CHAPTER 1

INDUSTRY PROFILE

THE INDISPENSABLE VALVE
A valve is a product rarely noticed by the average person, yet it plays an important role in the quality of our life. Each time you turn on awater faucet, use your dishwasher, turn on a gas range or step on the accelator of your car, you operate a valve. Without modern valve syatems, there would be no fresh pure water or automatic heat in your home. There would be no public utilities, and beyond wood and coal, almost no energy of any kind. Plastics would be unheard of, as would many inexpensive consumer products. A valve is a device that regulates the flow of afluid (gases, liquid, fluidized solids, or slurries) by opening, closing, or partially obstructing various passageways. Valves are technically pipe fittings, but are usually discussed as a seprate category. In an open valve, fluid flows in a direction from higher pressure to lower pressure. Valves are also found in the human body . for example, there are several heart valves which control the flow of blood in the chambers of the heart and maintain the correct pumping action. Valves are used in a variety of contexts, including industrial, military, commercial, residential, transport.

HISTORY For centuries, throughout the Dark Ages, there were no advances in valve design. Then during the Renaissance, artist and inventor Leonardo da Vinci designed canals, irrigation projects, and other large hydraulic systems, which included valves for use in these projects. Many of his technical sketches are still in existence.

The modern history the valve industry parallels the Industrial Revolution, which began in 1705 when Thomas Newcomer invented the first industrial steam engine. Because steam built up pressures that had to be contained and regulated, valves acquired a new importance. And as Newcomer’s steam engine was improved upon by James Watt and other inventors, designers and manufactures also improved the valves for these steam engines. Their interest, however, was in the whole project, and the manufacture of valves as a separate product was not undertaken on a large scale for a number of years. AUTOMOBILE INDUSTRY The history of the automobile begins as early as 1769, with the creation of steam engine automobiles capable of human transport. In the 1806, the first cars powered by an internal combustion engine running on fuel gas appeared, which led to the introduction in 1885 of the ubiquitous modern gasoline- or petrolfueled internal combustion engine. The internal combustion engine is an engine in which the combustion of fuel (normally a fossil fuel) occurs with an oxidizer (usually air) in a combustion chamber. In an internal combustion applies direct force to some component of the engine, such as pistons, turbine blades, or a nozzle. This force moves the component over a distance, generating useful mechanical energy. Applications Internal combustion engines are most commonly used for mobile propulsion in vehicles and portable machinery. In mobile equipment, internal combustion is advantageous since it can provide high power-to-weight ratios together with excellent fuel energy density. Generally using fossil fuel(mainly petroleum), these engines have appeared in transport in almost all vehicles

(automobiles. almost in variably a deflagration. and in a wide variety of aircraft and locomotives). motorcycles. production dropped 13. The hot mixture is expanded. jet angines do all steps simultaneously at different parts of the engines. Internal combustion engines can be classified by their configuration. Many engines overlap these steps in time. although a few systems involve detonation. Four stroke configuration As their name implies. boats. Two stoke configuration Engines based on the two-stroke cycle use two strokes(one up. one down) for every power stroke.5 percent to 61 million. In 2010. pressing on and moving parts of the engine and performing useful work.3 million new motor vehicles. . Exhaust: the cooled combustion products are exhausted into the atmosphere. worldwide production reached a peak of 73. operation of four stroke internal combustion engines have four basic steps that repeat with every two revolutions of the engines: Intake: Combustion mixtures are emplaced in the combustion chamber Compression: The mixtures are placed under pressure Combustion: The mixture is burnt. world markets mostly recovered. trucks. Worldwide production In 2007. In 2009.

Russia.694 units. The Detroit branch of Boston Consulting Group predicts that. Tus.632. India being the top seventh Motor Vehicle Manufacturing country has produced of about 2. . by 2014. India and China). there were about 1006 million cars and light trucks on the road in 2009. Other potentially powerful automotive markets are Iran and Indonesia. one-third of world demand will be in the four BRIC markets (Brazil. Around the world.In 2009. it can be said that valve industries have a very good future. Consumption trends About 250 million vehicles are in use in the United States.

CHAPTER 2 COMPANY PROFILE .

