LATEST Sahi Report

8/3/2019 LATEST Sahi Report

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EXECUTIVE SUMMARY

The major objective of the study is to proper understanding the working capital of Scooters

India Limited& to suggest measures to overcome the shortfalls if any.

Funds needed for short term needs for the purpose like raw materials, payment of wages and

other day to day expenses are known as working capital. Decisions relating to working capital

(Current assets-Current liabilities) and short term financing are known as working capital

management. It involves the relationship between a firms short-term assets and its short term

liabilities. By definition, working capital management entails short-term definitions, generally

relating to the next one year period.

The goal of working capital management is to ensure that the firm is able to continue its

operation and that it has sufficient cash flow to satisfy both maturing short term debt and

upcoming operational expenses.

Working capital is primarily concerned with inventories management, Receivable

management, cash management & Payable management.

Inventories management at Scooters India Limited

SIL is a large scale manufacturing company. It is a totally integrated automobile plant,

engaged in designing, developing, manufacturing and marketing a broad spectrum ofconventional and non-conventional fuel driven 3-wheelers.

Cash management at SIL:

SIL has been accumulating huge cash surpluses over last several years, which enables the

organization to maintain adequate cash reserves and to generate required amount of cash.

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HISTORY OF THE COMPANY

Incorporated in 1972, Scooters India Limited is an ISO 9001:2000 and ISO 14001 Company,

situated at 16 Km mile stone, South-west of Lucknow, the capital of Uttar Pradesh on NH No

25 and is well connected by road, rail and air.

It is a totally integrated automobile plant, engaged in designing, developing, manufacturing

and marketing a broad spectrum of conventional and non-conventional fuel driven 3-

wheelers.

Companys plant owes its origin to M/s. Innocenti of Italy from which it bought over the

plant and machinery, design, documentation, copyright etc. The company also possesses the

world right of the trade name LAMBRETTA / LAMBRO.

In 1975, company started its commercial

production of Scooters under the brand name of Vijai Super for domestic market and

Lambretta for overseas market. It added one more wheel to its product range and introduced

three wheelers under the brand name of VIKRAM/LAMBRO. However, in 1997,

strategically, the company discontinued its two-wheeler production and concentrated only on

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manufacturing and marketing of 3 wheelers.These three wheelers have become more relevant

in the present socio-economic environment as it transports goods and passengers at least cost.

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DEPARTMENTS

The organisation has various departments to perform different activities competently. SIL has

an organised system to control different activities. Personnel & administration department

looks after the employees welfare, medical benefits, conveyance facilities, maintains their

personal records and controls their regularity. It also take care of the security for the

organisation. Marketing & services department looks after the marketing of the products,

provide services to the customer and regulates the activities in its various regional offices.

Materials control the purchasing of the raw material, keep an eye on the cost of the material in

the market, store the different materials and products and establish a company-vendor

relationship. Workshop manufactures different products in steps in different lines. Design &

development is the prime creative unit for the organization. It brings out some brilliant design

with modern technologies. Finance & accounts section keeps track on the financial growth

and the maintenance of various types of accounts. Based in Lucknow, Scooters India Limited

successfully caters to the various needs of the customers through its own marketing network

of Regional Sales Offices all over India.

The company is facing stiff competition from other private players but still it is fairing well

especially in Northern India and running in profit. Its well equipped CAD laboratory provides

a wide range of facilities. The versatility of brains combines with the flavour of new creation

to evolve a quality product.

There are various types of departments present SIL as can be seen from the following page:

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MATERIAL DEPARTMENT

Material Department is responsible for the proper handling of inputs and controlling of

material inputs. Proper handling of input materials ensures the smooth running of plant.

Material department recognizes the need of the input materials and arranges them for the

plant. It includes the procurement, verification and controls of materials in right quantity and

at right time to facilities the production function.

Material management includes two important functions:

Purchasing

Storing and control of materials

Thats why; it is divided into following sections:

Purchase section ( It is responsible for purchasing of materials )

Store section ( It stores the inputs)

These both sections are interrelated and perform their function on coordination.

All purchases are to be made only by the materials department except purchases of petty item

through some vouchers and Department Managers within the limits prescribed in purchase

procedure. Material purchase indent should give following information:

1) Quantity in stores

2) Average monthly consumption since last purchase for stock items

3) Maximum /minimum level

4) Last purchase order reference

5) Reorder level

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PURCHASE SECTION

The purchase department is at the interface of internal and external department. Purchase

department do enquiry about the inputs whether it is required or not. This enquiry is done in

two ways that are:

1) Single stage

2) Two stage

After enquiry purchase department invites a tender. After confirmation of all terms and

conditions the department contacts the supplier and orders for the inputs. Thus it is

responsible for purchasing of materials and other raw materials whatever is required by the

organization. Purchase department is responsible for the delivery of right amount of material

at the right time and at the right location to avoid the hampering of the production.

Purchasing is distinct from buying. Purchasing involves the extra knowledge as the tenders,

various vendors, their prices, comparison between them, after sale service, dispatching follow

up and payment terms.

The purchase department considers various things before purchasing the raw materials.

1. Information about the input material

2. Sources of material- vendor

3. Reasonable price of that material

4. All terms and conditions

Assembly Department: The components manufactured in plant as well as those

bought have to be finally assembled to make the product three wheelers. In the

process many sub assemblies, too, are involved. However, two main assemblies worth

mentioning are engine assembly and vehicle assembly.

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Both are conveyorised. Every 5 minutes a three wheeler rolls

down the conveyor. The vehicle conveyor has 23 stations.

Speed can be adjusted to meet increasing demand

.

Scooters India Limited is the only organistion to bring the revolution in

the automobile field by designing and developing an Electric Maestro

Vikram EV. It has stylish and bold masculine bodyline that allows

spacious interior having ample space for entire family.

Die Casting Department: The biggest die casting shop in this

part of the country handles both Aluminum and Zinc alloys.

Equipped with pressure die casting machines of 160, 250, 400

and 1,000 tons locking pressure, the metal is fed to machines

from individual holding furnaces of 75/150 kg., which in turn

are fed by mother melting furnace of 500 kg. aluminum

capacity.

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The shop based on projected area, is capable of producing

aluminum die casting upto 5 kg. in weight. The shop is backed

by chemical and metallurgical labs as also with a die

maintenance section. The well-equipped machineries are used in

this department in single shift, except two machines that are

used in two shifts; that produce all the accessories required by

this organization. The die casting of various type of components

like Gear box housing, Crantcase, Front wheel drum, Rear

wheel drum, Bell housing, Magneto flange, Cylinder head,

lower and upper Handle bar, Levers, Differential housing cover,

Brake shoe etc are undertaken.

Die casting some components for fulfilling customers' requirement are

also taken up. Some of our customers are BHEL, Bhopal; Greaves India

Limited, Aurangabad to whom supplying the Gear boxes and 422 cc

aluminium Engine are supplied.

Machine Shop Department: Machine shop has a wide variety

of machines like General purpose machine, Special purpose

machine, Multispindle automatic machine, Single spindle

automatic machine etc; which are mainly working on single

shift through eight different lines. Line no 2 is basically

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machining the aluminium components. crank shaft and

cylinder machining is usually done on line no 3.

Line no. 4 is the Grinding line where the grinding process is

done. Heat treatment is performed in line no 5, while different

turning of shafts and gear shaping and shaving are carried on

line no 6.Line no. 7 includes the functioning of gear

manufacture process mainly broaching, hobbing, finish turning,

gear shaving etc.Machining of different levers, centreless

grinding of tubes and shafts, serration / thread rolling operations

is achieved in line no. 8 & lastly different components are fed in

two other lines by line no. 9. Blank turing of gear and

machining of parts is done on multi spindle and single spindle

automatic machine. Engine components and some vehicle

component are the prime production.

