sreeniprjct autokast ltd final

PROJECT REPORT

ON

WORKINGCAPITAL MANAGEMENT IN AUTOKAST Ltd

Submitted in partial fulfilment of the requirements for the award of the

degree of Master of Business Administration of University of Kerala

Submitted by: SREENI ANILKUMAR

(Reg. no.13460040)

Under the Guidance of

PROF: ANOOP NAIR

DC School of Management and Technology

KINFRA Film & Video Park

Sainik School (P.O)

Kazhakoottam

Thiruvananthapuram 695585

PROJECT ON WORKING CAPITAL MANAGEMENT-AUTOKAST LTD, CHERTHALA

Dc School Of Management & Technology

DECLARATION

I hereby declare that the project report entitled “A study on working capital management” with

reference to “Autokast Ltd”, cherthala written and submitted by me under the guidance of Mr Anoop

Nair, professor in MBA department, DC SCHOOL OF MANAGEMENT AND TECHNOLOGY,

TRIVANDRUM.

The findings in the project report are based on the data collected by me from “Autokast Ltd”.Also I

declare that this project has not been submitted for the award of any degree from any university.



ACKNOWLEDGEMENT

Firstly I, express my gratitude to Almighty god with whose grace this education has been possible to

me.

First And foremost, I would like to express my sincere thanks to Mr.P.V.Jitesh, Asst Manager HRD&

Administration, and all other staffs of finance as well as other departments for the bestowing on me

this rare opportunity to undergo my study in such an esteemed organisation. I remember with

profound gratitude and invaluable help rendered by him to me for the successful completion of this

project.

I am deeply obliged to Mr .V.Gopakumar, Director, DC SCHOOL OF MANAGEMENT AND

TECHNOLOGY,TRIVANDRUM.I place my heartfelt gratitude of special thanks to my project guide

Mr.Anoop Nair ,who helped me at all time with valuable suggestion to enable me to carry out the

project with great confidence and enthusiasm.

I am greatful to all my friends and relatives who extended their co-operation and encouragement for

doing this project.

Above all I wish to utilize this opportunity to acknowledge faith in almighty. Without his blessings,

this project would have reached nowhere.



CONTENTS

SI .NO TITLE PAGE .NO

CHAPTER - 1

INTRODUCTION

8

CHAPTER -2

INDUSTRY PROFILE

10-15

CHAPTER -3

COMPANY PROFILE

17-87

CHAPTER -4

LITERATURE REVIEW

89-103

CHAPTER -5

FINANCIAL ANALYSIS OF DATA

105-134

FINDINGS,SUGGESTIONS,CONCLUSION

BIBLIOGRAPHY

APPENDIX

136-139

140



LIST OF TABLES

Table no Table Name Page no

1. AUTOKAST LTD at a glance 19

2. List of major products at Autokast Ltd 21

3. Chemical composition 38

4. Chemical composition 38

5. Manpower in Autokast 43

6. Punching system 44

7. Evaluation process -rating 47

8. Major customers 58

9. Schedule of changes in working capital (2009-10) 106





14. Current ratio 111

15. Quick ratio 112

16. Absolute liquidity ratio 113

17. Inventory turnover ratio 115

18. Total asset turnover ratio 116

19. Fixed asset turnover ratio 117

20. Current asset turnover ratio 118

21. Current asset to fixed asset ratio 119

22. Current asset to total asset ratio 120

23. Debtors turnover ratio 121

24. Working capital turnover ratio 122

25. Net profit ratio 123

26. Administrative expense ratio 124

27. Operating profit ratio 125

28. Proprietary ratio 127

29. Current asset trend 129

30. Current liability trend 130

31. Fixed asset trend 131

32. Working capital trend 132

33. Sales trend 133

34. Gross profit trend 134



LIST OF FIGURES

Figure no CHART NAME Page no

1. Metal casting share in percentage 11

2. Top ten casting producing countries 12

3. Share of no of small and medium foundry industry in total -

India

14

4. Market share of major products 57

5. Current ratio 112

6. Quick ratio 113

7. Absolute liquidity ratio 114

8. Inventory turnover ratio 115

9. Total asset turnover ratio 116

10. Fixed asset turnover ratio 117

11. Current asset turnover ratio 118

12. Current asset to fixed asset ratio 119

13. Current asset to total asset ratio 120

14. Debtors turnover ratio 121

15. Working capital turnover ratio 122

16. Net profit ratio 123

17. Administrative expense ratio 124

18. Operating ratio 126

19. Proprietary ratio 127

20. Current asset trend percentage 129

21. Current liability trend percentage 130

22. Fixed asset trend percentage 131

23. Working capital trend percentage 132

24 sales 133

25. Gross profit trend percentage 134



INTRODUCTION

The primary purpose of this study is to fulfilment of the requirements for the degree of MBA.

For this I conducted my Study in Autokast Limited, Cherthala for a period of one month. The

era of liberalization has opened up new vistas for Indian Economy. In the fast changing

economic scenario it is imperative for every aspiring entrepreneur to have a vivid

understanding of the functional application of the new age business. The study was about the

analysis of working capital management in autokast ltd. Well-managed working capital is

crucial to the running of a healthy and successful business. In simple terms, working capital

is the cash available for the day-to-day running of the business, used to settle regular bills

such as wages and supplies, and also covering unplanned costs and unexpected expenses. An

important part of working capital management is a company's cost structure.

Working capital represents the liquidity available to a business, and can be calculated in

various ways. Gross working capital is the entire sum of a company‟s current assets; net

working capital (NWC) stands for the company‟s current assets minus its current liabilities,

and represents the actual amount available at any given moment.

Working Capital is the life blood of every business concern. Business firm cannot make

progress without adequate working capital. Inadequate working capital means shortage of

inputs, whereas excess of it leads to extra cost. So the quantum of working capital in every

business firm should be neither more nor less than what is actually required. The

management has to see that funds invested as working capital in their organization earn return

at least as much as they would have earned return if it invested anywhere else. At the time of

increasing capital costs and scare funds, the area of working capital management assumes

added importance as it deeply influences a firm's liquidity and profitability. A notable feature

of utilization of funds is that they are of recurring nature. Therefore, efficient working capital

management requires a proper balance between generation and utilization of these funds

without which either shortage of funds will cause obstruction in the smoother functioning of

the organization or excess funds will prevent the firm from conducting its business

efficiently. So the main objective of working capital management is to arrange the needed

funds on the right time from the right source and for the right period, so that a trade-off

between liquidity and profitability may be achieved.

A firm may exist without making profits but cannot survive without liquidity. The function of

working capital management organization is similar that of heart in a human body. Also it is

an important function of financial management. The financial manager must determine the

satisfactory level of working capital funds and also the optimum mix of current assets and

current liabilities. He must ensure that the appropriate sources of funds are used to finance

working capital and should also see that short term obligation of the business are met well in

time.

Through the study of working capital management I can able to understand the total current

assets, current liabilities, companies day to day operations etc.



INDUSTRY PROFILE

OVERVIEW

The Indian Foundry Industry produces approximately 7 Million MT of Castings employing

estimated 500,000 persons directly & another 1.5 million indirectly. The growth of Foundry

Industry is very important for inclusive growth, other Engineering sectors & the overall

Indian Economy

Foundry Industry is the basic Engineering Industry, the product of which is used by

almost all people. Virtually each and every industrial process needs Castings of one type or

the other. All forms of transport do require to a major extent the Foundry Industry

production.

Founding or Casting is the process of producing metal /alloy into a prepared mould and then

allowing the metal/alloy to cool and solidify. The solidified piece of metal/alloy is known as

a Casting. Founding or Casting is one of the oldest manufacturing processes, which dates

back to approximately 4000BC. The first Foundry centre came into existence in the days of

Shan Dynasty in China. A number of foundries using Cast Iron as the structural material

came into being after the industrial revolution.

The Indian Foundry is striving to rewrite its history and emerge as automated green

Industry. India is currently one among the 10 largest producers of ferrous and non-ferrous

Castings and has over 6500 foundries in the small, medium and large –scale Industries.

The Indian Foundry Industry occupies a special place in shaping the country‟s

economy. India is currently among the 10 largest producers of ferrous and non-

ferrous Castings and has over 6500 foundries in the small, medium, and large scale

sectors. Approximately 90% are in the small scale. India exports annually above

Rs.700/- crores worth of Castings to countries like USA, U.K., Canada, Germany

etc.

There are more than 5,000 Foundry units in India, having an installed capacity of

approximately 7.5 million tons per annum. The majority (nearly 95%) of the Foundry units

in India falls under the category of small -scale Industry.

The Foundry Industry is an important employment provider and provides direct employment

to about half a million people. A peculiarity of the Foundry Industry in India is its

geographical clustering.

Typically, each Foundry cluster is known for catering to some specific end-use markets. For

example, the Coimbatore cluster is famous for pump-sets Castings, the Kolhapur and the

Belgaum clusters for automotive Castings and the Rajkot cluster for diesel engine Castings.



SIGNIFICANCE OF FOUNDRY INDUSTRY

Foundry Industry is Major Feeder to following sectors:-

Automobiles & Auto Components

Railways

Power Sector

Tractor Industry

Earth Moving Machinery

Pumps, Compressors, Pipes Valves & Pipe Fittings

Electrical/Textile/Cement/Agro Machinery

Machine Tools & Engineering Industries

Sanitary Castings

Engineering Exports

Approximately 32% Output of Foundry Industry goes to Auto Industries & Balance to other

downstream Engineering Sector. Automotive Mission Plan (AMP) 2006-2016 envisages 4 Fold

Growth by 2016. I.e. from$34 Billion Industry to $ 122-160 billion Industry and employing about 25

million by 2016. AMP 2006-16 will drive demand of Castings from Foundry Industry. Corresponding

Growth in Foundry Sector vital to sustain growth in Auto & other Engineering Sectors.

Graph below Depicts Types of Metal Castings Share in %

Figure 1

Series1, Grey Iron, 70, 70%

Series1, Ductile Iron,

9, 9%

Series1, Steel, 12, 12%

Series1, Non Ferrous, 8,

8%

Series1, Others, 1, 1%

Types of Metal Castings Share in %

Grey Iron

Ductile Iron

Steel

Non Ferrous

Others



Graph below Depicts Top Ten Casting Producing Countries

Figure 2

THE INDIAN CASTING INDUSTRY

India ranks 6th country in the world for producing an estimated 6 Million MT of various

grades of Castings. The various types of Castings which are produced are ferrous, nonferrous,

Aluminium alloy, graded Cast Iron, ductile Iron, Steel etc. for application in automobiles, railways,

pumps compressors and valves, diesel engines, cement/electrical/ textile machinery, amongst

others. The Grey Iron Castings have a major share of 70 per cent of the total Castings produced.

There are approximately 4,500 units engaged in Castings, out of which 80 per cent can be classified

as small-scale units and 10 per cent each as medium and large-scale units.

The Industry is a labour intensive one, employing about 5, 00, 000 people directly and an

additional 1,50,000 people indirectly. The small units are mainly dependant on manual labour.

However, the medium and large units are semi or fully mechanized and some of the large units are

world class.

The Industry is organized in clusters in various regions like Agra, Belgaum, Chennai, Howrah,

Coimbatore, Chennai, Kolhapur, Ludhiana, Pune and Rajkot. Each cluster has its own niche products

for its user Industries.

Series1, Korea, 2.1

Series1, France, 2.4

Series1, Italy, 2.6

Series1, Brazil, 3.4

Series1, Japan, 5.7

Series1, Germany, 5.8

Series1, India, 7

Series1, Russia, 7.8

Series1, USA, 10.8 Series1, China, 33.5

Million MT

Top Ten Casting Produsing Countries (Figures in Million MT)



THE PRODUCT MIX

The Industry is trying to focus on higher value added products to face competition globally.

It may be noted that 62 per cent of the Casting production is catered by China, European Union and

US. The shortage of scrap and pig Iron in EU continues to affect its cost of Castings, forcing them to

look to China and India for cost effective Castings. The production of Castings grew from 2.76 million

MT in 97-98 to 7.77 million MT in 2007- 08. This is a 300 per cent jump in production capacity in a

decade. It was the growth in the automobile Industry that provided the major thrust in the Castings

Industry.

COMPETITIVE ADVANTAGE

India has a major competitive advantage over the Castings Industry in the developed

Countries. Here the total labour cost is low compared to that of the US and EU. Here Labor cost

accounts for 12-15 per cent of the product cost. The Indian government has encouraged technology

transfer through a joint venture (JV) with foreign companies.

The Foundry Industry has an edge over China as well – it is able to produce complex Machine and

precision Castings as per international quality standards. The clusters in Belgaum, Coimbatore and

Howrah are undergoing modernization under the Industrial Infrastructure up gradation scheme

INVESTMENT

India would need approx. $ 3 Billion in investment to meet the demand of growing domestic

Industry and strong export drive. Following the economic reforms the Government of India has

reduced tariffs on imported capital goods. As a result, the annual average amount of FDI is reported

to have increased; but is still one tenth of the annual FDI in China. The reforms encourage the

privatization of Industry, enabling foreign companies to invest or enter into joint ventures with

Indian Foundries. Several International Corporate from USA, EU and East Asian countries have

increased overseas Foundry operations in India. I.e. VOLVO foundries in Chennai and Suzuki in

Haryana. Sundaram Clayton has joined hands with Cummins. Hyundai Motors, Delphi. Ford India,

Tata‐Cummins, GM and Ford have contracts of Foundry products for export with a value of $ 40

Million.

RAWMATERIAL & ENERGY

Since 2003, the steep increases in cost of Raw Materials and energy have resulted in the closure of

approx. 500 units. Overall, India is exporter of Pig Iron; but must import Scrap metals and coke, etc.

Cost recovery for material and energy is very difficult as most contracts are long term contracts



without any clause for price adjustment. Moulding sand is locally available & India has an advantage

on this account. Energy cost typically varies between 12‐15%.

LABOUR

India has major competitive advantage over the Foundry Industries in the developed

countries. The total labour cost account for 12‐15 %. But availability of skilled labour becomes an

issue; bothering many Industries including the Foundry Industry.

TECHNOLOGY

The Government of India (GOI) has encouraged technology transfer through a Joint Venture

(JV) with foreign companies and the GOI has cooperated with UNIDO with many Foundry clusters.

The Indian Foundry Industry has an edge over China for producing complex machined and precision

Castings as per international quality standards. The GOI also helps upgrade Foundry clusters. The

clusters in Belgaum, Coimbatore and Howrah are undergoing modernization under the industrial

infrastructure up gradation scheme. More of such clusters are likely to follow.

Figure 3

SWOT ANALYSIS OF CASTING INDUSTRY

Strengths

Cost competitiveness in terms of labour costs.

Well established manufacturing base

Matured Industry level

Proven product development and tooling capabilities.

Strong Engineering skills and robust IT domain knowledge.

Top Companies have world’s class manufacturing facilities.



Weakness

Capacity constraints

Below top 10, rest are in small and medium sector, who need to scale up.

Engineering changes lead times is rather large in India.

High energy cost.

High cost of alloy Steels because Ni, Cr, Mo & V are imported and not locally available which

makes the cost high.

Technology up gradation lacking in small sector because of high capital cost involved.

Inefficient economics of scale.

Logistics costs are high.

Environment compliance costs are high.

Perception about quality inadequate.

Infrastructure bottlenecks.

Opportunities

The higher cost of environmental compliance in EU is leading to closure of Casting units

across Europe and they are off-loading the components involving Casting to Asia.

Switch to value added products and niche products

Growth of Auto sector in India is giving big boost to Casting Industry to upgrade both

capacities and quality.

Buying the closed units in EU and shifting plants to India and cater to their local customers

by exports from India.

Threats

Increasing cost of Environmental compliances.

Too high wastage in manufacturing, the raw material productivity is low.

High logistics cost.

Competition from China, Indonesia and Eastern Europe.



COMPANY PROFILE

Autokast was established in the year 1982 as a subsidiary of Steel Industrials Kerala Ltd. (SILK), a

Govt. of Kerala Undertaking for the manufacture of Grey Iron and Spheroidal graphite Iron Castings.

Autokast limited was started on with the aim of manufacturing all types of ferrous Casting unit under

the Steel Industrials Kerala ltd (SILK). On May 21-1984 incorporated as separate subsidiary on SILK

and renamed as Autokast Limited, which is located at S N Puram near Cherthala is a modern

industrial Casting unit an ISO 9002: 2008 Company. The unit has an optimum capacity of 18000 tons

per annum and covers an area of 21500 square meters. The plant comprises of two distinct production

lines via, the conventional moulding line and the high pressure moulding line. The Company can

manufacture ferrous Castings of all grades and sizes ranging from 5kg to 8000kg.

The conventional moulding line is semi-automatic system in which large Casting is

manufactured, whereas high pressure moulding line is fully automated system in which smaller

Casting are manufactured in large quantities. The plant manufactures intricate high precision item of

mass production like cylinder block and cylinder heads for the entire range of automotive engine.

Produce all grades of Grey Iron Castings up to 8.5Mt single pc (18700 lbs.) and all grades of

Ductile Iron Castings up to 7 MT single pc (15500 lbs.)and Steel Castings weighing up to 3MT

single piece. Commonly produced grades are IS 1030 and WCB range casting. Induction melting

furnace of 5MT and 3MT are exclusively

Autokast has the following range of manufacturing facilities.

1. Air impulse type high pressure moulding line with a box size of 750 x 750 x 400/350 mm

capable of producing 80 moulds per hour. The line is fully computer controlled and is

supported by automatic core shooting machines employing different sand systems like cold

box, shell core etc. Product range varies from 10 kg to 120 kg.

2. Conventional hand moulding line capable of manufacturing Castings ranging from 200kg. to

4000kg. Single piece weight.

3. Machine moulding facility having a mould box size of 790 x 790 x 400/400 mm and 1190 x

790 x 400/400 mm capable of manufacturing Castings ranging from 30kg. to 160kg.

4. Liquid metal is generated from 2 numbers of 6 MT Mains Frequency Induction Furnaces and 2

High Frequency Induction Furnace of 3MT and 5MT capacity.

Pattern shop at AKL acts as a service shop for pattern equipment used in production.

Autokast is fully equipped with state of the art testing facilities like

1. Well-equipped wet analysis laboratory.

2. Twenty six channel, Baird make vacuum spectrometer imported from U.S.A.



3. Mechanical testing lab with 60T UTM, Brinnel hardness Tester, Rock well

Hardness tester etc.

4. Metallographic facilities.

5. Ultrasonic testing facilities.

6. Magnetic particle testing facilities, and

7. Liquid penetrant tests.

The Company‟s products at present cater to the needs of following segments of Indian and overseas

Industries.

1. Automotive,

2. Tractor,

3. Butterfly Valve and Disc assembly,

4. Agricultural,

5. Wind mill energy and

6. General Engineering Industries

SCOPE & FIELD OF APPLICATIONS

This quality Management system covers manufacture, inspection, testing and supply of Steel,

Grey Iron and nodular Iron Castings for automotive, tractor, butterfly valve wind mill energy and

general Engineering Industries.

Autokast manufactures Castings to customers‟ design only. Likewise, all products of

Autokast can be verified by subsequent monitoring and testing. All activities of Autokast are covered

under the quality Management system to continually improve the quality of its products as well as to

ensure complete customer Satisfaction



AUTOKAST LTD AT A GLANCE

Registered Office & Works SN Puram,Cherthala;Alappuzha(dist.)

