arrangement of funds lps

7/30/2019 Arrangement of Funds LPS

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INTRODUCTION

Despite all the differences among companies, there are only a few sources of funds

available to all firms.

1. They make profit by selling a product for more than it costs to produce. This is the

most basic source of funds for any company and hopefully the method that brings in the

most money.

2. Like individuals, companies can borrow money. This can be done privately through

bank loans, or it can be done publicly through a debt issue. The drawback of borrowing

money is the interest that must be paid to the lender.

3. A company can generate money by selling part of itself in the form of shares to

investors, which is known as equity funding. The benefit of this is that investors do not

require interest payments like bondholders do. The drawback is that further profits are

divided among all shareholders.

In an ideal world, a company would bring in all of its cash simply by selling goods and

services for a profit. But, as the old saying goes, "you have to spend money to makemoney," and just about every company has to raise funds at some point to develop

products and expand into new markets.

When evaluating companies, it is most important to look at the balance of the major

sources of funding. For example, too much debt can get a company into trouble. On the

other hand, a company might be missing growth prospects if it doesn't use money that it

can borrow
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SOURCES OF FUNDS

Grants are made to non-profit organizations by development assistance agencies and

foundations. Usually grants do not have to be repaid. Grant money is available to enhance

country institutional capacity, to support governmental and non-governmental institutions

and to finance project formulation, policy reform and sector management and

development. Grants are provided by bilateral donors, multilateral grant aid institutions,

United Nations organizations and specialized agencies, international financing

institutions, international non-governmental organizations, the private sector, foundations

and charity organizations.

Loans, unlike grants, have to be repaid. Loans can be obtained from most banks, but

development assistance agencies may provide loans for development priorities at

preferential rates of interest, with an initial interest free period, repayable over the long

term. To justify a loan a strong business case must be made. Loans are made to

borrowing countries that are further up the development ladder and to the private sector

and development groups in all countries. Loans are made at near-to-commercial

conditions reflecting the cost of resource mobilization on capital markets plus a small

fund administration margin to cover a donor's operational costs. Interest rates are

generally variable. Loans are generally repayable over 15 to 20 years and often include

up to a five-year grace period. There are some interest-free loans but these carry an

annual service charge and a commitment fee is usually applied. These loans are repayable

over 25 to 50 years with a maximum ten-year grace period.

Equity investments enable persons and institutions to invest in shareholding of a

company managing or implementing a sustainable forest management project. The

investment may make an enterprise viable or enable it to expand, while the new

shareholder will benefit through shareholder voting rights and dividends on profits.

Co-funding is provided by some donor agencies to complement existing funding.

Depending on the proposal, it may be possible to find an agency that provides the full

cost of a project proposal. However, it is frequently the case that funding is only available


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on the basis of shared cost. It may be necessary, therefore, to identify perhaps as much as

50% of the project cost from other sources of funding. If an agency requires co-funding,

it is important to include a co-funding component in the project proposal. To secure co-

funding it is necessary to identify existing matching funds. Complementary projects

being formulated by other groups may provide possible sources of co-funding.

Large corporations could not have grown to their present size without being able to find

innovative ways to raise capital to finance expansion. Corporations have five primary

methods for obtaining that money.

Issuing Bonds. A bond is a written promise to pay back a specific amount of money at a

certain date or dates in the future. In the interim, bondholders receive interest payments at

fixed rates on specified dates. Holders can sell bonds to someone else before they are

due.

Corporations benefit by issuing bonds because the interest rates they must pay investors

are generally lower than rates for most other types of borrowing and because interest paid

on bonds is considered to be a tax-deductible business expense. However, corporations

must make interest payments even when they are not showing profits. If investors doubt a

company's ability to meet its interest obligations, they either will refuse to buy its bonds

or will demand a higher rate of interest to compensate them for their increased risk. For

this reason, smaller corporations can seldom raise much capital by issuing bonds.

