Rasj Verma

Chapter No. 1 Executive Summary

In this project, work selected. Kirloskar oil Engines limited Khadki, Pune because it is one of the most different oil Engines Company. In this project the study of Company’s annual report through an analysis & interpretation of Treasury Management has been undertaken. The management is not satisfied with only total figures recorded in the financial statements. I want to know the financial strength of the Company such the liquidity, profitability and solvency position of the co. Treasury Management is the process of identifying the financial strength any weaknesses of the company by properly establishing relationships between the items of the balance sheet and the profit and loss account. The figures recorded in the financial statement are analysed, interrelated and then they are interpreted i.e. the conclusions are drawn.

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Chapter No. 2 PROFILE OF COMPANY

Kirloskar Oil Engines limited KIRLOSKAR OIL ENGINES LIMITED

The Kirloskar Story It has now been more than a century since the Kirloskar story started. We started with an aim of becoming the pioneers in fields in which our country needed innovation. In the 100 years and more that we have been in existence as a family and as an organisation, we've been seminal to Indian agricultural and industrial development. We gave India its first iron plough, pump and engine; inventions that were deviced from the need of the hour and went on to become signs of the time. Which is why our group history can in many ways can be considered a history of the economic and industrial revolution in India

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The first Kirloskar Group Company

Kirloskar Brothers Limited (KBL) - the first Kirloskar venture at Kirloskarvadi was to become the base for all of the Kirloskar Group’s subsequent enterprises. It began as the only Indian company with its own standard products - the fodder cutter and the iron plough, which competed with the British products. KBL also manufactured groundnut shellers, sugarcane crushers and pumps, which were to usher in a new economic order in the Indian industry. To power these machines, diesel engines, coal gas generators and electric motors were developed at Kirloskarvadi. In a display of great versatility, KBL then shifted its focus to fluid handling and control. As India's largest manufacturer of pumps and valves, and also the group's flagship company, KBL lends its strength and expertise to every new venture of the Kirloskar Group.



Playing a part in the War The intensified boycott of the British goods and the approaching World War threatened to stop imports of machine tools into India. The Kirloskar, with characteristic foresight began making machine tools. This paradigm shift of sorts, from farm implements to machine tools, created a new company - The Mysore Kirloskar Limited. This company, situated in Harihar, benefited greatly from the patronage of yet another Raja - the

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Maharaja of Mysore. In the first month of production, Mysore Kirloskar sold all of manufactured seven lathes. The new generation -Innovation, creation, tradition From colonialism to independence An important change, for the country, and for one of its premier industrial houses, the Kirloskar Group. The altered political climate of the 1940s heralded the end of the princely patronage for enterprise. The policy shifts and changes in authority were the order of the day. This marked a turning point for the group. Shantanurao Kirloskar, the eldest son of the founder travelled to Pune to initiate a new aspect of the group's activities - diesel engines. His experience of trying to secure the land for his factory in Pune was quite different from his father's in Kirloskarvadi. There was no benevolent ruler here to bestow acres gratis. Shantanurao had to face the tangle of red tape and public resistance to acquisition of land for industrial purposes. Finally, after arguing that factories have a longer life than human beings Shantanurao Kirloskar won a place for Kirloskar Oil Engines Ltd. (KOEL), twelve months after signing an agreement of collaboration with Associated British Oil Engines Export Ltd. of UK. This collaboration, incidentally, was the first of its kind between an Indian and a foreign company, and signified a bridging of the technological gap between east and west.

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The KOEL factory was incorporated in 1946, and soon after that gave India her first vertical high-speed engine. Brijlal Sarda, who reported its satisfactory running for over 4 decades, bought this first engine! To electric motors and pneumatics The making of the electrical motor. This was the second of Laxmanrao Kirloskar's long cherished dreams, the first being the making of an engine. Ravi Kirloskar brought his youngest son, this task to completion, in 1946. Way back then, the authorities whom Ravi Kirloskar had approached for land was astonished by the request for 25 acres. Today, Kirloskar Electric Company Limited (KECL) has four plants occupying several times that acreage. The dawn of a new millennium To meet the changing demands of a global business environment and emerging economic trends, the Kirloskar Group has refocused and restructured its direction by concentrating on its core segment of agriculture, water supply, power, and air conditioning. By consciously opting out of hospitality, advertising and unreal services, the Group has channeled its potential in these core sectors.

The Group aims at unlocking the strength and value in the Kirloskar brand and distribution to enhance returns for its stakeholders. It has identified and is implementing processes that would bring greater customer focus and competitiveness. Today, the Kirloskar Group is a conglomerate with interests across a diverse range of industries. It is still spurred by the simple yet profound ethic born with Laxmanrao Kirloskar

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that where there is will there are many ways. The setting up of KECL and other Kirloskar companies saw a major role being played by Nanasaheb Gurjar, a lawyer who made industry his sole area of operation. Though the development of air compressors was an established activity at Kirloskarvadi, a full-fledged plant to manufacture the same was set up at Pune in 1958, under the eventual management of Shreekant Kirloskar, Shantanurao's youngest son. In collaboration with Broom and Wade of England, Kirloskar Pneumatic Company Limited began the manufacture of air compressors and pneumatic tools. Today, its turnkey expertise is sought in almost every major industrial project in India. Collaboration with Twin Disc Inc. of the USA has taken the company into torque invertors, marine gearboxes and rail traction transmissions. A new direction - services The phenomenal success of the Kirloskar name prompted entrepreneurs and businessmen of the time to approach the group for guidance and expertise. This gave birth to the concept of formalised engineering consultancy and a new company - Kirloskar Consultants Limited (KCL) in 1963. Marking an extension of the group's repertoire from manufacturing to services, KCL, in its 25 years of operation, has contributed to critical areas such as defence, irrigation, roads and environment. This paradigm shift saw the setting up of yet another service company - Pune Industrial Hotels Limited in 1964, the Kirloskar Group's first foray into hospitality. This company set up Hotel Blue Diamond in Pune and began to manage Hotel Pearl in Kolhapur. The Baker's Basket confectionery chain and the Hotel and Catering Consultancy Services (HOCON) were also set up.

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1. The dawn of a new millennium To meet the changing demands of a global business environment and emerging economic trends, the Kirloskar Group has refocused and restructured its direction by concentrating on its core segment of agriculture, water supply, power, and air conditioning. By consciously opting out of hospitality, advertising and unreal services, the Group has channeled its potential in these core sectors. The Group aims at unlocking the strength and value in the Kirloskar brand and distribution to enhance returns for its stakeholders. It has identified and is implementing processes that would bring greater customer focus and competitiveness. Today, the Kirloskar Group is a conglomerate with interests across a diverse range of industries. It is still spurred by the simple yet profound ethic born with Laxmanrao Kirloskar that where there is will there are many ways.

