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EXECUTIVE SUMMARY
I had the opportunity to take up the Internship Project at Vardhman textiles limited .
During the project I had the privilege of being guided by Mr. Ajay Sharma, Executive in
Finance department.
Vardhman, a household name in Northern India, has carved out a niche for itself in textile
industry. The Vardhman group was setup in 1962 by late Lala Rattan Chand Oswal, father
of present Chairman cum Managing Director, Sh. S.P. Oswal. Vardhman aims to be world
class textile organization producing diverse range of products for the global textile market.
Vardhman seeks to achieve customer delight through excellence in manufacturing and
customer service based on creative combination of state-of-the-art technology and human
resources.
My project is study of inland bill discounting under letter of credit and Analysis of
Working capital and of Yarn division Of Vardhman textiles limited.
The study was conducted at the commercial department of textiles limited under Account
Receivable Department.
The project was of 6 weeks duration. During the project interviewed the executives & staff
to collect the data, & also made use of company records & annual reports. The data
collected were then compiled, tabulated and analyzed.
The objective of my internship was the knowledge of sale under letter of credit of yarn
customers and to operate the working capital cycle of the management.
Working Capital Management is a very important facet of financial management due to:
Investments in current assets represent a substantial portion oftotal investment.
Investment in current assets & the level of current liabilities have toBe geared
quickly to change sales.
Some the points to be studied under this topic are:
In Industry Project Report 1
How much cash should a firm hold?
What should be the firms credit policy?
How to & when to pay the creditors of the firm?
How much to invest in inventories?
By studying about the company s different areas I came to know
certain things like:
Acid test ratio is more than one but it does not mean that company has excessive
liquidity.
Creditors turnover ratio also improved so it is better for company
Inventory turnover ratio is improving from 2006-7 to 2007-08, which means inventory
is used in better way so it is good for the company.
A study of letter of credit deals with studying and understanding the Letter of credit,
different fields of letter of credit and different types of L/C charges namely L/C Advising
charges, L/C Amendment charges and discrepancy charges and calculating saving potential
and making recommendations.
A letter of credit (LC) is a binding document that a buyer can request from his bank in
order to guarantee that the payment for goods will be transferred to the seller. Basically, a
letter of credit gives the seller reassurance that he will receive the payment for the goods.
By studying the LC of Yarn division I came to know
All the dealing of LC is centralized of yarn customers.
It reduces the credit risk of company
It even reduces the payment delays
It increase the liquidity position of company
Some suggestions for the company are
The prices should be less to re-establish the market for Yarn.
Not only for yarn customers but for other product customer dealing under
letter of credit should done
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Company should put more efforts to improve its liquidity position
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LETTER OF CREDIT
The English name “letter of credit” derives from the French word “accreditif”, a power to
do something, which in turn is derivative of the Latin word “accreditivus”, meaning
trust.
A letter of credit is basically a document issued by a bank guaranteeing a client's ability to
pay for goods or services. A bank or finance company issues a letter of credit on behalf of
a buyer, authorizing the seller to obtain payment within a specified timeframe once the
terms and conditions outlined in the letter of credit are met. The letter of credit acts like an
insurance contract for both the buyer and seller and practically eliminates the credit risk for
both parties, while at the same time reducing payment delays. A letter of credit provides
the seller with the greatest degree of safety when extending credit. It is useful when the
buyer is not well known and when exchange restrictions exist or are possible.
The LC can also be the source of payment for a transaction, meaning that a will get paid by
redeeming the letter of credit. Letters of credit are used primarily in international trade
transactions of significant value, for deals between a supplier in one country and a
customer in another. The parties to a letter of credit are usually a beneficiary who is to
receive the money, the issuing bank of whom the applicant is a client, and the advising
bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e.,
cannot be amended or canceled without prior agreement of the beneficiary, the issuing
bank and the confirming bank, if any. In executing a transaction, letters of credit
incorporate functions common Traveler's cheques.
FROM ABOVE WE CAN CONCLUDE LETTER OF CREDIT IS
A letter of credit is a document issued mostly by financial institutions which usually
provides an irrevocable payment undertaking to a beneficiary against complying
documents as stated in the credit.
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Once the beneficiary or a presenting bank acting on his behalf, makes a presentation to the
issuing bank or confirming bank, if any, within the expiry date of L/C, comprising
documents complying with the terms and conditions of the L/C, the applicable UCP. And
international standard banking practices. The issuing bank or confirming bank, if any, is
obliged to honor irrespective of any instructions from the applicants to the contrary.
Seller Bank
Carrier
After a contract s concluded between buyer and seller, buyer bank supplies a letter of credit
to the seller
Seller consigns goods to a carrier in exchange for a bill of lading.
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Buyer Bank
Seller Buyer
Seller Bank Buyer Bank
Seller Buyer
Carrier
6
Seller provide bill of lading to a bank in exchange for payment. Seller’s bank exchanges
bill of lading for payment from a buyer’s bank. Buyer’s bank exchange bill of lading for
payment from buyer.
Seller Bank
Carrier
Buyer provides bill of lading to a carrier and takes delivery of goods
Seller Bank
Carrier
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Buyer Bank
Seller Buyer
Buyer Bank
Seller Buyer
7
Elements of a Letter of Credit
A payment undertaking given by a bank (issuing bank)
On behalf of a buyer (applicant)
To pay a seller (beneficiary) for a given amount of money
On presentation of specified documents representing the supply of goods
Within specified time limits
Documents must conform to terms and conditions set out in the letter of credit
Documents to be presented at a specified place
PARTIES TO AND ASSOCIATED WITH THE LETTER OF CREDIT
1. Applicant
The applicant is the party who requests and instructs the issuing bank to open a letter of
credit in favor of the beneficiary. The applicant usually is the importer or the buyer of
goods and/or services. The applicant can also be another party acting on behalf of the
importer, such as a confirming house. The confirming house is equivalent to a buying
office, it acts as an intermediary between buyer and seller, and it can be located in a third
country or in the seller’s country.
2.Beneficiary
The beneficiary is entitled to payment as long as he can provide the documentary evidence
required by the letter of credit. The letter of credit is a distinct and separate transaction
from the contract on which it is based. All parties deal in documents and not in goods. The
issuing bank is not liable for performance of the underlying contract between the customer
and beneficiary. The issuing bank's obligation to the buyer, is to examine all documents to
insure that they meet all the terms and conditions of the credit. Upon requesting demand
for payment the beneficiary warrants that all conditions of the agreement have been
complied with. If the beneficiary (seller) conforms to the letter of credit, the seller must be
paid by the bank.
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3.Issuing Bank
The issuing bank's liability to pay and to be reimbursed from its customer becomes
absolute upon the completion of the terms and conditions of the letter of credit. Under the
provisions of the Uniform Customs and Practice for Documentary Credits, the bank is
given a reasonable amount of time after receipt of the documents to honor the draft.The
issuing banks' role is to provide a guarantee to the seller that if compliant documents are
presented, the bank will pay the seller the amount due and to examine the documents, and
only pay if these documents comply with the terms and conditions set out in the letter of
credit.Typically the documents requested will include a commercial invoice, a transport
document such as a bill of lading or airway bill and an insurance document; but there are
many others. Letters of credit deal in documents, not goods.
4.Advising Bank
An advising bank, usually a foreign correspondent bank of the issuing bank will advise the
beneficiary. Generally, the beneficiary would want to use a local bank to insure that the
letter of credit is valid. In addition, the advising bank would be responsible for sending the
documents to the issuing bank. The advising bank has no other obligation under the letter
of credit. If the issuing bank does not pay the beneficiary, the advising bank is not
obligated to pay.
5.Confirming Bank
The correspondent bank may confirm the letter of credit for the beneficiary. At the request
of the issuing bank, the correspondent obligates itself to insure payment under the letter of
credit. The confirming bank would not confirm the credit until it evaluated the country and
bank where the letter of credit originates. The confirming bank is usually the advising
bank.
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TYPES OF LETTER OF CREDIT
1.Commercial and stand by L/C: Commercial letters of credit are used primarily to
facilitate foreign trade. The commercial letter of credit is the primary payment mechanism
for a transaction. It is a contractual agreement between a bank, known as the issuing bank,
on behalf of one of its customers, authorizing another bank, known as the advising or
confirming bank, to make payment to the beneficiary. The issuing bank, on the request of
its customer, opens the letter of credit. The issuing bank makes a commitment to honor
drawings made under the credit. The beneficiary is normally the provider of goods and/or
services. Essentially, the issuing bank replaces the bank's customer as the payee The
standby letter of credit serves a different function. The standby letter of credit serves as a
secondary payment mechanism. The bank will issue the credit on behalf of a customer to
provide assurances of his ability to perform under the terms of a contract. A bank will issue
a standby letter of credit on behalf of a customer to provide assurances of his ability to
perform under the terms of a contract between the beneficiary. The parties involved with
the transaction do not expect that the letter of credit will ever be drawn upon. The standby
letter of credit assures the beneficiary of the performance of the customer's obligation. The
beneficiary is able to draw under the credit by presenting a draft, copies of invoices, with
evidence that the customer has not performed its obligation. The bank is obligated to make
payment if the documents presented comply with the terms of the letter of credit.
