Mayur Project

CHAPTER 1
INTRODUCTION
1 NEW HORIZON COLLEGE 07VFC08057
FINANCE
FINANCE AND RELATED CONCEPTS: Meaning of Finance:

Finance is the support to any business in terms of money or moneys worth. It is the lifeblood of the economy. Finance includes determining what has to be paid for raising the money on the best term available funds in the best possible way. Definition of Business Finance: The activity concerned with planning, raising, controlling and administering of fund in business -Guttmann and Dongall. Finance is also the science and art of determining if the funds of an organization are being used properly. Through financing analysis, companies and businesses can take decisions and corrective action towards the sources of income and the expenses and investments that need to be made in order to stay competitive.
FINANCIAL MANAGEMENT:Financial management is that managerial activity which is concerned with planning and controlling of the firms financial resources. According to phillipatusfinancial management is concerned with managerial decisions that result in the acquisitions and financing of long term and short term credit for the firm.
FINANCIAL ANALYSIS:Analysis is the process of critically examining in detail accounting information given in the financial statements. For the purpose of analysis, individual items are studied, their interrelationship with other relater figures established, the data is sometimes rearranged to have better understanding of the information with the help of different techniques or tools for the purpose.
OBJECTIVE OF FINANCIAL ANALISYS: The present future earning capacity or profitability of a concern. The operational efficiency of the concern as a whole and of its various parts or departments. The short term and the long term solvency of the concern for the benefit of debenture holders and trade creditors. The comparative study in regard to one firm with another firm or one department with another department. The possibility of developments in the future by making forecast and preparing budgets. The financial stability of business concern. The real meaning and significance of financial data The long term liquidity of its funds.
SOURCE OF FINANCE
Function of Finance:
1) Investment Design. Capital Budgeting Working Capital Management:
working Capital is the amount of funds necessary to cover the cost of operating the enterprise Shubin
Circulating Capital means current assets of a company that are changed in the ordinary course of business from one from to another, as for example, from cash to inventories, inventories to receivable, receivables into cash. - Genestenberg 2) Financial Decision. 3) Dividend Policy Decision. Financial Statement s: They refer to two statements, which are prepared by an organization at the end of the year: Income statement or profit and loss account to know the earned and loss sub stained during a specific period. Position statement or balance sheet in order to known its financial position as on a particular point of time usually one year.
Analysis of Financial Statement Interpretation

By Myer: Financial Statements analysis is largely a study of relationship among the various financial factors in a business as disclosed by single set of statement and a study of the trend if these factor as shown in a series of statements
Tools of Financial Analysis:

1 Comparative Statement Analysis 2 Common Size Statement Analyses 3 Trend- Percentage Analysis 4 Ratio Analysis 5 Fund Flow Statement Analysis
LIMITATIONS OF Financial Statement Analysis:

