You are on page 1of 82

A PROJECT REPORT ON AT AUTOLINE INDUSTRIES LTD.

AUTOLINE INDUSTRIES LIMITED.PUNE (CHAKAN PLANT II) SUBMITTED TO UNIVERSITY OF PUNE IN PARTIAL FULFILLMENT OF MASTERS OF BUSINESS ADMINISTRATION SUBMITTED BY SHIVAJI PRAKASH MEDRAN
JAYWANT SHIKSHK PRASALK MANDALS JAYAWANT INSTITUTE OF COMPUTER APPLICATION

YEAR (2010-2012)

DECLARATION
-1-

I Shivaji Praksh Medran, student of Master in Business Administration of JAYWANT SHIKSHK PRASALK MANDALS JAYAWANT INSTITUTE OF COMPUTER APPLICATION Tathwade, Tal- Haveli, Pune. Hereby declare that Project Report with title,

AT AUTILINE INDUSTRIS LIMITED, CHAKAN

Is the outcome of my own work & the same has not been submitted to any university for the award of Degree.

Date: Place: Pune

SHIVAJI PRAKASH MEDRAN

INDEX
-2-

Sr. No 1. INTROCUTION 2. INDUSTRY PROFILE 3. COMPANY PROFILE

CONTENTS

PAGE NO. 1-2 3-5 6-16

3.1] COMPANY PROFILE 3.2] AILS VISION 3.3] AILS MISSION 3.4] PRODUCT PROFILE 4. OBJECTIVE AND SCOPE 4.1] OBJECTIVES OF STUDY 4.2] SCOPE OF THE STUDY 5. LITERATURE SURVEY 5.1] 5.2] 5.3] 18-26 17

5.4]

-3-

5.5] 5.6] 5.7] 5.8] 6. RESERCH METHODOLOGY 6.1] RESEARCH METHODOLOGY 6.2] RESEARCH DESING 6.3] DATA COLLECTION SOURCE 6.3.1] PRIMARY SOURCE 6.3.2] SECOUNDARY SOURCE 6.4] PRESENTATION OF DATA 7. DATA ANALYSIS AND INTERPRETATION 8. OBSERVATION AND FINDINGS 9. LIMITATIONS 10. SUGGESTIONS 11. CONCLUSION 12. ANNEXURE BIOLIGRAPHY 29-50 51 52 53 54 55-58 27-28

1. INTRODUCTION

-4-

1.1)

RATIONAL OF STUDY:The project undertaken is on Working Capital Management in Autoline Industries Limited.

It describes about how the company manages its working capital and the analysis of various parts of working capital of the company Cash is the lifeline of a company. If this lifeline deteriorates, so does the companys ability to fund operations, reinvest and meet capital requirements and payments. Understanding a companys cash flow health is essential to making investment decisions. A good way to judge a companys cash flow prospects is to look at its working capital management (WCM). Working capital refers to the cash a business requires for day-to-day operations or, more specifically, for financing the conversion of raw materials into finished goods, which levels of inventory, accounts receivable, and accounts payable. Analytical look at these items for signs of a companys efficiency and financial strength. The working capital is an important yardstick to measure the companys operational and financial efficiency. Any company should have a right amount of cash and lines of credit for its business needs at all times.

1.2)

INTRODUCTION TO THE TOPIC:In every business concern the capital plays a vital role, because it is time foundation stone of the

financial position of the company. For all business there are two types of capital required-

Fixed Capital This is an initial capital requirement for a very long period and it is represented by fixed Assets. Working/Floating CapitalThis is a floating capital requirement for day to day operation of the company like purchase of raw material, payment of wages, meeting the overheads, etc.

-5-

Working/Floating Capital Described as the life blood of the business enterprises Working Capital represents the capital

invested in Current Assets. Working Capital Management is concerned with the problems that arise in attempting to manage the

current assents, the current liabilities and the interrelationship that exist between them. The goal of Working Capital Management is to manage the firms current assets and liabilities in such a way that a satisfactory level of Working Capital is maintained.

2. INDUSTRY PROFILE
2.1 INDUSTRY SIZE:The total size of the Indian auto component industry is USD 14 billion, out of which USD 2.0 is direct export of components. The world production of auto components is expected to reach $ 1.7 trillion by 2015. It is estimated that about 700 billion worth of auto components would be sourced out from Low Cost Countries (LCCs) in the next 7-8 years. If India targets to get 10% share of this potential, it would mean USD 70 billion, nearly 5 times of the current size of the industry in India, giving a huge business opportunity for the Indian auto component & ancillary industry. The Indian auto component industry is highly fragmented in nature and has 416 players, employing 250,000 people. The output of the Indian auto component segment, as per ACMA, was estimated at around $5.1 billion (Rs 245 billion) in FY08.

2.2 GROWTH TRENDS:The auto components and ancillary sector are optimistic in achieving a 15-20 percent growth year-on-year, in the next five years due to the current buoyancy in the Indian automotive sector as well as major investment and expansion plans of automotive manufacturers globally. An auto ancillary company can generate revenues from two major sources, the first is from

-6-

supplies to OEM (original equipment manufacturers) and the second is through aftermarket sales.

2.3 MAJOR PLAYER AND THEIR MARKET SHARE:The following table lists the industry segmentation on the basis of components, their contribution to the overall industry revenues and some of the leading players in those segments.

Sub-groups

Products

% to total Leading products companies


Ucal Fuel, Bosch, Lucas Sona Kaya, Steering Gabriel, Showa ZF

Engine Parts

Pistons, piston rings, fuel injection 24 % pumps & Transmission gears, axles and wheels 16 %

Transmission Steering parts

Suspension & Braking Leaf springs, shock absorbers parts Electrical Equipment

12 %

Munjal

Spark plugs, batteries, starter motors 8 % Dashboard instruments 7%

Exide, MICO, Motherson Lumax Sumi,

Others

Fan belts, sheet metal parts

33 %

Rico Auto, Sundram

2.4 GOVERNMENT POLICY AND SUPPORT:

Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country.

-7-

Promote a globally competitive automotive industry and emerge as a global source for auto components. Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world. Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry. Conduce incessant modernization of the industry and facilitate indigenous design, research and development. Steer India's software industry into automotive technology. Assist development of vehicles propelled by alternate energy sources. Development of domestic safety and environmental standards at par with international standards. SIAM welcomed the announcement of Auto Policy, and feels that the policy would serve as a reference document for all stake holders and other interested parties. The Auto Policy has spelt out the direction of growth for the auto sector in India and addresses most concerns of the automobile sector, includingPromotion of R&D in the automotive sector to ensure continuous technology up gradation, building better designing capacities to remain competitive. Impetus to Alternative Fuel Vehicles through appropriate long term fiscal structure to facilitate their acceptance. Emphasis on low emission fuel auto technologies and availability of appropriate auto fuels and encouragement to construction of safer bus/truck bodies-subjecting unorganized sector also to 16% excise duty on body building activity as in case of OEMs. The policy has rightly recognized the need for modernizing the part profile of vehicles to arrest degradation of air quality. The terminal life policy for commercial vehicles and move toward international taxing policies linked to age of vehicles, are steps in the right direction. SIAM has always been advocating encouragement of value addition within the country against mere trading activity. However, this aspect has not been fully addressed. The Auto Policy allows automatic approval for foreign equity investment up to 100% in the automotive sector and does not lay down any minimum investment criteria. However, with the Auto Policy in place, the automotive industry would get further fillip to become vibrant and globally competitive. The industry would get the required support from
-8-

other Ministries and departments of Government of India in achieving the goals laid down in the auto policy.

3. COMPANY PROFILE
3.1 HISTORY COMPANY:Auto line Industries Limited is a manufacturer of sheet metal components located in different parts of Pune, catering to the components and sub-assemblies requirements of leading automobile manufacturers. A partnership firm in the name of Autoline Pressings in 1995 was started with contract manufacturing of sheet metal components in January 1995 from a 3000 sq.ft rented premises at Survey No. 825 Kudalwadi, near MIDI, Chinchwad Area, Pune. Subsequently, a Company by the name of Autoline Stampings Private Limited was incorporated on December 16th; 1996. This Company was renamed as Autoline Industries Limited w.e.f. January 13th, 2006. The company purchased the premises at Kudalwadi, Pune including the land measuring approx. 5500 sq.ft. In 1995. The manufacturing unit at Kudalwadi is located about 3 Km from Tata Motors and 5 Km from Bajaj Auto Limited with manufacturing facilities. Later on company set up another factory in 1997-98 at MIDI Chakan, Pune with a built up area of 104,000 sq.ft. On a plot of land admeasuring 114,000 sq. ft. The company set up 3rd manufacturing unit at MIDI, Bhosari in 1999-2000 on a 54,000-sq.ft plot of land located near Tata Motors. Besides this we are having no. of following other units. 1) Detroit Engineering products, Inc USA (DEP) 2) Butler Indian Plant, USA 3) Nirmiti Auto components Pvt. Ltd (NIRMITI) 4) Union Autoline Spare Parts, LLC (Abu Dhabi UAE) In November 2005 AIL acquired Western Pressing Private Limited, with facilities for manufacturing Silencers and Exhaust Systems required for auto sector.

