A

PROJECT REPORT

ON

“A STUDY OF WORKING CAPITAL OF BAJAJ STEEL

INDUSTRIES”

SUBMITTED TO

RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY

IN PARTIAL FULFILLMENT FOR AWARD DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

SPECIALISATION IN FINANCIAL MANAGEMENT

SUBMITTED BY

PRINCE NAGRIKAR

GUIDED BY

MISS. DIPAWALI RANDIVE

 PRERNA COLLEGE OF COMMERCE
Reshimbagh square Nagpur -440009

2020 – 2021
CERTIFICATE

This is to clarify that this project entitled “A STUDY OF WORKING CAPITAL

OF BAJAJ STEEL INDUSTRIES” submitted by PRINCE R. NAGRIKAR to
R.T.M. Nagpur university, Nagpur for the partial fulfillment of bachelor of business
administration is a bonafied original research work carried out under my guidance
and supervision. It is piece of research of a sufficiently high standard to warrant it
submission to the University for Reward of the said degree.

No part of the project has been submitted for any degree or diploma or
published in any other form.

The assistant and the help rendered to the research during course of this research in
the form of basic source material and information have been duly acknowledged.
 PROJECT GUIDE PRINCIPAL

MISS DIPAWALI RANDIVE Dr. BHARTI DESHMUKH

DECLARATION

I hereby declare that this project “A STUDY OF WORKING CAPITAL OF

BAJAJ STEEL INDUSTRIES” has been submitted as project report is partial
fulfillment of Bachelor of Business Administration.

The project detail or any part has put been submitted earlier to any institute for any
other degree or diploma.

The source of material and data used in the study have been duly acknowledge
and certified.

Place: Nagpur PRINCE NAGRIKAR

Date: B.B.A Final Year

ACKNOWLEDGEMENT

It express my sincere and hearty gratitude to my project guide for giving me an

opportunity and support to carry out this project without whose able guidance this
project would never materialized. It was here polite talks, Keen interest, knowledge,
and practical suggestion that inspired me to bring out the best.

I gratefully acknowledge my deepest gratitude honorable President Prof. R. C.

GULHANE and honorable secretary Dr. S. C. GULHANE for their persistent
inspiration and the principal Dr. BHARTI DESHMUKH conservative suggestion
and constant encouragement.

I also want to thank my friends, my family and all the members who were associated
directly or indirectly in making my project successful.
Place: Nagpur PRINCE NAGRIKAR

Date: B.B.A Final Year

INDEX

SR. NO. PARTICULARS PAGE

NO.

1 INTRODUCTION AND RESEARCH METHODOLOGY

• INTRODUCTION

• COMPANY PROFILE

• RESEARCH METHODOLOGY

• AIM AND OBJECTIVES

• SCOPE AND LIMITATIONS

• HYPOTHESIS
 2

DATA COLLECTION

• PRIMARY DATA

• SECONDARY DATA

3 ANALYSIS OF DATA AND HYPOTHESIS TESTING

4 CONCLUSION AND SUGGESTION

5 BIBLIOGRAPHY

INTRODUCTION

Summer Internship is the most crucial aspect for a management student.

It is the first rendezvous of the student with the industry. It gives the
students a chance to apply the fundamentals they have learnt in the first
year into actual practice. For students without work experience, it
provides an opportunity to get the first taste of working life. Also it helps
students in deciding the kind of specialization they want to pursue.
Finally, from the Company’s point of view, it provides them with a great
opportunity to prejudge a candidate. So the summer internship has a
direct impact on the final placements of the students.
I did my Summer Internship at, BAJAJ STEEL INDUSTRIES LIMITED at
NAGPUR. The internship period was 1th May to 25th June, 2011 which was
highly enriching.
My Industry Guide was Bharti Karamchandani

This Summer Internship had benefited me in the following manner:

• It bridged the gap between theory and practical. Many of the
theoretical aspects were clearly understood.
• Despite the work experience, it was my first hand experience in the
field of Banking & Finance sector.
• It gave me an opportunity to explore the career field of interest.
• It enhanced my skills and habits required to be successful in this
particular field.
• It may open the doors of opportunity for me to debut in the field of
Banking & Finance sector.