Historical nature of financial statements. Non substitute for judgment Reliability of figures Single year analysis is not of much value and useful Result may have different interpretations Change in accounting methods Pitfalls in inter firm comparison Price level changes reduce validity of analysis
Financial Analysis becomes a need, a requirement due to the above significant it provides to the people involved.
Financial accounting:It is concerned with the recording of financial transactions and analyzing the effect of such transactions to assist in the development of business decisions. In addition, financial accounting provides information in the form of balance sheets, income statements, and other financial statements to users outside of businesses that are in some way concerned or affected by the performance of the businessstockholders, creditors, lenders, governmental agencies, and other outside users.
Hospitality management accounting :is concerned with providing specialized internal information to managers who are responsible for directing and controlling operations within the hospitality industry. Internal information is the basis for planning alternative short- or long-term courses of action and the decision as to which course of action is selected. Specific detail is provided as to how the selected course of action will be implemented. Managers direct the needed material resources and motivate the human resources needed to carry out a selected course of action. Managers control the implemented course of action to ensure that the plan is being followed and, as necessary, modified to meet the objectives of the selected course of action.
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 (RCP)
Raw material storage Conversion period(RMSCP)
Cash received form Debtors and paid to suppliers Of raw materials
Sales of finished Goods
Raw materials introduced into process
Finished Goods Produced
Finished goods conversion Period (FGCP)
Work in process Conversion period (WPCP)
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
Gross Working Capital t
Net Working Capital
Permanent or Fixed Working Capital
Temporary or Variable Working Capital
Regular Working Capital
Reserve Working Capital
Seasonal Working Capital
Special Working 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 Stock of Raw Material Stock of Work -in- Process Stock of finished Goods Debtors Cah
BASIS OF VALUATION Purchase of Raw Material At cost of Market value which is lower Cost of Production Cost of Sales or Sales Value 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 underassessment 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 RISK VARIATIONS
PRINCIPLES OF COST OF CAPITAL
PRINCIPLES OF EQUITY PRINCIPLES
PRINCIPLES OF MATURITY OF PAYMENTS
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 over assessments 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.
CHAPTER 2
COMPANY PROFILE
COMPANY PROFILE
Shapoorji Pallonji & Co. Ltd. will be the company of first choice in the Construction Industry. We shall be driven by our commitment to Customer Satisfaction." For the past 140 years, Shapoorji Pallonji has been striving hard to embrace the aforesaid objective. The proof of the same lies in our impressive list of repeat clients who have trusted us time and again for their construction requirements. These include Tata Motors, Birla, Skoda, Mahindra & Mahindra, WIPRO, ICICI, RBI, BOI, TCS, The American School and Siemens, just to name a few. This unwavering trust of our clients has since long become our trademark. Fostering an environment that helps in the creation of knowledge and its application to work, we seek to excel in all of our business activities and strive to build Shapoorji Pallonji into a creative organization. The greatest asset of any organization is the sum total of knowledge existing across the length and breadth of its employees and operations. Information in any form is only useful if it is accessible to the right person at the right time without any procedural delay. Acknowledging the importance of streamlining and centralizing its organizational data, Shapoorji Pallonji embarked upon building two cutting-edge knowledge banks that make us the unique organization that we are. In an industry where innovations are made constantly at each and every site, this portal documents and preserves each of these for future reference. These can then be shared and implemented across other sites, thus translating into considerable savings on manpower, material and other resources
140 years ago Mumbai was largely an uninhabited cluster of islands. To fulfill the water supply needs of the city a reservoir was built, in the famous Malabar Hills. Not only did the reservoir sustain the needs of Mumbai for the next 100 years, it also witnessed the growth of Mumbai as the Commercial Capital of India. The reservoir was built by a company called Little wood Pallonji & Co., which today is Shapoorji Pallonji Co. & Ltd. one of the leading construction giants in India and abroad. Over the next hundred years, the companys expertise has been repeatedly showcased on projects which involved a major advance in construction technology or whose size was beyond the capacity of most others. Blessed with a rich legacy and heritage, it has marched into the new millennium with modern management skills, state-of-the-art technology and the ideals of innovation and customer satisfaction. Over time, Shapoorji Pallonji has built diverse civil and structural engineering masterpieces like factories, nuclear research establishments, nuclear waste handling, scientific and research establishments, stadia and auditoria, airports, hotels, hospitals, giant skyscrapers, housing complexes, townships, water treatment plants, roads, expressways, power plants and biotech facilities. When the Sultan of Oman decided to build a palace around his throne, he placed his trust in Shapoorji Pallonji. Shapoorji Pallonji & Co. Ltd. is just one of the jewels in the SP crown. It draws vital support from other group companies to be able to execute turnkey projects swiftly and efficiently. These include SP Fabricators, AFCONS, Forbes, Sterling and Wilson, SP Construction Materials Group, SP Real Estate and Samalpatti Power Company Private Limited. Together, this conglomerate continues to strive towards perfection, quality and commitment virtues. Shapoorji Pallonji is the largest private shareholder (18.5%) of TATA SONS LIMITED, the Holding Company of the TATA Group. The Annual turnover of the TATA Group is over $15 billion.
Shapoorji Pallonji has emerged as one of the most quality-conscious construction companies. With over 1250 dedicated and qualified engineers employed by the organization, it's not hard to imagine why Shapoorji Pallonji is:

The oldest Indian construction company with a legacy of 140 years. The first Indian construction company to enter the Middle East (Oman Palace) in the 1970s.
The first Indian construction company to have earned the ISO 9001 Certification. The first Indian company to construct two, sixty-storey residential towers in the heart of Mumbai.
Today, as Shapoorji Pallonji moves towards a new chapter of progress, it will continue to undertake and accomplish projects that will stand as proud testimony to their times.
Shapoorji Pallonji Construction
Shapoorji Pallonji Constructions are not limited to India; they have stormed the Middle East including Muscat, Dubai, Abu Dhabi, Qatar and also Guyana in South America. Shapoorji Pallonji Co. Ltd. builds the palace around the Throne of the Sultan of Oman on the very call of the Sultan himself.
Shapoorji Pallonji Company is also the oldest and the largest construction company in India. It was the first Indian construction company to get ISO 9001 certification. They were also the firsts in building two sixty-storey residential towers - Imperial Towers, with a nine - level parking system in the very heart of Mumbai. It is also the tallest residential buildings in
India. Another first was the construction of a Desulphurization Plant.
The company has managed the legacy set up by Pallonji Mistry, founder of Shapoorji Pallonji & Co. by adhering to the basic quality norms set by the man himself. Shapoorji Pallonji is a name synonymous to quality, reliability and integrity. Each foundation brick by Shapoorji Pallonji promises the highest standards and an assurance of the very best. The overseas projects by Shapoorji Pallonji include:

Ebene Cyber City, Mauritius Hotel Kabul Serena, Kabul, Afghanistan Les Pailles Exhibition Centre, Mauritius Providence Cricket Stadium, Guyana Stone Palace, Oman Between Two Bridges Hotel, Abu Dhabi, UAE Jumeirah Lake Towers, Dubai Seat of Government, Ghana P Infocity projects are brought to you by Shapoorji Pallonji & Company Limited. The Shapoorji Pallonji Group is one of Indias leading construction and real estate conglomerates. With an impeccable track record of over 143 years, the group is known for quality & reliability. Our portfolio includes a wide range of projects; be them residential, commercial, industrial, infrastructure, hotels or hospitals. Our projects have stood the test of time, redefining benchmarks time and again. It is this consistency which has led to many of our creations being considered landmarks.
Our reputation as a leader in Indias construction scenario is based on our ability in offering only the very best in terms of management expertise, architectural design & construction techniques. Landmarks like the Indira Gandhi International Airport New Delhi, World Trade Centre Mumbai, Reserve Bank of India Mumbai, Oberoi Towers Mumbai, Ebene Cybercity Mauritius and the Palace of the Sultan of Oman
in Muscat are a few of our prestigious projects. The Imperial, a project in the heart of Mumbai, comprising of 60 storied residential towers defining the ultimate in luxurious living is also a Shapoorji Pallonji construction. Shapoorji Pallonji Group has been associated with numerous IT companies and has the unique distinction of having successfully constructed approximately ten million square feet of IT complexes across the country for various leading organizations. After gathering such vast expertise in the field, Shapoorji Pallonji is now constructing IT Parks/IT SEZs under the brand name SP Infocity. As part this venture, we are constructing quality spaces for the IT/ITeS sector on a pan-India basis. The first such development is at Pune, where SP Infocity is already home to MNC's like IBM and Honeywell.
SP Infocity projects across the country have a combined area of approximately 40 million square feet and are located at Pune, Chennai, Gurgaon, Manesar, Nagpur, Mohali, Mysore, Kolkata and Durgapur.
The Shapoorji Pallonji Group comprises of companies which help us in excellent backward integration and providing turnkey solutions. These are SP Fabricators (Facades), SP Construction Materials Group (Interiors), Sterling & Wilson (Electromechanical), Afcons (Infrastructure projects) and the Forbes Group (Multiple products and services). With over a 2000 engineers on board and the best of systems & management practices in place, we are looking forward to raising the bar many more times.
It is the policy of Shapoorji Pallonji & Co. Ltd. to : Provides a safe working environment to enable all company activities to be performed in a manner that reduces risk to all employees, other workers and the public;
To achieve this the Company will : Comply with all central, state and local statutory provisions pertaining to Safety, Health and Environment; Maintain all equipment, office and job site conditions in ways that eliminates risk; Provide such information, instruction, supervision and training to ensure the Health and Safety at work of all employees ; Use relevant techniques and methods such as Safety Audits and risk assessment for periodical assessments of the status of Health, Safety and Environment.
Correspondingly, it is required that; Each employee of company will be responsible for Safety and Health; All Safety equipment issued by the company must always be used as intended ; Each employee must be familiar with and observe all safety rules, procedures and policies, as may be in force from time to time; Supervisors will see that rules, procedures are observed by their crews, and immediately enforce appropriate corrective measures whenever violations are observed
MISSSION of the Company:Shapoorji Pallonji & co.Ltd. will be the company of first choice in the construction industry. We shall be driven by our commitment to Customer Satisfaction.
Group Vision:Fostering an environment that helps in the creation of knowledge and its application to work, we seek to excel in all our business activities and strive to build SHAPOORJI PALLONJI into a creative organization.
Quality Policy Statement:We are committed to meet the expectations of our customers, through our well- designed and established service delivery system, that is sensitive and accommodative to continuous technology up gradation and value analysis. We shall continuously strive to improve the effectiveness of our quality system.
Objectives: Optimal utilization of men, machine, finance and resources. Provision of safe working environment. Planning systems for effective implementation. Strong organizational support through human resource development. Development of reliable vendor for higher degree of Quality Assurance. Adherence to project completion schedules.
Project Experience:Like the city of birth, the company has grown and expanded at an unparalleled pace in last century to its present status. Shapoorji pallonji is a firm that is proud of its past. The company today is not only a force within the country but abroad also. It has been an achievement for the group to sustain its name at forefront of the construction over the years.
Today when a brick is laid by Shapoorji Pallonji, the client knows that the highest quality standards are going to be met. The company has adapted to changing times and has accelerated the momentum of its growth by using modern management skills with state-of-the-art technology. Moving resolutely forward the company is poised to raise the bar even further in terms of quality, reliability and integrity. International Tech Park was the first project to be executed on a public private partnership with the Govt.of Karnataka, tatas & Accendas of Singapore. Shapoorji Pallonji takes pride in the fact that they are a part of shaping Indias youth into capable citizens of tomorrow. One of their most prestigious was the Birla Resident School Bangalore, while another campus to be mentioned is BITS, Goa. Shapoorji Pallonji has also constructed the world-renowned Tata Institute of Fundamental Research (TIFR), which is one of the country s leading research institutions, while the American Embassy School at Delhi and Mumbai deserves special mention for excellent quality construction. In the 1970s, Shapoorji Pallonji was asked to build the palace for the Sultan of Oman which was the first international project for any Indian construction company. Shapoorji Pallonji has made its contribution in Sports by electing some of the finest stadiums in India and abroad. The Brabourne Stadium in Mumbai is the work of Shapoorji Pallonji, along with the Providence cricket Stadium at Guyana, which hosted the 2007 world cup.
AUTOMOTIVE:SHAPOORJI PALLONJI has often been the force that set wheels rolling on Indian roads. The VOLVO Factory was a turnkey green field project the construction of its state-of-the-art trucks.
In the year 1996 the company constructed the mammoth indica plant in TATA MOTERS PUNE. The most recent and prized automotive project for Shapoorji Pallonji has been the SKODA AUTO FACTORY at Aurangabad. This was a design and build project, with the entire factory being completed in an astonishing record time of six months. When it comes to hospitality, Shapoorji Pallonji has always extended a warm welcome to such related projects. The TAJ MAHAL HOTEL IN MUMBAI is one of the finest and most renowned hotel structures worldwide. Shapoorji Pallonji was also involved on the expansion of the MAURYA SHERATON TOWERS, as well as the final touches of the TAJ WELLINGTON MEWS, the first luxury service apartment in India.
Branches:Corporate office Mumbai Corporate HR division Mumbai Regional offices: Ahmadabad Bangalore Chennai Delhi Hyderabad Kolkata Mumbai Pune Nasik
CHAPTER 3
RESEARCH AND DESIGN
Research Design
According to Pauline V. Young, a research design is "the logical and systematic planning and directing a piece of research". The design, according to her "results from translating a general scientific model into varied research procedures". It gives an outline of the structure and process of the research programmers. Without such a plan of study no scientific study is possible.
Russel Ackoff has defined it as "Design is the process of making decisions before a situation arises in which the decision has to be carried out. It is a process of deliberate anticipation directed towards bringing unexpected situation under control".
A report is based on the STUDY OF THE WORKIN CAPITAL MANAGEMENT AT SHAPOORJI PALLONJI & CO. LTD.
RESEARCH DESIGN: CLASSIFICATION

