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CHAPTER:-1
INDUSTRY PROFILE
INTRODUCTION:
Mechanical industry is characterized by the principle of physics and materials
science for analysis, design, manufacturing, and maintenance of mechanical systems. It
involves the production and usage of heat and mechanical power for the design,
production, and operation of machines and tools. Mechanical engineering industry
encompasses all mechanical operations like designing manufacturing or maintenance of
mechanical structures. Mechanical engineering industry also deals with the engineering
equipments and accessories like spacecrafts, automobiles etc. Mechanical engineering
industry can be treated as a profitable industry, specifically in the field of robotics. Major
areas of mechanical engineering industry include designing, manufacturing, finding out
the strength of materials or the amount of heat transfers or energy conversion etc.,
studying solid mechanics, thermodynamics, fluid mechanics, instrumentation and
measurement etc.
The application of fluid power is causing many positive changes in the world
around us. The application of hydraulic control and drive systems have resulted in new
designs and improved efficiency in case of machines and installations. The use of fluid
under pressure to transmit power and to control intricate motions is relatively modern and
has had its greatest development in the past two or three decades. Industrial hydraulics is
necessary it can move rapidly in one part of its length and slowly in another. No other
medium combines the same degree of accuracy and flexibility, maintaining the ability to
transmit maximum power. Broadly, the hydraulic products are classified as: Industrial,
Mobile, Marine, and Aerospace.
Industrial: Plastic processing machinery, steel making and primary metal extraction
industry, Machine tool industry.
Mobile: Agricultural tractors, Earthmoving equipment, drilling rigs, commercial vehicles,
industrial tractors etc.
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Aerospace: Equipment and systems, e.g. transmission, rudder control, which are used in
airplanes, rockets and spaceships.
Marine: Fishing boats and naval equipment.
INDIAN SCENARIO:
Mechanical engineering industry in India is showing rapid advancements in every
sphere of the economy with Indian companies forging ahead in making of defense
equipments, aircrafts, sleekly designed cars, vehicles and various industrial devices. The
name technology is now closely associated with mechanical engineering because of its
vital contribution to this. Urban development with building of bridges and flyovers, dams
etc. all requires the contribution of Indian Mechanical Engineering Industry.
With the advent of many types of cars and consumer tastes varying in every respect
the Indian mechanical engineering industry is constantly engaged in its endeavors to
provide new designs and sleek models of cars. Thus automotive engineering is ruling the
roost nowadays in the Indian economy.
The Indian hydraulic industry started in early sixties primarily with an objective of
import substitution for some of the hydraulic products being used by the industry in
various applications. Range of products in the oil hydraulic industry is quite wide. It is,
therefore, difficult to specify a minimum economically viable capacity for the industry.
While there has been a continued overall growth in the oil hydraulic products business
due to large variety of specialized products to meet specific individual applications,
volume growth in individual products has been very low. With low volumes and high
development costs concerning tooling, casting and forging, the industry has not been able
to adopt modern production methods. Current production technology in use is largely
dictated but production volumes, quality requirements and costs. Since the Indian
industry has to manufacture a large variety of products with low volumes, the industry is
not able to use the modern high production lines.
Most of the manufacturers, with exception to some ( who have installed CNC
Machines for the manufacture of components), are currently using general purpose
machines with special tooling and some special purpose machines for specialized metal
cutting operations. Although the industry has shown a reasonable growth over the years
but it is still far away from the volumes which would lead to adopting modern production
methods.


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WORLD SCENARIO:
Mechanical engineering industry is regarded as a major industry throughout the
world, specifically in European Union and U.S. and due to its huge volume of production;
this industry products .maximum employment opportunities. This industry is the worlds
primary capital goods provider and that is the reason it has an enormous impact over the
economy of any country. Other industries are also supported and assisted by mechanical
engineering industry in respect of increasing quality of process, developing mew
processes or innovating new techniques,
For the last couple of years, the employment opportunities of mechanical
engineering industry remain unchanging. Some of the common mechanical engineering
job categories are Assistant Engineers, Assistant Executive Engineers, Executive
Engineers, Superintendent, Junior Engineer, and other technically skilled workers. Some
other fields of mechanical engineering, where there are recruitment opportunities are
production operations, maintenance, technical sales, managers and administration. This is
the basic bread winning industry on Indian Soil and OSHPL (Om Shakthi Hydraulic
Private Limited) operates to the needs of Mechanical Industry and wants in the form of
building Hydraulic and Pneumatic Cylinders and Power Packs.
Hydraulic cylinders get their power from pressurized hydraulic fluid, which is
typically oil. The hydraulic cylinder consists of a cylinder barrel, in which a piston
connected to a piston rod moves back and forth. The barrel is closed in each end by the
cylinder bottom (also called the cap end) and by the cylinder head where the piston rod
comes out of the cylinder. The bottom chamber (cap end) and the piston rod side chamber
(rod end). The hydraulic pressure acts on the piston to do linear work and motion. The
piston rod also has mounting attachments to connect the cylinder to the object or machine
component that it is pushing.
A hydraulic cylinder is the actuator or motor side of this system. The
generator side of the hydraulic system is the hydraulic pump which brings in a fixed or
regulated flow of oil to the bottom side of the hydraulic cylinder, to move the piston rod
upwards. The piston pushes the oil in the other chamber back to the reservoir. If we
assume that the oil pressure in the piston rod chamber is approximately zero, the force F
on the piston rod equals the pressure P in the cylinder times the piston area A.
F = P. A.
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The piston moves instead downloads if oil is pumped into the piston rod side
chamber and the oil from the piston area flows back to the reservoir without pressure. The
pressure in the piston rod area chamber is Pull Force. Hydraulics is a topic in applied
science and engineering dealing with the mechanical properties of liquids. Fluid
mechanics provides the theoretical foundation for hydraulics, which focuses on the
engineering uses of fluid properties. In fluid power, hydraulics is used for the generation,
control, and transmission of power by the use of pressurized liquids. Hydraulics topics
range through most science and engineering disciplines, and cover concepts such as pipe
flow, dam design, fluidics and fluid control circuitry, pumps, turbines, hydropower,
computational fluid dynamics, flow measurement, river channel behavior and erosion.
Free surface hydraulics is the branch of hydraulics dealing with free surface flow, such as
occurring in rivers, canals, lakes, estuaries and seas. Its sub field open channel flow
studies the flow in open channels.














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CHAPTER:-2
COMPANY PROFILE
INTRODUCTION
South India, Bangalore based - OM SHAKTHI HYDRAULICS Pvt. belongs to
BBK Group of companies that was established in 1990. OM SHAKTHI HYDRAULICS
Pvt. supplies & manufactures hydraulic cylinder & hydraulic equipment. Organized &
managed by dynamic, young & efficient engineers having worked in various Hydraulic
Industries for over a decade. Policy being customer satisfaction, service, quality, the
company boasts of having supplied high quality products to various companies related to
Indian Industrial sector.

OM SHAKTHI HYDRAULICS Pvt. Ltd - the leading manufacturers, suppliers &
exporters of hydraulic cylinder, telescoping pneumatic cylinder, pneumatic cylinder,
hydraulic equipment, hydraulic cylinders, telescopic cylinders, telescopic pneumatic
cylinder, earth moving cylinders, hh series, lh series. Bangalore based OM SHAKTHI
HYDRAULICS Pvt. Ltd is engaged in manufacturing & supplying of hydraulic system &
equipment at a reasonable rate. Supported with a wide dealer network, best sales service
personal, the hydraulic & pneumatic products are available at short notice thus serving the
industry at its best with less delivery time.
Hydraulic cylinders, Pneumatic cylinders and other hydraulic systems & equipment
manufactured at Bangalore South India fallows ISO, CETOP Standards. These hydraulic
products have been supplied to machine tool, steel, food processing, defense, material
handling, paper, pulp, SPM, automobiles, heavy duty application such as Hydraulic Press,
Earth Moving Equipment Industries etc. The companies are equipped with sound
manufacturing & testing facilities that have gained the confidence of valued customers
over a long period of time.