-9-

3.2 VISION AND MISSION STATEMENT

OUR VISION
To be an innovation driven, Global Leader in the Design, Engineering and Manufacturing of Automotive Mechanical Systems.

OUR MISSION
To migrate into the fast lane without speed limits.

- 10 -

3.3 COMPANIYS GOALS & VALUES: Our goals at AIL are simple and they are accomplished by commitment from every employee. Treat each employee with respect and provide him an opportunity for growth and thereby continually improve our goals. Provide the most effective and efficient corrective action, to resolve customer service issues, to ensure our customers satisfaction and that the problem not to be repeated in future. Deliver competitive service to our customers and wherever possible, take all necessary steps to improve the quality. Make First time Right our commitment as a team and our only way of doing business. This commitment as a team will assure continued growth and prosperity.

- 11 -

3.4 ORGANIZATION STRUCTURE:

- 12 -

3.10 Autoline Industries Hierarchy

CHAIRMAN EMERITUS BOARD OF DIRECTORS CHAIRMAN MANAGING DIRECTOR & CEO JT. MANAGING DIRECTOR WHOLETIME DIRECTOR DIRECTORS

Mr. Vilas V. Lande

Mr. Gopal G Patwardhan Mr Shivaji. T Akhade Mr. M Radhakrishnan Mr. Sudhir V. Mungase CA. Vijay K. Thanawala Mr. Prakash B. Nimbalkar Prof. Abraham Koshy Mr. Ajit B. Karnik Cmde. N Ravindranathan IN (Retd) Prof. Chandramouli

Padmanabhan Mr. Rakesh Jhunjhunwala Mr. J. Stanston Dodson CHIEF FINANCIAL OFFICER COMPANY SECRETARY AUDITORS Mr. Narayan Bhatt Mr. Ashutosh B Kulkarni Gujar Rawat Sheth & Associates Chartered Accountants, Pune INTERNAL AUDITORS Pune. REGISTERED OFFICE Nanekarwadi,
- 13 -

Ernst and Young Private Ltd, S. Nos. 313, 314, 320 to 323

Chakan, Taluka- Khed, Pune-410501.

3.5 MILESTONES AND ACHIEVEMENTS

Period/Time January 1995

Particulars Set up the first manufacturing facility at Kudalwadi, Chikhali, Pune with one 150 T C frame press and supporting machinery on a built-up shed of 3000 sq.ft. Area. Doing job work as Tier III supplier. Obtained the Vendor Code for direct supplies to Bajaj Auto Ltd.

June 1996

September 1996 Obtained the Vendor Code for direct supplies to Tata Motors Ltd. (then TELCO) December 1996 Converted the partnership firm into Private Limited Company June 1997 Expanded the facilities at Kudalwadi by acquiring adjacent land, adding 250/300 T press, setting quality systems, etc. for supplies to Bajaj Auto, Tata Motors and Kinetic Engg. Ltd. Received CQ certification from Tata Motors for supplying on DSL basis (Direct Supply Online, without inspection at OEM)

January 1998

March 1997 toSet up second Manufacturing facility at Chakan with Presses ranging from 250 T October 1998 to 600 T and supporting facilities for Tata Motors prestigious INDICA car project on the basis of Letter of Intent August 1999 Set up a Tool Room at Chakan. Imported Hartford CNC Vertical Milling Centre and bought other sophisticated machines locally.

December 1999 Set up CAD/CAM facilities with the latest software available for Tool Making. April 2001 Took over Amogh Engineers, a Rs.40 million company manufacturing Brake Assembly for Tata Motors 407/709 models and also entered into export of brake shoes to UAE, Singapore, Germany, etc.

- 14 -

September 2002 Received QS 9000/ISO 9002: 1994 certification from TUV (Rh), Germany for Chakan Plant. June 2003 Took over smaller pressing companies (Tier II and III) locally supplying to Tata Motors Ltd. with their Dies & Tools.

December 2003 Set up third Manufacturing Unit at MIDC, Bhosari on 54,000 sq.ft. land with a modern light press shop facilities (Press Range 40 T to 300 T) for small and medium components for Bajaj Auto, Tata Motors, Walker Exhaust, Kinetic, etc. February 2004 Obtained a Term Loan from a nationalized bank and shifted our banking operations from a cooperative bank to a large bank in the public sector. The company achieved a turnover of Rs.510.00 million in 2003-04, registering a hefty growth of 87% over previous year. Load Body for Tata Motors prestigious ACE mini truck model awarded to company as a single source supplier, to make large sized Floor Dies in-house. Chakan Unit gets ISO/ TS 16949 : 2002 certification from TUV (Rh), Germany one among the 40 companies then all over India

March 2004

August 2004

October 2004

December 2004 Purchased 15 acres of land in Chakan prime area near to existing factory for future expansion January 2005 Set up a Joint Venture company in UAE under the name Union Autoline Spare Parts, LLC with 49% stake to manufacture brake shoes, wheel rims and also provide facilities for cylinder head reconditioning and machining of automotive and marine engine parts Bhosari Unit get ISO/TS 16949: 2002 certification from TUV (Rh), Germany Duke Special Opportunities Fund, Private Equity Investor, invests in company

February 2005 August 2005

November 2005 Acquired as a wholly-owned subsidiary Western Pressing Pvt. Ltd., a company manufacturing tubular cross members, silencers and Exhaust Systems thus is getting into proprietary products. Turnover of Rs.140.00 million in 2005-06. March 2006 Acquired a 51% stake in Dimensions Engineering Software Services Pvt. Ltd., a company with 40 people into CAD/CAM/CAE & Design Engineering Services

- 15 -

making AIL a Concept to Delivery company. April 2006 Crossed Turnover of Rs. 111 crores achieved in full financial year 2005-06

September, 2006 Filed Draft Red Herring Prospectus with Securities Exchange Board of India September, 2006 Filed Draft Red Herring Prospectus with Securities Exchange Board of India December, 2006 Filed Draft Red Herring Prospectus with Securities Exchange Board of India January,2007 Made Initial Public Offering (IPO) (January 7 to 12, 2007) and listed on BSE and NSE On 31st January, 2007- IPO oversubscribed by 20 times. Commenced commercial production of skin panel like door assembly at Chakan Unit II 100% acquisition of Autoline Dimensions Software Private Limited. Closed financial year with turnover of Rs. 210 Crores Autoline Buys 51% stake in US firm - Detroit Engineering Products, Inc (DEP) The Global Launch of Meshworks Morpher 4.0 proprietary software developed by DEP in Pune, India (Path breaking software which reduces vehicle development time by 90%) Letters of Intent received for new business from customers like Daimler Chrysler India Private Limited, Cummins Power Generation, USA and Tata Daewoo, South Korea 100% takeover of Nirmiti Auto components Private Limited, a company engaged in the Business of pedal systems, door hinges and manufacturing of sheet metal components and fabricated small assemblies, in view of the strategic importance and synergies with the Company. It has manufacturing facilities at Pune and Uttaranchal.

March 2007

March 2007 April 2007 May 2007 August 2007

October 2007

October 2007

December 2007 Formation of wholly owned subsidiary Autoline Industries USA, Inc. and 100% Acquisition of business and associated assets of Dura Automotive Systems, USA by Autoline Industries USA, Inc, Fast-growing Autoline adds Important Capability & footprint with U.S. acquisition. (Also acquired 12 patents &
- 16 -

proprietary designs in the Jack and Tool Kit area) February 2008 Autoline Industries Limited, Pune" and "Sharjah Cement & Industrial Development Co. (SCIDC), UAE", enter into Shareholders' Agreement on 28th February, 2008 with Autoline Industrial Parks Limited, Pune a subsidiary company of Autoline Industries Limited. This Joint Venture has been formed for the purpose of setting up and development of industrial parks relating mainly to Auto Ancillary Units, Design Engineering Units etc. By virtue of this agreement Autoline Industries Limited and its Associates hold 51.00% and Sharjah Cement & Industrial Development Co. and its Associates propose to hold 47.33% of the total paid-up share capital of Autoline Industrial Parks Limited". Constructed factory shed and started manufacturing operations for Silencers, Exhaust Systems, etc. at Mahalunge, Chakan, and Tal- Khed. State of the art Tool Room on built up area of 60000 sq. fts on 2 acres of land commissioned and full fledged commercial tool room started commercial production.

May 2008

June 2008

September 2008 In September 2008, acquired 100% stake in Koderat Investments Limited Koderat (making it Wholly Owned Subsidiary), a Company incorporated and existing under the laws of Cyprus; acting as a Special Purpose Vehicle (SPV). Further Koderat acquired (49.0%) equity share capital of SZ Design S.R.I., and Zagato S.R.I., Italian limited liability companies, Milan (the Companies/Zagato). Zagato is a Milano-based Italian automotive design Company responsible for designing some of the most spectacular cars of the last century for companies such as Ferrari, Maserati, Bugatti, Bentley, Rolls Royce, Jaguar and Lamborghini etc. October 2008 Company received Best performance award for excellence in cost effectiveness in sheet metal business at National Vendor meet of Tata Motors Limited.

