Honda Finance

7/31/2019 Honda Finance

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SUMMER TRAINING PROJECT REPORT

ON

FINANCIAL ANALYSIS OF HONDA

(With special reference to working

capital management)

in

Submitted in the partial fulfillment of the

requirements of

MBA curriculum

(Gautam Buddha Technical University)Faculty Guide :Ms. Neha ShavSubmitted to :

Dr. Jatin SrivastavaHOD

Submitted by:

Pradeep KumarMBA - IIIrd Sem.

Roll no: 1105470056Specialization: Finance

DEPARTMENT OF MANAGEMENT STUDIES

BABU BANARASI DAS NATIONAL INSTITUTE OF

TECHNOLOGY MANAGEMENT

LUCKNOW

(2011-2013)

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Acknowledgement

The project title financial analysis on Honda with

special reference to working capital management has

been conducted by me from 15th June to 31th July 2012 at

HONDA. I have completed this project, based on the primary

research under the guidance of Mr. VIVEK SINGH (Finance) .

I owe enormous intellectual debt towards my guides Mr. JatinSrivastava (HOD), BBDNITM, Lucknow who have augmented

my knowledge. They have helped me learn about the

process and giving me valuable insight to understand how I

can suggest new and innovative ways. They have provided

me a true learning platform, and have been the perfect

mentors, in giving me the necessary guidance regarding my

project.

I would like to thank all the respondents without whose co-

operation my project would not have been complete.

I feel indebted to all those persons and organizations that

have provided help directly or indirectly in successful

completion of this study.

At the end, HONDA, was a great experience to work in,

where I feel, the dedication of its employees is one of the

vital factors of its success.

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TABLE OF CONTENT

Acknowledgement

Preface

Executive Summary

Introduction

Company Profile

Aims of Objective

Objective of the Study

Research Methodology

financial Analysis

Swot Analysis

Suggestion

Problems and Limitations

Conclusion

Bibliography

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FINANCIAL MANAGEMENT

Finance is the life of any business. No business can runproperly unless it maintains its cash. Blood is essential for

human being alive. In case of business finance take the

position of blood. Now the question arises what is finance.

Simply finance is known as cash and monetary terms but

finance means more of it. Finance means measure the

financial requirement and allocate cash in different heads for

proper working of each department.

The word management refers to manage-men-t. It

means manage the men tactfully. Here the word men mean

all those person who are working in the organization.

Financial management is that managerial activity

which is concerned with the planning and controllingof the firms financial resources

According to Howard & Upton Financial Management

is the application of planning and controlling function

to the finance function.

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Thus financial management means manage the financial

activity of the company. There are different approaches

regarding financial management.

Traditional Approach

Under this approach financial management refers to

rising of funds through various sources according to current

need of the company. This approach is mainly concentrate

on rising of fund. Through different sector in this approach

the main thing is raising of capital.

Transactional Approach

Under this approach financial management refers to inflow

and outflow of cash in operating activity. Operating activity

means purchase and sale of material.

Modern Approach

Modern approach is rising of funds through different

sources and utilizes them effectively. Capital budgeting and

cost of capital must be kept in mind while raising the funds.

Capital budgeting means the investment in capital goods in

such a way so that we can get back our invested money

easily and quickly. Cost of capital means what is the cost of

raising capital. The return demanded by preference

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shareholders, the interest rates demanded by debenture

holders, dividend requirement of equity capital holders is

considered as cost of capital.

Utilization of funds means effective utilization of funds in inflow-

outflow; allocate the cash to different department in such a way so that

business can run successfully. Thus financial management means rising of

funds through different sources and utilizes them effectively.

SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation of Financial Statements

The Financial statements have been prepared under the

historical cost convention, in accordance with applicable

Accounting Standards and provisions of the companies

Act, 1956 as adopted consistently by the Company.

2. Recognition of Income/Expenditure

All incomes & expenditures having a material bearing on

the financial statement are accounted for on an accrual

basis and provision is made fore all known losses and

liabilities.

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3. Fixed Assets

Fixed assets are stated at cost, net of Modvat/Cenvat/Vat,less accumulated depreciation. Cost of fixed assets

comprises purchase price, duties, levies borrowing cost,

net charges on forward exchange contracts and exchange

rate variations and any directly attributable cost of

bringing the assets to its working condition for the

intended use.

Machinery spares that can be used only in connection with

an item of fixed asset and their use is expected to be

irregular are capitalized. Replacement of such spares is

charged to revenue.

Intangible assets acquired on or after 1st April 2003

satisfying the qualifying conditions prescribed under

Accounting Standard 26- Intangible assets, issued by

Institute of Chartered Accountants of India are capitalized.

4. Capital Work in Progress

Advance paid towards acquisition of fixed assets and the

cost of assets not ready to put to use before the year end,

are disclosed under capital work in progress.

5. Impairment of Assets

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Carrying amount of cash generating units/assets is

reviewed for impairments, Impairment, if any, is

recognized where the carrying amount exceeds the

recoverable amount being the higher of net realizable

price and value in use.

6. Inventories

Inventories are valued at lower of cost and net realizable

value. The cost of raw material is determined by using

First-In-First Out (FIFO) method. However, scrap is valued

at Net realizable value. Cost of finished goods and work in

progress includes cost of conversion and other cost

incurred in brining the inventories to their present location

and condition.

7.Sales

Sales are recognized on dispatch of goods from the

factory and are net of discounts but exclude sales tax.

8. Depreciation

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Depreciation on fixed assets is provided on written down

value basis at the rate and in the manner prescribed in

schedule XIV to the Companies Act, 1956. Depreciation is

charged on pro-rata basis for assets purchased/sold

during the year. Individual assets costing Rs. 5000 or less

is depreciated in full in the year of purchase. Depreciation

on incremental cost arising on account of translation of

foreign currency liabilities for acquisition of fixed assets is

provided as aforesaid over the residual life of the

respective assets. Costs of intangible assets are amortizedover five years.

9. Foreign Exchange Transactions

Transactions denominated in foreign currencies are

normally recorded at the exchange rate prevailing at the

time of transaction. Monetary items denominated in

foreign currencies outstanding at the year-end are

translated at exchange rate applicable as on that date.

Non-monetary items denominated in foreign currency are

valued at the exchange rate prevailing on the date of

transaction. Any income or expenses on account of

exchange difference either on settlement r on translation

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is recognized in the profit and loss account except in

cases where these relate to the acquisition of fixed assets.

10. Borrowing Cost

Borrowing Cost that is attributable to the acquisition or

construction of qualifying Assets is capitalized as part of

the cost of such assets. A qualifying asset is one that

necessarily takes substantial period of time to get ready

fore intended use. All other borrowing costs are chargedto revenue.