They are issued by banks to stand behind monetary obligations, to insure the refund of
advance payment, to support performance and bid obligations, and to insure the completion
of a sales contract. The credit has an expiration date.The standby letter of credit is often
used to guarantee performance or to strengthen the credit worthiness of a customer. In the
above example, the letter of credit is issued by the bank and held by the supplier. The
customer is provided open account terms. If payments are made in accordance with the
suppliers' terms, the letter of credit would not be drawn on. The seller pursues the customer
for payment directly. If the customer is unable to pay, the seller presents a draft and copies
of invoices to the bank for payment.
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2.Revocable or irrevocable letter of credit: Letters of credit may be either revocable or
irrevocable. A revocable letter of credit may be revoked or modified for any reason, at any
time by the issuing bank without notification. A revocable letter of credit cannot be
confirmed. Once the documents have been presented and meet the terms and conditions in
the letter of credit, and the draft is honored, the letter of credit cannot be revoked. The
revocable letter of credit is not a commonly used instrument. If a letter of credit is
revocable it would be referenced on its face.The irrevocable letter of credit may not be
revoked or amended without the agreement of the issuing bank, the confirming bank, and
the beneficiary. An irrevocable letter of credit from the issuing bank insures the beneficiary
that if the required documents are presented and the terms and conditions are complied
with, payment will be made. If a letter of credit is irrevocable it is referenced on its face.
3) Sight or usance letter of credit: All letters of credit require the beneficiary to present
a draft and specified documents in order to receive payment. A draft is a written order by
which the party creating it, orders another party to pay money to a third party. A draft is
also called a bill of exchange. There are two types of drafts: sight and time. A sight draft is
payable as soon as it is presented for payment. The bank is allowed a reasonable time to
review the documents before making payment. A time draft is not payable until the lapse
of a particular time period stated on the draft. The bank is required to accept the draft as
soon as the documents comply with credit terms. The issuing bank has a reasonable time to
examine those documents. The issuing bank is obligated to accept drafts and pay them at
maturity. A Letter of credit is known as a Sight letter of credit if it involves payment to the
seller against a Sight Draft. On the other hand, if the payment is made against a Usance
Draft, then it is known as Usance letter of credit.
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DIFFERENT FIELDS OF LETTER OF CREDIT
FROM :( NAME & ADDRESS OF OPENING BANK )
This clause contains details of bank which has opened the Letter of Credit, and it works
on the behalf of the buyer of goods. The opening bank plays the first step in the whole
process of letter of credit.
TO :( NAME & ADDRESS OF ADVISING BANK )
This clause shows the details of bank which plays the foremost role in the process of
letter of credit. The advising bank belongs to the country of seller. It plays the role of
middleman between the seller and the opening bank
TYPE OF L/C :IRREVOCABLE
This clause shows the type of L/C in which it is being made. Various types of L/C’s
are Revocable, Irrevocable, Commercial, Negotiable etc.
L/C Number :
The clause shows a particular number for L/C and every L/C has different number so
that difference can be judged between different L/C’s.
DATE OF ISSUE :
This clause shows that date on which the opening bank has issued the L/C.
DT. & PLACE OF EXPIRY : __________________________________IN
INDIA
This shows about the date and the place in india where the lc will get expired, means
that financial institution where the L/C is send by the opening bank.
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NAME & ADDRESS OF THE:
APPLICANT
It contains detail about the buyer of the goods. It gives complete address of the buyer.
NAME & ADDRESS OF THE:
BENEFICIARY
It shows details of the seller of goods, like seller’s name, address, country to which he
belongs.
AMOUNT OF CREDIT IN :
US DOLLARS /EURO/ANY
OTHER FREELY
EXCHANGEABLE CURRENCY
(IN FIGURES & WORDS)
It shows the currency in which the deal is been made, the code for that currency as well
as the amount of the goods
PERCENTAGE CREDIT : AS PER CONTRACT
AMOUNT TOLERANCE
Sometimes the amount in the letter of the credit and the exact amount of the goods does
not match. There can be a difference between the both. So a specific percentage of
amounts of goods specified in L/C is given as a tolerance and the exact amount of
goods can be in between the minimum and maximum tolerated limits.
CREDIT AVAILABLE WITH:
This part shows the details of that party from where the amount can be reimburses by
the seller. This state’s either a specified bank in India or any bank in India.
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USANCE OF THE DRAFTS :
This clause shows whether the draft is payable at sight or at any date in future.
DRAFTS TO BE DRAWN ON:
It tells about the party which acts as a drawee. Generally the opening bank acts as a
drawee
PARTIAL SHIPMENT : AS PER CONTRACT
This clause contains details whether the shipment of goods is allowed through one
shipment or the goods can be sending through various shipments.
TRANSHIPMENT : AS PER CONTRACT
Transshipment means when the goods are send,
SHIPMENT FROM :
It tells about that place from where goods are send by the seller.
SHIPMENT TO :
It’s that place where the goods are sending by the seller. And generally its that country
where the buyer lives.
LATEST SHIPMENT DATE :
It’s that date till which the goods should reach to the buyer. After that date, it’s the
choice of the buyer whether he accepts the goods or not.
DESCRIPTION OF GOODS :
Description of Materials
Size ( in mm) and Quantity (in MT)
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Specification
Tolerance
Quantity
Quantity Tolerance
Price per MT (in USD/Euro/any other freely exchangeable currency)
DOCUMENTS REQUIRED :
Beneficiary’s Commercial Invoice - one original plus two signed copies covering materials
shipped. Invoices will be raised on the basis of (THEORETICAL/ ACTUAL/ DRAFT
SURVEY) WEIGHT.
In Industry Project Report 15
L/C in Vardhman
In this system , first corporate centralized market Yarn department advices a branch to
make sale of yarn through letter of credit In case of those customers who are either new
for a organization whose credit worthiness is not satisfactory according to market research
report
NOTE
All L/C of Yarn division is deal by State bank of Patiala
Thereafter on the basis of instructions sent by CMY department, the branch advise the
customers to open the L/C with the bank. Some of the common points stated in th L/C are
mentioned below:
Prorate shipment Transshipment Shipment date Expiry period of L/C Usance period Rate of interest for the usance period Other conditions as per mutual consent between buyer and seller
After opening the L/C concerned unit makes the sale to the customers as per agreed
terms and conditions stipulated in the L/C. Then concerned unit sent the invoice and
other papers to the centralized accounting cell for lodging the documents with the
bank.. This documents consists of
Bill of exchange Original invoice Original G/r copy Packing list Copy of L/C
On the Due date mentioned in the L/C, we receive the realization advice from the bank,
where we have lodged the document drawn under L/C. after getting the advice from the
bank, we credit the customers with the amount we have realized
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DOCUMENTS NEED FOR L/C
Letter of credit documents are required to be arranged in the following series:
By seller (duplicate documents)
Bill of exchange
Bill
Goods lorry receipt
Party acceptance letter
Debit note
Packing list
Original letter of credit
By seller’s bank (Duplicate documents)
Letter
Bill of exchange
Bill
Goods lorry receipt
Party acceptance letter
Debit note
Packing list
Letter of credit (duplicate)
By buyer’s bank (Original documents)
Bill of exchange
Bill
Goods lorry receipt
Party acceptance letter
Debit note
Packing list
Letter of credit (DUPLICATE)
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BILL OF EXCHANGE
A non- interest bearing written order used primarily in international trade that binds one
party to pay a fixed sum of money to another party at a predetermined future date
It’s an unconditional order issued by a party or business which directs the recipient to pay
a fixed sum of money to a third party at a future date. The future date may b either fixed or
negotiable. A bill of exchange must be in writing and signed and dated also called draft
Negotiation of letter of credit
NEGOTIABLE means the ability to be sold or transfers to another party as a form of
payment. Something which is negotiable is transferable by endorsement and delivery.
(When documents come back from bank).
JOURNAL ENTIRES
IN THE BOOKS OF VARDHMAN AT THE YEAR ENDED MARCH 31ST 2….
PARTICULARS L.F
DEBIT
(RS)
CREDIT (RS)
Particular bank a/c……………………………Dr
Interest on inland bill discount a/c…………….Dr
To inland bill discount a/c
(BEING Negotiation of ibdno……….on dated…….
Inland bill discount charges a/c………………..Dr
To bank a/c
(BEING INALND BILL DISCOUNTING CHGS DR
BY BANK ON DATED ……….AGST IBD NO……
XXXX
XXXX
XXXX
XXXX
XXXX
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How interest is calculated?
Total bill of exchange amount * rate of interest* number of days in Bill of exchange.
Rate of interest is 11.5% (according to STATE BANK OF PATIALA)
Number of days is calculated as per the conditions laid down IN L/C AGREEMENT
Realization of bill of exchange
JOURNAL ENTIRES
IN THE BOOKS OF VARDHMAN AT THE YEAR ENDED MARCH 31ST 2….
PARTICULARS L.F DEBIT(RS) CREDIT (RS)
I inland and bill discounting a/c………Dr
To party account
(BEING REALISATION OF IBD NO, AGST INV
NO…….ON DATED…….)
XXXX
XXXX
At the time of realisation of L/C there may be over due days
Bank will charge over due interest against late payment according to number of days
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Fully payment but late payment (overdue interest charged by bank)
JOURNAL ENTIRES
IN THE BOOKS OF VARDHMAN AT THE YEAR ENDED MARCH 31ST 2….
PARTICULARS L.F DEBIT(RS) CREDIT (RS)
Party a/c …………………………..Dr
To bank
( BEING AMOUNT OF OVERDUE INTEREST DEBITED
TO PARTY ACCOUNT AGST IBD NO. ON DATED
……..)