Issuing Preferred Stock. A company may choose to issue new "preferred" stock to raise

capital. Buyers of these shares have special status in the event the underlying company

encounters financial trouble. If profits are limited, preferred-stock owners will be paid

their dividends after bondholders receive their guaranteed interest payments but before

any common stock dividends are paid.

Selling Common Stock. If a company is in good financial health, it can raise capital by

issuing common stock. Typically, investment banks help companies issue stock, agreeing

to buy any new shares issued at a set price if the public refuses to buy the stock at a
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certain minimum price. Although common shareholders have the exclusive right to elect

a corporation's board of directors, they rank behind holders of bonds and preferred stock

when it comes to sharing profits.

Investors are attracted to stocks in two ways. Some companies pay large dividends,

offering investors a steady income. But others pay little or no dividends, hoping instead

to attract shareholders by improving corporate profitability -- and hence, the value of the

shares themselves. In general, the value of shares increases as investors come to expect

corporate earnings to rise. Companies whose stock prices rise substantially often "split"

the shares, paying each holder, say, one additional share for each share held. This does

not raise any capital for the corporation, but it makes it easier for stockholders to sell

shares on the open market. In a two-for-one split, for instance, the stock's price is initially

cut in half, attracting investors.

Borrowing. Companies can also raise short-term capital -- usually to finance inventories

-- by getting loans from banks or other lenders.

Using profits. As noted, companies also can finance their operations by retaining their

earnings. Strategies concerning retained earnings vary. Some corporations, especially

electric, gas, and other utilities, pay out most of their profits as dividends to their

stockholders. Others distribute, say, 50 percent of earnings to shareholders in dividends,

keeping the rest to pay for operations and expansion. Still other corporations, often the

smaller ones, prefer to reinvest most or all of their net income in research and expansion,

hoping to reward investors by rapidly increasing the value of their shares.

Funds from operations: Funds from Operations (FFO) is a measure of cash generated

by a real estate investment trust (REIT). It is important to note that FFO is not the sameas Cash from Operations, which is a key component of the indirect-method cash flow

statement.

The formula for FFO is:

Funds from Operations = Net Income + Depreciation + Amortization - Gains on Sales ofProperty
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Issue of shares: Shares in Issue amount, is the current number of ordinary shares in issue

and it is expressed in millions.

Issue of debenture: A debenture is an instrument of debt executed by the company

acknowledging its obligation to repay the sum at a specified rate and also carrying an

interest. It is only one of the methods of raising the loan capital of the company. A

debenture is thus like a certificate of loan or a loan bond evidencing the fact that the

company is liable to pay a specified amount with interest and although the money raised

by the debentures becomes a part of the company's capital structure, it does not become

share capital.

Internal Methods of Improving Cash FlowIf a business faces ongoing cash flow problems, then if the business is in other ways

successful, it is good management to look for internal methods of solving or reducing the

problem, some of the more successful methods are outlined below.

1. Stock management - Often cash flow problems arise because too much capital istied up in stock. When we talk about stock we mean raw materials, work-in-progress

and finished goods. Many firms are now implementing practices such as Just-in

Time, and Kan Ban, which are designed to reduce capital tied up in stock and allow

it to be used in more effective ways within the business.

2. Manpower management - Examining manpower costs can reduce outflows of cash.Is it necessary to have permanent contracts for all workers? Can some work be sub-

contracted, or can some work be transferred to temporarily contracted workers?

Doing this can save expenditure on pensions, National Insurance, holiday pay etc.

3. Budgeting - Why base next years budgets on last year's budgets? Why not start witha clean slate and opt for Zero Budgeting?

These methods can save on business costs and in larger organizations often prove the best

long-term solution to cash flow and liquidity management problems.
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UTILISATION OF FUNDS OR FINANCE MANAGEMENT

Finance is the science offunds management. The general areas of finance are business

finance, personal finance, and publi c fi nance. Finance includes saving money and oftenincludes lending money. The field of finance deals with the concepts of time, money and

riskand how they are interrelated. It also deals with how money is spent and budgeted.