KML has also got well equipped classrooms with the facilities of LCDs and OHPs. The company manufactures valve of all sizes and ranges used in various vehicles like motorcycle. which are used to train the employees and trainee students. generator sets and marine engines. cars. It has got a very good transportation facilities and canteen facilities for the employees and for trainees.INTRODUCTION KAR mobiles limited manufacture valves for internal combustion engines. Aiming to achieve and sustain product excellence. . trucks. KML has corners in establishing comprehensive world class facilities for its entire range of products. railway engines. The test laboratories and other manufacturing shops are well equipped with the state-of-the-art facilities for reliable manufacturing and testing operations. defense tanks.

THEY BELIEVES IN: K-Knowledge A-Application R-Reliability M-Motivation O-Opportunity B-Brilliance I-Innovation L-Leadership E-Excellence S-Service .

Company Products 1 Kar Mobiles Limited Medium & Large (KML) Valves for diesel engines. Power generation.Rane Group – Companies Sl. Off-road vehicles &defense applications. Composite brake blocks. Limited (REVL) Tappets . 2 Rane Brake Linings Brake linings. Clutch facings 3 Rane Diecast High Pressure Limited (RDL) Casting Products Die 4 Rane Engine Valve Valves. Specialize in Locomotive. Valve Guides. Disc Limited (RBL) pads. No.

➢ This company was started in the year 1936 and was engaged in distribution of electricity. with licensed capacity of 1. Narayan laid the foundation stone on 30th August 1973 and established as private organization and started as a manufacturing unit. ➢ In 1971 this business was nationalized so the company received compensation from the government and the shareholders decided to invest in the new business activity. ➢ The company was name as “KAR Valves Limited” and incorporated in the year 1972 under India companies Act.L.5 Rane (Madras) Manual Steering & Limited (RML) Suspension Systems 6 Rane NSK Steering Energy Absorbing System Limited Steering Columns (RNSSL) Rane TRW Steering Power Steering Systems Limited Systems & Seat Belt (RTSSL) Systems 7 A. L. ➢ Mr. Aghoram was appointed as the Managing Director of the company in 1972. V. P. ➢ .BACKGROUND AND INCEPTION OF THE COMPANY Kar valves limited was born out of an electric supply undertaking in the old Maharaja’s state of cochin under the name of cochin state power and light corporation limited.5 million valves per annum. Sri.

In the year 1997. the company entered into technical collaboration with TRW inc.➢ The company commenced its commercial production in the year 1975 and the first invoice was made on 12-03-1975 to M/S. NATURE OF THE BUSINESS CARRIED It manufactures valves for all internal combustion engines. A valve is a product rarely noticed by the average person. use your dishwater. Each time you turn on water faucet. ➢ Large valves for Diesel Loco Application & Export came into focus. convert private limited.5 million to 5 million per annum. yet it plays an important role in the quality of our life. . USA. Delhi. B. This success led the company to expand its licensed capacity from 1. to upgrade its product and process technology. ➢ In 1981 the company set up a 100% export oriented unit at Tumkur. The company is one the diesel oriented unit which supplies valves for all engines both petrol and diesel and is fully equipped to support its developing market needs.

This improves resistance with consequent sliding ease.. usually operated closed or globe valves. for inlet or exhaust. or turn on a gas range. Valves are used to regulate the flow of fluids in piping system and machinery the flow phenomenon is frequently of pulsating or intermittent character and the valve.or turn on water faucet. Valves made from chrome-silicon alloy steel and exhaust from chrome-nickelsilicon alloy steel (to operate under high temperature and high stress conditions). for automatically limiting flow in a piping system. A structure in a hollow organ (like the heart) with a flap to ensure one way flow of fluid through it. Device in a brass wind instrument for varying the length of the air column to alter . system engine valves range from D-slide and piston valves to multicoated types. alternately covered and uncovered by the main piston. with its associated gear. or step in the accelerator of your car. Two-cycle engines utilize ports. contributes a timing feature. The valves commonly used in piping systems are gate valves. Many type of reversing gear have been perfected which use the same slide valve or piston valve for both forward backward rotation of an engine. use your dishwater. frequently fitted with a renewable disk and adaptable throttling operations check valves. Valves are also supplied with liquid nitrating process or hard chrome plating which increases the surface hardening the stem. To control the kinematics of the cycle. as in rail road almost exclusively in internal combustion receipt locating engines because of the demands for tightness with high operating pressures and temperatures. you operate a valve.