HISTORY

Kirloskar oil Engines limited was formed in 1946, by late Mr. Shantanurao Kirloskar was founded Kirloskar oil Engines limited with the object of carrying on business of manufacturing and selling of all type of internal combination engines. The factory is situated on 55 acres of land in Khadki, Pune and was inaugurated on 25th April 1949.The production commenced immediately thereafter. The company secured the technical collaboration of British oil Engine (Export), now known as Hawker siddeley Brush International limited, for the period of 15 years up to 26th June 1961.

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Initially production was restrieted to small diesel engines having agriculture and industrial applications. Over the period of time, the company developed medium and large engines; The year 1954-55 was the beginning of the decade of rapid growth. The company began exporting engines to Germany, The Middle East and The Far Eastern countries.

In 1954 the company started manufacturing bearing primarily for the captive use stationary engines. In 1957,The Company entered into a technical collaboration agreement with Glacier Metal Co. Ltd. To cope-up with the increased demand, The Company launched the first phase of its expansion in 1958. In 1959-60, the company acquired Shivaji Works Ltd.as a subsidiary. The Company entered into technical collaboration agreement with French Company, e-Agro French, 1961-62, for the manufacturing of light air cooled engines of modern design in the range of 20 to60 hp: In 1970-71, The company promoted Kirloskar Kisaan Ltd., as fully owned subsidiary. In 1979, the company got the approval for collaboration agreement with Societe D’Etidues De Machines Thermiques (SEMT), France for manufacturing of pielstick engines. The agreement is valid for 13 years from 1981.In 1983-84; the Company manufactured the high power diesel engines in collaboration with SEMT Pielstick of France.

In 1989-90, the Company undertook a scheme for modernisation of the Company’s plant at pune and Ahmednagar. During 1990-91 Company undertook packaging of gas turbines for industrial power generation market in 1MW to 10MW range in association with Solar Turbines Inc U.S.A. a subsidiary of Caterpillar U.S.A.

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In early 1993 KOEL purchased the product know how and selected manufacturing line from IFA an East German Company. In late 1993 Company. Secured the ISO 9001 certificate in first go.

In 1995 - Approval from Government was received for setting up a project at Ambad, District Nasik in Maharashtra for the manufacture of 300 units per annum of heavy duty large diesel generating sets. In this connection, a technical collaboration agreement was entered into with M.A.N.B & W Diesel GmbH, West Germany.

In 2000, KOEL has been named the country's best automotive components manufacturer by the Automotive Components Manufacturers Association (ACMA) for 19992000. The Company has launched its `Gen Power 2000 Project' in Guwahati in collaboration with Assam Allied Industries.

In 2001, Kirloskar Oil Engines has launched a new range of ready-to-use gensets.

In 2003, KOEL becomes the first company in the country to achieve compliance with the Central Pollution control Board's mass emission and smoke norms.

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Business Location and Services

10

Organization Structure

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Corporate Social Responsibility:

KOEL, as has been its tradition, willingly wears its social responsibility by sustaining initiatives that support the community. Throughout the year, it organized programs to improve the status of education and health of people living in the vicinity of its premises. KOEL continues with following initiatives

: 1. HEALTH

2. EDUCATION

 Individual

 Sponsorship

• •

• •

Donation to SOFOSH and labs Financial support to orphans

 Women

•

Performance awards for school children

• •

•

School bag and raincoat distribution

Health check up camp Spectacles distribution

Women health programme Yoga camp for women

 Community • Tree plantation

 Awareness

• •

Spraying & fogging De-addiction in workshop

• •

Computer literacy for school children Livelihood programme for youth

•

Pollution check ups

•

Study visits by school and college students

•

HIV/AIDS Awareness program  Employability • Various occupational training programme for making candles, washing powder, Agarbatti, Rakhi & Papad. 3. GENERAL

• • • • •

Sport Tournament Community Gymnasium Well Reconstruction Environment program by Green peace Energy Conservation Competition

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KOEL Objectives



Kagal Project should be financially viable without considering the incentive benefits.



To recover 100% Fixed Capital Investment at Kagal within shortest possible period in terms of VAT refund (recovered on Sales and paid to GOM) from GOM. This is critical in view of KOEL’s > 90% sales being out of Maharashtra and also because of proposed CST phase out plan of the Government.



Any restructuring by KOEL should not be perceived as a device for solely availing incentive benefits from GOM.



While achieving above, follow Corporate Governance guidelines and keep intact the image and reputation of KOEL.



Restructuring, if any, should be long term. Restructured Company should be a going concern. Its existence shouldn’t end after availing of incentive from GOM.



Restructuring should be logical, justifiable and should achieve long-term business objectives. E.g. creation of customer centric organization focusing on sales and servicing of products. Price to the ultimate customer should remain the same. Creation of separate manufacturing/sales & services Company entails additional overheads, which should be offset by increased 13

Vision 2012 Will become a globally major player in off - highway engines & power generation businesses by offering winning combination of quality, cost & delivery through innovation & unmatched services. Thus, we will strive to attain amongst top ten positions world wide in selected engine businesses. While pursuing the above, we will continue to enhance the value of engine bearing & values business. Business for us is the best service, customer care and a lifelong relationship.

Mission 2012

 Over 11% profits on sales of Rs.8525 Cr.  Achieve CII Exim Business Excellence Score of 600+ points by Assessment Year 2012.



Sales turnover of Rs. 20,000 million



Profit of Rs. 2000 million



Exports at 25% of total sales

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

Increasing market share by 5% in the domestic market



1,00,000 engines per annum by 2008-2009



Process centric customer driver organization.

Kirloskar has –got market presence in all the sectors generic to the engines. i.e. Agriculture, industry and services.

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Product Profile

1982

First pielstick engine manufactured.

1984

Thyristor convertor made; Kirloskar Ebara JV established for specialisation in Pumps.

1988

Kirloskar Group completes a 100 years in operation; the Centenary year.

1991 1992 1993

Kirsons Trading Pvt. Ltd. Singapore established. Kirloskar Ferrous Industries Ltd. established. All major companies in the group receive ISO 9001 Certification. India's first Concrete Volute Pump installed in Dahanu;KOEL and KEC celebrate Golden Jubilee Merger of Kirloskar Oil Engines Limited, with Prashant Khosla Pneumatic Limited on March 1, 1996.

