additional directors of the Company with effect from May 17, 2007.
- The Company has splits its face value from Rs5/ - to Rs1/-.
2010
- Usha Martin Limited has appointed Dr. Vijay Sharma and Mr. P. K. Jain as executive
Directors on the Board of the Company.
- Usha Martin Ltd has appointed (a) Mr. G N Bajpai as Additional Director [non -
executive & independent] with effect from March 18, 201 0; and (b) Mr. Nripendra
Misra as Additional Director [non-executive & independent] with effect from March
22, 2010.
- Usha Martin Ltd has appointed Mr. Jitender Balakrishnan as Additional Director (non
- executive & independent) with effect from June 10, 2 010.
13. FINANCIAL ANALYSIS: -
Shareholding pattern
Shareholding pattern - Usha Martin Ltd.

No of % Share
Holder's Name
Shares Holding
Promoters 88459017 29.03%
Foreign Institutions 52943476 17.37%
National Banks Mutual Funds 50900204 16.70%
Foreign Promoter 33336135 10.94%
General Public 31008972 10.18%
Financial Institutions 23206663 7.62%

Other Companies 20157943 6.61%
The shareholding pattern says that only around 10% of the total shares are open for
the general public. The company’s shares had Face Value of INR 5.00 from 2003 to
2007;
however the year ending ’08 it has been changed to INR 1.00 .
31
% Share Holding
6.61%
7.62%
Promoters
29.03% For eign Institutions

10.18% National Bank s Mutual Funds
For eign Pro moter
10.94% General Public
Financial Institutions
17.37%
Other Companies
16.70%
CASH MANAGEMENT: -
Meaning a nd Importanc e of c a sh
Cash, the most liquid asset and also referred to as the life blood of a business
enterprise is of vital importance to the daily operations of business firms. Its efficient
management is crucial to the solvency of the business because cash is the focal po int of
the funds flow in a business. Cash plays a very important role in the entire
economic life of an organization. A firm needs cash to make payments to its
suppliers, to incur day to day expenses and to pay salaries, wages, interest and
dividend etc. C ash is money that is easily accessible either in the bank or any
business.
It is very essential for a business to maintain an adequate balance of cash. But many
a times a concern operates profitably and yet it becomes very difficult to pay taxes
and dividends. This may be because:
 Although huge profit have been earned yet cash may not have been
received because of large credit sale was made.
 Even if cash has been received, it may have drained out (used for some
other purposes).
This movement of cash is of vital importance to the management, so
proper
management of cash is very important.
32
Ca sh/fund ma nagement
Cash/Fund, the most liquid assets is the vital importance to the daily operations of
the business firms. The proportion of corporate assets held in the form of cash is very
small, often between 1 and 3 percent, its efficient management is crucial to the
solvency of the business enterprise because in a very important sense cash is the
focal point of fund flows in business. It is generally referred to as the “life blood of a
business enterprise”.
There are three possible motives for holding

cash:
i. Transaction motive
ii. Precautionary motive
iii. Speculative motive
The need for holding cash arises from a variety of reasons which are briefly
summarized
below.
Tra nsac tion motive
A company is always entering into transactions with other entities. While some of
these transactions may not result in an immediate inflow/outflow of cash (e.g.
credit purchases and sales), other transactions cause immediate cash inflow s and
outflows. So firms always keep a certain amount as cash to deal with routine
transactions where immediate cash payment is required.
Prec autiona ry motive
Contingencies have a habit of cropping up when least expected. A sudden fire may
break out, accidents may happen, employees may go on strike, creditors may
present bills earlier than expected or debtors may make payments later than
warranted. The company has to be prepared to meet these contingencies to minimize
its losses. For this purpose companies generally maintain some amount in the form of
cash.
Spec ulative motive
Firms would like to tap profit making opportunities arising from fluctuation
in commodity price, security price, interest rate, and foreign exchange rates. A cash
rich firm is better prepared to exploit such bargains. Firms which have such
speculative leanings may carry additional liquidity. Most firms their reserve borrowing
capacity and
marketable securities would suffice to meet their speculative
needs.
33
Ca sh Ma nagement Cyc le
Cash management is concerned with the managing

of:
 Cash flows into and out of the firm.
 Cash flows within the firm.
 Cash balances held by the firm at a point of time by financing deficit or
investing surplus cash.
It can be represented by a cash managemen t cycle as shown below. Sales generate

cash which has to be disbursed out. The surplus cash has to be invested while deficit
has to be borrowed. Cash management seeks to accomplish this cycle at a minimum
cost. At the same time, it also seeks to achieve liquidity and control. The management
of cash is important because it is difficult to predict cash flows accurately, particularly
the inflows and there is no perfect coincidence between the inflows and outflows of
cash. During some periods, cash outflows exceed cash inflow, because payment for
taxes, dividends or seasonal inventory builds up. At other times, cash inflow can be
more than cash payment because there may be large cash sales and debtors may be
realized in large sums promptly.
Cash management is also important because cash constitutes the smallest portion of
the total current assets, yet management’s considerable time is devoted in managing
it. An obvious aim of the firm now-a-days is to manage its cash affairs in such a way as
to keep cash balance at a minimum level and to invest the surplus cash in profitable
investment
opportunities.
Cash
Collectio
Business Deficit
Operation Surplus
Information Borrow
And control Invest

Cash
Payments
34
DEBTORS MANAGEMENT: -
The basic objectives of the debtor’s management are to optimize the return on
investment on the assets. Its main aim is to promote sales and profit until that point
is reached where the return on investment is further funding of debtors is l ess than
the cost of funds raised to finance that additional credit.
When a firm makes sale of goods and services and does not receive payment, it
grants trade credit and creates Debtors accounts, which would be collected in the
future. These represent the extension of credit on an open A/c by the firm to its
customers, as the substantial amount is tied up in trade debtors; it needs careful
analysis and proper management.
 Size of Investment in Debtors:

Investment in debtors A/c is a major part of their assets in most of business
enterprises. Debtors A/c is one of the major components of working capital.
The financial executives should pay due attention to the management of
debtors, so that each rupee invested in debtors may contribute to the net
worth o f the organization.
 The Basic Problem of Debtors Mana gement:

The basic problem of debtor’s management is the balancing of profitability &
liquidity. Soft credit terms attract sales and so the longer the time a company
allows to pay to its customers the gr eater the sales and higher the profits.
The longer the period of credit the greater the risk, the greater the level of debt
and greater the strain on the liquidity of the company.
INVENTOR Y MANAGEMENT: -
Inventory consists of raw material, semi-manufactured products and completely

manufactured products. It has been defined by the Accounting Principles Board as
“The aggregate of those items of tangible personal property which (a) are held for sale
in the ordinary course of business, (b) are in the process of production for such sales,
or (c) are to be currently consumed in the production of goods or services to be
available for sale”.
Every firm invests a huge amount to maintain a certain level of inventory, or say
stocks. Thus a large portion of working capital is involved in stock. On an average,
inventories
are approximately 60% of the total current assets in public limited companies in
India.
35
The level of inventories for a firm depends upon the nature of its business. A
manufacturing firm will have high level of all three types of inventories, while a retail
or wholesale firm will have a very high level of finished goods, no raw material and
no work in progress inventories.
Firm also maintain a fourth kind of inventory suppliers OR store s and spares. It
includes office and plant cleaning materials like soap, brooms, oil, bulb etc. These
materials do not directly enter in production but are necessary for production
process.
Because of the large size of inventory and the considerable fund engaged in
Inventories it is become necessary to manage it in an effective and efficient manner.
Material is as much cash as cash as cash itself and any theft, waste and excessive
use of materials leads to immediate and direct financial loss. The proces s of
managing inventory is called INVENTORY MANAGEMENT.
PUR POSE FOR HOLDNG INVENTORY
As we all know that huge fund is required to maintain a certain level of inventory, so
the question is if it is expensive to maintain inventory, why do firms hold invento
ries? A company should maintain adequate stock of material for a continuous
supply to the factory for an uninterrupted production. Sometime it is not possible for
the company to procure raw material whenever it is needed. Also there exists
uncertainty i n procuring raw material in time in many occasions. The procurement
of material may be delayed because of such factors as, transport, disruption, short
supply, strike etc. Therefore, the firm should maintain sufficient stock of raw
materials at a given ti me to streamline production.
Other factors which may necessitate purchasing and holding of raw material
inventories are quantity discount and anticipate price increase. The firm may
purchase large quantities of raw material than needed for the desired prod uction
and sales levels to obtain quantity discount of bulk purchasing. At times the firm
would like to accumulate raw material in anticipation of price rise.
Thus there are three general purposes for holding