Year of Establishment 1984

Products Grey Iron and Ductile Iron

Production facilities High Pressure moulding .M/c Moulding

&Hand Moulding

Moulding process Green Sand &CO2 system

Core Making CO2,No bake & Pepset

Furnace 6MT Electric Induction *2 nos

Testing Facilities Spectrometer, Ultrasonic, Magnetic

Particle test, Dye penetrant

Present Production 350MT/month

Spare Capacity 150MT/month

Total Land & Covered area 2,20,000 m2 & 60,700 m2

Table 1



MISSION

Production in large volume and cost effectiveness in all segments

Produce technologically superior products

Achievement of customer delight through benchmarking global practice

Consistent production through harmonious industrial relations Strengthen supply chain Management

VISION

To raise the Company as a leader of Casting Industries in India

The Company should be recognized and respected as a manufacture of the

world class product serving customers by supplying quality Castings at right

time



LIST OF MAJOR PRODUCTS

Sl.No Item Material Cast. Weight Application

1 Gear Box Hsg/Engine

Housing Grey Iron 40 Kg to 130 Kg Tractor

2 HUB Ductile Iron 1000 Kg to 3300 Kg Wind Mill

3 Extender Ductile Iron 400 Kg to 600 Kg Wind Mill

4 Main Brg Hsg Ductile Iron 150 Kg to 1250 Kg Wind Mill

5 Yaw Top Ductile Iron 700 Kg to 1200 Kg Wind Mill

6 Claw Beam Ductile Iron 70 Kg to 110 Kg Wind Mill

7 Brake Disc Ductile Iron 50 Kg to 120 Kg Wind Mill

8 Gear Stay Ductile Iron 150 Kg Wind Mill

9 Bed & Frame Grey Iron 200 Kg to 3500 Kg Machine

Tool

10 Valve Body Grey Iron +2% Ni 300 Kg to 5500 Kg Butterfly

valve

11 Valve Disc / Vane Ductile Iron 250 Kg to 5750 Kg Butterfly

valve

12 Sphere Grey Iron 300 Kg to 1200 Kg Ball Valve

13 Valve Body Grey Iron 700 Kg to 2200 Kg Gate Valve

14 Body & Head Grey Iron +2% Ni +0.75%

Cr 100 Kg to 3300 Kg

Vacuum

Pump

15 Discharge Head Grey Iron 100 Kg to 160 Kg Vertical

Pump

16 Dome Grey Iron + 1%Cr 40 Kg to 100 Kg Ash

Handling

17 Ash Vessel Ductile Iron 170 Kg to 600 Kg Ash

Handling

Table 2



ISO CERTIFICATION

Autokast is an ISO 9002: 2008 certified Company. It has got the certification in 1990. ISO 9000 is a

family of standards for quality Management systems. ISO 9000 is maintained by ISO, the

International Organization for Standardization and is administrated by accreditation and certification

bodies. The ISO 9002: 2008 agency in Autokast is Netherlands agency KEMA. The agency studies on

various department and prepares a manual on each department. There is managing committee on ISO

9002: 2008 certification procedure. If there is any default or defect in the department, the agency

prepares a detailed copy of changes to each department for modification. The Autokast which has

export relationship with the foreign companies, the ISO certification enables a prompt Impact on the

functioning procedure. The agency also does Internal Audit in the Company. The NVT is the Indian

agency which does the certification procedures. It is granted by KEMA.



QUALITY POLICY OF AUTOKAST

EXCELLENCE IN THE FIELD

BY ACHIEVING

COMPLETE CUSTOMER SATISFACTION

THROUGH

CONTINUAL IMPROVEMENT

AS WELL AS

INVOLVEMENT OF EMPLOYEES

AND,

CONTRIBUTING ITS MITE TOWARDS

NATION BUILDING

THROUGH

INCREASED EXPORT EARNINGS.



BUSINESS PURPOSE

SERVING CUSTOMERS BY SUPPLYING QUALITY CASTINGS

AT RIGHT TIME

QUALITY OBJECTIVES

The Quality Policy is translated in terms of specific measurable objectives as given below:

A. CUSTOMER SATISFACTION

1. Minimize customer complaints

2. Minimize rejection at customer ends.

3. Cutting down lead time for sample development.

4. Minimize delivery slippages

B. CONTINUAL IMPROVEMENT IN OPERATIONS

1. Bring down shop floor rejections.

2. Minimize reworks.

3. Improvement in overall efficiency of critical equipment‟s.

C. EMPLOYEE INVOLVEMENT

Meetings conducted under various shop councils & Defect Analysis review

Committee.

D. IMPROVEMENT IN EXPORT TURNOVER

Continual growth in export turnover.

The quality policy, quality objectives and targets are reviewed annually for its continued suitability.

Quality policy objectives shall be made known to all Employees by means of Bills at different

locations in the plant and by personal communication by department heads. Every Employee of

Autokast shall be committed to achieve this objective by strictly following the documented quality

system.



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RESPONSIBILITY AND AUTHORITY OF EXECUTIVES

1) MANAGING DIRECTOR

RESPONSIBILITY Overall control of the Company

Resource planning

Growth and development of the Company

Ultimate responsibility for product quality Management system

Chairing of the Company policy and achieving targets/objectives

AUTHORITY

Total authority for all type of transaction of the Company subject to approval by the board

of directors

2) PLANT MANAGER

RESPONSIBILITY

Overall responsibility of Engineering quality control, production and maintenance contain

cost of production in line with the budget; minimize non-conformity in products and

process. Shop planning to achieve target, maintain shop floor discipline.

AUTHORITY

Approve purchase indents of Raw Materials & spares

Initiate discipline proceeding against subordinates

Authorize to send subordinates staff on tour for official purpose.

3) HEAD MARKETING

RESPONSIBILITY

Overall responsibility of marketing activities.

Contact review and market development.

Co-ordinate customer complaints with emphasis on preventive action.

AUTHORITY

Contract finalization

Authorized to send subordinates staff on tour for official purpose.

To initiate disciplinary action against subordinates.



4) HEAD, ENGINEEING &PATTERN SHOP

RESPONSIBILITY

Assessment of Technical feasibility, Finalization of Casting, Drawing and Process methods,

Sample Development, Technology advancement, customer service & control of technical

data.

Ensure that Castings are developed within the targeted time period.

AUTHORITY

Corrective and preventive action related to methods, manufacture /procurement of

Patterns, Core boxes, Molding Flasks etc.

To send subordinates staff on official tour

To initiate disciplinary action against subordinates.

5) HEAD, QUALITY CONTROL

RESPONSIBILITY

Inspection of incoming materials &process material like moulds, cores &liquid metal.

Calibration of Testing and Laboratory Instruments

AUTHORITY

Final authority to accept/reject incoming and process materials

Authorized to send subordinates staff on tour for official purpose

Authorized to stop /restart production /process in line with non-conformity ,of process

parameters as stipulated in process sheet

To issues materials Test Certificate for finished products

To initial disciplinary action against subordinates.

6) HEAD, INSPECTION

RESPONSIBILITY

Responsible for final inspection of all the finished product of the Company

Responsible for inspection of pattern equipment’s

Dispatch clearance

Calibration of measuring and other inspiration Instrument and Gauges

AUTHORITY

Final authority to accept/reject all finished products with respect to Dimensional and visual

aspects

Authorized to send subordinate staff on tour for official purpose

To initiate disciplinary action against subordinates



7) HEAD, PURCHASE

RESPONSIBILITY

Supplier evaluation and all purchase activities

Inventory Management of incoming materials, compliance of purchase and inventory

procedures

AUTHORITY

Realize of purchase order up to value of Rs. Ten lakhs.



8) HEAD, SUB CONTRACT AND PROJECTS

RESPONSIBILITY

All Subcontracting activities including development of new subcontractors and matters

related to projects, Maintenance of building ,work space and utilities

AUTHORITY

Release of Work Orders, Suppliers evaluation and approval of bill of subcontractors

Authorized to send Employees working under him on tour for official purpose


9) HEAD, HUMAN RESOURCE DEVELOPMENT & ADMINISTRATION

RESPONSIBILITY

Wage administration and statutory compliance under Labor Law.

Identifying Training needs and Organizing training programs

General administration and Employee welfare.

Adopt measures to seek Employee involvement in Company‘s development activities

Up keeping of work environment and pressure vessels & lifting tackles

AUTHORITY

Approve payments to Employees ,Security ,Canteen, Transport etc. as per norms

Sales of usufructs


To initiate disciplinary action against erring subordinates



10) HEAD, FINANCE

RESPONSIBILITY Overall charge of the department

Preparation of Budget annually and enforcing financial discipline to work within the Budget

Costing of activities and suggesting cost control measures

AUTHORITY

To represent Autokast in financial transaction with financial institution and other agencies as

authorized by Managing Director

To recommend necessary Training needs to Subordinates staff

To initiate necessary discipline action against erring subordinate staff

11) HEAD, PRODUCTION PLANNING & CONTROL

RESPONSIBILITY

Over all charges of the department

Plan production and dispatch based on Work Order from Marketing Department

Follow-up of activities to achieve the target

Appraise the top Management about the progress of activities on a daily basis

AUTHORITY

To recommend necessary training need to subordinates staff

To initiate necessary disciplinary action against erring subordinate staff.

12) HEAD, MELTING

RESPONSIBILITY

Overall charge of Melting Production ,Manpower control ,and co-ordinates with other

departments

Cost control and productivity improvement

Monitoring and implementing adequate safety measures for mean and machinery

AUTHORITY

To recommend necessary Training needs to Subordinate staff

To initiate necessary disciplinary action against erring subordinate staff



13) HEAD, CONVENTIONAL MOULDING (HAND MOULDING)

RESPONSIBLITY

Over all charge of production ,manpower ,and co-ordination with other departments


Monitoring and implementing adequate safety measures for men and machinery

AUTHORITY

To recommend necessary training needs to subordinates staff

To initiate necessary disciplinary action against erring subordinates.

14) HEAD, HP LINE (AIR IMPULSE)

RESPONSIBILITY

Over all charge of Production, Manpower and co-ordination with other departments

Cost control and Productivity improvement

Monitoring and implementing adequate safety measures for mean and machinery

AUTHORITY


To initiate necessary disciplinary action against erring subordinate staff

15) HEAD, FETTLING

RESPONSIBILITY

Over all charge of Production ,finished goods store, manpower ,and co-ordination with other

department


Monitoring and implementing adequate measures for mean and machinery

AUTHORITY


To initiate necessary disciplinary action against erring subordinates staff



16) HEAD, MAINTENANCE (MECHANICAL & ELECTRICAL)

RESPONSIBILITY

Overall charge of technical and administrative function of electrical and mechanical

departments

Making plant and machinery available for maximum productivity by bringing down

breakdown and scheduling preventive maintenance suitably

Liaison with outside agencies like KSEB Electrical Inspectorate and Factory Inspectorate

Introducing cost reduction where ever possible and implementing value Engineering

AUTHORITY


To initiate necessary disciplinary action against erring subordinates staff



PRODUCT REALIZATION PROCESS



Steps

1. At first the customer places an enquiry with the Marketing Department.

2. The drawings and specifications by the customer are transferred to the Engineering department by

the Marketing Department asking for the feasibility report.

3. Engineering department prepares the feasibility report based on the factors such as weight order

quantity, complications, materials used and other technical details.

4. The report is send back to the Marketing Department.

5. The Marketing Department fixes the rate (by putting up the proposal to the pricing committee

which includes the representatives from the marketing, finance, Engineering, Production Departments

and the managing director) and inform to the party (customer).

6. Negotiation with the party is made if required.

7. Customer places the order.

8. The Marketing Department issues the work order to other departments.

9. If the model (pattern) is not provided by the customer, then it should be produced first. The design

is made by the Engineering department as per the drawings and specifications provided by the

customer and the pattern shop produces the pattern.

10. The required Raw Materials for the product are procured (mostly from suppliers).

11. The production planning and control department issues the production schedule.

12. Manufacturing process is established which includes mould making, melting and coring.

13. Quality inspection is held at each stage of production by the quality control department.

14. Maintenance and calibration of machines are done at proper intervals.

15. After the manufacturing process, the Casting is brought to the Fettling Department. Finishing of

the product is ensured here and the excess metal on the Castings are removed.

16. The final product is inspected and tested for the quality and is send back to the customer.

17. As per the customer‟s feedback, further improvement measures are taken by the Company.



PRODUCTION

Autokast is making Casting to Customers Design and production is controlled in two stages, first

stage being developing Sample Casting followed by regular production after getting approval from

the customer.

Sample Casting

All the activities of taking out samples shall be controlled by the Development team under

leadership of Head, Eng. until it is cleared for regular production. In process inspection shall monitor

each activity and record observations.

Based on work order from marketing dept. Prepare the process sheet and draft quality plan along

with method drawing and issue copies of quality plan/process sheet to concerned depts., like

Moulding, Melting, Quality Control/Inspection.

Study the quality plan/process sheet of the item and arrange required facilities/materials at their

respective shop.

Based on production plan from PPC, draw patterns and start moulding process according to the

guidelines provided in the process sheet/quality plan and documented work instruction of Moulding

dept.

After completion of moulding process, close the moulds (Mould Assembling).

Cast the mould with specified molten metal under specified pouring conditions.

Knock out the Casting after specified holding time.

Decor the Castings and transfer them to Fettling shop.

Fettle the Castings.

Inspect the Casting visually and record the status.

Castings cleared after the visual inspection shall be marked for dimensional conformance.

Test mechanical and metallurgical properties of representative test coupons and record the status.

When all the characteristics are conforming to customer requirements, issue despatch clearance for

the Castings.

Despatch the Castings and seek Customer feedback.

Forward the feedback from the customer to Head, Engineering.

Evaluate observations by customer and observations by the development team during the course of

development and update quality plan/process card.



Issue final quality plan and clearance for regular production.

Regular production.

After getting for regular production from Engg,dept., plan regular production and issue copies

o planning sheet to concerned departments.

Ensure availability of update (latest revision) of process sheet/quality plan at respective departments.

During regular production, total responsibility of clearing the Casting for despatch shall be with

Heads of inspection and QC, visual, dimensional and NDT with the former and metallurgical and

mechanical with the latter.

STEPS INVOLVED IN MAKING A CASTING

1) Make the Pattern out of Wood or Metal.

2) In case of Sand Casting, select, test and prepare the necessary sand mixtures for mould and

Core Making

3) With the help of patterns prepare the Mould and necessary Cores.

A Mould is a container having a cavity of the shape to be cast.

A Core is a body which is employed to produce a cavity in the Casting

4) Melt the Metal to be cast.

5) Pour the molten metal into the mould and remove the Casting from the mould after the

metal solidifies.

6) Clean and finish the Casting.

7) Test and Inspect the Casting.

8) Remove the defects, if any.

9) Relieve the Casting stresses by Heat Treatment

10) Again inspect the Casting

11) The Casting is ready for shipping.

ADVANTAGES OF METAL CASTING

Casting is one of the most versatile manufacturing processes.

Casting provides the greatest freedom of design in terms shape, size and the product quantity

Casting imparts uniform directional properties and better vibration damping capacity to the

cast parts.

Casting produces machine parts

Shapes difficult and uneconomic to obtain otherwise may be achieved through Casting

process.

A product may be cast as one piece, thereby eliminating the need of metal jointing

processes.

Very heavy and bulky parts like those of power plants and Mill Housings, which are

otherwise difficult to get fabricated may be cast.

Metals difficult to be shaped by other manufacturing processes may be cast.



Castings can be designed for equal distribution of loads and for minimum stress

concentration in order to achieve more strength and increased service life.

Casting process can be mechanized and usefully employed for mass production of

components.

APPLICATIONS OF METAL CASTING

The growing demand of high precision Castings and of intricate designs at lower costs has

helped considerably in the development of Foundry Industry. Hardly there is any product, which

does not have one or more Casting components.

A few applications of Founding or Casting are mentioned below:

1. Transportation vehicles: Cast metal parts account for more than 90% of an

automobile engine and for more than 50% of the total weight of a tractor.

2. Machine tool structures.

3. Turbine vanes.

4. Power generators.

5. Mill housings.

6. Railway crossings.

7. Super-charger Casting

8. Pump filter and valve.

9. Paper mill stock breaker parts.

10. Aircraft Jet engine blades.

11. Agricultural implements.

12. Sanitary fittings.

13. Communication Construction and Atomic Energy Applications.

14. Wind mills.

PRODUCT PROFILE

Autokast Ltd is a Foundry unit producing Iron Castings for a variety of Industries. The Iron

Castings are made of Cast Iron. Cast Iron is a general term that describes Iron, carbon, silicon alloys

which are produced by pouring the molten metal into sand / metal moulds. Cast Iron is brittle and grey

in colour. The carbon content in Cast Iron is more than that in Steel which makes it less malleable. By

varying the silicon and carbon content at alloy, several types of core Iron can be produced each with

different properties and uses.

The major product lines of Autokast are:

1. Auto motives Castings

Cylinder heads, Cylinder blocks, Drum Housing etc.

2. Machine Castings

Machine tool Casting

3. Pump Castings

Vacuum and Slurry pump Casting



4. Castings for Pressure Tight Application

Central valves, pressure vessel Castings etc.

5. Windmill Castings

Bearing Housings, Hub, Extender, etc.

Autokast produces Castings in Grey Iron and spheroidal graphic Iron or nodular Cast Iron.

Grey Cast Iron

Grey Iron can be readily cast into desired shapes by pouring into moulds. So it is the most commonly

used type of Cast Iron for the manufacture of Castings. The other distinguishable characteristics of

Grey Iron are:

Lowest melting point of all ferrous alloys.

Carbon in Grey Iron is found in the form of graphite flakes.

Low cost combined with hardness and rigidity.

High compressive strength.

High resistance to whether etc

Chemical composition

Grey Iron

Carbon % Silicon % Manganese % Sulpher % Phosphorous %

2.5 – 3.75 1.0 – 2.5 0.4 – 1.0 0.06 - 0.12 0.1 – 1.0

Table 3

Applications

Machine tool structures.

Gas or water pipes for underground purposes.

Cylinder blocks and heads for internal combustion engines etc.

Spheroidal Graphite Iron

Spheroidal Graphite Iron or Nodular Cast Iron is a higher grade of Iron, because unlike structures

in Grey Iron, the graphite in Spheroidal Graphite (SG) Iron is precipitated as Spheroids. This is

attained by adding some spheriodising agents, which changes the solidification characteristics and

account for notarization.

Chemical composition

S G Iron

Carbon % Silicon % Manganese % Sulpher % Phosphorous %

3.2 – 4.2 1.1 – 3.5 0.3 – 0.8 0.2 0.08

Table 4



CASTING

FERROUS CASTINGS

SG/DUCTILE IRON GREY IRON

Similar to Steel Brittle

Graphite in Spheroidal shape Easy to handle

Low Manganese Rust free

Hardness

Costly

Take more finishing time

Rust free

More elastic



DEPARTMENTS

Autokast limited has the following departments

HR Department

Marketing Department

Production Planning & Control Department

Engineering & Pattern Shop Department

Production Department

Quality Control & Inspection Department

Mechanical Maintenance Department

Electrical Maintenance Department

Materials Department

Subcontract Department

Finance Department

R&D Department



HR DEPARTMENT

Human Resources is exactly it says: resources for humans – within the workplace! Its main

objective is to meet the Organizational needs of the Company it represents and the needs of the people

hired by that Company. In short, it is the hub of the Organization serving as a liaison between all

concerned.

To ensure its success, a Company must establish a hierarchal reporting system. The funnel of

responsibility is critical to the efficiency of a smoothly operating business entity in which there is a

clearly defined understanding of who is responsible for what. They provide consultation to a

Company's Management team to identify what the Company's core business and culture is about, and

proceeds to plan and map the Company's Organizational infrastructure to support those needs.

Personnel Management is the specialized branch of Management that deals with people

who are not mere Machines or Commodities or Costs but who are as human as any human beings

are, and who constitute the principal asset of the firm.

Personnel Management is the part of total Management of the Organization, which

specifically deals with the human resources in respect of their

1. Procurement

2. Development

3. Their motivation towards the attainment of the Organizational objectives

The success of modern Organization always depends on the contribution made by the

Employees. An Organization tends to be successful when Employees are satisfied and productive

inspection performing their tasks. The active function of labour factor is needed.HR and

Administration department is an inevitable part of every Organization and in this Organization also it

is performing a number of functions like recruitment, selection, training, placement and development

of staff, job description, job evaluation, merit rating etc. It devices methods of wage payment,

promotions, transfers, provides welfare measures, enters into contract for employment, handles labour

problems and disputes, keep employment records and so on.