BAJAJ STEEL INDUSTRIES LIMITED

• BAJAJ STEEL INDUSTRIES LIMITED, a significant part of

Bajaj Group of Industries, Nagpur was established in the year
1961, as a manufacturer and exporter of cotton pressing and
ginning machines. Under the guidance of Mr. M. K. Sharma,
 the President of the organization, we have set a strong
foothold in the global market. His experience and knowledge
has assisted us in achieving specialization in the
manufacturing of Ginning and Pressing Equipment. Today, we
are counted among the Decorticating Machines Suppliers and
Hull Beater Exporters in India.
•
• HISTORY
•
• The company was established by Late Shri Gangabisenji
Bajaj in 1961 and is now run under able guidance of his son
Shri Hargovind Bajaj. The group is having wide experience
in the fields of engineering, cotton, plastics and various
other activities.
• The company has been pioneer in double roller cotton
ginning technology with largest market share in the
segment. The company has grown rapidly and now
expanded its manufacturing, fabrication and assembly
facilities manifold. Earlier company was having only factory
at Imambada Nagpur, now it is having four major
manufacturing facilities.
• The company has recently entered into technical collabration
for manufacturing of saw gin, rotobar gin and other
equipments earlier manufactured by Continental Eagle
Corporation, USA to manufacture them in India.

COMPANY PROFILE
Bajaj Steel Industries Limited (BSIL), Nagpur, India, established
in 1961, is a public limited company, listed on Bombay Stock
Exchange. The company is having world class engineering setup
in its various plants situated in and around Nagpur. The present
activities of the company are as below:

A) Manufacturing
• Largest and Modern Cotton Ginning & Pressing Machinery Manufacturer in
India
• World class Delinting and Decorticating machinery manufacturing
• World class machining of components and parts for various applications
• All types of electrical panels to meet various industrial needs
• High quality structural fabrication for buildings and machinery applications
etc.
• Manufacturing of various other machineries, components and parts as per
drawings
• High quality mechanical conveyors and elevators
• Pneumatic conveying, dust / waste handling systems and humidification
systems
• Engineering and construction projects
• Hydraulic cylinders, Power packs & Manifolds for various applications

Bajaj is the only company in the world producing machineries for

all cotton ginning technologies i.e. Double Roller, Saw Gin &
Rotobar, all Pressing technologies i.e. Down Packing, Up Packing &
Horizontal Packing, as well as

Seed Cleaning, Delinting & Decorticating, apart from general

engineering fabrication, machining, intelligent electrical panel
manufacturing and various other engineering activities. The
company is on high growth path and adding various items to its
fold consistently yoy.

Company is having extensive facilities for following:

 1. Engineering Designs
2. Machining
3. Fabrication
4. Assembly

B) Trading
Cotton Trading: Domestic and Exports

Bajaj Group of Industries are starting a new “Cotton Export Division"

at Nagpur to widen their horizon in the field of Cotton Export, to serve
buyers across the globe and thus making a mark in the cotton world.

We Endeavor to put in our hardest and best of efforts, to provide the

best quality cotton to the world.

Dealing in all types of Raw Cotton ranging from short staple to extra
long staple, according to the specifications & parameters of the
buyers, at most affordable and attractive terms.

People contribute when they relate to an organization and

they relate, when they understand the organization.
People understand an organization through its values, by
experiencing the culture that values create and by using
the systems and processes that values define. In large
organizations, such share understanding can not be
created through leadership of individuals alone; it requires
leadership of principles, of beliefs, of conviction.
 • Integrity
• Commitment
• Passion
• Seamlessness
• Speed

These together constitute what we call our “Values”.

Integrity :- Acting and taking decisions in a manner that these

are fair, honest, following the highest standards of professionalism
and are also perceived to be so. Integrity for us means not only
financial and intellectual integrity, but in all other forms as are
commonly understood.

Commitment: - On the foundation of integrity, doing whatever it

takes to deliver values to all stakeholders. In the process, taking
ownership for our own decisions and actions, those of our team
and that part of the organization that we are responsible for.

Passion: - A missionary zeal is arising out of emotional

engagement with the organization that makes work joyful and
inspires each one to give his or her best.

Seamlessness: - Thinking and working together across functional

silos, hierarchies, businesses and geographies.
Speed: - Responding to internal and external customers with a
sense of urgency.

Board Of Directors of Bajaj Steel Industries Ltd

Chairman Shri Hargovind Bajaj

Managing Director Shri Rohit Bajaj

Executive Director Shri Sunil Bajaj

Whole-time Director Shri Ashish Bajaj

Directors Shri Vinodkumar Bajaj

Shri Lalchand Mutha
Shri Ramadevi Ruia
Shri Kamal Kishore Kela
Shri Mohan Agrawal
Shri Alok Goenka
Shri Raj Kumar Lohai
Shri Rajiv Ranka
Shri R.G. Dwivedi

Company Secretary Shri Jagdish Shirke

Auditors B.Chhawchharia & Co.

