TOPIC

WORKING CAPITAL MANAGEMENT AT

PRICOL LTD
CHAPTER 1:

INTODUCTION, SCOPE AND OBJECTIVES

CHAPTER2: LITERATURE REVIEW

CHAPTER 3:

COMPANY PROFILE-
I.GENESIS OF THE ORGANIZATION.

II. ORGANIZATION STRUCTURE AND HIERARCHIES

1.ORIGIN , VISION & MISSION

2. BUSINESS PROFILE

3. FUNCTIONAL AREAS

4. ORGANIZATIONAL STRUCTURE

5. PRODUCT/ SERVICE RANGES ETC.

6. ACHIEVEMENTS/ RECOGNITIONS

. COMPARATIVE PERFORMANCE OF THE ORGANIZATION

8. SWOT ANALYSIS
9. MARKETING STRATEGIES
CHAPTER 4:

INTRODUCTION TO WORKING CAPITAL

CHAPTER 5:

RESEARCH DESIGN

CHAPTER 6:

INTERPRETATION AND ANALYSIS

CHAPTER 7:

FINDINGS, CONCLUSION, RECOMMENDATION AND LIMITATIONS

BIBLIOGRAPHY
 CHAPTER-1
INTRODUCTION
 CHAPTER-1

INTRODUCTION

Pricol Limited (formerly known as Premier Instruments & Controls Ltd) was

established in 1974 at Coimbatore in Tamil Nadu, and commenced manufacturing

operations in 1975 in the precision engineering field of automotive instruments.

Today, Pricol is the market leader enjoying about 53% of the automotive

instruments market share. Denso Corporation, Japan is the Joint Venture Partner

with Pricol since 1997.

The company is engaged in the manufacture and export of a complete range of

automotive components starting from instrument clusters, dashboard meters, fuel

sensors, oil pressure switches, speedometer drive cables, fuel cut off valve, filter

suction, etc.

Innovation. And the vision to look beyond. At Pricol, it is this combined power

called Innovision that has set the pace of growth. Innovision helped Pricol set new

standards, redefine its corporate objectives and grow into a new horizon of

opportunity.

Innovision helped Pricol travel beyond products and markets. It paved the way for

the emergence of a new kind of social consciousness. It created a new pathway to

achievements: not in terms of success, but in terms of value added contributions.

Innovision helped Pricol envision a greener future. A future that's synonymous

with the green of prosperity. A future that signals greener pastures of opportunity.

And a future that is greener for the world.

The other group companies English Tools ,Pricol Travels, Pricol Technologies,

Pricol Packing Limited, Pricol Cargo, Xenos Technologies, Pricol Properties

Limited, Pricol Corporate Services Ltd, Synoro Technologies, Pricol Academy of

Excellence, Pricol Software, Carcerano Pricoltech, Ananya Innovations and Pricol

HoldingsLimited

Pricol Limited (formerly known as Premier Instruments & Controls Ltd) was

established in 1974 at Coimbatore in Tamil Nadu, and commenced manufacturing

operations in 1975 in the precision engineering field of automotive instruments.

Today, Pricol is the market leader enjoying about 53% of the automotive

instruments market share. Denso Corporation, Japan is the Joint Venture Partner

with Pricol since 1997.

The company is engaged in the manufacture and export of a complete range of

automotive components starting from instrument clusters, dashboard meters, fuel

sensors, oil pressure switches, speedometer drive cables, fuel cut off valve, filter

suction, etc.

Innovation. And the vision to look beyond. At Pricol, it is this combined power

called Innovision that has set the pace of growth. Innovision helped Pricol set new
standards, redefine its corporate objectives and grow into a new horizon of

opportunity.

Innovision helped Pricol travel beyond products and markets. It paved the way for

the emergence of a new kind of social consciousness. It created a new pathway to

achievements: not in terms of success, but in terms of value added contributions.

Innovision helped Pricol envision a greener future. A future that's synonymous

with the green of prosperity. A future that signals greener pastures of opportunity.

And a future that is greener for the world.

The other group companies English Tools ,Pricol Travels, Pricol Technologies,

Pricol Packing Limited, Pricol Cargo, Xenos Technologies, Pricol Properties

Limited, Pricol Corporate Services Ltd, Synoro Technologies, Pricol Academy of

Excellence, Pricol Software, Carcerano Pricoltech, Ananya Innovations and Pricol

Holdings Limited.
 SCOPE
Any countries economic development is depend upon manufacturing, service and
agricultural output. Since independence, in a process of development thorough
industrialization has been engaged by India. In order to connection to the gap of
more than 200 years of immobility, it is decided by the industrial development to
achieve progress through five-year plans. The development of industries does not
happen by itself. A mass of other socioeconomic problems are to be solved before
any perceptible results are achieved. The most widespread of these problems is that
of Human Resources Development and Development of the industry through
employees motivation. It is much easier to set construct building and bridges and
manufacture plants, product then to develop human beings, which requires a long
process of education and training that is both time-consuming and strenuous.
Employee motivation is more important than the job satisfaction for a person. To
serve in a fix and low salary job is very tough for any one presently. Here the
researcher has tried to find the factors contributing towards employees motivation.
Eight important factors contributing towards employees motivation like; training,
humanly behavior of the seniors, good working environment, welfare facilities,
career growth and development facilities, awards rewards and recognition
facilities, job securities and the salary were measured.
 OBJECTIVE

Estimation of working capital requirement

Evaluation of working capital management

Evaluation of Liquidity position & working capital utilization

Analysis of relationship between working capital and profitability

Analysis & sources of working capital

Analyzing the level of current assets with relation to current liabilities.

 CHAPTER-2

LITERATURE REVIEW
LITERATURE REVIEW

The dominance of labour and capital is often observed due to strike, unprecedented
shop floor events, lockout, lay-off and retrenchment. This dominance can be
viewed as industrial difference or conflict or disputes between labour and capital.
The Industrial Disputes Act, 1947 defined strike and lockout1 as: Strike Sec 2 (q)
of the Act, Strike means a cessation of work by a body of persons employed in
any industry acting in combination, or a concerted refusal, or a refusal, under a
common understanding of any number of persons who are or have been so
employed to continue to work or to accept employment; Lockout Sec 2(1) of the
Act, Lockout means the [temporary closing of a place of employment], or the
suspension of work, or the refusal by an employer to continue to employ any
number of persons employed by him. The following are the different forms of
strikes2 which labour resort to: Economic strike: In this strike, labour stops their
work to enforce their economic demands such as wages and bonus. Workers ask
for increase in wages, allowances like travelling allowance, house rent allowance,
dearness allowance, bonus and other facilities such as increase in privilege leave
and casual leave.

Sit down strike: Usually workers do not absent themselves from their place of
work when they are on strike. They keep control over production facilities. But do
not work. It is also known as pen down or tool down strike. Slow down strike:
Employees remain on their jobs but do not stop work, but restrict the rate of output
in an organized manner. They adopt go-slow tactics to put pressure on the
employers. Wild cat strikes: These strikes are conducted by workers or employees
without the authority and consent of unions. Sympathetic strike: When workers go
on strikes in sympathy with workers of another unit or industry who are already on
strike, it is a sympathetic strike. The members of other unions involve themselves
in a strike to support or express their sympathy with the members of unions who
are on strike in other undertakings. Homicides on shop floor: Assault on
supervisor, harassment on either worker or supervisors, injuring personnel in
production sections, revenge on personnel for disciplinary action.
 CHAPTER-3
COMPANY PROFILE
 COMPANY PROFILE
Pricols longstanding commitment to social and employee welfare, we are
determined to help create a better society. As good corporate citizens, we feel
responsible to actively contribute our best efforts to enhance the lives of our
society and the environment. Pricol group has initiated We Care, a program which
involves in the CSR activities. As part of We Care, we continuously hold a variety
of events that are in alignment with the above mentioned purpose.

The main focus areas of We Care are:

List of activities for (2015-2016)

 Computers donated to a Govt High School in Valavadi village near Udumalpet.

Tree plantation in Govt High School at Valavadi village near Udumalpet.

