Project Report

“A STUDY ON WORKING CAPITAL OF

YAMAHA AUTO WHEELERS AT BURDWAN”

A PROJECT REPORT SUBMITTED TO THE UNIVERSITY

OF BURDWAN
IN PARTIAL FULFILLMENT OF BACHELOR’S DEGREE OF
ADMINISTRATION (HONOURS)

SUBMITTED BY
ATULYA KERKETTA
ROLL NO: 19BBA060015
REGISTRATION NO: 201905000023 OF 2019-2020

BURDWAN INSTITUTE OF MANAGEMENT AND

COMPUTER SCIENCE
DEWANDIGHI, KATWA ROAD, BURDWAN

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 ACKNOWLEDGEMENT
It is privilege to acknowledge each individual those who have given my
support and guidance.

First of all I want to express my deep sincere of gratitude to Mr. Gautam

Majhi for his valuable suggestions and guidance throughout the project
work.

I express my deep sincere and gratitude towards Mrs. Lisa Banerjee

Teacher-in-charge of Burdwan Institute of Management and Computer
Science (BIMS) Burdwan for her valuable suggestion and help to prepare
this project.

I express my gratitude and offer my sincere thanks to Yamaha Motors

Burdwan. Who has given me this opportunity to undertake this work and
provide all guidance and help.

I am indebt to all the faculty of member of BBA, (BIMS) for never ending
valuable guidance and directions through valuable suggestions with
enthusiastic encouragement throughout the period of my work and
presentation of this project.

Finally, I am also thankful to all the respondents who look time out of
their busy schedule to respond to the survey.

Date:-

Place:-

ATULYA KERKETTA

Roll No :- 19BBA060015

Reg. No :- 201905000023 OF 2019-2020

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 SELF DECLARATION
I would like to hereby declare that this project titled “A study on Ratio
Analysis of Yamaha Autowheelers ” has been prepared by me during he
year 2019-2020 under the supervision of faculty of Bachelor of Business
Administration Department, Burdwan Institute of Management And
Computer Science (BIMS), Yamaha Autowheelers.
I also hereby declare that this project is done of my own and not
submitted to any institution nor published before hand.
The Project was undertaken as a part of course curriculum of B.B.A.
(HONS) at Burdwan Institute of Management and Computer Science
(BIMS).
Name :
Registration no :
Roll no :
Place :
Date :

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 CONTENT

1. Company profile

2. Review of Literature

3. Research Methodology (a) Objective of study (b) Scope of study (c)

Method of data collection (d) Limitation of the study

4. Data Analysis and Interpretation

5. Conclusion

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6. Recommendations and Suggestion

7. Bibliography

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 EXECUTIVE SUMMARY
Yamaha Motor Escorts Limited (YMEL) is a joint venture company
formed by the alliance of Escorts Limited,the Flagship company of
the Rs. 3600 crores Escorts Group, a major in the two-wheeler
business and Yamaha Motor Company Limited (YMCL),Japan.
Recently YMEL launched a new bike – Yamaha Crux in December. My
Project was aimed at investigating about the awareness level of Crux
from the owners of the competitive brands.These competitive brand
names are Hero Honda’s Splendor and CD 100/SS and Bajaj’s
Caliber.My Project also aimed at determining the primary factors
which influence scooter owners to shift from scooters to motocycles.
My project was restricted to only and sample size was 250 including

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100 for scooter owners and the rest 150 divided equally among the
three competitive brands, that is,Splendor -50,Caliber -50 and Cd
100/SS -50.Questionnaries were made and were filled by the
respondents and the data collected was analyzed to get some useful
results. After analyzing the data, we discovered the primary factors
influencing scooter owners to shift from scooters to motorcycles. The
prominent among these factors were that motorcycles have better
fuel economy,motocycles are more stylish and the engine power of
motorcycles is more as compared to scooters. We also discovered
that the awareness level of Yamaha Crux was very low and this was
primarily due to lack of advertisements and other promotional
activities.Thus, in the end some recommendations were also given to
Yamaha Motor Escorts Limited so that they could take the required
preventive measures

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COMPANY’S
PROFILE

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The YAMAHA brand has its roots in the name of our founder,
Torakusu Yamaha. Familiar with western science and technology
from his youth, Yamaha initially found employment repairing medical
equipment. This led to a request to repair a organ, a project that
resulted in the birth of the Yamaha brand. Confident of the potential
of his business, Yamaha struggled against great odds to establish
Yamaha Organ Works. Entrepreneurial spirit, far-sightedness, and
determination to overcome difficulties fueled his passion to succeed.
This same spirit formed the foundation of the Yamaha brand, and is a
vital legacy of Yamaha Corporation today.