November 2008 Exported its first consignment to Cummins Power Generation, USA January 2009 The Company has received orders from Cummins, Global, for export of sheet metal components /parts worth Rs.11 crores. (2) Nirmiti Auto components Private Limited (wholly owned subsidiary of the Company) received first order from GENERAL MOTORS worth Rs.9.50 crores. Set up manufacturing facility at Plot No. 8, Sector 11, IIE, Rudrapur, Uttarakhand

April 2009
- 17 -

and commenced commercial production of medium and large stamped parts. July 2009 Acquired land located at Plot No. 6 Sector 11, IIE, Rudrapur, Uttarakhand, adjacent to existing plots at Uttarakhand. The Company bagged incremental export orders approximately worth Rs. 45 Crores from Overseas Original Equipment Manufacturers (OEMs). Autoline Industries USA, Inc a wholly-owned subsidiary of the Company bagged orders to manufacture Brake and Clutch Pedal Assemblies from two US automakers. The orders are for two vehicle platforms that will be launched in late 2010. This new business will boast the sales of the US unit by approx. $40,000,000 (USD 40 million) over the next 4 years period. Company received Best performance award for excellence in Quality in sheet metal business at National Vendor meet of Tata Motors Limited. Company received General Motor's Supplier of the Year Award - 2009". Autoline Industries, USA Inc (wholly owned subsidiary of the company) at GM Dome, Warren, USA, (The only other Indian Company being Sundaram Fasteners Limited) in recognition of its performance in brake and clutch pedal product line. Tata Motors Limited ranked Chakan plant -1 as number one in sheet Metal family and 4th in all PCBU suppliers. Cummins Supplier Annual Scorecard 2009 for delivery and technology - A+ for quality and internal process - A for costing - B

July 2009

October 2009

February 2010

March 2010

May 2010

August 2010

September 2010 ABO supplier award For Excellence Performance & Support in 2009 received from Cummins, IPO India- 2nd September, 2010 April toReceived new business orders from OEMs like - , Volkswagen, Diamler India, September 2010 Ashok Leyland Nissan, General Motors etc.

3.6 SUBSIDIARIES OF COMPANY:-

- 18 -

THE AUTOLINE GROUP OF COMPANIES:-

Manufacturing Facilities:Autolines manufacturing operations are carried on from our facilities at the following locations.

1. T-135, MIDC, Bhosari


Bhosari Unit is located in MIDC, Bhosari, very near to Telcos main Entrance. The production facilities here are housed in 30,000 sq.ft. Of built-up area on a plot of land admeasuring 530,000 sq.ft. With main roads on two sides of the plot and other excellent infrastructure. Co. manufacture small sub-assemblies such as chain covers, front fork, wheel rims for Bajaj Auto, outer shield of catalytic converters for Walker Exhaust India (a subsidiary of Tenneco, a Fortune 500 US Company.

2. Kudalwadi/ Jadhavwadi Units:


These Units at Survey No. 825 and Survey No. 712, Kudalwadi, Chikhali, Pune 412114 are located near to Telco and Bajaj Auto Ltd in Chinchwad/Pimpri area. The Production facilities here are housed in 12,000 sq.ft. Of built-up area, including 2,000 sq.ft. Office area with conference room and Training facilities. These units are predominantly single components such as door hinges various types of brackets mainly for cars and is mostly supplied to Tata Motors.

3. FII Unit (Western Pressing Pvt. Ltd.,)


Company utilizing the facilities of the Western Pressing Pvt. Ltd for manufacturing formed tubular products such as Silencers and exhaust systems for Tata Motors commercial vehicles of all categories. It is located near TELCO Material gate, Pimpri.

4. Unit 1 Chakan
Unit-1 at Chakan is manufacturing load bodies and rear wall of drivers cabin for Tata Ace Mini-Truck, Front Floor Assemblies, Suspension Tower, and heat shields etc for passenger cars, mudguards for SUVs (e.g. Tata Sumo), and headlight assemblies for HCVs. It is located in MIDC Kuruli Nanekarwadi (Chakan).

5. Unit II Chakan- Nanekarwadi, Chakan.


This unit is a part of the expansion initiative and Phase-I of the expansion is at an advanced stage of completion and has commenced commercial production in November 2006.
- 19 -

Company have started manufacturing of aesthetic parts such as door assemblies, bonnets, fenders and also tippers, tipper trailers, cement bulkers, garbage extractors etc from this plant. It is also located in MIDC Kuruli Nanekarwadi (Chakan). Besides this Manufacturing facilities are available at following units

6. Unit III Chakan


This unit started its operation in may 2008 and has manufacturing facilities for silencers, cross members, Exhaust systems from Engine it tailpipe for e.g. front tube with bellows, middle tube, Muffler, pre-silencer, post silencer main silencer tail pipe etc. for heavy commercial vehicles, Light commercial vehicles as well as passenger cars and mainly suppliers to Tata motors ltd. This unit also manufactures Radiator tubes, CAC inlet and outlet tubes etc. Which are supplied to Asian motors works (AMW). Manufactures from here Structural items as well as Press components for TATA MARCOPOLO Buses for their Dharwad (Karnataka) plant.

7. Uttaranchal
Company is under process of setting up additional manufacturing facility at Plot no.6, Sector 11, IIE, Rudrapur, SIDCUL, Uttarakhand which is expected to be completed by October, 2010.The company proposes additional assembly lines here, weld line for Ace Frame, weld line for assembly door inner-Ace weld facility for load body cross member, weld facility for assembly control Mounting bracket, Small presses for child parts etc. for upcoming models of TATA MOTORS LIMITED, and is expected to take care of the large volume growth at Uttarakhand.

8. Butler Indian USA


Company through Autoline Industries Inc.USA, manufactures and supplies Accelerator, Brake, Clutch Pedal Assemblies, Parking Brake, Door Hinges, Scissor and bottle Jacks, Stamped Metal Assemblies, and Gear Shifters, Brackets and Stamped Assemblies etc. to various OEMs like- General Motors, Honda, Chrysler, Ford, Nissan, International Truck, US Military, Cummins Power Generation etc. This Manufacturing facility achieved Ford Q1 certification and successfully passed TS 16969 and ISO 140001 rectification audits. Company through Autoline Industries Inc. USA established and started operation in Korea during the year to support global small car program OEM.

9. Autoline Design Software Limited


Autoline Design Software Limited has emerged as a multifaceted, end-to-end engineering Solutions company that offers business solutions for manufacturing organization worldwide. Company proposition to its customers as a provider of engineering-Design, tooling services and mass-Manufacturing capabilities that can continually innovate through process engineering, reengineering and re-tooling to improve manufacturing efficacy. The activities are picking up rapidly in 2010.Due to the renewed in the Automobile sector. The business relating to selling of
- 20 -

engineering software product of parametric technology corporation (PTC) has also gathered momentum in 2010.

10.Autoline Industrial Parks Limited: (AIPL)


The domestic demand for residential and commercial activity in chakan has picked up given the fact that Volkswagen with 500 acres, Mercedes with 150 acres, Mahindra & Mahindra with 750 acres, General Motors with 300 acres, Bajaj Auto Ltd with 400 acres, Hyundai with 100 acres and other multinational companies have started their units. All these companies are located within two km radius from about 100 acres of land tied up & owned by AIPL (subsidiary of Autoline) the site is situated in the centre of all industrial activity in chakans Auto Hub, opposite Bajaj Auto limited on the proposed 8 lane Talegaon Ahmednagar Road. AIPL has applied for getting residential permission for township development as this will give far greater value in terms of returns. It is proposed simultaneously with completion of formalities, Company is in the process of identifying a reputed Developer for joint development project. Companys contribution will be the land with no further investment and expected returns would be approx. Rs. 750 Million per year over 5 years period or about Rs. 400 Million per year over 8 to 9 years depending on the pace of development.

MANUFACTURING PLANTS

- 21 -

BHOSARI UNIT

WESTERN PRESSING

NIRMITI AUTOCOMPOUNTS LTD.

KUDALWADI UNIT

CHAKAN UNIT-I

CHAKAN UNIT-II

UNION AUTOLINE SPARE PARTS, LLC (ABU DHABI, UAE)

BUTTER INDIAN LTD. USA

3.7 PRODUCT PROFILE:


- 22 -

Overview:
Autoline Industries Ltd. is a major supplier of sheet metal components, sub assemblies and assemblies. Also manufacturing "A" class sheet metal dies, we supply about 130 components to Tata Motor's prestigious INDICA, Car Project and its mid-sized sedan INDIGO & MARINA mostly as single source supplier, and about 400 components to its Auto Division for LCVs, MCVs and HCVs, besides components for SUVs like Safari, Sumo and their variants. Various other components numbering more than 150 are being supplied to Bajaj Auto Limited & Kinetic Engineering Limited for 2 wheelers & 3 wheelers. Critical and prestigious components are regularly supplied to Walker Exhaust (India) Pvt. Ltd, a wholly owned subsidiary of a Fortune 500 company. Besides these, we also supply Tractor components to Mahindra & Mahindra Limited, Mumbai, and Fiat, Mumbai, for their prestigious Palio Project. Exports of Brake shoes meant as spares for Mercedes Trailers to Germany, Singapore, UAE, Saudi Arabia, etc. A joint venture by the name of Union Autoline Spare Parts LLC, UAE has been set up to promote exports of Auto Components for the Gulf and African Markets.