Bankers/Financial SICOM LIMITED

Institution State Bank of India
Axis Bank Limited

Main Products of Bajaj Steel Industries Ltd

Ginning Machine

This is well reckoned as one of the overruling

Double Roller Ginning Machine Exporters based in India. Our Ginning
Machine is widely used to gin the lint in small as well as bulk quantity.
Use of technically advanced machines for the manufacturing of rotating
parts of Cotton Ginning Machine assures high tolerance and best finish
ensuring high durability. Availability with various user-friendly features
ensures ease of operation and maintenance of Cotton Ginning
Machine.

Cotton Baling Press

 This provides a wide range of high
technology Cotton Baling Press that includes fully automatic, Medium
Capacity (15-18Bales) and High capacity (30-35 Bales). Our Automatic
Cotton Baling Press is designed to offer low cost as well as power
consumption per bale. Robust construction of

our Cotton Baling Press ensures long lasting life with no maintenance.
High-pressure power pack based on German Technology assures high
performance of our Cotton Baling Press. Today, we have carved a niche
as one of the distinguished Hydraulic Cotton Baling Press Exporters
based in India.

Cotton Pre-Cleaner

The advanced Cotton Pre Cleaner is

ideally suited for removing yellow/ pre-matured bolls, stones, and
various other impurities from raw cotton. Cotton Pre cleaning Machine
offered by us is prefect to improve the quality of the raw cotton before
ginning. It protects the fiber quality and gin from any kind of damage
from impurities. With its efficiency, our Pre Cleaner enhances the
performance of the ginning and reduces the maintenance cost of
ginning machines. We have firmly propositioned ourselves as one of
the key Cotton Pre cleaner Manufacturers based in India.

Lint Cleaner

Today, the company stands among the major

Lint Cleaning Machine Manufacturers and Suppliers based in India. Our
Lint Cleaner is precisely designed to efficiently remove leafy matters,
seed coasts etc. from ginned lint and clean the Cotton Fiber. Cotton Lint
Cleaner offered by us is perfect to improve the grade as well as
appearance of lint. With high quality grid and spade system, it protects
the quality of the fiber and reduces the trash content. Available in a
variety of models with various feeding systems, our Lint Cleaner is easy
to operate and maintain.
Auto Feeder

They have firmly positioned themselves as

one of the chief Automatic Feeder Manufacturers and suppliers based
in India. Our Auto Feeder for Ginning Machine is manufactured from
the advanced technology parts to increases productivity from 15% to
20%. Electric Auto Feeder offered by us is perfect to save labor. With
high technology, it assures low consumption of electricity. Ensuring

proper feeding of Cotton to the Gin Machine, our Electric Auto Feeder
is easy to operate and maintain

Cotton Seed Delinting Machine

They provide high capacity Cotton Seed

Delinting Machine that is highly appreciated in the national and
international markets. We have carved a niche as one of the key
Mechanical Cottonseed Delinter Manufacturers and Suppliers based in
India.

Energy Saving Features

• Efficient Roll Box design minimizes drag for an easier flow of seed
Mass.
• 176 Saw Blanks made of superior & special steel material.
• Lowest Energy – to capacity ratio in the Industry

Mechanical Advantages

• Saw Mandrel made of mechanical tubing provides smooth

operation.
• Electric motors are conveniently located for ventilation & easy
maintenance.
• Positive tooth belt drives eliminate slippage & provides efficient power
transmission.

Decorticator

Today, they are one of the leading

Decorticating Machine Manufacturers and Suppliers based in India.
A Proven Winner since 1962
 • CEC was the first to envision and implement the modern twin-roll
hulling design since 1962.
• First to incorporate a decorticator with a basket beater and high-
speed separation.
• First to successfully process undelinted cottonseed with lowest oil
losses.
• Highest Capacity per meter width of twin roll drum.

Hull Beater

The high capacity Hull Beater is

unsurpassed in efficiency as well as performance. The model 4620
Double Drum Hull Beater is uniquely designed with a built in tailing
beater eliminating the need for additional conveying systems. Capable
of handling capacities in excess of 200 tons per day of delinted &
undelinted cottonseed, the model 4620 is unequaled in the industry.
When combined with the CEC/BAJAJ decorticator/separator system, oil
in hulls is maintained at a low level, even with 12 % to 14% lint on hulls.
Today, we stand among the leading Industrial Hull Beater
Manufacturers and Suppliers based in India.

