Professional Documents
Culture Documents
ENGINEERING LTD
ORGANIZATION STUDY
Submitted to
REMYA RAJEEV
Register Number: 50738
DECLARATION
I, Remya Rajeev, hereby declare that this summer project report titled An Analysis on
Cash management of Thejo Engineering Limited is prepared in partial fulfillment of the
requirement for the award of Masters degree in business administration during the academic
year 2013-15 by Rajagiri College of Social Sciences, under the guidance of, Dr. Mathew
Joseph (Rajagiri College of Social Sciences).
I also declare that this report has not been submitted in full or part thereof, to any university
or institutions for the award of any degree or diploma.
Kalamassery
21-07-2014
2|Page
Remya Rajeev
ACKNOWLEDGMENT
I express my heartfelt thanks to the Management of THEJO ENGG LTD for giving me a
golden opportunity to undergo this organization study & internship in their organization.
I owe my sincere thanks to the head of my institution, Dr. Joseph I. Injodey, for giving me
an opportunity to undergo this organization study.
I consider this as a privilege to express my sincere gratitude to Dr. Mathew Joseph, faculty
guide, Department of Management Studies for his valuable support and suggestion and
guidance during the course of the project.
In preparing this report, I want to give special acknowledgement to Mr. Sanjaya Kumar,
Senior Manager HR, Project Guide, Thejo Engineering Ltd. for his guidance to carry out my
project work and providing me intellectual guidance and assistance.
I thank Almighty for his blessings in completing this project work successfully.
Last but not the least I extend my sincere thanks to my parents, friends and all well-wishers
who have been the back bone in completing this project work in a successful manner.
3|Page
LIST OF CONTENTS
CHAPTER
PARTICULARS
PG NO
EXECUTIVE SUMMARY
SECTION I
1.
INDUSTRY PROFILE
10
2.
11
3.
VISION/MISSION STATEMENTS
12
4.
13
5.
14
6.
16
7.
ORGANIZATIONAL STRUCTURE/HIERARCHY,
EMPLOYEE STRENGTH
17
8.
PRODUCTS/SERVICES
18
9.
21
10.
CUSTOMERS/CLIENTS
22
11.
27
4|Page
12.
43
13.
43
14.
SWOT ANALYSIS
45
SECTION II
48
CHAPTER 1.
RESEARCH METHODOLOGY
49
CHAPTER 2.
60
CHAPTER 3.
95
BIBLIOGRAPHY
97
5|Page
LIST OF TABLES
TABLE NO:
TABLE NAME
TABLE 1
TABLE 2
CAPITAL STRUCTURE
SHAREHOLDING PATTERN
TABLE 3
TABLE 4
TABLE 5
TABLE 6
TABLE 7
TABLE 8
TABLE 9
TABLE 10
TABLE 11
TABLE 12
TABLE 13
TABLE 14
TABLE 15
TABLE 16
TABLE 17
TABLE 18
TABLE 19
TABLE 20
TABLE 21
TABLE 22
TABLE 23
TABLE 24
TABLE 25
6|Page
PAGE
NO:
14
14
15
16
61
63
65
66
68
70
71
72
74
75
77
79
80
82
84
85
86
88
89
91
93
LIST OF GRAPHS
TABLE NO:
GRAPH 1
GRAPH 2
GRAPH 3
GRAPH 4
GRAPH 5
GRAPH 6
GRAPH 7
GRAPH 8
GRAPH 9
GRAPH 10
GRAPH 11
GRAPH 12
GRAPH 13
GRAPH 14
GRAPH 15
GRAPH 16
GRAPH 17
GRAPH 18
GRAPH 19
GRAPH 20
TABLE NAME
CURRENT RATIO
QUICK RATIO
NET WORKING CAPITAL RATIO
INVENTORY TURNOVER RATIO
DEBTORS TURNOVER RATIO
CREDITORS TURNOVER RATIO
FIXED ASSETS TURNOVER RATIO
TOTAL ASSETS TURNOVER RATIO
CAPITAL TURNOVER RATIO
DEBT-EQUITY RATIO
OWNERS FUND TO TOTAL FUND
INTEREST COVERAGE RATIO
EQUITY DIVIDEND COVERAGE RATIO
NET PROFIT RATIO
OPERATING PROFIT RATIO
RETURN ON ASSETS
RETURN ON INVESTMENTS
RETURN ON NETWORTH
EARNINGS PER SHARE
DIVIDEND PER SHARE
PAGE
NO:
63
65
66
68
70
71
72
74
75
77
79
80
82
84
85
86
88
89
91
93
LIST OF CHARTS
TABLE NO:
CHART 1
CHART 2
CHART 3
CHART 4
CHART 5
CHART 6
CHART 7
CHART 8
CHART 9
CHART 10
7|Page
TABLE NAME
ORGANIZATIONAL STRUCTURE OF THE
COMPANY
PRODUCTION PROCESS
FINANCE DEPARTMENT
MATERIALS & STORES DEPARTMENT
COD DEPARTMENT
EXECUTION & MONITORING DEPARTMENT
MARKETING DEPARTMENT
SALES DEPARTMENT
STRUCTURE OF FACTORY
TOTAL MAINTENANCE CENTER
PAGE
NO:
17
21
27
28
30
31
34
34
39
41
EXECUTIVE SUMMARY
Bulk material handling is an engineering field that is centered on the design of equipment
used for the handling of dry materials such as ores, coal, cereals, wood chips, sand, gravel
and stone in loose bulk form. It can also relate to the handling of mixed wastes. Thejo
Engineering Ltd is one of Indias major solution providers in bulk material handling,
conveyor systems, mineral processing and corrosion protection sectors. The company
pioneered the cold vulcanizing process in India and over the years has registered a steady and
systematic growth. It is one of the few organizations engaged in the manufacturing, sales and
servicing of specialized engineering products, catering to various segments of bulk materials
handling industry
The study is conducted for Thejo Engineering Ltd on its cash management system. The
objective of the study is to find out the liquidity position of the concern through ratio
analysis, to understand the growth of the company in terms of cash flow statement and make
necessary suggestions to improve the cash position of the company. The research design
adopted for the project is analytical in nature where the facts and information used in the
study are already available and these are analyzed to make critical evaluation of the
performance. The primary data for the study is collected through personal interviews and
discussion with Deputy Manager (Material Planning) and the secondary data is collected
from the annual reports, company website and other books and journals related to the study.
The time period taken for the study has been four years 2009-2013. The tools used in the
analysis are cash flow statement for the study period, ratio analysis and trend analysis. From
the above methods of analysis it is found that the cash management of Thejo Engineering has
been working well within the norms. The major limitation of the study is the lack of adequate
data due to confidentiality of information.
8|Page
SECTION-I
PROFILE STUDY OF THE
ORGANIZATION
9|Page
INDUSTRY PROFILE
Bulk material handling is an engineering field that is centered on the design of equipment
used for the handling of dry materials such as ores, coal, cereals, wood chips, sand, gravel
and stone in loose bulk form. It can also relate to the handling of mixed wastes.
Bulk material handling systems are typically composed of stationary machinery such
as conveyor
belts, screw
elevators,
truck
dumpers, railcar dumpers or wagon tipplers, ship loaders, hoppers and diverters and various
mobile equipment such as loaders, various shuttles,[combined with storage facilities such
as stockyards, storage or stockpiles. Advanced bulk material handling systems feature
integrated bulk storage, conveying, and discharge.
The purpose of a bulk material handling facility may be to transport material from one of
several locations (i.e. a source) to an ultimate destination or to process material such as ore in
concentrating and smelting or handling materials for manufacturing such as logs, wood chips
and sawdust at sawmills and paper mills. Other industries using bulk materials handling
include flour mills and coal fired utility boilers.
