A Project Report On Evaluation of Financial Performance and Export Procedure and Documentation at FLOWSERVE MICROFINISH PVT LTD

A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD
INDEX
Titles Chapter I Chapter II - Executive summary - Introduction Company profile Product profile Organization structure Chapter III - Different departments and its functions 1. Production and Assembly Department 2. Quality Assurance Department 3. Planning and Purchase Department 4. Stores department 5. Administration and Accounts Department 6. Sales & Shipping Department Chapter IV - Export Procedure Steps involved in export order processing Logistics for exporting unit Customer related process - Ratio Analysis Introduction to ratios Analysis and interpretation Chapter V Chapter VI Chapter VII Chapter VIII - Findings and suggestions - Conclusion - Annexure - Bibliography 71 72 73 74 34-70 17-33 Page No 1-3 7-6
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EXECUTIVE SUMMURY
Flowserve Microfinish pvt ltd., a manufacturing unit situated in Gokul Industrial Estate, Hubli was established in 1996. Flowserve Microfinish pvt ltd. is producing engineering goods like valves and pumps which are the basic requirements of process industry. As my topic of study Ratio analysis and study of export Procedure I developed some objectives according to them I collected the data from the balance sheet provided by them and analyzed them to find the area of improvement if any. Regarding these data charts were drafted to support the analysis and the conclusion are drawn.
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1.
Statement of problem:
The Title of project A study on evaluation of financial performance and export procedure & documentation of Flowserve Microfinish Values Pvt Ltd, Hubli which had shown good turnover in recent years. The study is to be conducted to evaluate the financial performance of the company in order to give a better scope to the investors, share holders, creditors and the rating of the company and its performance in the market and to study the export procedure of the company.
2. Objectives of the study:

The following are the main objectives of this study To analyze the companys financial statement for the last 5 years To bring out the results of Financial Statement through ratio analysis. To study about the company in general. To judge the financial position of the company is satisfactory or not. To study the export procedure and documentation of the company.
3. Scope of the study:

This study is exclusively conducted for Flowserve Microfinish Values Pvt Ltd, Hubli. It covers period 5 years financial statement analysis. The trends indicated may differ from year to year as the pattern of investments, borrowings etc change. This also covers study in general about the company and industry and also covers a brief study in export procedure.
4. Methodology:
The information furnished in this report has been collected from primary data as well as secondary data. The primary data has been collected through the discussion with finance manager and various executives in the company. The secondary data has been collected from the company annual reports and from the text books on management accounting and financial management. Ratio analysis is used as main tool in analyzing the financial variables and statistical tool as classification and tabulation and bar charts used to present information in the report in manner.
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5. Limitations of study:
A good report tells the result of the study. But every project has its own limitations. The following are the limitations of this study This study is limited to 5 years financial statements only. The companys ratios are not compared with the industry due to non-availability of the information about the industry. The present study is not exhaustive due to time and cost constraints.
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INTRODUCTION
The Flowserve Microfinish group of companies is having two units namely Flowserve Microfinish Valves Pvt Ltd [FMVPL] and Flowserve Microfinish Pumps Pvt Ltd [FMPPL]. Flowserve Microfinish is one of the 100% EOU [Export Oriented Unit] Hubli. Flowserve Microfinish Valves Private Limited (Hereinafter referred to as the company) was established in 1997 to manufacture Industrial valves, plug valves and valve components. The company is located in the Industrial Area, Hubli which is one of the Biggest Industrial centers in the state of Karnataka, India. Hubli is situated midway between Poona and Bangalore on the NH 4 Highway and is connected by Road, Rail, and Air. The companys manufacturing unit has a 15,000 Sq .ft of built up area to house the facility. in the city of
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INTRODUCTION TO THE GROUP OF COMPANIES

FLOWSERVE MICROFINISH GROUP OF COMPANIES having two units namely Flowserve Microfinish Valves Pvt. Ltd.., and Flowserve Microfinish Pumps Pvt. Ltd., was established in 1997 to manufacture Industrial Valves viz. Ball Valves and Plug Valves and Industrial Pumps viz. ISO Pumps and ANSI Pumps. The Group of Companies are located in Industrial Area, Hubli, which is one of the biggest Industrial Center in the State of Karnataka, Hubli is situated midway between Pune and Bangalore on the NH4 Highway and is well connected by road and rail. Valves and Pumps manufacturing company have a 15,000 Sq. feet and 10,000 Sq. feet of built-up area to house the facilities respectively. Both divisions have an open space of 10,000 Sq. feet and 15,000 Sq. feet respectively for further expansion. The two units have excellent machining testing facilities, consisting of CNC's, center lathes, milling, drilling, grinding machines, SPMS etc. supported by adequate gauging, measuring instruments. Dedicated Staff &, workers strive &, ensure that quality objectives are achieved. The units are catering to the needs of major Industries in the field of Petrochemicals, Refiners, Fertilizers, Fine chemicals, Pharmaceuticals, food and Beverages and other general Chemical industries. Flowserve Microfinish Valves Pvt. Ltd., and Flowserve Microfinish Pumps Pvt. Ltd., have a documented Quality System to meet the requirements of ISO 9001: 2000 requirements to ensure that its orders are processed; products are manufactured to meet the requirements of the customer. Flowserve Microfinish. Valves Pvt. Ltd., in addition meets requirement of PED 97/23/EC.
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FLOWERSERVE PVT LTD., USA:

Flowserve Pvt Ltd. is a U.S.A company which was set up in early 1920. Flowserve Pvt Ltd produces engineered and process pumps, precision mechanical seals, automated and a manual quarter-turn valve, control valves and valve actuators, and provides a range of related flow management services, primarily for the process industries. Flowserve engineers products and provides services to meet the needs of the global flow management industry. Flowserve serves the flow management industry worldwide. More than 40% of the Company's 2006 sales of $3 billion were outside the United States. Flowserve Pvt Ltd is having its business more than 30 countries to name few are Canada, Belgium, Australia, India, Argentina, Mexico, Germany, etc. Flowserve Pvt Ltd of U.S.A. found a Indian market for its expanding its business and came to India by the way of joint venture. The Indian Flowserve Microfinish ltd. has a joint venture with a Flowserve Pvt Ltd of USA. The joint venture is in the form of a technical collaboration which is nowadays a one kind of mode of entering a foreign market. The one such we find here is a Flowserve Microfinish Ltd.
FLOWSEREVE MICROFINISH LTD:

Microfinish was set up in the year 1978. The Microfinish is manufacturing a industrial pumps and valves. Microfinish is known for its quality product and has got certificate of ISO 9002. In 1998 Flowserve Pvt Ltd of USA came to India by entering into a joint venture with a Microfinish of Hubli. As Microfinish is known for its quality product world wide, the Flowserve Corporation made a technical collaboration with the Microfinish valves. Flowserve Pvt Ltd came to India and gave technical and management training to the employees of the Microfinish in the year 1996 and commercialized its business in the year 1998. The training they give was of high standard and then later Microfinish of Hubli was able to produce spare parts of high quality. Later Microfinish started its separate 100% exporting unit and came to be known as a Flowserve Microfinish Pvt Ltd. Hubli. Now the Flowserve Microfinish ltd. exports to more than 15 countries to name few, 1. USA 5. SOUTH AFRICA 9. AUSTRALIA
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD 2. U.K 3. GERMANY 4. BRAZIL 6. TIWAN 7. BELGIUM 8. MEXICO 10. HONGKNOG 11.KOREA 12. SINGAPORE
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SHAREHOLDING PATTERN: Shareholders % of Holding Number of Equity shares Flowserve (Mauritius) Corporation, USA 76% 265200 26524000.00 Equity capital (Rs.)
Microfinish Valves Ltd, Hubli, India 24% 837600 8376000.00
Total
100%
3490000
34900000.00
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VISION: Our vision is to manufacture quality valve products for the process industry worldwide. We embrace the concept of total quality and people involvement to enhance TOTAL QUALITY SATISFACTION and commit to maintain this standard of excellent through continual improve and use of quality management system MISSION: Mission is to manufacture quality valve products for the process industry worldwide. We embrace the concept of total quality and people involvement to enhance Total Customer Satisfaction and commit to maintain this standard of excellence through continual improvements and use of quality management system. FLOWSERVE MICROFINISH GROUP OF COMPANIES PVT. LTD., AT GLANCE
Flowserve Microfinish Group Of Companies pvt. Ltd., Name & Address of The Industry Status of Organization Certificates Date of Registration Date of Commencement Availability of communication facility Cost of Project(Initial Investment) Exporting Capacity Turn Over Per Year 568/1, Industrial Area, Gokul Road, Hubli 580 030. India. Private Limited (100% EOU). ISO 9001, ISO 2000 and PED97/ 23 / EC. 19th April 1996 1st June 1998 Telephone, Fax, Internet, Printer, Hard copy, P.O. 3 Crores 20,000 valves 20 Crores
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD Applicable Act 1) Factory Act: 2) Provident fund: 3) ESI( Employee State Insurance) 4) Bonus Act 5) Payment of Gratuity: 6) Product Processing order: 1) Canara Bank 2) Bank of India.
Bank
Email
admin@flowservemicrofinish.com dispatch@flowservemicrofinish.com 3 Acres , Built Up area : 15000 Sq. Ft. 75 Pumps Pvt Ltd., and Valves Pvt Ltd., Foreign System Pvt. Ltd Germany Panel Kena South Africa Uniworld Logistics US. Export Freight Singapore. 2233202, 2332301 / Fax 0836-2333205
Factory Area
Manpower Branches Agencies
Tel & Fax No.
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VALVE & PUMPS industry