inventories:
 Transaction motive
 Precautionary motive
 Speculative motive
1. TRANSACTIONS MOTIVE: It emphasizes the need to maintain inventories

to facilitate smooth production and sales operation.
36
2. PRECAUTIONARY MOTIVE: It necessitates holding of inventories to guard
against the risk of unpredictable change in demand and supply forces and
factors.
3. SPECULATIVE MOTIVE: It influences the decision to increase or deduce

inventory level to take advantage of price fluctuations.
OBJECTIVES OF INVENTOR Y MANAGEMENT
The objective of inventory management is to maintain sufficient inventory for

the smooth production and sales operations and to avoid excessive and inadequate
levels of inventory. Some other objectives are as below;
 Ensure a continuous supply of raw material to facilitate uninterrup

ted production.
 Maintained sufficient stock of raw material in period of short supply and

anticipate price changes.
 Maintain sufficient finished goods inventory for smooth sales operation

and efficient customer service.
 Minimize the carrying cost and time and
 Control investment in inventories and keep it at an optimum level.
INVENTORIES MANAGEMENT TECHNIQUES
Various techniques commonly used for inventory control are listed below:
 ABC technique
 Stock level – minimum, maximum and re-order level
 Economic order quantity (EOQ)
 Inventory turnover ratio to review slow and non –

moving material
 Perpetual inventory system
 Methods of pricing of material
ABC TECHNIQUE
ABC Technique is a value based system of material control. In this technique

material are analyzed according to their value so that costly and more valuable
materials are given greater attention and care. All items are classified according to
their value ie, high, medium and low values, which are known as A, B and C items
respectively.
37
A items: High in value and low in quantity. These items engage 70% of funds and 10%
of space in the inventory.
B items: Medium in value and medium in quantity. These items engage 20% of
funds and 20% of space in the inventory.
C items: Low in value and high in quantity. These items engage only 10% of fund and
70% of space in the inventory.
Thus the ratio between A, B and C is as follows:-
1. PRICE WISE – 7:2:1
2. QUANTITY WISE – 1:2:7
STOCK LEVELS
In order to check under stocking and over stocking most of the large
companies adopt a scientific approach of fixing stock levels.
These levels are:
 Maximum level = Re – order level + Re – order quantity – (Max.

consumption* Max. re-order period)
 Minimum level = Re-order level-(Normal consumption* Maximum Re-

order period)
 Re-order level=Maximum consumption * Maximum re-order period
 Average stock level = ½ (Maximum level + Minimum level)
 Danger level = Normal consumption *Maximum re – order period under

emergency condition.
ECONOMIC OR DER QUANTITY ( EOQ)
Economic order quantity is that size of order which gives

maximum economy in purchasing any material and ultimate contribution towards
maintaining the material at the optimum level and at minimum cost. It is also
called RE -ORDER QUANTITY.
EOQ=√ (2*O.C.*A.D./C.C)
Where,
O.C. = Ordering cost, the cost of placing an order.
38
A.D. = Annual demand, annual consumption of material in units.
C.C. = Carrying cost, this is the cost of holding the stock in
storage.
INVENTOR Y TR UNOVER R ATIO TO R EVIEW SLOW AND NON -MOVING M ATERIAL
Inventory turnover ratio tells us how many times in a year stock are
used up and replaced. The greater the stock turnover, the more efficient is the stock
policy.
 Stock turnover ratio= Cost of material consumed during the period/ Average
stock of materials during the period
 Stock turnover in terms of days= days of period / stock turnover rate
In order to detect the slow and non-moving materials, a standard stock

turnover rate should be computed for each item of material with the help of
following formula:
Turnover rate of an item = Budgeted consumption/Average stock level
PER PETUAL INVENTOR Y SYSTEM
A perpetual inventory system is defined as “The method of recording

stores balance after each receipt and issue to facilitate regular check ing and
obviate closing down for stock taking.”
METHOD OF PRICNING OF MATERIAL S
Some important methods of pricing are as follows:
 LIFO (Last in fast out)
 FIFO (First in first out)
 Simple Average Price
 Weighted Average Price
14. ASCERTAINING OF WORKING CAPITAL: -
About Working Capita l

One of the most important areas in the day-to-day management of the firm deals
with the management of Working Capital, which is defined as the short-term assets
used in daily operation.
Funds are needed for short term purposes for the purchase of raw materials,
payment of wages and other day to day expenses etc. These funds are known as
39
WORKING CAPITAL. In simple words working capital refers to that part of firm’s
capital which is required for financing short term or current assets such as cash,
marketable securities, debtors and inventories. Funds, thus 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 also known as
revolving or circulating capital so working capital is the amount of funds
necessary to cover the cost of operating the enterprise.
Long term funds are required to create production facilities through purch ase of
fixed assets such as plant and machinery, land, building, furniture, etc. Investments in
these assets represent that capital which is fixed.
Kinds of
Working Capital
On the On the
Basis of basis of
Concept time
Gross Working Net Working Variable Fixed

Capital Capital working working
Capital Capital
Special Seasonal Reserve Regular

Working Working Working Working
Capital Capital Capital Capital
40
Classific ation of working c apita l:
 On the basis of concept:

 Gross working capital
 Net working capital
 On the basis of periodicity of requirement:

 Fixed and permanent working capital
 Variable working capital
 On the basis of concept
There are two interpretations of working capital under basis of

concept:
a) GROSS WORKING CAPITAL
b) NET WORKING CAPITAL
a) Gross working c apita l: Gross working capital is the capital invested in

total current assets of the enterprise. Current assets are those assets which
in the ordinary course of business can be converted into cash within a short
period of normally one accounting year such as:
Cash
Short term securities
Debtors
Bills receivable
Inventory
Temporary investment of surplus funds
The concept of gross working capital focuses attention on two aspects of current
assets management:
 Optimum investment in current assets
 Financing of current assets
b) Net working c apital:

Net working capital is the difference between current assets and current
liabilities.
According to this concept working capital refers to the difference between
current assets and current liabilities. It is the excess of current assets
over current liabilities. Current liabilities refers to the claims of outside
which are
expected to the mature payment within an accounting year.
41
It includes –
Creditors for goods
Bills payable
Bank overdraft
Short term bank loans and advances
Prepaid expenses
Net working capital can be “positive” or “negative”.
 Positive net working capital: it arises when current assets exceed current
liabilities.
 Negative net working capital: it occurs when current liabilities are in excess of
current assets.
The net working capital concept indicates the liquidity position of the firm
and suggests the extent to which working capital need may be
financed by permanent sources of funds.
Thus gross working capital concept is financing or going concern concept whereas
net working capital is an accounting concept of working capital. Both concepts have
go t their own merit, but in general practice net working capital is given more priority.
 On the basis of periodic ity of requirement -
 Fixed & permanent working c apital: It represents the part of

capital permanently locked up in the current assets to carry out the business
smoothly this investment in current assets is of the permanent nature. It
increases as the size of the business expands. Such as investment required the
maintenance of minimum quantity of raw material, work-in-progress, finished
products e tc.
The permanent working capital can again be sub divided into two parts:
 Regular working capital
 Reserve margin working capital
 R egular working c apital: It is the minimum amount of liquid working

capital required to keep up the circulation of the capita l from cash to
inventories to receivable and again to cash. This includes minimum bank
balance to discount all bills to maintain adequate supply of raw material etc.
 R eserve ma rgin of working c apita l: It is the excess capital over the need or
regular working capital that should kept in reserve for contingencies that
may arise at any time. These contingencies include rising price. Business
depression,
strikes, special operations such as experiments with new product
etc.
42
 Va ria ble working c apital:
Variable working capital change with the increase or decrease in the value of
business. It may also be sub divided into seasonal and special working capital.
o Seasonal variable working c apita l: The working capital to meet the