Providing storage and inventory control and possibly material blending is usually part of a
bulk material handling system.
.
10 | P a g e
11 | P a g e
HISTORY-AT A GLANCE
1974
1986
2012
2013
2014
MISSION
To efficiently manage an investor owned Company engaged in the manufacture of
quality rubber products.
To emerge as a reliable leader in the Maintenance of bulk materials handling before
2015.
To strive for a balance among various products.
To earn optimum and long term profit while offering viable products and services par
excellence.
To ensure steady growth of the company.
To strive for the well-being of the employees and their families and their mental,
physical and emotional growth.
12 | P a g e
CORPORATE OFFICE
ZONAL OFFICES
1.
2.
3.
4.
EAST ZONE
SOUTH-EAST ZONE
CENTRAL ZONE
SOUTH ZONE
ASSOCIATES
1.
2.
3.
4.
5.
6.
Vadodara(Gujrat)
Varanasi(UP)
Vasco(Goa)
DuPont(USA)
African Relining Services-Ghana
Losugen-Australia
BRANCHES
1. Tata Nagar
2. Dhanbad
3. Talcher
4. Shakthi Nagar
5. Nagpur
6. Delhi
7. Korba
8. Chennai
9. Vizag
10. Ramagundam
11. Bellary
13 | P a g e
To
Year
Class Of
Share
Authorized Issued
Capital
Capital
(Crores) (Crores)
Paid Up
Shares
(Nos)
Paid Up
Face
Value
Paid Up
Capital
(Crores)
2012
2013
Equity Share
2.00
1.72
1716776
10
1.72
2011
2012
Equity Share
2.00
1.18
1184740
10
1.18
TABLE:1
Source: Annual reports for the years 2011-12 ,2012-13
31/03/2013
Face Value
10
No. Of Shares
% Holding
PROMOTER'S HOLDING
0.00
0.00
Indian Promoters
979920
57.08
Sub Total
979920
57.08
Foreign Promoters
288436
16.80
Sub Total
288436
16.80
26700
1.56
900
0.05
Other Investors
Private Corporate Bodies
NRI's/OCB's/Foreign Others
14 | P a g e
76500
4.46
Sub Total
104100
6.06
General Public
344320
20.06
1716776.0000
100.00
Others
GRAND TOTAL
TABLE: 2
317072
9.23
248400
7.23
S P George
124000
3.61
Anand T Pethe
62420
1.82
Lukose O J
62080
1.81
George V A
50000
1.46
225000
6.55
Jose Kozhipat
43140
1.26
37800
1.10
1169912
34.07
Total
Number of
shares held
Sr.
No
TABLE: 3
15 | P a g e
AMOUNT(IN
CRORE)
66 crore
2010-11
95.22 crore
2011-12
115.36 crore
2012-13
133.38 crore
TABLE: 4
16 | P a g e
DGM-MKTNG
CORROSION
PROTECTION
DY- MANAGER
TRANSFER POINT
SOLNS
DY MANAGER
DIRECTOR, MA
RKETING
HEAD,COD
WEAR &
ABRASION
PROTECTION
SR. ENGG
CONVEYOR CARE
FC-F&A
DY MANAGER
DESIGN
GM,TMC
BOARD OF
DIRECTORS
M.D
V.P
BUSINESS DIV
ZONE
DGM, HR&AD
MN
ZM-CENTRAL
HEAD,
MATERIALS
DIRECTOR
,SALES
SALES &
SERVICES
ZM-EAST
ZM-SOUTH
HEAD. EMD
GMOPERATIONS(
CHART: 1
17 | P a g e
ZMSOUTHEAST
PRODUCTS/SERVICES
MAJOR PRODUCTS
1. CONVEYOR CARE
Vulcanizing equipments
Hydraulic machine
Pressure bay machine
Spillage control
FLEXI SEALS
Segmented skirt board sealing system
Skirt rubbers
HERCULES
Rubber with UHMWPE
SURRACK
1. Carrying side trackers
2. Return side trackers
2. DUST CONTROL
Dry forging dust suppression for confined space
Dry forging dust suppression for open space
Dusgon-dust suppression of stock piles, haul roads and wagons.
18 | P a g e
3. FLOW ENHANCEMENT
G force air canons
Rubber
Alloy steel cast cap
Rubber
Ceramic
Alloy steel casting
MATROX- Roaching
UHMWPE
Rubber
Larox
Customized
19 | P a g e
Lined pipes
-Soft, high abrasion resistant rubber lining polyurethane lined pipe fitting, ceramic coated
pipes
8. CORROSION PROTECTION
Rubber sheeting, primers and adhesives-materials
Site lining
Fabrication and rubber lined supplies
9. CONVEYOR SERVICES
Belt repair-Fabric ply, steel cord
Conveyor pulling
20 | P a g e
PRODUCTION PROCESS
Production planning
Mixing
(Banburry)
Designing
Technical
(Quality check of batches
, Stage-I)
Pre-form(Mill)
1. Calendering
Warming&
2. Extruder
3. Rotocure
Trimming
(Hydraulic press)
Finished Goods ,
Quality check Stage -III &
Client inspection
Inspection
CHART: 2
21 | P a g e
Product installation
byThejo Engineers
CUSTOMERS/CLIENT
22 | P a g e
PORT TRUSTS
Chennai
Mormugao, Goa
Jawaharlal Nehru Porttrust
Paradeep
Vishakapatinam
Tuticorin
CEMENT FACTORIES
Associated Cement Co. Ltd
Cement Corporation of India Ltd
India Cements Ltd
Madras Cements Ltd
Tamilnadu Cement Corporation Ltd
Panyam Cements & Minerals
Coromandel Cement
Priyadarshini Cement
Visaka Cement
Grasim Industries
Ambuja Cements
Vikram Cement
UTLRATECH CEMENTS
Tadipatri
Awarpur
Arakkonam
23 | P a g e
Rajula
Hirmi
OTHER PRIVATE SECTORS
Lafarge Cements
Diamond Cements Ltd
Zuari Cements
Manikgarh Cement
CHEMICAL PLANTS
Mangalore Chemicals &Fertilizers Ltd
Fertilizers & Chem. Travancore Ltd
Aluminium Industries Ltd.
Southern Petrochemicals Indus Coprn.
Fertilizer Corp of India Ltd
Zuari Agro-Chemicals,Goa
Sindri Fertilizers Corp.
Paradip Phosphates
Oswal Chemicals
IFFCO,Chasnala
FOUNDRIES
Ennore Foundries Ltd
Talcher Super Thermal power station
Ramagundam Super thermal power station
Korba Thermal power station
Simhadhri Thermal power station
PVT SECTOR POWER PLANTS
Tata Power plant-Mumbai
Bharat Aluminium-Captive Power plant
MINES
Tata Steel- Joda mines, Namundi Iron ore mines, Jamadoba Coal mines
24 | P a g e
ALUMINIUM
National Aluminium Company-Angul, Damanjodi
PVT SECTOR
Bharat Aluminium Company
OEMs
Lakshmi Machine works Ltd
Larsen & Toubro-Material handling division
Thyssen Krupp Industries(Buckau Wolf)
B.M.M
Tata Robin Fraser(TRF)
O&K Orenstein &Koppel(I) Pvt. Ltd
McNally Bharath
MECON Ltd
UB Engineering
FLSmidth Minerals Pvt.Ltd
GEA Energy Systems
26 | P a g e
.