VISION. heavy duty engines. A testimony to the company’s commitment to quality system through.  Evolve as an institution that serves the best interest of all stakeholders. marine engines.  Well-equipped standards room with testing facilities. battle tanks.  Motto “Customer satisfaction through-on-time delivery of superior quality valves”. Agriculture/Industry/ stationery. TPM and employees involvement. Application: Engine valves for high performances locomotives. .pitch of a ton control consisting of a mechanical device for controlling the flow of a fluid. C.  Initiation like TQM. Tractors. Mission Provide superior products and service to our customers and maintain market leadership.  Ensure the highest standard of ethics and integrity in all our action.  QS 9000 Quality certificate from BVQI. Automotive passenger cars/ Light commercial vehicles/ heavy commercial cars.  Pursue excellence through total quality management.  Negligible warranty claims. MISSION AND QUALITY POLICY Vision To be highly profitable and socially responsible leading manufacturer of engine valves for customers in global markets.

 Providing training to all employees to particle total quality management and achieve continual improvement in all areas. engine valves. Concern for environment and initiatives for ISO 14000 certificate. carburetors and bimetal bearings. Quality policy KML is committed to comply with ISO/TS 16949 system requirements and improve customer satisfaction by –  Identifying and fulfilling all requirements of the clients/ customers. ➢ Electrical Parts ➢ Transmission . generators and and spark plug. D.  Complying with all applicable statutory and regulatory requirements. Starter motors. ➢ Engine parts Piston.  Operate under an environmental management system as specified in ISO 14001. fuel pumps. PRODUCTS PROFILE Product classification The auto ancillary industry can be further divided into six main segment.  Build awareness amongst all employees on environmental issues through continuous training. piston rings.

Leaf springs. wheel. Heat treatment.  Lathe cutters. Engine Valves Applications ranging from 5 H.P.  Valves are being used in engines having 5 H. steering gears and system. engines in segment such as: ➢ Agricultural/Industrial/ Stationary ➢ Marine ➢ Locomotives . brake assembly and facings. clutch plate and and disc. to 4000 H. MANUFACTURING KML has 2 world class manufacturing plants in Bangalore & Tumkur  Manufacturing valves of all sizes for internal combustion engines for automated and non – automated applications. CNC machine etc. ➢ Equipment ➢ Others Head light instruments. and dashboard ➢ Suspension breaking Sheet metal parts.  For production of these valves different sophisticated and modern equipment’s are being used such as McGrinders.P.steering Gears. pressure disc castings. shock absorbers.P to 4000 H.P. welders.

➢ Battle Tanks ➢ Farm Tractors ➢ Automotive – Passenger cars / Light Commercial vehicle / Heavy Commercial vehicles ➢ High performance cars Manufacturing capability: Min Head Dia Stem Dia Overall Length Configuration: Monometal Bimetal Friction welded Projection welded Head Finish Machine finish Forge finish Seat Hardfaced Induction Hardened Tip end Flame Hardened Induction Hardened Stellite faced MONOMETAL In Monometal only a single metal or material is used to manufacture the 18mm 5mm 50mm Max 105mm 22mm 450mm .

Material used : ➢ Low Carbon Steel ➢ Martensitic Valve Steel ➢ Austenitic Valve Steel ➢ Nickel Alloy ➢ Stainless Steel Surface Treatment : ➢ Hard Chrome Plated ➢ Tufftrided ➢ Phosphated . If any vehicles requires the valves of long length then Starting material of the valve will be of high alloy and ending material will be of low alloy. The main aim of this process is to reduce the cost of the valve. The head to tip of valve is produced using the single material. BIMETAL In Bimetal two metals or materials are used.Valve. Bimetal is used for increasing the length of the valve. This type of valve is comparatively costlier.

5 95%  The company has its network all over the globe. They have agents who market their products behalf of the company and even they sell their product directly to the customers according to their needs and satisfaction.67% 0.D.18% . Shares 979337 37500 3978 of % of share holdings 43.mt s) 2430 14000 6 Export Bangalore 5% Tumkur 40450 2200 2.72% 1. 2011 Sl. and the manufacturing process entirely takes place in India. OWNERSHIP PATTERN Pattern of shareholdings as on March 31. AREA OF OPERATIONS Location Total Built Up Production Geographic Area Valve al (Sq.mts) (million) Area(Sq. D. A B C Category PROMOTERS GOVT. No. OF KERALA BANKS No.