11.Claims

Claims receivable are accounted for on the certainty of

receipt & claims payable are accounted at the time of

acceptance.

12.Excise Duty

Excise duty is accounted on the basis of both payments

made in respect of goods cleared as also provision made

for goods lying in bonded warehouse.

Cenvat claimed on Capital goods is credited to

capital Assets/capital work in process. Cenvat claimed on

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purchase of raw and other materials are deducted from

cost of such material

13.Retirements Benefits

Contribution to Provident fund are made to the

Employees Provident fund schemes administered through

Provident fund Commissioner and companys

contributions is charged to revenue. The Gratuity is

funded through payment to Life Insurance Corporation of

India. Companys contribution paid/payable to said fund is

charged to Profit & Loss Account. Provision is made for the

value of unutilized leave due to employees as at the year

on the basis of actuarial valuation.

14.Miscellaneous Expenditure

Preliminary Expenses are amortized over a period of ten

years.

15.Dividend

Provision is made in the financial statements of dividend

proposed for approval at the subsequent Annual General

meeting.

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16.Income Tax

Provision for current Income Tax is made after taking

credit for allowances and exemptions. In case of matters

under appeal, due to disallowance or otherwise, the same

is considered for provision when company accepts the

said liabilities.

In accordance with Accounting Standard 22- Accounting

for Taxes on Income, issued by the Institute of Chartered

Accountants of India, the deferred tax for timing

differences between the book and tax profits for the year

is accounted for using the tax rates and the tax laws that

have been enacted or subsequently enacted as of the

date of balance sheet.

Deferred tax assets arising from temporary timing

differences are recognized to the extent there is virtual

certainty that the sufficient future taxable income will be

available against which such deferred tax assets can be

realized and are reviewed at each balance sheet date to

reassure the realization.

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WORKING CAPITAL

MANAGEMENT

Introduction

Every business needs funds for two purposes for its

establishment and to carry out day-to-day operations. Long

term funds are required to create production facilities

through purchase of fixed assets such as plant and

machinery, land building, furniture etc. investment in these

assets represent that part of firms capital, which is blocked

on a permanent or fixed basis is called fixed capital.

Funds are also needed for short-term purposes of raw

materials, payment of wages and other day-to-day expenses

etc. these funds are known as working capital.

. MEANING OF WORKING CAPITAL

Working capital refers to that part of firms capital, which is

required for financing short term or current assets such as

cash, marketable securities, debtors and inventories.

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DEFINITIONS OF WORKING CAPITAL

In the words ofShubin,working capital is the amount

of funds necessary to cover the cost of operating the

enterprise.

According to GenestenbergCirculating capital means

current assets of a company that are changed in

ordinary course of business from one form to another

as for example, from cash to inventories, inventories

to receivables, receivables into cash.

NATURE OF WORKING CAPITAL

Working Capital management is concerned with

the problems that arise in attempting to manage the

current assets, the current liabilities and the inter-

relationship that exists between them. The term

current assets refer to these assets which in the

ordinary course of business can be, or will be,

Converted into cash within one year without

undergoing the diminution in value and without

disrupting the operating of the firm, whereas the

current liabilities are those liabilities which are

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intended, at there inception, to be paid in the

ordinary course of business, within a year out of

current assets or earning of the concern. Thus the

goal of working capital management is to manage

the firms assets and liabilities in such a way that a

satisfactory level of working capital is maintained.

The interaction between current assets and

liabilities in such a way that optimum level of

current assets, the trade off between profitability

and risk which is associated with the level of currentliabilities and assets, better financing mix

strategies and other short term goals are attained.

There are two concepts of working capital: Gross and Net

1. The term gross working capital, also referred to

as working capital, means the total current assets.

2. The term net working can be defined in two ways.

Difference between current assets and current liabilities.

The task of the financial manager in managing

working Capital efficiency is to ensure efficiency

liquidity in the operations of the enterprise. The

basic three measures of a firms overall liquidity

are: Current ratios, Acid test ratio, Net Working

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Capital. For the purpose of working capital

management

Therefore, NWC Can be said to measure the liquidity

of the firm. In other words, the goal of working

capital management is to manage the current assets

and liabilities in such a way that an acceptable level

of NWC is maintained.

IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working Capital is very essential to maintained

the smooth running of the business. It is lifeblood

and nerve center of a business. No business can run

successfully with out adequate amounts of working

capital.

1.Adequate working capital helps in maintaining

solvency of the business by providing

uninterrupted flow of production.

2. It also enables a concern to avail each discount on

the purchases and hence it reduces casts.

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WORKING CAPITAL REQUIREMENT

WORKING CAPITAL IS THE LIFE BLOOD AND

CONTROLLING NERVE CENTRE OF A BUSINESS. No

business can be successfully run without an

adequate amount of working capital. To avoid theshortage of working capital at once, an estimate of

working capital requirements is not an easy task

and a large number of factors have to be considered

before starting this exercise. The following factors

have to be considered for this: -

1. The length of sales cycles during which inventory

is to be kept waiting for sales.

2. The average period of credit allowed to

customers.

3.The amount of cash required paying day-to-day

expenses.

4.The average amount of cash required making

advance payments, if any.

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5. The average credit period expected to be allowed

by suppliers.

6. Time lag in payment in wages and in other

expenses.

From the total amount blocked in current assets

estimated on the basis of first for items given

above, the total current liabilities i.e. the last two

items is deducted. In order to provide for

contingencies, some extra amount calculated as a

fixed percentage of WC may be added as safety

margin.

NEED OF WORKING CAPITAL

The need for the working capital (gross) or current assets

cannot be over emphasized. Given the objectives of financial

decision making to maximize the shareholders wealth, it is

necessary to generate sufficient profits. The extent to which

profits can be earned will naturally depend, among other

things. Open the magnitude of sales. A successful sales

program is necessary for earning profits by any business

enterprise. There is a need of working capital in firm of

current assets to deal with the problem arising out of the

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lack of immediate realization of cash against goods sold.

Thus sufficient working capital is necessary to sustain sales

activity. Technically, this is referred to as the operating or

cash cycle.

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CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:

1. Gross working capital: In the broad sense, the term

working capital refers to the gross working capital and

represents the amount of funds invested in current assets.

Thus, gross working capital is the capital invested in the total

current assets of the enterprise. Current assets are those

assets, which in the ordinary course of business can be

converted in to cash with in a short period of normally one

accounting year. Constitutes of current assets are:

Current Assets

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23

SR. No. Constitute of current Assets

1. Cash in hand

2. Cash at bank

3. Bills receivables

4. Sundry Debtors (less pro. For bad

debts)

5. Short term loans and advances

6. Inventories of stocks:

(a) Raw materials

(b) Work in process

(c) Stores and spares

(d) Finished goods

7. Temporary investments of surplus

funds

8. Prepaid expenses

9. Accrued incomes


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2. Net working capital: In a narrow sense, the term

working capital refers to the net working capital. Net working

capital is the excess of current assets over current liabilities.