FINANCE
CONTROLLER
SENIOR MANAGER
ZONAL
ACCOUNTANTS
ASSISTANT
COMPANY
SECRETARY
MANAGER
COSTING(FACTORY)
BRANCH
ACCOUNTSMENTOR
( 4 ZONES)
BRANCH ACCOUNTS
ASST(4 ZONES)
HEAD FACTORY
ACCOUNTS
ASST MANAGER
ACCOUNTS
(FACTORY)
BRANCH ACCOUNTS
ASST
SITE ACCOUNTANTS
CHART: 3
In the above figure, left side indicates the service operations and right side indicates
the manufacturing operations.
The main function of the Branch Accountants is to collect the expense sheets, check
transactions; budget details etc from the sites which is obtained from the site
accountants and the Branch Manager have to approve it.
The Branch Accountants has to report the same to the corresponding Zonal
Accountants that is; Thejo is mainly having four zones of operations East, South,
Central and Southeast zones.
The main function of Branch Accounts in Charge is to enter the details in accounting
software.
27 | P a g e
This will be verified by the Branch Accounts Mentors. They also determine the
statutory requirements, other budgets, methods to reduce cost, tax etc.
Zonal Accountants, Branch Accounts Mentors have to report to the Senior Manager
Accounts.
Senior Manager will make the necessary modifications if any.
Factory Accountants will estimate the expenses statement of different departments
like materials, production and maintenance.
They also enter the same in accounting software.
It is further verified by the Head Factory Accounts. Central excise will take care of it.
Head Factory Accounts and the Senior Manager Accounts will finally report to the
Finance Controller.
HEAD, MATERIALS
DEPT
RAW MATERIALS
STORES AT FACTORY
PURCHASE
CORPORATE(CRITICAL
,RUBBER)
FACTORY(ROUTINE
ACTIVITIES)
.
CHART: 4
Inventory is an essential part of manufacturing process. Without essential inventory, a
manufacturing or a production unit cannot work efficiently. The materials department meets
these requirements of inventory whenever is needed. Materials and stores department is
divided in to three; raw materials products, engineering products and stores products.
The raw materials will be purchased according to the reorder level of the stock. Whenever the
reorder level is reached a particular amount of stock is purchased. In the case of commonly
28 | P a g e
consumed materials, it will be purchased more or less according to the market conditions. If
the department forecasts any deviation in the price or policies of the government regarding
these materials the purchase decision is changed in according to the situation. The
requirements of the production department and other departments is informed to the materials
department according to the purchase requisition of the departments they order the product.
The engineering products are purchased according to the decision of the CEO only. If the
management fined an engineering product is essential to the plant, CEO takes the decision
accordingly. Materials department makes the purchase order and the decisions regarding
stores materials, tools and other spare parts are purchased by materials department whenever
is necessary. Thejo mainly import the materials from Germany, USA, and Brazil etc.
CRITERIA TO SELECT A SUPPLIER
The supplier of the company is selected by certain criteria
ROLE OF COD
ORDER PROCESSING
CORPORATE PLANNING
29 | P a g e
HEAD,COD
AT
CORPORATE
PRODUCTION
PLANNING AT
FACTORY
CHART: 5
ORDER PROCESSING
1. All quotes made by Zonal Office/BDM/Marketing team shall be vetted by the COD
before it is submitted to clients.
2. To verify all tender documentation, to ensure that accurate costing/estimates are
provided in accordance with company/business strategy.
3. To co-ordinate and scrutinize the commercial aspects concerned with all contracts,
tenders and projects.
4. In case of new products, the Order Processing Department shall consult with the
R&D Department in the factory about the viability, cost and lead time for
manufacturing the products.
5. To work as an extension of the Factory Planning Department for viability of
Production in the time for all orders for services and supplies.
6. The offer/quote should be sent after vetting to the concerned Zonal office/Marketing
department within immediately from the date of receipt to the corporate office. If no
response is received from COD within immediately, the concerned office can go
ahead with the quote.
7. This department should work in co-ordination with Marketing Department, Zonal
offices, EMD, marketing back office and factories/ dispatch.
CORPORATE PLANNING
1. To prepare short and medium term plan for all operations of the company.
2. Periodic monitoring of the plans estimated and report to top management.
3. To ensure in co-ordination with the finance department, whether the approved
CAPEX requirement are met promptly apart from working capital requirement.
30 | P a g e
ZONAL
MANAGERS(4
ZONES)
BRANCH IN
CHARGE
BDM
SITE IN CHARGE
PRODUCT
INSTALLATION
ENGINEERS
TECHNICIANS
CHART: 6
Execution Monitoring department in Thejo integrate all the services activities and co-ordinate
all the projects works. The major service activities are:
1. Conveyor Belt Splicing(joint)
Cold process
Hot process
31 | P a g e
5. HR DEPARTMENT
The five resources which constitute any organization are man, materials, machine,
market and money. Simultaneously 5 departments are functioning correspondingly for
the effective use of these resources.
5 MS
RESOURCES
5 MS DEPARTMENT
MAN
HRD
MACHINE
PRODUCTION
MATERIALS
PURCHASE/MATERIALS
MONEY
FINANCE
MARKET
MARKETING
The appraisal policy adopted by the HR department is 360 degree appraisal policy which
includes:
(a) Self appraisal, (b) Peer appraisal and (c) HOD appraisal and apart from these there will
also be a potential appraisal. The promotion policy of the company is based upon
performance of the employee after the completion of minimum of three years experience
in the company. Training need will be analyzed through the appraisal. TNA will be
consolidated and the workers employees are then deputed for suitable training programs.
Marketing and Sales Department integrate all the marketing activities of the product. The
activities of the Marketing Department commences when an enquiry comes from a client.
The marketing department first audits and gives engineering solutions with the help of the
companys engineers. Then based on the solution, necessary products will be designed. The
designing department prepares an accurate design according to the client requirements and
then prepares a quotation before giving it to the COD department. The COD department then
analyses and study on the quotation and gives it to the Marketing department and them in turn
forward it to the particular client. Mr. Manoj Joseph is the Director of Marketing and Mr.
Rajesh John is the Director of Sales.
33 | P a g e
ORGANISATIONAL CHART
MARKETING
DIRECTOR,
MKTNG
CPD(PDH)
TRANSFER
PT
SOLN(PDH)
WEAR
&ABRASION
(PDH)
CONVEYOR
CARE(PDH)
DUST
SEPARATIO
N & FLOW
ENHANCEM
ENT(PDH)
CHART: 7
SALES
DIRECTOR
OF SALES
HEAD, EMD
ZONAL
MANAGERS
(4 ZONES)
BRANCH
MANAGERS
BDM
PRODUCT
INSTALLATIO
N
ENGINEERS
SITE-INCHARGE
TECHNICIAN
S
CHART: 8
34 | P a g e
VP, BUSINE
SS
DEVELOPM
ENTY(OEM)
MARKETIN
G COORDINATO
R(INTERNAT
IONAL)
PRODUCTS
1. CONVEYOR CARE
Vulcanizing equipment
Hydraulic machine
Belt cleaners
Belt scrappers
Spillage control
FLEXI SEAL
Skirt rubbers
HERCULES
SURRACK
3. DUST CONTROL
Dry forging dust suppression for confined space
Dry forging dust suppression for open space
Dusgon-dust suppression of stock piles, haul roads and wagons.
35 | P a g e
4. FLOW ENHANCEMENT
G force air canons
Rubber
Rubber
Ceramic
MATROX- Roaching
UHMWPE
Rubber
Larox
Customized
36 | P a g e
7. SLURRY HANDLING
ANAKONDA-slurry hose
Customized design
End connectors
Lined pipes
-Soft, high abrasion resistant rubber lining polyurethane lined pipe fitting, ceramic coated
pipes
8. CORROSION PROTECTION
Rubber sheeting, primers and adhesives-materials
Site lining
9. CONVEYOR SERVICES
Belt repair-Fabric ply, steel cord
Conveyor pulling
Spillage control
Belt cleaning
Dust suppression
7. MANUFACTURING UNIT
Mr. Manesh Joseph is the GM. Operation; Head of Factory. The factory is located at Ponneri.