List of activities for (2014-2015)

Water purifiers with UV and Ozone technology are distributed to 22 rural Govt.
schools, Under this project until Feb15. These machines provided with four
years free AMC.

Free public eye camps are being conducted every month across all remote
location and tribal settlements around Coimbatore.

Free surgery was done for more than 140 people through this eye camp.

Free spectacles are provided to school going children, who are diagnosed with
eye defects.

Furniture donation to rural Government schools 20 Chairs were donated to the

computer lab in the Govt. Higher Secondary School at Mathuvarayapuram
village, Coimbatore

A five hours first aid and fire safety training program through certified agencies
are conducted across 12 rural Govt. schools around Coimbatore in the financial
year 2014-15.

Creating sanitation facility for girls in three identified rural Govt schools in
Periyanaikenpalayam, Veerapandi and Rakipalayam village in the financial year
2014-15.

Converted three empty reserve sights at Veerapandi village as tree parks and
maintaining the same.

De-silting and repair of check dam at Annanthambi pallam, Coimbatore

 Donated 15 computers to the rural and tribal Govt. schools in
Mathuvarayapuram and Perumalkovilpathy village.

Joy of giving week was observed across all operating locations. 5 essential
groceries (Daal, Sugar, semolina, wheat flour and sunflower oil) were collected
and distributed to 15 charitable institutions across India

Tiled Flooring, water facility and furniture provided to a tribal settlement school
in Perumalkovilpathy village near Coimbatore.

Two pairs of school uniform and a pair of shoes were provided to all school
children in a tribal settlement school in Alandurai village near Coimbatore.

Conducted a mass awareness campaign about cancer at Coimbatore, in tie-up

with Coimbatore Cancer Foundation.

List of activities for (2013-2014)

WE CARE for employees

Eye Care Camp for employees: Tie ups with eye hospitals for complete eye
checkups across all Business Units

Art of Living classes across all Business units

Launch second phase of foot-care

Diabetes screening and blood pressure check up

CSR External
Supplying free clean drinking water to 10 needy government schools across our
BUs

Eye camps in villages across our BUs

 Donation of computers to needy government schools

Implementation of waste management project with a NGO in Coimbatore in

and around Perianaickenpalayam

We Care Activities Forecast (October 2012 March 2013)

Joy of giving week (Grocery requirements for identified orphanages/ old-age

homes / hospices will be communicated to employees. Boxes to collect the
groceries will be placed at the work stations were employees can contribute
their share towards the cause.)

Eye Camp at identified villages, were the hospitals have not reached before to
conduct any eye camps.

Identify and adopt schools in remote areas, as an initial step, trees will be
planted at those schools and the children of that school will be formed into
teams and given the responsibility to grow the trees. As an encouraging factor
future follow-up will be done and the teams that have well maintained the tree
will receive prizes. In future all programs relating to school will be
implemented on the adopted schools and will contribute for the continuous
development of the school and the children.

List of programs conducted in the year 2011-12

Free eye camp at the village of Perumalkovilpathy, where no eye camps had
been conducted earlier.

Cancer awareness campaign at Brookfields mall, Coimbatore, in tie up with the

Coimbatore Cancer Foundation.
 Donation of used computer to a Government school for tribal children. Further
we educate the teachers of that school on computer science and the maintenance
of the donated computer is also borne by Pricol group.

Pricol staffs participation in a rally conducted by Siruthuli on World

Environment Day to bring awareness among the public to protect nature.
ORGANIZATION STRUCTURE AND HIERARCHIES
ORIGIN
 VISION & MISSION

Vision
We will strive to attain leadership and excellence in all the products and services
that we provide, through socially and environmentally acceptable means.

Mission
Be Dynamic: Constantly innovate and find better ways to deliver value to our
customers
Constantly Evolve: Improve in every sphere of our activity
Work Passionately: To enhance value to our customers, employees, suppliers and
shareholders
Be Sustainable: Care for the society and environment around us

Core Values
Passion Whatever we do, we do it from the bottom of our heart
Respect We respect those who add value to our lives
Integrity We never compromise on our values.
Collaborate We believe in working towards a unified goal
Ownership We take responsibility for all our actions.
Listen We listen to both the spoken and unspoken before we act
FUNCTIONAL AREAS
 PRODUCT AND SERVICES
TWO WHEELER PRODUCT

AUTO DECOMPRESSION UNITS

Arm & Holder type

Arm & Holder are sintered components

Auto Fuel Cocks

Diaphragm single or double

Mounting

2. Flange
1. Nut mounted
mounted
Single 3. Bracket mounted
Single
Diaphragm Single
Diaphragm
Double Diaphragm
Double
Diaphragm
Diaphragm

Flow Rate Range: 15 litres/hour to 30 litres/hour

Options:
With Inlet and Outlet Pipes

With / without reserve facility

Chain Tensioners
Types

1.Rack: Movement of Plunger in steps 2.Screw & Torsion Spring: Movement of

Plunger is continuous 3.Screw & Flat Spiral Spring: Compact and movement of
Plunger is continuous
FUEL LEVEL SENSORS

Types

1.Lever 2.Tubular

Resistance Wire Resistance Wire

Thick-film resistor Thick-film resistor

SMD Resistance

Float: Hard Rubber Float (to suit flexi-fuels)

Fuel Feed Pumps

Electronic Twin Coil

Pumps fuel from tank at bottom to engine on top Inputs to Pump from drive circuit
Discharge:
250 cc / minute minimum
315 cc / minute maximum

500 cc / minute minimum

700 cc / minute maximum

Standard Instrument Cluster

Speedometer : Mechanical Drive (Straight or Angular)

Fuel Gauge : Cross-coil Movement
Pointer : Solid type
Illumination & Warning Indicators : Lamps

DELUXE INSTRUMENT CLUSTER

Speedometer : Mechanical Drive (Straight or Angular)

Fuel Gauge : Cross-coil Movement
Pointer : Solid type
Illumination & Warning Indicators : Lamps

ELECTRONIC INSTRUMENT CLUSTER

Mechanical Drive (Straight or

Speedometer :
Angular)
Fuel Gauge : Cross-coil Movement
Pointer : Solid type
Illumination & Warning Indicators : Lamps

TEMPERATURE GAUGE

Clock (12hr / 24hr)

Distance to empty

Battery Voltage / Level Indicator

Service or Maintenance Indication

 Mean & Maximum Speed

Fuel Consumption (average

/instantaneous)
OIL PUMPS

Types

With Shock Sensor

1. Reciprocating (For Two Stroke Engines)
Fixed Flow Single Outlet

Variable Flow Single Outlet

Variable Flow Mutiple Outlet

2. Gerotor (For Four Stroke Engines)

Options:

Integrated Filter

Rotating Pump & Stationary Shaft

Twin Rotor with single inlet and double outlet

Integrated Relief Valve

Type of Driven Gear:

1. Plastic moulded
2. Sintered and shaved
3. Sheet Metal and fine blanked
OIL LEVEL SWITCHES

Contact type using Nitrile Rubber Float

speed Sensors

Mechanical

Hub drive Assembly with Gear & Pinion

Electronic:
Wheel mounted Hall IC type

Engine mounted Hall IC type

 VEHICLE SECURITY SYSTEM

Model 1 Model 2 Model 3

With Shock Sensor With Immobilizer With Remote Start

Shock Sensor with adjustable

All features as in model 1, and Remote start
sensitivity, or

On/Off through remote Vehicle Immobilizer RPM sense

Ignition security Neutral safety

Minimum cranking
Arm/Disarm chirps
time

Silent Arm/Disarm Remote stop

Vehicle locate in parking area Indicator flash

Panic mode

Code hopping
 FOUR WHEELER

ANALOG CLOCKS

Range : 12 Hrs
Diameter : 52 mm
Operating Voltage : 12V DC
Front Ring : Black painted / Chrome plated
Case and Clamp : Zinc plated and passivated / Plastic white
Pointer : Solid / Self-illuminated type
Illumination : Lamp