YAHAMA: Profile, Structure& Environment

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Yamaha made its initial foray into India in 1985. Subsequently, it
entered into a 50:50 joint venture with the Escorts Group in 1996.
However, in August 2001, Yamaha acquired its remaining stake as
well, bringing the Indian operations under its complete control as a
100% subsidiary of Yamaha Motor Co., Ltd, Japan. India Yamaha
Motor operates from its state-of-the-art-manufacturing units at
Faridabad in Haryana and Surajpur in Uttar Pradesh and produces
motorcycles both for domestic and export markets. With a strong
workforce of 3000 employees, India Yamaha Motor is highly
customer-driven and has a countrywide network of over 400 dealers.

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 About the Director of YMI

YUKIMINE TSUJI appointed Yamaha Motor India's director sales and

marketing news. New Delhi: Yamaha Motor India, the 100 per cent
subsidiary of Yamaha Motor Co Ltd, Japan, has announced the
appointment of Y. Tsuji as the director, sales and marketing. Tsuji
brings with him over 20 years of experience with Yamaha globally
and will play a key role in implementing Yamaha’s evolving growth
strategy for India. He will co-ordinate the sales, marketing and
engineering functions to develop a strong product line for the Indian
market.

What is Kando?

Kando is a Japanese word for the simultaneous feeling of deep

satisfaction and intense excitement that people experience when
they encounter something of exceptional value. At Yamaha Motor

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we believe that Kando can be generalized by the products and
services that surpass customer’s expectations. Yet for all the
emotional evaluation Kando provides, the feeling can be short lived,
and people may be touched only for a moment. Therefore, our
challenge is to make sure that all our products and services genuinely
thrill, impress and touch customer’s heart at the first time and every
time. We strive to achieve our corporate mission by adhering to
these principles. expectations. We can as we will earn a fair profits
by putting forth a superior efforts to satisfy our customers.

India Yamaha Motor Pvt. Ltd. (IYM)

Head Office: A-3 Surajpur Industrial Area, Noida-Dadri Road, Surajpur
- 201306, Distt. Gautam Budh Nagar, U.P., India Foundation: Oct. 17,
2007 Start of operation: April 1, 2008 Headed by: Mr. Tsutomu
Mabuchi, Managing Director and Chief Executive Officer Capital: 1.5
billion rupee (as of Mar. 5, 2008), with plans to eventually increase
capital to 5.6 billion rupee (approx. 16 billion yen) Capital ratio: 70%
by Yamaha Motor Co., Ltd. 30% by Mitsui & Co., Ltd. Number of
employees: 2000 (approx.) Areas of business: Development,
manufacture and sales of motorcycles, spare parts and accessories.
Export of locally assembled motorcycles and parts Scale of
operations: First year (nine months beginning Apr. 2008) projected
sales of 10 billion rupee (approx. 30 billion yen)

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 INTRODUCTION

The Two-Wheeler Market Globally Globally,

the Two-wheeler Industry is concentrated in the developing world,

especially China and India, Which together account for over half the
total worldwide sales of Two-wheelers. The Japanese Manufacturers,
Honda, Yamaha, Suzuki and Kawasaki, dominate the Two-Wheeler
Industry globally currently, all major two wheeler market, except
India are dominated either by Japanese firms or their joint ventures.
However, in the leading markets, such as China and India and South-
Asia, a host of local players exists. Globally, four-Stroke engines are
fast replacing the Two-Stroke variants with stricter emission norms
being imposed and vehicles powered by two-stroke being banned,
four-stroke powered two-wheeler have found increasing favour.
Powered Two-Wheeler Popular in Asian Countries such as China and
India where Motorcycle dominate the PTW market. Outside India,
presence of Scooters is limited. Scooters are far more popular in
Europe than in the US. Europe has very High fuel prices, congested
city streets with limited parking space, and a long history of
accepting scooters as a respectable mode of transportation, all
leading to a considerable interest in scooters. Two-wheeler
Industries: The Indian scenario The Indian two-wheeler industry can
be divided into three broad categories: scooters, motorcycles and
mopeds. Each of these categories can be further segmented on the
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basis of several variables, like price, engine power, type of ignition
and engine capacity. The two-wheeler industry has come a long way
since its inception in the early 1950s when scooters were first
produced in the country. Today, India is the second largest producer
and consumer of two-wheeler in the world; the Indian two-wheeler
industry has grown rapidly over the past 15 years. The demand for
two-wheelers increased at a FY2013.

