1

Summer Internship Report

Working Capital Management of Jaiprakash
Associates Limited (JAL).

Carried out during
Summer Internship Programme
At
BHILAI JAYPEE CEMENT LTD.,
BABUPUR, SATNA (M.P.)

GUIDE BY SUBMITED TO
MR. GIRIRAJ BHATTAR MR FAWAD KHAN & MR MANISH
FINANCE & ACCOUNT DEPT DEPUTY MANAGER
FINANCE & ACCOUNT

SUBMITED BY
VIVEK SINGH BAGHEL
V.N.S BUSINESS SCHOOL

2


1. DECLARATION


I, the undersigned, hereby declare that the project report entitled WORKING CAPITAL
MANAGEMENT IN JAIPRAKASH ASSOCIATES LIMITED. Written and submitted
by me to the college of V.N.S Business School Bhopal, in partial fulfillment of the
requirements for the award of degree of M.B.A Finance under the guidance of Mr. Giriraj
bhattar is my original work and conclusions drawn therein are based on the material
collected by myself.


Place: Satna M.P
Date: .
VIVEK SINGH BAGHEL










3


CERTIFICATE OF APPROVAL

The foregoing project entitled WORKING CAPITAL MANAGEMENT IN
JAIPRAKASH ASSOCIATES LIMITED (JAL), is hereby approved as a creditable
study of research topic and has been presented in satisfactory manner to warrant its
acceptance as prerequisite to the degree for which it is submitted.

It is understood that by this approval, the undersigned do not necessary endorse any
conclusion drawn or opinion expressed therein, but approved the project for he purpose for
which it is submitted.




(External Examiner)
Mr Fawad Khan & Mr manish
Deputy Manager
(Finance &Accounting)
BJCL, BABUPUR, SATNA.





4


ACKNOWLEDGEMENT

This project would have been difficult to complete without the invaluable contributions from
some important persons. Let us take this opportunity to thank them.
First of all, I would like to thank JAIPRAKASH ASSOCIATES LTD (JAL), for giving me
such challenging projects to work upon. I hope this challenge has brought the best out of us.


I am indebted to my project guide Mr. Fawad Khan & Mr manish, Deputy Manager
(Accounting and Finance), Resource Mobilization Unit, for the direction and purpose he
gave to this project through his invaluable insights, which constantly inspired us to think
beyond the obvious. His encouragement and co-operation helped us instill a great degree of
self-confidence to deliver a good work.

I am also thankful to all the employees of JAIPRAKASH ASSOCIATES LIMITED who
provided us with an environment conducive for learning during the last one month.


I hope I can build upon the experience and knowledge that we have gained here and make a
valuable contribution towards this industry in the coming future.




Vivek singh baghel
M.B.A 2
nd
sem Finance





5





PREFACE


Practice makes more perfect


In the field of management every time there is a requirement of understanding or
Practical aspect of the organization with managerial mind. There is requirement to go for
practical training of any subject supplement to the theoretical knowledge and clarified
concept.

It is more applicable in the field of the management especially a professional course like
MBA. (College of V.N.S Business School Bhopal) has prescribed 45 days project report
training during the 2
nd
Semester as a part of MBA. Programmers my training at the BHILAI
JAYPEE CEMENT PLANT Works is to comply with these requirements also.











6


CONTENTS


Ch. No. Particulars Page
No.
1
COMPANY PROFILE

1.1 Origin, Vision, Mission, Values
1.2 Historical milestone
1.3 Quality policy
1.4 Competitors
1.5 Business activities

- Civil engineering construction
- Hotel and hospitality
- Cement manufacturing
- Jaypee cement limited
- Jaypee power grid ltd
- Gujrat anjan cement ltd
- Jaypee infratech ltd
- Bhilai jaypee cement ltd
- Himalayan express ltd
- Madhya Pradesh Jaypee mineral ltd

1.6 Hydropower
1.7 Information technology
1.8 Integrated township
- Jaypee green
1.9 Education and welfare
1.10 Thermal
- Nigrie thermal project
- Captive thermal project
1.11 Expressway
1.12 Bokaro jaypee cement ltd

11-28
7


2


INTRODUCTION

2.1 Cement division
2.2 About jaypee cement and jaypee group
2.3 Manufacturing unit
2.4 Introduction of the Bhilai Jaypee Cement Limited(BJCL)
2.6 Cement manufacturing process
2.7 Sail background
2.8 Departmental profile

29-48

3

WORKING CAPITAL
3.1 Definition
3.2 Concept of working capital

a. Traditional or Balance sheet concept
- Gross working capital
- Net working capital
- Permanent working capital
- Variable working capital
b. Operating cycle concept

3.3 Significance of working capital
3.4 Effect of excessive working capital
3.5 Factors determining the working capital
3.6 Advantage of adequate working capital
3.7 Calculation of working capital

49-62

4

WORKING CAPITAL MANAGEMENT

4.1 Calculation of working capital management in JAL
a. Position of inventory
b. Sundry debtor analysis
c. Cash and bank analysis
d. Loan and advances analysis
e. Current liability analysis
- Position of other current liability
- Provision analysis

63-102
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4.2 Working capital ratio
a. Receivable ratio
b. Payable ratio
c. Current ratio
d. Quick ratio
e. Working capital ratio
f. Stock turnover ratio
g. Debt equity ratio

4.3 Management of working capital

A. Cash management
- Meaning
- Objective of cash management
- Technique of cash management
a. Cash management planning
- Cash budget
- Characteristics of the cash budget
- Methods of cash budget
b. Cash management control
B. Inventory management
- Supply chain management
- Function of inventory management
- Position of inventory in JAL
- Motives of holding inventory
- Types of inventory
- Factors determine the optimum level of
inventory
- Objective of inventory management
- Technique of inventory management

C. Debtors management
- Sundry debtors analysis
- Objective of receivable
- Factor of receivable management


D. Marketable securities

9


5

RESEARCH METHODOLOGY

5.1 Methodology
5.2 Research objective
5.3 Research design
5.4 Sources of data
- Primary data
- Secondary data
5.5 Limitation of the study


103-105

6

CONCLUSION


106

7

BIBLIOGRAPHY


107














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OBJECTIVE

Knowledge and awareness of the corporate environment, its components & functioning is a
must for tomorrows managers. The basic objectives of the summer internship program are:

To facilitate ourselves in testing what we have learnt in all the bridge courses during
MBA
To understand the internal functioning of the organization within finance and accounts
department.
To get an exposure to the corporate life and various interaction methods.
To have an analytical overview of working capital management at Jaiprakash
association ltd (LTD) by bringing into use various theoretical tools and skill which
have been studied and includes studying and analyzing various financial data over a
period of three year 2010-11, 2011-12, 2012-13











11

COMPANY PROFILE
ORIGIN
With a single minded focus in mind, to achieve pioneering myriads of feat in civil
engineering Shri Jaiprakash Gaur ji, the founding father of Jaiprakash Associates Limited
after acquiring a Diploma in Civil Engineering in 1950 from the University of Roorkee, had
a stint with Government of Uttar Pradesh and with steadfast determination to contribute in
nation building, branched off on his own, to start as a civil contractor in 1958.
MISSION
The companys solitary mission is to achieve excellence in every sector that it operates in,
be it Engineering & Construction, Cement, Real Estate or Consultancy, to augment our core
competencies and adopt the most comprehensive modern technology to overtake the
obstacles in its path of achievement and to obtain sustainable development and
simultaneously enhancing the shareholders value and fulfilling its obligations towards
building a better India.
VISION
As a group, Jaypee group is committed to strategic business development in infrastructure,
as the key to nation building in the 21st century. The group aims to achieve perfection in
everything it undertakes with a commitment to excel. It is the determination to transform
every challenge into opportunity; to seize every opportunity to ensure growth and to grow
with a human face.

VALUES
The Jaypee way of life can be best represented by the Indradhanush. The Indradhanush or the
rainbow of seven different colours stands for seven values. Seven values that form the pillars
of the entire Jaypee parivar are:
1. Collective Wisdom (VIOLET)
2. Excellence in Performance (INDIGO)
3. Credibility (BLUE)
4. Human Face (GREEN)
5. Conviction (YELOW)
6. Commitment (ORANGE)
7. Leadership by Example (RED)

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HISTORICAL MILESTONES
1958 Undertook first entrepreneurial work as contractor in Mangrol in Kota
1979 Jaiprakash Associates Private Ltd. ( JAPL)
Uttar Rasayan Udyog Ltd. was formed for setting up Malathion Technical
Plant in Sikandrabad (U.P.). The company name was later changed to
Jaiprakash Enterprises Ltd.
1980 Hotel Siddhartha was set up
1982 Hotel Vasant Continental was set up
1986 Commissioning of 1
st
unit of 1 MTPA Jaypee Rewa Plant (JRP) in district
Rewa (M.P.)
Formation of Jaiprakash Industries Ltd. (JIL) by amalgamating JAPL into
Jaypee Rewa Cement Ltd.
1991 Commissioning of 2
nd
unit of 1.5 MTPA Jaypee Rewa Plant in district Rewa
(M.P.)
1992 Formation of Jaiprakash Hydro Power Ltd.(JHPL)
1995 Formation of Jaiprakash Power Ventures Ltd. (JPVL)
Hotel Jaypee Residency Manor set up
1996 Commissioning of 1.7 MTPA Jaypee Bela Plant in district Rewa (M.P.)
1999 Jaypee Palace Hotel, Agra set up
2000 Acquisition of land for Jaypee Greens Ltd.
2001 Commissioning of 0.6 MTPA Jaypee Cement Blending Unit in district
Allahabad (U.P.)- the 1
st
of its kind in the country
Jaypee Institute of Information Technology (JIIT- deemed university since
Nov 1, 2004) at Noida set up
2002 Commissioning of 1.0 MTPA Grinding Unit in district Ambedkar nagar
(U.P.)
Jaypee University of Information Technology (JUIT- state university),
Waknaghat set up
13




2003 Commissioning of 25 MW Captive Thermal Power Plant-I at JRP
Formation of Jaiprakash Associates Ltd. ( JAL) formed by merging JIL with
JCL
Jaypee Institute of Engineering Technology, Guna set up
2004 Commissioning of 25 MW Captive Thermal Power Plant-II at JBP
Commencement of work for setting up 3 MTPA Cement Plant at Baga and
Bagheri in district solan (H.P.) and 1.5 MTPA capacity Grinding Unit at
panipat
2005 Successful completion of the up gradation scheme enhancing the total
capacity of Rewa Operations to 7.0 MTPA
Shares of JHPL listed on BSE/NSE. First Hydropower Company to be
publicly held and listed in the country.
2006 Setting up of Madhya Pradesh Jaypee Minerals Ltd. (MPJML)
Commissioning of 38.5 MW Captive Thermal Power Plant at JRP
Railway siding operational at JBP
Commencement of work for setting up a new green field 1.5 MTPA Cement
Plant in district Sidhi (M.P.)
Acquisition of cement plants and assets of UP State Cement Corporation
Ltd. (in liquidation) of 2.5 MTPA capacity
Acquisition of Gujarat Anjan Cement Ltd. for setting up a green field
cement plant of 1.2 MTPA capacity in Bhuj, district Kutch, Gujarat
2007 Signing of MOU with Gujarat Mineral Development Corporation (GMDC)
for setting up a new green field cement plant of 1.2 MTPA capacity in JV,
district Kutch, Gujarat
Signing of MOU with government of HP for setting up a new green field
cement plant of 2.0 MTPA capacity in district Chamba (HP)

14

QUALITY POLICY


15

COMPETITORS
Ambuja Cements Ltd.
Ultratech Cement Ltd.- a subsidiary of Grasim Industries
Lafarge
ACC Ltd.
Birla Corporation Ltd.
Prism cement
Maihar cement



BUSINESS ACTIVITIES
The Jaypee Group is a well diversified infrastructural industrial conglomerate in India. Over
the decades it has maintained its salience with leadership in its chosen line of businesses -
Engineering and Construction, Cement, Private Hydropower, Hospitality, Real Estate
Development, Expressways and Highways. The group has been discharging its
responsibilities to the satisfaction of all its shareholders and fellow Indians, summed by its
guiding philosophy of "Growth with a Human Face".

JAL (Jaiprakash Associates Ltd.) is an acknowledge leader of river and valley dam and
bridge construction including hydropower projects on turnkey basis and has been in the
business for more than 3 decades. The company has unique distinction of executing
simultaneously 13 hydropower projects spread over 6 states and the neighboring country of
Bhutan for the generation of 10,290 MW of power.

JAL is a flagship company of the Jaypee group, one of the largest business conglomerates of
north India with annual revenue of over Rs 3000 crores, starting with a humble beginning in
1979 with construction activities, getting in to cement manufacturing was only a logical and
natural diversification for the group in the year 1986.

Today with the work force of more than 50,000 committed professional manpower and the
presence in almost all states of north India and countries like Nepal, Bhutan etc. The Jaypee
group has diversified interest with the motto of building nation in activities such as-
16





CIVIL ENGINEERING CONSTRUCTION



JAYPRAKASH
ASSOCIATES
LTD.

EDUCATION


INTEGRATED
TOWNSHIP


CONSTRUCTION

HOTEL AND
HOSPITALITY
CEMENT
DIVISION

HYDROPOWER
INFORMATION
TECHNOLOGY

THERMAL/
HYDEL
17

Initially, the Jaypee Group started as civil engineering contractors. Jaiprakash Associates
Ltd., the flagship company of the Group, is a leader in Construction of river valley and
hydropower projects on turnkey basis for more than 4 decades. The company is currently
executing various projects in hydropower / irrigation / other infrastructure fields and has had
the distinction of executing simultaneously 13 hydropower projects spread over 6 states and
the neighbouring country Bhutan for generating 10,290 MW of power.
Jaypee Group undertakes projects involving:-

led earth/rock fill


-mechanical equipment procurement and erection



The projects that have been commissioned or in the advance stages of completion have been
undertaken by it either as a successful EPC contractor or as a Non EPC contractor. The
group also has secured three BOT contracts in the private hydropower generation sector after
the opening up of the doors by the Government of India in 1991 for private sector power
generation companies.

It is not an embellishment to state that over the past three decades the company has not only
successfully executed large and prestigious projects, but in this process has acquired a pool
of knowledge, skills and experience in their field of technological excellence.







18

HOTEL AND HOSPITALITY

The group owns and operates four Five Star Deluxe hotels through jaypee hotel limited. A
subsidiary company and is a significant player in north of India. All the hotels enjoy the
patronage of most illustrious of the families, businessmen leaders and dignitaries from
around the world. This leading chain of deluxe hotels in India offers luxurious
accommodation, exquisite dining facilities, interesting leisure options and a pleasant
environment to provide a comfortable stay for our esteemed guests.
The first two five star hotels in the capital were set up in the back drop of the Asian Games
in 1980 - Hotel Siddharth and Hotel Vasant Continental. An ode to the cosmopolitan culture
of Delhi these two five star hotels unfold the finest lifestyle experiences. An exquisite
blend of business and pleasure makes them a perfect place to confer, relax or pamper your
senses.
Pioneering the concept of deluxe hotels Hotel Jaypee Palace Agra, is a hotel and
convention centre. The hotel is a fine blend of the Mughal architectural brilliance and it
combines classic qualities, simultaneously blending luxury and exclusivity with modern
style, flair and sophistication.
Jaypee Residency Manor, Queen of hills, Mussoorie is a tribute to the majesty and splendor
of the Mussoorie hills. Built on an individual hilltop, the Hotel offers an amazing 180
degrees of the most awe inspiring view of the hills.
Whether staying for business or for pleasure, whether running a conference or a meeting,
arranging receptions or any other special occasion, the Jaypee Hotels has it all to make that
affair a memorable one. Each visit is an experience of a lifetime.