BRAKE LIGHT SWITCHES

Insulated double terminal type

NC / NO Switching circuit

Optional feature: Water-proof integrated connector

Cigarette Lighters

Cigarette Lighter consists of Socket assembly, Heater assembly, Illumination Ring

assembly

Types

Without illumination
 With illumination White / Green

Operating voltage : 12V DC

Optional features : Assembly Wiring Harness

EGR VALVES

diaphragm type

Single Terminal

Isolated Terminals

Setting Pressure : 0.3 to 5 Kg/Cm2

Mounting : As per customer requirement

Operating Voltage : 12 V DC / 24 DC

FUEL LEVEL SENSORS

Types

1.Lever

Wire-wound

Thick-film resistor

2.Tubular

Wire-wound

Thick-film resistor
 3.Capacitance (No moving parts)

Earthing : Negative or Insulated

Float :Nitrile Rubber Float (to withstand Ethanol blending in petrol)

Global Presence in 45 Countries

Customers
Employees
Share Holders
Suppliers
/ TFT (Virtual)

ELECTRONIC INSTRUMENT CLUSTER

Speedometer : Electric Cross-coil / Stepper Motor

Main Odo & Trip : LCD

Tachometer : Electric Cross-coil / Stepper Motor

Fuel Gauge : Cross-coil / Stepper Motor

Temperature Gauge : Cross-coil / Stepper Motor

Illumination & Warning indicators : Lamps / LEDs

Warning Indicators Pointer : Self-illuminated type

Optional feature : Dimmer output for illumination

LCD optional features : Clock (12hr / 24 hr) : Temperature Bar graph

Ambient temperature : Distance to Empty

Fuel Bar graph : Average speed

MECHANICAL INSTRUMENT CLUSTER

Speedometer : Mechanical (with reset assembly)

Tachometer : Cross-coil

Fuel Gauge : Cross-coil

Temperature Gauge : Cross-coil

Illumination & Warning Indicators : Lamps

Pointer : Solid type / Self-illuminated type

MAP SENSORS

Specifications

Work on Piezo Resistive effect

Function is to measure the Absolute Pressure in the Intake Manifold

Fitted on the throttle body

OIL PUMPS

Gerotor type

Chain Driven / Crankshaft Driven

Inbuilt Pressure Relief Valve (Optional)

POWER SOCKETS

Without illumination

With illumination White / Green

Operating voltage : 12V / 24V DC

Optional features : Assembly Wiring Harness, Dust Cap
SPEED SENSORS

Types

1. Hall Effect with biased magnet

Contact type

Non Contact type

2. Magneto Resistive Element (MRE) type Non Contact

3. Proximity Sensor

TEMPERATURE SENSORS

1. Insulated double terminal, Leaded type, NTC Thermistor

2. Non-insulated single terminal, Disc type, NTC Thermistor

Mounting: As per customer requirement

Optional feature : Water-proof integrated connector

Top Dash Tachometers

Diameter : 80 mm / 85 mm (standard)

Operating Voltage : 12V DC

Front Ring : Black painted / Chrome plated

Case and Clamp : Zinc plated and passivated / Plastic white

Pointer : Solid / Self-illuminated type

 Illumination : Lamp

Top Dash Tachometers

Diameter : 80 mm / 85 mm (standard)

Operating Voltage : 12V DC

Front Ring : Black painted / Chrome plated

Case and Clamp : Zinc plated and passivated / Plastic white

Pointer : Solid / Self-illuminated type

Illumination : Lamp

VACUUM SWITCHING VALVES

1. On / Off type Used in Euro II cars

On / Off pulses operate the solenoid
VSV either closes fully or opens fully
2. Unlike On / Off type, flow is regulated for various conditions
Duty pulses operate the solenoid
Unlike On / Off type, flow is regulated for various conditions
vehicle Convenience & Security Systems

Model 1 Manual Central Locking

Model 2 Remote Central Locking / Keyless Entry
Model 3 Remote Central Locking / Keyless Entry with Alarm
Model 4 Remote Central Locking / Keyless Entry with Alarm &
Immobilizer (Starter Cut-off)
 Model 5 Remote Central Locking / Keyless Entry with Alarm &
Immobilizer & External Sensors (Shock Sensor)
Common convenience features for Models 3, 4 & 5:
Power door lock/unlock, Parking light flash, Chirp while remote lock/unlock,
Silent mode lock/unlock,
Car finder, Panic alarm, Reverse horn, Water-proof remote
Common security features for Models 3, 4 & 5:
Open door indication, Stereo protection, Auto rearm/relock, Passive arming,
Passive locking, Progressive alarm, Door open warning, Nuisance prevention
circuitry
Idle Speed Control Valve

Rotary Solenoid type

Forms part of the Fuel Management System

Controls the volume of air flowing through the throttle valve in accordance
with the signals from ECU

Improves fuel efficiency by reducing and stabilizing the idle speed

Hot water pipe orientation as per customer requirement

WINDSHIELD WASHER SYSTEMS

Windshield washer kit comprises of Pump assembly, Reservoir, PVC tube, Cover
with retaining tag, T Joint, Nozzle assembly

1. Front Washer Nozzle (1 no. 12V DC motor)

2. Front & Rear Washer Nozzle (2 nos. 12V DC motor)
 TRACTORS, CONSTRUCTION & INDUSTRIAL

NEUTRAL SAFETY SWITCHES

Types:

Push On/Off

Normally Opened and Normally Closed

OPERATING VOLTAGE

OPERATING TEMPERATURE

Vacuum Switches

Type : Diaphragm

Range : 350 mm Hg to 750 mm Hg

Operating Voltage : 12V / 24V DC

Mounting : As per customer requirement

GAUGES FOR TRACTORS AND OFF-ROAD VEHICLES

1.RPM Meter

Range : 0 to 3500 rpm

Diameter : 80 mm / 85 mm

Operating Voltage : 12V / 24V DC

Front Ring : Black painted /Chrome plated

Case and Clamp : Zinc plated and passivated / Plastic white

Pointer : Solid / Self-illuminated type

Illumination : Lamp

2.Fuel Gauge

Range :As per customer requirement

Diameter : 52 mm / 60 mm (standard)

Operating Voltage : 12V / 24V DC

Front Ring :Black painted / Chrome plated

Case and Clamp : Zinc plated and passivated / Plastic white

Pointer : Solid / Self-illuminated type

BRAKE LIGHT SWITCHES

Insulated double terminal type

NC / NO Switching circuit

Optional feature: Water-proof integrated connector

CHARGE PUMPS

Charge Pumps is also called as Crescent type Gear Pump.

Application : Gear box and Clutch pack
Working Temperature : -40 C to 120 C
Salient features:

Less wear & tear of pumping elements

Higher operating pressure

Compact size for the given output

Types

Without illumination

With illumination White / Green

Operating voltage : 12V DC

Optional features : Assembly Wiring Harness
EGR Valves

Diaphragm type

Single Terminal
 Isolated Terminals

Setting Pressure : 10V to 36V DC

Mounting : 1.3kg

Operating Voltage : 185 mm x 190 mm x 60 mm

FUEL LEVEL SENSORS

Types

1.Lever

Wire-wound

Thick-film resistor

2.Tubular
Wire-wound

Thick-film resistor
3.Capacitance (No moving parts)

Earthing : Negative or Insulated

Float :Nitrile Rubber Float (to withstand Ethanol blending in petrol)

HOUR METERS

Analog or digital

Range : 99999.9

Diameter : 52 mm (standard)

Operating Voltage : 12V DC

Front Ring : Black painted / Chrome plated

Case and Clamp : Zinc plated and passivated / Plastic white

Illumination : Lamp

Instrument Clusters
ELECTRONIC INSTRUMENT CLUSTER

Tachometer : Cross-Coil / Stepper Motor

Hour Counter : Plunger / LCD

Fuel Gauge : Cross-Coil / Stepper Motor

Temperature Gauge : Cross-Coil / Stepper Motor

Air & Oil Pressure Gauge : Cross-Coil / Stepper Motor

Illumination & Warning Indicators : Lamps

Pointer : Self-illuminated type

 MECHANICAL INSTRUMENT CLUSTER

Tachometer : Cross-Coil, with Hour Counter

Fuel Gauge : Cross-Coil

Temperature Gauge : Cross-Coil

Oil Pressure Gauge : Cross-Coil

Illumination & Warning Indicators : Lamps

Pointer : Solid type

LOW OIL PRESSURE SWITCHES
Types:

Diaphragm

Polyamide

Rubber

Setting Pressure : 0.3 to 5 Kg/Cm2

Operating Voltage : 12V / 24V DC

NEUTURAL SAFETY SWITCHES

Types

Push On/Off

Normally Opened and Normally Closed

Operating voltage : 12V / 24V DC

Operating Temperature : -20 C to 130 C

OIL PUMPS

Types

Gerotor type

Chain driven / Crankshaft driven

Inbuilt Pressure Relief Valve (optional)

Operating voltage: 12V / 24V DC

Optional features : Assembly Wiring Harness, Dust Caps

PRESSURE RELIEF VALVE

Diaphragm Type

Opening Pressure: 1.5 Kg/cm2 (standard)

Optional feature : Assembly Wiring Harness can be provided as per

customer requirement

POWER SOCKETS

Types

Without illumination

With illumination White / Green

Operating voltage : 12V / 24V DC

Optional features : Assembly Wiring Harness, Dust Cap
PRESSURE SENSORS

Types

1. Diaphragm

Polyamide

Metal

2.Terminals

Single Terminal (Screw Type or 6.3 mm blade (spade)

Double Terminal (Screw Type or 6.3 mm blade (spade)

Range : 0-5 / 0-7 / 0-10 Kg/Cm2 or equivalent in PSI

Warning : 0.8 +/-0.2 Kg/Cm2 / 1 +/-0.2 Kg/Cm2 or equivalent in PSI
Operating Voltage : 12V / 24V DC
SPEED SENSORS

Types

1. Hall Effect with biased magnet

Contact type

Non Contact type

2. Magneto Resistive Element (MRE) type Non Contact

3. Proximity Sensor
TEMPERATURE SWITCHES

Types

1. Bimetal (Normally Closed)

2. Snap terminal (Normally Closed)

3. Terminals

Single Terminal

Isolated Terminals

Optional feature: Water-proof Integrated Connector

TEMPERATURE SENSORS

Types

1. Insulated double terminal, Leaded type, NTC Thermistor

2. Non-insulated single terminal, Disc type, NTC Thermistor
Mounting: As per customer requirement
Optional feature : Water-proof integrated connector

WARNING INDICATORS

Types

Single Warning Indicator

4-in-1 warning Indicator

5-in-1 warning Indicator

8-in-1 warning Indicator

12-in-1 warning Indicator

16-in-1 warning Indicator

Optional feature: 12V / 24V DC

Illumination : Lamps / LEDs
 SERVICES
Quality Policy

Pricol will provide value and satisfaction to customers on products and services.
This will be achieved through:

Systematic training and motivation of employees

Complying with customer requirements and applicable statutory/regulatory

requirements

Continually improving the efficiency and effectiveness of the Quality

Management Systems

TPM Policy

Establish an excellent Total Productive Manufacturing system with total

involvement of all employees to achieve utilization of all resources.
 ACHIEVEMENT & RECOGNITION

NEW DELHI: Automotive components manufacturer Pricol Ltd has signed

binding agreements to acquire 100% of the wiping systems business of Ashok
Piramalgroups PMP Auto Components Pvt. Ltd. The acquisition would be
undertaken by Pricol Limited through its wholly owned subsidiaries. The
transaction will be funded by a combination of internal accruals and external debt.
The transaction would be EPS accretive to the shareholders of Pricol and the
profitability is expected to further improve upon integration of the business with
Pricol.

PMP had acquired this business in 2008 from Magna and is presently running
manufacturing facilities in Czech Republic, Mexico and India. The business is
supplying wiper motors to global automotive customers including VW, Fiat, John
Deere, Skoda, Audi, Seat and has a turnover of around Rs. 250Cr currently with a
confirmed order book and revenue visibility of more than Rs. 450Cr in FY 2020.

The acquisition will help Pricol diversify its product offerings and provide access
to manufacturing facilities in Europe and North America, where it currently does
not have a footprint, helping it cement its status as a global supplier. Additionally,
with this acquisition, Pricol will increase its presence with Passenger vehicles
customers diversifying revenue streams and opening up multiple cross selling
opportunities.

Pricol also expects to realize substantial synergies within the first couple of years
to further boost the financial performance of the business. Pricols focus as an auto
component supplier and experience in low cost production and sourcing can be
leveraged by the target businesses for realizing cost savings in sourcing raw
materials and reducing manufacturing overheads. Joint R&D is also expected to
reduce product development costs.

Vikram Mohan, the Managing Director of Pricol, said, This acquisition ties in
well with our long term strategy of driving growth and achieving product
diversification. We believe that wiping systems is a growing product segment
which would be largely immune to the ever changing technological trends in the
automotive sector and the eventual move to electric vehicles. With manufacturing
presence in Czech Republic and Mexico, this acquisition fits in perfectly with our
ongoing plans to establish presence in these regions. We are also very excited
about the potential of this business in the Indian market and confident of extracting
synergies

Harsh Piramal, the Managing Director of PMP Auto Components Pvt. Ltd., said,
PMP has decided to divest this business as part of its strategic portfolio
reallocation where this business has been determined as non-core. We are happy
that an automotive focused group like Pricol is taking over this business and hope
that they will take it to further heights

The transaction is subject to customary closing conditions and the parties to the
transaction are bound by standard confidentiality obligations.
SWOT ANALYSIS
 MARKETING STRATEGIES
Pricol had showcased this TFT cluster at Auto Expo 2016. Developed on a multi-
core CPU platform, it enables in-vehicle networking, CAN protocol, Bluetooth and
phone integration.

Vikram Mohan, the 41-year-old managing director of Pricol Ltd, sees himself as a
serial entrepreneur. When this second-generation entrepreneur took over the
current role in the familys automotive components business in 2011, the condition
of the company was far from being ideal.
New to the automotive business, Vikram had the tough challenge of steering
Pricol, a well-established brand, back on track.
The company had industrial relationship (IR) issues, lost business of crucial new
vehicle programmes and, as a result, faced a double whammy of huge losses and
high debts. There were multiple setbacks from 2007 to 2011 which set us back by
6-7 years. Those were the high growth years of the auto industry. Though our peers
grew, we de-grew or remained flat during that time, says Vikram in a candid
interview with Autocar Professional.
Fast forward to 2016, the company, with a redesigned brand identity, now has a
robust growth outlook and healthy order book stretching till 2020, after going
through an intense period of business restructuring.
The company, which closed FY2015-16 at revenues of nearly Rs 1,500 crore and
almost debt- free (Rs 100 crore), is aiming at a healthy 20 percent growth YoY
for the next 4-5 years with a target of Rs 3,000 crore in top-line.
This target is expected to be achieved through both organic and inorganic steps.
The strong demand from the domestic market, growth in exports, a few new
acquisitions in Europe and USA and a couple of greenfield plants will keep
Vikram and his team quite busy. This is in contrast to the 2011 period, when the
companys debt level stood at Rs 340 crore, almost half of the companys turnover.
Past forward
However, the return to profitability and growth of the present day was not a
cakewalk as the company had to take a complete re-look at its business. As part of
the restructuring, Pricol found that it has been highly Coimbatore-centric despite
the absence of any big customer or vendor base there. Therefore, it decided to
expand into other auto clusters in the country. Pricol shut down one plant in
Coimbatore, scaled down operations in another and let go of nearly 1,800
employees. The overall employee base has come down from 7,000 to 5,000 now.
Automation was introduced, end-of-testing, upgrades labs and development
capabilities were scaled up. It has sold a die-cast plant in Coimbatore, shut down
one plant in Pantnagar and expanded the other and also closed a plant in Pune
which was not in a suitable location, and faced IR issues.
The company decided to focus on its strengths and do away with non-core
business. It has divided its business largely into three key areas instrument
cluster and sensors, pumps and mechanical products, and asset management
solutions. We looked at product by product, our cost structure and our leadership
position. Whatever is not fitting in these three verticals is either sold or shut
down, says Vikram.
In order to strengthen its product offerings and achieve leadership in its chosen
business areas, the business strategy has been tweaked to suit the changing market
dynamics. We strategised internally about the future of the instrument cluster in a
car. In 2020, the instrument cluster will cease to exist in large automobiles. It will
be a driver information system and not instrumentations, combined with
entertainment or infotainment, navigation, climate control everything with one-
touch screen panel and a lot of software, elaborates Vikram.
Though Pricol had a strong presence in the domestic passenger vehicle instrument
cluster market earlier, it exited that business by selling it off to Visteon and
Denso because it knew that with the changing dynamics in that segment, it
wouldnt be able to match the development investments by MNCs which have an
advantage of spreading big investments across the globe.
Pricol has enhanced its focus on the two-wheeler instrument cluster business,
where it is the worlds second largest by volume and value terms. It supplies all the
key two-wheeler manufacturers. As part of its new strategy, the company wants to
be present in the top five global two-wheeler markets.
It also plans to focus on instrument clusters for commercial vehicles, tractors and
the off-road segment. These segments, despite being lower in volume terms, offer
greater business opportunity and growth. Our strategy is to be among the top three
players in any geography and product that we operate in. If there is no roadmap to
get there organically or inorganically or we lack the technology, let us not step into
that space. Our inorganic strategy is based on this, elaborates Vikram.
Winning back the business
As a result of the massive restructuring of the business, Pricol is winning orders
and regaining customer confidence. Over the years, its market share has grown
significantly in key market segments including two-wheelers, tractors, CVs and
off-highway.
We have been growing and this year we are expecting 20 percent growth. We are
confident we can sustain this growth till 2020 and perhaps a little higher as many
projects are in the pipeline, avers Vikram.