The Indian two-wheeler industry has undergone a significant change

over the past 10 years with the practical changing from mopeds to
scooters and more recently, from scooters to motorcycles. Scooters,
which were considered the family vehicle for middle class Indians,
are increasingly losing their position as a cheap mode of personal
transportation. With the reduction in the price differential between
scooters and motorcycles, there has been a perceptible shift towards
motorcycle motorcycles because of their better styling, higher fuel
efficiency, and higher load carrying capacity. Further, the decline in
excise duty on scooters and motorcycles has reduced their price
differential in comparison with mopeds. The change in customer
preferences, better fuel efficiency and increased affordability of
motorcycles has titled the demand in favour of motorcycles. The
share of scooters sales in two-wheeler sales has been reducing
steadily since FY2012 when scooters accounted for more than half of
all two-wheelers sold in the country. Till FY2010, scooters formed the
largest segment accounting for 41% of total industry sales, while
motorcycles and mopeds accounted for 37% and 21% of all two-
wheelers sales respectively. However, during FY2011, for the first
time, the sales of motorcycle outperformed scooter sales. The shares
of scooters, motorcycles and mopeds inFY2011 were 33%, 48%, and
19%, respectively. Although, the shares of scooters and mopeds

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declined in FY2005 and FY2013, the shares of motorcycles increased
to 60% and 69% respectively in these years.

Mission of Yamaha Motor India Private Limited

Our corporate mission is same as the mission of Yamaha Motor

Company, Japan

. We create ‘kando’ –Touching people’s hearts.

“Kando” is a Japanese word for expressing Feelings Of Excitement

And Deep Satisfaction. The Yamaha Motor Company that creates
Kando. Yamaha Motor India Private Limited Registered Office Allianz
house, 2nd Floor, 273, Capt. Gaur Marg. Sriniwas Puri New Delhi
Faridabad Plant 19/6, Mathura Faridabad Surajpur Plant A-3,
Surajpur Industri Noida-Dadri Road Surajpur

YAMAHA MOTOR COMPANY JAPAN

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1 Landmarks

2 General & commercial information

3 Hierarchical structure

4 Welfare activities

Ever since it’s founding as a motorcycle manufacturer on July 1,

1955, Yamaha Motor Company has worked to build its products
which stands among the very best in the world through its constant
pursuit of quality; and at the same time, through these products it
has sought to contribute to the quality of life of people all over the
world. Following are the success of our motorcycle, Yamaha being
manufacturing Powerboats and outboards Motors in 1960, since
then, Engine and FRP Technology were used as a base to actively
diversify and Globalize the area of business. Today, our field of
influence extends from the land to the sea and even into skies as our
business divisions have grown motorcycle operations to include
Automotive Operations, Power Product Operations, and Intelligent
machinery Operations and PAS Operations.

Pursuing the Ultimate in Personal Vehicle

Ever since the founding Yamaha Motor Company has been a

company that continues to develop its expertise in the field of small
Engines and Fibber Glass Reinforced Plastic (FRP) Manufacturing as

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well as Electronic Control Technologies Yamaha Pursues the ideals of
building products of “High Quality” and “High Performance”

. Environment friendly and People friendly

In product building and promotional efforts Yamaha takes as one of

the fundamental ideals the concept that products, which are people
friendly, should be Environment Friendly and products that are
environment friendly should also be people friendly. This concept is
born of our awareness that “ It is the Earth and Possible”. Yamaha
Motor Company Supplies the “Power” that moves people and helps
them to live to their fullest as human beings. Yamaha vehicles have
the practical advantage of using the minimum of energy for human
transport that means less negative impact on the Environment.
Technological Advantages At the hearts of the efforts of
environmental preservation are the environmental management
system designed and implemented under the ISO 14001
international standard. Under the slogan “Absolute Quality Control”.
Yamaha was the early adopter of comprehensive Quality Control
System and quick to put in a place or Total Productive Management.

Producing means to an active Life

At Yamaha business and leisure are treated as insuperable parts of

life that is a reason of striving to help bring people around the world
a more active life

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. Landmarks of Yamaha Motor India Private Limited

1960: Secured License under Technical Collaboration with CEKOP,

Poland.

1961: Obtained 23 acres of land for separate factory.

1962 : Assembly And Partial Manufacturing stored in plant I.

Introduction to motorcycles with Technical Collaboration with M\S
CEKOP, Poland.

1964 : Machinery was installed in new building.

1965 : Manufacturing activities shifted from plant I to the present

Building Of Yamaha Motor Limited, Faridabad.

1970 : Introduction to scooters.

1972 : GTS a small Motorcycle was introduced.

1979 : Entered into a technical Collaboration with Yamaha Motor Company of
Japan for manufacturing of 350 cc Motorcycles.

1982 : Research and Development Section shifted to 19/2 Mathura Road,

Faridabad.

1983 : Letter of intent obtained for manufacturing of 100cc Motorcycles

Launched 350 cc Motorcycles in market all over the India. Setting up of CNC
Cell in an organization.

1997 : Launched of RXZ and 175 cc Escorts ACE.

1998 : YBX 4-Stroke Bi-wheeler was launched.

2000 : The share of Yamaha Motor has increased to Yamaha 74% and Escorts
26%. YD125, 4 stroke Bi-wheeler was launched.

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2001 : Yamaha Motor Escorts Limited become a subsidiary of
Yamaha Motor Company and its name changed from Yamaha Motor
Escorts Limited to Yamaha Motor India Private Limited.