Cotton Seed Cleaner

They offer fine Cotton Seed Cleaner that is first

and the foremost designed to be the main machine in seed cleaning.
Cotton Seed Cleaning Machine offered by us is available with Material
feed roller as well as Aspiration chamber fitted with trash conveyors that
enhance its efficiency. Today, we

stand among the prominent Cotton Seed Processor Exporters based in

India.

Linter Cleaner
 Linter is discharged from a cyclone to the top
chamber of the LC-410D Linter Cleaner. This chamber consists of two
x 3 Meter' long, 500 MM diameter cylindrical beaters operating side by
side in 550MM dia. Half round screen sections. Linter enters at one end
of one beater, is conveyed to the opposite end and transferred to the
opposite beater section. From this point, the Linter is once again
conveyed over the screen section for the length the top section.
Cleaned Linter discharged from the top section is pneumatically
conveyed to the bale press

ACCOUNTING POLICY
i) Accounting Convention:

The financial statements are prepared under the historical cost

convention in accordance with applicable Accounting Standards.

ii) Valuation of Fixed Assets:

Fixed assets are stated at cost without deducting capital grants

which are shown separately in the accounts.

iii) Method of depreciation:

Depreciation is provided on Written Down Value Method in

accordance with the provisions of Schedule XIV to the Companies
Act, 1956.

iv)Treatment of expenditure during construction:

The expenditure incurred during the period of construction is

charged to capital work-in-progress and on completion the cost is
allocated to the respective fixed assets.

v) Valuation of Inventories:

Inventories are valued as follows:

Raw Materials, Stores, Spares and Fuel:- Lower of cost and net
realizable value. However, materials and other items held for use
in the production of inventories are not written down below cost if
the finished products in which they will be incorporated are
expected to be sold at or above cost.

Cost is determined on FIFO basis. Semi finished goods and

finished goods:- Lower of cost and net realizable value. Cost
includes direct materials and labour and a proportion of
manufacturing overheads based on normal operation capacity.
vi) Obsolescence and damaged materials:

The inventories are periodically reviewed to ascertain

dormant/obsolescence materials and necessary adjustments are
made thereof.

vii) Investments:

Long Term investments are valued at cost except that provision

is made to recognize the permanent diminution in their value.
Investment sin tended to be held for less than one year are
classified as current investments and are valued at lower of cost
and market value.

viii) Foreign Exchange Variations:

Closing balances of current assets and current liabilities relating

to foreign currency transactions are converted into Rupees at
prevailing rates or at the rate of forward cover. Export sales are
recorded in rupee amount by applying the exchange rate existing
at the time of discounting the bills of exchange with the bankers
or at closing rate of exchange.

ix) Sales and other income:

a) Sales include excise duty and exclude sales taxA/alue

Added Tax.

b) Revenue recognition is postponed to a later date only when it

is not possible to estimate it with reasonable accuracy.

x) Employees Benefits:
 a) Short term employee benefits are charged off at the
undiscounted amount in the year in which the related service is
rendered.

b) Post employment and other long term employee

benefits are charged off in the year in which the employee has
rendered services. The amount charged off is recognized at the
present value of the amounts payable determined using actuarial
valuation techniques. Actuarial gain and losses in respect of post
employment and other long term benefits are charged to Profit
and Loss Account.

xi) Taxes on Income:

a) Current tax is determined as the amount of tax payable

in respect of taxable income for the year.

b) Deferred Tax is recognized, subject to consideration of

prudence, in respect of deferred tax assets/liabilities arising on
timing differences, being the difference between taxable incomes
and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods.

xii) Impairment of assets:

Impairment loss in the value of assets as specified in Accounting

Standard 28 is recognized whenever carrying value of such assets
exceeds the market value or value in use, whichever is higher.

xiii) Use of Estimates:

The preparation of financial statements in conformity with

generally accepted accounting principles requires estimates/
exemptions to be made that affect the reported amount of assets
and liabilities on the date of financial statements and the reported
amount of revenues and expenses during the reporting period.
Difference between actual results and estimates are recognized in
the period in which the results are known/ materialized.

RESEARCH METHODOLOGY

When we talk of research methodology, we not only talk of the

research methods but also the comparison of the logic behind the
methods, we used in this context of our
research study and explain why we are using a particular method
or technique and why using the others. Research methodology is a
way to systematically solve the research problem. It may be
understood as a science of studying how research is done
systematically. In this, we study the various steps that are
generally adopted by researcher in studying his research problem
along with the logic behind them.

