SUMMER TRAINING REPORT ON

“CASH MANAGEMENT”
AT

ESCORTS PVT LTD.

SUBMITTED IN THE PARTIAL FULFILLMENT OF

MASTER BUISNESS OF ADMINISTRATION

AFFILIATED TO MAHARISHI DAYANAND UNIVERSITY, ROTHAK

SESSION: 2018-2020

UNDER THE GUIDANCE OF: SUBMITTED BY:

POONAM NAGAR Name: NIKHIL

Registration No. : 1511342697

Roll No. : 1441436

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 DECLRATION

I NIKHIL Registration No. 1511342697 Roll No. 1441436 Class 3Rd Sem MBA of Institute

Of Management Technology hereby declare that the Summer Training Report entitled

“CASH MANAGEMENT” is an original work and the same has not been submitted to any

other institute for the award of any other degree. A seminar presentation of the training report

was made on ______________ and the suggestions as approved by the faculty were duly

incorporated.

Presentation Incharge Signature of the Candidate

Countersigned

Principal/Director of the Institute

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 PREFACE

If the development capital is what establishes a business, cash flow is what keeps it going.
One of the most common downfalls of business is unexpectedly high running cost. What is
important is not just the size of operating costs, but the cash flow-that is when money has to
be paid out in relation to the stream of income arriving in. Thus cash flow management is of
prime importance.

ESCORTS PVT LTD. is the holding company of the ESCORTS Group. Post restructuring,
agri - machinery or tractors have become the focus area of operations. Other business i.e.
two- wheelers, IT, Telecom, construction equipment, are controlled through subsidiaries and
joint venture. Post hive off of its pistons business to a joint venture with a foreign
collaborator, ESCORTS is focusing on its ‘core competence’ of tractors. ESCORTS have
strong hands in house engineering skills, a wide distribution/service network and brand
franchise.

The training is small attempt to study the cash management in ESCORTS Agri - Machinery
group. Added to this fact that mechanization level in India is currently very low as compared
to the world standards.

 Maintaining proper set of accounting records.

 Maintaining an accurate cash book with bank statement

 Daily cash inflow & cash outflow.

 Marking regular forecast of cash requirement based upon planed sales volume.

 Ageing of debts/credits with comparisons to previous month

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 ACKNOWLEDGEMENT

At the outset would like to thank the management of Escorts Pvt. Ltd. for the wholehearted

cooperation and guidance extended by them, which made my summer training summer

training possible.

I would like to thank Mr.TaranjeetSingh(Chief Manager Financial),Mr.RajeshGoel

(HeadEmployeeRelation), and Mrs.KiranChopra (Secretary to CFO-AMG) for providing

me this opportunity to carry out the summer training.

I am very grateful to my summer training guide Mr. R.K Gandotra(Manager, Finance)

ESCORTS Pvt Ltd.-AMG for his support and suggestions, which led to the completion of this

summer training.

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 TABLE OF CONTENTS
CHAPTER 1 : INTRODUCTION……………………………………………… (7)

Significance of the Study/Problem……………………................. (8)

Review of Existing Literature…………………………………… (9)

Conceptualization………………………………………………… (13)

Focus of the Study/Problem……………………………………… (33)

Objective of the Study…………………………………………… (34)

CHAPTER 2 : RESEARCH METHODOLOGY……………………………… (35)

Universe and Survey Population (Industry Profile)…………… (36)

Profile of the Organization……………………………………… (39)

Research Design…………………………………………………. (63)

Data Collection ………………………………………………….. (64)

Analysis Pattern………………………………………………….. (66)

Limitations of the Study………………………………................. (67)

CHAPTER 3 : MICRO ANALYSIS……………………………………………. (68)

CHAPTER 4 : MACRO ANALYSIS…………………………………………… (78)

CHAPTER 5 : ……………………………………………………………………

Findings…………………………………………………………… (82)

Recommendations………………………………………............... (83)

BIBLIOGRAPHY………………………………………………………………… (86)

APPENDICES…………………………………………………………………….. (87)

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CHAPTER 1
Introduction
Significance of the Study.
Review of Existing Literature.
Conceptualization.
Focus of the Study.
Objective of the Study.

INTRODUCTION

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 Cash is the important current asset for the operation of the business. Cash is a

medium of exchange to purchase the goods and services and to discharge the liabilities.

Cash is the basic input needed to keep the business running on a continuous basis; it is

also the ultimate output expected to be realized by selling the service or product

manufactured by the firm. The firm should keep sufficient cash, neither more nor less.

Cash shortage will disrupt the firm’s manufacturing operations while excessive cash will

simply remain idle, without contributing anything towards the firm’s profitability. Thus a

major function of the financial manager is to maintain a sound cash position.

Cash is the money which a firm can disburse immediately without any restriction.

The term cash includes coins, currency and cheques held by the firm, and balances in its

bank accounts. Sometimes near cash terms, such as marketable securities or bank time

deposits, are also included in cash. The basic characteristic of near cash asset is that they

can readily be converted into cash. Generally, when a firm has excess cash, it invests it in

marketable securities. This kind of investment contributes some profit to the firm.

SIGNIFICANCE OF THE STUDY

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For a fresher like me, in a big organization like Escorts Ltd. provided me an experience of

the real working atmosphere. It enhanced my horizons about how the members of the

organization work as a team, coordination with each other, and their interdependence on each

other. I became aware of the synergy effect i.e. how different members in different profiles

produce greater results with coordination.

The usefulness of study:

 In depth knowledge of company’s working.

 Familiar atmosphere of company motivates the researchers.

 Knowledge of company’s policies.

 Motivation to work as a team members to get aware of current position of the

company.

 Synergy effect.

 It helps to understand how to tackle work pressure and meet dead lines.

 Time utilization.

 Wealth maximization.

 Knowledge of company’s decision to solve the problem.

REVIEW OF EXISTING LITRATURE

CASH
CASH MANAGEMENT

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 MANAGEMENT

Financial Management is the managerial activity which is concerned with the planning and

controlling of the firm’s financial resources. For the effective execution of the finance

functions, certain other functions have to be routinely performed.

Some of these important finance functions are:

1. Record Keeping and Reporting.

2. Taking care of the material details for the new outside financing.

3. Custody and safeguarding of securities, insurance policies and other valuable papers.

4. Supervision of cash receipts and payment and safeguarding of cash balances.

The basis of the financial planning, analysis and decision–making is the financial

information. Financial information is needed to predict, compare and evaluate the firm’s

earning ability and position. It is also required to aid in economic decision making,

investment and financial decision making.

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The financial information of an Enterprise is contained in the financial statement or

accounting reports. Financial statement contains summarized information of the firm’s

financial affairs, organized systematically. Investors and financial analyzer is to examine the

firm’s performance in order to make investment decisions.

Three basic financial statements of great significance to owners, management and investors

are balance sheet, profit and loss account and cash flow statement.

BALANCE SHEET

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“Balance Sheet” is the most significant financial statement. It indicates the financial position

or the state of affairs of a business at a particular moment of time. Balance Sheet contains

information about resources and obligations of a business entity and about its owner’s interest

in a business at a particular point of time.

In the language of accounting, balance sheet communicates information about,

1. Assets,

2. Liabilities and

3. Owner’s equity.

for a business firm as on a specific date. It provides a snapshot of the financial position of

the firm at the close of the firm’s accounting period.

ASSETS:

Assets are valuable economic resources owned by the firm. They represent future benefits

and are measured in monetary terms. Assets represent:

1. Stored purchasing power (e.g. cash)

2. Money Claims (e.g. receivables, stock) and

3. Tangible and intangible items that can be sold or used in business to generate

earnings.