D. Remaining share is divided among private body corporate.91% 100 Rane Group is the main promoter of the company with 43. government of Kerala. individual and others. However there are a few large companies that have integrated their operations across the valve chain. The key to compete in this industry is through specialization by .30% 0. banks. The market is so large and diverse that a large number of players can be absorbed to accommodate buyer needs.21 43.  Rane Engine Valves Limited  Shriram Piston & Rings Limited  Auto Field Engineers  Benera Udyog  Gratco Valves Limited  Duro Valves Limited  Vikram Valves Limited The range of products manufactured with each broad product segment having different market structure and technology has neglected any possible concentration of the market in a few hands.72% share in the company. COMPETITORS INFORMATION There is several numbers of competitors of KML in the industry.D E F G  PRIVATE BODY CORPORATE NRIs & OBCs INDIVIDUALS OTHER TOTAL AND 230786 4800 983599 2240000 10.

1948. These systems are considered essential for enabling productivity in the economy. They look at these recognitions as a source of motivation that drives them to pursue higher level of performance and excellence. technical books etc. INFRASTRUCTURE FACILITIES The basic physical systems of a country’s or community’s population. etc. Developing infrastructure often requires large initial investment. Ambulance: 24 hours ambulance facilities are provided to the employees in case of any damage to employees or health upset during the working hours. journals. and articles. E. Canteen Facilities: Hygienic nutritious foods are facilitated to the employees according to standards prescribed by the organization and factories act. utilities. ACHIEVEMENTS/AWARD Award is parts of the evolution and growth of every company. sewage. including roads. Sports/Clubs: The Company has its own team of sports such as cricket team and indoor games are facilitated such as carom. table tennis. Library: A Library facility is available with books. but the economies of scale tend to be significant. D. water. with related to the company.product type and integrating operations across the related area of specialization.. They are proud of every award they have received and they greatly value the role they .

 1983 set up plant II.5 million to 5 million numbers. ➢ 1988.  1977 First exports made to RA lister &Co.5 million valves.played in transforming Kar Mobiles Limited into a high performance organization.  2000 TQM and TRM initiated. with a capacity of 1.  1988 Capacity enhanced from 1. USA.  1999 Approved by Electro Motive Division [EMD] of General Motors Corporation. a 100% EOU. USA as first vendor from India. .Excellence of export award (E&PC) ➢ 1995.ISO 9000 Certification ➢ 2001-Received QS9000/98 certification from BVQI ➢ 2004-JIPM award (Japan institute of plant maintenance) ➢ 2004-Achieving for DEMING award ➢ 2004-ISO/TS/16949 Certification ➢ 2005-06-ISO 14000 Certification MILESTONES OF KAR MOBILES LIMITED  1973 Foundation stone laid  1975 Commercial production started and made forays into OEM segment..  2001 Received QS 9000 Certification.  1995 Received ISO 9000 Certification.  1976 Developed large valves for diesel low applications.  1996 Business process Re-engineering implemented  1997 Entered into technical collaboration with TRW Inc.  1991 Promoted “ ETA Technologies ” for developing special purpose machines.

the shipping department automatically causes Systems Applications and Products(SAP) to send a bill to the customer by interchanging customer master data with the shipment data. phone numbers and references ( to name but a few ) are compiled and entered into an accounts receivable software program and/or a hard copy file is organized and stored for later use. Contract information such as names. the price of each item. The next step of accounts receivable is setting up of client account record. With the accounts receivable software. as well as instructions on where and how to send a payment. any additional fees or taxes and a due date. Penalties for missing the due date is listed on every bill. When this occurs. addresses.D. a form from the sales/credit department or whatever documentation is used to record a sale. a bill can be produced using the client account record. a sales contract. This transcation also posts to the Accounts Receivable subsidiary ledger and also to the reconciliation account. a description of the product or service.The billing to the customer may be on paper or by Electronic Data Interchange (EDI). If accounts are not . WORK FLOW MODEL Accounts Receivable Process The Accounts Receivable Process starts with the shipment of the goods to the customer. After the sale is made or the service has been provided. Bills are sent to clients on a regular basis and include such things as the date of the bill. the orders/contracts are all entered and identified by a client ID and then the bills are printed and sent to each customer. This information may come from a sales receipt.

