SUMMER TRAINING REPORT ON “WORKING CAPITAL MANAGEMENT”

IN

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

SESSION 2012-2013

Under the Guidance of: SUBMITTED BY:

MISS __________ Abhishek Dixit

(Lecturer BBA Department) BBA 5thSEM.

ROLL NO: - .

DAV CENTENARY COLLEGE

NH-3, NIT FARIDABAD-121001

(AFFILIATED TO M.D.UNIVERSITY, ROHTAK)

PREFA CE

A summer Training is an integral part of our academic curriculum pursuing the training a student

get an opportunity to see the practical aspect of theory, Training makes the concept more clear.

The training report is the outcome of the summer Training I have undergone YMI Pvt. Ltd.

(1916) Mathura Road Faridabad (HARYANA) in the month 1st June 2013 to 31th July 2013 for

the partial fulfillment of B.B.A(CAM).

The project fundamentally was screening of prospective Preferences of the target retailers or

dealer and consumer Behavior with an eye on media planning. It explored my Creativity and

learning and leads me to the mental multiplication in the field of marketing under this project are

directed to me for my research work was NOIDA due to the short span of time. I analyze a

proper number of consumer and Retailers to get the attitude and behavior regarding the bikes

which are prevailing in the present market and collect all the required data by the help of

Questionnaire and conducting interviews and dealing.

I hereby present my detailed training report

ACKNOWLEDGEMENT

After completing the project at Yamaha Motors Ltd., it is a great pleasure for me to thank all

those who have helped me during the course of completion of my project.

I express my sincere thanks to Ms. Swati Mishra (Finance Manager) of Yamaha Motors India

Pvt. Ltd. for giving me a unique opportunity to do project in their esteemed organization.

Last but not the least I would like to place a word of appreciation on record for a all those who

directly or indirectly supported me.

Index

1. Company profile

2. Review of Literature

3. Research Methodology

(a) Objective of study

(b) Scope of study

(c) Method of data collection

(d) Limitation of the study

4. Data Analysis and Interpretation

5. Conclusion

6. Recommendations and Suggestion

7. Bibliography

8. Annexure

COMPANY’S

PROFILE

ABOUT LOGOMARK

The YAMAHA brand has its roots in the name of our founder, Torakusu Yamaha.

Familiar with western science and technology from his youth, Yamaha initially found

employment repairing medical equipment. This led to a request to repair a organ, a

project that resulted in the birth of the Yamaha brand. Confident of the potential of his

business, Yamaha struggled against great odds to establish Yamaha Organ Works.

Entrepreneurial spirit, far-sightedness, and determination to overcome difficulties fueled

his passion to succeed. This same spirit formed the foundation of the Yamaha brand,

and is a vital legacy of Yamaha Corporation today.

YAHAMA: Profile, Structure& Environment

Yamaha made its initial foray into India in 1985. Subsequently, it entered into a 50:50

joint venture with the Escorts Group in 1996. However, in August 2001, Yamaha

acquired its remaining stake as well, bringing the Indian operations under its complete

control as a 100% subsidiary of Yamaha Motor Co., Ltd, Japan.

India Yamaha Motor operates from its state-of-the-art-manufacturing units at Faridabad

in Haryana and Surajpur in Uttar Pradesh and produces motorcycles both for domestic

and export markets. With a strong workforce of 3000 employees, India Yamaha Motor

is highly customer-driven and has a countrywide network of over 400 dealers.

About the Director of YMI

YUKIMINE TSUJI appointed Yamaha Motor India's director sales and marketing

news.

New Delhi: Yamaha Motor India, the 100 per cent subsidiary of

Yamaha Motor Co Ltd, Japan, has announced the appointment of Y. Tsuji as the director, sales

and marketing.

Tsuji brings with him over 20 years of experience with Yamaha globally and will play a key role

in implementing Yamaha’s evolving growth strategy for India.

He will co-ordinate the sales, marketing and engineering functions to develop a strong product

line for the Indian market.

What is Kando ?

Kando is a Japanese word for the simultaneous feeling of deep satisfaction and intense

excitement that people experience when they encounter something of exceptional value.

At Yamaha Motor we believe that Kando can be generalized by the products and

services that surpass customer’s expectations.

Yet for all the emotional evaluation Kando provides, the feeling can be short lived, and

people may be touched only for a moment. Therefore, our challenge is to make sure that

all our products and services genuinely thrill, impress and touch customer’s heart at the

first time and every time. We strive to achieve our corporate mission by adhering to

these principles.

expectations. We can as we will earn a fair profits by putting forth a superior efforts to

satisfy our customers.

India Yamaha Motor Pvt. Ltd. (IYM)

Head Office:

A-3 Surajpur Industrial Area, Noida-Dadri Road, Surajpur - 201306, Distt. Gautam

Budh Nagar, U.P., India

Foundation:

Oct. 17, 2007

Start of operation:

April 1, 2008

Headed by:

Mr. Tsutomu Mabuchi, Managing Director and Chief Executive Officer

Capital:

1.5 billion rupee (as of Mar. 5, 2008), with plans to eventually increase capital to 5.6

billion rupee (approx. 16 billion yen)

Capital ratio:

70% by Yamaha Motor Co., Ltd.