seasonal liquidity of the business is seasonal variable working capital.
o Spec ia l variable working c apita l: It is the part of variable working

capital which is required for financing special operations such as extensive
marketing campaigns, experiments with product or model of production.
OBJECTIVES OF THE STUDY
 TO study and analyze the working capital policy of the USHA MARTIN LTD.
 TO study the affairs of the company with refe rence to the working
capital ascertainment and methods of its estimation used in the
company.
 To understand the general performance of the company.
 To use quantities data for defining company’s financial performance.
 To know the profitability, production and efficiency of the firm.
 To study the methods of financing working capital.
 To analyses the performance effectiveness of the company.
RESEAR CH METHODOLOGY
Research Design: The study is based on descriptive and applied research.
Data Source: Both primary and secondary data are used for the collection of
the information required for the report.
Primary data:
1. Interview schedules with officers of account department.
2. Interview schedules with officers of inventory department.
3. Interview schedules with officers of cash department.
4. Interview schedules with officers of purchase department.
43
Secondary Data:
1. Annual report of the company.
2. Company’s data records.
3. Company’s website.
WOR KING CAPITAL CYCLE
The working capital cycle refers to the length of time between the firms paying cash
for materials etc., entering into the production process/stock and the inflow of cash
from debtors (sales).
It indicates the length of time between a company’s paying for materials, entering
into stock and receiving the cash from sale of finished goods. It can be determined by
adding the number of days required for each stage in the cycle. For example, a
company holds raw materials on an average for 60 days, it gets credit from the
supplier for 15 days, production process needs 15 days, finished goods are held for
30 days and 30 days
credit is extended to debtors.
DEBTORS CASH
RAW
SALES
MATERI ALS
FINISHED WORK I N
GOODS PROGRESS
Fig. Operating cycle
The totals of all these, 120 days is the total working capital cycle. The duration of
the operating cycle for the purpose of estimating working capital is equal to the sum
of the durations of each of the above said events, less the credit period allowed
by the
suppliers.
44
Thus there is a complete cycle from cash to cash wherein cash gets converted into
raw materials, work in progress, finished goods, debtors and finally into cash again.
Short term funds are required to meet the requirements of funds during this time
period. This time period is dependent upon the length of time within which the
original cash gets converted into cash again. This cycle is also known as operating
cycle or cash cycle.
Working c apital mana gement:
A managerial accounting strategy maintaining efficient level of both

components of working capital, current assets & current liabilities in respect to
each other. Working capital management ensures a company has sufficient cash flow in
order to meet its short term debt obligations and operating expenses.
Working capital management or short term financial management which is
concerned with decision relating to current assets & current liabilities; short
term financial decision typically involve cash flow within a year or within the
operating cycle of the firm.
Definition: Working capital management is concerned with the problem that arises
in attempting to manage the current assets & current liabilities and the
interrelationship that exists between them.
Working capital management refers to all aspects of the administration of both
current assets & current liabilities.
Working capital management is divided into six parts, these are as follows:
1. Working capital policy
2. Cash and liquidity management
3. Credit management
4. Inventory management
5. Working capital financing
6. Working capital management: extensions
1. Working c apital polic y:

Working capital management is a significant fact of financial management its
important stems policy is two reasons:
1. Investment is current assets represents substantial portion of total

investment.
2. Investment is current assets and the level of current liabilities has to be
geared quickly to changes in sales.
45
Working capital policy is divided into seven heads, these are as follows:
1. Characteristic of current assets
2. Factors influencing working capital requirements
3. Level of current assets
4. Current assets financing policy
5. Profit creation for working capital
(A)Characteristic of current assets: In the management of working capital

two characteristic of current assets must be borne in mind: (i) short life span
and (ii) swift transformation in other assets form.
Current assets have a short life span. Cash balance may be held idle for a week
or two; account receivable may have a life span of 30 to 60 days, and
inventories may be held for 30 to 100 days. It depends upon the time requir
ement.
(B)Factors influencing working capital requirements:

The working capital need of a firm is influenced by numerous factors.
The important ones are:
a) Nature of business
b) Seasonality of operation
c) Production policy
d) Market conditions
e) Condition of supply
a) Nature of business: The working capital requirement of a firm is closely

related to the nature of its business. A service firm, like
electricity undertaking, it has a short operating cycle and its sales
predominantly on cash basis, has a modest working cap ital requirement.
On the other hand a manufacturing concern likes a machine tools unit,
which has a long operating cycle and which sales largely on credit have
a very substantial working capital requirement.
b) Seasonality of operation: Firms which have marked seasonality in

their operations usually has highly fluctuating working capital
requirements. To consider firm manufacturing ceiling fans, the sale of
ceiling fan reaches a peak during the summer months and drop sharply
during the winter period.
c) Production policy: A firm marked by pronounced seasonal fluctuation in

its sales may pursue a production policy which may reduce the sharp
variation in working capital requirements.
d) Market condition: The degree of competition prevailing in the market

place has an important bearing on working capital need.
46
e) Condition of supply: The inventory of raw material spares and stores
depend on the condition of supply. If the supply is prompt and adequate, the
firm can manage with small inventory. A similar policy may have to be followed
when the raw material is available only seasonally and operation is carried out
around the year.
(C) Level of current assets:
An important working capital policy decision is concerned with
the level of investment in current assets. Under a flexible policy, the investment in
current assets is high and under a restrictive policy the investment in current assets is
low.
(D) Current assets financing policy:

After establishing the level of current assets, the firm must deter mine how
these should be financed and what mix of long term capital and short term debit
should the firm employee to support its current assets.
Several strategies are available to a firm for financing its capital requirements.
 Strategy A: Long term financing is used to meet the fixed assets requirements
as well as peak working capital requirement. When the
working capital requirement is less than its peak level, the surplus is invested
in liquid assets.
 Strategy B: Long term financing is used to meet fixed assets

requirement, permanent working capital requirement and a portion of
fluctuating working capital requirement during seasonal up wings, short
term financing is used during seasonal down swing, surplus is invested in
liquid assets.
 Strategy C: Long term financing is used to meet fixed assets requirement and
permanent working capital requirement. Short term financing is used to meet
fluctuating working capital requirement.
(E) Profit creation for working capital:

Current assets can be easily liquidated and value realized on liquidation
would be more or less equal to the amount invested initially put differently
investment in current assets is reversible. For reversible investment the certain of
net profit per
period is equivalent to the certain of net present value.
47
15. PROFIT & LOSS ACCOUNT AND WORKING CAPITAL ANALYSIS
Working capital level

The consideration of the level investment in current assets should avoid two
danger points excessive and inadequate investment in current assets. Investment in
current assets should be just adequate, not more or less, to the need of th e
business firms. Excessive investment in current assets should be avoided because it
impairs the firms’ profitability, as idle investment earns nothing. On the other hand
inadequate amount of working capital can be threatened solvency of the firms
because of it s inability to meet it s current obligation. It should be realized that the
working capital need of the firms may be fluctuating with changing business activity.
This may cause excess or shortage o f working capital frequently. The management
should be prompt to initiate an action and correct imbalance .
Expected value of the P/L Account of the Ranchi unit.
Usha Martin Limited
Projected Profitability of Ranchi unit for FY 2012 -13
Rs./lacs
Q1 FY 2012-13 Q2 FY 2012-13 Q3 FY 2012-13 Q4 FY 2012-13 Total FY 2012-
13
Produc
tions
(M / T)
Wire
Rope & 15, 15, 17, 16, 65,9
Convey 975 881 327 732 15
er Cord
Wire &
Strand 19, 19, 19, 19, 79,2
s 648 798 898 898 40
Bright
Bars 4,0 4,1 4,2 4,4 16,8
00 50 50 00 00
39, 39, 41, 41, 1,61,