“The present study is based upon the case study method of

research to investigate procedures at micro level”.
As the study is analyzing probing in nature, thus, entirely based on
the secondary data gathered through the annual reports of the
industry. Therefore it provides a historical perspective of decisions.

RESEARCH

Research refers to search for knowledge. Research is an original

contribution to the existing stock of knowledge making for its
advancement. It is the pursuit of truth with the help of study,
observation, comparison and experiment. In short, the search for
knowledge through objective and systematic method of finding
solution of the problem is research. The advance learner’s
dictionary of current English gives the meaning of research “a
careful investigation or inquiry especially through search
for new facts in any branch of knowledge”.

RESEARCH METHODS

Research methods may be understood as those

methods/techniques that are used for conduction of research. All
those methods which are used by the researcher during the course
of studying his research problem, are termed as research methods.
Keeping in view, the research methods can be put into following
three groups:

➢ In the first group we include those methods which are

concerned with the collection of data. These methods will be
used where the data already available are sufficient to arrive
at the required solution.
➢ The second group consists of those statistical techniques
which are used to establish relationships between the data
and the unknown.
The third group consists of those methods which are used to
evaluate the accuracy of the obtained results.
 OBJECTIVE OF THE STUDY

Study of the working capital management is important because

unless the working capital is managed effectively, monitored
efficiently planed properly and reviewed periodically at regular
intervals to remove bottlenecks if any the company can not earn
profits and increase its turnover. With this primary objective of
the study, the following further objectives are framed for a depth
analysis.

• To study the working capital management of Jain Irrigation

Systems Ltd.

• To study the optimum level of current assets and current

liabilities of the company.

• To study the liquidity position through various working

capital related ratios.

• To study the working capital components such as receivables

accounts, cash management, Inventory position

• To study the way and means of working capital finance of

the Jain Irrigation System Ltd.

• To estimate the working capital requirement of Jain

Irrigation System Ltd

• To study the operating and cash cycle of the company.

 SCOPE AND LIMITATION
SCOPE

Cash flows are somewhat unpredictable, with the degree of

predictability varying among firms and industries. Unexpected
cash needs at short notice may also be the result of following:

1) Uncontrollable circumstances such as strike and natural

calamities.

2) Unexpected delay in collection of trade dues.

3) Cancellation of some order for goods due unsatisfactory

quality.

4) Increase in cost of raw material, rise in wages, etc.

The higher the predictability of firm’s cash flows, the lower will be
the necessity of holding this balance and vice versa. The need for
holding the precautionary cash balance is also influenced by the
firm’s capacity to have short term borrowed funds and also to
convert short term marketable securities into cash.

LIMITATION

Following limitations were encountered while preparing this

project:

1) Limited data:-
This project has completed with annual reports; it just constitutes
one part of data collection i.e. secondary. There were limitations
for primary data collection because of confidentiality.

2) Limited period:-
This project is based on five year annual reports. Conclusions and
recommendations are based on such limited data. The trend of
last five year may or may not reflect the real working capital
position of the company

3) Limited area:-
Also it was difficult to collect the data regarding the competitors
and their financial information. Industry figures were also difficult
to get.

HYPOTHESIS

H1: Backtesting and optimizing the hypothesis - Obtaining data, coding

the strategy, analyzing the performance.

H2: Automating the strategy - Linking to brokerage Risk management -

Optimal capital allocation, bid-ask size etc.
 DATA COLLECTION

There are several ways of collecting the appropriate data which

differ considerably in context of money, cost, time and other
sources at the disposable of the researcher.
There are two types of data:
• Primary data
• Secondary data

Primary data

Primary data are those which are collected afresh and for the
first time, and thus happen to be original in character. In case
of descriptive research, researcher performs survey whether
sample survey or census survey, thus we obtain primary data
either through
• Observation
• Direct communication with respondent
• Personal interview

Secondary data

Secondary data are those which have already been collected by

someone else and have already been passed through statistical
process.
In this project report, both types of data have been used.
Mainly, secondary data is used such as annual reports of last
two years of Bajaj steel industries.
 ANALYSIS OF WORKING CAPITAL
MANAGEMENT