2002 : Launched Enticer 125cc and Libero 106 cc (4-Stroke)

Motorcycles.

2004 : Launched Of FAZER 125 cc (4-Stroke).

2006 : Launched 125cc Bikes with 5 Gears “Gladiator”.

2007: Launched 125cc Bikes with CRUX”.

2008: Launched 100cc Bikes with CRUX R’’.

2009: Launched 125cc Bikes with YBX’’.

2010: Launched 125cc Bikes with YBR’’.

2011: Launched 125cc Bikes with FZ’’.

2012: Launched 125cc Bikes with FZ S’’.

2013: Launched 125cc scooter.

2015: Launched 150cc bike R15.

2017: Launched 150cc bike R15 v2.

2019 : Launched 155cc bike R15 v3 with vva.

2019: Launched 155cc bike MT15 with vva.

2021 Launched 150cc bike R15 v4 with vva.

2022 : Launched 155cc scooter Aerox.

General Information:

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Yamaha Motor India Private Limited Total Area : 116640 Sq. Mtrs.

Total Covered Area : 41350 Sq. Mtrs.

Date Of Starting : Jan 1, 1963

Production achieved in 2008-09 : Motorcycle : 75,582

Production achieved in 2009-10 : Motorcycle : 8,782

Yamaha : 1,10,684

Production achieved in 2010-11 YBR : 91,013 FZ : 1,550 FZS : 1,070

R15 : 1,58,806

Production achieved in 2011-12 : Rajdoot : 67,260

RX : 358

RX 135 : 20,890

Production achieved in 2012-13 : YBR : 66,660

FZ : 1,115

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 FZS : 26,290

R15 : 100

Commercial Information (As per 2013)

Total Investment : Rs 1400.25

Crores Regular Supplier : 1000

Sales Outlet : Rs. 1250.15 Crores

Projected Purchase : Rs. 1200.12 Crores

Nos. Of Vehicle Sold (2004-05) :

Faridabad 105919

Surajpur 188519

Projected Growth 40%

YMIL Turnover Forecast : $ 80 MIllion

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Indigenous Contents

Faridabad: 100%

Surajpur: 80%

FACTORY HOURS

The factory operates in three shifts as per the following

details:
IST : 8:00 AM To 5:00 PM

IINd : 5:00 PM To 2:00 AM

IIIRD : 2:00 AM To 8:00 PM

WELFARE ACTIVITIES :-

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MEDICAL FACILITIES
For providing domiciliary treatment to the employees and their
dependents, a dispensary and a full time doctor available in the plant.

GROUP ACCIDENT INSURANCE SCHEME

Employees not covered under ESI are automatically under the
Company’s Group Accident Insurance Scheme.

PROVISION OF LOANS
Members for purpose such as Marriages, Purchase Of Land,
Construction Of House, Long Term Medical Treatment, and Natural
Calamities can obtain loans.

BENEVOLENT FUND
For providing financial help as a responsible co-operative Citizen, Rs.
2,00,000 are given to the family of a deceased person.

SERVICES AWARDS
In appreciation on the long association, the company gives services
awards as a mark of Honours to the employees.

SCHOLARSHIPS
It is offered to the children of all employees. TRAINING ACTIVITIES
There are three training centre all over the India. The company is
concerned with the personnel growth and development of
employees and sponsors them for various training and development
programs.

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 REVIEW OF
LITERATURE

REVIEW OF LITERATURE OF WORKING CAPITAL

MANAGEMENT
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INTRODUCTION:

Working capital typically means the firm’s holdings of current, or

short-term, assets such as cash, receivables, inventory, and
marketable securities. Much academic literature is directed toward
gross working capital, i.e., total current or circulating assets. These
items are referred to as circulating assets because of their cyclical
nature. In a retail establishment, cash is initially employed to
purchase inventory which is in turn sold on credit and result in
accounts receivable Corporate executives devote a considerable
amount of attention to the management of working capital. Net
working capital (current assets minus current liabilities) provides an
accurate assessment of the liquidity position of the firm. With the
liquidity- profitability dilemma solidly authenticated in the financial
scheme of management, concerted efforts are made to ensure the
ability of the firm to meet those obligations which mature within a
twelve – month period. Management must always ensure the
solvency and viability of the firm. An examination of the components
of working capital is helpful at this point because of the
preoccupation of management with the proper combination of
assets and acquired funds. First, short-term, or current, liabilities
constitute the portion of funds which have been planned for and
raised.

CONCEPT OF WORKING CAPITAL

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There are to possible interpretations of working capital
concept:
(a) Balance Sheet Concept
(b) Operating Cycle Concept
It goes without saying that the pattern of management will be very
largely influenced by the approach taken in defining it. Therefore the
two concepts are discussed separately in a nutshell.