Fabrication Department: The fabrication operations are

carried out in Two departments viz. Press Shop and Welding

Shop. The Press Shop is equipped with 20 presses ranging from

10 tons to 550 tons. Presses are fed by sheets cut to size on

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shearing machines of 3000x6 & 2500x3 mm. size. Components

ranging from washer to cabin roof and door(1000x1200 mm.)

are being processed in this shop.

The Welding Shop is equipped with battery of Spot welding,

MIG welding, Seam welding as well as Arc welding machines.

CO2 welding is extensively used for getting close tolerance on

welded structures. The department has its own auxillary shop

for maintenance of tools and dies.

Surface Treatment and Painting Department: Paint shop

includes three sections namely Paints section, spray phosphating

section, pickling.Paint section includes two convention painting

spray booth & one electrostatic painting plant. The first one is

called conventional primer where mainly frame paintings are

done. The equipments used for conventional painting are

Bullow's 230 spray gun and pressure fit tanks (we prepare

paints). The various types of frames like Diesel 750, Mini

petrol, Mini diesel, Diesel floor mounting, Diesel Nepal, Diesel

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scrubber, Electric vehicle are painted here. The other

conventional booth is known as conventional finish booth. Here

the frame accessories like cabin front, roof top, front fork, axle

housing are painted. In electrostatic plant the accessories of the

frame, the component of lighter weight and minimum size like

silencer, pillar and various brackets are painted here.

In spray phosphating the main work is to clean the components before

painting or to make surface according to paint requirement. After

phosphating the products goes to passivation for converting ferrous to

ferric for paintings need. The products comes from welding shop, press

shop and machine shop to phosphating, and after the process is being

done the products go to vehicle assembly. The pickling department is

mainly for maintaining the surface of heavily corroded materials.

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Foundry Department: The foundry, most modern in this part

of the country, can produce all grades of grey cast iron as well

as S. G. iron. In fact, it had been innovative to find new

processes of modulisation, for which it was granted 2

patents.Equipped with an Induction Melting furnace, Shell

Moulding Machines & Core Shooters, Green Sand Moulding

facilities, Isothermal Heat Treatment Furnace, one sand muller

machine, two shot blasting machine, two set jolting machines

for green sand moulding, fettling and shot blasting equipments,

its normal range of production weighs upto 8 Kgs. on a pattern

plate of 450x600 mm. However, foundrymen are trained to

make casting even of 1 ton weight if emergent requirement

arises.

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The foundry is not fully loaded with its captive requirement. Spare

capacity is utilised for producing sophisticated castings of prestigious

customers like BHEL, Indian Railways, Aerospace, Brakes India

Limited, Crompton Greaves limited.The induction furnace has a

capacity of 1.3 tons. The two types of moulding is been done here. 1.

Shell moulding 2. Green sand moulding. The foundry can manufacture

a wide range of products namely Differential housing, Differential

cages, Power transimission wheel, Crankcase flange, Magneto motor,

Engine output flange, Adapter plate for electric vehicle, Cylinder for

both Vikram 410 petrol version and Vikram 750 diesel version

Tool Room Department: The tool room is a cell where brain

combines with versatility to evoke the new era of invention. The

designs of tool coming from main tool planning departments are

implemented here. The tool room is furnished with well

equipped machineries namely, CNC machine (Taiwan), Jig

Boring machine (Czec Republic), Jig Grinding machine

(Switzerland), Profile Grinding machine (Germany), Die

shielding machine (Czech Republic), EDM (USA), Schaublin

machine (Switzerland).

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Tool room evoke a high performance output, consisting almost 99.9%

of company's requirement : one die casting die per year, 1-10 press

tools per month, 8-10 jigs per month, 10-12 gauges per month and 400

C.T. tools per monthThese machines are efficiently used to

manufacture different tools and dies like Jigs & fixture, Gauges,

Cutting tools, Forging dies, Die casting dies, Development items etc.

The different activities like like turning, milling different shapes,

grinding, heat treatment, jig boring, jig grinding, checking in the

standard room, heat treatment according to the job requirement, final

inspection are undertaken in the tool room.

Design and Development Department: Design &

Development has become the prime mover for the organisation.

The business today is customer driven. The department remains

in constant touch with the customers to transplant their needs

and thinking on the drawing board - nay on the computer

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screen. The department serves the internal customers through

design, development, standardization, value engineering, defect

removal etc. Equipped with Computer Aided Design Laboratory

(CAD lab ), Advanced Instrumentation, testing rigs prototype

manufacturing facilities and internet, the company's D & D is

recognised by the Ministry of Science and Technology, Govt. of

India.

It has the distinction of the developing first zero pollution

electric three wheeler in the world. Company besides its own in-

house R&D ; also works in association with leading Research

Associations & Educational Institution like I.I.T 's. Kanpur;

I.I.T. , Dehradun; A.R.A.I. Pune; T.C.I.R.D. Patiala etc

Computer Aided Design Laboratory: The CAD laboratory

provides a wide range of facilities. The versatility of brains

combines with the flavour of new creation to evolve a quality

product. All the designing & drafting process moulds into a

shape in this well-equipped environment of CAD

laboratory.Which includes FE analysis, Working model

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simulation & designing through Auto-Cad 14. Computer-Aided

Design is one of the many tools used by engineers and designers

and is used in many ways depending on the profession of the

user and the type of software in question. There are several

different types of CAD.

Each of these different types of CAD systems require the

operator to think differently about how he or she will use them

and he or she must design their virtual components in a different

manner for each department.

VISION MISSION

Mission

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To fulfill customer's needs for economic and safe mode of road

transport and quality engineering products through contemporary

technologies.

Vision

To grow into an environment friendly and globally competitive

company constantly striving to meet the changing needs of customer

through constantly improving existing products, adding new products

and expanding customer base.

Objective

Providing economical and safe means of transportation with

contemporary technology for movement of cargo and people.Providing

eco-friendly, flawless and reliable products to fulfill customer needs.

Achieving customer satisfaction by providing products at right price

and at right time.

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The Initial Moves

When Dr. Sahay took charge in February 1990, the production of

scooters had dropped to zero level. There were problems of orders as

the SIL scooters could not withstand the intense competition that had

set in the two wheeler market (by over capacity in the industry and the

entry of fuel efficient scooters), with its outdated technology and worn

out plant and machinery.

Luckily, the company also had a three wheeler technology, which met

the requirements of low cost public transport system. But it had never

been the focus of the companys attention. The production and sales of

three-wheeler averaged around 100 per month that could fetch about

Rs.90 million sales, which was not adequate to foot even the salary and

wages bill that was over Rs.120 million. The first and foremost task

was to build the confidence of people, said Dr. Sahay. How to make

them see the harsh reality, the impending threat of closure of the

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* A regional festival, which is celebrated with geity in many parts of

the country. company, and that by only superior performance the threat

could be warded off, was a difficult task. The task was further

compounded by the fact that some of the senior members of the

management team were not co-operating. I was given the release order

of the departing Executive Director and was asked to take charge of the

company. Today, employees firmly believe that even higher out-put is

possible without additional plant and machinery or manpower., he

concluded. Commenting on the issue of perception of capacity for 3W

manufacturing, a senior officer said, it is true. Though we had the

machines that could be used for manufacturing both 2-Wheelers

(scooters) and 3-Wheelers, but we had not realised

the extent to which the facilities could be geared up to make 3-

Wheelers. Our bankers, therefore, were in no mood to help on working

capital front. As no outside help was available, we started identifying

and selling scrap and requested the suppliers to extend a helping hand

for reviving the company. We also asked our Dealers to place advance

with the company for purchase of three-wheeler Unsatisfied demand

and spare capacity in supply chain became major source of working

capital

Marketing Challenges

Reflecting on the challenges earlier and now, the Dy. General Manager

(Marketing) said, before the present CEO took over, we produced 50-

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60 3Ws a month, they used to get sold in and around Lucknow.

