A Summer Training Report On

Working Capital Management of Wuerth India Pvt.Ltd. with reference to Ahmedabad Branch

Submitted for partial fulfillment of requirement for the award of degree Of Master of Business Administration Of CHHATTISGARH SWAMI VIVEKANAND TECHNICAL UNIVERSITY BHILAI (C.G.)

Session 2010-12
Supervised By External Guide
Name:-Mr. Manish Baghel District Manager Sales

Supervised By Internal Guide

Name: - Prof. Reshma Shrivastava Reader Faculty of Management

Submitted by
Neeraj Amravat Roll No: - 5053610056 Enrollment No: - AG8032 MBA III Semester (Section- C)

2010-12 DEPARTMENT OF MANAGEMENT

DISHA INSTITUTE OF MANAGEMENT AND TECHNOLOGY
(Disha Education Society) Satya Vihar, Vidhansabha-Chandrakhuri Marg, Mandir Hasaud, Raipur (C.G.) 492007

Appendix II

DECLARATION
I the undersigned solemnly declare that the report of the Summer Training work entitled Working Capital Management with respect to Wuerth India Pvt.Ltd. (Ahmedabad), is based on my own work carried out during the course of my study under the supervision of Prof. Reshma Shrivastava. I assert that the statements made and conclusions drawn are an outcome of the project work. I further declare that to the best of my knowledge and belief that the project report does not contain any part of any work which has been submitted for the award of any other degree/diploma/certificate in this University or any other University.

___________________ (Signature of the Candidate) Neeraj Amravat Roll No: 5053610056 Enrollment No: AG8032

Appendix III

Certificate by Organization

Note: In this page you have to put the certificate received from the organization.

Appendix IV

CERTIFICATE BY INTERNAL GUIDE This to certify that the report of the project submitted is the outcome of the project work entitled Working Capital management with respect to Wuerth India Pvt.Ltd.(Ahmedabad) carried out by Neeraj Amravat bearing Roll No5053610056 & Enrollment No AG8032 carried by under my guidance and supervision for the award of Degree in Master of Business Administration of Chhattisgarh Swami Vivekanand Technical University, Bhilai (C.G), India. To the best of the my knowledge the report i) ii) iii) iv) Embodies the work of the candidate himself, Has duly been completed, Fulfils the requirement of the ordinance relating to the MBA degree of the University and Is up to the desired standard for the purpose of which is submitted.

_______________________ (Signature of the Guide) Prof. Reshma Shrivastava Reader Faculty of Management Disha institute of Management & Technology Satya Vihar, Vidhansabha-Chandrakhuri Marg, Mandir Hasaud, Raipur (C.G.) 492007 The project work as mentioned above is hereby being recommended and forwarded for examination and evaluation.

Appendix V

CERTIFICATE BY THE EXAMINERS This is to certify that the project entitled Working Capital management with respect to Wuerth India Pvt.Ltd. (Ahmedabad) Submitted by Neeraj Amravat Roll No 5053610056 Enrollment NoAG8032. Has been examined by the undersigned as a part of the examination for the award of Master of Business Administration degree of Chhattisgarh Swami Vivekanand Technical University, Bhilai (C.G.).

________________ ________________ Name & Signature of Internal Examiner Date:

__________________ __________________ Name & Signature of External Examiner Date:

Forwarded by Academic Head Department of Managemen

Appendix VI

ACKNOWLEDGEMENT

I take this opportunity to place on record my grateful thanks and gratitude to all those who gave me valuable advice and inputs for my study. My study could not have been completed if I had not been able to get the reference materials from the company. I express my sincere regards to my guide Prof. Reshma Shrivastava and my external guide Mr.Manish Baghel For support and guidance. Last but not least, I would also like to express my thanks to my family members who inspired me to put in my best efforts for the research / project report.

