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Sr. No. Particulars 1 Company Profile  Introduction  History  Group Profile  Vision & Mission  Awards and honors  Organization chart  Aurangabad Works  Business process cycle Basic Accounting Terminology Introduction of Working Capital Objective Behind The Study  Types of Working Capital  Principle of Working Capital Management Factors Determining of Working Capital  Sources of Working Capital Methods of Calculation of Require of Working Capital  Working Capital Cycle  Components Of Working Capital  Management of Working Capital Statement of Working Capital Evaluation of Working Capital Observation & Summery Page No. 05 06 07 08 09 10 11 12 13 14 22 23 24 27 28 31 32 32 34 35 37 38 38 40

2 3 4 5 6

7 8 9 10

11 12

Study of Various Departments in SIEMENS Ltd. Conclusion Bibliography

52 53

Company Profile



SIEMENS (SIEMENS), the 55% Indian subsidiary of Siemens AG,
Germany is a leader in the electrical and electronic engineering sector. It offers products, systems, solutions and services in power generation, power transmission and distribution, automation and drives, industrial solutions and services, transportation systems, enterprise communications, mobile phones and medical solutions. Siemens AG holds a 54.6% stake in SIEMENS. The company was established in 1957. The company has a wide presence across the country; its operations include 15 Manufacturing plants and 16 sales offices. Siemens`s Worli plant makes medical equipment. The three Kalwa units make motors, switchgear, and switchboards. The Nashik unit makes industrial automation products, controllers, PLCs and UPS. Joka works makes control boards and switchboards. Aurangabad makes switchgear and photovoltaic modules. Goa makes medical equipment. SIEMENS derives 33% of its revenues from the automation and drives division, followed by 24% from the power division, 18% each from Siemens Information Systems (SISL) and healthcare/other services divisions. During fiscal 2005, it acquired Siemens VDO Automotive, Demag Delaval Industrial Turbo machinery, and 51% interest in Pimac Engineers and Services. SIEMENS has a vast global network of 461,000 people, operating in over 190 countries. In India, SIEMENS mirrors the portfolio of Siemens AG, except that Siemens VDO Automotive, and Siemens Public Communication Networks operate as separate companies. SISL, another group company, is now a 100% subsidiary of SIEMENS, and Siemens Building Technologies (SBT) has already been merged into Siemens.


From a humble workshop to a global enterprise

Siemens was founded in Berlin by Werner von Siemens in 1847. As an extraordinary inventor, engineer and entrepreneur, Werner von Siemens made the world's first pointer telegraph and electric dynamo, inventions that helped put the spin in the industrial revolution. He was the man behind one of the most fascinating success stories of all time - by turning a humble little workshop into one of the world's largest enterprises.

As Werner had envisioned, the company he started grew from strength to strength in every field of electrical engineering. From constructing the world's first


electric railway to laying the first telegraph line linking Britain and India, Siemens was responsible for building much of the modern world's infrastructure. Siemens is today a technology giant in more than 190 countries, employing some 440,000 people worldwide. Our work in the fields of energy, industry, communications, information, transportation, healthcare, components and lighting have become essential parts of everyday life. While Werner was a tireless inventor during his days, Siemens today remains a relentless innovator. With innovations averaging 18 a day, it seems like the revolution Werner started is still going strong.

Group Profile








Vision & Mission
Vision of Siemens PTD Division of Aurangabad:    • • • To be amongst Top Three PTD Companies. Consistently profitable (EBIT>10%). Offer State of art: Product. System. Solution.

“…Improved technology…” the means Technology is no more a premium input; it has become the bare minimum in recent years. Rapid advances have only fuelled this phenomenon. SIEMENS is extremely vigilant in shunting out dated technology and replacing it with the best-in-class offers of the times. “…Innovative products…” the means Product development, innovation and customizations are the tools SIEMENS uses to stay ahead of the competition. This is because a continuous stream of innovative products excites the market and enhances brand recall. “…Inspired thinking about the future.” the means


The future is unpredictable, but not doing anything about it is fraught with grave risk. SIEMENS extrapolates future trends on the basis of current changes in technology and preferences as well as sheer gut feel. Fine-tuned business instincts are worth their weight in gold, lots of it.

Awards and honors
 Siemens Sensor scores a hat trick at the annual ABCI (Association of Business Communication of Indian) awards.

 SRE Indian wins top+ awards in global SRE competition.

 Siemens receives ‘market leadership’ award from frost and Sullivan (global consulting company).

 “Go for profit and go for growth” in this competition out of 280 companies A&D India is qualified for final round (top 5)!



Organization Chart


Aurangabad Works (PTD)
The ET(Electrical Transmission). department, Aurangabad Works offers a variety of products. They are:
 Miniature circuit breakers.

 Fuse bases.  Isolating link.  Fuse puller.  Fuses.  Residual current circuit breakers.  Residual current circuit breakers with overload protection.  CT (Curent Transformer) & CVT (Capacitor voltage Transformer)

 Anchor.  Bentex Linger.  General Electric.  Hager – L and T.  Havell’s Euro Breaker.  Legrand.  Merlin Gerin – Schneider.