19

CEMENT MANUFACTURING

Jaypee group is the 4th largest cement producer in the country. The groups cement facilities
are located in the Satna Cluster (M.P.), which has one of the highest cement production
growth rates in India.

JAYPEE CEMENT LIMITED (JCL)
JCL recently acquired Gujarat Anjan Cement with a capacity of 1.2MTPA

At Bhuj, Gujarat. The company is also exploring further opportunities of setting up /
acquiring new / existing cement plants in India.

JAYPEE POWER GRID LTD.(JPL)
JPL is a subsidiary of JHPL & a joint venture company of JHPL & Power Grid Corporation
of India (Ltd.) has been formed for execution of the transmission system between Wangtoo
in Kinnaur district of Himachal Pradesh & Abdullapur in Yamuna Nagar district of Haryana
for evacuation of 1000MW power from Karcham Wangtoo HEP in Himachal Pradesh.
www.jaypeepowergrid.com
20



GUJRAT AMBUJA CEMENT LTD (GACL)
This Company, a subsidiary of Jaypee Cement Limited, is setting up a cement plant of 1.2
MTPA capacity at village Vayor, Taluka Abdasa, Distt. Kutch in Gujarat.

JAYPEE INFRATECH LIMITED (JIL)
A subsidiary of Jaiprakash Associates Ltd. which would undertake the implementation of
prestigious Taj Expressway Project comprising of 165 KM, 6/8 Lane Access Controlled
Expressway connecting Greater Noida with Agra.

BHILAI JAYPEE CEMENT LIMITED (BJCL)
Incorporated in the state of Chhattisgarh as a Joint Venture with Steel Authority of India Ltd.
(SAIL). The said company is to produce 2.2 MTPA of cement at Bhilai and Satna.

HIMALAYAN EXPRESS Ltd.
The Company will undertake the construction of Zirakpur-Parwanoo Highway connecting
Punjab, Haryana & Himachal Pradesh on BOT basis. The total length of the highway would
be 28.690 kms.

MADHYA PRADESH JAYPEE MINERAL LTD (MPJML)
A Joint Venture company between JAL and the Madhya Pradesh State Mining Corporation
Limited (MPSMCL) to develop the Amelia (North) Coal block.

21

AREAS OF WORK:-
Transforming challenges into opportunities has been the hallmark of the Jaypee Group, ever
since its inception four decades ago. The group is a diversified infrastructure conglomerate
and has a formidable presence in Engineering & Construction along with interests in the
power, cement and hospitality. The infrastructure conglomerate has also expanded into real
estate & expressways.
Its cement division has modern, computerized process control cement plants namely, Jaypee
Rewa Plant (JRP), Jaypee Bela Plant (JBP) with an aggregate capacity of 7.0 MTPA. With
its plans of adding capacities in different regions of the country, the Group is poised to be a
25 MTPA cement producer by the year 2010 and 30.5 MTPA by 2011. Thus, it is likely to be
third largest cement producer in the country.
HYDROPOWER

The water flowing through rivers of our country is not only a natural resource but liquid
gold which if harnessed properly can serve the nation in more than one way. Nature has
bestowed our country with a bounty of this resource readily available for exploitation for
the benefit of the common man.
The Jaypee group is working at their best to make the best use of the bounty of resource to
serve the nation as stated in the above statement made by Shri. Jaiprakash Gaur ji,
founding father of Jaypee Group. Some major hydro power projects of Jaiprakash
Associates Limited are:
Baspa-II, 300MW project undertaken by the groups subsidiary company JHPL.
Vishnu Prayag, 400MW project undertaken by its subsidiary company JPVL.
Karcham-Wangtoo, 1000MW project undertaken by its subsidiary company JKHCL.

22

JAIPRAKASH HYDRO-POWER LIMITED (JHPL), subsidiary of Jaiprakash
Associates Limited will venture into the development of transmission systems with
the Power Grid Corporation of India Ltd (PGCIL).

The Memorandum of understanding between PGCIL and JHPL has been signed
with the purpose of formation of a Joint Venture company to lay a 230 km (approx.)
long transmission system to evacuate power from the 1000 MW Karcham-Wangtoo
Hydro Electric Project in Himachal Pradesh. The project is located on river Baspa a
tributary of River Satluj. The transmission line is to be completed by 2011
coinciding with the commissioning of the Karcham Wangtoo Project and is likely to
cost Rs.10, 000 million.
INFORMATION TECHNOLOGY

We are living in an era of information driven enterprise. Focus is consistently placed on
automation techniques that increase the productivity and profitability of the enterprise with
reduced costs across various functional heads. IT is an enabler in this context. The Groups
InfoTech arm JIL Information Technology Limited (JILIT) specializes in providing services
in the area of:
IT Infrastructure Management
Software Development & Consultancy
Multimedia Services
Content Management, Security & Delivery
Multimedia based Educational Content Development
Agricultural Content Development
Learning Solution
23

JILIT manages the entire IT Infrastructure of the various Group companies that include over
10 construction sites in some of the remotest terrains of the country including 200 cement
locations in the interiors of India and 3 University Campuses that house over 7000 computers
and various servers.
The company has set up and operates the largest private network of VSATs in Northern
India that connect the Groups various project sites, cement locations and Hydropower
stations. This facilitates seamless connectivity for video conferencing of remote locations
and data connectivity for the ERP solutions of the E&C, Cement and Hydropower divisions
and Educational institutions.
JILIT is one of the leading education content providers for schools in India. A pioneering
initiative was taken in the year 2000 when JILIT conceptualized and developed the first of its
kind digital classroom teaching aid that serves to assists in teaching, difficult to visualize
topics and concepts in Science, Mathematics and Social Sciences. Today more than 10000
teachers in 500 schools across 152 cities and a few other countries for example Dubai,
Kuwait, Oman, Bahrain and South Africa trust our educational content for adding value to
their classroom teaching process and inturn providing benefit to over 150000 students. Other
innovative solution from JILIT includes Campus Connect (integrated resource planning
solution for academic institutions), online testing tools and Bizconnect.
INTEGRATED TOWNSHIP

Jaypee Group embarks one to take a journey to a place where nature and its surroundings
transcend human soul to reach and ask for tranquility in its every form. The Jaypee group has
vested interest in the development of real estate but with a different kind of fervor. The
premier way of expression is its real estate development property in Greater Noida.


24

JAYPEE GREEN
With its inception in the real estate industry in the year 2002 brought about a revolution in
the concept of golf centric real estate development in India. With this concept already very
popular abroad, in countries like the U.S., Europe, Middle-East, Australia etc, Jaypee Greens
were the pioneers in conceptualizing the idea of golf homes in India. The main idea was to
give the residents a feel of resort living at the Jaypee Greens residential community.
Despite being very new in the real estate industry Jaypee Greens successfully positioned
itself in the niche market as an aspirational product. It brought about a revolution in the
concept of urban living coupled with all luxuries that one can aspire for. After 4 years,
Jaypee Greens has now launched its second project in Noida which is 4 times as big as its
first project.
Launched in November 2007, this is Indias First Wish Town. If Jaypee Greens Greater
Noida was Indias First Golf Centric Real Estate Development then Jaypee Greens Noida is
Indias First Integrated Township spread over 1162 acres of land comprising one 18 hole and
two 9 hole golf facility, world class residences that caters to the high-end consumers and also
to the mid segment of the society, commercial complex, medical facilities, educational
facilities that range from Kindergarten to Pre-university levels, host of recreational facilities
like social clubs, entertainment zone etc.
EDUCATION AND WELFARE

Towards the aim of servicing the society and also acknowledging the fact that education
for all is the most important dimension in building the nation, the company is running
education centers under the aegis of Jaiprakash Sewa Sansthan (JSS) a non-profit
organization.
25

At Jaypee we firmly believe that Education is the cornerstone to economic development and
the strength of 1 billion Indians can be channelized by education alone to build India into a
developed nation. With this prospective in mind we believe that quality education on an
affordable basis is the biggest service we can provide to our country.
The 21st century has brought to our doorstep the technology of tomorrow, which when
harnessed effectively can lead to economic growth and prosperity of all mankind. With this
thought in mind the visionary beacon of light Sh. Jaiprakash Gaur, the Founder Chairman,
set up 3 technical institutes of engineering and information technology, in order to prepare
the youth of today for the challenges of tomorrow. These technical institutes host the best of
faculty, students and educational infrastructure to ensure creation, generation, dissemination
and application of knowledge through an innovative teaching learning process, to mould
the world leaders of tomorrow.
These world class centers of learning are:
Jaypee Institute of Information Technology University (JIIT), Noida, U.P. is a deemed
university.
Jaypee University of Information Technology (JUIT), Waknaghat, and H.P. is a state
university.
Jaypee Institute of Engineering and Technology (JIET), Guna M.P.
Besides setting up of technical institutes the group has also made endeavors in setting up
schools (primary and higher secondary), vocational technical training institutes and a degree
college which caters to the need of nearly 17,540students.
Engineering colleges at Noida, Solan and Guna.
Two degree colleges in Uttar Pradesh.
Primary & Secondary schools in U.P. & M.P.

A total of 17 villages around Jaypee Cement Ltd. Complex have been selected for all round
development of the area under a Programme named Comprehensive Rural Development
Programme (CRDP).
Education Balwadi, adult education, Young girls project.
Drinking water
Self employment
26

Village Roads
Socio Religious activities Temples, Schools, Baarat Ghar
Natural Calamity Relief activities Flood relief at Rewa & Gorakhpur, Orison cyclone
relief, Gujarat earthquake relief etc.
Jal Sangrahan Yojana.

THERMAL

The Group in the recent years in order to diversify from the hydropower sector has taken up
the task of exploiting the rich coal resources that exist within the state of Madhya Pradesh.
To this effect the company has formed a Joint Venture company with Madhya Pradesh State
Mining Corporation Limited (MPSMCL) to undertake coal production and sale of coal from
coal block/blocks which might be allotted to MPSMCL. The company has been selected by
MPSMCL as a joint venture partner through competitive bidding process. The joint venture
has been formed in the name and style of MADHYA PRADESH JAYPEE MINERALS
LIMITED.
NIGRIE THERMAL PROJECT
The 1320 MW Nigrie Thermal project in the Singrauli district in the State of Madhya
Pradesh is expected to comprise two 660 MW units, each deploying supercritical technology
and is expected to be commissioned in 2012. This project will be developed by an associate
company of JAL. The Nigrie Thermal Project is expected to utilize coal from two captive
coal blocks, the Amelia (North) and Dongri Tal II coal block. We believe that these coal
blocks contain sufficient coal reserves to fuel the Nigrie Thermal project over the long term.
JAL is expected to develop and mine this coal in a joint venture with MPSMCL. The joint
venture has been allotted these two coal blocks solely for the purpose of supplying fuel to
our Nigrie Thermal Project.
27

CAPTIVE THERMAL POWER
The group currently has a Captive Thermal Power generation capacity of 88.5 MW at its
cement complex at M.P. With new cement plants coming up across India, will have Captive
Thermal plants from day one to ensure cost effective source of power, taking the total
captive generation to 308 MW by 2010.
EXPRESSWAY

India has the worlds second largest road network, aggregating over 3.34 million kilometers.
As Indian Economy grew in the early part of this decade, challenges & opportunities across
entire spectrum emerged and so was the case of large expressways with unique model of
ribbon development along it, which modeled as developed tracks of New India.

The Group has entered into construction of expressways with the Yamuna Expressway
project a 165 km access controlled 6 lane super expressways between Greater Noida and
Agra on Build Own Transfer basis. The project envisages ribbon development along the
expressway at 5 locations totaling 25 million square feet for
residential/industrial/institutional purposes and shall trigger multidimensional, socio-
economic development in Western U.P. besides strengthening the Groups presence in real
estate segment in this decade.

Recently, the Group successfully bid for and was awarded all packages (pkg. 1 to pkg.4) of
prestigious Ganga Expressway contract by the Government of Uttar Pradesh. This is the
largest private sector infrastructure project in India. The Company had emerged as the lowest
bidder, as it bid for the least land for development, which was the most important criteria for
bid evaluation. The 1047 km long 8 lanes Ganga Expressway would be developed on the left
bank of River Ganga, covering the stretch from Greater Noida to Ballia (Eastern Uttar
28

Pradesh). The project will be built on Built-Own-Transfer basis. The Group would also get
the rights for development of an estimated 30,000 acres of land along the expressway.
BOKARO JAYPEE CEMENT






SAIL proclaimed having entered into a partnership with Jaypee Associates for its proposed 2
MT cement plant at Bokaro, Jharkhand, reports Economic Times.
Both the companies will shortly enter into a joint venture (JV), in which Jaypee will hold the
majority stake.

This would be the companys second tie up with the Jaypee for a cement unit. The earlier
one was signed two months back for its 2.5 MTPA capacity plant at Bhilai.
The JV will help Jaypee to raise its production capacity to over 26 MTPA by 2011. Further
SAIL (Q, N,C,F)* will earn additional revenue with its venture into cement sector.
Shares of the company closed down Rs 5.30, or 4.07%, at Rs 125.00. The total volume of
shares traded was 3,009,616 at the BSE (Friday).





29



INTRODUCTION

CEMENT DIVISION
JAL-cement division (Jaypee Cement) today is the market leader in central zone of India;
and on all India bases it is one of the largest players having around 5% share of the total
cement market of the country. Such coveted position has been achieved through utmost
endeavor cum commitment towards quality and excellence in all facets of business
management.
JAL cement division has been certified for the internationally acclaimed ISO 9001:2000
certificate, which further shows its commitment towards achieving total customer
satisfaction and overall excellence.