1996

1998 1. With t Baramati, undertakings of Poona Industrial Hotel Ltd. were sold to Taj Group of Hotels. 2. Shivaji Works Ltd., merged with Kirloskar Oil Engines Limited. 3. Kirloskar Oil Engines Limited gets ISO 14001 certification for Environment Management Systems from TUV. he stepping down of Mr. Vijay Kirloskar as Chairman and Director as on 23rd July 1998, the following took over as Chairman and Managing Directors of the respective companies: Mr. Atul C. Kirloskar, Kirloskar Oil Engines Limited. Mr. Sanjay C. Kirloskar, Kirloskar Brothers Limited.

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Mr. Rahul C. Kirloskar, Kirloskar Pneumatic Company limited. 2. Mr. Gautam Kulkarni co-opted as an additional director on the Board of Kirloskar Oil Engines Limited, and the directors appointed him as the Joint Managing Director with effect from 20th August 1998, for a period of five years. 3. Joint Venture between Kirloskar Oil Engines Limited and Denso Corporation, Japan, for the manufacture of car air conditioners and aluminium radiators for Automotive applications.

1999

1. Hotel Blue Diamond, Pune and Hotel City Inn, 4. Collaboration Agreement of Kirloskar Brothers Limited with Ebara Corporation-Japan for Hydro Turbines. 5. ISO 14001 Certifications for major plants of Kirloskar Brothers Limited and Kirloskar Oil Engines Limited. 6. All India trophy of largest exporter of pumps for 11th successive year from EEPC. Mr. Vijay Kirloskar and six companies under him separate from the Kirloskar group of Companies.

2000

2001

Launch of Kirloskar Green Power Ideas by KOEL at New Delhi on 26th Feb 2000. KBL gets order to supply concrete volute pumps worth 78 Million US Dollors to world's largest hydro-electric project : Sardar Sarovar Narmada Valley Project· Toyota Corp. Japan forms a joint venture with Kirloskars to manufacture multi-utility vehicle QUALIS. Agreement to dissolve the partnership between Kirloskar Oil Engines Limited and Briggs & Stratton Corporation, USA.

2002

Agreement to dissolve the partnership between Kirloskar Oil Engines Limited and KNECHT Filterwerke GmbH, Germany. Toyota-Kirloskar introduces its latest offering in India the luxury sedan CAMRY.

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Kirloskar Oil Engines - Industrial Engines, Epacks and Gensets for the Agriculture, Power Generation, Construction, Material Handling, Rental and Telecommunication Industries Founded in 1888, Kirloskar Group today is a multi-product, multi-location Engineering Conglomerate with annual sales exceeding $1.0 billion. We are the leader of the Indian power generation, construction, material handling & agriculture sectors. With annual sales exceeding $320 million, engine quantity exceeding 200,000 engines and rapidly growing exports to European Union, North America & China, we are India's largest manufacturer of diesel engines, both air-cooled and liquid cooled, covering a power range of 3hp to 11,000hp. Kirloskar engines conform to US as well as European Tier II emission norms. Tier-III designs are in progress. These power 80 different applications in nine distinct segments such as: agriculture, power generation, construction, material handling, earth moving, mining, offshore, fluid handling, agro industrial and defence automotive retrofits. We also manufacture over 35,000 AC generators in 5kVA to 300 kVA range.

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QUALITY AND PROCESS GEAR •

ISO 9001, QS 9000, ISO 14001 and TS 16949 certified plants

•

Self-certification status for quality systems from the Indian Army

•

Modern Emission, Research Center and NVH Lab

•

eBusiness Suite covering the entire demand-supply chain, including CRM module

ePacks FOR STAND-BY AND PRIME POWER FOR GENERATING SET OEMS

ePack is a sub assembly of engine complete with cooling package and alternator close coupled and resting on a common base-frame through anti-vibration mountings. With over 45% share of the Indian power generation segment we lead the world majors such as Perkins, Cummins, Iveco, and Caterpillar by a substantial margin. With annual volumes exceeding 55,000 gensets in the 15kVA to 300kVA range, we represent the world's largest Genset business. GENSETS FOR RENTAL, TELECOM AND CELLULAR POWER We are the first choice of global telecom OEMs and cellular service providers. A national fleet of over 45,000 Kirloskar Green Gensets ensures India's cellular network is kept ticking 19

round the clock. To just name a few cellular majors, AT&T, Airtel, Hutch, Alcatel, Idea Cellular, BPL, RPG, Essar and ESCOTEL all count on Kirloskar reliability. An active population of over 2 million engines amply demonstrates product reliability and customer acceptance in these fiercely competitive markets. GENSET AND ePacks - 15KVA / 50HZ PRIME TO 300KVA / 60HZ STAND-BY

We offer a comprehensive range of Gensets as well as ePacks to suit a wide-spectrum of end uses. These are available from 50Hz to 60Hz, with multiple voltage options, 1-Ø and 3-Ø, stationary or towable, open-skid to silent to super silent and manually operated to auto mains failure to web-enabled. LIQUID-COOLED R1040 SERIES ENGINES 28HP TO 189HP

•

Sectors: agriculture, construction and earthmoving, power, oil and gas and transport

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•

Applications: gensets, agri tractors, backhoes, loaders, excavators, forklifts, pavers, compressors, cranes, aerial platforms, harvesters and assorted pump sets

LIQUID-COOLED SL90 SERIES ENGINES 154HP TO 355HP

Sectors: agriculture, construction and earthmoving, fluid handling (fire pumps), power, oil and gas and transport •

Applications: gensets, fire pumps and compressors

AIR-COOLED HA SERIES ENGINES, THE POWER DIFFERENTIATORS, 19HP TO 120HP

•

Sectors: agriculture, construction and earthmoving, oil and gas, power, utilities and transport

•

Applications: gensets, compactors, pavers, loaders, cranes, transit mixers, agri tractors, and assorted pump sets

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In order to familiarize yourself with our product offerings and explore a sustainable business partnering in mutual interest, visit the website below or call Rajiv Bandivadekar, General Manager Strategic Businesses.

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Chapter No.3

Objectives of Study

 To study financial position of Kirloskar oil Engines Limited Khadki, Pune  To analyse and interpret financial statement of the Company.  To examine and verify liquidity, solvency and profitability position of Company.  To make suggestion, if any.