(A) BALANCE SHEET CONCEPT There are two interpretations of

working capital under the balance sheet concept. It is represented
by the excess of current assets over current liabilities and is the
amount normally available to finance current operations. But,
some- times working capital is also used as a synonym for gross or
total current assets. In that case, the excess of current assets over
current liabilities is called the net current assets. Institute of
Chartered Accountants of India, while suggesting a vertical form
of balance sheet, also endorsed the former view of working
capital when id described net current assets as the difference
between current assets liabilities.
The conventional definition of working capital in terms of the
difference between the current assets and the current liabilities
somewhat confusing. Working capital is really what a part of long-
term finance is locked in and used for supporting current
activities. Consequently, the larger the amount of working capital
so derived, greater the proportion of long-term capital sources
siphoned off to short- term activities. It is difficult to say whether
this is right or wrong. Apparently, when firms are warned about
tight working capital situation, the logic of the above definition
would perhaps indicate diversion of long- term finances for short-

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 term purposes. For, if short-term bank loan were procured to
bring in cash, under the conventional method, working capital
would evidently remain unchanged.
Liquidation of debtors and inventory into cash would also
keep the level of working capital according to this definition may
produce a false sense of security at a time when cash resources
may be negligible.

(B) OPERATING CYCLE CONCEPT A company’s operating cycle

typically consists of three primary activities: purchasing resources,
producing the product, and distributing (selling) the product.
These activities create fund flows that are both unsynchronized
and uncertain. They are unsynchronized because cash
disbursements (for example, payments for resource purchases)
usually take place before cash receipts (for example, collection of
receivables. They are uncertain because future sales and costs,
which generate the respective receipts and disbursements, can’t
be forecasted with complete accuracy. If the firm is to maintain
liquidity and function properly, it has to invest funds in various
short-term assets (working capital) during this cycle. It has to
maintain a cash balance to pay the bills as they come due. In
addition, the company must invest in inventories to fill customer
order promptly. And, finally, the company invests in accounts
receivable to extend credit to its customers.
Operating Cycle = Inventory conversion period + Receivables
conversion period
The inventory conversion period is the length of time required to
produce and sell the product. It is defined as follows:

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 Average inventory

Inventory conversion period = Cost of sales / 365

The receivables conversion period, or average collection period,

represents the length of time required to collect the sales
receipts. It is calculated as follows:

Accounts receivables

Receivables conversion period = Annual credit sales / 365

3. OPTIMAL LEVEL OF WORKING CAPITAL INVESTMENT The

optimal level of working capital investment is the level expected
to maximize shareholder wealth. It is a function of several factors,
including the variability of sales and cash flows and the degree of
operating and financial leverage employed by the firm. Therefore
no single whirling capital investment policy is necessarily optimal
for all firms.

(I) PROPORTIONS OF SHORT- TERM AND LONG-TERM FINANCING

Not only does a firm have to be concerned about the level of
current assets; it also has to determine the proportions of short-
and long- term debt to use in financing these assets. This decision
also involves tradeoffs between profitability and risk.
Source of debt financing are classified according to their
maturities. Specifically, they can be categorized as being either

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short- term or long- term, with short-term sources having
maturities of 1 year or less and long-term sources having
maturities of greater than 1 year.

(II) COST OF SHORT TERM VERSUS LONG TERM DEBT

Historically long-term interest rates normally exceed short-term
rates because of the reduced flexibility of long-term borrowing
relative to short-term borrowing. In fact, the effective cost of
long-term debt may be higher than the cost of short- term debt,
even when short-term interest rates are equal to or greater than
long-term rates. With long-term debt, a firm incurs the interest
expenses even during times when it has no immediate need for
the funds, such as during seasonal or cyclical downturns.
Therefore, the cost of long-term debt generally is higher than the
cost of short-term debt.

(III) RISK OF LONG-TERM VERSUS SHORT-TERM DEBT

Borrowing companies have different attitudes toward the relative
risk of long-term versus short-term debt than lenders. Whereas
lenders normally feel that risk increases with maturity, borrowers
feel that there is more risk associated with shot-term debt. The
reasons for this are two fold.

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 First, there is always the chance that a firm will not be able to
refund its short-term debt. When a firm’s debt matures, it either
pays off the debt as part of a dept reduction programmed or
arranges new financing. At the time of maturity however the firm
could be faced with financial problems resulting from such events
as strikes, natural disasters, or recessions that cause sales and
cash inflows to decline. Under these circumstances the firm may
find it difficult or even impossible to obtain the needed funds.

4. OVERALL WORKING CAPITAL STRATEGIES

Until now this chapter has analyzed the working capital
investment and financing decision independent of one another in
order to examine the profitability risk tradeoff associated with
each, assuming that all other factors are held constant. Effective
working capital policy however also requires the consideration of
the joint impact of these decisions on the firm’s profitability and
risk.