In a survey which was held by the Consumer Voice Magazine, SIEMENS was ranked first for its best performance in 3Ka MCB’s.


Business transaction process


Basic Accounting Terminologies
Every human being consciously engages himself in some meaningful activity. Although the measure of success may vary in each case one has to be careful and cautious at every stage in his life. Bookkeeping and accountancy is a science, which has attracted the attention all such human activities. Accounting enables a person to assess the risk appropriate steps.

Account an account denotes a summarized record of transactions pertaining to one
person, one kind of asset, or one class of income, or one class of income or loss.

Assets properties of every description owned by a person will be called assets for
example land and building, plant and machinery, cash balance, bank balance etc.

Bad debts which are irrecoverable and written off from debtors A/C as a loss are
termed as bad debts.

Casting means the totaling of the books of account casting has to be done of the
ledger accounts and also of a journal. Creditor a creditor is a person to whom we owe some thing. He is the person to whom we have to pay.

Capital the dictionary meaning of the term capital is wealth capital is the total
account invested in business the capital of a business is the claim of the owner to the business is the claim of the owner to the business.

Debtor is person who owes something he is the person who has to pay to other


Drawing is the total amount withdrawn by a trader from his business for meeting
personal expenses. Trader becomes a debtor of business by the amount withdrawn by him from business for private purpose.

Discount it is an allowance or a concession allowed by the receiver of benefit to the
giver of benefit. It is normally allowed to the customers, debtors, and retailers’ etc. the discount may be classified in two ways. 1) Cash discount. 2) Trade discount. Cash discount it is discount allowed to customer as an inducement to make payment immediately. Cash discount is closely related to cash receipt and cash payment. When cash is received, discount is allowed is a loss to a business while cash discount received is a gain to him. Trade discount it is an allowance made by a wholesaler to a retailer in order to enable the retailer to sell the articles at list prices and earn a reasonable margin of profit. The amount of trade discount is deducted from the invoice; therefore, it has no connection as to the receipt and payment of cash. Hence, trade discount does not appear in the books of accounts.

Entry the term entry refers to the recording of a transaction in the books of account.
It is the primary record of a transaction in the books called journal or any other subsidiary journal.

Expenses the effort made by business to obtain the revenues are termed as expenses.
It is the amount spent on manufacturing and selling of goods and services.

Folio it means the page number of the book of original entry or of the ledger by
writing folio i.e. page number, one can easily find out on what page the original entry is made and on what page the entry is made in the main book.

Goods commodities in which a trader deals are called as goods.

Insolvent a person is said to be insolvent when his liabilities are more than asset Insolvency when the liabilities of a firm are greater than its assets, it is referred to
as insolvency indicating the liabilities of a business to meet all its liabilities. Such a business firm is said insolvent.

Journal is the book 0f accounts in which business transaction are first recorded. It is
a book of prime entry or first entry.

Liabilities debts owed by a person are called liabilities. Liabilities represent the
total amount to creditors. Debts arise because, goods may be purchased out but payment may not be made at the time of purchasing the goods. Therefore the total amount payable to creditors will be the liabilities.

Narration it is a brief explanation or description on to a journal entry it is given on
the line just below the journal entry within the brackets.

Posting transaction entered in the original books of entry are also to be recorded in
the ledger on the basis of the entry made in the original book is called posting.

Purchases the goods bought for resale or manufacture and resale are called
purchases. Purchases may be classified as 1) Cash purchase 2) Credit purchase

Revenue it represent the accomplishment of the enterprise until the company has
been successful in selling its products, no revenue is realized. Revenue is the amount that adds to the capital.

Sales the goods sold by a business for cash or on credit are called sales. The sales
may be classified as; 1) Cash sales 2) Credit sales


Solvent a person is said to be solvent when his assets are equal to or more than his

Stock goods unsold lying with a business on any given date are called as stocks. Transactions a transaction are an exchange of money or moneys worth between
two parties. It is dealing between two parties. It is dealing between two or more persons. The transactions are classified on the basis of exchange of goods and service they may be. 1) Barter transactions. 2) Monetary transactions. Monetary transactions are classified in they two types. 1) Cash transactions. 2) Credit transactions.

Book keeping is defined as the process of analyzing, classifying and recording
transaction in a systematic manner to provide the information about the financial affairs of the business concerns.

Accounting is a wider concept, which includes book keeping accounting, is
involved not only maintaining records, but also balancing of accounts, interrupting the balances, preparation of summaries, drawing conclusions from the summaries knowing the results of financial transactions etc.

Classification of accounts.
Accounts are classified in to four types 1) Personal accounts. 2) Real accounts.




Journal is derived from the French word “jour’ which means a day journal is the
book of original entry or primary entry. It is book of daily record first of all the business transactions are recorded in the journal and subsequently they are posted in the ledger.

Ledger “ a group of accounts is known as ledger” a ledger is the principle book of
account a journal is meant for passing the entries of business transaction. A ledger is a bound book. It contains many pages, which are called folios. These pages are consecutively numbered. For each account a separate page is kept. Every ledger has an index. It is generally an alphabetic index one page is allotted for each alphabet. All the accounts commencing with that particular alphabet are indicated on that particular page only. The page number on which the particular account appears is shown in the index. This facilities appear is shown against the account in the index. The facilities immediate reference.