Assets are classified as:

 CurrentAssets

 Fixed Assets

LIABILITY:

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Firm’s obligations are called liabilities. Liabilities represent debt payable in the future by the

firm to its lenders and creditors. They represent economic obligations to pay cash or to

provide goods or services in some future period. Generally, borrowing money or purchasing

goods or services on credit creates liabilities. Examples of liabilities are Creditors, Bills

payable e.t.c

Liabilities are classified as:

 Current Liabilities

 Long-term Liabilities

OWNERS EQUITY

The financial interests of the owners are called owners equity or simply equity. The owner’s

interest is residual in nature, reflecting the access of firm’s assets over its liabilities. As

liabilities are the claim of outside parties, equity represent owners claim against the business

and entity of the balance sheet date. But the nature of owners claim is not the same as that of

the creditors .Creditors claims are defined and have to be met within a specified period. The

claim of owners change and the amount payable to them can be determined only when the

firm is liquidated. Since assets are recorded at cost, there can be considerable differences

between the owner’s book claim and the real claim.

CONCEPTUALISATION

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 If the development capital is what establishes a business, cash flow is what keeps it

going. One of the most common downfalls of business is unexpectedly high running cost.

What is important is not just the size of operating costs, but the cash flow-that is when

money has to be paid out in relation to the stream of income arriving in. Thus cash flow

management is of prime importance.

Escorts Ltd. is the holding company of the Escorts Group. Post restructuring, agri -

machinery or tractors have become the focus area of operations. Other business i.e. two-

wheelers, IT, Telecom, construction equipment, are controlled through subsidiaries and

joint venture. Post hive off of its pistons business to a joint venture with a foreign

collaborator, Escorts is focusing on its ‘core competence’ of tractors. Escorts have strong

hands in house engineering skills, a wide distribution/service network and brand

franchise.

The summer training is small attempt to study the cash management in Escorts Agri

- Machinery group. Added to this fact that mechanization level in India is currently very

low as compared to the world standards.

To analyze the performance, published balance sheets of Escorts Limited, CASH

FLOW STATEMENTS are been used. This summer training report is based on financial

data up to 2018-19 only. The financial year for Escorts is from 01/10/20XX to

31/09/20XX.

Escorts is maintaining the following records which is indicative of its professional

approach:

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  Maintaining proper set of accounting records.

 Maintaining an accurate cash book with bank statement

 Daily cash inflow & cash outflow.

 Marking regular forecast of cash requirement based upon planed sales volume.

 Ageing of debts/credits with comparisons to previous month

CASH FLOW MANAGEMENT

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 Cash flow management is a process of monitoring, analyzing, and adjusting one’s

business cash flows. The most important aspect of cash flow management is avoiding

extended cash shortages, caused by having too great a gap between cash inflows and

outflows. Therefore, one needs to perform a cash flow analysis on a regular basis, and

use cash flow forecasting so that one can take the steps necessary to head off cash flow

problems.

Cash management involves the efficient collection, disbursement and temporary

investment of cash. The treasurer department of a company is usually responsible for the

firm’s cash management system. A cash budget, instrumental in the process, tell us how

much cash we likely to have it, and for how long.

In cash flow management I studied many statements like as follows:

 Cash flow Statement

 Cash Budget

CASH MANAGEMENT SYSTEM

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 With timely information reporting a firm can generate significant income by properly
managing collections, disbursement cash balance and cash equivalents investment,

Collection Disbursement

Cash

Cash Equivalents

Control through Information Report

IMPORTANCE OF CASH MANAGEMENT

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 Cash management assumes more important than other current assets because cash is

the most significant and the least productive asset that a firm holds. It is significant

because it is used to pay the firms obligations. However cash is unproductive. Unlike

fixed assets or inventories, it does not produce goods for sale. Therefore, the aim of cash

management is to maintain adequate control over cash position to keep the firm

sufficiently liquid and to excess cash in some profitable way.

Cash management is also important because it is difficult to predict cash flow

accurately, particularly the inflows and there is no perfect coincidence between the

inflows or outflows of cash. During some periods, cash outflows will exceed cash

inflows, because payments for taxes, dividends, or seasonal inventory build up. At other

times, cash inflows will be more than cash payments because there will be large cash

sales and debtors may be realized in large sums promptly.

Cash management is significant because cash constitutes the smallest portion of the

total current assets, yet management’s considerable time is devoted in managing it.

 Cash is the most significant and the least productive asset that a firm holds.

 Cash is unproductive.

 It does not produce goods for sale.

 It is difficult to predict cash flow accurately.

 Cash outflows will exceed cash inflows, because payments for taxes,
dividends, or seasonal inventory build up.

CASH MANAGEMENT STRATEGIES

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 The firm should develop appropriate strategies for cash management. The firm should

evolve strategies regarding the following four facets of cash management:

Cash planningcash inflow and outflow should be planned to summer training cash

surplus or deficit for each period for each period of the planning period. Cash budget

should be prepared for this purpose.

Managing the cash flowsthe flow of cash should be properly managed. The cash inflows

should be accelerated while, as far as possible, the cash outflows should be decelerated.

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 Optimum cash level the firms should decide about the appropriate level of cash

balances. The cost of excess cash and danger of cash deficiency should be matched to

determine the optimum level of cash balances.

Investing surplus cash the surplus cash balances should be properly invested to earn

profits. The firm should decide about the division of such cash balance between short-

term investment opportunities such as bank deposits, marketable securities, or inter-

corporate lending.

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 CASH OUTFLOW

For cash management, the control of cash outflows, which is directly related to

organizational arrangements for budget execution, can pose more difficulties than the

control of cash inflows. However, issues related to cash management should not be

confused with issues related to the distribution of responsibilities for accounting control

and administration of the payment system. The major purpose of controlling cash

outflows is to ensure that there will be enough cash until the date payments are due and to

minimize the costs of transactions, while keeping cash outflows compatible with cash

inflows and fiscal constraints. The first condition for ensuring that cash outflows fit fiscal

constraints is good budget preparation and budget implementation covering both cash and

obligations. However, during budget implementation, cash outflows must also be

regulated through cash plans to smooth cash outflows.

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 CASH INFLOW

It is necessary to minimize the interval between the time when cash is received and the

time it is available for carrying out expenditure programs. Collected revenues need to be

processed promptly and made available for use. When tax collection is done by the tax

administration offices (or by Treasury offices) the administrative organization of these

offices may have to be reviewed and their equipment modernized.

Commercial banks by virtue of the banking sector infrastructure are often able to collect

revenues more efficiently than tax offices, which should therefore focus instead on

tracking taxpayers. When revenues are collected by commercial banks, arrangements

must be defined to foster competition and ensure prompt transfer of collected revenues to

government accounts. Systems of bank remuneration through float, which consists of

authorizing the banks to keep the revenues collected for a few days, present

inconveniences. Stringent rules to ensure prompt transfers must be established. Moreover,

bank remuneration through fees is more transparent and promotes competitive bidding.

An appropriate system of penalties for taxpayers is also an important element in avoiding

delays in revenue collection.

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 CASH FLOW STATEMENT

Meaning:

IT IS a summary of firm’s cash receipts and cash payments duringperiod of time.

The purpose of cash flow statement is to report a firm’s cash inflow and outflows,

during a period of time, segregated in to three categories: operating, investing

andfinancing activities.

The statement of cash flow explains changes in cash and cash equivalent such as

treasure bill and the activities that increase and decrease cash. The cash flow statement

may be presented using either a “direct method” (Which is encouraged by financial

accounting standards board) or an “Indirect Method” (which is likely to be the method

followed by good majority of firms). The only difference between the direct and indirect

method of presentation concern the reporting of operating activities; the investing and

financing activities section would be identical under either method. Under the direct

method, operating cash flow reported directly by major classes of operating cash receipts

(from customers) and payment (to suppliers and employees). A separate indirect

reconciliation of Net income to net cash flow from operating activities must be provided.

The reconciliation starts with reported net income and adjusts this figure for non-cash

income statement items and related changes in balance sheet items to determine cash

provides by operating activities.

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 Cash flow statement has three activities like as follow:-

Operating Activities:- Shows impact of transactions not defined as investigation or

financing activities. These cash flows are generally the cash effects or transaction that

enter into the determination of net income. Thus, we see items that not all statement users

might think of as ‘operating’ flows-items such as dividends and interest received, as well

as interest paid.

Investing Activities:- Shows impact of buying and selling fixed assets or equity

securities of other entities.

Financing Activities:- Shows impact of all cash transactions with shareholders and the

borrowing and repaying transactions with lenders.