So,

Net working capital = current assets current

liabilities

Net working capital may be positive or negative. When the

current assets exceed the current liabilities the working

capital is positive and the negative working capital results

when the current liabilities are more than current assets.

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Current liabilities are those liabilities, which are intended to

be paid in the ordinary course of business with in a short

period of normally one accounting year out of the current

assets or the incomes of the business. Constitutes of current

liabilities:

Current Liabilities

25

SR.

NO.

Constitutes of current liabilities

1. Bills payable

2. Sundry creditors or accounts payable

3. Accrued or outstanding expenses

4. Short term loans, advances and deposits

5. Dividend payable

6. Bank overdraft7. Provision for taxation


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CLASIFICATION OF WORKING CAPITAL

26

KINDS OF WORKING CAPITAL

ON THE BASIS OF

CONCEPT

ON THE BASIS OF TIM

GROSS

WORKING

PERMANENT OR

FIXED WORKING

CAPITAL (MINIMUM

AMOUNT ALWAYS

REQUIRED)

TEMPORAR

OR VARIAB

WORKING

SEASONAL W.C.

(SEASONAL

DEMAND)

SPECIAL W.C.

(SPECIAL DEMAND

LIKE

NET WORKING

CAPITAL


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On the basis of concept:

On the basis of concept working capital may be divided into

two parts i.e.

A) Gross working capital: Gross working capital is the

capital invested in total current assets of the enterprise.

B) Net working capital: Net working capital is the excess

of current assets over current liabilities, so,

Net working capital = current assets current liabilities

On the basis of time, it may be classified as:

A) Permanent or fixed working capital: It is the

minimum amount, which is required to ensure effective

utilization of fixed facilities and for maintaining the

circulation of current assets. There is always a minimum

level of current assets, which is continuously required by the

enterprise to carry out its normal business operations. For

Example: every firm has to maintain a minimum level of

raw materials, work in process, finished goods and cash

balance. This minimum level of current assets is called

permanent or fixed working capital as this part of capital is

permanently blocked in current assets. As a business grows,

the requirements of permanent working capital also increase

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due to the increase in current assets. It can be further

divided into two parts:

Regular working capital: It is that part of the working

capital which is required to ensure the circulation of current

assets from cash to inventories, from inventories to

receivables and from receivables to cash and so on.

Reserve working capital: It is the excess amount over the

requirement for regular working capital, which may be

provided for contingencies that may arise at unstated

periods such as strikes, rise in prices, depression.

B) Temporary or variable working capital: It is the

amount of working capital, which is required to meet the

seasonal demands and some special exigencies. Variable

working capital can be further divided into two:

Seasonal working capital: It is that part of the working

capital, which is required to meet the seasonal needs of the

enterprise.

Special working capital: It is that part of the working

capital which is required to meet special exigencies such as

launching of extensive marketing campaigns for conducting

research

Importance or advantages of adequate working

capital

1. Solvency of business

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2. Goodwill

3. Easy loans

4. Cash discounts

5. Regular supply of raw material

6. Regular payment of salaries, wages and

other day-to-day commitments.

7. Exploitation of favorable market conditions

8. Ability to face crisis

9. Quick and regular return on investment

10. High morale.

Sources of Working Capital

1) Long- term sources: -

a) Issue of shares

b) Issue of debentures

c) Long term loans

d) Retained earning

e) Sale of any old asset

2) Short Term Sources: -

a) Internal sources: -

i) Provision for tax

ii) Depreciation funds

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iii) Outstanding expanses

b) External sources: -

i) Normal trade creditii) Bills payable

iii) Overdraft

iv) Public deposit

v) Advance from customers

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WORKING CAPITAL TURNOVER RATIO

Working capital of a concern is directly related to sales.

Working capital turnover ratio indicates the velocity of the

utilization of net working capital.

Formula:

Working Capital Turnover Ratio

PARTICULARS YEARS2010 2011

Cost of good sold

4394094

50

4306298

86

Working Capital

2993232

7

2234480

3

Ratio (In Times) 14.6 19.2

31

Cost of good sold

Working Capital Turnover Ratio =

Working Capital


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Graphical Representation

Working Capital Turnover Ratio

05

101520

25

2005 2006

Years

Working

Capital

Turnover

Ratio

INTERPRETATION

This ratio measures efficiency with which the working capital is being

used by a firm. A higher ratio indicates efficient utilization of working

capital and a low ratio indicates otherwise. Working capital increase in 2011

as compare to last year. It shows the efficiency of the company to doing day-

to-day activities.

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OPERATING CYCLE &WORKING CAPITAL NEEDS

As for as the requirement of working capital is concern

we can say that this amount is completely depends upon

the nature of business as well as the size of business.

Here we discuss only about two types of firms:

1) Trading firms

2) Manufacturing firms

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OPERATING SELLING

34

WORK INFINISHED

WAGES, SALARIES

& OTHEREXPENCES

RAW

MATERIAL

CASHCOMISSION

TIME


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OPERATING CYCLE PERIOD : The operating cycle of any

firm is consist of the time required for the completion of the

phonological order of some or all of the following:

1) Procurement of raw material

2) Conversion of raw material into work in progress

3) Conversion of work in progress into finished goods

4) Sale of finished goods (cash / credit)

5) Conversion of receivable (credit into cash)

LENGTH: The length of any operating cycle depends on the

duration of any firm to complete its processing as all

appoints mentioned above. There are two operating cycles,

which we have to calculate:

1) Total operating cycle period

2) Net operating cycle

INVENTORY CONVERSION PERIOD: It is the time which

any firms takes to convert the raw material to sales of

finished goods in manufacturing firms. The ICP is consist raw

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material conversion period, work in progress conversion

period and finished goods conversion period.

RECEIVABLE CONVERSION PERIOD: When any company

sold the goods in market the sale can be made by cash or

credit .In case of cash the company gets the return

immediately on the other hand if it is an credit sale means

the company has to recover the amount of cash after a time

gap and how much time the firms takes to convert the credit

or receivables into cash are known as receivable conversion

period.

The total of ICP& RCP is also known as total

operating cycle period (TOCP). Finished goods but in case of

trading unit the company needs the less amount of working

capital only for purchasing the goods and to maintain thecredit policy.

