A SUMMER TRAINNING TRAINING PROJECT REPORT

ON

RATIO ANALYSISAT

AUSTIN ENGINEERING COMPANY LTD.(AEC)

PREPARED BY

DHAVAL K. KALOLAMBA – SEM 3ROLL NO. – 22

SUBMITTED TO,

GTU UNIVERSITYGUIDED BY

PROF. KUMAR GAURAV

COLLEGE

K.N.V. INSTITUTE OF BUSINESS MANAGEMENT

CERTIFICATE

PREFACE

This project report is containing in accordance with the Master of Business

Administration (M.B.A.) program, prescribed by Gujarat Technological Univercity.

Thus, it is our morale and obligatory duty to take this part of our studies with great

enthusiasms and seriousness and give it the more importance.

The main objective of the project work training is to develop among the student a

feel that about industrial environment & business practice in order to develop a practical

basis in them as a supplement to theoretical study of the management.

The report is based on my elective subject of “A STUDY ON RATIO

ANALYSIS.” As a part of my project work, I had been departed to “The Austin

Engineering Company Pub. Ltd.”

I have mentioned all the information which is true and useful in some time

in business.

KALOLA DHAVAL K.

ACKNOWLEDGEMENT

I am pleased to present this report on industrial training undergone at Austin

engineering company ltd.

I hereby take this opportunity to express my gratitude to Mr. Amit Joshi who has

guided and cooperate me in each and every aspect of preparing this report.

I also express my gratitude to staff members of Austin Engineering company

limited for their valuable cooperation and guidance and sincere thanks to Mr.

Amit Joshi, an ISO coordinator for sharing his wonderful experience and give his

kind guidelines during my training.

Date : Signature

Place:

DECLARATION

I, the undersigned Dhaval K. Kalola astudent of M.B.A. hereby declare that the project work presented in this report is my own work and has been carried out under the supervision of Prof………………… affiliated to Gujarat technological university.

I assure you that this work has not been submitted previously to any other university from any examination.

Date Yours faithfully Dhaval K.kalola

INDEX

NO PARTICULAR Page no

1 GENERAL INFORMATION

2 PRODUCTION DEPARTMENT

3 HUMAN RESOURSEMENT DEPARTMENT

4 MARKETING DEPARTMENT

5 FINANCE DEPARTMENT

6 RESEARCH METHODOLOGY

7 RATIO ANALYSIS

8 DATA ANALYSIS

9 FINDINGS

10 SUGGESTION

11 BIBLIOGRAPHY

12 APPENDIX

GENERALGENERAL INFORMATIONINFORMATION

INDEX

Sr. No. Particular Page No.

A INTRODUCTION

B HISTORY AND DEVELOPMENT OF COMPANY

C COMPANY PROFILE

D BOARD OF DIRECTORS

E ORGANIZATION CHART

F CORPORATION VISION

G SIZE AND FORM OF THE ORGANIZAION

H ACHIEVEMENTS OF ORGANIZATION

I CONTRIBUTION OF THE ORGANIZATION

A) INTRODUCTION

In India there are many industries which are producing bearing one of them is of

which I had undertaken the training of “Austin Engineering Co. Ltd.” it is on the

top of bearing producing company. It is most successfully unit in Gujarat as well

as in India. This company got ISO and TS this certificate was given by

international organization such certificate is given which company ‘s production

material and quality of products are standardized. It gives employment to so

many people. It is a continuous raising unit because of its sound financial

condition and efficient management. The actual picture of “Austin Engineering

Co. Ltd.” can be analyzed with the help of four main departments viz. production

department, personnel department, financial department and marketing

department are as given in the report.

“AUSTIN ENGINEERING COMPANY LTD.”, is having the largest range of

bearing among the manufactures of it in Asia and i.e. 4000 types of bearings.

It has also the largest range in size of bearing. Among them, the smallest is

having 10mm ID (Inner Diameter) and 2000mm OD (Outer Diameter). They are

also developing 7-8 designs per month. The company’s turnover is 42-50 crores.

B) HISTORY AND DEVELOPMENT OF THE COMPANY

The firm was established in the year of 1973. at that time a turn of 5 top and

qualified engineers decided to produce a high quality bearing. It was started by

Mr. N.C.Vadgama, Mr. R.N.Bhambhania. Mr. S.M.Thanki, Mr. Bhogayta,

Mr. G,B.Modha partnership firm. At that time it’s name was “ACCURATE

ENGINEERING COMPANY as.”

On 27th July, 1978 due to continuous development and increment in demand of bearing, it was converted into Private Limited Company. The company at that time was located at G.I.D.C. Estate in Junagadh city.

The growth and development kept on increasing and on 2nd November, 1985 this company was converted into Public Ltd. Co. under the name “AEC Ltd.” and purchases the trademark “aec” in the year 1994.

Due to some problem such as inappropriate place for expansion, this company has established 2nd unit at Patla, a village which is 25 k.m. far away from Junagadh on 15th February, 1987. It was under developed industrial area so they decided to locate their industry at Patala.

In the very beginning the company was producing only 40 to 50 varieties of bearings. At present the company is producing 4500 varieties of bearings.

The initial company invest was 530794 and production capacity was 41900 piece p.a. At present, production achieved is 20,00,000 piece p.a. which was 18,50,000 piece in previous year. The present invest is 25,14,87,000.

C.) COMPANY PROFILE Name of the unit : - Austin Engineering Company Ltd.

Year of the Establishment :- 1973

Form of Organization :- Large Scale

Registered Office :- Austin Engineering Co. Ltd. Dist. : Junagadh Tal. : Bhesan Post : Hadmatiya Patala – 362 030Address of JunagadhOffice :- 101, G.I.D.C. Estate, Vadal Road, Junagadh – 362 003.

Phone Numbers :- (91-285) 2660144, 2660069

Fax Numbers :- (91-285) 2661505

E-mail Address :- info@aecbearings.com

Auditors :- Dhirubhai Dand & Co. Chartered Accountants Gokul Chamber, Junagadh – 362 001.

Cost Auditors :- S.B. Parikh & Co. Cost Accountants, Vadodara.