Special Cylinders such as Swing Cylinders & Clamp cylinders are made specially
according to customer specifications which are the land mark in the companies list of
achievements. Stainless steel cylinders for Marine applications have been manufactured
& supplied taking into consideration of the essential parameters such as high corrosion
pitting & low temperature.
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A GLANCE OF THE ORGANIZATION:
Business Type :
Exporter / Manufacturer / Wholesaler/Distributor /
Supplier / Trading Company

Year Established : 1990

No. Of Employees : 56

Export Turnover : Rs 5 Lakhs

Annual Turnover : Rs 4 Crores

Bankers : CANARA BANK

Standard Certification : ISO 9001-2000

Products Exporter, Trader,
Manufacturer, Distributer and
Supplier
:
Hydraulic cylinders, pneumatic cylinders, hydro-
pneumatic cylinders, hydraulic swing cylinders,
hydraulic power press, hydraulic press.

MAJOR CLIENTS
With its contribution to design and manufacturing capability has proved to be basic
backbone and strength to all major Industries.
Within India:
L&T Komatsu Ltd, Bangalore
Voltas Ltd, Mumbai
Omega construction Ltd, Faridabad
Indital construction machineries Ltd, Bangalore
Dynamatic technologies, Bangalore
Kam Avida Enviro Engineers, Pune
BEML, Bangalore & Mysore
Tinplate company of India Ltd, Jamshedpur
Phooltas tamper India Patna
TPS Infrastructure , New Delhi
Tata steel, Jamshedpur
Maniar & co. Ahmedabad
Liftmak, gurgaon
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Abroad:
Scorpion jacks, Australia
Gulf Equipments, Bahrain
Unite co SRL, Italy
Board of directors:
1. Mr. Bhojaraju B N
2. Mr. Krishana N Shetty
3. Mr. Balakrishnan D

B) NATURE OF BUSINESS CARRIED
Om shakthi Hydraulics PVT LTD (OSHPL) is the manufacturer of Hydraulics products
mainly
Hydraulic cylinders
Hydraulic press
Hydraulic power packs.

It carries a high advanced technology for the production of hydraulics products in
different application.











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C) VISION, MISSION AND QUALITY POLICIES
OSHPL vision:
Company vision is to be known as one of the Best Manufacture. Of Hydraulic
Gear Pumps in World through Commitment to the best Quality, Prompt Services & 100%
Customers Satisfaction.
The vision of Om shakhti Hydraulics is customer satisfaction with
uncompromising integrity. OSH makes sure that our products and services meet the best
standards in the industry. To meet our customers expectations we ensure that our sales
and service executives generate enthusiasm and respond with extra efforts in addressing
our customers needs. We always look for the new and better ways to address the
customers and to satisfy them at any cost.
OSHPL mission:
Company mission is to develop & Market the full range of world class Product &
Services. All our customers must experience the Value for Money from our product
prepared with the latest technology.
To strive our level best to get the best quality products and services to our
customers and build a long lasting business relationship
Quality policy
All products manufactured are thoroughly inspected and tested for quality and
reliability. Our in house QC department is equipped with advances and sensitive
measuring instruments controlled by experienced Engineers, faithfully uncompromising
on quality.
The checks begin with the incoming materials / components and end only when the
finished product is tested and dispatched. Products improvement and products
development is continuous process. Our qualified and motivated Engineers are
continuously working on tomorrows solutions.

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Quality objectives
Quality policy Quality objectives
1) Meeting Quality Review of Quality performance and conduct root cause
analysis for rejection and rework.
2)On time delivery Review the delivery performance on order-to-order basis and
take action to achieve on time delivery.
3)Continual improvement
of QMS
Review and improve documentation including quality policy
and objective once in three years.
4Enhancing customer
satisfaction
Measure customer satisfaction once in a year and improve the
customer satisfaction index of permanent customers.
(Permanent customers are those who are giving orders since
last two years).

D) PRODUCT AND SERVICE PROFILE
1. Hydraulic Power Packs
We are the prominent manufacturer and exporter of Hydraulic Power Pack, which
is manufactured by using fine grade materials. These hydraulic power packs are used in
many applications like mobile hydraulic, industrial hydraulic equipments, hydraulic
presses, hydraulic cylinders and hydraulic machines. We also export hydraulic power
packs to various countries at competitive price.
Specifications:
Tank Capacity: 15 Lars to 3000 Lars
Power: 0.5 HP to 100 HP
Flow: 1 plum to 600 plum
Pressure: 400 kg /cm
2

Application: Machine tool, Mobile Hydraulic, Hydraulic Presses, General
Engineering Purpose.
Profile Projector
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2. Hydraulic cylinder
Om shakthi Hydraulics makes customized designed Hydraulic Cylinders to meet
the clients exact requirement. Cylinder includes single acting, double acting, tie-rod &
welded construction and telescopic cylinders with a maximum stoke up to 4500mm, bore
of 350mm and maximum pressure of 300 bar.
Specification:
Working pressure : Up to 270 kg/cm2
Type : Single Acting and Double Acting
Single Acting : Up to 5 Stage
Double Acting : Up to 3 Stage
Mounting : For various application
Application : Tipper- Tractor, Lorry.





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3. Hydraulic press
Specifications:
Capacity : 0.5 Ton to 30 Ton
Working Media: By pneumatic pressure up to 15 kg/Cm2
Mounting : Fornt Flange or Face
Application : Press, Riveting, Coining, Punching etc.


E) AREA OF OPERATION
Om Shakthi Hydraulics Pvt. Ltd is the manufacturer and exporter of high quality
hydraulic power pack, which is designed and developed according to the international
standards. Our product range includes hydraulic power packs, hydraulic press machine,
industrial hydraulics, hydraulic press frame, hydraulic cylinders, industrial hydraulic
presses and hydraulic presses. We are not only manufacturing, we are exporting to
domestic and international markets at competitive price.





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F) OWNERSHIP PATTREN

Factory name OM SHAKTHI HYDRAULICS PVT. LTD.
Type of firm Private ltd
Area of factory 10000 sqft
Phone number 91-80-28364084
Web address www.oshpl.in
Company timings 9.a.m to 5.p.m
Working hours 8 hours
Year of establishment 1992
Factory address
B-197, peenya industrial Area, 2
nd
stage,
BANGALORE-560058.

G) COMPETITORS INFORMATION
Wipro fluid power
Vijay Hydraulic
Deutal Hydraulic
UT Hydraulic
OSCER Hydraulics
H) INFRASTRUCTURAL FACILITIES
No of Units: 3 locations
Total Ares: 18000 sq.feet New facility is over 140,000 sq. feet
Number of Employees: 55
Own & Representative Offices: Delhi, Jamshedpur, Jabalpur, Bokaro, Bhilai,
Bilaspur, Rourkela, Kolkata, pune.

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I) ACHIEVEMENT / AWARDS
Awarded the most aggressive dealer in Bangalore.
OSHPL are No.2 in corporate sales.
Best dealer in Karnataka in overall performance.
Acquired ISO9001-2008 certification.
Acquired bureau veritas certification.
WORK FLOW MODEL


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K) FUTURE GROWTH AND PROSPECTIVE
140,000 Sq.feet. Facility coming up near Bangalore by March 2010.
Focus on OEM/Volume /Export Business.
Complete revamp of production floor and manufacturing / cleaning/ Assembly /
Testing / Painting methods.
Dedicated R&D division with focus proprietary product development.
ERP implementation materials, supply chain, design, quality, production and
finance areas.
Striving to acquire TS 16949 Certification.
























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CHAPTER:-3
APPLICATION OF MCKENSYS 7S MODEL
The McKinsey 7S model involves seven interdependent factors which are
categorized as either "hard" or "soft" elements:

HARD ELEMENTS SOFT ELEMENTS
Strategy Shared values
Structure Skills
Systems Style
Staff

"Hard" elements are easier to define or identify and management can directly
influence them: These are strategy statements; organization charts and reporting lines;
and formal processes and IT systems.
"Soft" elements, on the other hand, can be more difficult to describe, and are less
tangible and more influenced by culture. However, these soft elements are as important as
the hard elements if the organization is going to be successful. Those seven elements are
distinguished in so called hard Ss and soft Ss. The hard elements are feasible and easy
to identify. They can be found in strategy statements, corporate plans and organizational
chart sand other documentation.

The entire profile of the organization which has been presented is in accordance
with MCKENSY.
7s model states that there are 7 basic dimension which represents the core of managerial
activities. There are the levers which executes use to influence complex and large
organizations. Obviously, there was a concerted effort on the part of the originators of the
model to coin the managerial variables with words beginning with later s so as to
increase the communication power of the model

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Structure:
The organizational chart and associated information that shows who reports to
whom and how tasks are divided and integrated.
Strategy:
A set of decisions and actions aimed at gaining a sustainable competitive advantage.
Systems:
The flow of activities involved in a business .including its processes and its support
system.
Staff;
How companies develop employees and share basic value.
Skills :
An organizations dominant capabilities and competencies.
Styles:
How managers collectively spend their time and attention and how they use
symbolic behavior, how management acts is more important than.
Structure
The organizational structure of an enterprise would depend upon its size, product
manufactured and its functional division. In public sector the government plays
significant role in determining the organizational structure of the concern. The
organization structure may be flexible. The company may change its structure
accordingly to the needs and suitability.

