DEDICATED TO

In the Lotus Feet of !! Shri Sant Gajanan Maharaj!!

A PROJECT REPORT ON

“WORKING CAPITAL MANAGEMENT”
OF SIEMENS LTD, AURANGABAD

SUBMITTED TO Prof. Dr. V.K. DESHPANDE

SUBMITTED BY MR. RAKESH N. DHOPTE MBA II YEAR 2008-2009

SSGMCE, DBAR

Shri Sant Gajanan Maharaj College of Engineering & Department of Business Administration and Research, Shegaon

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ACKNOWLEGEMENT
It is my pleasure to place on record my sincere gratitude towards Mr. Pravin Kulkarni (HR Manager) & my guide Mr. Manoj Dhok (Commercial Dept.) SIEMENS Limited, who spent his precious time providing continuous ideas and expert guidance to my Report work. It was his direction and encouragement at every moment and step that motivated me to steer the research work confidently and successfully. We are also thankful to our Venerable H.O.D. Prof V. K. Deshpande, whose encouragement, moral support provide the valuable guidance, which has been a source of inspiration to us. I especially thankful to Mr. Gaurav Bhasin, Mr. Jyotirmoy Datta, Commercial staff & All Department that have to provide me valuable guidance, which is helpful to fulfillment my Project Report I am also thankful to my friends who directly or indirectly helped me lot. . Last but not the Least, I would like to pray our divine source of inspiration Shri Sant Gajanan Maharaj whose blessing always back us.

Mr. Rakesh Dhopte

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MBA (Finance)

CONTENTS
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 Study of Various Departments in SIEMENS Ltd. 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 52
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2 3 4 5 6

7 8 9 10 11

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Conclusion Bibliography

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Company Profile
SIEMENS “WHERE EXPERIENCE AND NEW IDEAS CONVERGE TO SHAPE THE FUTURE.” SEIMENS LTD. E-76, MIDC Waluj, Aurangabad- 431136.

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Demag Delaval Industrial Turbo machinery. Germany is a leader in the electrical and electronic engineering sector. the 55% Indian subsidiary of Siemens AG. except that Siemens VDO Automotive. operating in over 190 countries. another group company. power transmission and distribution. and switchboards. and Siemens Public Communication Networks operate as separate companies. 7 . and 51% interest in Pimac Engineers and Services. The three Kalwa units make motors. and Siemens Building Technologies (SBT) has already been merged into Siemens. SIEMENS derives 33% of its revenues from the automation and drives division. transportation systems. PLCs and UPS. mobile phones and medical solutions. During fiscal 2005. solutions and services in power generation. In India. is now a 100% subsidiary of SIEMENS. 18% each from Siemens Information Systems (SISL) and healthcare/other services divisions. Aurangabad makes switchgear and photovoltaic modules. It offers products. industrial solutions and services. controllers. The company was established in 1957. it acquired Siemens VDO Automotive. The company has a wide presence across the country. SIEMENS mirrors the portfolio of Siemens AG. The Nashik unit makes industrial automation products. systems.000 people. SISL.Introduction SIEMENS (SIEMENS). switchgear.6% stake in SIEMENS. followed by 24% from the power division. Siemens AG holds a 54. its operations include 15 Manufacturing plants and 16 sales offices. Siemens`s Worli plant makes medical equipment. Joka works makes control boards and switchboards. SIEMENS has a vast global network of 461. enterprise communications. automation and drives. Goa makes medical equipment.

engineer and entrepreneur. industry. Siemens today remains a relentless innovator. Werner von Siemens made the world's first pointer telegraph and electric dynamo.000 people worldwide. it seems like the revolution Werner started is still going strong. He was the man behind one of the most fascinating success stories of all time . Siemens was responsible for building much of the modern world's infrastructure. communications. As Werner had envisioned. While Werner was a tireless inventor during his days. transportation. 8 . information. With innovations averaging 18 a day. healthcare. From constructing the world's first electric railway to laying the first telegraph line linking Britain and India.by turning a humble little workshop into one of the world's largest enterprises. inventions that helped put the spin in the industrial revolution. the company he started grew from strength to strength in every field of electrical engineering. Siemens is today a technology giant in more than 190 countries. As an extraordinary inventor. employing some 440.History From a humble workshop to a global enterprise Siemens was founded in Berlin by Werner von Siemens in 1847. components and lighting have become essential parts of everyday life. Our work in the fields of energy.