Bankers :- Bank of Baroda, Junagadh.Registrar & TransferAgent :- Sharepro Services, Satam Estate, 3rd floor, Above Bank of Baroda, Cardinal Gracious Road, Andheri (E) Mumbai – 400 099

D.) BOARD OF DIRECTORS

Mr. N.C.Vadgama : Chairman & Executive Director

Mr. S.M.Thanki : Managing Director

Mr. R.N.Bambhania : Joint Managing Director

Mr. J.R.Bhogayta : Executive Director

Mr. S.V.Vaishnav : Non Executive Director

Mr. B.R.Sureja : Non Executive Director

Mr. K.J.Mehta : Non Executive Director

Mr. D.B.Nakum : Non Executive Director

E) ORGANIZATION CHART

F.) CORPORATE VISION

1) Make AEC Limited a great place to work.

2) Effective boundary management.

3) Fulfill social responsibility.

4) Apply the best technology.

5) Be an ethical company.

6) Strong and dynamic system.

7) Establish first class brand and corporate image.

8) Sound business performance and operational efficiency.

9) Have excellent customer caring and customer service.

10)To be the best.

11) Make people a source of our improvement.

G.) SIZE AND FORM OF THE ORGANISATION

According to the definition given by Government of India, the size of the industry can be divided in three main types.

Small Scale Organization

Medium Scale Organization

Large Scale Organization

If company’s investment in plant & machinery is more than 3 crores, it is under the category of large scale organization.

The investment of “Austin Engineering Co. Ltd.” In fixed assets is Rs. 21, 82, 35,149-00. Therefore it is coming under the category of large scale organization. It

also uses manpower, electronic equipment and machines and having 655 employers.

The total land area is 27,960 sq. meters; while total built up area is 7093 sq. meters and expansion are available for building is 6000 sq. meters (approx).

According to the form of organization, the organization can be divided as follows:

Private Sector Unit

Public Sector Unit

Joint Sector Unit

“Austin Engineering Co. Ltd.” is a Public Ltd.Company. A public company is a company where there are minimum seven members and maximum there is no limit. The company can invite general public to subscribe for its share or debentures and the shares are freely transferable. It has limited liability and wide distribution of risk.

H.) ACHIVEMENTS

Backup roller bearings for sendzimir Cold Strip Mills.

Multi-row cylindrical roller bearings and four row tapered roller bearings for roll neck applications in rolling mills.

Flush ground single row angular contact ball bearings.

Precision class cylindrical roller bearings for machine tool spindle applications.

Thin section series ball bearings:618.. and 619… series.

Engine crank and other application bearing for battle tanks and armored vehicles.

Flexible roller bearings.

Iso/TS certification for quality management.

I.) CONTRIBUTION OF THE UNIT

To the industry

Austin Engineering Company Ltd. is having 15% to 20% market

share. So it contribute this much in the total production of the industry.

Moreover, it scored 4th rank in bearing industry.

To the society

The company provides employment to 655 workers of rural as well

as urban areas. The Austin Engineering Company Ltd. is situated in backward

area and so it is involved in the process of the development of the area. Thus, it

contributes to the society by providing employment and developing backward

area.

To the country

It has trademark of ‘Austin Engineering Company Ltd.’ through

which they exports its products in USA, Italy, Sri Lanka, Argentina and

Newzealand. Thus, they earn the foreign exchange in this way it contribute to

the country.

PRODUCTIONDEPARTMENT

PRODUCTION DEPARTMENT

INDEX

Sr. No. Particulars Page no.

1 Introduction

2 Organization structure

3 Products and its users

4 Raw material

5 Material storage

6 Production process

7 Production capacity

8 Machinery and equipment

9 Quality assurance

INTRODUCTION

There are four functional areas in a business organization, namely

finance, personnel, and marketing. Production is the basic activity of all industrial

units. All other activities revolving around this activity. The end of the production

activity is the creation of goods and services for the step conversion of one form

of material into another either chemically or mechanically.

This is done in the factories which have manufacturing process.

The basic input of the operation process are men, machines, plant, services and

the methods. The product if the mine, farm and forest are used as raw material

on which the processing is done to creat and enhance the firm utility.

ORGANIZATION STRUCTURE

PRODUCTS AND ITS USERS

Austin Engineering Company Ltd. now a days engaged in producing bearings

near about 4500 varieties. The main product of Austin Engineering Company

Ltd. are as follow :

Ball bearing

Cylindrical roller bearing

Tapered roller bearing

Spherical roller bearing

Flexible roller bearing

Special purpose bearing

Needle roller bearing

User industries

The company offers wide range of the different category of buyers like,

automobiles industries, defense, State Road Transport Corporation, steel plants,

cement plants, sugar and paper industries, fan and pump industries and material

handling equipments.

RAW MATERIAL

The first matter related with production is the availability of raw material. For the

production of high quality bearing Austin Engineering Company Ltd. requires

following types of raw material.

Steel wire

Steel ball

Rollers

Races

Steel tube

This has to reach big order of export market and big original equipment

manufacturers, so company kept six month inventory for raw material to supply

regularly.

Main suppliers in India are :

Mahindra and Mahindra ltd.

India steel less metal tube ltd.

Needumra industry ltd.

Specific steel ltd.

Austin Engineering Company Ltd. purchases its raw material from abroad also.

They purchase raw material from Germany and USA also.

MATERIAL STORAGE

Man, material, money etc. are the basic elements required to produce any

product. Among them, material i.e. raw material is the thing by which the whole

production process stats. So the procurement of raw material plays an important

role here.

Here, when we talk about Austin Engineering Company Ltd. it purchases its raw

material from domestic as well as international units. The raw materials are

bought from different places of Junagadh,

They store these raw materials in store room and when required they inspect and

test them in terms fitness for further production process which are according to

purchase order.

PRODUCTION PROCESS

Manufacturing process is conducted to produce or manufacturing the product.

Followings are main stages of manufacturing process.

1. Material stage

Raw materials are steel bars, steel wire, steel tubes and rollers etc. This

company has to reach big orders of export market and big original equipment

manufactures, so company kept six month inventory for raw material and has

make contract with their suppliers of raw materials to supply regularly.