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ORGANIZATION STRUCTURE OF OSHPL


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SKILLS:
In Om shakthi Hydraulics PVT ltd employees are to be recruited on the
basis of their Qualifications. Training facilities be provided to be both employees
both internal and external. There are 3 types of labors based on their skills they are
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1. skilled labors
2. semi-skilled labors
3. un-skilled labors
The OSHPL concentrate more on production. The Organization gives at most
importance to produce goods of superior quality checking system and research and
development facilities. The OSHPL intention is continuous improvement on quality
of product and process, because of customer satisfaction, consistent quality and
competitive price. The organization success is depends on the skills of the
employees. The company conducting different training programs to employees in
order to meet the quality of the product
STYLE
The management believes in an open organization. In Om shakthi hydraulics
PVT ltd. They do not involve employees for taking any decision. The management
will be taking the decision itself may be in any area like production decision,
marketing decision. Management itself takes all finance decisions
STRATEGY:
The Om shakthi Hydraulics PVT ltd started in1990 in the place of
Bangalore Penya 2
nd
stage. There is no perfect mission statement in the OSHPL but
the main aim of the company will be producing good quality of the hydraulics
products to the public as well as providing more number of employment and
increase the standard of living of the people.


The business strategy emphasizes the following
1. Increase their market shares.
2. Reduced cost of production.
3. Increase company performance.
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4. Produce always quality product.
5. To meet social responsibilities.
6. Provide employment opportunity to the people of the area.
SYSTEMS
SYSTEMS refer to the processes used to manage the organization.
A system includes:
Management Information System
Innovation System
Performance Management System
Financial System/ Reward System
Compensation Monitoring System
STAFF:
Staff requirement is designed to ensure that those on board have the
primary focus as customer service with a high level of product and process
knowledge and operation excellence. Induction and training program are designed
to conduct for all employees at regular basis to ensure that these levels are
continually enhanced feedback for continuous improvement in solicited from all
understood. Being a dynamic organization susceptible and the changes are well
understood.
Being a dynamic organization to frequent change in policy so as to suit
business needs that require being a learning organization fulfilled by the systems
and processes which document all changes and feedback received. Development
programmes are conducted by OSHPL every year only for the persons who are in
the management cadder. Which helps them to improve their skills and knowledges
SHARED VALUES:
The Values shared by the numbers of an organization. The values shared by
the OSHPL Member are.
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1. Continuous innovation
2. Empowerment of working force
3. Installing a sense of responsibility in each employee.
4. Focus on and belief in employees.















CHAPTER:-4
SWOT ANALYSIS OF THE COMPANY
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SWOT
Analysis
Strength
Weakness
Opportunities
Threats
SWOT
AnalysisZ
Strength
Weakness
Opportunities
Threats
SWOT analysis (alternately SLOT analysis) is a strategic planning method used to
evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in
a project or in a business venture. It involves specifying the objective of the business
venture or project and identifying the internal and external factors that are favorable and
unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who
led a convention at the Stanford Research Institute (now SRI International) in the 1960s
and 1970s using data from Fortune 500 companies.
Setting the objective should be done after the SWOT analysis has been performed. This
would allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business, or project team that give it an
advantage over others
Weaknesses (or Limitations): are characteristics that place the team at a
disadvantage relative to others
Opportunities: external chances to improve performance (e.g. make greater
profits) in the environment
Threats: external elements in the environment that could cause trouble for the
business or project
Identification of SWOTs is essential because subsequent steps in the process of
planning for achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable, given
the SWOTs. If the objective is NOT attainable a different objective must be selected
and the process repeated.
Users of SWOT analysis need to ask and answer questions that generate meaningful
information for each category (strengths, opportunities, weaknesses, and threats) in
order to maximize the benefits of this evaluation and find their competitive advantage




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INTERNAL AND EXTERNAL FACTORS
The aim of any SWOT analysis is to identify the key internal and external factors
that are important to achieving the objective. These come from within the company's
unique value chain. SWOT analysis groups key pieces of information into two main
categories:
Internal factors The strengths and weaknesses internal to the organization.
External factors The opportunities and threats presented by the external
environment to the organization.
The internal factors may be viewed as strengths or weaknesses depending upon their
impact on the organization's objectives. What may represent strengths with respect to one
objective may be weaknesses for another objective. The factors may include all of
the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on. The external
factors may include macroeconomic matters, technological change, legislation, and socio-
cultural changes, as well as changes in the marketplace or competitive position. The
results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For
example, it may tend to persuade companies to compile lists rather than think about what
is actually important in achieving objectives. It also presents the resulting lists uncritically
and without clear prioritization so that, for example, weak opportunities may appear to
balance strong threats.
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It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of
individual SWOTs will be revealed by the value of the strategies it generates. A SWOT
item that produces valuable strategies is important. A SWOT item that generates no
strategies is not important.
STRENGTH
Wide network of distribution channels
Better customer service
Easy availability of raw material for in time production
Flexibility in adapting strategy to suit market fluctuations.
WEAKNESS
Lack of experience in foreign market
Poor financial condition
High cost of production
Lack of advertisement and Promotional activities.
OPPORTUNITIES
Expansion, Modernization and Up gradation of unit
Newer technology is available
Capacity of meeting higher demands and attains optimum
utilization off existing resources.

THREATS
Tough competition.
Frequent changes in government policies causing
the organization to change its policies.
Development on technology may change this market beyond
their ability to adapt.
New entrants in market may dilute the market share of the
company.


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CHAPTER:-5
ANALYSIS FINANCIAL STATEMENT
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31
ST
MARCH
2012
PARTICULARS NOTES
YEAR ENDED 31-
3-2012
(Rs)
TEAR ENDED 31-
3-2011
(Rs)
I. Revenue From Operations
Sale of products 50,450,064.25 64,836,323.18
Less: Excise Duty
4,638,014.00 5,958,636.00
Net Turnover
45,612,050.25 58,877,785.82
II other Income
18 50,709.00 145,358.80
III. Total Revenue (I + II)
45,662,758.26 59,023,144.22
IV. Expenses
Cost of material consumed 19 19,538,944.66 39,044,247.07
Increase / Decrease Work in
progress
20 7,256,143.00 5,055,221.00
Employee Benefit Expenses 21 6,984,371.53 8,111,111.00
Finance cost 22 3,052,477.16 3,387,032.60
Depreciation and Amortization
Expense
23 524,303.00 682,300.90
Other Expenses
24 9,122,652.81 11,842,815.14
Total Expenses
46,476,852.05 58,012,284.75
V. profit Before exceptional &
Extraordinary items & Tax
(816,093.80) 1,010,859.61
VI. Less exceptional items
--------- -------
VII. profit before extraordinary
items & tax
(816,093.80) 1,010,859.57
VIII. Less Extraordinary items
--------- --------
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IX. Profit Before Tax
(816,093.80) 1,010,859.61
X. Other Tax Expenses
---------- -----------
- Current Tax
---------- 605394.00
- Differed Tax (286,234.00) (165,511.00)
XI. Profit for the period from
continuing operations
(529,809.80) 870,976.57
XII. Profit from discontinuing
operations
--------- --------
XIII. Less Tax Expense of
discontinuing operations
-------- ---------
XIV. Profit from the
discontinuing operations after
tax (XII XIII)
-------- -------
XV. Profit for the period
(XI XIV)
(529,809.80) 670,970.52









BALANCE SHEET FOR THE YEAR ENDED 31
ST
MARCH 2012
PART ICULARS NOTE AS AT 31- 3- 2012 AS AT 31-3 -2011
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(Rs) (Rs)
I.EQUITY AND
LIABILITIES


(1) Share Holders Funds
(a) Share Capital 2 9,917,00.00 1,000,000,00
(b) Reserves and Surplus

3 4,915,481.58 5,445,291.38
(2) Share Capital amount
pending Allotment

8,870,000.00
(3) Non- current Liabilities
(a) Long Term
Borrowings
4 25,558,088.92 28,406,847.46
(b) Long Term
Provisions