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Chapter No.4 Methodology of Research

Data collection is an essential part of a research proposal the task of data collection starts after the objective of the study and the Research Design has been decided. The Research data is generally of two types. (I) Primary Data: Oral interview of Company Finance Manager was taken to get relevant information or data from the Company. (II) Secondary Data: The study is mainly based on secondary data for the purpose of this study, secondary data has been collected from annual reports and relevant records of the Kirloskar oil Engines limited Khadki, Pune

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Chapter No. 5 Conceptual Study Treasury Management Treasury means cash/Funds hence treasury management means managing the funds of an organization. Typically the role of a treasury manager involves forecasting & planning the future cash flows (of course supported with solid basis...) It involves ensuring that proper funds are available with the company at the time of outflow required & also that funds are not kept unutilized for a good long time...this requires investing/disinvesting funds in opened ended mutual fund schemes (if we are not using funds let the Treasury management means "To plan, organize and control cash and borrowings so as to optimize interest and currency flows, and minimize the cost of funds, Also to plan and execute communications programmes to enhance investors confidence in the firm" or in other words "the corporate handling of all financial matters, the generation of external and internal funds for business, the management of currencies and cash flows, and the complex strategies, policies, and procedures of corporate finance" The Treasury Management Policy applies to the treasury functions of all public sector agencies, incorporating both General Government agencies and Government businesses. However, the policy is of greater relevance to Government businesses, given the extent of their treasury functions. The objective of the policy is to provide an overarching framework for managing the risks associated with treasury

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functions. the scope of Treasury management includes the management of cash flows, banking, money-market and capital-market transactions; the effective control of the risks associated with those activities;and the pursuit of optimum performance consistent

with

those

risks.

This definition is intended to embrace an organisation’s use of capital and project financings, borrowing, investment, and hedging instruments and techniques. Part of Treasury Management •

Working Capital

•

Cash flow Management

•

Import Procedure

•

Export Procedure

•

Risk Management

•

Fund Flow Management

•

Financial statement

•

Capital Markets

Working Capital Management One of the most important area in the day to day management of the firm is the management of working capital. Working capital management is the functional area of finance that covers all the current accounts of firm. Working capital management is concerned with current assets and current liabilities and their relationship to the rest of the firm.

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Working capital is calculated as:

Working capital is defined as the difference between current assets (such as cash, receivables and inventory) and current liabilities (payables, credit lines, notes). It measures how many liquid assets are available for a business to use for growth opportunities. A lack of working capital can really hold a business back from reaching their full potential. There are many different ways can help to obtain working capital for your business.

Cash Flow Cash flow is a term that refers to the amount of cash being received and spent by a business during a defined period of time, sometimes tied to a specific project. Measurement of cash flow can be used: 1. To evaluate the state or performance of a business or project 2 to determine problems with liquidity . Being profitable does not necessarily mean being liquid. A company can fail because of a shortage of cash, even while Profitable 3 to generate project rate of returns. The time of cash flows into and out of projects are used as inputs to financial models such as internal rate of return, and 4 to examine income or growth of a business when it is believed that accrual accounting concepts do not represent economic realities. Alternately, cash flow can be

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used to 'validate' the net income generated by accrual accounting. Cash flow as a generic term may be used differently depending on context, and certain cash flow definitions may be adapted by analysts and users for their own uses. Common terms include operating cash flow . In financial accounting, a cash flow statement or statement of cash flows is a financial statement that shows a company's incoming and outgoing money (sources and uses of cash) during a time period. The statement shows how changes in balance sheet and income accounts affected cash and cash equivalents, and breaks the analysis down according to operating, investing, and financing activities. As an analytical tool the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills.

Financial Analysis Analysis: Analysis is placing the collected data in some order or format so that the data acquire meaning row data become information only when they are placed in meaning form.

Financial Analysis: The term ‘Analysis’ means methodical classification of the data given in a financial statement will not help one unless they are put in a simplified form.

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According to Myers “Financial Statement” analysis is largely a study of the relationship among the various financial factors in a business as disclosed by a single set of statement and a study of the trend of these factors as shown in a series of statement.

Interpretation Meaning: Analysis and Interpretation are complementary to each other. Interpretation requires analysis while analysis is useless without interpretation. Interpretation means drawing inferences from the collected facts after the analysis study.

Techniques of Financial Analysis

1)

1)

Comparative Financial Analysis

2)

Common-size Financial Analysis

3)

Trend Percentage

4)

Fund Flow Analysis

5)

CVP Analysis

6)

Ratio Analysis

Comparative Financial Analysis: -

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Comparative Financial Statements are those statements, which have been designed in a way so as to provide time perspective to the consideration of various elements of financial position. the income statements and Balance Sheet can be prepared in the form of comparative Financial Statement. 2)

Common-size Financial Statements: Common-size Financial Statements are those figures reported are Converted into percentages to some common base in the income statement. The sale figure is assumed to be 100 and all figure are expressed as percentages of this total.

3)

Trend Percentage: Trend Percentage is helpful in making a comparative study of the financial statements for several years. The method of calculating trend percentage involves the calculation of percentage relationship that each item bears to the same item in the year.

4)

Fund Flow analysis: Fund Flow analysis has become an important tool in the analysis kit of financial analysis. Credit. Granting institutions and financial managers this is because the Balance Sheet of a business reveals its financial transactions, which

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have been behind the balance sheet changes it will help him in making a better estimate about the companies financial position and policies.

5)

Cost – Volume – Profit Analysis: It is an important tool of profit planning it studies the relationship between costs. Volume of production sales it is not strictly a technique used for analysis of financial statement.

6)

Ratio Analysis: Ratio means simply one number expressed in the term of another number ratio analysis is useful in simplifying financial statement.

Ratio analysis is widely used tool of financial analysis. It is defined as a systematic use of ratio to interpret the financial statement.

Types of Financial Analysis 1)

2)

1)

On the basis of material used a)

External Analysis

b)

Internal Analysis

On the basis of modus operand a)

Horizontal Analysis

b)

Vertical Analysis

On the basis of material used: -

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According to this basis financial analysis can be of two types a) External Analysis: This analysis in done by those who are outside for the business means investors, credit agencies, Govt. agencies and other creditors, these persons mainly depend upon the published financial statement. b) Internal Analysis:Persons who have access to the books of account do this analysis and other information related to the business it is done by executives and employees of organizations or by officers appointed for the purpose by the Government. 3)

On the basis of modus operandi: According to this basis financial analysis can be two types. a)

Horizontal Analysis: In case of this type of analysis financial statements for a number of year received and analyzed the current year’s figures are compared with the standard or base year it is also called. Dynamic analysis the analysis statement usually contains figures for two or more year and the changes are shown.

b)

Vertical Analysis: In case of this type of analysis a study is made of the quantitative relationship of the various items in the financial statements one a particular data for example the ratios of different items of costs for a particular period such as analysis 32

is useful in comparing in the same group or divisions or depts. In the same company.