2. Turning, Races and Rollers

This is the second step for manufacturing the proper bearing from the raw

material to finished product. In this stage, trained workers turn races and rollers

in required size and then it is transferred to main unit.

3. Heat Treatment

This is the third stage where all the races and rollers are given heat through

electric furnace at 845c to 855c through which defective pieces are removed.

It means this testing are done to measure the capacity of the products.

4. Grinding of races and rollers

This is fourth step, after heat treatment, the part of races and rollers are refined.

Inner and outer part of races and rollers are given through the grinding machine.

5. Tapping, Happing and Super finished

In this stage, there are checking of rollers and races because it has single

mistakes of races and rollers. If any races and rollers are defective that piece is

tapped and happed. Then, the super finishing will be done these are done

through their respective machine.

6. Inspection and Graiding

After the procedure of making the bearing, all the races are inspected by

inspection department and then after grade fixed by the company. The precious

sample is gone for mass production.

7. Assembling, Cleaning, Oiling, Packing

There are separate department for making of different kinds of bearings are

managed its size and quality and then this bearings are assembled.

After the assembling of the bearing is done, then the bearing finally goes at

packing department where it has given the “Trade mark” “Austin Engineering

Company Ltd.”

8. Storage and Dispatch

After passing through all the above stage, the finished products are stores in

godown, from where they are dispatch as per the order.

PRODUCTION CAPACITY

Production capacity is defined as the maximum production rate of a facility

or a plant.

Capacity indicates the ability of a firm to meet market demand. Production

capacity of Austin Engineering Company Ltd. is as follows.

Installed capacity

At the time of installing plant, the capacity that is installed is called

installed capacity. It is determined by on the basis of capacity as indicated by

suppliers plant and machinery in technical quotient.

Austin Engineering Company Ltd.’s installed capacity: 3500 pieces per

day.

Utilized capacity

This is the actual output achieved during a particular time period. The

actual output may be less than the rated output because of short range factors

such as actual demand, employee absenteeism, labour inefficiency and low

productivity levels.

Austin Engineering Company Ltd.’s utilized capacity : 3500 pieces per

day.

MACHINERY AND EQUIPMENT

Machinery and equipment plays an important role in any manufacturing

company. The advancement in the machinery makes the product more

qualitative and it makes an impact on the quality of the production.

Austin Engineering Company Ltd. is a reputed firm in the field of

manufacturing bearing. It is specially known for its maximum range of bearings

in all over the Asia. So, according to this range, it has also a big range of the

machinery to produce the bearings.

The total number of the machines are 215. moreover, apart from this, the

company has given extreme importance to quality maintenance and so it is

having 48 testing instruments also.

These machines includes mainly grinding, lapping, furnace, air

compressor, drilling and packaging machines. Then different sizes of machines

are there. The list of machinery includes domestic as well as imported machines

for better efficiency.

QUALITY ASSURANCE

Quality may be defined as the sum of total of features of a product which

influence its ability to satisfy given demand.

Basically the quality of product and service is not defined or determined by

production firms, it is determined by customers.

The quality of the product and service is a customers perception of the

degree to which the products or service meets his/her expectation.

At Austin Engineering Company Ltd. they focus in ensuring best in class

quality through

Commitment and investment in continuous research and development,

Facility for measuring and improving process performance,

Well entrenched HR program to provide adequate training.

Austin Engineering Company Ltd. bearings are designed, developed and

engineered using professional CADD and 3D modeling tools by their skilled

engineers and are backed by their highly experienced technocrats. The products

are made from high quality bearings steel from industry approved vendors with

optimum dimensional stability. The geometry and profile are in accordance with

the international standard for the highest quality. The company got certificate

from the TUV Rhineland, Germany.

ISO/TS 16949 : 2002

ISO 9001 : 2008

HUMAN HUMAN

RESOURCERESOURCE DEPARTMENTDEPARTMENT

PERSONNEL DEPARTMENT

INDEX

Sr. no Particulars Page no.

1. Introduction

2. Organization structure

3. Recruitment, selection, and

introduction

4. Training and development

5. Wages and salary administration

6. Promotion, Transfer and Demotion

7. Performance Appraisal

8. Employee’s Detail

9. Employee’s benefits and services

10. Grievance Handling System

INTRODUCTION

In the opinion of Dunn and Stiphen, “Personnel management is the

process of attraction “ holding and motivating people involving all managers line

and staff.

Personnel management is the direction and co-ordination of human in

business organization. This obtaining maximum production with minimum

afforts, stress and strain on the individual workers and group of workers and

without sacrifice genuine well being of the employee. The objective of personnel

management is to obtain maximum individual development, desirable work,

atmosphere and interpersonal relation. The essence of personnel management

the understanding as people at work and on the basis of knowledge, formulate

personal policies of the enterprise.

In short, personnel management is management tactful.

ORGANIZATION STRUCTURE

RECRUITMENT, SELECTION AND

INDUCTION

GENERAL MENAGER

PERSONAL MANAGER

PUBLIC RELATION OFFECER PERSONAL

TIME KEEPER

TIME CLERKS

Recruitment

According to Flippo defines recruitment , as “A process of searching for

prospective employee and simultaneously applying them for jobs.”

Recruitment is the process of discovering potential applicants and

stimulating and encouraging them applying for jobs in organization.

In Austin Engineering Company Ltd. they are using internal as well as

external sources. The policy for recruiting the person through external sources in

such that,

1. Advertisement in the newspapers.

2. Applications are collected form the sources.

3. Scrutiny of applications.

4. Interview call is sent.

Selection

The main purpose of selection procedure is to eliminate excess or

unnecessary candidate and to select the most appropriate one for the particular

job. Different industrial concern undertake different selection procedure. It is

depend on the jobs for which appointment is to be made.

Thus, selection policy passes through following steps in Austin

Engineering Company Ltd.