PRODUCT RANGE:
Commercial Vehicles: o Engine Hood o Frame Parts o Aesthetic Parts Front Grill Side Panel Assembly

Three Wheelers: o Frame Parts o Upper Plate Two Wheelers: o Frame parts o Diaphragm Assembly o Aesthetic Parts
- 23 -

Swing Arm Petrol Tank Chain Cover Scooter Wheel Rim Silencer Guard Steering Tube Assembly Front Fork Assembly Bonnet Reinforcement Assembly Center Stand Assembly Side Stand Assembly Foot Stand Assembly

Tractors:
o Front Panel Assembly o Front Grill o Side Panel Assembly

Passenger Cars:
o Mudguard Assembly o Pillar Top o Cross Member o Steering House o Engine Parts Engine Cross Members Alternator Bracket Assembly Push Rod Chamber Cover. Assemblies: o FIP Bracket Assembly
- 24 -

o Tailgate Assembly o Front Panel Assembly Tailgate Panel Assembly o Rear Wheel Assembly o Axle Brake Assembly o Mudguard Front Assembly

3.8/ MAJOR CUSTOMERS:-

- 25 -

4. OBJECTIVES & SCOPE OF STUDY

4.1 PRIMARY OBJECTIVE

To study the process of Accounts Payable in Autoline Industries.

4.2 SECONDARY OBJECTIVE

To study procurement & payment process in Accounts Payable System.

To study comparison of purchases and payments of raw material and bought out.

To study effective management of Accounts Payable for reducing frauds & error.

5.3 SCOPE OF THE STUDY

Accounts Payable is required for reducing errors and minimizing paperwork .It enables the organization for accomplishment of objectives by bringing a systematic, disciplined approach to evaluate & improve the effectiveness of payable process. A/C Payables helps in cost reduction, fraud prevention, cash flow management. It helps in maintaining better relations with the regular suppliers.

- 26 -

5. RESEARCH METHODOLOGY

5.1 MEANING & DEFINITION OF RESEARCH MEANING OF RESEARCH


Research is an Endeavour to discover intellectual & practical answers to problems through the application of scientific methods to the knowable Universe. Research is systematic & redefined technique of thinking. Research starts with the problems, collects data or facts, analyses them critically & reaches decision based on actual decision. Research is advance of knowledge, which is a scientific Endeavour of the human mind.

DEFINITION OF RESEARCH
According to KARL PEARSON, There is no shortcut to the truth, no way to gain knowledge of the Universe except through the gateway of scientific method.

According to P.V.YOUNG, A method of studying , analyzing & conceptualizing social life in order to extend , modify ,correct or verify knowledge , whether that knowledge aids in construction of theory or in the practice of an art. Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research.

- 27 -

5.2 METHODS & SOURCE OF DATA COLLECTION:The two main sources of data collection in research are,

Research Methodology

Primary Data

Secondary Data

1) PRIMARY DATA:-

Primary data are those which are collected fresh and for the first time, and thus happen to be original in character. Primary data is the information collected during the course of an experiment during experimental research. The collection of primary data requires deploying more manpower. It calls for greater planning and co-ordination. There are several methods of collecting primary data like, observation method, interview method, questionnaires etc. For this, prior study was important and I had to go through the various processes and Accounts Payable System of the company to get a proper idea about the actual process. The collection of primary data requires considerable time. In this research the Primary data were obtained by actual working with those managers who are involved in this process.

- 28 -

2) SECONDARY DATA:-

Secondary data means data that are already available i.e. they refer to the data which have already been collected and analyzed by someone else. It may be defined as data that has been collected earlier for some purpose other than the purpose of the present study. Secondary data is that, which has been used previously for any research & is now in use for the second time. Secondary data is already available in various Annual reports, diaries, letters, books, biographies, autobiographies, accounting & financial records etc. Thus, any data that is available prior to the commencement of the research project is secondary data, and therefore secondary data is also called as Historical Data. For this project, sources for secondary data included Procurement to Payment Material Process, Accounts Payable Process, Audit Report of the Company, and the various websites of the company.

6. LITERATURE SURVEY
6.1 INTRODUCTION OF ACCOUNTS PAYABLE:Accounts Payable is the money which a company owes to vendors for products and services purchased on credit. This is treated as a Current Liability on a Balance Sheet, since the expectation is that the liability will be fulfilled in less than a year. Account Payable is a file or account that a person or company owes to the suppliers, but has not yet paid. Thus a/c payable is a form of credit that suppliers offer to their purchaser by allowing them to pay for a product or service after it has already been received. When Accounts Payable is paid off, it represents cash out flow for the company. A/C Payable is divided into two parts:-

- 29 -

1.Accounts Payable (Materials):Accounts Payable (Material) process is very important. The person who has to pay the sum of amount to vendors in specific period as well as specific account, then it is called as Accounts Payable. This amount is paid on inventory, raw material for manufacturing any products etc.

2.

Accounts Payable (Services):-

Generally, one has to use the services with the help of Electricity bill, Water bill and Telephone bill etc. These services are nothing but Invisible services. It is one type of Invoices which is included in Goods Inwards Note (GIN). In case of any company or organization there are services like Purchasing of software, Gardening, Training, Transportation, Maintenance, Certify bill, Chassis transportation, Internal Travelling etc. All these services are Accounts Payable (services). Certification of all the services is must. Certifications of all the services are manual. In

- 30 -

Autoline, payments for over 200 different types of services are availed by various department or locations. Finance department processes the receipt of paper invoices from the services provider & certification by the agency availing the services.

6.1.1 INTRODUCTION OF ACCOUNTS PAYABLE SYSTEM


Account is formal record that represents in words, money or other unit of measurement, certain resources, claims to such resources, transactions or other events that result in changes to those resources and claims & Payable means amount owed to a creditor for delivered goods or completed services. Hence Accounts Payable means nothing but an expense that has been incurred but not yet paid. Accounts payable is a file or account that contains money that a person or company owes to suppliers, but has not paid yet (a form of debt). When you receive an invoice you add it to the file and then you remove it when you pay. Thus, accounts payable is a form of credit that suppliers offer to their purchasers by allowing them to pay for a product or service after it has already been received. The accounts payable process has a significant impact on the profits of a business.

.
- 31 -

6.1.2 MEANING AND DEFINITIONS OF ACCOUNTS PAYABLE


According to Financial Dictionary;
Money owed to suppliers An expense that has been incurred but not yet paid

According to Don Hofstrand, An amount owed to a supplier for goods or services purchased on credit; payment is due within a short time period, usually 30 days or less.

According to Berenson LLP Certified Public Accountants, Accounts Payable is the obligation that a business owes to its creditors for buying goods or services i.e. it is the unpaid invoices, bills or statements for goods or services rendered by outside contractors, vendors or suppliers. Accounts Payable is sometimes referred to as "Payables". Accounts Payable is also used to refer to the unit within an organization's accounting department that manages these payments. The Accounts Payable unit often oversees a variety of tasking which may include authorizing purchase orders, collecting credit card receipts, organizing account withdrawals, and keeping the general ledger, and auditing expense reports. Other accounting transactions that an organizations accounting department may manage include, accounts receivable which focuses on the billing of customers and payroll which focuses on paying the organization's employees. The job of the Accounts Payable administrator is a serious responsibility. Paying bills on time and according to the specific terms and conditions can affect company credit ratings and ultimately business relationships. Commonly, a supplier will ship a product, issue an invoice, and collect payment later, which creates a cash conversion cycle. A period of time during which the supplier has already paid for raw materials but hasn't been paid in return by the final customer. Certain companies, most famously Dell have been able to profit handsomely by reversing the conversion cycle. They
- 32 -

receive payment before they ship the product. Instead of granting credit to their customers, they receive it from them. The firm may delay payment for materials and production of sold output (sales). This will cause Accounts Payable (suppliers credit) to increase. Since Accounts Payable is included in expenses, they overstate actual cash payments. Thus, increase (or decrease) in Accounts Payable should be subtracted from (or added to) expenses for computing actual cash payments. The powerful Accounts Payable library of accounting and reporting features facilitates rapid entry of vendor invoices, flexible cash disbursement and full check reconciliation using Bank Services. Expense administration is usually closely related to Accounts Payable. Accounts Payable makes it easier to manage the detailed information that the company requires.