NET OPERATING CYCLE = TOCP DEFFEREL PERIOD

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FACTORS AFFECTING THE REQUIREMENT OF WORKING

CAPITAL

1) Size of business: This is very clear that if there is any

big concern means it need maximum of working capital to

run the business smoothly but the requirement of working

capital will be reduced if we will reduced the size of business

as we do not have the sufficient long operating cycle to

invest the higher rate of working capital.

2) Nature of business: Here we will discuss on the major

part of firms -

i) The manufacturing unit

ii) The trading unit

Means we can easily understand that in case of

manufacturing unit the firm required maximum working

capital to complete its operating cycle.

3) Seasonal operation: The seasonal operation also effect

the requirement of working capital because the sale can be

increased or decreased if they is any concern which is

manufacturing the seasonal goods.

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Example: If any manufacturing unit which is producing

garments requires less amount of working capital during the

summer season but on the other hand in the winters they

require more working capital to produce the woolen clothes.

4) Credit policy: This policy normally takes an important

place to impact on the requirement of working capital means

any company having a good credit policy for a shorter period

may required the less working capital on the other hand the

lenient credit policy may generate the risk of doubtful debts.

In this case the company requires more working capital

during this period this takes place to convert the credit into

cash.

5) Marketable competition: As per the present synerio ofthe market we can find the toughest competition between

every two company which are dealing with the same time of

product to reduce the competitiveness and to win the gain

the company gives or provides the some special offers to the

buyer and to the seller and these offers are not related with

the operating cycle of the company so the company needs

exist amount of working capital to manage the amount of

these offers.

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6) Growth and expansion: As for as the growth and

expansion is concerned it is very clear it will increase the

size of business we require some extra money for this

purpose. In the same condition if any company going to

launch a new product they again r4equired exist amount of

working capital to complete the operating cycle of that

particular product. The increment in the size is known as

growth and the establishment in the new sector or segment

is called expansion.

7) Shortage of raw material: The requirement of working

capital is also depends on the aviability of the raw material

in the market. At the time of shortage of raw material the

price may also be high due to higher demand and less

aviability in this case the firm has to purchase the raw

material on higher price and required some extra amount for

the increment of cost. It means the company has to invest

more money for purchasing.

8) Dividend policy: This factor is important because it is

directly impact on the financial position of the firm because

the higher dividend rate makes the company enable to get a

strong position in the market. So to fulfill the requirement ofthe dividend the company may use the retained earning or

profit or they have to generate the funds for dividend from

other sources. So this will impact on the operating cycle as

well as this will degrees the cash balance of the company,

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which the company is used to fulfill requirement of

temporary working capital.

9) Depreciation policy: Depreciation policy also is treated

as a source of working capital because we can use the

depreciation funds for the timing of fulfill the requirement of

temporary working capital. If the company is not maintaining

the depreciation policy in this case the company has to

generate the funds from the long term sources or any other

source which can be increase the liability of the firm.

Financing of temporary, variable or short term

working capital

1. Indigenous:

2. Trade credit

3. Installment credit4. Advances

5. Factoring or account receivables credit

6. Accrued expenses

7. Deferred incomes

8. Commercial paper

9. Working capital finance by commercial banks:

a) Loans

b) Cash credits

c) Overdrafts

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d) Purchasing and financing of bills.

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Concept of Gross Working Capital

Let us Analyze the gross

working capital

The above

figure

indicates

that the

gross

working

capital

Current

Liabilities

(Rs.)

42

Current

Assets

2011 2010

Stock 284737

18

229977

80

Sundry

Debtor

552017

83

429847

56

Cash &

bank bal.

158147

2

130894

7

Advances 115059

34

290995

1

Total

967629

07

702014

34

Liabilities 2011 2010

Sundry Creditors 530452

14

313452

74

Working Capital

Borrowings

226625

56

765063

4

Interest accrued

but not due

1204 95109

Other Liabilities 409052

3

390787

9

Provisions 319840

2

360099

8

Vehicle Loan 174428 419847

Int. free sales tax

loan

390833

3

900000

Total 8708066

0

4791974

1


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Net Working Capital

Let us Analyze the net Working

Capital (Rs)

Year 2011 2010

Current Assets

(A)

967629

07

702014

34

Current

Liabilities (B)

870806

60

479197

41

Net Working

Capital (A-B)

968224

7

222816

93

WORKING CAPITAL FINANCING

The financing of working capital are done by from different

sources of financial distribution here we will discuss about

the short term sources of finance which are directly related

to business or the finance policy of Indian commercial bank.

Every financial managers has to analyses the situation and

create the funds accordingly. Every firms the action which is

easily available and normally do not increase the long term

liabilities of the company from the above we can explain the

financing for working capital into two parts: -

1) Direct sources of financing working capital

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2) Role of commercial bank in financing of working

capital

1) Direct sources of financing working capital: here the

direct source means any option for credit which is related to

the business and do not impact on the liabilities of the

business for long term thats why these are treated as trade

liabilities and current liabilities.

There are two direct sources in relation of any

business: -

a) Trade credit: Trade credit means any credit, which is

directly related to the goods or the services, which is use, by

the firm.

Example: a supplier of raw material can provide you the

raw material today and you may request for the payment of

these goods after sometime. The gap between the

purchasing and the payment can be treated as trade credit.

In trade credit normally there is no factor of interest and this

is very easily available and helps the firm to maintain itsoperating cycle.

There are two types of trade credit normally

used in India, which are as follows:

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i) Open account: in open account the credit facility

provided by the seller on the basis of mutual understanding

with the buyer. In this process there is not legal obligation to

sign or to promise for the repayment of the credit amount.

Thats why the credit limit in open account depends upon

the goodwill and healthy relationship between the buyer and

seller.

ii) Bills payable: bills payable normally related with the

negotiable instrument as described in Negotiable

Instrument Act .It is the kind of promissory note. In bills

payable the buyer or the seller provides some terms and

conditions from the payment. In this case the buyer has to

sign on the bill and has to repay the amount to the seller onthe date of maturity.

b) Accrued expanses: In routine life of business we can

find the different expanses of these types of expenses.

Normally the accrued expenses are those expanses for

which we have available the service or goods from the

persons or supplier and has to pay the amount for theservice after a fixed period.

Example:The salaries of the employees.

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In case of salaries the employees works for the firm for

a fixed period say one month and after the completion of

this period the firm will pay this amount to the employees.

Other example: Post paid connection etc.