this implies moving away from being standalone companies to entering into either contact manufacturing or being ancillary units. accounts receivables collection measures are taken. The spate of new investment plans announced by global and domestic automobile manufacturing promises the emergency of India as a global hub for auto components. As the clients send in payments are posted to the correct accounts. they have always taken a long term perspective when preparing their business strategies. FUTURE GROWTH AND PROSPECTS Looking forward. The vast market for auto components. They expected robust all-round growth in the global economy in the next 10 years. At the same time. The newly defined rules are specialized. Each payment is identified either by account number or client ID in order to be posted accurately. Among the small players in the unorganized segment.paid in full before the due date. They also believe that the global economy has more inclusive. and the diverse products and technology involved ensure a place and role for many. development and delivery that hold the key of the success in the auto component industry. E. At KAR MOBILES LIMITED. the entry of several global automobile manufacturing will bring in more regulation into the industry and see a pruning of the spurious market. the industry displays tremendous potential in generating employment and boosting entrepreneurship in country. The industry is transforming and the boost in demand will see the emergency of several new payers in industry. Countries like India and .

Their goal is to be the industry bench mark in all these area. Europe and China has positioned them to capture global growth opportunities. Their manufacturing presence in India. In view of this. should they occur. to be an end-to-end service provided to global customers and provide them with unassailable value. the US. there are critical areas like:➢ Technology ➢ Product development ➢ Customer service ➢ Human resource In which they are striving to excel.China are now poised to play a larger role in determining the course of the global economy. 3. and helping downturns. While scale of operation is an important parameter for manufacturing company like KAR Mobiles. The company in its continuous guest for excellence seeks new frontiers. McKensy’s 7S MODEL McKensy’s 7S FRAME WORK . delivering best-of-breed products that meet global quality standards and adopts innovative techniques to further improve customer services. they are very optimistic about the future. KAR MOBILES LIMITED is a 37 years old company. Since their inception they have believed in setting challenging milestone and have worked hard to achieve their goals.

The model starts on the premise that an organization is not just Structure. a very well management consultancy firm the United States.INTRODUCTION Background of the model The 7’s framework was developed by the consultants at the Mc Kensy Company. towards the end of 70’s to diagnose the course of organizational problems and to formulate programs for improvement. but consists of seven elements: .

The 7s frame of Mckensey is a value based management model that describes how one can holistically and effectively organize a company. The ‘3 ’ S across the top the model are described as “Hard S” Strategy: the plan devised to maintain and build competitive advantage over the competition. Together these factors determine how a company operates. more culture in the nature and were termed as “Soft S” by McKinsey: . Systems: the daily activities and procedures that staff members engage in to get the job done. Structure: the way the organization is structured and who reports to whom. The 4S across the bottom of the model are less tangible.

a) Overall organization structure details Level 1 Chairman (1) Level 2 President (1) . Staff: the Company’s people resources and hoe they are development trained and motivated.Skills: the capabilities and competencies that exist within the company. Style: the leadership approach of top management and the company’s overall operating approach. Shared values: the capabilities and beliefs of the company. STRUCTURE In Kar Mobiles Limited functional organization structure exists under which all employees reports to their respective head of department reports directly to the president. Ultimately they guide employees towards ‘valued’ behavior.

Level 3 General Manager/ Deputy General Manager/Senior Manager (12) Level 4 Manager/Assistant manager/Deputy manager (40) Level 5 Senior executive/Executive/Deputy Executive/ Assistant executive (180) Level 6 Staff (20) Level 7 Workmen (285) b) Substructure dealing with each functional discipline Finance department President General Manager Senior Manager .

Assistant Senior Executive Deputy Marketing department President General Manager Senior Manager Senior Manager Senior Manager Executives Office Administration Executives Field staff HR department President Senior Manager HR Senior Executive Assistant Manager(Tum .

Executives IT department President Senior In charge IT Quality Assurance department Plant Head 1 Head Plant Quality Product Audit Process Audit Raw Material Audit Gauge Room Material Labs Customer complaint s Production Planning & Control department Plant Head Operations Head PC .

In charge PPC Forge Shop In charge PPC Machine Shop Shift In charge 1 PPC Machine Shop Shift In charge 2 PPC Machine Shop Shift In charge 1 PPC Forge Shop Shift In charge 2 PPC Forge Shop Materials department President Senior Manager Materials Purchases Stores Consumable Raw Materials Sub Contracting Maintenance department Plant Head Plant Head Maintenance Utilities Shop In charge .