COMPONENTS. DRIVES &UPS. FINANCE AND DISTRIBUTION PERSONNEL SIEMENS REAL ESTATE (SRE) 9 . MOTOR. PRIVATE COMMUNICATION SYSTEM.Group Profile BUSINESS DIVISION NON-BUSINESS DIVISION AUTOMATION. POWER GENERATION. PROJECTS. TELECOMMUNICATION. AUTOMOTIVE BUSINESS. POWER TRANSMISSION AND DISTRIBUTION. MEDICAL ENGINEERING. RAILWAY TRANSPORT SYSTEM.

Solution. it has become the bare minimum in recent years. SIEMENS is extremely vigilant in shunting out dated technology and replacing it with the best-in-class offers of the times. 10 . SIEMENS extrapolates future trends on the basis of current changes in technology and preferences as well as sheer gut feel. Rapid advances have only fuelled this phenomenon. Offer State of art: Product. This is because a continuous stream of innovative products excites the market and enhances brand recall. lots of it. “…Improved technology…” the means Technology is no more a premium input. System.Vision & Mission Vision of Siemens PTD Division of Aurangabad:    • • • To be amongst Top Three PTD Companies. “…Inspired thinking about the future. but not doing anything about it is fraught with grave risk. innovation and customizations are the tools SIEMENS uses to stay ahead of the competition.” the means The future is unpredictable. Consistently profitable (EBIT>10%). Fine-tuned business instincts are worth their weight in gold. “…Innovative products…” the means Product development.

 “Go for profit and go for growth” in this competition out of 280 companies A&D India is qualified for final round (top 5)! 11 .  SRE Indian wins top+ awards in global SRE competition.Awards and honors  Siemens Sensor scores a hat trick at the annual ABCI (Association of Business Communication of Indian) awards.  Siemens receives ‘market leadership’ award from frost and Sullivan (global consulting company).

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Organization Chart 13 .

 Fuse puller.  CT (Curent Transformer) & CVT (Capacitor voltage Transformer) COMPETITORS:  Anchor.  Fuse bases.  Bentex Linger. 14 .  Legrand. department. In a survey which was held by the Consumer Voice Magazine.  General Electric.  Residual current circuit breakers with overload protection. SIEMENS was ranked first for its best performance in 3Ka MCB’s.  Merlin Gerin – Schneider.  Isolating link.Aurangabad Works (PTD) The ET(Electrical Transmission).  Hager – L and T. They are:  Miniature circuit breakers. Aurangabad Works offers a variety of products.  Havell’s Euro Breaker.  Residual current circuit breakers.  Fuses.

Business transaction process 15 .

Accounting enables a person to assess the risk appropriate steps. or one class of income or loss. 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. Although the measure of success may vary in each case one has to be careful and cautious at every stage in his life. bank balance etc. which has attracted the attention all such human activities. cash balance. one kind of asset. Assets properties of every description owned by a person will be called assets for example land and building. 16 . or one class of income. Creditor a creditor is a person to whom we owe some thing. Debtor is person who owes something he is the person who has to pay to other person. Bad debts which are irrecoverable and written off from debtors A/C as a loss are termed as bad debts. Bookkeeping and accountancy is a science. plant and machinery. He is the person to whom we have to pay.Basic Accounting Terminologies Introduction Every human being consciously engages himself in some meaningful activity. Casting means the totaling of the books of account casting has to be done of the ledger accounts and also of a journal. Account an account denotes a summarized record of transactions pertaining to one person.

The amount of trade discount is deducted from the invoice. Expenses the effort made by business to obtain the revenues are termed as expenses. It is the primary record of a transaction in the books called journal or any other subsidiary journal. page number. It is normally allowed to the customers. It is the amount spent on manufacturing and selling of goods and services. Trader becomes a debtor of business by the amount withdrawn by him from business for private purpose. Hence. 1) Cash discount. Discount it is an allowance or a concession allowed by the receiver of benefit to the giver of benefit. Cash discount is closely related to cash receipt and cash payment. 17 . and retailers’ etc. the discount may be classified in two ways. 2) Trade discount. When cash is received. debtors. Cash discount it is discount allowed to customer as an inducement to make payment immediately. 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. it has no connection as to the receipt and payment of cash.e. discount is allowed is a loss to a business while cash discount received is a gain to him. Folio it means the page number of the book of original entry or of the ledger by writing folio i. therefore. 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. Entry the term entry refers to the recording of a transaction in the books of account. trade discount does not appear in the books of accounts.Drawing is the total amount withdrawn by a trader from his business for meeting personal expenses.