5 47,400.00 50,000.00
(4) Current Liabilities
(a) Short -Term
Borrowings
6 123,221,396.00 14,579,006.00
(b) Trade Payables 7 19,201,482.78 25.151,202.04
(c) Other Current
Liabilities
8 3,948,570.74 2,531,442.02
(d) Short Term
Provisions
9 494,738.00 494,738.00
TOTAL

76,357,158.02 86,728,526.95

II. ASSETS


(1) Non- Current Assets


(a) Fixed Assets 10
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(i) Tangible Assets 3,871,291`.40 3,772,664.40
(b) Non Current Investment 11 35,413,621.00 32,540,799.00
(c) Deferred Tax Asset 599,658.00 313,374.00
(d) Long Term Loans and
Advances
12 501,741.00 494,741.00
(e) Other Non - Current Assets

13 2,812,692.19 2,902,282.19
(2) Current Assets


(a) Inventories 14 14,088,096.00 19,105,639.00
(b) Trade Receivables 15 16,893,585.18 25,644,613.87
(c) Cash and Cash Equivalents 16 1,083,673.91 1,077,058.78
(d) Short Term Loans and
Advances
17 1,092,799.34 877,331.71
Notes Forming Part of
Accounts

1
TOTAL

76,357,158.02 86,728,526.95

ANALYSIS OF FINANCIAL STATEMENT
In the year 2011-12 current asset is less than year of 2010-11. The
current asset is decreased by 29%. In the year 2011-12 current liability is
more than the year of 2010-11. The current liability is increased by 16%.

The operating profit of in 2011-12 is negative of RS. - (529,809.80) which
is against the positive of RS. 670,970.52 In 2010-11.

The sale in the year 2011 is RS64, 836,323.18 which is decreased to RS
50,450,064.25 in the year 2012.


CHAPTER:-6
LEARNING EXPERIENCE
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 29
In my ten weeks of in plant training and specialization study in OSHPL
studied and learnt many things carried in the organization. This project work
training helped me in gaining more knowledge about the work and production
carried out in the organization. There is a very strict rules followed in HR
department and attendance was taken daily to check the regularity we were used to
stay from morning 9 to evening 5 daily and we have to visit different department
daily according to the schedule given by them.
There was good reaction and co-operation by the superiors and subordinates
in OSHPL. They helped me in collection of the information regarding the different
departments and production process.
I got clear picture about the organizational work carried on and how the
work is allotted and how it is carried out and duties and responsibilities of the
employees in the organization. I observed the work techniques that are studied in
subject are implemented and practiced in the organization like, training techniques
etcThroughout my project period I learned how to interact with people in the
organization, it was a great experience for interact with professional personalities &
I was able to know how employees are working under pressure & how they perform
their decision making skills. It was an opportunity for me to apply my management
knowledge in practical. This project helped me how to evaluate the financial
position of the bank.
Finally in this in plant training and specialization study of finance gave me
the clear idea about the working condition in the organization which will help me in
future days. I have seen OSHPL factory in Bangalore peenya 2
nd
stage from so
many years but I did not get an opportunity to visit and getting opportunity for my
finance project in this company but this MBA summer project helped me to see this
big organization, All the plants and machineries in this company are very big which
are imported from Germany. When we see this company from the outside we
cannot imagine this big company but when we enter this company then only we
could come to know its capacity and accompanied areas its machineries and all.
Finally I conclude that it was a great experience for me to do my
project in OSHPL.
INTRODUCTION OF FINANCE
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 30
It would be worthwhile to recall what Henry Fayal once remarked that money is an arm
or a leg; you either can use it or lose it. This statement throws light on the significance of
money or finance. A budding concern may need a small amount of money and yet it may
be difficult for it to commence business simply because it is not in the position to get
required funds. A firms success and survival mainly depends upon its ability to generate
sufficient funds when need arises. Finance holds the key to all the activities. The role of
financial manager, that is the one who is in charge of the finance function, is difficult
because he has to play that role and relate it to the role of other managers.
Finance is the life blood of business. It flows in mostly from scale of goods and
services. It flows out for meeting various types of expenditure. The activating element in
any business which may be on industrial or commercial undertaking is the finance.
Kenneth Midgely and Ronald Burns define financing as a process of organizing the flow
of funds so that a business can carry out its objectives in the mist efficient manner and
meet its obligations as that fall due.
1. The science of the management of money, banking, investments, and credit.
2. The management of money, banking, investment, and credit.
3. Finances Monetary resources; funds, especially those of a government or
corporate body.
4. The supplying of funds or capital.










GENERAL INTRODUCTION OF WORKING CAPITAL
MANAGEMENT
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 31
Working capital is the part of total capital which is required to make payment
towards Manufactured expenses, Administration expenses, Selling and distribution
expenses, and make payment towards salaries and wages to workers.
Working capital may be regarded as the life blood of a business. Its effective provision
can do much to ensure the success if a business. A study of working capital is of major
importance to internal analysis because of its close relationship with the day-to-day
operations of a business. Working capital is the portion of the assets of a business which
are used in or related to current operations. It refers to the flow of ready funds necessary
for the working of the enterprise. Some experts view it us the aggregate of the current
assets available to meet the probable current liabilities.
The study of the problem is related to working capital management at the OM SHAKTHI
HYDRAULICS PVT LTD, BANGALORE The purpose of the study is to know how
efficiently working capital management is being carried on in the company. There should
be a proper control over the availability of cash in such a way that effort is required to
balance the cash inflow and outflow. The demand for working capital and its varies
components vary proportionately to the changes in the sales. The problems of the
receivables management means there is blockage of the funds in debtors. There is no
proper control over the components in the working capital management.
The two main aspects of companys life are liquidity and profitability. These cannot
gain momentum unless working capital is properly managed. So the company must
balance between liquidity and profitability. Some of the significant are a failure the
business concern are due to the inadequacy and mismanagement of working capital.
Therefore , management of working capital as becomes a yardstick to measure the
performance of a business.