HRD and administration department is a specialized branch which deals with the people. This

department services to the use of human resources in an effective manner so as to transform them for

realizing the objectives of the Organization.

In Autokast HRD&A is a specialized branch of Management, which deals with the people. This

department strives to use human resources in an effective manner so as to transform them for

realizing the objectives of the Organization. It aims at relating people at work with the activities

necessary to achieve goals.



MANPOWER IN AUTOKAST

CATEGORY NO OF EMPLOYEES

Manager 8

Deputy Manager 4

Assistant Manager 11

Engineer 6

Assistant Engineer 21

Assistant Officer 11

Permanent Workers 160

Table 5

TIME OFFICE

The main functions of time office are attendance keeping and payroll preparation. It comes under the

control of personnel department.

Employees can take 12 casual leave and 15 medical leave per year.

13 holydays are allowed for the Company, including 9 Festivals and 4 National holydays.

PUNCHING SYSTEM

Attendance and payroll are maintained using the punching card system. The latest computer

technology (Biometric Technology) is used in punching system. The worker has to insert the card into

the system when he enters as well as leaves the Company. If the worker omits inspection punching the

card, he will not be given the wages for that day. The details of the worker‟s attendance are entered

into the computer everyday with the help of punching system. An electronic worksheet is used for this

purpose. Wages are given to the workers based on the verification of the punching system as well as

the worksheet. The punching card system gives only the attendance of the workers. It gives the

information whether a worker was present or absent during a particular day but not whether he was

working or not. Therefore the time office maintains individual attendance register for each section of

the Production Department. IN Autokast there are 4 shifts which are classified A, B, C and general

shift. The duration is 8 hours for each shift. The timings are:



Shift Time

General Shift 9.00am to 5.00 pm

A Shift 6.00am to 2.00pm

B Shift 2.00pm to 10.00pm

C Shift 10.00pm to 6.00am

Table 6

RECRUITMENT

Recruitment Process

It is an important function of Human Resource and Administration department. Recruitment

is done by the corporate personal and administration department as per the delegation of powers

issued from time to time. All the permanent Employees are recruited during the starting stage of

Company. Recently Autokast does not make any permanent recruitment. Now they make only

temporary selections. Also apprentices are there to meet the manpower.

Source of Recruitment

Through Employment Exchange as per the provisions of the Employment Exchange

(compulsory notification of vacancies).

Through Public Service Commission in respect of posts exclusively reserved for P.S.C

Promotion of existing Employees from the lower scale who meet the prescribed standard.

Direct recruitment from outside candidate, who meet the prescribed standards.

From ITI‟s and RI (Related Instruction) Centre.

Mode of Recruitment

1. Workmen – Vacancies are notified in the Employment Exchanges. A part of the vacancies

are filled up that way and the other, which is earmarked for those who are promoted are

filled through promotions.

2. Executives and Managerial Staff - Vacancies are notified in Employment Exchanges,

newspapers and Professional Employment Exchanges.

3. Trainees and apprentices – Recruitment is done under the provisions of the Apprentice Act

1961.

Recruitment Procedure

Advertisement

Registration &

Screening Interview

Appointment

Manpower

budgets



Man power budgets : Information about the vacancies

Selection Committee : Representatives from vacancies listed department, from the Human

Resource and Administration department and representatives from other departments. The procedure

also includes,

Advertisement for open selection

Registration and screening

Selection, Interview/wait-listing

Candidate are called for interview

Appointment : It include medical check-up, verification report, signing of appointment order after

approved by appointing authority, joining time, joining formalities, deputation.

TRAINING

Training is also essential for members of staff who have been working for the Organization for a long

time. This is especially so in the wake of technological advancements, legal changes and changes in

service delivery. It is important for an Organization to keep up with Industry trends otherwise it faces

the danger of becoming obsolete; especially in the background of increasing competition. In Autokast,

Kerala State Productivity Council (KSPC) and National Institute of Personal Management (NIPM) are

usually providing training to Employees. It helps to improve work culture.

Training Process

Determining competence.

Collect data on available knowledge and skill and prepare a list of all Employees showing details

about the qualification, experience and training undergone.

Issue training identification formats to section heads along with Employee data every year.

Identify training needs of Employees working under them, file the formats and forward the same to

Head, HRD.

Preparation of training calendar indicating course details and nominations.

Arrange training programmes.

Arrange training to make each Employee aware of the relevance and importance of his activities and

how they contribute to the achievement of Company‟s quality objectives.

Arrange specific training for identified personals as recommended by the HOD‟s.

Maintenance of training documents.

Details of all training programmes shall be documented and maintained properly.

Effectiveness of the training shall be evaluated by concerned HOD within a period of six months after

completion of training and report sent to Head, HRD



PERFORMANCE APPRAISAL

Performance appraisal is another important function of Human Resource and Administration

Department. It refers to all the formal procedures used in working Organization to evaluate the

personalities, contributions and potential of group members.

It is done yearly.

Done by Department Heads.

Purposes of Appraisal

• It can serve as a basis for job change/promotion

• It serves as a guide for formulating a suitable training & development programme

• It serves as a feedback to the Employee

• It serves as an important incentive to all the Employees

• It tends to make the Supervisors and Executives more observant of their subordinates

• It helps to determine the rewards and privileges

• It can be helpful in selection and placement of workers

• Performance appraisal records of Employees help the Management to give up sole reliance

upon personal knowledge

Evaluation Process

Based on

1) Assessment of job

- Job knowledge

- Planning, organizing, control and coordinating

- Work output

- Cost consciousness

- Attitude to work

- Knowledge of current trends & developments pertaining to his general fields of

work

2) Professional & managerial abilities

- Ability to inspire, motivate & develop subordinates

- Decision making & judgments

- Initiative

- Communication skill

- Theoretical & analytical ability

- Leadership & team building

- Sense of responsibility

- Dependability

-



3) Personal qualities

- Integrity

- Attitude towards Organization

- Discipline

- Cooperation & team spirit

- Capacity to withstand stress

- Interpersonal relationship

Rating

EXCELLEN

T

OUTSTANDIN

G

GOO

D

SATISFACTO

RY

UNSATISFACTO

RY

PAR

T 1

4 3 2 1 <1

PAR

T 2

12 10 8.5 7 <6

PAR

T 3

5 4 3 2 <2

Table 7

WELFARE ACTIVITIES

Autokast Employee‟s welfare fund is formulated to carry out various welfare activities. The major

supports provided by the fund includes

1. If a member of the welfare fund dies while in service, An amount of Rs 2500 would

be given to his/her dependents for cremation purpose

2. Medical grant of Rs 5000 is provided to the members while in service

3. Voluntary retirement schemes

4. Retirement benefits

5. Death benefit/family benefit schemes

6. SSLC awards for the children of Employees

7. Loan facility for Employees



Recreation club

Autokast recreation club started its activities on 4th of October 1986 with the purpose of enhancing

and encouraging various co-curricular activities of the Employees and their family members.

Encourage Art, Cultural and Sports activities of Employee, assistance may be given by the Company

for the formation of Recreation Club in the corporate office and different units/subsidiary units. The

following facilities may be given, provided it is in conformity with the approved by –law

Accommodation at normal rent one-time –amount determined by the Company subscription –

will be deducted from monthly salary as prepayment of wages act.

Assistance of an internal auditor as and when required

Chairman and one member –will be nominated by the Company to the recreation club

Facilities and programs conducted

Library

SSLC cash award

Sports

Indoor games

Veterans meet

Painting competition

Cultural meet

Health programs

INDUSTRIAL RELATION

The Industrial Relation Policy of Autokast is to introduce and establish systems and procedures which

would ensure a healthy Employee-Management relation so as to achieve maximum productivity,

Employee satisfaction and development.

Participation

The Management of Autokast believes that active association of all Employees in various

aspects of productive operations and welfare activities in a true participative spirit is essential for the

creation of a climate of involvement and commitment which alone can motivate them to contribute

their best for the sustained growth and prosperity of the Organization.

The grievances/demands raised by the recognize Trade Unions which command a minimum

strength of 30% of the total strength of workmen in a unit.

The representatives of all recognized trade unions are given equal status during bilateral discussions.



GRIEVANCE HANDLING

In Autokast there were no much big grievances so far. It is the policy of the Company to settle

grievances at the lowest possible level so that grievances are not prolonged. The object of the

grievance procedure is to provide the workmen of Autokast with an easy and readily accessible

procedure and machinery for the ventilation and prompt redressal of their day to day grievances.

Current Issue

Long Term Agreement (LTA) not performed for so many years. So that Salary revision is not done so

far. Since the Workers in the Company have variable DA, their pay revision is not done due to the non

revisal of LTA.

Scope

Complaints affecting an individual workman in respect of the following matters will constitute

grievances and will be subject to the procedure.

Payment of wages

Regarding wage or payment (other than monthly salary)

Leave

Inter-department transfer

Promotion

Seniority

Work assignment

Working condition

Procedure

The procedure to be followed by an aggrieved work man for presentation of the grievances and

procedure for actual settlement is detailed below

a. Informal Redressal

The aggrieved Employee shall first present his grievance orally to his section head within 24

hours of the instance of such grievance and the section head will inquire into the matter and

give his answer orally within 48 hours .a record of such oral grievance will be maintained by

the section head /Supervisor

b. Formal Redressal

Stage 1:

If the matter is not settled through informal redressed and if the Employee finds necessary

he can obtain from the section head/Supervisor a copy of the grievance form 1. This should

be done within one week of the date on which the facts on the basis of which the complaint

has arisen became known to the worker, except that in the case of promotion in question

will be allowed

The section head or Supervisor or his equivalent officer will make the necessary and inform

the workers in the prescribed form with his remarks in the space provided for the purpose



within one week. If necessary the worker can discuss his case further with the Supervisor in

the light of Supervisor’s remarks.

Stage2:

If the worker is not satisfied with the reply at stage 1, obtained from shop-in –charge or

Supervisor or his equivalent as the case may be, he should obtain a copy of grievance form 2

and enter in the form his reason for re-consideration of his case and submit the form to his

department head, within 3 working days of the receipt of the reply at stage 1 and obtain an

acknowledgement receipt.

The department head will discuss the issue with the Supervisor and with the Employee and

give the reply to the worker with his remarks within 7 days .if not the workman will present

his grievance to the next authority, grievance committee.

Stage 3:

If the worker is not satisfied with the reply from the department head, he may appeal to the

Chairman of the grievance committee in grievance form 3 within 3 days of the receipt of the

reply at stage 2

The grievance committee consists of the following:

1) an officer specifically nominated by the unit head } Chairman

2) Department head or section head } Member

3) One trade union representative } Member

4) Representative of the personal department } Secretary

The above committee will meet at least once in every for on sight, to consider the

grievance if any. Unanimous decision will be communicated within 20 days of receipt of

grievance by the committee. In case of difference, the matter will be immediately referred

to the unit head .cases where the grievance committee feels that the issue involved is of

general importance on which the higher Management alone can take a decision, will be

referred to the chairman & managing director.

The chairman & managing director’s decision on the matter will be final and will be

communicated to the Employees expeditiously, after which the union will be free to take up

the issue as industrial dispute with the legal machinery if deemed

In the above, grievance committee, 3 members will constitute the quorum .the

Management and union can nominate one alternative member each to participate in the

meeting, in the absence of any of their representative.

WAGE SYSTEM

The wage system used in Autokast is the time wage system. Punch card method is used for

time keeping. The net wages and salary distributed comes to about 22.25 lakhs, out of

which about 13.13 lakhs as wages provided for the workmen and the rest 9.11 lakhs is

provided for executives. For overtime work there is no additional benefits, single salary

system is followed for workers.



DISCIPLINARY ACTIONS

If a workman is found guilty any of the following punishments may be awarded to him

1) Censure or warning

2) Withholding of increments, with or without cumulative effect or postponing of any

increment to any future date with cumulative effect or without cumulative effect.

3) Recovery from his pay of the whole or part of any pecuniary loss caused to the

Company by such misconduct, subject to the provision of payment of wages act.

4) Imposition of fine, up to 2% of his salary in a month.

5) Reversion or demotion to a lower grade or post or time scale or to a lower stage in the

same time scale either permanently or for a specified duration.

6) Suspension for a period not exceeding 4 days at a time without pay or salary or on

such reduced pay /salary as maybe ordered.

7) Barring of promotion

8) Discharge from service, compensation or notice

9) Dismissal



DEPARTMENTAL CHART

MARKETING DEPARTMENT

The Marketing Department must act as a guide and lead the Company's other departments in

developing, producing, fulfilling, and servicing products or services for their customers.

Communication is vital. The Marketing Department typically has a better understanding of the market

and customer needs, but should not act independently of product development or customer service.

Marketing should be involved, and there should be a meeting of the minds, whenever discussions are

held regarding new product development or any customer-related function of the Company.

Industrial marketing is a set of activities directed towards facilitating and expediting exchanges,

involving industrial products and customers in industrial markets. Industrial markets consist of

commercial manufacturers, government and other institutions. Industrial marketing is different from

marketing of consumer goods. But the ultimate aim remains the same exchange of goods for the

satisfaction of human needs and wants.

Marketing in Autokast is not much aggressive as in FMCG Industries and Autokast uses

only their website as an advertising medium. Autokast is a jobbing Foundry i.e. they produce

MANAGING DIRECTOR

ASSISTANT MANAGER (HR)

ASSISTANT OFFICER (HR)

SKILLED TIME

OPERATOR

UNSKILLED



items according to customer demands. Hence they don‟t have a fixed product mix. It will vary with

variations in customer demands.

The duty of Marketing Department shrinks to new customer identification and their

evaluation. The new customers will be the firms in the same Industry. When those firms are unable to

meet their production requirements they will turn to other firms in the same Industry. In such

situations the Marketing Department has a crucial role to attract those firms into Autokast.

Marketing Department receives enquiry from the customers. The enquiries including the

drawings, specifications and other details are send to the Engineering department. After receiving the

feasibility study report by the Engineering department, the Marketing Department goes for costing

and pricing activities. The pricing committee consists of representatives from marketing, Engineering

and Finance Department and the managing Director. Quotation is given after the price fixation and

negotiation is made if required by the Marketing Department. On receiving the order from the

customer issues purchase order for Raw Materials and work order to production planning and control

,Engineering ,production and quality control departments. After the production process, the Marketing

Department Despatches the product to the customer.

MARKETING PROCESS

Determination of requirements.

Receipt of enquiry and entering the details in the register.

Preliminary study of the enquiry for adequacy of information and obtaining further details from

customer, if required.

Forwarding the enquiry to Head – Engineering for assessing product requirements, including any

implied, statutory and regular requirements related to the product and for feasibility study as well as

cost/pattern cost estimation.

Review of requirements.

Feasibility study involving chief of Production. The study group shall make sure that,

1) Product requirements are defined

2) Requirements differing from those previously expressed are resolved

3) The Organization has the ability to meet the defined requirements

Return the Feasibility Report and Cost Estimation to Marketing.

Preparation of draft quotation and obtaining approval from MD.

Negotiation with the customer, obtaining Purchase Order/Contract, verification of the same with

proposal after resolving differences if any with the customer.

Issue of Work Order with relevant documents.

Negotiation with the customer and finalization of changes in the contract if any, found necessary

during course of development / regular production.



Getting those amendments formally confirmed by the customer and communicating the same to

concerned departments. In case of repeat order, issue of work order shall be after ascertaining

capability of meeting delivery requirements.

MARKETING STRATEGIES

Making highly sophisticated and modern facilities for inspection and quality control, the firm has no

difficulties in challenges of job. In this field it has dependable supplies of quality Castings and

economic supplies. The Company follows the guidance such as production of high quality Castings,

provided inspection to ensure uniform and rigid quality control, the firm represents automated

breakthrough in Indian Foundry Industry and grading to better international standards.

MARKETING MIX

The primary duty of Marketing Department is to take decision of product mix, price mix, and

promotion mix together known as marketing mix. The Marketing Department of Autokast aims at

improved customer satisfaction through reduced rejection and complaints at customer ends. Thus they

ultimately aim at improvement in business which can be achieved through large export volume as

well as through the domestic customers.

PRODUCT MIX

The important features of industrial goods that should be kept in mind while deciding the

product mix is that they have a derived demand, limited number of buyers, greater scale of

purchase, complex nature and that the buyers are fully aware of the product they buy.

Autokast Ltd is equipped to produce a variety of Castings, from the smallest to the largest.

Since the firm had been incurring losses for some time now, the most important consideration is

the proper product selection, so as to reduce the losses. The main factors taken into consideration

while selecting a product are:

1. Price – Price is the single most important factor considered while selecting a product

2. Quantity and Consistency of Orders – While bulk orders are received, due to economy of

mass production, the costs can be reduced. So for bulk orders, the primary consideration is

the price negotiation. In the case of some products, where customer is well known and has

a well-established business, the Company can expect repeated orders. In such cases too,

prices are often negotiated.

3. Simplicity of the Manufacturing Process – To generalize, the more complex the product

becomes, the more will be the cost of production. So Castings, which has complex

structures like cylinder blocks have higher cast of production, and simpler Castings like

pipe Castings, which are less complex, have less cost of production. Giving due

consideration to the above factor the Company has almost abandoned the production of

thin walled Castings like cylinder blocks for automobiles.



PRICE MIX

Price is the exchange value placed on the product. It is a very important factor, which

affects the profitability of the firm, because it relates directly to the generation of total revenue.

There are various methods of pricing that could be followed. In Autokast the pricing

method followed is the “cost plus pricing” where a fixed percentage of profit is added to the cost of

production to arrive at the price. In this method, the total cost is considered. It consist of

manufacturing cost, administration overheads and selling and distribution overheads. To this a

fixed percentage of profit is added, and thus the price is fixed. Usually provisions are provided for

all losses, like melting losses, Casting losses and rejections.

PLACE MIX

It refers to the distribution channel adopted to place the products before the customer.

Though there are a variety of distribution channels, industrial goods usually have a shorter

distribution channel. In Autokast about 95% of the distribution is done through the direct channels.

Direct channel represent a distribution channel in which the Company directly distributes the

products to the customers. This method can be conveniently followed because the customers are

less in number, and can be given individual attention. The rest 5% is done through agencies for

exports, a Madras agency sources orders for Autokast. Besides that, an agency in Pune, Sividha

enterprises, performs liaison functions in West India. Jabalpur agency is one another agency in

North India for Autokast.

PROMOTION MIX

Promotion is the process of communicating with customers. For marketing purposes, communication

of products and services contributes to the persuasion process to encourage consumers to avail

themselves of whatever offer.Autokast mainly done their promotional activities through various

exhibitions conducted at International Foundry Bangalore.

LOCATING CUSTOMERS

Autokast does not advertise in any medias. Though it has an attractive brochure, designed by the

leading advertising agency ULKA, with the attractive caption, “If you can design it, we can cast it”,

it has never been used for commercial advertising. Since the firm does not advertise, sourcing of

customers is a major duty of the Marketing Department in Autokast. Usually it is done

From Experience – Almost all the managers and executives in Autokast are those who

have had previous experience in foundries. So from their prior experience, they are in a

position to know the people who need particular Castings.

Organizations like EEPC – Engineering Export Promotion Council (EEPC) is a government

Organization promoting our Engineering goods abroad. They conduct trade fairs and

provide brochures, which contain specifications of Industries and the facilities available.

Autokast is included in EEPC’s brochure.

Media – Customers, who are in need of the Castings, usually advertise their enquires,

tenders etc in newspapers.

EXECUTION OF THE CONTRACTS

Mere sourcing of the customers is not enough. In fact, it is the first step from which the lengthy

process of gathering and execution of contracts for production and supply of Castings.

Normally execution of contracts proceeds through different steps.