(Signature of the student) NEERAJ AMRAVAT Roll.No.5053610056 MBA III Semester Section C

Appendix VII

PREFACE
By observing the working capital it has been noticed that the Gross Working capital has increased during the year 2009-2011. It has found that current ratio of the company for last three years it has increased by 494.13% in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors and decreased by 91.75%. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash. If we see the quick ratio of the company for last three years it has increased by 516.96 % in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors and decreased by 91.96 %. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash. These ratio shows that company carries a small amount of cash in year 2009 and 2011 and large amount of cash in year 2010. But there is nothing to be worried about the lack of cash because company has reserve, borrowing power & long term investment. This ratio shows how rapidly the inventory is turning into receivable through sales. In 2009 the company has 36.81 inventory turnover ratio and it increased to 86.68 times in 2010 and decrease to 27.16 in 2011. This shows that the companys inventory management technique is not so efficient as compare to last years. This ratio indicates that there is increase in debtors turnover ratio by 39.27 % in year 2010 and decrease 49.85 % in year 2011 debtors turnover ratio this shows that company is not so efficient of being converted or turnover into sales. It is found from above data that company has managed to reduced its average collection period from 47.46 to 34.08 in the year 2010 which is indicator of efficient management but in year 2011 the average collection period has gone up to 67.97 from 34.08 which is due to inefficiency of management.

Appendix IX

Declaration Certificate by Organization Certificate by Internal guide Certificate by Examiner Acknowledgement

I Ii Iii Iv V

Preface List of Tables List of Figures

Vi Vii Viiii Page No. 10 10 10 10 11 12 13 14 15 16 16 16 17-28 29 31 31 Ix X

Serial No. 1 1.1 1.2 1.3 1.4 2 2.1 2.2 3 3.1 3.2 3.3 4 4.1 5 5.1 Bibliography Annexure

Table of Contents Chapter-1 Introduction Objective of study Scope of study Limitation of study Introduction to Topic Chapter-2 Company Profile Products Customers Chapter-3 Research Methodology Type of Research Collection of Data Research Technique Chapter-4 Data Analysis & Interpretation Findings & Discussion Chapter-5 Conclusion Suggestions

Chapter-1 Introduction

1. INTRODUCTION 1.1 OBJECTIVES OF THE STUDY

To study the working capital management of the company so as to analyze and interpret the inventory position of the Wuerth India Pvt.Ltd. (Ahmedabad).

To assess the strength and weakness of the company in various areas. To assess the overall efficiency and performance of the company.

1.2 SCOPE OF THE STUDY My scope of research study was the company branch at Ahmedabad (Gujarat). 1.3 LIMITATIONS OF THE STUDY The limitations of present study are as follows: Different accounting procedures may make results misleading. In spite of precautions taken there are certain procedural and technical limitations. Lack of sufficient time to exhaust the detail study of the above topic became a hindering factor in my research.

1.4 INTRODUCTION TO TOPIC Working Capital is considered as blood of any Company or firm, and its not possible in absence of adequate working capital. Wuerth India Pvt. Ltd. use maximum of its funds as working capital to conduct their operation. In the present study it was found that it had Rs 7915836.38 in 2009, Rs 12218374.26 in 2010, and Rs 16191789.25 in 2011 effectively meeting its working capital requirement to conduct its operations smoothly. I also found that inventory is increasing which shows that company has sufficient

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stocks to meet up sale. But the Inventory Turnover Ratio is decreasing which is not a good sign for the company. Companies working capital management was a great learning and it helped me to understand the current assets and current liability how it is being managed. Inventory Management was also part of my study.

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Chapter-2 Company Profile

2. INTRODUCTION OF COMPANY Wuerth India Pvt. Limited is the Indian subsidiary company of the group. The Company was incorporated in October 1994 with headquarters in Mumbai. It started functioning in January 1996, with Automotive & Industry division products, this division comprises of about 75,000 products selling through direct marketing. Wuerth India presently has branches in Ahmedabad, Noida, Bangalore, Nagpur, Goa, Surat, Raipur, Hyderabad, Pune, Bhubeneshwar, etc. With ready stock availability for all fast moving products. WUERTHS client is primary professional craftsman in the assembly techniques. Being a front in the pack, Wuerth only focuses on sale of its product.