IMPORTANCE

 The effects of cash and non-cash investing and financing transaction.

 A manager can assess the reason for differences between net income and net cash

flow from operating activities.

 It is also helpful for a company to generate future net cash inflows from

operations to pay debts, interest and dividends.

 It gives indication to a company’s need for external financing.

 A cash flow statement is straightforward and easy to Understand.

 It gives a strong indication of how viable the company will be over time.

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  The extent of success or failure of cash planning can be known by comparing the

actual cash statement with the budgeted cash flow statement and remedial

measures can be taken.

 It discloses the volume and the speed at which cash flows in different segments of

the business

DAILY CASH FLOW REPORT

The Daily Cash Flow report is prepared with an objective to keep incessant check on

the cash flows of the firm, which includes both inflow and outflow cash. The cash flows

are planned to summer training cash surplus or deficit for each period i.e daily, monthly,

quarterly, semi-annual & annual basis. The framework of report highlights all the effects,

which lead to cash surplus or deficit. It is a measure, which calculates the details of daily

transaction in terms of sale and purchase, which further includes the means through which

they take place.

At Escorts-AMG, the daily cash flow report is designed in a format suiting their

requirements .The sales of tractors is their primary goal which includes exports as well.

The bills are presented for desired collection from various channels i.e dealers, stockiest,

distributors through which the tractors are supplied in the market. Besides tractors they

also deal in engines, backend, implements which are included in the category of other

receipts. The receipts are other than collections as they aren’t generated through sales.

Next come the payments, which are made in discharge of financial obligation towards

various suppliers, bank payments, excise duty, salary & wages etc.

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 Through the various collections, receipts and payment, we are now in a position to

derive the surplus or deficit which is the result of above transactions. The surplus balance

shows that the collections & receipts are more than payments and vice-a-versa in case of

deficit. Though surplus is an indicator of sound financial position and deficits the other

way round, but excess surplus is also not considered healthy which has reasons to it like

inventory pile up and so on.

COMPONENTS

The annual cash flow statement at ESCORTS- AMG is prepared for the fiscal period

commencing from 01/10/20XX to 31/09/20XX. They are also maintaining the daily cash

flow report with a purpose of keeping constant check on the daily flow of cash i.e cash

inflow and cash outflow, for different products categories, their parts and other

miscellaneous.

The main products at ESCORTS – AMG are “ TRACTORS “ which are available in three

major categories:

 Farmtrac

 Powertrac

 Escorts

These products are sold into the market through intermediaries like dealers, stockists and

distributors , these parties charge a commission for the services provided by them.

Among these parties dealers are given priority over the stockists& distributors for the

delivering the product to the end customer and the commission also varies in the same

manner.
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 The following are the transactions that take place in the daily cash flow report under the

following main heads:

 Particulars,

 Year to date i.e the very first day of the financial year till the previuos months end

(in which the daily report is being made),

 The previous month,

 Plan for the ongoing month,

 The particular day for which the report is being made,

 Month to date (from the beginning of the current month till the day for which

report is being made).

SALES – This includes the number of tractors sold in the domestic boundaries as well

as overseas.

BILLING – It is the process of sending accounts to customers for goods or services. The

document used is called an invoice, the invoice may be attached to the goods or

forwarded separately. The average sale value of each tractor is calculated as a follows :

Number of tractors sold

COLLECTION – The collections is recovered from all those parties to whom the

products is being sold. The parties involved are :

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 Tractors ( Direct ) – This includes the sale made through dealers to the end customer, for

which a predetermined amount is given as commission to the opposite party. If the dealer

fails to make the sale till the due date than he has to pay interest on it thereon.

Tractors ( Stockists ) – This includes the sale made through stockists, who doesn’t sell

the product by themselves but sells them through dealers. The credit period allowed to

stockists by the company is less in comparison than that of dealers, which yields to

faster generation of income .

Tractors ( Channel financing )– This system is adopted to improve the working capital

of the company by avoiding inventory pile up and earning speedy collections.

Furthermore, Channel Financing is an innovative option for extending working capital

finance to dealers who have business relationships with large companies

OTHER RECEIPTS :An acknowledgment (usuallytangible) that payment has

beenmade. The below mentioned are the transactions included in it :

Bill discounting:It is a major activity with some of the smaller banks. Under this type of

lending, bank takes the bill drawn by borrower or his (borrower’s) customer and pay him

immediately deducting some amount as discount / commission. The bank then present the

bill to the borrower’s customer on the due date of the bill and collect the total amount. If

the bill is delayed, the borrower or his customer pays the bank a predetermined interest

depending upon the terms of the transaction.

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 The following entries could be passed in the co.’s books:

Sales bill discounting:Following entries are passed during the sales

Made by the company:

Party a/c dr. ..........

To sales a/c ...........

(Being sale made on credit)

Bank a/c dr. ..........

Bank charges a/c dr. …….

To party a/c ……..

( being payment recived)

Purchase bill discounting:Following entries are passed in the books

purchases made by the company :-

Purchase a/c dr. ……

To party a/c ……

( being purchases made)

Party a/c dr. ……

To bill discounting supplier a/c ……

( being paid to party through bank )

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Bill discounting supplier a/c dr. …….

To bank a/c ……

( being payment made to bank)

Letter of credit :The LC can also be the source of payment for a transaction, meaning

that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily

in international trade transactions of significant value, for deals between a supplier in one

country and a customer in another. The parties to a letter of credit are usually a

beneficiary who is to receive the money, the issuing bank of whom the applicant is a

client, and the advising bank of whom the beneficiary is a client.

Packing credit: When we receive an export order from countries , than we can avail

loan from bank at nominal interest as packing credit loan. It provides the exporters with

working capital between the time of the receipt of order and the time of shipment to

arrange for production or procurement of goods. Pre-shipment finance is of particular

importance to small scale manufacturers and exporters who do not possess sufficient

financial resources to meet the expenditure involved in the production of goods for

export.

Pre shipment finance is normally provided by the commercial banks. As in the

case of many other advances the bank takes into consideration a number of factors before

making the necessary other advances to exporters viz., (1) honesty, integrity and capital of

the borrower, (2) exporter’s experience in the line, (3) security offered, (4) the margin of

interest (5) the bank’s experience about the exporter to ensure that his name does not

appear on the caution list of the Reserve Bank.

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 Pre- shipment:when the company receives order

Post shipment :when assignment is dispatched from the company.

The following entries to be passed in the books for packing credit loan :

Party a/c dr. ……

To export a/c ……

( being export order received)

Bank a/c dr. ……

Bank charges a/c dr. …….

To packing credit loan ……

( being loan granted by bank )

Bank a/c dr. ……

To party a/c …….

( being payment made to bank)

Pcl a/c dr. ……

To bank a/c ……

( being payment of loan made to bank)

Credit note :This note is presented to the other party for the payment to be made by the

opposite party. Whereas debit note is given to the company by the other party in case

ofpayment is to be made by the company.

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 PAYMENTS : It is the transfer of wealth from one party (such as a person or company)

to another. A payment is usually made in exchange for the provision of goods, services or

both, or to fulfill a legal obligation.

The payments at Escorts – AMG includes – Direct (hundis, LC ), bank payment , excise

duty which is lieved on the parts of the tractors, ladt ( local area development tax), sales

tax , salary and wages, vrs, spare parts, implements, electricity, overhead, finance charges,

capex is the capital expenditure made to purchase the fixed assets or adding value to the

existing fixed asset, credit note, corporate loan, loan rapyments, interest, wcdl payment,

packing credit & bill discounting.

OUTSTANDING :Outstanding debtors are calculated by the following formula –

ClosingO/S = Opening O/S + Billing - Collection

In this, values are calculated for debtors outstanding in different point of time in

domestic and overseas sales of tractors & its part.

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 FOCUS OF THE STUDY PROBLEM

Any type of research study suffers from certain limitation relating to either the research itself

or to the topic thought. The degree and nature of the limitation varies with the topic.

The present study has been undertaken to analyze the Cash Management being managed in

the company and how far it contributes to the overall objective of maximization of

shareholders wealth and the organization wealth.