Import Procedure:

The procedure of import is routed through following four departments:

 Purchase Department: For generating P.O.s and all other formalities involved in the process of import.

 Stores Department: For preparation of GRRs., inspection of material received and applying the duty on the purchases made.

 Central Receipt Department: For receiving material.

 Finance Department: For settling the liability.

The above departments are involved in the following manner

1. Analyzing materials to be imported:

Purchase department analyses the production plan for next six months according to Annual Operating Plan based on which import purchases are planed for the period. 33

2. Selection and Registration of the supplier:

Co. has list of suppliers registered in the system. If the co is planning to procure material from the supplier not registered in the system then it is required to register the supplier.



Purchase order will not be created unless the vendor is registered in the system.



Purchase department is responsible for giving timely advice to finance department regarding the registration of new vendor.



Vendor no is defined by the finance department which is informed to the purchase department as per the advice given by the purchase department.

3. Preparation of purchase order:

The procedure for generating P.O. is same as for the indigenous purchases.

•

For the import purchases planned purchase orders are prepared. In planned purchase orders lead-time for material is planned. If material is not received in that lead time then approval for the extended period is required to be taken otherwise GRR will not be passed

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•

The rates of customs duty including the concessional if any available against license are punched manually.

Figures in the red box are punched manually in case there is any concession is available.

4. Receipt of Order Confirmation:

As per RBI rules it is necessary to get Order acceptance from the vendor for further import formalities

5. Arrangements for financing Exports:

After P.O is generated and order confirmation is received purchase department informs finance department and issues the internal memo as regards arrangements for payments

There are two modes of financing imports

1 Remittance by way of advance – Advances are given in case of imports are for the value in foreign currency up to 10000. There is no hard & fast rule for payment of advances. It mostly depends on the discretion of the purchase department.

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2. Opening of L/Cs – For high value items & capital good L/Cs are opened. One month prior to shipment date, Purchase Department gives intimation to finance department Regarding opening of L/Cs through memo. The finance department at the earliest stage i.e. at the time of payment of advance, or acceptance of documents against L/Cs or payment of duty whichever is earlier, gives consignments number. Then this consignment number is informed to the Central receipt department. It is used to identify the consignment actually received. These consignment numbers are not system generated. Payments made for imports and goods actually received are not linked in the system.

6. Receipt of Airway/Shipment Bill:

Follow up for delivery is made with the supplier by the purchase department. Airway bill or bill of lading is received from the supplier after dispatching the consignment. These bills are sent to ATC for preparation of Bill of Entry.

7. Payment of Customs Duty:

ATC sends Performa Bill of Entry wherein customs duty liability is mentioned. Purchase department enters these details in the system and after saving those details, Bill of Entry no is generated by the system. Then intimation regarding payment of customs duty is given by purchase department to finance department through internal memo. 36

 When payment of customs duty is made customs department issue Bill of entry in triplicate

•

Original copy is retained by the customs department

•

Duplicate copy is transporters’ copy which comes along with the goods

•

Triplicate copy is Exchange control copy (ECC), which is deposited with the bank.

 For the purpose of calculating customs duty, exchange rate declared by the Customs for the month is considered. Actual rate of exchange may be different but the customs liability is finalized on the basis of rate declared by customs.  When the customs duty is paid it is debited to prepayment of bill of entry (GL code 350618). When actually goods are received the person in charge in the Central receipt department loads customs duty on the purchases.  The process of loading duties is built in the system except for the ACBG where the duty is loaded manually.

37

8. Receipt of material:

There is central receipt department in the company. The major task of Central Receipt Department is to make documentation relating to materials purchased. When the goods are actually received a gate entry is made. ATC Bill comes along with the material. At the time when material comes in a pre-numbered sticker is stuck on the ATC Bill. This no is used for reference to give acknowledgement to the transporters against material received. The ATC bill has an ATC job No. Which is used as control No. i.e. this no. is informed by the purchase department and finance department to central receipt department to identify the specific shipment. On receipt of material Octroi is checked at Central Receipt Department and if there is any shortfall it is paid and excess if any is claimed. In case of imports Delivery Challan doesn’t come along with the material. It is prepared at purchase department on the basis of P.O. and invoice of the supplier and forwarded to Central Receipt Department. In delivery challan actual quantity received is entered and a bin number is given. Purchase order is released by entering the original PO number and actual quantity received is punched into the system. P.O. release No. Is mentioned in the Delivery Challan. A PO release number is given which is a reference for the order received towards the original purchase order. There can be various PO release numbers

38

against single PO. P.O. release shows the actual quantity received against specific P.O.

9. Dispatch & inspection at the respective location:

After creating GRR all the documents except customs document i.e. B.O.E. are sent to stores where the shipment is unloaded. At respective stores inspection of goods is conducted. Here the actual quantity received is checked according to delivery challan. If there is any discrepancy as regards material received then person inspecting it, declares the discrepancy. A discrepancy report is generated.

10. Creation of GRR:

Person receiving the material sends PO, Bill of entry, ATC Bill, and Delivery Challan along with GRR issuance request to central receipt department. On the basis of above documents Central receipt department creates GRR At the time of preparing GRR, first PO is called and following other details are filled in

39

 Invoice No.  Date of invoice  ATC Job No.  Sticker No.  Bill of Lading No.  Container No. (write what is container no.)  Supplier’s name  Receiver’s name  BOE No.  Consignment No., given by corporate finance  Octroi No.  Gate entry No.  Value of CVD  P.O. release No.  Comment i.e. other details as many as possible. Once all the above information is filled and the GRR is saved system generates GRR No.

GRR is reopened in case of there is any mistake in the original GRR. If the quantity recorded in GRR is in excess of actual receipt then the GRR is reopened and the excess is shown as rejection. At this time system

40

automatically generates debit note. Due care is taken so that system do not generate debit note i.e. it is ensured that default flag for generating debit note is deactivated. When the quantity recorded is shorter than actual receipt or the entire GRR is wrong then the original GRR is cancelled and new GRR is created. When the value of CVD is entered in the GRR it automatically goes to Auto Claim Cenvat Report. For accounting and controls for CVD refer system audit report on purchases. After creation of GRR system gives the outstanding balance against the specific P.O.

11. Loading the duties:

Duties are manually entered in the system at Central Receipt Department, as per Bill of Entry. Duty as per system generated BOE and customs BOE should match

unless

the

GRR

will

not

be

created

If there is minor difference between duties as per system generated BOE and customs BOE it will be manually corrected as per customs BOE at Central Receipt Department.

Duties are loaded through apply function at the time of creating GRR. Once the BOE is applied it is not possible to go back and make changes in the BOE.