30% by Mitsui & Co., Ltd.

Number of employees:

2000 (approx.)

Areas of business:

Development, manufacture and sales of motorcycles, spare parts and accessories. Export

of locally assembled motorcycles and parts

Scale of operations:

First year (nine months beginning Apr. 2008) projected sales of 10 billion rupee

(approx. 30 billion yen)

Introduction

The Two-Wheeler Market Globally

Globally, the Two-wheeler Industry is concentrated in the developing world, especially China

and India, Which together account for over half the total worldwide sales of Two-wheelers.

The Japanese Manufacturers, Honda, Yamaha, Suzuki and Kawasaki, dominate the Two-

Wheeler Industry globally currently, all major two wheeler market, except India are dominated

either by Japanese firms or their joint ventures. However, in the leading markets, such as China

and India and South-Asia, a host of local players exists.

Globally, four-Stroke engines are fast replacing the Two-Stroke variants with stricter

emission norms being imposed and vehicles powered by two-stroke being banned, four-stroke

powered two-wheeler have found increasing favour.

Powered Two-Wheeler Popular in Asian Countries such as China and India where

Motorcycle dominate the PTW market. Outside India, presence of Scooters is limited. Scooters

are far more popular in Europe than in the US. Europe has very High fuel prices, congested city

streets with limited parking space, and a long history of accepting scooters as a respectable mode

of transportation, all leading to a considerable interest in scooters.

Two-wheeler Industries: The Indian scenario

The Indian two-wheeler industry can be divided into three broad categories: scooters,

motorcycles and mopeds. Each of these categories can be further segmented on the basis of

several variables, like price, engine power, type of ignition and engine capacity.

The two-wheeler industry has come a long way since its inception in the early 1950s when

scooters were first produced in the country. Today, India is the second largest producer and

consumer of two-wheeler in the world; the Indian two-wheeler industry has grown rapidly over

the past 15 years. The demand for two-wheelers increased at a FY2013.

The Indian two-wheeler industry has undergone a significant change over the past 10 years with

the practical changing from mopeds to scooters and more recently, from scooters to motorcycles.

Scooters, which were considered the family vehicle for middle class Indians, are increasingly

losing their position as a cheap mode of personal transportation. With the reduction in the price

differential between scooters and motorcycles, there has been a perceptible shift towards

motorcycle motorcycles because of their better styling, higher fuel efficiency, and higher load

carrying capacity. Further, the decline in excise duty on scooters and motorcycles has reduced

their price differential in comparison with mopeds. The change in customer preferences, better

fuel efficiency and increased affordability of motorcycles has titled the demand in favour of

motorcycles. The share of scooters sales in two-wheeler sales has been reducing steadily since

FY2012 when scooters accounted for more than half of all two-wheelers sold in the country.

Till FY2010, scooters formed the largest segment accounting for 41% of total industry sales,

while motorcycles and mopeds accounted for 37% and 21% of all two-wheelers sales

respectively. However, during FY2011, for the first time, the sales of motorcycle outperformed

scooter sales.

The shares of scooters, motorcycles and mopeds inFY2011 were 33%, 48%, and 19%,

respectively. Although, the shares of scooters and mopeds declined in FY2005 and FY2013,

the shares of motorcycles increased to 60% and 69% respectively in these years.

Mission of Yamaha Motor India Private Limited

Our corporate mission is same as the mission of Yamaha Motor Company, Japan.

We create ‘kando’ –Touching people’s hearts.

“Kando” is a Japanese word for expressing Feelings Of Excitement And Deep Satisfaction.

The Yamaha Motor Company that creates Kando.Yamaha Motor India Private Limited

Registered Office

Allianz house, 2nd Floor,

273, Capt. Gaur Marg.

Sriniwas Puri

New Delhi

Faridabad Plant

19/6, Mathura

Faridabad

Surajpur Plant

A-3, Surajpur Industri

Noida-Dadri Road

Surajpur

YAMAHA MOTOR COMPANY JAPAN

1 Landmarks

2 General & commercial information

3 Hierarchical structure

4 Welfare activities

Ever since it’s founding as a motorcycle manufacturer on July 1, 1955, Yamaha Motor Company

has worked to build its products which stands among the very best in the world through its

constant pursuit of quality; and at the same time, through these products it has sought to

contribute to the quality of life of people all over the world. Following are the success of our

motorcycle, Yamaha being manufacturing Powerboats and outboards Motors in 1960, since then,

Engine and FRP Technology were used as a base to actively diversify and Globalize the area of

business. Today, our field of influence extends from the land to the sea and even into skies as our

business divisions have grown motorcycle operations to include Automotive Operations, Power

Product Operations, and Intelligent machinery Operations and PAS Operations.