XXXX
XXXX
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INTRODUCTION TO WORKING CAPITAL
Working Capital is life blood and nerve centre of a business. Just as circulation of blood is
essential for the survival of the human being similarly working capital is necessary for the
survival of every business organization, whether it is a small organization or a big
organization.
Every business needs funds for two purposes-for the establishment and to carry out its day
to day operations. Long terms funds are required to create production facilities through
purchase of fixed assets such as plant & machinery, land & building, furniture & fixtures
etc. Investments in these assets the present that part of the firm’s capital, which is blocked
on a permanent or fixed basis and is called fixed capital. Funds are also needed for short-
term purposes as for the purchase of raw material, payment of wages & other day to day
expenses etc. these funds are known as working capital.
Before discussing about the working capital management of VARDHMAN TEXTILES
LIMITED, we should know the meaning, definition and different concepts of working
capital.
MEANING OF WORKING CAPITAL
In simple words, working capital refers to that part of the firm’s capital which is required
for financing short term or current assets such as, cash, marketable securities, debtors, and
inventories or in other words the working capital is the excess of current assets over
current liabilities.
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CLASSIFICATON OR KINDS OF WORKING CAPITAL
Working capital may be classified in two ways:
a) On the basis of concept
b) On the basis of time
On The Basis Of Concept
On the basis of concept, working capital is classified as gross working capital and net
working capital. This classification is important from the point of view of the financial
manager.
Gross working capital: - This is a wider term in a relation to the working capital. It
includes all current assets. Thus the gross working capital is the capital invested in total
current assets of the company. Examples of current assets are:
1. Cash in hand and Bank
2. Bill Receivables
3. Sundry Debtors
4. Short Term Loan & Advances
5. Inventory of Stock
6. Prepaid expenses
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Gross Working Capital = Total Current Assets
ON THE BASIS OF TIME, WORKING CAPITAL MAY BE CLASSIFIED AS:
Permanent or fixed working capital
Temporary or variable working capital
PERMANENT OR FIXED WORKING CAPITAL: Permanent working capital is the
minimum amount which is required and ensures effective utilization of fixed facilities and
or maintaining the circulation of current assets. There is always a minimum level of current
assets which is continuously required by the enterprise to carry out its normal business
operations. For example, work-in-progress, finished goods and cash balance. This
minimum level of current assets is called permanent working capital as this part of the
capital is permanently blocked in current assets. As the business grows, the requirements
of permanent working capital also increase due to the increase in current assets.
TEMPORARY OR VARIABLE WORKING CAPIAL: Temporary working capital is
the amount of working capital which is required to meet the seasonal demands and some
special exigencies. Variable working capital can be further classified as seasonal working
capital and special working capital. Most of the enterprises have to provide additional
working capital to meet the seasonal and social needs. The capital required to meet the
seasonal needs of the enterprise is called seasonal working capital. Special working capital
is that part of working capital which is required to meet exigencies such as launching of
extensive marketing campaign for conducting research, etc
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FACTORS DETERMINING THE WORKING CAPITAL
The working capital requirement of the concern depends upon a large numbers of factors
such as nature and the size of business, the character of their operations, the length of
production cycles, the rate of stock turnover and the state of economic situation. It is not
possible to rank them because all such factors are of different importance and influence of
individual factor changes for a firm overtime. However, the following are important factors
generally influencing the working capital requirements.
Nature and character of business.
Size of business\scale of operation.
Production policy.
Manufacturing process\length of production cycle.
Seasonal variation.
Working capital cycle.
Rate of stock turnover.
Credit policy
Business cycle.
Rate of growth of business.
Earning capacity and dividend policy.
Price level changes.
Other factors.
In Industry Project Report 25
IMPOTANCE OF ADEQUATE WORKING CAPITAL
Working Capital is the blood and the nerve centre of business. Just as the blood circulation
is essential in the human bodies for maintaining life, working capital is very important to
maintain the running of business. No business can run successfully without an adequate
amount of working capital.
The advantages are as follows:
Solvency of the business. Adequate working capital helps in maintaining solvency
of the business by providing uninterrupted flow of production.
Goodwill. Sufficient working capital enables a business concern to make prompt
payments.
Easy loan. A concern having adequate working capital high solvency and good
credit standing can arrange loans from banks and others on easy terms.
Cash discounts. Adequate working capital also enables a concern to avail cash
discounts on the purchase and hence it reduces costs.
Regular payments of salaries, wages and other day to day commitments. A
company which has adequate working capital can make regular payments of
salaries, wages and other day to day commitments with raises the morale of its
employees, increases their efficiency, reduces wastages and enhances production
and profits.
Exploitation of favorable market conditions. Only concerns with adequate
working capital can exploit favorable market conditions such as purchasing its
requirement in bulk when the prices are lower and holding its inventory for higher
prices.
Ability to face crises. Adequate working capital enables the concern face business
crises in emergencies such as depression because during such periods, generally,
there is much pressure on working capital
In Industry Project Report 26
THE NEED OF WORKING CAPITAL
The need for working capital cannot be over emphasized. Every business needs some
amount of working capital. The need for working capital arises due to the time gap
between the productions and realized of cash from sales. There is an operating cycle
involved in sales and realization of cash. There are time gaps in purchase of raw material
and production; production and sales; and realization of cash.
Thus, working capital is needed for the following purposes:
For the purchase of raw materials, components and spares.
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 maintain the inventories of raw material, work-in-progress, stores and spares and finish stock.
To provide credit facilities to the customers.
In Industry Project Report 27
OPERATING CYCLE OF VARDHMAN TEXTILES LIMITED
The operating cycle refers to the length of the length of time between the firms paying the
cash for the material, entering into the production process\stock and the inflow of cash
from debtors. There is a complete cycle from cash to cash where in cash gets converted
into raw material, work-in-progress, finished goods debtors and finally in cash. Short-term
funds are required to meet the requirements of the funds during this time period this time
period depends on the length of time within which the original cash gets converted into
cash again. The determination of working capital cycle helps in the forecast, control and
management of working capital. It indicates the total time lag and the relative significance
of constituent parts.
In Industry Project Report
WORK-IN-PROGRES DEBTORS
CASH RAW MATERIAL
28
FINISHED GOODS
THE OPERATING CYCLE CONSISTS OF FOLLOWING EVENTS, WHICH
CONTINUES THROUGHOUT THE LIFE OF BUSINESS.
Conversion of cash to raw material.
Conversion of raw material to work in progress.
Conversion of work in progress into finished goods.
Conversion of finished goods into accounts receivable.
Conversion of accounts receivable into cash.
FINANCING BY THE WORKING CAPITAL REQUIRMENTS BY BANKS
The bank credit is the primary institutional source of working capital finance. The bank
provides finance through loan agreements, overdrafts, cash credit, purchasing of bills, and
term loans. Banks have been certain norms in granting working capital finance to
companies. These norms have been greatly influenced by the recommendation of various
committee appointed by RESERVE BANK OF INDIA from time to time.
VARDHMAN TEXTILES LIMITED finance his working capital from the different banks
like ICICI BANK, STATE BANK OF INDIA, ALLAHABAD BANK,PUNJAB
NATIONAL BANK. Company finances the amount according to its need according to its
need of working capital requirement.
In Industry Project Report 29
WORKING CAPITAL LIMITS FROM SCHEDULED BANKS FOR YEAR 2007-
08
BANKS RS
State Bank of Patiala 5 crore
Punjab National Bank 5 crore
Allahabad Bank 50 crore
ICCI 5 crore
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NET WORKING CAPITAL
Net working capital is the difference between the current assets and the current liabilities.
Therefore it is called net working capital. When current assets exceed current liabilities
then the working capital is positive otherwise negative. Examples of current liabilities.
Bill Payable
Sundry creditors
Outstanding expenses
Short term loans
Dividend payable
Bank overdraft
In Industry Project Report 31
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REVIEWS
1. Bergami Robert (2007) analysis that that international trade transactions carry
inherently more risk than domestic trade transactions, because of differences in culture,
business processes, laws and regulations. It is therefore important for traders to ensure
that payment is received for goods dispatched and that the goods received and paid for
comply with the contract of sale. One effective way of managing these risks has been
for traders to rely on the letter of credit as a payment method. However for exporters in
particular, the letter of credit has presented difficulties in meeting the compliance
requirements necessary for the payment to be triggered. The current rules that govern
letter of credit transactions(UCP 500) have been under review for the past three years
and an updated set of rules (UCP 600) is expected to be introduced on 1July 2007. This
paper focuses on the changes mooted for 2007and compares these main issues with the
existing rules and other associated guidelines and regulations governing this method of
payment. This paper considers the implication to changes of letter of credit transactions
and the sharing of risk. Firstly the paper provides some background to letters of credit,
then comments on existing literature and models, and subsequently an analysis of the
most important changes to the existing rules, before reaching a conclusion. The
conclusion is that the UCP 600 have not paid enough consideration to traders and
service providers and are likely to engender an environment of uncertainty for
exporters in particular.