Jaypee Cement with commissioned capacity of over 13.5 million tonnes per annum (MTPA)
is a brand leader in its current marketing zone, consisting of Central and parts of Northern
India. The Company has undertaken a bold expansion plan to achieve a 35 MTPA capacity
by 2011 one of the fastest organic expansions worldwide in the cement industry. Jaypee
Cement is poised to achieve a pan India presence and cement the dreams & aspirations of a
billion Indians, quite like the Master Blaster himself

ABOUT JAYPEE GROUP AND JAYPEE CEMENT
The Jaypee Group is a diversified industrial conglomerate with a turnover of over Rs. 5,500
Crores. From humble beginnings in the infrastructure sector 4 decades ago, the Group today,
driven by the vision of the Founder Chairman Mr. Jaiprakash Gaur, is a leader in the
Engineering & Construction sector with substantial interests in Cement, Power, Expressways
& Highways, Hospitality & Tourism, and Real Estate.
The Jaypee Group, over the last 7 years, has executed and dedicated 8840 MW of hydro
electric power to the nation. The Group was responsible for delivering 54% of the total
hydro-power generation envisaged in the 10th Five Year Plan (2002 2007). In the private
30

hydropower space, the Group has taken a pioneering initiative and is the largest player in the
country 700 MW of capacity. The Group also has the unique distinction of working on 2 of
the largest Expressway projects of the country on a Build, Own, Operate (BOO) basis the
165 kms long Yamuna Expressway project connecting Noida to Agra and the 1,047 kms
long Ganga Expressway Project connecting Greater Noida to Ballia, which is also the largest
private infrastructure project in the country till date.
In recent times, the Group has identified and included sports as a focus area where it would
like to support the nations efforts. The Group is responsible for bringing Formula 1 (F1)
racing to India and will host the first Indian Grand Prix in 2011. A state-of-art Sports arena
with Formula One Grand Prix Circuit and Go-Cart track is under development. The arena
will also have a 25,000 seating capacity Hockey Stadium, 100,000 seating capacity Cricket
Stadium, 18-hole Golf Course and a Sports Academy. The Group has also constructed a
world class Integrated Sports Complex in Greater Noida - spread over 15 acres, this complex
provides facilities conforming to international standards in the all disciplines of racket sports,
indoor & outdoor basketball and various track & field events. On the domestic front, the
Jaypee Group has developed an 18 hole Greg Norman Signature golf course housed amidst
450 acres of premium real estate at Jaypee Greens, Greater Noida.
The Cement Division of Jaiprakash Associates Ltd. (JAL) has 6 state-of-the-art, fully
computerized Integrated Cement Plants (ICPs), 3 Grinding Units & 1 Blending Unit with an
aggregate capacity of 13.5 million tonnes per annum (MTPA). JAL is in the process of
setting up new capacities in Northern, Central, Western & Southern parts of the country and
is targeting a capacity of 25 MTPA by 2010 and 35 MTPA by 2011, along with 375 MW of
Captive Thermal Power Plants (CPPs).
Once the expansion plans have been implemented, the Group will have 12 Integrated Cement
Plants, 9 split location plants (Grinding & Blending units), 11 Railway sidings and a captive
jetty across the states of Madhya Pradesh, Uttar Pradesh, Gujarat, Himachal Pradesh,
Haryana, Uttarakhand, Chhatisgarh, Jharkhand and Andhra Pradesh, giving the former a pan-
India presence in the cement sector and placing it in the top 3 cement companies in India and
within the top 10 cement companies in the World.

MANUFACTURING UNITS
Bhilai jaypee cement ltd (BJCL)
Jaypee Rewa Plant (JRP)
Jaypee Bela Plant (JBP)
31

Jaypee Cement Blending Unit (JCBU)
Jaypee Ayodhya Grinding Operation (JAAGO)
Jaypee Himanchal Cement Plant (JHCP)
Jaypee Sidhi Cement Plant (JSCP)
Dalla Cement Factory (DCF)
Chunar Cement Factory (CCF)
Jaypee Cement Grinding Unit (JCGU-Roorkee)
Jaypee Cement Grinding Unit (JCGU-Panipat)
Gujarat Anjan Cement Plant (GACL)

Jaypee group is the 3rd largest cement producer in the country. The groups cement facilities
are located in the Satna Cluster (U.P), which has one of the highest cement production
growth rates in India.
The group produces special blend of Portland Pozzolana Cement under the brand name
Jaypee Cement (PPC). Its Cement Division currently operates modern, computerized
process control cement plants with an aggregate capacity of 13.5 MTPA. The company is in
the midst of capacity expansion of its cement business in Northern, Southern, Central,
Eastern and Western parts of the country and is slated to be a 24.30 MTPA cement producer
by the year 2010 and 26.80 MTPA by 2011 with Captive Thermal Power Plants totaling
327MW.
Keeping pace with the advancements in the IT industry, all the 140 cement dumps are
networked using TDM/TDMA VSATs along with a dedicated hub to provide 24/7
connectivity between the plants and all the 120 points of cement distribution in order to
ensure track the truck initiative and provide seamless integration. This initiative is the
first of its kind in the cement industry in India.
In the near future, the group plans to expand its cement capacities via acquisition and
Greenfield additions to maximize economies of scale and build on vision to focus on large
size plants from inception.




32



INTRODUCTION

Bhilai jaypee cement limited (BJCL) is a joint venture of steel Authority of India Limited
(SAIL) and Jaiprakash Associates Limited (JAL). BJCL is planning to develop a cement
complex by installing new clinker plant of capacity 1.09 MTPA produced clinker and cement
plant of capacity 0.6 MTPA at Babupur village, Tehsil Raghuraj nagar, District Satna,
Madhya Pradesh.
Project Brief
The proposed green field cement plant project details are given in Table-1
TABLE
DETAIL OF THE PROPOSED PROJECT
Sr.
No.
Unit Capacity
(MTPA)
Route of proposed
1 Clinker Plant 1.09 6-stage pre-heater/Pre-calciner
kiln and VRMs for coal and raw
material grinding
2 Cement Plant 0.6 By installing a new VRM for
cement grinding and packing
Unit with truck and wagon
loading
3 Captive Limestone Mines:
A. Captive Limestone Mine ML-
I (ML Area-590.522 ha)
B. Captive Limestone Mine
ML-II (ML Area-1033.99 ha)

0.6

1.5
To open up ML-I and ML-II for
feeding captive clinker plant

The supporting installation for the proposed project includes installation of limestone
crushing and storage facility at adjacent to plant and captive mines leases I & II area and new
railway siding at plant site to Sakaria railway station.
33

Size of the project
The project cost estimated for the proposed cement plant including utilities, offsite, auxiliary
services, margin money etc is Rs 364.5 crores. The anticipated capital expenditure for the in-
built pollution control measures is Rs. 36.0 crores. The total project cost for proposed mine
leases I and II is Rs. 35 crores. The anticipated expenditure for the pollution contril measures
is Rs. 0.70 crores.
Location of the project
The environmental setting of the cement plant complex and both the captive limestone mines
area is presented in Table-2. The vicinity map of plant and mines are shown in Figure-1.

34

VICINNITY MAP OF PROPOSED CEMENT PLANT AND CAPTIVE MINES I & II

Sr.
No.
Particulars
Details
ML I ML II Cement Plant
1 Location Spread over parts of
Barikhurd, Putondha,
Putondhi Sarwahna and
Nimi villages of Raghuraj
Nagar Tehsil, Satna
District, and Madhya
Pradesh.
Spread over parts of
Ramasthan,
khamariya
(Tiwarian), Jamorhi,
Atrahara, Mohana,
Sakaria, Sarwahana,
Barera, Lohora,
Babupur
35

Bharpurwa and
khamariya (Payasian)
Villages of Raghuraj
Nagar Tehsil,
Satna District,
Madhya Pradesh.
2 Latitude 24
0
36

33
"
to 24
0
38

25
"

North
24
0
35

20
"
to 24
0
37

28
"
North
24
0
36

01
"
to 24
0

36

52
"
North
3 Longitude 80
0
54

21
"
to 80
0
56

58
"

East
80
0
54

23
"
to 80
0
57

48
"
East
80
0
53

55
"
to 80
0

54

37
"
East
4 Current status
of land
Industrial use Industrial use Industrial use
5 Elevation
above Mean
Sea Level
Plain land of about 292-
313 m above mean sea
Level (MSL)
Plain land of about
292-313 m above
mean sea Level
(MSL)
Plain land of
about 292-313 m
above mean sea
Level (MSL)
6 Nearest
Highway
NH -75, 5.6 km (S) NH 75, 3.5 km
(S)
4.3 km, S
7 Nearest
Railway
Station
Satna R.S, 9.8 km, SW
direction
Satna R.S, 9.1 km,
SW direction
8.3 km, SW
8 Nearest
Airport
Khajuraho, 100 km NW Khajuraho, 100 km
NW
Khajuraho, 100
km NW
9 Reserved/Pro
tected Forest
within 10-km
radius
1) Jumori R.F, 1.2
km, SE,
2) Naro P.F, 10.5
km, S
Jumori R.F, 0.6 km,
SE,
Naro P.F, 8.4 km, S
Jumori R.F, 4.6
km, E, Naro P.F,
9.5 km, S
10 Nearest
Township
Satna, 9.3 km, SW Satna, 8.3 km, SW Satna, 7.3 km,
SW

11 Rivers/Lakes Tamas or Tonnes River,
2.9 km, SE
Simarawal Nadi, 5.1 km,
NE
Tamas or Tonnes
River, 1.3 km, SE
Simarawal Nadi, 4.8
km, NE
Tamas or Tonnes
River, 3.5 km,
SSE
Simarawal Nadi,
8.8 km, NE
12 Seismic Zone Zone-II as per IS-1893
(Part-1)-2002
Zone-II as per IS-
1893 (Part-1)-2002
Zone-II as per IS-
1893 (Part-1)-
2002

36

PROJECT DESCRIPTION
Details Proposed Plant Facilities
The cement and clinker manufacturing in the plant is proposed through dry process.
The proposed project details are given in Table-3
TABLE-3
DETAILS OF THE PROJECT
Sr.
No.
Parameter Description

1 Clinker production 1.09-MTPA
2 Cement production 0.6- MTPA Cement
3 Lime stone
production details
ML I : 0.6 MTPA
ML II: 1.5 MTPA
4 Mineral reserves ML I ML II
Lime stone : 37.37 MT
Overburden: 12.18 Million m
3

Top Soil : 0.18 Million m
3

Mineable reserve: 23.32 MT
Lime stone : 154.84 MT
Overburden: 54.07 Million
m
3

Top Soil : 19.82 Million
m
3

Mineable reserve: 69.56 MT
5 Process 6 stage preheater/precalciner kiln for calcinations
VRMs for coal and raw material grinding
6 Land requirement Cement plant : 87.45 ha
ML I : 590.522 ha
ML II : 1033.99 ha
7 Water requirement
and source
Water requirement and entire cement plant complex : 1400
m
3
/day
Water requirement for plant Activity :1200 m
3/
day
Water requirement for
Mine Activity (ML I & ML II) : 200 m
3/
day
Water source : Ground water resources initially and thereafter
from Reservoir created in mined out area
8 Raw material
requirement for
cement plant
Limestone : 2.1 MTPA
Laterite : 0.07 MTPA
Coal : 0.18 MTPA
Gypsum : 0.05 MTPA
37

Slag : 0.20 MTPA
9 Power requirement
and source
22 MW (Including Plant and township)
1 MW for Mine Activity
Source: Madhya Pradesh State Electricity Board (MPSEB) grid
Standby DG set for emergency Purposes : 10 MW
10 Main equipment
details
Raw mill: 1 300 tph (Vertical Roller Mill)
Pyro process : 3300 tpd (dry process twin string 6 stage)
Coal Mill: 30 ph (Vertical Roller Mill)
Clinker silo : 1 25,000 t
Limestone crusher : 750 tph (impactor with pre & post
screening)
11 Pollution control Plant: Bag dust collectors (emission below 50 mg/Nm
3
)
Mines: Dust Suppression and Green belt development with in the
Mine Lease Area
12 Storage capacities Finished product (Clinker): 1 25,000 t RCC Silo
Blending Silo : 12,000 t RCC Silo
Limestone : Stockpile : 2 3000 t, covered
Coal: 1 10,000 t, linear
13 Total manpower
requirement
581 persons for entire plant complex, Additional contract labor
required for auxiliary services like loading and unloading of
materials, general cleaning work and security

Land requirement
An area of 87.45 ha including railway siding has been earmarked for the cement plant
project. The land use of proposed plant is given in Table 4


TABLE 4
LAND USE OF PROPOSED PLANT SITE

Sr. No. Land use Area (hectares)
1 Plant area 45.10
2 Administrative building, etc. 0.63
3 Railway siding 5.76
38

4 Landscaping and greenbelt area 27.00
5 Truk parking 1.00
6 Raw material storage 7.96
Total 87.45

Raw Material Requirement and Transportation Details
The major raw materials used in the manufacturing of the clinker are limestone, laterite and
black coal. The raw material like limestone and laterite will be transported to site through
roadway by dumpers. The outflow of finished products from plant will be 1.09 MTPA
clinker and 0.60 MTPA cement. The lime stone wil be transported through dumpers from
crusher to plant. The detail of raw material requirement and transportation are given in
Table-5
TABLE 5
LAND MATERIAL REQUIREMENT & TRANSPORTATION

Sr.
No.
Material Quantity
(MTPA)
Source Mode of
transport
Quantity store
at site (tones)
1 Limestone 2.1 Captive limestone
Quarry, adjoining to
the plant site
Road dumpers Stockpile: 2
36,000 t, linear
2 Laterite 0.07 Katni, Madhya
Pradesh
Road 13000 t, covered
3 Coal 0.18 Central coal fields Covered
rail/truks
110,000 t, linear


Water requirement
The break-up of water requirement for different units for the proposed project is given in
Table-6
TABLE-6
WATER REQUIREMENT

39

Sr.
No.
Water Consumption Quantity (m
3
/day)
1 Cement Plant 1100
2 Township 100
3 Greenbelt development (Re-circulated from STP) 80
Total 1200

Water is required for equipment cooling and for domestic purpose. The total fresh water
requirement of proposed plant to meet the requirement of cooling of equipment and domestic
purpose is about 1200-m
3
/day. The water requirement will be met from ground water
sources.
Power requirement
The power requirement of the proposed clinker plant and mining activities will be about 22
MW and 1 MW respectively. The power will be sourced for
Manpower
The total manpower requirement for the proposed project during construction phase is 2000
nos. including skilled and unskilled workers. About 393 people will be employed during
operation of cement plant. Contract labour shall be employed for auxiliary services like
loading of cement bags, unloading of stores & miscellaneous materials and general cleaning
work.
Township
A full-fledged township will be developed to accommodate plant, mines and security
personnel and supporting staff. Other amenities such as community center, guest house,
health center, shopping complex, post office, bank etc. will be established. The location of
township is in the NE direction to the plant and also adjacent to the ML I boundary.