Pursuing the Ultimate in Personal Vehicle

Ever since the founding Yamaha Motor Company has been a company that continues to develop

its expertise in the field of small Engines and Fiber Glass Reinforced Plastic (FRP)

Manufacturing as well as Electronic Control Technologies Yamaha Pursues the ideals of

building products of “High Quality” and “High Performance”.

Environment friendly and People friendly

In product building and promotional efforts Yamaha takes as one of the fundamental ideals the

concept that products, which are people friendly, should be Environment Friendly and products

that are environment friendly should also be people friendly. This concept is born of our

awareness that “ It is the Earth and Possible”. Yamaha Motor Company Supplies the “Power”

that moves people and helps them to live to their fullest as human beings. Yamaha vehicles have

the practical advantage of using the minimum of energy for human transport that means less

negative impact on the Environment.

Technological Advantages

At the hearts of the efforts of environmental preservation are the environmental management

system designed and implemented under the ISO 14001 international standard. Under the slogan

“Absolute Quality Control”. Yamaha was the early adopter of comprehensive Quality Control

System and quick to put in a place or Total Productive Management.

Producing means to an active Life

At Yamaha business and leisure are treated as insuperable parts of life that is a reason of striving

to help bring people around the world a more active life.

Landmarks of Yamaha Motor India Private Limited

1960: Secured License under Technical Collaboration with CEKOP, Poland.

1961: Obtained 23 acres of land for separate factory.

1962 : Assembly And Partial Manufacturing stored in plant I. Introduction to motorcycles with

Technical Collaboration with M\S CEKOP, Poland.

1964 : Machinery was installed in new building.

1965 : Manufacturing activities shifted from plant I to the present Building Of Yamaha Motor

Limited, Faridabad.

1970 : Introduction to scooters.

1972 : GTS a small Motorcycle was introduced.

1979 : Entered into a technical Collaboration with Yamaha Motor Company of Japan for

manufacturing of 350 cc Motorcycles.

1982 : Research and Development Section shifted to 19/2 Mathura Road, Faridabad.

1983 : Letter of intent obtained for manufacturing of 100cc Motorcycles Launched 350 cc

Motorcycles in market all over the India. Setting up of CNC Cell in an organization.

1997 : Launched of RXZ and 175 cc Escorts ACE.

1998 : YBX 4-Stroke Bi-wheeler was launched.

2000 : The share of Yamaha Motor has increased to Yamaha 74% and Escorts 26%.

YD125, 4 stroke Bi-wheeler was launched.

2001 : Yamaha Motor Escorts Limited become a subsidiary of Yamaha Motor Company and its

name changed from Yamaha Motor Escorts Limited to Yamaha Motor India Private Limited.

2002 : Launched Enticer 125cc and Libero 106 cc (4-Stroke) Motorcycles.

2004 : Launched Of FAZER 125 cc (4-Stroke).

2006 : Launched 125cc Bikes with 5 Gears “Gladiator”.

2007: Launched 125cc Bikes with CRUX”.

2008: Launched 100cc Bikes with CRUX R’’.

2009: Launched 125cc Bikes with YBX’’.

2010: Launched 125cc Bikes with YBR’’.

2011: Launched 125cc Bikes with FZ’’.

2012: Launched 125cc Bikes with FZ S’’.

2013: Launched 125cc scooter.

General Information: Yamaha Motor India Private Limited

Total Area : 116640 Sq. Mtrs.

Total Covered Area : 41350 Sq. Mtrs.

Date Of Starting : Jan 1, 1963

Production achieved in 2008-09 : Motorcycle : 75,582

Production achieved in 2009-10 : Motorcycle : 8,782

Yamaha : 1,10,684

Production achieved in 2010-11 YBR : 91,013

FZ : 1,550

FZS : 1,070

R15 : 1,58,806

Production achieved in 2011-12 : Rajdoot : 67,260

RX : 358

RX 135 : 20,890

Production achieved in 2012-13 : YBR : 66,660

FZ : 1,115

FZS : 26,290

R15 : 1000

Commercial Information (As per 2013 )

Total Investment : Rs 1400.25 Crores

Regular Supplier : 1000

Sales Outlet : Rs. 1250.15 Crores

Projected Purchase : Rs. 1200.12 Crores

Nos. Of Vehicle Sold (2004-05) :

Faridabad 105919

Surajpur 188519

Projected Growth 40%

YMIL Turnover Forecast : $ 80 MIllion

Indegenious Contents

Faridabad : 100%

Surajpur : 80%

FACTORY HOURS

The factory operates in three shifts as per the following details:

IST : 8:00 AM To 5:00 PM

IINd : 5:00 PM To 2:00 AM

IIIRD : 2:00 AM To 8:00 PM

WELFARE ACTIVITIES

MEDICAL FACILITIES

For providing domiciliary treatment to the employees and their dependents, a dispensary and a

full time doctor available in the plant.