Research Design Exploratory Research Design Descriptive Research Cross-Sectional Design Longitudinal Design Conclusive Research Design Casual Research
Single Cross-Sectional Design
Multiple Cross-Sectional Design
DESIGN OF THE STUDY
1. STATEMENT OF PROBLEM :-
Working capital is either taken as current assets or as the excess of current assets over current liabilities. Working capital management is concern with the problem that arise in attempting to manage the current liabilities and the inter relationship that exist between them. In any industry the working capital is most important as it plays a significant role starting from procuring raw material until it is covered into finished goods. If the working capital is under invested it results in delay in input of finished products which is reduces sales and profits or if it is over invested, the interest has to be paid on the amount. The payables rate of the field of working capital management, raw materials, receivables, cash and its management system is very vast. It is evident that a study on working capital management is very important what are the procedures and method followed? Problems faced by the same, these questions call for an empathic study. Hence, an attempt has been made in this direction to study working capital management in Shapoorji Pallonji.
2. SCOPE OF THE STUDY:37 NEW HORIZON COLLEGE 07VFC08057
The field of working capital management comprising capital management, raw materials, receivables, cash and its management and work in progress system is very vast. The study was confined to SHAPOORJI PALOONJI. To make a study of working capital management-systems, procedure and methods SHAPOORJI PALOONJI and to study the components of working capital i.e., inventory management, receivable, raw material, cash and its management and work in progress. Analyze the financial performance with reference to working capital with the help of tables, ratios, graphs and suggestions for improving working capital procedures and systems in the firm.
3. OBJECTIVES OF THE STUDY :-
The main objectives of this study of working capital management in SHAPOORJI PALOONJI are: To study the inventory management of SHAPOORJI PALOONJI in details with reference to raw material inventory, work in progress inventory and finished goods inventory. To know the details of the consumption of the raw material to produce the good s of the firm. To study the components of current assets and measures its impact on the working capital. To evaluate the performance of SHAPOORJI PALOONJI over a period of 5 years. To suggest possible solution for the better management of working capital
To know the inflow and outflow of cash in details. To know the credit balance of the company and its working capital.
4. HYPOTHESIS:As this organizational and financial study, there are no assumptions to be proved or disproved.
5. OPERATIONAL DEFINITION:-
NET WORKING CAPITAL:

It stands for excess of over current over current liabilities.
CURRENT ASSETS:
Represents shorter life span, includes inventorys sundry-debtors, shortterm investment and others.
CURRENT LIABILITIES:
It also represents shorter life includes acceptance sundry-creditors, Advances and deposits and other liabilities.
CASH:
The term cash with reference to cash management is used in two senses, in a narrow sense it includes coins, currencies notes, cheques, bank drafts, in broader sense it includes near cash assets such as marketable securities and time deposit with banker .
INVENTORY:
They are the goods held for eventual sale by the firm inventories are those one of the major elements held by the firm in obtaining the desired level of sales. RECEIVABLES: When firm sales good on credit, the payments are postponed to future dates and receivables are created.
WORKING-IN-PROGRSS:
Firm incurring only normal process losses partial automation and reasonable maintenance system is in vague. The productivity per employee. The holding of inventories in the form of work in progress.
STOCK-OUT COST:When the requires materials are not in the stock, it is called STOCK-OUT the cost associated with the required stock-out is called STOCK-OUT COST.
6. METHODOLOGY:
To achieve the objective of study, both primary and secondary data are used. Primary data comprises of personal interviews, annual reports of company inventory holding, cash credit management, receivables system etc. and discussion with the executives of the firm. These are the main of information of the study. Secondary data comprises of books, journals and necessaries for the collection of theoretical data. To draw the meaningful inference the data collected are analyzed with the help of financial ratios.
7. SAMPLING:Samples are not required for the study.
8. PLAN OF ANALYSIS (INTERPRETETION):Tables, charts, ratios and schedule of changes in working capital are used in interpretation module.
9. LIMITATIONS OF THE STUDY : The study is limited to SHAPOORJI PALOONJI. The data provided by the management does not affect its secrecy The authenticity of the data utilized for analysis is fully depended on the information provided by the company. This study is based on secondary data.
10.
CHAPTER SCHEME:-
After the completion of the study, a report has been submitted in the form of the following chapter: Introduction Company profile Research design Analysis and interpretation Findings Suggestions and conclusion.
CHAPTER 4
ANALYSIS AND INTERPRETATION
THEORY OF WORKING CAPITAL
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. A suggestive for, at for cash budget is given below:
MONTHS PARTICULARS Estimated cash inflows . I. Total cash inflows Estimated cash outflows .. .. II. Total cash outflows III. Opening cash balances IV. Add/deduct surplus/deflictduring the month ( III) V. Closing cash balances (III -IV) VI. Minimum level of cash balance VII. Estimated excess or short fall of cash (V-VI) JANUARY FERBUARY MARCH
INVENTORIES
In the context of Shapoorji Pallonji the major increase in the present three financial years has been of the inventory.
3,000,000,000 2,500,000,000 2,000,000,000 Stock in Trade 1,500,000,000 1,000,000,000 500,000,000 0 2009 2008 2007 2006 2005 Construction Work in Progress
Reasons: The pile up of inventory that is used in trial run, before hand to be used in the checking the machinery & the newly installed production capacity. The increased inventory to produce more goods so as to utilize the new plant set up
DEBTORS AND AVERAGE RECEIVABLES

The debtors are increasing heavily in the financial year 2009 because of a sales boom that has accounted for huge accounts receivables increase.
Sundry Debtors
12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 2009 2008 2007 2006 2005 Sundry Debtors
CASH AND BANK BALANCES

Cash and bank balance as per the balance sheet it is seen to be increasing per yearly. And in 2009 it highly increases. This discrepancy can be attributed to the fact that balance sheet figures carry additional cash balance of unutilized FCCB issue proceeds which amount to long term liability as well. As a result to find the actual outlay of cash the unutilized money has been subtracted. Also we should take note of the fact that the FCCB money can only be used for expansion purpose and not as money for usual application of working capital.
Cash & Bank Balance

177,758,508 1,212,015,324
1,634,695,427
2009 2008
1,605,956,532
1,701,537,485
2007 2006 2005
LOANS AND ADVANCES :-
Loans & advances are increasing on the part of increased advances that are given to pile up inventory when the company went for the expansion mode
960,278,264 1,372,174,357
Loans & Advances
3,254,625,336
9,185,648,742
2009 2008
5,987,990,922
2007 2006 2005
CURRENT ASSETS
Current assets includes cash & those assets which can be easily converted into cash within a short period generally one year such as marketable securities , bills receivables, sundry debtors, inventories, work in progress, prepaid expenses etc .The total current assets are the sum of below contingency i.e. Current Assets = Stock/ Inventory + Sundry Debtors + Advances + Cash and bank balances + other current assets+ Construction work in Progress
12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 2009 2008 2007 2006 2005
NET CURRENT ASSETS:-
5.37%
8.32% 2009 11.80 % 2008 44.52% 2007 2006 2005 29.99%
Conclusions: The trend of the current assets in Shapoorji Pallonji throughout the period from 2005-09 are shown in the pie-chart .it is evident from the table that the current assets in Shapoorji Pallonji has increased except in year 2008-09.
CURRENT LAIBILITIES
These are those obligations which are payable within a short period of generally one year and includes outstanding expenses, bills payable, sundry creditors, accrued expenses, bank overdraft, short term advances, income tax payable.
Total Current Liabilities & Provisions

14,000,000,000 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 0 2009 2008 2007 2006 2005 Total Current Liabilities & Provisions
Conclusion: The trend of Current Liabilities of Shapoorji Pallonji throughout the period from 2005-2009 are shown in the table. It is evident from the table that it shows increasing trends in the year 2005 to 2009. It shows that Shapoorji Pallonji has stability in trends of Current Liabilities.
RATIO ANALYSIS
LIQUIDITY RATIOS CURRENT RATIO Current ratio is defined as the relationship between current assets and current liabilities. It is a measure of general liquidity & is most widely used to make the analysis of short term financial position of a firm. Current ratio is the ratio of current assets to current liabilities. A relatively higher ratio is an indication that the firm is liquid and has the ability to pay its current obligations on time. On the other hand a low current ratio indicates that the Liquidity position of the firm is not good and shall not be able to pay its current liabilities in time. Current Ratio: The Current ratio is calculated by dividing current assets by current liabilities:
Current ratio: Current Assets Current Liabilities
Year
Current Assets in (Rs.)
Current liability in
Current Ratio in
(Rs.) 2009 2008 2007 2006 2005