2) Role of commercial banks in working capital

financing: In India most of the commercial banks provide

the credit facilities to the firm to meet the working capital

requirement. The commercial banks are important source of

short term financing. The commercial banks provides credit

to the extend limit and is known as Credit Limits. The

bank can finance the working capital by the following ways:

i) Cash credit / Overdraft

ii) Loans

iii) Letter of credit

iv) Purchasing and discounting of bills

CASH CREDIT / OVERDRAFT: This is basic facility of credit

provided by the commercial banks of India. In overdraft

facilities the current account holder can withdraw the

moreover and axis of available balance in its currentaccount. The bank will fix the limit for this credit one time at

starting and the account holder can use the credit till its

limit. The advantage of overdraft or cash credit is the firm

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has to pay only the interest to the bank for the period for

which we cash over drawn.

PURCHASING AND DISCOUNTING OF BILLS: Now days

most of the firms wants to increase the sale so that they do

a liner credit. In this process the buyer or the seller makes

an advance bills and promise to pay the amount as

mentioned in bill account to the maturity of the order. In this

case the seller firm may required some amount to complete

this order, so the contact to there bank and ask for the

required money on the basis of the available bill which they

have to handover to the bank as guarantee of security. If the

bank provide the total amount after deducting the charges,

commissions, fees etc. is known as purchasing of bills. In

other hand if the bank provides some percentage (%) of the

total amount of the bill then the banks has to wait till its

maturity date to get the payment from the buyer and when

the bank collects the payment from the buyer and deduct

the amount which has been already paid to seller fir and

deduct other expenses. Which has been born by the bank for

collection of the payment and the remaining amount

deposited in the sellers current account and this process is

known as discounting of bills.

GEOGRAPHICAL DISTRIBUTION

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Honda is headquartered in Tokyo, Japan. American Honda

Motor Co. is based in Torrance, California. Honda Canada Inc.

is headquartered in the Scarborough district of Toronto,

Ontario, and is building new corporate headquarters in

Markham, Ontario, scheduled to relocate in 2011. Hero

Honda, a joint venture

between India's Hero Group and Honda, is the largest

manufacturer of two wheelers in the world. Honda of Canada

Manufacturing is based in Alliston, Ontario. Honda has also

created joint ventures around the world, such as Honda Siel

Cars India Ltd, Hero Honda Motorcycles India Ltd, Guangzhou

Honda and Dongfeng Honda Automobile Company in China

and Honda Atlas Cars Pakistan

LISTED STOCK EXCHANGES

Honda is headquartered in Tokyo, Japan. Their shares

trade on the Tokyo Stock Exchange and the New York Stock

Exchange, as well as exchanges in Osaka, Nagoya, Sapporo,

Kyoto, Fukuoka, London, Paris and Switzerland.

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FINANCIAL STANCE

Market cap US$ 58.74 Billion (2011)

Revenue US$ 119.801 Billion (2011)

Operating income US$ 9.513 Billion (2011)

Net income US$ 5.989 Billion (2011)

Total assets US$ 125.916 Billion (2011)

Total equity US$ 45.356 Billion (2011)

Employees 167,231 (Sep 2011)

Fiscal year ends March

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WORLDS FIRSTS BY HONDA

Although a relatively small manufacturer compared to theother Japanese automakers, Honda is the largest engine

maker in the world. Honda has a number of firsts in many

categories, including the first engine to meet the 1970 US

Clean Air Act (1975 CVCC), the first luxury Japanese car

(1985 Legend)

and motorcycle (2006 Gold Wing bikes) equipped with an

airbag, as well as the first mid-size pickup truck with

independent rear suspension (2006 Ridgeline)

Honda has also pioneered new technology in its HA-420

HondaJet that allows new levels of reduced drag, increased

aerodynamics and fuel efficiency thus reducing operating

costs.

In Takanezawa, Japan, on June 16, 2011, Honda Motors

produced the first assembly-line FCX Clarity. More efficient

than a hybrid vehicle, the FCX Clarity combines hydrogen

and oxygen from ordinary air to make electricity. The vehicle

does not emit any pollutants and its only byproducts are

heat and water. The FCX Clarity also has an advantage over

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hybrids in that it does not require a rechargeable battery

and the use of electricity.

HONDA ROBOTICS

ASIMO is the part of Honda's Research & Development

robotics program. It is the eleventh in a line of successive

builds starting in 1986 with Honda E0 moving through the

ensuing Honda E series and the Honda P series. Weighing 54

kilograms and standing 130 centimeters tall, ASIMO

resembles a small astronaut wearing a backpack, and can

walk on two feet in a manner resembling human locomotion,

at up to 6 km/h. It is the world's only humanoid robot able to

ascend and descend stairs independently.

COMPETITOR ANALYSIS

Honda Motor Co., Ltd. operates in the Motor vehicles and

car bodies sector. This analysis compares Honda Motor Co.,

Ltd. with another company in this sector in Japan: Mitsubishi

Motors Corporation (2011 sales of 2.68 trillion Japanese Yen

[US$25.32 billion] of which 99% was Automobile).

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3.5.1 An Overview:

3.5.1(a)HONDA WORLDWIDE:

The history of the Honda Motor Company began with the vision of one man - Soichiro

Honda. His dream was personal mobility for everyone.

Soichiro Honda founded the Honda Motor Company in 1948. In the same year, he designed

and engineered the first product of this company - a 50 cc motorised bike on a bicycle

frame - in his small shed at Hamamatsu.

Soichiro's vision was international in character. His desire was to lead the world in

technology, and make a significant contribution to the creation of a better society. As a

result, most of the products that Honda developed started out by making a difference.

Whether it was the CVCC engine in the sixties or the solar powered car of the nineties,

they all sought to challenge and overcome conventional wisdom.

3.5.1(b) PRINCIPLES OF HONDA:

Honda Motor Co., Ltd. operates under the basic principles of "Respect for the Individual"and "The Three Joys" commonly expressed as The Joy of Buying, The Joy of Selling

and The Joy of Creating. "Respect for the Individual" reflects our desire to respect the

unique character and ability of each individual person, trusting each other as equal partners

in order to do our best in every situation.

3.5.1(c) Honda in India:

Honda Siel Cars India Ltd., (HSCI) was incorporated in December 1995 as a joint venture

between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddharth Shriram Group

company, with a commitment to providing Hondas latest passenger car models and

technologies, to the Indian customers. The Honda City, its first offering introduced in 1997,

revolutionized the Indian passenger car market and has ever since been recognized as an

engineering marvel in the Indian automobile industry. The success of City as well as all its

other models has led HSCI to become the leading premium car manufacturer in India. The

total investment made by the company in India till date is Rs. 1620 crores, further

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investment of RS. 1000 crore is planned and being currently invested for the coming

second plant in Rajasthan. The company has a capacity of manufacturing 100,000 cars.

7HSCIs state-of-the-art manufacturing unit was set up in 1997 at Greater Noida, U.P with

an investment of Rs. 450 crore. The green-field project is spread across 150 acres of land

(over 6,00,000 sq. m.).

The initial installed capacity of the plant was 30,000 cars per annum, which was thereafter

increased to 50,000 cars on a two-shift basis. The capacity has further been enhanced to

1,00,000 units annually in February 2011 . The capacity expansion was necessitated by the

excellent performance of all the Honda models, particularly the growing demand forCity

in India. Several modifications were done by the company with the objective of offering

higher quality products to its customers, faster and quicker. The expansion process also

included expansion of the covered area in the plant, from 1,07,000 sq. m. to 1,31,794 sq. m.

HSCI currently produces the newly launched Honda Jazz, All New City, Civic and

Accord models in India and the premium SUV, CR-V is sold as a fully imported unit from

Japan.

The company operates under the stringent standards of ISO 9001 for quality management

and ISO 14001 for environment management.

3.6 About the Car:

3.6.1 The all new Honda City:

The third generation of the concept design arrow-shot or arrows, make All New Honda

City looks very different from the generation predecessor. Overall view All New Honda

City more impressive. With exterior design changes so that the overall look sporty luxury

at a time.

All New Honda City is a perfect evolution of a mini-class sedan. The latest generation of

Honda City will continue success in the automotive market. Honda City has this

revolutionary view, and the more luxurious for a mini-class sedan.

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Design front bumper and spoiler made refers to the cars racing to the level of

Aerodynamics can be maximum. In addition, also made a whole big enough air on the

spoiler to reduce barriers when its winds, also as Feed of fresh air to the engine room. The

larger size of the headlight to make Honda call it The Eagle Eye.

Behind, All New City is designed according to tail arrows. An effect of arrows is

established by design decks high and the trunk cut off, which also contribute to the smooth

flow of air to the rear body. In addition, the form of bumper diffuser also added to create

the effect HANDICAP style press and the road surface in order to maintain stability when

the car was on high speed.

The shape of the rear lights also changed, now mica lamp made in two colors, red and

white three-dimensional. Interior also participate improvement, Honda wants to apply the

concept of cozy Lounge in the car cabin. This is possible with the dimensions of space

that is longer and more widely each 5mm from the previous generation (4.395mm and

16.95mm) and less than 15mm (1.470mm).

There are also features reclining seat, which allows rear seat passengers could be laid down

sitting position to get more comfortable. This technology may be applied first in a sedan,

usually because the rear seat passengers with what is required baggage.

3.6.2 Importance of the all new Honda City for the Company:

According to the management of HSCI, Honda City has been the most important car in the

Honda line up. HSCI claims to sell around 60,000 cars every year. Out of these 2/3rd of the

cars sold are City i.e. Honda sells 40,000 City every year.

The City has been the star performer for HSCI since the time it was launched. However

now it is taking the position of a cash cow for the company. i.e. it is generating the

maximum sales for the company despite its small & stagnant market share.

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RESEARCH METHODOLOGY:There were several methodologies of research that the researcher could have utilized to

collect information regarding customer satisfaction. Some of the more commonly used

strategies. However factors such as information need, resources, accessibility to customers,

sample to be used, time etc. had to be considered prior to selection of a methodology.

4.1 Research Method:

For this particular study, the method of acquiring information from the customer needed tobe both easy to use and understand. Therefore the researcher decided to use the

FINANCIAL STATEMENT. Under this method, the information was collected from the

customers using a research..

4.2 Data Source:

The research makes use ofSecondary Data.

a. Secondary Data: use of secondary data was also made in the research. The purpose

was to gather information as to who is a customer, what is customer satisfaction,

information pertaining to four-wheelers market, company profile & research papers on

customer satisfaction. This secondary data was collected from various websites, Magazines

& broachers, management books and articles.

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4.3 Target population & Sampling plan:

The target population consisted of all the working Capital Management of Honda City

and the research area wasLucknow.

4.5 Data processing:

The data collected from the respondents, through the questionnaire, was recorded in an

excel sheetwhich was then converted intoSPSSdatabase for analysis procedure. This data

has been displayed in the report usinggraphical presentations (pie-charts, bar diagrams,

histograms etc.) and tabulations.

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II A. FINANCIAL ANALYSIS

SALES ANALYSIS

Honda Motor Co., Ltd. reported sales of 12.00 trillion

(US$113.31 billion) for the fiscal year ending March of 2011.

This represents an increase of 8.3% versus 2007, when the

company's sales were 11.09

trillion. Sales at Honda Motor Co., Ltd. have increased during

each of the previous five years. Honda Motor Co., Ltd. also

saw significant increases in sales in Motorcycle Business (up

13.7% to 1.56 trillion).

Sales Comparisons (Fiscal

Year ending 2011)

Company

Sale

s

(trln

s)

Sales

Grow

th

Sales/

Emp

(US$) Largest Region

Honda Motor Co.,

Ltd.

12.00

38.3% 633,140

North America

(50.8%)

Recent Sales at Honda

Motor Co., Ltd.

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8 89 10 11 12

200

3

200

4

200

5

200

6

200

7

201

1

(Figures in Trillions of

Japanese Yen)

Just over half of the company's 2011 sales were in North

America: in 2011, this region's sales were 6.09 trillion,

which is equivalent to 50.8% of total sales. In 2011, sales in

Rest of the World were up at a rate that was much higher

than the company as a whole. Honda Motor Co., Ltd. also

experienced significant increases in sales in Europe (up

22.3% to 1.50 trillion) and Asia (up 27.6% to 1.31 trillion).

DIVIDEND ANALYSIS

During the 12 months ending 30/6/2011, Honda Motor Co.,Ltd. paid dividends totaling 88.00 per share. Since the

stock is currently trading at 3,340.00, this implies a

dividend yield of 2.6%. Honda Motor Co., Ltd. has increased

its dividend during each of the past 5 fiscal years, in 2003,

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the dividends were 16.00 per share. During the same 12

month period ended 6/30/2011, the Company reported

earnings of 338.02 per share. Thus, the company paid

26.0% of its profits as dividends.

PROFITIBILITY ANALYSIS

On the 12.00 trillion in sales reported by the company in

2011, the cost of goods sold totaled 8.02 trillion, or 66.9%

of sales i.e., the gross profit was 33.1% of sales which is

better than in comparison as achieved in 2007, when cost of

goods sold totaled 67.6% of sales. This profit margin is lower

than the level the company achieved in 2007, when the

profit margin was 5.3% of sales. The company's return on

equity in 2011 was 13.4%. This was a decline in performance

from the 14.4% return that the company achieved in 2007.

Profitability

Comparison

Company Yea

r

Gross

Profit

Marg

in

EBIT

DA

Margi

n

Earn

s

bef.

extr

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a

Honda Motor Co.,

Ltd.

201

133.1%12.3%5.0%

Honda Motor Co.,

Ltd.

200

732.4%11.0%5.3%

Honda Motor Co., Ltd. reports profits by product line.

During 2011, the itemized operating profits at all divisions

were 953.11 billion, which is equal to 7.9% of total sales. Of

all the product lines, Financial Services had the highest

operating profits in 2011, with operating profits equal to

22.1% of sales. Power Products and Other Businesses had

the lowest operating profit margin in 2011, with the

operating profit equal to only 5.3% of sales. However, in

2007, Automobile Business had the lowest profit margin.

INVENTORY ANALYSIS

As of March 2011, the value of the company's inventory

totaled 1.20 trillion. Since the cost of goods sold was 8.02

trillion for the year, the company had 55 days of inventory

on hand. In terms of inventory turnover, this is an

improvement over March 2007, when the company's

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inventory was 1.18 trillion, equivalent to 58 days in

inventory.

FINANCIAL POSITION

As of March 2011, the company's long term debt was

1.84 trillion and total liabilities (i.e., all money owed) were

7.75 trillion. The long term debt to equity ratio of the

company is 0.39. As of March 2011, the accounts receivable

for the company were 2.36 trillion, which is equivalent to

72 days of sales. This is an improvement over the end of

2007, when Honda Motor Co., Ltd. had 82 days of sales in

accounts receivable.

Financial Positions Honda

Motors Pvt., Ltd.

Company

Yea

r

LT

Debt/

Equity

Day

s

AR

Day

s

Inv.

R&D

/

Sale

s

Honda Motor Co.,

Ltd.

201

10.39 72 55 4.9%

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II B. RATIO ANALYSIS

a. CURRENT RATIO:

Current Ratio shows a firms ability to meet current liabilitieswith its current assets.

Computation:

Current Ratio = Current Assets/ Current Liabilities

2007 (for Honda) 2007 (for

Mitsubishi)

Current Ratio = 5192609/4287527 Current

Ratio = 1059633/1110874

Current Ratio = 1.21 times. Current

Ratio = 0.95 times


Mitsubishi)

Current Ratio = 5231568/4678550 Current

Ratio = 964133/1030913

Current Ratio = 1.11 times. Current

Ratio = 0.93 times

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Company

Yea

r

Curre

nt

Ratio

Honda Motor Co.,

Ltd.

201

11.11

200

71.21

Mitsubishi Motor

Co., Ltd.

201

10.93

200

70.95

Analysis:

The current ratio is lower in 2011 as compared to

2007.There is an increase in all the current assets

except other receivables which decreased in 2011. The net

current assets increased by 38959 million in 2011 and at

the same time the net current liabilities increased by

391023 million in 2007.

b. ACID TEST RATIO:

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Acid Test Ratio or Quick Ratio shows a firms ability to

meet current liabilities with its most liquid assets.

Computation:

Quick ratio = (Current Assets-Inventory)/Current

Liabilities.


Mitsubishi)

Quick ratio = (5192609-1183116)/4287527

Quick ratio = (1059633-351991)/1110874

Quick ratio = 0.93 times. Quick ratio =

0.63 times


Mitsubishi)

Quick ratio = (5231568-1199260)/4678550

Quick ratio = (1059633-351991)/1030914

Quick ratio = 0.86 times Quick ratio =

0.64 times

Company

Yea

r

Quick

Ratio

Honda Motor Co., 201 0.86

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Ltd. 1

200

70.93

Mitsubishi Motor

Co., Ltd.

201

10.64

200

70.63

Analysis:

We have seen that the company had a lower current ratio

in 2011 and was unable to meet its short term obligations as

compared to 2007. Where as the quick ratio identifies the

role played by the inventories in this context. Therefore the

ratio shows that in year 2011 it has decreased as compared

to 2007 due to the fact that the investment in

inventories is increased by 16144 million only and

current liabilities have increased by 391023 million.

ASSET MANAGEMENT RATIOS.

c. INVENTORY TURNOVER RATIO

Computation:

Inventory Turnover Ratio = Sales/Inventory

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Mitsubishi)

Inventory Turnover Ratio = 9819973/1183116

Inventory Turnover Ratio =2202869/351991

Inventory Turnover Ratio = 8.32 times Inventory

Turnover Ratio = 6.25 times


Mitsubishi)

Inventory Turnover Ratio = 11304485/1199260

Inventory Turnover Ratio =2682103/299644

Inventory Turnover Ratio = 9.42 times Inventory


Company

Yea

r

Invento

ry

Turnov

er Ratio

Honda Motor Co.,

Ltd.

201

19.42

200

78.32

Mitsubishi Motor 201 8.95

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Co., Ltd. 1

200

76.25

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Analysis:

The inventory turnover ratio in the year 2007 was8.32 which indicate that 8.32 times in a year the

inventory of the firm is converted into receivables or

cash. However, in 2011, the inventory turnover ratio slightly

increased to 9.42. This was due to the fact that the

companys current assets have increased by 38959 million

and a slight increase of 1.3% in inventories.

d.FIXED ASSETS TURNOVER RATIO

This ratio measures the extent of turnover or volume of

gross income generated by the fixed assets of a company or

in other words the efficiency in their utilization.

Computation:

Fixed Assets Turnover Ratio = Sales/Fixed Assets


Mitsubishi)

Fixed assets Turnover Ratio = 9819973/2078728 Fixed

assets Turnover Ratio = 2202869/555994

Fixed assets Turnover Ratio = 4.72 times Fixed

assets Turnover Ratio = 1.23 times

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Mitsubishi)

Fixed assets Turnover Ratio = 11304485/2201299 Fixed

assets Turnover Ratio = 2682103/485278

Fixed assets Turnover Ratio = 5.13 times Fixed

assets Turnover Ratio = 4.40 times

Company

Yea

r

Fixed Asset

Turnover

Ratio

Honda Motor Co.,

Ltd.

201

15.13

200

7

4.72

Mitsubishi Motor

Co., Ltd.

201

14.40

200

71.23

Analysis:

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According to the calculations above the productivity of

fixed assets in year 2011 is better than it was in previous

years. In 2007, it was 4.72 times and now it has been slightly

increased to 5.13 times. This change was brought about by

increase in total sales by 13.13%, where as the fixed assets

increased only by 5.57%.

e.TOTAL ASSETS TURNOVER RATIO

Computation:

Total Assets Turnover Ratio = Sales/Total Assets


Mitsubishi)

Total Assets Turnover Ratio=9819973/120336500 Total

Assets Turnover Ratio=2202869/1778693

Total Assets Turnover Ratio = 0.81 times Total

Assets Turnover Ratio = 1.23 times


Mitsubishi)

Total Assets Turnover Ratio=11304485/12615543 Total

Assets Turnover Ratio=2682103/609408

Total Assets Turnover Ratio = 0.89 times Total

Assets Turnover Ratio = 4.40 times

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Company

Yea

r

Total Assets Turnover

Ratio

Honda Motor Co.,

Ltd.

201

10.89

200

70.81

Mitsubishi Motor

Co., Ltd.

201

14.40

200

71.23

Analysis:

According to the calculations above the productivity of

assets in year 2011 is good as it was in previous years. In

2007, it was 0.81 times and now it has been increased to

0.89 times. This change was brought about by increase of

only 4.59% in the total assets, where as the total sales

increased by 13.13%.

f.NET PROFIT TURNOVER RATIO

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Computation:

Net Profit Turnover Ratio = Sales/Net Profit

2007 (for Honda) 2007 (forMitsubishi)

Net Profit Turnover Ratio = 9819973/592322 Net Profit

Turnover Ratio = 2202869/8745

Net Profit Turnover Ratio = 16.57 times Net Profit



Mitsubishi)

Net Profit Turnover Ratio = 11304485/600039 Net Profit

Turnover Ratio = 2682103/34710

Net Profit Turnover Ratio = 18.83 times Net Profit


Company

Yea

r

Net Profit

Turnover Ratio

Honda Motor Co.,

Ltd.

201

118.83

200 16.57

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7

Mitsubishi Motor

Co., Ltd.

201

177.27

200

7251.6

Analysis:

The net profit turnover ratio has increased by 2.26 times in

2011 as compared to the previous year. This change was

brought about by the increase in the total sales in 2011 by

13.13% as compared to 2007. There has also been an

increase in the net profit in 2011 by an amount of 7717

million.

III. COMPARATIVE ANALYSIS OF CURRENT FISCAL

YEAR WITH THE PREVIOUS FISCAL YEAR.

Hondas consolidated net sales and other operating

revenues for the fiscal year ended March 31, 2011 grew

915.6 billion, or 8.3%, compared with fiscal 2007, to

12,002.8 billion. Factors behind this increase were higher

unit sales in the motorcycle business in Other Regions,

higher unit sales in the automobile business in all overseas

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regions, and higher unit sales of power products in Asia, as

well as the positive impact of foreign exchange rate

changes.

Domestic net sales decreased by 95.4 billion, or 5.7%, to

1,585.7 billion, but overseas net sales were up 1,011.1

billion, or 10.7%, to 10,417.0 billion as compared to FY

2007.

Net income rose 7.7 billion or 1.3% from the previous

year, to 600.0 billion.

Consolidated cash and cash equivalents for the year ended

March 31, 2011 increased by 105.3 billion from March 31,

2007, to 1,050.9 billion. This can be primarily attributed to

higher unit sales in motorcycle business.

The provision for credit losses increased by 19.3 billion,

which was at 25.5 billion on 2007 and rose to 44.8 in

2011, primarily as a result of the weakening U.S. economy.

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Limitations

Following Limitations faced by me during the Study of theProject as: -

1. Time Limitations

2. Unavailability Of Proper Material

3. Lack Of Guidance

4. Organizational Restrictions

An Explanation of the Above: -

Time Limitation

The time was a limitation during completion of the report.

The time was not enough to cover all the points about the

topic. Also it was a tough job to understand all the

recruitment and selection in this short period. It brings the

eagerness in completion of the report. The time raise as a

big difficulty in the preparation of the report. This time

limitation enables to better understanding the policies of the

company.

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Unavailability Of Proper Material

The lack of proper material was also a limitation whendeveloping the report. There was not adequate availability of

material in developing the report. Some of the material

available was not available. The material available was not

sufficient.

Lack Of Guidance

There was lack of guidance at some of the stages. The

supervisors sometimes were not able to give proper

guidance because of his own job responsibilities and lack of

time. So it was a little lack of guidance.

Organizational Restrictions

There were restrictions on the supervisor and on the

respondents to very much clear all the policy and process.

No organization discloses all the recruitment and selection

policy to the outsides. Nobody in the organization is

authorized to disclose all the policies it is because of some

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certain principles made by the top management of the

organization.

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SUGESSTIONS

After undergone training for a limited period in this

organization, I found during my training some suggestions

but these suggestions merely my own opinion. I hope these

suggestions will help at least to some extent if implemented.

Following are the suggestions that are based on my

observations of the different departments of the company:

1. Company is having huge loans which results in thefinancial expenses, so proper strategies and techniques of

budgeting should be used which results in the proper

utilization of borrowed money.

2. Company should use Management Information System

(MIS) as it provides very effective information, which

ultimately helps in decision-making. This results in the

proper future projections effectively.

3. Net Profits is going low. Effective efforts should be taken

for this the company must reduce indirect expenses and

to control unnecessary costs.

85


86/90

.

4. Company should install modernized equipments and

machines in the production plants and new techniques

should also be used to produce.

5. Improve co-operation and co-ordination among the

departments.

6. Proper market survey should be conducted to know

consumers/dealers buying behavior.

7. JBES is leading company in the Indian manufacturing

industry. It has the maximum market share in domestic

market. But as far as international market is concerned, itexports only 5% of the total production, which is needed

to increase.

8. The company needs to improve a lot in advertisements.

Advertisements are the best way to enhance the sales

and ultimately the revenues. But the company is not able

to advertise its products properly, due to which the

customer is unaware of any brand that comes from JBES.

It is a common saying that out of sight is out of

mind. Therefore the company must make attempts to

use proper advertising media so as to set their brands in

the minds of the consumers. It should be more consumers

oriented rather than being customer oriented.

86


87/90

.

87


88/90

.

CONCLUSION

Finance is the basic pillar on which the structure of industrial

undertaking is based. This pillar should be properly placed. A

good working environment and attractive incentives for the

achievement of targets has obviously created ideal

conditions in Jay Bharat Exhaust Systems Ltd. for the both

management and workers. Not a single day of production

has been lost this shows efficiency in management.

Moreover, solvency position or long-term liquidity of the

company was satisfactory.

To conclude, any reduction in operation cost as a result of

effective and efficient management of finance would

improve the profitability, liquidity and solvency of the

organization.

88


89/90

.

89


90/90

.

BIBLIOGRAPHY

I. M. Pandey - Financial Management Vikas-

2003

Prassana chandra - Financial management Tata

McGraw Hill 2011

Philip Cotler - Marketing Management PHI-

2003

Annual reports - Jay Bharat Exhaust

Systems Ltd.

Company website - www.jbm.com

Date post:	04-Apr-2018
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