Company believed what was happening was the best. Nobody was

prepared to think big. My first effort after arrival of Dr. Sahay was to

seek the approval of State Transport Authorities (STA) of different

states. You know all the (automobile) vehicles have to first get road

worthiness certificate, either from ARAI, Pune or VRDE, Ahmednagar,

without which the state transport authorities would not give approval

for registration of vehicle in their state.

They may still deny the permission on other criteria such as total

vehicle population in the state being more than required etc. The next

stage is getting permit from Regional Transport Authority (RTA),

which is necessary in the case of commercial vehicles and without

which they wont be allowed to ply, and therefore, no body will

purchase it. We had permit for Uttar Pradesh (UP) and Bihar States

only. They also had to be persuaded, because if they are not favourably

inclined, they may not give permit as it happened in the case of

Lucknow, when RTA refused to issue permit.

The second problem we are facing is that of changed norms of

emission (e.g., earlier the carbon monoxide permissible limit was 4%,

now it is reduced to 2.5%. Likewise, hydrocarbon plus nitrox limit was

2 gm. now it is 0.97gm. Now I have to get all the products re-tested

from ARAI, or VRDE and get approval from each state afresh. You can

imagine the task from the fact that getting STA approval may take 6

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months to 24 months. We are also facing the problem of technology.

We have developed and produced in-house, a battery operated electric

motor driven vehicle.

We had also worked a project on electric car, but the opportunity was

lost as we did not get permission from the appropriate authorities at the

appropriate time. I feel the quality of product is not up to our

expectation. It has to improve further. We must give credit to the

present CMD that he is relentlessly pressing the point that customer has

to be listened and that customer is the only profit rest all are overheads.

The Service Department would be asked many questions to shut them

up. To some extent they are also to be blamed for inadequacy of their

analysis on account of lack of proper data to support the customers

viewpoint. Occasionally the modifications in the design get validated in

the field, rather than fixing the quality standards, before the

modifications are introduced.

Reflections of the Trade Unions

By 1990 we realized enough was enough. There wase too much of

Dushmani

(animosity). There was no law and order. We asked officers, how will

all this make our future. However, before any result could come out, the

company got covered under BIFR. Ministry played havoc. The

machines, which were rejected earlier are giving 40% more output

these days. As the representatives left, the Chief of Personnel winked

to the case writers this firebrand man is a good machinist. He finishes

the days work in 2 hrs, without having any quality problem.

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Sharing their experience of over 25 years, the representatives of Union

A said,

From 1974 to 1985, the people used to think that they were

government employees, do whatever they felt (good or bad) only to

ensure their serviceBy 1986 the environment started changing.

Government started feeling that it could not run loss making

companies. Our union started thinking if the company is in loss, it has

implications for us. In 1986 we had no work. Indeed, we formed a joint

action committee (JAC) along with (supervisory) staff and officers. We

also formed an expert group, who went for an extensive examination of

viability, met all the past Chief Executives and came to the same

conclusion. We submitted report to government, who rejected it.

Government was willing to offer it to be run as cooperative, but was

unwilling to write off the losses.

There was some change in government attitude also. Government

appointed a new Chief Executive (Dr. Sahay). We also thought we must

cooperate and work. With Chief Executive from inside, the climate

changed. BIFR said you people are

responsible for loss, we realized that we must also admit our share of

responsibility in companys mounting losses. It was not easy to convey

this to people, but we told them after BIFR meeting plainly. Indeed, we

maintained what we had said in 1986 (we must get 8 hours work) and

that there was no alternative to work if the company was to survive.

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There has been some positive role played by the management. They

promoted 10% people in 1991 before the company got covered under

BIFR. Since, April 1995 to April 97, about 80% people have got

promotion. Today we realise a mental revolution has taken place.

Majority of people believe now that without work, no prosperity was

possible. Now if a target is set (collectively) no body needs to be

watched. Indeed, at times people go and ask others (down stream)

whether there was any problem with what they produced.

SIL

From Loss to Profit Position

Increase in Revenue Reduction in

Costs

Increase Increase Reducing the

Reducing the

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in Price in Volume Variable Costs

Fixed Costs

Increase in Expand Interest

Productivity Capacity

Brief History of the Company:

Scooters India was established by the Government of India in 1972 as a

public sector enterprise, by importing old plant and machinery from an

automobile company in Italy, which had closed down its scooters

manufacturing activity a few years back. The company was employing

over 3200 persons, about 85% of which constituted the labour force.

SILs performance right from the beginning was poor and was

deteriorating at a faster rate during the later part of eighties. Indeed

during the year 1989-90, the company had made a net loss of Rs. 404

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million on a sales of Rs. 103 millions and had accumulated loss of Rs

2125* millions.

In 1987 the government had explored the possibility of selling the

company to a leading automobile giant in private sector, but the talks

failed, as the latter was reluctant to accept the total labour force, which

was thought to be far in excess of the requirements of meagre

production. (Further details about the background of the company are

available in the SIL (A), (B) and (C) cases).

In 8 years period, by 1998, the company had touched a sale of Rs.

1279 million, earning a net profit of Rs. 119 million and shattering

several myths while achieving this performance level. The government

almost makes up its mind to wind up the company and appoints a new

chief executive, who pleads against the winding up and works for

revival of the company.

Achievements of SIL:

The sales went up from Rs.10.3 million to Rs.119.1 million

(11.3 times).

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The company earned a net profit 109 million in 1996-97 as

compared to a net loss of Rs.404 million on a sale of 103

million in 1989-90.

The 3W production went up from 1435 to 15618 i.e., 10.9

times.

This was achieved, when the work force was reduced from

about approximately 3000 to 2000 or so.

There has been no substantial change in the investment. Gross

block increased from Rs.251 million to Rs.297 million (the net

block indeed reduced from Rs.86 million to Rs.60 million).

The rise has not been overnight, but through a sustained effort,

highlighting the slogging done in achieving the results.

LINE CHART AT SCOOTER INDIA LTD.

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Sr. General Manager


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Organisation Structure

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General Manager General Manager

JGM/CM

Technical

JGM/CM

Maint.

JGM/CM

Production

JGM/CM

Utility

JGM/CM

Comm.

JGM/CM

F & A

Ammoni

aMechanical Process Power Plant Purchase F& A

Urea Plant Electrical Design &

Drawing

Offsite Store

Traffic

Product

Handling

Instrumental

Library &

Document

General

Engg.JGM/CM

Fire & Safety

& Env.