GROUP ACCIDENT INSURANCE SCHEME

Employees not covered under ESI are automatically under the Company’s Group Accident

Insurance Scheme.

PROVISION OF LOANS

Members for purpose such as Marriages, Purchase Of Land, Construction Of House, Long Term

Medical Treatment, and Natural Calamities can obtain loans.

BENEVOLENT FUND

For providing financial help as a responsible co-operative Citizen, Rs. 2,00,000 are given to the

family of a deceased person.

SERVICES AWARDS

In appreciation on the long association, the company gives services awards as a mark of Honors

to the employees.

SCHOLARSHIPS

It is offered to the children of all employees.

TRAINING ACTIVITIES

There are three training center all over the India. The company is concerned with the

personnel growth and development of employees and sponsors them for various training and

development programs.

REVIEW

OF

LITERATURE

REVIEW OF LITERATURE OF WORKING CAPITAL MANAGEMENT

INTRODUCTION:

Working capital typically means the firm’s holdings of current, or short-term, assets such as

cash, receivables, inventory, and marketable securities. Much academic literature is directed

toward gross working capital, i.e., total current or circulating assets. These items are referred to

as circulating assets because of their cyclical nature. In a retail establishment, cash is initially

employed to purchase inventory which is in turn sold on credit and result in accounts receivable

Corporate executives devote a considerable amount of attention to the management of working

capital. Net working capital (current assets minus current liabilities) provides an accurate

assessment of the liquidity position of the firm. With the liquidity- profitability dilemma solidly

authenticated in the financial scheme of management, concerted efforts are made to ensure the

ability of the firm to meet those obligations which mature within a twelve – month period.

Management must always ensure the solvency and viability of the firm.

An examination of the components of working capital is helpful at this point because of the

preoccupation of management with the proper combination of assets and acquired funds. First,

short-term, or current, liabilities constitute the portion of funds which have been planned for and

raised.

CONCEPT OF WORKING CAPITAL

There are to possible interpretations of working capital concept:

(a) Balance Sheet Concept

(b) Operating Cycle Concept

It goes without saying that the pattern of management will be very largely influenced by

the approach taken in defining it. Therefore the two concepts are discussed separately in a

nutshell.

(A) BALANCE SHEET CONCEPT

There are two interpretations of working capital under

the balance sheet concept. It is represented by the excess of current assets over current

liabilities and is the amount normally available to finance current operations. But, some-

times working capital is also used as a synonym for gross or total current assets. In that case,

the excess of current assets over current liabilities is called the net current assets. Institute of

Chartered Accountants of India, while suggesting a vertical form of balance sheet, also

endorsed the former view of working capital when id described net current assets as the

difference between current assets liabilities.

The conventional definition of working capital in terms of the difference between the current

assets and the current liabilities somewhat confusing. Working capital is really what a part of

long- term finance is locked in and used for supporting current activities. Consequently, the

larger the amount of working capital so derived, greater the proportion of long-term capital

sources siphoned off to short- term activities. It is difficult to say whether this is right or

wrong. Apparently, when firms are warned about tight working capital situation, the logic of

the above definition would perhaps indicate diversion of long- term finances for short-term

purposes. For, if short-term bank loan were procured to bring in cash, under the conventional

method, working capital would evidently remainunchanged.

Liquidation of debtors and inventory into cash would also keep the level of working capital

according to this definition may produce a false sense of security at a time when cash resources

may be negligible.

(B) OPERATING CYCLE CONCEPT

A company’s operating cycle typically consists of

three primary activities: purchasing resources, producing the product, and distributing

(selling) the product. These activities create fund flows that are both unsynchronized and

uncertain. They are unsynchronized because cash disbursements (for example, payments for

resource purchases) usually take place before cash receipts (for example, collection of

receivables. They are uncertain because future sales and costs, which generate the respective

receipts and disbursements, can’t be forecasted with complete accuracy. If the firm is to

maintain liquidity and function properly, it has to invest funds in various short-term assets

(working capital) during this cycle. It has to maintain a cash balance to pay the bills as they

come due. In addition, the company must invest in inventories to fill customer order

promptly. And, finally, the company invests in accounts receivable to extend credit to its

customers.

Operating Cycle = Inventory conversion period + Receivables conversion period

The inventory conversion period is the length of time required to produce and sell the

product. It is defined as follows:

Average inventory

Inventory conversion period =

Cost of sales / 365

The receivables conversion period, or average collection period, represents the length of time

required to collect the sales receipts. It is calculated as follows:

Accounts receivables

Receivables conversion period = Annual credit sales / 365

3. OPTIMAL LEVEL OF WORKING CAPITAL INVESTMENT

The optimal level of

working capital investment is the level expected to maximize shareholder wealth. It is a function

of several factors, including the variability of sales and cash flows and the degree of operating

and financial leverage employed by the firm. Therefore no single whirling capital investment

policy is necessarily optimal for all firms.