Finance works most basically through individuals and business organizations depositing

money in a bank. The bank then lends the money out to other individuals or corporations

forconsumption orinvestment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the

loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to

investors from corporations, while that investor can then hold the debt and collect the

interest or sell the debt on a secondary market. Banks are the main facilitators of funding

through the provision ofcredit, althoughprivate equity, mutual funds, hedge funds, and

other organizations have become important as they invest in various forms of debt.

Financial assets, known as investments, are financially managed with careful attention to

financial risk management to control financial risk. Financial instruments allow many

forms ofsecuritized assets to be traded on securities exchanges such as stock exchanges,

including debt such as bonds as well as equity in publicly-traded corporations.

Central banks act as lenders of last resort and control the money supply, which affects the

interest rates charged. As money supply increases, interest rates decrease.

Loss from operations

Amount by which the cost of goods sold plus operating expenses exceeds operating

revenues. The net loss from operations applies only to the normal business activities of

the entity. Excluded are financial revenue and expense items and ancillary operations ofthe firm (i.e., extraordinary items). However, interest would be an includable expense in

calculatingNet Operating Lossfor carryforward purposes.
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Redemption of shares

The company may choose to repurchase if it has cash available, as an alternative to

investing it in expanding the business. Or it may issue bonds to raise the money it needs

to repurchase, which changes the company's debt-to-equity ratio.

Corporate finance

Managerial orcorporate finance is the task of providing the funds for a corporation's

activities. Forsmall business, this is referred to as SME finance. It generally involves

balancing risk and profitability, while attempting to maximize an entity's wealth and the

value of its stock.

Long term funds are provided by ownership equity and long-term credit, often in the

form ofbonds. The balance between these forms the company's capital structure. Short-

term funding orworking capital is mostly provided by banks extending a line of credit.

Another business decision concerning finance is investment, orfund management. An

investment is an acquisition of an asset in the hope that it will maintain or increase its

value. In investment managementin choosing a portfolioone has to decide what, how

much and when to invest. To do this, a company must:

Identify relevant objectives and constraints: institution or individual goals, timehorizon, risk aversion and tax considerations;

Identify the appropriate strategy: active v. passivehedging strategy Measure the portfolio performance

Financial management is duplicate with the financial function of the Accounting

profession. However, financial accounting is more concerned with the reporting of

historical financial information, while the financial decision is directed toward the futureof the firm.

Capital

Capital, in the financial sense, is the money that gives the business the power to buy

goods to be used in the production of other goods or the offering of a service.
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The desirability of budgeting

Budget is a document which documents the plan of the business. This may include the

objective of business, targets set, and results in financial terms, e.g., the target set for sale,

resulting cost, growth, required investment to achieve the planned sales, and financing

source for the investment. Also budget may be long term or short term. Long term

budgets have a time horizon of 510 years giving a vision to the company; short term is

an annual budget which is drawn to control and operate in that particular year.

Capital budget

This concerns proposed fixed asset requirements and how these expenditures will be

financed. Capital budgets are often adjusted annually and should be part of a longer-term

Capital Improvements Plan.

Cash budget

Working capital requirements of a business should be monitored at all times to ensure

that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of

cash. The cash budget has the following six main sections:

1. Beginning Cash Balance - contains the last period's closing cash balance.2. Cash collections - includes all expected cash receipts (all sources of cash for the

period considered, mainly sales)

3. Cash disbursements - lists all planned cash outflows for the period, excludinginterest payments on short-term loans, which appear in the financing section. All

expenses that do not affect cash flow are excluded from this list (e.g. depreciation,

amortisation, etc)

4. Cash excess or deficiency - a function of the cash needs and cash available. Cashneeds are determined by the total cash disbursements plus the minimum cashbalance required by company policy. If total cash available is less than cash

needs, a deficiency exists.

5. Financing - discloses the planned borrowings and repayments, including interest.6. Ending Cash balance - simply reveals the planned ending cash balance.