1. Formation of selection committee,

2. Selection committee conducts interview

3. Checking of references

4. Physical checking

5. Placement

Induction

When a candidate is finally selected, he/she is issued with appointment

letter and is asked to join the organization on a specific date. Induction is follow

up action of hiring and concerned with the problem of introducing or oriented a

new employee to the organization.

After, appointing new candidate, he/she is being introduced with staff and

make aware about rules and regulations of the company.

TRAINING AND DEVELOPMENT

Training and development is another important function which become

some what compulsory for the modern business. It is inevitable function of the

organization. It is an important aspects of personnel which increase the

knowledge of workers for doing specific works.

In Austin Engineering Company Ltd. no special training program is

conducted because, they select mostly trained and experienced employees. But,

in case of fresh candidate on the job training is provided by the senior officer and

experience manager. This company gives the training duration of six months by

the experts of experienced engineers.

In the company there is no separate department for training, only on the

job training is provided to middle and bottom level employees. Besides, the

seminars and conferences are also held and group discussion is also arranged

for the top level officers for the solving particular problem.

WAGES AND SALARY ADMINISTRATION

Wages and salary administration is concerned with establishment and

implementation of sound policies and practices to employee compensation. It

involves the areas or relevant organizational problems, administrating wages,

wage payment, profit sharing, wage cages and adjustment, supplementary

payments, control of compensation cost and other related items. A sound wage

and salary administration tries to achieve objectives which are beneficial for both

employees and employers.

In Austin Engineering Company Ltd. wages are determined on the basis of

job and as per the government rules and regulation while salary is determined on

the basis of competitive rates.

Employees wages and salary are fixed but increment is given on their

basis of performance and efficiency. From their wages some amount of

provident fund which is 12%, income tax and ESI scheme is deducted and wages

and salary paid on the date 7th and 8th every month.

Normal figures of wage and salary :

1. Workers (per month)

Minimum - Rs. 1500

Maximum- Rs. 4500

2. Officers (per month)

Minimum – Rs. 10000

Maximum- Rs, 25000

PROMOTION, TRANSFER AND DEMOTION

Promotion

Austin Engineering Company Ltd. is having the promotion policy based on

both merit as well as seniority. If vacancy arises in the company firstly selection

is being made from internal source. If any qualified employee is found there, he

is given promotion. While giving promotion, management has to check work

performance, regularity and seniority of such employee.

In Austin Engineering Company Ltd. promotion for the lower level is made

for operative to supervisory level and that to the officer clerks. The company only

give promotion to their employees when any person resign from his post or

retires. Thus, there is less chance of promotion.

Transfer

A transfer is horizontal movement of an employee from one job, section,

department, shift, plant or position to another at the same or another place where

his salary, status and responsibility remain same. The company has two units so

as per requirements transfer is done from one unit to another.

Demotion

It is downward movement of the employees post. The Austin Engineering

Company Ltd. used demotion as a disciplinary measure. Due to misbehavior of

any employee at managerial level, warning is given and if it is repeated demotion

given to that employee. But, still the firm do not adopt this policy as the workers

are co-operative and well qualified.

PERFORMANCE APPRAISAL

Performance appraisal means valuation of the personality and

performance of each employee by the supervision. It is the step where the

management finds out how effective it has been hiring and placing employees.

Austin Engineering Company Ltd. has adopted a systematic appraisal

system according to which;

First, work given to the employee is properly observed.

Second, they have to see whether the employee is superior to complete

the job entrusted to him/her and if able, he/she is appraised. They have kept

secret records for the workers to avoid disturbance. This system is useful to take

the decision regarding promotion and other rewards for the work done by the

employees.

In this company, there are three criteria for performance appraisal,

1. Production

2. Attitude

3. Attendance

EMPLOYEE’S DETAIL

Number of employees

Among the all employees all are not even as far as the skills

are concerned. In Austin Engineering Company Ltd. There are total 655

workers are working so the distribution of the workers according to their skills are

as under :

Administrative staff 80

Engineers 28

Supervisors 20

Quality assurance 70

Direct manufacturer 207

Indirect manufacturer 250

Personal records

In Austin Engineering Company ltd. personal records are kept by personnel

department. In this records, employees’ performance, attitude, his contribution

to the unit etc. are record. They include information regarding job analysis,

evaluation, while for recruitment and selection test records are used.

EMPLOYEES’ BENEFITS AND SERVICES

Facilities provided by the company

12% provident fund

Yearly bonus 20%

15 days gratuity

30 days leave per year

5 days medical leave

Dearness allowance

House rent allowance

Medical allowance

Attendance bonus

Free transportation service

Educational facilities for the employees children upto 12th standard.

GRIEVANCE HANDLING SYSTEM

A grievance is any discontent or dissatisfaction, whether express or not, arising

out of anything connected with the company which on employee thinks, belief or

even feel to be unfair, unjust or inequitable. Grievance generally give rise to

unhappiness, frustration, indifference work, poor morale and they ultimate lead to

the inefficiency of workers low production.

Grievance handling procedures :

Any aggrieved employee may approach first supervisor is concerned. Answer

from supervisor is given within 3 days.

If employees are not satisfied then he may approach to the departmental head.

He will investigate the matter and give opinion within a week.

He may approach factory manager or he may approach personnel manager.

If a grievance arises out of any order given by the management then send the order shall be complained before concerned involve the procedure laid down for

redressal of grievance.

MARKETINGMARKETING DEPARTMENTDEPARTMENT

A.) INTRODUCTION

Marketing is the performance of the business activities that directs the flow of goods and services from producer to the consumer in the process of distribution.

According to CUNDIFF and STEEL,

“Marketing is the managerial process by which products are matched through which consumer is enable to use and enjoy the product.”

According to Paul mazur,

“Marketing as the creation and delivery of standard of leaving to the society.”

Here in AEC LIMITED, there is a separate marketing department at head office. The study of marketing management is essential for concern responsible officer or every organization for successful operation because without effective management of marketing, organization goal can’t be achieved.

In AEC LIMITED marketing department is managed by experience manager, officers and staff. There are presently two divisions for marketing.

Marketing division Sales division.