ROLE OF RATIO ANALYSIS

Ratio analysis helps to appraise the firms in the term of there

profitability and efficiency of performance, either individually or in
relation to other firms in same industry. Ratio analysis is one of
the best possible techniques available to management to impart
the basic functions like planning and control. As future is closely
related to the immediately past, ratio calculated on the basis
historical financial data may be of good assistance to predict the
future. E.g. On the basis of inventory turnover ratio or debtor’s
turnover ratio in the past, the level of inventory and debtors can
be easily ascertained for any given amount of sales.
Similarly, the ratio analysis may be able to locate the point out
the various arias which need the management attention in order
to improve the situation. E.g. Current ratio which shows a
constant decline trend may be indicate the need for further
introduction of long term finance in order to increase the liquidity
position. As the ratio analysis is concerned with all the aspect of
the firm’s financial analysis liquidity, solvency, activity,
profitability and overall performance, it

enables the interested persons to know the financial and

operational characteristics of an organization and take suitable
decisions.
 METHODS OF WORKING CAPITAL ANALYSIS

There are so many methods for analysis of financial statements but

BAJAJ STEEL INDUSTRIES LTD used the following techniques:-

• Comparative size statements

• Trend analysis
• Cash flow statement
• Ratio analysis

A detail description of these methods is as follows:-

COMPARATIVE SIZE STATEMENTS:-

When two or more than two years figures are compared to
each other than we called comparative size statements in order to
estimate the future progress of the business, it is necessary to
look the past performance of the company. These statements
show the absolute figures and also show the change from one
year to another.

Benefits of this method to the BSI:-

• To indicate the trends, these statements show the change in

production, sales, and expenses.
• To make the data simple and more understandable.

TREND ANALYSIS:-
To analyze many years financial statements BSI uses this
method. This indicates the direction on movement over the long
time and help in the financial statements.

Procedure for calculating trends:-

1. Previous year is taken as a base year.

2. Figures of the base year are taken 100.
3. Trend % are calculated in relation to base year.

Benefits:-

• It is beneficial to find out the long run changes.

• It is helpful in future forecasting.

CASH FLOW STATEMENT:-

Cash flow statements are the statements of changes in the

financial position prepared on the basis of funds defined in cash
or cash equivalents. In short cash flow statement summaries the
cash inflows and outflows of the firm during a particular period of
time.

Benefits for the BTM:-

? To prepare the cash budget

? To compare the cash budgets
? To show the position of the cash and cash equivalents

RATIO ANALYSIS:-
Ratio analysis is the process of the determining and presenting
the relationship of the items and group of items in the statements
.According to Batty j. management accounting “Ratio can assists
management in its basics functions of forecasting, planning,
coordination, control and communication”.

Benefits of ratio analysis to BTM:-

1. Helpful in analysis of financial statements.

2. Helpful in comparative study.
3. Helpful in locating the weak spots of the BSI.
4. Helpful in forecasting.
5. Estimate about the trend of the business.
6. Fixation of ideal standards.
7. Effective control.
8. Study of financial soundness.

Types of ratio:-

• Liquidity ratio: They indicate the firm’s ability to meet its

current obligation out of current resources.

• Current ratio:- Current assets / Current liabilities

• Quick ratio:- Liquid assets / Current liabilities

Liquid assets =Current assets – Stock -Prepaid expenses

 • Leverage or Capital structure ratio: This ratio discloses
the firm’s ability to meet the interest costs regularly and
long term solvency of the firm.

• Debt equity ratio:- Long term loans / Shareholders funds

or net Worth

• Debt to total fund ratio:- Long terms loans/ share holder

funds +long term loan

• Proprietary ratio:- Shareholders fund/ shareholders

fund+long term loan

• Activity ratio or Turnover ratio: - They indicate the

rapidity with which the resources available to the concern
are being used to produce sales.

• Stock turnover ratio: - Cost of good sold/Average stock

(Cost of good sold= Net sales/ Gross profit,

average stock=Opening stock+closing stock/2)

• Debtors turnover ratio: - Net credit sales/ Average

debtors+Average B/R

• Average collection period: - Debtors+B/R /Credit sales per

day
(Credit sales per day=Net credit sales of the year/365)

• Creditors Turnover Ratio: - Net credit purchases/ Average

Creditors + Average B/P
• Average Payment Period: - Creditors + B/P/ Credit purchase
per day.

• Fixed Assets Turnover ratio:- Cost of goods sold/Net fixed

Assets
(Net Fixed Assets = Fixed Assets – depreciation)

• Working Capital Turnover Ratio:- Cost of goods sold/

Working Capital
(Working capital= current assets – current liability)

• Profitability Ratios or Income ratios: - The main

objective of every business concern is to earn profits. A
business must be able to earn adequate profit in relation to
the risk and capital invested in it.