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Management of current assets

Credit policy

Credit gives the customer the opportunity to buy goods and services, and pay for them at

a later date.

Advantages of credit trade

Usually results in more customers than cash trade. Can charge more for goods to cover the risk of bad debt. Gain goodwill and loyalty of customers. People can buy goods and pay for them at a later date. Farmers can buy seeds and implements, and pay for them only after the harvest. Stimulates agricultural and industrial production and commerce. Can be used as a promotional tool. Increase the sales. Modest rates to be filled.

Disadvantages of credit trade

Risk of bad debt. High administration expenses. People can buy more than they can afford. More working capital needed. Risk of Bankruptcy. May lose peace of mind.

Forms of credit

Suppliers credit: Credit on ordinary open account Installment sales Bills of exchange Credit cards


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Contractor's credit Factoring of debtors Cash credit Cpf credits Exchange of product

Factors which influence credit conditions

Nature of the business's activities Financial position Product durability Length of production process Competition and competitors' credit conditions Country's economic position Conditions at financial institutions Discount for early payment Debtor's type of business and financial positions

Credit collection

Overdue accounts

Attach a notice of overdue account to statement. Send a letter asking for settlement of debt. Send a second or third letter if first is ineffectual. Threaten legal action.

Effective credit control

Increases sales Reduces bad debts Increases profits Builds customer loyalty Builds confidence of financial industry


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increase company capitlisation

Sources of information on creditworthiness

Business references

Bank references credit agencies Chambers of commerce Employers Credit application forms Credit repair companies

Duties of the credit department

Legal action Taking necessary steps to ensure settlement of account Knowing the credit policy and procedures for credit control Setting credit limits Ensuring that statements of account are sent out Ensuring that thorough checks are carried out on credit customers Keeping records of all amounts owing Ensuring that debts are settled promptly Timely reporting to the upper level of management for better management.

Stock

Purpose of stock control

Ensures that enough stock is on hand to satisfy demand. Protects and monitors theft. Safeguards against having to stockpile. Allows for control over selling and cost price.


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Stockpiling

This refers to the purchase of stock at the right time, at the right price and in the right

quantities.

There are several advantages to the stockpiling, the following are some of the examples:

Losses due to price fluctuations and stock loss kept to a minimum Ensures that goods reach customers timeously; better service Saves space and storage cost Investment of working capital kept to minimum No loss in production due to delays

There are several disadvantages to the stockpiling, the following are some of the

examples:

Obsolescence Danger of fire and theft Initial working capital investment is very large Losses due to price fluctuation

Rate of stock turnover

This refers to the number of times per year that the average level of stock is sold. It may

be worked out by dividing the cost price of goods sold by the cost price of the average

stock level.

Determining optimum stock levels

Maximum stock level refers to the maximum stock level that may be maintainedto ensure cost effectiveness.

Minimum stock level refers to the point below which the stock level may not go. Standard order refers to the amount of stock generally ordered. Order level refers to the stock level which calls for an order to be made.


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Cash

Reasons for keeping cash

Cash is usually referred to as the "king" in finance, as it is the most liquid asset. Thetransaction motiverefers to the money kept available to pay expenses. Theprecautionary motiverefers to the money kept aside for unforeseen

expenses.

Thespeculative motiverefers to the money kept aside to take advantage ofsuddenly arising opportunities.

Advantages of sufficient cash

Current liabilties may be catered for. Cash discounts are given for cash payments. Production is kept moving Surplus cash may be invested on a short-term basis. The business is able to pay its accounts in a timely manner, allowing for easily-

obtained credit.

Liquidity

Management of fixed assets

Depreciation

Depreciation is the allocation of the cost of an asset over its useful life as determined at

the time of purchase. It is calculated yearly to enforce the matching principle.

Insurance

Insurance is the undertaking of one party to indemnify another, in exchange for a

premium, against a certain eventuality.