 Cash flow statement in the company.

 Resources of cash inflow of the company.

 Daily cash inflow & cash outflow.

 Ageing of debts/credits with comparisons to previous month

 Maintaining proper set of accounting records.

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 OBJECTIVES OF THE STUDY

It is well known fact that we remember 20% of what we hear, we remember 40% of what

we see but we remember 75% of what we do.

Undergoing M.B.A is the first step to prepare myself as a manager and visualize the ever-

dynamic business world and my main objective while taking up the training was to

familiarize myself with the working of the finance department of ESCORTS Agri

Machinery Group (AMG)

To present study in ESCORTS Agri machinery group mainly focus on the following :

 Resources of cash inflow of the company.

 Cash flow factors which have effect of cash inflow.

 Cash flow statement in the company.

 Cash flow management in the company

 Maintaining proper set of accounting records.

 Maintaining an accurate cash book with bank statement

 Daily cash inflow & cash outflow.

 Marking regular forecast of cash requirement based upon planed sales volume.

 Ageing of debts/credits with comparisons to previous month

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CHAPTER 2

Research Methodology
 Universe and Survey Population
(Industry Profile).
 Profile of the Organization.
 Research Design.
 Sample Size and Techniques.
 Data Collection.
 Analysis Pattern.
 Limitations of the Study.

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 INDUSTRY PROFILE

India’s long-term economic prospects, even today, depend to a large extend on the

agricultural sector, which contributes a quarter to the gross domestic summer training and

provides livelihood to two-third of the population. A gradual and perceptible shift from

subsistence farming to enterprise farming is harbinger of modernization of the agricultural

economy and this will increase the contribution of agricultural sector to the overall Gross

Domestic Product (GDP) in the time to come. The “Central Government” as well as several

“State Governments” are giving due priority to agricultural and rural development.

A tractor is a product, which has maximum utility in the agricultural sector. The tractor

industry is segmented on the basis of power of the tractor engine measured in terms of

Horsepower (HP). The maximum consumption is for 31-40 HP tractors. With the increase in

the availability of low cost finance for longer tenures & expected to go up. The new trend

observed in this sector is the shift in consumption from majority in the northern states to other

parts of the country too. The soil in the northern states is alluvial in nature and thus requires a

low powered tractor for tilling it.

Western and southern parts of the country where the soil being late rite or black etc, is harder

and needs high – powered tractors.

Tractor industry in India has passed through various hazes before reaching where it is today.

During 1945 to 1960 demand was met entirely through import. There were 37,000 tractors by

1960. Production began in 1861 with five manufactures producing 880 units per year. By

1965, it increased to over 5,000 units per year and by 1970 annual production rose to more

than 20,000 units. Six new manufacturing were established during 1971-1980. In 1971

Escorts also started local manufacturing of Ford Tractors in collaboration with Ford, UK.

During 1990 annual production rose to 1, 40,000 units making India an exporter to countries,
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mainly to Africa. After De-licensing of tractor industry, production exceeded 2, 55,000 units

in 1997.

The growth of the industry over the last three decades resulted in the entry of several new

entrants including all the major multinational companies. The industry now consists of 14

manufactures with an aggregate installed capacity of approximately 4.50 lack tractors. In the

tractor industry, following are the key manufacturers:

 Mahindra& Mahindra Limited (M&M),

 Tractors and Farm Equipment Limited,

 Hindustan Machine Tools Limited,

 Bajaj Tempo Limited,

 New Holland, etc.

After three years of decline, tractor industry grew by 11.5% in 2018-19 to a level of 1.92 lack

tractors. The Indian tractor industry had been growing at an average compounded

Annual growth rate of 8% over the last three decades and attained a peak of 2.70 lacks

In 1999-2000. Since then, however the industry declined to a level of 1.72 lack tractors in the

year 2002-2003, a decline of 33.3% over three years.

Despite the step decline in the industry, Escorts consciously decided to aggressively reduce

channel inventory further by approximately 3,500 units reduces in the previous year. This has

not only impacted their revenue and profit adversely but has also enabled the company to

balance the cash flow of company effectively. During the 2018-2019, company has achieved

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a sales volume of 45,800 tractors as compared to 29,425 tractors during the corresponding

period in the previous year

Tractors form an integral part of farm mechanization and have a crucial role to play in

increasing agriculture productivity. In India, 90% of the tractors are financed by banks- credit

at concessional rates. Availability of credit therefore is the most crucial factor, impacting

tractor demand. Increased use of irrigation facilities, shift towards multi-cropping,

consolidation of lands holdings, promotion of cooperatives and higher investment in

agriculture also contributes to higher tractor demand.

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 COMPANY PROFILE

AGRI MACHINERY GROUP

CORPORATEOFFICE ESCORTS LTD. (1944)

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 INTRODUCTION

The Escorts Group, is among India's leading engineering conglomerates operating in the high

growth sectors of agri-machinery, construction & material handling equipment, railway

equipment and auto components.

Having pioneered farm mechanization in the country, Escorts has played a pivotal role in the

agricultural growth of India for over five decades. One of the leading tractor manufacturers of

the country, Escorts offers a comprehensive range of tractors, more than 45 variants starting

from 25 to 80 HP. ESCORTS, Farmtrac and Powertrac are the widely accepted and preferred

brands of tractors from the house of Escorts.

A leading material handling and construction equipment manufacturer, we manufacture and

market a diverse range of equipment like cranes, loaders, vibratory rollers and forklifts.

Escorts today is the world's largest Pick 'n' Carry Hydraulic Mobile Crane manufacturer.

Escorts has been a major player in the railway equipment business in India for nearly five

decades. Our product offering includes brakes, couplers, shock absorbers, rail fastening

systems,composite brake blocks and vulcanized rubber parts.

In the auto components segment, Escorts is a leading manufacturer of auto suspension

products including shock absorbers and telescopic front forks. Over the years, with

continuous development and improvement in manufacturing technology and design, new

reliable products have been introduced.

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Escorts Brand of tractors is symbolic of reliability and enjoys the confidence of the farming

community for the last 40 years.

Powertrac Brand of tractors is the most fuel-efficient tractors in their respective categories

that offer excellent value for money and have helped the farmer improve their quality of life.

Farmtrac Brand is the most powerful premium range of tractors that give maximum

productivity to the farmers.

Spanning these three brands, the company has a full range of tractors to cater to the domestic

as well as overseas markets. The company is developing state-of-the-art highly fuel efficient

engines with the assistance of AVL of Australia and have also entered into a Joint venture

with CARRARO SPAof Italy for the manufacturing of transmission and axles.

Modernization of Agri Machinery Group R&D Center

Escorts Agri Machinery Group (AMG) has invested over US $7.5 million in state of the Art

& Research and Development Center. Virtual prototypes of components and aggregate

assemblies are made and assembled on computer workstations using 3D technology. Their

performance is checked on computers using simulation techniques thus saving a lot of time

for the end-user as well as lowering development costs. The R&D center uses advanced 3D

modeling, analysis and simulation software for engines, transmission and vehicles. Physical

prototypes are then extensively tested for performance, durability and reliability. Facilities

include a high –technology engine laboratory featuring fully computerized test-beds with on

line control, data collection, and analysis.

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 RESEARCH &DEVELOPMENT(1976)

MODEL OF ESCORTS

TRACTORS

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 ENGINES

(G15)(G20) (G25)(G30)

(Rigid Tyne Tiller) (FarmTrac Gear oil)(Mobile Cranes) (Hydra 12 SB)

ESCORTS SYMBOL

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The Escorts symbol means more than a seen by eye. It has been prepared with certain

objective in mind and is symbol in more than one way.

The philosophy behind Escorts and the ‘e’ in the Escorts is “enterprise”. The hexagon is a

symbol of productivity. Precision when interposed as a nut. It symbolizes a craft man ship

and mending productivity. The sprains super imposed on the hexagon represent the workers

and the people of Escorts. This forms the letter ‘E’ the first of Escorts a company even of

more changing unveiling the future.