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. Sales the goods sold by a business for cash or on credit are called sales. Revenue is the amount that adds to the capital. it is referred to as insolvency indicating the liabilities of a business to meet all its liabilities. Liabilities represent the total amount to creditors. Therefore the total amount payable to creditors will be the liabilities. 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. Liabilities debts owed by a person are called liabilities. Purchases the goods bought for resale or manufacture and resale are called purchases. Such a business firm is said insolvent. goods may be purchased out but payment may not be made at the time of purchasing the goods. no revenue is realized. It is a book of prime entry or first entry. 18 . 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. 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. Debts arise because.Goods commodities in which a trader deals are called as goods. The sales may be classified as. Journal is the book 0f accounts in which business transaction are first recorded.

19 . 1) Cash transactions. It is dealing between two parties. classifying and recording transaction in a systematic manner to provide the information about the financial affairs of the business concerns. Transactions a transaction are an exchange of money or moneys worth between two parties. Book keeping is defined as the process of analyzing. which includes book keeping accounting. 2) Monetary transactions. 2) Credit transactions. Stock goods unsold lying with a business on any given date are called as stocks. Classification of accounts. interrupting the balances. The transactions are classified on the basis of exchange of goods and service they may be. Monetary transactions are classified in they two types. It is dealing between two or more persons. 1) Barter transactions.1) Cash sales 2) Credit sales Solvent a person is said to be solvent when his assets are equal to or more than his liabilities. preparation of summaries. but also balancing of accounts. Accounting is a wider concept. is involved not only maintaining records. drawing conclusions from the summaries knowing the results of financial transactions etc.

which are called folios. The page number on which the particular account appears is shown in the index. It is generally an alphabetic index one page is allotted for each alphabet. 20 . This facilities appear is shown against the account in the index. 3) Nominal accounts. All the accounts commencing with that particular alphabet are indicated on that particular page only. Every ledger has an index. Ledger posting After the transaction has been analyzed into its debit and credit elements in a journal.Accounts are classified in to four types 1) Personal accounts. A ledger is a bound book. Journal is derived from the French word “jour’ which means a day journal is the book of original entry or primary entry. each such debit and credit elements must be transferred in a journal accounts. The facilities immediate reference. The process of transfer of entries from journal to ledger account is called ledger posting. 2) Real accounts. It contains many pages. These pages are consecutively numbered. Personal accounts DEBIT THE RECIVER AND CREDIT THE GIVER Real accounts DEBIT WHAT COMES IN AND CREDIT WHAT GOES OUT Nominal accounts DEBIT EXPENSES AND LOSSES AND CREDIT GAINS OR INCOMES. 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. 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. For each account a separate page is kept.

A debit note is a statement sent by the buyer to the supplier stating the full details of the good returned. Trade discount The amount of trade discount is deducted from the bill itself. a trade discount does not appear in the books of accounts. the purpose being to determine the 21 . It gives the full details of the good returned by the customer. Credit note A credit note is sent to the customers when we receive goods returned from them. If double entry principles are strictly followed the total of the entire debit balances must agree with the total of all the credit balance. Credit notes are generally is printed in red ink. It intimates the supplier that his account has been debited by the value of the good returned to him. 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. Transaction is recorded in this book on the basis of credit notes. which shows the list of accounts showing debit balances and list of accounts showing credit balance. It is sent along with the goods. If a trade discount is given in the transaction. Therefore.Trial balance After posting the transaction to respective ledger accounts they are balanced and then a trial balance is drawn. 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. A trial balance is a statement. Debit note A debit note is sent to the supplier when the goods purchased from him are returned.