There are five units and a PU unit and R&D lab.
UNIT-1
Production of all main products takes place here and dispatches it after its quality checking.
In unit-I, mixing department, technical department, production department, mould
department and lining department works together for the production of better, good quality
products.
PRODUCTS
Rubber lining
Pulley lagging
Thor
Unit-II
Unit-II generally takes care of reconditioning and repair of conveyor belt, production of
pressure bags, HIPO diaphragms, air bags etc. Mr.Arulanand is the in-charge of this unit.
Unit-III
This unit is divided in to three divisions: vulcanizing material department (VMD), Bulk
material handling and Tool room. The production is undertaken according to the need of the
client.
Unit IV
Unit four mainly concentrates on production of solution and adhesives according to the need
of the client.
38 | P a g e
UNIT V
All lining activity takes place in unit v. The different lining activities are:
Vessel Lining
Pipe Lining
GENERAL
MANAGEROPERATION
R&D
PU
UNIT-I
UNIT-II
CHART: 9
39 | P a g e
UNIT-III
UNIT-IV
UNIT-V
Production Planning
HR and Administration
Materials and stores
Technical
Pre-form
Mixing
Production
Maintenance
Lining
Mould
Design
Quality &
Dispatch
POLYURETHANE DEPARTMENT
PU is the next department under manufacturing unit. Poly urethane is a costly, hard material
and is more flexible which lasts long compared to normal rubber materials. In PU department
they produce PU products according to the clients needs. One of the main products is belt
cleaner. Mr. Pradeep Banerjee is the in-charge of this department.
RESEARCH AND DEVELOPMENT
Thejos R&D sector has been the cornerstone for developing products that meets the needs of
customers and society. R&D uses innovative technology to update their existing products and
services and also tries to put forward something new in the market. The R&D team regularly
focuses on market and takes necessary studies according to the market conditions and
competitors strategies. If any quality issue related to any product arises, then proper research
is carried out to rectify the problem. Thejo focuses on R&D with core emphasis on polymeric
science and materials research which made them outsource manufacturer of choice for many
US and European Original Equipment Manufacturers. Along with these, the R&D centre at
Thejo is certified by DSIR which helps it to act as an independent testing
centre.Mr.Gopinathan.C is the General Manager of the department.
40 | P a g e
Continually improve the effectiveness of the QMS through training, development and
employee involvement.
GM
AGM
HR
FINANCE
ADMIN
CHART: 10
41 | P a g e
OPERATIONS
FUNCTIONS OF TMC
Maintenance of cranes
UNDERTAKING PROJECTS
The TMC is now undertaking the following projects:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
42 | P a g e
Manage the entire sales cycle, from order generation to post-sales activities
Saudi operations
Australia
African markets like Liberia, Ghana
North American markets like Brazil, Chile, Argentina
44 | P a g e
SWOT ANALYSIS
45 | P a g e
STRENGTH
Professional Management team
First organization in the field of conveyor belt servicing and related products
manufacturing.
First company in India which is NSE listed under SME Category.
85% market share in servicing.
Wide range of clients in core sector industries.
Thejos own plants of operation and no outsourcing.
ISO 9000, CRISIL Rating
First company in India which introduced the cold vulcanizing process.
Overseas operations:
Thejo Hatcon
Thejo Australia
WEAKNESS
Supply and transportation are subject to various uncertainties and risks, and delays in
delivery or non delivery may result in penalty clause and Thejo is responsible to pay
the client heavy penalties according to the penalty clause agreed.
Agreements with various banks contain restrictive clauses for certain activities and if
Thejo is unable to get their approval, it might restrict their scope of activities.
46 | P a g e
OPPORTUNITIES
Products and services are intended to core industries, so high opportunities in such
industries.
During the period of sluggishness , any loss of business in installation related work
will be compensated by increased maintenance works as well as maintenance of
existing systems would be given due importance.
Increasing demand for operations and Maintenance service.
Opportunity to tap the untapped market with huge business potential.
THREATS
Competition from parties in unorganized sectors.
Prices of the key raw materials such as natural rubber and synthetic rubber are highly
volatile.
Each of the products is unique and according to customer specifications, so cost of
implementation is very high.
47 | P a g e
SECTION-II
PROBLEM CENTERED STUDY OF
THE ORGANIZATION
48 | P a g e
CHAPTER-1
RESEARCH METHODOLOGY OF THE
STUDY
49 | P a g e
Primary Objective:
To analyze the cash management of THEJO ENGINEERING LTD.
Secondary Objective:
To find out the liquidity position of the concern through ratio analysis.
50 | P a g e
Secondary Sources
a. From the annual reports maintained by the company.
b. Data are collected from the companys website.
c. Books and journals pertaining to the topic.
Ratio analysis.
The present study has taken into account four financial years viz., 2009-2010 to 2012-2013.
51 | P a g e
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
accounts. Sometimes near-cash items, such as marketable securities or bank times deposits,
are also included in cash. The basic characteristic of near-cash assets is that they can readily
be converted into cash.
Cash management is concerned with the managing of: (i) Cash flows into and out of
the firm, (ii) Cash flows within the firm, and (iii) Cash balances held by the firm at a point of
time by financing deficit or investing surplus cash.
management cycle. Sales generate cash which has to be disbursed out. The surplus cash has
to be invested while deficit this cycle at a minimum cost. At the same time, it also seeks to
achieve liquidity and control. Cash management assumes more importance than other current
assets because cash is the most significant and the least productive asset that a firms holds.
It is significant because it is used to pay the firms obligations.
unproductive.
However, cash is
Unlike fixed assets or inventories, it does not produce goods for sale.
Therefore, the aim of cash management is to maintain adequate control over cash position to
keep the firm sufficiently liquid and to use excess cash in some profitable way.
time is devoted in managing it. In recent past, a number of innovations have been done in
cash management techniques. An obvious aim of the firm these days is to manage its cash
affairs in such a way as to keep cash balance at a minimum level and to invest the surplus
cash in profitable investment opportunities.
In order to resolve the uncertainty about cash flow prediction and lack of
synchronization between cash receipts and payments, the firm should develop appropriate
strategies for cash management. The firm should evolve strategies for cash management.
The firm should evolve strategies regarding the following four facets of cash management.
Cash planning: Cash inflows and outflows should be planned to project cash surplus
or deficit for each period of the planning period. Cash budget should be prepared for
this purpose.
Managing the cash flows: The firm should decide about the properly managed. The
cash inflows should be accelerated while, as far as possible, the cash outflows should
be decelerated.
Optimum cash level: the firm should decide about the appropriate level of cash
balances. The cost of excess cash and danger of cash deficiency should be matched to
determine the optimum level of cash balances.
Investing surplus cash: The surplus cash balances should be properly invested to
earn profits. The firms should decide about the division of such cash balances
between alternative short-term investment opportunities such as bank deposits,
marketable securities, or inter-corporate lending.
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TRANSACTION MOTIVE
The transactions motive requires a firm to hold cash to conduct its business in the
ordinary course. The firm needs cash primarily to make payments for purchases, wages and
salaries, other operating expenses, taxes, dividends etc. The need to hold cash would not
arise if there were perfect synchronization between cash receipts and cash payments, i.e.,
enough cash is received when the payment has to be made. But cash receipts and payments
are not perfectly synchronized. For those periods, when cash payments exceed cash receipts,
the firm should maintain some cash balance to be able to make required payments. For
transactions purpose, a firm may invest its cash in marketable securities. Usually, the firm
will purchase securities whose maturity corresponds with some anticipated payments, such as
dividends or taxes in the future. Notice that the transactions motive mainly refers to holding
cash to meet anticipated payments whose timing is not perfectly matched with cash receipts.