Pricol supplies water pumps to passenger cars, commercial vehicles and two-
wheelers. It is one of the largest suppliers of pumps to two-wheelers. Besides
instrument clusters and pumps, the company is highly bullish on the telematics and
asset management solutions business. It has won some big global orders from JCB
and is on the verge of becoming a global partner for half-a-dozen other
companies. While this vertical does not offer huge scale, the margins are quite
healthy with sustainable long-term business.
One of the key developments in this vertical is a centralised lubrication system
which it supplies to truck-maker Daimler and a few other companies. In asset
management, we have developed various products and are moving forward. All of
this is done in Coimbatore as we shifted production and substituted it with these
products as we have plants and permanent labour, informs Vikram.
The way forward
According to Vikram, the key for future growth is not just being an Indian
company but become a global company as increasingly vehicle platforms are being
developed globally. One of the major steps in this direction was to expand its
footprint to Indonesia six years ago when a number of Indian two-wheeler makers
ventured into that country. Although Indian companies failed to make inroads in
the second largest two-wheeler market in Asia, Pricol managed to gain some
business there.

The Indonesian plant has ramped up quickly, bagging orders from prominent
players like Honda, Yamaha and Suzuki. Pricol has a near-18 percent market share
in the two-wheeler instrument cluster market and hopes to grow it to a healthy 30
percent. It has recently introduced its range of pumps for two-wheelers. Today
Indonesia is not just catering to the local market but has become a hub for the
ASEAN region including Thailand, Vietnam and the Philippines.
Similarly, Latin America was added to Pricols manufacturing network when it
acquired a company in Brazil a year and half ago. More than the manufacturing,
the companys technology prowess in pumps is what made Vikram invest in it.
Today, it has become the global technical centre for Pricols pumps vertical, which
is expected to be the companys largest revenue generator in the next two years or
so. Currently, driver information systems are the biggest with a 40 percent share
of the companys total revenue. Brazils economic fall may have disturbed Pricols
business plans but Vikram is hopeful of a recovery in that market in 2-3 years.
Acquisitions ahead
As part of its aspirations to go global and fuel its future growth, the company is
aggressively looking at 2-3 acquisitions in Europe and the US. The acquisitions
would be made to plug the gaps in Pricols product portfolio. To fill in those gaps
and gain entry into the larger European market, the company is eyeing two
acquisitions in Europe (one each for pumps and sensors for CVs, tractors, off-road
instrument clusters) and one instrument cluster company in USA. While acquiring
any company, Vikram has set very clear criteria. The criteria to buy a company
are based on five scales including financial health, customer base, local
management expertise, technology roadmap and quality of manufacturing asset.
Unless three of them are complete, we wont buy the company. It took us 2-3 years
to identify the right assets. We have a focused strategy, he says.
After the acquisitions, all the three companies are likely to add anywhere between
Rs 750-1,000 crore to Pricols top-line, taking the company close to its aspiration
of reaching the Rs 3,000 crore revenue mark by 2020. To fund these acquisitions,
the company has earmarked a capex of Rs 400 crore for the next four years by
leveraging its strong balance sheet and profit from the existing business. It could
also raise some funds for the same.
New plants in India
At the home front, Pricol is set to open a greenfield plant in Pune next month.
Moving away from the practice of buying land for a new plant, the company has
adopted an asset-light model. Instead of buying land for a plant which is 50-60 of
the total cost, it is collaborating with an industrial park operator on a build-to-suit
basis. Besides insulating itself from huge investment in real estate, this model
offers flexibility to take faster decisions on shifting production if industry
dynamics change.
The company looks to leverage this model for having constraints with a
geographical presence. As the Pune plant is ready to go live, Pricol is looking to set
up another greenfield plant in the next 24 months to fuel domestic growth. The
greenfield plant will be either in Gujarat or outside of Chennai in Andhra Pradesh
as there are some good policies and power availability is not a problem, says
Vikram.
 CHAPTER-4
WORKING CAPITAL PROCESS
 WORKING CAPITAL PROCESS
THEORY OF WORKING CAPITAL

MEANING OF WORKING CAPITAL:

Capital required for a business can be classifies under two main categories:

Fixed Capital

Working Capital

Every business needs funds for two purposes for its establishments and to carry out

day to day operations. Long term funds are required to create production facilities

through purchase of fixed assets such as plant and machinery, land and building,

furniture etc. Investments in these assets are representing that part of firms capital

which is blocked on a permanent or fixed basis and is called fixed capital. Funds

are also needed for short term purposes for the purchasing of raw materials,

payments of wages and other day to day expenses etc. These funds are known as

working capital. In simple words, Working capital refers to that part of the firms

capital which is required for financing short term or current assets such as cash,

marketable securities, debtors and inventories.

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:

Balance Sheet concepts

Operating Cycle or circular flow concept

BALANCE SHEET CONCEPT:

There are two interpretation of working capital under the balance sheet concept:

Gross Working Capital

Net Working Capital

The term working capital refers to the Gross working capital and represents the

amount of funds invested in current assets . Thus, the gross working capital is the

capital invested in total current assets of the enterprises. Current assets are those

assets which are converted into cash within short periods of normally one

accounting year. Example of current assets is:

Constituents of Current Assets:

Cash in hand and Bank balance

Bills Receivable

Sundry Debtors

Short term Loans and Advances

Inventories of Stock as:

 Raw Materials

Work in Process

Stores and Spaces

Finished Goods

Temporary Investments of Surplus Funds

Prepaid Expenses

Accrued Incomes

The term working capital refers to the net working capital. Net working capital is

the excess of current assets over current liabilities or say:

Net Working Capital = Current Assets Current Liabilities.

NET WORKING CAPITAL MAY BE NEGATIVE OR POSITIVE:

When the current assets exceed the current liabilities, the working capital is

positive and the negative working capital results when the current liabilities are

more than the current assets. Current liabilities are those liabilities which are

intended to be paid in the ordinary course of business within a short period of

normally one accounting year of the current assets or the income of the business.

Examples of current liabilities are:

CONSTITUENTS OF CURRENT LIBILITIES:

 Bills Payable

Sundry Creditors or Account Payable

Accrued or Outstanding Expenses

Short term Loans, Advances and Deposits

Dividends Payable

Bank Overdraft

Provision for Taxation, If does not amount to appropriation of profits

The gross working capital concept is financial or going concern concept whereas

net working capital is an accounting concept of working capital.