623 829 475 030 955
Particu N Qt Rat Rs./ Qt Rat Rs./ Qt Rat Rs./ Qt Rat Rs./ Qty Ra Rs./l
lars or y e lacs y e lacs y e lacs y e lacs te acs
m
s
S ales
Domes 8, 1,0 8,7 8, 1,0 8,8 8, 1,0 8,9 8, 1,0 8,9 33, 35,4
tic - 30 5,3 47. 35 6,1 69. 42 5,9 23. 47 5,5 46. 55 87.0
Wire 0 93 65 6 45 51 2 49 00 7 43 92 5 8
Rope &
C cord
- Wire 16 52, 8,8 16 52, 8,9 16 52, 8,9 16 52, 8,9 67, 35,7
& ,7 768 63. ,9 83 54. ,9 83 54. ,9 83 54. 64 26.8
Strand 98 78 48 6 37 48 6 37 48 6 37 0 9
- 3, 67, 2,5 3, 67, 2,6 4, 67, 2,7 4, 67, 2,7 15, 10,7
Bright 80 788 75. 90 78 43. 00 78 11. 10 78 79. 80 10.5
48
Bars 0 .17 95 0 8 74 0 8 53 0 8 32 0 3
Export 7, 84, 6,4 7, 84, 6,3 8, 85, 7,5 8, 84, 7,0 32, 27,3
- Wire 67 237 65. 52 08 27. 90 34 99. 25 83 03. 36 95.4
Rope 5 20 5 7 58 5 0 53 5 5 15 0 6
- Wire 2, 56, 1,6 2, 56, 1,6 2, 56, 1,6 2, 56, 1,6 11, 6,58
& 85 876 20. 85 87 20. 95 62 70. 95 62 70. 60 2.86
Strand 0 96 0 6 96 0 6 46 0 6 46 0
s
- Bright 20 55, 110 25 55, 138 25 55, 138 30 55, 165 1,0 553.
Bars 0 320 .64 0 32 .30 0 32 .30 0 32 .96 00 20
ISMAL/ 0 0 0
M.Divis
ion 970 895 1,8 1,8
.08 .76 76. 09.
02 09
Scrap 538 540 566 558

.78 .41 .61 .51
39 75, 29, 39 75, 29, 41 78, 32, 41 77, 31, 1,6 71 1,16,
,6 445 893 ,8 29 990 ,4 21 439 ,0 71 887 1,9 ,9 456.
23 .06 29 9 .62 75 6 .81 30 9 .77 55 06 02
Less :
Excise 1,9 1,9 2,0 2,0
duty 73. 95. 20. 24.
52 52 15 63
NET
SALES 27, 27, 30, 29,
919 995 419 863
.53 .10 .66 .15
E x p en s
es
Wire 386 38 38 38
Rods 41 43 15, 41 67 16, 43 65 16, 42 70 16, 1,6 65,2
,2 948 ,4 6 045 ,1 7 690 ,7 1 537 8,6 21.6
70 .16 87 .45 76 .57 32 .51 65 8
Zinc 116 11 11 11
56 000 650 56 60 655 60 60 703 58 60 680 2,3 2,68
1 .61 5 00 .11 7 00 .89 6 00 .24 19 9.86
Lubric 31 105 31 10 34 10 32 10
ant 5 656 332 2 62 331 1 59 361 9 61 349 1,2 1,37
.66 91 .67 82 .36 03 .14 97 4.83
Fibre 22 114 22 11 23 11 22 11
4 488 256 4 44 256 5 44 268 9 44 261 91 1,04
.09 88 .92 88 .59 88 .72 1 3.32
Other
Raw 1,6 1,6 2,3 2,2
materi 55. 17. 38. 65.
als 11 18 50 57
Power 4.7 20 4.7 21 4.7 20 4.7
20 0 957 1 0 961 2 0 1,0 8 0 996 82 3,93
0 .21 .94 15. .75 0.6 1.21
30 8
Fuel
49
561 561 584 577 2,28
.23 .23 .97 .05 4.47
Stores
& 419 419 480 473 1,79
Spares .13 .34 .48 .81 2.76
Contra
ctor & 445 446 473 470
Proces .97 .29 .76 .81
sing
charge
s
Freight
& 1,9 1,9 2,1 2,0 8,16
other 53. 63. 71. 79. 8.17
selling 74 86 01 56
expens
e
Other
Expens 1,4 1,4 1,4 1,4
es - P 25. 25. 55. 55.
&A 00 00 00 00
Expens
e total : 24, 24, 26, 26, 86,5
604 683 543 147 06.2
.91 .99 .41 .17 9
PBIDT
3,3 3,3 3,8 3,7 29,9
14. 11. 76. 15. 49.7
62 10 25 97 4
3,3 3,3 3,8 3,7

14. 11. 76. 15.
62 10 25 97
3,3 3,3 3,8 3,7

14. 11. 76. 15.
62 10 25 97
0.0 - 0.0 0.0

0 0 0
Problem formulation: -
The company is trying to find out how much working capital is being required for
smooth functioning and operations of wire and wire rope manufacturing during the
financial year 2012-13.
Why? -
As per the business plan and sales forecasting of previous year the company has given
the target to the marketing department for the future projection/forecasting of sales
and how much working capital will be required for the manufacturing process
of its products. According to that the marketing department does the market
survey. That survey report they submit to the company. According to that market
survey the company estimate that how much working capital is needed to the
production department for the production of wire and wire rope product.
50
What? -
According to the forecasted figure, which is given by the marketing department, the
company execute that how much working capital is required and how much of raw
materials should keep in hand for the operation of business. According to that we have
to make P/L account and working capital of different department and consolidate it
that what are the expenses that company incur in the p roduction and what types of
working capital is required.
First of all company has given the estimated target to the marketing
department that these much amount of products should be produced during the
financial year 2012 -
13. According to the estimation of marketing department the production department
of the company is functioning that how much raw materials will be required for
the production of these goods and what are the expenses that the company has to
incur for manufacturing of wire, rope, conveyer cord, strands and bright bars.
According to this company manages fund that keeps as inventory, which is
needed in production so that the production process does not stop. The company also
keep watch on holding period, because if the holding period increases, then
company has to incur additional capital and probably the chance of bad debt increases.
At last the most important thing is that to keep cash in hand for their day to day
expenses and for running the production process conveniently.
After the management of working capital the company procure s the raw
materials i.e. used in production process. Company brings its main raw materials
i.e. wire rode from its Jamshedpur Unit. The company Usha Martin basically produces
wire and wire rope. These are the main products i.e. manufactured by its Usha
Martin Ltd. Ranchi unit. For proper running of the machine different kind of
fuels are being required, that the company has to keep in advance any time.
Project Stages: -
Stage 1: -
First of all the Business Plan sheet (as a primary data) is given to me on behalf of
the
company where following are the things are mentioned:
-
1. Highlights of the Business Plan

2. Business Plan Norms
3. Contribution Summery
4. Wire and Wire Rope Contribution
5. SPD Contribution
6. P&L Overall Ranchi
7. Expenses Overall
8. P&L WWR
9. Expenses of WWR
10. P/L Machinery Division
11. Expenses of Machinery Division
12. P/L ISMAL
51
13. Expenses of ISMAL
14. P/L Power Project
15. Expenses of Power Project
16. Consumption
17. Power Plant Working
18. FC Data
After getting the Business Plan we have analyzed all the data that are mentioned in
the Business Plan and according to that we have prepared P/L account and Working
Capital of the company Usha Martin Ltd., Ranchi unit.
Stage 2: -
After getting the Business Plan Sheet, we carefully understand and analyzed that what
is happening actually in the company. We analyzed on the following question: -
1. How the company is performing its day to day activities?