Ledger posting
After the transaction has been analyzed into its debit and credit elements in a journal, each such debit and credit elements must be transferred in a journal accounts. The process of transfer of entries from journal to ledger account is called ledger posting.

Trial balance
After posting the transaction to respective ledger accounts they are balanced and then a trial balance is drawn. A trial balance is a statement, which shows the list of accounts showing debit balances and list of accounts showing credit balance. If 17

double entry principles are strictly followed the total of the entire debit balances must agree with the total of all the credit balance.

Trade discount
The amount of trade discount is deducted from the bill itself. Therefore, a trade discount does not appear in the books of accounts. If a trade discount is given in the transaction, the amount of such a trade discount is deducted from the gross value of purchase and only the net value (arrived at after allowing a trade discount) is recorded in the purchase books.

Debit note
A debit note is sent to the supplier when the goods purchased from him are returned. A debit note is a statement sent by the buyer to the supplier stating the full details of the good returned. It is sent along with the goods. It intimates the supplier that his account has been debited by the value of the good returned to him.

Credit note
A credit note is sent to the customers when we receive goods returned from them. It gives the full details of the good returned by the customer. Credit notes are generally is printed in red ink. Transaction is recorded in this book on the basis of credit notes.

Trial balance
The dictionary for accountants written is “ a list or abstract of the balance or of total debits and total credits of the accounts in a ledger, the purpose being to determine the equality of posted debits and credits and to establish a basic summary for financial statements”. Subsidiary books (sub division of journal) If all the business transaction were recorded in one and the same journal, the journal would be bulky and cumbersome. It would be very difficult to make clerks to work on


the same journal at one and the same time. Instead of recording all the transaction in on and the same journal, they are recorded in separate journals meant for the purpose. Therefore, in order to meet the requirements of modern business, the original journal is divided into the following  Purchase book  Sales book  Purchase return book  Sales return book  Cash book  Bills receivable book.  Bills payable book.  Journal proper.

Final accounts
The final accounts are prepared to find out the profit or loss and to know the financial position of the business. These account consist of  The trading account  The profit and loss account  Balance sheet

Trading account
A trading account is prepared to find out the gross profit or gross loss in the business done during the year. The gross profit is the difference between the cost of good sold and the sale proceed without any deduction of indirect expenses. Hence, in the trading account it is necessary to include all items of expenses directly affecting the cost of good sold. The cost of good sold includes the


purchase price of the good sold plus buying and bringing expenses and the expenses of conversion of raw material into saleable finished goods.

Profit and loss account
Profit and loss account is another summary account, which is prepared after preparation of trading account. Trading account does not disclose the net income or loss. There are other expenses in order to ascertain the profit or not loss.

Balance sheet
A balance sheet is a statement of the financial position of a business on a given date. It is a snapshot of the financial condition of the business. The balance sheet is not account; it is only a statement showing asset and liabilities of the business. It is important to note that the balance sheet always balances. The total value of the assets is always equal to the capital and liabilities. We can define balance sheet as “a statement of financial position of any economics unit as at a given moment of time, its assets, at cost, depreciated cost or another indicated value, its liabilities and its ownership equities”

Introduction Of Working Capital
Working capital could be defined as the portion of assets used in current operations. The movements of the funds from capital to income and profits and back to working capital are one of the most important characteristics of the business. This cyclical operation is concerned with utilization of the funds with the hope that will return with an additional amount called income. If the operations of the company are


to run smoothly, a proper relationship between fixed capital and current capital has to maintain. Sufficiently liquidity is important and must be achieved and maintained to provide that funds to pay off obligation as they arise. The adequacy of cash and other current assets together with their efficient handling, virtually determine the survival o demise of the company. A businessman should be able to judge the accurate requirement of working capital and should be quick enough to raise the enquired funds to finance he working capital needs. Working capital is also called as net current assets, “it is the excess of current assets over current liabilities.” All organization has to carry working capital. It is important from the point of view of both liquidity and profitability. Poor management of working capital means that funds that unnecessarily tied up in idle assets hence educing liquidity and also reducing ability to invest in productive assets such as plant and machinery. So affecting profitability. The term working capital refers to current assets, which may be defined as: i) Those which are convertible into cash or equivalents with the period of one year and ii) Those which are required to meet day to day operations,

The fixed as well as current assets, both requires investment of ‘Funds’. So the management of working capital and fixed assets apparently seem to involve it type of consideration but it is no so. The management of working capital involve different concept and methodology than the techniques used in fixed assets management.


Objective behind the Study Of Working Capital & Research Methodology
Working capital management is very important in modern business. The analysis of working capital is also very useful for short-term management of funds. The following are objective of study: 1) To make. Items wise analysis of the elements or component of working capital to identify the items responsible for change in working capital. 2) To calculate working capital for Four Month.

Scope & Limitation of the Study
1. The Study is limited to Four Month projected performance of the Company. 2. The data used in this study have been given commercial Manager. As per the requirement and necessary some data are grouped and sub grouped. 3. For making a clear-cut opinion, Ratio technique of financial management has been used.