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 RERSEACH
METHODOLOGY

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OBJECTIVE OF THE STUDY

The basic purpose of the study is to get a feel of practically of

Accounts Deptt In
Yamaha Motors India Pvt.Ltd. The other objectives are as:

(1)To understand the basic organization hierarchy.

(2)To understand the working culture of accounts department.

(3)To analyze accounting system and terminology used for

booking of accounts Transactions.
(4)To analyze basics of management information system

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 SCOPE OF THE STUDY

1. It helps in estimating the future cash requirement of the

organization.

2. Helpful in selection of proper source of finance.

3. Helps in taking the investment decision of surplus cash.

4. Helpful in getting cash discount.

5. Helps in planning for purchase of asset.

6. Helps in determining the proper dividend policy.

7. Helps in reducing the over spending of money.

8. `Effective control on cash.

METHOD OF DATA COLLECTION

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 The data can be selected in two ways:
. Primary
. Secondary

PRIMARY SOURCES OF DATA COLLECTIONS:

The primary sources of data are collected by the personal

interviews with the senior officers and colleagues in the
organization

SECONDARY SOURCES OF DATA COLLECTION

The secondary data is collected by the detailed study and

analysis of the various records of the company.

HYPOTHESIS OF THE STUDY

The cash and their control has become an essential tool of the
management for controlling costs and maximizing profits.
The cash and its administration are one of the principal means of
meeting its end.

RELEVANCE OF THE STUDY

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The study is done on the topic of CASH MANAGEMENT in the
Escort limited. This topic includes the planning and control of
Cash and expenditure.
It helps in deciding whether or not to commit resources to a
particular long-term as well as short term projects whose benefits
to be realized during the year or more than one year.

LIMITATIONS

Although every effort has been in to collect the relevant

information through the sources available, still some relevant
information could not be gathered.

A Busy Schedule of Concerned Executives: The concerned

executives were having very busy schedule because of which they
were reluctant to give appointment.

Time: The time duration could not provide ample opportunity to

study every detail of working capital management of the
company.

Unawareness: Executives were unaware of many terms related to

working capital study while asking to them.

Confidential Information: As the company on account of

confidential report has not disclosed some figures. Moreover, in
some cases separate accounts of division are not separately
maintained thereby, leading to restrictions in study.

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 DATA ANALYSIS
&
INTERPRETATION

USE OF CELEBRITY HELPS IN SELLING THE PRODUCT

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 Sr. No Opinion No. of Percentage(%)
Respondents

1 YES 90 75.00%
2 NO 30 25.00%

ANALYSIS
75% of the respondents considers that use of celebrity helps in
selling the product.
25% of the respondents does not considers use of celebrity helps in
selling the product.
ACCOUNTS RECEIVABLE MANAGEMENT

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INTRODUCTION: -
Trade credit arises when a firm sells
its products or services on credit and does not receive cash
immediately. It is an essential marketing tool, acting as a bridge for
the movement of goods through production and distribution stages
to customers. A firm grants trade credit to protect its sales from the
competitors and to attract the potential customers to buy its
products at favourable terms. Trade credit creates receivable or book
debts which the firm is expected to collect in the near future. The
book debts or receivable arising out of credit has tree characteristics:

1.First, it involves an element of risk which should be carefully

analyzed. Cash sales are totally risk less, but not the credit sales as
the cash payment is yet to be received.
2.Second, it is based on economic value to be received later on.
3.Third, it implies futurity. The cash payment for goods or services
received is the buyer will be made by him in a future period. The
customer from whom receivable or book debts have to be collected
in the future are called trade debtors or simply as debtors and
represent the firm’s claims or assets.

Receivable constitutes a substantial

portion of current assets of several firms. For example in India, trade
debtors, after inventories, are the major components of current
assets. They form about one third of current assets in India. Granting
credit and creating debtors amount to the blocking of the firm’s
funds. The interval between the date of sale and the date of
payment has to be financed out of working capital. This necessitates
the firm to get funds from banks or other sources. Thus, trade
debtors represent investment. AS substantial amounts are tied up in
trade debtors, it needs careful analysis and proper management.

38
CREDIT POLICY: NATURE AND GOALS
A firm’s investment in accounts receivable depends on:

(a) The volume of credit sales.

(b) The collection period.

For example, if a firm’s credit sales are Rs. 30 Lack per day and
customers, on an average, take 45 days to make payment, then the
firm’s average investment in accounts receivable is:

Daily credit sales x Average collection period

Rs. 30 lacks x 45 = Rs. 1350 Lacks

The Investment in receivable may be expressed in terms of costs

instead of sales value.
The volume of credit sales is a function of the firm’s total sales and
the % of credit sales to total sales. Total sales depend on market size,
firm’s share, product quality, intensity of competition,
economic condition etc. The financial manager hardly has any control
over these variables. The percentage of credit sales to total sales is
mostly influenced by the nature of business and industry
norms. For example, car manufacturer in India, until recently, were
not selling cars on credit. They required the customers to make
payment at the time of delivery; some of them even asked for the
payment to be made in advance. There is one way in which the
financial manager can affect the volume of credit sales and
collection period and consequently, investment in accounts
receivables. That is through the changes in credit policy. The term
credit policy is used to refer to the combination of three decision
variables:

i) Credit standards

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 ii) Credit terms

iii) Collection efforts

Which the financial manager has influence:

Credit standards are criteria to decide the types of customers to

whom goods could be sold on increase. The firm will also be exposed
to higher risk of default.