OPERATING CYCLE OR CIRCULATING CASH FORMAT:

Working Capital refers to that part of firms 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 being constantly converted into cash and these

cash flows out again in exchange for other current assets. Hence it is

also known as revolving or circulating capital. The circular flow concept

of working capital is based upon this operating or working capital cycle

of a firm. The cycle starts with the purchase of raw material and other

resources

And ends with the realization of cash from the sales of finished goods. It

involves purchase of raw material and stores, its conversion into stocks

of finished goods through work in progress with progressive increment

of labor and service cost, conversion of finished stocks into sales,

debtors and receivables and ultimately realization of cash and this cycle

continuous again from cash to purchase of raw materials and so on. The

speed/ time of duration required to complete one cycle determines the

requirements of working capital longer the period of cycle, larger is the

requirement of working capital.

Receivable conversion period Raw material storage

(RCP) conversion period (RMSCP)

Cash received form

Debtors and paid to suppliers

Of raw materials

Sales of finished Raw materials

Goods introduced into process

Finished Goods

Produced

Finished goods conversion Work in process

Period (FGCP) Conversion period

(WIPCP)
The gross operating cycle of a firm is equal to the length of the inventories and

receivables conversion periods. Thus,

Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP

Where,

RMCP = Raw Material Conversion Period

WIPCP = Work in- Process Conversion Period

FGCP = Finished Goods Conversion Period

 RCP = Receivables Conversion Period

However, a firm may acquire some resources on credit and thus defer payments for

certain period. In that case, net operating cycle period can be calculated as below:

Net Operating Cycle Period = Gross Operating Cycle Period Payable Deferral period

Further, following formula can be used to determine the conversion periods.

Raw Material Conversion Period = Average Stock of Raw Material.

Raw Material Consumption per day

Work in process Conversion Period = Average Stock of Work-in-Progress

Total Cost of Production per day

Finished Goods Conversion Period = Average Stock of Finished Goods

Total Cost of Goods sold per day

Receivables Conversion Period = Average Accounts Receivables

Net Credit Sales per day

Payable Deferral Period = Average Payable

Net Credit Purchase per day

 CLASSIFICATION OR KIND OF WORKING CAPITAL:

Working capital may be classified in two ways:

On the basis of concept

On the basis of time

Om the basis of concept, working capital is classified as gross working

capital and net working capital. The classification is important from the point

of view of the financial manager.

On the basis of time, working capital may be classified as:

Permanent or Fixed working capital

Temporary or Variable working capital.

 Kinds of Working Capital

On the basis of concept On the basis of time

Permanent or
Temporary or
Gross Working Net Working
Fixed Working
Variable Working
Capital Capital
t Capital
Capital

Regular Reserve Working Seasonal Working Special Working

Working Capital Capital Capital Capital

1. PERMANENT OR FIXED WORKING CAPITAL:

Permanent or fixed working capital is the minimum amount which is required to

ensure effective utilization of fixed facilities and for maintaining the circulation of

current assets. There is always a minimum level of current assets which is

continuously required by the enterprises to carry out its normal business

operations.

2. TEMPRORAY OR VARIABLE WORKING CAPITAL:

Temporary or variable working capital is the amount of working capital which is

required to meet the seasonal demands and some special exigencies.Varibles

working capital can be further classified as second working capital and special

working capital. The capital required to meet the seasonal needs of the enterprises

is called the seasonal working capital.

Temporary working capital differs from permanent working capital in the sense

that is required for short periods and cannot be permanently employed gainfully in

the business

IMPORATNCE OR ADVANTAGE OF ADEQUATE WORKING

CAPITAL:
Working capital is the life blood and nerve centre of a business . just a circulation

of a blood is essential in the human body for maintaining life, working capital is

very essential to maintain the smooth running of a business. No business can run

successfully without an adequate amount of working capital. The main advantages

of maintaining adequate amount of working capital are as follows:

Solvency of the Business

Goodwill

Easy Loans

Cash discounts

Regular supply of Raw Materials

Regular payments of salaries, wages & other day to day commitments.

Exploitation of favorable market conditions

Ability of crisis

Quick and regular return on investments

High morals

THE NEED OR OBJECTS OF WORKING CAPITAL:

The need for working capital cannot be emphasized. Every business needs some

amount of working capital. The need of working capital arises due to the time gap

between production and realization of cash from sales. There is an operating cycle
involved in the sales and realization of cash. There are time gaps in purchase of

raw materials and production, production and sales,

And sales, and realization of cash, thus , working capital is needed for the

following purposes:

For the purchase of raw materials , components and spaces

To pay wages and salaries

To incur day to day expenses and overhead costs such as fuel, power and

office expenses etc.

To meet the selling costs as packing, advertising etc.

To provide credit facilities to the customers.

To maintain the inventories of raw materials, work in- progress, stores and

spares and finished stock.

FACTORS DETERMING THE WORKING CAPITAL REQUIRMENT:

The working capital requirements of a concern depend upon a large number of

factors such as nature and size of the business, the characteristics of their

operations, the length of production cycle , the rate of stock turnover and the state

of economic situation. However the following are the important factors generally

influencing the working capital requirements.

 NATURE OR CHARACTERSTICS OF A BUSINESS: The nature and

the working capital requirement of enterprises are interlinked. While a

manufacturing industry has a long cycle of operation of the working capital,

the same would be short in an enterprises involve in providing services. The

amount required also varies as per the nature, an enterprises involved in

production would required more working capital then a service sector

enterprise.

MANAFACTURE PRODUCTION POLICY: Each enterprises in the

manufacturing sector has its own production policy, some follow the policy

of uniform production even if the demand varies from time to time and other

may follow the principles of demand based production in which production

is based on the demand during the particular phase of time. Accordingly the

working capital requirements vary for both of them.

OPERATIONS: The requirement of working capital fluctuates for seasonal

business. The working capital needs of such business may increase

considerably during the busy season and decrease during the

MARKET CONDITION: If there is a high competition in the chosen

project category then one shall need to offer sops like credit, immediate

delivery of goods etc for which the working capital requirement will be high.
 Otherwise if there is no competition or less competition in the market then

the working capital requirements will be low.

AVABILITY OF RAW MATERIAL: If raw material is readily available

then one need not maintain a large stock of the same thereby reducing the

working capital investment in the raw material stock . On other hand if raw

material is not readily available then a large inventory stocks need to be

maintained, there by calling for substantial investment in the same.

GROWTH AND EXAPNSION: Growth and Expansions in the volume of

business result in enhancement of the working capital requirements. As

business growth and expands it needs a larger amount of the working capital.

Normally the needs for increased working capital funds processed growth in

business activities.

PRICE LEVEL CHANGES : Generally raising price level require a

higher investment in the working capital. With increasing prices, the same

levels of current assets needs enhanced investments.

 MANAFACTURING CYCLE: The manufacturing cycle starts with the

purchase of raw material and is completed with the production of finished

goods. If the manufacturing cycle involves a longer period the need for

working capital would be more. At time business needs to estimate the

requirement of working capital in advance for proper control and

management. The factors discussed above influence the quantum of working

capital in the business. The assessment of the working capital requirement is

made keeping this factor in view. Each constituents of the working capital

retains it form for a certain period and that holding period is determined by

the factors discussed above. So for correct assessment of the working capital

requirement the duration at various stages of the working capital cycle is

estimated. Thereafter proper value is assigned to the respective current

assets, depending on its level of completion. The basis for assigning value to

each component is given below:

COMPONENTS OF WORKING CAPITAL BASIS OF VALUATION

Stock of Raw Material Purchase of Raw Material

Stock of Work -in- Process At cost of Market value which is lower

Stock of finished Goods Cost of Production

Debtors Cost of Sales or Sales Value

Cah Working Expenses

 Each constituent of the working capital is valued on the basis of valuation

Enumerated above for the holding period estimated. The total of all such valuation

becomes the total estimated working capital requirement.