PRECAUTIONARY MOTIVE
The precautionary motive is the need to hold cash to meet contingencies in the future.
It provides a cushion or buffer to withstand some unexpected emergency. The precautionary
amount of cash depends upon the predictability of cash flows. If cash flows can be predicted
with accuracy, less cash will be maintained for an emergency. The amount of precautionary
cash is also influenced by the firms ability to borrow at short notice when the need arises.
Stronger the ability of the firm to borrow at short notice less is the need for precautionary
balance.
precautionary reasons is not expected to earn anything; the firm should attempt to earn some
profit on it. Such funds should be invested in high-liquid and low-risk marketable securities.
Precautionary balances should, thus, be held more in marketable securities and relatively less
in cash.
SPECULATIVE MOTIVE
The speculative motive relates to the holding of cash for investing in profit-making
opportunity to make profit may arise when the security prices change. The firm will hold
cash, when it is expected that interest rates will rise and security prices will fall. Securities
can be purchased when the interest rate is expected to fall; the firm will benefit by the
54 | P a g e
subsequent fall in interest rates and increase in security prices. The firm may also speculate
on materials prices. If it is expected that materials prices will fall, the firm can postpone
materials purchasing and make purchases in future when pric4e actually falls. Some firms
may hold cash for speculative purposes. By and large, business firms do not engage in
speculations. Thus, the primary motives to hold cash and marketable securities are: the
transactions and the precautionary motives.
CASH PLANNING
Cash flows are inseparable parts of the business operations of firms. A firm needs
cash to invest in inventory, receivable and fixed assets and to make payment for operating
expenses in order to maintain growth in sales and earnings. It is possible that firm may be
making adequate profits, but may suffer from the shortage of cash as its growing needs may
be consuming cash very fast. The poor cash position of the firm cash is corrected if its cash
needs are planned in advance. At times, a firm can have excess cash may remain idle.
Again, such excess cash outflows. Such excess cash flows can be anticipated and properly
invested if cash planning is resorted to. Cash planning is a technique to plan and control the
use of cash. It helps to anticipate the future cash flows and needs of the firm and reduces the
possibility of idle cash balances ( which lowers firms profitability ) and cash deficits (which
can cause the firms failure).
Cash planning protects the financial condition of the firm by developing a projected
cash statement from a forecast of expected cash inflows and outflows for a given period. The
forecasts may be based on the present operations or the anticipated future operations. Cash
plans are very crucial in developing the overall operating plans of the firm.
Cash planning may be done on daily, weekly or monthly basis. The period and
frequency of cash planning generally depends upon the size of the firm and philosophy of
management. Large firms prepare daily and weekly forecasts. Medium-size firms usually
prepare weekly and monthly forecasts. Small firms may not prepare formal cash forecasts
because of the non-availability of information and small-scale operations. But, if the small
firms prepare cash projections, it is done on monthly basis. As a firm grows and business
operations become complex, cash planning becomes inevitable for its continuing success.
55 | P a g e
The management should, after knowing the cash position by means of the cash
budget, work out the basic strategies to be employed to manage its cash.
CASH CYCLE:
The cash cycle refers to the process by which cash is used to purchase materials from which
are produced goods, which are then sold to customers.
56 | P a g e
Cash cycle=Average age of firms inventory +Days to collect its accounts receivables Days
to pay its accounts payable.
The cash turnover means the numbers of times firms cash is used during each year.
360
Cash turnover = ---------------Cash cycle
The higher the cash turnover, the less cash the firm requires. The firm should, therefore, try
to maximize the cash turn.
MANAGING COLLECTIONS:
a) Prompt Billing:
By preparing and sending the bills promptly, without a time log between the dispatches
of goods and sending the bills, a firm can ensure earlier remittance.
b) Expeditious collection of cheques:
An important aspect of efficient cash management is to process the cheques receives
very promptly.
c) Concentration Banking:
Instead of a single collection center located at the company headquarters, multiple
collection centers are established. The purpose is to shorten the period between the time
customers mail in their payments and the time when the company has use of the funds are
then to a concentration bank usually a disbursement account.
d) Lock-Box System:
With concentration banking, a collection center receives remittances, processes them
and deposits them in a bank. The purpose is to lock-box system is to eliminate the time
between the receipt of remittances by the company and their deposit in the bank. The
company rents a local post office box and authorizes its bank in each of these cities to pick up
57 | P a g e
remittances in the box. The bank picks up the mail several times a day and deposits the
cheque in the companys accounts. The cheques are recorded and cleared for collection. The
company receives a deposits the cheque in the companys accounts.
recorded and cleared for collation.
payments. This procedure frees the company from handling a depositing the cheques.
CONTROL OF DISBURSMENT
a) Stretching Accounts Payable
A firm should pay its accounts payables as late as possible without damaging its credit
standing. It should, however, take advantages of the cash discount available on prompt
payment.
b) Centralized Disbursement
One procedure for rightly controlling disbursements is to centralize payables in to a
single account, presumably at the companys headquarters. Such an arrangement would
enable a firm to delay payments and can serve cash for several reasons. Firstly, it increases
transit time. Secondly, if a firm has a centralized bank account, a relatively smaller total cash
balances will be needed.
c) Bank Draft
Unlike an ordinary cheque, the draft is not payable on demand. When it is presented
to the issuers bank for collection, the bank must present it to the issuer for acceptance. The
funds then are deposited by the issuing firm to cover payments of the draft. But suppliers
prefer cheques. Also, bank imposes a higher service charge to process them since they
require special attention, usually manual.
d) Playing the float
The amount of cheques issued by the firm but not paid for by the bank is referred to as
the payment float. The differences between payment float and collection float are the
net float. So, if a firm enjoys a positive net float, it may issue cheques even if it means
having an ever drown account in its books. Such an action is referred to as playing the
float; within limits a firm can play this game reasonably safely.
Thus management of cash becomes essential and it should be seen to, that neither
excessive nor inadequate cash balances are maintained.
58 | P a g e
59 | P a g e
CHAPTER-2
PRESENTATION AND ANALYSIS OF
DATA
60 | P a g e
Inflow
2010-2011
2011-2012
2012-2013
Opening balance
18167225
11691544
29693648
33047928
30812867
35603657
65808370
32293691
36616628
167584138
11231917
Sales of Asset
60444
530612
31205269
1000000
Total
865,596,720
47,355,645
263,616,768
107,778,805
Purchase of Asset
26289207
15540564
16552286
4060528
3211747
Closing balance
11691544
29693648
33047927
26655452
Total
37,980,751
48,445,959
49,600,213
30,715,980
Outflows
Cash outflow from
operation
TABLE: 5
Inference:
This table shows that the cash flow statements of THEJO ENGINEERING LTD are
to be efficient. The cash inflow of the company is to be increased for year after year. The
fund from operation is also to differ from every year. The company increased their share
capital from 2009-2010 for Rs. 10, 00,000. It was used as efficient for the next year for
decrease their loan amount.
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RATIO ANALYSIS:
Ratio Analysis is a powerful tool of financial analysis. A Ratio is defined as the indicated
quotient of two mathematical expressions and as the relationship between two or more
things. In financial analysis, a ratio is used as a benchmark for evaluating the financial
position and performance of a firm. Ratio helps to summarize large quantities of financial
data and to make qualitative judgment about the firms financial performance.
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If current ratio is bellow 1 (current liabilities exceed current assets), then the company
may have problems paying its bills on time. However, low values do not indicate a
critical problem but should concern the management.