41

12. ATC bills are received consignment wise. But entry for it is passed once in a month for all bills received during the month.

13. Generating ERS: Every evening GRRs generated during the day are converted in the Evaluated Receipt Settlement (ERS) by the system and shown in the payables module. ERS is the system-generated invoice for imports. All the accounting entries are processed in the system on the basis of ERS.

14. Import Rejection; Procedure for import rejection is same as that for indigenous purchases except, 

In case of import if the whole lot is to be rejected, a customs rejection certificate is required which is to be arranged by the purchase department. Amount of customs duties paid for imports is reversed by the customs department in this case.



If some items from the lot are to be rejected then these are scrapped and accounted for in the same way as indigenous material is scrapped.



It was told that there is no such a case till date.

42

Import Procedure

Analysing the material to be procured

Selection of the supplier

Yes Is supplier registered in the system? No Intimation is given to the finance department regarding registration of supplier by purchase dept.

Supplier is registered in the system by the finance department

Prepare the purchase order 43

Get the order confirmation

Intimation to finance department regarding opening of LCs. Or advance payment as the case may be

Advance is remitted by TT or LC is dispatched to supplier.

Following up for delivery

Receipt of airway bill or bill of lading

Submitting these bills to clearing agent – ATC for customs clearance

Receiving the bill of entry from the clearing agent Intimation isofgiven to finance Releasing order Preparation of44purchase delivery challan department regarding payment of with actually quantity received Generating bill of entry no. in the by purchase department Generating the PO Receipt of material at eKOEL customs duty through - mail system release number

PO, Bill of Entry, ATC’s Bill, Delivery Challan is sent along with GRR issuance request sent to Central receipt department

Preparation of GRR.

Dispatch of material to respective location where inspection of will be conducted

Unloading the container and inspecting the material Loading of duties Discrepancy is declared if any.

End 45

Exports

The Company traditionally exports engines; pump sets and generating sets mainly to Africa, Middle East and Asian region. At present, the Company exports to 65 countries and predominantly to Middle East Asia, South and East Africa and the Indian Sub-continent. The company’s major focus in future (in addition to existing export markets) will be the countries in South East Asia, West Africa and Europe. The Company’s export strategy is to focus on OEM suppliers as against our traditional retail customers. This has increased the demand on quality levels, on time delivery and cost competitiveness. At present, the Company exports to 65 countries and predominantly to Middle East Asia, South and East Africa and the Indian subcontinent. The company’s major focus in future (in addition to existing export markets) will be the countries in South East Asia, West Africa and Europe. The Company’s export strategy is to focus on OEM suppliers as against our traditional

46

retail customers. This has increased the demand on quality levels, on time delivery and cost competitiveness. In this financial year, the exports of the Company grew by 8% to1390 million (previous year Rs.1286 million). KOEL has targeted exports to contribute 50% to the Company’s total sales, in the long term.

Export Procedure

We can split the export procedure in following steps: 1) Order acceptance 2) Declaration 3) Custom clearance 4) Loading 5) Realisation of invoice 6) Cost related to export 7) Benefits that arise from export

1). Order Acceptance: The company has two offices out side India, one is in Johannesburg and the other one is in U.A.E. from where the orders are secured for the company and the Company can also receive orders through mail. The customer gives his requirement in a format given by the company.

47

After getting the order, the Production Card and Order acceptance is generated by the system, both of which contain separate serial number. The production card is sent to production department, according to which the production is done within the lead-time, which may differ item wise. On Order Acceptance, all the terms and conditions of export are mentioned on the basis of which the commercial invoice is prepared. 2) Declaration: -

The company prepares the pre shipment invoice, which is sent to clearing agent of the company. The clearing agent sends the Shipping bill on the basis of pre shipment invoice along with SDF declaration (Now a days, the shipping bill and SDF are prepared in same form) to the custom authority for clearance. There are different types of shipping bills depending upon the type of order and the type of benefit, which is going to be availed .The pre shipment invoice is prepared just for custom clearance. If the quantity of goods to be exported can be packed completely in containers, then the container is packed in Pune only, otherwise the goods are sent to Mumbai for packing in containers. The Custom authorities delegate their authority for clearance to the excise department. When the goods are packed in container in Pune, then only the Excise department checks the goods and seals the container and gives the Declaration to Custom department that they have checked the goods. (They put the remark on shipping bill itself). No separate custom clearance is required in that case.

3) Custom Clearance: -

48

When the goods go to Mumbai with shipping bill for custom clearance and for packing the goods in container, then the Mumbai Custom department verifies the certificate of origin, whether the goods are liable for Duty, provision for duty, etc and check the goods on sample basis and after satisfaction, they put a stamp on shipping bill. This is called Lets Export Certificate. Now, after this, the goods are ready for shipping.

4) Loading on ship: -

After custom clearance for shipping the goods on vessel, the goods are required to be present within the prescribed area (known as quay) before the cut off time prescribed as per the port authority for that vessel, if the goods are not present at Quay before prescribed time then the goods would not be allowed to go by the same vessel for which permission has been obtained. The export certificate would have to be amended by the port authority. On the dock the shipping line agent will verify the goods and after that it is loaded into the container that may contain goods from different exporters and issue a “Bill Of Lading” this is the time when the property of goods is transferred actually. There are three terms of export –

1. FOB 2. CIF 3. CFR / C&F

49

In case of FOB and C&F, insurance is the responsibility of importer, that is risk is transferred as and when the goods are loaded on ship. But in case of CIF, the insurance is our responsibility i.e. the insurance is from warehouse of exporter to the warehouse of importer.

5) Realisation of invoice: -

After the goods are loaded on ship, the clearing agent sends the shipping bill along with SDF declaration, bill of lading, insurance and freight certificate, his bill for expenses, after that the company prepares a commercial invoice, which is sent along with other documents to the companies’ banker. Companies banker sends the invoice to the bank on which the L/C is opened. That bank intimates the foreign bank. The foreign bank then intimates the importer to pay money due within the credit period given by exporter and collects the Bill of lading. After collecting the Bill of lading, the importer goes to the shipping agent and on delivery of Bill of lading, collects the goods and pays the freight according to the terms (e.g. for FOB the importer pays freight to the agent and collects the goods and in other cases, the importer just produces the Bill of lading and collects the goods).

There are three terms of payment-

1. On advance payment50

In this case, the entire payment is collected in advance.

2. On L/CL/C can be discounted before the due date from Bank, for that company has to pay discounting Charges to the bank.

3. Non L/C – In non-L/C, there is open credit available to the importer. If sight term is available then the Hundi can be discounted before the due date otherwise the importer will pay on the due date. On this term, the goods are exported mostly to group companies only.