2. How the funds are raising by the company?
3. From where the company is getting raw materials for its production?
4. What are the consumption norms?
5. How much inventory is company maintaining for the uninterrupted
production process?
6. How much amount of money is expensing on any kind of project like-
- WWR
- Machinery Division
- Power Project
- ISMAL etc.
Stage 3: -
After the carefully analyzing of Business Plan, I prepared a consolidated P/L account
of
Ranchi unit.
Analysis of P/L acc ount quarter wise of Ra nch i unit. -
1st Quarter of the FY 2012-13
Productio ns (M T) 15,975
Wire Rope & Conveyer Cord 19,648
Wire & Strands 4,000
Bright Bars 39,623
Interpretation- The total production of the Wire Rope & Conveyer Cord for the first
quarter would be 15975 MT in the 1 st quarter of the FY 2012-13. Here it is calculated
as
Wire production 15,475 MT + 500 MT Conveyor Cord productions. Wire and Strands
52
included total production of strand + LRPC strand + Ply strand +wire , [
535+8400+1500+9213] MT, that equals 19,648 MT. The third component is bright
bars. The expected production is 4000 MT.
Particulars Norms Qty Rate Rs./lacs
Sales
Domestic - Wire Rope & C cord 8,300 105,393 8,747.65
- Wire & Strand 16,798 52768 8863.78
- Bright Bars 3,800 67788.17 2,575.95
Export - Wire Rope 7,675 84,237 6,465.20
- Wire & Strands 2,850 56,876 1,620.96
- Bright Bars 200 55,320 110.64
ISMAL/M. Division 970.08
Scrap 538.78
39,623 75,445 29,893.06
Less : Excise duty 1,973.52

NET SALES 27,919.53
Interpretation- the company sales its products in domestic market as well as in

foreign market (i.e. exports). In each market company sales the three main product
groupings- wire ropes and cord; wire and strand; and bright bars. The sales figure
for each is calculated by multiplying quantity sold to its rate.
DOMESTIC-
Wire Ropes and Cord- the estimated sales of Wire Rope and C Cord would be total
8300 MT quantities at the rate of INR 105393 per MT. The items included are from
Wire and Wire Ropes sheet. These include Total Home Rope+ Total LCWR (Lock Coil
Wire Ropes) +Slings +Anchor Mooring Ropes+ Roof Stitching Wires.
Calculates as
6975+365+340+120+0. Also, as per the division total Conveyor Cord domestic sales
of
500 is also added (all units in MT).
Methods which is used-
Weighted average rate method = Quantity * Rate * Excise Duty/ Total

Quantity
e.g. - Weighted average rate =

{(6975*89876)+(365*163699)+(340*140000)+(
120*82000)+(0)+(500*98000)}/8300 (total quantity) *1.1236(12.36% excise duty)
=105,393
The final sales amount = 8300* 105,393

53
=INR 87476.1900 in lacs (rounded
off).
Wire and Strand – the expected sales of these products would be 16798 MT in the
first quarter of the FY 2012-13. Here two items are included for quantity calculation.
These are Total Domestic Strand + Wire + Fine Wire i.e. 9415 + 7383 + 0 = 16798 MT.
Calculation by Weighted Average Rate method -

{(9415*44837)+(7383*51671)+(0)}/
16798(total weights) * 1.1236(12.36% excise
duty)
=52,768.
The final sales amount = 16798* 52768
= INR 8863.78 in lacs
Bright Bars- the total sales of Bright Bar in the domestic market would be 3800 MT
quantity at the rate of INR 67788.17 MT. There is just one item included in bright
bars. Quantity taken directly from the total sales provided= 3800 MT.
Rate calculation - = (3800* 61458) / 3800 * 1.1236(12.36% excise duty

provided)
Total Sales = INR 2575.95 in lacs (rounded
off). EXPORT –
Wire Ropes and Cord- the company would export Wire Rope in foreign market is
7675
MT at the rate of Rs. 84237 per MT.
Rate calculations
-
= {(7675* 84237) + (0)} / 7675
= INR 84,237.
The sales amount = 7,675 * 84,237
= INR 6,465.20 in lacs.
Wire and Strands- the expected value of the products that company will export in
the
1st quarter of the financial year 2012-13 is 2850 MT at the rate of Rs. 56876 per MT.
The total quantity is taken as the summation of PC Strands + LRPC Strands + Galv.
Strands + Fine Wire. 900+120+1800+30= 2850.
Rate calculations -
= {(900*47397) + (120*64176) + (1800*60793) + (30*77000)} / 2850
= INR 56,876
The total amount would be INR 1620.96
lacs.
54
Bright Bars- this has just one major product under it. Hence rate and quantity are
directly taken as per the financial statements given. Quantity -200 MT and rate as
INR
55,320 Hence total sale would be the product = INR 110.64 lacs. There is no increment
in costs to be provided.
MACHINERY DIVISION AND SCRAP-
The total sales value of the scrap would be Rs. 538.78 lacs. The M. Division amount
is ascertained as deduction of scrap and total sales (both domestic and export) from
the Total Gross Sales.
= 29,893 – 539 -28,383.92 (amount in lacs)
= INR 970.08 lacs
Scrap= 539 lacs
EXCISE DUTY-
This is taken on the market sales. The amount is directly taken from the financial
statement. Total Gross Sales less Excise Duty (as it is the amount paid as per
Government requirement on production) gives the Net Sales INR 27,919.53 lacs.
Expenses
Wire Rods 41,270 38643 15,948.16
Zinc 561 116000 650.61
Lubricant 315 105656 332.66
Fibre 224 114488 256.09

Other Raw materials 1,655.11
Power 200 4.70 957.21
Fuel 561.23
Stores & Spares 419.13

Contractor & Processing charges 445.97
Freight & other selling expenses 1,953.74
Other Expenses - P & A 1,425.00
Expense total : 24,604.91
As earlier it is mentioned that the company so much amount of capital expenses in the
production process. As company produces different types of products so the capital
55
which is needed for the production is also different. In the production of some
product company expenses less amount of capital and in other products it is high. But
here the expenses are the other things that are required in the production process for
example - Wire Rode (raw materials), Zinc, Lubricant, Fibre, and other Raw materials
like - Power, Fuel. Company also expenses capital on Stores & Spares, on Contractor
& Processing charges. Company has other extra expenses (e.g. Freight & selling
Expenses).
The company expenses large amount of capital on its major Raw materials
Wire Rods for the manufacturing of its products. The company demands 41270 MT
quantities of Wire rods at the rate of Rs. 38643 per MT. So the total expense on Wire
Rods is Rs.
15948.16 lacs in the first quarter of the FY 2012 -13. The company uses Zinc as a
raw material for the production of its products. The company uses 561 MT quantities
at the rate of Rs. 116000 per MT. So the total value expense in the Zinc is Rs. 650.61
lacs. The company uses 315 MT Lubricant at the rate of Rs. 105656 per MT. So the total
expenses on Lubricant in the first quarter of the FY 2012 -13 are Rs. 332.66 lacs. Fibre
is another important raw material that company demands 224 MT quantities at the
rate of Rs .
114488 per MT. So the total expenses on Fibre are Rs. 256.09 lacs in first quarter of
the FY 2012-13. Company expenses Rs. 1655.11 lacs on other Raw materials. This
would include Raw materials consumed + Raw materials purchased - adjustments
for loss – major raw materials identified (wire rods, fibre, lubricant and zinc)
= 18,857+86-100-(15948+650.51+332.66+256.09)
=INR 1,655.11 lacs.
Every plant requires power (electricity, coal), fuel. Company uses 200 MT quantities
at the rate of Rs. 4.70 per MT. The company spend Rs. 957.21 lacs on power in the
first quarter of the FY 2012-13. It expenses Rs. 561.23 lacs on Fuel. The company
expenses some amount of capital on Stores & Spares, Contractor & Processing charges,
Freight & other selling expenses and Other Expenses- P & A are Rs. 419.13 lacs, Rs.
445.97 lacs, Rs.
1953.74 lacs and Rs. 1425.00 lacs respectively.
The total expenses of the company are Rs. 24604.91 lacs in the first quarter
of the Financial Year 2012-13.
PBIDT- Net Sales minus the Expenses gives the Total PBIDT for the quarter
1.
56
= 27,919.53 – 24, 604.91
= INR 3,314.62 lacs.
PBIDT 3,314.62
3,314.62
2ND QUARTER OF THE FY 2012-13
Productio ns (M T)
Wire Rope & Conveyer Cord
Wire & Strands
Bright Bars
Interpretation- The total production of the Wire Rope & Conveyer Cord for the
second
quarter would be 15881 MT in the FY 2012 -13. Here it is calculated as Wire
production
15,281 MT + 600 MT Conveyor Cord productions. Wire and Strands included total
production of strand + LRPC strand + Ply strand +wire , [ 535+8400+1500+9363]
MT, that equals 19,798 MT. The third component is bright bars. The expected
production is
4150 MT. total production would be 39829
MT.
Sales
Domestic - Wire Rope & C cord 8,356 106,145 8869.51
- Wire & Strand 16,948 52,836 8954.37
- Bright Bars 3,900 67788 2,643.74
Export - Wire Rope 7,525 84,087 6,327.58
- Wire & Strands 2,850 56,876 1,620.96
- Bright Bars 250 55,320 138.30
ISMAL/M. Division 895.76
Scrap 540.41
39,829 75,299 29,990.62