They are:

Step 1 – Sourcing the Customers

Step 2 – Contacting the Prospective Customers

Step 3 – Receiving Enquiries from Interested Customers

Step 4 – Prospects of Feasibility of Production is Enquired

Step 5 – If found Feasible, Quotations are Sent

Step 6 – Customer Reaction

Step 7 – Receiving Purchase Order

Step 8 – Preparing Internal Work Order

Step 9 – Follow up of the Production

Step 10 – Shipment

Step 11 – Collection of money and further extension orders

COMPLAINT HANDLING

Register all complaints from customers allotting a number with date and time of receipt and

acknowledge within a day.

Study the complaint to see whether the complaint is of technical or commercial nature. If the nature of

complaint is not clear, seek clarification.

Complaints of commercial nature shall be settled within a period of 72 hrs from the receipt of

complaint in consultation with the MD/Financial Chief.

Complaints of technical nature shall be directed to PM with a copy to MRs Office within 24 hrs of

receipt.

Plant Manager shall analysis the nature of complaint and direct it to concerned HOD like,

Complaints of dimensional deviations to Engineering and Inspection.

Due to failure of material property to QC.

Improper inspection procedure, to inspection.

Delay in delivery and damages occurred during transportation handling, packing etc to

Dispatch section (PPC/Marketing).

Department Heads shall analysis the problem and report their observations like

Cause of the non-conformity

Suggested disposition date

Corrective action plan

Preventive action plan, all with a target date

PM shall approve the action plan proposed by concerned HOD and return it to Marketing through

MR‟s Office.



Inform the customer about the proposed disposition and due date.

Interact with the customer to assure that the complaint has been addressed and disposed of to their

satisfaction and close the complaint.

Update the Complaint Log at stages of progress and send a monthly summary to MR for presenting in

the MRMCorrective action Report shall be discussed along with customer complaints in MRM as one

of its main agenda.

Measuring Customer satisfaction

Measure the level of customer satisfaction by getting AKL questionnaire filled by the customer

periodically and calculating an index of customer satisfaction.

An alternate method to calculate customer satisfaction, taking mainly two aspects like customer

complaints and customer returns shall be

For each percentage of customer complaints (A) one negative point

For each percentage of customer rejection quantity (B) two negative point

Then,Customer satisfaction Index = 100 - (A+B)

To work out this, with the presently set target of customer complaint and customer returns.

Number of complaints, 7. Then 7*1=7 negative points (A)

Customer return per cent, 4% Then 4*2=8 negative points (B)

Adding A+B its is 15 negative points

Then customer satisfaction index minimum=100 – (A – B) = 100 – 15 = 85

MARKET SHARE OF MAJOR PRODUCTS

Figure 4

20.31

18.02

9.49

9.46 7.06

4.94

5.48

5.82

2.85

7.67

7.18

Shares

Macawber Beekay

Kakati

Fouress

Kamco;Athani

Triveni Gears

L & T LTM

Kamco;klsy

Koso



MAJOR CUSTOMERS

Sl No CUSTOMER SECTOR

1 Kamco Power tiller

2 Macawbwer bekay Ash handling

3 United Conveyor Corporation Ash handling

4 Pioneer Wincon Wind mill

5 Reliance Energy Wind mill

6 Fourees Engg Valve

7 Flowserve Valve

8 Kakati Karshak Vacuum pump

9 L&T Units Heavy Engineering

10 Ace Designers Machine tool

11 Triveni Engineering Heavy duty gear box

12 Shriram EPC Wind mill

Table 8



EXPORTS

Autokast has been exporting its products to America and Saudi Arabia, since 1989. Now

approximately 10% of the total annual production is exported. The Castings, which are exported,

are all GI Castings.

Foreign customers are:

1. National Pump Company, USA.

2. J-line Pump Company, USA.

3. Saudi National Pump Company, Riyadh.

The most important benefits of exports are that the Company gets a higher price for its products

when exported and that the payments are made in cash.

MAJOR COMPETITORS

The major competitors of Autokast Limited are the following:

1. LMW Foundry, Coimbatore

2. Simplex Castings, Bhilai

3. Southern alloy foundries, Chennai

PRODUCTION PLANNING & CONTROL DEPARTMENT

Production planning is the process of planning production in advance of operations, routing

the materials and controlling the whole production accounting to the plans specified and scheduled.

This department takes care of feeding and supporting materials such as sand, coal dust etc. to the

production.

The PPC department plans the product realization process. They Prepare the production and despatch

schedule, material planning ,production follow-up, despatch and improvements. The department also

monitors the stage wise progress of the process and it is recorded.

SCOPE

Planning of product realization, Control of production, Control of nonconforming products, Analysis

of data.

BRIEF DESCRIPTION OF PROCESS

Preparation of production and despatch schedule - Material planning - Production follow up -

Despatch - Improvements

PROCESS PLANNING

Based on work order, collected all input documents from Marketing Department and check the input

for adequacy, if inadequate, call for required data.

Prepare pattern method drawings and arrange to manufacture.



Customer supplied patterns are to be inspected and if any modification is required, arrange for the

same.

If patterns are to be procured from vendors, forward four sets of pattern drawing to Purchase

Department to arrange procurement.

Major raw material requirements are assessed and necessary indents are raised for procurement

Prepare a draft quality plan and circulate it to Production, Quality Control and Inspection

Departments.

Open up a product file which shall contain all input documents together with method drawing and

copy of quality plan.

Based on quality plan, make arrangements for necessary inspection and testing activities.

PRODUCTION PLANNING

Based on work order from Marketing Department, monthly schedule for pouring, Fettling and related

activities shall be prepared.

Copy of this planning sheet shall be distributed to all concerned departments, under intimation to MD

& PM.

Despatch schedule for the month shall be prepared and communicated to concerned departments.

Progress of these activities shall be closely monitored and status reported to MD/PM via a daily

report. This report shall contain production figure for the previous day, and cumulative till date, of

pouring, Fettling machine and that of despatch and rejection.

Requirements of major Raw Materials for Engineering and Pattern shop shall be planned and

purchase requisition raised accordingly.

Product stock position shall be maintained up to data and monthly stock position prepared and

submitted to MD.

Physical verification on inventory of Castings shall be done annually and report submitted to MD.

RECORDS MAINTAINED

Pouring plan

Production, Despatch consolidated report

Fettling plan

Despatch Monthly

Despatch plan

Inventory as on date

Daily production report

Physical stock of Castings



PROCESS

ENGINEERING AND PATTERN SHOP DEPARTMENT

Consist of Engineering and Pattern shop Departments. The Engineering department designs the

product and the pattern shop makes the pattern for that product. In Engineering and Pattern Shop

Department of Autokast, pattern of the object to be casted is constructed according to the sample

provided by the customer. The sample may either be a drawing or the one in the form of what

customer needs.

OBJECTIVES

Time taken for development of Casting should be within 30 days

Manufacturing/servicing of pattern equipment has to be set as per time

90% of timely submission of feasibility report

Number of attempts to develop a Casting shall be reduced to maximum of 3 times

PROCESS

ENGINEERING

Engineering department receives the work order from the Marketing Department with

customer drawings and all necessary documents. The department checks some factors with regard to

the order such as

Weight

Order quantity

Materials required



Complication

Other technical details

And submit the feasibility report back to the Marketing Department. After receiving the real

work order they design the pattern, prepare and issue the process drawing to the manufacturing

department. The departments also issue process cards and also do the follow up of sample

development and maintain the sample development register.

PATTERN SHOP

Pattern shop is responsible for the pattern inspection, rectification/modification and

periodical checking of patterns. A Pattern is a mould forming tool in the hands of Foundry men. A

Pattern is a mould or the replica of the object to be cast. A Pattern is required even if one object has

to be cast. A Pattern may be defined as a model or form around which sand is packed to give rise to a

cavity known as mould cavity in which when molten metal is poured, the result is the Cast Object.

Patterns are normally made up of wood, thermo coal etc. Patterns either customer supplied or

manufactured in house or by sub-contractors are to be inspected with reference to corresponding

drawings and inspection reports are prepared. In case of any rework the same shall be carried out

and offered for inspection. Pattern is released for production only after inspection clearance.

Selection of Pattern Materials

The following factors assist in selecting proper pattern material

1) The number of Castings to be produced. Metal Patterns are preferred when the production

quantity is large.

2) The desired dimensional accuracy and surface finish required for the Castings.

3) Nature of moulding process.

4) Method of moulding.

5) Shape, complexity and size of the Casting.

6) Casting design parameters and the complexity of the cast part.

7) Type of moulding materials.

8) The high probability of changing the Casting and hence the pattern in near future. An

inexpensive pattern material under such conditions.

9) The chances of repeat orders.

Types of Patterns

For selecting a particular kind of pattern for making a Casting, one may consider the following

points:

Quantity of Castings to be produced

The size and the complexity of the shape of the Casting to be produced

Type of moulding method to be used

Problems associated with the moulding operation such as with-drawing the pattern from the

mould etc

Other difficulties resulting from poor Casting design or pattern design.



In Autokast mainly two types of Patterns are used:-

Match Plate Pattern – It consists of a match plate, on either side of which each half of a number of

split patterns is fastened.

Split Pattern – Patterns of intricate Castings cannot be made in made in one piece because of the

inherent difficulties associated with the moulding operations. Such patterns are then made as Split

Patterns.

Pattern Making Tools

1) Measuring, Making and Layout Tools

Steel rule

Caliper

Marking gauge

Trisquare

Shrinkage rule

Divider

2) Tools for Clamping Purpose

Hand vice

C – clamp

Bar clamp

Hand screw

3) Sawing Tools

Coping saw

Compass saw

Bow saw

Panel saw

4) Drilling and Boring Tools

Hand drill

Gimlet

Auger bit

Centre bit

5) Wood Planning Tools

Jack plane

Block plane

Circular plane

Universal plane

Smooth plane

Pattern Making Machines

Wood Turning Lathe : Make cylindrical patterns

Circular Saw : Used for ripping, cross cutting, grooving

Band saw : Used to obtain irregular shapes

Scroll Saw : Make intricate & irregular cuts on small jobs

Drill Press : For drilling and boring the holes



Pattern Colors

Patterns are imparted certain colors and shades

Black – Core surfaces to be left unmachined

Red – Cast surfaces to be machined

Red strips on yellow base – Loose pieces and seatings

Yellow – Core print seats

Black strips on a yellow back ground – Stop offs or supports

No color – Parting surfaces

Yellow stripes on black back ground – Core prints for machined openings.

Records Maintained

Register:-

Original drawing details

AKL drawing details

Drawing issue

AKL drawing issue

Process Sheet details

Pattern details

Pattern Shop load details

Pattern Shop log

Pattern inspection clearance

Pattern and Casting Inspection

Formats:-

Process sheets

Pattern movement card

PRODUCTION DEPARTMENT

Production denotes the conversion of Raw Materials to semi-finished or finished products with the

help of certain production processes. The main aim of any production system is to produce

economically the goods and services required by the customer.

Autokast Ltd is a Foundry unit producing Iron Castings for a variety of Industries. The Iron Castings

are made of Cast Iron. Cast Iron is a general term that describes Iron, carbon, silicon alloys which are

produced by pouring the molten metal into sand / metal moulds. Cast Iron is brittle and grey in colour.

The carbon content in Cast Iron is more than that in Steel which makes it less malleable. By varying

the silicon and carbon content at alloy, several types of core Iron can be produced each with different

properties and uses.



PRODUCTS OF AUTOKAST

The Company‟s products at present cater to the needs of following segments of Indian and

overseas Industries

1. Automotive

2. Tractor

3. Butterfly valve assembly

4. Agriculture

5. Wind mill energy and

6. General Engineering Industries

DEPARTMENTS

The manufacturing department of Autokast limited is divided into four divisions .They are,

1. Melting

2. Conventional line

3. High pressure line

4. Fettling

1. MELTING

Before pouring into the mould, the metal to be cast has to be in the molten or liquid state. The raw

material melting process is done in the melting department. For the preparation of liquid metal the

Raw Materials like CRCA(cold rolled continuously annealed)scrap and HMI(heavy melting )scrap are

brought to the Induction Furnace. The scrap is charged to the furnace with the help of electro magnet

hooked in EOT cranes, the furnace can withstand a capacity of 6T with holding attachment and with a

change over control system. Furnace is heated to about 1450 degree Celsius(including the loss due to

transportation of liquid metal from the furnace to the pouring moulds).the slag is skimmed off from

the molten metal by adding coagulant. The liquid metal is tested for its grades in comparison with the

standards (eg: different grades of IS 210 for Cast Iron). The samples are tested at each stage of

melting. The extra/excess chemicals components are added/removed to achieve the specification.

Temperature of the liquid metal is adjusted by the electrical settings of the furnace and measured with

measuring instrument(pyrometer)and is recorded in the log sheet. Finally the molten metal is tapped

into clean pre heated Laddle and required quantity of inoculants is added to the stream for the purpose

of homogeneous structure of metal Castings. Liquid metal is carried in this Laddle and is poured into

the previously prepared moulds for the testing of final chemistry Laddle sample is taken.

The other melting components are Foundry returns, pig Iron, coke(both petroleum

and shell),Ferro silicon alloys, ferromanganese, nickel ,copper, aluminum, molybdenum,

ferrotitanium etc.



Records Maintained

Register:-

Lining details

Laddle details

Formats:-

Log sheet

Charts

Metallurgical control for HP Line

Metallurgical control for Conventional Line

Alloy addition

2. CONVENTIONAL LINE

This is the semi-automated division of the manufacturing department. The main raw material used for

mould making is silica sand. This silica sand is treated with sodium silicate, dried and mixed with

flour dust and is filled into the pattern box. Carbon dioxide gas is passed through the sand for

strengthening (CO2 process).then the core assembly is fixed. The moulds are painted with spirited

paint for further finish. The metal pouring path is fixed and the liquid metal from the Laddle is poured

through this.

After a proper setting time the product is separated from the moulds and is dispatched from the

section for finishing.

Records Maintained

Register:-

Mould shop planning

Core shop planning

Closing

Daily production

Consumption of materials

Mould box maintenance

Knock Out

Formats:-


Pattern inspection

Knock Out and Decoring

Check points for closing

3. HIGH PRESSURE LINE

High pressure line is fully automated. Green sand is the material used for high pressure molding at

first the molding machine is inspected and the good working condition is ensured. The molding

machine is operated at 6 to 7 kg/cm2.at first the sand mix(silica sand mixed with Bentonite and

Mentacoal).is made available to the machine in the pattern box. The sand mix is thoroughly rammed



in the box to the required compactness by applying pressure. The core is placed for cavity formation.

The metal is poured by the Laddle facility.

Casting identification marks such as Sl No., month and year is punched in the specified area

marked in the pattern and details recorded in the register. After a dwelling time of four to five hours

the moulds are knocked out. The return sand shall be collected in an overhead hopper by means of

conveyor belt and bucket elevator. Casting is sent to the decoding shop for further process. The

molding box are cleaned, inspected and returned to mould box yard. All the mould boxes shall be

identified by its size and serial number.

Records Maintained

Register:-

Sand property

Production details

Core production

Core shop consumption

Stock position of cores

Pouring reports

Mould box details

Formats:-

Daily production planning


Daily core production report

4. FETTLING

Fettling is the process by which unwanted parts of the Casting are cut off, cleaned and finished .this

includes removal of gates ,risers from Casting etc .The Castings are send to the shot blasting machine

from which Iron shots are blasted at high velocity and proper finishing is established.

Records Maintained

Register:-

Castings for Fettling

Castings to sub contracts

Painting details

Rejection details

Formats:-

Production report

Finished product return no



PRODUCTION PROCESS

Metal

5)Melting

5)Handlin

g molten

metal

2)Sand

Additives

1)Pattern

Making

3)Core

making

and

Sand

2)Sand

mixing and

preparation

4)Moulding

4)Mould

assembling

and handling 6)Pouring

7)Shaking out

8)Fettling & Finishing

9)Heat Treatment

10)Inspection & Testing



STAGE 1 – MOULDING SAND

A mould material is one, out of which the mould is made. A mould material should be such that

the mould cavity retains its shape till the molten metal has solidified. Sand is the principal

moulding material in the Foundry Shop where it is used for all types of Castings. The most

important characteristics of sand are its Refractory nature, Chemical Resistivity, high degree of

Permeability and Flexibility. These properties vary from sand to sand and only those sands

characterized by the foregoing features are considered for moulding work.

In Autokast Silica sand is mainly used for moulding.

Sources of Silica sand :-

- River beds

- Sea

- Lakes

- Desert

Properties of Moulding Sands :-

Flow ability

Green Strength

Dry Strength

Hot Strength

Permeability

Refractoriness

Adhesiveness

Collapsibility

Fineness

Bench Life

Coefficient of Expansion

Durability

MATERIALS USED AS ADDITIVES TO SAND

Two types of additives used with sands in AKL are:

1. Reducing agents: These are used to improve surface finish of the Castings. Coal dust and

pitch are the most common reducing agents. Coal dust suppresses the formation of silicates

or Iron oxides due to the reaction of metal and sand and also reduces metal penetration.

2. Binders: The primary purpose of binders is to influence the bonding properties of sand.

Dextrine is the common organic type of green binder used in AKL. Dextrine increases air

setting and collapsibility. It prevents sand from drying rapidly.



MOULDING SAND PREPARATION

Even the best selected sands and binders would not produce good Castings, until they are

efficiently and properly mixed and prepared. The quality of moulding sand depends upon the

manner in which it is prepared. An operation connected with sand preparation is known as Sand

Tempering which is essentially an operation by which adequate amount of moisture is added to

moulding sand to make it workable. Sand preparation means mixing the moulding sand

ingredients, such as sand, binder, moisture and other additives. Mixing is carried in Autokast by

mechanical mixers called Muller. A Muller kneads, shears, slices through and stirs the sand by

means of revolving wheels or rollers. Sand conditioning consists of preparing the mould sand so

that it becomes suitable for moulding process.

STAGE 2 – CORE SAND AND CORE MAKING

A core may be defined as any projection into the mould and made up of core sand. A core forms

internal or external surfaces of a Casting. Core sand is a suitable sand mixture employed for

making cores. Cores are made separately, are baked and are suitably placed and positioned in the

mould cavity. Core may be defined as that portion of the mould, which forms the hollow interior of

the Casting or a hole through the Casting. Cores must have sufficient hardness, strength in both dry

and green states, permeability, collapsibility, high temperature resistance and should produce only

minimum amount of gas when in contact with molten metal.

Properties of Core Sand:-

Adequate Green Strength

High Dry Strength

Core hardness

Adequate Permeability

High Refractoriness

High Collapsibility

Smoothness

Good Friability

Bench Life

Able to resist the effects of molten metal

Generate minimum amount of gases during the pouring of the Casting.

STEPS INVOLVED IN CORE MAKING

1. Core box is usually placed on work-bench, it is filled with already mixed and prepared

core sand, is rammed by hand and the extra sand is removed from the core box.

2. Weak cores may be reinforced with Steel wires to strengthen them.

3. Core box is inverted over the core plate and this transfers the core from the core box to

core plate which is then baked in the oven.



STAGE 3 - MELTING

Before pouring into the mould, the metal to be cast has to be in the molten or liquid state. A

furnace is used to melt the metal. A furnace contains a high temperature zone or region surrounded

by a refractory wall structure which withstands high temperature and being insulating minimizes

heat losses to the surroundings. Metal to be remelted is placed in the high temperature region of the

furnace. Scrap Iron, which is the most important raw material, is melted in furnace into molten

Iron. In Autokast Induction Furnace is used to melt metals. Pyrometer is used to calculate the

temperature.

STAGE 4 – POURING

It is the process by which the molten metal is poured into the pre-prepared sand moulds. Pouring

is a complicated process, in which many things are to be noted. The metal should be poured at

the right temperature. If it is too hot it will produce a technical defect called blowholes in

Castings, and if it is too cold due to premature solidification, proper filling will not be attained.