Current ratio gives an idea of company's operating efficiency. A high ratio indicates
"safe" liquidity, but also it can be a signal that the company has problems getting paid
on its receivable or have long inventory turnover, both symptoms that the company
may not be efficiently using its current assets.
Current ratio = Current assets/ Current Liabilities
YEAR
2009-10
RATIO
39.94/15.06=2.65
REMARKS
Liquidity position is
good
2010 11
52.73/25.01=2.11
good
2011 12
66.23/53.03=1.25
Satisfactory
2012 13
90.13/61.79=1.46
Satisfactory
TABLE: 6
63 | P a g e
current ratio
3
2.5
2
1.5
current ratio
1
0.5
0
2009-10
2010 - 11
2011 - 12
2012 - 13
GRAPH: 1
INFERENCE:
Since, the current ratios are above 1, the company has a safe liquidity position i.e. the
company can pay off its debt over the next business cycle. During the FY2010 till
FY2011, the ratio is slightly high which can be a signal that the company has
problems getting paid on its receivable or have long inventory turnover, both
symptoms that the company may not be efficiently using its current assets. But during
FY2012 and FY2013, the ratio attained a safe position which indicates the operational
efficiency of the company has improved. Increase in current ratio over a period of
time may suggest improved liquidity of the company or a more conservative approach
to working capital management. A decreasing trend in the current ratio may suggest a
deteriorating liquidity position of the business or a leaner working capital cycle of the
company through the adoption of more efficient management practices.
Traditional manufacturing industries require significant working capital investment in
inventory, trade debtors, cash, etc, and therefore companies operating in such
industries may reasonably be expected to have current ratios of 2 or more. However,
with the advent of just in time management techniques, modern manufacturing
companies have managed to reduce the size of buffer inventory thereby leading to
significant reduction in working capital investment and hence lower current ratios.
64 | P a g e
Quick ratio specifies whether the assets that can be quickly converted into cash are sufficient
to cover current liabilities. Ideally, quick ratio should be 1:1.If quick ratio is higher, company
may keep too much cash on hand or have a problem collecting its accounts receivable. Higher
quick ratio is needed when the company has difficulty borrowing on short-term notes. A
quick ratio higher than 1:1 indicates that the business can meet its current financial
obligations with the available quick funds on hand. A quick ratio lower than 1:1 may indicate
the company relies too much on inventory or other assets to pay its short-term liabilities.
Quick ratio shows the extent of cash and other current assets that are readily convertible into
cash in comparison to the short term obligations of an organization.
YEAR
RATIO
2009-10
33.54/15.06 = 2.22
REMARKS
Liquidity
position is
good
2010-11
44.61/25.01 = 1.78
good
2011-12
54.59/53.03 = 1.03
good
2012-13
77.66/61.79 = 1.26
good
TABLE: 7
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Quick ratio
4.5
4
3.5
3
2.5
Quick ratio
2
1.5
1
0.5
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 2
INFERENCE:
A quick ratio of 0.5 would suggest that a company is able to settle half of its current liabilities
instantaneously. Quick ratio differs from current ratio in that those current assets that are not
readily convertible into cash are excluded from the calculation such as inventory and deferred
tax credits since conversion of such assets into cash may take considerable time. Thejo
Engineering LTD has quick ratio which ranges from 2.22 maximum during FY2010 and
lowest ratio 1.03 at FY2012. These ratios indicate that the company has a good liquidity
position which indicates the business can meet its current financial obligations with the
available quick funds on hand.
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YEAR
RATIO
REMARKS
2009 10
39.94-15.06 =24.88
Good
2010 11
52.73- 25.01 =
27.72
Good
2011 12
66.23 -53.03 =
13.20
Good
2012 13
90.13 61.79 =
28.34
Good
TABLE: 8
10
5
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 3
INFERENCE:
Positive working capital means that the business is able to pay off its short-term liabilities.
Also, a high working capital can be a signal that the company might be able to expand its
operations. Negative working capital means that the business currently is unable to meet its
short-term liabilities with its current assets. Therefore, an immediate increase in sales or
additional capital into the company is necessary in order to continue its operations. Working
67 | P a g e
capital also gives an idea of company's efficiency. Money tied up in inventory or accounts
receivable cannot pay off any of the company's short term financial obligations. Therefore,
working capital analysis is very important, but very complex too. For example, an increase in
working capital can be explained by sales increase, but can also be explained by slow
collection or inadequate increase in inventory. Here, it is found that there is an increase in the
working capital ratio.
YEAR
RATIO
REMARKS
2009-10
6409.95/651.98 =
Average
9.83
2010-11
9693.89/726.77 =
Good
13.33
2011-12
11888.53/988.79 =
Good
12.02
2012-13
13420.6/1206.08 =
11.127
TABLE: 9
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Satisfactory
6
4
2
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 4
INFERENCE:
A low inventory turnover ratio is a signal of inefficiency, since inventory usually has a rate of
return of zero. It also implies either poor sales or excess inventory. A low turnover rate can
indicate poor liquidity, possible overstocking, and obsolescence, but it may also reflect a
planned inventory buildup in the case of material shortages or in anticipation of rapidly rising
prices.
A high inventory turnover ratio implies either strong sales or ineffective buying (the company
buys too often in small quantities, therefore the buying price is higher).A high inventory
turnover ratio can indicate better liquidity, but it can also indicate a shortage or inadequate
inventory levels, which may lead to a loss in business.
High inventory levels are usual unhealthy because they represent an investment with a rate of
return of zero. It also opens the company up to trouble if the prices begin to fall.
Thejo Engineering LTDs inventory turnover ratio is found to increase over the years which
are considered satisfactory.
69 | P a g e
YEAR
RATIO
REMARKS
2009-10
65.96/17.33 = 3.81
Low
2010-11
96.20/22.63 = 4.25
Satisfactory
2011-12
117.86/29.46 =4.00
Satisfactory
2012-13
135.49/36.80 = 3.68
Low
TABLE: 10
3.7
3.6
3.5
3.4
3.3
2009-10
2010 11
2011 12
2012 13
GRAPH: 5
70 | P a g e
INFERENCE:
Generally, a high ratio indicates that the receivables are more liquid and are being collected
promptly. A low ratio is a sign of less liquid receivables and may reduce the true liquidity of
the business in the eyes of the analyst even if the current and quick ratios are satisfactory.
Thejo Engineering LTD is found to have low debtors turnover ratio.
(c) CREDITORS TURNOVER RATIO
A business organization has to pay creditors if it buys goods on credit. Any new creditor will
give us the goods on credit if he knows that we pay our creditors bill within short period of
time. So, for knowing this time period, both parties calculate creditor turnover ratio.
YEAR
RATIO
2009 10
3.84
2010 11
1.39
2011 12
3.14
2012 13
3.23
TABLE: 11
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REMARKS
1.5
1
0.5
0
2009 10
2010 11
2011 12
2012 13
GRAPH: 6
INFERENCE:
Higher creditor turnover ratio is good because it will decrease the average payment period.
The company have low creditors turnover ratio.
72 | P a g e
YEAR
RATIO
REMARKS
2009-10
6,432.30/ 889.66=
Satisfactory
7.23
Performance
2010-11
9,521.95/905.54 =
Good
10.51
2011-12
11,536.44/1,132.10
Good
= 10.19
2012-13
13,338.12/1,504.89
Satisfactory
= 8.86
TABLE: 12
4
2
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 7
INFERENCE:
The fixed-asset turnover ratio measures a companys ability to generate net sales from fixedasset investments specifically property, plant and equipment (PP&E) net of depreciation.
A higher fixed-asset turnover ratio shows that the company has been more effective in using
the investment in fixed assets to generate revenues. Thejo Engineering LTD has a satisfactory
73 | P a g e
FA turnover ratio which indicates that the company is effective in using fixed assets to
generate revenues.