NET SALES 27,995.10

for each is
calculated by multiplying quantity sold to its
rate.
57
DOMESTIC-
8356 MT quantities at the rate of Rs. 106145 per MT. The items included are from
Wire Ropes) +Slings +Anchor Mooring Ropes+ R oof Stitching Wires.
Calculated as
7050+366+340+0+0. Also, as per the division total Conveyor Cord domestic sales of
600
is also added (all units in
MT).
second quarter of the FY 2012-13. Here two items are included for quantity
calculation. These are Total Domestic Strand + Wire + Fine Wire i.e. 9415 + 7533 + 0 =
16948 MT.
quantity at the rate of Rs. 67788per MT. There is just one item included in bright
EXPORT –
7525
MT at the rate of Rs. 84087 per MT. The wire includes various types and on an
average taking the weighted figures the rate has als o decreased. The total sales now
stand at INR
6,327.58 lacs.
the financial year 2012-13 is 2850 MT at the rate of Rs. 56876 per MT. The total
quantity is taken as the summatio n of PC Strands + LRPC Strands + Galv. Strands +
Fine Wire.
900+120+1800+30= 2850. The total amount would be INR 1620.96 lacs. There is no
change in the export of Fine Wire and Strands. The market stood absolutely constant.
INR
55,320 Hence total sale would be the product = INR 138.30
lacs.
the Total Gross Sales. On deduction of the domestic and export sales from the total
sales mentioned in P&L the machinery division sale is ascertained as INR 513.49 lacs.
EXCISE DUTY-
This is taken on the market sales. The amount is directly taken from the
financial statement. Total Gross Sales less Excise Duty (as it is the amount
paid as per
Government requirement on production) gives the Net Sales
.
58
Expenses
Wire Rods 41,487 38676 16,045.45
Zinc 565 116000 655.11
Lubricant 312 106291 331.67
Fibre 224 114488 256.92

Power 201 4.70 961.94
Fuel 561.23

Interpretation- The expenses have been categorized into major heads which are
easily traceable. The values of Wire Rods, Zinc, Lubricant, Power and Fuel are taken
directly from the consumption as provided. Other raw materials include raw material
purchased and consumed less already provided ones. The raw materials consumed
have increased by a very slight amount and now stands at INR 18,930 lacs. Apart from
this the contract and processing charges including repairs and
maintenance (45.17+341.53+35.50+24.10) comes to INR 446 lacs. Freight
and Distribution expenses are very similar to the first quarters as commission and
discount percentages etc. usually do not change over quarters. Thus, the total
expenses are quite balanced to what we saw earlier.
PBIDT 3,311.10
3,311.10
The difference between the Net Sales and Expensed incurred gives the PBIDT.
However, there is a slight decline in the profit value. This happened because the
overall increase in the sale amount was less compared to the total expenses incurred.
PBIT fell fr om INR
3314 to 3311(in lacs).
59
3rd Quarter of the FY 2012-13
Q3 FY 2012-13
Productio ns (M/T)
Bright Bars 4,250
41,475
third quarter would be 17327 MT in the FY 2012 -13. Here it is calculated as Wire
production
16727 MT + 600 MT Conveyor Cord productions. Wire and Strands included total
production of strand + LRPC strand + Ply strand +wire , [ 535+8400+1600+9363]
production is
4250 MT. total production would be 41475
MT.
Sales
Domestic - Wire Rope & C cord 8,422 1,05,949 8,923.00
- Wire & Strand 16,948 52,836 8,954.37
- Bright Bars 4,000 67,788 2,711.53
Export - Wire Rope 8,905 85,340 7,599.53
- Wire & Strands 2,950 56,626 1,670.46
- Bright Bars 250 55,320 138.30
ISMAL/M. Division 1,876.02
Scrap 566.61
41,475 78,216 32,439.81

NET SALES 30,419.66

DOMESTIC-
Wire and Wire Ropes sheet. These include Tota l Home Rope+ Total LCWR (Lock
Coil Wire
Ropes) +Slings +Anchor Mooring Ropes+ Roof Stitching Wires. Calculated
as
60
of
600 is also added (all units in
MT).
third quarter of the FY 2012-13. Here two items are included for quantity
16948 MT.
EXPORT –
8905
average taking the weighted figures the rate has also decreased. The total sales now
stand at INR
7599.53 lacs.
quantity is taken as the summation of PC Strands + LRPC Strands + Galv. Strands +
Fine Wire.
1000+120+1800+30= 2850. The total amount would be INR 1620.96 lacs. There is
no change in the export of Fine Wire and Strands. The market stood absolutely
constant.
directly taken as per the financial statements given. Quantity-250 MT and rate as
INR
lacs.
sales mentioned in P&L the machinery division sale is ascertained as INR 791 lacs.
Hence estimated value stands at INR 1876.02 lacs
EXCISE DUTY-
The estimated excise duty payable is INR 2020.15 lacs. A deduction of the duty from
the total sales would give the value of projected Net Sales for the third quarter. It
sees a positive growth more than the extent of the first quarter to INR 30,419.66 lacs.
This was accounted for because of interdivisional sales and estimated increase in
export of Wire
Ropes.
61
Expenses
Wire Rods 43,176 38657 16,690.57
Zinc 607 116000 703.89
Lubricant 341 105982 361.36
Fibre 235 114488 268.59

Power 212 4.70 1,015.30
Fuel 584.97

Interpretation- The expenses have been categorized into major heads which are
easily traceable. The values of Wire Rods, Zinc, Lubricant, Power and Fuel are taken
directly from the consumption as provided. Other raw materials include raw material
purchased and consumed less already provided ones. The raw materials consumed
have increased by a very slight amount and now stands at INR 2338.50 lacs. It
included raw material consumed+ raw material purchased subtracting the losses and
raw materials already provided for.
= 101+20,362-100-18,024(sum of raw materials already provided

for)
=INR 2,339 lacs Freight and Distribution expenses are very similar to the
second quarters as commission and discount percentages etc. usually do not
change over quarters. Thus, the total expenses are quite balanced to what we saw
earlier.
PBIDT 3,876.25
3,876.25
PBIDT Will increase up to INR 3876.25 lacs in the third quarter of the FY 2012 -13.
This
accounted for due to increase in sales.
62
4th Quarter of the FY 2012-13
Productio ns (M/T)
Bright Bars 4,400
41,030
fourth quarter would be 16732 MT in the FY 2012 -13. Here it is calculated as Wire
production
16132 MT + 600 MT Conveyor Cord productions. Wire and Strands included total
production of strand + LRPC strand + Ply strand +wire , [ 535+8400+1600+9 363]
production is
4400 MT. total production would be 41030 MT.
Sales
Domestic - Wire Rope & C cord 8,477 1,05,543 8,946.92
- Wire & Strand 16,948 52,836 8,954.37
- Bright Bars 4,100 67,788 2,779.32
Export - Wire Rope 8,255 84,835 7,003.15
- Wire & Strands 2,950 56,626 1,670.46
- Bright Bars 300 55,320 165.96
ISMAL/M. Division 1,809.09
Scrap 558.51
41,030 77,719 31,887.77

NET SALES 29,863.15

DOMESTIC-
Wire Ropes) +Slings +Anchor MooringRopes+ Roof Stitching Wires.
Calculates as
of
600 is also added (all units in
MT).
63
fourth quarter of the FY 2012-13. Here two items are included for quantity
16948 MT.
EXPORT –
8255
average taking the weighted figures the rate has also decreased. The total sales now
stand at INR
7003.15 lacs.
quantity is taken as the summation of PC Strands + LRPC Strands + Galv. Strands +
Fine Wire.
1000+120+1800+30= 2950. The total amount would be INR 1670.46 lacs. There is
no
change in the export of Fine Wire and Strands. The market stood absolutely
constant.
INR
lacs.
sales mentioned in P&L the machinery division sale is ascertained as INR 724 lacs.
Hence estimated value stands at INR 1809.09 lacs.
EXCISE DUTY-
The estimated excise duty payable is INR 2024.63 lacs. It sees a negative growth less
than the extent of the fourth quarter to INR 29863.15 lacs. This was accounted for
because of interdivisional sales and estimated decrease in export of Wire
Ropes.
64
Expenses
Wire Rods 42,732 38701 16,537.51
Zinc 586 116000 680.24
Lubricant 329 106103 349.14
Fibre 229 114488 261.72