Valve is a gate which allows to flow of gas, liquid etc. It is a flow control device. Valves are mechanical devices specifically designed to direct, stop, mix or regulate the flow, pressure or temperature of a process fluid. Valves can be designed to handle either liquid or gas application. It is also defined as a device that regulates the flow of fluids (either gases, fluidized solids, slurries or liquids) by opening, closing, or partially obstructing, various passageways. Valves are used in a variety of applications including industrial, military, commercial, residential, transportation, etc. Pumps are defined as the devices which are used for process industries that manage the needs of (either gases, fluidized solids, slurries or liquids) by pumping.
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GROWTH & DEVELOPMENT OF THE INDUSTRY

The domain of primary sensing elements comprises of measurement of flow, level, temperature, pressure, vibration, electrical parameters and analyzers. Development in flow elements is targeted towards reducing pressure loss and increasing accuracy. The demand for the valve business is going to increase by 30-40% and pump business would increase proportionately. Pumps & Valve Manufacturing Industry in India is growing at the rate of 1012% per annum. 500 large, medium & small-scale manufacturers in India manufacture approximately 6,000 pumps & 20,000 valves per day in India. All core sectors of industry namely power, oil & gas, water & infrastructure projects, metal and mining, chemicals, drugs & pharmaceuticals & food and beverages require various types of pumps & valves and each of these industries are growing at a exorbitant rate today in India.
BUSINESS ENVIRONEMENT OF THE INDUSTRY

India has been a reliable, technically competent, competitive and enterprising outsourcing option for many multinational companies in the field of Industrial Pumps and Systems for outsourcing to countries such as USA, Germany etc for pumps and systems. Pump Components and sub-assemblies cast molded, customized and/or mass-produced - Basic and Applied research and analysis employing also CFD techniques. A Valves & Pumps industry deals with the Business Marketing. They are widely used in Chemical & Process industries, Refineries, Petrochemicals & Fertilizer plants, Pharmaceuticals, Oil Exploration, Thermal & Nuclear plants, Food & Beverage industries, Effluent Treatment & Sewerage plants, Water Treatment, Cooling Water & Water Supply plants, mining industries etc. and machined, fabricated and finished,
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FUTURE OF THE INDUSTRY

Valves & Pumps are tremendous growth opportunity in the areas of Chemical & Process industries, Refineries, Petrochemicals & Fertilizer plants, Pharmaceuticals, Oil Exploration, Thermal & Nuclear plants, Food & Beverage industries, Effluent Treatment & Sewerage plants, Water Treatment, Cooling Water & Water Supply plants, mining industries etc.
FUTURE GROWTH AND EXPANSION:

1. The company aims to produce T line Products i.e., Teflon products. They have already started manufacturing the T- line products in case of pipeline, from 3rd quarter. 2. The company is also striving to achieve the water treatment, reducing the recognition of ISO 14001 such as waste db (sound) levels in the factory premises.
OWNERSHIP PATTERN: Board of Directors:

Flowserve Microfinish Pvt.Ltd is managed by directors: Shri. Tilak.K.Vikamshi Shri Deepak.K.Vikamshi Shri.Tushar.K. Vikamshi Shri.Mahendra.K. Vikamshi Shri.Shivanand.K.Awati Miss.Jaya.B.Sali Chairman&MD Executive director Director-Commercial Director-works Director-technical Director-Accountant
MAIN IMPORTANCE IS GIVEN ON THESE FOLLOWING POINTS; 1) Following the safety rules. 2) Providing adequate lighting facilities. 3) Ensuring the proper air circulation. 4) Maintaining cleanliness at all the areas.
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VALVES
By definition, valves are mechanical devices specifically designed to direct, stop, mix or regulate the flow, pressure or temperature of a process fluid. Valves can be designed to handle either liquid or gas application.
Main Functions of valves

Starting and stopping flow. Regulating flow volume (frequently called throttling). Preventing reverse flow (called anti-back down).
. SI. NO
Product Range PRODUCT SIZE RANGE 1. 2. Ball Valve Plug Valve IN mm 15-200 15-20 15-300 15-300 MAX PRODUCT #300 #800 #150 #300 MATERIAL OF CONS CS/SS CS/SS CS/SS CS/SS
Products manufactured by flowserve micro finish valves pvt ltd fall generally under category 1, 2, & 3 of the PED 97/23/EC. Conformity assessment procedure is adopted is module BE+D. The valves falling under category 1 are manufactured in accordance with sound engineering practice and for these valves CE marking will not be affixed. The company is having a documented Quality system to meet the requirements of ISO 9001 2001 to ensure that its orders processed, products manufactured meet the requirements of the customer. Further the company is also certified for CE Marking. Flowserve Microfinish has established a documented quality management system in accordance with the requirements of ISO 9001: 2000 & PED 97/23/EC wherever applicable organization implemented & maintains it and continually improves upon its effectiveness. In this company 70% importance given to the quality, 20% is to the delivery and 10% is to the services.
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WORK FLOW
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DIFFERENT DEPARTMENTS & ITS FUNCTIONS:

1) Production and Assembly Department 2) Quality Assurance Department 3) Planning and Purchase Department 4) Stores department 5) Administration and Accounts Department 6) Sales & Shipping Department
PRODUCTION PROCESS CHART

PRODUCTION AND ASSEMBLY INCHARGE DEPARTMENT
SHIFT
I
MAINTENANCE
ASSEMBLY
SHIFT II
MACHINE OPERATION
MAINTENANCE ASSISTANT
FILTERS
MACHINE OPERATION
HELPERS
HELPERS
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OBJECTIVES: 1. Productivity improvement. 2. To reduce the cost without compromise on quality. 3. To manufacture non defective product by training the people. There are two types of machines which are used in the production department: 1. Conventional machines 2. CNC machines 1. Conventional machines: All the operations in this types of machines are done manually work the cost of such machines are cheaper & the capacity is very less 2. CNC machines: Computerized numerical control machines. This machines are operated automatically i.e. a program is written for its function which is in assembly level language i.e. economic codes which are not understood by human beings.
PRODUCTION PROCESS:
The production process is carried out in the following 3 steps, 1. Control of customers supplied product. 2. Process control. 3. Production planning and process.
CNC Vertical Turret Lathe
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Vertical Machining Center
QUALITY ASSURANCE DEPARTMENT
QUALITY ASSURANCE INCHARGE
RECEIVING QUALITY
INPROCESS QUALITY
FINAL PRODUCT
WORKERS
COMPONENT
TESTING
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QUALITY:
Here importance in this company more is given to the quality comparing to other processes like delivery and services. 70% importance is given to the quality, 20% is to the delivery and 10% is to the services. Quality refers to the degree of perfection as perceived by the user of a product. At Flowserve Microfinish, the objective of the Quality Assurance department is to maintain a consistent appraisal of the quality of the product at all stages of manufacturing till the product is dispatched.
FUNCTIONS OF QUALITY ASSURANCE DEPARTMENT

Incoming Material Inspection In-process Inspection Final Inspection
1) Incoming Material Inspection

The materials coming from outside such as castings, bars, and bought items- nuts, bolts and pickings and sub-contract items are inspected as per the drawings or according to the applicable work instructions Receiving Quality Engineer is responsible to ensure that the quality of incoming components\raw materials\products is in accordance with the established methods and the quality of all accepted items are conforming to the specified requirements.
2) In process Inspection
Components taken for further process are also taken for inspection. Machines that are used in the manufacturing process are also inspected periodically. In process Quality Engineer is responsible to ensure that inprocess components\raw materials\products is in accordance with the established methods and the qualities of all accepted items are conforming to the specified requirements. In process Quality Engineer is also responsible for ensuring that the special processes are in accordance with the established methods. (Calibration of inspection and maintaining calibration records)
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Special process carried out by in process quality Engineer is as follows: a) Welding:

In process Quality Engineer is responsible for continuously monitoring the welding process so as to ensure that it is in compliance with documented procedure. All the welding process parameters are listed in welding process specification and are carried out by a qualified welder.
b) Painting:
Painting is carried out as per work instruction of painting specification and the painters have been qualified based on the past experience. 3) Final Inspection: This inspection is mainly to check if any of the lapses that may have occurred in the above stages. Final Product Engineer is responsible to ensure that the products are in accordance with the established methods and the quality of all accepted items is conforming to the specified requirements. Final Product Engineer is also responsible for identification of items, reviewing nonconforming products\component and for maintaining quality records and to ensure that all assembled products\components are identified with regard to inspection and test results. Final Product Engineer is also responsible for issuing test certificates, material certificates, compliance and warranty certificates as against requirement of Work Order for closing all positive recall loops. Final Product Engineer is also responsible for inspection of painted product\ components as per specification. Final Product Engineer is responsible to ensure that all outgoing components\ products are subjected to dispatch inspection. He verifies the components\products material of construction, size, class, special requirements and metal tags etc ensures that the sample tested valves are packed with identified box and note down the box identification and then the inspection and testing results are noted down in the Dispatch Inspection Report.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD Inspection colour codes used by the Q.A.Department Green Black Yellow Red Dark Blue : : : : : Conforming Accepted on Deviation Rework Reject Hold
PLANNING AND PURCHASE DEPARTMENT:
PLANNING AND PURCHASE INCHARGE
SALES AND SHIPPING OFFICER
PLANNING
STORE OFFICER I
STORE OFFICER II
LOCAL PURCHASE R
Planning is very important part of all organization because success of every organization depends upon how effectively planning is made. Planning is made for usage of resources and to meet the delivery commitment.
. THERE ARE TWO TYPES OF PLANS

1. Tentative Plan: It is a plan for a particular which is drawn five weeks prior to a month. It can be modified\amended.
2. Final Plan: It is a plan which is issued one week earlier to the particular month. It can be modified, if required on the basis of information from other departments.
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PROCEDURE:
1. Tentative plan is modified /amended if required on the basis of feedback information from other departments. 2. Final plan is amended, if require on the basis of feedback from P&A department. 3. Cause of not meeting the plan is discussed with P&A department.
PURCHASING DEPARTMENT Objectives: To ensure that all the purchase/ processed items and services meet the
specified requirements.
Scope: Applicable to all raw materials, bought out items, sub contracted items, capital
goods, consumable and services to be produced
Responsibility:
1. P&P incharge is responsible for approval of supplier. 2. P&P incharge is responsible for approval of purchase order. 3. Planning assistant in co-ordination with quality assurance department is responsible for evaluation of supplier and submit the report to P&P incharge for review and approval.
STORES DEPARTMENT Objective: To provide general guidelines for monitoring stock levels from material receipt
stage through finished components\ finished valves.
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Responsibility:
Stores Officers are responsible for proper accounting, handling and storage of raw material\ components and products. Store Officers of respective stores are responsible for planning the storage space in stores section and assigning the material to identified location and maintains records of receipt and issue of material.
Functions of Stores Department:

1. Verification of materials on receipt of material 2. Issue of raw-material and control of raw material 3. Finished components issued for assembly\dispatch 4. Handling
1) Verification of materials on receipt of material:

Store Officers verify the material with respect to delivery channel of vendor for weight, quantity and material grade etc and compare the same with respect to Purchase Order. In case of subcontractor the material is verified with respect to gate pass cum subcontractor Work Order. If weight, quantity and material are found ok, party acknowledgement copy of delivery channel is stamped as defined below.
Goods received subject to Verification

And the stores officers
and acceptance
arrange to store accepted materials\ components and products in respective stores to prevent damage and deterioration. The stores are identified as under STORE I: Sand Castings, Investment Castings, Levers, Stems, End Caps, Adapters etc. STORE II: Fasteners, Teflon, Gland, Seat, springs, Spring Disc, Accessories etc.
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2) Issue of Raw Material & Control of Raw Material:

Raw materials like Castings issued for processing are issued to Production and Assembly through material issue slip duly signed by authorized persons.
3) Finished components issued for assembly\ dispatch:

Finished components\ bought out items are issued to Production and Assembly for assembly or shipment through Material Requisition Note.
4) Handling:
Finished components\ products are stored at identified area and are protected to avoid damage\ deterioration by means of protective caps for bodies and tailpiece, Netlon Sleeves for plugs. Proper cushioning is to be provided while storing and traveling of finished items.
ADMINISTRATION AND ACCOUNTS DEPARTMENT:

ADMINISTRATION AND ACCOUNTS INCHARGE
PERSONAL OFFICER [FACTORY & PERSONAL SAFETY]
ACCOUNT ASSISTANT
Functions of Administration Department

In HR department there are so many functions like, training, recruitment, safety, house keeping etc.
1. Training
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Objective: Is to provide the adequate training to the personnel of all Departments

performing activities affecting quality.
Responsibility:
1. Personnel officer is responsible for identifying the appropriate trainer in consultation with the top management for arranging the training. In charge of respective departments are responsible to appraise and to forward the training requirements of their department personnel to personnel officer. 2. Training is given for employees ones or twice in a month depending on the need. In training the following aspects are covered: Product Application, Basic Computer Knowledge, Instrument Knowledge, Industrial Safety and First Aid, Statistical Quality Control, ISO Awareness (9001:2000), Leadership Quality, Manpower Handling, Commercial Acumen, Communication Skills, Identification and Traceability, Material Handling
2. Recruitment
Personnel Officer is responsible for recruiting the right person for the right job at a right time. He conceders the following aspects while recruiting a person, Knowledge Skill and Work experience of the person.
3. Safety Objective: To ensure safe and healthy environment for personnel Responsibility:
Administration and Accounts in charge through personnel officer is responsible for safety related activities
Procedure:
A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD 1. Safety committee meeting is conducted every quarter. Safety related training and workers is conducted once in two months such as Fire Hazardous, Personal Hygiene etc and first-aid for staff Extinguisher, Chemical
facility is also provided for workers.
2. Safety round-up is carried out by the personnel\staff of different department.
4. House Keeping
The FMVPL follows the 5S concept of House Keeping system
Objective: To ensure good, healthy, clean, neat and safe work environment. Responsibility:
While the activities are co-ordinated by the personnel officer, each and every individual in the organization is responsible for the implementation.
Procedure:
For effective implementation of the system, the entire premises of the company are divided into sub-zones as Production and Assembly division, Quality Assurance division, Administration and Accounts division etc. Each sub-zone is headed by a team leader and supported by co-ordinates, supervisory staff and workers.
5S:
SEITON: A). Place for everything B). Everything in its place SEIRI: Sort out items and discard the unnecessary. SEISO: Clean your workplace thoroughly SEIKETSU: Maintain a standard SHITSUKE: Train people to be disciplined
The effectiveness of system is monitored by periodical internal audits, the frequency of which is currently once in 15 days. Team leaders are given responsibility of conducting regular audits and COO conducts unscheduled surprise audits.
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5. Other Functions
The other functions of Administration department are as follows: 1. Salary Calculation 2. Maintenance of all relevant records 3. Issuing of canteen coupons 4. National Sample Survey 5. Employment Exchange 6. Quarterly returns of men and women 7. House Keeping 8. Canteen Administration 9. Security Administration
Facilities Provided By The Flowserve Microfinish To Its Workers

1. Employee State Insurance (E.S.I): is provided to all employees drawing a salary of Rs.6500 or below. 2. Provident Fund (PF): is provided to all employees. This fund is deducted from the salary as per the PF Act 1925; this is remitted along with the employers contribution bank. 3. Gratuity: The gratuity is provided to those employees who has completed 5years service 4. Travel and Boarding: Travel and Boarding arrangements will be made to the employees who are on outstation duties. 5. C.A (Casualty Allowances): The Company pays Casualty Allowances to needy employees. 6. R.A (Regularity Allowance): is paid to the employee to boost regularity in attendance. 7. Medical Premiums: Medical premiums are paid to the eligible employees.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD 8. Company Loan: The Company provides loans to the employees @ 0% Interest. 9. Washing Allowance: company provides washing allowance to all the employees. 10. Bonus: According to the amended Bonus Act of 1996, the minimum bonus fixed is 8.33% of workers total annual wages including D.A. and maximum of 20%. The Company is paying 20% bonus to the employees annually. 11. Safety Measures: The Company provides the following various safety tools to its employees: Safety Goggles & Safety Masks. The equipments and machineries are periodically checked by the inspectors to avoid accidents. Other Facilities Provided By The Company: 1. Canteens: The Company provides breakfast facility to the employees. The Canteen is maintained in a hygienic condition. 2. Coupon Books: Coupon books are provided to employees for their daily, Breakfast in the company canteen at cheap rates. .3. Drinking Water: Cool and clean drinking water facility is provided at the work place to its employees.
Salary Administration:
There are skilled, semiskilled and unskilled workers in the organization and they are paid according to their ability and qualification and with consideration of the Government regulation.
Salary Staff
Payment Date 31st of every month
Employees Workers
Date of Payment 5th of every month
Man Power:
A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD There are about 75 employees working in the organization.
ACCOUNTS DEPARTMENT. Objectives of Accounts Department:

1. To provide accurate and complete systematic information of financial Activities. 2. To maintain all the books of the accounts and other financial documents. 3. To prepare periodic financial statements of the company like Profit and Loss Account and Balance Sheet.
Function of Accounts Department:

1. Preparation of outstanding debtors and creditors list on regular basis. 2. Issue of bank guarantees, indemnity bond and follow up of expired bank Guarantees for cancellation. 3. Maintenance of Accounts books, inventory on tally. 4. Writing of Cheques. 5. Handling of cash payments and petty cash. 6. Issue of C forms etc. 7. Preparing Export documents.
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Books of Accounts maintained by the Accounts Department:

It maintains its complete accounts in the TALLY software package and takes print copies of following registers every year: 1. General Ledger Register 2. Sundry Debtors Register 3. Sundry Creditors Register 4. Journal Register 5. Asset Register 6. Stock Register 7. Purchase Register 8.Sales Register 9. Debit and Credit Note Register 10. Bills Discounting and Collected Register 11. Cash Book with Bank column Register
SALES & SHIPPING DEPARTMENT: RESPONSIBILITIES: 1. HEAD OF THE DEPARTMENT :

He should see to the product requirement, the order acceptance document approval
2. SALES ENGINEER (Order review: OR) : He is responsible for order acceptance.
3. SHIPPING OFFICER:
He is responsible for handling, storage, packing and delivery, dispatch follow up, providing delivery status and allocation of stock.
PROCEDURE:
a) Size of the box will b decided the S&SD depending on the quantity. b) S&SD will collect the value remember from Q.A.dept against packing slip Scope: This procedure is applicable for all tenders/ enquiries/ orders/ Amendments.
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Strengths:
The company has excellent network, which provide good quality product with minimum time. ISO standard helps to marketing in International Level. 1. The good HR system is their like - Motivation, Training, to new employee etc. 2. Feed-back information is provided to all employees.
Weaknesses:
It is not having a separate marketing dept. No direct exporting. No international recognition by its own name.
Opportunities:
Potential market for spare parts is growing high. Export order received is greater than what they are able to produce, so opportunity to increase production capacity for which ready market is available Whatever is produced is exported. Opportunity to enter plug valve market. International Customers shows more interest to buy Flowserve microfinish products. Company has a out Bond logistic Management & documentation. They have excellent infrastructure facility to workers.
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Threats:
No threat in the sense, no competitors for it because it is not a independent firm but has got JV with Flowserve USA. So threat may be any action of Flowserve USA on microfinish like taking back shares invested in microfinish or can stop giving export order to flowserve microfinish.
STEPS INVOLVED IN EXPORT ORDER PROCESSING: 1.

Initially a purchase order or export order received by Flowserve Microfinish Ltd which will be sent by importing party. The purchase order will be acknowledged and then examined carefully. The various terms and conditions of export contact viz. Item specification, pre shipment inspection, packing requirement, labeling, payment conditions, shipment and delivery date, marine insurance and documentation, etc. once all the terms and conditions are complied with a formal confirmation of the order need to be sent, after this conformation of the work order is prepared.
2. WORK ORDER FILE: - Work order is a document which is prepared in

with Purchase Order.
accordance
Work Order will contain:

1 Work order number, date. 2 Customer Purchase Order Number with date. 3 The country of importing party. 4 Specification of the item. 5 Purchase Order Item Number. 6 Product code (standardized world wide). 7 Size (mm). 8 Mode of transportation and due date
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So work order file is prepared filling all the above particulars and once it is received in order to check the technical specification of item number, material status and capacity for manufacturing also verify whether the item is purchased through order or tender. All technical specifications from T1 to T14 are verified and work order finally is prepared (singed) and approved by sales and shipping officer and chief operating officer. And then a copy of work order is sent to there departments namely; Planning and Purchase Department (P&P). Purchase and Assembly Department (P&A). 3. Planning and Purchase Department : A copy of work order is received by Planning and Purchase Department, according to which the Department members plan for the requirement and purchase of casting (raw materials) and other necessary materials for the production of valves and pumps. After determining the quantity of raw materials required for each item (based upon size, weight and dimensions), raw materials purchased from near by suppliers and sometimes imported (gestations period). Some times ready components instead of raw materials i.e. steel, like nuts, bolts, etc will also be purchased by this department Flowserve Microfinish has regular suppliers of raw materials at a lower cost. 4. Production and Assembly Department: A copy of work order is received also by P&A department, since this department has to go ahead with actual production and assembly, according to this size, quality, and dimension and item code specified in the work order. For production of specified items a requisition on stores for collection of raw materials is made. 5. For production of specified items a requisition on stores for the collection of required raw materials is made by production and assembly departments the store supplies required material for P&A department and actual production starts and thus work order comes to the stage of work in progress 6. Production work in progress: Goods are in process stage (production taking place) not yet complete.
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7. CCN -. Stores finished: In this stage of export order processing, different components required for the final product that is Valves / Pumps are ready and are to be further assembled. Hence CCN that is composed completion note is given by the store after it gets components from production. 8. Assembly (work in progress) - Here work order is issued for assembly department by supplying different finished components from store for assembling final product according to item code specified in work order. Assembly work goes on to reach the stage of final product. 9. VCN -. Final Inspection: valves completion note is given by the assembly department saying that valves are ready in every aspect and are ready for final inspection. Final inspection will be done by inspection department which involves members specialized in technical aspect of product. They check the valves heat tolerance, water proof cover etc. required features through some testing techniques. 10. Final design: Now the valve / Pump are ready for final design, where in billing instructions is prepared. Billing instruction contains several information regarding final design of product.
Contents of billing instructions are: Work order number Purchase order number Item - Ball valve Item number 1 2 3 Consignee address : Singapore Payment Terms : 30 days Number of cases : 1 WOODEN / CRATE / PLYWOOD / CORRUGATED Box numbers : V - 730 To V I Product Code: 2BF21 FRLTXC66D 3BF21FRLTXC66D ---------------------Quantity (numbers) 1 3 -
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Box details
(a) Box dimensions [Outside (inches)] (b) Box dimensions [inside] (c) Weight of the box (d) Quantity in each box (e) Net weight (f) Gross weight (g) Volume (h) Freight - 20X1 4X1 7 - 16X10X10 - 15 KG - 2+2 - 30 KG - 45 KG - 2.754 CBFT - AIR / OCEAN /COURIER
These all contents of billing instructions give the full design of the product. 11. Customs invoice - after preparing billing instruction for final design of the product, a customs invoice is prepared and certified by the exporter himself. Customs invoice contains all detailed description of goods consigned, like the consignor's name, consignee's name, number and date of bill of lading, date of sailing, order acceptance, country of origin, marks and number of packages, special markings, quantity shipped selling price and terms of sale etc. 12. Packing list: Packing list is prepared by exporter (seller) Itemizing goods shipped, quantities, sizes, weights and packing marks. Very common in trade finance the packing list should prepare so as to be consistent with other documents especially under a letter of credit. 13. ARE I form - ARE I form is prepared by the exporter which is obligatory. 14. GR form or SDF form -. Preparation of GR form or SDF form is done for exchange control declaration and exports t all countries and for declaring exports in the case of specified customs offices and specified categories of shipping bills under EDI System.
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15. Form A - Prepared to get certificate of origin from Chamber of Commerce, by Presenting or showing export order. 16. Shippers instructions - Shippers instruction is prepared by the exporter, containing exporters name consignee's name, invoice number, and all information same as in case of invoice and also other documents of contract like LOC, AR4 / AR4A Form, GR form, invoice, packing list, declarations of important instruction to the shippers and to the receiving authority are given at the end.
LOGISTICS FOR EXPORTING UNIT:

When the foreign marketer begins producing and selling more than one country and becomes a global marketer, it is time to consider the concept of logistics management, that is a total systems approach to management of the distribution process that includes all activities are involved in physically moving raw material, inprocess inventory, and finished goods inventory from the point of origin to the point of use of consumption. Logistics J.E facility location decision, transportation decision and inventory decision are related to each other and are important. In the whole logistics structure of Flowserve Microfinish, in plant inventory system also playa an imp role, by reducing the cost of maintaining inventory. There is a short period of time involved in movement of raw materials to the manufacturing place. Some times RMs that is some components need to be imported and then assembled to a final product, when the customers specifies that final product should have certain imported spare parts. In this case there is gestation period, during which manufacturing unit has to wait for arrival of imported RMs.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD When the RMs reach manufacturing plant maintaining stock at different levels place very important role, since it is concerned with efficient use of space available. In this matter Flowserve Microfinish has found its own inventory system. As and when there is a work order issued, planning and purchase Dept. order for required RMs and limited space is made available for initial storage of RMs since immediately RMs will be issued to production and they in turn will be converted into components and to a final product. So major amount of inventory is there in the process of production itself, so cost of maintaining huge stock is reduced. New Inventory System is introduced to trace out the stock at different stage of production. After the final product are ready for dispatch, the transportation charges and for their transportation to importer's place is given by Flowserve Microfinish by appointing C&F agents or sometimes forwarders appointed by concerned importing party
CONTINUAL IMPROVEMENTS
The effectiveness of the QMS is continually improved through the use of Quality Policy, Quality Objectives, and audit results, Analysis of data, Corrective and Preventive actions and Management review. All functional Incharges identify the areas for improvement. Following steps are taken for implementing the continual improvement as appropriate;
1. Defining the objective and outlining the project. 2. Identifying the constraints in the existing process. 3. Identifying possible solutions. 4. Selection of best solution. 5. Identification of required resources, if any. 6. Implementation of the improvement. 7. Evaluation of the improvement achieved, including lessons learned.
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CORRECTIVE ACTION: Actions are taken to eliminate the causes of nonconformity's & to prevent recurrence. Corrective actions are taken as appropriate to the Effects of the non-conformity encountered. Documented procedure,
A121 is established to define the requirements of Reviewing the nonconformity's (including customer complaints) Determining the causes of nonconformities. Evaluating the need for action to ensure that nonconformities do not reoccur. Determining and implementing action needed records of the results of action taken, and Reviewing corrective action taken.
PREVENTIVE ACTION: Actions are taken to eliminate the causes of the potential non-conformities in order to prevent their occurrence. Preventive actions are taken as appropriate to the effects of the potential problems. Documented procedure, A122 is established to define the requirements ofDetermining potential nonconformity's and their causes Evaluating the need for action to prevent occurrence of nonconformities. Determining and implementing actions needed Records of results of action taken, and Reviewing preventive actions taken.
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CUSTOMER - RELATED PROCESSES: DETERMINATION OF REQUIREMENTS RELATED TO THE PRODUCT