Civil

Laboratory

Training &

Development

FINANCE & ACCOUNT

DEPARTMENT


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Line of Control in Finance & Account Department

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Supply

Section

Note Sheet

Payment

Work Order

BOOKS/FICC

CELL

FINANCIAL

CONCURRENCE

BILL

SECTION

PAYROLL

SECTION

PSL

SECTION

Work

contract

Imported

supply

Indigenous

supply

Service

contract

Senior Manager

(F& A)

Senior Manager

(F& A)

HOD/ C.M. (F & A)


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Account Officers

Junior Account officers

Senior Accountant

Junior Accountant

SIL-PRODUCTS

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Manager(Account)

Deputy Account

Manager

Senior Account Officers

Manager(Account)

Manager(Account)

Manager(Account)

Deputy Account

Manager

Deputy Account

Manager

Deputy Account

Manager


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Scooters India Limited makes various & versatile types of three

wheelers: Vikram 450D,Vikram 410G, Vikram 600G, Vikram

750D,Vikram 750D(WC), Vikram EV.

The products have a high payload capacity and efficiency. These are

specially designed and developed for local transportation. However, the

generation of Vikram run successfully in different countries also. Our

product is very demanding in various countries all over the world .

Germany, Italy, Sudan, Nigeria, Nepal, Bangladesh are few of the

countries. For product details click on the product options.

LIST OF PRODUCTS

Vikram 750D

Vikram 600P

Vikram 450D

Vikram 410G

Vikram EV

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PRODUCTS

I. Vikram 750D

A premiere product from the family of "Vikram" vehicles. It is sturdy,

highly fuel efficient, easily maintainable and meets latest emission

norms. It is highly cost effective and being used as bread earner for

many families .

Application :Passenger Carrier, Load Carrier, Delivery Van etc.

Specification

Engine 4 Stroke, Single Cylinder Diesel Engine

; Air Cooled / Water Cooled

Fuel Diesel

Displacement 510cc

Bore 85mm

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Stroke 90mm

Maximum Power 7.5KW @ 3000 rpm

Maximum Torque 27Nm @ 1800-2400 rpm

Compression Ratio 17.5 : 1

G.V.W 1250 kgs

Kerb Wt.

625 kgs for Passenger Carrier, 570 Kg

for Goods Carrier

Wheel Track 1315 mm

Wheel Base 2270 mm

Ground Clearence 140 mm

Tyre Size 4.5 x 10 " , 8 ply

Steering Steering Wheel

Brakes

Hydrualic brakes for simultaneous

action on all 3 wheels

Suspension

Front coil spring with hydraulic

damper . Rear leaf spring with hydraulic

damper.

Gear Box Constant mesh type ; Four forward and

one reverse gear.

Clutch Dry

Starting Electric Start

Maximum Speed 52 Km / Hour

Fuel Tank

Capacity

10 Ltr

Seating Capacity For Passenger Carrier- Driver + 6

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Passenger

For Goods Carrier - Driver + 1

Applications

Pickup / Delivery Van, Garbage

Carrier , Sewage Cleaning, Poultry / Milk

Van, Gas Cylinder / Bottle Carrier,

Postal Van etc.

Vikram 450D

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A premiere product from the family of "Vikram" vehicles. It is sturdy,

highly fuel efficient, easily maintainable and meets latest emission

norms. It is highly cost effective and being used as bread earner for

many families .

Application :Passenger Carrier, Load Carrier, Delivery Van etc.

Specifications

Engine 4 Stroke, Single Cylinder Diesel

Engine ; Air Cooled / Water Cooled

Fuel Diesel

Displacement 395cc

Bore 86mm

Stroke 68mm

Maximum Power 5.51KW @ 3600 rpm

Maximum Torque 16.7Nm @ 2200-2800 rpm

Compression Ratio 18 : 1

Recommended

G.V.W

990 kgs

Kerb Wt.

625 kgs for Passenger Carrier, 320 Kg

for Goods Carrier

Wheel Track 1168 mm

Wheel Base 1950 mm

Ground Clearence 140 mm

Tyre Size 4.5 x 10 " , 8 ply

Steering Sterring Wheel and Handle Bar

Brakes

Hydrualic brakes for simultaneous

action on all 3 wheels

Suspension

Front coil spring with hydraulic damper

. Rear leaf spring with hydraulic damper.

Gear Box Constant mesh type ; Four forward and

one reverse gear.

Clutch Wet Type

Starting Electric Start

Maximum Speed 483 Km / Hour

Fuel Tank Capacity 10 Ltr

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Sitting Capacity

For Passenger Carrier - Driver + 3

Passenger

For Goods Carrier - Driver + 1

Applications

Pickup / Delivery Van, Garbage Carrier

, Sewage Cleaning, Poultry / Milk

Van, Gas Cylinder / Bottle Carrier,

Postal Van etc.

Vikram 410G

Based on Italian design,

improved with English, American & Japanese technology to

suit rough roads and driving conditions - VIKRAM 410CNG is

equipped with welded steel cabin, electronic ignition, turn

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signal indicators, wind screens wiper, rear view mirror,

speedometer, indicator lights.

Specifications

Engine 2 Stroke, Single Cylinder air cooled

Bore 66mm

Stroke 58mm

Displacement 198cc

Output 9.8 BHP

Maximum RPM 4800

Maximum Speed 55 2 km/hr

Fuel CNG Gas

Ignition

By means of electronics device and

HT coil fed by specify fly wheel

magneto

Clutch

Multiple plate oil immersed wet type

clutch arrangement

Gear Box

Constant mesh type 4 forward and

one reverse gear.

Wheel Tracks 1168 mm.

Wheel Base 1864 mm.

Fuel Tank Capacity

CNG Cylinder of 22.5ltr and petrol

tank of 3ltr for limphome only

Recommended

G.V.W.

975 Kgs.

Pay Load Capacity 550 Kgs.

Lighting &

Signaling

Single head lamp, centrally located,

12V 35W with front & rear turn

signals, parking and brake stop lights.

Steering Handle bar.

Brakes Hydraulic brakes for simultaneous

action on all 3 wheels.

Suspension Front coil spring with hydraulic

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damper. Rear leaf spring with

hydraulic damper.

Starting Kick start

Applications Delivery, Sewage Cleaning Poultry,

Milk Van, Bottle carrier

VIKRAM EV

Scooters India Limited is the one and only organistion to bring the

revolution in the automobile field by designing and developing this

Electric Maestro. In this age of pollution this electric vehicle is

exceptionally pollution free as it is totally working on 12 batteries. It

has stylish and bold masculine bodyline which makes it a different and

attractive looks from others. The design is based on the concept " Man

maximum Machine minimum " that allows spacious interior having

ample space for entire family. This three wheeler has been launched

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on trial basis in the heart of Lucknow & Delhi. Successfully. For

product details click on the product options

Specifications

Vehicle Model Vikram EV

Vehicle Type Electrical Three Wheeler

Seating Capacity 7 Passenger & Driver

Wheel base 2270 mm

Wheel track 1316 mm (rear)

Length 3179 mm

Width 1480 mm

Height 1885 mmGround clearance 140 mm

Turning radius 3.5 mts.

Maximum Gradebility 12 %

Body type FRP

Frame type Welded channel steel space frame

Suspension Front trailing link Rear under slung type

with semi elliptical leaf spring &

hydraulic shock absorberTyre Size 4.5 x 10" 8 ply

Dual circuit hydraulic drum brake

No. of batteries Twelve 12 volts rechargeable

Charging time 6-8 hrs for 100% charging

Total distance covered

by single charging

80Km.@30-35km/hr

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INTRODUCTION

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TO

WORKING

CAPITAL

Working Capital:-

The life blood of business, as is evident, signified funds required for

day-to-day operations of the firm. The management of working capital

assumes great importance because shortage of working capital funds is

perhaps the biggest possible cause of failure of many business units in

recent times. There it is of great importance on the part of management

to pay particular attention to the planning and control for working

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capital. An attempt has been made to make critical study of the various

dimensions of the working capital management ofSIL.