Uninsured risks

Bad debt Changes in fashion Time lapses between ordering and delivery
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New machinery or technology Different prices at different places

Requirements of an insurance contract

Insurable interest The insured must derive a real financial gain from that which he is

insuring, or stand to lose if it is destroyed or lost.

The item must belong to the insured. One person may take out insurance on the life of another if the second

party owes the first money.

Must be some person or item which can, legally, be insured. The insured must have a legal claim to that which he is insuring. Good faith Uberrimae fidei refers to absolute honesty and must characterise the

dealings of both the insurer and the insured.

Shared Services

There is currently a move towards converging and consolidating Finance provisions into

shared services within an organization. Rather than an organization having a number ofseparate Finance departments performing the same tasks from different locations a more

centralized version can be created.

Finance of states

Country, state, county, city or municipality finance is called public finance. It is

concerned with

Identification of required expenditure of a public sector entity Source(s) of that entity's revenue The budgeting process Debt issuance (municipal bonds) for public works projects
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Financial Economics

Financial economics is the branch ofeconomics studying the interrelation of financial

variables, such as prices, interest rates and shares, as opposed to those concerning the real

economy. Financial economics concentrates on influences ofreal economic variables on

financial ones, in contrast to pure finance.

It studies:

Valuation - Determination of the fair value of an asset How risky is the asset? (identification of the asset appropriate discount

rate)

What cash flows will it produce? (discounting of relevant cash flows) How does the market price compare to similar assets? (relative valuation) Are the cash flows dependent on some other asset or event? (derivatives,

contingent claim valuation)

Financial markets and instruments Commodities - topics Stocks - topics Bonds - topics Money market instruments- topics Derivatives - topics

Financial institutions and regulation

Financial Econometrics is the branch of Financial Economics that uses econometric

techniques to parameterise the relationships.
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Financial mathematics

Financial mathematics is a main branch of applied mathematics concerned with the

financial markets. Financial mathematics is the study of financial data with the tools of

mathematics, mainly statistics. Such data can be movements of securitiesstocks and

bonds etc.and their relations. Another large subfield is insurance mathematics.

Experimental finance

Experimental finance aims to establish different market settings and environments to

observe experimentally and provide a lens through which science can analyze agents'

behavior and the resulting characteristics of trading flows, information diffusion and

aggregation, price setting mechanisms, and returns processes. Researchers in

experimental finance can study to what extent existing financial economics theory makes

valid predictions, and attempt to discover new principles on which such theory can be

extended. Research may proceed by conducting trading simulations or by establishing

and studying the behaviour of people in artificial competitive market-like settings.

Behavioral finance

Behavioral Finance studies how the psychology of investors or managers affects financial

decisions and markets. Behavioral finance has grown over the last few decades to become

central to finance.

Behavioral finance includes such topics as:

1. Empirical studies that demonstrate significant deviations from classical theories.2. Models of how psychology affects trading and prices3. Forecasting based on these methods.4. Studies of experimental asset markets and use of models to forecast experiments.

A strand of behavioral finance has been dubbed Quantitative Behavioral Finance, which

uses mathematical and statistical methodology to understand behavioral biases in

conjunction with valuation. Some of this endeavor has been lead by Gunduz Caginalp
http://en.wikipedia.org/wiki/Mathematicshttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Experimental_financehttp://en.wikipedia.org/wiki/Behavioral_Financehttp://en.wikipedia.org/wiki/Gunduz_Caginalphttp://en.wikipedia.org/wiki/Gunduz_Caginalphttp://en.wikipedia.org/wiki/Behavioral_Financehttp://en.wikipedia.org/wiki/Experimental_financehttp://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Bond_(finance)http://en.wikipedia.org/wiki/Stockhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Mathematics


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(Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-

2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics),

David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran, Huseyin Merdan).

Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral

effects in stocks and exchange traded funds. Among other topics, quantitative behavioral

finance studies behavioral effects together with the non-classical assumption of the

finiteness of assets.
http://en.wikipedia.org/wiki/Journal_of_Behavioral_Financehttp://en.wikipedia.org/wiki/Vernon_Smithhttp://en.wikipedia.org/wiki/Vernon_Smithhttp://en.wikipedia.org/wiki/Journal_of_Behavioral_Finance


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INDUSTRY PROFILE

MEANING OF FASTENERS AND TYPESA fastener is a broad term for nut, bolds & screws. It is an alternate of

welding and riveting. Fasteners can be classifying broadly in to two categories: -

1. Depending on their tensile

2. Mild Steel (MS) & high tensile fasteners.USES

Mile steel fasteners are used in general application & produced by the SSI

& unorganized sector.

On the other trend (HT) fasteners that are relatively technology advance,

are manufactured by organized sector.

In India fasteners are used in textiles, machine tools, pumps automobiles &

general engineering largest consumer 50% HT fasteners.

MAJOR MANUFACTURES

In India there are 4 major players in fasteners industries:

1. Sundaram fasteners2. Sterling tools3. Precision fasteners4. LPS

A Sundaram fastener Industries (SFI) is a leader of automotive fasteners.

While, precision fasteners limited (PFL) leads in industrial fasteners. Both are

trying to enter in the each other segment industry.


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IMPROVED INPUT FRONT

Until a few years ago producer of HT fasteners had to input as much as

60% of their Raw Material like careful steel & cold heading quality steel due topoor quality. But availability of good steels in India also has changed the scenario.

Now days Bihar alloys, Shri SR alloys, Steel Authority of India Ltd, Salam Steel

Corporation are producing the special steel for fasteners.

The automobile boom is the major reason for continuous growth of

fasteners industry because the total sale of automobile (passenger cars, 2& 3

wheelers, multiutility Vehicles, sport utility vehicles) has achieved the total figure

of 10 lakhs figures and commercial vehicles sales has also earned a growth of

continuous increase in total sale.

The engineering segment has also registered 25 % growth, which is also a

major consumer of fasteners.


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PRODUCTION

Near about 200000 metric ton of fasteners are being produced by various fasteners

manufactures in organized and unorganized sector.Sundaram fastener is the largest manufacturer of HT fasteners. Which

produces approximately 48000 metric tons of high quality HT fasteners and it

crossed the sales figures of Rs. 800 crore in year 2000-2001.

Precision fasteners also have done well. Its sales went up 32% to Rs. 251

Crore in 2000-2001.

LPS has also come in a long way. It crossed the 4475 tones mark of

production in 2000-2001 years and total sales of 8640 Lakh.


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EXPORT OPPORTUNITY

The concept of outsourcing fasteners is under going a sea change globally.

Auto giants around the world have identified countries to buy a particular

component depending upon technology and cost. Arun Sharma, president PFL

explains India has very good scope in this of globalize purchase and many auto

giants are looking at India as a sourcing lease.

Quality is an important factor in export but not the only criterion; what is

more important is timely deliveries and after sales service through there is a vast

potential to export fasteners to DEMs abroad, it has not been exploited due to

difficulties in setting up service points near each of the DEM manufacture. Hence

the domestic producer foray abroad is limited to the replacement market.

To the successful in exports, Indian companies dont require foreign

technical collaboration, as a fastener is not a very hi-tech item. What is required is

a foreign tie up for marketing and after sales service. This is evident from the fact

that recently the market leader, Sundaram fastener tied up with kamax were

Rudolf Kellies, Germany for marketing. As India prepares to join the international

economic mainstream, there will be many such tie-ups.


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COMPANY PROFILE

LPS Limited was promoted by Late Sh. Bimal Parsad Jain. LPS was

incorporated as a Pvt. Limited Company on 27th

Dec., 1968. It was convertedinto a Public Limited Company in August 1971. At present it is operating as

LPS Limited.

LPS Plant-II is another step forward in progress of the company.

The company has started with only one machine 3/8 Bolt Maker. Now it has

wide range of machine producing a wide range of products. Today the company is

the leading manufacturer of High Tenslile Fasterners in India. The Quality of the

product is well accepted in the market so demand is growing very fast and to meet

the demands and expand its production range the company is adding more

production facilities.