Flowserve Microfinish Group of Companies manufacture Plug Valves Plug valve / components, Pumps / Pumps components as per designs, drawings and specifications supplied by M/s. Flowserve Corporation Inc. Process for customer related processes procedure no A109 identifies all the requirements, specified by customer, including the requirements for delivery and post-delivery activities, Statutory and regulatory requirements &, requirements of PED97/23/EC related to the product and any additional requirements required by the organisation.
REVIEW OF REQUIREMENTS RELATED TO THE PRODUCT

During enquiry stage all the above requirements are reviewed for feasibility. If found feasible, formal quotation is submitted to customer. With mutual agreement, the products are taken for execution. It is ensured that client is aware of his responsibility to provide any information necessary to carry out a hazard analysis and category evaluation of valve as per the requirements of PED97/23/EC. Once the order is received, it is reviewed for all the technical, commercial and shipment terms and for decision whether the PED97/23/EC is to be applied or not and, determine any other statutory & regulatory requirement is applicable. It is ensured that the contract or order requirements differing from those previously expressed are resolved. Records of the results of the review and actions arising from the review are maintained. For the requirements given by the customer in verbal means, the customer requirements are confirmed before acceptance, in writing. In case of amendments to the contract, the necessary reviews are conducted and decision is taken. It is ensured that changes do not alter the decision made regarding PED97/23/EC.
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CUSTOMER COMMUNICATION:Flowserve Microfinish group of companies have determined and implemented effective arrangements for communicating with the customers through internet, fax, telephone etc. relating to a) Product information b) Enquiries, order handling, including amendments, and c) Customer feedback, including customer complaints
DESIGN &, DEVELOPMENT:All designs, verification, validation and responsibility and authority for design rests with M/s. Flowserve Corporation Inc. for Plug Valves and Pumps, M/s. Microfinish Valves Ltd. for Ball Valves. Flowserve Microfinish Group of Companies assists development activity by development of process, tooling, Jigs and fixtures as defined M procedure A I 10.
PURCHASING PROCESS: It is ensured that all the purchased products conform to specified purchase requirements as per A 111. The type and extent of control applied on the supplier is dependent upon the effect of the purchased product on the subsequent product realization or final product. Purchasing I/C evaluates and selects the suppliers based on their ability to supply product in accordance with the company's requirements. Criteria for selection, evaluation and re-evaluation are established based on the type of product/ service. Records of the results of evaluation and any necessary actions arising from the evaluation are maintained As per A 111. It is ensured that changes do not alter the decision made regarding PED97/23/EC.
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PURCHASING INFORMATION :Purchasing information, communicated to the Supplier, describes the Product to be purchased, including where appropriate, requirements for approval of the product, procedures, processes, equipment, qualification of personnel and Quality Management systems requirements, and requirements of PED97/23/EC including compliance certificates from suppliers. The adequacy of specified purchase requirements is ensured prior to their communication to the supplier through proper approval system.
VERIFICATION OF PURCHASED PRODUCT :Processes are established and implemented to inspect the -purchased products to ensure that the product meets specified purchase requirements. as per A 119 If FMVPL's /FMPPL's representative or Certified body intends to perform verification at the supplier's premises, the intended verification arrangements and t4e method of product release is specified in the Purchasing Information.
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PRODUCTION AND SERVICE PROVISION: CONTROL OF PRODUCTION PROCESSES

Production activities are planned as per A108. The production processes are carried out under controlled conditions which include: Availability of information that describes the characteristics of the product. The availability of Process drawings documented, work instructions, as necessary. Use of approved process, equipments and personnel. The availability and use of monitoring and measuring devices. Implementation of monitoring and measurement, All pressure containing products requiring CE marks are traced through unique identification marks. In case of special processes continuously monitoring process parameters, specifying qualification requirements and maintaining records of qualified process, equipments and personnel. In case of permanent joining process such qualifications will be through the recognized third party /notified body as required by Annexure 1 3.1.2 of PED97/23/EC. Implementation of release, delivery & post delivery activities. The details of Production control is explained in procedure A 112. And relevant work instructions.
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VALIDATION OF PROCESSES FOR PRODUCTION:The production processes, for which the resulting output cannot be verified by subsequent monitoring or measurement, process validation is carried out. The validation ensures the ability of the processes to achieve planned results. Arrangements for these processes are established, including, as applicable Defined criteria for review and approval of the processes Approval of equipment and qualification of personnel Use of specific methods and procedures Requirements of records and Revalidation. Special processes identified are welding and painting. Which detailed in work instruction in the respective functions, welding in P A function & painting in S & S function.
IDENTIFICATION &. TRACEABILITY: The products are identified by suitable means such as colour codes, tags, punching throughout all the stages of product realization delivery installation to ensure that the non-conforming products are not mixed with the conforming products as per A 114
CE MARKING:The CE marking consists of initials "CE" in accordance with the model in Annexure VI of the PED97/23/EC. The marking shall be accompanied by the identification number as issued by the notified body.
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MONITORING AND MEASUREMENT

To ensure that the output meets the specified requirements, & to continually improve the effectiveness of the quality management system. Applicable to monitoring and measurement of Product, Processes and QMS.
RESPONSIBILITY:
M.R., Functional Incharges.
SYSTEM: MONITORING AND MEASUREMENT OF CUSTOMER SATISFACTION:

Sales I/C along with top management ensure that all the customer requirements are met and all the activities in the organization are intended towards enhancing the customer satisfaction. Customer satisfaction is monitored for all the customers/ buyers. Sales I/C sends the customer satisfaction survey form to all the customers/ buyers and collect the required information to judge whether customer is satisfied with the organizations performance. Based on the data collected, indicators for customer dissatisfaction are identified and necessary actions are taken to improve the performance.
INTERNAL AUDIT: Internal audit is the independent assessment of any designated process or activity. Internal audit schedule is finalized at the beginning of each year. Internal Audits are planned on the status and importance and based on the previous audit findings. MR plans the internal audit at least once in three months or as found necessary. The audit criteria, scope methods for conducting the audits are defined. Methodology for selecting the auditors is defined to ensure objectivity and impartiality of the audit. Auditors are not allowed to audit their own area to avoid bias. Procedure for conducting the internal audit is defined in A 118. Based on the audit findings, the personnel responsible for the area being audited take the necessary actions. Follow-up activities are conducted for verification of the actions taken.
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MONITORING AND MEASUREMENT OF PROCESSES: Measurable for all the processes are identified at end of the procedures for the same. Targets for all these measurable are set and communicated to the concerned. Methods for monitoring and measurement are also defined. Measurable and targets would be reviewed at each MR meeting and changes if required would be effected as found necessary by the Top Management. When planned results are not achieved, correction and corrective action is taken to ensure conformity of the process.
MONITORING AND MEASUREMENT OF PRODUCT:The characteristics of the product are monitored in three stages viz. receiving, in-process and final stage to ensure that those meet the product requirement. Procedures are established to define the monitoring and measurement of the product as per A 119. QA is overall responsible for monitoring and measurement at all the stages. including requirements of PED97/23/EC. Records of the monitoring and measurement are maintained to give the evidence of the activity. Authorities are defined for carrying out the monitoring and measurement and taking the decisions on the results. All documentation (Technical / non- technical) for PED97/23/EC are maintained a period of at least ten years. Products are not released until Quality requirements have been satisfactorily completed, unless otherwise approved by a relevant authority and, where applicable, by customer.
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PACKAGING AND PACKING:

The material used for packing for valves are; Wooden box, crates, corrugated boxes and polythene bags and also thermocol. If the space parts are of small size and less weight they are packed with corrugated boxes first and then they are put into plywood box. But in the packaging list copy in material for packaging used column. Plywood is only marked not corrugated box. If the spare parts are big & heavy (pumps) they are put in to wooden box or crate box. 6 to 8 parts are usually put in to one box. In crate box, the gross weight of the box is reduced by putting less no of crate sheets i.e. leaving space between two sheets (the material is big & heavy cannot come out of the crate box) Gross weight of box = weight of product i.e. value or pump + weight of wooden or crate box.
The weight of the packed good will determine the mode of transportation. If the weight of valves is less (i.e. small size) & also if less weight packing material are used like corrugated box + plywood then goods are send through air. Freight otherwise goods are send through sea or courier.
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BENEFIT ENJOYED BY THE EOUS/SEZS UNITS