Decisions relating to working capital and short term financing are

referred to as working capital management. These involve managing

the relationship between a firm's short-term assets and its short-term

liabilities. The goal of Working capital management is to ensure that

the firm is able to continue its operations and that it has sufficient

money flow to satisfy both maturing short-term debt and upcoming

operational expenses.

Working Capital

Every business needs investment to procure fixed assets, which remain

in use for a longer period. Money invested in these assets is called

Long term Funds or Fixed Capital.

Business also needs funds for short-term purposes to finance current

operations. Investment in short term assets like cash, inventories,

debtors etc., is called Short-term Funds or Working Capital. The

Working Capital can be categorized, as funds needed for carrying out

day-to-day operations of the business smoothly. The management of

the working capital is equally important

as the management of long-term financial investment.

Every running business needs working capital. Even a business which

is fully equipped with all types of fixed assets required is bound to

collapse without

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o adequate supply of raw materials for processing;

o cash to pay for wages, power and other costs;

o creating a stock of finished goods to feed the market demand

regularly; and,

o The ability to grant credit to its customers.

All these require working capital. Working capital is thus like the

lifeblood of a business. The business will not be able to carry on day-

to-day activities without the availability of adequate working capital.

Working capital cycle involves conversions and rotation of various

constituents

Components of the working capital. Initially cash is converted into

raw materials.

Subsequently, with the usage of fixed assets resulting in value

additions, the raw materials get converted into work in process and then

into finished goods. When sold on credit, the finished goods assume the

form of debtors who give the business cash on due date. Thus cash

assumes its original form again at the end of one such working capital

cycle but in the course it passes through various other forms of current

assets too. This is how various components of current assets keep on

changing their forms due to value addition. As a result, they rotate and

business operations continue. Thus, the working capital cycle involves

rotation of various constituents of the working capital.

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While managing the working capital, two characteristics of current

assets should be kept in mind viz. (i) short life span, and (ii) swift

transformation into other form of current asset.

Each constituent of current asset has comparatively very short life span.

Investment remains in a particular form of current asset for a short

period. The life span of current assets depends upon the time required

in the activities of procurement; production, sales and collection and

degree of synchronization among them. A very short life span of

current assets results into swift transformation into other form of

current assets for a running business.

These characteristics have certain implications:

Decision regarding management of the working capital has to be

taken frequently and on a repeat basis.

The various components of the working capital are closely

related and mismanagement of any one component adversely

affects the other components too.

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Sundry Creditors.

Trade Advances.

Borrowings.

Provisions.

The working capital needs of a business are influenced by

numerous factors. The important ones are discussed in brief as

given below:

Nature of Enterprise

The nature and the working capital requirements of an enterprise are

interlinked. While a manufacturing industry has a long cycle of

operation of the working capital, the same would be short in an

enterprise involved in providing services. The amount required also

varies as per the nature; an enterprise involved in production would

require more working capital than a service sector enterprise.

Manufacturing/Production Policy

Each enterprise in the manufacturing sector has its own production

policy, some follow the policy of uniform production even if the

demand varies from time to time, and others may follow the principle

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of 'demand-based production' in which production is based on the

demand during that particular phase of time. Accordingly, the working

capital requirements vary for both of them.

Working Capital Cycle

In manufacturing concern, working capital cycle starts with the

purchase of raw materials and ends with realization of cash from the

sale of finished goods. The cycle involves the purchase of raw materials

and ends with the realization of cash from the sale of finished products.

The cycle involves purchase of raw materials and stores, its conversion

in to stock of finished goods through work in progress with progressive

increment of labor and service cost, conversion of finished stick in to

sales and receivables and ultimately realization of cash and this cycle

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

Operations

The requirement of working capital fluctuates for seasonal business.

The working capital needs of such businesses may increase

considerably during the busy season and decrease

during the slack season. Ice creams and cold drinks have a great

demand during summers, while in winters the sales are negligible.

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increase in sales, rise in prices, optimistic expansion of business etc. On

the country at he time of depression i.e. when there is a down swing of

the cycle, business

contracts, sales decline, difficulties are faced in collections from

debtors and firms may have a large amount of working capital lying

idea.

Availability of Raw Material

If raw material is readily available then one need not maintain a large

stock of the same, thereby reducing the working capital investment in

raw material stock. On the other hand, if raw material is not readily

available then a large inventory/stock needs to be maintained, thereby

calling for substantial investment in the same.

Growth and Expansion

Growth and expansion in the volume of business results in

enhancement of the working capital requirement. As business grows

and expands, it needs a larger amount of working capital. Normally, the

need for increased working capital funds precedes growth in business

activities.

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Earning Capacity and Dividend policy

Some firms have more earning capacity than others due to the quality

of their products, monopoly conditions etc. Such firms with high

earning capacity may generate cash profits from operations and

contribute to their capital. The dividend policy of a concern also

influences the requirements of the working capital. A firm that

maintains steady high rate of cash dividend irrespective of its

generation of profits needs more capital than the firm retains larger part

of its profits and does not pay high rate of cash dividend.

Price Level Changes

Generally, rising price level requires a higher investment in the working

capital. With increasing prices, the same level of current assets needs

enhanced investment.

Manufacturing Cycle

The manufacturing cycle starts with the purchase of raw material and is

completed with the production of finished goods. If the manufacturing

cycle involves a longer period, the need for working capital would be

more. At times, business needs to estimate the requirement of working

capital in advance for proper control and management. The factors

discussed above influence the quantum of working capital in the

business. The assessment of working capital requirement is made

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keeping these factors in view. Each constituent of working capital

retains its form for a certain period and that holding period is

determined by the factors discussed above. So for correct assessment of

the working capital requirement, the duration at

various stages of the working capital cycle is estimated. Thereafter,

proper value is assigned to the respective current assets, depending on

its level of completion.

Other Factors

Certain other factors such as operating efficiency, management ability,

irregularities a supply, import policy, asset structure, importance of

labor, banking facilities etc. also influences the requirement of working

capital.

Component of Working Capital Basis of Valuation

Stock of raw material Purchase cost of raw materials

Stock of work in process At cost or market value, whichever is

lower

Stock of finished goods Cost of production

Debtors Cost of sales or sales value

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Cash Working expenses

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

valuation

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

such valuation becomes the total estimated working capital

requirement.

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

case of small and micro enterprises where business operation is not

very large. We know that working capital has a very close relationship

with day-to-day operations of a business. Negligence in proper

assessment of the working capital, therefore, can affect the day-to-day

operations severely. It may lead to cash crisis and ultimately to

liquidation. An inaccurate assessment of the working capital may cause

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

both of them are dangerous.

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WORKING CAPITAL MANAGEMENT

Working Capital Management refers to management of current assets

and current liabilities. The major thrust of course is on the management

of current assets .This is understandable because current liabilities arise

in the context of current assets. Working Capital Management is a

significant fact of financial management. Its importance stems from

two reasons:-

Investment in current assets represents a substantial portion of

total investment.

Investment in current assets and the level of current liabilities

have to be geared quickly to change in sales. To be sure, fixed

asset investment and long term financing are responsive to

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variation in sales. However, this relationship is not as close and

direct as it is in the case of working capital components.

The importance of working capital management is effected in the fact

that financial manages spend a great deal of time in managing current

assets and current liabilities. Arranging short term financing,

negotiating favorable credit terms, controlling the movement of cash,

administering the accounts receivable, and monitoring the inventories

consume a great deal of time of financial managers.