Besides LPS the other leading companies are Sundram Fastners of TVC group,

Un-Brako and Guest Keen Williams. Recently Pandatogon Screws and Fasteners

Limited has also been introduced.

The installed capacity at present is about 8795 mt and annual turnover of the

company is 74 crores approximately. The number of employee are 2000 which

only 20 at the time of installation.

Company has covered 23500 sq. yards. The screws, nuts and bolts range from

3mm to 24mm in diameter. The products are marked under name and style of LPS.


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BOARD OF DIRECTORS

L.K.Jain Chairman & Managing Director

D.K.Jain Vice Chairman & Managing Director

V.K.Jain Whole Time Director

R.K.Jain

S.D.Jain

J.R.Desai

M.M.Lal

S.R.Singh

S.K.Aggarwal

M.H.P.Byramji

B.S.Aggarwal


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OUTLINE

1) Name of the Company : LAKSHMI PRECISION SCREWS LTD.

2) Founded on : March 10, 1972

3) Head Office & Factory : 46/1, Mile Stone

Rohtak - 124 001

Haryana (India)

4) Chairman & Managing Director : Lalit Kumar Jain

5) Total Assets : 978 Mill. INR (March 2004)

($19 Million)

7) Annual Sales : 1123 Mill. INR (March 2004)

($24 Million)

8) Employees

Production Office QC R & D Others Total

372 90 48 60 54 62455% 14% 8% 10% 9% 100%

9. Factory

(Unit : m

x m)

SECTION PLANTS TOTAL

PLANT I PLANT II

w.e.f. 1972-73 1993-94

LAND 19,000 44,000 63,000

BUILDING 16,000 23,000 39,000


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COMPANY ORGANISATION

Board of Directors

Chairman & Managing Director

Quality ManagementCorporate Strategy

Marketing R & D Planning Production QA General

D S D L C P P P P P F H E

E A E A E R L L L U I R D

V L V B N O A A A R N D P

E E E O T D N N N C A

L S L R R U N T T H N

O O A A C I A C

P P T L T N I II S E

M M O I G E

E E R O

N N Y N

T T


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CHRONOLOGICAL HISTORY OF LPS

1959 Established Nav Bharat Industries as small partsmanufacturer.

1972 Established Lakshmi Precision Screws Pvt Ltd as Socket Head Screws

Manufacturer

1973 Technical tie-up with the German firm M/s Richard Bergner.

1977 Acknowledged quality source of fastener.

1978 Technical tie-up with M/s Richard Bergner expires.

1983 Secured self certification status from FORD.

1984 Declared Public Limited Company.

1986 Secured self certification status from M/s Lakshmi Machine Works.

1988 Established as manufacturer-exporter.

1991 Received Regional Export Award from Engineering Export Promotion

Council, (EEPC) India.

1992 Received Regional Export Award from EEPC for the second Consecutive

year.

1993 Received Regional Export Award from EEPC for the third consecutive

year.


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1993 Established Plant - II.

1994 Received Employment Generation Award from Director of Industries,

Haryana State.

1995 Accredited in Mechanical & Chemical Testing by A2LA, USA to meet

Fastener Quality Act of US.

1995 Accredited in Mechanical Measurement, Mechanical & Chemical

Testing by National Accreditation Board for Calibration & Testing

Laboratories (NABL). Government of India.

1996 Certified to ISO-9002.


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MAIN PRODUCTS

Division Products

Precision Cold Forming parts for AutomobileEngine Parts ( Con Rod, Cylinder Studs,Counter Weights, Cylinder Head, Rocker Arm, EngineMounting, Main Bearing etc.)

Bolts & Nuts

for

Automobiles

Chasis Parts (Wheel Bolts, Wheel Hub Bolts & Nuts,Axle Bolts/Pin, Flanged Bolts, Collar Bolt, ShockAbsorber Mounting Pins etc.)

