CH-1 INDUSTRY OVERVIEW

Although the development of India's ball and roller bearing industry is not quite enviable, it can be said without contradiction that India has relatively strong base for the manufacture of bearings. There are about 12 large and medium units which together turn out over 100 million bearings every year. Almost all the units have foreign collaboration. The Indian Bearing industry makes around 500 types of bearings as against over 30,000 types of bearings being used by the Indian industry. Bulk of these are only of standard types and are used mostly in low-technology areas like fans, electric motors, water pumps, and by the automotive sector The current Indian bearings industry is worth Rs.3500 crore. In this, automotive segment accounts for 45 percent of the revenues, which amount to Rs 1,350 crores and the remaining 55 percent of revenues are being contributed by industrial demand. In the automotive bearings market, the organized segment manufactures cater to 50 percent of the demand. About 15 percent of the production is by the unorganized segment in India, and the remaining 35 percent of demand is fulfilled through imports. The rolling bearing manufacturers in India mostly manufacture bearings based on the original design and specifications obtained from their collaborators. Generally there is a limited facility available with the bearing manufacturers for research or development of new bearings of indigenous designs. Generally, bearings have been standardised internationally i.e. the boundary dimensions of the product have been laid down. However, with moderate modifications in the standardised designs, bearings have been manufactured and used for various applications the world over. The manufacturing activity in the country started in the late 40's, with the production of small and standard bearings. The Indian industry today manufactures small and medium bearings mainly in five categories, i.e. ball bearings, cylindrical roller bearings, taper roller bearings, spherical roller bearings and needle roller bearings. The popular size range is generally restricted to 140 mm OD, though larger sizes are also manufactured by some units.

However, commendable efforts have been made by some units to design and develop bearings, particularly larger diameter ball and roller bearings, to suit specific customer requirements. There are also small scale units producing bearings in small quantities from imported components by assembling them. The following are the major manufacturers of bearings in India: Asian Bearings Company Ltd. FAG Precision Bearings Ltd. Union Bearings Manufacturing Co. Austin Engg Company Limited. SKF India Limited. Timken India Limited. Antifriction Bearing Company Ltd. Tata Iron and Steel Company Ltd. Shriram Bearings Ltd. National Engineering Industries Ltd.

Company overview
In India, there are many industries which are producing bearings. One of them in which I have done my work during my summer project in Austin engineering company limited. It is on the top of all the bearing producing company in India. It is most successful unit in Gujarat as well as India. The Austin engineering company limited is a large scale company as it is a public limited company. The company produced various types of bearing. The various types of bearing which are directly used by another Industry like defense industry etc. The company Austin engineering is located at patla.it is registered by name AEC and its main product is bearings. The company was started as partnership firm in 1973 and in the year 1985, it was converted into public limited company. The company was awarded by ISO 9001 certification in 1999. And in 2006, AEC is awarded ISO/TS 16949:2002. So progress of AEC is very good. Moreover, the company gives employment to so many people. It is a continuously rising unit because of its sound financial position and efficient management. The award of ISO 9001:2000 is given by international organization to those companies whose production material and quality of product are standardization. So these awards are the proof to shoe the work and standard of the company.

HISTORY AND DEVELOPMENT OF THE COMPANY

In 1973, there was great need for some good automatic industry in the field of bearing. At that time a team of five top & qualified engineers decide to produce a high quality bearing and thus accurate engineering company came into existence. On 27 June in 1973 due to rapid development & increasing in demand of bearing. It was converted into private company & the production was started on September 1980.this Company at that time was located at GIDC estate in junagadh. The pace of growth & development keeps on increasing and in November, 1985 Company has converted into public limited company on the name of AUSTIN ENGINEERING COMPANY LIMITED. Due to appropriate place for expansion & shortage of power supply, this company has established its second unit, which is presently used at main unit. This main unit is located at patla,a village 25 k.m away from junagadh city. In the starting company produced only 50 types of bearing but today it produces 4500 type of bearing. At present, the AUSTIN ENGINEERING COMPANY LIMITED has become a wide & popular unit in the market.

Development:1973: when co. has started manufacturing needle roller edge assembles with 10 peoples. and capital investment of 3500 U.S Dollar. 1978: partnership firm converted in to private limited company. 1985: it is converted into public limited company & share/stock offered to public. 1987: its established second unit at patla. 1999: awarded ISO 9001 certification from TUB RHINELAND. 2004: established a subsidiary company in U.S.A. 2006: awarded ISO/IS 16949:2002 by TUB RHINELAND.