2. Dolan John (2007) analysis that The Law of Letters of Credit – Commercial and
Standby Credits is the four the Edition of a traditional treatise on a rather narrow legal
subject. Letters of credit fall into two categories: (1) commercials, which find use in
international sales; and (2) standbys that are a common device in many domestic
transactions. As international trade becomes more and more rationalized, the use of
commercials has diminished; but the use of the standby has enjoyed something of a
In Industry Project Report 33
boom, for it accomplishes much that security interests, surety ship arrangements, and
other credit enhancing devices accomplish and does it with significantly lower
transaction costs. Regrettably, the parties using letters of credit often are unaware of
the credit’s legal significance. This treatise covers the legal features of the commercial
and the standby, all in a global context. While it is codified to some extent in the
Uniform Commercial Code, the law of letters of credit is largely the law merchant, the
is gentium; and the UCC defers in many respects to international rules. Thus, the
treatise deals with those international rules and cites cases from virtually all of the
common-law jurisdictions in an effort to provide complete coverage of the field.
3. Padachi Kesseven (2006 ) analysis that A well designed and implemented working
capital management is expected to contribute positively to the creation of a firm’s
value The purpose of this paper is to examine the trends in working capital
management and its impaction firms’ performance. The trend in working capital needs
and profitability of firms are examined to identify the causes for any significant
differences between the industries. The dependent variable, return on total assets is
used as a measure of profitability and the relation between working capital
management and corporate profitability is investigated for a sample of 58small
manufacturing firms, using panel data analysis for the period 1998 –2003. The
regression results show that high investment in inventories and receivables is
associated with lower profitability. The key variables used in the analysis are
inventories days, accounts receivables 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 the five industries shows
significant changes and how best practices in the paper industry have contributed to
performance. The findings also reveal an increasing trend in the short-term component
of working capital financing.
In Industry Project Report 34
4. Klien Carter (2005) studied that For a relatively small fee and assuming sufficient
collateral or creditworthiness of the tenant or a guarantor, a tenant may be able to
apply for and have its bank issue to its landlord a letter of credit (“L/C”) to secure the
tenant’s obligations under a long-term lease. If the L/C is large enough, the landlord
may enter into a lease with a tenant that the landlord would otherwise refuse due to the
tenant’s lack of creditworthiness. From the tenant’s perspective, an L/C may be
preferable to a large security deposit. An L/C will not necessarily tie up large amounts
of the tenant’s cash or other liquid collateral, as would a security deposit. Instead, the
cash can be deployed as working capital in the tenant’s business. An L/C is an
independent obligation of the issuer. As long as conforming documents specified by
the terms of the
L/C is presented to the issuer before the expiration date and no fraud is involved, the issuer
must honor. The credit of the issuer stands behind the obligation of the tenant. If the tenant
is insolvent and/or bankrupt, the issuer still must honor the beneficiary’s conforming
draws. Rights the landlord will lose if the L/C draw is enjoined and the credit expires. This
two-part article provides tips for drafting L/Cs. Part one includes a discussion of using the
International Standby Practices, keeping the draw condition s simple and allowing partial
draws conclusion addresses issues such as providing coverage of the settlement period
after lease termination; shortening pitfalls is eliminated.. The conclusion of this article will
provide six more drafting tips and a discussion of the issuing banks’ concerns.
5. Lazaridis Dr Ioannis, Tryfonidis Dimitrios (2004) analysis that the relationship of
corporate profitability and working capital management. We used a sample of 131
companies listed in the Athens Stock Exchange (ASE) for the period of 2001-2004.
The purpose of this paper is to establish a relationship that is statistical significant
between profitability, the cash conversion cycle and its components for listed firms in
the ASE. The results of our research showed that there is statistical significance
In Industry Project Report 35
between profitability, measured through gross operating profit, and the cash conversion
cycle. Moreover managers can create profits for their companies by handling correctly
the cash conversion cycle and keeping each different component (accounts receivables,
accounts payables, inventory) to an optimum level.
6. Schelin Johan (2004) studied that This thesis give a historical introduction in foreign
trade and letters of credit. The reasons for using letters of credit will be shown. The
legal relationships of the concerned parties will be analysed. The doctrine of strict
compliance will be explained. Then problems will be worked out: the different
interpretation of strict compliance, the fraudulent exception and questions of liability if
the doctrine of strict compliance was not carefully used. The thesis bases on German
law, but tries, whenever useful, to compare with law of other countries and / or
International law. At the end of the thesis a critical outlook will follow. The analyse of
problems concerning the strict compliance lead to the result that still today, about 100
years after letters of credit became a common method to pay, problems exist. One of
these problems is the different interpretation of courts in different countries. Especially
the considerations of German courts that strict compliance must be interpreted in the
frontiers of good faith and that letters of credit must be interpreted as will declarations.
7. Shelton Fred (2002) studied that Working capital, an important liquidity indicator, has
historically been a major benchmark of the surety and credit-granting institutions. In
today’s environment, because of the tight bond and credit markets, both institutions are
scrutinizing the amount and quality of working capital more than ever. The fewer
resources that need to be invested in working capital, after recognizing liquidity risk,
the better.
In Industry Project Report 36
8. Weinraub Herbert, Visscher Sue (1998) studies that This study looked at ten diverse
industry groups over an extended time period to examine the relative relationship
between aggressive and conservative working capital practices. Results strongly show
that the industries had significantly different current asset management policies.
Additionally, the relative industry ranking of the aggressive/conservative asset policies
exhibited remarkable stability over time. Industry policies concerning relative
aggressive/conservative liability management were also significantly different.
Interestingly, it is evident there is a high and significant negative correlation between
industry asset and liability policies. Relatively aggressive working capital asset
management seems balanced by relatively conservative working capital financial
management.
9. Mills Geofrey (1996) analysis that the impact of inflation on the capital budgeting
process. It has shown that it is reasonable to expect that the cost of capital will increase
at the same rate as the rate of inflation on an ex ante basis, and that this increase will be
a multiplicative relationship. In addition, the paper has shown that the capital budgeting
process is not neutral with respect to inflation, even if output prices rise at the same
rate as costs. Of critical importance is the degree of net working capital as a proportion
of the overall financing required, the higher the net working capital the greater being
the impact of inflation on capital spending. Finally, it would appear that corporate
financial behavior is influenced by inflation. Inflation will cause the firm to reduce its
capital budget, to attempt to reduce net working capital, and to alter the debt/asset ratio
using short term debt, thus driving up short term rates relative to long term rates.
In Industry Project Report 37
In Industry Project Report 38
About Vardhman Group
Vardhman is a major integrated textile producer in India. The Group was setup in 1965
at Ludhiana, Northern India. Since then, the Group has expanded manifold and is today,
one of the largest textile conglomerates in India. The Group portfolio includes
Manufacturing and marketing of Yarns, Fabrics, Sewing Threads, Fiber and Alloy Steel.
The group started its corporate journey with an installed capacity of 6000 spindles in
1965 under the flagship company Vardhman Spinning & General Mills Limited (now
known as Vardhman Holdings Limited and is an investment arm of the Group) in
Ludhiana. Over the years the group has expanded its spinning capacities besides adding
new businesses. The group has also diversified into yarn processing, weaving, And Sewing
Thread, fabric processing, acrylic fiber manufacturing and into special/ alloy steels. Today,
close to 20,000 people are the Organization is most important asset its human capital
The Vardhman group comprises of three listed and two unlisted companies-
Listed Companies
Listed companies
Vardhman Textiles Limited (formerly Mahavir Spinning Mills Limited)
Vardhman Acrylics Limited
Vardhman Holdings Limited1 (formerly Vardhman Spinning & General Mills
Limited)
Unlisted Companies
VMT Spinning Company Limited
Vardhman Threads Limited
LOGO OF VARDHMAN GROUP
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The “Flame” signifies growth i.e. growth of the company along with the growth of each
and every individual associated with it whether he/she is a worker , a white collar
employee, a shareholder or a customer.
The “Stick” symbolizes cotton that is the basic raw material of the core product of
Vardhman. The “V” stands for the Vardhman Group
.
In Industry Project Report 40
HISTORY
The industrial city of Ludhiana, located in fertile Malwa region of central Punjab is known
as the “MANCHESTER OF INDIA”. Within the precincts of the city is located
The corporate head quarters of Vardhman group, A household name in northern India. The
Vardhman group , born in 1965 under the entrepreneurship of late Lala Rattan Chand
Oswal has today blossoms into the one of the larger textile business houses in India .
At its inception, vardhman has installed capacity of 14000 spindles. Today: its capacity has
increase multifold to over 5.5 lacs spindles. In 1982 the group enters sewing threads
market in company, which was the forward integration of business. In 1990, it undertook
yet another diversification – this time into the weaving business. The grey fabric weaving
unit at Baddi, commissioned in 1990 with a capacity of 20,000 meters per day , has already
made its mark as a quality producer of grey poplin, sheeting, shirting in the domestic as
well as foreign market . This was followed by entry into fabric processing by setting up of
AURO TEXTILES at BADDI, which currently has a processing of 1,00,000 meters per
day. In the year 1999, the group has added yet another feather to its cap with a setting of
VARDHMAN ACRYLICS LTD in. The company also has a strong presence in the
markets of JAPAN, HONG KONG, KOREA, and UK & EUROPE in addition to the
domestic market. Adherence to systems & true dedication to quality has resulted in
obtaining the coveted ISO 9002/ISO 14002 quality awards which is the first in
textileindustry.
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PHILOSHOPHY
Faith in bright future of Indian textile industry & hence continues expansion areas “which
we know best”.
Total customer focus in all operational areas
Products to be of best available quality for premium market segments through TQM &
ZERO DEFECT implementation in all functional areas.
Global orientation targeting- at least 20% production for exports.