Details of Captive Limestone Mines
The salient features of the captive limestone mining areas are presented in Table-7
TABLE-7
SALIENT FEATURES OF LIMESTONE MINE LEASES

40

Sr.
No.
Description Details
1 Name of the Mine lease ML I ML II
2 Extent of Mine lease (ML)
area
590.522 1033.99 ha
3 Type of ML area Non forest land Non forest land
4 Method of mining Fully mechanized opencast Fully mechanized
opencast
5 Rated capacity of mine 0.6 MTPA limestone
production
1.5 MTPA limestone
production
6 Expected life of mine 39 years 47
7 Date of expiry of ML 31.10.2021 3.01.2027
8 Average stripping ratio 1 : 0.94 1:1
9 Geological reserves 37.37 Million Tonnes
(15094378m
3
)
154.825 Millions
10 Recoverable reserves 74.0. Millions
11 Mineable reserves 23.32 Million Tonnes 69.56 Millions
12 Mineable overburden 12.18 million m
3
67.07 Millions m
3

13 Average no. of working days 330 days/annum 330 days/annum
14 Number of shifts per day 3 shifts/day 3 shifts/day
15 Working hours per day 8 hrs 8 hrs
16 Mining blocks 1 1
17 No. of benches 2 2
18 Average Bench height for
top soil
1.0 m 0 1.5 m
19 Average Bench height for
over burden (OB)
1 6 m 1.5 8.0 m
20 Bench height for limestone 6 8 m 6.0 8.0 m
21 Ultimate depth of mine 25 m below GL (approx.
313 m above MSL)
313 m above MSL (15
25 m BGL)

22 Topsoil to be generated
during entire life of mine
About 2.5 lakh tones in 5
years
6.0 lakh tones in 5 years
23 Overburden to generated
during entire life of mine
18.36 Million m
3
54.07 million m
3

24 No. of waste dumps planned Nil (temporary dump will
be maintained
No separate Over burden
dump planned
25 Power requirement 1 MW (Including ML 1 MW (Including ML I
41

II ) form power grid )
26 Water requirement 75 m
3
/day from mine
sump
125 m
3
/day
27 Transport of OB Dumpers of capacity 22 to
32 T
22/35 t capacity dumper
28 Transport of limestone from
mine face to crushing plant
Dumpers of capacity 22 to
32 T
35 t/50 t capacity
dumper
29 Distance to mine face to user
point
Crusher is located at a
distance of 3 km from the
working face within ML
area
Clinker plant is adjacent to
the ML II and from mine
crushing plant

Method of Mining
The choice of mining method has been considered as opencast mining for quarrying the
limestone from the mines. The mining operation will be fully mechanized. The sequence of
operation in quarrying will be drilling, blasting, loading and transportation.
All the rock types occurring within the area are fully exposed. There is hardly any top soil
that occurs on the surface and hence separate dozing of top soil would not be required.
Drilling and blasting will be carried out for excavation of OB and limestone. For OB, 115
mm size drills will be used for drilling and shovel combination with 32/22 tone capacity
dumper will be used to transport the OB blasted material from the face to dump area.

For limestone, 115 mm size drills will be used for drilling. Crawler mounted hydraulic
excavator with bucket capacity of 3.8 m
3
and 4.1 m
3
capacity will be used for loading
and in combination with 32/22 tones capacity dumpers shall be used to transport the
blasted material from the mines leases.


Mining Equipment
There are four types of equipment systems available for open cast mining
Bucket wheel excavator mining;
Draggling mining;
Shovel dumper combination; and
42

Surface miners.
The mining machinery will be placed in a phased manner till the operations continue at the
same rate of production in this mine. The machinery will be shifted gradually to the other
captive mine lease of ML II the detail of the proposed major mining machineries are given
in Table 8

TABLE 8
DETAIL OF MINING MACHINERY

Sr.
No
Description No of
Units
size/Capa
city

Make Motive
power
H.P
1 Bull Dozer 1 - BEML Diesel 400
2 4
"
/6
"
dia drill 1 4
"
/6
"
dia IG/Atlas Diesel 180 to 400
3 Hydraulic excavator 1 3.8 to 4.2
m
3

Komatsu/L Diesel 295 to335
4 Dumpers 6 22 to 32 Volvo/Tata Diesel -

Site Services
Lime crusher and ancillary facilities
The limestone crushing plant and ancillary facilities are mainly consists of 750 TPH
capacity jaw crusher, 800 TPH capacity hamper crusher, stacker and declaimer.
Fuel requirement
Drilling and mining operations, 1.0 KLD of diesel is being used to operate the dumpers and
other transport vehicles in mine lease to transport the lime stone, over burden, sprinkling of
water and other mining operation and no additional requirement of fuel is envisaged.
Water requirement
Industrial water required for mining operations/establishment mainly for sprinkling haulage
roads and at faces for suppression of dust. Water is also required for washing and servicing
utilities for equipment. The average daily water requirement for the proposed mines lease I
& II during operation is 200m
3,
which will be met from the rainwater accumulated in the
mine sump except for potable water. However, potable water will be sourced from the
43

clinker plant. No additional water requirement is envisaged in mining operations and also in
potable water.

CEMENT MANUFACTURING PROCESS
MINING
The cement manufacturing process starts from the mining of limestone, which is the
main raw material for making cement. Limestone is excavated from open cast mines
after drilling and blasting and loaded on to dumpers, which transport the material and
unload into hoppers of the limestone crushers.
CRUSHING STACKING & RECLAIMING OF LIMESTONE
The Limestone (LS) Crushers crush the limestone to 80 mm size and discharge the
material onto a belt conveyor which takes it to the stacker via the Bulk material
analyzer. The material is stacked in longitudinal stockpiles. Limestone is extracted
transversely from the stockpiles by the reclaimers and conveyed to the Raw Mill
hoppers for grinding.
CRUSHING STACKING & RECLAIMING OF COAL
The process of making cement clinker requires heat. Coal is used as the fuel for
providing heat. Raw Coal received from the collieries is stored in a coal yard. Raw
Coal is dropped on a belt conveyor from a hopper and is taken to and crushed in a
crusher. Crushed coal
discharged from the Coal Crusher is stored in a longitudinal stockpile from where it is
reclaimed by a reclaimer and taken to the coal mill hoppers for grinding of fine coal.
RAW MEAL DRYING / GRINDING & HOMOGENIZATION
Reclaimed limestone along with some laterite stored in their respective hoppers is fed
to the Raw Mill for fine grinding. The hot gasses coming from the clinkerisation
section are used in the raw mill for drying and transport of the ground raw meal to the
Electrostatic Precipitator / Bag House where it is collected and then stored and
homogenized in the concrete silo. Raw Meal extracted from the silo (now called Kiln
feed) is fed to the top of the pre-heater for pre-processing.
CLINKERIZATION
Cement Clinker is made by pre-processing of Kiln feed in the pre-heater and the rotary
kiln. The limestone is heated at 1400 C into furnace, fine coal is fired as fuel to
provide the necessary heat in the kiln and the precalciner located at the bottom of the
5/6 stage preheater. Hot clinker discharged from the Kiln drops on the grate cooler and
gets cooled. The cooler discharges the clinker onto the pan / bucket conveyor and it is
44

transported to the clinker stockpiles / silos. The clinker is taken from the stockpile /
silo to the ball mill hoppers for cement grinding. At the end of each sampling process
there is a sampling procedure by the quality control lab every 2 hours, the report is
send to the CCR which varies the process parameters depending upon the sampling
feedback.

CEMENT GRINDING AND STORAGE
Clinker and Gypsum (for OPC) and also Pozzolona (for PPC) are extracted from their
respective hoppers and fed to the Cement Mills. These Ball Mills grind the feed to a
fine powder and the Mill discharge is fed to an elevator, which takes the material to a
separator, which separates fine product and the coarse. The latter is sent to the mill
inlet for regrinding and the fine product is stored in concrete silos. Its capacity is about
14000 tones.

PACKING
Cement extracted from silos is conveyed to the automatic electronic packers where it
is packed in 50 Kgs polythene bags and dispatched in trucks or rail.

ELECTRICAL POWER
For total power requirement of 90 MW (Jaypee Rewa Plant and Jaypee Bela Plant)
they have three CPPs and four DG sets to provide an emergency backup.
CPP 1 - 25.0 MW
CPP 2 - 25.0 MW
CPP 3 - 38.5 MW

BJCL proposes to set up a Greenfield cement plant in joint venture with SAIL at Satna with a
clinker capacity 1.09 mio tpa along with a split grinding unit with capacity 2.2 mio tpa at
Bhilai of Chhattisgarh.
45

Overall view of Plant

SAIL BACKGROUND:-
STEEL AUTHORITY OF INDIA LTD
Is a major player in the business of Steel Manufacturing? The blast furnace slag generated
by the Integrated Steel Plant of SAIL at Bhilai is granulated, which forms a major constituent
for manufacture of Slag Cement (Portland Slag Cement). SAIL, with an objective of using
this waste by-product generated in their Bhilai Steel Plant (BSP) at Bhilai and utilizing
limestone of their mines at Satna, opted for tendering route way back in the first quarter of
2006. They invited Bidders for participating in a proposed Joint Venture with SAIL to set up
a cement plant.
JAIPRAKASH ASSOCIATION LTD
A major player of the cement industry became a successful bidder in the Bid submitted by
various cement players on 31
st
March, 2006. Thereafter various agreements were discussed
and formulated between the two corporate SAIL and JAL over a year.
Jaiprakash Associates Limited (JAL) and Steel Authority of India Limited (SAIL) have
signed a Share Holders Agreement on the 21
st
March 2007. It is the Biggest Joint Venture of
SAIL with a Private Corporate till date. SAIL shall contribute 26% of the total equity, while
the balance 74% shall be contributed by JAL.
The new JV Company formed in the name of Bhilai Jaypee Cement Limited (BJCL) was
incorporated on 11
th
April 2007. Bhilai Jaypee Cement Limited is setting up split-location
cement project, with the clinkerisation cum grinding unit to be set up near the limestone
deposit, Ispat Limestone Quarry (ILQ) mine in Village Babupur at Satna in the state of
46

Madhya Pradesh, called the Bhilai Jaypee Cement Plant and a Grinding Unit located
within the Bhilai Steel Plant premises to be set up at Bhilai in Chhattisgarh, called the
Bhilai Jaypee Grinding Plant.
BJCL shall mainly produce Portland Slag Cement (PSC) at Bhilai. Clinker shall be
transported from Satna to Bhilai for producing PSC at Bhilai.
Railway sidings are proposed to be set up at both the plant locations to ensure smooth
transport of inter-alia clinker between the two split-located units.

DEPARTMENTAL PROFILE
The finance and accounts department works as judicious manager in distribution of
available funds in an optimal manner for the organization as a whole on daily, monthly and
annual basis and also a conscious book-keeper for the company going through every
transaction having financial implication with complete thoroughness before acceptance of
liability. It looks after the information requirements of the company and various statutory
authorities in compliance of the applicable statutory provisions. The bonus of ensuring
companies various assets adequately insured is also with this department. For effective and
efficient management of finances, there are adequate teams for finance and accounts
activities in the plant location.













FINANCE AND ACCOUNTS DEPARTMENT

FINANCE
ACCOUNTS

SALES
GENERAL
INSURANCE
M.I.S



RAW MATERIAL AND STORE
ACCOUNTING
PERSONNEL
ACCOUNTING




47

FINANCE CELL
The long, medium short term financial planning and assessment is done in context of the set
objectives and targets for the current year and projected years, considering various factors
such as-
Capacity expansion

Technology up gradation

Manpower training

New machineries

Tools and Equipments

Addition in infrastructure

ACCOUNTS CELL
The cement industry is one of the industries prescribed for COST-AUDIT under the
companies act. It casts a statutory obligation on the company to get the final accounts
statement audited by statutory financial and cost authorities.
The entire operation of the plant is divided into various cost centers based on the processes
involved, in addition to the accounts codes for accounts heads. The accounts function is
totally computerized with well proven in house established accounts package, catering to the
needs of the company. ERP-PACKAGE is broadly used. The base data of each transaction
is entered only once with relevant account code and cost code with both quantitative and
financial information making the financial and cost records updated at the same time in the
system.
This cell has following sections:

a) GENERAL ACCOUNTS
Is sub divided in to two subsections to take care of accounting related to two vital
resources of organization:-
Raw material & Stores accounting
Personnel accounting.

48

b) SALES ACCOUNTS
The sales accounts department is one of the most important departments of any company.
It has the main function to handle sales accounting of the company. The department
performs its functions through following divisions:
1. Invoicing
2. Collections
3. Stock Records
4. Freight

INVOICING: Under invoicing first of all Price Feeding is done then it is cross checked
with the challan being approved. Then FEG i.e. Financial Entry Generation and G/L i.e.
General Ledger is prepared.

COLLECTIONS: Collection is related to the receivables from the various Sales
Promoters and Traders. All the payments are majorly obtained in form of Demand Drafts
and handled by Punjab National Bank.

STOCK RECORDS: Stock Records are being maintained in company on daily basis.

FREIGHT: Freight is charged according to the contract made between company and the
customers. The freight if paid by the company then TDS is also calculated.

c) INSURANCE
Companies associated with Jaypee are:
ICICI Lombard.
IFFCO TOKYO
Bajaj Allianz
United India Insurance
Oriental Insurance



49

d) MIS AND BUDGET
This section is responsible for collecting the data from various departments and analyzing
them and then reproducing them as per the requirement in the form of reports.
The most significant part is the preparation of cash budget
Monthly budget
Annual budget
Weekly actual against monthly budget
















50

WORKING CAPITAL

WORKING CAPITAL is the amount of fund necessary to cover the cost of operating the
enterprise. Working capital is the part of firms capital which is required for financing short
term or current assets such as inventories, debtors, marketable securities and cash. Funds
invested in these current assets keep revolving with relative rapidly. Hence is also known as
circulating or revolving capital or short term capital or liquid capital.

Every running business needs working capital. Even a business which is fully equipped with
all types of fixed assets required are bound to collapsed without-

i) Adequate supply of raw material for processing.
ii) Cash to pay for wages, power and other costs.
iii) Creating stock of finished goods to feed the market demand regularly.
iv) The ability to grant credit to its customers.




51

CONCEPT OF WORKING CAPITAL
There is a lot of difference of opinion among accountants, financial experts, entrepreneur and
economists.
1) TRADITIONAL AND BALANCE SHEET CONCETS-
According to this concept working capital depicts the position of the firm at certain
point of time. With this point of view working capital is of two types-


A) GROSS WORKING CAPITAL
The gross working capital is financial or going concern concept. According to this
concept all the current assets of the business financed by long term funds or short term
funds form the working capital of the firm.
The following arguments are placed in favour of this concept-
1) It enables the enterprise to provide correct amount of working capital at the right
time.

2) Every management is more interested in the total current asset with which it has to
operate rather than the sources from it is financed.
TYPES OF
WORKING
CAPITAL
ON THE BASIS OF
B/S CONCEPT
GROSS
WORKING
CAPITAL
NET WORKING
CAPITAL
ON THE BASIS OF
TIME
REGULAR
WORKING
CAPITAL
TEMPORARY
WORKING
CAPITAL
SEASONAL
WORKING
CAPITAL
SPECIFIC
WORKING
CAPITAL
52

3) The gross concept of working capital takes into consideration that every increase in
the funds of the enterprise would increase the working capital.

4) The concept of gross working capital is more useful in determining the rate of
return on investment.

B) NET WORKING CAPITAL-
Net working capital is the difference between CURENT ASSETS & CURENT
LIABILITY. A part of funds required to maintain CURENT ASSETS is provided by
CURENT LIABILITY & the balance is provided by long term funds.
Therefore net working capital may also be defined as that part of firms CURENT
ASSETS which is financed with long terms funds. The following arguments are put in
favour of this concept.

1) Excess of CURENT ASSETS over CURENT LIABILITY is an indicator of financial
soundness and the ability to face depression and contingencies.

2) It indicates the margin of protection available to the short term creditor that is the
excess of CURENT ASSETS over CURENT LIABILITY.