- 33 -

6.1.3 ROLE OF ACCOUNTS PAYABLE SYSTEM IN THE ORGANIZATION


The Accounts Payable system controls the disbursement of funds to outside organizations. As part of this process, it retains subsidiary ledger information for thousands of vendors and thus becomes a vital tool, providing management with an abundance of information relating to vendor activity. Effective and efficient Accounts Payable processing is important for several reasons:
1. The Accounts Payable system is one of the main sources of general ledger activity. 2. Because of the disbursement of funds, Accounts Payable is a likely place for fraud to occur. 3. The relationship between customer & supplier can be greatly influenced by the Accounts Payable services. 4. The nature of the Accounts Payable system makes it a prime target for periodic auditing.

The primary role of the Accounts Payable system is to process payments to vendors for both trade and administrative payables. In addition to this, most businesses use the system as a centralized disbursement system for paying other demands such as customer refunds or employee expense advances.

6.1.4 OBJECTIVES OF ACCOUNTS PAYABLE SYSTEM

The Accounts Payable process has a significant impact on the profits of a business. Companies spend huge amounts of money every year to process invoices, perform purchase order matching, address defects and respond to vendor inquiries. If the Accounts Payable system is not effective, a company has to bear the additional cost of late payment penalties, missed

- 34 -

discounts, duplicate payments and rework. With an increased focus on cost reduction and improved fiscal management, executive management teams are realizing the benefits of an effective Accounts Payable process. The Accounts Payable system is a totally integrated and consistent sub-system of the general ledger system.

1. Maintain good relationship with supplier: Flexibility is critical to meet the unique needs of the suppliers and Accounts Payable provides the tools to help to build and maintain efficient, personalized supplier partnerships. Whether a supplier prefers electronic funds transfers (EFTs), drafts or paper cheques. It supports individual payment terms and ensures the recognition of preferences. One can handle prepayment, specific information, and multicurrency payments requests and can also save time of the suppliers. 2. Establish Prompt and Efficient Invoice Processing: Accounts Payable has the flexibility to meet the unique business requirements, whether it is processing multiple recurring invoices or high-dollar prepayments. The system automatically calculates taxes, discounts, and currency conversions based on preconfigured specifications. This capability enables to take full advantage of discounts and make payments to the suppliers according to their terms without interrupting the Accounts Payable process. 3. Manage Cash Effectively: An effective cash management approach takes maximum advantage of discounts while maintaining suppliers preferred payment methods. Accounts Payable allows to consider a virtually unlimited number of variables before submitting payment to a supplier, including due date, discount offered and amount of cash on hand. Payment of vouchers, whether automatically or manually the result is always controlled, efficient and accurate. Accounts Payable handle the payments or selects vouchers for manual, split, or partial payments based on current cash requirements by organizing the vouchers. On a supplier-bysupplier basis, online inquires allows to review information quickly, such as balances
- 35 -

forward and open items, before authorizing payments. Accounts Payable provides timely and accurate information on cash flow, ageing information, and discount opportunities. Online access to real-time supplier information, payment history, and vouchers, enables to improve supplier relationships, negotiate better contracts and control cash flow.

6.2 PURCHASE PROCEDURE


Established the need for procuring

Quotation

Order

Secreting order

Follow up with supplier

Receiving and inspection

Storage and record keeping

Invoicing and payment

- 36 -

6.3 PROCUREMENT TO PAYMENT PROCESS

START

VENDOR MASTER CREATION IS UPDATED WITH DETAILS OF VENDOR

PURCHASE ORDER IS RAISED & RATES OF MATERIALS ARE FIXED

MATERIALS RECEIVED IN AUTOLINE INDUSTRIESLTD.

EXCISE POSTING

STORES CONFIRMATION

INVOICE DATA ENTRY

INSPECTION OF MATERIAL

- 37 -

INVOICE VERIFICATION

UTILIZATION OF MATERIAL

INVOICE VERIFICATION

INCORRECT

THEN THE BILL GOES IN ERROR

INVOICE PROCESSED

MANUALLY CORRECTED & THEN PROCESSED

PAYMENT RUN (Payment made to vendor/bank)

NORMAL PAYMENT
- 38 -

ADVANCE PAYMENT

HUNDI PAYMENT

Local cheques Cheque generated on due date which is handed over to bank.

A/C to A/c transfer END

6.4 THE MATERIAL FLOW PROCESS


The effectiveness of flow system is largely dependent upon the organizations ability to control quantity and location movement of the materials and to a large extent, decision quality and decision information available at a time when needed, quickly and readily.

Material flow Process of product Assembly Front Floor.

- 39 -

In the production of the Assy Front Floor the material passes through the various stages. First the material goes to the inspection process and after that pressing assembly spot welding restrict on press machine after that the material goes on CO2 welding then the material goes to semi finished goods and finished goods. When the all these process completed then the material goes to packing and dispatch the material.

6.5 METHODS OF PAYMENT


1. Advance Payment: -

Under this method the half amount is paid to the supplier before the goods are received according to the terms and conditions mentioned in the purchase order. The remaining amount is paid after the goods are received or as mentioned in the purchase order.
2. Hundi Payment: -

Under hundi payment the bill is discounted i.e. the payment is to be made in short period and no credit days are being given by the supplier.
3. LC payment (Letter of Credit):- 40 -

This method of payment is used for large amount of material. LC is the letter of credit i.e. the confirmation given by the buyers bank to the sellers bank that they will make the payment after the receipt of documents.
4. SIDBI payment: -

This method of payment is used for small scale industries. The raw material purchased from small scale industries are paid through SIDBI bank.
5. Import payment: - Import payment includes various terms. They are i. Advance Payment: - Under advance payment the whole amount is paid to the supplier before the goods are received. The drawback of this method is seller may not send the goods or send them late.

ii.

LC (Letter of Credit): - Letter of credit is the confirmation given by the buyers bank to the sellers bank that they will make payment only after the receipt of original documents. They are of two types:

a)

LC at Sight:- Under this method the buyer receives the goods only after the payment is made. The payment made by the buyer is done immediately only after the receipt of the original document from the seller.

b)

LC at 60 days: - Under this method the buyer makes the payment after the bill of lading date .The payment limit is maximum to 180 days.

iii.

DP (Documents against Payment):- Under this method the payment is done by the buyers bank only after the receipt of original documents. The main drawback of this method is no credit period is allowed to the buyer.

- 41 -

iv.

DA (Documents against Acceptance):- Under this method the buyers bank makes the payment only after the acceptance of the goods by the buyer to the seller.

6.5.1 GENERAL PROBLEMS FACED DURING PAYMENT


1. No proper process followed while doing calculations. 2. Improper method of bill passing. 3. No Segregation of bills. 4. Unavailability of funds for making payments. 5. Improper Data entry. 6. Changing of bank leads to Non Payment of clients and is time consuming procedure.

6.8 ACCOUNTS PAYABLE PROCESS


Sr No
1 2

Process Description
As Purchase Department has presence at each plant, the Purchase Orders (POs) are prepared at each plant level. POs are made for every type of purchase. These Pos include Pos for Raw Material, Bought-Out Items, Consumables and other material and nonmaterial Purchases. Copy of each PO is sent to Accounts Department based at Chakan Plant II. Based on these POs, supply is affected by the vendors. At each plant an Inward Register is maintained by the Security Department to record the inward entry of every receipt of material. Material received is inspected by Quality Department Goods Inward Note (GIN) is prepared by Stores Department located at each plant for inward of accepted quantity of material. Quantitative records are maintained in separate computerized package by the name
- 42 -

Accounting Entry

3 4 5 6 7

MMS. This is not integrated with Tally Accounting System 8 Separate Excise Records are maintained at each plant to avail input credit 8 on account of excise and service tax. Relevant excise returns are filed by Excise Department. Copies of all GINs prepared by stores Department at each plant are sent to the Accounts Department along with the Challans and Invoices of the vendors. All GINs received are checked by the Accounts Department to ensure completeness of the receipts of such GINs along with the Challans and Invoices of the vendors Any deficiency in the paper work as mentioned in 10 above is communicated to the respective plant. GINs and Challans received without accompanying suppliers invoices are kept in separate file till such invoices are received. In case of new vendors, new vendor / supplier accounts are opened in Tally in the appropriate accounting group. After scrutinizing the GINs, Challans and relevant invoices, accounting entries are passed to book the relevant purchase / expenditure in the Tally. Such entries are booked plant wise. 9

10

10

11 12 13 14

11 12 13 RM Purchase A/c Dr Excise Input Credit Dr Cess /SAH Cess Dr Vat Input Dr To Vendor A/c Cr

15

In Case of short quantity accepted than the invoiced quantity, the invoices are adjusted accordingly and appropriate accounting entries are booked. In case there is no intimation from Stores Department of short quantity received, then the suppliers invoices are adjusted accordingly. Return of material purchasing is routed through sales invoicing. Vendor A/c Dr To RM Purchase A/c
- 43 -

16 17

Cr To Input Cr Excise Credit

To Cess/ SAH Cess Cr To Vat Input Cr 18 In case of rate difference billing, additional credit is passed on to the suppliers on the basis of supplementary invoices raised by them based upon the relevant amendment to the original POs. Vendor A/c Dr To RM Purchase A/c Cr Excise Input Credit Dr Cess/ SAH Cess Dr Vat Input Dr To Vendor A/c Cr

19

In case the rate charged by the vendors is found to be in excess of what should have been charged (by them), an analysis of quantity received is carried out and debit notes are raised on the vendors with retrospective effect. However, while passing the accounting entry Excise and cess thereon are excluded.