(I) PROPORTIONS OF SHORT- TERM AND LONG-TERM FINANCING

Not only does a firm have to be concerned about the level of current assets; it also has to

determine the proportions of short- and long- term debt to use in financing these assets. This

decision also involves tradeoffs between profitability and risk.

Source of debt financing are classified according to their maturities. Specifically, they can be

categorized as being either short- term or long- term, with short-term sources having

maturities of 1 year or less and long-term sources having maturities of greater than 1 year.

(II) COST OF SHORT TERM VERSUS LONG TERM DEBT

Historically long-term interest rates normally exceed short-term rates because of the reduced

flexibility of long-term borrowing relative to short-term borrowing. Infact, the effective cost of

long-term debt may be higher than the cost of short- term debt, even when short-term interest

rates are equal to or greater than long-term rates. With long-term debt, a firm incurs the interest

expenses even during times when it has no immediate need for the funds, such as during seasonal

or cyclical downturns. Therefore, the cost of long-term debt generally is higher than the cost of

short-term debt.

(III) RISK OF LONG-TERM VERSUS SHORT-TERM DEBT

Borrowing companies have different

attitudes toward the relative risk of long-term versus short-term debt than lenders. Whereas

lenders normally feel that risk increases with maturity, borrowers feel that there is more risk

associated with shot-term debt. The reasons for this are two fold.

First, there is always the chance that a firm will not be able to refund its short-term debt. When a

firm’s debt matures, it either pays off the debt as part of a dept reduction programmed or

arranges new financing. At the time of maturity however the firm could be faced with financial

problems resulting from such events as strikes, natural disasters, or recessions that cause sales

and cash inflows to decline. Under these circumstances the firm may find it difficult or even

impossible to obtain the needed funds.

4. OVERALL WORKING CAPITAL STRATEGIES

Until now this chapter has

analyzed the working capital investment and financing decision independent of one another in

order to examine the profitability risk tradeoff associated with each, assuming that all other

factors are held constant. Effective working capital policy however also requires the

consideration of the joint impact of these decisions on the firm’s profitability and risk.

RERSEACHMETHODOLOGY

OBJECTIVE OF THE STUDY

The basic purpose of the study is to get a feel of practically of Accounts Deptt In

Yamaha Motors India Pvt.Ltd. The other objectives are as:

(1)To understand the basic organization hierarchy.

(2)To understand the working culture of accounts department.

(3)To analyze accounting system and terminology used for booking of accounts Transactions.

(4)To analyze basics of management information system

SCOPE OF THE STUDY

1. It helps in estimating the future cash requirement of the organization.

2. Helpful in selection of proper source of finance.

3. Helps in taking the investment decision of surplus cash.

4. Helpful in getting cash discount.

5. Helps in planning for purchase of asset.

6. Helps in determining the proper dividend policy.

7. Helps in reducing the over spending of money.

8. `Effective control on cash.

METHOD OF DATA COLLECTION

The data can be selected in two ways:

. Primary

. Secondary

PRIMARY SOURCES OF DATA COLLECTIONS:

The primary sources of data are collected by the personal interviews with the senior officers

and colleagues in the organization

SECONDARY SOURCES OF DATA COLLECTION

The secondary data is collected by the detailed study and analysis of the various records of

the company.

HYPOTHESIS OF THE STUDY

The cash and their control has become an essential tool of the management for controlling costs

and maximizing profits.

The cash and its administration are one of the principal means of meeting its end.

.

RELEVANCE OF THE STUDY

The study is done on the topic of CASH MANAGEMENT in the Escort limited. This topic

includes the planning and control of Cash and expenditure.

It helps in deciding whether or not to commit resources to a particular long-term as well as short

term projects whose benefits to be realized during the year or more than one year.

LIMITATIONS

Although every effort has been in to collect the relevant information through the sources

available, still some relevant information could not be gathered.

A Busy Schedule of Concerned Executives: The concerned executives were having very busy

schedule because of which they were reluctant to give appointment.

Time: The time duration could not provide ample opportunity to study every detail of working

capital management of the company.

Unawareness: Executives were unaware of many terms related to working capital study while

asking to them.

Confidential Information: As the company on account of confidential report has not disclosed

some figures. Moreover, in some cases separate accounts of division are not separately

maintained thereby, leading to restrictions in study.

DATA ANALYSIS

&

INTERPRETATION

USE OF CELEBRITY HELPS IN SELLING THE PRODUCT

Sr. No. OpinionNo. of

Respondents Percentage(%)

1 Yes 90 75.00%2 No 30 25.00%

90

75.00%

30

25.00%0

10203040

50607080

90

PERCENTAGE%

Yes No

OPINION

USE OF CELEBRITY

No. Of Respondents

Percentage%

ANALYSIS

75% of the respondents considers that use of celebrity helps in selling the product.

25% of the respondents does not considers use of celebrity helps in selling the product.