25,100,668,504 11,748,494,991
% 2.14 1.83 1.37 1.49 1.62
19,801,668,140
10,807,317,809
13,212,910,786
9,672,453,543
7,561,746,750
5,066,884,535
4,230,103,561
2,619,003,899
total current Ratio

2.50 2.00 1.50 total current Assets 1.00 0.50 2009 2008 2007 2006 2005
CURRENT SCENERIO INTERPRETATION:The trend of Current Ratio of Shapoorji Pallonji throughout the period from 2005-2009 are shown in the table. It is evident from the table that it shows increasing trends in the year 2005 (1.62%)to 2009.( 2.14%) . In 2009 it increases at. It shows that Shapoorji Pallonji has stability in trends of Current Ratio.
QUICK RATIO: Quick ratio or liquid ratio is a more rigorous test of liquidity than the current ratio. The term liquidity refers to the ability of the firm to pay short term obligations as and when they become due. Quick ratio may be defined as ration of quick assets to quick liabilities. Liquid assets include all the current assets excluding inventories & prepaid expenses. Liquid liabilities mean all liabilities excluding bank overdraft. Inventories & prepaid expenses are not termed as liquid assets because they cannot be converted into cash.
FIANANCIAL YEAR
Quick Assets in (Rs.)
Current Liabilities in (Rs.)
Quick Ratio in %
2009 2008 2007 2006 2005
14,038,689,073
11,748,494,991
1.19
11,062,110,236
10,807,317,809
1.02
8,336,007,054
9,672,453,543
0.86
5,075,831,609
5,066,884,535
1.00
2,610,676,945
2,619,003,899
1.00
Quick Ratio
1.20 1.00 0.80 0.60 0.40 0.20 0.00 2009 2008 2007 2006 2005 Quick Ratio
CURRENT SCENERIO INTERPRETATION:-
While interpreting the figures of both the above ratios we should keep in mind the following one point Shapoorji Pallonji is a construction concern. Since it is construction concern the an excess of inventory as compared to other industry models such as the services sector is an integral fact. As a result it is bound to have higher current ratio and quick ratio as compared to other industries. The sharp rise of quick Ratio from (2005) 1.00% to (2006)1.00% to (2007)1.02% (2008) to 0.86% to (2009) 1.19% can be attributed to a. Higher pile up of inventory which was to be used up for trial run in producing new products from the new plant set up.
b. Higher prepaid expenses related to advances given so as to pile up the inventory so that when the inventory is needed for trial run, its available. c. An increase in average receivables which was in sync with increased capacity of production and also increased sales. An important point to note here is that an excess of cash balance arising out of idle money coming out of FCCB issue expense has been deducted as correspondingly it accounts for long term liability (debentures) which have no effect on working capital management. The quick ratio is a more important indicator of liquid position of Shapoorji Pallonji as it hardly varies from 19.72 %( FY 06-07) to 20.15 % (FY 07-08) to 23.53(FY08-09). Obviously the effect of inventories has been negated.
ABSOLUTE LIQUID RATIO
Absolute Liquid Ratio is also known as quick Ratio or Cash Ratio. Absolute liquid assets include cash at bank; cash in hand, and marketable securities or temporary investments.
ABSOLUTE RATIO= cash in hand+ short term marketable securities Current liabilities
years 2009 2008 2007 2006 2005
Liquid assets in (Rs.) 1,634,695,427 1,701,537,485 1,605,956,532 1,212,015,324 1,77,758,508
Current liabilities in (Rs.)
Absolute ratio in % 0.14 0.16 0.17 0.24 0.07
11,784,494,991 10,807,317,809 9,672,453,543 5,066,884,535 2,619,003,899
Absolute Ratio
0.25 0.20 0.15 0.10 0.05 0.00 2009 2008 2007 2006 Absolute Ratio
2005
Interpretation:-
In calculating this ratio, inventory, debtors, etc. are delectated from current assets to arrive at absolute liquid assets such as cash and easily marketable investments in securities. Higher the ratio, the higher is the cash liquidity. Since, in this process the absolute ratio of2005 is0.07:1 2006 is 0.24:1, 2007 is 0.17:1, 2008 is 0.16:1, and 2009 is 0.14:1. Therefore, these absolute ratios are satisfactory.
EFFICIENCY RATIO :From the perspective of working capital management we would be discussing three important ratios they are. Sales to working capital ratio Inventory turnover ratio Current assets turnover ratio.
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.
year total working capital (Rs)
2009
2008
2007
3,540,457,243
2006
2,494,862,215
2005
1,611,099,662
13,352,173,513 8,994,350,331
Sales(Rs)
53,643,674
49,568,673
67,105,793
42,117,236
46,114,406
sales to total working capital
43.1
31.4
9.1
10.3
6.1
sales to total working capital

45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 2009 2008 2007 2006 2005 sales to total working capital
CURRENT SCENERIO INTERPRETATION
As seen from the above table the ratio has increased from 2006 to 2007 and then Decrease to 4.2(FY07-09). 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 increase in 2008-2009 at 43.1%. The slight increase from 6.1 to 43.1 is indicative of the fact that the full impact of expansion is being highly realized & sales are highly 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.
Year
average stock in trade
2008
6,152,252,338
2007
5,037,304,043
2006
3,572,708,209
2005
2,641,432,966
in (Rs.) Sales in (Rs.)