Pouring temperature is very important and should be specified with the Casting method, the

tapping temperature and mould sequences are determined accordingly. Higher temperature is

required for Castings with high surface area to volume ratio and short freezing time, in order to

fill the mould satisfactorily. Lower pouring temperatures are preferred where heavy, compact

Castings are to be produced.

POURING EQUIPMENT

Pouring Laddles : Laddles are used to carry molten metal from the furnace to the

Moulding boxes.

Laddle handle

Trolley

Rails

Cranes

Hand wheels

Tilting levers

STAGE 5 – KNOCK OUT (SHAKE OUT) AND DECORING

After the molten metal has been poured into the mould, it is permitted to cool and solidify.

When the Casting has solidified, it is removed from the moulding box. This operation is called

Knock Out.

A Casting may be removed or separated from the sand in the following ways:-

Dump the mould assembly upside down on the bench or ground. It will disintegrate the

sand of the moulding box.

Break the sand around the Casting by striking against the sand with the metal rod or even

the back of a rammer.

Castings can be separated from sand by mechanical shake out also.



STAGE 6 – FETTLING

Fettling is the name given to cover all those operations which help giving the Casting a good

appearance after the same has been shaken out of the sand mould. Fettling is the process by which

unwanted parts of the Castings are cut off, cleaned and finished.

Fettling includes:

Removal of cores from the Casting

Removal of adhering sand and oxide scale from the Casting surface

Removal of gates, risers, runners etc from the Casting

Removal of fins and other unwanted projections from the Castings

STAGE 7 – SHOT BLASTING

Even after Fettling, there may be minute sand particles attached to the Castings. These are

removed by shot blasting. Shot blasting is the process by which Cast Iron shots are blown to the

surface of the Castings to remove the adhering sand.

QUALITY CONTROL & INSPECTION DEPARTMENT

The concept of high quality in Castings is defined as the absence of significant defects in each

pieces. The fact that the properties of metals have been subject to scatter has been with Metallurgists

for so long that the problem is hardly noticed. In fact a number of quality assurance systems have

developed to allow for the taking of a second sample test bar if the first fails unexpectedly.

Quality is the essence of modern economic process. The word quality refers to the

degree of excellence of a product. Modern age is the Era of quality. The competition today

is cut-throat and every producer tries to improve the quality of products to lure the

customers to him. For improving quality, Quality Control is a must. Quality control is the

systematic control of those variables, which affect the excellence of the ultimate product.

In Autokast there is a full-fledged quality control and inspection department.

LAB

In Autokast 4 Labs are functioning.

1. Sand Lab

2. Mechanical Lab

3. Chemical Lab

4. Spectro Lab

The lab is equipped for the detection and measurement of the elements like Silicon,

Manganese, Phosphorus, Sulphur etc. It has various equipment for testing the properties

and characteristics of moulding sand.



SAND LAB

The need for systematic evaluation of the working qualities of moulding sands has led to tha

development of a wide range of sand control tests. Sand control tests are performed on the

sand which has been prepared and is ready to be transferred to the moulding section. Sand

tests indicate the moulding sand performance and help the Foundry men in controlling the

moulding sand properties through the control of composition.

Various sand control tests conducted in Autokast are:

Infra-Red Speedy Moisture Test

This test is used for checking the moisture content is sands. Water is one of the most

important factors which controls properties of moulding sands. Low moisture content in

the moulding sands does not develop strength properties. High moisture content decreases

permeability and adds to other problems associated with moulding operations. The

moisture is determined by an instrument known as “Infra-Red Moisture Tester”. Specimen

is weighed and placed on the apparatus. The moisture percentage reading will be zero.

Then it is allowed to heat up to a temperature of 110-degree Celsius. Moisture percentage

reading is again taken. This gives the moisture content in the specimen.

Sand Strength Machine

The strength of a Foundry moulding sand is determined by compression, Tensile and Shear

tests. The most commonly used test is that of compression strength. Strength testers are

used to estimate the compressive, tensile and shear strengths of sand. The sand sample as

prepared by a standard sand rammer is placed in a holder and the same tester may be used

for testing shear and tensile strength.

Permeability Test

Permeability is that property of moulding sand which permits the escape of steam and

other gases generated in the mould during hot metal pouring. Permeability is tested with an

apparatus known as a „Permeability Meter‟. This has an arrangement for allowing a

controlled amount of air to pass through a sand sample. Permeability is expressed in terms

of the permeability number, which is defined as the volume of air that will pass per minute

through a sand sample of 1sq. cm in cross section and 1cm high at a pressure of 1g/sq. cm.

Thus permeability number = V.H/A.P.T, where

V is the volume of air in cc,

H, the height of sample in cm,

A the cross sectional area of sample in sq. cm and

P, the pressure of air in g/sq. cm,

T, the time in minutes.



Sieve Analysis

This test is used to classify Silica sand according to different grain size. The apparatus

required for determining grain fineness consists of a number of standard sieves mounted

one above the other, on a power driven shaker. The shaker vibrates the sieves and the sand

placed on the top sieve gets screened and collects on different sieves depending upon the

various of grains present in the moulding sand. There are eleven standard sieves mounted

one above the other and under the bottom most sieve is placed on a pan. The top sieve is

the coarsest and the bottom most sieve is the finest of all the sieves. The grain size of sand

is expressed by a number called „grain fineness number‟. A given grain fineness number

corresponds to a standard sieve of 280mm diameter which has the identical number of

meshes in it.

Sand Rammer

Since permeability is the property of rammed sand, a standard sized sand specimen is first

rammed by a Specimen Rammer. A standard specimen is made with Split Specimen Tube.

Clay Content Test

In the clay content test, 50gms of sand is mixed with 425cc of water and 25cc of standard

NaOH solution in a jar, which is then covered and sealed. The clay content testing

apparatus has the provision for tightly holding the jar in a frame and rotating the whole

frame at about 60rpm. After an hour of rotation the jar is removed and unsealed and the

sand adhering to the cover and sides is washed into the container. The jar is then filled

with water to a predetermined mark. After the sand has settled water is removed from the

container. Clay is dissolved in water and gets removed along with the same. To the sand

left in the container, more water is added up to the mark and is once again siphoned off

after allowing the sand to settle for 10 minutes. The process is repeated till water over the

settled sand is clean and then the settled sand is dried. The clay content can be determined

from the difference in weights of the initial and final samples.

MECHANICAL LAB

Representative test bars poured along with Casting identified by heat numbers punched on

the strips imbedded in it shall be tested for its mechanical properties. The pouring of the test bars

shall be witnessed by shift in charge of laboratory.

Two bars out of the total poured shall be machined to the specified dimensions and one

shall be tested in the lab of Autokast. In case the test values do not conform to the specification,

two more bars shall be tested and if only both of these bars conform, the Casting represented by

this test shall be considered as quality passed.

Brinnel Hardness Tester : For checking the hardness of the Casting

Bend Test : For checking welding quality

Impact Testing Machine

Universal Testing Machine



Non Destructive Tests

- Ultra Sonic Test

- Magnetic Particle Test

- Die Penetrant Test

- Radiographic Test

CHEMICAL LAB

WET Analysis is done in this lab. It is the Chemical analysis of Iron and Steel by

conventional method. In this test, the content analysis of Carbon, Manganese, Silicon,

Phosphorous, Sulphur, Chromium, Nickel etc. are conducted.

SPECTRO LAB

Analysis of chemical combination of metals by Spectrometer is based on the principle of

direct reading atomic emission. Atoms of each element can be energized to emit radiant energy

(light) and every element has its own characteristic wavelength. The emitted light is diffracted over

a high resolution grating or prism and made fall on an array of photo multiplier tubes. The PMTs

convert the light energy into electrical energy, which is proportional to the concentration of the

element present in the specimen. The computer converts the measured energy into concentration

mode, which is displayed on the monitor as percentage of elements.

Representative specimens for evaluating the microstructure of the Casting made shall be

drawn from every heat of SG Iron and of Grey Iron as per contractual requirement. Type and size

of graphite flakes and the matrix structure shall be examined and recorded for Grey Iron

specimens. Percentages nodularity, count of nodule per standard area and matrix structure shall be

examined and recorded for SG Iron specimens.

QUALITY CONTROL

Depending on the requirement of testing & measuring instruments indents for procurement

shall be raised by concerned departments under intimation to QC dept. On arrival of the instrument, it

shall be inspected, verified for calibration, calibrate if necessary, label with identification number &

due date for next calibration where ever required, and clear it for issue to user dept.

A master list of all inspection, measuring and test equipment shall be maintained and all

these equipment‟s shall be identified by a code/serial number.

The frequency of calibration required for the instrument shall be determined and a schedule

prepared. When calibration can be done in house, ensure that calibration is done as per schedule

against masters having traceability to national standards and maintain records for such calibration.

When outside agencies are engaged for calibration, ensure that such agencies do the calibration

against masters having traceability to national/ international standards. Certificates of such calibration

shall be maintained as record. Ensure that users are trained to handle the instrument. Store them in

such a way that accuracy and fitness for use are maintained. If and when Inspection, measuring and

test equipments are found out of calibration, the immediate previous test records shall be analyzed,

verified, documented and necessary corrective action shall be initiated. If necessary the product will

be recalled.



INSPECTION

The job of inspection department is to interpret the specification properly, inspect whether or not

the job confirms to those specification and convey the information obtained to the concerned

department for necessary correction process. In AKL, a four stage inspection procedure is followed

1) Black Casting Inspection

- Inspecting Castings without removing sand

- If defects found, then segregation

2) After Shot Blasting

- Non conformity Salvaging

- Non Conformity Rejection

3) In Process Inspection

- Direct to NC

4) After Finishing

- With paint → Direct to NC

– Without paint → Direct to NC

Types of Inspection

1) Visual Inspection

2) Dimensional Inspection

– As per Customer drawing

In Dimensional Inspection the deviations noticed will be send to the concerned Product Development

Team

Dimensional Inspection done to :

- Sample Inspection

- Random Inspection

Clearance Report will be send to the Production, Marketing, Lab, PPC Departments

Rejection Report will be send to the Production, Quality Control, PPC Departments

Records Maintained

Register:-

Details of Measuring equipments

Manufacturing and NC details

Casting Inspection details

Subcontract Inspection – Fettling

Final Inspection after machining

Despatch details

Customer details

Returnable gate pass



Formats:-

Shot blasting Inspection Report

Casting Dimensional Inspection Report

Defect Analysis Report

Daily NC Report

Check list for inspection clearance

Machining inspection report

Inspection clearance report for Despatch

Check list for export clearance

MECHANICAL MAINTENANCE DAPARTMENT

Autokast uses several machines for its operation. This Department helps to maintain machines and

reduce the downtime of equipment‟s. Provide fast maintenance within less time. This Department is

working on all days including Sundays

All machinery and equipment being used for production and inspection purpose shall be properly

maintained. This procedure covers Breakdown Maintenance & Preventive Maintenance

TYPES OF MAINTENANCE

Break down Maintenance – Company mainly follow this type. There is a Breakdown Form given to

all concerned Departments.

Preventive Maintenance – It‟s usually done on all Sundays.

Shut down Maintenance – So far this type of maintenance is not performed in Autokast

Breakdown Maintenance

On receiving breakdown memos from concerned departments, enter the details in the Log Book.

Study the work and assign it to technicians and enter in Log.

Attend to the required repair work using work instructions as guidelines. The status of the work shall

be entered in the Log for the next shift to follow up and complete the work.

Upon completion of the work, get it inspected by the respective Production shift in charge and get his

signature on the memo.

Details of the work done, spares used if any, shall be entered in the Log Book and major ones in the

Machine History Register.

Details of monthly breakdown report shall be complied.

The report after review shall be sent to the chief of works for review.



Preventive Maintenance

Annual schedule for preventive maintenance of critical equipments shall be prepared before starting

of the financial year.

Updating of the schedule shall be done every month and distributed to Production Departments.

For test equipments, maintenance schedule shall be prepared and communicated to Subcontract

Department for carrying out the job.

Carry out the Preventive Maintenance Schedule Register shall be updated.

Next due date of Preventive Maintenance schedule shall be displayed on the machine.

Routine maintenance Lining of Induction Furnaces.

900sq. meters of covered floor area mechanical workshop having equipment’s like

BTDEM compressor - 8kg/sq. .cm working pressure

Heavy duty lath

Heavy duty radial drilling machine

Power hacksaw machine and related equipment’s.

ELECTRICAL MAINTENANCE DEPARTMENT

Autokast uses large electric power for its operations. Maintain electrical equipment‟s. The

Company has a KSEB 110 KV Sub-Station in itself. Electrical department is responsible

administrative functions of the departments which includes liaison work with KSEB, electrical

inspection and implementation of various electrical project works. Other responsibilities of the

department are planning, scheduling and execution of the day to day maintenance activities .this

includes both preventive and breakdown maintenance works, spare parts Management, co-ordination

with purchase and user departments, maintaining records, labour Management and cost control in

maintenance works. The objective of the department is to minimize the downtime and keep all

machineries in good condition for maximum utilization of equipment‟s to achieve the maximum

quality production, as per the quality policy of Autokast insist.

WORKING

Using 20 MVA Transformer 110 KV is step down to 11 KV. With the help of 1 MVA

transformer 11 KV is again step down to 440 V.

For HP Line there is separate Sub-Station.

Company has total 6 transformers

1) 20 MVA

2) 1 MVA TR-1 (off load)

3) 1 MVA TR-2 (off load)

4) 1 MVA TR-3 (HP Line separate)

5) Main Frequency Induction Furnace 1700 KVA (on load)

6) Medium Frequency 2300 KVA



EQUIPMENTS USED

1) EOT Crane (12)

Electric Overhead Trolley

2) Induction Furnace (4)

6 Ton capacity (2)

3 Ton

5 Ton

3) Shot Blasting Machine (3)

4) Core Shooter (2)

5) Swing Frame Grinder (above 15)

6) Hand Moulding Machine

7) HP Line

8) Sand dryer

ELECTRICITY CHARGES

1 Unit : 4.5 Rs – Peak Hours (6PM to 10 PM)

: 2.9 Rs – Normal Hours (6AM to 6 PM)

: 2.46 Rs – Off Peak Hours (10PM to 6AM)

Last Month‟s Consumption (April 2012)

Bills paid monthly

Rs.2658000/- (2160 Units + 2070 Units + 2000 Units)

MATERIALS DEPARTMENT

Materials department concerned with purchasing of Raw Materials needed for the production process.

Every manufacturing Organization will have a purchase department and performs a variety of

functions starting from purchase requisition to the purchase of Raw Materials.

Purchase and stores together forms the materials section of materials and subcontract department.



PURCHASE DEPARTMENT

Obtain purchase indents of all Raw Materials, consumable and spares from user departments.

Indents for office equipment‟s, stationery and printing items shall be raised by Administration

department. All indents shall be duly approved by Plant Manager. Details shall be entered in a

register. Verification of indents for completion in respect of specifications and other details and

ambiguities if any, are clarified.

After selection of the vendor, purchase section prepare a purchase proposal and put up to the

tender committee. The committee consists of representatives from finance and purchase departments

and plant manager and MD .After the approval by the tender committee, purchase order is prepared

and registered. Purchase order up to a value of Rs 10 lakh is reviewed and released. The reviewing

authority of purchase order ensures all the relevant data in the purchase order. Finally the original

copy of the purchase is sent to the supplier.

PROCESS

PARAMETERS FOR SELECTING A SUPPLIER

Specifications of material

Price negotiation

Delivery time



LOCATING SUPPLIERS

Through Mail, Phone, Advertisements

EXISTING SUPPLIERS

These are the some of the existing registered suppliers

1) Scrap

- Calicut Steel

- Kerala Metal, Thrissur

- Ambal Traders, Coimbatore

- Vijaya Traders, Ottappalam

2) Sodium silicate

- Kiran Global Chemicals Ltd

- Minar Chemicals

3) CO2 Gas

- Paulos & Mathen, Ernakulam

- Akshaya Gas, Ernakulam

4) Yellow Dextrine

- Quality Traders

STORES DEPARTMENT

Store is a part of Materials Department. It‟s main function is to store items. Raw Materials, other

items related to production and spares etc. shall be labelled using tags after clearance from

Inspection Department. The tag shall contain material code number, material description, unit of

account, part number if any GRV reference etc. Storage procedure for raw material depends on the

volume size and quantity. Spare parts shall be stored equipment wise. Quality of stored material

shall be assessed annually to detect any deterioration in quality. Black Castings after first stage

inspection clearance, handed over to Feting dept.by PPC, shall be stacked item wise near the shot

blasting machine. After shot blasting, inspection cleared Casting shall be stacked at designated

area. Castings marked for salvage shall be shifted to area demarked for salvaging operations. After

salvaging operations, these Castings shall be offered for inspection and shall be shifted to

designated areas as per the status. Fettled Castings after inspection clearance, ready for Despatch

shall be shifted to designated area and preserved there carefully till Despatch. Castings meant for

painting and machinery operations shall be shifted to respective areas. After painting Castings

shall be preserved carefully at the areas demarked for such Castings. Machined Castings, cleared by

inspection, shall be subjected to painting /greasing/rust preventive coating as per requirement and

stacked with proper coverings to protect from dust and rust.



FUNCTIONS

Reception of materials

House Keeping

Issue/Disposal

Main thing that is concerned with this department is quantity

PROCESS

1. When a material is received, it is weighed and the receipt is entered in the day book.

2. Next step is to prepare GRV (goods received note)

3. The material is send to the quality control department for checking and inspection

4. If the material satisfies the required specifications and quality standards, it is put to stock and

otherwise it is rejected.

5. Finally prepare material wise bin cards (stock cards)

(At first the Company prepared the bin cards manually, but, now it is done by the software- Tally

ERP 9)

Receipt in and Dispatch from stores is controlled through documented system.

Stock Statement is given to PPC

Indent stores Issue Note (Departments have to give to stores for receiving

materials)

Stores Return Note (For excess materials from the concerned departments)



Materials Stored

M S Scraps

Ferro Alloys

Additives & Fluxes

Refractories & Ramming Masses

Fuels & Gases

Abrasives‟ & Grinding Wheels

Electrical Items

Loose Tools

Lab Chemicals & Equipments

Production Consumables

Machinery Spares

Instruments & Gauges

Welding & Brazing Materials

Fasteners & Hardware Items

Bearings

Pulleys & V Belts

Chains, Sprokets, Wire Ropes & Slings

Paints & Pipe Fittings

Miscellaneous Stores

Capitalized Stores

Protective & Safety Appliances

Stationary Items

Cement & Structural Steels

Pattern & Pattern Equipments

Spares for HP Lines

SUBCONTRACT DEPARTMENT

In Autokast the in house facility for Fettling Department is less. So there is a need for sub-contracting

some of the jobs in order to balance the Production capacity and Fettling facilities.

Sub-contracting is the internal production supporting activity.

Installed Fettling facility is inefficient to meet the Production requirement.

Some of the activities usually sub-contracting:

- Decoring

- Removing Runner, Riser etc

- Collecting metal for reusing

- Cleaning activities

A Public Tender is called yearly for finding sub-contractors

Public Tender is displayed in the following areas



- Company notice board

- Main gate

- Kanjikuzhi Block Office

- Cherthala Municipal Office

In house facility for Fettling and machining of Casting is limited in Autokast Ltd. Hence these jobs

are entrusted to subcontractors and this activity is controlled by the subcontracting division under

purchase department. The main functions are

1. Job allocation and control

2. Service contract activities etc.

DD’s may be discharged and return to the bidders when the concerned work has been awarded to

some others.

The DD’s submitted by the Contractors as EMD along with the offers has been converted as security

amount of concerned Work Order Holder and are to be retained with Company Bank Account.

FINANCE DEPARTMENT

The part of an Organization that manages its money. The business functions of a Finance Department

typically include planning, organizing, auditing, accounting for and controlling its Company‟s

finances. The Finance Department also usually produces the Company‟s financial statements.