 Journal proper. These account consist of  The trading account  The profit and loss account  Balance sheet 22 . Final accounts The final accounts are prepared to find out the profit or loss and to know the financial position of the business. 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. 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. Subsidiary books (sub division of journal) If all the business transaction were recorded in one and the same journal.equality of posted debits and credits and to establish a basic summary for financial statements”.  Bills payable book. Therefore. they are recorded in separate journals meant for the purpose. the journal would be bulky and cumbersome.

it is only a statement showing asset and liabilities of the business. Balance sheet A balance sheet is a statement of the financial position of a business on a given date. The balance sheet is not account. its assets.Trading account A trading account is prepared to find out the gross profit or gross loss in the business done during the year. Trading account does not disclose the net income or loss. Profit and loss account Profit and loss account is another summary account. 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. in the trading account it is necessary to include all items of expenses directly affecting the cost of good sold. The gross profit is the difference between the cost of good sold and the sale proceed without any deduction of indirect expenses. It is important to note that the balance sheet always balances. its liabilities and its ownership equities” 23 . at cost. depreciated cost or another indicated value. We can define balance sheet as “a statement of financial position of any economics unit as at a given moment of time. which is prepared after preparation of trading account. There are other expenses in order to ascertain the profit or not loss. Hence. It is a snapshot of the financial condition of the business. The total value of the assets is always equal to the capital and liabilities.

“it is the excess of current assets over current liabilities. It is important from the point of view of both liquidity and profitability. which may be defined as: i) Those which are convertible into cash or equivalents with the period of one year and 24 . This cyclical operation is concerned with utilization of the funds with the hope that will return with an additional amount called income. Working capital is also called as net current assets.” All organization has to carry working capital. So affecting profitability. a proper relationship between fixed capital and current capital has to maintain. 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. Sufficiently liquidity is important and must be achieved and maintained to provide that funds to pay off obligation as they arise. If the operations of the company are to run smoothly. virtually determine the survival o demise of the company. The adequacy of cash and other current assets together with their efficient handling. 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.Introduction Of Working Capital Meaning: Working capital could be defined as the portion of assets used in current operations. 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. The term working capital refers to current assets.

As per the requirement and necessary some data are grouped and sub grouped.ii) Those which are required to meet day to day operations. The Study is limited to Four Month projected performance of the Company. both requires investment of ‘Funds’. The data used in this study have been given commercial Manager. Objective behind the Study Of Working Capital & Research Methodology Working capital management is very important in modern business. Ratio technique of financial management has been used. The management of working capital involve different concept and methodology than the techniques used in fixed assets management. The analysis of working capital is also very useful for short-term management of funds. For making a clear-cut opinion. Scope & Limitation of the Study 1. 3. 2. The fixed as well as current assets. 25 . 2) To calculate working capital for Four Month. 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. So the management of working capital and fixed assets apparently seem to involve it type of consideration but it is no so.

kinds of a thing are depending upon the different utilization of working capital. Net Working Capital Negative Working Capital Types of Working Capital Cash Working Capital Gross Working Capital Permanent Working capital .Data & Methodology of the Study: The data of Siemens Ltd. which are collected from the above-mentioned sources. For the four Month used in this study have been taken from company. Types of working capital The type. It prominently works in the direction of performing different functions in different situation and in the context of divergent variables. classification and tabulation of the financial data. Balance Sheet Working Capital Temporary Working Capital 26 . have been done as per the requirement of the study. So following are some important types of working capital. Editing.

Amount left for operational requirement. 4) Temporary Working Capital: It represents the additional assets. It is the amount of funds required to produce the goods and services. It constantly shifted from one assets o another and continues to remain in the business process. Permanent working capital has following features: i) ii) iii) It is classified on the basis of the time factor. 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 represents the current assets.1) Net Working Capital: Term Net working capital can be define in two way i) ii) It is the difference between current assets and current liabilities. receivables. It is the temporary investment in the current assets and possesses he following features: 27 . which are needs to conduct the business even during the dullest season of the year. Seasonal working capital is the additional amount of current assets particularly cash. Its size increase with the growth of the business. which are necessary to satisfy demand at a particular point. It is maintain as the medium to carry on operation at any time. which are required on a continuing basis over the year. 3) Permanent Working Capital: It is the minimum amount of the current assets. 2) Gross Working Capital: Gross working capital means the total current assets. which are required at different times during the operating year. and inventory which is required during the more active business seasons of the year.

b) It is particularly suited to business of seasonal on cyclical nature. is example of the balance sheet working capital. The reason is that the cash working capital indicates he adequacy of he cash flow which is an essential pre requisite of a business.a) It is not always gainfully employed. 5) Balance Sheet Working Capital: The balance sheet working capital is one. 7) Negative Working Capital: It emerges when current liabilities exceeds current assets. which has assumed a great importance in financial management in recent year. such a situation is absolutely theoretical and occurs when a firm is nearing a crisis of some magnitude. Gross working capital. though is May also shift from one asset to another as permanent working capital does. which is calculated from the items appearing in he Profit and Loss Account. which is represented by the excess of current assets over current liabilities. 28 . It is the basic of he operation cycle concept. 6) Cash Working Capital: It is one. which is calculated from the items appearing in the balance sheet. It shows the real flow of money or value at a particular time and considered to be most realistic approach in working capital management.