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With 22 Branch Offices in India as above the expansion is an ongoing process, as the only thing constant in WUERTH is GROWTH. The present organization of the Company is 350 employees-outs of which 200 are Sale Force, which will grow to about 10000 employees, as per vision 2020 report of company The present Employees at Wuerth India Pvt.Ltd. Ahmedabad has1 Branch Manager, 2 District Manager, 1 Store Manager and 10 Sales Force. The present sales turnover with only industries division is about Rs.250 Million.
Branch Manager

District Manager

District Manager

Store Manager Executives Executives

Sales ExecutiveSales Executive Sales Executive Sales Executive Sales Executive Executive ales Executive Sales S Sales Executive

2.1 Wuerth has the following offering for his customers in different segments:Automotive Technology, Workshop Tools & Chemicals, Body shop Tools & Chemicals, Cutting Devices and Abrasives, Industrial Safety Products Service and Maintenance, Chemicals Lubricants & Adhesives Electrical & Pneumatic Tools, Assembly tools, General Tools and Equipments, Connecting elements and Assembly Technology, Screw and Plug connections, Fasteners(DIN & Standard Parts), Rivet Technology, Dowel Technology, Soldering & Welding Technology Storage and Retrieval Systems. 2.2 Wuerth Indias prestigious customer Godrej Industries, Tata Motors, Tisco, Maruti Udyog, OEMs like Honda Siel, Mercedes Benz, Ford, Fiat. Emco Ltd, Kone Elevators, and franchise workshops of these and all other manufacturers in India.

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Quality, Reliability and Service Wuerth is an International Logistic Oriented group for Industrial Fasteners and C-parts management. Wuerth has its own manufacturing and allied companies globally to access worldwide procurement and engineering know-how. We are committed to giving customers the full benefit of our expertise and skills, constantly working to optimize processes and boost efficiency. Every single order is confirmation of the quality of our service, but also a new challenge to become even better and ever faster. The first priority at Wuerth is to provide top quality products and become No.1 in the view of the customer worldwide with a wide customer base of 2.9 million customers globally.

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Chapter-3 Research Methodology

RESEARCH METHODOLOGY TYPE OF RESEARCH: Exploratory COLLECTION OF DATA: 1. 2. Primary Data Secondary Data

PRIMARY DATA:It is the information collected directly without any reference. In the study, it mainly interviews with concerned officers and staff either individually. Some of the information had been verified or supplemented

15

with personal observation, the data collected through conducting personal interview with the officer of the Wuerth India Pvt.Ltd.(Ahmedabad). SECONDARY DATA:1. Collection of required data from annual report of Wuerth India Pvt.Ltd.(Ahmedabad),. 2. Reference from text book and journals relating to financial management. RESEARCH TECHNIQUE: Comparative Study

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Chapter-4 Data Interpretation Findings & Discussion

DATA INTERPRETATION 1.Statement Showing the change in Working Capital 31st March 31st Particular CURRENT ASSET Cash Bank Sundry Debtor Closing Stock Advance Prepaid exp(insurance) Other Asset TOTAL CURRENT 31291.25 1034494.98 3786297.38 790803.23 27916 1004 2309765.54 7981572.38 42245.25 1775743.49 6396589.72 790803.23 27916 2226 3199807.54 12235331.23 10954 741248 2610293 2009 March2010 Increase Decrease

1222 890042

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LAIBILITY Outstanding Liability Sundry Creditor TOTAL WORKING CAPITAL Increase in working capital 4278234 41437 24299 65736 7915836.38 16961.97 -5 16956.97 12218374.26 4253930 4278234 24475.03 24304

INTERPRETATIONS:1. By observing the above table we can notice that the Gross Working capital has increased during the year 2009-2010. 2. From the above table there has been increase in Current Assets from Rs. 7981572.38 in the year 2009 to Rs. 12235331.23 in year 2010. And Current Liabilities decreased from 65736 in year 2009 to Rs. 16956.97 in year 2010.Understudy of above table working capital overall increase 4253930 in 2009-2010. 3. There it is to be noticed that greater the net Working Capital higher liquidity, there is found 1year of Wuerth India Pvt.Ltd. (Ahmedabad).