AWARENESS ABOUT CELEBRITY BY YAMAHA & HERO

Sr. No. OpinionNo. of

Respondents Percentage(%)1 Yes 102 85.00%2 No 18 15.00%

YesNo

102

85.00%

1815.00%

0

20

40

60

80

100

120

PERCENTAGE%

OPINION

AWARENESS ABOUT YAMAHA CELEBRITY

Percentage(%)

No. of Respondents

ANALYSIS

85% of the respondents are aware about the celebrity associated with YAMAHA15% of the respondents are unaware about the celebrity associated with HERO.

ACCOUNTS RECEIVABLE MANAGEMENT

INTRODUCTION: -

Trade credit arises when a firm sells its products or services on credit

and does not receive cash immediately. It is an essential marketing tool, acting as a bridge for the

movement of goods through production and distribution stages to customers. A firm grants trade

credit to protect its sales from the competitors and to attract the potential customers to buy its

products at favorable terms. Trade credit creates receivable or book debts which the firm is

expected to collect in the near future. The book debts or receivable arising out of credit has tree

characteristics:

1 First, it involves an element of risk which should be carefully analyzed. Cash sales are

totally risk less, but not the credit sales as the cash payment is yet to be received.

2 Second, it is based on economic value to be received later on.

3 Third, it implies futurity. The cash payment for goods or services received is the buyer

will be made by him in a future period. The customer from whom receivable or book

debts have to be collected in the future are called trade debtors or simply as debtors and

represent the firm’s claims or assets.

Receivable constitutes a substantial portion of current assets of

several firms. For example in India, trade debtors, after inventories, are the major

components of current assets. They form about one-third of current assets in India. Granting

credit and creating debtors amount to the blocking of the firm’s funds. The interval between

the date of sale and the date of payment has to be financed out of working capital. This

necessitates the firm to get funds from banks or other sources. Thus, trade debtors represent

investment. AS substantial amounts are tied-up in trade debtors, it needs careful analysis and

proper management.

CREDIT POLICY: NATURE AND GOALS

A firm’s investment in accounts receivable depends on:

(a) The volume of credit sales.

(b) The collection period.

For example, if a firm’s credit sales are Rs. 30 Lack per day and customers, on an average, take

45 days to make payment, then the firm’s average investment in accounts receivable is:

Daily credit sales x Average collection period

Rs. 30 lacks x 45 = Rs. 1350 Lacks

The Investment in receivable may be expressed in terms of costs instead of sales value.

The volume of credit sales is a function of the firm’s total sales and the % of credit sales to total

sales. Total sales depend on market size, firm’s share, product quality, intensity of competition,

economic condition etc. The financial manager hardly has any control over these variables. The

percentage of credit sales to total sales is mostly influenced by the nature of business and

industry norms. For example, car manufacturer in India, until recently, were not selling cars on

credit. They required the customers to make payment at the time of delivery; some of them even

asked for the payment to be made in advance.

There is one way in which the financial manager can affect the volume of credit sales and

collection period and consequently, investment in accounts receivables. That is through the

changes in credit policy. The term credit policy is used to refer to the combination of three

decision variables:

i) Credit standards

ii) Credit terms

iii) Collection efforts

Which the financial manager has influence:

Credit standards are criteria to decide the types of customers to whom goods could be sold on

increase. The firm will also be exposed to higher risk of default.

Credit terms specify duration of credit and terms of payment by customers. Investment in

accounts receivables will be high if customers are allowed extended time period for making

payments.

Collection efforts determine the actual collection period. The lower the collection period, the

lower the investment in accounts receivable and vice-versa

GOALS OF CREDIT POLICY:

A firm may follow a stringent credit policy. The firm following a

lenient credit policy tends to sell on credit to customers on very liberal terms and standards;

credits are granted for longer periods even to those customers whose credit worthiness is not

fully known or whose financial position is doubtful. In contrast, a firm following a stringent

credit policy sells on credit on a highly selective basis only to those customers who have proven

creditworthiness and who are financially strong. In practice, firms follow credit policies ranging

between stringent to lenient.

MARKETING TOOL:

Why at all do firm sell on credit? Firms use policy as a marketing tool for

expanding sales. In a declining market, it may be used to maintain the market share. Credit

policy helps to retain old customers and create new customers by weaning them away from

competitors. In a growing market, it is used to increase the firm’s market share. Under a highly

competitive situation or reversionary economic conditions, a firm may loosen its credit policy to

maintain sales or to minimize erosion of sales.

Why do companies in India grant credit?

Companies in practice feel the necessity of granting credit for several reasons:

1. Competition Generally the higher the degree of competition, the more the credit granted by a

firm. However, there are exceptions such as firms in the electronics industry in India.

2. Company’s bargaining power If a company has a higher bargaining power via-a- vis its

buyers, it may grant no or less credit. The company will have a strong bargaining power if it has

strong product, monopoly poor, Brand image, Large size or strong financial position.

3. Buyer’s requirements In a number of business sectors buyer/dealers are not able to operate

without extended credit. This is particularly so in the case of industrial products.