GENERAL INFORMATION
NAME: YEAR OF ESTABLISHMENT: REGISTERD OFFICE: FACTORY : VILLAGE : PATLA TALUKA : BHESAN DIST:JUNAGADH-362030 PHONE NO: 02873-252223 / 252267 /252268 FAX: 0285-2661505 / 02873-252267 E-MAIL: info@aecbearing.com WEBSITE: http://www.aec-bearings.com AUSTIN ENGINEERING COMPANY LTD. 1973 101-G.I.D.C. ESTATE VADAL ROAD, JUNAGADH-362001

PROMOTORS & EXISTING GROUP Chairman & E.D.

Managing director Joint managing director Executive director Non executive director Non executive director Non executive director Non executive director Auditors : : : : : : : : : Mr. N.C.Vadgama Mr. S.M.Thanki Mr. R.R.Babhania Mr.J.R.Bhogayta Mr. S.V.Vaishnav Mr.B.R.Sureja Mr.K.J.Maheta Mr.D.B.Nakum Dhiybhai dand & Co. Chartered Accountant. Junagadh-362001 S.B.Parikh & Co. Cost Accountant. Vadodara. Bank of Baroda. Azad chock, Junagadh-362002

Cost Auditors

Bankers

PRODUCTS OF THE COMPANY

Austin engineering company ltd. Is a large scale company and heavy wide product range. Company has more than 3000 products in their product range. Front line main products of the Austin engineering company ltd are as under: Needle roller. Cylindrical roller. Spherical roller. Tapper roller. Ball bearing. Bearing components. Thrust ball bearing. Cylindrical roller bearing. Row deep groove ball bearing. Spherical roller bearing. Tapered roller bearings.

PRODUCTION PROCESS
THERE ARE EIGHT STAGES OF MANUFACTURING PROCESS: 1. Material stage:
Raw material is steel bars, steel wire, steel tubes; rollers Etc.This Company has improved sophisticated plant and machinery especially from Germany.As the company has to reach big orders of export market defence on big

original equipment manufacturers. So, company kept six months inventory for raw material and has make contact with their supplier of raw materials to supply regularly.
They store this raw material in store room and when required they inspect and test then in terms fitness for further production process which are according to purchase order. 2. Turning of Races and Roller:

This is the second stage of step for manufacturing the proper bearing from the raw material to the finished product. In this stage the races and roller are turned in required sizes by trained workers and then it is transferred to main unit. 3. Heat Treatment: This is the third stage in this stage all the races and roller are given heat through electric rollers are given heat through electric furnace at 845 to 855 temperatures through which defective pieces are removed. It means the testing of races and roller is done to measure the capacity of the products. 4. Grinding of Races and Rollers:
This is the fourth stage, after heat treatment, the part of races and rollers and refined. Inner and outer part of racer and rollers are given through the grinding machine.

5. Tapping, Happing and Super Finishing: In this stage there are checking of rollers and races because it has single mistake of defect in outer and inner side of races and rollers. If any aces and roller is defective that pieces is tapped and happed. Than offer, super finishing will be done on that part. There are done through their respective machine. 6. Inspection and Grinding: After the procedure for making a bearing all the races and rollers are inspired by the inspection department and then after grades fixed by the company, the precious sample is gone mass production. 7. Assembling, Cleaning, Oiling and Packing: There are separate department of bearing all kind of bearing are managed and its size, quality and shapes is measured and its size, quality and shapes is measured bearing are assembled. After the assembling of the bearing, the cleaning and oiling of bearing is done and then the bearing finally goes at packing department where this bearing has given AEC trade mark.
8. Storage and Dispatch:

After passing through all the above stage the finished product are stored in go down. From where they are dispatched as per the order. The transportation capacity is mainly done by Transport Company.

ORGANIZATION STRUCTURE
Organizational structure refers to the way that an organization arranges people and jobs so that its work can be performed and its goals can be met. When a work group is very small and face-to-face communication is frequent, formal structure may be unnecessary, but in a larger organization decisions have to be made about the delegation of various tasks. Thus, procedures are established that assign responsibilities for various functions. It is these decisions that determine the organizational structure. In this business management there are many types of organization structure. 1) 2) 3) 4) 5) Line organization Line & staff organization Functional organization Staff organization Committee organization

In Austin Engineering Co. Ltd. There is a line and staff organization so, authority and responsibility moves up ward to down ward. Staff person guides time manager in taking decision.

