157409347 venkatesh-pandey

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ACKNOWLEDGEMENT

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click here for freelancing tutoring sitesSUMMER TRAINING REPORT ON

WORKING CAPITAL MANAGEMENT IN BHEL

Undertaken at

BHARAT HEAVY ELECTRICALS LIMITED

Submitted in partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATIONto Rajarshi School of Management & Technology, Varanasi Under the Guidance of Submitted by

Venkaesh PandeytSession 2012-13

Rajarshi School of Management & Technology, VaranasiACKNOWLEDGEMENTBehind every study there stands a myriad of people whose help and contribution make it successful. Since such a list will be a prohibitively long. I may be excused for important omission.

I am grateful to all who helped & guided me at every stage of my work. Their constant appraisal & encouragement helped me to accomplish my training smoothly.

I am thankful to Mr C.P. Bahari(AGM , Taxation) & Mr. Sandeep Kataria (DGM) for the cooperation extended to me in compiling the project report. This acknowledgement would be incomplete without the mention of Mr. Devendra who sorted out my queries time to time.I gained a lot of knowledge & experience by observing their way of working which is surely to be admired. I extend My gratitude to the entire staff that provided a very comfortable environment which helped me deliver this performance.

VENKATESH PANDEY MBA 3rd SemDECLARATION CERTIFICATE

This is to certify that the Project work entitled WORKING CAPITAL MANAGEMENT IN BHEL is a record of bonafide work carried out by Mr. VENKATESH PANDEY under my supervision towards partial fulfillment of the MBA course of RSMT, Varanasi.

Place: Signature

Date:Name & Designation of the Project Guide

CONTENTS

SR.NOTOPICPAGE NO.

1.CERTIFICATE

2.SUMMER TRAINING APPRAISAL

3.ACKNOWLEDGEMENT

4.EXECUTIVE SUMMARY

5.Chapter-1 Introduction

Introduction of working capital Objective of study

Scope of study

Introduction of organization

6.Chapter-2 Review of literature

7.Chapter-3 Research Methodology

8.Chapter-4 Data reduction, presentation & interpretation

Ratio analysis Trend analysis

9.Chapter-5 Summary & Conclusion

Facts &Findings

Recommendation & Suggestion

10.Bibliography

ACKNOWLEDGEMENTBehind every study there stands a myriad of people whose help and contribution make it successful. Since such a list will be a prohibitively long. I may be excused for important omission.

I am grateful to all who helped & guided me at every stage of my work. Their constant appraisal & encouragement helped me to accomplish my training smoothly.

I am thankful to Mr C.P. Bahari(AGM , Taxation) & Mr. Sandeep Kataria (DGM) for the cooperation extended to me in compiling the project report. This acknowledgement would be incomplete without the mention of Mr. Devendra who sorted out my queries time to time.

I gained a lot of knowledge & experience by observing their way of working which is surely to be admired. I extend My gratitude to the entire staff that provided a very comfortable environment which helped me deliver this performance.

VENKATESH PANDEY MBA 3rd SemCHAPTER-1INTRODUCTION

INTRODUCTION ON FINANCEFinance is one of the major elements that activate the overall growth of the economy. Finance is the life blood of economic activity. A well - knit financial system directly contributes to the growth of the economy. An efficient financial system calls for the efficient performance of institution, financial instruments and financial markets.

Finance which acts as the lifeblood in the modern business types is one of the most important consideration for an entrepreneur-company. While Implementing, expanding, diversifying, modernizing or rehabilitating any project the meaning of finance is better understood. In this section we have covered finance related information and the process of managing the same.

Finance is a science of managing money and other assets. It is the process of channelization of funds in the form of invested capital, credits, or loans to those economic agents who are in need of funds for productive investments or otherwise. E.g. On one hand, the consumers, business firms, and governments need funds for making their expenditures, pay their debts, or complete other transactions. On the other hand, savers accumulate funds in the form of savings deposits, pensions, insurance claims, and savings or loan shares, etc which becomes a source of investment funds. Here, finance comes to the fore by channeling these savings into proper channels of investment,In general, finance is that business activity which is concerned with acquisition and Conservation of capital funds in meeting financial needs and over all objectives of a business entrepreneur.

Finance is the common denominator for a vast range of corporate ., projects and the major part of any corporate plan must be expressed in financial terms.The main reasons a business needs finance are to:

Start a business

Finance expansions to production capacity

To develop and market new products

To enter new markets

Take-over or acquisition

Moving to new premises

To pay for the day to day running of business

MEANING OF WORKING CAPITALWorking capital refers to the management of current assets.Working capital refer to that part of total capital which is used for carrying out the routine or regular business operation. In other words, it is the amount of funds used for financing the day-to day operation. In short, it is the capital with which the business is worked over.Thus, the capital invested and locked up in various current assets , such as stocks of raw material, work in progress , stocks of finished goods account receivable and cash and bank balances constitutes the working capital.

Working capital may be regarded as life blood of a business. Its effective provision can do much to ensure the success of a business while its in provision can do much to ensure the success of a business while its in efficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concerns.

> According to shoo-in, Working Capital is the amount of funds necessary to cover the cost of operating the enterprise. Working Capital is also known as Revolving or Circulating Capital.

> According to Genesterberg, Circulating Capital means current assets of a company that are changed in the ordinary cause of business from one to another form. Example: From cash to inventory, inventories to bills receivable and bills receivable to cash.

Concept of working capital

There are five concepts of working capital :-

o Gross Working Capital

o Net Working Capital

o Negative working capital

o Permanent working capital

o Variable working capital

On the basis of the components or items comprised in working capital, working capital can be classified into the following types:

Gross Working capital: Simply called as working capital, refers to the firms investment in current assets. Current assets which can be converted in to cash with in the accounting year (or operating cycle) and includes cash, short term securities, debtors, Bills receivable and stock (inventory) .Net Working Capital: Refers to the difference between current assets and current liabilities. Current liabilities are those claims of outsiders, which are expected to mature for payment with in a year and include creditors, Bills payable and outsiders expenses.

Negative working capital or working capital deficit: means the excess of current liabilities over the current assets. It accurse when the current liabilities exceed the current assets

Permanent working capital or fixed working capital: refer to the minimum amount of investment in current assets required throughout the year for carrying out the business. In other words , it is the amount of working capital which remains in the business permanently in one form or other.

Variable working capital or fluctuating working capital: refer to the amount of working capital which goes on fluctuating or changing from time to time with the change in the volume of business activities.Ratios :The term ratio simply means one number expressed in terms of another. It describes in mathematical terms the quantitative relationship that exists between two numbers.

NEED FOR WORKING CAPITAL

Every business undertaking requires funds for two purposes, investments in fixed assets & investment in current assets.

Funds required for investing in inventory, debtors & other current assets keep changing in shape & volume. Company has some cash in the beginning; this cash may be the source of raw material, keeping the labor cost & other overheads. These three combined would generate work in progress, which will be converted into finished goods on the completion of the production process into debtors & when the debtor pay, the firm may generate cash. Wor