Data & Methodology of the Study:
The data of Siemens Ltd. For the four Month used in this study have been taken from company. Editing, classification and tabulation of the financial data, which are collected from the above-mentioned sources, have been done as per the requirement of the study.


Types of working capital
The type, kinds of a thing are depending upon the different utilization of working capital. It prominently works in the direction of performing different functions in different situation and in the context of divergent variables. So following are some important types of working capital.

Net Working Capital Negative Working Capital Types of Working Capital Cash Working Capital

Gross Working Capital

Permanent Working capital

. Balance Sheet Working Capital 1) Net Working Capital: Term Net working capital can be define in two way i) ii)

Temporary Working Capital

It is the difference between current assets and current liabilities. Amount left for operational requirement.

2) Gross Working Capital: Gross working capital means the total current assets. 3) Permanent Working Capital: It is the minimum amount of the current assets, which are needs to conduct the business even during the dullest season of the year. This amount varies from year


to year depending upon the growth of a company and stage of the business cycle in which it operates. It is the amount of funds required to produce the goods and services, which are necessary to satisfy demand at a particular point. It represents the current assets, which are required on a continuing basis over the year. It is maintain as the medium to carry on operation at any time. Permanent working capital has following features: i) ii) iii) It is classified on the basis of the time factor. Its size increase with the growth of the business. It constantly shifted from one assets o another and continues to remain in the business process. 4) Temporary Working Capital: It represents the additional assets, which are required at different times during the operating year. Seasonal working capital is the additional amount of current assets particularly cash, receivables, and inventory which is required during the more active business seasons of the year. It is the temporary investment in the current assets and possesses he following features: a) It is not always gainfully employed, though is May also shift from one asset to another as permanent working capital does. b) It is particularly suited to business of seasonal on cyclical nature. 5) Balance Sheet Working Capital: The balance sheet working capital is one, which is calculated from the items appearing in the balance sheet. Gross working capital, which is represented by the excess of current assets over current liabilities, is example of the balance sheet working capital. 6) Cash Working Capital:


It is one, which is calculated from the items appearing in he Profit and Loss Account. It shows the real flow of money or value at a particular time and considered to be most realistic approach in working capital management. It is the basic of he operation cycle concept, which has assumed a great importance in financial management in recent year. The reason is that the cash working capital indicates he adequacy of he cash flow which is an essential pre requisite of a business. 7) Negative Working Capital: It emerges when current liabilities exceeds current assets, such a situation is absolutely theoretical and occurs when a firm is nearing a crisis of some magnitude.

Principles of Working Capital Management:
There are some principles of sound working capital management policy. They are as follows: 1) Principle of Risk Variation: Risk here refers to inability of a firm to meet its obligation when they become due for payment. Large investment in current assets with less dependence on a short


term borrowing increase liquidity, reduces dependence on short term borrowing increases liquidity, reduces risk. On the other hand less investment in current assets and greater dependence on debt increase the risk, reduces liquidity and increases profitability. In other word these is a definite inverse relationship between he degree of risk and profitability. A conservative management prefers to minimize risk by maintaining a higher level of current assets or working capital while a liberal management should be to establish a suitable trade off between profitability and risk. 2) Principle of Cost of Capital: The various sources of rising of working capital finance have different cost of capital and the degree of risk involved. Generally higher the risk lower is the cost and lower the risk higher is the cost. A sound working capital management should always try to achieve a proper balance between these two. 3) Principle of Equity position: According this principle, the amount of working capital invested in each component should be adequately justified by a firm’s equity position. Every rupee invested in the current assets should contribute to he net worth of he firm. 4) Principle of Maturity of Payment: This principle is concerned with planning he sources of finance for working capital. According to this principle, a firm should make every efforts o related maturity of payment to its flow of internally generated funds. Maturity pattern of various current obligations is an impotent factor in risk assumptions and risk assessment.


Factors determining working capital
1) Nature or character of Business: The working capital requirement of a firm basically depends upon he nature of its business. Public utility undertaking like Electricity, Water Supply, and Railways need very limited working capital because they offer cash sales only and supply services, not products and as such no funds are tied up in inventories and receivables. On the other hand trading and financial firms require less investment in fixed assets but they have to invest large amount in current assets like inventories, receivables and cash. So they need large amount of working capital. 2) Production cycle: Another factor, which has a bearing on the quantum of working capital, is the production cycle. The term ‘production or manufacturing cycle’ refers to the time involved in the manufacturing of goods. It covers the time span between the procurement of raw material and the completion of the manufacturing process leading to the production of finished goods. In other words, there is sometime gap before raw material becomes finished goods. To sustain such activities that need for working capital is obvious. The longer time span (production cycle) the large will be the tied up funds and therefore, larger is working capital need and vise versa. 3) Production Policy: In certain industry the demand is subject to wide fluctuations due to seasonal variations. The requirement of working capital in such case, depend upon the production policy. The production can be either kept steady by accumulating