DEFINITION:
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 32
Gestenberg, circulating According to C.N. Gentenberg capital is that capital which
keeps on changing its form after being utilized, but at the end it comes to its original form
again. It keeps on revolving or circulating from cash to current asset.
Operating capital: - As the working capital is the capital required to operate the
business and is the capital invested in the current asset, it is called as operating capital.
Circulating capital: - Interchanging used word for working is circulating capital.
Gestenberg has suggested this item circulating capital as all the assets of business
change from one form to another.
According to Hoagland working capital is descriptive of that capital which is not
fixed. But the more common use of the working capital is to consider it as the difference
between the book value of the current assets and current liabilities.
According to Shubin, working capital is the amount of funds necessary to cover the
cost of operating the enterprise. Working capital in a going concern is a revolving fund; it
consists of cash receipts from sales which are used to cover the cost of current operation.
CONCEPTS OF WORKING CAPITAL
Working capital can be classified into two concepts,
a. Gross working capital
b. Networking capital
a. Gross working capital
Goss working capital concept refers to firm investments in its current assets.
Current assets are assets, which can be converted into cash with in an accounting year (
operational cycle) and includes cash, short term securities, debtors, bills receivables and
inventories.
The gross working capital is a financial concept. It also called as current capital
or circulating capital and is represented as sum total of current assets of an enterprise. The
gross working capital concept focuses attention on 2 aspects of current asset management:
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 33
1. Optimum investment in current assets
2. Financing of current assets
B) Net working capital concept
Net working capital is the difference between current assets and current liabilities. It
may be positive or negative. A positive working capital arises when a current assets
exceeds current liabilities and a negative working capital occurs when current a liability
exceeds current assets.
NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITY
Net working capital is a qualitative concept and indicates the
1. Liquidity position of the fir
2. Suggest the extent to which working capital needs may be financed by permanent
sources of funds.
The current assets of the firm should be sufficiently in excess of current liabilities
to constituting margin for maturing obligation within the ordinary operating cycle of the
business. A weak liquidity position poses a threat to solvency position of the firm and
makes it unsafe and unsound. A negative working capital may prove to be harmful for the
companys reputation. On the other hand, excessive liquidity also bad which may lead to
mismanagement of current assets.
The net working capital concept also covers the question of judicious mix of long
term funds for financing the current assets. Every firm needs a minimum amount of net
working capital, which is permanent. Hence apportion of working capital should be
financed with the permanent source of funds such as owners capital, debenture, long-
term debts, preference capital or retained earnings. Management must therefore decide
the extent to which current assets should be financed with long- term sources.
Even though both gross and net working concept are the important facets of
working capital, there is no precise way to determine the exact gross or net working
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 34
capital for every firm. The working capital needs depends upon the business operations of
the firm
It refers of the firms investment in current assets. Current assets are the assets
which can be converted into cash with in accounting year and include cash, short term
securities, debtors, bills receivables and stock.
c. Positive or Negative working capital:
The net working capital of a firm may be positive or negative. When the total current
assets exceed the current liabilities the working capital is positive.
Negative working capital refers to the excess of current liabilities over the current
assets that is when current liabilities exceed current assets negative working capital or
working capital deficit emerges. Negative working capital is an indication of some crisis
in the firm.
NEED FOR WORKING CAPITAL FINANCE
Working capital. The need for working capital arises due to the tome gaps between
production and realization of cash from sales. There is the need for working capital
finance is over emphasized. Every business needs some amount of time gaps between
purchase of raw materials & production, production & dales and realization of cash. Thus,
working capital is needed for following purchases.
For the purpose of raw materials, components and spares.
To pay wages and salaries.
To incur day-to-day expenses and overhead costs such as fuel, power and office
expenses, etc.
To meet the selling costs as packing, advertising etc.
To provide credit facilities to the customers.
To maintain the inventories of raw materials, work in progress, stores and spares
and finished stock.
DANGER OF EXCESSIVE WORKING CAPITAL:
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 35
Excessive working capital does not earn any profit to the firm, hence it cannot get
proper rate of return on investment.
It results in unnecessary accumulation of inventories. Thus the chances of
inventory mishandling, waste, theft and losses increase.
It is an indication of defective credit policy and slacks collection period.
Consequently; highest incidence of bad debts adversely affects profits.
Tendencies of accumulations inventories to make speculative profit grow which
tends to make dividend policy liberal and difficult to cope with in future when the
firm is unable to make speculative profits.
Excessive working capital may result in overall inefficiency in the organization.
DANGERS OF INADEQUATE WORKING CAPITAL:
It stagnates growth it becomes difficult for the firm to under tale profitable
projects due to non-availability of working capital funds.
A firm with inadequate working capital cannot honor its short term obligations.
Thus the firm loses its reputation; as a result the firm faces light credit terms.
The rate of return on investments slumps as the fixed assets are not efficiently
utilized due to lack of working capital funds.
It becomes difficult to exploit favorable market conditions and implement
operating plans and undertake profitable projects to achieve the firms profit target.
Inadequate working capital will not allow the make use of attractive credit
opportunities available to it.
The firm cannot meet its day to day commitments it thus creates inefficiencies,
increases costs and reduces the profits of the business.
It directly affects the liquidity position of the business firm.
IN A TRADING CONCERN:
Cash into inventories
Inventories into debtors and bills receivables.

Working Capital Cycle
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 36

a. STATEMENT OF PROBLEMS:
The problems taken for study are working capital management hence the
study is titled as a study of working capital management in OSHPL
A substantial portion of total investment is invested in current assets
Level of current assets and current liabilities will change quickly with the
variation in sales.
The level of working capital, which can be determined, by the level of current
asset and current liability.
The composition of current assets and liabilities.
b. NEED AND IMPORTANCE OF STUDY:
To fulfill its endeavor to maximize the shareholders wealth, firm has to earn
sufficient return from its operations, which needs a successful sales activity. The firm
has to invest sufficient funds in current assets to succeed in sales, as the sale do not
convert into cash instantaneously because of time gap between the sale of goods and
actual receipts in cash. Hence there is a need for working capital in the form of
current assets to sustain sales activity during that period. Since cash inflows and cash
outflows dont match, firms have to necessarily keep cash or investment in short term
liquid securities o fulfill its obligations as and when they become due. The adequate
stock of inventory provides a cushion against being out of stock and help as a guard to
meet the demand for its products. To be competitive, the firm must sell its products to
their customers on credit, on necessitates the holding of accounts receivables therefore
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 37
an adequate level of working capital is absolutely necessary for the smooth sales
activities, which in turn enhance the owners wealth.
The working capital need arises for the following purpose:
For purchasing raw materials, components and spare parts.
For paying wages and salaries.
To incur day to day expense and overhead costs like fuel, power and office
expense etc
To meet selling costs of packing advertising etc...
To provide credit facilities to customers.
c. OBJECTIVES OF THE STUDY:
To study and understand basic concept of working capital management.
To study schedule of changes in working capital of OSHPL.
To analyze the working capital position of OSHPL by using ratios.
To identify the factors affecting working capital management at OSHPL products.
To analyze Liquidity position of OSHPL during the study period by using liquid
ratio.
d. SCOPE OF THE STUDY
The scope is limited to published information received from company.
The study was limited to few important financial techniques of the firm.
The study is limited to working capital management of OSHPL.
The study covers 2008-2012 P&L a/c and balance sheet items only.



e. RESEARCH METHODOLOGY:
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 38
Research is a process through which we attempt to achieve systematically and with the
support of data the answer to a question, the resolution of a problem, or a greater
understanding of a phenomenon. This process, which is frequently called research
methodology, has eight distinct characteristics:
Research is guided by the specific research problem, question, or hypothesis.
Research accepts certain critical assumptions.
Research requires the collection and interpretation of data in attempting to
resolve the problem that initiated the research.
Research is, by its nature, cyclical; or more exactly, helical.
SOURCES OF DATA
There are two types of data
Primary data
Secondary data
Primary data:
The method which was adopted to collect the primary data was
personal interview.
To collect the information regarding the financial performance of
the company direct personal interview and discussions was made
with the finance manager, marketing manager and assistant general
manager, project guide and other staff members.
Secondary data:
There are two main sources of secondary data
Published data:
Data that is already available in books, magazines, trade journals, news
paper, reports prepared by the researcher, scholar etc..
Published data in this study is collected from are
1. Four years annual reports of the company
2. Companies web site and other search engines
3. Company magazine
4. News paper
Unpublished data:
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 39
This is not published data. It can be found in unpublished biographies, autobiographies,
some governmental aspects etc.
g. LIMITATIONS OF THE STUDY:
The study was limited to analysis of selected Ratios.
Time constraint for carrying out a detailed analysis.
The study was limited to selected financial parameters of OSHPL only.
The datas may not adequately represent the issue entirely.
TOOLS AND TECHNIQES OF WORKIG CAPITAL MANAGEMENT
A number of tools and techniques are available for working capital management, the
important tools and techniques are as follows
Current ratio
Quick ratio
Total assets turnover ratio
Fixed assets turnover ratio
Net working capital ratio
Inventory to working capital ratio
Current assets to fixed assets ratio
Net profit ratio
Gross profit ratio
Cash ratio
1. Current ratio
Capital ratio. It is calculated by dividing the total current assets by total current
liabilities. Current ratio may be defined as the relationship between current assets asd
current liabilities. This ratio is also known as working

2. Quick ratio
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 40
Liquid ratios express the relationship between liquid assets and liquid liabilities,
the ideal ratio for a concern is 1:1. This ratio is measure repayment of immediate
liabilities.
3. Total asset turnover ratio
Assets are used to generate sales therefore a form should be manage its assets
efficiency to maximize sales the relationship between sales and assets is called a assets
turnover.
4. Fixed asset turnover ratio
The fixed assets turnover ratio underlines the relationship between a companys sales and
fixed assets.
5. Net working capital ratio
Net Working capital is more a measure of cash flow than a ratio. It is an indication of
short term financial health of a business.
6. Inventory to working capital ratio
Percentage measure of a firm's capability to finance its inventories from its available cash.
Numbers lower than 100 are preferable as they indicate high liquidity. Numbers higher
than 100 suggest that the inventories are too large in relation to the firm's financial
strength.
7. Net profit ratio
The two basic components of the net profit ratio are the net profit and sales. The net
profits are obtained after deducting income-tax and, generally, non-operating expenses
and incomes are excluded from the net profits for calculating this ratio. Thus, incomes
such as interest on investments outside the business, profit on sales of fixed assets and
losses on sales of fixed assets, etc are excluded.