3) It is an indicator of the financial soundness of the enterprise.

4) It suggests the need to financing a part of the working capital requirements out of the
permanent sources of funds.

In the company, in year 2011-2012 the current assets are Rs 563676 lacks and current
liability is Rs 365514 lacks, and in year 2012-2013 the current assets are Rs 848017
lacks and current liabilities are Rs 503670 lacks, this shows that in both the year
current assets are more than current liabilities, which shows positive move in company
position and the net working capital ratio in year 2011-2012 is 1.54:1 and in year
2012-2013 ratio is 1.68:1. Suggested ratio by chore and tendon committee is 1.33:1.


53

C) PERMANENT OR FIXED WORKING CAPITAL
A minimum level of current assets, which is continuously required by a firm to carry
on its business operations, is referred to as permanent or fixed working capital.

D) VARIABLE OR FLUCTUATING WORKING CAPITAL
The extra working capital needed to support the changing production and sales
activities of the firm is referred to as fluctuating or variable working capital.

STATEMENT SHOWING CHANGES IN WORKING CAPITAL IN JAL
PARTICULARS 2010-11 2011-12 2012-13 INC.
(IN10-
11 TO
11-12)
DEC.
(IN 10-
11 TO
11-12)
INC.
(IN 11-
12 TO
12-13)
DEC.
(IN 11-
12 TO
12-13)
CURRENT
ASSTES

INVENTORIES 80616 98130 122862 17514 24734
SUNDRY
DEBTOR
45205 58618 102204 13413 43586
CASH & BANK
BALANCE
142981 181544 290859 38563 109315
OTHER
CURRENT
ASSTES
1253 3190 1282 1937 1908
LOANS AND
ADVANCES
109850 222194 330810 112344 108616
TOTAL (A) 379899 563676 848017

CURRENT
LIABILITIES

CURRENT
LIABILITY
202624 334909 455439 132285 120530
PROVISIONS 30407 30605 48231 198 17626
TOTAL (B) 233031 365514 503670

CA-CL (A-B) 146868 198162 344347

54

INTERPRETATION
By analyzing the data from 2010-2011 TO 2011-2012 we come to the conclusion that the
difference between current assets and current liabilities in year 10-11 TO 11-12 is from
146868 to 198162, which shows that working capital is increases in year 11-12. The
increase in working capital indicates that the company position is improved than previous
year. The reason for this improvement is the value of inventory, debtors, cash and
balance, other current assets, loans and advances increase from the previous year which
indicates that all the assets are properly utilized in the company.
By analyzing the data from 2011-2012 TO 2012-2013 we come to the conclusion that the
different between current assets and current liabilities more increases in the comparison
of previous year which indicates that the position of the company is more improving from
the previous year. The reason for such improvement is company also properly utilized the
all assets in the company in the year 2012-2013.

2) OPERATING CYCLE CONCEPT
The working capital requirement of firm depends, to a greater extent upon the operating
cycle of the firm. The duration of time required to complete the sequence of events right
from purchase of raw material/goods for cash to the realization of sales in cash is called
working capital cycle or operating cycle.

DETERMINING THE OPERATING CYCLE FOR THE YEAR 2013

AMOUNT OPENING BAL. CLOSING BAL.
RAW MATERIAL 37931 51497
WORK IN PROGRESS 43418 50238
DIRECT EXPENSE 198858
FINISHED GOODS 3215 3733
SALES 614793
PROFIT BEFORE TAX 35397
DEBTORS 102204 58618
CREDITORS 70102 88063
RAW MATERIAL
CONSUMED
306640

55

RAW MATERIALSTORAGE PERIOD(R)
= AVERAGE STOCK OF RAW MATERIALS
AVERAGE COST OF PRODUCTION PER DAY
= (37931+51497)/2 = 44714 =53DAYS
(201140/365) 840
WORK IN PROGRESS (W)
= AVERAGE WORK IN PROGRESS INVENTORY
AVERAGE COST OF PRODUCTION PER DAY
(50238+43418)/2 = 46828 =68 DAYS
(50238+198858)/365 682
FINISHED GOODS STORAGE PERIOD (F)
= AVERAGE STOCK OF FINISHED GOODS
AVERAGE COST OF GOODS SOLD PER DAY
= (3215+3733)/2 = 3474 =2DAYS
(614793-35397)/365 1587
DEBTORS COLLECTION PERIOD (D)
= AVERAGE BOOK DEBTS
AVERAGE CREDIT SALES PER DAY
= (58618+102204)/2 = 80411 = 48DAYS
(427389/365) 1684
CREDITORS PERIOD AVAILED (C)
= AVERAGE TRADE CREDITORS
AVERAGE CREDIT PURCHASES PER DAY
= (70102+88063)/2 = 79082.50 = 87 DAYS
(306640+122862-98130)/365 907.9
NET OPERATING CYCLE PERIOD
OC= M+W+F+D-C
= 53+ 68+ 2+ 48- 87 = 84

56

DETAILS
1) The data required for the calculation of operating cycle period has been extracted from
annual report for the year 2009.
2) Number of days is taken as 365 days.
3) The figure of average daily consumption is taken as raw material consumed divided by
number of days.
4) The figure of cost of goods sold is obtained from profit and loss account

COGS=SALES- PROFIT BEFORE TAX
5) As the credit sales figure is not given so the figure of sales is taken.
6) The figure of credit purchase is calculated as-

CREDIT PURCHASE= RAW MATERIAL+CLOSING STOCK-OPENING
STOCK

INTERPRETATION
From the above calculation it has been found that the net operating cycle period is 89days,
which indicate that the finished goods take 89days to be converted into cash. The operating
cycle indicates the minimum number of days for realization of cash. If the period of
operating cycle is lesser then it will make the business more effective.
57


OPERATING CYCLE
SIGNIFICANCE OF WORKING CAPITAL
Working capital is as essential for the smooth and efficient running of a business, as
circulation of blood is essential in the human body for maintaining life.
1) IMMEDIATE PAYMENT TO SUPPLIERS
Adequate working capital enables a firm to pay its suppliers immediately that ensures
regular supply of raw material.
In JAYPEE GROUP at the year of 2007-2008 the working capital is Rs 198162 lacks and
in year 2008-2009 the working capital is Rs 344347 lacks. This shows that the capital is
properly utilized in the company and which indicate the financial soundness of the
company, it enables the firm to make immediate payment to its suppliers.


CASH
(PURCHASE)
RAW MATERIAL
(PRODUCTION
PROCESS)
WORK IN
PROGRESS
(PRODUCTION
PROCESS)
ACCOUNT
RECEIVABLE
(SALE)
ACCOUNT
RECEIVABLE
(REALIZATION)
58

2) BENEFIT OF CASH DISCOUNT
The firm can avail the advantage of cash discount this will result in reducing the cost of
production, where by firm can reduce its selling prices and attract more customers by
allowing trade discount.

3) ADEQUATE DIVIDEND DISTRIBUTION
Firm short of working capital plough back their profit in their business to make up the
deficiency of working capital. In such case dividends will not be declared and the
shareholders will feel dissatisfied. When a firm has enough working capital dividends can
be declared and this will create satisfaction among the share holders and bring stability in
the market price of shares.

4) INCREASE IN GOODWILL AND DEBT CAPACITY
In business promptness in payment to third party creates goodwill and increases the debt
capacity of the concerned firm. It enables the firm to raise loan whenever needed.
As the company makes the proper utilization of its capital, this enables the firm to make
immediate payment to its suppliers and to its share holders in the form of dividend, this
increase the goodwill of the company and enable the firm to raise loan when ever needed.

5) EXPLOITATION OF GOOD OPPORTUNITIES
Only company with adequate working capital can exploit good opportunities and can
earn handsome profits. Example a firm can make seasonal purchase in bulk when the price
are cover or can accept big supply orders.

6) MEETING UNFORSEEN CONTINGENCIES
Business oscillations, legal cases, and small crises can be easily handled through adequate
working capital.

7) INCREASED EFFICIENCY
Adequate working capital has psychological effect on the directors and executives of the
company as it motivates them to work. Moreover timely payment of wages to employees,
they work with more vigor and confidence. Thus adequate working capital creates an
atmosphere of security and increases overall efficiency.
59

8) INCREASE IN FIXED ASSETS PRODUCTIVITY
Without working capital fixed assets are like gun which cannot shoot as there are no
cartages. It is there said the fate of large scale investment in fixed asset is often determined
by a relatively small amount of current assets.

EFFECTS OF EXCESSIVE WORKING CAPITAL
The need to maintain adequate capital cannot be questioned but a firm must not have
excessive or redundant working capital. Excess working capital refers to ideal funds which
do not earn any profit for the firm.

1) UNNECESSARY STOCK PILING
Surplus money may lead to unnecessary purchasing and accumulation of inventories
causing more chances of mishandling of inventories, theft, waste, losses.

2) DEFECTIVE CREDIT POLICY
Excessive working capital implies excessive debtors and defective credit policy. This
causes higher incidence of bad debts that ultimately affects profit of the firm.

3) MANAGERIAL INEFFICIENCY
It shows that the management is not interested in utilizing the resources and encouraging
economy.

4) EFFECT ON PROFITABILITY
Excessive working capital remains idle and earns no profits whereas interest has to be paid
on it.

5) PROMOTES SPECULATION
Excessive working capital promotes profits of speculation nature by stock piling. It results
in liberal dividend policy which the firm may not be able to maintain in future.

60

FACTORS WHICH DETERMINE THE WORKING CAPITAL

1) NATURE OF THE BUSINESS
The amount of working capital is basically related to the nature and volume of the
business. Firms engaged in public utility services such as railway, transport and
electricity supply companies require moderate amount of working capital because they
are selling services instead of products. Trading concerns or manufacturing concerns
have to maintain large amount of working capital because they require current assets
such as inventories, receivables and cash.

2) SIZE OF BUSINESS
The size may be measured either in terms of scale of operations or in assets or sales.
Large firm will require more working capital. The cement industry has witnessed an
increase in the competition in the market and thus this has led to increase in working
capital requirement of the firm.

3) CHANGES IN TECHNOLOGY
Changes in technology may lead to improvement in processing of raw material,
savings in waste, higher productivity and more speedy production. All these
improvement enables the company to reduce investment in inventories. If a company
decide to go for automation, if will reduce the requirement for working capital. The
technological change in cement industry led to reduce investment in inventories.

4) LENGTH OF OPERATING OR WORKING CYCLE
The amount of working capital depends upon the length or duration of operating cycle.
The speed with which the operating cycle is completed determines the amount of
working capital .The larger the period of working capital the more is the investment in
bill and inventories. Normally the need for working capital funds precedes growth in
business activity. As the division has witnessed an enormous growth over last few
years, its working capital requirement has increased.



61

5) FIRM CREDIT POLICY
Credit policy of the firm also has an impact on working capital needs. A firm
following liberal credit policy will require more working capital to carry book debts.
On the contrary a firm that adopts strict credit policy and grants credit facility to
customer with higher credit handing will require less amount of working capital as
funds tied up in receivable will be realised promptly for further use.

6) TERMS OF PURCHASE AND SALES
A firm buying raw materials and other services on credit and selling goods on cash
will require less investment in current assets. On the other hand a firm which
purchases raw material on cash basis and sells its products on credit basis will need
large amount of working capital in a firm.

7) BUSINESS CYCLE
In a period of boom when the business is prosperous, there is need for large amount of
working capital due to increase in sales and rise in price of raw material. In times of
depression when demand falls lesser amount of working capital is required.

8) WORKING CAPITAL TURNOVER
This is measured by ratio of sales to current assets. When the turnover is fast the
working capital required is less.

9) PROFIT MARGIN AND DIVIDEND POLICY
The amount of working capital required in a firm also depends upon its profit margin
and dividend policy. A high rate of profit margin due to quality products or good
marketing management or monopoly power in the market reduces the working capital
requirements of the firm because profit earned in cash is a source of working capital.





62

ADVANTAGE OF ADEQUATE WORKING CAPITAL

1) SOLVENCY OF THE BUSINESS
Adequate working capitals help in maintaining solvency by the business by providing
uninterrupted flow of production.

2) GOODWIL
Sufficient working capital enables a business concern to make prompt payment and
hence helps in creating and maintaining goodwill.

3) EASY LOANS
A concern having a adequate working capital, high solvency and good credit standing
can arrange loan from banks and other uneasy and favourable terms.

4) CASH DISCOUNTS
Adequate working capital can also enable a concern to avail cash discount on the
purchases and hence it reduces costs.

5) REGULAR SUPPLY OF RAW MATERIAL
Sufficient working capital ensures regular supply of raw material and continuous
production.

6) REGULAR PAYMENT OF SALARY, WAGES AND OTHER DAY TO DAY
COMMITMENTS
A company which has ample working capital can make regular payment of salary,
wages and other day to day commitment which raises the moral of its employees,
increases there efficiency, reduce wastages and cost and enhances production and
profits.



63

7) EXPLOITATION OF FAVOURABLE MARKET CONDITION
Only concern with adequate working capital can exploit favourable market condition
such as purchasing its requirements in bulk when the prices are lower and by holding
its inventories for higher prices.

8) ABILITY TO FACE CRISIS
Adequate working capital enables a concern to face business crisis in emergencies
such as depression because during such period, generally, there is much pressure on
working capital.

APPROACHES OF WORKING CAPITAL
There are three approaches of working capital-
1) MATCHING APPROACH

2) CONSERVATIVE APPROACH

3) AGGRESSIVE APPROACH


MATCHING- According to this principle, the maturity of the sources of financing
should match the maturity of the assets being financed. This means that fixed assets
and permanent current assets should be supported by long term sources of finance,
whereas fluctuating current assets must be supported by short term sources of finance.

CONSERVATIVE- In conservative approach long term financing is used to meet
fixed asset requirement, permanent working capital requirements and a portion of
fluctuating working capital requirement. During seasonal upswings short term
financing is used. During seasonal downswings surplus is invested in liquid assets.

AGGRESSIVE- In aggressive approach long term financing is used to meet fixed
asset requirement as well as peak working capital requirement. When the working
capital requirement is less than its peak level the surplus is invested in liquid assets


64

WORKING CAPITAL MANAGEMENT
Decisions relating to working capital and short term financing are referred to as working
capital management. Management of working capital therefore is concern with the problems
that arise in attempting to manage the current assets; the current liability and the inter-
relationship that exists between them. In other word it refers to all aspect of administration of
both current assets and current liability.