inventories during slack period with a view to meet high demand during peak season of the production could be curtailed during the slack season and increased during the peak season. If policy is to keep production steady by accumulating inventories it will require higher working capital. 4) Credit Policy: The credit terms granted to customers have a bearing in the magnitude of working capital by determining the level of book debts. The credit sales result in higher book debs. Higher book debts mean more working capital. On the other hand, if liberal credit terms are available from the supplies of goods trade needs less working capital. The working capital requirement of a business are thus, affected by term of purchase and sale, and the ole given to credit by a company in its dealing with creditors and debtors. 5) Growth and Expansion: The working capital requirement of concern increase with the growth and expansion of its business activities. Although, It is difficult to determine the relationship between the growth in the volume of business and the growth in the working capital of a business, yet it may be concluded that for normal rate of expansion in the volume of business. We may have retained profits to provide for me working capital but in fast growing concern, we shall require lager amount of working capital. 6) Seasonal Variation: In certain industry raw material is no available throughout the year. They have to buy raw material in bulk during the season to ensure uninterrupted flow and process them during the entire year. So a huge amount is blocked in form of row


material during the peak season, which gives more requirements for working capital and less requirement during the slack season. 7) Earning Capacity: Some firm have more earning capacity than others due to quality of the products, monopoly condition etc. Such firms with high earning capacity may generate cash profits from operations and contribute to their working capital. 8) Dividend Policy: The dividend policy of a concern influence on the requirement of the working capital. A firm that maintains a steady high rate of cash dividend irrespective of its profits level needs more working capital than the firm that retains large part of its profits and does not pay at high rate of cash dividend. 9) Other Factors: Certain other factors such as operating efficiency, management ability, irregularities in supply, import policy, assets structure, importance of labour, banking facilities etc, also influence the requirement of working capital.

Sources of Working Capital
Mainly there are two sources of working capital: i. Permanent or Fixed working capital ii. Temporary or variables working capital In any concern, a part of the working capital investments are as investment in fixed assets. This is so because there is always a minimum level of current assets, which are copiously required by the enterprise to carry out its day-to-day business


operation and this minimum, cannot be expected to reduce at any time. This minimum level of current assets need long term working capital, which is permanently blocked. Similarly, some amount of working capital may be required to meet the seasonal demands and some special exigencies such as rise in prices, strikes, etc. this gives rise to short term working capital which is required for day to day transaction also. The fixed proportion of working capital should be generally financed from the fixed capital sources while the temporary or variable working capital equipment may be met from the short term sources of capital.

Sources of Working Capital Short Term sources Long term Sources
Commercial Banks Shares Debentures Public Deposits Ploughing back of Profits Loans from Financial institution Indigenous Banks Trade Creditors Installment Credit Advances Account receivable Credit Accrued Expenses Differed Income

Methods of Calculation of Paper Commercial Required Working Capital
The methods of calculation of required working capital are as follows:

Working Capital Cycle:
The working capital cycle is also known as operating cycle. It refers to the duration between the firm’s payment of cash for raw material, entering into production and inflow of cash from debtors and realization of receivables. Simply


speaking, operating cycle is the duration between the outflow of cash and inflow of cash and this may be evidenced from the following working capital cycle.



Finished Goods

Raw Material

Work In Process

The above and network diagram may offer a clear picture of a complete working capital i.e. it is a cash phenomenon. In the diagram, raw material, stock refers to material only. In work in process, components involve are raw material, wages, and overhead more specifically manufacturing overheads. Finished stock consists components of material, wages and overheads inclusive of factory, office and administration and selling and distribution. Debtors include material, wages, overheads and profits. Credit involves for the components of raw material, etc. something a contingency margin is also given while estimating the working capital requirement. The operating cycle consists of him following events, which continues throughout his life of a firm remaining engaged in commercial activities. Avg. Stock of Raw Material 1) Raw Material Holding Period = Avg. Cost of Consumption per day Avg. Stock of Work in Process 2) Work in Process Holding Period = Avg. Cost of Production per day


Avg. Stock of Finished Goods 3) Finished Goods Holding Period = Avg. Cost of Goods Sold per day Avg. Book Debt 4) Receivables Collection Period = Avg. Credit Sales per day Avg. Trade Creditors 5) Creditors Collection Period = Avg. Credit Purchased per day In the form of a simple equation working capital cycle or operating cycle can be represented as bellow:

O = R+W+F+D-C
Where, O = Operating Cycle (In Days) R = Raw Materials Holding Period W = Work in Process Holding Period F = Finished Goods Holding Period D = Receivables Collection Period C = Creditors Collection Period.

Total Operating Cost Working Capital Required = Number of Operating Cycle

Components of Working Capital:


Current Assets:
i) ii) Stock of Raw Material (for…month consumption) Work In Process (for…Month) a) Raw Materials b) Direct Labour c) Overheads Stock of Finished Goods (for…month sales) Sundry Debtors or Receivables (for…month sales) Payments in Advance (if any) Balance of Cash (required to meet day-to-day Expenses) Any Other (if any)


iii) iv) v) vi) vii)


Less: Current Liabilities:
i) ii) iii) Creditors (for…month purchase of raw materials) Outstanding Expenses (for month) Others (if any) --------------------------------------

Working Capital (CA – CL) Add: Provision/ Margin for contingencies Net Working Capital Required

Management of working capital:


Working capital, in general practice, refers to him excess of current assets over current liabilities. Management of working capital therefore, is concerned with problems that arise in attempting to mange him current assets, current liabilities, and interrelationship that exists between them. In other word it refers to all aspects of administration of both current assets and current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such way that a satisfactory level of working capital is maintained, i.e. neither inadequate nor excessive. This is so because both inadequate as well as excessive working capital position is bad for the business. Inadequacy of working capital, may lead the firm insolvency and excessive working capital implies idle funds, which earn no profit for the business. Working capital management policies of the firm have a great effect on its profitability, liquidity and structural health of the organization. In this context, working capital management is three-dimensional nature: 1) Dimension I is concerned with the formulation of he policy with regard to Profitability, risk and liquidity. 2) Dimension II is concerned with the decision about his composition and level of current assets. 3) Dimension III is concerned with the decision about his composition and level of current liabilities.

This dimension aspect of his working capital has been more clearly and precisely Explains by the following diagram. Profitability, Risk & Liquidity Dimension I 34

Dimension III

Dimension II Composition & Level of current assets

Composition & level Of current Liabilities

Evaluation of working capital
The working capital management needs attention of all the finance head/ working capital management is important for avoiding unnecessary blockage of fund. Like that liquidity is important at it refer to the short-term financial strength of company. It is very important to have proper balance in regard to the liquidity of the firm.


Table I - Statement of Working Capital Requirement Particulars
A) Current Assets: i) Inventories ii) Sundry Debtors iii) Cash & Bank Balance iv) Other Current Assets v) Loans & Advances B) Current Liabilities: i) Current Liabilities ii) Provisions 2002-03 1,215,892 3,559,062 2,584,729 1,753,370 9,113,053 6,532,933 511,492 7,044,425 Working Capital (A-B) Add: Provision for Contingencies Net Working Capital Requirement 2,068,628 -2,068,628 2003-04 1,698,235 4,172,586 4,309,852 1,802,032 22,982,705 8,552,122 632,131 9,184,253 2,168,452 -2,168,452 2004-05 3,283,909 7,319,804 4,855,139 1,798 1,809,396 17,270,127 12,759,018 2,468,701 15,227,719 2,042,408 -2,042,408 2005-06 4,842,246 11,097,716 9,394,447 3,597 4,164,082 29,502,088 24,275,052 3,415,310 27,690,362 1,811,726 -1,811,726

Graphical Representation of Working Capital Requirement
Working Capital Requirement 2,200,000 Working Capital (in Rs.) 2,100,000 2,000,000 1,900,000 1,800,000 1,700,000 1,600,000 2002-03 2002-04 2002-05 2002-06 Year Working Capital Requirement


Table II - Statement of Changes in Working Capital

Particulars A) Current Assets: i) Inventories ii) Sundry Debtors iii) Cash & Bank Balance iv) Other Current Assets v) Loans & Advances Total Current Assets: B) Current Liabilities: i) Current Liabilities ii) Provisions Total Current Liabilities:

Previous Year 3,283,990 7,319,804 4,855,139 1,798 1,809,396 17,270,127 12,759,018 2,468,701 15,227,719

Current Year Effect on Working Capital Increase Decrease 4,842,246 11,097,716 9,394,447 3,597 4,164,082 29,502,088 24,275,052 3,415,310 27,690,362 11,516,034 946,609 1,558,256 3,777,912 4,539,308 1,799 2,354,686

Working Capital (A-B) Net Increase Or Decease In Working Capital


1,811,726 230,682 230,682






Observation and Summary
Training in a multinational company like SIEMENS, Aurangabad. Which is fast growing company in the field of high voltage product i.e. C.T., C.V.T. Breaker. It is noticed that functioning in the company is carried out very systematically and technically. Technical as well as common process is followed meticulously. It is observed that SIEMENS firmly believe on human and ethical value so, being a soft management they treat employee as a very important and appreciating assets of continuous growing. Not only this company that strive to ensure organization growth by raising strength of employees and providing various facilities for every individual to raise his\ her full potential.

Table I: It is observed that current asset decrease in 2004-05 as compare to 2002-03 to 200304 but in the year 2005-06 it had been increase from 1.72cr to 2.95cr and the current liabilities has been increase from 2002-06. Current asset decreases in 2004-05 and again it increases 2005-06. It shows fluctuation in these years. Working capital of SIEMENS ltd at only in the 2003-04 it increased reaming year i.e. 2004-05 and 200506 it decreases, it means that in the year excluding 2003-04 working capital falls down which shows the current liabilities increasing in greater percentage as compare to current asset. In the 2002-03, 2004-05 and 2005-06 working capital shows the negative trend due to the increase in the current liability in the condition of the year 2003-04 is increased it shows the positive trend.

Table II: 38

Statement of changes in the working capital is prepared to show the changes in the working capital between the two balance sheet dates. This statement is prepared with the help of the current asset and current liabilities derived from the 2 balance sheets So, i) ii) iii) iv) An increase in current asset increases working capital A decrease in current assets decreases in working capital An increase in current liabilities decreases working capital. A decrease in current liabilities increase working capital

It is worth noting that schedule of changes in working capital is prepared only from current assets and current liabilities and the other information is not of any use for preparing this statement. The company should look in to the proper current liabilities.