SYSTEMS Management system of KML is as follows: ➢ Preparation of budget for the different activities. Apart from this company continuously focus on the development of existing product as well as tries to enter in new market segment.e. financial policies. ➢ Quarterly auditing of financial records. KML continouously review and adjust the policies of different department i. .Forge Shop Machine Shop STRATEGIES Kar Mobiles Limited has maintained a good position in the value industry through its good strategies in the market. to respond the environment of business. Company is focusing more on cost reduction and inventory control in order to increase the efficiency of firm by periodically review the system of the organization. Continuously cost reduction and consistent quality helps to Kar Mobiles limited in the maintenance of good position in the valve industry. every year in the month of February for the next financial year. Human resource policies. Distribution system and Marketing Strategies etc. Kar Mobiles limited also review the management structure of the organization as well as different of departments in order to know whether to increase or decrease staff and makes new structure of top management also. Because of its innovative strategies KML is the second largest valve manufacturing company.

➢ Incentives are given on the basis of performance appraisal system only. SHARED VALUES ➢ Provide superior products and services to company’s customer and maintain leadership. Mostly male workers are there in Kar Mobiles Limited. SKILLS . ➢ Pursue excellence through total quality management. Kar Mobiles Limited’s workers belong to different geographical areas but most of them are from Karnataka state only. ➢ All major decision are takes by president subject to the discussion with Board of Director. ➢ Insurance for all employees on the basis of team.➢ Pay scale revision for the top management once in a year. STAFF Staff of KML is efficient but not highly qualified. ➢ Performance analysis report of company is prepared for every financial year. ➢ Continuous training program for the employees in its own training institute as well as outbound training. ➢ Sales of valves in replacement market through 500 dealers only spreading in all over the India. ➢ Ensure the highest standards of ethics and integrity in all actions. ➢ Pay scale revision for the employees once in four years. Kar Mobiles Limited is not a big company so there is no more opportunity for career growth. ➢ Evolve as an institution that serves the best interests of all stakeholders.

4. this helps the management to make changes with regard to these factors. SWOT ANALYSIS The SWOT analysis is the foundation for developing your strategies and tactics that then becomes the road map for writing your business operating plan. Mission and Values statement. opportunities and threats you need to:  Have a written Vision. So SWOT analysis plays an important role in comparing between the competitors. STRENGTHS ➢ High brand equity ➢ Vast dealer network and field force . weaknesses.The staff of KML can be divided into 3 categories i. Culture of KML is very open and all employees enjoy freedom at the work place. STYLE Culture of KML is very good there is a democratic environment exists within the organization.e skilled non skilled and semi-skilled. Prior to defining the company’s strengths. and problems within the company. Relationship amongst the employees and between the employees and manager is not very formal. In the some types of decision making process ideas are invited from the employees. There is less number of highly competent employees. There are lacks of multi-tasks employees and most of employees are specialized in particular area only. All employees day to day reports to the respective head if necessary and get suggestion and recommend them without any restriction.  Have completed a through internal and external business status evaluation.

➢ ➢ ➢ ➢ Capability to manufacture large valves Skilled manpower Wide range of products at industry level Experience in handling overseas customers WEAKNESS ➢ Low productivity ➢ Changing product/ market mix ➢ Poor process capability ➢ Inadequate focus on exports ➢ Poorly maintained machines ➢ Weak in technological innovation ➢ Lack of pride in workmanship ➢ Insensitivity to customers ➢ High wages cost ➢ Inadequate systems ➢ Low competencies OPPORTUNITIES ➢ Win market shares from high cost competitors in overseas market ➢ Exploit large and growing domestic two wheeler market in global outsourcing ➢ Manufacturing/trading of related engine components THREATS ➢ Dumping from china and cheaper imports from other low cost countries ➢ Strengthening of Rupee affecting exports ➢ More competition since there are no growth opportunities for MNC’s elsewhere .

CHAPTER 5 ANALYSIS OF FINANCIAL STATEMENT .

while with a higher ratio the company has money in cash or safe investments that could be put to better use in the business.85:1 Though the ideal current ratio depends to some extent on the type of business. the company is suggested to work on its Current Ratio. a general rule of thumb is that it should be at least 2:1. So.85 which can be read as 1. As the current ratio is lower the company will not be able to pay its bills on time. “Current” usually is defined as within one year.Current Ratio: Current Ratio measures the ability of an entity to pay its nearterm obligations. Inventory Turnover Ratio: . Formula: Current Ratio= Current Assets /Current Liabilities The company’s current ratio is 1.