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2.Statement Showing the change in Working Capital 31st March Particular CURRENT ASSET Cash Bank Sundry Debtor Closing Stock Advance Prepaid exp Other Asset TOTAL CURRENT LAIBILITY Outstanding Liability Sundry Creditor TOTAL WORKING CAPITAL Increase in working capital 4741919.1 12218374.26 16191789.25 3973414.9 9 4741919.1 16961.97 -5 16956.97 276975.98 0 276975.98 260014.01 -5 42245.25 1775743.49 6396589.72 790803.23 27916 2226 3199807.54 12235331.23 61297.25 1267632.38 7282193.86 1441342.86 47916 1847 6366535.88 16468765.23 19052 508111.11 885604.14 650539.63 20000 379 3166728.3 4 2010 31st March2011 Increase Decrease

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1 INTERPRETATIONS:-

1. By observing the above table we can notice that the Gross Working capital has increased during the year 2010-2011. 2. From the above table there has been increase in Current Assets from Rs. 12235331.23 in the year 2010 to Rs. 16468765.23 in year 2011. And Current Liabilities increased from Rs. 16956.97 in year 2010 to Rs. 276975.98 in year 2011. Understudy of above table working capital overall increase 4253930 in 2010-2011. 3. There it is to be noticed that greater the net Working Capital higher liquidity, there is found 1year of Wuerth India Pvt.Ltd. (Ahmedabad).

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CURRENT RATIO CURRENT RATIO = CURRENT ASSETS CURRENT LIABILITES Year Current Assets Current Liabilities Current Ratio 2009 7981572.38 65736 121.41 2010 12235331.23 16961.97 721.34 2011 16468765.23 276975.98 59.46

Interpretation:If we see the current ratio of the company for last three years it has increased by 494.13% in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors and decreased by 91.75%. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash.

QUICK RATIO QUICK RATIO = QUICK ASSETS CURRENT LIABILITES Year Quick Assets Current Liabilities Quick Ratio 2009 7189765.15 65736 109.37 2010 11442302 16956.97 674.78 2011 15025575.37 276975.98 54.25

Interpretation: If we see the quick ratio of the company for last three years it has increased by 516.96 % in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors

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and decreased by 91.96 %. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash.

ABSOLUTE LIQUID RATIO: ABSOLUTE LIQUID RATIO = ABSOLUTE LIQUID ASSETS CURRENT LIABILITES ABSOLUTE LIQUID ASSETS = CASH & BANK BALANCES Year Absolute Liquid Assets Current Liabilities Absolute Liquid Ratio 2009 1065786.23 65736 16.21 2010 1817988.74 16956.97 107.21 2011 1328929.63 276975.98 4.79

Interpretation: These ratio shows that company carries a small amount of cash in year 2009 and 2011 and large amount of cash in year 2010. But there is nothing to be worried about the lack of cash because company has reserve, borrowing power & long term investment. INVENTORY TURNOVER OR STOCK TURNOVER RATIO INVENTORY TURNOVER RATIO = SALES

AVERAGE INVENTORY AVERAGE STOCK = OPENING STOCK + CLOSING STOCK

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Year Sales Average Stock Inventory Turnover Ratio

2009 14558318.84 395401.615 36.81 times

2010 34275480.14 395401.615 86.68 times

2011 19578875.88 720671.43 27.16 times

Interpretation: This ratio shows how rapidly the inventory is turning into receivable through sales. In 2009 the company has 36.81 inventory turnover ratio and it increased to 86.68 times in 2010 and decrease to 27.16 in 2011. This shows that the companys inventory management technique is not as efficient as compare to last year. DEBTORS TURNOVER RATIO: DEBTORS TURNOVER RATIO = SALES (CREDIT) AVERAGE DEBTORS AVERAGE DEBTORS= OPENING DEBTOR+CLOSING DEBTOR Year Sales Average Debtors Debtor Turnover Ratio 2008(1) 14558318.84 1893148.69 7.69 times 2009(2) 34275480.14 3198294.86 10.71 times 2010(3) 19578875.88 3641096.93 5.37 times

Interpretation: This ratio indicates that there is increase in debtors turnover ratio by 39.27 % in year 2010 and decrease 49.85 % in year 2011 debtors turnover ratio this shows that company is not so efficient of being converted or turnover into sales. AVERAGE COLLECTION PERIOD: Average Collection Period = No. of Working Days

Debtors Turnover Ratio

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Average Collection Period =

365 (Net Working Days)