Marketing is a social and managerial process that involves identifying unsatisfied need or wants of consumer, producing goods or services to satisfy those needs or wants, determining appropriate price, promotion and distribution and maintaining relation with market.

In today’s modern era each & every firm gives priority to have a different marketing department.

Marketing involves the activities such as advertising, publishing, market research, distribution aspect, sales promotion etc.

B.) PRODUCT PLANNING

The base of any product before launching into market is its marketing strategies, which depends on the analytical survey of the similar kind of product with the competitive companies.

In “AEC” whether they want to take any decision regarding products, they always perform product research and accordingly they formulate strategies.

A well planned product strategy depends on the analytical data from the market which in turn give the benefit to both the customer & the sellers along with the stock holder of the company, in consideration.

C.) PRICING POLICY

Price is the exchange value of the product and services expressed in terms of money. Decision about pricing is considered important aspect for success of marketing of any product for an organization. Various factors are taken into consideration while pricing.

Objective of the business Estimated demand Cost of production Competition Distribution policy

D.) CHANNEL DISTRIBUTION POLICY

Distribution channel is the combination and sequence of agencies through which one or more of marketing flows move. The most important factor for channel choice and channel management is economic criteria i.e. cost & profit. There are two types of channels.

Direct Indirect

In “AEC”, they are producing bearing & i.e. industrial goods. So in this case, direct channel will be more effective than indirect channel. So the company use direct channel of distribution & i.e. manufacturer to consumer.

E.) ADVERTISING AND SALES PROMOTION

Now a days marketing plays an important role for all the organizations. Marketing is very necessary for all the products, as without marketing the consumer will have lack of information about the products. Thus to make the consumers aware of the products marketing is done.

AEC generally does not require advertising its product as it has some really loyal customers (buyer) who are customer from many years. But still company does some advertising through cost media, poster and pamphlet with the trade-mark of AEC.

AEC’S SLOGEN

“Buy the Best, Leave the Rest.”

The slogan gives us idea about company’s confidence in their products.

Sales promotion refers to the other than personal selling, advertising and publicity which stimulates consumers purchasing, dealer’s effectiveness, free sample, exhibition and free offers.

Promotional tools such as free sample, coupons etc. are used in AEC to attract the buyers to buy their product to increase selling efforts by the dealer’s. This company gives sales promotion at both the level, consumer as well as dealer’s level. F.) MARKET SEGMENTATION

Marketing segmentation is based upon market oriented strategy and philosophy segmentation gives special emphasis on the demand side of the market.

“Market segmentation is a method of achieving maximum market response from limited marketing resources.” By market segmentation tries to identify the target customer. Generally there are two type of market segmentation.

1. People oriented approach.2. Consumer demand or product oriented approach.

AEC has accepted the consumer demand market segmentation. National and international marketing is also done.

The dealer’s through which this company marketed its products are in India and its original equipment manufacturers are:-

Bharat Heavy Electric Ltd.

Tata Electric & Locomotive Co. Ltd. Voltas Ltd. Kirloskar Electric Co. Ltd.

G.) MARKET RESEARCH

Market research is very important for most of the organizations due to the increasing competitiveness in the present market. If an organization wants to survive than it has to introduce some new products which are latent needs of the consumer. Thus market research is the systematic and intelligent investigation about unsatisfied needs & wants of potential buyers.

With the market research the “AEC” finds out the demand of bearings in different regions through surveys. South India is the best marketing field of automobile in India so AEC adopted market research in South region and company finds out the golden opportunity or possibility of development in that field.

Therefore, the technique of survey and observation is adopted by AEC to allocate the data.

H.) COMPETITION

Competition has increased in almost every field now days. A healthy competition may beneficial but cut throat competition may create hazardous effect on the company. Competition affects the customers, sales figures & other aspects of marketing.

As far as “AEC” faces no close competition because it is having the largest range of bearings in Asia. . The competitors are:-

SKF NBC FAG KOYO RHP NTN

I.) INTERNATIONAL MARKETING

Austin Engineering Co. Ltd. Has got customer from some international market also. The company exports about 20% to 25% of its total production into different countries. All the trading activities between the AEC and foreign customers are carried out through sea way of transportation.

AEC helps in bringing foreign exchange in India through exports which is beneficial for India. In the year 2006-2007 Rs. 2855.97 (in lacks) where earned by AEC as foreign exchange.

The foreign customers of AEC are mainly from following countries:- U.S.A. U.K. Italy Sudan Pakistan Shrilanka Nether land Bangladesh South Arabia

There are some problems which are faced by AEC while exporting as:-

1. Difficulty of dispatch2. High cost of transport3. Problem of currencies4. Difficult & complex custom formalities

J) SOCIAL RESPONSIBILITY

Each and every unit is responsible towards the society. Since business operates in society, it cannot survive and grow unless it meets the need of the society. It is an important part of its objectives to fulfill its obligations to the society.

“AEC” is also responsible to the society. It has accepted the objective of avoidance of antisocial practices. The company also provides employment to the unemployed persons. Under antisocial practice it does not overcharge its customers and its products do not pollute the environment.

SWOT ANALYSIS

SWOT is a good tool for a manager, like a thermometer and a stethoscope for a doctor.

The SWOT analysis for AEC Limited is:

S - Concentrates on your STRANGTH.

It enables to put your best foot forward.

STRENGTH:

Good brand image. Large scale refining. Fast development Diversified and top quality asset base. Associated with Consultant University involved in R n D department. Consumer satisfaction. Dedicated workforce. Single source of all types of bearings.

W - Recognize your WEAKNESS.

Who doesn’t have them? Only when you recognize them can you do something to correct them.

WEAKNESS:

Interference of the government. Transportation cost. Heavy import of raw-material. Raw material prices.

O - Evaluate your OPPORTUNITIES.

“Opportunities are plenty even in adversity. Only one has to evaluate them for what they are.”

OPPORTUNITIES:

Advertising to increase sales.

expansion

T - Research your THREAT.

“Threat are like tickling time bongs, defuse them by anticipating and taking preventive actions.”

THREATS:

Increase price of raw material in inter national market, causes variation in domestic market.

Competition from the multinational companies. Fixed financial charges.