Finance is defined as the provision of money at the time when it is wanted. Finance Department in

Autokast is concerned with the maintenance of accounts and preparation of financial statements. The

accounts of the Company are maintained according to the Company act of 1956 regarding income and

expenditure. It is finalized during the end of the financial year and the annual reports are all under due

proper audit. The year begins on 1st April and ends on 31

st March.

The Finance Department keeps the transaction of the sale of Castings, purchase of cast

materials, payment of salaries and wages etc. Details regarding over time payment, leave surrender,

bonus are also maintained by the Finance Department.

FUNCTIONS

Maintenance of Accounts

Accounts in AKL are maintained as per the requirements of the Companies Act 1956. The

Company maintains the detailed account of its assets & liabilities and incomes &

expenditures. At the end of the financial year accounts are finalized and annual accounts

are prepared. They are properly audited.

Transactions

The main transactions in the Company are sale of Castings, purchase of Raw Materials and

other materials, payment of salaries and wages, various statutory and other payments etc.



1. Purchases – A book is maintained at the stores for purchases. Any material brought

to the Company is routed through the stores. The accounts department maintains a

parallel record for the same, i.e. a purchases daybook through the Computer

System.

2. Sales – Whenever a sale is effected, the sales or Marketing Department prepares

invoices, central sales tax, gate pass etc and Despatch Castings. The transactions

are conveyed to the accounts department through network, where the sales

daybook is maintained.

3. Wages and Salaries – Employees payments are made by the department and HR

Department prepare the detailed pay rolls for monthly wages, salaries, overtime

payments, leave surrender salary, bonus etc.

All other transactions are recorded and carried out through other books of entries viz. cash book, bank

book and journals.

PRICING METHOD

There are various methods of pricing that could be followed. In Autokast the pricing

method followed is the “cost plus pricing” where a fixed percentage of profit is added to the cost of

production to arrive at the price. In this method, the total cost is considered. It consist of

manufacturing cost, administration overheads and selling and distribution overheads. To this a

fixed percentage of profit is added, and thus the price is fixed. Usually provisions are provided for

all losses, like melting losses, Casting losses and rejections.

BUDGETING

Budget Preparation

Annual Budget of the Company is prepared by Finance Department in consultation with

the higher Management. Circulars are issued months ahead for the collection of required

data from the other departments. Past data and future projections are collected from all the

departments, they are verified for accuracy and consistency and draft budgets are prepared.

Based on the further discussions with the MD/HODs budget is prepared. There is a budget

for the Company as a whole and for each department. As the financial resources of the

Company are very much limited the budget is again trimmed and brought down to the bare

minimum size. The budget consists of expected expenses and anticipated incomes for the

coming financial year.

The different components of the budgets are:

The Sales Budget

The production Budget

The Revenue Budget

The Capital Budget and

The Manpower Budget.

The Budget is approved by the Board of Directors of the Company before the commencement of

the financial year.



Implementation of the Budget

Finance Department is the watchdog of the budget. It scruitinises the implementation of the annual

budget and its monthly, quarterly, and half yearly targets.

AUDIT

There are three types of regular annual audits in Autokast. They are:

1. Internal Audit

2. Statutory Audit

Internal Auditing is done monthly by L R Kammath & Company.

External Auditing is done by the Auditors Paul & Abraham Chartered Accountants, Alappuzha.

Operational Highlights

In spite of the adverse effect of global meltdown and acute shortage of working capital, Autokast

achieved a production of 2659 MT of Castings in 2010 – 2011 compared to 1914 MT of Castings

in 2009 – 2010. During the year, Company achieved a turnover of Rs.2025 lakhs compared to

Rs.1428 lakhs during 2009 – 2010. During 2010 – 2011, Company tried to put in special efforts to

produce maximum quantity of high value items compared to previous years. Average sales price

received is Rs. 76.07 per kg during 2010 – 2011. Autokast maintained its position as a major

producer of critical Castings needed for wind power sector but the off take by the Industry segment

was very poor due to global financial meltdown.

DEPARTMENTAL CHART

MANAGING DIRECTOR

MANAGER (FINANCE)

ASSISTANT MANAGER (INCOME

TAX)

ASSISTANT OFFICER (SERVICE TAX)

ASSISTANT

(PURCHASE)

ASSISTANT (CASH) ASSISTANT

(BANK)



R & D DEPARTMENT

In today‟s competitive scenario, Research and Development has assumed a very important

role. For many large corporations, R & D is the source for competitive advantage. Some firms use

innovative ideas to develop new products, molecules while others innovate to reduce cost or improve

product/ service quality and some businesses are completely developed from an innovative idea.

Autokast has separate R&D Department. Just 4 months ago R & D Department starts functioning as a

separate Department.

In Autokast R&D Department does not conduct any researches. Rather it functions along with the

Engineering Department for giving assistance for Pattern making.

PROCESS

DEPARTMENTAL CHART

MANAGING DIRECTOR

MANAGER (QC & ENGG)

MANAGER (R&D)



LITERATURE REVIEW

THEORETICAL ASSESSMENT

Working capital policy refers to the firm's policies regarding

1) target levels for each category of current operating assets and liabilities, and

2) how current assets will be financed.

Generally good working capital policy (i.e. under conditions of certainty) is considered to be one in

which holdings of cash, securities, inventories, fixed assets, and accounts payables are minimized.

The level of accounts receivables should be used as a means of stimulating sales and other income.

Previous literature on working capital management has found a negative association, overall, between

level of working capital and operating performance as measured by operating returns and operating

margins (Peterson and Rajan, 1997). Under conditions of certainty (i.e. sales, costs, lead times,

payment periods, and so on, are known), firms have little reason to hold more working capital than a

minimum level. Larger amounts would increase the level of operating assets, increase the need for

external funding, resulting in lower return on assets and a lower return on equity, without any increase

in profit.

However the picture changes when uncertainty (i.e. uncertain growth) is introduced (Brigham and

Houston, 2000). Larger amounts of cash, securities, accounts receivables, marketable securities,

inventories, and fixed assets will be needed to support increased sales Required levels will be based

on expected sales levels and expected order lead times. Additional holdings may be needed to enable

the firm to deal with departures from the expected values. Further, firms will also attempt to increase

their accounts payable balances as a means of financing increased levels of current operating assets.

Firms which are in high growth stages will face the challenge of maintaining the necessary level of

operating assets to support subsequent growth, while at the same time attempting to maintain adequate

performance indicators.

This study focuses on understanding how IPO companies manage their working capital and other

balance sheet items to support subsequent growth. This study supports the existing literature on

working capital and contributes to the existing literature by examining a sample of firms (i.e. recent

IPO firms) which have a wider range of growth levels than non-IPO firms. Our study examines the

impact of working capital management on the operating performance and growth of new public

companies. The study also examines these relationships under three categories of growth (i.e. negative

growth, moderate growth, and high growth). The study also examines other selected firm

characteristics in light of working capital management: firm operating and financial risk, amount of

debt, firm size, and industry.

An underlying theme of this study is that high growth certainly does not ensure high operating

performance. Consistent with prior research (Peterson and Rajan, 1997) this study provides further

evidence that good working capital management is positively associated with better operating

performance. Higher levels of accounts receivable are associated with higher operating performance,

in all three of the growth rate categories. The study also finds that maintaining control over levels of

cash, securities, inventory, fixed assets, and accounts payables is associated with higher operating

performance. We find that firms which are experiencing very high growth will hold higher levels of

cash, securities, inventory, fixed assets, and accounts payable to support the high growth. The study

suggests that these firms are sacrificing operating performance (accepting lower operating returns) to



support the high growth. This, in turn, increases financial and operating risk for these firms. Perhaps

IPO firms should stay more focused on their operating performance, while maintaining more

moderate growth levels

Another aspect of this study is that it fills a void in the initial public offerings literature. Recent

literature finds that new public companies underperform the market after going public. Ritter in his

1991 paper reports substantially lower stock returns for IPO firms between 1975 and 1984 than for a

size-and-industry-matched sample of seasoned firms. Since then there is a growing literature

explaining IPO underperformance as related to agency cost (Smith, 1990), institutional holdings

(Field, 1995), venture capital (Jain and Gompers, 1997; Jain and Kini, 2000), market timing of IPO

(Benninga, 2004), and earnings management (Teho et al., 1998; Ahmad-zaluki et al., 2008). However,

there is no study linking the working capital management and post-IPO performance. Our paper tries

to fill the void. The findings of this study would be interesting to investors and creditors of new public

companies.

DEFINITIONS OF WORKING CAPITAL:

The following are the most important definitions of Working capital:

1) Working capital is the difference between the inflow and outflow of funds. In other words it is the

net cash inflow.

2) Working capital represents the total of all current assets. In other words it is the Gross working

capital, it is also known as Circulating capital or Current capital for current assets are rotating in their

nature.

3) Working capital is defined as The excess of current assets over current liabilities and provisions. In

other words it is the Net Current Assets or Net Working Capital

CONCEPTS OF WORKING CAPITAL:

There are two concepts of working capital:- gross & net. Gross working capital, simply called

working capital, refers to the firm‟s investment in current assets. Current assets are the assets which

can be converted into cash within an accounting period (or operating cycle)and cash, short-term

securities, receivables, debtors and stock (inventory) are included in current assets. Net working

capital refers to the difference between current assets and current liabilities. Current liabilities are

those claims of outsiders, which are expected to mature for payment within an accounting periodand

include creditors, bills payableand outstanding expenses.

1) Gross working capital:

According to this concept, total current assets are working capital which presents both owned capital

as well as loan capital used for financing current assets. It includes cash, short-term securities and

receivables inventories. These assets can be converted into cash within a year. Generally, when it

comes to current assets, cash is the most valuable element because it is immediately available to settle

bills and debtors are more value than stock which is nearer to being turned into cash. The gross

concept of working capital refers to the amount funds invested in short-term assets that are employed

in the enterprise. Gross working capital is the firm‟s total current asset and net working capital is



current assets minus current liabilities.Another name of gross working capital is circulating capital.

Circulating capital means circular flow of cash. This is also called operating cycle in case of

manufacturing firm. This cycle starts with which is used to pay for raw materials. Raw materials are

converted into work-in progress which is again converted into finished goods. When it is ready for

sale, it is a circular cash-flow from cash into inventories to receivables and back to cash, this cycle

will be repeat again for the whole life of the firm. The value represented by current assets circulates

from one working capital to another working capital from purchase accounts to goods manufacturing

accounts. From inventory accounts to sales accounts, from sales accounts to cash accounts, this is

described as circulating nature of current assets of in other work working capital has circulating

nature. The speed of circulating of working capital of the turnover of current assets is an indicator of

degree of efficiency of the management. The faster the turnover shows the higher degree of

efficiency.

The working capital cycle can be presented in the diagram as:

COLLECTION PAYMENTS

DEBTORS

SALES

PRODUCTION

VALUE ADDED CONVERSION

CREDITORS CASH

RAW MATERIALS

WORK-IN-

PROGRESS

FINISHED GOODS



If the business is profitable the firm‟s assets at the end of each cycle will be greater than the

original investment. In this manner, each cycle will produce a gross profit, and the amount of

net earnings for the year will depend. In part, on number of times the cycle occurs or how

measured by the ratio of sales to current assets. The higher the ratio, the more efficiency the

operations, fewer current assets are needed to support each dollar of sales.

The flow of working capital does not always proceeds as it is pre- planned when it moves

through different stage of cash cycle, for example, sales may decline due to can in consumer

taste, slow economy and receivable become more difficult to collect the working capital cycle

will be interrupted. This leads to decline in profitability and firm could suffer bankruptcy if

this adverse situation prevails for sometimes.

There is also a much shorter cycle of activity where in goods and materials are held for

manufacture and sale, and credit is advanced to customers for rapid conversion into cash to

provide the funds with which to continue in business and to make a profit distribution

possible.

The working capital cycle shown in figure 4.1 is the operating cycle for non- manufacturing

firm where, cash is required to purchase raw materials which are needed to convert into

work-in- progress, which is again converted into finished goods. Are sold for cash and credit

and ultimately debtors will be realized.

The non-manufacturing firms such as wholesalers and retailers do not manufacture goods. So,

they have the direct conversion of cash into stock of finished goods into debtors and then

into cash. This can be shown graphically as:

CASH

DEBTORS STOCK OF FINISHED GOODS



Sometimes service and financial concerns may not have any inventory. In this case the

operations cycle will be shortest as follows:

CASH

The gross capital working capital focuses on two aspects of current assets

management:

a) Optimum investment in current assets: As state earlier, both excessive and inadequate

investment is harmful for the business. This aspects thus, emphasis on the optimum

adequate level of current assets, working capital depends upon the business activated. It

also changes with the change in business activities. This may cause excess or shortage of

working capital frequently. The management should be active and alert to correct the

imbalance.

b) Financing of current assets: This aspect focus on the need of arranging funds to finance

current assets when more working capital is required due to the increase in business

activities. Then the arrangement should be made quickly. Similarly, when surplus funds

arise, then they should be invested in short term securities.

2) Net working capital:

Net working capital comprises short term net assets: stock, debtors and cash less creditors.

Working capital management then is to do with management of all aspects of both current assets

and current liabilities, so as to minimize the risk of insolvency while maximizing return on assets.

Net working capital represents the excess of total current assets over total current liabilities. It is a

qualitative concept which shows the financial soundness of current financial position. Net

working capital may be positive or negative according to the size of current assets and current

liabilities. Current assets should be sufficiently in excess of current liabilities for the positive

working capital. This concept lives idea about the case and cost of raising working capital to the

management.

Not only for the management, is it also a major importance to investors and lenders. They always

like a company to maintain current assets should be two fold of current liabilities and these

concepts is measured by the current ratio via current assets ÷current liabilities. Which should be

DEBTORS



4:1? A large ratio indicates greater solvency and makes it unsafe and unsound. A negative

working capital denotes negative liquidity which is also dangerous for the company.

Management should always be alert to improve the imbalance in the liquidity position of

the firm. Mathematically, it is presented as:

Net working capital ˭ Current assets – Current liabilities

An alternatives definition of net working capital is that portion of a firm‟s current assets

financed with long term funds.

For every firm today, minimum portion of working capital is financed with the permanent

sources of funds such as owners‟ capital, debentures, long-term debt, and preference

capital or retained earnings; this portion of working capital which is financed with long

term funds is called permanent working capital. Management must therefore, decide the

extent to which current assets should be financed with equity capital or/ and borrowed

capital.

Both the concepts of working capital, gross and net, are not mutually exclusive, however.

They are equally important from the management point of view in the gross concept

points out two important aspects of current assets: (i) Optimum investment in each of the

component of current assets and (ii) Financing of these current assets; while the net

concept indicates (i) The liquidity position and (ii) The extent to which working capital

may be financed by permanent sources of funds. Both the concepts have their own

advantages and disadvantages, which concept to choose depend upon the purpose of the

firm. The concept of gross capital is a financial concept where as that of net concept is an

accounting concept. Management is interested in current assets to operate the business

with efficiency. To evaluate the efficiency, gross concept is appropriate. On the other

hand interest of investors and lenders is in concept of net working capital because it helps

in the judgment if liquidity position of the enterprise.



Objective of Working capital:

Even profitability companies fail if they have inadequate cash flow. Liabilities dare settled with

cash and net profits. The primary objective of working capital management is to ensure that

sufficient cash is available to:

Meet day to day cash flow needs;

Pay wages and salaries when they fall due;

Pay creditors to ensure continued suppliers of goods and services;

Pay government taxation and providers of cash dividends; and

Ensure the long term survival of the business entity.

IMPORTANCE OF WORKING CAPITAL

Working capital may be regarded as the lifeblood of the business. Without insufficient working

capital, any business organization cannot run smoothly or successfully.

In the business the Working capital is comparable to the blood of the human body. Therefore

the study of working capital is of major importance to the internal and external analysis

because of its close relationship with the current day to day operations of a business. The

inadequacy or mismanagement of working capital is the leading cause of business failures.

To meet the current requirements of a business enterprise such as the purchases of services,

raw materials etc. working capital is essential. It is also pointed out those workings.

Growth and Expansion Activities

As a company grows, logically, larger amount of working capital will be needed, though it is

difficult to state any firm rules regarding the relationship between growth in the volume of a

firm's business and its working capital needs. The fact to recognize is that the need for

increased working capital funds may precede the growth in business activities, rather than

following it. The shift in composition of working capital in a company may be observed with

changes in economic circumstances and corporate practices. Growing industries require more

working capital than those that are static.

Operating Efficiency

Operating efficiency means optimum utilization of resources. The firm can minimize its need

for working capital by efficiently controlling its operating costs. With in-creased operating

efficiency the use of working capital is improved and pace of cash cycle is accelerated. Better



utilization of resources improves profitability and helps in relieving the pressure on working

capital.

Price Level Changes

Generally, rising price level requires a higher investment in working capital. With increasing

prices the same levels of current assets need enhanced investment. However, firms which can

immediately revise prices of their products upwards may not face a severe working capital

problem in periods of rising levels. The effects of increasing price level may, however, be felt

differently by different firms due to variations in individual prices. It is possible that some

companies may not be affected by the rising prices, whereas others may be badly hit by it.

Other Factors

There are some other factors, which affect the determination of the need for working capital.

A high net profit margin contributes towards the working capital pool. The net profit is a

source of working capital to the extent it has been earned in cash. The cash inflow can be

calculated by adjusting non-cash items such as depreciation, out-standing expenses, losses

written off, etc., from the net profit.

The firm's appropriation policy, that is, the policy to retain or distribute profits also has a

bearing on working capital. Payment of dividend consumes cash resources and thus reduces

the firm‟s working capital to that extent. If the profits are retained in the business, the firm'

s

working capital position will be strengthened.

In general, working capital needs also depend upon the means of transport and

communication. If they are not well developed, the industries will have to keep huge stocks

of raw materials, spares, finished goods, etc. at places of production, as well as at distribution

outlets.

Determinants of working capital:

There are no hard and fast rules or certain formulae to determine the working capital

requirement of the firm. The importance of efficient working capital management is an aspect

of overall financial management. Thus a firm plans its operations with adequate working

capital requirement or it should have neither too excess nor too inadequate working capital. A

number of factors affect the working capital. Generally, the following factors affect the

working capital requirement of the firm.



i) Nature and size of business:

The working capital requirement of a firm is basically related size and nature of the business. If the

size of the firm is bigger, then or requires more working capital whereas small firm needs less

working capital relatively to public utilities.

ii) Manufacturing Cycle:

Working capital requirement of an enterprise are also influenced by the manufacturing or production

cycle. It refers to the time involved to make finished goods from the raw materials. During the process

of manufacturing cycle funds are tied up longer the manufacturing cycle, the larger will be working

capital requirement and vice-versa.

iii) Production Policy:

Working capital requirement is also determined by its production policy. If a firm produces seasonal

foods, the its production and sales volume fluctuate with different seasons. This type of fluctuating

policy affects the working capital policy of the firm.

iv) Credit Policy:

Credit policy affects the working capital of a firm. Working capital requirement depends on terms of

sales. Different term may be followed by different customers according to their credit worthiness. If

the firm follows the liberal credit policy, then it requires more working capital. Conversely, if a firm

follows the stringent policy, it requires less working capital.

v) Availability of Credit:

Availability of credit facility is another factor that affects the working capital requirement. If the

creditors avail a liberal credit terms then the firm will need less working capital and vice-versa. In

other works, the firm can get credit facility easily on favourable conditions. Thus, it requires less

working capital to run the firm otherwise more working capital is required to operate the firm

smoothly.

vi) Growth and Expansion:

Growth and expansion also affects the working capital requirement of firm. However, it is difficult to

precise; determine the relationship between the growth and expansion of the firm and working

capital needs, however, the other things being the same growing firms needs more working

capital than those static ones.



vii) Price level Change:

Price level change also affects the working capital requirement of a firm. Generally, a firm requires

maintaining the higher amount of working capital, if the price level rises. Because the same level of

current assets needs more due to the increasing price. In conclusion, the implications of changing

price level of working capital position will vary from firm to firm depending on the nature and

another relevant consideration of the operation of the concerned firm.

viii) Operating Efficiency:

Operating efficiency is also an important factor, which influences the working capital requirements of

the firm. It refers to the efficient utilization of available resources at minimum cost. Thus, financial

manager can contribute to strong working capital position through operating efficiency. If a firm has

strong operation efficiency then it needs lesser amount of working capital and vice-versa.

ix) Profit Margin:

The level of profit margin differs from firm to firm. It depends upon the nature and quality of product

has a sound marketing management and enjoys the monopoly power in the market then it earns quite

high profit and vice-versa. Profit is sources of working capital because it contributes towards the

working capital as a pol by generating more internal funds.

x) Level of Taxes

The level of taxes also influences working capital requirement of firm. The amount of taxes to be paid

in advances is determined by the prevailing tax regulations. But the firm‟s profit is not constant, or

can note be predetermined. Tax liability in absence of short-term liquidity is payable in cash.