considering its volume of sales. higher proportion of owner-supplied capital- .e. Extremely high inventory turnover will indicate a narrow selection and possibly lost sales. Debt to equity ratio: Debt to equity shows the ratio between capital invested by the owners and the funds provided by lenders. A low inventory turnover rate. and distribution of product.76 which is 76% A company is generally considered safer if it has a low debt to equity ratio i. therefore. warehousing. and may be overstocking or carrying obsolete items. Formula: Cost of Goods Sold for the year / Average Inventory The company’s inventory turnover ratio is 9. Formula: (Debt)/(Equity) The company’s Debt Equity Ratio is 0.Inventory Turnover Ratio shows how efficiently the company is managing its production. on the other hand.88 Higher ratios-over six or seven times per year-generally thought to be better. the company is suggested retain the Inventory Turnover Ratio for further years. means that the company is paying to keep a large inventory.

. Formula: (Net Profit)/ (Total Sales) The company’s Return on Sales is 8.35 times Although the ideal level for this ratio varies greatly. debt should be between 50 and 80 percent of equity. On the other hand. In general. Look at the trend from month to month.through a very low ratio can indicate excessive caution.15% Compare to other businesses in the same industry to see if the business is operating as profitably as it should be. too little debt means the company is not realizing the full potential of the business – and actually hurts the overall profitability. Is saying the same? Improving? Deteriorating? Are you generating enough sales to leave an acceptable profit? Trend from month to month can show how well the company is managing the operating or overhead costs. Formula: Net Sales/Total Assets The company’s Investment Turnover Ratio is 1. Investment Turnover Ratio: Investment turnover ratio measures a company’s ability to use assets to generate sales. Return on Net Sales: Return on Net Sales shows how munch profit comes from every rupee of sales. It can be justified that the company is using its assets efficiently. a very low figure may mean that the company maintains too many assets or has not deployed its assets well. whereas a high figure means that the assets have been used to produce good sales numbers. The company is maintaining very less Debt Equity Ratio when compared with the standards which shows that it’s playing safe.

PART B .

Receivables are typically issued by companies to reliable customers. Receivables are treated as current assets on a company’s balance sheet. are treated as a marketing tool aid the sales of goods. Receivables are entered into a company’s books when they receives an invoice for good or service provision (and not before). Accounts receivables(alternately “receivables”) are created when a customer purchases goods or services from a company but do not pay for them at the time of purchase. Management should weigh the benefits as well as cost to determine the goal of receivables management. Objectives The sales of goods on credits is an essential part of modern competitive economic systems. receivables. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period. credit sales and therefore. On a public company’s balance sheet. since they are selling their goods on credit. Instead.GENERAL INTRODUCTION THEORITICAL BACKGROUND OF THE STUDY Accounts Receivable is the money owed by a customer (individuals or corporations) to another entity in exchange for products and services that have been delivered or used. accounts receivbles is often recorded as an asset because this represents a legal obligation for the customer to remit cash for its short-term debts. the company issues an invoice for the goods or services at a later date. The objective of receivables management is to promote sales and profits until that . but not yet paid for. In fact. often at the end of the month. ranging from a few days to a year. as the invoice proves that money is legally owed to the company by an outside entity. The amount due on the invoice is considered accounts receivables for the company.

cost of capital ). The specific cost and benefits which are relevant to the determination of objectives of receivables management are examined below.point is reached where the return on investment in further funding receivables is less than the cost of funds raised to finance that additional credit (i.e. Costs The major categories of cost associative with the extension of credit and account receivables are: • • • • Collection costs Capital cost Delinquency cost Default cost Benefits of Receivables management • • • • • Increase sales Market share increase Increase in profit Enhanced customer services Control bad debts .

directing and controlling of receivables.” Statement of Problem Accounts Receivables Management means planning. • To calculate various ways in which the debtors can be managed efficiently. • To study the trends in bad debts for the last 5years. • To determine different ways in which the customer service can be increased by redefine the collection process. . Bangalore. The company is locking funds in idle assets resulting in improper cash management.TITLE OF THE STUDY “A study on account receivables management of Kar Mobiles Ltd. the study is conducted to know the accounts receivables management of Kar Mobiles Ltd. organizing. Hence. Generally. Objectives of study • To study the present receivables management procedure in the organization. account receivables refer to the total amount due and are considered in calculating the value of a business or the business’ problems in paying its own debts. Poor administering of credit policies by the company to its customers: By following a relaxed credit policy the liquidity decision is seriously affected. This problem spills into another serious issue such as longer operating cycle resulting in increased working capital requirement.