8. Gross profit ratio
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 41
The basic components for the calculation of gross profit ratio are gross profit and net
sales. A net sale means that sale minus sales returns. Gross profit would be the difference
between net sales and cost of goods sold. Cost of goods sold in the case of a trading
concern would be equal to opening stock plus purchases, minus closing stock plus all
direct expenses relating to purchases. In the case of manufacturing concern, it would be
equal to the sum of the cost of raw materials, wages, direct expenses and all
manufacturing expenses. In other words, generally the expenses charged to profit and loss
account or operating expenses are excluded from the calculation of cost of goods sold.
9. Cash ratio
The ratio of a company's total cash and cash equivalents to its current liabilities. The cash
ratio is most commonly used as a measure of company liquidity. It can therefore
determine if, and how quickly, the company can repay its short-term debt. A strong cash
ratio is useful to creditors when deciding how much debt, if any, they would be willing to
extend to the asking party.













ANALYSIS OF DATA AND INTERPRETATION
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 42
Financial Analysis is the process of identifying the financial strengths and weakness
of the firm by properly establishing relationship between the items of the balance sheet
and the profit and loss account. Financial analysis can be undertaken but management of
the firm, or by the parties outside the firm, viz, owners, creditors, investors and others.
They analysis the firms profitability over times, its ability to general cash to be able to
pay interest and repay principal and the relationship between various sources of funds.
Ratio analysis is a powerful tool of financial Analysis. As such they concentrate on
the analysis of the firms present and future profitability.
Working capital is that portion of the total assets of business which are used in stores,
work in progress and finished goods, Merchandise, Bills receivables and cash.
In other words, it is the funds needed to carry day- to- day operations like purchase of
raw materials; payment of wages and other expenses is called working capital.
The results obtained during the study on working capital management at OSHPL is
presented and discussed in this chapter.








1. To study the changes in the working capital over a period of 4 years
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 43
SCHEDULE OF CHANGES IN WORKING CAPITAL UNDER OSHPL
IN THE YEAR OF 2009-2010
PARTICULARS 2009 2010
INCREASING
WORKING
CAPITAL
DECREASING
WORKING
CAPITAL
1. Current Asset


(a) Inventories 12,527,396 14,335,616 1,828,618 ---------
(b) Sundry
Debtors
19,196,568 24,743,934 5,547,366 ---------
Cash and Bank
Balances
2,274,216 1,769,974 504,242
(d) Loans and
Advances
5,831,934 4,929,893 902,041
2. Current
Liabilities

(a) Liabilities
13,357,145 22,293,352 8,936,207
(b) Provisions
433,960 622,082 188,122
Total 7,375,984 10,530,612
Decreasing
working capital
3,154,628


10,530,612 10,530,612

WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 44
SCHEDULE OF CHANGES IN WORKING CAPITAL UNDER
OSHPL IN THE YEAR OF 2011- 2012
PARTICULARS 2011 2012
INCREASING
WORKING
CAPITAL
DECREASING
WORKING
CAPITAL
1. Current
Assets

(a) Inventories 19,105,639.00 14,088,096.00 -------- 5,017,543
(b) Trade
Receivables
25,644,636.87 16,893,585.18 8,751,051.69
Cash and Cash
equivalents
1,077,058.78 1,083,673.91 6,615.15 ----------
(d) Short term
Loans and
Advances
877,331.71 1,092,799.34 214,867.95 ----------
2. Current
Liability

(a)Short Term
Borrowing
14,579,006.00 12,221,396.00 2,357,610 ----------
(b) Trade
payables
25,151,202.04 19,201,482.78 5,949,719.26 ----------
Other Current
Liabilities
2,531,442.09 3,948,570.74 ----------- 1,417.128.72
(d) Short Term
Provisions
494,738.00 494,738.00 ----------
Total 8,528,812.36 15,185,723.41
Decreasing
working capital
6,656,911.05
15,185,723.41 15,185,723.41

WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 45
The analysis of working capital becomes necessary to know if the management is using
the working capital effectively. An important function of finance department is to
maintain an optimum level of working capital as it has got an important position because
of its nature of revealing the clear cut position of liquidity of the firm. To study the
changes in working capital over the period of 4 years, the statement of changes in
working capital prepared for the stu0dy.
The working capital of the company has been decreased in the year 2009 10
Rs.6, 656,911.05 and in 2011 12was also decreased Rs.3, 154,628
SCHEDULE OF CHANGES IN WORKING CAPITAL
The various sources and utilization of working capital are shown by preparing
schedule of changes in working capital. Schedule of changes in working capital OSHPL
between 2009 10 & 2011 12
The net working capital of the company may state as shown in the figure that in the year
2009 &10 it shows decreasing working capital is Rs 3,154,628 and in the year 2011&12
decreasing the working capital is Rs. 6,656,911.05.Where as an increasing in the 48.11%
of decrease of working capital as compare to the 09-10.
Statement of changes in working capital shows the trend of changes in the working
capital. This statement is prepared with the help of current assets and current liabilities of
two periods. It is a comparative statement that is used to calculate the increase or decrease
in the working capital. It also indicates the overall effects of the changes which show the
trend in the changes of working and its components.
Due to the frequent decreasing working capital of the company leads to slow growth in
the company progress and also it will hit back for the smooth operations of the business.




WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 46
2. To analyze the working capital position of OSHPL by using ratios
1. CURRENT RATIO (WORKING CAPITAL RATIO
Current Ratio = Current assets / Current liabilities
TABLE:-1
YEARS
CURRENT
ASSETS
CURRENT
LIABILITIES
RATIOS
2008-09 35,770,504 18,379,227 1.95:1
2009-10 45,799,419 22,727,312 2.02:1
2010-11 46,705,260.02 42,756,388.06 1.09:1
2011-12 33,158,154.43 35,866,187.52 0.92:1
Source: - Balance sheet figures
Figure:-1

ANALYSIS
In the year 2008-09 the current ratio position of the company is 1.95 is increase to 2.02
in the year 2009-10 but later in the year 2010-11 & 2011-12 it leads to downsize on the
current ratio position of the company1.09 to 0.92.
INTERPRETATION:
Here the reason for decrease in current ratio is that current asset of the firm decreased
without a corresponding decrease in a current liability of the firm
1.95
2.02
1.09
0.92
0
0.5
1
1.5
2
2.5
2008-09 2009-10 2010-11 2011-12
CURRENT RATIO
CURRENT RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 47
2. QUICK RATIO
QUICK RATIO = CURRENT ASSETS INVENTORY / CURRENT LIABILITY
TABLIE:-2

YEAR
QUICK ASSETS
QUICK
LIABILITIES
RATIOS
2008-09 23,243,108 18,379,227 1.26
2009-10 31,463,803 22,727,312 1.38
2010-11 27,599,621.02 42,756,388.06 0.64
2011-12 18,821,536.43 35,866,187.52 0.52
Source:- Balance sheet figures
Figure: 2

ANALYSIS
The standard quick ratio is 1:1 the quick assets are fixed at the same as the quick
liability no question over margin is provided but in the year 2008-09 the ratio is 1.26:1
but 2009-10 ratio is increased to 1.38. And 2010-11 and 2011-12 also it is decreasing by
0.64 and 0.52.
INTERPRETATION
Here the quick ratio decreased because or account receivables balance decrease without a
corresponding decrease in current liabilities. The firm spent cash to pay off a long term
debt.
1.26
1.38
0.64
0.52
0
0.5
1
1.5
2008-09 2009-10 2010-11 2011-12
QUICK RATIO
QUICK RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 48
3. TOTAL ASSETS TURNOVER RATIO
TORAL ASSETS TURNOVER RATIO = NET SALES / TOTAL ASSETS
TABLE:-3
YEAR NET SALES TOTAL ASSETS RATIO
2008-09 56,248,553 47,964,192 1.17
2009-2010 43,585,252 56,874,678 0.77
2010-2011 58,877,785.82 86,728,526.95 0.68
2011-2012 45,612,050.25 76,357,158.02 0.60
Source: Balance sheet figures
ANALYSIS
The total assets turnover ratio is in the year 2008 -2009 Ratio is1.17. But in the year 2009
- 2010 decreasing the Ratio is 0.77. Again it is increasing in the year 2010 2011 Ratio is
0.68. And 2011-12 decreasing by 0.60.
Figure:-3

INTERPRETATION
The companys asset turnover ratio is decreasing year by year. If the company has less
assets, it indicates unfavorable position.