Credit terms specify duration of credit and terms of payment by

customers. Investment in accounts receivables will be high if
customers are allowed extended time period for making payments
Collection efforts determine the actual collection period. The lower
the collection period, the lower the investment in accounts
receivable and vice-versa.

GOALS OF CREDIT POLICY:

A firm may follow a stringent credit policy. The firm

following a lenient credit policy tends to sell on credit to customers
on very liberal terms and standards; credits are granted for longer
periods even to those customers whose credit worthiness is not fully
known or whose financial position is doubtful. In contrast, a firm
following a stringent credit policy sells on credit on a highly selective
basis only to those customers who have proven creditworthiness and
who are financially strong. In practice, firms follow credit policies
ranging between stringent to lenient.

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MARKETING TOOL:

Why at all do firm sell on credit? Firms use policy as a marketing tool
for expanding sales. In a declining market, it may be used to maintain
the market share. Credit policy helps to retain old customers and
create new customers by weaning them away from competitors. In a
growing market, it is used to increase the firm’s market share. Under
a highly competitive situation or reversionary economic conditions, a
firm may loosen its credit policy to maintain sales or to minimize
erosion of sales.

Why do companies in India grant credit?

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Companies in practice feel the necessity of granting
credit for several reasons:
1. Competition Generally the higher the degree of competition,
the more the credit granted by a firm. However, there are
exceptions such as firms in the electronics industry in India.

2. Company’s bargaining power If a company has a higher bargaining

power via-a-vis its buyers, it may grant no or less credit. The
company will have a strong bargaining power if it has strong
product, monopoly poor, Brand image, Large size or strong financial
position.
3. Buyer’s requirements In a number of business sectors
buyer/dealers are not able to operate without extended credit. This
is particularly so in the case of industrial products.
4. Buyer’s status Large buyers demand easy credit terms because of
bulk purchases and higher bargaining power. Some companies follow
a policy of not giving much credit to small retailer’s since it is quite
difficult to collect dues from them.

5. Relationship with dealers

Companies sometimes extend credit to dealers to build long-term
relationship with them or to reward them for their loyalty.

6. Marketing tool
Credit is used as a marketing tool, particularly when a new product is
launched or when a company wants to push its weak product.

7. Industry Practice Small companies have been found guided by

industry practice or norm more than the large companies.
Sometimes companies continue giving credit because of the past
practice rather than industry practice.

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NATURE OF INVENTORIES: -

Inventories are stock of the product a company is manufacturing for

sale and components that make up the product. The various forms in
which inventories exist in a manufacturing company are: raw
materials, work-in-process and finished goods.

1.Raw materials are those basic inputs that are converted into
finished product through the manufacturing process. Raw materials
inventories are those units which have been purchased and stored
for future productions.

2.Work-in-process inventories are semi-manufactured products.

They represent products that need more work before they become
finished products for sale.

3.Finished goods inventories are those completely manufactured

products which are ready for sale. Stocks of raw materials and work-
in-process facilitate production, while stock of finished goods is
required for smooth marketing operations. Thus, Inventories
serve as a link between the projection and consumption of goods.

The levels of three kinds of inventories for a firm depend on

the nature of its business. A manufacturing firm will have
substantially high levels of all there kinds of inventories, while a retail
or wholesale firm will have a very high level of finished goods
inventories and no raw materials and work-in-process inventories.
Within manufacturing firm’s there will be differences. Large heavy

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engineering companies produce long production cycle products;
therefore, they carry large inventories. On the other hand.
Inventories of a consumer product company will not be large
because of short production cycle and fast turnover.

A fourth kind of inventory, supplies is also maintained by firms.

Supplies include office and plant cleaning materials like soap,
brooms, oil, fuel, light bulbs etc. These materials do not directly
enter production, what are necessary for production process usually,
these supplies are small part of the total inventory and do not
involve significant investment. Therefore, a sophisticated system of
inventory control may not be maintained for them.

NEED TO HOLD INVENTORIES: -

The question of managing inventories arises only when the company
holds inventories. Maintaining inventories
involves typing up of the company’s funds and incurrence of storage
and handling costs. If it is expensive to maintain inventories, why do
companies hold inventories? There are three general motives for
holding inventories.

1.Transactions Motive emphasis’s the need to maintain inventories

to facilitate smooth production and sales operations.