The basic goal of working capital management is to manage the current assets and current
liability of the firm in such a way that a satisfactory level of working capital is maintained,
that is, it is neither inadequate nor excessive.
CALCULATION OF WORKING CAPITAL IN JAL
From above details THE NET WORKING CAPITAL FOR the following years are given below-
YEARS 10-11 11-12 12-13
146868 198162 344347
ANALYSIS THROUGH CHART


INTERPRETATION
By analyzing three year data we come to a conclusion that net working capital is more in
2012 than 2011 that increment also in 2013. It continuous increases in the net working
capital indicate that the position of the company is growing continuously.
65

ANALYSIS OF VARIOUS COMPONENTS OF WORKING CAPITAL
INVENTORY ANALYSIS
Inventory is total amount of goods and materials content in a store of factory at any given
time. Inventory means stock of three things:-
Raw materials
Semi finished goods.
Finished goods.
POSITION OF INVENTORY IN JAL
(SUB TO)
For analysis point of view major item of inventories are considered.
YEAR 31.03.11 31.03.12 31.03.13
STORE, SPARE PARTS etc. 29311 34761 44150
RAW MATERIAL 641 905 707
FINISHED GOODS 2377 2653 3169
STOCK IN PROCESS 756 3006 2324
WORK IN PROCESS 39598 43418 50238
TOTAL 72683 84743 100588

ANALYSIS THROUGH CHART:


66

INTERPRETATION
By analyzing the 3 years data we see that the inventories are increased year by year. We are
looking increasing pattern in inventories. We can see that inventories are growing in 11-12
and 12-13 respectively from previous year. By this growth we can say that the company is
growing very rapidly in cement sector. A company uses inventory when they have demand
in market and JAL is having a great demand in infrastructure sector. That is biggest reason
for increase in inventories. From other point of view we can say that the liquidity of firm is
blocked in inventories but to stock is very good due to uncertainty of availability of raw
material in time.
SUNDRY DEBTORS ANALYSIS
Debtors or an account receivable is an important component of working capital and fall
under current assets. Debtors will arise only when credit sales are made.
POSITION OF SUNDRY DEBTOR IN JAL
YEAR 31.03.11 31.03.12 31.03.13
DEBT OUTSTANDING FOR A
PERIOD EXCEEDING 6 MONTHS

i. FROM OVERSEAS WORK 10163 10163 10163
ii. FROM OTHERS 15279 17434 20760
Less: PROVISION FOR BAD DEBT (140) (139) (155)
OTHER BAD DEBTS 19903 31160 71281
TOTAL 45205 58618 102049










67

ANALYSIS THROUGH CHART


INTERPRETATION
In the table and figure we see that there is continuous rise in the debtors of JAL in the
successive years. A simple logic is that debtors increase only when sales increase and if sales
increases it is good sign for growth. We can see 30% growth in 2012 in comparison with
2011 and there is 74% growth in year 2013 while comparing with previous year.
We can say that it is a good sign as well as negative also. Company policy of debtors is very
good but a risk of bad debts is always present in high debtors. When sales are increasing with
a great speed the profit also increases. If company decreases the Debtors they can use the
money in many investment plans. Increase in debtors also result in strong working capital
ratio. But the company should regularly monitor the debtors to avoid loss as bad debts.

CASH AND BANK BALANCE ANALYSIS
Cash is called the most liquid asset and vital current assets; it is an important component of
working capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a
broader sense it includes near cash assets such as marketable securities and time deposits
with bank.


68



POSITION OF CASH AND BANK BALANCE IN JAL

YEAR 31.03.11 31.03.12 31.03.13
CASH IN HAND 9162 5858 30818
BALANCE WITH
SCHEDULED BANK
133707 175627 259542
BALANCE WITH NON
SCHEDULED BANK
112 59 499
TOTAL 142981 181544 290859





ANLYSIS THROUGH CHART:



69

INTERPRETATION
If we analyze the above table and chart we find that in year 2012 it increases from the
previous year and comparing between 2012 and 2013 then we analyze that in 2012 it
increases more from the previous year. Company is utilizing the fixed cash for exploding the
projects that is good for growth. Cash requirement of any company should be there to
provide for its requirement when it needs, so holding excess cash is not good for any
company.
LOANS AND ADVANCES ANALYSIS
Loans and Advances here refers to any to amount given to different parties, company,
employees for a specific period of time and in return they will be liable to make timely
repayment of that amount in addition to interest on that loan.
POSITION OF LOAN AND ADVANCES IN JAL

YEAR 31.03.11 31.03.12 31.03.13
ADVANCES TO SUPPLIERS 53013 74690 99930
STAFF IMPREST AND
ADVANCES 333 525 592
CLAIMS AND REFUND
RECEIVABLE 8592 20363 42383
PREPAID EXPENCES 4645 3550 12901
DEPOSIT WITH GOVT.
a) Govt. dept. 14794 17519 21119
b) Others 849 82596 112779
ADVANCES & INCOME TAX
DEDUCTION AT SOURCE 24875 21493 4358
SALES TAX RECEIVABLE 2705 1458 36748
TOTAL 109850 222194 330810





70

ANLYSIS THROUGH CHART

INTERPRETATION
If we analyze the table and the chart we can see that it follows an increasing trend which is a
good sign for the company. We can see that from the year 2011 to 2012 it increased and in
year 2013 the increase is more than the previous two years. The increasing pattern shows that
company is giving advances for the expansion of plants and machinery which is good sign
for better production of cement and other goods. Although companys cash is blocked but
this is good that company is doing modernization of plants in time to compete with other
competitors in market.


CURRENT LIABILITIES ANALYSIS
Current liabilities are any liabilities that are incurred by the firm on a short term basis or
current liabilities that has to be paid by the firm with in one year.

POSITION OF OTHER CURRENT LIABILITIES IN JAL

(SUBJECT TO)
71

For analysis point of view major item of current liabilities are considered.
YEAR 31.03.11 31.03.12 31.03.13
SUNDRY CREDITORS
a) Due to micro, small & medium
enterprise
5 - -
b) Others 48312 70102 88063
ADVANCES FROM
CUSTOMER
42140 69367 138305
DUE TO STAFF 900 1229 5320
DUE TO DIRECTORS 2 2 37
ADJUSTABLE RECEIPT
AGAINST CONTRACTS

a) Interest bearing 21217 22347 21283
b) Non interest bearing
i) From subsidiaries 61430 140620 159559
ii) From others 7106 5160 5182
OTHER LIABILITY 14127 16872 25147
INT. ACCRUED BUT NOT DUE
ON LOANS
6983 8567 11892
INVESTORS EDU. &
PROTECTION FUND
402 643 651
TOTAL 202624 334909 455439











72

ANALYSIS THROUGH CHART:



INTERPRETATION
If we analyze the above table then we can see that there is an increasing trend in liabilities.
The important component of current liabilities is sundry creditors and other liabilities. In
2011-2012 the percentage is 65% and in year 2012-2013 it increases by 35% which shows a
decreasing trend, which is good for the company as it indicate that the company is using less
credit facilities by creditors. When company has minimum liabilities it creates a better
goodwill in market.
PROVISIONS ANALYSIS
POSITION OF OTHER PROVISION IN JAL
YEAR 31.03.11 31.03.12 31.03.13
FOR TAXATION 23291 20647 30758
FOR GRATUITY 1981 2915 4055
FOR PROVIDENT FUND 270 339 517
FOR LEAVE ENCASHMENT 761 1222 2186
FOR SECOND INTERIM DIVIDEND - - 3551
FOR TAX ON SECOND INTERIM
DEVIDEND
- - 604
73

FOR PROPOSED FINAL DIVIDENT 3508 4686 5607
FOR TAX ON PROPOSED FINAL
DIVIDEND
596 796 953
TOTAL 30407 30605 48321

ANALYSIS THROUGH CHART:


INTERPRETATION
From the above table we can see that provision shows an increasing trend and the huge
amount is being kept in these provisions. The increase in provision indicates that the
expenditure on the company increases and the profit decreases. The increase in provision
does not affect company wealth. It shows for the liability which the company will have to
incur in future for which profit have been kept in advance.




74

WORKING CAPITAL RATIO AND ITS INTERPRETATION

POSITION OF RECEIVABLE RATIO IN JAL
FORMULA
DEBTORS
RECEIVABLE RATIO = ---------------- * 365
SALES

31.03.11 31.03.12 31.03.13
RECEIVABLE RATIO
(IN DAYS) 46.14 50.06 60.68

ANALYSIS THROUGH CHART:

INTERPRETATION
While analyzing the three years data it shows an increasing trend, as in year 2012 it increases
from 2011 and again in year 2013 it increase from 2012. The increase in receivable ratio
indicates that there is increase in credit sales, but the increase in receivable ratio has no affect
on working capital management and it affects the liquidity position of the firm.
75

POSITION OF PAYABLE RATIO IN JAL
FORMULA
CREDITORS
PAYABLE RATIO= -----------------------------
COST OF SALES

YEAR 31.03.11 31.03.12 31.03.13
PAYABLE
RATIO (IN DAYS) 0.14 0.17 0.15

ANALYSIS THROUGH CHART:

INTERPRETATION
Actually this ratio reveals the ability of the firm to avail the credit facility from the suppliers.
Generally a low creditors turnover ratio implies favorable since the firm enjoys lengthy
credit period
Now if we analyze the three years data we find that, it follows an increasing trend, in year
2011 and 2012. But firm manage the payable ratio in 2013 which good sign for the firm. The
decreasing in payable ratio indicates that there is proper management of fund.
76

POSITION OF CURRENT RATIO IN JAL
FORMULA
TOTAL CURRENT ASSETS
CURRENT RATIO= --------------------------------------------
TOTAL CURRENT LIABILITIES

31.03.11 31.03.12 31.03.13
CURRENT RATIO 1.84 1.64 1.81
ANALYSIS THROUGH CHART:-



INTERPRETATION
This ratio reflects the financial stability of the enterprise. The standard of the normal ratio is
2:1 but in most of companies standard is taken according to Tandon Committee which is
taken as 1.33:1.
Now if we analyze the three years data in 2011 it is at the high position but in the 2012 it is
at the low label as it follows a decreasing trend but in the 2013 it again reach at the high
position and it is seen that it holds a high position than the standard one and the company is
improving its position but more improvement is required to come to the standard position.
77

POSITION OF QUICK RATIO IN JAL
FORMULA
TOTAL CURRENT ASSETS - INVENTORIES
QUICK RATIO= -----------------------------------------------------------------
TOTAL CURRENT LIABILITIES
31.03.11 31.03.12 31.03.13
QUICK RATIO 1.28 1.27 1.43
ANALYSIS THROUGH CHART:


INTERPRETATION
It is the ratio between quick liquid assets and quick liabilities. The normal value for such
ratio is taken to be 1:1. It is used as an assessment tool for testing the liquidity position of the
firm. It indicates the relationship between strictly liquid assets whose realizable value is
almost certain on one hand and strictly liquid liabilities on the other hand. Liquid assets
comprise all current assets minus stock.
By analyzing the three years data it can be said that its position was good in the year 2011 &
2012 but in the year 2013 its position is weak.

78


POSITION OF WORKING CAPITAL RATIO IN JAL
FORMULA
INVENTORY + RECIVEABLE - PAYABLE
WORKING CAPITAL RATIO= ---------------------------------------------------------
(AS % OF SALES) SALES


31.03.11 31.03.12 31.03.13
WORKING
CAPITAL RATIO 0.21 0.20 0.18
ANALYSIS THROUGH CHART:


INTERPRETATION
While analyzing the three year data, in year 2011 the working capital ratio is more than the
year 2012 and 2013. The working capital ratio follows a decreasing trend. The ideal ratio is
2:1, but the company ratio is not ideal which indicates that the position of the company is not
good.
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POSITION OF INVENTORY TURNOVER RATIO IN JAL

FORMULA
COST OF GOODS SOLD
STOCK TURN OVER RATIO (IN DAYS) = --------------------------------------- * 365
AVERAGE STOCK

YEAR 31.03.11 31.03.12 31.03.13
STOCK 46.07 50.01 56.06
TURNOVER RATIO

ANALYSIS THROUGH CHART:



INTERPRETATION
While analyzing the three year data we analyze that there is increase in stock turn over ratio
from year 2011 to 2012 and in year 2013. The increase in stock turn over ratio is not a good
80

sign for the company because increase in this ratio indicates that the stock is not easily been
converted into cash it takes more number of days.
POSITION OF DEBT-EQUITY RATIO IN JAL
Formula = Debt / Equity
Calculation of debt-equity ratio at JAL:-
Particulars 2010-11 2011-12 2012-13
Long Term
Debt
12159.08 8974 7176.98
Net Worth 38423.56 66581.37 100497.53
D/E Ratio 0.32:1 0.14:1 0.07:1

ANALYSIS THROUGH CHART:



INTERPRETATION
When a company has lower debt equity ratio, it means that company is utilizing its own
funds and reserves rather than taking loans from outsiders. The ideal debt equity ratio is 2:1.
JAL have a decreasing trend in debt equity ratio so we can say that JAL is using its funds
and not taking loans from banks. Equity is more than debt that shows a very strong position
in whole market and if debt is
increasing the shareholders
expectation increases.
MANAGEMENT OF
WORKING
CAPITAL

Guided by the above criteria,
management will use a
81

combination of policies and techniques for the management of working capital. These
policies aim at managing the current assets (generally cash and cash equivalents, inventories
and debtors) and the short term financing, so that cash flows and returns are acceptable.
1) CASH MANAGEMENT
2) INVENTORY MANAGEMENT
3) DEBTORS MANAGEMENT
4) SHORT TERM INVESTMENT


I) MEANING OF CASH MANAGEMENT

Cash management refers to cash balance and the bank balance including the short terms
deposits. For cash management purpose, the term cash is used in broader sense that is it
covers cash, cash equivalent and those assets which are immediately convertible into cash.








Business
Operations
Information
and control
Cash
Collection
Cash
Payments
Deficit
Surplus
Surplus

Borrow
Invest
Invest
82

MOTIVES FOR HOLDING CASH
The need for holding cash by a firm arises from a variety of reasons which could be briefly
summarized into three main motives.
1. Transaction motive.
2. Precautionary motive.
3. Speculative motive.

TRANSACTION MOTIVE
The Transaction motive requires a firm to hold cash to conduct its business in the ordinary
course. The firm needs cash primarily to make payments for purchases, wages and salaries,
other operating expenses, taxes, dividends etc. Transaction motive mainly refers to holding
cash to meet anticipated payments whose timing is not perfectly matched with cash receipts.


PRECAUTIONARY MOTIVE
The Precautionary motive is the need to hold cash to meet contingencies in the future. It
provides a cushion or buffer to withstand some unexpected emergency. The precautionary
amount of cash depends on the predictability of the cash flows. Precautionary balance should
be held more in marketable securities and relatively less in cash.


SPECULATIVE MOTIVE
The Speculative motive relates to the holding of cash for investing in profit making
Opportunities as and when they arise. The opportunity to make profit may arise when the
security prices change. Generally business firms do not engage in speculations.

OBJECTIVE OF CASH MANAGEMENT
The basic objectives of cash management are two types;
1) MEETING THE PAYMENT SHEDULE
In the normal course of business firm have to make payment of cash on a continuous
and regular basis to suppliers of goods, employees and so on. At the same time there is
constant inflow of cash through collections from debtors. A basic objective o cash
management is to meet the payment schedule that is to have sufficient cash to meet the
cash disbursement needs of a firm. The importance of sufficient cash to meet the
payment schedule can hardly be over-emphasized.
83

ADVANTAGES OF ADEQUATE CASH
1) It prevents insolvency or bankruptcy arising out of inability of a firm to meet its
obligations.
2) The relation with the bank is not strained.
3) It help in fostering good relation with trade creditor and suppliers of raw material,
as prompt payment may help their own cash management.
4) To make advantage of favorable business opportunities that may be available
periodically.
5) It leads to strong credit rating which enables the firm to purchase goods on
favorable terms and to maintain its line of credit with banks and other resources of
credit.