Study of Various Departments

Of PTD H-5 in SIEMENS Ltd.
HUMAN RESOURCE DEPARTMENT Head of the dept: - Mr. Pravin Kulkarni Human needed desire, expectation etc. are changing constantly because of the change in environment condition. This happens mainly because of the presence of these factors of influence heart, brain & mind. Human beings needed to be maintained at every cost. They are considered as through individuals which varied characteristics, attitude etc Management is to “MANAGE - MEN – TACTFULLY”. Through there are other major organizational function such as financial management, production management, material & marketing management etc. it is undoubtedly the management of the human resources that provides all other organizational function. In short human resources department is that part of the total management of an organization which specifically deals with human resources in respect of: a) Their procurement b) Their Development in terms of skills, knowledge & attitude c) Their Motivation towards the attainment of organizational objective by creating and maintaining an organizational limit conducive to such development.



• •

To cultivate & maintain adequate source of labor supply To get information regarding job requirements & prevailing wage rates.

To hire through the effective use of application blanks, tests, physical examinations, interviews & checking references, records, supervisor’s approvals.

To maintain words of prospective employers, present employers & former employees.

To introduce the new employee to company policies & his supervisor him up for on early adjustment. 2) PROMOTION & TRANSFER • To aid the establishment of lines of promotion & to follow up as for as possible in order to see that company policies are followed. • To aid in the establishment of company policies regarding transfer for the convenience of the company & employee. • To aid the formation of the company policies regarding termination as well as respiration initiated by the employee. • To remove as much as possible the cause for discharges.

3) TRAINING • To aid in the formulation of policy governing training of new employees. 41

• •

To provide for training in safety & company policies. To co-operate in the preparation of a special annual report for employee.

4) WAGES & OTHER INCENTIVES • • • To collaborate with others or be responsible for wage plan. To write job specification & evaluate all jobs. To participation in the formation of policies governing payment for suggestions, pension plans profit-sharing programs, mutual saving program, insurance, loan to employees. 5) SERVICE ACTIVITIES • • • To supervise restaurant & recreation facilities. To provide counseling concerning personal affairs. To publish the plant magazine.

6) COLLECTIVE BARGAINING & EMPLOYEES REPRESENTATION • To conduct union negotiation & to co-operate with union representatives. • To co-operate neither with an employers job which is nor on union level. • To participate actively in handling grievances.


STORE DEPARTMENT Head of the Dept. – Mr. Nitin Bhalerao Store keeping is an important function of material management. It is a primarily services function in which the storekeeping act as a custodian of all the items kept in the store. Store is the connecting link between the shops as work place & the production control department. Raw material is usually referred to as stares & the place where they kept is known as storeroom.

Function of store department • Requesting from purchasing department economical quantity of material for delivery at the most appropriate time. • • Exercising control and quality of material received. Storing & protection of material against hazards, condition, weather & pilferage • • • Issuing material against properly authorized material requisition. Maintaining adequate records or receipt & expenditure. Maintaining adequate stocks of material to serve production need.

SIEMENS LTD follows ABC Principal for Maintaining Stock A) Item: - it is usually founds that 5 to 10% of item cost for 7075% of the total money. These items are stocked in smaller quantities due to high cost those they can procure frequently. B) Item: - these items are generally of 10 to 15% of the total items & represent 10 to 15 % of total expenditure. To control of these items is not very rigid. C) Item: - these items are 70 to 80% of total items & 5 to 10& expenditures. These items procured in bulks hence helps in price discount & reduce workload dose not requires close control. The ABC analysis helps to storage all items into three categories-

Principal of Good Store Locations • • • • • • • Economy in cost of transportation Possibilities of efficient service Reducing free risk Flexibility for further expansion Minimization risk spoilage & deterioration Overall integration Away from outside (security)


QUALITY ASSURANCE DEPARTMENT Head of the Dept. –: -Mr. Saikumar Quality assurance department actually deals with final product that is assuring its quality or rather maintain its quality to the best this assurance of quality to the best. This assuring of quality or rather maintaining its quality to the best. This assuring of quality is given either in process of manufacturing it self or after the completion of the product. Thus there are three main type of quality assurance namely: 1. Inward inspection. 2. Line quality assurance. 3. Sample inspection.

INWARD QUALITY ASSURANCE The inward inspection is done when the parts are purchased form the venders. The parts, which come from venders, are inspected properly by the inspector or engineer or technician and then if it okay then the part is allowed to go to the production dept. where it is made fit in the appropriate place. If the part is found faculty in the first inspection, the whole bunch of the parts is sent back to the vender and asked for new one. The faults may be minor, major or some times critical. The minor faults are some times critical. The minor faults are some times repaired within the company itself but in case of the major & critical faults, the part is straight sending away of the vender.


LINE QUALITY ASSURANCE: In the line quality assurance, frequent checking or inspection is done of any part during the manufacturing process. Here any part is taken and then testing, if it gives positive or desired result then it is preceded further. But here also if the result is not positive then there is a through inspection is testing again & again. In this line quality assurance any part can be check and taken care of immediately. In process checking eight to ten people are involved.