Power 208 4.70 996.75
Fuel 577.05

Interpretation- in this quarter overall expected expenses is showing a fall. As

expenses are directly linked to sales and with a fall of the same raw materials
consumed will come down and hence a decrease. The total expenses now stand at INR
26,147.17 lacs.
PBIDT 3,715.97
3,715.97
Interpretation- A deduction of the expected expenses from the Sales would give
the projected PBIDT which is INR 3,715.97 lacs. Though there is a fall compared to
third quarter owing to fall in sales yet the value denotes healthy financials.
ASCER TAINING OF WORKING

CAPITAL
Working capital level
The consideration of the level investment in current assets should avoid two
danger points excessive and inadequate investment in current assets. Investment in
current assets should be just adequate, not more or less, to the need of th e
business firms. Excessive investment in current assets should be avoided because it
impairs the firm s profitability, as idle investment earns nothing. On the other hand
inadequate amount of working capital can be threatened solvency of the firms
because of it s inability to meet it s current obligation. It should be realized that the
working capital
need of the firms may be fluctuating with changing business activity. This may cause
65
excess or shortage of working capital frequently. T he management should be prompt
to initiate an action and correct imbalance.
Once the initial calculations were made based on the projected B Plan for 2012 -13,
the next step involved was determining Working Capital. Working Capital is calculated
as -
Net Working Capital= Current Assets - Current liabilities.
1ST Quarter of the FY 2012-13
Holding Qty Rate Rs./lacs

Gro ss Current Assets
Months
Raw Materials
Wire Rods 3.00 41270 38643 15948.16
Zinc 2.00 374 116000 433.74
Others 2.00 392.50
Stock in Process (Month's of net sales) 0.25 2,326.63
Finished Goods (month's of net 0.75 5,234.91

sales) Wire Ropes
Wires
Bright Bars
Others
Sundry Debtors (month's of gross
sales) Export 3.00 8,196.81
Domestic 1.00 7,052.49
Other Expenses - Materials 1.00 738.78
Other Expenses - P & A
Gross Current Assets 40743.15
Interpretation - The holding month’s data is directly taken from the Business
Plan sheet as per company norms. The different holding month’s are -
Wire Rods- 3 month - primarily sourced from its own company Usha Martin
ltd. Jamshedpur. Few grades of Wire Rods sourced from Jindal Steel which is situated
at a distance of 45 km in Patratu, Ramgar h. Sometimes company purchases Imported
Wire Rode in case of special customer requirement. 41270 MT quantities would be
required at the rate of INR 38643 MT for the manufacturing process in first quarter
of the FY
2012-13.
66
Zinc- 2 months- It is the second most important material required for manufacturing
purpose. Zinc is purchased from Hindustan Zinc limited (world’s second largest zinc
producer). Zinc is supplied from the smelters situated in Rajasthan, namely
Debari Udaipur & Chanderiya , Chittorgarh.
Other Raw Materials- 2 months – The other raw material primarily consists of
Lubricants, fibres, lead , wire drawing soaps , chemicals
etc.
Lubricants - lubricants purchased consists of WRL -55 and WRL-8 purchased from
Usha lubes situated in Jamshedpur. N80-BA and Nuristan are imported lubricants
purchased from Germany.
Fibres – It mainly consists of imported sisal fibre and indigenously purchased jute
and polypropylene fibre.
Fuel – Butane and High speed diesel, kerosene oil are purchased indigenously from
Eastern gases Pvt, ltd and Indian Oil Ltd
respectively.
Stock in Progress- 0.25 months- Manufacturing of finished product takes a

substantial amount of time as it has to undergo a number of processes stating from
pickling of wire rods, passing through furnace, wire drawing to stranding to
closing of ropes etc. Resultantly a significant amount of funds are blocked in the
process stock. So to take care of this aspect stock in progress has also been taken into
account for working capital determination.
Finished goods- 0.75

months
Debtors (export) - 3 months –the company export its overseas products via ship. So
it takes more time then in domestic products. Because Export of products involves a
huge no. of documentations and clearances at the loading and unloading ports hence
time period for realization of export sales is 3 month s longer than the domestic
debtors.
Debtors (domestic) - 1
month
Other Materials- 1
month
Calculation of value of Current Assets based on the Holding Period given:

-
Wire Rode- it is determined that the projected need of the Wire Rode in the first
quarter of the FY2012-13 would be 41270 MT. hence the value of this assets would be
-
= 41270/3*3 where 3 is the holding period
Total Sales = 41270*38643 (Quantity

*Rate)
= INR 15947.96610lacs.
67
Zinc-
= 561/3*2
Total Sales = 374*116000
= INR 433.74 lacs.
Other raw material includes Fiber and Lubricant. As per holding period 2
months calculation it would come to INR 392.50lacs.
Stores and Spares are the next expense determined which has no holding period. The
Stock in Progress determines the holding period of unfinished products which
are under process. It is taken on the basis of Net Sales (0.25 months). Finished
goods determine the company’s stock of goods that has not been yet sold. It is taken
on the basis of Net Sales (0.75 months).
Sundry Debtors- this represents the debtors to whom goods have to sale while. The
company has both, Domestic sales as well as Export sales. So the value determined
is separated, for Export – 3 months and for Domestic – 1 month.
Other expenses include the other raw materials and miscellaneous expenses to
be included. A sum of all the items gives the Gross Current Assets for the quarter. I
t is expected to be INR 40743.15 lacs.
Current Liabilities
Credit from Jamshedpur 2.50 13,290.13
Zinc and other RM credit 3.00 2,894.47
Credit for other Expenses 1.00 1,297.10
Total Current Liabilities 17,481.71
Net Current assets 23261.44
Interpretation- Current Liabilities represent the value for that company has to
make payments.
Wire Rode- It is proclaimed from the Jamshedpur branch, as Ranchi is very near to
Jamshedpur, so it helps to save the transportation cost. The credit given is of
2.5 months.
Zinc and other materials- this includes Zinc, Lubricant, Fibre and other
requirements. The credit given is of 3 months, this shows good terms of the company
with its suppliers
in terms of payments.
68
Credit for all other Expenses- It includes power, Fuel, Spar es, Freight and
Selling Expenses incurred. The credit given is of 1 month for all expenses. A
summation of all the items gives the Total Current Liabilities. The projected value is
INR 17,481.71 lacs
Working Capital = Current Assets – Current

Liabilities
= 40743.15 – 17481.71
= INR 23261.44 Lacs.
Therefore, the estimated working capital requirement in the first quarter of the
FY
2012-13 would be INR 23261.44 lacs.
2nd Quarter of the FY 2012-

13

Raw Materials
Wire Rods 3.00 41487 38676 16045.45
Zinc 2.00 376 116000 436.74
Others 2.00 392.39
Finished Goods (month's of net sales) 0.75 5,249.08

Wire Ropes
Wires
Bright Bars
Others
Sundry Debtors (month's of gross sales)
Export 3.00 8,086.84
Domestic 1.00 7,121.12
Interpretation- The overall Current Assets of this quarter is estimated to have an

increase than the last one. Holding period would remain the same. The
quantity requirement of Wire Rods has increased from 41270MT to 41487 MT. there
would be little change of 2MT in Zinc. Stock in Progress and Finished Goods would also
very small change. Sundry Debtors (Export) are expected to decline while in domestic
sales there
would be some increment. The total Current Assets would be up to INR 40810.03
lacs.
69
Current Liabilities
Interpretation- The supplier credit of Wire Rods is expected to rise to INR

13,371.21 lacs while other raw materials show a decline. The total liabilities would
increase by a lesser amount than the extent of the increase in assets.
Working Capital = 40810.03 – 17,534.21
= INR 23275.82 Lacs.
The working capital requirements for the second quarter will be decrease up to
50.15 lacs.
3rd Quarter of the FY 2012-