ORGANIZATION CHART

TIME KEEPING SYSTEM

Time keeping system is very important because, by this management can control and facilitate employee discipline. Time keeping system contains how many shifts are there and how many hours in an each shift. For time keeping, there are card system.every employees given a card having name of the person and serial no. on that card. Time keeping officer notes the coming and going time out of the company. This company is working throughout 24 hours a day. The working hours are divided in to 3 shifts. Shift First Second Third Timing Hours 06:00 am TO 02:00 pm 02:00 pm TO 10:00 pm 10:00 pm TO 06:00 am

EMPLOYERS BENEFITS & SERVICE

Austin engineering com ltd. Also provides different types of facilities to their workers they are as follows: MEDICAL FACILITY: The company has appointed well know doctors for the services of the employees. Company also provides pain up leave of employees is in hospital. BONUS FACILITY: The Company provides to every employee and workers once in a year. Bonus is general given on diwali festival and it should be as such as 20% of wages and salary of employee. BUS FACILITY: The Company is situated at some far distance from city so; it provides the bus facility to its managerial staff and workers. ADVANCE FACILITY: The company also gives advance to their employee for some reason like marriage purpose, house construction etc. PROVIDENT FUND: The Company provided facility to the worker is as per the rules and regulation of government. CANTEEN FACILITY: The Company has its own canteen, where the workers can get tea, coffee and soft drinks at reasonable rates.

CONTRIBUTION OF THE UNIT

Austin Engineering co.Ltd.Is most popular industry in the field of bearing in India, because it is a very successful unit in India. The contribution of Austin engineering co.Ltd.Is 15% to 20%. The company is leading co. in ball bearing industry. Austin engineering com. runs 4Th in India in Ball Bearing Company. It also contributes in relation to employment to near about 746 workers. This co. also helpful in increasing national income of country. It is also helpful in development of backward area announce by Govt. this company raises the standard of living of their employees by providing so many benefits to their workers. The contribution of company is remarkable one as it is very efficient in the field of bearing.

CH-2 LITERATURE REVIEW

All theoretical information relating to working capital management is must important for the know the working capital of any industry. Theoretical information like concept of working capital, management of receivable, cash management, inventory management and working capital finance is necessary to study the working capital of any organization. It helps the researcher in making project. Without these information researcher is baseless. Trends in working capital management and its impact on firms performance: A well designed and implemented working capital management is expected to contribute positively to the creation of firms value. The purpose of this likes to examine the trends in working capital management and its impact on firms performance. the trend in working capital needs and profitability of firms are examined to identify the causes for any significant difference between the industry. The key variables used in the analysis are inventories days, accounts receivable days, accounts payable days and cash conversion cycle. A strong significant relationship between working capital management and profitability has been found in previous empirical work. an analysis of the liquidity, profitability and operational efficiency of five industries shows significant changes and how best practice in bearing industry have contribute to performance. The findings also reveral an increasing trend in short term component of working capital financing. a firm required to maintain balance between liquidity and profitability while conducting its day to day operations. Working capital management is of particular importance to the small business. with limited access to the long term capital markets, these firms tend to rely more heavily on owner financing, trade credit and short term bank loan to finance their needed investment in cash, accounts receivable and inventory. Some research studies have been undertaken on working capital management practice of both large and small firms to identify the push factors for firms to adopt good working capital practice or econometric analysis to investigate the association between working capital management and profitability. Specific research studies exclusively on the impact of working capital management on corporate profitability of the small and large manufacturing company. it

is a modest attempt to measure and analysis the trends of working capital investment and needs of small manufacturing firms. This study therefore attempts to assess the impacts of working capital management on profitability of a sample of manufacturing company. The study objective are to examine the working capital management of the sample firms: To examine the impacts of accounts receivable days, inventory days, accounts payable days and cash conversion cycle on return of assets. To analysis the trend in working capital needs of firms and to examine the causes for any significant difference between industries.

INTRODUCTION TO WORKING CAPITAL MANAGEMENT

Working capital is concerned with management of current asset. It is important and Integral part of financial management as short-term survival is prerequisite for longterm Success. Working capital to a company is like the blood to human body. It is concern with short term financial decision, Working capital is defined as the excess of current assets over current assets over current liabilities. I.e. WCM = CURRENT ASSETS CURRENT LIABILITIES The key difference between long term financial management and short term financial management is in the term of the timing of cash. All elements of Working Capital are quick moving in nature and there for require constant monitoring for proper management, the efficient Working capital management is necessary to maintain a balance of liquidity and profitability. Therefore a Finance Manager should give at most care in management of working capital.