Principles of Working Capital Management: There are some principles of sound working capital management policy. Large investment in current assets with less dependence on a short term borrowing increase liquidity. reduces dependence on short term borrowing increases liquidity. 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. On the other hand less investment in current assets and greater dependence on debt increase the risk. reduces liquidity and increases profitability. 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. In other word these is a definite inverse relationship between he degree of risk and profitability. 3) Principle of Equity position: 29 . Generally higher the risk lower is the cost and lower the risk higher is the cost. reduces risk. A sound working capital management should always try to achieve a proper balance between these two. 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.

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. The term ‘production or manufacturing cycle’ refers to the time 30 . is the production cycle. 4) Principle of Maturity of Payment: This principle is concerned with planning he sources of finance for working capital. not products and as such no funds are tied up in inventories and receivables. Maturity pattern of various current obligations is an impotent factor in risk assumptions and risk assessment.According this principle. a firm should make every efforts o related maturity of payment to its flow of internally generated funds. and Railways need very limited working capital because they offer cash sales only and supply services. which has a bearing on the quantum of working capital. Water Supply. So they need large amount of working capital. According to 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. 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. receivables and cash. Public utility undertaking like Electricity. 2) Production cycle: Another factor.

larger is working capital need and vise versa. if liberal credit terms are available from the supplies of goods trade needs less working capital. The longer time span (production cycle) the large will be the tied up funds and therefore. If policy is to keep production steady by accumulating inventories it will require higher working capital. On the other hand. 5) Growth and Expansion: 31 . The requirement of working capital in such case. 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. 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. 3) Production Policy: In certain industry the demand is subject to wide fluctuations due to seasonal variations. depend upon the production policy. Higher book debts mean more working capital. and the ole given to credit by a company in its dealing with creditors and debtors. To sustain such activities that need for working capital is obvious. there is sometime gap before raw material becomes finished goods. The working capital requirement of a business are thus. affected by term of purchase and sale.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. The credit sales result in higher book debs.

7) Earning Capacity: Some firm have more earning capacity than others due to quality of the products. 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. They have to buy raw material in bulk during the season to ensure uninterrupted flow and process them during the entire year. monopoly condition etc. So a huge amount is blocked in form of row material during the peak season. yet it may be concluded that for normal rate of expansion in the volume of business. Although. we shall require lager amount of working capital. 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. Such firms with high earning capacity may generate cash profits from operations and contribute to their working capital.The working capital requirement of concern increase with the growth and expansion of its business activities. which gives more requirements for working capital and less requirement during the slack season. We may have retained profits to provide for me working capital but in fast growing concern. 9) Other Factors: 32 . 8) Dividend Policy: The dividend policy of a concern influence on the requirement of the working capital. 6) Seasonal Variation: In certain industry raw material is no available throughout the year.

which is permanently blocked.Certain other factors such as operating efficiency. some amount of working capital may be required to meet the seasonal demands and some special exigencies such as rise in prices. assets structure. which are copiously required by the enterprise to carry out its day-to-day business operation and this minimum. This is so because there is always a minimum level of current assets. etc. Sources of Working Capital Mainly there are two sources of working capital: i. Similarly. a part of the working capital investments are as investment in fixed assets. Loans from Financial institution . also influence the requirement of working capital. cannot be expected to reduce at any time. irregularities in supply. Permanent or Fixed working capital ii. 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 Sources of Working Capital Short Term sources Commercial Banks Indigenous Banks Trade Creditors Installment Credit Advances Account receivable Credit Accrued Expenses Differed Income Commercial Paper 33 Long term Sources Shares Debentures Public Deposits Ploughing back of Profits met from the short term sources of capital. management ability. Temporary or variables working capital In any concern. banking facilities etc. import policy. This minimum level of current assets need long term working capital. importance of labour. this gives rise to short term working capital which is required for day to day transaction also. strikes.