Can import or procure the domestic sources free of duty, all requirements of capital goods, raw material, office equipments etc. No license required for import / domestic procurement. Are exempted even free from anti dumping duties. Domestic procurement is free from variety of state lavies including CST. Are entitled for duty free supply of furnace oil etc. Full freedom to subcontract part of the production and production process in the domestic are. Can clear goods up to 50% of the value of export in the domestic area on concessional duty. Sales beyond this can be made on full duty. Can supply to other EOU/SEZ unit without payment of duty and such supplies are counted towards fulfillment of EP. Supplies from the domestic area to EOU are allowed deemed export benefit. Can procure duty free inputs for supply manufacturing goods to advance license holders. Are exempted from industrial licensing for manufacture of items reserved for small scale industry sector. Are exempted from state trading regime except in limited cases. Can club their exports with exports of their parent company for purpose of obtaining trading house/export house status. Brand promotion and equity: manufacture/processers who have acquired quality status with specified certification from identified agencies are eligible for double weight age for recognition as status holder. Can repatriate their profit freely without any dividend-balancing requirement. Are permitted 100% foreign direct investment through automatic approval route except for few sectors.
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RATIO ANALYSIS MEANING

Ratio analysis is a widely-used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements to that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. A ratio is relationship expressed in mathematical terms between two individual and groups of figures connected with each other in some logical manner. The relationship between two or more accounting figures/groups is called financial ratio. 1. Liquidity ratios. 2. Capital structure or leverage ratio 3. Turnover ratios. 4. Profitability ratios. 5. Expenses ratios.
1. Liquidity Ratios:
Liquidity of the company means its ability to meet its current and short term obligations when they become due for payment. It reflects the short financial strengths and solvency of a company. The short term creditors of the company are interested
* Current Ratio:
The current ratio is the ratio of current assets to the current liabilities. It is calculated by dividing current assets by current liabilities. Current Ratio = Current Assets/Current Liabilities
The current assets of the company represent such assets, which can be converted into cash within sort time or period which is normally not exceeding one year and includes cash and bank balances, marketable securities, inventory of raw material, work in process and finished goods, net debtors, bills receivable. Similarly total of current liabilities includes short term liabilities namely trade debtors, bills payable, outstanding expenses etc different current assets to liquidate is different.
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3) Turnover or Activity Ratios:

The Turnover Ratio or Activity ratios are concerned with measuring the efficiency in asset management. Hence some times these ratios are also called as efficiency or asset utilization ratios, these ratios reflect the management efficiency in utilization of the companys assets and its operations.
* Inventory or stock turnover ratio:It is computed by dividing the cost of goods sold by the average inventory.
Inventory Turnover Ratio= cost of goods sold / average inventory

The cost of the goods sold can also be computed as net sales less gross profit. The average inventory is computed as the simple average of the opening stock and closing stock of the inventory.
* Asset Turnover Ratios:

This ratio is also known as the investment turnover ratio. This is based on the relation between the cost of goods sold and assets of the company. The important ratios this isTotal Asset Turnover Ratio: The Ratio is computed by dividing the cost of goods sold by the average total assets. Total assets include, current assets, and miscellaneous expenditure .Average total assets are simple average of the opening and closing balance of the total assets.
Total Asset Turnover Ratio = Cost of goods sold / Average Total assets
Fixed Asset Turnover Ratio: it is computed by dividing the cost of goods sold by total fixed assets.
Fixed Asset Turnover Ratio = Cost of goods sold / Total fixed assets
This ratio show that the efficiency with which the fixed assets are utilized for operations.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD Net Asset Turnover Ratio: Net asset is also called capital employed .It is calculated by dividing net assets divide by net sales.
Net Asset Turnover Ratio = Net sales / Net Assets
* Working Capital Turnover Ratio: A firm may also like to reduce net current assets to net sales. It may compute working turnover by dividing net sales by the net working capital
Working Capital Turnover Ratio = Net sales / Net working capital

Higher ratio indicates efficiency of using working capital to maximize the sales and vice-versa. But too high ratio indicates shortage of working capital of firm. The reciprocal of this ratio indicates that the availability of working capital on one rupee of sales.
Accounts Receivable (debtors)Turnover Ratio:
This ratio is computed by dividing the sales by debtors.
Debtors Turnover Ratio = Sales / Average Debtors

This ratio shows how quickly receivable or debtors are converted into cash .It is test of liquidity of debtors of the company. This ratio will be expressed in terms of days or months gives the average collection period. It is calculated as follows-
Average collection period = 360 / Debtors Turnover Ratio

This gives time period after which the debtors are converted into cash on an average. This is important from the point view of efficiency of collection. This average collection period if compared with the credit period given to the customers of the company, will give a lot of insight into receivables management of the company. Hence, in general a high turnover ratio of debtors is or short collections period is preferable.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD A very collection period would imply either poor credit selection or an inadequate collection effort. The delay in the, collection of receivables affect liquidity position of the company seriously and there is possibility of a large number of accounts receivables becoming bad debts. * Creditors Turnover Ratio: This ratio is the ratio between purchases and creditors outstanding. The creditors turnover ratio as follows-
Creditors turnover Ratio = Purchases / Average Creditors

A low ratio reflects liberal credit terms granted by the suppliers, while a high ratio shows that accounts are settled rapidly. It is important ratio for analysis, as company can reduce its requirement of working capital by relying on suppliers credit. This ratio can be expressed as the accounts payable period in terms of days or months.
This ratio shows the extent to which the trade creditors are willing to wait for payment. The velocity of creditor (i.e. accounts payable period) on higher side reflects better negotiation for the credit period. The velocity of creditors should be compared with the credit period received from the suppliers. This should show the efficiency of the management in negotiation for the credit terms.
Account Payable Period = 360 / Creditors Turnover Ratio
4. Profitability Ratio:
The management of a company or the company itself is naturally interested to measure operating efficiency. Also, the owners invest their funds in the company in the expectation of reasonable return to its share holders depends on the profits earned by it. activities. The profitability ratios help in measuring the profitability of the company. Various types of such ratios are explained below,
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* Gross profit Margin: Gross profit margin represents the relation between the profits and
sales.
Gross Profit Margin = Gross Profit / Net Sales

Gross profit is the result of the relation between prices, sales value and cost. Any changes in these well effect the gross profit. A high gross profit margin is the of good management. As it implies that the cost of goods it self might have reduced.
* Operating Profit Margin: This ratio measures the relationship between operating profit
and sales.
Operating Profit Margin = Operating Profit / Net Sales

The operating profit means the profit before the interest and taxes and before considering the effect of non trading transactions.
* Net Profit Margin: This ratio measures the relationship between and profit after tax and net
sales
Net Profit Ratio = Net Profit / Net Sales
The high net profit margin should ensure adequate return to the owners as well as enable company to withstand adverse economic conditions and selling price declining, the cost of production is rising and the demand product is falling.
* Return on Capital Employed: It is the indicator of relationship between net profit and
total assets (capital employed).
Return on Capital Employed = Earnings after Tax / Average Total Assets

This gives the return on total assets employed. But it throws no light on the profitability of the different sources of funds, which finance the total assets.
* Return on Equity: In this ratio profitability measures by dividing the net profit after taxes
by the average shareholders equity. The average shareholders equity includes equity, reserves and surplus excluding miscellaneous expenditure.
Return on Equity = (Net Profit after Taxes) x 100 / Average Net Profit 5. Expenses Ratios:
It is computed by dividing sales. There are various expense ratios Material Cost Ratio = Material / Sales Manufacturing Expense Ratio = Manufacturing Expense / Sales Cost of Goods Sold Ratio = Cost of Goods / Sales In case of lower ratio is favorable while higher one is unfavorable.
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1. LIQUIDITY RATIO:
Current ratio:
Current ratio= Current Assets/ Current Liabilities
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Current Assets 106338799.00 145760324 146531184 155290452 224355920
Current Liabilities 34073999 48219292 39620366 23401949 58933415
Ratios 3.12 3.02 3.70 6.64 3.81
Interpretation: As conventional rule, current ratio of 2:1 or more is considered satisfactory. By

observing the all five years ratios there was highest ratio 6.64 in the year 2006-07 which is high compared to the standard and was more than sufficient to meet its current obligations. In other financial years also it is on the higher side.
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Quick ratio:
Quick ratio = Liquid Assets / Current Liabilities
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Liquid Assets 58689100.00 89901880.00 86260409.00 86454567.00 145975706.00
Current Liabilities 34073999.00 48219292.00 39620366.00 23401949.00 58933415.00
Ratios 1.72 1.86 2.18 3.69 2.48
Q u ic k r a tio 4 3 2 1 0 2003-04 2004-05 2005-06 2006-07 2007-08 Q u ic k r a tio
Interpretation: Generally quick ratio of 1:1 is considered to represent a satisfactory current