Debtors Turnover Ratio Year Days Debtor Turnover Ratio Average Collection Period 2009 365 7.69 47.46 2010 365 10.71 34.08 2011 365 5.37 67.97

Interpretation: It is found from above data that company has managed to reduced its average collection period from 47.46 to 34.08 in the year 2010 which is indicator of efficient management but in year 2011 the average collection period has gone up to 67.97 from 34.08 which is due to inefficiency of management. WORKING CAPITAL TURNOVER RATIO: Working Capital Turnover Ratio = __Cost of Sales____ Net Working Capital Working Capital Turnover = ____Sales Networking Capital Year Sales Networking Capital Working Capital Turnover 2009 13947.53 2586.97 1.83 2010 15388.11 3456.1 2.81 2011 18153.19 78.84 1.21

Interpretation: This ratio indicates low much net working capital requires for sales. Thus this ratio is helpful to forecast the working capital requirement on the basis of sale.

FINDINGS & DISCUSSION

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 By observing the above table we can notice that the Gross Working capital has increased during the year 2009-2011. If we see the current ratio of the company for last three years it has increased by 494.13% in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors and decreased by 91.75%. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash. If we see the current ratio of the company for last three years it has increased by 516.96 % in year 2010 because of lump sum debtors that can be bad as company has poor collection from debtors and decreased by 91.96 %. This depicts that companys liquidity position is not sound because company has high level of debtors and buys products in cash. These ratio shows that company carries a small amount of cash in year 2009 and 2011 and large amount of cash in year 2010. But there is nothing to be worried about the lack of cash because company has reserve, borrowing power & long term investment. This ratio shows how rapidly the inventory is turning into receivable through sales. In 2009 the company has 36.81 inventory turnover ratio and it increased to 86.68 times in 2010 and decrease to 27.16 in 2011. This shows that the companys inventory management technique is not as efficient as compare to last years. This ratio indicates that there is increase in debtors turnover ratio by 39.27 % in year 2010 and decrease 49.85 % in year 2011 debtors turnover ratio this shows that company is not so efficient of being converted or turnover into sales. It is found from above data that company has managed to reduced its average collection period from 47.46 to 34.08 in the year 2010 which is indicator of efficient management but in year 2011 the average collection period has gone up to 67.97 from 34.08 which is due to inefficiency of management.

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Chapter-5 Conclusion & Recommendation

CONCLUSION In the present study I have analyzed the working management of Wuerth India Pvt.Ltd. (Ahmedabad). I found that inventory is increasing which shows that company has sufficient stocks to meet up sale. Inventory Turnover Ratio measures the velocity of conversion of stock into sales. Usually, a high inventory turnover indicates efficient management of inventory because more frequently the stocks are sold; the lesser amount of money is required to finance the inventory. The Inventory Turnover Ratio is decreasing which is not a good sign for the company. From the comparative study of inventory turnover it is clear that stock velocity indicates inefficient management of inventory during the year 2011. It is also found that the company is inefficient in collecting debtors in 2011, as the debtor turnover ratio has decreased and average collection period has increased.

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The company has high level of current asset as compare to current liability, as they have lump sum debtors. So the company policy of buying products in cash and selling in credit is not efficient. RECOMMENDATION After interpretation and analysis, I am giving certain suggestions to the company which I hope may be helpful for the company. The company should pay attention towards the proper and efficient utilization of current assets and current liability, as current asset is very high as compare to current liability, they should have to purchase more number of products on credit. The company should utilize its stock more efficiently. Inventory turnover ratio is decreasing so the company has to provide some extra benefit to customers with their product. The company should pay attention towards the proper collection of debts through intimating them time to time regarding their payments.

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Annexure

BIBLIOGRAPHY 1. Sharma R.K & Gupta Shashi K; Management accounting principles and practice. Eight edition, Kalyani publishers New Delhi. 2. Bhalla V.K financial management and policy, first edition, annual publication, New Delhi. 3. Maheshwari S.N; Management accounting and financial control, thirteen edition, sultan chand & sons, New Delhi. 4. Kothari C.R;Research methodology methods & techniques, second edition, vishwa prakashan Delhi (1990).

WEBLIOGRAPHY

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http//www.wurth.com http//www.scribd.com

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