HISTORY OF COMPANY

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The Escorts Group, with Escorts Limited as its flagship company, is among India’s leading

corporations operating in the diverse fields of Agri Machinery, telecommunication,

healthcare, construction & material handling equipment, automotive & railway ancillaries’

information technology and financial services. The group has 15 modern manufacturing

facilities & an extensive marketing network spread across the country. The genesis of Escorts

goes back to 1944 when two brothers, Mr.H.P.Nanda and Mr.Yundi Nanda, launched a

small agency house, Escorts Agents Ltd.(EAL), in Lahore. The company’s principal activities

were trading and representing leading overseas manufacturing for the sale of their products in

India. One of its dealership was for the ‘Massy Ferguson’ brand of tractors.

In December 1959, EAL was converted into a public limited company and was renamed as

Escorts Limited (EL). In January 1960 decided to set up manufacturing facilities for making

tractors in India under the ‘Escorts’ brand name in the 25-40 horse-power (H.P.) categories.

EL promoted Escorts Tractors Limited in 1969 as joint venture with Ford Motor Company

(FMC) of USA for the manufacturing of ‘Ford’ series of tractors. The tractors manufactured

were in the 45-50 HP range and “Escorts Tractor Limited” (ETL) became the market leader in

this segment with a share of above 50%. Consequent to FMC’s

Disposal of tractors operations to Ford New Holland(FNH), USA, FNH acquired the shares

of FMC in ETL. Following an agreement in 1995 to end the joint venture association, EL

acquired the entire shake of NH in August 1995 making ETL a subsidiary of EL.

Over the years, Escorts has surged ahead and evolved into one of India’s largest

conglomerates. Till 1993-94, all these activities were being carried out in various division of

EL. EL undertook a major restructuring exercise between 1994-98 spinning off the various

divisions into separate companies.

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 Management & System
Mr.Rajan Nanda “Chairman and Managing Director”, look after EL’s day to day operation.

The Board of Directors of EL, comprising of eminent technocrats; industrialists and

professionals, decides on the overall policy and business strategy for the company. A large

team of well – qualified and experienced professionals in the areas of production, marketing,

finance, personnel, legal and other important areas assist the Board. The company has

decentralized profit center system of operational management, which combines considerable

delegation of authority at divisional level with strong and flexible planning in strategic areas.

Operating Performance
ESCORTS LIMITED (EL) is in the process of reorganizing manufacturing layouts to

improve operational efficiencies through Business Process Re Engineering (BPR) exercise.

The exercise is expected to lead to an improvement in productivity and a reduction in non –

value added activities. However, EL faces resistance from its labor union, which is not

agreeable to the productivity norms sought to be applied by EL for meeting the BPR

objectives. As a result, there has been no consensus on the wage. Agreement, which was due

to been signed, in the early part of 1997.Loss of production due to labor resistance cannot be

ruled out in the Short term to Medium term.

MISSION

For an Enterprise business mission embodies of its endeavor, which acts as a guiding light for

continuous development & growth.

Mission of ESCORTS is:

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Engineering changes through core competency for greater synergy reinforcing bonds with

customer & establishing powerful symbolic relationship with international allies, preparing

global market. The company wants to make a lasting difference to its shareholders,

customers, business associates, employees & country as a whole. Company also provide the

better quality and better technology to customers and treat every customer as “special” to

build respect for, and loyalty to “Escorts”,.

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QUALITY POLICY

We shall strive to continuously improve to meet the ever – rising expectation of our

customers at the lower cost.

Each one of us must fulfill the need of our customer, both internal and external with the

highest degree of commitment thereby creating a quality organization geared to ensure total

customer satisfaction and the sustained health and prosperity of our business.

Customer Orientation:The management is committed to the well being of the workforce

and plays an important role in providing employment opportunities to the vast work force in

India, for a better living. We are committed to the growth, development and welfare of our

people upon whom we rely to make this happen.

Process Orientation: To optimize and harmonize interrelated process rather than individual

function.

Preventive Behavior: To prevent the mistake to happen.

 Provide reliable and quality integrated facility management services.

 Enhance customer satisfaction.

 Continually improve quality management system through innovation.

 Adhere to applicable statutory and regulatory requirements.

 Excellent in Performance
 Designed for 100% continuous operation and longer service intervals
 Highly fuel efficient / Low operating cost
 Class A1 governing with 4% regulation for stable operation in fluctuating load

condition

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  Low Noise and Vibration
 Compact size
 Cooling system designed for extreme weather conditions
 Equipped with Pusher type fan for better cooling in Stationary application
 Meets CPCB Emission norms
 Fitted with Coolant expansion bottle - Does not require frequent topping up
 Easy and Low maintenance
 Quick start
 Plateau honed wet liners for longer life and low oil consumption and better service

ability
 3 ring pack version Piston with ring carrier for top ring for

 An ISO certified company

FUTURE OF TRACTOR INDUSTRY

The tractor industry in India has been on a growth trajectory since the second half of 2018-

19, after going through a for four consecutive years. The key factors driving this growth are

increasing farm incomes, aggressive financing resulting in easy availability of low cost credit,

sharp inventory correction and strong export growth.

The demand in the tractor industry is expected to grow mainly due to the agricultural sector,

with the expected increase in agricultural production. Also, the shift in trend for demand

towards higher HP tractors is expected to continue. This will be further strengthened by the

launch of several new models. In the next 2-3 year, demand for tractors is expected to

increase significantly in the eastern states, where traditionally, the tractors usage has been

low. Exports are expected to increase significantly as several Indian players are targeting the

‘hobby farming’ segment in the US, which is considerably large. Also, tractors of most Indian

Manufacturers Company with the emission standards accepted in the US. Most exports are

likely to be through overseas partnership or joint ventures. Mckinsey has also forecasted

tractor production requirement of 26 lacks. The extension of the 150 % deduction on R&D
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expenditure up to March 31, 2009, in the Budget2018-19 will also benefit the industry

interms of new product development besides increase in the area under irrigation under the

Bharat Nirman Summer training and the micro irrigation scheme.

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 Escorts Subsidiary

1. Escotoonz Entertainment Pvt.Limited

2. Escorts Asset Management Limited

3. Cellnext Solution Limited

4. Escorts Construction Equipment Limited.

5. Escorts Securities Limited

6. Farmtrac Tractors EuopeSpolkaZo.o.

7. Escorts Automotive Limited

8. Escorts Agri Machinery Inc.

9. Beaver Creek Holdings LLC (USA)

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 B O A R D O F D I R E C TO R S O F E S C O RT S L I M I T E D

Mr.RAJAN NANDA
CHAIRMAN
An alumnus of Doon School, Dehradun, Mr.Rajan Nanda took

over as Chairman of Escorts Group in the year 1994. That was the

time when the Indian economy had begun to burgeon as a result of

liberalization. The task before him was to prepare Escorts Group

for the emerging competitive, globalised business environment

and steer it to greater heights. Displaying vision and leadership qualities, Mr. Nanda

undertook a major restructuring programme to give sharper focus to the Group's businesses.

Under his stewardship the Escorts Group today is moving ahead in the high growth areas of

agri machinery, construction equipment, railway equipment and auto components.

----------------------------------------------------------------------------------------------------------------

Mr. Nikhil Nanda

Joint Managing Director

Mr. Nikhil Nanda is an alumnus of Wharton Business School,

Philadelphia. Having graduated in Business Administration in 1995,

he majored in Management and Marketing, before undergoing professional training with JC

Bamford Excavators Ltd., U.K.

Mr.Rohtash Mal

ED & CEO – Agri Machinery Group

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 An aluminous of the IIM, Calcutta and IIT, Delhi, Mr. Mal has over

31 years of rich and varied experience. His last assignments were

with the BhartiAirtel Group, firstly as its Chief Executive of its

Broadband and Telecom Service business, and later on as Chief

Executive of its food business i.e. BhartiDelmonte Limited. Having

started his career with Ballarpur Industries, his stint of 18 years saw him going from a

Management Trainee to Vice President Sales & Marketing of its Paper Division. Later, at

MarutiUdyog Limited as its Chief General Manager, Sales & Marketing, he was successful in

driving up the position of Maruti in the Sales and Marketing domain.