Vendor A/c Dr To RM Purchase A/c To Vat Input A/c T

20

For the purpose of booking an accounting entry for capital puruschases/ expenditure, the procedure with respect to PO, GIN, and Bill booking is followed.

CG Purchase A/c Dr Excise Credit Dr Input (CG)

Cess /SAH Cess Dr


- 44 -

Vat Input (CG) Dr To Vendor A/c Cr 21 Bill Passing is done in Tally & payment made. Vendor A/c Dr To Bank A/c 22 For the purpose of booking Administrative expenses and Purchase of Non- stock items, either PO copies or contract copies are received from respective department along with the original bill/ invoice of the vendor duly approved by the respective department. While booking such bills /invoices, TDS is deducted in applicable cases. Expenses A/c Dr To TDS A/c Cr To Vendor A/c Cr

20

For the purpose of booking an accounting entry for capital puruschases/ expenditure, the procedure with respect to PO, GIN, and Bill booking is followed.

CG Purchase A/c Dr Excise Credit Dr Input (CG)

Cess /SAH Cess Dr Vat Input (CG) Dr To Vendor A/c Cr 21 Bill Passing is done in Tally & payment made. Vendor A/c Dr To Bank A/c 22 For the purpose of booking Administrative expenses and Purchase of Non- stock items, either PO copies or contract copies are received from respective department along with the original bill/ invoice of the vendor duly approved by the respective department. While booking such bills /invoices, TDS is deducted in applicable cases. Expenses A/c Dr To TDS A/c Cr To Vendor

- 45 -

A/c Cr

23

For the purpose of booking of the employees salaries and wages, salaries and wages sheet [Showing the details of gross amount of salaries and wages, various deductions (Statutory and other deduction) including TDS (which is computed by accounts department) in case of each employee] duly approved by HR Department is received by the Accounts department. Based on this information, an appropriate accounting entry is booked.

Salary/Wages A/c Dr To TDS on Salary/Wages A/c Cr To Statutory Deduction Payable A/c Cr To Loans Payable A/c Cr To Payable Cr LIC A/c

To Employee Advances A/c Cr To Salary/ Wages Payable A/c Cr 24 Disbursement of net salary/ wages payable takes place through direct credit to the employees bank accounts Salary/ Wages Payable A/c Dr To Bank A/c Cr 25 Payment of statutory deductions and loan repayments are booked through Various Statutory bank payment entry Deductions/Lo ans Payable A/c Dr

- 46 -

To Bank A/c 26 Request / intimation are received from the Stores department to make payment of Excise Duty under PLA. Based on such request /intimation, payment is made PLA ED A/c Dr Cess/SAH Cess A/c Dr To Bank A/c Cr 27 28 Vat Working and Vat Payment Cash is withdrawn for incurring petty cash expenses. Petty cash expenses are settled through this cash balance Petty cash A/c Dr Expenses A/c Dr To Petty Cash A/c Cr 29 Payments effected through RTGS/ Electronic Fund Transfer System Party / Vendor A/c dry To Bank A/c Cr

- 47 -

DATA ANALYSIS INTERPRETATION


7.1 Data for outstanding payment

Table No.1 Table showing the outstanding payment for the past 3 years

Outstanding payment (Fig. in cr.) Year


2006-07 2007-08 2008-09

Purchase
14.03 16.37 20.17

Graph No.1

- 48 -

INTERPRETATION:From the above graph we can interpret that the outstanding payment are increasing from the past three years. This is due to the non-payment to the suppliers and the credit period allowed by them. As the credit period allowed are (30 days, 60 days, 90 days) according to the terms and conditions mentioned in the Purchase Order.

7.2 Data for purchase & payment of raw material

Table No.2 Table showing the purchases & payment of Bhushan Steel Ltd.

BHUSHAN STEEL LTD. (Fig. in cr.) YEAR 2007-08 2008-09 2009-10 PURCHASES 67.52 78.85 93.82 PAYMENT 45.87 65.72 72.77

Graph No.2

- 49 -

INTERPRETATION:From the above graph we can interpret that the purchases of raw material made from Bhushan Steel Ltd. are increasing every year and accordingly the payment also, but the payment is not equal to the purchases due to the credit period allowed to them.

Table No.3 Table showing the purchases & payment of Essar Steel Ltd

ESSAR STEEL LTD. (Fig in cr.) YEAR 2007-08 2008-09 2009-10


- 50 -

PURCHASES 57.85 75.77 84.75

PAYMENT 45.82 57.85 64.61

Graph No.3

INTERPRETATION:From the above graph we can interpret that the purchases of raw material made from Essar Steel Ltd. are increasing every year, but the payment is not equal to the purchases due to previous outstanding.

TATA STEEL LTD. (Fig. in cr.) YEAR 2007-08 2008-09 2009-10 PURCHASES 79.58 85.74 106.29 PAYMENT 68.75 65.78 87.55

- 51 -

Table No.4 Table showing the purchases & payment of Tata Steel Ltd

Graph No.4

INTERPRETATION:- 52 -

From the above graph we can interpret that the purchases of raw material made from Tata Steel Ltd. are increasing every year, but the payment is not equal to the purchases due to previous outstanding.

7.3 Data for purchase &payment of Bought out

Table No.5 Table showing the purchases & payment of Automobile Corporation of Goa
AUTOMOBILE CORPORATION OF GOA (Fig. in cr.) YEAR 2007-08 2008-09 2009-10 PURCHASES 15.87 25.4 42.32 PAYMENT 15.87 20.58 32.84

Graph No.5

- 53 -

INTERPRETATION:From the above graph we can interpret that the purchases of Bought out made from Automobile Corporation of Goa are increasing every year, In the year 2007-2008 the purchase and payment are equal as there were no outstanding and as compared to the raw material the price of bought out are less and the requirement is also in small quantity as per the size ordered.

Table No.6 Table showing the purchases & payment of Ayush Ferro Craft

AYUSH FERRO CRAFT (Fig. in cr.) YEAR 2007-08 2008-09 2009-10 PURCHASES 85.72 10.58 14.75 PAYMENT 83.78 10.38 13.75

Graph No.6

- 54 -

INTERPRETATION:From the above graph we can interpret that the purchases of Bought out made from Ayush Ferro Craft are decreasing in the year 2008-09 as compared to purchase made in the year 200708 , and then there is gradual rise in the purchase as well as the payment. This is due to the less requirement of bought out and small quantity of bought out were ordered.

Table No.7 Table showing the purchases & payment of Avanti Enterprises AVANTI ENTERPRISES (Fig. in lakhs)
YEAR 2007-08 2008-09 2009-10 PURCHASES PAYMENT

4.25 4.57 5.27

3.45 4.25 4.87

Graph No.7

- 55 -

INTERPRETATION:From the above graph we can interpret that the purchases of Bought out made from Avanti Enterprises are increasing every year. This is due low price of bought out as compared to the raw material and the requirement is also in small quantity as per the size ordered.

Table No.8 Table showing Sales turnover of the company of last 3 years

YEAR 2006-07 2007-08 2008-09

TURNOVER

(Millions)
2133.3 3814.5 3831.57

Graph No.8

- 56 -

INTERPRETATION:The above graph shows us the growth made by the company. In the year 2007-08 turnover of the company increased by 78.80% to Rs 3814.50 million as compared to 2006-07, similarly in year 2008-09 the turnover 0.44 % to 3831.57 millions. This is due to the increasing demand for the auto components by the automobile manufacturing companies.

Table No.9 Table showing category wise market share in 2008-09


Category (Fig in lakhs) Passenger Vehicles Commercial Vehicles Three Wheeler Two Wheeler Grand Total 2006-07 13.8 4.67 4.03 78.72 101.22 2007-08 15.49 4.9 3.64 72.49 96.54 2008-09 15.51 3.84 3.49 74.37 97.23

Graph No.9

- 57 -

INTERPRETATION:The above graph shows the category-wise market share of the vehicles in the year 200809. The growth rate for the commercial vehicles is decreased as compare to the earlier years. This is due to the global slowdown of car sales in U.S, European Unions, Asian car markets which is affecting the Indian Auto Components Industries and also due to the significant challenge from the cheap Chinese products.