Therefore, the provision for tax amount is one of the important aspects of working capital planning. If

tax liability increase, it needs to increase the working capital and vice-versa.

Financing of Working Capital:

The firm‟s working capital assets policy is never set in a vacuum; it is always established in

conjunction with the firm‟s working capital policy. Every manufacturing concern of industry requires

additional assets whether they are instable or growing conditions. The most important function of

financial manager is to determine the level of working capital and to decide how it is to financed.

Financial of any assets is concerned with two major factors- cost and risk. Therefore, the financial

manager must determine an appropriate financing mix, or decide how current liabilities should be

used to finance current assets. However, a number of financing mixes are available to the financial

manager. He can resort generally there kinds of financing.



i) Long-term financing:

Long-term financing has high liquidity and low profitability, Ordinary share, Debenture,

Preference share; retained earnings and long-term debt of financial institution are major sources

of long-term finance.

ii) Short-term financing:

A firm must arrange its short-term credit in advance. The sources of short-term financing of

working capital are trade credit and bank borrowing.

Bank credit: Bank credit is the primary institutional sources for working capital financing for the

purpose of bank credit, amount of working capital requirement has to be estimated by the

borrowers and banks are approached with the necessary supporting data.

After availability of this data, bank determines the maximum credit based on the margin

requirements of the security. The types of loan provided by commercial banks are loan

arrangement, overdraft arrangement, commercial paper etc.

APPROACHES TO MANAGING WORKING CAPITAL

Two approaches are generally followed for the management of working capital: (i) the conventional

approach, and (ii) the operating cycle approach.

The Conventional Approach

This approach implies managing the individual components of working capital (i.e. inventory,

receivables, payables, etc.) efficiently and economically so that there are neither idle neither funds nor

paucity of funds. Techniques have been evolved for the management of each of these components. In

India, more emphasis is given to the management of debtors because they generally constitute the

largest share of the investment in working capital. On the other hand, inventory control has not yet

been practised on a wide scale perhaps due to scarcity of goods (or commodities) and ever rising

prices.

The Operating Cycle Approach

This approach views working capital as a function of the volume of operating expenses. Under this

approach the working capital is determined by the duration of the operating cycle and the operating

expenses needed for completing the cycle. The duration of the operating cycle is the number of day

involved in the various stages, commencing with acquisition of raw materials to the realization of

proceeds from debtors. The credit period allowed by creditors will have to be set off in the process.



The optimum level of working capital will be the requirement of operating expenses for an operating

cycle, calculated on the basis of operating expenses required for a year.

In India, most of the organizations use to follow the conventional approach earlier, but now the

practice is shifting in favour of the operating cycle approach. The banks usually apply this approach

while granting credit facilities to their clients.

ADEQUACY OF WORKING CAPITAL

The firm should maintain a sound working capital position. It should have adequate working capital to

run its business operations. Both excessive as well as inadequate working capital positions are

dangerous from the firm‟s point of view. Excessive working capital not only impairs the firms

profitability but also result in production interruptions and inefficiencies.

The dangers of excessive working capital are as follows:

It results in unnecessary accumulation of inventories. Thus, chances of

Inventory mishandling, waste, theft and losses increase.

It is an indication of defective credit policy slack collections period.

Consequently, higher incidence of bad debts results, which adversely

Affects profits.

Excessive working capital makes management complacent which

Degenerates into managerial inefficiency.

Tendencies of accumulating inventories tend to make speculative

Profits grow. This may tend to make dividend policy liberal and difficult

To cope with in future when the firm is unable to make speculative

Profits.

Inadequate working capital is also bad and has the following dangers:

It stagnates growth. It becomes difficult for the firm to undertake

Profitable projects for non- availability of working capital funds.

It becomes difficult to implement operating plans and achieve the firm s

Profit target.

Operating inefficiencies creep in when it becomes difficult even to meet

day commitments.

Fixed assets are not efficiently utilized for the lack of working capital

Funds. Thus, the firm s profitability would deteriorate.



Paucity of working capital funds render the firm unable to avail

Attractive credit opportunities etc.

The firm loses its reputation when it is not in a position to honor its

short-term obligations.

An enlightened management should, therefore, maintain the right amount of working capital on a

continuous basis. Only then a proper functioning of business operations will be ensured. Sound

financial and statistical techniques, supported by judgment, should be used to predict the quantum of

working capital needed at different time periods.

A firm s net working capital position is not only important as an index of liquidity but it is also used

as a measure of the firm‟s risk.

Risk in this regard means chances of the firm being unable to meet its obligations on due date. The

lender considers a positive net working as a measure of safety. All other things being equal, the more

the net working capital a firm has, the less likely that it will default in meeting its current financial

obligations. Lenders such as commercial banks insist that the firm should maintain a minimum net

working capital position.

TOOLS OF ANALYSING WORKING CAPITAL

In the process of analysis various tools or methods are used by financial analyst. The different tools

are:

a. Statement of changes in working capital

To know the increase or decrease in the working capital over a period of time, the preparation

of a statement of changed in working capital is also very useful. The main objectives of the

statement preparation are to derive a fairly accurate summary of the event that affected the

amount of working capital. The amount of networking capital is determined by deducting the total

of current liabilities form the total of current assets.

b. Trend Percentage

Trend percentages are helpful in making comparative study of the working capital for several

years. The method of calculating trend percentage involves the calculation of percentage

relationship that each item bears to the same item in the base year. Base year is usually the earliest

year.

c. Ratio Analysis

Ratio analysis expresses the relationship between 2 according variables taken from financial

statement of accounting period in the form of ratio. It is the most important tool available to



financial analysis for their work. Ratio analysis is one of the powerful tools of financial analysis. It

aims at making use of quantitative information for decision making. A ratio is an expression of

relationship between two figures or two amounts. It is a yard stick which measures relationship

between two variables. It highlights solvency, liquidity etc.

According to Robert Antony, Ratio is “Simply one number expressed in terms of another”.

Ratio analysis gives answer to the problem such as

i. Whether the enterprises financial position is basically sound.

ii. Whether the capital structure of the business is in proper order.

iii. Whether the credit policy in relation to sales and purchase is sound.

iv. Whether the company is credit worthy.

v. Whether the profitability of the enterprise is satisfactory

METHODOLOGY OF THE STUDY

It can be defined as the method used for conducting the study.it may be based on different sources.

Research means search for knowledge. It is a process of systematic and in-depth study of search of

any particular topic, subject or area of investigation backed by collection, computation, presentation

and interpretation of relevant data.

This study is based on primary as well as secondary data. Mainly secondary data has been used for the

study.

1. Primary data

It can be defined as the firsthand data. Primary data refer to the actual information collected by

researcher for the study. It is specifically designed to fulfill the data needs of problem in hand.

Primary data is collected from the primary sources that are formal interviews. Information collected

is mainly based on personal discussion with finance executives.

2. Secondary data

Data which are not originally collected but rather obtained from the published or unpublished

sources are known as secondary data.

They are:

Annual reports

Company records

Journal of the company



METHOD OF DATA ANALYSIS

Statement of changes in working capital

Ratio analysis

Trend analysis



DATA ANALYSIS AND INTERPRETATION

STATEMENT OF CHANGES IN WORKING CAPITAL

Working capital is the difference between current assets and current liabilities.

The schedule of changes in working capital is prepared to find out the increase or decrease in

working capital during a period. This schedule is prepared with the help of only current assets and

current liabilities. To know the increase or decrease in the working capital over a period of time, the

preparation of a statement of changed in working capital is also very useful. The main objectives of

the statement preparation are to derive a fairly accurate summary of the event that affected the

amount of working capital. The amount of networking capital is determined by deducting the total

of current liabilities form the total of current assets.

The ultimate purpose of preparing the schedule of changes in the working capital is to illustrate the

changes in the volume of net working capital which envisages either sources or application of fund.

The schedule of changes is focused as follows:

Increase in Current Assets ---------> Increase in Working Capital

Decrease in Current Assets ---------> Decrease in Working Capital

Increase in Current Liabilities ---------> Decrease in Working Capital

Decrease in Current Liabilities ---------> Increase in Working Capital



Schedule of changes in working capital for the year (2009-10)

(Source: Annual reports of Autokast ltd for the period from 2009-10 to 2013-14)

Table 9

PARTICULARS 2009

(Rs.)

2010

(Rs)

EFFECT ON WORKING

CAPITAL

INCREASE DECREASE

A)CURRENT

ASSETS

Inventories 289.69 621.54 331.85

Sundry debtors 158.66 171.06 12.4

Cash and bank balance 172.48 134.98 37.5

Other current assets 1.94 3.67 1.73

Loans and advances 42.35 33.56 8.79

TOTAL(A) 665.14 964.82

B)CURRENT

LIABILITIES

Current liabilities 3433.82 3587.81 153.99

Provisions 360.53 382.95 22.42

TOTAL(B)

3794.36 3970.77

WORKING

CAPITAL(A-B)

-3129.21 -3005.94

Net decrease in

working capital

-123.27 -123.27

TOTAL -3129.21 -3129.21 222.7 222.7




Table 10


PARTICULARS 2010

(Rs.)

2011

(Rs) in lakhs

EFFECT ON WORKING

CAPITAL

INCREASE DECREASE

A)CURRENT

ASSETS

Inventories 621.54 735.71 114.17

Sundry debtors 171.06 239.26 68.2




TOTAL(A) 964.82 1786.27

B)CURRENT

LIABILITIES


Provisions 382.95 407.57 24.62

TOTAL(B)

3970.76 4203.97

WORKING

CAPITAL(A-B)

-3005.94 -2417.7

Net decrease in

working capital

-588.24 -588.25

TOTAL -3005.94 -3005.94 233.21 233.21




Table 11


PARTICULARS 2011

(Rs.)

2012

(Rs)

EFFECT ON WORKING

CAPITAL

INCREASE DECREASE

A)CURRENT

ASSETS

Inventories 735.71 930.08 194.37

Sundry debtors 239.26 336.15 96.89




TOTAL(A) 1786.27 1740.01

B)CURRENT

LIABILITIES


Provisions 407.57 420.14 12.57

TOTAL(B)

4203.97 4766.68

WORKING

CAPITAL(A-B)

-2417.7 -3026.67

Net decrease in

working capital

608.97 608.97

TOTAL -2417.7 -2417.7 988.82 988.82





Table 12

PARTICULARS 2012

(Rs.)

2013

(Rs)

EFFECT ON WORKING

CAPITAL

INCREASE DECREASE

A)CURRENT

ASSETS

Inventories 930.08 959.65 29.57

Sundry debtors 336.15 198.70 137.45




TOTAL(A) 1740.01 1501.63

B)CURRENT

LIABILITIES


Provisions 420.14 430.21 10.07

TOTAL(B)

4766.68 5071.59

WORKING

CAPITAL(A-B)

-3026.67 -3569.96

Net decrease in

working capital

543.29 543.29

TOTAL -3026.67 -3026.67 592.13 592.13





Table 13

PARTICULARS 2013

(Rs.)

2014

(Rs)

EFFECT ON WORKING

CAPITAL

INCREASE DECREASE

A)CURRENT

ASSETS

Inventories 959.65 1135.97 176.32

Sundry debtors 198.70 209.75 11.05




TOTAL(A) 1501.63 1845.08

B)CURRENT

LIABILITIES


Provisions 430.21 521.40 91.19

TOTAL(B)

5071.59 5525.86

WORKING

CAPITAL(A-B)

-3569.96 -3680.78

Net decrease in

working capital

-110.82 -110.82

TOTAL -3569.96 -3569.96 447.71 447.71



RATIO ANALYSIS

Accounting ratio or ratio analysis is an important technique of analysis of financial statements. Ratio

analysis was perhaps the first financial tool developed to analyse and interpret the financial statements

.Ratio simply refers to one number expressed in terms of another number .ratio analysis may be

defined as the process of computing and interpreting relationship between the items of the financial

statements for arriving at conclusion about the financial position and performance of an enterprise.it

helps in understanding financial health and trend of business.

A. LIQUIDITY RATIOS

The liquidity ratio measures the ability of firm to meet its short –term obligations and reflect its short-

term financial strength or solvency of firm. Liquidity ratio is generally based on the relationship

between current assets and current liabilities.

a) Current ratio

The current ratio is the ratio of total current assets to total current liabilities .It is calculated by

dividing current asset by current liabilities. It is also called working capital ratio.in a sound business

current ratio of 2:1 considered as ideal one.

Current ratio =current asset/current liability

YEAR CURRENT ASSET CURRENT LIABILITY CURRENT RATIO

2013-14 1845.08 5525.86 0.33

2012-13 1501.63 5071.59 0.29

2011-12 1740.01 4766.68 0.36

2010-11 1786.27 4203.97 0.42

2009-10 964.82 3970.76 0.24

Table 14



Figure 5

Interpretation

Table clearly shows current assets, current liabilities and current ratio. In the table show a

fluctuating trend in the five year study. The current ratio position fluctuates each year

because of the amount increasing in current asset and current liability. In the five year table

we can analyse the second (2010-11) year ratio is higher. The ratio reveals that the firm‟s

financial position is not satisfactory. This is due to the fluctuation of current assets and

current liabilities

b) Quick ratio

It is a measurement of firm‟s ability to convert its current asset quickly into cash in order to meet its

current liabilities. Quick assets include those current assets that presumably can be quickly converted

to cash at close to their book values. A company with a quick ratio of less than 1 cannot currently

fully pay back its current liabilities.

Quick ratio =Quick asset/current liability

YEAR QUICK ASSET CURRENT LIABILITY QUICK RATIO

2013-14 709.11 5525.86 0.128

2012-13 541.75 5071.59 0.106

2011-12 809.88 4766.68 0.169

2010-11 1050.56 4203.97 0.249

2009-10 343.27 3970.76 0.086

Table 15

0

0.1

0.2

0.3

0.4

0.5

2013-14 2012-13 2011-12 2010-11 2009-10

CURRENT RATIO

CURRENT RATIO



Figure 6

Interpretation

The above table shows that the relationship between quick asset and current liabilities. Quick

ratio of 1:1 considered satisfactory as firm can easily meet all its current liabilities. If the

ratio is less than 1:1 then the financial position of the concern shall be deemed to be unsound.

On other hand if the ratio is more than 1:1 then the financial position of the concern is sound

and good. Liquid ratio is true test of business solvency. Here we can find that for the last five

years 2010-11 quick ratio is high. It shows the not good sound position of the firms quick

asset to meet all its Current liabilities.

c) Absolute liquidity Ratio

Absolute liquidity ratio includes cash, bank, and marketable securities. It is obtained by dividing cash

and marketable securities by current liabilities. The standard ratio is 50%, 5:1or 1;2.

Absolute Liquidity ratio =Absolute liquid asset/Current liability

YEAR CASH CURRENT LIABILITY ABSOLUTE

LIQUIDITY

2013-14 362.81 5525.86 0.0656

2012-13 213.29 5071.59 0.0420

2011-12 337.53 4766.68 0.0708

2010-11 763.66 4203.97 0.1816

2009-10 134.98 3970.76 0.0339

Table 16

0

0.05

0.1

0.15

0.2

0.25

0.3

2013-14 2012-13 2011-12 2010-11 2009-10

QUICK RATIO

QUICK RATIO



Figure 7

Interpretation

This table shows that the relationship between the immediate source of fund and current

liabilities. A ratio of 0.75:1 is recommended to ensure liquidity. This test is more vigorous

measures of a firm‟s liquidity position. Table shows the absolute liquid asset i.e.

(cash+bank+bills receivable) are low compared to liabilities. The absolute liquidity ratio is

very low hence it indicates that the firm‟s liquidity position is not good.

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

2013-14 2012-13 2011-12 2010-11 2009-10

Absolute Liquidity Ratio

Absolute Liquidity Ratio



B. ACTIVITY RATIOS

These ratios evaluate the use of the total resources of the business concern along with the use of the

components of the total assets. They are intended to measure the effectiveness of the assets

management the efficiency with which the assets are used would be reflected in the speed and rapidity

with which the assets are converted into sales. The greater the rate of turnover, the more efficient the

management would be.

a. Inventory Turnover Ratio

This ratio is a relationship between the cost of goods sold during a particular period of time and the

cost of average inventory during a particular period.it is expressed in number of times.

Inventory Turnover Ratio = Cost Of Goods sold /Average inventory

YEAR COST OF

GOODS

SOLD

AVERAGE

STOCK

INVENTORY

TURNOVER

RATIO

2013-14 1364.65 286.05 4.77

2012-13 1647.52 178.325 9.23

2011-12 1538.48 181.755 8.46

2010-11 1482.4 153.64 9.64

2009-10 1485.76 138.985 10.69

Table 17

Figure 8

Interpretation

All the products are made to order .most of the customers have regular schedules of intake.

Production is planned according to intake schedule provided by the customer.as soon as

0

2

4

6

8

10

12

2013-14 2012-13 2011-12 2010-11 2009-10

INVENTORY TURNOVER RATIO

INVENTORY TURNOVERRATIO



castings are finished they are dispatched to the respective customers .therefore, the inventory

turnover ratio shows a high figure which shows that inventory management is good.

b. Total Assets Turnover Ratio

Total Assets Turnover Ratio=Net Sales /Total Assets

Table 18

Figure 9

Interpretation

This ratio shows the firm‟s ability in generating sales from all financial resources committed to total

assets .total asset turnover ratio for the year 2009-10 is .98 which implies that the company generates

a sale of rs 1 for one rupee investment in fixed and current assets together. Total assets turnover ratio

shows a decreasing trend from 2009-10 up to 2013-14 because the sales turnover is decreasing and the

value of total asset is increasing. The rise in the value of total asset is due to increase in the value of

fixed asset on account of depreciation and also increase in current assets.

0 50 100 150

2013-14

2012-13

2011-12

2010-11

2009-10

TOTAL ASSETS TURNOVER

RATIO

TOTAL ASSET TURNOVERRATIO

YEAR NET SALES TOTAL

ASSETS

TOTAL ASSET

TURNOVER RATIO

2013-14 2415.02 3288.24 0.73

2012-13 2235.15 2781.12 0.80

2011-12 2525.02 2833.14 0.89

2010-11 1867.88 2310.38 0.80

2009-10 1315.02 1332.8 0.98



c. Fixed Asset Turnover ratio

This ratio is also known as sales to fixed asset ratio. This ratio measures the efficiency and profit

earning capacity of the concern .higher the ratio greater is the intensive utilisation of fixed assets.

Lower ratio means less utilisation of fixed asset.

Fixed Asset Turnover Ratio =Net Sales/Net Fixed Assets

Table 19

Figure 10

Interpretation

This ratio indicates the extent to which the investments in fixed assets contribute towards sales. This

ratio shows the firm‟s ability in generating sales from all financial resources committed to fixed

assets. Fixed asset turnover ratio for the year 2009-10,2010-11 is 3.5 times which implies that the

company generates a sale of 3.5 rs for one rupee investment in fixed assets. Fixed asset turnover ratio

shows a decreasing trend from 2009-10 to 2013-14.