Research Methodology The system of collecting data for research projects is known as research methodology. Scope of the study The scope of study is confined to the manufacturing industry and there by suggesting ways by which an auto ancillary company such as Kar Mobiles Ltd can optimally manage its accounts receivables. • The study has been carried out with data for five years. The data may be collected for either theoretical or practical research.• To analyze the impact of present credit policy on the company. Collection of Data . For example management research may be strategically conceptualized along with operational planning methods and change management. The major purpose of descriptive research is description of the state of affairs as it exists at present. Descriptive research includes surveys and fact-finding enquiries of different kinds. Descriptive research is the type of research used in the collection of data. • Information has been collected after a study on the existing system of management of accounts receivables and also by interviewing the concerned authorities in finance department. The main characteristic of this method is that the researcher has no control over the variables. he can only report what has happened or what is happening.

The data is collected through both primary and secondary sources... company library. ○ Excepts from annual reports and other statements have been used for making the analysis ○ A study has been made on the reasonableness of credit sales of the company Sample size This study which has been carried out on accounts receivables management of Kar Mobile Ltd. previous projects. production department. etc… Tools Used Critical data with respect to accounts receivables will be analyzed by using various tools such as: Graphs – To analyze data this follows a trend or a pattern. HR department and so on… Secondary data is collected through various sources such as from company’s annual report. 2010-11 will be calculated. text books. Correlation Analysis – The data that will be collected will be analyzed in the following ways: ○ Trend Analysis: the growth of sales and the receivables position for the financial years ○ 2006-07. and has taken into consideration the entire aspect of accounts receivables of Kar Mobiles Ltd. Ratios – To analyze the various components in financial statements. Primary data is collected by approaching related personal in the finance department . internet. 2009-10. 2007-08. . 2008-09.

in total. ..therefore the sample size is Kar Mobiles Ltd. ➢ Other components of working capital management such as cash management. And the sample amount is annual report of 5 year period. ➢ The confidentiality of some facts and figures and the nonavailability of relevant information is one of the limitations. Limitation of the study ➢ The study on accounts receivables management of the company is time based. inventory management are not considered for the study.

ANALYSIS & INTERPRETATION .

Table no. 1 1.Determination of growth in sales
(‘000) Year Sales Changes in sales (37928) 183259 81943 (127977) 115527 Percentage

2006- 2007 2007-2008 2008-2009 2009-2010 2010-2011

670354 853613 935556 807579 923106

(5.35) 27.34 9.61 (13.68) 14.31

Analysis:

Interpretation:

Tables no. 2 2. Determination of growth in Accounts receivables

Year

Receivables Changes in Receivables 170703 195105 215235 163758 203691 12127 24402 20130 (51477) 39933

Percentage

2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

7.65 14.30 9.35 23.92 24.39

Analysis

3 3.03 Analysis .Table no.13) 40.18 2. Determination of growth in profits Year Profit Change in profit (12368) 5849 (18602) 21128 1496 Percentage 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 65340 71189 52587 73715 75211 15.95 (26.92 8.

27 920439 195105 4.4.72 998370 215235 4. 4 Determination of Debtors Turnover Ratio Year Gross Sales Average Debtors 170703 Times 20062007 20072008 20082009 20092010 728746 4.22 . Table no.64 855767 163758 5.

of working days 365 365 Average Collection period 85 77 2006-2007 2007-2008 4.72 .82 Analysis 5.20102011 981914 203691 4.27 4. Table no. 5 Determination of Average Collection Period Year Debtor turnover No.

2008-2009 2009-2010 2010-2011 4.82 365 365 365 79 70 75 Analysis Table no.64 5.22 4. Percentage of Debtors in total Current Assets (‘000) Year Debtors Total Percentage . 6 6.

80 Analysis .Current Assets 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 170703 195105 215235 163758 203691 317878 404977 355051 266935 393200 53.62 61.18 60.34 51.70 48.

Percentage of Debtors in total Current Assets (‘000) Year Debtors Total Assets Percentage 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 170703 195105 215235 163758 203691 479610 584637 578161 502563 679717 Analysis .Table no. 7.

Table no. Percentage of Debtors to Total Sales (‘000) Year Debtors Total Sales Percentage 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 170703 195105 215235 163758 203691 670354 853613 935556 807579 923106 .8 8.