The problem of working capital management is one of the

best utilization of a scarce resource.

Thus the job of efficient working capital management is a formidable

one, since it depends upon several variables such as character of the

business, the lengths of the merchandising

cycle, rapidity of turnover, scale of operations, volume and terms of

purchase & sales and seasonal and other variations.

CONSEQUENCES OF UNDER ASSESSMENT OF WORKING

CAPITAL

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The working capital in certain enterprise may be classified into the

following kinds.

1. Initial working capital.The capital, which is required

at the time of the commencement of business, is called

initial working capital. These are the promotion

expenses incurred at the

2. earliest stage of formation of the enterprise which

include the incorporation fees. Attorney's fees, office

expenses and other expenses.

2. Regular working capital. This type of working capital remains

always in the enterprise for the successful operation. It supplies the

funds necessary to meet the current working expenses i.e. for

purchasing raw material and supplies, payment of wages, salaries and

other sundry expenses.

3. Fluctuating working capital. This capital is needed to meet the

seasonal requirements of the business. It is used to raise the volume of

production by improvement or extension of machinery. It may be

secured from any financial institution which can, of course, be met with

short term capital. It is also called variable working capital.

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4. Reserve margin working capital.It represents the amount utilized

at the time of contingencies. These unpleasant events may occur at any

time in the running life of the business such as inflation, depression,

slump, flood, fire, earthquakes, strike, lay off and unavoidable

competition etc. In this case greater amount of capital is required for

maintenance of the business.

Financing Working Capital

Now let us understand the means to finance the working capital.

Working capital or current assets are those assets, which unlike fixed

assets change their forms rapidly. Due to this nature, they need to be

financed through short-term funds. Short-term funds are also called

current liabilities. The following are the major sources of raising short-

term funds:

I. Suppliers Credit

At times, business gets raw material on credit from the suppliers. The

cost of raw material is paid after some time, i.e. upon completion of the

credit period. Thus, without having an outflow of cash the business is in

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iii. Promoters Fund

It is advisable to finance a portion of current assets from the promoters

funds. They are long-term funds and, therefore do not require

immediate repayment.

These funds increase the liquidity of the business.

Management of Inventor.

Inventories constitute the most significant part of current assets of a

large majority of companies in India. On an average, inventories are

approximately 60 % of current assets in public limited companies in

India.

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Because of the large size of inventories maintained by firms maintained

by firms, a considerable amount of funds is required to be committed to

them. It is, therefore very necessary to manage inventories efficiently

and effectively in order to avoid unnecessary investments. A firm

neglecting a firm the management of inventories will be jeopardizing

its long run profitability and may fail ultimately.

The purpose of inventory management is to ensure availability of

materials in sufficient quantity as and when required and also to

minimize investment in inventories at considerable degrees, without

any adverse effect on production and sales, by using simple inventory

planning and control techniques.

Needs to hold inventories:-

There are three general motives for holding inventories:-

Transaction motive emphasizes the need to maintain

inventories to facilitate smooth production and sales operation.

Precautionary motive necessities holding of inventories to

guard against the risk of unpredictable changes in demand and

supply forces and other factors.

Speculative motive influences the decision to increases or

reduce inventory levels to take advantage of price fluctuations

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and also for saving in re-ordering costs and quantity discounts

etc.

Objective of Inventory Management:-

The main objectives of inventory management are operational and

financial. The operational mean that means that the materials and spares

should be available in sufficient quantity so that work is not disrupted

for want of inventory. The financial objective means that investments in

inventories should not remain ideal and minimum working capital

should be locked in it.

The following are the objectives of inventory management:-

o To ensure continuous supply of materials, spares and finished

goods.

o To avoid both over-stocking of inventory.

o To maintain investments in inventories at the optimum level as

required by the operational and sale activities.

o To keep material cost under control so that they contribute in

reducing cost of production and overall purchases.

o To eliminate duplication in ordering or replenishing stocks. This

is possible with the help of centralizing purchases.

o To minimize losses through deterioration, pilferage, wastages

and damages.

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o To design proper organization for inventory control so that

management. Clear cut account ability should be fixed at

various levels of the organization.

o To ensure perpetual inventory control so that materials shown in

stock ledgers should be actually lying in the stores.

o To ensure right quality of goods at reasonable prices.

o To facilitate furnishing of data for short-term and long term

planning and control of inventor

Management of cash

Cash is the important current asset for the operation of the business.

Cash is the basic input needed to keep the business running in the

continuous basis, it is also the ultimate output expected to be

realized by selling or product manufactured by the firm.

The firm should keep sufficient cash neither more nor less. Cash

shortage will disrupt the firms manufacturing operations while

excessive cash will simply remain ideal without contributing anything

towards the firms profitability. Thus a major function of the financial

manager is to maintain a sound cash position.

Cash is the money, which a firm can disburse immediately without any

restriction. The term cash includes coins, currency and cheques held by

the firm and balances in its bank account. Sometimes near cash items

such as marketing securities or bank term deposits are also included in

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Speculative Motive: - The speculative motive relates to the holding of

cash for investing in profit making opportunities as and when they

arise.

The opportunities to make profit changes. The firm will hold cash,

when it is expected that interest rates will rise and security price will

fall.

ACCOUNTING FOR STORES

General Outline of stores Function:

a. The authority of receipt, store and issue of all material is

centralized in the materials department subject to exception in

permitted in certain cases. In certain cases a nominal stock of few

consumable items can be permitted with uses departments such as

maintenance, laboratory and administration department for meeting

emergencies. In addition certain chemicals are permitted to be

stored in production department due to the operational needs.

b. The authority of storage of packing materials like bags is vested

with bagging department. The bagging department receives the

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material, gets it inspected in laboratory, issued the same for

product bagging and maintains the stocks.

c. Maintenance of records for all quantitative transaction of

packing material is the responsibility of bagging department.

Similarly the raw materials are handled by production

department with all responsibilities in respect of quantity

accounting.

Functions of Store Accounting Section

The section dealing with accounting of stores in the finance department

shall have following functions:-

Accounting of receipts, issues, return and transfer of materials.

Accounting of imported materials for capital works and operations.

Associating with stores section for stock verification.

4.Valuation of stores items should do on weighted average basis.

Insurance of Stock & Stores

For stocks of ammonia, naphtha, general stores, bags, phosphoric

acid, and finished products held at plants, insurance shall be taken

to cover the risks arising out of fire explosion, riot, strike terrorism,

malicious damage, earthquake, etc. The stock of finished products

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A). Maximum Level

It is the quantity of materials beyond which a firm should not

exceed its stocks. If the quantity exceeds maximum level limit then it

will be overstocking.

Maximum Level = Re-ordering level + Re-ordering Quantity-

(Minimum

Consumption*Minimum Re-ordering period)

B). Minimum Level

It represents the quantity of stock that should be held at all the

time, stock level is normally not allowed facing below this level.

Minimum Level = Re-order level (Normal consumption*Normal Re-

order Period)

C). Safety Level

Normal issues of stock usually stopped at this level and made

only under specific

instructions. Safety stock is a buffer to meet some unanticipated

increase in usage.

Safety stock level = Ordering Level (Average rate of consumption *

Re-order level)

OR

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5) Review of slow moving and non- moving items:

Stock turnover ratio should be as high as possible. Loss due to

obsolescence be eliminated or these items used in some profitable

work. Slow moving stock should be identified and speedily disposed

off. The speed of movement should be increased. The turnover of

different items of stock can be analyzed to find out the moving stocks.