13

Raw Materials
Wire Rods 3.00 43176 38657 16690.57
Zinc 2.00 405 116000 469.26
Others 2.00 419.96

Wire Ropes
Wires
Bright Bars
Others
Export 3.00 9,408.29
Domestic 1.00 7,488.30
70
Interpretation- As compared to the previous quarter this quarter is expected to see
a good increase in sales. The consumption of Wire Rods would increase by a
larger amount to 43176MT while Zinc also stands at 405mt. the stores
consumption as projected in the B Plan came up to INR 480.48 lacs. Since the
estimated sal es will be INR
44170.01 lacs. The Stock in Progress and Finished Goods worth (calculated in terms
of
Net Sales) will also increase. Debtors both domestic and exports would be rise . The
extent of increase in exports is much more than domestic; however this even blocks
a lot of funds as exports are realized in 3 months. Other expenses includ e other
raw materials will also increase as per sales growth.
Current Liabilities
Interpretation- The Current Liabilities have increased by a large amount. However,

the extent is much lesser compared to the expected increase of Current Assets. This
added to the increase in working capital requirements for the quarter. The credit
for Zinc, Lubricant, Fibre and other raw materials is expected to increase.
Working Capital = 44170.01 – 18,998.39
= INR 25171.63 lacs.
Therefore, the estimated working capital requireme nt in the third quarter of the
FY
2012-13 would be INR 25171.63 lacs.
71
4th Quarter of the FY2012-13

Raw Materials
Wire Rods 3.00 42732 38701 16537.51
Zinc 2.00 391 116000 453.50
Others 2.00 407.24

Wire Ropes
Wires
Bright Bars
Others
Export 3.00 8,839.58
Domestic 1.00 7,496.56
Interpretation- The overall Current Assets of this quarter is estimated to have

a decrease than the last quarter . Holding period would remain the same. The
quantity requirement of Wire Rods would decrease from 43176 MT to 42732MT.
The quantity requirement of Zinc will also decrease up to 14MT. There would be very
small change in Stock in Progress and Finished Goods. Debtors (export) are exp ected
to decline while there would be some increment in domestic sales. The total Current
Assets adds up to INR 43243.67 lacs.
Current Liabilities
72
Interpretation- The Total Current Liabilities is estimated to decrease from INR

18,998 to INR 18,713.66 lacs. However, the decre ase in Current Assets would be
INR 926.34 lacs and in Current Liabilities it would be INR 284.73 lacs, this will help
to reduce the working capital requirements for the quarter.
Working Capital = 43243.67 – 18713.66
= INR 24530.01 lacs.
Thus, the expected requirement of the quarter will be decrease while that of the last
quarter.
QUARTERS AT A GLANCE
PROJECTIONS QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4
CURRENT 40743.15 40810.03 44170.01 43243.67

ASSETS
CURRENT 17,481.71 17,534.21 18998.39 18713.66
LIABILITIES
WORKING 23261.44 23275.82 25171.63 24530.01
CAPITAL
16. RECOMMENDATIONS: -
A well designed and implemented Analysis of Financial statement is expected

to contribute positively to the creation of a firm’s value. The analyzed in
financial statement needs and profitability of firms are examined to id entify the
causes for any significant differences between the industries. High investment
in inventories and receivables is associated with lower profitability.
A firm is required to maintain a balance between liquidity and

profitability while conducting its day to day operations. Liquidity is a precondition
to ensure that firms are able to meet its short-term obligations and its
continued flow can be guaranteed from a profitable venture. The importance
of cash as an indicator of continuing financial health should not net surprising in
view of its crucial role within the business. This requires that business must be run
both efficiently and profit ably. In the process, and asset-liability mismatch may
insolvency. On the other hand, too much
focus on liquidity will be at the expense of profitability.
73
17. CONCLUSION (LEARN ING):-
The summer training was an endeavour to critically understand the

practical implication of the Production process at an industry. Though the industry is a
small one as compared to many others companies at Jamshedpur, Such as Tata Steel,
Tata Motor, etc it was quite an interesting experience to interact with the industry
environment. There are transparent and clear objectives which one has to achieve.
The industry is one of very unique in nature and the findings may be applied to
similar type of industries only.
At this stage I strongly fell that the area of production is so vast that the
Summer Training may be conducted again and again focusing on various
aspect of the production in order to gain effectiveness and efficiencies. I hope this
project will prove as a turning point in my Management Career.
Product:-
 UMLs product has good demand in market
 UMLs product are well tested and inspected by the world class
testing authorities like ABS,IRS,LOYDS
Price:-
 Overheads are quite high as compare to other companies
 From customer point of views due to high cost of UML product it loses
certain prospective customer
 From geographical point of view UML plant in Ranchi is well positioned , but
there are certain problems like band & strikes & lack of infrastructural
facilities
Promotion:-
 Promotion strategy such as participating in trade fairs are not enough to

create awareness to customer
 After sales service of UML is well appreciated
Packaging:-
 UML is at par with current packaging brands
 The iron rods are used mostly these days. They are well painted to give nice look
74
18. BIBLIOGRAPHY: -
www.u shamartin.com
www.scribd.com
www.slidshere.com
www.wikipedia.com
75

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A PROJECT REPORT ON SUMMER TRAINING

AT USHA MARTIN LTD.

MANOJ KUMAR PRAMANIK.

CENTRE FOR BUSINESS

MANOJ KUMAR PRAMANIK

A Report submitted in partial fulfilment

Deputy Manager (Accounts and Commercial)

Usha Martin Limited, Ranchi

I hereby declare that this project report entitled “A PROJECT REPORT ON

I also declared that the best of my knowledge, this project is a result of my

No portion of this project report is pu blished or submitted to any other University

CA- Rajiv Singh

Deputy Manager (Accounts and

Commercial) Usha Martin Limited.

Summer training is essential to get the practical orientation of theoretical knowledge

My topic is Ascertainment of Working Capital Requirement of Usha Martin Limited for

CONTENTS PAGE NUMBER

Started in 1961 in Ranchi, Jharkhand as a wire rope manufacturing company, today

1. Mr. Prashant jhawar (chairman)

3. Brij k jhawar (Director)

6. Mr Ashok basu (Director)

7. Mr Salil singhal (Director)

8. Mrs Ramni nirula (director)

10. Mr Nripendra mishra (Director)

11. Rajiv Jhawar (MD)

12. P Bhattacharya (JT MD)

13. Dr Vijay sharma (Ex Director & CE,steel business)

• Headquartered in Kolkata, India;

• Steel manufacturing facilities located in Jamshedpur and Agra;

• Wire and wire rope manufacturing facilities located in Ranchi (Jharkhand)

• High–value wire and conveyor cord manufacturing facilities at Ranchi;

• Machinery manufacturing and engineering application canters in Ranchi and

• Manufacturing units for bright bars in Ranchi and Sriperumbudur (Tamil

• Telecommunication cables manufacture at Silvassa (India).

Wide global network of marketing and distribution warehouses in Singap ore,

Following are the products manufactured by the company.

1. Coils and Bars.

PRODUCT QUALITY /TESTING FACILITIES:-

5. VISION, MISSION AND QUALITY POLICY:

USSIL became a Public Company Limited in 1997 and

USSIL is among the largest integrated Steel Wires, Industrial

BWWR is the first wire rope factory set up in the middle

(Wire & Strands)

b) Then the cleaned rod is sent for drawing.

d) After galvanisation the rod is again drawn and strands are

formed. e) The strands are coiled to form the “wire rope”.

8. BEST PRACTICES AT USHA MARTIN

A. Business Drivers: - ( PQCDSM).

TPM ( Total Produc tive Ma intena nc e) polic y:-

Whatever the type of change – restructuring, new processes, organizational

OBJECTIVE OF THE MODEL (To analyze how well an organization is positioned

 Improve the performance of a company

The Seven Interdependent Elements

WORLD’S LARGEST ARCH BRIDGE IN DUBAI

The Usha Martin Ltd. is produce 100,000 MT / annum manufacturing facilities at

HOWRAH BRIDGE & INCHEON BRIDGE NEW SONGDO CITY, KOREA

9. CORPORATE SOCIAL RESPONSIBILITY:-