(e) TOTAL ASSTES TURNOVER RATIO
Total Assets Turnover Ratio = Sales / Total Assets
It measures the efficiency of a firm in managing and utilizing its assets.
YEAR
RATIO
REMARKS
2009 10
6,432.30/4916.76 =
Satisfactory
1.31
Performance
9,521.95/6211.26 =
Good
1.53
Performance
11,536.44/7,976.04
Good
= 1.45
Performance
13,338.12/11.583.87
Satisfactory
= 1.15
Performance
2010 11
2011 12
2012 13
TABLE: 13
0.6
0.4
0.2
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 8
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INFERENCE:
The lower the total asset turnover ratio, as compared to historical data for the firm and
industry data, the more sluggish the firms sales. This may indicate a problem with one or
more of the asset categories composing total assets inventory, receivables, or fixed assets.
The small business owner should analyze the various asset classes to determine in which
current or fixed asset the problem lies. The problem could be in more than one area of current
or fixed assets. Since current assets also include the liquidity ratios, such as the current and
quick ratios, a problem with the total asset turnover ratio could also be traced back to these
ratios. Many business problems can be traced back to inventory but certainly not all. The firm
could be holding obsolete inventory and not selling inventory fast enough. With regard to
accounts receivable, the firms collection period could be too long and credit accounts may
be on the books too long. Fixed assets, such as plant and equipment, could be sitting idle
instead of being used to their full capacity. All of these issues could lower the total asset
turnover ratio.
It measures the efficiency of a company in utilizing its capital for generating sales.
75 | P a g e
YEAR
RATIO
REMARKS
2009-10
6,432.30/3,388.07
Satisfactory
=1.90
2010-11
9,521.95/3,690.72
Good
=2.58
2011-12
11,536.44/2,641.67
Good
= 4.37
2012-13
13,338.12/5,334.77
Good
= 2.50
TABLE: 14
2
1.5
1
0.5
0
2009-10
2010 11
2011 12
2012 13
GRAPH: 9
INFERENCE:
The ratio is fluctuating towards the end of the study period i.e. during FY2012 the ratio
decreased from 4.37 to 2.50 in FY2013.This indicates that the company is not effectively
utilizing its capital for generating sales.
76 | P a g e
YEAR
RATIO
REMARKS
2009-10
1,993.57/1,394.50 =
Not safe
1.43
2010-11
1,961.45/1,729.27
Not safe
=1.13
2011-12
66.87/2,574.80 =
Safe
0.02
2012-13
13.64/5,331.13
=0.03
77 | P a g e
Safe
Debt-Equity ratio
1.6
1.4
1.2
1
0.8
Debt-Equity ratio
0.6
0.4
0.2
0
2009-10
2010-11
2011-12
2012-13
GRAPH: 10
INFERENCE:
A ratio of 1 or 1: 1 means that creditors and stockholders equally contribute to the assets of
the business.
A less than 1 ratio indicates that the portion of assets provided by stockholders is greater than
the portion of assets provided by creditors and a greater than 1 ratio indicates that the portion
of assets provided by creditors is greater than the portion of assets provided by stockholders.
Creditors usually like a low debt to equity ratio because a low ratio (less than 1) is the
indication of greater protection to their money. But stockholders like to get benefit from the
funds provided by the creditors therefore they would like a high debt to equity ratio.
Debt equity ratio varies from industry to industry. Different norms have been developed for
different industries. A ratio that is ideal for one industry may be worrisome for another
industry. A ratio of 1: 1 is normally considered satisfactory for most of the companies.
78 | P a g e
YEAR
RATIO
REMARKS
2009-10
1,394.50/3,388.07
Risk is more
=0.41
2010 11
1,729.27/3,690.72
Risk is more
=0.47
2011 12
2,574.80/2,641.67
Less risk
=0.97
2012 13
5,331.13/5.344.77
Less risk
=0.99
TABLE: 16
0.4
0.3
0.2
0.1
0
2009-10
2010-11
2011-12
2012-13
GRAPH: 11
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INFERENCE:
Higher the proportion of owners fund to total fund invested in the business, lower is the
degree of risk. In the FY2010 and 11 the risk was more due to high proportion of owners
fund to total fund. The ratio came down to safer level during the FY2012 and 13.
YEAR
RATIO
REMARKS
2009 10
1,817.79/257.53 =
Good position
7.06
2010 11
1,652.33/257.32 =
Good position
5.96
2011 12
855.07/367.07
Satisfactory
=2.33
2012 13
608.46/380.16
=1.60
TABLE: 17
80 | P a g e
Satisfactory
8
7
6
5
4
3
2
1
0
2009 10
2010 11
2011 12
2012 13
GRAPH: 12
INFERENCE:
Loans and borrowings are cheap source of finance primarily because the interest cost is
usually tax deductible in most jurisdictions unlike dividend payments. However, interest
costs are obligatory payments unlike dividend payouts which are discretionary upon
management's intent. Therefore, the level of debt financing must be at an acceptable level and
should not exceed the point which exposes an organization to unacceptably high financial
risk as might be reflected in a low interest cover. Generally, companies would aim to
maintain interest coverage of at least 2 times. Interest cover of lower than 1.5 times may
suggest that fluctuations in profitability could potentially make the organization vulnerable to
delays in interest payments. A very high interest cover may suggest the fact that the company
is not capitalizing on the relatively cheaper source of finance (i.e. debt) and in such instances
an increase in gearing ratio may actually add value to the enterprise. From the table, it is
found that the ratio is declining and for the FY2013, the ratio had reached a low value of 1.60
times. Since the value is above 1.5 times, it is considered to be satisfactory.
81 | P a g e
YEAR
RATIO
REMARKS
2009 10
226.98/332.80
Satisfactory
=6.92
position
382.96/41.46=9.23
Satisfactory
2010 11
position
2011 12
2012 13
671.83/47.39
Satisfactory
=14.18
position
974.78/85.84
=11.35
82 | P a g e
Satisfactory
position
6
4
2
0
2009 10
2010 11
2011 12
2012 13
GRAPH: 13
INFERENCE:
Dividend Coverage is a measure of the ability of an organization to pay dividends. Although
dividend payments are usually discretionary, companies normally seek to maintain a
reasonable level of dividend payout in line with the market expectations.
Generally, companies would aim to sustain a dividend cover of at least 2 times in order to
avail adequate financing through retained earnings while providing a reasonable cash return
on shareholder's investment. A higher or lower dividend cover may be appropriate depending
on the level of stability in earnings of the organizations.
Dividend cover consistently below 1.5 may suggest that the company might not be able to
maintain the present level of dividends in case of adverse variation in profit in the future.
A high dividend cover may suggest that the company is retaining a higher portion of its
earnings to meet its financing requirements which may result in higher dividend payouts in
the future. Thejo Engineering LTD maintains a high equity dividend coverage ratio.
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YEAR
RATIO
2009 10
REMARKS
226.98/6,432.30
Satisfactory
=3.53 %
2010 11
382.96/9,521.95
Satisfactory
=4.02%
2011 12
671.83/ 11,536.44
Satisfactory
=5.82%
2012 13
974.78/13,338.12
Satisfactory
=7.31%
TABLE: 19
3.00%
2.00%
1.00%
0.00%
2009 10
2010 11
2011 12
GRAPH: 14
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2012 13
INFERENCE:
Net profit (NP) ratio is a useful tool to measure the overall profitability of the business. A
high ratio indicates the efficient management of the affairs of business.
There is no norm to interpret this ratio. The use of net profit ratio in conjunction with the
assets turnover ratio helps in ascertaining how profitably the assets have been used during the
period.