• Gross profit ratio:- Gross profit / Net Sales * 100

(Net sales= Sales – Sales return)

• Net profit Ratio:- Net profit / Net sales * 100

(Operating Net Profit= operating net profit/ Net Sales *100
or operating Net profit= gross profit – operating expenses)

• Operating Ratio: - Cost of goods sold + Operating

Expenses/Net Sales * 100
 (Cost of goods sold = Net Sales – Gross profit,
Operating expenses = office & administration expenses
Selling & distribution expenses + discount + bad debts
interest on short term loans)

• Earning per share(E.P.S.) :- Net Profit – dividend on

perShare / No. of equity shares

• Dividend per share (D.P.S.):- Dividend paid to equity share

Holders / No. of equity shares *100.

• Dividend Payout ratio (D.P.):- D.P.S. / E.P.S. *100

RATIO ANALYSIS

Key Financial Ratios of Bajaj Steel Industries

-------- in Rs. Cr. ---------

Mar '08 Mar '09

Investment Valuation Ratios

Face Value 10.00 10.00
Dividend Per Share 2.00 2.00
Operating Profit Per Share (Rs) 67.21 122.07
Net Operating Profit Per Share (Rs) 851.45 1,041.24
Free Reserves Per Share (Rs) 87.54 153.90
Bonus in Equity Capital 23.18 23.18

Profitability Ratios

Operating Profit Margin(%) 7.89 11.72

Profit Before Interest And Tax
Margin(%) 6.66 9.70
Gross Profit Margin(%) 6.72 9.84
Cash Profit Margin(%) 4.48 7.49
Adjusted Cash Margin(%) 4.48 7.49
Net Profit Margin(%) 3.63 6.50
Adjusted Net Profit Margin(%) 3.63 6.50
Return On Capital Employed(%) 25.44 38.33
Return On Net Worth(%) 31.25 41.31
Adjusted Return on Net Worth(%) 28.66 35.81
Return on Assets Excluding
Revaluations 6.78 14.84

Return on Assets Including

Revaluations 6.78 14.84
Return on Long Term Funds(%) 30.00 42.57

Liquidity And Solvency Ratios

Current Ratio 1.22 1.36
Quick Ratio 0.86 1.07
Debt Equity Ratio 1.57 0.84
Long Term Debt Equity Ratio 1.18 0.66

Debt Coverage Ratios

Interest Cover 3.56 5.84
Total Debt to Owners Fund 1.57 0.84
Financial Charges Coverage Ratio 4.06 6.73
Financial Charges Coverage Ratio Post
Tax 3.22 5.34

Management Efficiency Ratios

Inventory Turnover Ratio 6.00 9.59
Debtors Turnover Ratio 11.03 13.45
Investments Turnover Ratio 6 9.59
Fixed Assets Turnover Ratio 4.5 4.1
Total Assets Turnover Ratio 3.32 3.4
Asset Turnover Ratio 4.5 4.1

Average Raw Material Holding 48.79 41.97

Average Finished Goods Held 8.54 6.45
Number of Days In Working Capital 59.7 47.97

Profit & Loss Account Ratios

Material Cost Composition 72.61 67.16

Imported Composition of Raw
Materials Consumed 19.13 18.11
Selling Distribution Cost Composition 2.99 1.93
Expenses as Composition of Total
Sales 10.42 7.16

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 7.49 3.4
Dividend Payout Ratio Cash Profit 5.68 2.64
Earning Retention Ratio 91.84 96.08
Cash Earning Retention Ratio 93.94 97.05
Adjusted Cash Flow Times 4.06 1.76

Mar '08 Mar '09

Earnings Per Share 31.24 68.7

Book Value 99.94 166.31

COPARATIVE PROFIT & LOSS ACCOUNT

Profit & Loss account of

Bajaj Steel Industries
---------- in Rs. Cr. ---------
-

Mar '08 Mar '09

12 mths 12 mths
Income
Sales Turnover 212.21 256.02
Excise Duty 24.89 26.95
Net Sales 187.32 229.07
Other Income 2.28 5.42
Stock Adjustments 3.84 -8.33
Total Income 193.44 226.16
Expenditure
Raw Materials 136.02 153.87
Power & Fuel Cost 1.38 1.09
Employee Cost 7.81 12.52
Other Manufacturing Expenses 18.07 13.34
Selling and Admin Expenses 9.36 8.92
Miscellaneous Expenses 3.73 4.15
Preoperative Exp Capitalized 0.00 0.00
Total Expenses 176.37 193.89
Mar '08 Mar '09
12 mths 12 mths