COMPANY’S FUTURE PLANS

R & D (Research & Development) efforts are being planned as a continuous exercise to improve quality, reduce costs and try for import substitution as far as possible.

The company is striving to focus on sharpening its competitiveness, and for offering a product mix which is totally market driven in order to create a competitive advantage over players in the market.

Increasing manufacturing capacity. Making unit totally machine based for the some of the products

manufacturing.

FINANCE FINANCE DEPARTMENDEPARTMEN

A.) INTRODUCTION

All the functions of management like personnel, production; marketing etc. requires finance for implementation. Financial management is that activity which is concerned with planning, improving and controlling of the firms financial resources.

Prof. DHAVAL has rightly said “Money is the pivot around which all economic activities cluster” Finance in the modern business world is the life of blood of a business. it is said that :-

“Businessman takes money to make money”

From the above statement one question raised, how the business man make money? And there is only one answer by the extra ordinary management of finance. Finance management is that management activity which is concern with planning and controlling of the firm’s financial resources.

Finance function means procurement of find and their effective utilization in the business. In other word, the finance function is concerned with solution of three major problem relations to the financial operation of the firm and i.e. investment, financing and dividend decision.

We know from the above fact that all activities require finance for their implementations. So finance function is the most important for every organization.

In AEC there is a separate financial department and manage all the financial activities like,

Estimating the requirements of capital for company. Distribution of the profit. Determining the capital structure. Find out new sources of finances. Working of cash and bank management. Control overall financial activities. Recording of transactions. Maintenance of accounts.

Finance plays a very important role in any type of firm. From the initial stage onwards money is needed for the formation registration of the firm, listing of firm. Finance is needed for making many necessary documents.

Finance consists of procuring funds, managing and utilizing them efficiently in order to maximum the profit which is the ultimate goal of any organization.

In Austin Engineering Co. Ltd., the capital is procured by issuing equity shares. The authorized capital is 40,00,000 equity shares of Rs. 10 each. Out of which issued, subscribed and paid up shares are 35,11,250 equity shares of Rs. 10 each fully paid up.

The secured loan of AEC is of Rs.29,348,582 from deferred payment loan from Bank Of Baroda and Rs. 25,055,433 from working capital loan from Bank of Baroda for year 2008-2009.

B) FINANCIAL PLANNING

Financial planning refers to the planning regarding procurement, utilization and control of funds required by the firm. The decisions regarding planning of these inter related financial areas are taken under this. The areas are:

Investment decision – long term as well as current assets Financing decision Dividend Policy decision

The planning is the first step and so other steps in financial management are dependent in it. So it is very important to plan it efficiently so that it will be beneficial for the firm in future.

In Austin, the financial planning is done on the basis of time period. Thus, there are three types of financial planning in the company: short term, medium term and long term. Short term planning is done for one year, medium term is for five years and ling term is for ten years. Short term planning is used to fulfill the requirements of day to day expenses and production, medium term is used to increase working capital and funds to replace the machines and long term planning is used for expansion and modernization.

C.)

CAPITAL STRUCTURE

Capital structure refers to the mix of sources from which the term funds required by a business are raised. As a company, the capital structure should be examined from the view point of its impact on the value of the firm. A firm should select such a financing mix as will maximize the shareholder’s wealth.

Planning Period Purposes

Short term 1 Production and day to day expenses

Medium term 5 To increase working capital and funds to replace machines

Long term 10 Expansion and modernization

Such a capital structure is referred to as the optimum capital structure. The importance of an appropriate capital structure is referred to as the optimum capital structure is thus, obvious. It is necessary to keep in mind the various internal and external factors that affect the capital structure and i.e. cost of capital, risk factor, and control factor general economic conditions, level of interest rates, taxation policy etc.

Austin is having a capital structure which is not rigid and simple to understand. It includes the equity share capital i.e. owned capital and on the other hand, it is having loan funds also i.e. borrowed capital. It has not preference shares and debentures in its capital structure.

D.)SOURCES OF FINANCE

Financial management involves the three important areas: investment decision, financing decision and dividend policy decision. Among them, the investment decision is the first step to be taken up by the owners. This involves the decisions regarding the procurement of funds. So it is necessary to study the different sources of finance available. This decides the cost of capital. So the sources you select to procure the funds should be such that they would minimize the cost of capital. The terms and conditions of different institutions should be studied and compared while taking the decision about borrowed capital. The balance between owned and borrowed capital should also be kept in mind at that time.

At the initial stage of business firm, generally capital is brought by the owner and some outside institutions, banks etc. But when the business starts growing, the reinvestment of profits becomes also an important source of capital.

Here, Austin is a public limited company. So it is having share capital as a major source of finance. Some borrowed capital is also brought in the company. Moreover, now the retained earnings have also become an important source of finance for the company. The sources of finance are as under:

Equity Share Capital Bank of Baroda ICICI Bank Retained earnings HDFC Bank CHOLAMANDALAM DBS Fin. Ltd.

E.)CAPITALIZAITON

Capitalization means total among of long term funds available to the company which includes shares and debentures, issued by the company and also long term loans taken from financial institutions. As far as earned profits remained to be

distributed are concerned or it is necessary to classify them as either capital surplus or revenue surplus. The amount of capitalization should be only that much which can be justified by the profits and by the normal rate of return for the industry.

Over Capitalization:

A company is said to be over capitalized if its earnings are less in relation to its capital investment. The company may be having a low earning capacity. Thus, it results in over capitalization.

Under Capitalization:

A company is said to be undercapitalized if its earnings are more in relation to its capital investment. Under capitalization is an indication of effective and proper utilization of funds employed in the business. Under capitalization indicates sound financial position and good management of the company.

Austin’s earnings are Rs. 3, 73, 10,646 and investment is Rs. 12, 47, 61,492. Thus, earnings are less than investment. So we can say that the company is over capitalized.

F.)MANAGEMENT OF FIXED ASSETS

Assets, representing economic resources, are the valuable possessions owned by the firm. These possessions owned by the firm should be capable of being measured in monetary terms. Assets are of two types:

TANGIBLE ASSETS:

They are the assets which have physical existence and generate goods and services. It includes land, machinery, equipment, furniture etc.