The percentage of slow moving stores = Slow moving stores /

Total Inventory

Components of working capital are calculated as follows:

1) Raw Materials Storage Period=Average stock of raw

materials/Average cost of raw material consumption per day.

2.) W-I-P Holding period=Average w-i-p in inventory/Average cost of

production per day.

3.) Stores and spares conversion period= Average stock of Stores and

spares/ Average consumption per day.

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4.) Finished goods conversion period= Average stock of finished

goods/Average cost of goods sold per day.

5.) Debtors collection period=Average book debts/Average credit

sales per day.

6.) Credit period availed=Average trade creditors/Average credit

purchase per day.

Management of Receivables

A sound managerial control requires proper management of liquid

assets and inventory. These assets are a part of working capital of the

business. An efficient use of financial resources is necessary to avoid

financial distress. Receivables result from credit sales.

A concern is required to allow credit sales in order to expand its sales

volume. It is not always possible to sell goods on cash basis only.

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Sometimes other concern in that line might have established a practice

of selling goods on credit basis. Under these circumstances, it is not

possible to avoid credit sales without adversely affecting sales.

The increase in sales is also essential to increases profitability. After a

certain level of sales the increase in sales will not proportionately

increase production costs. The increase in sales will bring in more

profits. Thus, receivables constitute a significant portion of current

assets of a firm. But for investment in receivables, a firm has to insure

certain costs. Further, there is a risk of bad debts also. It is therefore,

very necessary to have a proper control and management of receivables.

Needs to hold cash:

Receivables management is the process of making decisions relating to

investment in trade debtors. Certain investments in receivables are

necessary to increase the sales and the profits of a firm. But at the same

time investment in this asset involves cost consideration also. Further,

there is always a risk of bad debts too. Thus, the objective of receivable

management is to take a sound decision as regards investments in

debtors. In the words of Bolton, S.E., the

need of receivables management is to promote sales and profits until

that point is reach where the return of investment in further funding of

receivables is less than the cost of funds raised to finance that

additional credit.

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Important Terms

Working Capital Cycle

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Each component of working capital (namely inventory, receivables and

payables) has two dimensions ........TIME ......... and MONEY. When it

comes to managing working capital - TIME IS MONEY. If you can

get money to move faster around the cycle (e.g. collect monies due

from debtors more quickly) or reduce the amount of money tied up (e.g.

reduce inventory levels relative to sales), the business will generate

more cash or it will need to borrow less money to fund working capital.

As a consequence, you could reduce the cost of bank interest or you'll

have additionalfree money available to support additional sales growth

or investment. Similarly, if you can negotiate improved terms with

suppliers e.g. get longer credit or an increased credit limit; you

effectively createfree finance to help fund future sales.

If you....... Then......

Collect receivables (debtors) faster You release cash from

the cycle

Collect receivables (debtors) slower Your receivables soak

up cash

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Get better credit (in terms of duration or

amount) from suppliers

You increase your cash

resources

Shift inventory (stocks) faster You free up cash

Move inventory (stocks) slower You consume more

cash

It can be tempting to pay cash, if available, for fixed assets e.g.

computers, plant, vehicles etc. If you do pay cash, remember that this is

now longer available for working capital. Therefore, if cash is tight,

consider other ways of financing capital investment - loans, equity,

leasing etc. Similarly, if you pay dividends or increase drawings, these

are cash outflows and, like water flowing downs a plug hole, they

remove liquidity from the business.

More businesses fail for lack of cash than for want of profit.

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1) The document regarding the material may be sent to the stores,

purchase, concerned department. But ultimately they have to be send to

stores.

The documents may be:

Goods receipt / railway receipt / challan

Form

Excise duty

2) The particulars of the document are noted in the carrier receipt

register (CRR).

3) After the entry in the register, the document is given to an agent

termed as handling contractor. He will collect the material.

4) Consignments cases are intact. If not he will ask for open

delivery. Then he has to deliver the goods to stores. In case of damage

he has to give a certificate. Some consignment may without document

i.e. door delivery and is some cases it may be face to face delivery.

5) If any discrepancy is found during checking, the accounts section

is informed for necessary action and getting claim from insurance

company. The date of receipt is filled in CRR.

6) The next operation is filling the stores receipt vouchers (SRV).

Here the quantity mentioned in challan and purchase order are

compared, SRV Has 7 copies, two for accounts and one for each

purchase, stores, indenter, master file & custody section.

7) Inspection is done by the indenter:

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Suppose all items are accepted then the material is handed to

custody section after putting identification & giving a SRV

control number.

If some items are defective then the accepted items will be sent

to custody and for defective ones, information is sent to

supplier, accounts, indenter & insurance company and the

particulars noted in rejection register.

If there is some breakage then either item may be replaced by

company or claim against insurance is obtained, when an item

is replaced, its dispatch advice is made.

Direct charge SRV (DCSRV) is prepared when indenter wants

material directly from receipt section.

CUSTODY SECTION

This section is responsible for proper keeping of materials and issuing

them when required by different department and contractors. The

material received here is first checked as per SRV for every material

there is a card. These cards are located in bins according to code of

material is received in custody the card information is updated.

When someone wants to issue certain material he has to fill the store

issue voucher (SIV). Once the item is issued again information is

updated in the kardex. When a particular part is returned then this

received in stores, by internal stores return voucher (ISRV). After

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Sources of additional working capital include the following:

Existing cash reserves

Profits (when you secure it as cash!)

Payables (credit from suppliers)

New equity or loans from shareholders

Bank overdrafts or lines of credit

Long-term loans

If you have insufficient working capital and try to increase sales, you

can easily over-stretch the financial resources of the business.

This is called overtrading. Early warning signs include:

o Pressure on existing cash

o Exceptional cash generating activities e.g. offering high

discounts for early cash payment

o Bank overdraft exceeds authorized limit

o Seeking greater overdrafts or lines of credit

o Part-paying suppliers or other creditors

o Paying bills in cash to secure additional supplies

o Management pre-occupation with surviving rather than

managing

Frequent short-term emergency requests to the bank (to help pay wages,

pending receipt of a cheque

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3. Make sure that these practices are clearly understood by staff,

suppliers and customers.

4. Be professional when accepting new accounts, and especially

larger ones.

5. Check out each customer thoroughly before you offer credit.

Use credit agencies, bank references, industry sources etc.

6. Establish credit limits for each customer... and stick to them.

7. Continuously review these limits when you suspect tough times

are coming or if operating in a volatile sector.

8. Keep very close to your larger customers.

9. Invoice promptly and clearly.

10. Consider charging penalties on overdue accounts.

11. Consider accepting credit /debit cards as a payment option.

12. Monitor your debtor balances and ageing schedules, and don't

let any debts get too large or too old.

Recognize that the longer someone owes you, the greater the chance

you will never get paid. If the average age of your debtors is getting

longer, or is already very long, you may need to look for the following

possible defects:

poor collection procedures

lax enforcement of credit terms

slow issue of invoices or

statements

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errors in invoices or statements

Customer dissatisfaction.

Debtors due over 90 days (unless within agreed credit terms) should

generally demand immediate attention. Look for the warning signs of a

future bad debt. For example.........

o longer credit terms taken with approval, particularly for smaller

orders

o use of post-dated checks by debtors who normally settle within

agreed terms

o evidence of customers switching to additional suppliers for the

same goods

o new customers who are reluctant to give credit references

o Receiving part payments from debtors.

Profits only come from paid sales.

The act of collecting money is one which most people dislike for many

reasons and therefore put on the long finger because they convince

themselves there is something more urgent or

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important that demand their attention now. There is nothing more

important than getting paid for your product or service. A

customer who does not pay is not a customer.