INVENTORIES TURN RATIO 34.48 23.29
26.31
49,568,673
67,105,793
42,117,236
46,114,406
15.91
INVENTORIES TURN RATIO
15.91% 34.48% 26.31% 2009 2008 2007 2006 23.29%
The stock velocity is decreasing subsequently from 15.91 (FY 06-07) to 34.48 (FY 08-09) 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.
YEAR
Current Assets in (Rs.)
Sales in (Rs.)
Currents Assets Turnover Ratio
2009 2008 2007 2006 2005
14,038,689,073 11,062,110,236 8,336,007,054 5,075,831,609 2,610,676,945
53,643,674 49,568,673 67,105,793 42,117,236 46,114,406
261.70 223.17 124.22 120.52 56.61
Current Assets Turnover Ratio

300.00 250.00 200.00 150.00 100.00 50.00 0.00 2009 2008 2007 2006 2005 Current Assets Turnover Ratio
The ratio is increase(FY 05-06)56.61 to 261.70(FY 08-09) which shows that sales increase is not matched by the increase in current assets in the expansion phase of Shapoorji Pallonji. The reason can be well attributed to the piling up of trial stock and not full use of the expanded production capacity.
OPERATING RATIOS:Operating Ratio establishes the relationship between cost of goods sold and other operating expenses on the hand and the sales on the other.
Operating Ratio =
operating expenses Sales
Year
Operating Expenses in (Rs.)
Sales in (Rs.)
Operating Ratio
2009 2008 2007 2006 2005
47,403,092 10,402,497 41,960,056 54,466,012 25,474,876
53,643,674 49,586,673 67,105,793 42,117,236 46,114,406
88.36 20.98 62.52 129.32 55.24
operating Ratio
150 100 50 0 2009 2008 2007 2006 operating Ratio
2005
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 Shapoorji Pallonji.
TOTAL LIABILITIES TO TOTAL ASSETS RATIO:-
TOTAL LIABILITIES TO TOTAL ASSETS RATIO = Total liabilities to outsiders*100 Total assets
Years
Total liabilities to outsiders in (Rs.)
Total assets in (Rs.)
Total liabilities to total assets Ratio
2009 2008 2007 2006 2005
17,362,667,967 11,514,695,578 5,642,721,307 4,122,643,342 2,954,540,176
14,038,689,073 11,062,110,236 8,336,007,054 5,075,831,609 2,610,676,945
123.68 104.09 67.69 81.22 113.17
Total liabilities to total assets Ratio

150.00 100.00 50.00 0.00 2009 2008 2007 2006 2005 Total liabilities to total assets Ratio
This ratio indicates the relationship between the total liabilities to outsiders to total assets of the firm. In 2005 the ratio is 113.17, in 2006 it is 81.22, in 2007 it is 67.69, in 2008 it is 104.09, in 2009 it is123.68. Lower the ratio of the liabilities to total assets, more satisfactory or stable is the long term solvency position. Hence the solvency position of the firm is good.
FIXED ASSETS TURNOVER RATIO
FIXED ASSETS TURNOVER RATIO=
sales
Fixed assets
Year
Sales in (Rs.)
Fixed assets in
Fixed assets turnover ratio
(Rs.)
2009 2008 2007 2006 2005
53,643,674 49,568,673 67,105,793 42,117,236 46,114,406
1,797,875,755 1,766,792,115 1,,441,942,252 947,974,421 651,705,844
1.31 1.28 0.47 0.44 0.71
Fixed assets turnover ratio