INTANGIBLE ASSETS:

They are the assets, which do not generate goods and services directly and have no physical existence. It includes patents, copyrights, goodwill, trademarks etc.

RATIO ANALYSIS

INTRODUCTION

Ratio analysis is a widely used tool of financial analysis. It is defined as

the systematic use of ratio to interpret the financial statement so that the strengths and

weaknesses of a firm as well assist historical performance and current financial condition

can be determined. The term ratio refers to the numerical or quantitative relationship

between two items/variables.

Ratio analysis is an important and age old technique of financial analysis.

The data given in financial statements, in absolute form, are dump and are unable to

communicate anything. Ratios are relative from of financial date and very useful

technique to check upon the efficiency to a firm some ratio indicates the trend or progress

or downfall of the firm.

IMPORTANCE OF RATIO ANALYSIS: -

Ratio analysis of a firm’s financial statements is of interest to a number of

parties, mainly, shareholders, creditors, financial executive etc. the importance of ratio

analysis are discussed below in brief:

They act as an index of the efficiency of the enterprise. As such

they serve as an instrument of management control.

Ratio analysis helps in making effective control of the business

measuring performance control of cost etc.

Ratio analysis is an effective instrument which, when properly

used, is useful to assess important characteristics of business liquidity, solvency,

profitability.

The communications by the use of simplified and summarized

ratios are more easy and understandable.

It throws light on the degree of efficiency of the management and

utilization of the assets and that is why it is called surveyor of efficiency. They

help management in decision making.

Ratio highlights the factors associated with successful and

unsuccessful firms. If comparison shows an unfavorable variance, corrective

action can be initiated. Thus, it helps the management to take corrective action.

Ratio analysis is an invaluable aid to management in the discharge

of its basic function such as planning, forecasting, control etc.

They point out firm’s liquidity position to meet its short term

obligations and long term solvency.

It facilitates the management to know whether the firm’s financial

position is improving or deteriorating by setting a trend with the help of ratios.

LIMITATIONS OF RATIO ANALYSIS

Different firms may use these terms in different senses or the same firm

may use them to mean different things at different times. Some of the limitations of the

ratio analysis are given below.

Ratio are tools of quantitative analysis only and normally

quantitative factors which may generally influence the conclusions derived, are

ignored which computing ratios.

A signal ratio would not be able to convey anything. Ratio can be

useful only when they are computed in a deficient large number.

When inter firm comparison is made they differ substantially in

age, size, nature of product etc. At inter firm comparison, these factors are not

considered. Therefore, ratio analysis cannot give satisfactory results.

Ratio analysis is use for limited purpose i.e.

o For applying judgment

o For indicators of bad or good management

o For decision making etc.

Ratio are only means of financial analysis but not and end in

themselves.

Window dressing means manipulation of accounts in a way so as

to conceal vital facts and present the statements in away to show better position

than what it actually is by doing so, it is possible to cover up bad financial

position. Therefore, ratios based on such figures are nor reliable.

It should be clearly noted that ratio are only tools and personal

judgment of analyst is more important.

Ratios are computed on the bias of past result. Past is not indictor

of future. Ratios computed from historical data are used for predicting and

projecting the likely events in the future.

Ratios are only post mortem of what has happened between two

balance sheet dates. The position in the interim period is not reveled by ratio

analysis.

Due to changes in price level of various years, comparison of ratios

of such years cannot give correct conclusions.

Classification by

Profitability ActivitySolvency

Short term Long term

- Current Ratio- Cash position Ratio

- Proprietary Ratio- Debt – Equity Ratio

- Gross profit Ratio - Net profit Ratio- Expense Ratio- Operating profit Ratio- Return on capital

employed Ratio- Return on Equity

Ratio

- Capital turnover Ratio

- Creditor Turnover- Debtor Turnover- Fixed Assets

CLASSIFICATION BY PURPOSE: -

The modern approach of classifying the ratio is according to purpose or

object analysis. Normally, ratio is used for the purpose of assessing the profitability and

sound financial position. Thus, ratios according to the purpose are more meaningful.

Purpose

Solvency ratio

(1)

Short-term

I. Current Ratio

II. Cash position Ratio

CURRENT RATIO :

Meaning:

Current ratio is the most common ratio for measuring liquidity. Being related to working

capital analysis it is also called the working capital ratio. Current ratio expresses

relationship between current assets and current liabilities.

Purpose:

The current ratio of a firm measures in short term solvency. i.e. its ability to meet short

term obligation. As a measure of short term current financial liquidity.

It is calculated by dividing current asset by current liabilities.

Solvency ratio

Short term Long tern

Current ratioCash position ratio

Proprietary ratioDebt-equity ratio

Current Ratio = Current Assets Current Liabilities

Year 2007-08 = 544854318 = 2.6:1 209011368

Year 2008-09 = 534102425 = 2.47:1 215455422

Year 2009-10 = 524544889 = 0.2.98:1

176139161

Interpretation:

Particulars 2007-2008 2008-2009 2009-2010

Current assets

Inventories 284664968 285516305 254321914

Sundry debtors 179198533 164825535 151569700

Cash & Bank Balance 17883875 19178538 64391467

Loans & Advances 63106942 64582047 54261808

Total 544854318 534102425 524544889

Current Liabilities

Liabilities 160455232 169730997 132349343

provision 48556136 45724425 43789818

Total 209011368 215455422 176139161

An ideal current ratio is 2:1 considered as a safe margin of solvency 2:1 i.e. the

current assets are two times the current liabilities. When ratio is 2:1. The creditors will be

able to get their payments in full.

The ideal ratio considered to be 2: 1. The above calculation shows that the

current ratio of the company is 2.6:1, 2.47:1,2.98:1, in the year March 2008, March

2009& March 2010 respectively. Here companies good position in all three years.

QUICK RATIO:

Meaning:

When liquidity is highly restricted in terms of cash and cash equivalent,

this ratio should be relationship between cash and near cash items on the one hand.