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Managing Payables (Creditors)

Creditors are a vital part of effective cash management and should be

managed carefully to enhance the cash position.

Purchasing initiates cash outflows and an over-zealous purchasing

function can create liquidity problems. Consider the following:

o Who authorizes purchasing in your company - is it tightly

managed or spread among a number of (junior) people?

o Are purchase quantities geared to demand forecasts?

o Do you use order quantities which take account of stock-holding

and purchasing costs?

o Do you know the cost to the company of carrying stock?

o Do you have alternative sources of supply? If not, get quotes

from major suppliers and shop around for the best discounts,

credit terms, and reduce dependence on a single supplier.

o How many of your suppliers have a returns policy?

o Are you in a position to pass on cost increases quickly through

price increases to your customers?

o If a supplier of goods or services lets you down can you charge

back the cost of the delay?

o Can you arrange (with confidence!) to have delivery of supplies

staggered or on a just-in-time basis?

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There is an old adage in business that if you can buy well then you can

sell well. Management of your creditors and suppliers is just as

important as the management of your debtors. It is important to look

after your creditors - slow payment by you may create ill-feeling and

can signal that your company is inefficient (or in trouble!).

Remember, a good supplier is someone who will work with you to

enhance the future viability and profitability of your company

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OBJECTIVES OF THE

RESEARCH

The following are the main objective which has been undertaken in the

present study:

1. To determine the amount of working capital requirement and to

calculate various ratios relating to working capital.

2. To make an item wise study of the components of the working

capital.

3. To suggest the steps to be taken to increase the efficiency in

management of working capital.

4. How to make the inventory system more efficient and effective?

5. By which way the cost can be minimized that is invested in the

inventory and how to regulate the whole inventory system in a

better way.

6. How SCOOTER INDIA LTD. can ensure the interrupted supply

without making over investment in the inventories. As we know

that SCOOTER INDIA LTD. has large machineries due to

which it has to retain too much stock of spares to avoid the

interruption?

7. As we know that SCOOTER INDIA LTD. is a very big

organization and it is typical to coordinate with all the

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employees who are working there. But for the effective

inventory system there should be coordination between the

store, purchase department and finance department. So what

should be done for the coordination between the departments to

make the inventory system effective?

8. To analyze the working of various departments that work in

coordination with Finance department as payroll section, bill

section, taxation section etc.

OBJECTIVE OF STUDY

The main aim of study is to check the efficiency and effectiveness of

inventory management system.

Investment in inventory incurs a high cost. Therefore effective

management is necessary to minimize the cost and ultimately increases

profitability of an organization.

A part from our main objective our main objectives are:

1) To analyze the level of investment in inventory by SCOOTER

INDIA LTD..

2) To analyze the financial position of the company.

3) To give suggestion if any, regarding effective inventory

management.

Or

To give suggestions to ensures smooth and uninterrupted supply

without making unnecessary investment of funds in inventory.

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considering the availability of data and convenience. Data were

collected through the inventory software, databases, net and by asking

questions. The collected data is captured into the questionnaire for the

analysis. There is no manual coding. I have also included some

financial data with the help of annual report.

The data is collected with the help of questionnaire and

observation. In the questionnaire all the relevant questions regarding

the inventory management are included. Here we have used

convenience sampling that is we have selected the data according to our

convenience. I have followed that results which are quite similar in

responses.

RESEARCH METHODOLOGY

It is well known fact that the most important step in marketing

research process is to define the problem. Choose for investigation because a

problem well defined is half solved. That was the reason that at most care was

taken while defining various parameters of the problem. After giving through

brain storming session, objectives were selected and the set on the base of

these objectives. A questionnaire was designed major emphasis of which was

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gathering new ideas or insight so as to determine and bind out solution to the

problems.

Study design and methodology:-

Two types of data are collected, one is primary data and second one is

secondary data. The primary data were collected from the Department

of finance, SIL. The secondary data were collected from the Annual

Report of SIL, SIL website, etc.

Place of study:-

The project study is carried out at the Finance Department ofSIL office

Situated at Lucknow, U.P. The study is undertaken as from 25 JUNE

2011 to 5 AUGUST 2011 in the form of summer placement.

DATA ANALYSIS AND

INTERPRETATION

(Rs in crores)

2007 2008200999


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A: CURRENT ASSETS:

Inventories: 47.43 36.38

19.71

Sundry debtors: 5.84 5.24

3.54

Cash and bank balance: 44.07 24.01

18.44

Other current assets: 1.30 6.89

2.12

Loans and advances: 5.69 6.84

7.35

.

TOTAL: 104.33 79.36

51.16

B: CURRENT LIABELITIES:

Acceptances: 7.31 2.53

2.82

Sundry creditors:

a) Total Dues of

SSI Undertakings: - --

b) On others: 16.90 14.74

13.23

Other liabilities: 9.91 7.79

4.68

Advance and Deposits: 3.85 4.18

5.79

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12790(crores) in 2008-09. This shows company has really worked hard

to increase its sales year on year .

2. SOURCES - RsLakhs

INTERPRETATION

The sources of funds required for the financial running of the

company was rs 485638(lakhs) in 2005 it reached highest in 2007

for rs 663244(lakhs) and according to the working requirements it

got down to rs 559793(lakhs) in 2009

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485638

568528

663244

626124

559793

2005 2006 2007 2008 2009


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3. FIXED ASSETS - Rs.

INTERPRETATION

The companies fixed assets were rs 46384(lakhs) in 2005 and on

year on year basis it reached tremendously rs 65262(lakhs) in 2009.

This shows that company has also increased its fixed assets during

the last past years.

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46 384 45 931 49348 54 563 65262

2005 2006 2007 2008 2009


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IMPORTANT RATIOS OF SIL

1. CURRENT RATIO (%)

INTERPRETATION

The ideal ratio of current assets:current liabilities should be 2:1.The

above ratio was well till 2008 but it has reached 1:1 for CA & CL in

2010 which is not healthy sign for the company.

106

192.41

166.23

101.10

2008 2009 2010


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2. Quick Ratio (%)

INTERPRETATION

The liquid assets were well enough to cope up with the current

liabilities in the year 2008 which was at rs 104.97(lakhs) and with

107

104.97

90.02

62.20

2008 2009 2010


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Financial ratios are calculated from one or more pieces of information

from a company's financial statements. A financial ratio can give a

financial analyst an excellent picture of a company's situation and the

trends that are developing. A ratio gains utility by comparison to other

data and standards. Ratio analysis can also help us to check whether a

business is doing better this year than it was last year; and it can tell us

if our business is doing better or worse than other businesses doing and

selling the same things.

Financial ratio analysis groups the ratios into categories which tell us

about different facets of a company's finances and operations. An

overview of some of the categories of ratios is given below.

1. Leverage Ratios which show the extent that debt is used in a

company's capital structure.

2. Liquidity Ratios which give a picture of a company's short

term financial situation or solvency.

3. Operational Ratios which use turnover measures to show how

efficient a company is in its operations and use of assets.

4. Profitability Ratios which use margin analysis and show the

return on sales and capital employed.

5. Solvency Ratios which give a picture of a company's ability to

generate cashflow and pay it financial obligations.

Ratios are always expressed as a decimal value, such as 0.10, or

the equivalent percent value, such as 10%. Financial ratios allow for

comparisons

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do not know how to operate that inventory software while it

should be known by all the employees that are related to

inventory management segment.

2) I have also observed one thing that there was not coordination

among the employees even between those who lies in the same

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