CHAPTER 1- INTRODUCTION

PART A: INDUSTRY SCENARIO

Manufacturing is the production of merchandise for use or sale using labour and machines, tools,
chemical and biological processing or formulation. The term may refer to a range of human activity,
from handicraft to high tech, but is most commonly applied to industrial production, in which raw
materials are transformed into finished goods on a large scale. Such finished goods may be sold to
other manufacturers for production of other more complex products, such as aircraft, household
appliances, furniture, sports equipment or automobiles, are sold to wholesalers, who in turn sell them
to retailers and from retailers to end users/consumers.

Manufacturing process are the steps through which raw materials are transformed into a final
product. The manufacturing process begins with the product design and materials specification from
which the product is made. These materials are then modified through manufacturing processes to
become the required product. Manufacturing takes turns under all types of economic systems. In
capitalist free markets, goods are manufactured on demand by millions of small independent
producers in direct competition with each other. In capitalist captive markets, goods are mass-
produced by legally protected publishing and manufacturing monopolies. In Collectivist markets, the
manufacturing of goods is entirely directed by the state based on necessity.

Manufacturing is a broad term. Any process that virtually turns a raw material into a finished product
through use of a machine can be considered manufacturing. If you look around at the objects strewn
in the room in which you’re currently sitting, you’ll see that quite a few things are manufactured.
However, we can break down the types of manufacturing based on what companies produce or by
industry, how they produce them and the level of engineering effort required to manufacture them.

Modern manufacturing includes all intermediate processes required in the production and integration
of a product's components. Some industries, such as manufacturing industries came into being with
the outbreak of technological and socio-economic transformations in the western countries in 18th-
19th century. This was widely known as industrial revolution. It began in Britain and replaced the
labour-intensive textile production with mechanization and use of fuels
as semiconductors and steel manufacturers using team fabrication instead. The manufacturing sector
is closely connected to web engineering and industrial design.
Rail wheel factory manufactures cast steel wheels by a controlled pressure pouring process. In this
process, the raw material used is pedigreed scrap (old used wheel sets, axles etc., rejected as unfit for
use by the railways). The scrap steel is melted in ultra-high frequency electric arc furnace.
Railways transport is a method for movement of passengers and goods on wheeled vehicles running
on rails. Present day transportation of travellers and merchandise couldn’t be envisioned without
trains, transport devices that bombshell our industry, human extension and the way we can move
starting from one place to another.

It all began 2000 years ago in Egypt, Babylon and Greece wherein transport of individuals and goods
was carried out with trucks that were pulled by creatures (horses or bulls), and their specialists
immediately saw to it that creatures will spend less energy if the cart was going on foreordained way,
without possibility for controlling or going over uneven territory. As a better approach for transport,
they laid out streets with pre-constructed requirements for wheels. These were the world’s first
railroad tracks, and archaeological stays of them can even now be found in Italy and Greece. The
most well-known case of these old stone carved “wagonways” can be found in the Isthmus, Greece.

These wagonways left unused after the fall of Roman Empire and figured out how to return simply
after expanded exchanging and early industrial efforts of European Renaissance. By eighteenth
century, each mine in Great Britain had its own particular basic railroad system, with steeds pulling
trucks from mines to industrial facilities. Changes to this sort of transport came in 1774 after the
world got some answers concerning James Watt fantastic revelation – stationary steam engine. In the
first-place steam motors began running along primitive rail tracks in 1804. Matthew Murray figured
out how to showcase his straightforward train to begin with, however Richard Trevithick got more
consideration with his “Penydarren” train that pulled weight of 25 tons and 70 people in its first ride.
This occasion demonstrated to the specialist group, that pressurized steam motors have enough
energy to wind up and helpful for transport of people and goods.

As train innovation got massive updates over those first few decades of public work, urban designers
in London began formulating first plan for inter-city railroad tracks and underground passengers.
The well-known “London Underground” area started its work in 1863 and despite the fact that it got
much protests as a result of the smoke in the passengers, it kept developing until 1890 when whole
London train fleet started using electrical motors. This marked the start of the new period of urban
quick travel frameworks, and underground Metros began showing up crosswise over whole world.

Another essential crossroads in the historical backdrop of the trains was presentation of Diesel
engines, which conveyed the end to the time of steam trains. After Second World War almost
absolute majority of the world left steam behind and grasped much quicker, simpler to keep up solid
diesel fuel motors. As time went on, diesel motors got to be consolidated with electrical ones,
empowering trains to utilize best of both worlds. Today’s trains represent one of the most imperative
ways people and goods travel. Huge urban communities can’t live without underground metro
framework that carry individuals consistently. Heavy and durable mechanical trains carried 40% of
overall products between towns, nations and continents. With the slowdown in world economic
growth, the Rail Wheel industry has also suffered a certain extent but still maintained a relatively
optimistic growth. During the past four years, Rail Wheel market maintained average annual growth
rate of 2.77% from 3280 million in 2013 to 3560 million in 2016. Business Report analysts believe
that in the next few years, Rail Wheel market size will be further expanded, and by 2021, the market
size of the Rail Wheel market will reach 4410 million.

Having established itself as a reliable source of high quality wheels, axles and wheelsets for meeting
the requirement of Indian railways, Rail Wheel Factory (RWF) is presently on the threshold of a
major effort to diversity its customer base. Concerted efforts are on to explore the export market for
wheels and axles and RWF as a major supplier in the global market. These efforts are being
complemented by substantial initiatives in augmenting the capacity of RWF and replacement and
up-gradation of existing machinery.
There is also consistent endeavor to widen product range by development of new types of wheels
and axles. Setting up of design, development and testing centers is a major effort in this direction
which would empower RWF to tackle future needs.
INTRODUCTION TO FINANCE:
Finance is the life blood and nerve centre of a business, just as circulation of blood is essential in the
human body for maintaining life. Finance is very essential for smooth running of business. Right
from the very beginning i.e., conceiving an idea to business, finance is needed to promote or establish
the business, acquire fixed assets, make investigations such as market surveys etc., develop product,
keep men and machines at work, encourage management to make progress and Create values. Even
an existing firm may require further finance for making improvement or expanding the business.

BUSINESS FINANCE
Business finance is a term that encompasses a wide range of activities and disciplines revolving
around the management of money and other valuable assets. Business Finance is that business
activity which is concerned with the acquisition and conservation of capital funds in meeting
financial needs and overall objectives of business enterprises.

DEFINITION
According to Prater and Wert
“Finance deals primarily with raising, administration and disbursing funds by privately owned
business units operating in non-financial fields of industry”.

According to H.G.Gugtman and H.E.Dougall

“Finance can be broadly defined as activity and administration of funds used in business”.

FINANCIAL MANAGEMENT

Financial management is a body of business concerned with the efficient and effective use of either
equity capital, borrowed cash or any other business funds as well as taking the right decision for
profit maximization and value addition of an entity. Financial Management refers to the efficient and
effective management of money (funds) in such a manner as to accomplish the objectives of the
organization. It is the specialized function directly associated with the top management. It includes
how to raise the capital, how to allocate it i.e. capital budgeting. Not only about long-term budgeting
but also how to allocate the short-term resources like current assets. It also deals with the dividend
policies of the shareholders.

DEFINITION

“Financial Management is the Operational Activity of a business that is responsible for obtaining and
effectively utilizing the funds necessary for efficient operation.” by Joseph Massie.

“Financial management is the area of business management devoted to a judicious use of capital and
a careful selection of sources of capital in order to enable a business firm to move in the direction of
reaching its goals.” by J.F.Bradlery.

IMPORTANCE OF FINANCIAL MANAGEMENT

 Sound financial management is indispensable for any organization where funds are involved.
Efficient and effective management of finance is essential for both profit and non-profit oriented
organization.

 Financial management helps in the effective deployment of funds in fixed assets and working
capital. It helps profits planning, capital spending, measuring costs and inventory control,
accounts receivable etc.

 Financial management also help in ascertaining how the company would perform in future and
essentially helps in optimizing the output from a given funds.

FINANCIAL ANALYSIS

Financial analysis is the process of identifying the financial strengths and weakness of the firm. It is
done by establishing relationships between the items of financial statements viz., balance sheet and
profit and loss account. Financial analysis can be undertaken by management of the firm, viz.,
owners, creditors, investors and others. One of the most common ways of analyzing financial data is
to calculate ratios from the data to compare against those of other companies or against the company's
own historical performance.
Financial Analysis is the process of evaluating businesses, projects, budgets and other finance-related
entities to determine their suitability for investment. Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income statement, balance sheet, and
cash flow statement. In addition, one key area of financial analysis involves extrapolating the
company's past performance into an estimate of the company's future performance.

FINANCIAL ANALYST
A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a
person who performs financial analysis for external or internal clients as a core part of the job.

DEFINITION OF FINANCIAL ANALYSIS

According to Myers, “Financial Analysis is largely a study of the relationship among the various
financial factors in a business as disclosed by a single set of statements and a study of trend of these
factors as shown in a series of statement”.

OBJECTIVES OF FINANCIAL ANALYSIS

1. Assessment of Past Performance

Past performance is a good indicator of future performance. Investors or creditors are interested in
the trend of past sales, cost of good sold, operating expenses, net income, cash flows and return on
investment. These trends offer a means for judging management's past performance and are possible
indicators of future performance.

2. Assessment of current position

Financial statement analysis shows the current position of the firm in terms of the types of assets
owned by a business firm and the different liabilities due against the enterprise.

3. Prediction of profitability and growth prospects

Financial statement analysis helps in assessing and predicting the earning prospects and growth rates
in earning which are used by investors while comparing investment alternatives and other users in
judging earning potential of business enterprise.

4. Prediction of bankruptcy and failure

Financial statement analysis is an important tool in assessing and predicting bankruptcy and
probability of business failure.

5. Assessment of the operational efficiency

Financial statement analysis helps to assess the operational efficiency of the management of a
company. The actual performance of the firm which are revealed in the financial statements can be
compared with some standards set earlier and the deviation of any between standards and actual
performance can be used as the indicator of efficiency of the management.

TOOLS OF FINANCIAL ANALYSIS

The following are the tools for analysis of the financial statement: -

 Comparative Financial Statement

 Common Size Financial Statement

 Trend Analysis Fund Flow Statement

 Fund Flow Statement

 Cost Volume Profit Analysis

 Ratio Analysis

Comparative Financial Statement

Comparative study of financial statements is the comparison of the financial statements of the
business with the previous year’s financial statements. It enables identification of weak points and
applying corrective measures. Practically, two financial statements (balance sheet and income
statement) are prepared in comparative form for analysis purposes.
A statement which compares financial data from different periods of time. The comparative statement
lines up a section of the income statement, balance sheet or cash flow statement with its
corresponding section from a previous period. It can also be used to compare financial data from
different companies over time, thus revealing the trend in the financials.

COMMON SIZE FINANCIAL STATEMENT

A company financial statement that displays all items as percentages of a common base figure. This
type of financial statement allows for easy analysis between companies or between time periods of a
company. A common size balance sheet each item on the balance sheet as a percentage of total assets.
A common size income statement expresses each income statement Category as a percentage of total
sales revenues.

TREND ANALYSIS FUND FLOW STATEMENT

Trend Analysis is the practice of collecting information and attempting to spot a pattern, or trend, in
the information. Trend analysis is the process of comparing business data over time to identify any
consistent results or trends. Trend Analysis helps to understand how business operations and
practices will take place.

FUND FLOW STATEMENT

It is a statement summarizing the significant financial changes in items of financial position which
have occurred between the two different balance sheet dates. This statement is prepared on the basis
of "Working Capital" concept of funds. Fund flow Statement helps to measure the different sources
of funds and application of funds from transactions involved during the course of business. The fund
flow statement also termed as Statement of Sources and Application of Fund, Inflow of Fund or
Outflow of Fund Statement.

COST VOLUME PROFIT ANALYSIS

A method of cost accounting used in managerial economics. Cost-volume profit analysis is based
upon determining the breakeven point of cost and volume of goods. It can be useful for managers
making short-term economic decisions, and also for general educational purposes. Cost-volume
profit analysis makes several assumptions in order to be relevant. It often assumes that the sales price,
fixed costs and variable cost per unit are constant. Running this analysis involves using several
equations using price, cost and other variables and plotting them out on an economic graph.

RATIO ANALYSIS
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of
a firm's financial performance in several key areas. Ratio analysis is the process of determining and
interpreting numerical relationship based on financial statements. It is the technique of interpretation
of financial statements with the help of accounting ratios derived from the balance sheet and profit
and loss account.

IMPORTANCE OF FINANCIAL ANALYSIS

1. Holding Of Share

Shareholders are the owners of the company. Time and again, they may have to take decisions
whether they have to continue with the holdings of the company's share or sell them out. The financial
statement analysis is important as it provides meaningful information to the shareholders in taking
such decisions.

2. Decisions and Plans

The management of the company is responsible for taking decisions and formulating plans and
policies for the future. They, therefore, always need to evaluate its performance and effectiveness of
their action to realise the company's goal in the past. For that purpose, financial statement analysis is
important to the company's management.

3. Extension of Credit

The creditors are the providers of loan capital to the company. Therefore they may have to take
decisions as to whether they have to extend their loans to the company and demand for higher interest
rates. The financial statement analysis provides important information to them for their purpose.
4. Investment Decision

The prospective investors are those who have surplus capital to invest in some profitable
opportunities. Therefore, they often have to decide whether to invest their capital in the company's
share. The financial statement analysis is important to them because they can obtain useful
information for their investment decision making purpose.

LIMITATIONS OF FINANCIAL ANALYSIS

1. Mislead the user

The accuracy of financial information largely depends on how accurately financial statements are
prepared. If their preparation is wrong, the information obtained from their analysis will also be
wrong which may mislead the user in making decisions.

2. Not useful for planning

Since financial statements are prepared by using historical financial data, therefore, the information
derived from such statements may not be effective in corporate planning if the previous situation
does not prevail.

3. Qualitative aspects

Then financial statement analysis provides only quantitative information about the company's
financial affairs. However, it fails to provide qualitative information such as management labour
relation, customer's satisfaction, and management’s skills and so on which are also equally important
for decision making.

4. Comparison not possible

The financial statements are based on historical data. Therefore, comparative analysis of financial
statements of different years cannot be done as inflation distorts the view presented by the statements
of different years.
5. Wrong judgement

The skills used in the analysis without adequate knowledge of the subject matter may lead to negative
direction. Similarly, biased attitude of the analyst may also lead to wrong judgement and conclusion.

RATIO

A ratio is the quantitative relation between two amounts showing the number of times One value

contains or is contained within the other.

1) A Ratio is an expression of the quantitative relationship between two numbers.

2) A Ratio is a numerical or an arithmetical relationship between the two figures.

RATIO ANALYSIS
Ratio analysis is one of the techniques of financial analysis where ratios are used as a yard stick for
evaluating the financial condition and performance of a firm. Ratio analysis was p i o n e e r e d b y A l
e x a n d e r w a l l w h o p r e s e n t e d a s ys t e m o f r a t i o a n a l ys i s i n the year 1909.

In financial analysis,’ a ratio is used as a benchmark for evaluating the financial performance
of a firm. Such a kind of financial analysis when under taken by taking ratio of several figures
of the firm’s financial statement, it can be termed as ratio analysis. Ratios help to summarize
large quantities of financial data and to make q u a l i t a t i v e j u d g m e n t a b o u t t h e f i
rm’s financial performance.

Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of
a firm's financial performance in several key areas. The ratios are categorized as Short-term Solvency
Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and Market Value
Ratios.

Ratio Analysis as a tool possesses several important features. The data, which are provided by
financial statements, are readily available. The computation of ratios facilitates the comparison of
firms which differ in size. Ratios can be used to compare a firm's financial performance with
industry averages. In addition, ratios can be used in a form of trend analysis to identify areas where
performance has improved or deteriorated over time.

Because Ratio Analysis is based upon Accounting information, its effectiveness is limited by the
distortions which arise in financial statements due to such things as Historical Cost Accounting and
inflation. Therefore, Ratio Analysis should only be used as a first step in financial analysis, to obtain
a quick indication of a firm's performance and to identify areas which need to be investigated further.

 They simplify financial statements: Ratio analysis simply information given in companies’
financial statements. Investors can easily obtain data from a few ratios instead of trying to
understand entire statements.

 They help detect a problematic trend: Each type of ratio analysed over a long period can
point to a defect in the functioning of a business. The analysis can also predict the future
performance of a company in a particular aspect of business.

 They facilitate comparisons: Ratios not only help analyse the performance of one company
but also facilitate a comparison of the performances of two or more companies within an
industry or a sector.

Standards of comparison

Ratio analysis involves comparison for a useful interpretation of the financial statements. A single
ratio in itself cannot indicate favourable or unfavourable condition. Standards of comparison may
consist of:

Past ratios:-Ratios from the part financial statement of the same firms.

Competitors ratios:-Ratios of some selected firms especially the most

Progressive and successful competitor at the same point of time.

Industry ratio:-Ratio of the industry to which the firm belongs.

 Projected ratio:-Ratio developed using the projected or preformed financial

statement of the same firm. Based upon the above standards of comparison following types of

ratio analysis can be carried out.

Time series analysis (Past Ratios)

Cross sectional analysis (Competitors Ratio)

Industry analysis (Industry ratio)

Performa analysis (Performa/Projected ratios)

TYPES OF RATIO:

The various types of ratios can be classified as following ratio.

a) Traditional classification/ statement ratios:-

Balance sheet ratios

Profit and loss a/c ratios

Composite / mixed / inter statement ratios

b) Significance /ratio according to importance: -

Primary ratio

Secondary ratio

c) Functional classification or according to tests: -

Liquidity ratios

Leverage ratios

Activity ratios / turnover ratios

 Profitability ratios.

Here in this project the functional classification is considered for the studying the

financial statement of the company.

LIQUIDITY RATIO:

Liquidity means ability of a firm to meet its current liabilities. The liquidity ratio, therefore,
try to establish a relationship between current liabilities, which are the obligations soon
becoming due and current assets, which presumably provide the source from which this
obligation will be met. These are the ratios which measure the short-term solvency or financial
position of a firm. These are calculated to comment upon the short term paying capacity of a
concern.

The most common ratios, which indicate the extent of liquidity or lack of it, are.

Current ratio

Quick ratio

Absolute ratio

CURRENT RATIOS:

It is defined as the relationship between current assets and current liabilities. This ratio is
most commonly used to perform the short -term financial analysis. It is also known as the
working capital ratio.

Formula for calculation of current ratio.

 Current assets

Current ratio =

Current liabilities

QUICK RATIO:

Also called acid test ratio, establishes a relationship between quick or liquid assets and current
liabilities. An asset is liquid if it can be converted into cash immediately or reasonably soon without
a loss of value.

Current assets- inventories

Current ratio =

Current liabilities

ABSOLUTE LIQUIDE RATIO:

Since cash is the most liquid asset, cash ratio can be determined by dividing cash and its equivalent
to current liabilities. Trade investment or marketable securities are equivalent to c a s h , t h e r e f o r e
it may be including in the computation of cash ratio.

The formula for the computation of cash ratio is

Cash + marketable securities

Cash ratio =

Current liabilities
Absolute liquid assets include cash in hand and at bank and marketable securities temporary

investment.

ACTIVITY RATIO:

All the funds employed by the creditors and owners are invested in various assets to generate sales
and profits. Better the management of assets greater the amount of sales. Activity ratios are employed
to evaluate how efficiently the management utilizes its available resources (assets). These ratios are
also called turnover ratios.

a) Inventory turnover ratio.

b) Debtors (Account receivable) turnover ratio.

c) Fixed assets turnover ratio.

d) Working capital turnover ratio.

e) Capital turnover ratio.

f) Creditor’s turnover ratio.

g) Cash turnover ratio.

h) Current assets turnover ratio.

a) INVENTORY TURNOVER RATIO: -

It indicates the efficiency of the firm in producing and selling its products. It is calculated by
dividing cost of goods sold by average inventory.
 Sales / cost of goods sold

Inventory turnover =

Average inventory

Average inventory usuall y is thee average of opening and closing balance of inventory but in a
manufacturing company inventory of finished goods is used to calculate inventory t urnover.
Sometimes cost of goods sold figure may not be available to an outside analyst then the other formula
can be used to calculate the turnover.

Sales

Inventory turnover =

Inventory

From the above available data we can calculate the dawns of inventory holding. When the
numbers me days of operation in a year are divide by inventory t urnover we get days of
inventory holding (DIH).

Number of days of operation (360 or 365)

DIH=

Inventory turnover

Now the interpretation part it is know that inventory turnover shows how rapidly the inventory
is turnover into receivables through sales. Generally a high inventory is indicative of goods
inve ntory turnover management. A low level of inventory turnover implies excessive
inventory than required by production and sales activities. A high level of sluggish inventory
amounts to unnecessary tie up of fund reduced profit and increased costs of maintenance.
b) DEBTORS TURNOVER RATIO:

Debtor turnover ratio indicate the number of times debtor’s turnover each year. Debtors
are convertible into cash over a short period and therefore are included in current asset
s. The formula for calculatin g the debtor’s turnover ratio is

Sales

Debtor’s turnover =

Debtors

If Information regarding credit sales and debtors opening and closing balance is available
then these figures can be used for the calculation purpose, as they are more relevant.

C) FIXED ASSETS TURNOVER RATIO: -

Assets are generally used to general sale. Therefore, a firm should manage its assets efficiently to
maximize sales. The relationship between sales and assets is called assets turnover ratio. It can be
calculated as follows

Sales

Assets turnover ratio =

Net fixed assets

 d) WORKING CAPITAL TURNOVER RATIO: -

Working capital turnover ratio indicates the efficiency or inefficiency in the utilization of working
capital in making sales. This ratio indicates the number of time the working capital is turned over in
the course of year. There is no standard / ideal working capital turnover ratio.

This ratio can be calculated by the following formula.

Sales

Working capital turnover ratio =

Net working capital

The term net working capital means current assets minus current liabilities.

e) CAPITAL TURNOVER RATIO:-

The ratio indicates how efficiently the company has been able to contest its each rupee to

sales. The formula is as follows.

Sales

Capital turnover ratio =

Capital employed

Greater the ratio, the more efficiently, the capital employed in the business, is being

managed.
 f) CASH TURNOVER RATIO:-

Cash turnover ratio is the ratio between cash and turnover or sales. The formula for cash

turnover ratio as follows

Net sales

Cash turnover ratio =

Cash

Here, cash for the purpose means cash in hand and at bank and readily realizable investments
or securities. Turnover refers to the total annual sales (i.e. Cash sales plus credit sales) effected
during the year. However sales means net annul sales i.e. total sales minus sales return.

USE OF CASH TURNOVER RATIO: -

This ratio indicates the extent to which cash resources are efficiently utilized by the enterprise.

It is also helpful in determining the liquidity of the concern. The standard ideal cash turnover

ratio is 10:1

g) CURRENT ASSETS TURNOVER RATIO:-

Current assets turnover ratio is the ratio between current assets and turnover or sales (i.e. net

sales). The formula is as follows.

 Net sales

Current assets turnover ratio =

Current assets

PROFITABLITY RATIO:

Every business should earn sufficient profits to survive and grow over a long period of time.

Infect efficiency of a business is measured in term of profits. Profitability ratios are calculated

to measure the efficiency of a business. Profitability of a business

may be measured in two ways.

a). Profitability in relation to sales:-

It indicates the amount of profit per rupee of sales.

b). Profitability in relation to investment:-

Similarly in relation to investment indicates the amount of profit per rupee invested

in assets. If a company is not able to earn a satisfactory return on investment, it will not be

able to pay a reasonable return to its investors and the survival of the company may be

threatened.

Profitability ratios based on sales:-

1. Gross profit margin

 2. Net profit margin

a) Net operating

b) Profit net profit ratio

3. Operating ratio

Gross profit margin:

The first profitability ratio in respect of sales is gross profit margin. It reflect the efficiency with

management produces each unit product. This ratio indicates the average spread between the costs

of goods sold to sales.

Sales - cost of goods sold

Gross margin ratio =

Sales

Or

Gross profit

Gross marginal ratio =

Sales

A high gross profit margin ratio relative to the industry average implies that the firm is able to

produce at relatively lower cost.

 On analyzing we find the high ratio can be due to any of the following reasons.

a) Higher sales prices, constant cost of goods sold.

b) Constant sale price, lower cost of goods sold.

c) A combination of both

d) Increase in the proportionate volume of higher margin items.

A low gross profit margin reflects higher cost of goods sold due to the firm’s inability to

purchase raw material at favorable terms, inefficient utilization of plant and machinery or

over investment in plant and machinery resulting in higher cost of production.

Net profit margin

Net profit is obtained when operating expenses, interest and taxes are subtracted from the gross

profit. The net profit margin ratio is calculated as

Profit after taxes

Net profit margin = X 100

Sales
 PROFITABILITY RATIOS BASED ON INVESTMENT: -

a. RETURN ON INVESTMENT

b. RETURN ON EQUITY

a. RETURN ON INVESTMENT (ROI): -

This is the most important test of profitability of a business, it measures the overall profitability.
It is ascertained by comparing profit earned and capital employed to earn it. It’s calculated as
follows.

Net profit before interest and taxes

ROI = X 100

Capital employed

LEVERAGE RATIOS:

Leverage ratio measure the relative interests of the owners and the creditors in an enterprise.
Leverage ratio indicate the relative interests of the owners and the creditors in an enterprise
further they measure the stake of the creditors as against the owners. The leverage ratios are
useful to the long term creditor’s owners and the management. Some of leverage ratios are as
follows:

a) Debt equity ratio external internal ratio.

b) Proprietary ratio, equity ratio or net worth ratio.

c) Fixed assets to net worth ratio.

 d) Solvency ratio

DEBT EQUITY RATIO: -

Debt equity ratio also known as external-internal equity is calculated to measure the relative claims
of the outsiders and the owners against the firm’s assets. This ratio indicates the relationship between
the external or the outsider’s funds and the internal equities or the shareholder fund.

The debt equity ratio can be calculated in the basis of either of the following formulas.

Long term debts

Debt Equity Ratio =

Shareholders’ funds

Outsider’s funds / Shareholders funds

Or

External equity / internal equity

The ratio is calculated to judge effectiveness of the long-term financial policy of the business. It
also establishes relationship between the external and internal liabilities of the company. External
liabilities or equities means outside liabilities. Internal equity means shareholder funds.
Generally, a ratio of 1:1 between external and internal equities is supposed to be satisfactory.
Debt equity is a relationship between long - term loans and long-term funds.
PROPRITERARY RATIO: -

A variant to the debit-equity ratio is the proprietary ratio, which is also known as “equity ratio”. This
ratio establishes the relationship between shareholder’s funds to total assets of the company. It is
expressed as.

Shareholder’s fund

Proprietary ratio = X 100

Total assets

SOLVENCY RATIO: -

Solvency ratio is the between the total assets and the total liabilities of a concern.

Solvency ratio is, generally, expressed as a proportion it is expressed as follows:

Total assets

Solvency Ratio =

Total liabilities

Solvency is the measure of the concern. Measure of concern means the ability of a concern too
meet its total liabilities out of its total assets.
FIXED ASSETS NET WORTH RATIO:-

Fixed assets to net worth ratio as the name itself suggests, is the ratio, which expresses the
relationship between fixed assets and net worth. A fixed assets refers to assets like lands, buildings,
machinery, vehicles, furniture, etc. Which are used in the enterprise permanently. They do not
include long-term investment on securities. Net worth as stated before means owner’s funds the fixed
assets to net worth ratio is usually, expressed as a proportion.

It is expressed as follows:

Net fixed Assets

Fixed assets net worth ratio =

Net worth
 CHAPTER-2
RESEARCH DESIGN

REVIEW OF LITERATURE
Justin (1999) argued that the method of gathering industry data and calculates averages were called
“Scientific ratio analysis”. The word “scientific” in this title was not entirely correct because no
evidence had been found that the hypothesis formulation and hypothesis testing actually carried out.

Horrigan (2001) says ratios analysis has come into existence since early ages and the main reason of
the development of ratio analysis was its use in the analysis of the properties of ratios in 300 B.C. in
recent time it is used as a standard tool for the analysis of financial statement. In nineteenth century
main reasons of using ratio analysis are power of financial institutions and shifting of management
to professional managers. Ratio analysis used for two purposes that are credit and managerial. In
managerial approach profitability and in credit approach capacity of firm to pay debts is the main
point of focus. Generally, ratio analysis is used credit analysis.

Bliss (1923) says basic relationship within the business is indicated by the ratios and developed
complete model based on the ratios. The purpose model was not mature but inspired others to start
working on this theory.

Different critics of ratio analysis also appeared. Gilman (2004) has following concerns on ratio
analysis (1) ratios are bond with time and changed as time passed so cannot be interpreted (2) ratios
are not natural measure for judging the performance companies manipulated them (3) ratios easily
affect the mind of viewers and hide the actual position and (4) ratios swing widely that also affect the
dependability.

Foulke (1931) create and promoted own set of financial ratios successfully. This set of financial ratios
was printed and promptly known as important and prominent group of ratios.

Fitzpatrick (1932) with the help of thirteen different type of ratios analysis 120 failed firms and found
that three out of thirteen ratios predict the failure of firms with precise accuracy while other ratios
also shown some prediction power.

Rasmer and foster (1931) used eleven ratios to examine that the successful firms has higher ratios
than unsuccessful firms. Although this study was immature but immaturity was ignored by
considering the vital contribution this study has in the evaluation of usefulness of ratios. Security and
exchange commission of America was formed in 1934. This also expands the flow and number of
financial statements and with the help of this peripheral factor importance of ratio analysis further
enhanced and realized.

Marwin (1942) by using several ratios analyze financial trends of huge successful and unsuccessful
firms. Compared normal ratios of industry with mean ratios of large unsuccessful firms and find out
that the three ratios current ratio, net working capital to total assets and net worth to debt were able
to foresee failure before actual failure happened. This study shows the actual power of prediction of
ratio analysis and results were still reliable.

Walter (1957) included cash flow statement items in ratio analysis. At the end of world war fund
statement came into existence and with fund statement fund statement ratios was also produced.

Hickman (1958) used times interest earned ratio and net profit ratio to predict the default rate on
corporate bond.

Saulnier (1958) says firms with low current ratio and debt ratio has greater chance to default then
firms with high ratios.
Moore and Atkinson (1961) point out the relationship between capacity to pay and financial ratios
and shows results of ratio analysis influence the borrowing ability of firms.

Beaver (1967) also examined the prediction power of ratio analysis and point out ratios ability to
predict failure as early as five years before the collapsed. Statistical technique used in the study was
more powerful than earlier studies and fund statement data was used to calculate ratio. This study set
the foundation for future research on ratio analysis.

Sorter and Becker (1964) examined the relationship between psychological model and corporate
personality of financial ratios and find out that long-established corporation maintain greater liquidity
and solvency ratios.

Gombola and Ketz (2013) found that the fund and income statement are produced for different
purpose and profitability ratios did not has the information that cash flow ratios provide. In other
words both ratios gave important as well as different information from one and other.

Pinches and Mingo (2006) evaluate the structure of ratios and found that ratios can be divided into
different groups. Present general classification of financial ratios on logical basis. Results concluded
that the ratios can be divided into four groups that are financial leverage, short-term capital
intensiveness, return on investment and long-term capital intensiveness.

Stevens (1973) also studies the topic of ratio classification and grouped the financial ratios in four
categories that include activity, liquidity, leverage and profitability.

Pinches, Mingo, and Caruthers (1973) and Pinches, Eubank, Mingo, and Caruthers (1975) carry on
further worked on this subject and categorized the financial ratios in seven factors that include
receivable turnover, capital turnover, short-term liquidity, return on investment, inventory turnover,
financial leverage and cash position.

Libby (1975) also studies the division of financial ratios and condenses that division from seven to five.
Five divisions include liquidity, activity, cash position, profitability and assets balance. Johnson
(1979) further studies the research of Pinches (1973) and added another factor that is decomposition
measure into seven factors.

Twelve different factors or division of financial ratios are presented in five different studies. On the
basis of five published studies assortment of financial ratios are very time consuming because the
results of published studies was very diverse.
Chen and Shimerda (2008) deeply examined five published studies and find out that some of the
twelve factors that has been presented in the studies has same and simply name is changed. Therefore,
twelve factors are grouped into seven factors. Seven factors are cash position, financial leverage,
inventory turnover, short-term liquidity, return on investment, receivable turnover and capital
turnover.

Gilman (1925) has following concerns on ratio analysis (1) ratios are bond with time and changed as
time passed so cannot be interpreted (2) ratios are not natural measure for judging the performance
companies manipulated them (3) ratios easily affect the mind of viewers and hide the actual position
and (4) ratios swing widely that also affect the dependability. Foulke (1931) create and promoted
own set of financial ratios successfully. This set of financial ratios was printed and promptly known
as important and prominent group of ratios.

Fitzpatrick (1932) with the help of thirteen different type of ratios analysis 120 failed firms and found
that three out of thirteen ratios predict the failure of firms with precise accuracy while other ratios
also shown some prediction power.

Rasmer and foster (1931) used eleven ratios to examine that the successful firms has higher ratios
than unsuccessful firms. Although this study was immature but immaturity was ignored by
considering the vital contribution this study has in the evaluation of usefulness of ratios. Security and
exchange commission of America was formed in 1934. This also expands the flow and number of
financial statements and with the help of this peripheral factor importance of ratio analysis further
enhanced and realized.
Moore and Atkinson (1961) point out the relationship between capacity to pay and financial ratios
and shows results of ratio analysis influence the borrowing ability of firms. Sorter and Becker (1964)
examined the relationship between psychological model and corporate personality of financial ratios
and find out that long-established corporation maintain greater liquidity and solvency ratios.

Beaver (1967) also examined the prediction power of ratio analysis and point out ratios ability to
predict failure as early as five years before the collapsed. Statistical technique used in the study was
more powerful than earlier studies and fund statement data was used to calculate ratio. This study set
the foundation for future research on ratio analysis. Gombola and Ketz (1983) found that the fund
and income statement are produced for different purpose and
profitability ratios did not has the information that cash flow ratios provide. In other words, both
ratios gave important as well as different information from one and other.

Need for the Study

Ratio analysis is a widely used financial tool as systematic use of ratios interpret the financial
statement and determine the strength, weakness as well as the historical performance and the current
financial condition can be determined. The need to study for the ratio analysis is as follows

 It evaluates the financial health, profitability and operating efficiency of the firm.
 It simplifies the financial statements and analyses the financial position of the firm
 It determines the long-term solvency, liquidity position and the operating efficiency of the
firm
 It provides reliable data useful for forecasting as well as budgeting.

Statement of problem
Financial statement alone is not enough to identify the progress of the rail wheel factory it has to be
further analysed to study the actual financial strength of it by using various techniques like
comparative statements, ratio analysis etc.

Here ratio analysis is used as a main technique to analyse the financial performance of the rail wheel
factory. This technique has been used to make a comparative study of financial reports of previous
four years and to find out the relative financial performance of the company. Ratio analysis is used
to evaluate various aspects of a rail wheel factory’s operating and financial performance such as its
efficiency, liquidity, profitability and solvency. The trend of these ratios over time is studied to check
whether they are improving or deteriorating.
Objective of study
a) To know the strength and weakness of the rail wheel factory.

b) To evaluate the financial performance of the rail wheel factory.

c) To understand the liquidity, profitability and efficiency position of the rail wheel factory.

d) To make comparison of ratios between various years.

e) To study the efficiency with which day to day funds management are managed

f) To analyze present and future earning capacity or profitability of the rail wheel factory

g) To analyze the capital structure of the business

Sources of data
Primary Data: - Primary data of the study was collected by personally contacting the financial
executive of the company and other officials. Where in the company direct interview and discussion
was made regarding the analysis of the financial statement. Primary data is the first data collected
directly through personal touch. The various sources of primary data are by having discussion with
different department managers and officers of the rail wheel factory to get information about the
company and its activities.

Secondary Data: - Secondary data are statistics that already exist. They have been gathered not for
immediate use. This type of data may be described as those data that have been compiled by some
agency other than the users. It the data collected from the secondary sources like the company’s
annual reports and balance sheets, company website, company manuals, text books, etc.

Tools of data collection

Data collection is the process of gathering and measuring information on targeted variables
in an established systematic fashion, which then enables one to answer relevant questions and
evaluate outcomes. The primary data will be collected from the employees of financial department
of Rail Wheel Factory.

Secondary data will be collected from the following sources:

 Company Manual
 Company Website
  Reference books of HRM, and Finance.

Plan of Analysis

Data will be gathered from the primary and secondary sources and it will be analysed by conducting
survey. Diagrams, charts and tables will be utilized to show the discoveries. The data collected will
be tabulated, analysed and interpreted using appropriate statistical tools. Finally, Suggestions,
Findings will be provided which help the organization to improve its finance structure.

Limitation of study

 The study is limited to then marking activity of Rail Wheel Factory. The investigator
could not cover all the branches, which are providing similar services.
 The data recorded was presumed to be authentic.
 This study contains comparison, as it is within the preview of only one organization.
 The study is confined to a particular department and does not consider the total network
of the company.
 The study is based on the data issued by company officials and reports of the company,
the confidentiality of some facts and figures are maintained.

CHAPTER SCHEME
1) Chapter-1 Introduction
2) Chapter-2 Review of literature and Research Design
3) Chapter-3 Company Profile
4) Chapter-4 Data Analysis & Interpretation
5) Chapter-5 Summary of Findings, Suggestion and Conclusion.
 CHAPTER-3

COMPANY PROFILE

Name of the Company: RAIL WHEEL FACTORY

INCEPTION AND HISTORY

Rail Wheel factory (RWF) is the main production unit of Indian Railways producing wheels, axles
and wheel sets for Indian railways as well as some of the overseas customers. Being a fully owned
government company, the rail wheel factory was started by C K Jaffer Sharief, who was railway
minister during 1984 and got the project done at Yelahanka, Bangalore. The Indian Railways during
1980s was importing around 55% of materials required to produce wheel and axle. The materials
needed by factory were supplied by Tata Iron and Steel Company (TISCO) and Durgapur Steel Plant
(DSP). DSP fulfilled partial requirements of Indian railways whereas TISCO was not able to meet
the requirements in respect of new varieties of wheels which were being produced and it required
new rolling stocks. As the price of importing the goods were very high, due to limited availability of
stock, improper foreign exchange policies and fluctuations in the market created an adverse effect
on imports as a result of which the government of India felt the necessity of establishing a unit
producing wheels, axles that would fulfil the needs. The ultimate decision for establishing the unit
was taken by Indian railways and an extensive study was conducted on latest technology and
equipment available and any global possibility of foreign exchange. Based on the results from the
study wheel factory project was started and decisions were made to adopt the cast wheel technology
which was developed by M/s Griffin Wheel Co., USA for manufacturing the wheels. American
technology was used for cast wheels and for freight operations the same was planned to be adopted
as it was best suitable for production and cost incurred was less when compared to forged wheels
which was used by European countries and an amount of 8 crores could be saved from foreign
exchange on import of wheel.

The planning commission endorsed the Rail Wheel Factory Plant venture in 1978 with an outlay of
Rs.146 Crore and trial production was commenced in 1983. Late Smt. Indira Gandhi, the then prime
minister of India formally commissioned the plant on 15th September 1984 and named the unit as
wheel and axle plant. The production was mainly intended for Indian railways and the factory was
included under the control of Indian Railways and named RAIL WHEEL FACTORY by the railway
ministry in 2003. In June 1999, rail wheel factory becomes the first unit of Indian railways to acquire
certification ISO: 14001 of M/s. BVQI. The new emblem of rail wheel factory was designed in 2003
and the new emblem comprises of a circular shield divided into two parts. The top half is in green
representing energy and productivity, which features a wheel / axel combination symbol
prominently. The bottom half is in light blue suggesting the sky infinity, opportunity and confidence,
featuring a modern-day freight train rolling on the wheel and axle.

The circular shield has a thick golden yellow border bearing the full name of the unit-in Hindi on top
and in English at the bottom. The golden yellow colour symbolizes optimacy and auspiciousness.
Below the shield it is symmetrical, threefold ribbon with the central base in red-representing passion
and courage, at the base it is written 1984 in bold white letters, marking the year of commencement
of the unit. The ribbon curls upwards on both the sides, which is in blue; once again evoking the sky,
infinity, opportunity and confidence. Slogans in Hindi and English are written on left and right side
of the curl respectively.

Rail Wheel Factory is a production unit under Indian Railways and engaged in the activity of
production of Cast Wheels, Forged Axles and Assembly of Wheel Sets. Wheels are manufactured
using casting process with input scrap primarily being condemned wheels, axles and rails cut to sizes
as Heavy melting scrap. Currently this scrap processing is being done manually using gas cutting in
the pre-conditioning bay at RWF. The scope of work involves setting up and operating a scrap
processing plant at site for cutting of Wheels, Axles and Wheel Sets at RWF to generate Heavy
Melting Scrap for 5 years on wet lease basis. This EOI is floated with an objective of identifying
capable firm which can take up the work. The identified firm will be called for a detailed discussion,
date for which will be advised shortly after submission of the EOI. Based on the discussion the scope
of work will be formed and quotation will be called from capable firm for formulating an estimate
for floating a tender. The successful bidder has to arrange required machinery, plant, fuel and man
power to execute the work in Scrap Preconditioning Bay at RWF premises. Electricity and water will
be charged at the rates as applicable from time to time. Payments shall be made on quantity of scrap
delivered to RWF on per ton basis.

ISO QUALITY POLICY

In November 1994, RWF became the first ever production unit that adopted ISO-9002 and Quality
Management System and obtained certification from internationally renowned certifying body M/s
BVQI. Gradually the standard was upgraded to 1SO-9001-2000 and certificate was provided by the
same agency. Later, in 1995 RWF was certified by American Rail Roads (AAR) under the quality
assurance program named as M-1003 specifying the need to export the products to American markets
from India. RWF established with the aim of protecting the environment was once again awarded
with ISO-14001 Environmental Management System a standard certification issued in the year 1999.
It has also set up an objective and has taken measures for health and safety management system based
on OHSAS 18001 during November 2004. In April 2003, RWF was re-certified by M/s IRQS with
Integrated Management System encompassing QMS, EMS & OHSAS, again in May 2016 by
International Certification Services.

ORGANIZATIONAL CHART

GENERAL
MANAGER

CONTROLLER CHIEF FINANCIAL

CHIEF
OF STORES ELECTRICAL ADVICER AND
VIGILANCE
ENGINEER CHIEF
OFFICER
CHIEF
ACCOUNTS
MATERIAL
OFFICER
MANGER Chief personnel Chief engineer
CHIEF
officer MECHANICAL
ENGINEER

Vision Statement

“To become a renowned global leader in the business of developing and manufacturing Cast
Steel Rail Road wheels, precision Forged Axles and immaculatelyassembled Wheel Sets.”

Mission Statement

 To emerge as a unique global center for design, development and manufacturing

excellence of our products through continuous improvement by upgrading our
quality, reliability, dependability and value addition in a deliberate and proactive manner.

 To perennially endeavor to sustain excellence in customer satisfaction by consistently

exceeding their expectations.
  To develop our human capital by constant enhancement of their technical, managerial
and innovative capabilities.

 To promote ethical business practices and values in the true spirit of corporate governance.

DEPARTMENTS OF RAIL WHEEL FACTORY:

 Mechanical department.
 Electrical department.
 Civil department.
 Personal department.
 Accountable department.
 Management information system centre.
 Stores department.
 Medical department.
 Security.
 Audit.

PRODUCT PROFILE

WHEELS
RWF manufactures cast steel wheels with diameters ranging from 725 mm to 1100 mm. The
manufacturing is done on a numerically controlled automatic assembly line with minimum human
intervention. The wheels are subjected to extensive and stringent quality control at all stages.
RWF produces variety of wheels including that for box N Wagon, Broad gauge coaching, meter
gauge coaching, EMU, container wagon and Locomotives.
Types of wheels manufactured:

 Box n Type
 MG loco (meter gauge locomotive)
 BG loco (broad gauge locomotive)
 CE36- (exported to USA)
 CE 40WF
 915 wagon wheel (for defence purpose)
 ICF BG coaching
  840 flat wagon
 MG coach
 844 flat wagon

AXLES
The factory has facilities for forging, heat treatment, rough and finish machining of axles. The
diameter of these axles is in the range of 105 to 285 mm and length 1600 to 2600 mm; the axles are
forged from the pre-cast steel blooms of desired specification and length, machined to accuracy after
checking for both internal and external flaw detection system. Blooms are checked for chemical
composition and micro/macro properties before they are taken up for forging.
Types of Axles Manufactured:

 Broad gauge wagon axles

 Broad coaching axles
 Broad gauge
 Meter gauge coaching axles
 Electric loco axles
 Transaction motor SKEL-4516
 Axle for WAP 1/WAP4
 Powered RT axle for BEML OHE car
 Dst/Eel axle
 BG DSL loco Wag 9.

WHEEL SETS
RWF has a high productivity, state-of-the-art wheelset assembly complex, consisting of an auto axle
measuring unit, precision borers and a 300T mounting press, assembly of wheels on axle can be
achieved to precise preset limits of interference, mounting rates and dimensional tolerances.

Types of wheel sets manufactured:

 Box N WS
 BG CHG WS
 BG CHG WS (1 shaper axle + RWE wheel)
 Trailer coaching WS (RWF axle+RWF wheels)
 Trailer coaching WS (RWF axle+imp wheels)
 WS16-25 axles load for EMO tri coaches
  840 dais container flat WS
 Box N WS (china axle + Rwf wheel)
 Box N WS (1 shaper axle + rwf wheels)
 Container fat WS (1 shaper axle + rwf wheel)

COMPETITORS
 Steel authority of India ltd (SAIL, New Delhi)
 Shree Om steel corporation (Delhi)
 Ad electro steel co Pvt ltd (Kolkata)
 India overseas corporation (New Delhi)
 Bhardwaj industries (Pune)
 Aieco industries (Hyderabad)
 Sahajanand industries (Ahmadabad)

Customers
 Indian Railways
 Wagon Builders
 BEML
 Kirloskar Ltd
 Anpara Thermal Power Station
 Jindal Rail Infrastructure ltd
 Malaysian Railways
 Bony Polymers
 The Indian Hume Pipe co.ltd
 CMI Industry
 RITES Expotech Division

Milestones

 Wheel & Axle Plant Project sanctioned by the Government of

India.
1  Dedication of the Plant(WAP) to the Nation by Hon. President 1978
of India, Sri. Neelam Sanjeeva Reddy.
  Foundation Stone laid by Sri Kamalpathi Tripathi, former
Hon’ble Minister for Railways
 First EQS heat tapped.
 First trial wheel cast (BOXN)
2  First trial Axle forged 1980-1990
 Inauguration of the Wheel and Axle Plant by late Hon. Prime
Minister Smt. Indira Gandhi
 First wheelset assembled (BOXN)
 Implementation of Incentive Scheme
 First 915 mm dia coaching wheel produced
 First 915 mm dia Coaching wheelset produced
 Accreditation of ISO-9002 certification by M/s.BVQI. (First
Railway Unit to obtain ISO-9002)
 First 840 mm dia Flat Container Wagon wheel produced
 First 840 mm dia wheelset produced
 First 915 mm dia Wagon wheel produced
 Executed first Non-Railway Order of value Rs.6 Lakhs to
M/s.Kirloskar
 Accreditation of AAR certification as a manufacturer of
3 Wheel, Axles for supply to US Railroads 1991-2000
 First 915 mm dia wagon wheelset produced
 Highest production of wheels for a particular month (10,031
wheels)
 Lowest rejection percentage of wheels in a particular month
(4.95%)
 March 1999 First WDM2 Loco No.16464 fitted with MoV
Cast steel wheel on trials
 Accreditation of ISO-14001 by M/s .BVQI. (First Railway
Unit to obtain ISO-14001)
 First MG coaching wheel produced

 Accreditation of ISO: 9001-2000 (First Railway Unit to obtain

ISO:9001-2000)
 First MG Loco wheel cast with MoV material composition.
 Largest single order from Non Railway Customer worth Rs.30
crores for supply of 5280 CONCOR Flat container wagon
wheelsets to M/s. HEIL/Kolkata
 Design Validation of BG Loco wheels at M/s. Transportation
Technology Centre, USA
 BG (1092 mm dia) Loco wheel clearance given by RDSO to
run for Passenger locomotives
 BG (1092 mm dia) Loco wheel clearance given by Railway
Board to MOV cast wheel for regular application
 Silver Jubilee of WAP Project
 First MG-DEMU wheel cast
 WAP renamed as ‘RAIL WHEEL FACTORY’
 ISO-14001:1996 certification for RWF colony & hospital
 Despatch of first batch of traction motor armature shafts to
Rly. Workshops
  50,000th Heat Tapped
 Certificate for OHSAS-18001 for RWF was received.
4  Lowest rejection percentage of wheels in a particular month 2001-2010
(3.36%)
 10,00,000th Axle forged
 75,000th Heat Tapped
 54 nos. Cast EMU Wheelsets have been manufactured and
dispatched to Southern Railway, Avadi, for trial monitoring.
 24 Nos. of LHB Wheels were cast for the first time on trial
basis with micro alloyed chemical composition.
 In house oxygen plant under boot system commissioned. This
is the first of its kind in Indian Railways.
 25T Axle load wheels cleared by TTCI for design validation.
These wheels have been dispatched to Rayanapadu, SC Rly.
For trials.
 24 No. of LHB wheels for high speed fiat bogie manufactured.
These wheels are under field trials in Shalimar Express at
Northern Railway.
 RWF achieved the best – ever landmark on 30.03.2012 March
2012 Good Wheels - 2,00,000, Machined Axles - 1,00,000
Wheel Sets - 70,000 Forged Axles - 75,250 50 1,00,000th Heat
tapped
 100% E-auction of Scrap is introduced
 Usage of Rail Scrap as alternate primary scrap. Rail Scrap
consumption per heat increased to 8 MT against 0.8 MT in
past
 Shutdown period reduced from 21 days to 14 days resulting in
increase in number of working days to 6 for all years to come
 Retrieval of the buried ferrous scrap accumulated over a period
of time.
 Heat No.1 Lakh tapped
5
 15,00,000th Axle forged
 RWF Re-received the RAJIV GANDHI NATIONAL
QUALITY AWARD (Awarded in the Year-2012)
 RWF received GOLDEN PEACOCK NATIONAL QUALITY
AWARD for Quality Management
20112011-2018
 16 No of 25 Tone Axle Load Prototype Wagons Suitable for K
Class CTRB Were Processed in 40 days
 The Wheel for Milk Tank Wagon & Wheel Set for Kolkata
Metro Manufactured at RWF. As a part of Make in India
Shri. Rajen Gohain, Hon’ble Minister of State for Railways
Inaugurated the Wheel Set.
 RWF was re-certified for Integrated Management System
encompassing ISO-9001,ISO-140001 & OSHAS-180001
 RWF was certified with AAR-QA 5000
 RWF has been recommended for certification of ISO-50001-
2011 for Energy Management System (EnMS)
Awards Bestowed

 Golden Peacock National Quality Award for the year 2015.

 Golden Peacock innovative product/ service award among Govt. Transport Category 2014.
 International Star for Quality (IFAQ) Award in Platinum Category for the year 2013, BID,
Madrid, Spain.
 Golden Peacock Award for Sustainability for the year 2013.
 Rajiv Gandhi National Quality Award for the year 2012.
 International Quality System Award 2009 in Gold Category by BID, Madrid, Spain.
 Golden Peacock Award 2009 for Innovation Management.
 Golden Peacock Award for Occupational health and safety for 2008.
 Golden Peacock National Quality Award in 2005.
 Awards won every year at Horticulture Show Lalbagh/Bangalore.

RECRUTMENT SOURCES:

Railroad workers are classified into gazetted (Group “A” and “B”) and non-gazetted (Group “C” and
“D”) employees. Group A and B consists of accounts officers, administration officers, engineers
(Civil, Mechanical, Electrical), stores officers, signal and telecom officers, faculty officers,
budgetary consultants, medicinal officers. Station experts, auditors of work, administrators,
specialists, pharmacists, guards, train ticket inspectors, motor drivers, administrative staff all go
under Group C. Group D consists of group men, specialists, train sweepers, office peons, train
attendants, hospital attendants etc..,

The recruitment of Group “A” gazetted workers is carried by the Union Public Service Commission
through exams directed by it. The recruitment to Group “C” and “D” workers on the Indian Railways
is done through Railway Recruitment Boards and Railway Recruitment Cells which are controlled
by the Railway Recruitment Control Board (RRCB).

ACTIVITIES IN WELFARE RAIL WHEEL FACTORY:

The following are the statutory labour welfare measures that have been implemented in Rail Wheel
Factory:
  Residence for officers / staffs
 Railway hospital
 Staff canteen
 Restrooms
 First and centers
 Drinking water facilities

EMPLOYEE SAFETY MEASURES AND BENEFITS OFFERED:

Employees are the greatest asset to the organization. Rail Wheel Factory mainly deals with iron so
helmets, shoes and glasses are compulsory, Rail Wheel Factory placing signboards, bullets, notice
boards and siren at the work place to avoid accidents. Rail Wheel Factory providing many benefits
to the workers like bonus, gifts and incentives. It provides educational facilities to staff children’s,
quarters, swimming pool, ATM facility etc..,

A central school fully financed by the plant is providing for the benefit of staff. In addition, guest
house for officers and staff, institute, club etc.., are providing for the use of the staff. A stadium with
a modern pavilion accommodating 200 spectators and an open gallery with adequate seating capacity
has also been provided to encourage the sporting activities of the staff. Canteen within the factory
serves meals to the staff during lunch break, is managed on a ‘no profit no loss’ basis with
considerable indirect subsidiary to the staff in the cost of food made available to them.

MONETARY BENEFITS:

 House building advance

 Vehicle advance
 Bicycle advance
 Festival advance
 Computer loan advance
 Re-imbursement now called as educational allowance

QUALITY POLICY:

The employee of Rail Wheel Factory will strive:

1. To sustain excellence in Quality in the manufacturing of Wheels, Axels and Wheels Sets.
2. To delight their customer
 3. To continually improved

TOTAL QUALITY MANAGEMENT:

There are several tools to maintain the maintain the quality in production and services for its
customers in Rail Wheel Factory under 5 tools TQM has been successful implemented:

 Standardization
 KAIZEN
 Total employee involvement
 Quantity function deployment
 Education and training

FUTURE GROWTH AND PROSPECTS:

Rail Wheel Factory vision and mission are to become a world – class manufacturer of rolling stocks.
In pursuant to this, the company is engaged in applying Total Quality Management (TQM) and
Environmental Management System (EMS) that is continuously leading it to acquire ISO
certification.

The company has come a long way since l978, when it was conceived and has far exceeded
production targets, overcome problems in absorption of technology and has constantly met the
quality requirements of the global and indigenous customers. The company is looking at optimizing
the production with limited infrastructure available to it. The company foresees a bright future in
order to become a leading global player.

FINANCE AND ACCOUNTS DEPARTMENT:

Function:

 All incomes and expenditure that are incurred during the process of running the industry
under different of accounts.
 The physical vouchers and other connected documents are filled by the respective file for
reference.
  All the bills vouchers and other connected documents will signed by the respective officer’s
authorities.
 Personnel records along with salary details are generated on the year to year basis for
references.

Budget:

Funds are allocated for various expenditure under different heads under a financial year this budget
will be approved by a committee after scrutinizing all the aspects like availability of funds nature of
expense and relevance to production activity. The respective heads of department will operate the
budget through a proposal to obtain the financial concurrence and sanction from the general manager.
All operating record will be maintained on case to case purpose.

1. General budget
 Production budget
 Store budget
2. Works program
3. M&P programme

Suspense Maintenance:

Suspense accounts are used for monitoring purpose and for keeping track of the amount temporarily
when final head of account is not known.

The following types of suspense are being maintained by Rail Wheel Factory:

 Purchase suspense
 Import suspense
 Railway suspense
 Sale suspense
 Deposit – X
 Deposit – stores
 Employee suspense
 Miscellaneous account capital
The various suspense registers maintained in the accounts departments these are:

 Cheque book
 Remittance into bank
 Reserve bank suspense
 Deposit – X
 Deposit – K
 Deposit stores
 Miscellaneous advances capital
 Employee security deposit
 Deposit – establishment
 Unpaid wages
 Stores suspense
 Stock adjustment account

Inputs:

 Cast transaction from cash and bank module

 Adjustment transaction from J.V module

Outputs:

 Transaction cheek list

 Suspense registers
 analysis of suspense balance
 Half yearly reports of suspense balance

SWOT ANALYSIS

Strengths

 Industrial relationship at the plant is very cordial and has well trained and highly skilled
employees with highly qualified administrators and non-officials in the administration.
  Technological absorption is easily understood by the highly educated and experienced
workers in RWF and the company is running its plant on highest level of environment
management and it has been awarded ‘‘Golden Peacock environmental award.’’
 RWF is the first production unit in railway to be awarded ‘‘Quality system’’ i.e., ISO-9002
certification and is equipped with metallurgical research centers and technical training
centers.

Weaknesses

 Scope for expansion and diversification is limited.

 Change in government policy may affect its financial and future growth prospects as it is
wholly a govt owned company.

Opportunities

 RWF has the potential to take orders from overseas customers so as to increase its
profitability and diversify its products.
 Atomization of production process with advance technology exits and this should be looked
into at the earliest.
 RWF has the infrastructure to increase the plant capacity in future, if the need arises due to
availability of both capital and land capacity.

Threats

 Introduction of Bullet trains and metros which uses magnetic tapes instead of wheels.
 Privatization of railways.