CONCEPT OF WORKING CAPITAL

There are two concept of Working Capital. 1.Gross Working Capital: 2. Net Working Capital: 1.GROSS WORKING CAPITAL:Simply called as Working Capital, refers to the firms investment in current assets. Current assets are the assets which can be converted into cash within an accounting (or operating cycle) and include cash, Short-term securities, debtors, bills receivable and stock (inventory). 2.NET WORKING CAPITAL:It refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature to payment with in accounting year and include creditors, bills payable and outstanding expenses. Net Working Capital can be positive and negative. A positive Net Working Capital will arise when current assets excess current liabilities and vise-versa.

ASSESSMENT OF THE WORKING CAPITAL

The assessment of the Working Capital in the Austin is done by the Finance department with consultation with the management staff of the company and on the companys previous years experience. This helps to maintain efficiently fund for operation of organization.

NEED FOR WORKING CAPITAL

The need for Working Capital to run day to day business activities can not be overemphasized; we will hardly find a business firm which dose not requires any amount of Working Capital. Indeed firm differs in their requirement of Working Capital. We know that firms aim at maximizing the Endeavour to maximize shareholders` wealth; a firm should earn sufficient returns from its operations. Earning steady amount of profit require successful sales activity. The firm has to invest enough funds in current assets needed because sales do not convert into cash instantaneously. There is always an operating cycle involve in the conversion of sales into cash.

FACTORS INFLUENCING WORKING CAPITAL REQUIREMENT

There is no set of lines or formats to determine the Working Capital requirement of the firms. Therefore, an analysis of relevant factor should be made in order to determine total investment in Working Capital. Nature of business: The Austin is a manufacturing unit so it require a large amount of working capital for uninterrupted production process Technology: In Austin, the technology use for production is labour intensive so its increase the requirement of working capital. Manufacturing Cycle: The Organization has long manufacturing cycle of seven days. This long manufacturing cycle means a large tie up of funds in inventories hence the working capital requirements is higher. Credit Policy: The credit policy of the firms affects the working capital by influencing the level of book depth. The Austin allows a merely 3 days of credit period and if the payments is not made the high rate of interest is charged. Banking facilities: The Austin uses the latest banking facilities like cash management services (CMS) which helps in maintaining almost zero bank balance. Business Fluctuations: The product manufactured by Austin has got demand through the year. So there is no seasonal or cyclical fluctuation in its demands. Operating Efficiency: The operating efficiency of the firm relates to the optimum utilizations of resource at minimum cost. Better utilizations of resource improves profitability thus helps in releasing the pressure on working capital

ISSUE IN WORKING CAPITAL MANAGEMENT

Working Capital refers to the administration of all component of Working Capital i.e. cash, marketable securities, debtors (receivables) and stock (inventories) and creditors (payables). The financial manager must determine levels and composition of current assets. He must ensure that right sources are trapped to finance current assets, and that current liabilities are paid in time. There are many aspect of Working Capital management, which makes it an important function of the financial management. Time:- Working Capital requires much of financial managerial time. Investment:- Working Capital represents a large portion of the total investment in the assets. Criticality:- Working Capital management has great significance for all firm but it is very critical for small firms. Growth:- the need for Working Capital is directly related to the firms growth.

MANAGEMENT FUNCTION IN WORKING CAPITAL CASH MANAGEMENT:

Generally any organization holds the cash for transaction motive, precaution motive speculative motive, and compensating motive. The Company holds the cash only for the transaction motive. It holds the cash for soothing the day-to-day operation only. Cash collection Company operation in various geographical area of the country. It tries to speed up the cash collection by decentralization with the help of ten cash collection centers all over the India. Cash disbursements The disbursement is one through centralized system by the organization. The payment of the bill will be made from the central account and from the head office. So the Co. can enjoy the transit time delay using the factories. Optimum cash balance The Company keeps a maximum level of cash balance worth and average payment for three days. If cash is more than its maximum level than the cash if transferred to the CFD and if cash is less than the requirement at that time cash is borrowed from the CFD. MANAGEMENT OF RECEIVABLE: The management of receivable is basically concerned with the old customers and wining the new ones by collecting a regulating the cost management of receivables also known as trade receivables or customers or debtors receivables. It means when firm make ordinary sales on credit and payment has not been received yet. Such management of receivables IRIL grants the credit term to its customers for 15 days.

The receivables arise out of three features:

It involves an element of risk, which should be carefully analyzes It is based on economic value. It implies future management of receivable. Management of receivables concerned with retaining the old customers and wining new by controlling and regulating the costs. Austin grants the credit form to its customers for 15 days.