The assessment of the working capital should be accurate even in the case

of small and micro enterprises where business operation is not very large. We

know that working capital has a very close relationship with day-to-day operations

of a business. Negligence in proper assessment of the working capital, therefore,

can affect the day-to-day operations severely. It may lead to cash crisis and

ultimately to liquidation. An inaccurate assessment of the working capital may

cause either under-assessment or over-assessment of the working capital and both

of them are dangerous.

PRINCIPLES OF WORKING CAPITAL MANAGEMENT POLICY:

The following are the general principles of a sound working capital management

policy:

PRINCIPLES OF WORKING CAPITAL MANAGEMNT POLICY

PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF PRINCIPLES OF

MATURITY OF
RISK COST OF EQUITY PAYMENTS
VARIATIONS CAPITAL PRINCIPLES
1. PRINCIPLE OF RISK VARAITAION (CURRENT ASSETS POLICY):

Risk here refers to the inability of a firm to meet its obligations as and when they

become due for payment. Larger investment in current Assets with less

dependence on short term borrowings, increase liquidity, reduces risk and thereby

decreases the opportunity for gain or loss. On the other hand less investments in

current assets with greater dependence on short term borrowings, reduces liquidity

and increase profitability. In other words there is a definite inverse relationship

between the degree of risk and profitability. In other words, there is a definite

inverse relationship between the risk and profitability. A conservative management

prefers to minimize risk by maintaining a higher level of current assets or working

capital while a liberal management assumes greater risk by reducing working

capital. However, the goal of management should be to establish a suitable trade

off between profitability and risk.

2. PRINCIPLES OF COST OF CAPITAL: The various source of raising

working capital finance have different cost of capital and the degree of risk

involved. Generally, higher and risk however the risk lower is the cost and lower

the risk higher is the cost. A sound working capital management should always try

to achieve a proper balance between these two.

3.PRINCIPLE OF EQUITY POSITION: The principle is concerned with

planning the total investments in current assets. According to this principle, the

amount of working capital invested in each component should be adequately

justified by a firms equity position. Every rupee invested in current assets should

contribute to the net worth of the firm. The level of current assets may be measured

with the help of two ratios:

1. Current assets as a percentage of total assets and

2. Current assets as a percentage of total sales

While deciding about the composition of current assets, the financial manager may

consider the relevant industrial averages.

4. PRINCIPLES OF MATURITY OF PAYMENT: The principle is concerned

with planning the source of finance for working capital. According to the

principles, a firm should make every effort to relate maturities of payment to its

flow of internally generated funds. Maturity pattern of various current obligations

is an important factor in risk assumptions and risk assessments. Generally shorter

the maturity schedule of current liabilities in relation to expected cash inflows, the

greater the inability to meet its obligations in time.

CONSEQUENCES OF UNDER ASSESMENT OF WORKING CAPITAL:

Growth may be stunted. It may become difficult for the enterprises to

undertake profitable projects due to non availability of working capital.

Implementations of operating plans may brome difficult and consequently

the profit goals may not be achieved.

Cash crisis may emerge due to paucity of working funds.

Optimum capacity utilization of fixed assets may not be achieved due to non

availability of the working capital.

The business may fail to honour its commitment in time thereby adversely

affecting its creditability. This situation may lead to business closure.

The business may be compelled to by raw materials on credit and sell finished

goods on cash. In the process it may end up with increasing cost of purchase and

reducing selling price by offering discounts . both the situation would affect

profitable adversely.

Now avaibility of stocks due to non availability of funds may result in production

stoppage. While underassessment of working capital has disastrous implications

on business overassesments of working capital also has its own dangerous.

CONSEQUENCES OF OUR OWN ASSESMNET OF WORKING CAPITAL:

Excess of working capital may result in un necessary accumulation of

inventories.

It may lead to offer too liberal credit terms to buyers and very poor recovery

system & cash management.

It may make management complacent leading to its inefficiency.

Over investment in working capital makes capital less productive and may

reduce return on investment.

Working Capital is very essential for success of business & therefore needs

efficient management and control. Each of the components of working capital

needs proper management to optimize profit.

INVENTORY MANAGEMNT: Inventory includes all type of stocks. For

effective working capital management, inventory needs to be managed effectively.

The level of inventory should be such that the total cost of ordering and holding

inventory is the least. Simultaneously stock out costs should be minimized.

Business therefore should fix the minimum safety stock level reorder level of

ordering quantity so that the inventory costs is reduced and outs management

become efficient.
RECEIVABLE MANAGEMENT: Given a choice, every business would prefer

selling its produce on cash basis. However, due to factors like trade policies ,

prevailing market conditions etc. Business are compelled to sells their goods on

credit. In certain circumstances a business may deliberately extend credit as a

strategy of increasing sales. Extending credit means creating current assets in the
form of debtors or account receivables. Investment in the type of current assets

needs proper and effective management as, it gives rise to costs such as :

Cost of carrying receivables

Cost of bad debts losses

Thus the objective of any management policy pertaining to accounts receivables

would be to ensure the benefits arising due to the receivables are more then the

costs incurred for the receivables and the gap between benefit and costs

increased resulting in increase profits. An effective control of receivables

Help a great deal in properly managing it. Each business should therefore try to

find out coverage credit extends to its clients using the below given formula:

Average Credit = Total amount of receivable

(Extend in days) Average credit sale per day

Each business should project expected sales and expected investments in

receivable based on various factor, which influence the working capital

requirement. From this it would be possible to find out the average credit days

using the above given formula. A business should continuously try to monitor

the credit days and see that the average. Credit offer to clients is not crossing

the budgeted period otherwise the requirement of investment in the working

capital would increase and as a result, activities may get squeezed. This may

lead to cash crisis.

CASH BUDGET: Cash budget basically incorporates estimates of future

inflow and outflows of cash cover a projected short period of time which may

usually be a year, a half or a quarter year . effective cash management is

facilated if the cash budget is further broken down into months, weeks or even a

daily basis.

There are two components of cash budget are:

1. Cash inflows

2. Cash outflows

The main source for thses flows are given here under:

1. Cash Sales

2. Cash received from debtors

3. Cash received from Loans, deposits etc.

4. Cash receipts other revenue income

5. Cash received from sale of investment or assets.

CASH OUTFLOWS:

1. Cash Purchase

2. Cash payments to Creditors

3. Cash payment for other revenue expenditure

4. Cash payment for assets creation

5. Cash payments for withdrawals, taxes.

6. Repayments of Loan etc.

 CHAPTER-5
RESEARCH DESIGHN
 RESEARCH DESIGHN

STATEMENT OF PROJECT

Evaluation, analysis & interpretation of working capital management of

United Engineering Services.

Suggesting ways to improve its working capital utilization.

OBJECTIVE OF RESEARCH

Estimation of working capital requirement

Evaluation of working capital management

Evaluation of Liquidity position & working capital utilization

Analysis of relationship between working capital and profitability

Analysis & sources of working capital

Analyzing the level of current assets with relation to current liabilities.

COLLECTION OF DATA:

Data has been collected from various sources like:

Annual reports of last three years

Manual of concerned departments

Consultants and personnel of United Engineering Services.

Internet sites like www.google.com, www.solidconeyor@indiatimes.com

METHODS OF QUANTATIVE ANALYSIS

Calculation of net working capital requirements.

Ratio analysis

Operating cycle & cash cycle

Cash flow analysis

Determining the Financing mix

Statistical tools like graphical presentation

 CHAPTER-6
INTERPRETATION AND ANALYSIS
 INTERPRETATION AND ANALYSIS
SALES TO WORKING CAPITAL RATIO

This ratio is computed by dividing working capital by sales. This ratio helps to

measure efficiency of the utilization of net working capital. It signifies that for an

amount of sales. A relative amount of working capital is needed. If any increase in

sales in contemplated, working capital should be adequate & thus this ratio helps

management to maintain the adequate level of working capital

Financial Year FY 05-06 FY 06-07 FY 07-08

Sales to working capital ratio 2.046727 1.294863 1.51595

 SALES TO WORKING CAPITAL RATIO

2.046727

2.5 1.515946
1.29486264
2
1.5
1
0.5
0
FY 05-06 FY 06-07 FY07-08

Sales to working capital ratio

CURRENT SCENERIO INTERPRETATION

As seen from the above table the ratio has decreased from 2 (FY 05-06) to 1.29

in (FY 06-07) and then increased to 1.5 (FY 07-08). This ratio is again

indicative of the fact that the year in which the expansion took place the sales

did not match up with the scale of expansion. Otherwise it would have

remained intact and not decreased. The slight increase from 1.29 to 1.51 is

indicative of the fact that the full impact of expansion is being slowly realized

& sales are slowly increasing.