Integrated diversification/ product range expansion
World class manufacturing facilities with most modern R&D & process technology
Faith in individual potential respect for human values
Encouraging innovation for constant improvements to achieve excellence in all functional
areas
Appreciating our role as a responsible corporate citizen.
MISSION
VARDHMAN aims to be a WORLD CLASS TEXTILE organization producing diverse
range of products for the global textile market. VARDHMAN seeks to achieve customer
delight through excellence in manufacturing & customer service based on creative
In Industry Project Report 42
combination of state- of – the- art technology & human resources. VARDHMAN is
committed to be responsible corporate citizen
BOARD OF DIRECTORS
Vardhman Textiles Limited
Shri Paul Oswal - Chairman & Managing DirectorAjay Kumar Chakraborty - (Nominee of ICICI Bank Ltd.)Vinod Kumar Saxena - (Nominee of IDBI)Arun Kumar Purwar(Dr.) Triloki Nath KapoorPrafull AnubhaiSurinder Kumar BansalSubash Khanchand BijlaniDarshan Lal SharmaSachit Jain - Executive Director
Vardhman Holdings Limited
Shri Paul Oswal - ChairmanSurinder Singh BagaiJagdish Rai SingalChaman Lal JainRam Swarup GuptaBal Krishan AroraSat Pal KanwarSachit JainShakun OswalSuchita Jain
Vardhman Acrylics Limited
Shri Paul Oswal - ChairmanSachit JainDarshan Lal SharmaSudeshkumar Ganpatrai GulatiSanjit Paul SinghMunish Chandra Gupta(Dr.)Arvind Kumar BakhshiBal Krishan Choudhary - Managing Director
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Organisational hierarchy chart
CHAIRMAN –CUM-MANGING DIRECTOR
CORPORATE GENERAL MANAGERS
VICE PRESIDENT
MANAGERS (M1-M4)
EXECUTIVES (E1-E2)
OFFICERS (O1-O2)
STAFF (S1-S4)
SUBSTAFF
In Industry Project Report 44
AWARDS AND ACHIEVEMENTS
Vardhman Spinning and General Mills Ltd. was the 1st textile company to be awarded ISO-9002 and ISO-14002 certificate in 1993.
It is the largest manufacturer and exporter of cotton yarn from India. It is the second largest producer of sewing threads in Indi It is a larger producer of acrylic fiber and finished fabrics
Textile Export Promotion Council 2003-04Gold trophy in EOU/EPZ for export of cotton yarn
Textile Export Promotion Council 2003-04Bronze trophy in mill fabric exporter category
Textile Export Promotion Council 2002-03Gold Trophy in EOU/EPZ for export of cotton yarn
Textile Export Promotion Council 1998-99Silver Trophy
Textile Export Promotion Council 1997-98Bronze Trophy
Textile Export Promotion Council 1996-97Silver Trophy
Govt. of India Award 1994-5, 1995-96Award of Merit
Textile Export Promotion Council 1993-94(Merchant Export Category for Fabrics)Bronze Trophy
In Industry Project Report 45
Textile Export Promotion Council 1993-94(Merchant Export Category for Fabrics)Gold Trophy
GROUP OF COMPANIES
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BUSINESS OF VARDHMAN GROUP
Vardhman Group consists of 5 SBUs spread across 9 manufacturing locations
In Industry Project Report 47
In Industry Project Report
ST Steel
Y Yarn
C Cotton Yarn
F Fabric
48
Spinning Business (Y)
Vardhman Spinning & General Mills Ludhiana, PunjabAuro Spinning Baddi, HPArihant Spinning Malerkotla, PunjabArisht Spinning Baddi, HPGas Mercerised Yarn Business Hoshiarpur, PunjabAuro Dyeing Baddi, HP
In Industry Project Report 49
Anant Spinning Mandideep, MPVardhman Spinning & General Mills (Export Oriented Unit) Baddi, HPVMT Baddi, HPVardhman Yarns Satlapur, MP
Fabric Business (C)
Auro Weaving Baddi, HPMSML Textiles Division Baddi, HPAuro Textiles Baddi, HPVardhman Fabrics Budhni, MP
Sewing Thread Business (ST)
ST-I Hoshiarpur, PunjabST-II Ludhiana, PunjabST-III Perundurai, TNVardhman Threads Limited Baddi, HPVardhman Special Steels (S) Ludhiana, PunjabVardhman Acrylics Limited (F) Bharuch, Gujarat
MARKET SHARE OF VARDHMAN TEXTILES LIMITED
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Spinning Business
Spindle Capacity
Existing About 600,000
Post Expansion 800,000
Fabric BusinessFabric Production in Lac (100 thousand) Metres/MonthAuro Textiles (Existing) 42Post Expansion 85-90
Sewing Thread BusinessProduction in Metric Tonnes/DayTotal 28.30
Dyeing (Yarn & Fibre) & MercerisingProduction in Metric Tonnes/DayTotal 54.5
Steel BusinessProduction in Metric Tonnes/AnnumSMS 100000Rolling Mill 84000
Acrylic Fibre BusinessProduction in Metric Tonnes/AnnumTotal 18500
PRODUCT RANGE
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Yarns
The group is one of the largest spinning group of the country with a spindlier of over
5, 50,000. The group has 12 production plants located in the states of Punjab, Himachal
Pradesh and Madhya Pradesh. In many of the yarn market segments, Vardhman holds the
position of market leader besides being a large and reliable supplier in the country.
Vardhman is also the largest exporter of yarn from India. The group yarn exports amount
to over US$ 100 million covering the most quality conscious markets in theworld. The
total export of Cotton yarn of the group is about 6% of total export of cotton yarn from
the country.
Sewing Threads
Vardhman entered the Sewing thread business in 1982 as a forward integration to its yarn
business. The group had to struggle for survival being pitted against a large multinational
organization. Today with approximately 25 metric tonne/per day of sewing thread
manufacturing capacity in its plant at Hoshiarpur, Ludhiana, Baddi & Perundurai.
Vardhman threads have emerged as second largest sewing thread brand in the country.
Processed Fabric
In Industry Project Report 52
In its quest for further value addition Vardhman started fabric processing in 1999.
Vardhman established a modern fabric process house in 1999 with a capacity of 30
million meters per annum. This capacity has been expanded to 42 meters per annum in
FY 2005-06. A Vardhman fabric is dedicated to meet customer demand for top quality
finished fabric through product innovation, world class quality, state-of-art technology
and excellence in service.
Fibre
In 1999 the group set up an Acrylic staple fibre plant at Bharuch in Gujarat in
collaboration with Marubeni and Japan Exlan of Japan. The plant has annual capacity of
18500 metric tonnes per annum.
Steel
The steel business was setup in 1973 as diversification with a capacity of 35000 million
tones per annum. Later on group acquired a steel plant from Mohta Group of Industries in
1988 and converted this loss making unit into a profitable business in first year of
operation with the Group. Subsequently the steel mill has been modernized and expanded
to a capacity of 100000 million tonnes per annum. Catering to high technology Quality
conscious alloy steel segment, the unit has a reputation of being a dependable
source of supply of special and alloy steel to Indian/International standards.
FINANCIAL STATUS
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PARTICULARS SALES REVENUE (RS CRORE)
Yarns 102873.31
Sewing thread 29634.83
Steel 34702.19
Fabric 33239.58
% SALES REVENUE
yarns , 57%sewing
thread, 15%
steel, 15%
fabric, 13%
FINANCIAL PERFORMANCE OF THE COMPANY
1.1 TABLE SHOWING FINANCIAL REULTS IN 07-08
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(IN BILLIONS)
Company Turnover Operating Profit Profit after Tax Operating Margin
VTEX 23.46 3.87 1.22 17%
VAL 2.28 0.32 0.05 14%
VMT 0.89 0.17 0.09 19%
VYTL* 0.29 0.08 0.06 27%
Vardhman Group 26.92 4.44 1.42 16%
1.1 GRAPH SHOWING TURNOVER AND PROFITS OF VARIOUS
COMPANIES OF VARDHMAN
INTRODUCTION TO FINANCE DEPARTMENT
In Industry Project Report 55
Every company is required to maintain proper books of account to record all the
transactions in the course of its business operations .it is necessary that the transactions
should be properly accounted for in the books of account so that they give a true and fair
view of the state of affair of the business.
Accounting is a service activity. Its function is to provide quantitative information
primarily of financial nature about economic entities that is intended to be useful in
making economic decision, in making reasoned choices among alternative course of
action
Accounting records only monetary transactions. Events of transactions which can not be
expressed in money, do not find place in the booked of account though they may be very
useful for the business.
The life of the business is divided in to appropriate segments for studying the results
shown by the business after each segment. this is because though life of the business is
considers to be indefinite ,the measurement of the income and studying the financial
position of the business after a very long period would not be helpful in taking proper
corrective steps at the appropriate time . It is therefore, necessary that after each segment
or time interval the businessman must stop and see back how things are going. in
accounting such a segment or time interval is called accounting period it is usually of a
year started from April and ended on March.
At the end of each accounting period an income statement and balance sheet are
prepared. The income statement discloses the profit & loss made by the business during
the accounting period while balance sheet depicts the financial position of the business as
on the last day of the accounting period. While preparing these statements a proper
distinction has to be made between capital expenditure and revenue expenditure .the
accounting statements help the management in making rational decisions.
The main object of running the business is to earn profits. in order to ascertain the profits
made by the business during a period. Is necessary that revenue of the period should be
matched with the cost/ expenditure of that period .in other words ,income made by the
In Industry Project Report 56
business during a period can be measured only when the revenue earned during a period
is compared with the expenditure incurred for earning the revenue.