- 58 -

WORKING CAPITAL RATIOS AND ITS INTERPRETATION


1) POSITION OF CURRENT RATIO:FORMULA

TOTAL CURRENT ASSETS CURRENT RATIO= -------------------------------------------TOTAL CURRENT LIABILITIES


(Resin laths)

RATIO 31.03.06 CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO 2284.39 1427.23 1.60 31.03.07 7586.55 2990.96 2.54

YEARS 31.03.08 7968.19 3755.44 2.12 31.03.09 7414.8 4411.97 1.68 31.03.10 9781.5 6541.17 1.50

TABLE NO-7.01

ANALYSIS THROUGH CHART:

Currentratio
5 4.5 4 3.5 e l t i T s i x A 3 2.5 2 1.5 1 0.5 0 Current ratio 2006 4.3 2007 2.5 2008 3.5 2009 4.5 2010 1.5

- 59 -

GRAPH NO. 7.01

INTERPRETATION:This ratio reflects the financial stability of the enterprise. In general the standard of the normal ratio is 2:1 but in most of companies standard is taken according to Tendon Committee which is taken as 1.33:1. Now if we analyze the five years data it can be predicted that it holds a stable position all throughout period but it is seen that it holds a high position than the standard one and the company is required to minimize its extra investment. In the year 2010 company maintain ratio 1.5:1 it is standard as per the tendon committee.

2) POSITION OF LIQUID RATIO:-

FORMULA (CURRENT ASSETS STOCK) LIQUID RATIO = -------------------------------------------(CURRENT LIABILITIES BANK OVERDRAFT)
(Rs. in laths)

RATIO 31.03.06 CURRENT ASSENT STOCK


- 60 -

YEARS 31.03.07 7586.55 3676.73 31.03.08 7968.19 1916.09 31.03.09 7414.8 2111.72 31.03.10 9781.5 2530.58

2284.39 1271.12

CURRENT LIABILITIES BANK OVERDRAFT LIQUID RATIO

1427.23 851.31 1.76

2990.96 720.91 1.72


TABLE NO. 7.02

3755.44 810.29 2.05

4411.97 583.71 1.39

6541.17 4536.20 3.62

\ ANALYSIS THROUGH CHART:

- 61 -

L IQUIDRA TIO
4 3.5 3 e l t i T s i x A 2.5 2 1.5 1 0.5 0 LIQUID RATIO 2006 1.76 2007 1.72 2008 2.05 2009 1.39 2010 3.62

GRAPH NO. 7.02

INTERPRETATION:Liquid ratio establishes a relationship between liquid asset and current liabilities. Liquid ratio measure the ability of the firm to meet its short-term as and when due. Generally a quick ratio of 1:1 is considered to be a satisfactory ratio. It is almost same in the year 2006 to 2009.It is largely increased in the year 2010 Means the company has highest liquidity power in this year.

3) POSITION OF AVERAGE STOCK RATIO:-

FORMULA
- 62 -

(OPERATING STOCK + CLOSING STOCK) AVERAGE RATIO = ----------------------------------------------------------------------2


(Rs. in laths)

YEARS RATIO 31.03.06 OPERATING STOCK CLOSING STOCK AVERAGE RATIO 798.94 1062.54 930.74 31.03.07 1062.54 3445.43 2253.99 31.03.08 3445.43 1804.94 2625.19 31.03.09 1804.94 1859.88 1832.41 31.03.10 1859.88 2282.43 2071.16

TABLE NO. 7.03

ANALYSIS THROUGH CHART:-

Averag Ration e
5000 4500 4000 3500 3000 2500

e l t T s i x A

2000 1500 1000 500 0 Average Ration 2006 1330.21 2007 2785.26 2008 4347.9 2009 2734.88 2010 3001.1

GRAPH NO. 7.03

It indicates the speed with which the inventory is converted into sales. In general high ratio indicates efficient performance since an improvement in the ratio shows that either the same volume of sales has been maintained with a lower investment in stocks.

- 63 -

In the above table it is seen that the ratio shows the almost equal trend but in the year 2008 it shows a highest position. It is almost double than the year 2005.

4) POSITION OF INVENTORY TO WORKING CAPITAL RATIO:-

FORMULA INVENTORY INVENTORY TO WORKING CAPITAL RATIO= ------------------------------------------------WORKING CAPITAL


(Rs. in laths)

YEARS RATIO 31.03.06 INVENTORY WORKING CAPITAL INVENTORY WORKING RATIO 1271.12 857.16 31.03.07 3676.73 4595.59 0.80 31.03.08 1916.09 4212.75 0.45 31.03.09 2111.72 3002.83 0.70 31.03.10 2530.58 3240.33 0.78

TO 1.48 CAPITAL

TABLE NO. 7.04

- 64 -

ANALYSIS THROUGH CHART: .GRAP


H NO. 7.04

INVENT ORYT WORK O INGCAPIT RA AL TIO


1.6 1.4 1.2 e l t i T s i x A 1 0.8 0.6 0.4 0.2 0 INVENTORY TO WORKING CAPITAL RATIO 2006 1.48 2007 0.8 2008 0.45 2009 0.7 2010 0.78

INTERPRETATION:Inventory to working capital ratio shows the amount required for inventory with the ratio of working capital. Amount employed in the inventory for the purpose of working capital. In the above table it is seen that in the year 2006 it require a highest inventory. But in the year 2007 to 2010 almost a equal trend. In the year 2007 it decreased to 50%In the year 2006 and 2007 almost same.

5) POSITION OF SALES TO WORKING CAPITAL RATIO FORMULA SALES SALES TO WORKING CAPITAL RATIO= --------------------------------------------- 100 WORKING CAPITAL

(Rs. in lakhs)

- 65 -

YEARS RATIO

31.03.06 18353.7 857.16 2141.22

31.03.07 31.03.08 31.03.09 23407.3 3002.83 779.51 31.03.10 27961.0 3240.33 862.91 26662.7 4595.59 580.18 23407.3 4212.75 555.63

SALES WORKING CAPITAL SALES TO WORKING CAPITAL RATIO

TABLE NO. 7.05

ANALYSIS THROUGH CHART:

S EST WORK AL O INGCAPIT RA AL TIO


2500 2000 1500

e l t T s i x A

1000 500 0 SALESTO WORKING CAPITAL RATIO

2006 2141.22

2007 580.18

2008 555.63

2009 779.51

2010 862.91

GRAPH NO. 7.05

INTERPRETATION:-

- 66 -

This ratio shows the relation of sales with the working capital. Amount of sales generated by employing working capital. In the above table it seen that in the year 2006 it shows highest position. In the year 2007 to 2010 it is almost shows equal trend.

6) POSITION OF WORKING CAPITAL TURNOVER RATIO FORMULA SALES WORKING CAPITAL TURNOVER RATIO= -----------------------------------------------------WORKING CAPITAL
(Rs. in lakhs)

YEARS RATIO 31.03.06 SALES WORKING CAPITAL 18353.7 857.16 31.03.07 26662.7 4595.59 5.80 31.03.08 23407.3 4212.75 5.56 31.03.09 23407.3 3002.83 7.80 31.03.10 27961.0 3240.33 8.63

WORKING CAPITAL 21.41 TURNOVER RATIO

TABLE NO. 7.14

ANALYSIS THROUGH CHART:


- 67 -

WORK CAPIT TURNOVERRA ING AL TIO


25 20 15

e l t T s i x A

10 5 0 WORKING CAPITAL TURNOVER RATIO

2006 21.41

2007 5.8

2008 5.56

2009 7.8

2010 8.63

GRAPH NO. 7.06

INTERPRETATION:This ratio establishes a relationship between net sales and working capital. It indicates the velocity of the utilization of net working capital. This ratio indicates the number of times the working capital turned over in the course of year. In the above graph it is seen that in the year 2006 it shows highest ratio. It is largely decreased in the year 2007. And from there it shows almost equal trend. It indicates the firms ability to generate sales per rupee of working capital. Higher the ratio shows the efficient management and utilization of working capital. Means in the year 2006 company has efficient management and effective utilization of working capital.

7) POSITION OF CURRENT ASSET TURNOVER RATIO


FORMULA - 68 -

NET SALES CURRENT ASSET TURNOVER RATIO = ------------------------------------TOTAL CURRENT ASSETS YEARS

RATIO

31.03.0 6 18353.7 2284.39 TURNOVER 8.03

31.03.07

31.03.0 31.03.08 9 23407.3 7968.19 2.94 23407.3 7414.8 3.16

31.03.10 27961.0 9781.5 2.86

NET SALES CURRENT ASSETS CURRENT RATIO ASSETS

26662.7 7586.55 3.51

TABLE NO. 7.7

ANALYSIS THROUGH CHART

CURRENTAS ETSTURNOVERRA S TIO


9 8 7 6 5

e l t T s i x A

4 3 2 1 0 CURRENT ASSETS TURNOVER RATIO 2006 8.03 2007 3.51 2008 2.94 2009 3.16 2010 2.86

GRAPH NO. 7.7

INTERPRETATION:- 69 -

This ratio reflects the relationship between current asset & net sales which shows that exactly how many times current assets is of net sales. From the above table & chart we see that ratio is increased in 2006 & 2008 then fractionally decreased in 2007 & 2008 as compared to previous year. This ratio is high due to huge capital is invested in inventories.