6) Cost related to export: -

The major costs that are involved in exports are freight, insurance, clearing agent commission and bank commission. For clearing and forwarding expenses, there is an agreement with the clearing agents. For export of engines and their spare parts, the agreement is with ATC clearing and for bearing and Valve, some other agents are there. According to the agreement, agents charge to the company and send their bill along with Bill of lading. All clearing and forwarding expenses are booked at individual A/C of agents. For bank commission, postage & handling charges and for other charges, the bank gives direct debit to companies 51

account and sends a debit advice. For realisation of Invoice, Company sent two sets of commercial invoice. The Bank charges first time to the company for postage and handling charged at very beginning i.e. when bank receives the invoice, and at the time of realisation of invoice bank again charges the company for postage & handling. In case of L/C, bank charges realisation claim in addition to the expenses at the second time.

7) Benefits that arise from export: -

There are various schemes under which the company can avail benefits. Some of the schemes are DEPB, DUTY DRAWBACK, and EXPORT LICENCE etc. The company has to satisfy the conditions under these schemes in order to avail the benefits of the same. In case of DEPB benefit, at the time of realisation, bank gives BRC i.e. Bank Realisation Certificate that is to be produced to DGFT, against which company gets the Import license which can be sold or can be utilized for further import. The amount for which the company is going to get DEPB benefit is transferred in the Accrued income A/C at the every month end. In the case of Duty Drawback, custom department automatically credits the exporter’s account. Hence the export procedure is complete after the benefits have been claimed.

52

Chapter No. 6 Data Analysis

1. Net Profit Ratio: This ratio indicates net margin earned on turnover of receipts of Rs. 100/-. It is calculated as Net Profit Net Profit Ratio =

X 100 Sales

Signification: -

53

This ratio helps in determining the efficiency with which affairs of the business are being managed An increase in the ratio over the pervious period indicates improvement in the operational efficiency of the business provided the profit ratio is constant This ratio is an effective tool to check the profitability of business.

2)

Fixed Assets Turnover Ratio: -

The ratio is arrived as under-

Sales Fixed Assets Turnover Ratio =

Net Fixed Assets = No. Of times

Significance: The ratio measures the efficiency in the utilization of fixed assets. This ratio indicates whether the fixed assets are being fully utilized. Normally a standard ratio is taken as five times.

4) Current Ratio: It is a ratio of current assets to current liabilities. The ratio is calculated by dividing the current assets by the current liabilities.

Current Assets 54

Current Liabilities

Current Ratio

=

Certain authorities have suggested that in order to ensure solvency of a concern current assets should be at least twice the current liabilities and therefore, this ratio is known as 2:1 ratio.

Significance: This ratio indicates the solvency of the business i.e. ability to meet the liabilities of the bank as and when they fall due. The current assets are the sources from which the current liabilities have to be met.

Analysis & Interpretation of Ratio 1)

Net Profit Ratio: -

Net Profit

Net Profit Ratio =

Sales Particulars Net Profit Sales

2006 - 2007

2007-2008

1,784,090

1,189,516

20,694,761

23,723,049

55

X 100

2006 – 2007

2007-2008 1,189,516

1,784,090

X 100

X 100 20,694,761

23,723,049 7.89

8.6

Interpretation: This ratio indicate the percentage of profit earning in this Company percentage of profit in 2006– 2007 is 7.52%, 2007– 2008 is 9.05% and generally standard of this ratio is 15 to 20% but, this Company’s profit level are changing year after year the net profit for these years are sufficient to pay dividend at reasonable & satisfactory rates on share capital. In 2007 – 2008 the net profit as well as 2006– 2007 are mostly increase because the company’s profit on sale are increase & other Income are mostly increase other year.

2)

Current Ratio: -

Current Ratio

=

Current Assets Current Liabilities

Particulars Current Assets Current Liabilities

2006 – 2007

2006 - 2007

2007-2008

6615365

7455319

4,738,704

5,574,962

2007-2008

56

6615365

7455319

4,738,704

5,574,962 1.33

1.39

Interpretation: -

Current ratio measures the inter-relation between the current assets & current liabilities. This ratio indicates the solvency of the business current ratio in 2006– 2007is1.39 in the year 2007 – 2008 ratio 1.33 The proportion of above current ratios indicates that the liquidity position of the company is not satisfactory. Because of these current ratios are lower than standard these current ratios are lower due to current assets are less than current liabilities.

3)

Return on Share Holder Investment: -

Net Profit

Return on Share Holder Investment =

Share Holder Fund

Particulars Net Profit Share holder fund

2006 - 2007

2007-2008

1,784,090

1,189,516

8,513,490

9,149,913

57

X 100

2006 – 2007

2007-2008 1,189,516

1,784,090 X 100 8,513,490

X100 9,149,913 13 %

20.9 %

Interpretation: -

This ratio important because indicates the percentage of return on investment the ratios of Kirloskar oil Engines limited year. In the year 2006 – 2007 are return on shareholder Investment for mostly increase than 2007-2008 because in the year net profit high.

4)

Debt to Equity Ratio: -

Outside Debts Debt to Equity Ratio =

Shareholder Fund

Particulars Outside Debts Share holder fund

2006 - 2007

2007-2008

176,392

37,968

8,513,490

9,149,913

58

2006 – 2007

2007-2008

176,392

37,968

8,513,490

9,149,913 0.004

0.020

Interpretation: High debts equity ratio is considered as in favorable this is because in such case the margin of safety available to creditors is less and on the other hand low debt equity ratio will show high margin of safety. Debt to equity ratio of 2006 – 2007 is 0.20:1; year 2007 - 2008 is 0.004:1 standard of debt to equity ratio is 1:1. This ratio measures financial strength of the company in these company debts are lower & equity is large.

Advantages of Ratio Analysis Following are some advantages of ratio Analysis: 1)

Ratios simplify the comprehension of financial statements. They tell the whole story as a help of financial data is condensed in them. They indicate the changes in the financial condition of the company.

2)

The Ratio Analysis can be of invaluable aid to management in the discharge of its basic functions of forecasting, planning. Co- ordination, communication and control.

59

3)

Investment decisions can at times be based on the conditions revealed by certain ratios.

4)

They make it possible to estimate the other figure when one figure is known.

5)

Ratio analysis provides data for inter-firm or intra firm comparison cannot be made with absolute figures. Net profit of one company cannot be compared with the net profit of the other company.

6)

They act as an index of the efficiency of enterprise. As such they serve as an instrument of management control. Thus, the ratio analysis points out the financial condition of business whether it enables the management to take necessary steps.