Mr.Kanwal Kishore Vij

ED & CEO – Escorts Construction Equipment Limited (ECEL)

Mr.Kanwal Kishore Vij is a Mechanical Engineer and has studied

advanced courses in Marketing and Management from Harvard, IIM (A) and Manila. He has

over 26 years of experience in the Automobile/Engineering industry and has worked with

leading companies including Eicher Group, Baxy Motors (Div. of Continental Engines Ltd.)

and VegeIntermotor B.V. Netherlands. Till recently, he was holding the position of CEO &

Director, VegeIntermotor B.V. Netherlands. At Escorts, Mr Vij is responsible for driving the

business growth of ECEL and to maintain its dominant position in the Construction

Equipment segment.

Mr.VikramSinghal

ED & Business Head – Engineering Division

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 A Mechanical Engineer by profession, Mr.VikramSinghal has got

around 30 years of rich and varied experience in business re-

engineering, sales & marketing operations, international business,

manufacturing operations, turnaround and conceptualization and

execution of strategic initiatives.

Mr. G.B. Mathur

EVP - Law & Company Secretary

Has considerable experience in Secretarial and Legal matters. Having joined Escorts in 1993,

Mr.Mathur is responsible for all Company law related matters and is also the custodian of the

shareholder related matters. Prior to joining Escorts he was the Company Secretary at

Chambal Fertilizers & Chemicals Ltd.

Mr. O K Balraj

EVP & Group CFO

A Chartered Accountant by profession, certified under the Indian Institute of Bankers,

London, with an advanced degree/ diploma from Harvard University on Summer training

Finance, Mr. O K Balraj has over 28 years of rich and valued experience in different facets of

financial operations and executive management.

OUTLINE ORGANISATION – ESCORTS GROUP

Chairman & Managing Director – Sh. Rajan Nanda

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 Secretariat

Flagship Operating Division

Escorts Limited Faridabad

Agri Machinery Engineering International

Business

Corporate Center Faridabad Escorts Research Institute of Farm

Center, Faridabad Mechanization,
Bangalore

Personnel Finance Summer training Escorts Heart Research Escorts

Medical
Institute, New Delhi Center, Faridabad

Administration and Law Export and

Security Communication

Associates Companies Subsidiary Companies

Escorts Employees Welfare Trust

Faridabad

OUTLINE ORGANISATION – ESCORTS LIMITED

Chairman & Managing Director – Sh. Rajan Nanda

Secretriat

Corporate Office Registered Office

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 Corporate Center, Faridabad New Delhi

Personnel Finance

Summer training Law

Administration Export and

and Security Communication

Agri Machinery Automotive Ancillaries

Marketing Division and Railway Equipment Division

Farmtrac Division Escorts Tractor Division

Corporate Office Functional Units Corporate Office Functional Units

(Line Duties) (Production & Operation) (Line Duties) Production & Operation)

BANKERS

1) IDBI BANK.

2) ABN AMRO BANK N.V.

3) BANK OF BARODA.

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 4) CITIBANK, N.A.

5) DEUTSCHE BANK AG.

6) HONGKONG & SHANGHAI BANKING CORPORAYION LIMITED.

7) HDFC BANK LIMITED.

8) PUNJAB NATIONAL BANK.

9) STATE BANK OF INDIA.

10) STATE BANK OF TRAVANCORE.

AGRI MACHINERY GROUP CONTRIBUTION

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 23%
AMG

Auto Ancilliary
Parts

Railway
56%
Equipments
12%
Construction
9%

AMG contribution is Almost Half of the Total Revenues of ESCORTS Group.

MARKET SHARE OF TRACTOR

INDUSTRY

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 For the year 2018-19

13.66% ESCORTS MAHINDRA &

1.30% 7.27% MAHINDRA
6.64%
8.15% PTL TAFE
1.37% HMT SONALIKA
8.83%
28.20% FML L&T
1.36% FORD NEW OTHERS
8.01%
HOLLAND
15.22% EICHER

Plant Location

1. 18/4, Mathura Road, Faridabad.

2. Plot No.2, Sector 13, Faridabad.

3. Plot No.3, Sector 13, Faridabad.

4. 115, Sector 24, Faridabad.

Product Line

Tractor (Major Constituent of AMG Sales)

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Escorts Series

A. Escorts 325 Josh (25-30 HP Category)

B. Escorts Jawan MPT (25-30 HP Category)

C. Escorts 335 Josh (31-40 HP Category)

D. Escorts 430 ()

E. Escorts 435 ()

F. Escorts 440 ()

G. Escorts 450 ()

Farmtrac and Powertrac Series

A. Farmtrac 30 Hero (26-30 HP Category)

B. Farmtrac 35 Champion (31 -40 HP Category)

C. Farmtrac 35 Joshila (31 -40 HP Category)

D. Farmtrac 45(40-45 HP Category)

E. Farmtrac 50 (45-55 HP Category)

F. Farmtrac 60(50-60 HP Category)

G. Farmtrac 70 (60-70 HP Category)

H. Farmtrac 50 EPI (60-70 HP Category)

I. Farmtrac 65 EPI (60-70 HP Category)

J. Farmtrac 80(71-80 HP Category)

K. Powertrac PT 434()

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 L. Powertrac PT 439 ()

M. Powertrac PT 445 ()

N. Powertrac PT 455 ()

Company’s Future

The growing domestic demand for food gains and agri products promises a very good future

for company’s business. With exemption of excise duty on tractors and growing importance

of agriculture sector in the growth of Indian economy. India can become a major exporter of

agri products and increased demand both domestic and export will call for increased yields.

Tractors population today is concentrated in 10% of villages and even today 70% of the

villages do not have tractor .Crisis infantry has estimated an annual demand 3.0 lacks to

3.20 lacks of tractors by 2018-19 vs. 2.8 lacks in 2018-19. All these show great potential for

growth in the industry and thus in the company.

Research Design:-

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The Research problem has been formulated in clear-cut terms; the Researcher will require

preparing a Research design i.e. he will have to state the conceptual structure with in which

Research would conduct. The preparation of such a design facilitates Research to be as an

efficient as possible yielding maximal information.

1. Exploration,

2. Description,

3. Diagnosis,

4. Experimentation.

Descriptive Design:-

Descriptive Research studies are those studies which are concerned with describing the

characteristics of a particular individual, or a group. Studies concerned with specific

prediction, with narration of facts and characteristics concerning individual, group, or

situation are all examples of descriptive Research studies. In a descriptive study, the first step

is to specify the relevant. The design must be rigid and not flexible and must focus attention

on the following:

1. Formulating the objective of study,

2. Designing the methods of data collection,

3. Selecting the sample,

4. Collecting the data,

5. Processing and analyzing the data,

6. Report the findings.

Collection of Data
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The task of data collection begins after a Research problem has been defined and Research

design/plan checked out. The collection of data is done to support your findings and interpret

the result whether the result have found is according to your hypothesis or not. The data can

be collected by various methods. These are broadly classified into two ways, as follows:

o Primary data,

o Secondary data.

 Primary data:-

Primary data are those which are collected as fresh and for the first time and thus happen to

be original in character. We collect primary data during the course of doing experiments in an

experimental Primary research. It is the first hand Primary data and no one else has collected

this before .There is various ways of collecting primary data, they are as follows:

1. Observation method,

2. Interview method,

3. Questionnaires,

4. Schedules,

5. Other method.

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  Secondary data:-

Secondary data means the data which is already available i.e., it refer to the data which has

already been collected and analyzed by someone else. When the researcher utilizes the

secondary data, then he has to look into various sources form where he can obtain it. In this

case, he is not confirmed with the problem that is usually associated with collection of

original data.

1. Annual report,

2. Books,

3. Management Information System (MIS),

4. Other material and report published by company.

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 ANALYSIS PATTERN

This Summer training titled “Cash Management”is a detailed study of the requirement and
availability of Cash and various items which determine the need for Cash in Escorts Agri
Machinery Group.

The study of Cash Management of Escorts has been performed with a view to measure the
effectiveness in the management of Cash in Escorts and to find the bottlenecks which affect
the proper functioning of the Cash Management Cycle.