The information contained in the published financial statements is of the paramount
importance to external users viz shareholders, creditors, banker’s etc. in order that the
users rely upon this information, is necessary that the information contained in the
financial statements is logical, consistent, fair. It is the responsibility of the accounting
profession to ensure that the information presented satisfies the above requirements .there
should not be too much discretion to the firms and their accountants to present the
financial information the way the y like, since this would greatly undermine the
confidence of the public in the financial statements presented by the different firms
Keeping the above fact in mind there have been efforts at the international level to brings
about uniformity in the presentation of the financial statements by formulating and
adopting international accounting standards.
Thus the role of accounting is to provide an effective measurement and reporting system.
This is possible only when accounting is based on certain coherent set of logical
principals that forms the general frame of reference for evaluation and development of
sound accounting practices
Vardhman Spinning & General Mills, finance department is headed by Mr. Bhushan
Punj (Chief Manager, Commercial fianance); Mr. Munish Jain (manager) .all the working
of the finance department is done through ERP (Enterprise Resource Planning) system,
which was installed in August 2003
NEED OF FINANCE DEPARTMENT
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Economic activities are those which includes buying and selling of goods and services for
purpose of profit. These activities are related to business. The main objective of the
business is to earn profits. This exchange is termed as TRANSACTION. A transaction
means a transfer from one person to another in money or money’s worth. Hence,
exchange of money, goods or services between persons or parties is known to have
resulted in a transaction. In each organization transactions are effected. The goods are
purchased from one market at a certain rate and then these goods are sold in another
market at higher price. However , in some cases organizations incur some losses instead
of profits, which may occur due to any reasons. So to achieve the purpose of recording a
will devised system plays a dominant role in an organization.
In VARDHMAN SPINNING AND GENERAL MILLS there is a finance department
headed by Mr.Bhushan Punj. ERP system is installed to deal with the finance problems
and to derive the maximum benefits of ERP system a concept of ‘ CENTRALISED
ACCOUNTING CELL’. Under this concept of centralization, all types accounting of
Debtors and Creditors of all units at one single platform i.e. at accounts department
VARDHMAN Ludhiana. The basic reason behind its implementation was to improve the
accounting relating to the customers and suppliers
CENTRALISED ACCOUNTING SYSTEM
Centralized Accounting System means the accounting system, which is maintained
centrally for the units or branches located at different locations. With this system, the
company can maintain the accounts for the different units at the head office or the desired
place where ever they want to keep those.
In VARDHMAN TEXTILES LIMITED, LUDHIANA, they have the centralized
accounting cell at there corporate office. This office is situated at Vardhman Spinning &
General Mills, Ludhiana. The corporate offices as well as the accounts department, which
controls the centralized accounts, are situated in this.
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This computerized centralized accounting cell has four departments and they performed
there specialized type of functions only as specified by the management which can be
altered time to time as per the need of the organization or as the organization suits better,
which are shown as under:
Accounts Department
Accounts Payable ACP
In Industry Project Report
Accounts Receivable ACR
Business Planning Control System
BPCS
Exports Import CellEXIM Cell
59
ACR Overview
Accounts Receivable is the amount owed to a company from customers who
have purchased goods or services on credit.
Account Receivable is a multi-company and open item debtors system and is
fully integrated with Configurable Enterprise Accounting (General Ledger). Customer
accounts can be maintained for one or multiple companies. Every invoice or payment
transaction can be stored separately, enabling individual payments to be applied against
individual invoices for the customer. Unpaid or partially paid invoices remain on file
until paid or written off. Accounts Receivable collects and reports information to assist in
collecting receivables, assessing credit and reducing bad debt. It generates an audit report
during each transaction posting session indicating that all transactions are posted during
the session.
ACR application consists of following applications:
ACR Setup - This includes defining various types of system parameters and master files
required for implementation of BPCS ACR module.
ACR Processing – This includes on-line data entry/maintenance related to customer
payments, debit and credit memos. It generates an audit report during each transaction
posting session indicating that all transactions are posted correctly during the session.
ACR Reports and Inquires – This includes aging, standard receivable reports and
inquiries to assist in managing Accounts Receivable operations effectively.
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Process Flow
In Industry Project Report
SetupEvent Processing
ACR ReportsAccount
Inquiry
ACR Cash & Memo Posting
,Bank Payment & Debit Credit Memos
Configurable Ledger
61
Manual Part -2 covers the ACR application and is divided into following
chapters
Accounts Receivable
(ACR) Setup
Describes setups involved in setting up
ACR application.
ACR Processing Describes the procedures of processing payments
Credit adjustments, debit adjustments and invoices.
Inquiries Describes inquiries related to the ACR application.
Reports Describes reports related to ACR application.
Appendix A & B Describes accounting procedure for customer collection,
Debit / credit Memos and reconciliation.
Appendix C Glossary The glossary contains a list of terms and their
Definition.
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ACR Setup
This chapter describes in detail various setup for system parameters and master files required
for implementation of BPCS ACR module. These are explained as below.
Company Master – Company master application is used to define or maintain the
company information. The Company master contains the following information:
Company Number – It is a two digit numeric code.
Company Name
Address
Currency Code
Every customer must have a default company number. In Vardhman setup following
company codes are being used
Company
Code
Name
20 VARDHMAN TEXTILES LIMITED.
40 VMT SPINNING MILLS LTD.
50 VARDHMAN THREADS LTD.
Reason Code - Reason codes are used to link a transaction in Cash and Memo posting
with an event. It allows creating journal entries and posting them to General Ledger.
(Described in detail in Configurable Enterprise Financial Manual Part-1). In Vardhman
setup following are some examples of reason codes being used and the complete list is
available in the system
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UnitReason
codeEvent Name
Auro Spinning Mills , Baddi PBAW BANK RECEIPT
PBAW BANK PAYMENT
DCBW DEBIT / CREDIT MEMO
G1VD BY PASS JOURNAL
Customer Type - It is a four character alphanumeric code used to combine
customers into groups. The members of a customer type group have same logical
similarities, such as geographic or industry trade classification. Customer groups
are assigned by currency, therefore different customer type can be established for
each currency in which the customer bills. In Vardhman setup following customer
types is being used.
Customer
TypeDescription
FBD FABRIC – DOMESTIC
FBE FABRIC – EXPORTS
YND YARN – DOMESTIC
YNE YARN – EXPORTS
SCD SCRAP DOMESTIC
WSD WASTE DOMESTIC
STD SEWING THREAD – DOMESTIC
STE SEWING THREAD - EXPORTS
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Customer Terms - It is a two character alphanumeric code and is used to compute the due
date for an invoice. The invoice due date is calculated from the invoice date. In Vardhman
setup following are some examples of term codes being used and the complete list is
available in the system.
Bank Code – It is a three character alphanumeric code used along with company and
currency to define a unique bank account code. At least one valid bank code must be setup
before issue any cash payment. In Vardhman setup following are some examples of bank
codes being used and the complete list is available in the system.
Document Sequence
Document Prefix - It is a two character alphanumeric code assigned to different A/R
transactions like payment, debit memo and credit memo. This is used to group customer
transactions on different parameters like company name, unit name and type of
transaction.
Document Sequence - It is a sequence number automatically generated by the system for
every document prefix.
In Vardhman setup following are some examples of document prefixes being used
and the complete list is available in the system.
Comp
Code
Unit Name Document
Prefix
Type of Document
20 VARDHMAN SPG
& GENERALMILLS
EV DIRECT INVOICING
20 ARISHT SPG
MILLS
ZB BILLING FROM SALE
DEPOT(LUDHIANA )
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Customer Master – It is a six digit alphanumeric code used for unique
identification of a customer. This file contains
Company code
Address
Phone Number
Fax Number
Customer Type
Payment type
Term Code
Credit Days
Credit Limit
Document Prefix
Corporate Parent (used to build the corporate parent hierarchy
structure of a customer)
In Vardhman setup following are the ranges used for codifying different types of
customers.
Customer From Customer To Customer Type
100000 150000 FABRIC – DOMESTIC
150001 199999 FABRIC – EXPORTS
200000 249999 YARN – DOMESTIC
250000 259999 YARN – EXPORT
300000 389999 HAND KNITTING YARN
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Customer From Customer To Customer Type
390000 393999 WASTE
394000 399999 RAW MATERIAL
400000 499999 SCRAP
500000 549999 THREADS – DOMESTIC
550000 649999 THREADS – BRANCHES
650000 659999 THREADS – EXPORT
660000 779999 THREADS - BRANCHES
ACR Processing
Here we will describe in detail the steps required to process following types of transactions
available in Accounts Receivable Application.
Create On-account payments
Apply On-account payments to existing invoices
Apply Payments to existing invoices
Create Credit Memo (without any reference to existing invoice)
Apply Credit Memo to existing invoices
Create Credit Memo against existing invoices
Create Debit Memo (without any reference to existing invoice
Apply Debit Memo to existing invoices
Create Debit Memo against existing invoices
Convert initial open invoices to BPCS system.