INVENTORY MANAGEMENT:
The assessment of the working capital in the Company is done by the CFD with the consultation with the management staff of the Co. and on the basis of the Co. previous year experience. This helps to maintain efficiently fund for operation of the organization. Inventory refers to the stockpile of the product a firm is offering for sale and the components that make up the product. The Company is the manufacturing organization, so being manufacturing organization it needs a large among of the inventories for the smoothing of business operation. The Company invests nearly 48 to 50 percent of total current assets in the inventories. In the Company the inventory is maintain by finding the actual requirement and the analyzing material, which is scared or not easily meet at the proper time. In Company there is a special storage dept. and separate inventory management force, which perform certain function for efficient management of inventories in the company. It maintains sufficient stock of raw materials in period of short supply and anticipates price change. It helps sales dept. by maintaining sufficient finished goods inventories for smooth sales operation.

FINANCING WORKING CAPITAL:

External funds available for a period of one year or less is called short- term funds are used to finance Working Capital. To most significant sources of finance of Working Capital are; trade credit and bank borrowings. The use of trade credit has been increasing over years in India. Trade credit as ratio of current assets is about 40 percent. Bank borrowing is the next important source of Working Capital finance. Now there are no government norms, and banks are free to take business in granting finance for Working Capital. Two other short-term sources of Working Capital finance which have recently developed in India are: (1) factoring of receivables and (2) commercial paper.

CREDIT STANDERD:

As per the industrial standard for Austin , the organization runs well on the track of average collection period. But because of the core competition in the chemical market the average collection period increased and reach near to the 50 to 55 days, so it can conclude that organization investment in receivable is not high. The customers are paying their obligation to the organization in a time. The default rate is nearly zero is the organization.

BANK FINANCE FOR WORKING CAPITAL

Banks are the main institutional resource of Working Capital finance in India. A bank considers a firms sales and production plans and the desirable levels of current assets in determining its Working Capital requirements. The amount approved by bank for the firms Working Capital is called credit limit. Credit limit is the maximum funds, which a firm can obtain from the banking system. In the cash of firms with seasonal business banks may fix separate limit for the peak level credit requirement and normal, non-peak level credit requirement indicating the period during which the separate limits will be utilized by the borrower.

CH-3 INTRODUCTION OF THE PROJECT

TITLE OF STUDY:

A Study of Working Capital Management at Austin Engineering Company Limited at Junagadh. OBJECTIVE OF STUDY:

The concept of Working Capital management is as older as the human understand to do Business. How organizations can works without having Working Capital through them Had spent on the fixed capital? This gives importance of the finance manager needs to Take the decision in this routine work life pertaining to manage Working Capital. The objective of the study is to focus on the very much important function of the finance Department. Under the head of Working Capital management, the decision related to Receivables, cash, debtors and inventory management are taken for the effective Production and finance management. The main objective of the study of Working Capital Management bifurcated in to sub objective like: Receivable Management Debtors Management Cash Management Inventory Management The various ratios given at the end of the report and their analysis helps the reader in Understanding the importance of the Working Capital and effect of the change in it.

SCOPE OF THE STUDY

As it is mentioned earlier that the management of the Working Capital requires a greatsense of understanding because the excess Working Capital leads to less profitability and ineffective use of the capital, while the inadequate Working Capital drags the company under the danger of liquidity. Thus in other words, the Working Capital management means to optimize between the profitability and liquidity. Many company works with excess Working Capital. But in case of Austin company. Capital just above the required. This can be predicted from the current ratio of the company, which should be near to 2:1 is general. But for the company current ratio was 3.26:1 in the FY 2005-2006 which further reduced To 2.21:1 in FY 2009-2010. This shows that the company has aggressive approach toward the management of Working Capital, which further creates the scope for the study.

LIMITATION OF THE STUDY

As we know every study has some limitation. The main limitation of this study is Classified in three categories.

Limitation From Research Side:

Capital management system like duplication of data at both finance and Management information system department, format of the data which differs From department to department. But the study has limited time to analysis.

Knowledge Limitation: The study conductor is not aware about the particular
approach and organizational politics and practices.

Analysis Limitation: Some data which is presented in one way and it is analyzed
In the other way and come to certain other conclusion or interpreted in wrong Manner might lead to wrong concept. The emphases are put to overcome these Limitations.

Limitation of the Respondent: Time Limitation: The respondent (staff of finance and accounting department)
are busy in their schedule of the work load. Sometime they are not free to answer the questions.

Knowledge Limitation: During the study, some staff members are came across
which are not aware about the working capital management system, some are found to be not aware fully about the usage of the computer except what they need in daily application.

Limitation of Environment: Improper time of the study. Lack of understanding between the communicators.