The following aspects relating to Cash Management has been analysed to observe the trend
and to reach a conclusion.

 Receivables Management
 Cash Management
 Inventory Management
 Payables Management
 Ratios

A List of tables and graphs has been used to show the performance of the company in the
above mentioned aspects. To analyse the trend in the performance of the company in these
aspects, a comparative study of the related data of four years have been performed.

Finally the recommendations have been presented at the end as to where Escorts is lacking in
effective management of Cash Management and suggestions are given as to how the flow of
the Cash Management Cycle can be maintained.

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 LIMITATION OF THE STUDY

Although every effort has been in to collect the relevant information through the sources
available, still some relevant information could not be gathered.

Busy Schedule of Concerned Executives: The concerned executives were having very
busy schedule because of which they were reluctant to give appointment.

Time: The time duration could not provide ample opportunity to study every detail of
working capital management of the company.

Unawareness: Executives were unaware of many terms related to working capital study
while asking to them.

Confidential Information: As the company on account of confidential report has not

disclosed some figures. Moreover, in some cases separate accounts of division are not
separately maintained thereby, leading to restrictions in study.

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 CHAPTER 3
MICRO ANALYSIS

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 CASH RATIOS

MEANING:-

Cash ratios are also important tool of cash control. There are various ratios which explain

the efficiency of cash management or vice-versa. They are the acids test ratio, cash ratio,

receivables turnover ratio, inventory turnover ratio, cash turnover ratio etc.

These are calculated as –

LIQUIDITY RATIOS

Liquidity ratio measures the ability of the firm to meet its current obligations. It is necessary

to strike a proper balance between high liquidity and lack of liquidity.

The ratios, which are used for the analysis of Escorts liquidity position in this

report, are:

Current Ratio

Quick Ratio

 CURRENT RATIO

Current ratio is calculated by dividing current assets by current liabilities:

Current ratio = CurrentAssets

CurrentLiabilities

Year 2018-19 2018-19

Current Ratio 1.12

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 Current Ratio
1.17

1.16

1.15

1.14

1.13

1.12

1.11

1.1
Year 2007-08 2008-09

From the above table and coulmn it can be interpreted that Escorts liquidity

position is not constant. As a conventional rule a current ratio of 2:1 or more is

considered satisfactory because in a worse situation, even if the value of current

assets becomes half, the firm will be able to meet its obligations.

 QUICK RATIO

Quick ratio establishes a relationship between quick or liquid assets and current

liabilities. An asset is liquid if it can be converted into cash immediately.

Quick Ratio = Current Assets – inventory

Current liabilities

2018-19 2018-19

Quick Ratio 0.90 0.99

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 Quick Ratio

1
0.98
0.96
0.94
0.92
0.9
0.88
0.86
0.84
Year
2007-08
2008-09

Escorts quick ratio in the current year has decreased in comparison to previous year, yet

it can be considered to be satisfactory, as it is 1:1 times of current liabilities. Although

quick ratio is more penetrating test of liquidity than current ratio. Yet it should be used

cautiously, as all debtors may not be liquid and cash may be immediately needed to pay

operating expenses.

ACTIVITY RATIOS –

Activity Ratios are used to evaluate the efficiency with which the firm manages and

utilizes its assets. The ratios are called Turnover Ratios as they indicate the speed with

which the firm manages and utilizes its assets.

Activity ratios, which are used to analyze Escorts effectiveness in Asset utilization, are

 Inventory Turnover Ratio

 Fixed Assets Turnover Ratio

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  Working Capital Turnover Ratio

 Debtors Turnover Ratio

 Creditors Turnover Ratio

INVENTORY TURNOVER RATIO

It indicates the efficiency of the firm in producing and selling its product. It is calculated

by dividing sales by avg. inventory. In a manufacturing company inventory of finished

goods is used to calculate inventory turnover.

Inventory Turnover = Cost of goods sold

Avg. Inventory

2018-19 2018-19

Inventory turnover 14.42 15.10

Inventory Turnover Ratio

15.2

15

14.8

14.6

14.4

14.2

14
Year 2007-08 2008-09

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 If the company is comfortably meeting the customer needs with 9.73 days inventory of

finished goods, all India basis.

It is a good achievement for the Escorts Limited.

FIXED ASSETS TURNOVER RATIO

A firm’s ability to produce a large volume of sales for a given amount of net assets is the

most important aspect of its operating performance. Fixed assets turnover is calculated by

dividing net sale by net fixed assets.

Fixed Assets Turnover = Sales

Fixed Assets

2018-19 2018-19

F.A.T 2.29 2.35

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 F.A.T.R.
F.A.T.R.

2.29 2.35

Year 2007-08 2008-09

Escorts fixed asset turnover have increased in 2018-19. The fixed asset turnover of 2.78

implies that it is producing Rs.2.78 of sales for one rupee of capital employed.

The higher the ratio, more it is satisfactory…

DEBTORS TURNOVER RATIO

Debtor’s turnover indicates the number of times debtors’ turnover each year. Higher the value

of Debtors turnover, the more efficient is the management of credit. The liquidity position of

the firm depends on the quality of the debtors to a great extent.

Debtors Turnover = Credit Sales

Avg. Debtors

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 2018-19 2018-19

Debtors Turnover 4.44 4.29

D.T.O.R.

4.45

4.4

D.T.O.R.
4.35

4.3

4.25

4.2
Year 2007-08 2008-09

Escorts debtors turnover is quite lower. The debtor’s turnover ratio is high at 2018-19 .

The ratio is decreasing. Also the debt collection period has its own importance. The debt

collection period of Escorts was 76 days in 2018-19 but it has increased to 95 days . This

does not show the satisfactory level. The shorter the collection period, the better the

quality of debtors, since a short collection period implies prompt payment by debtors.

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 CREDITOR TURNOVER RATIO

Creditors Turnover = Total Purchases

Creditors

2018-19 2018-19

Creditors Turnover 3.55 3.45

C.T.O.R.

3.56
3.54
3.52
3.5
3.48
3.46
3.44
3.42
3.4
Year
2007-08
2008-09

The payment period of Escorts Limited is 90 days in 2018-19, which is more reasonable

than previous years. This helps to make good quality product and also better relationship

with suppliers.

WORKING CAPITAL TURNOVER RATIO

Working capital turnover ratio has its own significance in the business organizations. It

shows the efficiency of the firm. How much sale that the company get with the utilization

of the limited working capital.

Working Capital Turnover = Net Sales

Net Working Capital

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 2018-19 2018-19

Working.Cap.Turn. 113.45 28.30

Working Capital Turnover Ratio

120

100

80

60

40

20

0
Year
2007-08
2008-09

In the case of working capital turnover ratio Escorts is significantly going very

downward. This is a very dangerous point of the firm. The company should try to

improve it earlier. It shows that the company requires more money to generate sales.

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CHAPTER 4

MACRO ANALYSIS

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 INTERPRETATION

Cash ratios are also important tool of cash control. The cashratio can also play a big role in

determining whether a group of investors should consider purchasing a company. Evaluation

and interpretation of cash ratio help the company for the efficiency of the cash management.

 Escorts liquidity position is not constant. As a conventional rule a current ratio of 2:1

or more is considered satisfactory because in a worse situation, even if the value of

current assets becomes half, the firm will be able to meet its obligations.

 Escorts quick ratio in the current year has decreased in comparison to previous year,

yet it can be considered to be satisfactory, as it is 1:1 times of current liabilities.

 Escorts inventory turnover ratio has increased in comparison to previous year, It is a

good achievement for the Escorts Limited.

 It should be interpreted very cautiously because the denominator of the ratio includes

fixed asset net of depreciation. Thus old assets with lower book value may create a

misleading impression of high turnover without any improvement in sales.

 Escorts debtors turnover is quite lower. The ratio is decreasing. The debt collection

period of Escorts was 76 days in 2018-19 but it has increased to 95 days . This does

not show the satisfactory level. The shorter the collection period, the better the quality

of debtors, since a short collection period implies prompt payment by debtors.

 Creditor turnover ratio has decreased in comparison to the previous year. The payment

period of Escorts Limited is 90 days in 2018-19, which is more reasonable than

previous years. This helps to make good quality product and also better relationship

with suppliers.