INVENTORY TURNOVER RATIO

This ration indicates the effectiveness and efficiency of inventory management.

This ratio is calculated as cost of goods sold: average inventory shows how

speedily the inventory is turned into accounts receivables through sales. The higher

the inventory turnover ratio (also called stock velocity) the more the efficient

inventory management.
Financial Year FY 05-06 FY 06-07 FY07-08

inventory turnover ratio/ stock velocity 4.351329 3.2479138 2.9936

INVENTORY TURNOVER RATIO

FY07-08

inventory turnover ratio/

FY 06-07
stock velocity

FY 05-06

0 1 2 3 4 5

CURRENT SCENERIO INTERPRETATION

The stock velocity is decreasing subsequently from 4.35 (FY 06-07) to 2.99 (FY

07-08) which shows inefficiency on the part of inventory management.

Partly the reason for the fall can be attributed to stocking up of inventory for the

trail run & using them in testing the expansion mode machinery.
CURRENT ASSETS TURNOVER RATIO

This ratio is indicated by sales upon current assets. This ratio indicates the

efficiency with which the current assets turn into sales & higher current assets

turnover ratio implies by & large a more efficient use of funds in current assets.

Thus, a high turnover rate indicates reduced lock up of funds in current assets. An

analysis of this ratio over a period reflects working capital management of the firm

Financial Year FY 14-15 FY 15-16 FY16-17

current assets turnover ratio 1.52472 1.11371834 1.331807

CURRENT ASSETS TURNOVER RATIO

1.6 1.52472
1.4 1.331807
1.2 1.11371834
1
0.8 current assets turnover
ratio
0.6
0.4
0.2
0
FY 05-06 FY 06-07 FY07-08
CURRENT SCENERIO INTERPRETATION

The ratio is slightly decreasing from 1.52 (FY 05-06) to 1.11 (FY 06-07) & then

increasing to 1.33 (FY 07-08) which shows that sales increase is not matched by

the increase in current assets in the expansion phase of United Engineering

Services . The reason can be well attributed to the piling up of trial stock and not

full use of the expanded production capacity.

OPERATING RATIOS

Working ratio

Interest coverage ratios

WORKING RATIO

A ratio used to measure a company's ability to recover operating costs from

annual revenue. This ratio is calculated by taking the company's total annual

expenses (excluding depreciation and debt-related expenses) and dividing it by

the annual gross income. A working ratio below 1 implies that the company is

able to recover operating costs, whereas a ratio above 1 reflects the company's

inability to do so.
 Financial Year FY 13-14 FY 14-15 FY15-16

working ratio 0.381701 0.43002689 0.460848

WORKING RATIO

FY07-08 0.460848

FY 06-07 0.43002689 working ratio

FY 05-06 0.381701

0 0.1 0.2 0.3 0.4 0.5

CURRENT SCENERIO INTERPRETATION

The ratio consistently has been below 1 which means company can very well take

out its operating costs, though the margin of comfort is slightly decreasing because

of the increase in expenses of the United Engineering Services

 CHAPTER-7
FINDINGS, CONCLUSION, RECOMMENDATION AND
LIMITATION
 FINDINGS
RUDRAPUR: Industries in Pantnagar area are estimated to have suffered a loss of
over Rs 300 crore after the Centre banned denominations of Rs 500 and Rs 1,000.
The production has also declined by 35% in many of the 452 industrial units in the
industrial estate. The worst hit are automobile factories and those involving
consumer goods.

President of the SIDCUL Entrepreneur Welfare Society, Pantnagar, Ajay Tiwari

told TOI that almost all the units at the Pantnagar industrial estate have suffered a
reduction of 35% in production. Transportation to distant states of east, west and
south India costs around Rs 10,000 per truck for a day and currency crisis has
worsened the situation as these transporters are not accepting banned currency
notes. Keeping in mind the pace of the production in terms of capital involved, the
industrial estate which maintained turnover of thousands of crores every month,
has lost around Rs 300 crore after demonetisation, Tiwari said.

The manufacturers are hopeful that once the flow of currency in the market is
normal, business will be back on track.

Surjeet Singh, unit head of Pricol Ltd, a vendor to Bajaj Auto, said the company
used to manufacture auto parts for 3,800 bikes every day. But soon after
demonetisation, this number has been reduced to 2,500. However, soon after the
publication of this article, Sudeep Dhavakumar, corporate communications
manager of Pricol Limited, denied any hit in production saying that as far as their
organisation was concerned, business outlook continued to be positive and all
business indicators were as usual.

At present, around 452 factories are operating in State Industrial Development

Corporation of Uttarakhand Ltd. (SIDCUL) owned Pantnagar industrial estate.

Luxury items market has been affected but I believe things will soon get back to
normal. The Prime Minister has taken a bold decision and this short-term crisis
once over will bring positive results in the market, said Manager of Henkel Ltd,
Shivendra Singh.

Plant head of the Mahindra & Mahindra tractor division, Avinash Kumar told TOI
that they have not reduced the production for the moment, but they did not have
any fresh order in the past 17 days. "Possibility of decline in production in next
few days can not be ruled out, looking at the currency crisis, said Kumar.
 CONCLUSION
Working capital management is an important aspect of any business. Every

business concern should have adequate working capital to run its business

operation. Every concern should have neither redundant of excess working capital

nor inadequate or shortage of working capital. Both excess as well as short

working capital positions are bad for any business.

The three elements of working capital management are cash management

receivable management and inventory management. If a finance manager

maintains these three elements of working capital management properly means the

concern will get dramatic improvement in their sales volume and also in business.

Working capital policies of a firm have a great effect on its profitability, liquidity

and structured health of the organization.

Every concern should adopt some new tread management strategies that will help

in greater productivity, inventory optimization and also better working capital

management. So, it is noted that working capital is a means to run business

smoothly and profitability. Thus, the concept of working capital has its own

important in a going concern.

Good management of working capital is part of good finance management

effective use of working capital will contribute to the operational efficiency of a

department; optimum use will help to generate maximum return.

United Engineering Services is also using SAP 6.0 versions which is very

advanced to do every transaction of any organization. SAP 6.0 also applicable

for e-transaction.
 RECOMMENDATION
People should be more accurate about refunding their
Amount directly to their wallet if any delay in payment.
People should update their pay tm or pay u money
Applications from time to time in order to safeguard.

Users should be more careful about the offers, cash

Backs provided by pay tm or pay u money.

The digital payment system has to take necessary steps

To overcome delay in processing of payments.
 LIMITATION
The data is collected from a small sample of 70 individuals.
Time period in which the data is collected is between Septembers to
October.
The study is done for only the Bareilly region.
Convenient sampling technique has been used and hence the samples are not
the true representation of the universe.
Personal bias and prejudices of the respondent could have affected the result
of the study.
 BIBLIOGRAPHY

I have used the following source for finding the data.

Research Methodology - C.R. Kothari

Website:

https://www.google.co.in/search?q=pricol&oq=pricol+&aqs=chrome.2.6
9i57j35i39l2j69i60j69i61j69i60.4159j0j1&sourceid=chrome&ie=UTF-8

http://profit.ndtv.com/stock/poricol-ltd_pricol ltd/reports

https://en.wikipedia.org/wiki/pricolltd

https://www.google.co.in/search?q=organisation+chart+of+bajaj+auto+ltd&s
afe=strict&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjz29bA45jXAhVI
pI8KHeanA5gQ_AUICigB&biw=1366&bih=662#imgrc=OMSQYo0DG4g_L
M