Limitations of Ratio Analysis 1)

The benefits of a ratio analysis depend to a great extent upon the correct interpretation. The interpretation may be based on a single ratio. But a single ratio in itself is meaning less as it does not provide a complete picture of a Company’s financial position. A single ratio may direct attention to only one aspect of its financial status or operating results.

2)

Reliability of Ratios depends upon the reliability of data.

60

3)

While comparing ratios of the two company’s, it must see both of them follow the same accounting plans or base, otherwise the comparison has no meaning.

4)

Changes in prices distort the comparison over a period of years.

5)

Ratios sometimes give misleading picture. It would, therefore be proper to study absolute figures along with ratios. Ratio analysis gives just a fraction of information needed for decision making. If there is window dressing the ratio calculated will fail to give the correct picture and will prove to be misleading.

Financial Statement

Introduction: -

Financial Statements are prepared because of statutory obligations from this statement outsiders can bet an idea about the performance of business unit.

Meaning: -

61

Financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business company financial statement generally refers to two basic statements.

1) Balance - Sheet. 2) Profit & Loss Account

62

BALANCE SHEET AS AT 31 MARCH 2008 Schedule

As at 31st March 2008

As at 31st March 2007

01 02

388,346 8,761,567

194,173 8,513,490

9,149,913

8,513,490

3,427,736 1,179

994,248 68,900

3,428,915

1,063,148

523,119 226,919

291,207 126,785

296,200

164,422

12,875,028

9,741,060

9,213,189 2,753,520 6,459,669 649,294

5,305,128 2,555,900 2,749,228 572,762

Particular 1. SOURCES OF FUNDS 1. Shareholder’s funds (a) Share capital (b) Reserve and Surplus

2. Loan funds (a) Secured loans (b) )Unsecured loans

03 04

3. Deferred Tax Adjustment (a) Deferred tax Liability (b) Deferred tax Asset

2. APPLICATION OF FUNDS 1. Fixed assets (a) Gross block (b) Less: depreciation (c) Net block (d) Capital work-in-progress including

05

7,108,963

Capital Advances

2. Investment 06

63

4,763,347

3,321,990

5,173,868

3. Current assets, loans and advances (a) Inventories (b) Sundry debtors (c) Cash and bank balances (d) Other current assets (e) Loans and advances

7 08 09 10 11

1,940,450 3,564,577 615,993 61,765 1,272,534

1,483,583 3,892,511 413,024 54,763 771,484

7,455,319

6,615,365

5,574,962 877,639

4,738,704 631,459

6,452,601

5,370,163

1,002,718

1,245,202

12,875,028

9,741,060

Less: Current liabilities and provisions (a) Liabilities (b) Provision

12 13

Net Current assets

Total

64

PROFIT&LOSS A/C FOR THE YEAR ENDED 31 MARCH 08 Particular

Schedule

65

As on 31st Mar 08

As on 31st Mar 07

Income Sales Less: Excise duty

Operating income Financial income

Expenditure Material Consumed Manufacturing Expense Employee Cost Selling &Administration Expenses Depreciation & amortisation Interest & Finance Charges

23,723,049 2,158,648

20,694,761 1,864,956

21,564,401

18,829,805

14 15

552,341 162,827 22,279,569

554,080 440,394 19,824,279

16 17 18 19 20 21

15,739,044 529,112 1,392,991 2,231,967 438,560 197,054

13,792,882 506,787 1,053,055 1,871,835 318,114 144,024

20,528,728 123,235

17,686,697 33,247

020,405,493 1,874,076 -

17,653.450 2,170,829 224,191

1,874,076

2,395,020

Less: expenses capitalised Profit Before exceptional items & Taxation 22 Exceptional income Profit Before Taxation Provision for taxation Current tax (including wealth Tax Rs.2, 9000,000/-, previous year Rs. 2,200,000/-) Deferred Tax (see note no.19) Fringe Benefit

482,900

525,000

182,626

66,930

19,034 684,560

Profit for the year after Taxation Prior period adjustment: Expenses Taxation, net As per last account

66

19,000 610,930

1,189,516

1,184,090

-

66 5,700

1,494,370

1,164,625

2,683,886

Less: Transferred to general reserve Interim dividend Tax on interim Dividend Proposed Dividend Tax on Proposed Dividend

Balance carried to Balance sheet

2,942,949

750,000 194,173 33,000 194,173 33,000

1,000,000 194,173 27,233 194,173 33,000

1,204,346

1,448,579

1,204,346

1,494,370

Chapter No. 7 Limitation of Study 1) Treasury Management which is used by company has not been made available for study and so that I used annual reports for the study of financial position by accounting ratios. Balance Sheet and Profit and Loss account shown in the annual report are used for study.

67

2) The time period is limited to know the entire process .we cannot draw effective conclusion as it is continuous process.

Chapter No 8 Finding

 The company is performing well in regard to long term liquidity, profitability and solvency position.

 The system does not indicate any standard of performance efficiency

 A System of budgetary control has not been used effectively

 Financial position of the company is not satisfactory.

Recommendation

68

The following are some recommendation, which will be useful for further improvement and efficient working of the company in future.  It is necessary to decrease the total expenses and to increase the net profit.  It is necessary to decrease the current liabilities and to increase the current assets for improving liquidity position.  To be self sufficient, the company should try to increase own fund & also try to decrease borrowed funds.

Chapter No 9 Conclusions After the study of this project, I conclude as follows: 1) The Company’s profitability position is not much good because the company 2007-08 profit less than the year 2006-07. 2) The company treasury management position is good. 3) The study of financial statement of company by analysis & interpretation of ratios & trend percentage show good position. 4) The turnover of company is good. 5) I conclude that financial position of this company is not good satisfactory because profitability, current, activity positions are not good for previous year.

69

Chapter No 10 Bibliography

No. 1 2

3

Books

Author

Publications/Edition

Patkar M.G.

“Management Accounting”

(Oct-2002) Phadke Prakashan, Kolhapur

Pardeshi P.C.

“Management Accounting”

(Aug.2002)Nirali Prakashan, Pune

Pillai R.S.N. Bagavathi V.

“Management Accounting”

S.Chand and co. ram nager New Delhi.

Annual Reports of Kirloskar Oil Engines Limited

4

2006 – 2007 to 2007 - 2008

5

Www. Kirloskar Oil Engines.com

70

Chapter No 11 Annexure Questioners 

What is treasury management?



What is fund flow statement?



Which is the part of treasury management?



What is working capital?



Which is different type of ratio?



Explain export & import process?

71