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  In the case of working capital turnover ratio Escorts is significantly going very

downward. This is a very dangerous point of the firm. The company should try to

improve it earlier. It shows that the company requires more money to generate sales.

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 CHAPTER 5
 FINDINGS

 RECOMMENDATION

FINDINGS

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  In the case of working capital turnover ratio Escorts is significantly going very

downward. This is a very dangerous point of the firm. The company should try to

improve it earlier. It shows that the company requires more money to generate sales.

 Escorts liquidity position is not constant. As a conventional rule a current ratio of 2:1

or more is considered satisfactory because in a worse situation, even if the value of

current assets becomes half, the firm will be able to meet its obligations.

 It should be interpreted very cautiously because the denominator of the ratio includes

fixed asset net of depreciation. Thus old assets with lower book value may create a

misleading impression of high turnover without any improvement in sales.

 Escorts inventory turnover ratio has increased in comparison to previous year, It is a

good achievement for the Escorts Limited.

 Escorts debtors turnover is quite lower. The ratio is decreasing. The debt collection

period of Escorts was 76 days in 2018-19 but it has increased to 95 days . This does

not show the satisfactory level. The shorter the collection period, the better the quality

of debtors, since a short collection period implies prompt payment by debtors.

RECOMMENDATIONS

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 LOANS AND ADVANCES

Special efforts should be made to analyze loans & advances, which are between 35%
to 56% of current assets. This can be classified between production / operation relation
related and non-production / operation related. No production related cases might be
financed from other sources like debenture etc. and treated separately.

INVENTORY

Inventory should be reviewed constantly to identify show / dead / obsolete item and
then disposed . Optimum level should be revised periodically, keeping in view, distance
of suppliers, production lead time of supplier, transport problem if any and reliability of
suppliers. This will help to avoid obsolesce and dead inventory.

DEBTORS
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 A study may be conducted if required by experts to pinpoint

reason behind Escorts high correction period of 95 days in 2018-19 against 50 days of
Mahindra & Mahindra. It is due to quality of products, quality of customer, the segment
of customers marketing effort, distribution pattern or other reasons.

CREDITORS

Though high payout days may be appartenly beneficial for the company. It has it very
heavy long term cost like high interest cost, bad credit ratings and shyness of good quality
/ standard suppliers.

RATIOS

The company should try to improve its current situation. The ratios, which are taken
in this research to evaluate the company’s position, are Current ratio, Quick ratio and
Activity ratio. These ratios show the actual position of the company. The Quick ratio is
declining since 2001-02 till now. There is a drastic declining in the working capital
turnover ratio. This ratio goes to –ve position in current year compared to previous. The
Debts collection period is 359 days for Exporters. This shows the poor collection policy.
The current ratio is 1.12 in 2018-19, which is not upto the ideal ratio. This shows that the
current assets are equal to the current liabilities. Not satisfactory.

OTHERS –

 More attention must be given to market forecasts can be made and the surplus of
inventory is reduced to minimum

 Company should not follow the competitors only. New products should be
produced for the farmers having low income and small holdings.

 Proper market survey should be carried out. The company should explore the
export market to study the present and prospective demand.

 Proper inventory plans should be made in order to reduce the carrying cost.
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  New market strategies should be devised from time to time. This is because, even
if the tractor is of good quality, the competitors may produce the same product
with additional features and at lower prices.

 Marketing network should be enhanced. Company should also produce more

tractors of higher H.P. But new developments should be made continuously in
order to survive in this competitive world.

BIBLIOGRAPHY

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 BOOKS

Financial Management- S.K Gupta

Management Accountancy-D k Gole

Cost and Management Accountancy, S.N.Maheshwari

Financial Management And Policy, James C.Van Horne

WORLD WIDE WEB

www.Escortsagri.com

www.economictimes.com

www.planware.com

www.icraindia.com

Other than Web

M.I.S of the company

Annual Reports

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 APPENDICES
1SToct 2017- 30th September 2018 1stoct 2017 – 30thsept 2018
Operating income 2,012.00 2,092.04
Material consumed 1,470.66 1,540.01
Manufacturing expenses 47.68 50.79
Personnel expenses 202.63 204.02
Selling expenses 114.57 118.63
Adminstrative expenses 69.12 57.45
Expenses capitalised - -
Cost of sales 1,904.66 1,970.90
Operating profit 107.34 121.14
Other recurring income 0.04 20.85
Adjusted PBDIT 107.38 141.99
Financial expenses 55.93 89.78
Depreciation 42.87 44.97
Other write offs - 3.32
Adjusted PBT 8.58 3.92
Tax charges 47.13 -10.89
Adjusted PAT -38.55 14.81
Non recurring items 17.56 -21.25
Other non cash adjustments 32.86 -
Reported net profit 11.87 -6.44
Earnigs before appropriation -133.59 -145.46
Equity dividend - -
Preference dividend - -
Dividend tax - -
Retained earnings -133.59 -145.46

PROFIT AND LOSS ACCOUNT

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BALANCE SHEET AS ON…..
1ST OCT 2017- 30th SEPT 2018 1st OCT 2007 – 30TH SEPT 2008
Equity share capital 90.71 83.69
Share application money - -
Preference share capital - -
Reserves & surplus 645.49 563.38
Secured loans 422.63 414.04
Unsecured loans 14.44 31.10
Total 1,173.27 1,092.21
Gross block 1,415.93 1,436.96
Less : revaluation reserve 466.46 471.90
Less : accumulated
593.41 583.24
depreciation
Net block 356.06 381.82
Capital work-in-progress 14.43 13.40
Investments 425.79 425.13
Current assets, loans &
1,131.98 1,325.61
advances
Less : current liabilities &
776.14 1,069.68
provisions
Total net current assets 355.84 255.93
Miscellaneous expenses not
11.00 15.93
written
Total 1,163.12 1,092.21
Book value of unquoted
494.53 493.87
investments
Market value of quoted 1.98 3.31

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investments
Contingent liabilities 168.40 318.74
Number of equity
907.09 836.94
sharesoutstanding (Lacs)

CASH FLOW STATEMENT

PARTICULAR MARCH MARCH
(2017) (2018)

CASH FLOW FROM OPERATING ACTIVITIES

N.P BEFORE TAX 26.14 -17.33
Adjustment for:

provision for doubtful debts , obsolescence inventory & 16.36 1.89

advances
Gain on sale of long term investment -1.22
Gain on sale of asset -4.8 -0.13

Depreciation 42.87 44..97

Assets w/off 11.64 8.08

Interest expense 62.2 72.22

Dividend income 0.04 -0.02

Interest income 12.93 -20.82

Operating profit before change in w.capital 141.52 87.64

Adjustment for:

Trade & receivable -65.36 -168.61

Money in escrow account 20.09

Inventory -43.68 13.79

Trade payable 58.02 67.05

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 Misc.expenditure -3.21 -7.5

Op.profit after change in w.capital -34.14 -95.27

Cash generated from operating activities 107.38 -7.63

Less-Direct taxes/refunds -6.25 -17.85

NET CASH FLOW FROM OPERATING ACTIVITIES 101.13 -25.48

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets -7.5 0.86

Proceeds from sale of fixed. Assets 14.26 -30.95

Loss on sale of investment -30.64

Movement in loan & advances -3.9 -16.27

Sale of investment -0.66 32.33

Short term deposits with schedule banks 8.58 -2.31

Interest received 3.21 20.7

Dividend received -0.04 0.02

NET CASH FLOW FROM INVESTING ACTIVITIES 16.69 4.38

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from share capital & securities premium 40.32 114.44

Proceeds/repayment from long- term borrowings 234.09 80.6
Less:repayment of long term borrowing -41.68 -0.54
Proceed/repayment from short-term borrowing -46.83 -146.82

Interest paid -66.27 -77.4

NET CASH USED IN FINANCING ACTIVITIES -114.46 -23.72

Net increase / decrease in cash & cash equivalents (30.03 -44.82

OPENING CASH BALANCE 60.83 105.65

CLOSING CASH BALANCE 30.8 60.83

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