0

0.5

1

1.5

2

2.5

3

3.5

4

2013-14 2012-13 2011-12 2010-11 2009-10

FIXED ASSETS TURNOVER RATIO

FIXED ASSETS TURNOVERRATIO

YEAR NET SALES FIXED ASSET FIXED ASSETS

TURNOVER RATIO

2013-14 2415.02 1443.14 1.67

2012-13 2235.15 1279.49 1.74

2011-12 2525.02 1093.12 2.3

2010-11 1867.88 524.09 3.56

2009-10 1315.02 367.97 3.57



d. Current Asset Turnover Ratio

Current Asset Turnover Ratio =Net Sales /Current Assets

Table 20

Figure 11

Interpretation

This ratio shows the ability in generating sales from all financial resources committed to current

assets. Current asset turnover ratio for the year 2012-13 is 1.4 times which implies that the company

generates a sale of 1.4 rs for one rupee investment in current assets. Current asset turnover ratio shows

a decreasing trend from 2009-11 periods then it shows an increasing trend up to 13 after that

decreasing trend continues.

0

20

40

60

80

100

120

140

160

2013-14 2012-13 2011-12 2010-11 2009-10

CURRENT ASSETS TURNOVER RATIO

CURRENT ASSETSTURNOVER RATIO

YEAR NET SALES CURRENT ASSET CURRENT ASSETS

TURNOVER RATIO

2013-14 2415.02 1845.08 1.30

2012-13 2235.15 1501.63 1.48

2011-12 2525.02 1740.01 1.45

2010-11 1867.88 1786.27 1.04

2009-10 1315.02 964.82 1.36



e. Current Asset To Fixed Asset Ratio

Current Asset to Fixed Asset Ratio = Current Assets/Fixed Assets

Table 21

Figure 12

Interpretation

Here the trend variation is in both sides as we can see that in2009-10 the ratio is 2.62 and in 2010-11

it is 3.40 that means an increase .and after that in2011 -12 it started decreasing and the decreasing

trend continues.

0

0.5

1

1.5

2

2.5

3

3.5

4

2013-14 2012-13 2011-12 2010-11 2009-10

CURRENT ASSETS TO FIXED ASSETS RATIO

CURRENT ASSETS TOFIXED ASSETS RATIO

YEAR CURRENT

ASSET FIXED ASSET CURRENT ASSETS TO

FIXED ASSETS RATIO

2013-14 1845.08 1443.14 1.27

2012-13 1501.63 1279.49 1.17

2011-12 1740.01 1093.12 1.59

2010-11 1786.27 524.09 3.40

2009-10 964.82 367.97 2.62



f. Current Asset To Total Asset Ratio

Current Assets to Total Assets Ratio =Current Assets/Total Assets

Table 22

Interpretation

The above table shows the current asset to total asset ratio of the company.in the year2012-13

the ratio is lower as compared to other years. The ratio is fluctuating year to year.

YEAR CURRENT

ASSET TOTAL

ASSETS

CURRENT ASSETS TO

TOTAL ASSETS RATIO

2013-14 1845.08 3288.24 0.56

2012-13 1501.63 2781.12 0.53

2011-12 1740.01 2833.14 0.61

2010-11 1786.27 2310.38 0.77

2009-10 964.82 1332.8 0.72

0 0.2 0.4 0.6 0.8

2013-14

2012-13

2011-12

2010-11

2009-10

CURRENT ASSETS TO TOTAL ASSETS RATIO

CURRENT ASSETS TOTOTAL ASSETS RATIO

Figure 13



g. Debtors Turnover Ratio

This ratio is also called as receivables turnover ratio.it also measures the liquidity of the company

.the purpose of ratio is to discuss the credit collection power and policy of the firm .it indicates the

number of time debtors turnover each year. Higher the ratio lowers the average debtors to the lower

credit sales.

Debtors Turnover Ratio = Net credit Sales/Average Trade Debtors

Table 23

Figure 14

Interpretation

Debtors turnover ratio shows an increasing trend from 2009-10 to 2010-2011 then in the year 2011-12

it started declining after that in the years 2012-14 it showed a highly increasing trend. Increase in

debtor‟s turnover ratio shows a better management control over the debtors.

0

2

4

6

8

10

12

14

2013-14 2012-13 2011-12 2010-11 2009-10

DEBTORS TURNOVER RATIO

DEBTORS TURNOVERRATIO

YEAR NET SALES DEBTORS DEBTORS

TURNOVER

RATIO

2013-14 2415.02 209.75 11.51

2012-13 2235.15 198.70 11.24

2011-12 2525.02 336.15 7.51

2010-11 1867.88 239.26 7.8

2009-10 1315.02 171.06 7.68



h. Working Capital Turnover Ratio

This ratio is also known as working capital leverage ratio .this ratio indicates whether the working

capital has been effectively utilised in marketing sales. This ratio indicates the number of times the

working capital is turned over in the course of a year. A big ratio indicates efficient utilisation of

working capital.

Working Capital Turnover Ratio =Net Sales/Net Working Capital

Table 24

Figure 15

Interpretation

From the above table it is clear that working capital turnover ratio is fluctuating year to year.in 2009-

10 working capital ratio is -0.43 and in 2010-11 it was -0.77and in the period 2011-12 it was -0.83

and it was the higher change. And in2012-13 the ratio was -0.62and in 2013-14 the ratio was -

0.65.ratios shows a large variation from year to year.

-0.9

-0.8

-0.7

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0

2013-14 2012-13 2011-12 2010-11 2009-10

WORKING CAPITAL TURNOVER RATIO

WORKING CAPITALTURNOVER RATIO

YEAR NET SALES WORKING

CAPITAL

WORKING

CAPITAL

TURNOVER

RATIO

2013-14 2415.02 -3680.78 -0.656

2012-13 2235.15 -3569.96 -0.626

2011-12 2525.02 -3026.67 -0.834

2010-11 1867.88 -2417.7 -0.772

2009-10 1315.02 -3005.94 -0.437



C. PROFITABILITY RATIOS

Profitability reflects the final result of business operations. Poor operational performance may

indicate poor sales and hence poor profit. A lower profitability may arise due to lack of control over

the expenses .there are two types of profitability ratios, profit margin ratios and rate of return

ratios. Profit margin ratio shows the relationship between profit and sales. Popular profit margin

ratios are gross profit margin and net profit margin ratio. Rate of return ratio reflects the

relationship between profit and investment.

1. Net Profit Ratio

Net profit ratio means the relationship between net profit and sales of a firm.it shows the overall

efficiency of production, administration, financing. This ratio shows the earning left for shareholders

as a percentage of net sales.

Net Profit Ratio =(Net Profit/Sales)*100

Table 25

Figure 16

-40

-35

-30

-25

-20

-15

-10

-5

0

2013-14 2012-13 2011-12 2010-11 2009-10

NET PROFIT RATIO

NET PROFIT RATIO

YEAR NET SALES NET PROFIT NET PROFIT

RATIO

2013-14 2415.02 -625.13 -25.88

2012-13 2235.15 -249.53 -11.16

2011-12 2525.02 -175.90 -6.96

2010-11 1867.88 -113.44 -6.07

2009-10 1315.02 -483.13 -36.7



Interpretation

This ratio is used to measure the overall profitability and hence it is very useful to proprietors.it is an

index of efficiency and profitability of the business. Higher the ratio ,better is the operational

efficiency of the firm. Here the large increase was in the year 2009-10 and after that 2013-14 only the

increasing trend is visible.

2. Administrative Expense Ratio

Administrative Expense Ratio =(Administrative Expense/Net Sales)*100

Table 26

Figure 17

0 0.5 1 1.5 2

2013-14

2012-13

2011-12

2010-11

2009-10

ADMINISTRATIVE EXPENSE RATIO

ADMINISTRATIVE EXPENSERATIO

YEAR NET SALES ADMINISTRATIVE

EXPENSE

ADMINISTRATIVE

EXPENSE RATIO

2013-14 2415.02 35.86 1.48

2012-13 2235.15 37.51 1.67

2011-12 2525.02 31.15 1.23

2010-11 1867.88 32.40 1.73

2009-10 1315.02 22.80 1.73



Interpretation

Here the administrative expense ratio shows a decreasing trend. If the ratio is lower than profitability

will be higher and if ratio is higher profitability will be lower .here the administrative ratio is lower.

The trend is decreasing in nature in the year 2013-14 the ratio is 1.48 which is comparatively low

compared to the previous years.

3. Operating Profit Ratio

This ratio is complementary of net profit ratio. It is computed to overcome the limitation of net profit

ratio. This ratio measures the relationship between operating profit and sale.

Operating Profit Ratio =(Operating Profit/Sales)*100

Table 27

YEAR NET SALES OPERATING PROFIT OPERATING RATIO

2013-14 2415.02 -639.56 -26.48

2012-13 2235.15 -285.03 -12.75

2011-12 2525.02 -187.71 -7.43

2010-11 1867.88 -86.16 -4.61

2009-10 1315.02 -487.99 -37.10



Figure 18

Interpretation

Operating profit ratio explains the relation between operating profit and net sales .here all the year

shows operating profit. Operating profit ratio of autokast ltd is negative for all the years. Here the

graph is showing the decreasing trend.

-40 -30 -20 -10 0

2013-14

2012-13

2011-12

2010-11

2009-10

OPERATING RATIO

OPERATING RATIO



D. LEVERAGE RATIOS

i. Proprietary Ratio

Proprietary Ratio =Shareholders Fund/Total Assets

Table 28

Figure 19

Interpretation

The shareholders fund in the year 2013-14 is 1897 lakhs and the total asset is 3288 lakhs so the

proprietary ratio is 0.576. The shareholders fund in the year 2012-13 is 1897 lakhs and the total asset

is 2781 lakhs so the proprietary ratio is 0.682.The shareholders fund in the year 2011-12 is 1897 lakhs

and the total asset is 2833lakhs so the proprietary ratio is 0.669.The shareholders fund in the year

2010-11 is 1897 lakhs and the total asset is 2310 lakhs so the proprietary ratio is 0.821.The

shareholders fund in the year 2009-10 is 1897 lakhs and the total asset is 1332 lakhs so the proprietary

ratio is 1.42. The proprietary ratio is in decreasing trend .the ratio shoes the long term solvency of the

business. The acceptable norm of ratio is 1:3.the ratio shows the financial strength of company .a high

ratio indicates a secure position to creditors and low ratio indicates greater risk to creditors.

0 0.5 1 1.5

2013-14

2012-13

2011-12

2010-11

2009-10

PROPRIETARY RATIO

PROPRIETARY RATIO

YEAR SHARE

HOLDERS

FUND

TOTAL ASSETS PROPRIETARY

RATIO

2013-14 1897 3288.24 0.576

2012-13 1897 2781.12 0.682

2011-12 1897 2833.14 0.669

2010-11 1897 2310.38 0.821

2009-10 1897 1332.8 1.423



TREND ANALYSIS

Trend analysis is a comparative analysis of a company’s financial ratios over time method is

immensely helpful in making a comparative study of the financial statement of several years. It helps

to study the position of items .one year is taken as the base year and then calculate the next year’s

percentage value. It is one of the most important tools for analysing statement. The values are

calculated as percentage value 2009-10 is taken as base year. Review and appraisal of tendency in

connecting in accounting variables is simply called as trend analysis. An analysis of the trend ratios

over a past few years may well suggest the direction in which the concern in going. Average analysis

is an improvement over trend analysis.

Uses of trend analysis

It helps in easily knowing the direction of movement of activity of business.

It makes data brief and easily understandable.

It helps in comparing one period with other period.

Trend Percentage = Current year amount

*100

Base year amount

Here trend analysis is conducted on following attributes such as

a. Current asset

b. Current liability

c. Fixed asset

d. Working capital

e. net sales



Table showing the trend percentage of current assets in autokast ltd from 2009-14

Table 29

Trend percentage of current asset

Figure 20

Interpretation

The table shows an increasing trend in the current asset. Here 2009-10 is taken as the base year. The

trend in current asset is high due to good increase in the percentage in 2014 is 122.87 as compared to

100 in 2010. The increase in the current assets is quite satisfactory. Highly recorded trend was for the

period of 2010-11 which was about 185.14.

0

20

40

60

80

100

120

140

160

180

200

2009-10 2010-11 2011-12 2012-13 2013-14

CURRENT ASSET PERCENTAGE

CURRENT ASSETPERCENTAGE

YEAR CURRENT ASSET CURRENT ASSET

PERCENTAGE

2009-10 964.82 100

2010-11 1786.27 185.14

2011-12 1740.01 97.41

2012-13 1501.63 86.3

2013-14 1845.08 122.87



Table showing the trend percentage of current liabilities in autokast ltd from 2009-14

Table 30

Figure 21

Interpretation

Current liabilities were high at the period of 2011-12 and after that it started showing a declining trend

.in the period 2013-14 a small rise is shown.in the period 2011-12 it was about 113.38%.

90

95

100

105

110

115

2009-10 2010-11 2011-12 2012-13 2013-14

CURRENT LIABILITY PERCENTAGE

CURRENT LIABILITYPERCENTAGE

YEAR CURRENT LIABILITY CURRENT LIABILITY

PERCENTAGE

2009-10 3970.77 100

2010-11 4203.97 105.87

2011-12 4766.68 113.38

2012-13 5071.59 106.39

2013-14 5525.86 108.95



Table showing the trend percentage of fixed assets in autokast ltd from 2009-14

Table 31

Figure 22

Interpretation

Fixed asset is showing a decreasing trend in the year 2011-12 the fixed asset percentage was very high

which was about 208.57.now it shows a decreasing trend and in the period of 2013-14 it was

only112.79.

0

50

100

150

200

250

2009-10 2010-11 2011-12 2012-13

FIXED ASSET PERCENTAGE

FIXED ASSETPERCENTAGE

YEAR FIXED ASSET FIXED ASSET PERCENTAGE

2009-10 367.97 100

2010-11 524.09 142.42

2011-12 1093.12 208.57

2012-13 1279.49 117.04

2013-14 1443.14 112.79



Table showing the trend percentage of working capital in autokast ltd from 2009-14

Table 32

Figure 23

Interpretation

Working capital trend analysis stood at its maximum in the year 2011-12 with table shows all

positive trends. In the working capital current asset is higher than the current liability. The increasing

working capital trend is satisfactory.

0 50 100 150

2009-10

2010-11

2011-12

2012-13

2013-14

WORKING CAPITAL PERCENTAGE

WORKING CAPITALPERCENTAGE

YEAR WORKING CAPITAL WORKING CAPITAL

PERCENTAGE

2009-10 -3005.94 100

2010-11 -2417.7 80.43

2011-12 -3026.67 125.18

2012-13 -3569.96 117.95

2013-14 -3680.78 103.10



Table showing the trend percentage of sales in autokast ltd from 2009-14

Table 33

Figure 24

Interpretation

The table shows an increasing trend in sales. Here 2009-10 is taken as the base year. The

trend in sales is high due to good increase in the sales and increasing the number of customers. The

percentage in 2014 is 108.05 as compared to 100 in 2010. The increase in the sales is quite

satisfactory. Highly recorded sales were for the period of 2010-11 which was 142.04.

0

20

40

60

80

100

120

140

160

2009-10 2010-11 2011-12 2012-13 2013-14

SALES PERCENTAGE

SALES PERCENTAGE

YEAR SALES SALES PERCENTAGE

2009-10 1315.02 100

2010-11 1867.88 142.04

2011-12 2525.02 135.18

2012-13 2235.15 88.52

2013-14 2415.02 108.04



Table showing the trend percentage of gross profit in autokast ltd from 2009-14

Table 34

Figure 25

Interpretation

The Gross profit ratio helps in ascertain whether the average percentage of mark up on the

goods in maintained or not. If firm has higher gross profit margins then it is a sign of success

because all operating expires, interest charges and divided would have to be taken off from

gross profit. It company increase selling price of goods sold and decreases cost of goods sold

then this ratio is increases. However it company decrease selling price of goods sold then

this ratio decrease .here the gross profit trend is increasing in the initial stage and it shows the

same trend in the year 2013-14 also.

-800

-600

-400

-200

0

200

400

600

2009-10 2010-11 2011-12 2012-13 2013-14

GROSS PROFITPERCENTAGE

GROSS PROFIT

YEAR GROSS PROFIT GROSS PROFIT PERCENTAGE

2009-10 --275.13 100

2010-11 -100.13 -36.3

2011-12 -125.90 -45.7

2012-13 -175.53 -63.79

2013-14 -425.13 -154.51



FINDINGS

As a result of studying the efficiency, of working capital management, is analysed for a

period of five year commencing from the year 2009 to 2014 .The following are the important

findings derived from the study.

Financial position of the firm is satisfactory.

The low value of quick ratio indicates that the liquidity position of firm is not

Good.

Working capital position is not good and the low value of working capital

Turnover ratio shows that there is no optimum use of working capital in

Improving the efficiency of operation. The current ratio of firm is very low and it

Indicates inadequate working capital

The low value absolute liquidity ratio indicates that the firms liquidity

Position is not good.

The sale during the period under study shows a varying trend.

Total asset turnover ratio is in decreasing trend from 2011-12.it means increase in

Total asset has not bought about commensurate gain.

The current asset to fixed asset ratio is variating year by year and now it is in an

Increasing trend.

The debtors turnover ratio is increasing from 2009-10 .the higher ratio would indicate that

Debts are being collected more promptly. Increase in debtor’s turnover ratio shows better

Management control over the debtors.

The proprietary ratio of the firm is decreasing and it shows that firm is financially

Satisfactory.

The administrative expense ratio is in a decreasing trend from the year 2009 onwards and in

The year 2014 it reaches the lowest ratio.

Inventory turnover ratio of the firm is decreasing year by year.

Sales of the company are in a decreasing trend.



SUGGESTIONS

Company should give more importance to the working capital management, because the

current liabilities are much higher than current assets.

Company should improve the liquidity position and maintain a proper balance between

current assets and current liabilities. The company should adopt proper working capital

management otherwise it will affect the overall performance of the company.

Investment by the company in fixed asset is high. This is the main reason to decrease the

investment in current asset .it will lead to heavy depreciation.

Sales of the products produced by company are in a decreasing trend that should be changed.

Company should maintain a steady mark-up on the sales by controlling the operation and

manufacturing.



CONCLUSION

This project is the study on the working capital management in Autokast ltd. Autokast ltd is the

largest foundry in the public sector in south India. Most of the customers are located outside Kerala.

The company exports castings to USA & Europe also.in spite of its past liabilities autokast ltd is

striving to turn around .even though it is public sector company it does not enjoy any privilege or

patronage from public bodies.it is completing with the private sector in open market .the company‟s

current liabilities are much higher than the current assets and the firm has only a negative working

capital. This is the main problem of the company.

Therefore the company should give more importance to the working capital management .the

company should find out a turnaround strategy which should include capital restructuring .since the

bank loans are guaranteed by the government .the government may take initiative to settle the loan

,which are already overdue and repair the ground for the company to obtain working capital support.

Government should also produce sufficient finance to settle the old outstanding dues of KSEB, sales

tax etc.



BIBLIOGRAPHY

Journals and websites

ANNUAL REPORTS OF AUTOKAST LTD.FROM 2009-2013

http://www.autokast.com/

http://shodhganga.inflibnet.ac.in/

Books

a. I.M.PANDEY : FINANCIAL MANAGEMENT

10TH

EDITION, VIKAS PUBLISHING HOUSE pvt.Ltd

b. Chandra. P, “Financial Management Theory and Practice”,

“Tata McGraw Hill Publishing Co. Ltd, New Delhi.

c. PRASANNA CHANDRAN :FINANCIAL MANAGEMENT THEORY

&PRACTICE sultan Chand and sons

d. Davies. D, “The Art of Managing Finance”,

Mc Graw Hill Book Company, New Delhi

d. NARENDER KUMAR JAIN :WORKING CAPITAL MANAGEMENT

APH publishing

http://www.autokast.com/

http://shodhganga.inflibnet.ac.in/

sreeniprjct autokast ltd final

Education