Maintain Customer Invoice
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ACR REPORTS
Report Name
Customer Outstanding Unit Wise
CMY Customer Outstanding Exception Report
Payment not received against Invoices
Customer Outstanding Invoice Wise (buckets)
Collection breakup summary
Customer outstanding (cmy)
Customer outstanding prefix wise as on date
Zone/ agent wise customer wise outstanding
Product wise outstanding
Customer wise invoice details
Sales tax return (within state & out of state), bt, consignment agents
Interest calculation
Customer wise balance confirmation letter
Cash receipt journal
Account statement
Aged trial balance- company
Salesman/ customer wise outstanding
Customer/invoice wise outstanding
Category/customer/invoice wise outstanding
City/customer/invoice wise outstanding
Salesman/customer/invoice wise outstanding
Category/customer wise outstanding
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Sister concern wise outstanding
YARN
The VARDHMAN range of yarn was a humble beginning. Tree decades of hard work,
commitment and constant innovation have resulted in well earn trust and goodwill of our
customers across the globe.
At VARDHMAN we move with a notion that customer serves is a way of life. We strive
to provide our customers delight with 3P service –PROMPT, POLITE
&PERSONALIZED
It today have a capacity of over half a million spindles along with two dyeing plants
bearing a capacity of more than 27 tones yarn & 22 tones fibers per day. Our goal,
therefore calls for serving our customers with multiple of products meeting the most
diverse of requirement. This, infect has position VARDHMAN as a” SUPER MARKET
of high quality yarn”.
YARN PRODUCTION CAPACITY
VARDHMAN GROUP has installed capacity of more than half a million spindles & out
of it about 1,74,000 spindles are fully dedicated to exports only.
Having built GIANT capacity in term of more than half million spindles spanned over 15
units out of 4 units are dedicated to exports only (EOU) , state – of –the- art technology.
Dextrose hands capable of plain rhythm with machines sourced from best available
around the world has made VARDHMAN a gallery of variety of world CLASS yarns.
EOU - 100% dedicated to export
only
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NON EOU – produce for domestic as well as for export market.
YARN OPERATIONS
The unique combination of man & machine, competing & supplementing each other with
continuos increase in productivity has enable VARDHMAN to dexterously ripe the fruit
of economies of scale & process variety of raw material required for variety of end
products to textiles.
Evenness results falls in 5% to 15% of user standards achieved through
Proper selection of raw materials
World class Pre spinning and Spinning Facilities
Techincal Know How
Human Skills
100% Quality Assurance System
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ACCOUNTING PRECUDURE FOR CUSTOMER COLLECTION (YARNS)There are three types of collections
Domestic collections Collection under CMS Collection through letter of credit L/C
DOMESTIC COLLECTION
Domestic collection means collection, which are collected by Ludhiana branch and
corporate centralized market yarns department. in this system they collect the cheque or
demand draft from the yarns customers and handed over it over to the centralized
accounting cell for the depositing the same in to the bank on daily basis. After receiving
all cheque on a particular day the e centralized accounting cell deposit the instruments in
to the bank for clearing.
After depositing the collections into the bank, the ACR section account for the same in
respective customer’s accounts on basis of advise sent to bank on day -to -day basis.
CASH MANAGEMENT SERVICES
Cash management means the proper use of an entity’s cash resources . it serves as a
means to keep an organization functioning by making th best use of cash or liquid
resources of the organization . at the same time the organization have the responsibility to
use timely , reliable and comprehensive financial information system .
Cash management helps the organization in:
Eliminating idle cash balances Monitoring exposure and reducing the e risk Ensuring timely deposit of collections Properly timely the disbursements
COLLECTION THROUGH LETTER OF CREDIT (L/C)
A letter of credit is a document issued mostly by financial institutions which usually
provides an irrevocable payment undertaking to a beneficiary against complying
documents as stated in the credit.
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OBJECTIVES OF THE PROJECT
To study the working of yarn division.
Knowledge of sale under Letter of Credit in Yarn Division
Bill Discounting under letter of credit
What factors that considers their working capital requirement.
Working Capital Policies.
To operate the working capital cycle of the management.
Detail study of Account receivable department (ACR)
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RESEARCH METHODOLOGY
Research comprises of defining & redefining problems, formulating hypothesis or
suggested solutions, collecting, organizing & evaluating data, making deductions &
reaching conclusions. In research design we decide about:
Type of data
From whom to get data
About sample size
How to analyze data
How to make report
DATA TYPE
Data collected was both Primary and Secondary in nature
SAMPLE SIZE
The sample size for the study of the project was yarn division of VARDHMAN GROUP
LTD.
RESEARCH DESIGN
STEP 1- To study the ACR module of yarn division
STEP 2 – understanding various methods used for collection of debtors to study
procedure followed for LC in Vardhman
STEP 3 – Data Analysis of working capital through Ratios
DATA COLLECTION
The information is collected through the PRIMARY SOURCES like:
Talking with the employees of the department.
Getting information by observations e.g. in manufacturing processes.
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Discussion with the head of the department.
Data was collected from following SECONDARY SOURCES like
1. Corporate department
a) Marketing department
b) Finance department
2. ACR reports
3. MIS Department
The collected information was edited & tabulated for the purpose of analysis.
TOOLS USED FOR PROJECT
While making the project file various tools were used. These tools helped in doing the
work. These are:-
Microsoft Excel
Microsoft Word
Various analysis tools like Bar Graphs, Pie Graphs, tables
LIMITATIONS OF STUDY
In the due course time, the main limitation was with searching the data. The data was not
completed in the main files of Vardhman. The training period of six weeks was to short
to study the organization in detail. In some cases budgets are available but actual figures
are not available for comparison. VARDHMAN is a big unit so it was very difficult to.
study the whole budgeted data
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RATIO ANALYSIS
CURRENT RATIO – CURRENT ASSETS CURRENT LIABILITIES
PARTICULARS 2006-07 2007-08
CURRENT ASSETS 1,153237,069.61 1,076,464808.72
CURRENT LIABILITIES 102,809,874.03 160,310,964.06
CURRENT RATIO 11.2 6.71
CURRENT RATIOS
11.2
6.71
0
2
4
6
8
10
12
2006-07 2007-08
CURRENTRATIOS
Interpretation:
A relatively high current ratio is an indication that the firm is liquid and has ability to pay its current obligations in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. Current ratio has moved down from 11.2 to 6.71, which indicates that there has been deterioration in the liquidity position of VARDHMAN.NOTEDURING CALUCALATION FRACTION FIGURES ARE ROUNDED OFF
In Industry Project Report 77
LIQUID RATIO – CURRENT ASSETS - STOCK -PREPAID EXPENSES
CURRENT LIABILITIES
PARTICULARS 2006-07 2007-08
CURRENT ASSETS 1,153237,069.61 1,076,464808.72
STOCK (431570480) (825491821.69)
CURRENT LIABILITIES 102,809,874.03 160,310,964.06
LIQUID RATIO 4.19 1.56
LIQUID RATIO
4.19
1.560
1
2
3
4
5
2006-07 2007-08
LIQUID RATIO
Interpretation:Usually, a high acid test ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low quick ratio represents that the firm’s liquidity position is not good.As a rule of thumb or as a convention quick ratio of 1:1 is considered satisfactory.Liquidity ratio is falling from 4.19 to 1.56 in the firm which means low quick ratio may have a good liquidity position if it has fast moving inventories.
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ABSOLUTE LIQUID RATIO – CASH + CASH AT BANK + SHORT TERM SECURITIES CURRENT LIABILITIES
PARTICULARS 2006-07 2007-08
CASH + CASH AT BANK
4,661,283.23 4,759,748.58
SHORT TERM SECURITIES
- -
CURRENT LIABILITIES 102,809,874.03 160,310,964.06
ABSOLUTE LIQUID RATIO
.045 .029
ABSOLUTE LIQUID RATIO
0.0450.029
0
0.01
0.02
0.03
0.04
0.05
2006-07 2007-08
ABSOLUTELIQUID RATIO
Interpretation:Although receivables, debtors and bill receivables are generally more liquid than inventories, yet there may be doubts regarding their realization into cash immediately or in time. Here the company acid test ratio decreased and its is low than the thumb rule
In Industry Project Report 79
STOCK TURNOVER RATIO – SALES AVERAGE STOCK
STOCK TURNOVER RATIO
4.46
4.76
4.3
4.4
4.5
4.6
4.7
4.8
2006-07 2007-08
STOCKTURNOVERRATIO
Interpretation:
Inventory turnover ratio measures the velocity of conversion of stock into sales. Usually, a high inventory turnover indicates efficient management of inventory because more frequently the stocks are sold; the lesser amount of money is required to finance the inventory. A low inventory turnover implies an inefficient management of inventory. We can clearly view that stock turnover ratio has improved.
In Industry Project Report
PARTICULARS 2006-07 2007-08
SALES 3424503526 3682682347.11
AVERAGE STOCK 767334308 773579205
STOCK TURNOVER RATIO
4.46 4.76
80
DEBTORS TURNOVER RATIO – SALES AVERAGE DEBTORS
DEBTORS TURNOVER RATIO
11.81
25.09
05
1015202530
2006-07 2007-08
DEBTORSTURNOVERRATIO
Interpretation:
Debtors velocity indicates the number of times the debtors are turned during the year. Generally, the higher the value of debtors turnover the more efficient is the management of debtors/sales or more liquid are the debtors. Similarly, low debtors turnover implies inefficient management of debtors/sales and less liquid debtors.We can see debtors turnover ratio 25.09 is very high which may imply a firm’s inability due to lack of resources to sell on credit thereby losing sales and profits
In Industry Project Report
PARTICULARS 2006-07 2007-08
SALES 3424503526 3682682347.11
AVEARAGE DEBTORS
289844033 146774094
DEBTORS TURNOVER RATIO
11.81 25.09
81
AVERAGE COLLECTION PERIOD - 365 DEBTORS TURNOVER RATIO
DEBTORS COLLECTION PERIOD
31
152006-07
2007-08
Interpretation:
The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. It measures the quality of debtors.VARDHMAN’S average collection period is short as compared to last financial year. This implies better quality of debtors as short collection period implies quick payment by debtors.
