BIBLIOGRAPHY

BOOKS REFERRED

1) Banarjee.A.K, Nair.R.K, Agarwal. V.K. – Organizational Behavior

(2007) – Pragathi Publishers – Meerut

2) Gupta.R.L – Advanced Accountancy

(2006) – Sultan Chand and Sons

3) Khan M.Y. Jain P.K. – Financial Management

(2008) – Tata Mc Graw Hill Publishers – New Delhi

4) Maheshwari.Dr.S.N. – Management Accounting and Financial Control

(2006) – Sultan Chand and Sons – new Delhi

5) Maheshwari.Dr.S.N - Accounting for Management

(2005) – Sultan Chand and Sons

6) Pandey.I.M – Financial Management

(2008) – Vikas Publishing House – New Delhi

REPORTS REFERRED
 Financial Statement – (Annual Report for 2006-10)

 Company Journals – TATA STEEL LTD.

 Main Economic and Social Indicators – 2009 - Ministry of National Economy

 BACKGROUND OF THE STUDY.

“THE MAJOR OBJECTIVE OF THIS STUDY IS FOR THE PROPER UNDERSTANDING OF THE WORKING CAPITAL OF TATA STEEL
LTD AND TO SUGGEST NECESSARY MEASURES TO OVERCOME THE SHORTFALLS IF ANY IN THE INDUSTRY.”

The project undertaken is on “Working Capital Management of TATA STEEL LTD.”. It describes about
how the company manages its working capital and the various steps that are required in the management of
working capital. Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability
to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash
flow health is essential to making investment decisions. A good way to judge a company's cash flow
prospects is to look at its Working Capital Management (WCM).

Working capital refers to the cash of a business requires for day-to-day operations or, more specifically, for
financing the conversion of raw materials into finished goods, which the company sells for payment. Among
the most important items of working capital are levels of inventory, accounts receivable, and accounts
payable. Analysts look at these items for signs of a company's efficiency and financial strength.

The working capital is an important yardstick to measure the company’s operational and financial
efficiency. Any company should have a right amount of cash and lines of credit for its business needs at all
times. This project describes how the management of working capital takes place at TATA STEEL LTD.

There are numerous instances in the history of business world where inadequacy of working capital
has led to business failures when a firm finds it difficult to meetings day to day affairs. Operating expenses
essential out lays may have to be postponed for want of funds, operating plans will go out of gear &
enterprise objectives on investment slumps the suppliers & creditors of the firm may have to wait longer to
raise their dues & will hesitate to extend further credit to the firm.

Thus efficient management of working capital in an important prerequisite for successful working of
a business concern it reduces the chances of business failure generates a felling of security and confidence in
the minds of personnel in the organization it assurance solvency of steady of the organization.
 STATEMENT OF PROBLEM

In the management of working capital, the firm is faced with two key problems:

1. First, given the level of sales and the relevant cost considerations, what are the optimal amounts of cash,
accounts receivable and inventories that a firm should choose to maintain?

2. Second, given these optimal amounts, what is the most economical way to finance these working capital
investments? To produce the best possible results, firms should keep no unproductive assets and should
finance with the cheapest available sources of funds. Why? In general, it is quite advantageous for the firm
to invest in short term assets and to finance short-term liabilities.

Besides this followings are some other problem, a firm is facing. Through this study we try to find answer
for these problems.

1. What are root causes of working capital on business?

2. What are the major effects on accounts receivable?

3. What is the nature of relationship between working capital and capital employed

4. What steps should be taken to ensure that it effect on the profit of the firm will not be negative?

5. How can working capital be managed?

6. What make up the working capital cycle?

7. How can debtors be controlled?

 NEED AND IMPORTANCE OF THE STUDY

1. This project is helpful in knowing the companies position of funds maintenance and setting the standards
for working capital inventory levels, current ratio level, quick ratio, current asset turnover level & size of
current liability etc.

2. This project is helpful to the managements for expanding the dualism & the project viability & present
availability of funds.

3. This project is also useful as it combines the present year data with the previous year data and there by it
show the trend analysis, i.e. increasing fund or decreasing fund.

4. The project is done as a whole entirely. It will give overall view of the organization and it is useful in
further expansion decision to be taken by management.
 OBJECTIVES OF THE STUDY

The main objective of the study is to determine the effect of working capital on business profitability which
has to do with:-

1. Maintenance of working capital at appropriate level, and

2. Availability of ample funds as and when they are needed

To accomplishment of these two objectives, the management has considered the composition of current
assets pool. The working capital position sets the various policies in the business with respect to general
operations like purchasing, financing, expansion and dividend etc,

The subsidiary Objective of Working Capital Management is to provide adequate support for the
smooth functioning of the normal business operations of a company. This Objective can be sub-divided into
2 parts:-

1. Liquidity,

2. Profitability.

1) Liquidity
The quantum of Investment in Current Assets has to be made in a manner that it not only meets the
needs of the forecasted sales but also provides a built in cushion in the form of safety stocks to meet
unforeseen contingencies arising out of factors such as delays in arrival of Raw Material, sudden spurts in
demand etc. Consequently, the investment in current assets for a given level of forecasted sales will be
higher if the management follows a conservative attitude than when it follows an aggressive attitude. Thus, a
company following a conservative approach is subject to a lower degree of risk than the one following an
aggressive approach. Further, in the former situation the high amount of Investment in Current Assets
imparts greater liquidity to the company than under the latter situation wherein the quantum of investment in
Current Asset is less. This aspect exclusively covers the liquidity dimension of Working Capital.

2) Profitability
Once we recognize the fact that the total amount of financial resources at the disposal of a company
is limited and these can be put to alternative uses, the larger the amount of investment in current assets, the
smaller will be the amount available for investment in other profitable avenues at hand with the company. A
conservative approach in respect of Investment in Current Assets leaves fewer amounts for other
Investments than an aggressive approach does.
 COLLECTION OF DATA

There are several ways of collecting both data-Primary and Secondary data’s, which differ
considerably in context of money, cost, time and other sources at the disposable of the researcher.

There are two types of data:

· Primary data

· Secondary data

1) Primary Data
Definition:-
The first handed information/Fresh data collected through various methods is known as primary data.

In respect of primary data which the researchers are directly collects data that have not been
previously collected.

The primary data was gathered through personal interaction with various functional heads and other
technical personnel. Some information was also collected by observation.

1) Secondary Data :
Definition:-

The data which has been already collected & comprised for another purpose. Secondary data was
collected various reports, annual reports, documents charts, management information systems, etc in TATA
STEEL LTD, And also collected various magazines, books, newspapers etc.

The analysis of the information gathered has been made on the basis of the clarifications sought
during the personal discussions with the concerned people and perception during the personal visits to the
important areas of services.

In marking observations identifying problems and suggesting certain remedies such emphasis was
given on the basis of opinions gathered during the personal discussions and with the personal experience
gained during the academic study of M.Com course.
 LIMITATIONS OF THE STUDY.

The following are the various limitations involved in the study.

The study in limited 5 years (2006 to 2010) performance of the company.

The data used in this study have been taken from published annual report only.

This study in conducted within a short period. During the limited period the study may not be retailed, full
fledged and utilization in all aspects.

Financial accounting does not take into account the price level changes.

1. We cannot do comparisons with other companies unless and until we have the data of other companies
on the same subject.

2. Only the printed data about the company will be available and not the back–end details.

3. Future plans of the company will not be disclosed to us.

4. Lastly, due to shortage of time it is not possible to cover all the factors and details regarding the subject
of study.
 Vision and Mission

Vision:-

We make the difference through:

Our people, by fostering team work, nurturing talent, enhancing leadership capability and acting with pace,
pride and passion.

Our offer, by becoming the supplier of choice, delivering premium products and services, and creating value
for our customers.

Our innovative approach, by developing leading edge solutions in technology, processes and products.

Our conduct, by providing a safe working place, respecting the environment, caring for our communities and
demonstrating high ethical standards.

Mission:

Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen India’s
industrial base through the effective utilization of staff and materials. The means envisaged to achieve this
are high technology and productivity, consistent with modern management practices.

Tata Steel recognizes that while honesty and integrity are the essential ingredients of a strong and stable
enterprise, profitability provides the main spark for economic activity.

Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from
fear, and thereby reaffirms its faith in democratic values.
 POLICIES:

Corporate Social Responsibility & Accountability Policy:

Tata Steel believes that the primary purpose of a business is to improve the quality of life of people

Tata Steel shall volunteer its resources, to the extent it can reasonably afford, to sustain and improve healthy
and prosperous environment and to improve the quality of life of the employees and the communities it
serves.

Tata Steel shall conduct its business ever mindful of its social accountability, respecting applicable laws and
with regard for human dignity.

Tata Steel shall positively impact and influence its partners in fostering a sense of social commitment for
their stakeholders.

Quality Policy:

Consistent with the group purpose, Tata Steel constantly strives to improve the quality of life of the
communities it serves through excellence in all facets of its activities.

We are committed to create value for all our customers and key stakeholders by continually standardizing,
improving and innovating our offerings, systems and processes involving all our employees.

This policy shall form the basis of establishing and reviewing the Business Objectives and Strategies and
shall be communicated across the organization. The policy will be reviewed to align with business direction
and to comply with all the requirements of TQM Principles.

Human Resource Policy:

Tata Steel is an equal opportunity employer.

Tata Steel recognizes that its people are the primary source of its competitiveness.
It will pursue management practices designed to enrich the quality of life of its employees, develop their
potential and maximize their productivity.

It will aim at ensuring transparency, fairness and equality in all its dealings with its employees.

Tata Steel shall strive continuously to foster a climate of openness, mutual trust and teamwork.

In the process Tata Steel shall strive to be the employer of choice by attracting the best available talent and
ensuring a cosmopolitan workforce.

Safety Principles & Occupational Health Policy:

Tata Steel’s safety and occupational responsibilities are driven by our commitment to ensure zero harm to
people we work with and society at large and are integral to the way we do business.

1. Safety Principles

2. Safety is a line management responsibility.

3. All injuries can be prevented.

4. Felt concern and care for the employee on “24 hours safety” shall be demonstrated by Leaders.

5. Employees shall be trained to work safely.

6. Working safely shall be condition of employment.

7. Every job shall be assessed for the risk involved and shall be carried out as per authorized
procedures/checklist/necessary work permit and using necessary work permit and using necessary
personal protective equipment.

8. We are committed to continual improvement in our S&OH performance.

We shall set objective-targets, develop, implement and maintain management standards and systems, and go
beyond compliance of the relevant industry standards, legal and other requirements.
Environmental Policy:

Tata Steel’s environmental responsibilities are driven by our commitment to preserve the environment and
are integral to the way we do business.

• We are committed to deal proactively with Climate Change issue by efficient use of natural
resources & energy; reducing and preventing pollution; promoting waste avoidance and recycling
measures; and product stewardship.

• We shall identify, assess and mange our environmental impact.

• We shall regularly monitor, review and report publicly our environmental performance.

• Well shall develop & rehabilitate abandoned sites through afforestation and landscaping and shall
protect and preserve the bio-diversity in the areas of our operations.

• We shall enhance awareness, skill and competence of our employees and contractors so as to enable
them to demonstrate their involvement, responsibility and accountability for sound environmental
performance.

• We are committed to continual improvement in our environmental performance.

• We shall set objectives, targets, develop, implement and maintain management standards and system,
and go beyond compliance of the relevant industry standards legal and other requirements.

• We will truly succeed when we sustain our environmental achievement and are valued
by the communities in which we work.
Research Policy:

Tata Steel believes that research provides the foundation for sustained, long-term, stakeholder delight.

Tata Steel shall nurture and encourage innovative research in a creative ambience to ensure that the
competitive advantages in its overall business is retained and surpassed. Towards this goal, the Company
commits itself to providing all necessary resources and facilities for use by motivated researchers of the
highest calibre.

Research in Tata Steel shall be aligned to the technological initiatives necessary to evolve and fulfill the
overall business objectives of the Company.

SUBSIDIARIES:
Tata Steel's position has been strengthened over the years through meaningful acquisitions of enterprises
across the globe. These enterprises have individually emerged as leaders in their respective industry segments
leading to judicious investments, therefore facilitating growth.

 Jamshedpur Injection Powder Limited (Jamipol)

 Jamshedpur Utility and Services Company Limited (JUSCO)

 Lanka Special Steel Limited

 Rawmet Ferrous Industries

 Sila Eastern Company Limited

 Tata Steel KZN

 Tata Metaliks Limited

 Tata Pigments Limited

 Tata Refractories Limited (TRL)

 Tata Steel Processing and Distribution Limited (TSPDL)

 Tata Sponge Iron Limited (TSIL)

 Tayo Rolls Limited

 Tinplate Company of India Limited (TCIL)

 TRF Limited
  The Indian Steel and Wire Products Limited (ISWP)

Joint Ventures:

Tata Steel is a global player with a balanced presence in developed European and fast growing Asian
markets. The Company has set itself the objective of expanding its capacities and becoming globally
competitive in its businesses.

 Dharma Port Company, Orissa

 mjunction services limited

 Tata BlueScope Steel Limited

 TM International Logistics Limited (TMILL)

 Tata NYK

 S&T Mining Company Pvt Ltd.

Enhancing Shareholder Value

Tata Steel strives to increase shareholders’ value by creating sound business strategies and productive
community building exercises. The Company’s Endeavour is strengthened each year through newer and
challenging initiatives, which not only enhances shareholders’ value but also benefits the community at
large.

Tata Steel follows the objective of expanding its capacities and becoming globally competitive in its
business. As part of its business and growth strategy, the Company has been adopting best practices in the
area of corporate governance. Acknowledging its responsibility towards its Shareholders, the Company
follows a new vision that has been etched on the guidelines of becoming the global steel industry benchmark
for value creation and corporate citizenship. The Tata Steel Group expects to realize its Vision by achieving
its goals of value creation, safety, environment and people.

Shareholders’ value is also augmented by:

Increasing earnings from current operations by optimizing assets; differentiation in the marketplace;
continuous improvement and achieving synergies across all Business Units.

Achieving strategic growth through capacity expansion; mining projects; enhanced research and
development innovation, in the area of construction and automotive and new territories.
Creating sustainable communities through various development programs and initiatives.

CONCLUSION

Working Capital is the lifeline of every industry, irrespective of whether it’s a manufacturing industry,
services industry. Working Capital is the prime and most important requirement for carrying out the day to
day operations of the business. Working Capital gives the much-needed liquidity to the business. Working
Capital Finance reduces the overall fund requirement, required to build up the Current Assets, which in turn
help you improve your Turn over Ratio.

The company is performing exceptionally well due to the up wising in the global market followed by the
domestic market. It is an up coming one with good and innovative ideas and believed in improving all the
areas of its operations. The company has a good liquidity position and does not delay its commitment in case
of both its creditors and debtors. The company being mostly dependent on the working capital facilities, it is
maintaining very good relationship with their banks and their working capital management is well balanced.

1. The working capital position of the company is sound and the various sources through which it is
funded are optimal.

2. The company has used its dividend policy, purchasing, financing and investment decisions to good
effect can be seen from the inferences made earlier in the project.

3. The various ratios calculated are an indicator as to the fact that the profitability of the firm and sales
are on a rise and also the deletion of the inefficiencies in the working capital management.

4. The firm has not compromised on profitability despite the high liquidity is commendable.
 SUGGESTIONS

Suggestions can be use by the firm for the betterment increased of the firm after study and analysis of
project report on study and analysis of working capital. The suggestions are:-

1. Company should raise funds through short term sources for short term requirement of funds, which
comparatively economical as compare to long term funds.

2. Company should take control on debtor’s collection period which is major part of current assets.

3. Company has to take control on cash balance because cash is non earning assets and increasing cost
of funds.

4. Company should reduce the inventory holding period with use of zero inventory concepts.

5. The current assets should be managed more effectively so as to avoid unnecessary blocking of
capital that could be used for other purposes.

There were lot of difficulties in the beginning of the project but slowly it got the grip on the road
towards future.