1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2009 2008 2007 2006 2005 Fixed assets turnover ratio
This ratio states that the usage of the fixed assets is proper. The fixed assets are utilized properly. In 2005 the ratio is0.71, in 2006 it is 0.44, in 2007 it is 0.47, in 2008 it is 1.28, and in 2009 it is 1.31. From the above tables we can see that the firm experienced the usage of the assets. Thus it can be said that the firm is utilizing the fixed assets to the maximum.
PROPRIETARY RATIO:-
Proprietary Ratio =
Share holders Fund Total Assets
Year
Share Holders Fund in (Rs.)
Total Assets in
Proprietary Ratio in %
(Rs.)
0.44 0.45 0.21 0.26 0.41
2009 2008 2007 2006 2005
6,210,117,406 14,038,689,073 5,008,191,248 11,062,110,236 1,722,701,507 8,336,007,054 1,295,342,749 5,075,831,609 1,072,964,231 2,610,676,945
Proprietary Ratio
0.50 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 2009 2008 2007 2006 2005
Proprietary Ratio
This ratio indicates the relationship between the Share holders Fund to total assets of the firm. In 2005 0.41 the ratio is 0.26, in 2006 it is 0.21, in 2007 it is 0.45, in 2008 it is in 2009 it is0.44. Lower the ratio of the liabilities to total assets, more satisfactory or stable is the long term solvency position. Hence the solvency position of the firm is good.
CHAPTER 5
FINDINGS & SUGGESTIONS
SUMMARY OF FINDINGS
Operating Ratio increased highly in Last as compared to four the previous years. It shows good and efficient management of the concern.
The firm had quite good operating ratio in first to last year and in 2009 it is in very good position.
Here, the firm is trying to maintain the balance in the stock turn over ratios between the previous years and the next years.
There hasnt been a good management in maintaining the capital turn overs ratio. As it is seen the ratio goes on increasing in the successive years and that too with no very much change in it.
Here, the firm is not able to maintain a good and consistent percentage of the working capital ratio in the five years. It is struggling in maintaining the ratio properly. All the years are witnessing a lightly decrease tendency. It must be consistent.
In the first two year it shows that there is over trading of assets. In the next year it is fine. But it highly increases in last three year it highly increase that is a sign of idle capacity.
The firm has kept the normal balance of the debtors turnover ratio in every year. Its neither higher nor very low. The firm has good efficiency management of debtors. And it has tried to maintain the stability in the debtors turnover ratio over five years.
The liquidity of the firm is good in all the five years.
RECCOMMENDATIONS
After a thorough study and analysis of financial statement several drawbacks were detected. To overcome these drawbacks the following suggestions are made:-
The firm should try to achieve greater sales efficiency for maximizing the return on investment. A high net profit of the firm indicates the overall profitability and improved efficiency of the firm.
Accumulation of extra stock should be avoided.
Fixed assets should be used be managed properly.
The working capital should be managed properly.
The firm should adopt effective marketing strategies to overcome the demerits faced by in the competition.
Unnecessary expenses like stationeries and all should be avoided.
The company can reduce its unwanted human resource and make productive use of the present personnel.
The financial department of the concern must be centralized so as to avoid unnecessary wastage of time in fund transfer.
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. Shapoorji Pallonji 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.
LIQUIDITY POSITION:O the basis of current Ratio, Liquid Ratio and Absolute Liquid Ratio; the Liquidity position of the firm is very much stable and does conform the standard norms.
PROFITABILITY POSITION:Profitability of the company is very good and it decrease middle of the year due to the increase in the operating expenses like rent, rise in price of the material etc..
ACTIVITY RATIO:The ratio indicates that the assets are efficiently utilized. The assets are not kept idle not under used. They have been efficiently utilized. Not only in the stock turnover ratio but debtors turnover ratio is also been utilized productively.
CHAPTER 6
BIBLOGRAPHY
BIBLOGRAPHY
BOOKS: Managing Human Resources Bohlander, snell Keeping Good People Roger Herman Human Resource Management Shashi k. Gupta Human Resource Management p. subba Rao
BROCHURES: Shapoorji Pallonji & co. Ltd. Corporate brochures Shapoorji Pallonji & co. Ltd. Induction brochures
WEBSITES: www.shapoorji.in www.themanagementmemtor.com www.google.com www.livemint.com

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CHAPTER 1

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FINANCE AND RELATED CONCEPTS: Meaning of Finance:

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Analysis of Financial Statement Interpretation

Tools of Financial Analysis:

LIMITATIONS OF Financial Statement Analysis:

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MEANING OF WORKING CAPITAL:

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Net Working Capital = Current Assets Current Liabilities.

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Receivable conversion period (RCP)

Raw material storage Conversion period(RMSCP)

Cash received form Debtors and paid to suppliers Of raw materials

Sales of finished Goods

Raw materials introduced into process

Finished Goods Produced

Finished goods conversion Period (FGCP)

Work in process Conversion period (WPCP)

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Gross Operating Cycle = RMCP + WIPCP + FGCP + RCP

Net Credit Purchase per day

CLASSIFICATION OR KIND OF WORKING CAPITAL:

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Kinds of Working Capital

On the basis of concept

On the basis of time

Gross Working Capital t

Net Working Capital

Permanent or Fixed Working Capital

Temporary or Variable Working Capital

Regular Working Capital

Reserve Working Capital

Seasonal Working Capital

Special Working Capital

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Quick and regular return on investments High morals

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NATURE OR CHARACTERSTICS OF A BUSINESS:

The nature and the working capital

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PRINCIPLES OF WORKING CAPITAL MANAGEMNT POLICY

PRINCIPLES OF RISK VARIATIONS

PRINCIPLES OF COST OF CAPITAL

PRINCIPLES OF EQUITY PRINCIPLES

PRINCIPLES OF MATURITY OF PAYMENTS

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Shapoorji Pallonji Construction

India. Another first was the construction of a Desulphurization Plant.

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