1.17
0.77
0.68
0.6
0
0.2
0.4
0.6
0.8
1
1.2
1.4
2008-09 2009-10 2010-11 2011-12
TOTAL ASSETS TURNOVER RATIO
TOTAL ASSETS TURNOVER
RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 49
4. FIXED ASSET TURNOVER RATIO
SALES TO FIXED ASSET = SALES / FIXED ASSET
TABLE:-4
YEARS SALES FIXED ASSETS RATIO
2008-09 56,248,553 5,091,188 13.16:1
2009-2010 43,585,251 4,272,359 8.56:1
2010-2011 58,877,785.82 3,772,864.40 15.61:1
2011-2012 45,612,050.25 3,871,291.40 11.78:1
Source: Balance sheet figures
ANALYSIS
The above table and graph shows that fixed asset turnover ratio is 13.16 times in
the year 2008-09. This has been decreased to 8.56 times in the year 2009-10. And in the
year 2010-11 increased to 15.61 times. But in the year 2011-12 it decreased to 11.78
times.
Figure:-4


INTERPRETATION
The company must adopt efficient financial system for the better utilization of
fixed assets to generate the sales. A high ratio indicates a higher degree of efficient in
asset utilization and a low ratio reflects inefficient use of assets. In this case company
utilizing the assets inefficiently, so it leads to decreasing the company progress.

13.16
8.56
15.61
11.78
0
5
10
15
20
2008-09 2009-10 2010-11 2011-12
FIXED ASSET TURNOVER RATIO
FIXED ASSET TURNOVER
RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 50
5. NET WORKING CAPITAL RATIO
NET WORKING CAPITAL RATIO = NET WORKING CAPITAL / NET ASSETS
TABLE:-5
YEAR
NETWORKING
CAPITAL
NET ASSETS RATIO
2008-09 17,391,277 40,861,692 0.43
2009-10 23,072,107 50,071,778 0.46
2010-11 3,948,871.96 49,584,714.65 0.08
2011-12 (2,708,033.09) 37,029,445.83 (0.07)
Source: - Balance sheet figures
ANALYSIS
From the above table shows that in the year 2008-09 ratio is 0.43. And it was
increasing in the year 2009-10 the ratio is 0.46. But in the year 2011-12 again it is
decreased by 0.08 and again it is decreasing means negative sign (0.07).
Figure: - 5

INTERPRETATION
The company must to maintain adequate working capital in order to meet any type short
term obligation. It shows the higher the ratio indicates the efficient utilization of working
capital and lower ratio indicates inefficient management of working capital.

0.43
0.46
0.08
-0.07
-0.1
0
0.1
0.2
0.3
0.4
0.5
2008-09 2009-10 2010-11 2011-12
NET WORKING CAPITAL RATIO
NET WORKING CAPITAL RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 51
6. INENTORY TO WORKING CAPITAL RATIO
INVENTORT TO WORKING CAPITAL RATIO = INVENTORY / WORKING CAPITAL
TABLE:-6
YEAR INVENTORY
WORKING
CAPITAL
RATIO
2008-09 12,527,396 17,391,277 0.72
2009-10 14,336,616 23,072,107 0.62
2010-11 19,105,639.00 3,948,871.96 4.84
2011-12 14,088,096.00 (2,708,033.09) (5.20)
Source: - Balance sheet figure
ANALYSIS
In this ratio identify in order to ascertain that there is no overstocking the ratio identifies
the size of the inventory and requirement of working capital. In the above table shows
that in the year 2008-09 the ratio is 0.72 and in the year decreased in the year 2009-
10ratiois 0.62. But it is increased in the year 2010-11ratio is 4.84 and next year 2011-12
decreased means negative sign (5.20).
Figure:-6


INTERPRETATION
The above graph indicates working capital is excess of current assets over current
liabilities. Increase in the volume of sales requires increase in the size of inventory but
from a sound financial point of view inventory should not exceed amount of working
capital. The desirable ratio is 1:1. In this table company is not having good inventory
system. In the year 2011-12 the company is excess of current liability over current assets
in this position company maintain the high inventory so it must concentrate on increase in
volume of sales.

0.72
0.62
4.84
-5.2 -6
-4
-2
0
2
4
6
2008-09 2009-10 2010-11 2011-12
INVENTORY TO WORKING CAPITAL RATIO
INVENTORY TO
WORKING CAPITAL
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 52
7. CURRENT ASSETS TO FIXED ASSETS RATIO
CURRENT ASSETS TO FIXED ASSETS RATIO = CURRENT ASSETS / FIXED
ASSETS
TABLE:-7
YEAR
CURRENT
ASSETS
FIXED ASSETS RATIO
2008-09 35,770,504 5,091,188 7.02
2009-10 45,799,419 4,272,359 10.72
2010-11 46,705,260.02 3,772,864.40 12.38
2011-12 33,158,154.43 3,871,291.40 8.56
Source: -Balance sheet figures
ANALYSIS
The table shows that in the year 2008-09 Ratio is 7.02. But in the year 2009-10 &2010-11
increased by 10.72 & 12.38. But In the year 2011-12 it is decreased by 8.56.
Figure:-7


INTERPRETATION
In this ratio it shows increase in sales to year to year and also current assets level of the
company up to the year 2010-11 after it is decreased by 8.56. This ratio indicates the
company is having unfavorable position.


7.02
10.72
12.38
8.56
0
2
4
6
8
10
12
14
2008-09 2009-10 2010-11 2011-12
CURRENT ASSETS TO FIXED ASSETS
RATIO
CURRENT ASSETS TO
FIXED ASSETS RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 53
8. NET PROFIT RATIO
NET PROFIT RATIO = NET PROFIT / SALES
TABLE:-8
YEAR
NET PROFIT /
LOSS
SALES RATIO
2008-09 1,601,946 56,248,553 2.85%
2009-10 1,340,022 43,585,251 3.07%
2010-11 870,978.50 58,877,785.82 1.48%
2011-12 (529,809.80 45,612,050.25 (1.16%)
Source: - Balance sheet figures.
ANALYSIS
The ratio explains per rupee profit generating capacity of sales. If the cost of sales is
lower the net profit will be higher in order to get sales efficiency. In the year 2008-09 net
profit is 2.85 & 2009-10 the net profit is increased to 3.07%. In the next year 2010-11
decreased by 1.48%. In the last year net profit will be negative.
Figure:-8


INTERPRETATION
The company must focus on increasing the sales efficiency by means of adopting
efficient marketing system by decreasing the cost incurred for sales.


2.85
3.07
1.48
-1.16 -1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
2008-09 2009-10 2010-11 2011-12
NET PROFIT RATIO
NET PROFIT RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 54
9. GROSS PROFIT RATIO
GROSS PROFIT RATIO = GROSS PROFIT 100
SALES
Table: 9
YEARS GROSS PROFIT SALES RATIO
2008-09 2,507,019 56,248,553 4.46%
2009-10 2,080,513 43,585,251 4.77%
2010-11 1,010,859.57 58,877,785.82 1.72%
2011-12 (816,093,80) 45,612,050.25 (1.79)
Source: - Company balance sheet
ANALYSIS
The gross profit has significant role in the company progress but in the year 2008-09 it is
4.46%. in the year 2009-10 the ratio is increased to 4.77%. and in the year 2010-11 it is
decreased to 1.72 and later it is decreased means negative sign (1.79).

Figure:-9

INTERPREETATION
The company gross profit ratio is decreasing year to year, so the company must focus on
maintaining adequate gross profit level and also helps for long run survival.
4.46
4.77
1.72
-1.79
-3
-2
-1
0
1
2
3
4
5
6
2008-09 2009-10 2010-11 2011-12
GROSS PROFIT RATIO
GROSS PROFIT RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 55
10. CASH RATIO
CASH RATIO = CASH BAALANCE + MARKETABLE SECURITIES

CURRENT LIABILITY
TABLE: 10
YEAR
CASH +
MARKETABLE
SECURITIES
CURRENT
LIABILITIES
RATIO
2008-09 2,274,216 18,379,227 0.12
2009-10 1,789,974 22,727,312 0.08
2010-11 1,077,058.78 42,756,388.06 0.02
2011-12 1,083,673.91 35,866,187.52 0.03
Source:- Balance sheet figures.

ANALYSIS
Cash ratio indicates company position or wellbeing growth in order to meet ready cash
for meet current liabilities. But in the graph shows in the year 2008-09 the ratio is 0.12. In
the year 2010-11 decreased to ratio is 0.08 and later also decreased and in the year 2011-
12 slightly increased to 0.03.
Figure:-10


INTERPRETATION
The company must have to maintain the better cash management in order to get a
favorable position to meet the cash requirement or short term requirement. In this
company cash ratio is decreasing . In this company is not having favorable position.