8) POSITION OF RECEIVABLE RATIO IN AIL RATIO FORMULA DEBTORS RECEIVABLE RATIO = ---------------- * 365 SALES
(Rs. in lakhs)

YEARS RATIO 31.03.06 DEBTORS SALES RECEIVABLE RATIO 576.33 18353.7 11.46 31.03.07 1090.88 26662.7 14.93
TABLE NO-7.08

31.03.08 1962.87 23407.3 30.61

31.03.09 2103.26 23407.3 32.80

31.03.10 3037.78 27961.0 11.46

ANALYSIS THROUGH CHART: -

- 70 -

Am ount(in lakhs)
35 30 25 20

e l t T s i x A

15 10 5 0 Am ount (in lakhs) 2006 11.46 2007 14.93 2008 30.61 2009 32.8 2010 11.46

GRAPH NO. 7.08

INTERPRETATION: Generally a low debtors turnover ratio implies that it considered congenial for the business as it implies better cash flow. The ratio indicates the time at which the debts are collected on an average during the year. Needless to say that a high Debtors Turnover Ratio implies a shorter collection period which indicates prompt payment made by the customer. Now if we analyze the five year data we can say that it holds a good position while receiving its money from its debtors. The ratios are in an increasing trend, which implies that recovery position is good and company should maintain these positions. In the year 2008 and 2009 the ratio is highest and it is largely decreased in the year 2010.

9) POSITION OF DEBTORS TURNOVER RATIO


FORMULA

- 71 -

CREDIT SALES DEBTORS TURNOVER RATIO = ------------------------------------------------------------------(AVERAGE DEBTORS + BILLS RECEIVABLE)


(Rs. in lakhs)

RATIO

YEARS 31.03.06 31.03.07 21003.19 833.61 1090.88 10.91 31.03.08 30229.03 1526.87 1962.87 8.66 31.03.09 26319.42 2033.06 2103.26 6.36 31.03.10 30212.45 2570.52 3037.48 5.39

CREDIT SALES AVERAGE DEBTORS BILLS RECEIVABLE DEBTORS RATIO

11132.57 427.01 576.33

TURNOVER 11.10

TABLE NO. 7.9

ANALYSIS THROUGH CHART:

DEB ORSTURNOVERRA T TIO


12 10 8 6

e l t T s i x A

4 2 0 DEBTORS TURNOVER RATIO 2006 11.1 2007 10.91 2008 8.66 2009 6.36 2010 5.39

INTERPRETATION

- 72 -

This ratio shows the relationship between net credit sales and average trade debtors. Ratio determines the efficiency with which the trade debtors are managed. It indicates the number of times the debtors are turned over during the year. Generally the high value of debtors turnover the more efficient is management of debtors. In the above table it is seen that it declining from the year 2006 to 2010.

10)

POSITION OF QUICK RATIO:-

FORMULA TOTAL CURRENT ASSETS - INVENTORIES QUICK RATIO = -----------------------------------------------------------------TOTAL CURRENT LIABILITIES
(Rs. in laths)

RATIO

YEARS 31.03.06 31.03.07 3909.82 31.03.08 6052.1 31.03.09 5303.08 31.03.10 7250.92

CURRENT ASSETS INVENTORY

1013.27

CURRENT LIABILITIES QUICK/LIQUID RATIO

1427.23 0.71

2990.96 1.31

3755.44 1.61

4411.97 1.20

6541.17 1.11

TABLE NO. 7.10

ANALYSIS THROUGH CHART: - 73 -

QUICK IQUIDRA /L TIO


1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 QUICK/LIQUID RATIO 2006 0.71 2007 1.31 2008 1.61 2009 1.2 2010 1.11

e l t T s i x A

GRAPH NO. 7.10

INTERPRETATION:It is the ratio between quick liquid assets and quick liabilities. The normal value for such ratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the firm. It indicates the relationship between strictly liquid assets whose realizable value is almost certain on one hand and strictly liquid liabilities on the other hand. Liquid assets comprise all current assets minus stock. By analyzing the three years data it can be said that its position was strong in the year 2008 but it decreased significantly in the next years and was stable during that year. In the year 2008 & 2009 it was very low to the standard and it can be said that its liquidity position on an average should be improved.

11) POSITION OF INVENTORY TURNOVER RATIO IN AUTOLINE INDUSTRIES


- 74 -

FORMULA COST OF GOODS INVENTORY TURNOVER RATIO =-------------------------------------AVERAGE STOCK

(Rs. in lakhs)

YEARS RATIO 31.03.06 COST OF GOODS AVERAGE STOCK INVENTORY TURNOVER RATIO 8584.32 930.74 9.22 31.03.07 15835.47 2253.99 7.03 31.03.08 22777.41 2625.19 8.68 31.03.09 21551.43 1832.41 11.76 31.03.10 24459.1 2071.16 11.81

TABLE NO-7.11

ANALYSIS THROUGH CHART:

- 75 -

INVENT ORYTURNOVERRA TIO


14 12 10 8

e l t T s i x A

6 4 2 0 INVENTORY TURNOVER RATIO 2006 9.22 2007 7.03 2008 8.68 2009 11.76 2010 11.81

GRAPH NO. 7.09

In the above graph we can see that year 2007 shows lowest ratio and in the year 2010 it shows highest ratio. After the year 2007 it shows increasing trend. It increase by 28.09% compare with the year 2006 to 2010. Inventory ratio indicate that in the year 2010 demand increase that is why it shows a highest ratio.In the year 2007 demand shows decreasing trend.

8. FINDINGS
- 76 -

1. The outstanding payments are increasing for the last three years as the payments to the vendors are not made in the specified credit period. 2. The payments done accordingly to the purchases made are not equal in case of raw material and bought out as the entire purchase is not utilized for processing. 3. The sales turnover is increasing due to great demand for auto components by automobile company. 4. The market share of the company for the commercial vehicles has decreased due to the global slowdown of car sales and the significant challenge from cheap Chinese products.

BIBLIOGRAPHY:
- 77 -

www.autolineind.com Autoline Industries Annual Report.

Financial Management I.M.Pandey

www.accountspayable.com

www.autolinestamping.com

www.google.co.in

REFERENCE:

- 78 -

1. Companies Annual Report 2. Economic Times 3. Books referred: I. M. Pandey, Financial Management Ninth Edition,Vikas Publishing House Pvt Ltd

ANNEXURE
PROFIT AND LOSS A/C OF AIL
- 79 -

(Rs. in lakhs) Years Sr. No A. Particulars 2006-07 2007-08 2008-09 2009-10 2010-11

INCOME Gross Sales Less: Excise Duty Net Sales Miscellaneous income 11132.57 1462.03 9670.54 9.61 21003.19 2649.49 18353.7 15.04 22.72 30229.03 3566.34 26662.69 116.22 -120.15 26319.42 2912.15 23407.27 186.56 140.70 30212.45 2251.45 27961 299.73 -3.69

Increase / decrease of finished 61.01 goods Total Income B. EXPENDITURES Raw Material Cost Other Manufacturing Expenses Employment cost Administrative Expenses Selling Expenses Miscellaneous Expenses TOTAL EXPENDITURE PROFIT OR LOSS 6160.77 1889.19 179.28 351.94 3.14 8584.32 1156.84 9741.16

18391.46

26658.76

23734.53

28257.04

12143.80 3231.57 335.38 118.18 6.55 15835.48 2555.98

17486.04 3938.38 778.29 492.83 81.87 22777.41 3881.35

15766.31 4022.42 1218.61 421.60 120.49 2.00 21551.43 2183.1

17652.34 4463.08 1439.06 497.74 404.87 2.00 24459.09 3797.95

BALANCE SHEET AIL (Rs. in lakhs)


- 80 -

Sr. No

Particulars

Years 2006-07 2007-08 2008-09 2009-10

ASSETS A. FIXED ASSETS Gross Block Less: Depreciation Net Block Capital WIP B. CURRET ASSETS LOANS & ADVANCES CURRENT ASSETS Inventories Sundry debtors Cash and Bank Balance Loans and Advances TOTAL LIABILITIES A. Shareholders funds Share Capital Reserve and surplus B. Loan Funds Secured Loans Secured Loans Unsecured Loans C. Current Liabilities and Provision Current Liabilities 127.79 232.93 269.63 418.66 312.54 111.56 301.37 86.59 806.23 376.59 944.91 527.62 81.05 134.76 103.66 903.44 109.54 1301.99 122.04 1610.79 1271.12 576.33 21.63 415.31 2284.39 367.67 109.08 140.97 140.92 1694.16 191.62 196.29 40.48 368.43 2969.89 211.17 210.33 12.02 307.95 3646.55 600.89 73.61 527.28 26.53 980.44 102.96 877.48 58.04 1712.75 145.74 1567.05 606.02 2270.44 221.58 2048.86 856.22

- 81 -

Provisions TOTAL

14.94 782.24

66.17 1694.16

105.91 2969.89

22.53 3646.55

- 82 -