financial condition of the company. The quick ratios of the company for five years from 2003-04 to 2007-08 are 1.72, 1.86, 2.18, 3.69, 2.48 respectively. By observing five years ratios, the company found to be sound liquidity position. During 2006-07 the company was having ratio of 3.69, it may be interpreted that the amount blocked. In slow moving asset, i.e. inventories are not too heavy when this is compared with the current ratio.
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD 1. ACTIVITY RATIO
Assets Turnover Ratio: Year 2003-04 2004-05 2005-06 2006-07 2007-08 Sales 111070550.0 0 200826666.0 0 162345990.0 0 212798446.0 0 268672843.0 0 Net Assets 96329353.00 118806891.00 148863956.00 148863956.00 180668764.00 Ratios 1.15 1.69 1.28 1.43 1.49
A s s ets turnov er ratio 1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2003-04 2004-05 2005-06 2006-07 2007-08 1.15 1.69 1.43 1.28 1.49
A s s ets turnov er ratio
Interpretation: It is the measure of efficiency in utilization of assets, high ratio indicates better
utilization. The asset turn over ratios for five year ratios i.e. from 2003-04 to 2007-08 are 1.15 times, 1.69 times, 1.28 times, 1.43 times,1.49 times respectively. The highest ratio was in the year 2004-05 which was 1.69 times, which indicates that the company had generated 1.69 of sales for one rupee of capital employed.
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Working capital Turnover Ratio:
Working capital Turnover Ratio = sales / Net working capital
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Sales 111070550.0 0 200826666.0 0 162345990.0 0 212798446.0 0 268672843.0 0
Net working capital 72264800.00 97541032.00 106910818.00 131888503.00 165672980.00
Ratios 1.54 2.06 1.52 1.61 1.62
W or kin g c a p ita l tur no v e r r a tio 2.5 2 1.5 W o rking c a pital tu r no v e r ratio 1 0.5 0 20 03 -0 4 20 04 -0 5 2 00 5-0 6 2 00 6 -07 2 00 7-0 8 1 .5 4
2 .0 6 1 .52 1 .61 1.62
Interpretation: This ratio establishes relation between sales and net working capital. The ratios
for five years are 1.54 times, 2.06 times, 1.52 times, 1.61 times, 1.62 times respectively. The highest ratio was 2.06 times, which was in the year 2004-05. It may be interpreted that the one rupee of net working capital, the company has generated Sales of rupees 2.06 and it can be said that its net working capital rotated 2.06 times in that year.
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DEBTORS TURNOVER RATIO : Debtors Turnover Ratio = Sales / Average Debtors Year 2003-04 2004-05 2005-06 2006-07 2007-08 Sales Average Debtors Ratios 111070550.0 37807737.00 0 200826666.0 52152812.00 0 162345990.0 56454556.00 0 212798446.0 54650209.00 0 268672843.0 76946960.00 0
2.94 3.85 2. 3.89 3.49
D e b to r s t u r n o v e r r a t io 4 .5 4 3 .5 3 2 .5 2 1 .5 1 0 .5 0
3 .8 5 2 .9 4 2 .8 8
3 .8 9
3 .4 9
D e b t o r s t u r n o v e r r a t io
2 003-04
200 4-0 5
2 0 0 5 -0 6
2006 -07
2007-08
Interpretation: This ratio indicates that how rapidly debts are collected. The ratios for five
years are 2.94 times, 3.85 times, 2.88 times, 3.89 times, 3.49 times respectively. By observing above ratios, it may be interpreted that the companys ratios are relatively low which signifies that the debts were not collected rapidly.
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DEBTORS COLLECTION PERIOD :
Debtors Collection Period : 360 days / Debtors Turnover Ratio
Year 2003-04 2004-05 2005-06 2006-07 2007-08
360 days 360 360 360 360 360
Debtors Turnover Ratio 2.94 3.85 2.88 3.89 3.49
Ratios 123 days 95 days 125 days 93 days 103 days
De b to r s c o lle tio n p e r io d 140 120 100 80 60 40 20 0 2003-04 2004-05 2005-06 2006-07 2007-08 123 94 125 93 103
De b to r s c o lle tio n p e r io d
Interpretation: The debtor collection period for five years are 123 days, 94 days, 125 days, 93
days,103 days respectively. These ratios indicate that the debts were remained outstanding for longer periods.
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CREDITORS TURNOVER RATIO :
Creditors Turnover Ratio = Net Sales / Creditors
Year 2003-04 2004-05 2005-06 2006-07 2007-08
Net Sales 111070550.0 0 200826666.0 0 162345990.0 0 212798446.0 0 268672843.0 0
Creditors 18096789.00 32342880.00 19666956.00 23171661.00 58528184.00
Ratios 6.13 Times 6.20 Times 8.25 Times 9.18 Times 4.59 Times
Creditors turnov er ratio 10 8 6 4 2 0 2003-04 2004-05 2005-06 2006-07 2007-08 6.13 6.2 4.59 Creditors turnov er ratio 9.18
8.25
Interpretation: This ratio reflects credit terms granted by the suppliers. A low ratio shows that
the liberal credit terms granted by the suppliers, while the high ratio shows that accounts are being settled rapidly. The ratio for five years are 6.13 times, 6.2 times, 8.25 times, 9.18 times, 4.57 times respectively. There was high ratio 9.18 times in the year 2006-07.
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ACCOUNTS PAYABLE PERIOD :

Accounts Payable Period: 360 days / Creditors Turnover Ratio
Accounts Payable Period 2003-04 2004-05 2005-06 2006-07 2007-08
Creditors Turnover Ratio 6.13 6.20 8.25 9.18 4.57
Days 59 days 58 days 44 days 39 days 79 days
A c c o u n ts p a y a b le p e r io d 90 80 70 60 50 40 30 20 10 0 2003-04 2004-05 2 0 0 5 -0 6 2006-07 2007-08 59 58 44 39 A c c o u n ts p a y a b le p e r io d
79
Interpretation: The ratio shows the extent to which the trade creditors are willing to for
payments. The above data reveals that the company availing good credit facility.
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3. PROFITABILITY RATIO GROSS PROFIT RATIO :

Gross Profit Ratio = Gross Profit * 100 / sales
Gross Profit Ratio 2003-04 2004-05 2005-06 2006-07 2007-08
Gross Profit 42935984.00 90234253.00 52319133.00 83271387.00 90323108.00
sales 111070550.00 200826666.00 162345990.00 212798446.00 268672843.00
Ratios 38.66 % 44.93 % 32.23 % 39.30 % 33.62 %
Gross profit ratio 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 44.93% 38.66% 32.23% 39.13% 33.62% Gross profit ratio
2003-04
2004-05
2005-06
2006-07
2007-08
Interpretation: The high gross profit ratio to sales is sign of good management as it implies
that the cost of production is relatively high. The ratios for five years i.e. from 2003-04 to 2007-08 are 38.66%, 44.93%, 32.23%, 39.30%, 35.07% respectively. The company has higher ratio, which is satisfactory sign.
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OPERATING PROFIT RATIO :
Operating Profit Ratio: EBIT * 100 / Sales
Operating Profit Ratio 2003-04 2004-05 2005-06 2006-07 2007-08
EBIT 26684407.00 46657607.00 40167797.00 55048331.00 48290757.00
Sales 111070550.00 200826666.00 162345990.00 212798446.00 268672843.00
Ratios 24.02 % 23.23 % 23.23 % 25.87 % 17.98 %
Operating ratio 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2003-04 2004-05 2005-06 2006-07 2007-08 24.02% 23.23%
24.74%
25.87% 17.98% Operating ratio
Interpretation: Operating profit margin represents the firms efficiency in covering operating
expenses. A high ratio indicative of firms ability to meet its operating expenses. The operating profit ratios for five years are 24.02%, 23.23%, 24.74%, 25.87%, 17.88% from 2003-04 to 200708 respectively. By analyzing the above ratios of the company. It clearly shows that the ratios are not satisfactory in recent years. But among the above five years ratio it was good in the year 200607.
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NET PROFIT RATIO :

Net Profit Ratio = Net Profit * 100 / Sales
Net Profit Ratio 2003-04 2004-05 2005-06 2006-07 2007-08
Net Profit 26317972.00 46462607.00 39179732.00 54494875.00 48290757.00
Sales 111070550.00 200826666.00 162345990.00 212798446.00 268672843.00
Ratios 23.69 % 23.14 % 24.13% 25.61 % 17.98 %
Net profit ratio 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2003-04 2004-05 2005-06 2006-07 2007-08 23.69% 23.14% 24.13%
25.61% 17.98% Net profit ratio
Interpretation: This ratio is the overall measure of the firms ability to turn each rupee of sales
into net profit. The ratios of the company for five years are 23.69%, 23.14%, 24.13%, 25.61%, 17.88% respectively. By analyzing the above ratios it clearly shows that, the companys profitability is satisfactory. But among the five years ratios, it is found that in the year 2006-07 it was good i.e. 25.61% on sales.
RETURN ON INVESTMENT (BEFORE TAX)