SAMPLE TESTING: Audit means sample checking of 20% of 10 units & then send to store. This inspection is nothing but selection two final CT & CVT. randomly out of 10 packed once and are kept under 24 hours run test. In this testing the following areas are considered: If it goes smoothly and as desired then the total 10 packed CT & CVT are allowed to go the store for dispatches. But if the selected one is found or giving poor responses then the CT & CVT are rechecked thoroughly.


PLANT ENGINEERING DEPARTMENT Head of the Dept: - Mr. Ahmer Hasan This department mostly deals with maintenance, cleaning, and timely inspection lubrication so as to provide provides proper & continuous working of machinery.

OBJECTIVES OF MAINTENANCE DEPARTMENT • • • • • • • • Minimize breakdown time Utilization of optimum capacity To keep the life of the equipment To ensure the highest availability To modify the machine tools and other production facility Economy in performing the maintenance activities Ensure safety Improve productivity

TYPES OF MAINTENANCE: 1) Preventive Maintenance It consist of routine actions in a planned manner should prevent break down & to ensure operation efficiency if this periodic inspection (weekly) is carried out. It is based on principal “PREVENTION IS BETTER THAN CURE”



a) To minimize the possibility of unanticipated production interruption. b) To make plant equipment &machines always available & ready for use. c) To ensure safety of life of employee. d) To reduce the work content of maintenance job.

2) Predictive / Scheduled Maintenance The aim of this is to minimize breakdown. This system provides for inspection, overhaul, lubrication & servicing of certain machine. This type of maintenance utilizes the ideal time of equipment without much disturbance schedule.

Objectives 1) Reduce the down time during repairs 2) Breakdown is minimized 3) Machine run at higher-level efficiency 4) Predetermination of date of commencement of work ensures to plan the work lode & distribution of maintenance work.


Breakdown maintenance: In this the request are made after the equipment fails to perform its normal function. Causes: 1) Failure to replace worn out parts 2) Lack of lubrication 3) In difference towards minor faults 4) External factors like wrong fuel 5) Indifference towards equipment mismanagement / handling

Disadvantages : 1) 2) 3) 4) 5) 6) 7) 8) Disruption of production plant. Imbalances attention of all equipment’s. Increase overtime, downtime, manpower & spares Reduction of output. Different to maintain quality of the product. Increase in spoilage of materials. Increase in changes of accidents. It leads to faster plant deterioration.

This type to lower level efficiency & the loss of production time, it is not Recommended as in general practice.


MATERIALS DEPARTMENT Head of the Dept: - Mr. Gaurav Bhasin This is a department in the company as it directly deals with raw material needed for the production of product that is CT & CVT. This department gets the production planning from the marketing department. The next step of material dept is to contact with respective vendor to fulfill the needs. According to requirement, the dept will search the vendor. The vendors have to make the quotation and allow submitting in company including the price list of raw material. The proper vendor is selected who is eligible from point of view of price, quality and who clarifies every teams and condition the transaction. The purchase order is given to vendor. The PO includes the list of raw material, quantity etc. The PO is very important part of transaction as it the legal proof between the company and the vendor. But before giving the PO to vendor, material dept checks the stock in stock dept and then accordingly gives order. The SIEMENS Ltd. (PTD H-5 div.) deals with two types of procurement – Local procurement and Import procurement. But it gives first preference to Indian market in case of purchasing raw material. The material dept get the plan of production from P.P.C. dept. The SIEMENS. Ltd. Produces the CT of capacity of 245kv and 420kv.


DESIGN & DEVELOPMENT DEPT. Head of the Dept: - Mr. Jyotirmoy Datta From the name itself it is clear the design of new model of CT & CVT. is done in this dept. and after the approval of it development of same model is done. The requirement of new model is come from the marketing dept .As per the need the new model is design. It may include aesthetic looks i.e. External design or Graphic Design / Internal design. So accordingly the model is designed and sends it to top management for its approval. Again from market feedback, the necessary chances are made if required. And the final model is selected and the production is started. The main function of the D & D dept is as follow Design of new model as per market dept.  Solid model preparation rendering is done.  Performance of model is done.  Sample testing and finalization. These are some of the main function of D & D dept. The CT & CVT. is prepared as per the requirement. The technical collaboration of SIEMENS Company is done with Germany. So, the D & d dept has very important function to perform- designing of new model is not very easy task and after that development of it is done in same dept. The further testing is also done in D & D dept. The final approval is done with management people and people working in D & D dept


• From this study, it has concluded that in sector there is huge requirement of PTD instrument from Siemens ltd.

• Siemens Produce different kinds of product in different sector mostly in energy/ Industry / Healthcare sector.

• The Production process in Siemens ltd. Systematic because of lots of testing of mechanism.

• All departments having there own responsibilities.

• Transaction system is become very easy to all of the employee in Siemens by using SAP system.

For more Notes, Presentations, Project Reports visit



1. Book about Excise Manual -By R. K. Jain 2. Commercial Department. -By Mr. Manoj Dhok. 3. Annual Report of SIEMENS in India 4. Financial Management by

-Khan & Jain -S. N. Maheshwari




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