2) MINIMIZING FUNDS COMMITTED TO CASH BALANCE

The second objective of cash management is to minimize cash balances. In
minimizing the cash balances two conflicting aspects have to reconcile. A high level
of cash balances will, ensure prompt payment together with all the advantages. But it
also implies that large fund will remain idle, as cash is a non earning assets and the
firm will have to forego profits. A low level of cash balances, on the other hand, may
mean failure to meet the payment schedule. The aim of cash management should be to
have an optimal amount of cash balances.

CASH MANAGEMENT TECHNIQUE/PROCESS

1) CASH MANAGEMENT PLANNING
Cash planning is a technique to plan and control the use of cash. It protects the
financial condition of the firm by developing a projected cash statement from a
forecast of expected cash inflow and cash outflow for a given period. The forecast
may be based on the present operation or the anticipated future operation


84

CASH BUDGET
Cash budget is an estimate of cash receipts and payments. Working capital is necessary to
meet the day to day requirements of the business. These cash requirements are met out of
cash sales amount collected from debtors and from other receipts. Cash is also received from
non trading receipts such as sales of fixed assets issue of shares and debentures increase loan
and from other non regular sources. These cash proceeds are used to meet various trading
expenses; which improve cash purchase of goods, payment to creditors and payment of
manufacturing, selling and distribution expenses.

CHARACTERSTICS OF CASH BUDGET
1) Cash budget is a statement of anticipated cash receipt and payment.
2) Cash budget is related to predetermine future period.
3) Cash budget is expressed in terms of monetary value.
4) Cash budget is forecast of financial aspiration of the enterprise.
5) Cash budget is an outline of future plan.


METHODS OF CASH BUDGET
There are three method of preparation of cash budget. These are adjusted profit and loss
method, balance sheet method, receipt and payment method.

1) ADJUSTED PROFIT AND LOSS METHOD
The method is suitable for preparing the long term estimates of cash inflows and
outflows; it is also called cash flow statement.
Under this method, profit and loss account is adjusted to know the cash estimates, this
method is useful in budgetary control technique.

Under this method, closing cash balance can be known by adding profit for the period
to the opening cash balance because the theory is based on the elementary assumption
that profit of the business are equal to cash.

85

ITEMS TO BE ADDED
A) All non cash item shown in the debit side of profit and loss account should be
added to the budgeted profit because these items do not involve any cash outflows,
depreciation, deferred revenue expenditure, writing-off of intangible assets, prepaid
expenses.

B) Changes in working capital which result in inflow of cash balance such as increase
in closing stock, debtors and decrease in sundry creditors and other liabilities,
redemption of preference shares and debentures, payment of dividend, purchase
capital assets and investments.

2) BALANCE SHEET METHOD

This method is similar to that of profit and loss adjustment method, a budgeted
balance sheet is prepared for the next period showing all items of assets and liabilities
except cash balance which is found out as the balancing figure of two side of balance
sheet.

If the assets side exceeds the liability side the balance shall reveal bank overdraft and
if the liability side is heavier than the asset side, the difference represent the bank
balance.

3) RECEIPT AND PAYMENT METHOD

It is the most simple and popular method of preparing cash budget. The method is
most commonly used in forecasting the short term cash position.

For the purpose of preparing cash budget, under this method cash informations are
collected from other budget such as, sales budget, wages and salary budget, overhead
budget, material budget.
Under this method cash budget is divided into two parts. One part show the timing and
amount of cash receipt and other part show the timing and the amount of cash
disbursement. Cash receipt and cash disbursement are estimated as under-
86

SOURCES OF CASH RECEIPT

1) Collection from debtors
2) Issue of share and debenture
3) Sales of fixed assets
4) Loans and borrowing
5) Interest and dividend
6) Miscellaneous receipts
7) Cash sales

SOURCES OF CASH PAYMENTS

1) Cash purchase
2) Payment to creditors
3) Labour cost
4) Factory overhead
5) Loan repayment
6) Purchase of market securities
7) Interest and dividends
8) Tax payment
9) Payment for wages and salaries, rent and other expenses
10) Miscellaneous expenses

2) CASH MANAGEMENT CONTROL

The efficiency of the firms cash mgmt program can be enhanced by the knowledge
and use of various procedure aimed at, accelerating cash inflows, and controlling
cash outflows.
i) ACCELERATING CASH INFLOWS
Efficient cash management is possible when the collections of cash are
accelerated. The delay between the time customer pay there dues and the
time the cash is collected in the sense of becoming useable by the firm
should be attempted to be reduced to the extent possible. Collection
process may be speeded up in any of the following manners.
87

a) The mailing time of payment from customers to the firm may be
reduced.

b) The time during which payment received by the firm remain
uncollected may be minimized. It includes the time a company takes
in processing the cheques internally and the time consumed in the
clearance of the cheque through the banking system.

ii) CONTROLLING CASH OUTFLOWS
Just as a golden rule for controlling cash inflows is
Accelerate the collection; similarly, the golden rule for controlling cash
outflows is slow down the disbursements. Decentralized collection system is
the best way to accelerate collection and centralized payment system is the best
way to slow down the disbursements. Delaying the account payable to extent
possible can help the firm only if the firm credit standing does not suffers. If an
effective control over disbursement is exercised, without losing goodwill, cash
availability is certainly enhanced.

II) INVENTORY MANAGEMENT
Inventory refers to stock of goods, in accounting language it may mean stock of finished
goods only. In a manufacturing concern, it may include raw materials, work in process,
and stores.


88

SUPPLY CHAIN MANAGEMENT
A supply chain in a manufacturing firm will comprise of a network of facilities to
Procure the material from the vendors
Transform the material to the end product
Distribute the finished product to the distribution centre or the consumer directly












FUNCTIONS IN INVENTORY MANAGEMENT
Material planning
Purchasing
Incoming material check
Selective inventory control
Storage and warehousing
Material handling and transportation
Scrap and obsolete disposal
Cost reduction through standardization

Vendors
Raw material and
other inputs

Manufacturing
Finished goods
moved to dumps
Customers
89

INVENTORY INCLUDE THE FOLLOWING THINGS

A) RAW MATERIALS
It includes direct material used in a manufacture of product. The
purpose of holding raw material is to ensure uninterrupted production
in the event of delaying delivery. The amount of raw material to be
kept by a firm depends on various factors such as speed with which
raw materials are to be ordered and procured and uncertainty in the
supply of these raw materials.

B) WORK IN PROGRESS
It includes partly finished good and material held between
manufacturing stages. It can also be stated that those raw materials
which are used in production process but are not finally converted into
final product are work in progress.

C) CONSUMABLE PRODUCT
Consumable are product that consumers buy recurrently that is, item
which get used up or discarded.

D) FINISHED GOODS
The goods ready for sale and distribution comes under this class. It
helps to reduce the risk associated with stoppage in output on account
of strikes, break downs, shortage of materials.

E) STORE AND SPARES
Which are accessories to the main products produced for the purpose
of sales called stores and spares. Spare parts are usually bought from
outside or sometimes they are manufactured in the company also.



90

POSITION ON INVENTORY IN JAL
(SUBJECT TO)
For analysis point of view major item of inventories are considered.
YEAR 31.03.11 31.03.12 31.03.13
STORE, SPARE PARTS etc. 29311 34748 44150
RAW MATERIAL 641 905 707
FINISHED GOODS 2377 2653 3169
STOCK IN PROCESS 756 3006 2324
WORK IN PROCESS 39598 43418 50238
TOTAL 72683 84730 100588

ANALYSIS THROUGH CHART:


INTERPRETATION:
By analyzing the 3 years data we see that the inventories are increased year by year. We are
looking increasing pattern in inventories. We can see that inventories are growing in 07-08
and 08-09 respectively from previous year. By this growth we can say that the company is
growing very rapidly in cement sector. A company uses inventory when they have demand
in market and JAL is having a great demand in infrastructure sector. That is biggest reason
for increase in inventories. From other point of view we can say that the liquidity of firm is
blocked in inventories but to stock is very good due to uncertainty of availability of raw
material in time.
91

MOTIVE OF HOLDING INVENTORY
There are three main purposes of motives of holding inventories-
1) TRANSACTION MOTIVE
Every firm has to maintain some level of inventory to meet the day to day requirement
of sales, production process, and customer demand. This motive makes the firm to
keep the inventory of finished goods as well as raw material. The inventory level will
provide smoothness to the operation of firm. Business firms exist for business
transaction which requires stock of goods and raw materials.
2) PRECAUTIONARY MOTIVE
A firm should keep some inventory for unforeseen circumstances also.
For example, the fresh supply of raw material may not reach the factory due to strike
by the transporters or due to natural calamities in a particular area. There may be
labour problem in the factory and the production process may halt. So, the firm must
have inventory of raw materials as well as finished goods for meeting such
inventories.
3) SPECULATIVE MOTIVE
The firm may be tempted to keep some inventory in order to capitalize an opportunity
to make profit. Example, sufficient level of inventory may help the firm to earn extra
profit in case of expected shortage in the market.

TYPES OF INVENTORY
1) MOVEMENT INVENTORY
These inventories are also called transit or pipe line inventories. There existence owes
to the fact that transportation time is involved in transferring substantial amount of
resources. For example, when coal is transported from the coal field to an industrial
town by trains, then the coal, while in the transit, can not provide any service to the
customer for power generation or for burning in furnaces.
2) BUFFER INVENTORIES
Buffer inventory are held to protect against the uncertainty of demand and supply. An
organization generally knows the average demand for various items that it need.
However the actual demand may not be exactly match the average and could well
exceed it. To meet this kind of situation, inventories may not be held in excess of the
average for expected demand. The inventory which are in excess of those necessary
92

just to meet the average demand, held for protecting again st the fluctuation in demand
and lead time are known also by the term SAFETY STOCK.

3) ANTICIPATION INVENTORY
These are held for the reason that a future demand for the product is anticipated.
Production of specialized time like crackers well before diwali, umbrellas and raincoat
before rain set in are the example of anticipation inventory.

4) DECOUPLING INVENTORIES
The idea of the decoupling inventories is to decouple or disengage, different part of
the production system. As we can easily observe, different machine equipment and
people work at different rates, some slower and some faster. In the absence of
decoupling inventory, different machine and people cannot work simultaneously on
continuous basis, when such inventory are held, then, even if machine break down, the
work on other would not stop.

5) CYCLE INVENTORY
Cycle inventory are held for the reason that purchases are usually made in lots rather
than for the exact amounts which may be needed at a point of time. If all purchases are
made exactly as and when the item required, there would be no cycle inventories. But,
practically, purchases are made in lots, the reason being that if purchases are made
frequently and in small numbers, then the cost involved in obtaining the item would be
very large.

6) INDEPENDENT DEMAND INVENTORY
Inventory item whose demand is not related to some higher level item. Demand for
such item is usually thought up as forecasted demand. Independent demand inventory
item are usually thought up as finished products.

7) DEPENDENT DEMAND INVENTORY
Inventory item whose demand is related to higher level item. Demand for such item is
usually thought of as derived demand. Dependent demand inventory item are usually
thought as the material, parts, components and assemblies that make up the finished
products.
93

FACTORS DETERMINING THE OPTIMUM LEVEL OF INVENTORY
1) RATE OF INVENTORY TURNOVER
It is time period within which inventory complete the cycle of production and sales.
When the turnover rate is high, investment in inventories tends to be low.

2) TYPE OF PRODUCT
Durable products are more susceptible to inventory holding as the risk of perishability
and obsolescence is less. Perishable and fashion goods are not stocked in large
amounts. Thus the type of products also influences the inventory level.
3) MARKET STRUCTURE
Under the condition of imperfect competition demand is uncertain and stocks must be
held if the firm wants to take advantage of profitable sales opportunities. The optimum
level of sales will depend upon the variability of sales and the cost revenue
relationship. The level of inventory rises with increase in the difference between price
and marginal cost. Thus market structure influence the level of inventories.

4) ECONOMIES OF PRODUCTION
It also determines the inventory level. Modern machinery is very costly and the cost of
idle machine time is considerable. Therefore, every business firm likes to maintain
sufficient stock of raw material to negotiate uninterrupted production.

5) COSTS
There are certain costs of carrying stock. Some of these costs are directly measurable
and certain costs are not measurable. All these costs are influence the level of
inventories.

6) FINANCIAL POSITION OF THE FIRM
It has significant influences on inventory levels. A financially sound company may
buy materials in bulk and hold them for the future use. A firm starved of funds cannot
maintain large stocks.

7) INVENTORY POLICY AND ATTITUDE OF MANAGEMENT
The inventory policy and attitude of management also influence the inventory level.
94

OBJECTIVE OF INVENTORY MANAGEMENT
1) OPERATING OBJECTIVE
Operational objective refer to material and other part which are available in sufficient
quantity. It includes

i) AVAILABILITY OF MATERIAL
The first and the foremost objective of inventory management are to make
all types of materials available at all time whenever they are needed by the
production department. So that the production may not be held up for wants
of materials.

ii) MINIMIZING THE WASTAGE
Inventory control is essential to minimize the wastage at all level that is
during its storage in the godowns or at work in the factory. Normal wastage,
in other words uncontrollable wastage, should only be permitted. Abnormal
or controllable wastage should strictly be controlled.
iii) PROMOTION OF MANUFACTURING EFFICIENCY
The manufacturing efficiency of the enterprise increases if right types of raw
material are made available to the production department at the right time. It
reduces wastage and cost of production and improves the moral of workers.

iv) BETTER SERVICE TO CUSTOMERS
In order to meet the demand of customers, it is the responsibility of the
concern to produce sufficient stock of finished goods to execute the order
received. It means flow of production should be maintained.

v) OPTIMAL LEVEL OF INVENTORIES
Proper control of inventories helps management to procure materials in time
in order to run the plan efficiently. It thus, helps in maintaining the optimal
level of inventories keeping in view the operational requirements. It also
avoids the out of stock danger.


95


2) FINANCIAL OBJECTIVE

i) ECONOMY IN PURCHASING
Proper inventory control brings certain advantages and economies in
purchasing the raw material. Management makes every attempt to purchase
the raw material in bulk quantity and to take advantage of favourable market
conditions.

ii) OPTIMUM INVESTMENT AND EFFICIENT USE OF CAPITAL
The prime objective of inventory control from financial
Point of view is to have an optimum level of investment
in inventories. There should neither be any deficiency of
Stock of raw material so as to hold up the production
Process nor there any excessive investment in inventory
So as to block the capital that could be used in an
efficient manner.

iii) REASONABLE PRICE
Management should ensure the supply of raw materials at a responsibility
low price but without sacrificing the quality of it. It helps in controlling the
cost of production and the quantity of finished goods in order to maximize
the profits of the concern.

iv) MINIMIZING COSTS
Minimizing inventory costs such as handling, ordering and carrying costs is
one of the main objective of inventory management. Financial management
should help controlling the inventory cost in a way that reduces the cost per
unit of inventory. Inventory costs are the part of total cost of production
hence cost of production can also minimized by controlling the inventory
costs.