Purpose:

The purpose of computing the ratio to measure e more rigorous of a firm’s liquidity position

Quick Ratio = Quick Assets Quick liabilities

Year 2007-08 = 260189350 = 3.25: 1 209011368

Year 2008-09 = 248586120 = 2.22:1

215455422

Year 2009-08 = 270222975 = 1.53:1 176139161

Interpretation:

A quick ratio 1:1 is good in business. Here in this company this ratio is grater than this norms. But last three years it is decreasing , yet it is not need to worry about it is, because it is yet above norms.

Long-term

I. Proprietary Ratio

II. Debt-Equity Ratio

I. Solvency Ratio

PROPRIETARY RATIO:

Meaning:

This relates the shareholders fund to total assets. It is a variant of the debt equity ratio.

This ratio shows the long term or future solvency of the business. It is calculated by

dividing shareholders funds by the total asset.

Purpose:

The purpose of proprietary ratio is indicating available to creditors and general financial

strength of the firm.

Particulars 2007-08 2008-09 2009-10

Shareholders Fund

Capital 35310000 35112500 34778000

Reserve 266960564 304198833 367104781

Total 302270564 339311133 401882781

Total Assets 683193923 698415831 678351780

Proprietary Ratio = Shareholders Fund Total Asset

Year 2007-08 = 302270564 = 0.44:1

683193923

Year 2008-09 = 339311133 = 0.49:1 698415831

Year 2009-10 = 401882781 = 0.59:1 678351780

Interpretation:

This ratio shows the general strength of the company is very important to

creditors as is help them to find out the proportion of share holder fund in the total asset

used in business. Higher ratio indicates a secured position to creditor i.e. 0.59 and lower

ratio indicates greater risk to creditor i.e. 0.44. From 2008 to 2010, the ratio is increase.

DEBT EQUITY RATIO:

Meaning:

The financing of total asset of a business concern is done by owner’s

equity as well as outside debts. This ratio indicates the relative proportions of debt and

equity in financing the asset of a firm.

It is also known as external internal equity ratio. Debt equity ratio is determined

to ascertain soundness of the long term financial policies of a firm.

Particulars 2007-08 2008-09 2009-10

Long Term Debt

Secured loan 164715322 135446717 93064494

Shareholders Fund 260189350 248586120 270222975

Debt Equity Ratio = Long Term Debt Shareholders Fund

Year 2007-08 = 164715322 = 0.63:1

260189350

Year 2008-09 = 135446717 = 0.54:1

248586120

Year 2009-2010 = 93064494 = 0.34:1 270222975

Interpretation:

Debt -equity ratio measures the ratio of long term or total debt to shareholder

equity. A High Ratio shows a large share of financing by the creditor of the firm a low

ratio implies smaller claim of creditor.

If the Debt-equity ratio is high the owners are putting up relatively less money of

their own. It is dinger signal for the creditors.

Here, Debt equity Ratio is 63% in 2008 and 54% in 2009 and 34% in 2010,

which shows good financial position of company.

Profitability ratio

I. Net profit Ratio

II. Raw material consumed Ratio

III. Operating Profit Ratio

IV. Return on capital employed ratio

V. Return on equity shareholder’s funds.

NET PROFIT RATIO :

Meaning:

It is also called net profit to sales ratio. The profit margin is indicative of

management’s ability to operate the business with sufficient success not only to recover

from revenue of the period, the expense of operating the business and the cost of

borrowed fund.

Net Profit Ratio = Net Profit X 100Net Sales

Year 2007-08 = 65061293 = 8.91% 729950074

Year 2008-09 = 51404613 =6.29% 816685475

Year 2009-2010 = 71507713 =10.69% 669249073

Interpretation:

Net profit Margin measure the percentage of each sale Rupee remaining after all cost and expenses including interest & taxes have been deducted a high net profit margin would ensure adequate return to the owner as well as enable firm. Here , Net profit Ratio is 8.91% in 2008 & 6.29% in 2009 &10.69% in 2010. This shows a profit is more in 2010 compare to last two year.

Raw material consumed Ratio:

Meaning : This ratio is shows how much raw material use for production during the period . a manufacturing company use this ratio to know consumption of raw material for it’s production.

Raw material consumed : Raw material X 100 Net sales

2007-08 = 280859547 = 38.47% 729950074

2008-09 = 254740308 = 31.19% 816685475Interpretation:

Here this ratio is decreasing, which shows good sign of company’s

efficiency.

Other income to PBT Ratio:

This ratio measures the relationship between other income to profit before tax.

The main purpose of computing this ratio is to determine the company’s

efficiency of investment in other industries.

Other income to PBT : other income X 100

PBT

Year 2008-09 = 16981569 = 18.27%

92945565

Year 2009-10 = 15761610 =16.64%

94702783

Year2009-10 = 16194030 = 24.92%

64980698

Here this ratio is more , which shows company is more earning from

other sources. In 2010 company’s income is more from other sources.

SYNOPSIS

1. Introduction

Name of the company :

AUSTIN ENGINEERING COMPANY LTD

Title of the Project:

“RATIO ANALYSIS OF AustIn engineering company Ltd.

.”

2. Statement of the problem

There is need of evaluating the fundamental strength of Austin engineering

company Ltd.

3. Scope of the Study:

Scope of project for studying the Fundamental strength & liquidity position of the

company with reference to .Austeen engineering company Ltd.

4. Objective of the Study:

To know the fundamental strength of the Austeen engineering company Ltd.

To study whole system of infolw and outflow of cash in an organisation.

To know the liqudity level of the company

5. Significance of the study:

By this project, we can get the information regarding company’s liquidity and

profitability.

.

6. Source of Data:

1. Balance sheet of the company

2. Website of company.

3. Annual Report Of company (2007-08)4. Annual Report Of company (2008-09)5. Annual Report Of company (2009-10)

7. Limitation of Study:

1. Time provide for the study is limited.

2. Analysis of 3 year company can be done.

3. There is inadequacy of some data for preparation of project.

4. The financial position of the company is affected by several factors like

economic, social.

5. The balance sheet or other financial statement given for analysis may be

wrong in figure.