4. Buyer’s status Large buyers demand easy credit terms because of bulk purchases and higher

bargaining power. Some companies follow a policy of not giving much credit to small retailer’s

since it is quite difficult to collect dues from them.

5. Relationship with dealers Companies sometimes extend credit to dealers to build long-term

relationship with them or to reward them for their loyalty.

6. Marketing tool Credit is used as a marketing tool, particularly when a new product is launched

or when a company wants to push its weak product.

7. Industry Practice Small companies have been found guided by industry practice or norm more

than the large companies. Sometimes companies continue giving credit because of the past

practice rather than industry practice.

8. Transit delays This is the forced reason for extended credit in the case of a number of

companies in India. Most companies have evolved system to minimize the impact of such delays.

Some of them take the help of banks to control cash flows in such situation.

INVENTORY MANAGEMENT

INTRODUCTION:-

Inventory constitutes the significant part of current assets of a large majority of

companies in India. On an average, inventories are approximately 60 % of current assets in

public limited companies in India. Because of the large size of inventories maintained by firms, a

considerable amount of fund is required to be committed to them. It is, therefore, absolutely

imperative to manage inventories efficiently and effectively in order to avoid unnecessary

investment. A firm neglecting the management of inventories will be jeopardizing its long run

profitability and may fail ultimately. It is possible for a company to reduce its levels of

inventories to a considerable degree, e.g., 10 to 20 %, without any adverse effect on production

and sales, by using simple inventory planning and control techniques. The reduction in

‘excessive’ inventories carries a favorable impact on a company’s profitability.

NATURE OF INVENTORIES: -

Inventories are stock of the product a company is manufacturing for sale

and components that make up the product. The various forms in which inventories exist in a

manufacturing company are: raw materials, work-in-process and finished goods.

1 Raw materials are those basic inputs that are converted into finished product through

the manufacturing process. Raw materials inventories are those units which have been

purchased and stored for future productions.

2 Work-in-process inventories are semi-manufactured products. They represent

products that need more work before they become finished products for sale.

3 Finished goods inventories are those completely manufactured products which are

ready for sale. Stocks of raw materials and work-in-process facilitate production,

while stock of finished goods is required for smooth marketing operations. Thus,

Inventories serve as a link between the projection and consumption of goods.

The levels of three kinds of inventories for a firm depend on the nature of its business. A

manufacturing firm will have substantially high levels of all there kinds of inventories, while a

retail or wholesale firm will have a very high level of finished goods inventories and no raw

materials and work-in-process inventories. Within manufacturing firm’s there will be

differences. Large heavy engineering companies produce long production cycle products;

therefore, they carry large inventories. On the other hand. Inventories of a consumer product

company will not be large because of short production cycle and fast turnover.

A fourth kind of inventory, supplies is also maintained by firms. Supplies include office and

plant cleaning materials like soap, brooms, oil, fuel, light bulbs etc. These materials do not

directly enter production, what are necessary for production process usually, these supplies are

small part of the total inventory and do not involve significant investment. Therefore, a

sophisticated system of inventory control may not be maintained for them.

NEED TO HOLD INVENTORIES: -

The question of managing inventories arises only when the comp-any holds inventories.

Maintaining inventories involves typing up of the company’s funds and incurrence of storage

and handling costs. If it is expensive to maintain inventories, why do companies hold

inventories? There are three general motives for holding inventories.

1 Transactions Motive emphasis’s the need to maintain inventories to facilitate smooth

production and sales operations.

2 Precautionary Motive necessities holding of inventories to guard against the risk of

unpredictable changes in demand and supply forces and other factors.

3 Speculative Motive influences the decision to increase or reduce inventory levels to take

advantage of price fluctuations.

OBJECTIVE OF INVENTORY MANAGEMENT: -

In the context of inventory management, the firm is faced with the problem of meeting two

conflicting needs:

1 To maintain a large size of inventory for efficient and smooth production and sales

operations.

2 To maintain a minimum investment in inventories are not desirable. These are two danger

points within which the firm should operate. The objective of inventory management

should be to determine and maintain optimum level of inventory investment. The optimum

level of inventory will lie between the two danger points of excessive and inadequate

inventories.

The aim of inventory management, thus, should be to avoid excessive and inadequate levels of

inventories and to maintain sufficient inventory for the smooth production and sales operations.

Efforts should be made to place an order at the right time with the right source to acquire the

quantity at the right price and quality. An effective inventory management should.

1 Ensure a continuous supply of raw materials to facilitate uninterrupted production.

2 Maintain sufficient stocks of raw materials in periods of short supply and anticipate price

changes.

3 Maintain sufficient finished goods inventory for smooth sales operation, and efficient

customer service.

4 Minimize the carrying cost and time.

5 Control investment in inventories and keep it at an optimum level

INVENTORY MANAGEMENT TECHNIQUES : -

In managing inventories, the firm’s objective should be in consonance with the shareholders.