In Industry Project Report
PARTICULARS 2006-07 2007-08
DAYS 365 365
DEBTORS TURNOVER RATIO
11.81 25.09
AVERAGE COLLECTION PERIOD
31 DAYS 15 DAYS
82
CREDITORS TURNOVER RATIO – PURCHASES (RAW MATERIALS) AVERAGE CREDITORS
CREDITORS TURNOVER RATIO
12.77
14.9
11
12
13
14
15
16
2006-07 2007-08
CREDITORSTURNOVERRATIO
Interpretation:
The ratio indicates the velocity with which the creditors are turned over in relation to purchases. Generally, higher the creditors velocity better it is or otherwise lower the creditors velocity, less favorable are the results
In Industry Project Report
PARTICULARS 2006-07 2007-08
RAW MATERIALS 1600792135 1969197435
AVERAGE CREDITORS
125284347 132084794.5
CREDITORS TURNOVER RATIO
12.77 14.9
83
AVERAGE PAYMENT PERIOD - 365 AVERAGE CREDITOR RATIO
PARTICULARS 2006-07 2007-08
DAYS 365 365
CREDITORS TURNOVER RATIO
12.77 14.9
AVERAGE PAYMENT PERIOD
29 DAYS 24 DAYS
CREDITORS PAYEMENT PERIOD
2924 2006-07
2007-08
Interpretation:
The average payment period ratio represents the average number of days taken by the firm to pay its creditors. lower the ratio the better the liquidity position of the firm, as in 2207-08 Vardhman payment period reduces to 5 days its shoe the liquidity position of company increased.
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.
WORKING CAPITAL RATIO - NET SALES NET WORKING CAPTIAL
WORKING CAPITAL TURNOVER RATIO
3.24.01
0
1
2
3
4
5
2006-07 2007-08
WORKINGCAPITALTURNOVERRATIO
Interpretation:
This ratio indicates the number of times the working capital is turned over in the course of year. This ratio measures the efficiency with which the working capital is being used by a firm.A higher ratio indicates efficient utilization and low ratio indicates otherwise.But a very high ratio is not a good situation for any firm and hence care must be taken while interpreting the ratio
In Industry Project Report
PARTICULARS 2006-07 2007-08
SALES 3424503526 3682682347.11
NET WORKING CAPITAL
1050427195 916153844.66
WORKING CAPITAL RATIO
3.2% 4.01%
85
NET PROFIT RATIO – NET PROFIT * 100
SALES
NET PROFIT
9.78
10.2
9.4
9.6
9.8
10
10.2
10.4
2006-07 2007-08
NET PROFIT
Interpretation:
The ratio is very helpful as if the profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. This ratio also indicates the firm capacity to face adverse economic conditions such as price competition, low demand, etc. Higher the ratio, the better is the profitability
In Industry Project Report
PARTICULARS 2006-07 2007-08 NET PROFIT 221,753,922.93 250,477,915.32
SALES 3,424,503,526.55 3,682,682,347.11
NET PROFIT RATIO 6.4 6.8
86
STATEMENT SHOWING NET CURRENTS ASSETS/NET WORKING CAPITAL
PARTICULARS 2006-07 2007-08
A. C.ASSETS
a. INVENTORIESb. SUNDRY DEBTORSc. CASH AND BANK
BALANCESd. LOANS & ADVANCES
721,666,589.86184,805,314.45
4661283.23242,103,882.07
825,491,821.69108,742,874.10
4759,748.58
137,470,364.35
TOTAL CURRENT ASSETS 1,153237,069.61 1,076,464,808.72
B. C.LIABILITIES
a. CREDITORSb. PROVISIONS
103,768,089.83(958,215.80)
160,401,500.43(90536.37)
TOTAL CURRENT LIABILITIES 102,809,874.03 160,310,964.06
NET WORKING CAPITAL [A-B]
1,050,427,195.58 916,153.844.66
Interpretation:This table shows the Working Capital position for the last 2 YEARS
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LIMITATIONS
Working capital is powerful tool of determining company’s strength and weakness. But
the analysis is based on the information available in the financial statements, which are as
follows:
It is only a study of interim report.
Working capital study is only based upon monetary information and non-
monetary factors are ignored.
It does not consider change in price level.
As working capital is prepared on the basis of going concern, it does not give
extract position. Thus accounting concept and conventions causes a serious
limitation to financial analysis.
Analysis is only a mean and not an end in itself. The analyst has to make
interpretation and draw his/her conclusion. Different people may interpret the
same analysis in different ways.
In Industry Project Report 88
FINDINGS
1. Standard current ratio is 2:1 and for industry it is 1.33:1. Vardhman ratio not satisfied
2. Liquidity ratio is improved in 2007-8
3. Absolute test ratio is slightly low to that of thumb rule
4. Debtors of the company were high; they were increasing year by year, so more funds
were blocked in debtors. But now recovery is becoming faster.
5. Debtors turnover ratio is increase which is beneficial for the company because as
ratio increases the number of days of collection for debtors decreases.
6. Inventory turnover ratio is improved which means inventory is used in better way so
it is good for the company.
7. Working capital turnover ratio is continuously increasing that shows Increasing needs
of working capital.
8. Creditors turnover ratio also increase which is good for company
9. Net profit ratio also increased which mean increase in profitability
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CONCLUSION
The sale of Vardhman Group is more in Ludhiana market in comparison to other mills.
The customers are giving faith in its quality. Oswal, Malwa & Sharman respectively
stand in close competition with Vardhman. The price of Vardhman for all yarns are the
highest because of its high quality standards and their expense on extensive sales
promotion. The other factors that contribute for its maximum sales are its timely supply
without much problems and its cordial relations with dealers.
In this project we have discussed what is letter of credit and how inland bill discounting
done under it and working capital and help in analysis short term financial position of
company
Letter of credit means when a bank or finance company issues a document on behalf of
an buyer, authorizing the seller to obtain payment within a specified timeframe once the
terms and conditions outlined in the letter of credit are met.
Working Capital is the lifeline of every industry, irrespective of whether it’s a
manufacturing industry, services industry. Working Capital is the prime and most
important requirement for carrying out the day to day operations of the business.
Working Capital gives the much-needed liquidity to the business. Working Capital
Finance reduces the overall fund requirement, required to build up the Current Assets,
which in turn help you improve your Turn Over Ratio.
In the end I would say that it was great working in Vardhman.
In Industry Project Report 91
SUGGESTIONS
The prices should be less to re-establish the market for Yarn.
Since the customer is very specific in terms of value so the company can introduce
new and alternative products whenever possible by adjusting the raw-material
mixing as a result achieve better profitability.
As far as accounting is concerned, although the entire system is computerized, but
there still involves lots of paperwork. So this should be minimized b acquiring more
advanced accounting software
Not only for yarn customers but for other product customer dealing under letter of
credit should done
L/C period should also increased
Company should put more efforts to improve its liquidity position
Company should stretch the credit period given by the suppliers.
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BIBILOGRAPHY
REFERENCE TO A BOOK
Gupta K Shashi , Sharma R.K (2 003), Management Accounting And business Finance , Kalyani Publishers ,New Delhi
REFERENCE FOR ARTICLES
1. Bergami Robert, (2007), “Will the UCP 600 Provide Solutions to Letter of Credit Transactions?” International Review of Business Research Papers,Vol.3 No.2, June 2007, Pp. 41 - 53
2. Dolan John, (2007),” THE LAW OF LETTERS OF CREDIT” The
Wayne State University Law School Legal Studies Research, Vol 1, April 2007, p149
3. Padachi Kesseven, (2006), “Trends in Working Capital Management and its Impact on Firms Performance: An Analysis of Mauritian Small Manufacturing Firms”, International Review of Business Research PapersVol.2 No. 2. October 2006, Pp. 45 -58
4. Klien Carter, (2005), “Using Letters of Credit to Secure Lease Obligations”, Law journal Newsletter ,Vol 18, No 4 , September 2005, p. 585
5. Lazaridis Dr Ioannis, Tryfonidis Dimitrios, (2004), “The relationship between working capital management and profitability of listed companies in the Athens Stock Exchange”, University of Macedonia ,Greece, Vol 28, No78,October , pp1013.
6. Schelin Johan (2004), “Letter of credit and doctrine of strict compliance”, University of Uppsala, Vol. 4, No. 3,, January, pp 27 – 34
In Industry Project Report 94
7. Shelton Fred (2002), “Working capital and constructions industry”, journal of construction accounting and taxation, December, pp. 45-56.
8. Weinraub Herbert, Visscher Sue (1998), “Industry practices relating to aggressive conservative working capital policies”, Journal of Financial and Strategic Decisions, Vol 11 No 2, November, pp. 770-774.
9. Mills Geofrey (1996), “The Impact of inflation on capital budgeting and working capital”, Journal Of Financial And Strategic Decisions, Vol 9 No 1 ,October, pp. 26-32.
WEB PAGES
www.google.com
http://en.widipedia.org/wiki/Letters_of_credit
www.vardhman.com
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