Operating Profit 14.79 26.85

PBDIT 17.07 32.27

Interest 4.07 4.47
PBDT 13.00 27.80
Depreciation 2.18 4.31
Other Written Off 0.00 0.00
Profit Before Tax 10.82 23.49
Extra-ordinary items 0.03 -0.15
PBT (Post Extra-ord Items) 10.85 23.34
Tax 3.98 8.23
Reported Net Profit 6.87 15.11
Total Value Addition 40.35 40.02
Preference Dividend 0.00 0.00
Equity Dividend 0.44 0.44
Corporate Dividend Tax 0.07 0.07
Per share data (annualized)
Shares in issue (lakhs) 22.00 22.00
Earning Per Share (Rs) 31.24 68.70
Equity Dividend (%) 20.00 20.00
Book Value (Rs) 99.94 166.31

CASH FLOW STATEMENT

Cash Flow of Bajaj Steel Industries

------ in Rs. Cr. ----------

Mar '08 Mar '09

12 mths 12 mths

Net Profit Before Tax 10.85 23.34

Net Cash From Operating Activities 12.62 18.22

Net Cash (used in)/from

Investing Activities -5.49 -12.37

Net Cash (used in)/from Financing
Activities 4.22 -4.14

Net (decrease)/increase In Cash

and Cash Equivalents 11.36 1.71

Opening Cash & Cash Equivalents 3.03 14.39

Closing Cash & Cash Equivalents 14.39 16.10

BALANCE SHEET

Balance Sheet of Bajaj Steel Industries

----------- in Rs. Cr. ----------

Mar '08 Mar '09

12 mths 12 mths

Sources Of Funds
Total Share Capital 2.20 2.20
Equity Share Capital 2.20 2.20
Share Application Money 0.00 0.00
Preference Share Capital 0.00 0.00
Reserves 19.79 34.39
Revaluation Reserves 0.00 0.00

Networth 21.99 36.59

Secured Loans 14.00 8.80
Unsecured Loans 20.43 21.93
Total Debt 34.43 30.73
Total Liabilities 56.42 67.32
Mar '08 Mar '09

12 mths 12 mths

Application Of Funds
Gross Block 41.58 55.91
Less: Accum. Depreciation 27.11 25.36
Net Block 14.47 30.55
Capital Work in Progress 9.23 4.60

Investments 1.65 1.65

Inventories 37.46 27.39
Sundry Debtors 18.04 16.02
Cash and Bank Balance 3.41 3.30
Total Current Assets 58.91 46.71
Loans and Advances 6.13 5.56
Fixed Deposits 10.98 12.80
Total CA, Loans & Advances 76.02 65.07
Deffered Credit 0.00 0.00
Current Liabilities 42.19 31.42
 Provisions 2.77 3.13
Total CL & Provisions 44.96 34.55

Net Current Assets 31.06 30.52

Miscellaneous Expenses 0.00 0.00
Total Assets 56.41 67.32
Contingent Liabilities 3.76 1.62
Book Value (Rs) 99.94 166.31

CONCLUSION

Working capital management is important aspect of financial

management. The study of working capital management of Jain
Irrigation system ltd. has revealed that the current ration was as
per the standard industrial practice but the liquidity position of
the company showed an increasing trend. The study has been
conducted on working capital ratio analysis, working capital
leverage, working capital components which helped the company
to manage its working capital efficiency and affectively.

SUGGESTION

The inventory management” is used in two ways- Unit Control

and Value Control. Production and purchase officials use this word
in term of unit control whereas in accounting this word is used in
term of value control .Investment in inventory is one the largest
asset item of business enterprises particularly those engaged in
manufacturing.

The proper management and control of the capital invested in

the inventory should be the prime responsibility of accounting
department because resources invested in inventory aren’t earning
a return for the company. Rather, on the other hand, they are
costing the firm money both in terms of capital costs being incurred
and loss of opportunity income that is being foregone.

BIBILOGRAPHY

FINANCE MANAGER

ASST. MANAGER ACCOUNTS

Annual Report of Bajaj Steel Industries.

2007-08
2008-09

www.bajajngp.com
www.studyfinance.com
www.google.com
www.wikipedia.com