0.12
0.08
0.02
0.03
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
2008-09 2009-10 2010-11 2011-12
CASH RATIO
CASH RATIO
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 56
5. To identify the factors affecting working capital management at OSHPL
The determination of the working capital requirements of a concern has to be
made, taking into account the following factors.
Total costs incurred on materials wages and overheads.
The length of time for which raw- materials are to remain in stores before
they are issued for production.
The length of production cycle or work-in-progress that is the time taken
for conversion of raw materials into finished goods.
The length of sales cycle during which finished goods are to be kept
waiting for sales.
The average amount of cash required to make advance payments if any.
The average credit period expected to be allowed by suppliers












WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 57
FINDING AND SUGGESTIONS
FINDINGS:
The study is made for the purpose of findings of efficiency of working capital
management in OSHPL following are the findings arrived at after analysis.
The table no. 1 shows that the current ratio in the year 2010-11 it was
1.09but in the year 2011-12 it is 0.92 it indicates that the current assets has
been drastically decreased nearly 0.17 vice versa the current liabilities
increased lot.
The table no.2 shows that the quick ratio in the year 2010-11 it was 0.64
but in the year 2011-12 it was reduced to 0.52 it indicates that quick
assets has been decreased to 0.12 without corresponding decreased in
current liabilities
The table no. 3 shows that the total asset turnover ratio in the year 2010-11
was 0.68. In the year 2011-12 it has been decreased to 0.60. This indicates
that the companys some machinery is kept idle.
The table no. 4 shows that the fixed asset turnover ratio in the year 2010-
11 was 15.61.in the year 2011-12 it has been decreased to11.78. this
indicates that it measure the efficiency with which fixed assets are
employed the efficiency.
The table no. 5 shows that the net working capital ratio in the year 2010-
11 was 0.08. But in the year 2001-12 it has been negative of (0.07). this
indicates that short term financial health of a business.
The table no. 6 shows that the inventory to working capital ratio in the
year 2010-11 was 4.84 In the year 2011-12 it has been decreased means
negative of (5.20) times. It indicates that increase in the volume of sales
requires increase in the size of inventory.
The table no. 9 shows that the gross profit ratio of the OSHPL was
decreasing year by year. The company was not focus on maintaining
adequate gross profit level. So it is not helps for long term survival.
The cash and bank balance shows decreasing trend in2008-09, 2009-10,
2010-11, 2011-12. It is not up to the mark.
The liability of the company are showing increasing trend from 2008-09 to
2011-12. This is decreasing the net working capital.

WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 58
SUGGESTION:
According to my study the following suggestions I would like to suggest
the company.
The company is very weak in handling of current assets. Its current ratio which is
even less than the standard of 2:1. So it has to give more concentration on
maintaining the required current ratio by having required current assets.
The companys quick ratio is also weakening. So its quick assets decreased
without corresponding decreased in current liabilities. So the firm has to
concentrate on holding surplus cash in hand.
The company has to improve its sales by adopting better sales like promotional
activities to improve the overall efficiency.
The company should prepare financial budgets to know the cash outflows and
inflows of the every department.
The company has to reduce its overall cost of production to improve its
competitive from the analysis it is clear that the short term solvency ratios like
current ratio and quick ratio should be maintained at standard norms 2:1 and 1:1
respectively. This cash balances can be maintained by collecting the debt within
credit period of 30 days.
Cost cutting the company can adopt cost cutting measures by placing purchase
order got raw material in bulk availing.









WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 59
CONCLUSION
Working capital management decision is one of the very important financial
decisions to be taken by the financial manager. Working capital considered as the life
blood of the business. It is the capital required to operate the day to day activities o the
business. The firm should maintain sufficient level of working capital to produce up to a
given capacity and maximize the return on investment in fixed assets. The goal of
working capital management is to maintain the firm current assets and current liabilities
in such a way that a satisfactory level of working capital is maintained.
The company having good working condition and create healthy environment of workers.
The company should also maintain the efficient working capital and proper utilization of
resource.
The organization should measure to improve the sales which in turn increase the profit
level. The organization should adopt new technologies for production so that it can
improve its production efficiency and too demand of the organization.
The organization takes effective measure to improve the working capital position. Even
though Om shakthi hydraulics industries established in 1990 the profit level of the
organization is showing increasing trend







WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 60

BIBILIOGROPHY AND APPENDIX

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31
ST
MARCH
2012
PARTICULARS NOTES
YEAR ENDED 31-
3-2012
(Rs)
TEAR ENDED 31-
3-2011
(Rs)
I. Revenue From Operations
Sale of products 50,450,064.25 64,836,323.18
Less: Excise Duty

4,638,014.00 5,958,636.00
Net Turnover

45,612,050.25 58,877,785.82
II other Income

18 50,709.00 145,358.80
III. Total Revenue (I + II)

45,662,758.26 59,023,144.22
IV. Expenses
Cost of material consumed 19 19,538,944.66 39,044,247.07
Increase / Decrease Work in
progress
20 7,256,143.00 5,055,221.00
Employee Benefit Expenses 21 6,984,371.53 8,111,111.00
Finance cost 22 3,052,477.16 3,387,032.60
Depreciation and Amortization
Expense
23 524,303.00 682,300.90
Other Expenses

24 9,122,652.81 11,842,815.14
Total Expenses

46,476,852.05 58,012,284.75
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 61
V. profit Before exceptional &
Extraordinary items & Tax

(816,093.80) 1,010,859.61
VI. Less exceptional items

--------- -------
VII. profit before
extraordinary items & tax

(816,093.80) 1,010,859.57
VIII. Less Extraordinary items

--------- --------
IX. Profit Before Tax

(816,093.80) 1,010,859.61
X. Other Tax Expenses

---------- -----------
- Current Tax

---------- 605394.00
- Differed Tax (286,234.00) (165,511.00)
XI. Profit for the period from
continuing operations

(529,809.80) 870,976.57
XII. Profit from discontinuing
operations

--------- --------
XIII. Less Tax Expense of
discontinuing operations

-------- ---------
XIV. Profit from the
discontinuing operations after
tax (XII XIII)

-------- -------
XV. Profit for the period
(XI XIV)
(529,809.80) 670,970.52

WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 62

BALANCE SHEET FOR THE YEAR ENDED 31
ST
MARCH 2012
PART ICULARS NOTE
AS AT 31- 3- 2012
(Rs)
AS AT 31-3 -2011
(Rs)
I.EQUITY AND
LIABILITIES


(1) Share Holders Funds
(a) Share Capital 2 9,917,00.00 1,000,000,00
(b) Reserves and Surplus

3 4,915,481.58 5,445,291.38
(2) Share Capital amount
pending Allotment

8,870,000.00
(3) Non- current Liabilities
(a) Long Term Borrowings 4 25,558,088.92 28,406,847.46
(b) Long Term Provisions

5 47,400.00 50,000.00
(4) Current Liabilities
(a) Short -Term Borrowings 6 123,221,396.00 14,579,006.00
(b) Trade Payables 7 19,201,482.78 25.151,202.04
(c) Other Current Liabilities 8 3,948,570.74 2,531,442.02
(d) Short Term Provisions 9 494,738.00 494,738.00
TOTAL

76,357,158.02 86,728,526.95

II. ASSETS


(1) Non- Current Assets


(a) Fixed Assets 10
(i) Tangible Assets 3,871,291`.40 3,772,664.40
WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 63
(b) Non Current Investment 11 35,413,621.00 32,540,799.00
(c) Deferred Tax Asset 599,658.00 313,374.00
(d) Long Term Loans and
Advances
12 501,741.00 494,741.00
(e) Other Non - Current Assets

13 2,812,692.19 2,902,282.19
(2) Current Assets


(a) Inventories 14 14,088,096.00 19,105,639.00
(b) Trade Receivables 15 16,,893,585.18 25,644,613.87
(c) Cash and Cash Equivalents 16 1,083,673.91 1,077,058.78
(d) Short Term Loans and
Advances
17 1,092,799.34 877,331.71
Notes Forming Part of
Accounts
1
TOTAL 76,357,158.02 86,728,526.95










WORKING CAPITAL MANAGEMENT
PGDMS, KIT Page 64

BIBILOGRAPHY
Books
Accounting for managers
S. P. Jain
Himalaya publishing house
Financial management
Shashi K Gupta, R. K. Sharma, Neeti Gupta
Kalyani Publishing house
Business Research Methods
Appanaiah, Reddy, and Ramanath
Himalaya Publication House
Annual reports:
For the year 2008-09
For the year 2009-10
For the year 2010-11
For the year 2011-12

Web site
www.0shpl.in
www.companyrecords.com