96

TECHNIQUE OF INVENTORY MANAGEMENT
Effective inventory management requires an effective control system for inventories. A
proper inventory control not only helps in solving the acute problem of liquidity but also
increases profit and causes substantial production in the working capital of the concern. The
following are the important techniques of inventory management are
1) DETERMINATION OF STOCK LEVEL
An efficient inventory management requires that a firm should maintain an optimum
level of inventory where inventory cost are minimum and at the same time there is no
stock out which may result in loss of sale of stoppage of production. Various stock
levels are as follows-

i) MINIMUM LEVEL

MINIMUM STOCK LEVEL=
RE-ORDER LEVEL-(NORMAL CONSUMPTION*NORMAL
RE-ORDER PERIOD)

Fall in stock level below minimum level will indicate potential danger to the
business. The following factor are to considered in fixing the minimum
level-

a) NATURE OF ITEM OF MATERIALS
b) MINIMUM TIME REQUIRED FOR DELIVERY
c) RATE OF CONSUMPTION OF MATERIALS
d) STOCK OUT COST WHICH INCLUDE LOSS OF CONTRIBUTION
MARGIN, LOSS OF GOODWILL

ii) RE-ORDERING LEVEL

REORDERING LEVEL= MAXIMUM
CONSUMPTION*MAXIMUM RE-ORDER PERIOD


97

When the quantity of material reaches at a certain figure then fresh Order is send
to get materials again. The order is send before the Materials reach minimum stock
level. The rate of ordering level is fixed between minimum and maximum level.
The rate of consumption, number of days required replenishing the stock, and
Maximum quantities of materials required on any day are taken into account while
fixing re-ordering level.

iii) MAXIMUM LEVEL

MAXIMUM STOCK LEVEL =
REORDERING LEVEL+REORDERING QUANTITY-(MINIMUM
CONSUMPTION*MINIMUM RE-ORDERING PERIOD)
Maximum stock level will depend upon the following factor-
a) The availability of capital for the purchase of material.
b) The maximum requirements of material at any point of time.
c) The availability of space for storing the materials.
d) The rate of consumption of material during lead time.
e) The cost of maintaining the stores.
f) The possibility of fluctuation in price.
g) The nature of materials.
h) Availability of materials
i) Restrictions imposed by the government.
j) Possibility of change in fashion will also affect the maximum level.

iv) DANGER LEVEL

DANGER LEVEL=
AVERAGE CONSUMPTION* MAXIMUM REORDERING PERIOD FOR
EMERGENCY PURCHASES
If the danger level arises then immediate step should be taken to replenish
the stock even if more cost is incurred in arranging the materials. If materials
are not arranged immediately there is a possibility of stock.



98

v) AVERAGE STOCK LEVEL

AVERAGE STOCK LEVEL=
MINIMUM STOCK LEVEL+1/2 OF RE-ORDERING QUANTITY
2) DETERMINATION OF SAFETY STOCK
In the determination of safety stock, OPPORTUNITY COST OF STOCK OUT and
THE CARRYING COST are involved. If a firm maintains low level of safety frequent
stock out will occur resulting into the larger opportunity costs. The larger quantities of
safety stock involve higher carrying costs.

3) ORDERING SYSTEM OF INVENTORY
The basic problem of inventory is to decide the re-order point. This point indicates
when an order should be placed. There order point is determined with the help of
AVERAGE CONSUMPTION RATE and DUARTION OF LEAD TIME and
ECONOMIC ORDER QUANTITY, when the inventory is depleted to lead time
consumption, the order should be placed. There are three prevalent system of ordering
and a concern can choose any one of these-
i) FIXED ORDER QUANTITY SYSTEM/ Q SYSTEM
ii) PERIODIC REVIEW SYSTEM / P SYSTEM
iii) MODIFIED REPLINISHMENT SYSTEM

4) ECONOMIC ORDER QUANTITY (EOQ)
It is a quantity of inventory which can reasonably be ordered economically at a time. It
is known as standard order quantity, economic lot size, or economical ordering
quantity. In determining this point ordering cost and carrying cost are taken into
consideration. Ordering cost is basically the cost of getting an item of inventory and it
includes cost of placing an order.
Carrying cost includes cost of storage facilities, property, insurance and loss of value
through physical deterioration, cost of obsolescence.

99



5) JUST IN TIME (JIT)
Just in time refers to less of every thing, in terms of minimizing wastage and proper
utilization of all available resources.


ADVANTAGE OF JIT
i) Increased awareness of different problems and their costs.
ii) Reducing lot size and less work in progress.
iii) Higher productivity.
iv) Reduce wastage of material.
v) Higher quality of finished goods.
vi) Better control over defects and overall working.

6) ABC ANALYSIS
Under ABC analysis, the material are divided into three categories A, B and C. in
ABC analysis 10% of the item contribute to 70% of value consumption and this
category called A category. 20% of items contribute about 20% of value of
consumption and this is known as B category. Category C covers about 70% of item
of material which contribute only 10% of value of consumption. There may be some
variation in different organization and an adjustment can be made in these
percentages.
100




INTERPETATION
A. Contributes 70% of annual consumption & number of items restricted around 10%
B. Contributes 20% of annual consumption & number of items restricted around 20%
C. Contributes 10% of annual consumption & number of items restricted around 70%
Sl. No. Class
of
items
Placement
of order
Phasing delivery
1 A
Items
Once in a
6 months
Maximum of 3 months requirement to be obtained
at a time. To be fixed taking into account inventory
norms.
2 B
Items
Once in a
year
A maximum of 6 months.
3 C
Items
Once in 2
years
A maximum of one years requirement be obtained
at a time. Staggered supply is recommended to take
care of problems regarding space.
101

7) VED ANALYSIS
VED analysis is used for spare parts. The requirement and urgency of spare parts in
different from that of materials. ABC analysis may not be properly used for spare
parts. Spare parts are classified as vital (V), essential (E), desirable (D). The vital
spares are must for running the concern smoothly and these must be stored adequately.
The E types of spare are also necessary but their stocks may be kept at low figure. The
stocking of D types of spare may be avoided at time. If the lead time of these spares is
less, then stocking of these spares can be avoided.

8) INVENTORY TURNOVER RATIO
Inventory turnover ratio are calculated to indicate whether inventory have been used
efficiently or not. The purpose is to ensure the blocking of only required minimum
funds in inventory. The inventory turnover ratio also known as stock velocity is
normally calculated as sales/average inventory or cost of goods sold/ average
inventory cost.

INVENTORY TURNOVER RATIO=
COST OF GOODS SOLD = SALES
AVERAGE INVENTORY AT COST INVENTORY

III) DEBTOR / RECEIVABLE MANAGEMENT
Receivable represent amounts owed to the firm as a result of sale of goods or services in the
ordinary course of business. There are claims of the firm against its customer and form part
of its current assets. Receivable are known as an account receivable, trade receivable,
customer receivable or debtor receivable. The receivables are carried for the customer. The
period of credit and extent of receivable depend upon the credit policy followed by the firm.
The purpose of maintaining or investing in receivables is to meet competition, and to
increase sales and profits.
SUNDRY DEBTORS ANALYSIS
Debtors or an account receivable is an important component of working capital and fall
under current assets. Debtors will arise only when credit sales are made.

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POSITION OF SUNDRY DEBTORS IN JAL
YEAR 31.03.11 31.03.12 31.03.13
DEBT OUTSTANDING FOR A
PERIOD EXCEEDING 6 MONTHS

i. FROM OVERSEAS WORK 10163 10163 10163
ii. FROM OTHERS 15279 17434 20760
Less: PROVISION FOR BAD
DEBT
(140) (139) (155)
OTHER BAD DEBTS 19903 31160 71281
TOTAL 45205 58618 102049


INTERPRETATION
In the table and figure we see that there is continuous rise in the debtors of JAL in the
successive years. A simple logic is that debtors increase only when sales increase and if sales
increases it is good sign for growth. We can see 30% growth in 2012 in comparison with
2011 and there is 74% growth in year 2013 while comparing with previous year.
We can say that it is a good sign as well as negative also. Company policy of debtors is very
good but a risk of bad debts is always present in high debtors. When sales are increasing with
a great speed the profit also increases. If company decreases the Debtors they can use the
money in many investment plans. Increase in debtors also result in strong working capital
ratio.

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OBJECTIVE OF RECEIVABLES
The objective of receivable management are to improve sales, eliminate bad debt, and reduce
transaction costs incidental to maintenance of account and collection of sales proceed and
finally, enhance profit of the firm. Credit sales help the organization to make extra profit. It
is known fact, firm charge a higher price, when sold on credit, compared to normal price.
1) BOOK DEBT ARE USED AS A MARKETING TOOL FOR IMPROVEMENT
OF BUSINESS
If the firms want to expand business, it has to, necessary, sell on credit. After a certain
level, additional sales do not create additional production cost due to the presence of
fixed cost. So, that additional contribution, totality, goes towards profit, improving the
profitability of the firm.
2) OPTIMUM LEVEL OF INVESTMENT IN RECEIVABLE
It is necessary for the firm to make investment in receivable. Investment in receivable
involves cost as funds are tied up in debtors. There is also risk in respect of bad debt.
Investment in receivables is to be made till the incremental costs are less than the
incremental return.

BENEFIT OF RECEIVABLES

1) INCREASE IN SALES
Except a few monopolistic firm, most of are required to sell goods on credit, either
because of trade customs or other condition. The sales can further be increased by
liberalizing the credit terms. This will attract more customers to the firm resulting in
high sales and growth of the firm.

2) INCREASE IN PROFIT
Increase in sales will help the firm-
a) To easily recover the fixed expenses and attaining the break even level.

b) Increase the operating profit of the firm. In a normal situation, there is positive
relation between the sales volume and the profits.


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3) EXTRA PROFIT
Sometimes, the firm makes the credit sales at a price which is higher than the usual
cash selling price. This brings a opportunity to the firms to make extra profit over and
above the normal profit.

FACTORS OF RECEIVABLE MANAGEMENT
The factors of receivable management or debtors management are as follows-
1) Size of the credit sales
2) Credit policy
3) Terms of trade
4) Expansion of plans
5) Relation with profits
6) Credit collection efforts
7) Habit of customers
8) Stability of sales
9) Size and policy of cash discount
10) Bill discounting and endorsement
MARKETABLE SECURITIES / SHORT TERM INVESTMENT
Marketable securities are the securities which can easily be converted into cash in a short
period of time. Marketable securities identify the appropriate source of financing, given the
cash conversion cycle, the inventory is ideally financed by credit granted by the supplier;
however, it may be necessary to utilize a bank loan (or overdraft), or to "convert debtors to
cash" through "factoring.







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RESEARCH METHODOLOGY

METHODOLOGY:
The efficiency of working capital management in Jaiprakash Associates Ltd. (Cement
division) over the years has been analyzed with the help of following techniques and
approaches
1) OPERATING CYCLE APPROACH:
The normal operations of a manufacturing and trading company start with cash, go through
the successive segments of the operating cycle, viz, raw material storage period, conversion
period, finished goods storage period and average collection period before getting back cash
along with profits. The shorter the duration of the operating cycle period, the locking up of
funds in current assets is for a relatively short duration. Thus, operating cycle period has
been calculated for four years and the operating cycle period for the current year has been
compared with the previous years to know whether the period has increased or decreased
over the years. To provide a better view, each segment of operating cycle period is compared
over the years to get a picture of management of working capital management in the
division.
2) RATIO ANALYSIS
Despite the usual limitations associated with ratios, ratio analysis is still popular for
analyzing the financial statements of business entities. This is mainly attributable to the
simplicity in calculation and indication of the direction in which the entity is moving. Thus
various working capital ratios have been calculated for the various years and compared to
gauge the efficiency of working capital management in the Cement division of Jaiprakash
Associates Ltd.


RESEARCH OBJECTIVE
1) The research objective of working capital management is to ensure that the
firm is able to continue its operation and that it has sufficient cash flow to
satisfy both maturing short-term debt and upcoming operational expenses.

106

2) The objective of working capital is to find the amount of fund necessary to
cover the cost of operating the enterprise.

3) The research objective of Working capital is that it indicates financial
soundness of the enterprise.

4) The objective of determining the working capital is to minimize the level of
risk arising in the business.

RESEARCH DESIGN:
Research design is a frame work or plan for a study that guides the collection and
analysis of the data. The controlling plan for a marketing research study in which the
methods and procedures for collecting and analyzing the information to be collected is
specified. A plan for collecting and utilizing data so that desired information can be obtained
with sufficient precision or so that a hypothesis can be tested properly.
SOURCES OF DATA:

PRIMARY DATA
Primary data refers to the data which is collected for the first time from the origin. It is the
first hand information. The inputs related to inventory management has been obtained from
the inventory stores located at cement plant (Jaypee group). Some data and information
related to working capital management has been obtained from the finance and accounts
department of the division. The data so received are also collected from the management.
SECONDARY DATA
Secondary data refers to the data which are already in existence. These are second hand
information. The data required for making a comparative study are collected from annual
reports available on internet and published sources. The data required for the application of
quantitative tools and techniques for monitoring the efficiency of working capital
management has been extracted from the annual report presented in year 2010-2011, 2011-
2012 and 2012-2013.
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LIMITATIONS OF THE STUDY

The period for the application of quantitative techniques and approaches for analyzing
the efficiency of working capital management in the division is restricted to three
years.
Some of the aspects related to working capital management being internal matters of
finance were not accessible.

The time factor also plays as a limitation for the study of working capital management




























108


CONCLUSION

An attempt has been made in the project to study and analyze various aspects of working
capital management in jaypee cement division. All the division are efficiently managing its
working capital especially in the recent two years, there have been a lot of improvement in
the management of working capital. A careful attention has been given by the executives in
enhancing the efficiency in working capital management.

The company has adequate sources of finance to meet its short term obligations. The
combined interpretation of liquidity ratios indicate that interest of short term creditors is
well protected by adequate solvency and liquidity in the firm.

The shortening of operating cycle during the period of study indicates not only efficiency in
the management of working capital but also efficiency in production and distribution system,
logistic and delivery system prevailing in the organization.

In the context of the present highly competitive market it is necessary that the division keeps
on identifying new areas and work on it for improvement in working capital management.
More advanced and efficient method of managing different component of current asset
should be worked upon.












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BIBLIOGRAPHY

i) I.M PANDEY, financial management, vikash publishing house,
New Delhi.
ii) PRASANNA CHANDRA, financial management, theory and practice,
3
rd
edition, Tata McGraw hill, New Delhi.
iii) BHATTACHARYA, H, total management by ratios, New Delhi, sage
publication India pvt. Ltd.
iv) YADAV, R. A, working capital management- a parametric approach,
the chartered accountant.
v) PRASAD, R. 5, working capital management in paper industry finance
India volume XV. NO. 1, March 2001.
vi) Financial management and policy, J.C. VAN HORNE, PHI.
vii) Research methodology by C.R.KOTHARI.

viii) www.jalindia.co.in

ix) www.google.com

x) www.altavista.com