It refers to the duration between the firm’s payment of cash for raw material. In the diagram. Receivables Cash Finished Goods Raw Material Work In Process The above and network diagram may offer a clear picture of a complete working capital i. 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. stock refers 34 .e.Methods of Calculation of 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 is a cash phenomenon. raw material. Simply speaking. entering into production and inflow of cash from debtors and realization of receivables.

Trade Creditors 5) Creditors Collection Period = Avg. which continues throughout his life of a firm remaining engaged in commercial activities. Stock of Finished Goods 3) Finished Goods Holding Period = Avg.to material only. wages. Credit involves for the components of raw material. Cost of Goods Sold per day Avg. wages and overheads inclusive of factory. Avg. components involve are raw material. Stock of Work in Process 2) Work in Process Holding Period = Avg. overheads and profits. In work in process. something a contingency margin is also given while estimating the working capital requirement. and overhead more specifically manufacturing overheads. wages. etc. Cost of Consumption per day Avg. The operating cycle consists of him following events. Book Debt 4) Receivables Collection Period = Avg. Debtors include material. Cost of Production per day Avg. Credit Sales per day Avg. Stock of Raw Material 1) Raw Material Holding Period = Avg. office and administration and selling and distribution. Finished stock consists components of material. 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 35 .

Total Operating Cost Working Capital Required = Number of Operating Cycle Components of Working Capital: 36 . 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.Where.

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) Amount ----------- 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: 37 .

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. current liabilities. 2) Dimension II is concerned with the decision about his composition and level of current assets. This dimension aspect of his working capital has been more clearly and precisely Explains by the following diagram. risk and liquidity. liquidity and structural health of the organization. refers to him excess of current assets over current liabilities. Risk & Liquidity 38 . is concerned with problems that arise in attempting to mange him current assets. Profitability. In this context. In other word it refers to all aspects of administration of both current assets and current liabilities.e. which earn no profit for the business. in general practice. i. Management of working capital therefore.Working capital. may lead the firm insolvency and excessive working capital implies idle funds. This is so because both inadequate as well as excessive working capital position is bad for the business. Inadequacy of working capital. and interrelationship that exists between them. neither inadequate nor excessive. working capital management is three-dimensional nature: 1) Dimension I is concerned with the formulation of he policy with regard to Profitability. Working capital management policies of the firm have a great effect on its profitability. 3) Dimension III is concerned with the decision about his composition and level of current liabilities.

It is very important to have proper balance in regard to the liquidity of the firm.Dimension I 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. 39 .

584.726 -1.705 8.396 17.000 1.042.200.362 1.042.235 4.726 Graphical Representation of Working Capital Requirement Working Capital Requirement 2.172.097.068.628 2003-04 1.415.000 1.275.000.798 1.842.408 -2.802.909 7.088 24.370 9.000 2.532.759.701 15.753.032 22.113.000 1.131 9.068.800.811.168.492 7.053 6.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 1.122 632.227.394.052 3.892 3.600.716 9.900.246 11.933 511.044.586 4.855.425 Working Capital (A-B) Add: Provision for Contingencies Net Working Capital Requirement 2.452 -2.) 2.502.309.852 1.468.811.809.139 1.804 4.Table I .127 12.062 2.283.552.184.719 2.164.690.408 2005-06 4.000 2002-03 2002-04 2002-05 2002-06 Year Working Capital Requirement 40 .729 1.982.700.559.100.270.082 29.253 2.018 2.698.319.215.168.310 27.447 3.628 -2.452 2004-05 3.000 Working Capital (in Rs.597 4.000 1.

246 11.799 2.597 4.719 Current Year Effect on Working Capital Increase Decrease 1.275.362 11.139 1.798 1.396 17.716 9.052 3.462.539.256 3.842.270.643 12.726 230.408 12.394.990 7.682 230.354.516.855.468.912 4.034 946.804 4.042.558.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 3.227.042.082 29.408 2.415.686 4.809.310 27.690.811.643 41 .127 12.283.777.682 2.018 2.097.609 Working Capital (A-B) Net Increase Or Decease In Working Capital 2.319.Table II .408 1.088 24.164.308 1.502.042.701 15.462.447 3.759.

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.V.T. Technical as well as common process is followed meticulously.T. 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.95cr and the current liabilities has been increase from 2002-06.e.72cr to 2. Aurangabad. C. It shows fluctuation in these years. 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. Breaker.. 2004-05 and 200506 it decreases. Which is fast growing company in the field of high voltage product i. C. Current asset decreases in 2004-05 and again it increases 2005-06. 42 .Observation and Summary Training in a multinational company like SIEMENS. It is noticed that functioning in the company is carried out very systematically and technically. 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.e. Working capital of SIEMENS ltd at only in the 2003-04 it increased reaming year i.

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.Table II: 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. 43 .

production management. expectation etc. 44 . Pravin Kulkarni Human needed desire. knowledge & attitude c) Their Motivation towards the attainment of organizational objective by creating and maintaining an organizational limit conducive to such development. are changing constantly because of the change in environment condition. They are considered as through individuals which varied characteristics.Mr. attitude etc Management is to “MANAGE .MEN – TACTFULLY”. HUMAN RESOURCE DEPARTMENT Head of the dept: . 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. This happens mainly because of the presence of these factors of influence heart. brain & mind. material & marketing management etc. Human beings needed to be maintained at every cost.Study of Various Departments Of PTD H-5 in SIEMENS Ltd. it is undoubtedly the management of the human resources that provides all other organizational function. Through there are other major organizational function such as financial management.

FUNCTION OF HUMAN RESOURCES DEPARTMENT 1) EMPLOYMENT • • To cultivate & maintain adequate source of labor supply To get information regarding job requirements & prevailing wage rates. 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. 45 . supervisor’s approvals. present employers & former employees. tests. physical examinations. To introduce the new employee to company policies & his supervisor him up for on early adjustment. • To remove as much as possible the cause for discharges. records. • To maintain words of prospective employers. • To aid the formation of the company policies regarding termination as well as respiration initiated by the employee. • To hire through the effective use of application blanks. interviews & checking references. • To aid in the establishment of company policies regarding transfer for the convenience of the company & employee.

46 .3) TRAINING • To aid in the formulation of policy governing training of new employees. To co-operate in the preparation of a special annual report for employee. • • To provide for training in safety & company policies. loan to employees. 5) SERVICE ACTIVITIES • • • To supervise restaurant & recreation facilities. To participation in the formation of policies governing payment for suggestions. insurance. • To co-operate neither with an employers job which is nor on union level. To publish the plant magazine. mutual saving program. 6) COLLECTIVE BARGAINING & EMPLOYEES REPRESENTATION • To conduct union negotiation & to co-operate with union representatives. To write job specification & evaluate all jobs. To provide counseling concerning personal affairs. pension plans profit-sharing programs. 4) WAGES & OTHER INCENTIVES • • • To collaborate with others or be responsible for wage plan.

47 .• To participate actively in handling grievances.

condition. Storing & protection of material against hazards. Maintaining adequate stocks of material to serve production need. Nitin Bhalerao Store keeping is an important function of material management. Maintaining adequate records or receipt & expenditure. – Mr. 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. • • Exercising control and quality of material received. It is a primarily services function in which the storekeeping act as a custodian of all the items kept in the store. . weather & pilferage • • • Issuing material against properly authorized material requisition. Function of store department • Requesting from purchasing department economical quantity of material for delivery at the most appropriate time.STORE DEPARTMENT Head of the Dept.

these items are 70 to 80% of total items & 5 to 10& expenditures. B) Item: .these items are generally of 10 to 15% of the total items & represent 10 to 15 % of total expenditure.it is usually founds that 5 to 10% of item cost for 7075% of the total money. 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) 49 . These items procured in bulks hence helps in price discount & reduce workload dose not requires close control.SIEMENS LTD follows ABC Principal for Maintaining Stock A) Item: . To control of these items is not very rigid. C) Item: . These items are stocked in smaller quantities due to high cost those they can procure frequently.

The faults may be minor. the whole bunch of the parts is sent back to the vender and asked for new one. This assuring of quality is given either in process of manufacturing it self or after the completion of the product. Line quality assurance. If the part is found faculty in the first inspection. INWARD QUALITY ASSURANCE The inward inspection is done when the parts are purchased form the venders. 2. –: -Mr. The minor faults are some times repaired within the company itself but in case of the major & critical faults. which come from venders. This assuring of quality or rather maintaining its quality to the best. where it is made fit in the appropriate place. Sample inspection. The parts.QUALITY ASSURANCE DEPARTMENT Head of the Dept. The minor faults are some times critical. 50 . 3. 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. Inward inspection. Thus there are three main type of quality assurance namely: 1. major or some times critical. the part is straight sending away of the vender. 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.

Here any part is taken and then testing. In this line quality assurance any part can be check and taken care of immediately. randomly out of 10 packed once and are kept under 24 hours run test. SAMPLE TESTING: Audit means sample checking of 20% of 10 units & then send to store. 51 . 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. This inspection is nothing but selection two final CT & CVT. 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. frequent checking or inspection is done of any part during the manufacturing process. In process checking eight to ten people are involved.LINE QUALITY ASSURANCE: In the line quality assurance. But if the selected one is found or giving poor responses then the CT & CVT are rechecked thoroughly.

cleaning. and timely inspection lubrication so as to provide provides proper & continuous working of machinery. It is based on principal “PREVENTION IS BETTER THAN CURE” 52 .Mr.PLANT ENGINEERING DEPARTMENT Head of the Dept: . Ahmer Hasan This department mostly deals with maintenance. 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.

53 . This system provides for inspection. lubrication & servicing of certain machine. c) To ensure safety of life of employee. overhaul. This type of maintenance utilizes the ideal time of equipment without much disturbance schedule. b) To make plant equipment &machines always available & ready for use. 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. d) To reduce the work content of maintenance job.Objectives a) To minimize the possibility of unanticipated production interruption. 2) Predictive / Scheduled Maintenance The aim of this is to minimize breakdown.

Increase overtime. manpower & spares Reduction of output. Increase in changes of accidents. Increase in spoilage of materials. Different to maintain quality of the product. 54 .Breakdown maintenance: In this the request are made after the equipment fails to perform its normal function. downtime. 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. This type to lower level efficiency & the loss of production time. It leads to faster plant deterioration. Imbalances attention of all equipment’s. it is not Recommended as in general practice.

P. But it gives first preference to Indian market in case of purchasing raw material. 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. The proper vendor is selected who is eligible from point of view of price. Ltd. The SIEMENS Ltd. the dept will search the vendor. The PO is very important part of transaction as it the legal proof between the company and the vendor. dept.MATERIALS DEPARTMENT Head of the Dept: . The SIEMENS.) deals with two types of procurement – Local procurement and Import procurement. The purchase order is given to vendor. The PO includes the list of raw material. The next step of material dept is to contact with respective vendor to fulfill the needs. (PTD H-5 div.C. According to requirement. The material dept get the plan of production from P. quantity etc. But before giving the PO to vendor.Mr. quality and who clarifies every teams and condition the transaction. The vendors have to make the quotation and allow submitting in company including the price list of raw material. material dept checks the stock in stock dept and then accordingly gives order. This department gets the production planning from the marketing department. 55 . Produces the CT of capacity of 245kv and 420kv.

 Performance of model is done. is prepared as per the requirement. the necessary chances are made if required. Again from market feedback. It may include aesthetic looks i. Head of the Dept: .  Sample testing and finalization.  Solid model preparation rendering is done. The requirement of new model is come from the marketing dept .DESIGN & DEVELOPMENT DEPT. The CT & CVT. The technical collaboration of SIEMENS Company is done with Germany. And the final model is selected and the production is started. is done in this dept. Jyotirmoy Datta From the name itself it is clear the design of new model of CT & CVT. So accordingly the model is designed and sends it to top management for its approval. So.Mr. These are some of the main function of D & D dept.As per the need the new model is design.e. The main function of the D & D dept is as follow Design of new model as per market dept. The further testing is also done in D & D dept. and after the approval of it development of same model is done.designing of new model is not very easy task and after that development of it is done in same dept. External design or Graphic Design / Internal design. the D & d dept has very important function to perform. The final approval is done with management people and people working in D & D dept 56 .

• Transaction system is become very easy to all of the employee in Siemens by using SAP system. • All departments having there own responsibilities. it has concluded that in sector there is huge requirement of PTD instrument from Siemens ltd. 57 . Systematic because of lots of testing of mechanism.Conclusion • From this study. • The Production process in Siemens ltd. • Siemens Produce different kinds of product in different sector mostly in energy/ Industry / Healthcare sector.

Maheshwari 5.Bibliography 1. Manoj Dhok. N.com 58 . K. Financial Management by -Khan & Jain -S.siemens. Commercial Department. Book about Excise Manual -By R. 3. -By Mr. www. Jain 2. Annual Report of SIEMENS in India 4.

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