Wealth maximization principle. To achieve this, the firm should determine the optimum level of

inventory. Efficiently controlled inventories make the firm flexible. Inefficient inventory control

results in unbalanced inventory and inflexibility the firm may someti9mes run out of stock and

sometimes may pile up unnecessary stocks. This increases the level of investment and makes the

firm unprofitable.

To manage inventories efficiency, answers should be sought to the following two questions: -

1 How much should be ordered?

2 When should it be ordered?

The first question, how much to order, relate to the problem pf determining economic order

quantity (EOQ), and is answered with an analysis of the costs of maintaining certain level of

inventories. The second question, when to order, arise because of uncertainty and is a problem of

determining the re order point.

RECOMMENDATIONS

&

SUGGESTIONS

Recommendations

However the company implemented the change process effectively, but there were still some

weaknesses. So, I would recommend some ideas, which the company could have implemented

for a successful change process and I will also give some recommendations on future measures,

which the company can take to bring about effective change. These are as follows:

IYMPL went for the installation of new machinery to cope up with the technological

changes. Instead of installing the new machinery, they could have got the old machinery

upgraded. This would have saved a lot of extra cost incurred.

IYMPL must respond to changes in its environment quickly. When competitors introduce

new products or services, government agencies enact new laws, 52important sources of supply

go out of business, or similar environmental changes take place, YMIPL should respond quickly

and should make plans to implement changes so as to bring about an effective and a planned

change process. This type of a change process will ensure less resistance from the employees.

IYMPL must try to build good relations between employees in the organization, as the

people working in the organization are a mixture of Japanese and Indians, which are totally

different cultures. So maximum co-ordination between the Indians and the Japanese employees

should be forced so as to improve the overall efficiency of the employees.

To improve the working environment within the organization, IYM should organize

cultural programmers so as to get the Japanese and the Indian culture together. This would fill up

the cultural gaps between employees in the organization and they would respect each other’s

cultures, which in turn is good for a bright future of the company.

CONCLUSIONS

CONCLUSIONS

The purpose of this project report was to provide an analytical overview of Working Capital

Management at YAMAHA MOTORS INDIA PVT. LTD.

To conclude the project I can say that management has been making constant efforts, with

reasonable success to attain efficiency in management of Working Capital.

The entire process of Working Capital Management at YAMAHA MOTORS INDIA PVT.

LTD. is backed up by a well-organized information system, which is used to make forecasts

with reasonable accuracy. Yamaha Motors enjoys a good rapport with its suppliers as well as

with its customers, enabling it to make payments for liabilities whenever they are due.

Its return on investments has not been very phenomenal. Though the figures show a good

return on investment but it is quite clear that return on Investment figure has been steadily

growing. In the future it is likely to earn more returns on investments.

Management also hopes to reduce the operating cycle, with further improvement in inventory

holding periods and better management in dealing with debtors. Through efficient inventory

management, inventory levels have been brought down.

The Marketing Department is in continuous touch with customers. Regular follow up of

payment being done. This is Infact reflected upon by the cycle time as shown by the

operation cycle.

Finance Department is working on a war footing to improve the financial health. It has

opened six Depots to increase its Turnover. They are really in an aggressive mood to increase

their market share, and are very hopeful for a better tomorrow.

BIBLIOGRAPHY

Bibliography

BOOKS

Financial Management- Gupta S.K

Management Accountancy _GOLE D.K

Cost and Management Accountancy Maheshwari S.L

Financial Management and Policy, C.VAN James Horne.

WORLD WIDE WEB

www.Yahama.com

www.economictimes.com

www.planware.com

www.icraindia.com

Other than Web

M.I.S of the company

Annual Reports

QUESTIONARE

Find the correct option

Q.persentage of investors with regard to age group

Ans. 20-25 25-35

35-55 above55

Q. Persentage of investors with regard to the

occupation

Ans. Service student

business other

Q. Persentage of investors with regard to the

income group

Ans. upto 10000 10000-20000

20000-40000 above40000

Q. Awarenass of people reagarding unicon mutual

fund

Ans. Yes no

Q. Invest in unicon mutual fund or not

Ans. Yes no

Q. Regularity of investment

Ans. Yes no

Q. Frequency of investmant in mutual fund

Ans. less than 3 month 6-9 month

9-12 month above 1 year

Q. Investors pref. Reagarding type of mutual fund

Ans. Equity debt hybrid

Q. Preference reagarding mode of investment

Ans. One time sip

Q. Performance in comparison with competitors

Ans. Outstanding good

acceptable poor

v.poor

Q. Satisfaction from returns/service

Ans. Highly satisfied satisfied

moderate dissatisfied

highly dissatisfied

Q. Satisfaction from information provided by

unicon mutual fund

Ans. Fully satisfied not fully

satisfied

Q. Satisfaction by time taken in dispatch of

redemtion request

Ans. Highly satisfied satisfied

moderate dissatisfied

highly dissatisfied

Q. Reinvestment unicon mutual fund

Ans. Very likely quite likely

possibly unlikely very unlikely