(b)OPERATING PROFIT RATIO
The operating profit margin ratio indicates how much profit a company makes after paying
for variable costs of production such as wages, raw materials, etc. It is expressed as a
percentage of sales and shows the efficiency of a company controlling the costs and expenses
associated with business operations. Phrased more simply, it is the return achieved from
standard operations and does not include unique or one time transactions. Terms used to
describe operating profit margin ratios this includes operating margin, operating income
margin, operating profit margin or return on sales (ROS).
Operating Profit Ratio = (EBIT/Sales) x 100
YEAR
RATIO
REMARKS
2009-10
1,817.79/6,432.30
Reasonable
= 28.26 %
2010-11
1,652.33/9,521.95
Reasonable
= 17.35%
2011-12
855.07/ 11.536.44
Average
= 7.41 %
2012-13
608.46/13,338.12 =
4.56%
TABLE: 20
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Average
10.00%
5.00%
0.00%
2009 10
2010 11
2011 12
2012 13
GRAPH: 15
INFERENCE:
The ratio is expressed as a percentage of sales and shows the efficiency of a company
controlling the costs and expenses associated with business operations. For Thejo
Engineering LTD, the ratio is found to decline towards the FY 2012 and 2013 which
indicates the decrease in efficiency of the company in controlling the costs and expenses
utilized for the operations.
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YEAR
RATIO
REMARKS
2009-10
226.98/3410.41
Average
=6.65%
performance
382.96/3,709.81
Satisfactory
2010-11
=10.32%
2011-12
671.83/7,976.04
Average
= 8.42%
2012-13
974.78/11,583.87
Average
= 8.41%
TABLE: 21
ROA
12.00%
10.00%
8.00%
6.00%
ROA
4.00%
2.00%
0.00%
2009 10
2010 11
2011 12
GRAPH: 16
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2012 13
INFERENCE:
The higher the return on assets is, the better, because the company is earning more money on
its assets. A low return on assets compared with the industry average indicates inefficient use
of company's assets. Thejo engineering has an average Return on Assets rate.
(b) RETURN ON CAPITAL EMPLOYED (ROCE)
ROCE is especially useful when comparing the performance of companies in capitalintensive sectors such as utilities and telecoms. This is because unlike return on equity
(ROE), which only analyzes profitability related to a companys common equity, ROCE
considers debt and other liabilities as well. This provides a better indication of financial
performance for companies with significant debt.
Return on Capital Employed = [(Net Profit after Taxes + Interest)/ (Total Capital
employed)] x100
Higher the ratio, the more efficient is the use of capital employed.
YEAR
RATIO
REMARKS
2009-10
484.51/3,388.07 =
Reasonable
14.30%
2010-11
660.28/3690.72 =
Reasonable
17.89%
2011-12
751.72/2,641.67 =
Good
28.46%
2012-13
1.227.69/5,344.77
=22.97%
TABLE: 22
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Good
ROCE
30.00%
25.00%
20.00%
15.00%
ROCE
10.00%
5.00%
0.00%
2009 10
2010 11
2011 12
2012 13
GRAPH: 17
INFERENCE:
A higher ROCE indicates more efficient use of capital. ROCE should be higher than the
companys capital cost; otherwise it indicates that the company is not employing its capital
effectively and is not generating shareholder value.
Net worth means equity share capital + preference share capital + reserves and surplus
miscellaneous expenditures if any.
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YEAR
RATIO
REMARKS
2009-10
226.98/1,394.50 =
Satisfactory
16.28%
2010-11
382.96/ 1,729.27
Reasonable
=22.15%
2011-12
671.83 / 2,574.80
Good
=26.09%
2012-13
974.78/5,331.13 =
Satisfactory
18.28%
TABLE: 23
Return on networth
30.00%
25.00%
20.00%
15.00%
Return on networth
10.00%
5.00%
0.00%
2009 10
2010 11
2011 12
2012 13
GRAPH: 18
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INFERENCE:
An excessively high net worth ratio may indicate that a company is funding its operations
with a disproportionate amount of debt and trade payables. If so, a decline in its business
could result in the inability to pay back the debt, which increases the risk of bankruptcy; this
means that the shareholders may lose their investment in the company. Thejo Engineering
LTD has a moderate net worth ratio.
Earnings per Share = Net profit after taxes & preference dividend / No: of Equity
shares
It measures the profit available to equity share holders on a per share basis.
YEAR
RATIO
REMARKS
2009-10
226.98/11.847 =
Average
19.16
2010-11
382.96/11.847 =
Reasonable
32.32
2011-12
671.83/ 11.847 =
Good
56.71
2012-13
974.78/17.168 =
56.78
TABLE: 24
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Good
20
10
0
2009-10
2010-11
2011-12
2012-13
GRAPH: 19
INFERENCE:
There is no rule of thumb to interpret earnings per share. The higher the EPS figure, the better
it is. A higher EPS is the sign of higher earnings, strong financial position and, therefore, a
reliable company to invest money. A consistent improvement in the EPS figure year after
year is the indication of continuous improvement in the earning power of the company. Thus,
Thejo is having continuous improvement in the earning power as the EPS ratio is found to be
consistently improving year after year.
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YEAR
RATIO
REMARKS
2009-10
32.80/11.847 =
Average
2.77
2010-11
41.46/11.847 =
Average
3.50
2011-12
47.39/11.847 =
Average
4.00
2012-13
85.84/17.168 =
Average
5.00
TABLE: 25
2
1.5
1
0.5
0
2009-10
2010-11
2011-12
2012-13
GRAPH: 20
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INFERENCE:
A high ratio is preferred from the investors point of view. It is found that Thejo Engineering
LTD has only an average dividend per share value. Dividends are a form of profit distribution
to the shareholder. Having a growing dividend per share can be a sign that the company's
management believes that the growth can be sustained.
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CHAPTER-3
FINDINGS AND CONCLUSIONS
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FINDINGS
The cash management of Thejo Engineering Ltd has been working well in the
organization.
The cash inflow and outflow of cash flow statement have a cash balance will be
increased times when compared to last year balance.
Current Ratio shows that the company has sufficient funds to meet its short-term
obligations. Since, the current ratios are above 1, the company has a safe liquidity
position i.e. the company can pay off its debt over the next business cycle.
The quick ratio shows the company has a good liquidity position which indicates the
business can meet its current financial obligations with the available quick funds on
hand.
Positive working capital means that the business is able to pay off its short-term
liabilities. The working capital of the company is found to increase year after year.
Thejo Engineering LTDs inventory turnover ratio is found to increase over the years
which are considered satisfactory.
A low debtors turnover ratio is a sign of less liquid receivables and may reduce the
true liquidity of the business in the eyes of the analyst even if the current and quick
ratios are satisfactory. Lower debtor turnover ratio is not good because it tells us that
we have not managed debtors better. Money from debtors is not collected quickly.
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CONCLUSION
The Cash Management Analysis done on the financial position of the company has provided
a clear view on the activities of the company. The use of the ratio analysis, Cash Flow
Statement and other accounting and financial management helped in this study to find out the
financial soundness of the company. On completion of my two months internship period, I
observed that there is effective and efficient management of working capital. No material
discrepancies were found during the study. There is a greater efficiency of asset utilization
and management of inventories in the organization. It was further observed that the credits of
the company have to be managed more efficiently. Also, efficiency of the company in
controlling the costs and expenses utilized for the operations have to be improved.
They have reduced the level of imports by producing products in their own factories and also
the level of exports is high compared to imports. The services offered by the company are
always made sure to be of superior quality. Proper records of all types of business operations
are kept in the organization and there is also very efficient customer recovery system.
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BIBLIOGRAPHY
WEBSITES
http://www.thejo-engg.com
www.moneycontrol.com
www.nseindia.com
BOOK
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