2.Precautionary Motive necessities holding of inventories to guard

against the risk of unpredictable changes in demand and supply
forces and other factors.
3.Speculative Motive influences the decision to increase or reduce
inventory levels to take advantage of price fluctuations.

OBJECTIVE OF INVENTORY MANAGEMENT: -

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In the context of inventory management, the firm is faced with the
problem of meeting two conflicting needs:
1.To maintain a large size of inventory for efficient and smooth
production and sales operations.

2.To maintain a minimum investment in inventories are not

desirable. These are two danger points within which the firm should
operate. The objective of inventory management should be to
determine and maintain optimum level of inventory investment.
The optimum level of inventory will lie between the two danger
points of excessive and inadequate inventories.

The aim of inventory management, thus, should be to avoid

excessive and inadequate levels of inventories and to maintain
sufficient inventory for the smooth production and sales operations.
Efforts should be made to place an order at the right time with the
right source to acquire the quantity at the right price and quality. An
effective inventory management should.

1. Ensure a continuous supply of raw materials to facilitate

uninterrupted production.

2. Maintain sufficient stocks of raw materials in periods of short

supply and anticipate price changes.

3. Maintain sufficient finished goods inventory for smooth sales

operation, and efficient customer service.

4. Minimize the carrying cost and time.

5. Control investment in inventories and keep it at an optimum level

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NVENTORY MANAGEMENT TECHNIQUES:-
In managing inventories, the firm’s objective should be in
consonance with the shareholders. Wealth maximization principle.
To achieve this, the firm should determine the optimum level of
inventory. Efficiently controlled inventories make the firm flexible.
Inefficient inventory control results in unbalanced inventory and
inflexibility the firm may someti9mes run out of stock and
sometimes may pile up unnecessary stocks. This increases the level
of investment and makes the firm unprofitable.
To manage inventories efficiency, answers should be sought to the
following two questions: -
1. How much should be ordered?
2. When should it be ordered?

The first question, how much to order, relate to the problem pf

determining economic order quantity (EOQ), and is answered with
an analysis of the costs of maintaining certain level of inventories.
The second question, when to order, arise because of uncertainty
and is a problem of determining the re order point.

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 RECOMMENDATIOS
&
SUGGESTIONS

Recommendations

However the company implemented the change process effectively, but

there were still some weaknesses. So, I would recommend some ideas,
which the company could have implemented

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for a successful change process and I will also give some
recommendations on future measures, which the company can take to
bring about effective change. These are as follows:

•IYMPL went for the installation of new machinery to cope up with the
technological changes. Instead of installing the new machinery, they
could have got the old machinery upgraded. This would have saved a lot
of extra cost incurred.

•IYMPL must respond to changes in its environment quickly. When

competitors introduce new products or services, government agencies
enact new laws, 52important sources of supply go out of business, or
similar environmental changes take place, YMIPL should respond quickly
and should make plans to implement changes so as to bring about an
effective and a planned
change process. This type of a change process will ensure less resistance
from the employees.

•IYMPL must try to build good relations between employees in the

organization, as the people working in the organization are a mixture of
Japanese and Indians, which are totally different cultures. So maximum
co-ordination between the Indians and the Japanese employees should
be forced so as to improve the overall efficiency of the employees.

To improve the working environment within the organization, IYM should

organize cultural programmers so as to get the Japanese and the Indian
culture together. This would fill up the cultural gaps between employees
in the organization and they would respect each other’s cultures, which in
turn is good for a bright future of the company.

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 CONCLUSIONS

The purpose of this project report was to provide an

analytical overview of Working Capital Management at YAMAHA
MOTORS INDIA PVT. LTD.

To conclude the project I can say that management has been making
constant efforts, with reasonable success to attain efficiency in
management of Working Capital.

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The entire process of Working Capital Management at YAMAHA
MOTORS INDIA PVT. LTD. is backed up by a well-organized
information system, which is used to make forecasts
with reasonable accuracy. Yamaha Motors enjoys a good rapport
with its suppliers as well as with its customers, enabling it to make
payments for liabilities whenever they are due.

Its return on investments has not been very phenomenal. Though

the figures show a good return on investment but it is quite clear
that return on Investment figure has been steadily growing. In the
future it is likely to earn more returns on investments.

Management also hopes to reduce the operating cycle, with further

improvement in inventory holding periods and better management
in dealing with debtors. Through efficient inventory management,
inventory levels have been brought down.

The Marketing Department is in continuous touch with customers.

Regular follow up of payment being done. This is In fact reflected
upon by the cycle time as shown by the operation cycle.

Finance Department is working on a war footing to improve the

financial health. It has opened six Depots to increase its Turnover.
They are really in an aggressive mood to increase their market share,
and are very hopeful for a better tomorrow.

Bibliography

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 www.Yamahamotors india.com

 www.myaccountingcourse.com

 www.wikipedia.com

Sample Questionnaire

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