Return On Investment (Before tax) = Operating Profit * 100 / Capital Employed Operating Profit Year 2003-04 2004-05 2005-06 2006-07 2007-08 26684407.00 46657607.00 40167797.00 55048331.00 48290757.00 Capital Ratios Employed 96080985.00 118866975.00 126308821.00 148870020.00 180828275.00
27.77 % 39.25 % 31.80% 36.98 % 26.71 %
ROI bef ore tax 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2003-04 2004-05 2005-06 2006-07 2007-08 27.77% 39.25% 31.80% 36.98% 26.71% ROI bef ore tax
Interpretation: This ratio indicates that how much profit that the company has earned on its
investment. The analysis of the five years data reveals that, this is average. But it can be considered as good in 2004-05 and 2006-07.
RETURN ON EQUITY :
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD Return on Equity = Profit after tax * 100 / Shareholders Fund
Return on Equity 2003-04 2004-05 2005-06 2006-07 2007-08
Profit after tax 26317972.00 46462607.00 39179732.00 54494875.00 48290757.00
Shareholders Fund 34900000.00 34900000.00 34900000.00 34900000.00 34900000.00
Ratios 75.41 % 133.13 % 112.26% 156.15% 138.37 %
Return on equity 180.00% 160.00% 140.00% 120.00% 100.00% 80.00% 60.00% 40.00% 20.00% 0.00%
156.15% 133.13% 112.26% 75.41% Return on equity 138.37%
2003-04
2004-05
2005-06
2006-07
2007-08
Interpretation: ROE indicates how well the firm has used the resources of owners. The return
on equity at the end of the year 2004 is 75.41%, 2005 is 133.13%, 2006 is 112.26%, 2007 is 156.15%, 2008 is 137.65%. the company earned high rate of return on equity in the year 2006-07. Overall position of the return on equity was satisfactory.
4. EXPENSES RATIO:
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Material Cost Ratio:

Material Cost Ratio = Material Cost * 100 / Sales
Material Cost Ratio 2003-04 2004-05 2005-06 2006-07 2007-08
Material Cost Amount in Rs. 59789027.00 121746602.00 95988742.00 124969710.00 174920189.00
Sales 111070550.00 200826666.00 162345990.00 212798446.00 268672843.00
Ratios 53.83 % 60.62 % 59.13% 58.73 % 65.11 %
material c os t ratio 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2003-04 200 4-05 200 5-06 2006-07 2007-08 materia l c os t ratio 53.83 % 60 .62 % 65 .11%
58.13%
5 8.7 3%
Interpretation: The ratio indicates how much material cost incurred on one rupee of sales the
five years ratios i.e. from 2003-04 to 2007-08 are 53.83%, 60.62%, 58.13%, 58.73%, 65.11% respectively. There was high ratio in the year 2007-08 which shows that the company has incurred high cost on sales.
FINDINGS
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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD The currents assets of the company are more than the standard ratio. The company is found to be in sound liquidity position. The highest sales 268672843 was recorded in the year 2007-08. The creditors turnover ratio is quite low which show that the company availing good credit facility The company had generated 1.69 of sales for one rupee of capital employed. Debts were remained outstanding for longer period.
SUGGESTIONS
Debtors collection period of the company is high. So, the company must take necessary steps to speed up the recovery of debts. The company tries reducing its investment in inventories by taking necessary steps in distributing finished products soon after the production. Cost of the sales of the company is high. So the company either increase the prices (By taking consideration of marketing situation) or reduce the cost of sales through the economies of scale by this it can earn profit reasonably.
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CONLUSION:
The study conducted on Flowserve Microfinish has explored, various factors lying behind the success of the Flowserve Microfinish in the manufacturing industry. Flowserve Microfinish industry which is basically into valves and pumps has been able to achieve high turnover, internationally recognized product and quick delivery within very short period of time. The profitability position of the company is satisfactory and it is fluctuating also, because of mounting expenses of the company especially in terms of material cost which are procured from the foreign countries. The overall financial performance of the company is satisfactory and operating performance in terms utilization of various assets is good.
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PRTICULARS SOURCES OF FUNDS: Shareholders Fund Share Capital Advance against share capital Reserve & Surplus Net Deferred Tax liability APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress Investments
Current Assets, Loans&Advances
2003-04
34900000 35179 61145786 325000 96405965
2004-05
34900000 35179 83931796 -118866975
2005-06
34900000 35179 91373642 358133 126666954
2006-07
34900000 35179 113934841 110964 148980984
2007-08
34900000 35179 145642621 110964 180688764
45786561 21746008 24040553 24000 24064553 10500 47649699 37807737 19528750 768414 584199 106338799 & 18096789 15977210 72264800 66112 96405965
47194657 25928798 21265859 -21265859 10500 55858444 66497887 21117872 1540382 745739 145760324 32342880 15876412 97541032 49584 118866975
48904788 30298491 18606297 1096283 19702580 20500 60270775 46411224 37247819 2120432 480934 146531184 19666956 19953410 106910818 33056 126666954
49825927 33869036 15956891 1098562 17055453 20500 68835885 62889194 20727918 817918 2019537 155290452 23171661 230288 131888503 16528 148980984
50856043 36708346 14147697 1098562 15246259 20000 78380214 91004726 47073751 750366 7146863 224355920 58778659 154756 165422505 -180688764
Inventories Sundry Debtors Cash & Bank Balances Other Current assets Loans & Advances
Less: Current Provisions Liabilities
Liabilities Provisions Net Current Assets Miscellaneous Expenditure to the extent not written off
Total
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BIBILIOGRAPHY
o Text Book Khan & Jain
admin@flowservemicrofinish.com
Web Sites: www.FMPVL.com
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A Project Report On Evaluation of Financial Performance and Export Procedure and Documentation at FLOWSERVE MICROFINISH PVT LTD

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A Project Report On Evaluation of Financial Performance and Export Procedure and Documentation at FLOWSERVE MICROFINISH PVT LTD

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A Study on Evaluation of Financial Performance and Export Procedure & Documentation at FLOWSERVE MICROFINISH PVT LTD

2. Objectives of the study:

3. Scope of the study:

INTRODUCTION TO THE GROUP OF COMPANIES

FLOWERSERVE PVT LTD., USA:

FLOWSEREVE MICROFINISH LTD:

Microfinish Valves Ltd, Hubli, India 24% 837600 8376000.00

Manpower Branches Agencies

Tel & Fax No.

VALVE & PUMPS industry

GROWTH & DEVELOPMENT OF THE INDUSTRY

BUSINESS ENVIRONEMENT OF THE INDUSTRY

FUTURE OF THE INDUSTRY

FUTURE GROWTH AND EXPANSION:

OWNERSHIP PATTERN: Board of Directors:

Main Functions of valves

DIFFERENT DEPARTMENTS & ITS FUNCTIONS:

PRODUCTION PROCESS CHART

CNC Vertical Turret Lathe

Vertical Machining Center

QUALITY ASSURANCE DEPARTMENT

QUALITY ASSURANCE INCHARGE

FUNCTIONS OF QUALITY ASSURANCE DEPARTMENT

1) Incoming Material Inspection

Special process carried out by in process quality Engineer is as follows: a) Welding:

PLANNING AND PURCHASE DEPARTMENT:

PLANNING AND PURCHASE INCHARGE

SALES AND SHIPPING OFFICER

. THERE ARE TWO TYPES OF PLANS

Functions of Stores Department:

1) Verification of materials on receipt of material:

Goods received subject to Verification

2) Issue of Raw Material & Control of Raw Material:

3) Finished components issued for assembly\ dispatch:

ADMINISTRATION AND ACCOUNTS DEPARTMENT:

PERSONAL OFFICER [FACTORY & PERSONAL SAFETY]

Functions of Administration Department

Objective: Is to provide the adequate training to the personnel of all Departments

facility is also provided for workers.

2. Safety round-up is carried out by the personnel\staff of different department.

Facilities Provided By The Flowserve Microfinish To Its Workers

Payment Date 31st of every month

Date of Payment 5th of every month

ACCOUNTS DEPARTMENT. Objectives of Accounts Department:

Function of Accounts Department:

Books of Accounts maintained by the Accounts Department:

SALES & SHIPPING DEPARTMENT: RESPONSIBILITIES: 1. HEAD OF THE DEPARTMENT :

2. SALES ENGINEER (Order review: OR) : He is responsible for order acceptance.

STEPS INVOLVED IN EXPORT ORDER PROCESSING: 1.

2. WORK ORDER FILE: - Work order is a document which is prepared in

Work Order will contain:

LOGISTICS FOR EXPORTING UNIT:

CUSTOMER - RELATED PROCESSES: DETERMINATION OF REQUIREMENTS RELATED TO THE PRODUCT

REVIEW OF REQUIREMENTS RELATED TO THE PRODUCT

PRODUCTION AND SERVICE PROVISION: CONTROL OF PRODUCTION PROCESSES

MONITORING AND MEASUREMENT

SYSTEM: MONITORING AND MEASUREMENT OF CUSTOMER SATISFACTION:

PACKAGING AND PACKING:

BENEFIT ENJOYED BY THE EOUS/SEZS UNITS

RATIO ANALYSIS MEANING

3) Turnover or Activity Ratios:

Inventory Turnover Ratio= cost of goods sold / average inventory

* Asset Turnover Ratios: