working capital study at suzlon

7/31/2019 working capital study at suzlon

1/52

A Summer Internship Project Report on

WORKING CAPITAL MANAGEMENT

Submitted in partial fulfillment of the requirements for the degree of

Post Graduate Diploma in Management (FINANCE)

by

PALVINDER KAUR MATHARU

(Roll No. 35)

Under the guidance of

Prof SACHIN NAPATE

A Study Conducted for SUZLON ENERGY LTD.

at

Indira School of Business Studies,

Tathawade, Pune 411033

(2011-13)


2/52

ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not have been possible

without the kind support and help of many individuals and organizations. I would

like to extend my sincere thanks to all of them.

I am highly indebted to Anupkumar Shah for their guidance and constant

supervision as well as for providing necessary information regarding the project &

also for their support in completing the project.

I would like to express my gratitude towards my parents & member of Suzlon for

their kind co-operation and encouragement which help me in completion of this

project.

I would like to express my special gratitude and thanks to industry persons for

giving me such attention and time.

My thanks and appreciations also go to my colleague in developing the project

and people who have willingly helped me out with their abilities.


3/52

INTRODUCTION


4/52

The project is about working capital management in a wind turbine

manufacturing industry the various things that constitute the working capital of

suzlon energy power limited. To know the various methods used to determine the

standard requirements of the company to maintain the optimal amount of

working capital. Various methods of inventory management. Checking thevariance i.e. actual vs. budgeted and analyzing the areas of major difference.

Preparing budgets for expenditure. Preparing schedules and reports for analyzing

the stock and utilizing it to its optimum level which again leads to a better

working capital management. I have learned the utilization of SAP in the process

of preparing budgets reports. The module used under SAP for inventory is the

MM module i.e. the material management module. I have also learned preparing

budget vs. actual for the purpose of analysis. I have been well versed with excel

and its utilization and importance while preparing schedules.

The project is about working capital management at suzlon energy ltd. The things

that are considered as working capital ie a clear understanding of the

requirement of the working capital in the organization. Working capital

(abbreviated WC) is a financial metric which represents operating liquidity

available to a business, organization or other entity, including governmental

entity. Along with fixed assets such as plant and equipment, working capital is

considered a part of operating capital. Net working capital is calculated as current

assets minus current liabilities. A company can be endowed with assets and

profitability but short of liquidity if its assets cannot readily be converted intocash. Positive working capital is required to ensure that a firm is able to continue

its operations and that it has sufficient funds to satisfy both maturing short-term

debt and upcoming operational expenses. The management of working capital

involves managing inventories, accounts receivable and payable, and cash.

Current assets and current liabilities include three accounts which are of special

importance. These accounts represent the areas of the business where managers

have the most direct impact:

accounts receivable (current asset)

inventory (current assets), and accounts payable (current liability)

The main objective of the project is to understand how the working capital of the

company is managed. The purpose behind doing this project is to understand how

Suzlon manages the working capital and the various accounting procedures that
http://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Accounts_receivable


5/52

are used by the organization the average collection period, budgets prepared by

using zero based budgeting. Land forms an important cost for the working capital

and thus understanding the procedure of land acquisition. Control of costs for

various expenditures like COGS, admin cost, project related expenses.

Main objective in undertaking this project is to supplement academic knowledge

with absolute practical exposure to day to day functions of the organization.

SCOPE

Accounting procedures, budget v/s actual comparison and analysis for variance,

Cost controlling, Inventory management. SAP knowledge i.e. the actuallyexperiencing how effective ERP systems helps the organization to work

effectively. Preparing budget using Zero based budgeting. Costs related for the

construction of WTG. Understanding various verticals of Suzlon WRD (wind

resource development), land acquisition, power evacuation, and projects, OMS

(operation and maintenance services).


6/52

INDUSTRY

OVERVIEW


7/52

Industry in the sense of manufacturing became a key sector of production and

labor in European and North American countries during the Industrial Revolution,

which upset previous mercantile and feudal economies through many successive

rapid advances in technology, such as the steel and coal production. It is aided by

technological advances, and has continued to develop into new types and sectors

to this day. Industrial countries then assumed a capitalist economic policy.

Railroads and steam-powered ships began speedily establishing links with

previously unreachable world markets, enabling private companies to develop to

then-unheard of size and wealth. Following the Industrial Revolution, perhaps athird of the world's economic output is derived from manufacturing industries

more than agriculture's share. Many developed countries and many

developing/semi-developed countries (People's Republic of China, India etc.)

depend significantly on industry. Industries, the countries they reside in, and the

economies of those countries are interlinked in a complex web of

interdependence.

The Manufacturing sector comprises establishments engaged in the mechanical,

physical, or chemical transformation of materials, substances, or components into

new products. Establishments in the Manufacturing sector are often described asplants, factories, or mills and characteristically use power-driven machines and

materials-handling equipment. However, establishments that transform materials

or substances into new products by hand or in the worker's home and those

engaged in selling to the general public products made on the same premises

from which they are sold, such as bakeries, candy stores, and custom tailors, may

also be included in this sector. Manufacturing establishments may process

materials or may contract with other establishments to process their materials for

them. Both types of establishments are included in manufacturing.

Suzlon energy LTD. is involved in the manufacturing of wind turbines whichrepresents sustainability of the manufacturing industry. Suzlon has 13

manufacturing facilities, spread across 5 countries: China, India, USA, Portugal and

Germany. These units make a wide range of rotor blades, nacelles, nacelle covers,

control panels and hubs, tubular towers and generators, covering all key

components of wind turbines.


8/52

Overview of the wind power industry- The wind power industry is involved with

the design, manufacture, construction, and maintenance of wind turbines. The

modern wind power industry began in 1979 with the serial production of wind

turbines by Danish manufacturers. The industry is currently undergoing a period

of rapid globalization and consolidation. The wind power industry is the industryinvolved with the design, manufacture, construction, and maintenance of wind

turbines. Although the wind power industry is small compared to those of the

conventional power generation technologies (hydro, coal, natural gas, and

nuclear), it is growing at a much faster rate (25% per year, from 2002 to 2007).

The modern wind power industry began in 1979 with the serial production of

wind turbines by Danish manufacturers Kuriant, Vestas, Nordtank, and Bonus.

Initially, most of these early turbines were installed in western Denmark.

California, USA experienced a wind power boom from 1982 to 1986 whenthousands of Danish and American wind turbines were installed in massive arrays.

India got involved in wind power in the mid-1980s as well, while Germany and

Spain gradually developed domestic wind power industries starting in the early

1990s.

The wind power industry is currently undergoing a period of rapid globalization

and consolidation, with much of the recent wind farm development occurring

outside the older established markets. Several large companies with market

capitalizations greater than the entire wind power industry itself (General Electric,

Siemens, and BP) are now making large investments in wind power. To meet a

global wind turbine supply shortage, start-up wind turbine manufacturers are still

appearing and ramping up the production of their new wind turbine models as

quickly as possible. Suzlon has 13 manufacturing facilities, spread across 5

countries: China, India, USA, Portugal and Germany. These units make a wide

range of rotor blades, nacelles, nacelle covers, control panels and hubs, tubular

towers and generators, covering all key components of wind turbines.

MARKET OVERVIEW OF WIND POWER INDUSTRY-

SECTOR OUTLOOK

The sector outlook is progressively looking bright for the wind industry as it is

exploiting an inexhaustible resource (i.e. wind) and is amongst the cheapest

sources of renewable energy. Improvement in wind powers technical


9/52

effectiveness, development of larger wind turbines, and improved knowledge of

sitting, servicing and maintenance has made wind power a

economically viable and competitive source of energy. The other key drivers

include climate change, the Kyoto Protocol, the industrys job creation potential

and a desire for greater security of supply for energy. Policy support models likeFixed Tariffs for the feed in of wind powered electricity, Renewable Portfolio

Standards, price premium, energy taxes and other tax related benefits,

Investment grants and Green Certificates, continue to boost development of wind

market across the globe.

Wind energy has been accepted as a mainstream renewable technology by

utilities across the world, to meet their renewable

portfolio targets as mandated international and country based targets.

During the period 2011-2015, wind power is expected to grow at an annual

growth rate of about 17%. In Asia strong growth isexpected, especially in China. India will continue to demonstrate high level

capacity additions approximately to the tune of 3 to 4

GW per year. Growth in emerging markets such as Latin America, Southern and

Eastern Europe and Africa will offset probable

short-term sluggish growth rates in the mature markets of the world.

The development ofwind power in India began in the 1990s, and has significantly

increased in the last few years. Although a relative newcomer to the wind

industry compared with Denmark or the United States, India has the fifth largestinstalled wind power capacity in the world. In 2009-10 India's growth rate was

highest among the other top four countries.

As of 31 March 2011 the installed capacity of wind power in India was 16078MW,

mainly spread across Tamil Nadu (6007 MW), Maharashtra (2310.70 MW),

Gujarat (2175.60 MW), Karnataka (1730.10 MW), Rajasthan (1524.70 MW),

Madhya Pradesh (275.50 MW), Andhra Pradesh (200.20 MW), Kerala (32.8 MW),

Orissa (2MW) West Bengal (1.1 MW) and other states (3.20 MW). It is estimated

that 6,000 MW of additional wind power capacity will be installed in India by2012.Wind power accounts for 6% of India's total installed power capacity, and it

generates 1.6% of the country's power. India's wind atlas is available.


10/52

Top 10 wind turbine manufacturers by annual market share (installed capacity) in

2011.

1. Vestas 12.7%2.

Sinovel 9.0%3. Goldwind 8.7%

4. Gamesa 8.0%5. Enercon 7.8%6. GE Wind Energy 7.7%7. Suzlon Group 7.6% (inc Suzlon Energy (India) and REpower (Germany))8. Guodian United Power 7.4%9. Siemens Wind Power 6.3%10. Ming Yang 3.6%

COMPANY OVERVIEW

The Suzlon Group is ranked as the worlds fifth largest wind turbine supplier,

interims of cumulative installed capacity, at the end of 2010. The companys

global spread extends across Asia, Australia, Europe, Africa and North and South

America with over 19,000 MW of wind energy capacity installed in 28 countries,

operations in 32 countries, a workforce of over 13,000.

The Group offers one of the most comprehensive product portfolios

ranging from sub-megawatt on-shore turbines at 600 Kilowatts

(KW), to the worlds largest commercial 6.15 MW offshore turbine

built on a vertically integrated, low-cost, manufacturing base.

The Group headquartered at Suzlon One Earth in Pune, India

comprises Suzlon Energy Limited and its subsidiaries, including
http://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Denmark


11/52

REpower Systems SE, a leader in offshore wind technology.

VISION-

To be the technology leader in the wind sector To be in the top three wind companies in all the key

markets of the world

To be the global leader in providing profitable, end-to-endwind power solutions

To be the 'company of choice' for stakeholders

GROWTH

The seeds of Suzlon were sown by Mr. Tulsi R. Tantis venture into

the textile industry. Faced with soaring power costs and the

infrequent availability of power, he looked to wind energy as an

alternative. Beginning with a wind farm project in the Indian state

of Gujarat in 1995, with a capacity of just 3 MW he set forth to

acquire the basic technology and varied expertise to set up

Suzlon Energy Limited - Indias first home-grown wind

technology company.

By the end of 2011, Suzlon:

Supplied over 19,000 MW across the world Was ranked the 5th leading wind power equipment*


12/52

manufacturer

Earned a global market share of 8%** Suzlon in India installed over 6706 MW of wind turbine

capacity, acquired over 44% (as of 31 March 2011) market

share (YOY) and has reigned as the market leader forthe last 14 consecutive year.

Combined Suzlon and RE Power.CHAIRMAN

Mr. Tulsi Tanti, a qualified Mechanical Engineer, founded and

Chairman Suzlon Energy Limited. Mr. Tanti has driven Suzlon not

as a business, but as a cause contributing to the world by

creating sustainable social, economic and ecological development,by using the very best of technology to help mitigate the global

climate crisis.

VERTICAL INTEGRATION

Suzlons vertical integration has been its success driver. Foresight

of the current economic challenge and adopting a visionary

strategy has set us forth to become the most vertically integrated

wind turbine maker in the world. We embarked on a journey to

develop leading edge technology and build manufacturing

capability for all key components in the wind power domain.

The Wind Industrys supply chain experiences the critical

bottleneck of a long production lead time for key components

such as Bearings, Gearboxes, Forging materials etc. However,

Suzlon has gained the critical competitive advantage with:

Better control over time, cost & quality Long-term service support to customers Turbine technology integration Faster product rollout


13/52

PRODUCTS AND SERVICES OF SUZLON- As Suzlon is vertically integrated, it

manufactures and also provides services to the same. It mainly manufactures

WTG.

The Wind Electricity Generators (WEGs) are broadly divided into three parts:

Tower - supports the Nacelle and Rotor Nacelle - contains the key components of the wind turbine Rotor - converts kinetic energy into electrical energy


14/52

PRODUCTS MANUFACTURED

COMPANY LOCATION ESTABLISHED PRODUCTS

Suzlon energy

power Ltd

Pondicherry 2003 Roter blades,

Nacelles,Nacelle cover,

Control

systems, Hubs.

SE Electricals

ltd

Coimbatore 2008 Generators,

Control

systems.

SE Blades ltd Padubidri 2008 Roter blades

Suzlon wind

Internationalltd

padubidri 2008 Nacelles,

nacelles cover,nose cones.

Suzlon

generator ltd

Chakan 2004 Generators

Suzlon energy

ltd

Daman 2004 WTG

assembly,

Nacelle

covers,

Control

systems,nacelles.

Suzlon

structures pvt.

Ltd

Gandhidham 2005 Tubular

towers.


15/52

REVIEW OF

LITERATURE

Suzlon Group FY12: Guidance achieved;

Robust US$ 7.4 bn order book

Revenues of Rs 21,082 cr (US$ 3.75 bn), a YoY growth of 18%

Positive EBIT margin at 5.5%

Cash profit of Rs 418 cr (US$ 74.26 mn)

Rs 41,500 cr (US$ 7.4 bn) order book

FY13 Guidance: Revenues of Rs 27,000 cr to Rs 28,000 cr; EBIT

Margin of 6%

Pune: Suzlon Group, the worlds fifth largest wind turbine maker, on Friday

announced its results for financial year 2011-12.

Speaking after the announcement, Mr. Tulsi Tanti, Chairman Suzlon Group said:

Our stated plan was to return the business to a position of strength during FY12,

and I am pleased to report that we achieved our guidance. Despite an extremely

challenging business environment we as a Group continue to be extremely well

positioned in the market place, as evidenced by our positive EBIT margin.

Our order backlog is now an impressive Rs 41,500 cr, giving us strong visibility

through FY13 and beyond. In addition, we are now realizing significant revenues


16/52

from operations and service offerings for our global fleet approaching 20,000

MW, giving us secured annuity income over a 15 year horizon. With this strong

performance, robust order book, strategic positioning in high growth / high

margin markets, and the global market independently projected** to grow at

over 20 per cent in 2012, we have a secure foundation to maintain our growthtrajectory. Our guidance for FY13 is a revenue target of Rs 27,000 cr to Rs 28,000

cr growth of approximately 30 per cent and an EBIT margin of six per cent.

Speaking on the Groups performance Mr. Kirti Vagadia CFO, Suzlon Group

said: We have delivered a strong improvement in our Group performance with a

gross profit margin of 33.3 per cent, and an operating profit (EBIT) margin of 5.5

per cent against 2.2 per cent a year ago. We achieved a cash profit of Rs 418 cr for

the full year. The net loss (PAT) for the period stood at Rs 479 cr primarily due to

high interest rates, notional forex impact and non-cash tax items.

Our key priorities as a company in FY13 are: addressing our near-termrepayment obligations; balancing our debt appropriately across the Group;

reducing our interest burden; reducing our working capital intensity; and,

strengthening our balance sheet. I am confident that our improved business

situation is sustainable and that we will realize significant growth over the fiscal."

Key Updates:

Board updates: Mr. Vinod R. Tanti takes over the position of COO at the Group's

Wholly-owned subsidiary REpower Systems SE from 1st June 2012, and therefore

resigns as an Executive Director of the Company while continuing to serve as aNon-Executive Director on the Board. Mr. Ashish Dhawan, Independent Director,

also resigns from the directorship of the Company with effect from 25th May

2012.

Orders: The Suzlon Group order book stood at 5.7 GW (~Rs. 41,500 cr, ~US$ 7.4

bn) as on 25th May, 2012, with an order inflow of 3,817 MW in FY12. The

orderbook saw strong contributions from high growth / high margin markets, and

a financially robust investor base. Additionally, the Group also built up its long-

term service agreements for its global fleet approaching 20,000 MW, creating a

secured annuity income of approximately US$ 2 bn over a 15 year horizon.Financial: Suzlon successfully secured an incremental increase of ~US$ 350 mn

in working capital facilities for Suzlon Wind in the last quarter based on future

growth plans of the company. The facility will enable the smooth execution of the

companys robust order book.


17/52

REpower banking facilities were also increased to EUR 750 mn, a 25 per cent

increase, with participation from large European banks despite a volatile

European market.

REpower: Collaboration between Suzlon and REpower grew significantly in

FY12.The companies combined operations in Australia and realigned Europeanmarketing operations, unlocking operational efficiencies. Additionally, initiatives

were launched to reduce cost of goods through joint sourcing and by utilizing the

Groups manufacturing facilities in Asia. Production in India of REpowers MM92

also commenced at the Groups manufacturing facilities in Padubidri, Karnataka.

Offshore: The Group installed nearly 200 MW of capacity in offshore projects in

FY12. In March, REpower completed installation of the first 6.15 MW turbine in an

offshore project, which will feature 48 6M turbines and is scheduled for

completion in mid-2013.The Group has an offshore order book of 1,038 MW

valued at US$ 1.8 bn, with several large orders signed in FY12, including thelargest ever offshore project for 332 MW in Germany and a contract with PNE

Wind AG to deliver 54 offshore turbines to projects in the North Sea.

Technology: Suzlon Group introduced several new products over the course of

the fiscal aimed at higher efficiencies and lowering cost of generation: the Suzlon

S9X2.1 MW and S8X 1.5 MW, as well as the REpower MM100 1.8 MW and

3XM 3.2/3.4 MW turbines. The S9X turbine suite exceeded 1.2 GW of order

inflow across India, USA, Canada, Australia and Brazil and 3XM secured over 900

MW of orders.

Fleet performance: Suzlons Group fleet approached 20,000 MW across 28countries and delivered availability (uptime) levels consistently above the industry

average of 97 per cent.

Markets update: The wind market is independently projected to grow by over

20 per cent in 2013. The share of wind power in global electricity generation is

estimated to go up to ~8 per cent by 2020, from current ~2.3 per cent**.o

Mature markets: The US market is about to experience the biggest year for wind

energy installations, more than what was achieved in 2009. However, visibility

beyond 2012 is poor due to expiry of cash grants and PTC. The Canadian wind

market is expected to have an annual size of more than 1 GW with Ontario andQuebec having established wind energy targets of 10 GW and 4 GW respectively

by 2015. Germany, France and UK remain top markets in Europe.

o Emerging markets: In India, volumes traded in the REC market have steadily

increased since Feb 2011 giving an additional boost to the industry, especially

wind IPPs. Currently, the development pipeline for major IPPs in India is


18/52

estimated to be about 9,200 MW**. The Brazilian wind industry current potential

of 143 GW is estimated increase up to 300 GW with the use of modern

generators. Brazilian Government expects wind capacity to exceed 11.53 GW by

2019, compared to current capacity of around 1.5 GW. In South Africa, the total

wind potential is pegged at more than 70 GW. The South Africa Wind Associationtargets 30 per cent of total generation from wind by 2025, with more than 10 GW

of wind projects already in the pipeline.

THEORETICALBACKGROUND


19/52

MEANING OF WORKING CAPITAL MANAGEMENT- Working capital

management involves the relationship between a firm's short-term assets and

its short-term liabilities. The goal of working capital management is to ensure thata firm is able to continue its operations and that it has sufficient ability to satisfy

both maturing short-term debt and upcoming operational expenses. The

management of working capital involves managing inventories, accounts

receivable and payable, and cash.

Working capital (abbreviated WC) is a financial metric which represents operating

liquidity available to a business, organization or other entity, including

governmental entity. Along with fixed assets such as plant and equipment,

working capital is considered a part of operating capital. Net working capital iscalculated as current assets minus current liabilities. It is a derivation of working

capital that is commonly used in valuation techniques such as DCFs (Discounted

cash flows). If current assets are less than current liabilities, an entity has a

working capital deficiency, also called a working capital deficit.


20/52

A company can be endowed with assets and profitability but short of liquidity if its

assets cannot readily be converted into cash. Positive working capital is required

to ensure that a firm is able to continue its operations and that it has sufficient

funds to satisfy both maturing short-term debt and upcoming operational

expenses. The management of working capital involves managing inventories,accounts receivable and payable, and cash.

Current assets and current liabilities include three accounts which are of special

importance. These accounts represent the areas of the business where managers

have the most direct impact:

accounts receivable (current asset) inventory (current assets), and accounts payable (current liability)

The current portion of debt (payable within 12 months) is critical, because it

represents a short-term claim to current assets and is often secured by long term

assets. Common types of short-term debt are bank loans and lines of credit.

An increase in working capital indicates that the business has either increased

current assets (that is has increased its receivables, or other current assets) or has

decreased current liabilities, for example has paid off some short-term creditors.

Decisions relating to working capital and short term financing are referred to asworking capital management. These involve managing the relationship between a

firm's short-term assets and its short-term liabilities. The goal of working capital

management is to ensure that the firm is able to continue its operations and that

it has sufficient cash flow to satisfy both maturing short-term debt and upcoming

operational expenses.

IMPORTANCE OF WORKING CAPITAL MANAGEMENT

The importance of the management of working capital can be judged from the

following factors

(1) There is a positive correlation between the sale of the product of the firm and


21/52

the current assets. An increase in the sale of the project requires a corresponding

increase in current assets. It is, therefore, indispensable to manage the current

assets properly and efficiently.

(2) More than half of the total capital of the firm is generally invested in currentassets. It means less than half of the capital is blocked in fixed assets. We pay due

attention to the management of fixed assets in details through the capital

budgeting process. Management of working capital too, therefore, attracts the

attention of the management.

(3) In emergency (Non availability of funds etc.) fixed assets can be acquired on

lease but there is no alternative for current assets. Investment in current assets,

i.e., inventory or receivable, can in no way be avoided without sustaining loss.

(4) Working capital needs are more often financed through outside sources, so it

is necessary to utilize them in the best way possible.

DETERMINANTS OF WORKING CAPITAL MANAGEMENT

There are lots of factor of determinants of working capital

1) Nature of business - working capital requirement of a firm basically influenced

by the nature of its business trading and financial forms have a very small

investment in fixed assets, but require a large sum of money to be invested in

working capital. Retails stores, for example must carry large stock of a verity of

good to satisfy varied and continuous demand of their customer.

2) Market and demand condition - the working company related to its sales. it is

difficult to precisely determine the relationship between the volume of sales and

working capital need. Current assets will have to be employed before growth

takes place. Then necessary to make planning of working capital for a growing

firm on a continuous basis

3) Technology and manufacturing policy - the manufacturing cycle comprise of

the purchase and use of raw material and the production of finished goods.

Longer the manufacture cycle, larger will be the firm's working capital

requirement. For example, the manufacturing cycle in the case of a boiler,


22/52

depending on its size, may range between six to twenty four month. On the other

hand the manufacturing cycle of product such as detergent powder, soap, ice

creams etc. maybe a few hours extend product take a large time

4) Credit policy of the firm affect the working capital by influencing the level ofdebtor. The credit term to be guaranteed to customer may depend upon the

norm of the industry to which the firm belongs. But a firm has the flexibility of

shaping its credit policy within the constraint of industry norms and practice. The

firm should use discretion in granting credit term to us customer

5) Operating efficiency: the operating efficiency of the firm relates to the

optimum utilization of all its resource at minimum costs. The efficiency in

controlling operating cost and utilizing fixed and current assets leads to operating

efficiency. The use of working capital is improved and pace of cash conversioncycle is accelerated with operating efficiency. Better utilization improves

profitability and helps the releasing on working capital

6) Conditions of supply: the inventory of raw material, spares and stores depends

on the conditions of supply. if the supply is prompt and adequate, the firm can

manage with small inventory. However, if the supply is unpredictable and scant

then the firm, to ensure continuity of production, a similar policy may have to be

followed when the raw material is available only seasonally and production

operations are carried out round the year

Decision criteria

By definition, working capital management entails short term decisions -

generally, relating to the next one year period - which is "reversible". These

decisions are therefore not taken on the same basis as Capital Investment

Decisions (NPV or related, as above) rather they will be based on cash flows and /

or profitability.

One measure of cash flow is provided by the cash conversion cycle - the netnumber of days from the outlay of cash for raw material to receiving

payment from the customer. As a management tool, this metric makes

explicit the inter-relatedness of decisions relating to inventories, accounts


23/52

receivable and payable, and cash. Because this number effectively

corresponds to the time that the firm's cash is tied up in operations and

unavailable for other activities, management generally aims at a low net

count.

In this context, the most useful measure of profitability is Return on capital(ROC). The result is shown as a percentage, determined by dividing relevant

income for the 12 months by capital employed; Return on equity (ROE)

shows this result for the firm's shareholders. Firm value is enhanced when,

and if, the return on capital, which results from working capital

management, exceeds the cost of capital, which results from capital

investment decisions as above. ROC measures are therefore useful as a

management tool, in that they link short-term policy with long-term

decision making. See Economic value added (EVA).

Credit policy of the firm: Another factor affecting working capitalmanagement is credit policy of the firm. It includes buying of raw material

and selling of finished goods either in cash or on credit. This affects the

cash conversion cycle.

Management of working capital

Guided by the above criteria, management will use a combination of policies and

techniques for the management of working capital. These policies aim at

managing the current assets (generally cash and cash equivalents, inventories and

debtors) and the short term financing, such that cash flows and returns are

acceptable.

Cash management. Identify the cash balance which allows for the businessto meet day to day expenses, but reduces cash holding costs.

Inventory management. Identify the level of inventory which allows foruninterrupted production but reduces the investment in raw materials -

and minimizes reordering costs - and hence increases cash flow. Besides

this, the lead times in production should be lowered to reduce Work in

Process (WIP) and similarly, the Finished Goods should be kept on as low


24/52

level as possible to avoid over production - see Supply chain management;

Just In Time (JIT); Economic order quantity (EOQ); Economic quantity

Debtors management. Identify the appropriate credit policy, i.e. creditterms which will attract customers, such that any impact on cash flows and

the cash conversion cycle will be offset by increased revenue and henceReturn on Capital (or vice versa); see Discounts and allowances.

Short term financing. Identify the appropriate source of financing, giventhe cash conversion cycle: the inventory is ideally financed by credit

granted by the supplier; however, it may be necessary to utilize a bank loan

(or overdraft), or to "convert debtors to cash" through "factoring

OBJECTIVES:

To understand the basic business of Suzlon energy Ltd. To understand various verticals of Suzlon. To understand services provided by Suzlon to its customers. To understand how the working capital of the company is managed. To understand various contents of working capital management. To understand budgeting process for various expenditures like COGS,

Admin cost, project related expenses, and Land acquisition.

To understand Land acquisition procedure. To understand the usage of SAP for inventory and working capital

management.

To understand how to park and post the invoice


25/52

To prepare schedules and reports with the help of excel and pivot tableoptions.

To release purchase orders (PO) with the help of SAP. To understand how to follow up on lag in payments with the help of GRIR

(goods received invoice received ) Tracking of advances given to vendors.

RESEARCH

METHODOLOGY


26/52

MEANING OF RESEARCHResearch in common parlance refers to a search for knowledge. One can also

define research as a scientific and systematic search for pertinent information on

a specific topic. In fact, research is an art of scientific investigation. The Advanced

Learners Dictionary of Current English lays down the meaning of research as a

careful investigation or inquiry especially through search for new facts in any

branch of knowledge.1 Redman and Mory define research as a systematized

effort to gain new knowledge.2 Some people consider research as a movement,

a movement from the known to the unknown. It is actually a voyage of discovery.

We all possess the vital instinct of inquisitiveness for, when the unknownconfronts us, we wonder and our inquisitiveness makes us probe and attain full

and fuller understanding of the unknown. This inquisitiveness is the mother of all

knowledge and the method, which man employs for obtaining the knowledge of

whatever the unknown, can be termed as research. Research is an academic

activity and as such the term should be used in a technical sense According to


27/52

Clifford Woody research comprises defining and redefining problems, formulating

hypothesis or suggested solutions; collecting, organizing and evaluating data;

making deductions and reaching conclusions; and at last carefully testing the

conclusions to determine whether they fit the formulating hypothesis.

3 Research is, thus, an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study,

observation, comparison and experiment. In short, the search for knowledge

through objective and systematic method of finding solution to a problem is

research. The systematic approach concerning generalization and the formulation

of a theory is also research. As such the term research refers to the systematic

method consisting of enunciating the problem, formulating a hypothesis,

collecting the facts or data, analyzing the facts and reaching certain conclusions

either in the form of solutions(s) towards the concerned problem or in certain

generalizations for some theoretical formulation.

OBJECTIVES OF RESEARCH

The purpose of research is to discover answers to questions through the

application of scientific procedures. The main aim of research is to find out the

truth which is hidden and which has not been discovered as yet. Though each

research study has its own specific purpose, we may think of research objectives

as falling into a number of following broad groupings:

1. To gain familiarity with a phenomenon or to achieve new insights into it(studies with this object in view are termed as exploratoryorformularize research

studies);

2. To portray accurately the characteristics of a particular individual, situation or a

group(studies with this object in view are known as descriptive research studies);

3. To determine the frequency with which something occurs or with which it is

associated with something else (studies with this object in view are known as

diagnostic research studies);

4. To test a hypothesis of a causal relationship between variables (such studies

are known as hypothesis-testing research studies).

TYPES OF RESEARCH

The basic types of research are as follows:


28/52

Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive

research is description of the state of affairs as it exists at present.

Applied vs. Fundamental: Research can either be applied (or action)research or fundamental (to basic or pure) research. Applied research aims

at finding a solution for an immediate problem facing a society or an

industrial/business organization, whereas fundamental research is mainly

concerned with generalizations and with the formulation of a theory.

Gathering knowledge for knowledges sake is termed pure or basic

research.4 Research concerning some natural phenomenon or relating to

pure mathematics are examples of fundamental research. Similarly,

research studies, concerning human behavior carried on with a view to

make generalizations about human behavior, are also examples of

fundamental research, but research aimed at certain conclusions (say, a

solution) facing a concrete social or business problem is an example of

applied research

Quantitative vs. Qualitative: Quantitative research is based on themeasurement of quantity or amount. It is applicable to phenomena that

can be expressed in terms of quantity. Qualitative research, on the other

hand, is concerned with qualitative phenomenon, i.e., phenomena relating

to or involving quality or kind. For instance, when we are interested in

investigating the reasons for human behavior (i.e., why people think or do

certain things), we quite often talk of Motivation Research, an important

type of qualitative research. This type of research aims at discovering theunderlying motives and desires, using in depth interviews for the purpose.

Other techniques of such research are word association tests, sentence

completion tests, story completion tests and similar other projective

techniques. Attitude or opinion research i.e., research designed to find out


29/52

how people feel or what they think about a particular subject or institution

is also qualitative research.

Conceptual vs. Empirical: Conceptual research is that related to someabstract idea(s) or theory. It is generally used by philosophers and thinkers

to develop new concepts or to reinterpret existing ones. On the other hand,

empirical research relies on experience or observation alone, often without

due regard for system and theory. It is data-based research, coming up with

conclusions which are capable of being verified by observation or

experiment. We can also call it as experimental type of research. In such aresearch it is necessary to get at facts firsthand, at their source, and actively

to go about doing certain things to stimulate the production of desired

information. In such a research, the researcher must first provide himself

with a working hypothesis or guess as to the probable results

Some Other Types of Research: All other types of research are variations ofone or more of the above stated approaches, based on either the purposeof research, or the time required to accomplish research, on the

environment in which research is done, or on the basis of some other

similar factor. Form the point of view of time, we can think of research

either as one-time research or longitudinal research. In the former case the

research is confined to a single time-period, whereas in the latter case the

research is carried on over several time-periods. Research can be field-

setting research or laboratory research or simulation research, depending

upon the environment in which it is to be carried out.

DATA COLLECTION


30/52

Data Collection is an important aspect of any type of research study. Inaccurate

data collection can impact the results of a study and ultimately lead to invalid

results.

Data collection methods for impact evaluation vary along a continuum. At the oneend of this continuum are quantitative methods and at the other end of the

continuum are Qualitative methods for data collection

Types of Data

There are various different types of data that you will encounter when looking at

educational statistics or doing research yourself. This section gives you a brief

overview of these different types of data. When you are conducting research the

nature of the data you collect will depend on both what you are researching and

how you collect the data. The two main types of data are explained below.

Quantitative Data

Quantitative data is that which can be easily measured and recorded in numerical

form. This is used extensively in education in forms such as exam results, SATs

results, absence and truancy figures etc. Quantitative data is collected by testing

to agree criteria as in exams or by measuring as in height, age etc. Often this data

is expressed using percentages rather than the actual numbers themselves.

Qualitative Data

Qualitative data is information that is represented by means other than numbers.

This could be data on gender, place of birth, school attended etc. Data from

questionnaires or forms is often of a qualitative nature and categories are often

used to group the data together such as questions on racial origin. Qualitative

data is often presented in numbers or percentages such as in the statement, ' 23%

of May town College students are of Afro - Caribbean origin '.

Discrete and Continuous DataWhen measuring to obtain data you also have to consider whether it is of a

discrete or continuous nature.

Discrete data is anything that can be measured exactly as a whole number such as

how many children are attending a class on a particular day. There can only be 24

or 31 children not 24.756 or 31.961.


31/52

Continuous data is that which can be any number on a scale. If you were to

measure the heights of the children in the class there would be a range of

measurements from the shortest to tallest child and these measurements could

be anywhere on the chosen scale. For practical purposes the measurements

would usually be rounded off to the nearest whole or half unit but could actuallybe at any point. Other examples of continuous data are things like rainfall, length

of feet and weight.

Obtaining Data

The sort of data you wish to collect will determine how you go about collecting it.

If you are dealing with quantitative data you may well go already published

sources such as school performance tables or obtain your data first hand by

counting or measuring. With qualitative data you may need to devise a survey or

questionnaire form that you can use to obtain your information.

Designing Questionnaires

It is important that you think carefully about the wording of your questions on

any survey or questionnaire to avoid bias and unclear questions. For instance the

question 'Have you ever taken drugs?' is unclear as it doesn't differentiate

between prescription and non- prescription drugs.

Sampling

One of the most important aspects of obtaining data is thinking about how much

data you need and the quality of the data that you will obtain. Sometimes it is

possible to include everyone in your research if it is concerning a small target

group, such as the teachers at one school or members of one youth group, but

more often the target group is too large and a sample of the total population is

needed for the research to be feasible to carry out.

When deciding on what size of sample to take and who to include you need to

bear in mind that the sample should be representative in order for your researchto have validity. There are two main ways of doing this and the choice of method

will depend on which data you are collecting and the nature of your target group.


32/52


33/52

DATA COLLECTION

AND ANALYSIS

INTRODUCTION TO SUZLON VERTICALS:-

There are three verticals in Suzlon energy power ltd namely

IPD (Information planning and development) Project OMS(Operation maintenance and services)

Suzlon energy power limited is a total vertically integrated company by this we

mean it produces the raw materials itself for manufacturing the final product and

also further sells the same to the end user. The three main verticals of suzlon

therefore are IPD, Project & OMS.


34/52

1. IPD (Information, planning and development)INTRODUCTION- IPD mainly consist of WRD i.e. wind resource development, land

acquisition and PE(Power evacuation) . IPD is the initial stage wherein the plan is

prepared and executed for the erection of WTG (wind turbine generator).

WRD(wind resource and development) basically is a research with the help of

met- mass to find out how much mega watts of electricity could the wind

generate and is it actually profitable to erect a WTG (wind turbine generator)

because there is a lot of cost involved and incase its a failure its a big loss to the

company. In short we can say that WRD basically consists of research for the

project. The next step to it is Land acquisition.

Carries out technical survey:-

Installation of Met-mast on the site. Study the wind speed for approx 1 year. Approx. cost 100m 12 to 13 L

80m 10 L

One met-mass covers approx 3/4 km (hilly area) and 9/10 km (flat territory) If site is favorable for installation of WTGs, WRD will summit the report to

land department for acquisition of Land

FINANCE ACTIVITIES-

Map out the area where WTGs are to be installed Research budget Cost of overall project Budget of WRD

MAJOR COSTS-

Installation of met-mass Consultancy cost Security cost. Leasing of land


35/52

LAND ACQUISITION- After the research if, it is successful we then try to acquire

land the acquisition depends on the type of land

Types of land

Private LandGenerally purchased from the ownerVerification of title to the ownerMemorandum of understanding (MOU) is formed

Revenue land Under the custody of Government/Revenue Taken on lease Approval of district collector required

Forest Land Compensatory land equal to the forest land acquired should be given to the

forest authority i.e. A forestation

Compensatory land should be adjoin to forest land In MP forest land is held by Revenue department

FINANCE ACTIVITIES-

Preparation of budgets for acquisition of land Finalization of rates Verification of land and rates

MAJOR COST

Buying of land Development of land for installation. Land incidental cost

PE (Power evacuation)- External line and Substations for the transfer of electricity

to the Electricity board. PE mainly consist of building substations wherein the

electricity that is generated from the WTG is transferred with the help of external

line that is routed in this process


36/52

FINANCE ACTIVITIES

Purchase requisition Work order

Releasing payments Standard v/s actual production of electricity.MAJOR COST

External line Substation construction

2. PROJECT-Under this vertical the activities that are carried out are

Civil foundation Installation Electrical Commission

CIVIL FOUNDATION after the area for the erection of WTG is selected andacquired the first thing done for the erection of WTG is civil foundation on

which the WTG would be erect. A lot of cost is involved in civil foundation

as it forms the base and support for the WTG.

MAJOR COST-

Construction of the foundation. Labor cost Material cost

INSTALLATION- At this stage the WTG is erected with the help of cranes andthe tower is build. Blades are also put and the whole WTG is fixed and a lot

work and tasks are involved like painting fitting cost transportation workers

etc.

MAJOR COST


37/52

Crane charges. Labor cost

ELECTRICAL-the installation of internal lines that are connected to WTG forthe transfer of electricity to the external line and then further to the

substations and then finally to the electricity board. Wiring and path of the

internal line are taken care of under this activity. How much cable required

the type of cable required etc all these decisions and estimates are made

under electrical activity.

MAJOR COST

DP Yard cost Internal and external line length cost

COMMISSIONING- commissioning is most important in the project. Basicallyunder this consent from the officer for the WTG to produce electricity is

acquired over here. A decent amount of fees is paid as commissioning

charges to this officer. He checks the safety and technology and inspects

the WTG and then only approves it for producing electricity in case he

disapproves then that5 particular WTG or site cannot produce electricity.

3. OMS(Operation maintenance and services)-This is a very important vertical as we know that Suzlon is a end to end

solution provider so this edge basically consist of interaction with

customers acting as a agent in helping them provide a solution to their

problems.

After the WTG is constructed by the project team it is taken over by the

OMS, OMS team then carries out a survey checking the approach roads to

the WTG, since they would visit it frequently for servicing and maintenance.

Once everything is approved the project team hands over the WTG and


38/52

does not interfere. This process is called HOTO (hand over take over) in

simple words the project department hands over the project and OMS

takes over.

Providing services for maintenance of WTG. Servicing for 20 yrs and free servicing for first 2 yrs.

Periodic servicing of WTG. Security services. Acts as a guide and agent to both electricity board and its customers.


39/52

QUESTIONNAIRE

What is the working capital according to your understanding ?

a) Cash in handb) Cash at bankc) Amount or gap between current assets and liabilitiesd) liquid cash

what are the basic features or components of w.c ?

a) current assets and current liabilitiesb) fixd assetsc) other liabilitiesd) other assets

how is w.c managed ?

a) sales increasedb) readily convertible assets increasedc) increasing assetsd) gap between c.a c.l increased


40/52

what are the benefits of w.c ?

a) good cashb) no usec) high liquidityd) un interrupted work flow

what harm does a company face in absence of w.c

a) interruption in workb) no harmc) high liabilities on purchase of R.Md) low goodwill in the market

how does sap help in the inventory management ?

a) reduces the workloadb) indulgence of technology for betterc) well organizedd) less chances of manual errors

what is the main cost for the w.c ?

a) landb) stockc) wind turbinesd) others


41/52

how is the procedure of land acquisition executed ?


42/52

DATA ANALYSIS

The first question was basically asked for the purpose of understanding what w.c is

according to the people of intellect section of SUZLON so as to get the real feel

and understanding of what the organization takes w.c u;timately as

INTERPRETATIONthe different parts of the intellectual department has come

up with different answers basically the 34 % which says that w.c is the gap

between the c.a , c.l . people or respondents has been mainly from the finance

department

20%

26%34%

20%

a) Cash in hand

b) Cash at bank

c) Amount or gap

between current assets

and liabilities

d) liquid cash


43/52

2nd

question was basically aimed to acquire knowledge about how really the people

at suzlon percteive features of w.c to be out of their complete functioning

INTERPRETATION point comes down to the fact that nearly 60% of the

people have hit the right spot with the (option a ) whereas there has been a wague

amount of presence of answers regarding the same question . this also

acknowledges us that more or so picture regarding w.c features are clear

60%26%

8% 6%a) current assets and

current liabilitiesb) fixd assets

c) other liabilities

d) other assets


44/52

Next question of this set was asked to know how is w.c management being taken

or pursued or being traced so as to track down the flow of w.c

INTERPRETATIONthe w.c management is a very important task and there is

a lot of way to do it and the most efficient or effective of

them is that of solving through increasing the gap between c.a c.l , and this is

what has been prevailing majorly in the suzlon working culturw as per the data of

the respondents . which is the best manner to manage it

24%

26%18%

32%

a) sales increased

b) readily convertibleassets increased

c) increasing assets

d) gap between c.a c.l

increased


45/52

When talking about anythings management it is very imp to know about the

importance of managing that thing its like the outcome of an act or a stuff beingmanaged or look after

INTERPRETATIONa goof w.c can have a whole lot of benefits and these can

be ranging from any particular dimension as represented in

this data also it has been on an overall nearly same segregation basis , but as the

most accounting books say that the utmost benefit is that of uninterrupted work

flow and this is somewhat the highest on the data table too in the above pictorial

presentation of the data collected from respondents

24%

26%22%

28%a) good cash

b) no use

c) high liquidity

d) un interrupted work

flow


46/52

Next in the set of queries was the frame of words asking or acquiring knowledge

about the fact that how harmful it gets for an organization to be running in an

absence of w,c or with low w.c (below the adequate)

INTERPRETATIONabsence of w.c can be a great disaster or headache

situation to be handled as it makes a manager to fall in

the category of problem which states that a chaotic situation of low goodwill in the

market , high liabilities on purchase of raw material . the data also represents it to

be the main 2 concerns in absemce of w.c . though this doesnt fades out the

negative impact of interruption in work

20%4%

38%

38%

a) interruption in work

b) no harm

c) high liabilities on

purchase of R.M

d) low goodwill in the

market


47/52

Sap being a part of the whole process of w.c management it was imp to acquire

some knowledge regarding it and the data that been tried to collect is that around

how it helps in INVENTORY MANAGEMENT

INTERPRETATIONmajority and the main core of people believe that itsmain USP is that of technology indulgence of technology

for the betterment of the whole system and efficiency , this is not an ubiquitous

answer its the peoples view back at suzlon , different people at different places

can have different views

2%

62%

4%

32%

a) reduces the workload

b) indulgence of

technology for better

c) well organized

d) less chances of

manual errors


48/52

Last in this knowledge acquiring list of questions is that the main cost for the w.c

INTERPRETATIONthe main cost of the working capital is that of landas

pretty well visualized in the above pie chart its %age

being 72 % and others thing that and goes with the rest of the options

72%

6%

8%

14%

a) land

b) stock

c) wind turbines

d) others


49/52

CONCLUSIONS

suzlon is an organization with almost majority of membershaving a clear view of the understanding of the w.c and its

associated components

sap is of great help in providing the better control over the dataand also the better management of the w.c thorough integration

and segregation of assets being used (for eg in sap for every

asset being purchased and entered into the system there is a

different code attached to it and this helps in easy interpretable

form of extracting data at requirement)

other good feature of sap is that of DUMP (extracting) apartfrom segregation of assets it also helps in the segregation of the

whole of data that is related to w.c and its management , which

ultimately adds to better management of w.c


50/52

land acquisition procedure of the suzlon people is pretty muchlengthy as its been acquired for about 12 15 months

sap is also a technology that helps the people at suzlon to grab awhole lot track of debtors and the period renging entered is

from 90 days to debtors to 60 days to creditors , in this way it

keeps the track and also provide the possible arrangements thatcan be done to meet these requirements and obligations

in the working capital form or structure of the firm the mainconstituent is that of LAND

the working capital knowledge is not all pervasive in theorganizational areas and is mainly concentrated in the areas

related to finance which is not good


51/52

RECOMMENDATION

the organization named suzlon has its customers ranging fromgovt to the public superstars precisely falling in the sector of

BOLLYWOOD ACTORS , as they have a huge consumption and also

when they buy these resources of wind mill they get a certain tax

deduction from the govt . so what people at suzlon could do is

that of offering them at low prices and ask them for the branding

or promotion of any sort on any media at cheaper rates

suzlon must try and figure out the most out of its production sideof transaction and not just relying on OMS , as being an omsorganization the control is less and the possibilities of having a

better control is less , whereas a manufacture have a wide range

of control under them as the whole process of SCRATCH to PACK

is in there undertaking eyes

the market of this MNC suzlon is great when it comes to abroadand not so good down the domestic or nationalized market of

india , so what the organization could perform is that it can

ultimately reach out more EXTENSIVELY in the far markets and


52/52

use that good will in the local markets with suppliers , govt ,

promotion , advertsising etc

as the suzlon also faces a high competition from the rivals whoare not as big in size as compared to suzlon ,therefor the

organization must try and consolidate them by using there

structured power , money power , goodwill etc

another challenge that can be deployed is that of loss occurrencedue to cancellation of orders because of being late or not exactly

on the time period required , for this purpose thing that can beadopted is that of flexible delivery period , firstly the organsiation

suzlon must know the varying time period or the range within

which it can deliver the order and must book the order on the

same basis , along with providing whole lot benefits and different

plans for availing these orders

suzlon must try and break down the cost of CRANES by eitherhaving different varieties of suppliers or by having a one single

supplier and having a good relation or contact so as to beat the

prices compared to the competitors or rivals

it should also focus on basic knowledge of w.c being prevailed inthe overall organization and not just finance , as this wouldbasically help in the development of caring and awareness

regarding the imp of w.c and its management

Date post:	05-Apr-2018
Category:	Documents
Upload:	jauhar-raza
View:	219 times
Download:	0 times

working capital study at suzlon

Documents