Washer Assemblies Bolts

The other critical & safety parts bolts

Construction parts (Friction Grip)

Bolts & Nuts for Agriculture Industry

FASTENERS Bolts & Nuts for Industrial Machinery

Cold formed parts for Automobile (Piston Pins, Switch Body, Ball JointsGear Blanks, Rocket Shaft, Ball Pins, Plunger etc.)

Pins for Hydraulics & Pumps

Bolt for Refrigeration Compressor

Friction Grip Bolts & Nuts for Construction Industry

Socket Head Cap Screw

Low Head Socket Bolt

Shoulder Bolt

Button Head

CSKStandard Set Screws

Fasteners Hex Wrench Keys

Hex Head Bolt

Dovel Pin

Nuts

Friction Grip Bolts

Track Shoe Bolts

Stainless Steel Hex Head

Stainless Steel Socket Head Cap Screws


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MISSION OF LPS

To be a growth-oriented professional company promoting high standards of businessethics and producing best quality products thereby achieving international standards

of excellence.

To establish a strong R & D facility to fulfill the demands of the automotive industryas comprehensively as possible.

To make each member of the company feel proud and empowered by fostering aculture of participation and innovation.

To strive for reduction in defects and achieve 6 sigma and beyond so as to makequality a way of life in LPS.

To reduce cycle time in all processes as a step towards over-all improvement. To provide prompt and excellent service to customers anywhere in the world. To maximize shareholders wealth.


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VISION OF LPS

Be recognized as the best and preferred supplier of national/international standard.

MOTTO: -

Total customer satisfaction and market leadership.

TARGET: -

Annual growth rate of 30% out of which export should contribute up to 50%

PLAN: -

Continuous up gradation of process and technology and development of

new products.

FUNCTION: -

System oriented approach.

PEOPLE: -

The driving force behind it.

IMAGE: -

To build up a high degree of customer confidence by sustaining international

standards of excellence in product quality, performance and service. To fulfill the

expectations which shareholders, employees, customers and country have from LPS.


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LPS PLANTII

Lakshmi precision screws ltd. is one of the leading manufacturers and suppliers of high

tensile fasteners such as bolts, screws, nuts and similar parts for automobile and other

industrial sectors. LPS ltd. was founded by shri Bimal Parsad Jain, in 1993, under the

name of Nav Bharat industries. LPS plant 2 was established in 1993. The company has

latest machines imported from abroad Japan, Germany and Taiwan. In addition, the

company has heat treatment; automatic microprocessor controlled planting and

phosphating plants. To update the both product and process requirements, the company

has its own research and development cell which is well equipped with most modern

chemical and psychical labs.


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OBJECTIVES OF LPS

BUSINESS MISSION: -

To achieve and maintain a leading position as supply of quality (precision)

fasteners and to serve the national and international market in th3 field of fasteners.

GROWTH: -

To ensure a steady growth in business to as to fulfill national expectation and

expand international operations.

PROFITABILITY: -

To provide a reasonable and adequate return on Capital employed primarily

through improvements in operational efficiency, capacity utilization and producing &

generating efficiency, capacity utilization and producing & generating adequate internal

resource to finance the companys growth.

BUSINESS OF THE ORGANISATION

Here the organization in a manufacturing concern. It deals in the domestic market

and in the international market. The company produces the High quality products,

which are well accepted in both domestic and foreign market. The Main market of

LPS comprises of

1. DOMESTIC Automotive Aviation Heavy & light machinery


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Railways Machine tools, jigs& fixture Refrigerator & air conditioning

2.INTERNATIONAL

Australia Germany Hong Kong Japan Singapore Sweden U.K South Korea South Africa

Its elite list of customers include Telco, Eicher, Escorts, Hindustan motors,

Kelvinator India Ltd., Voltas, Bajaj auto, Hero Honda, HMT, BHEL, Majestic

auto, Bajaj tempo etc.


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MAIN MARKETS

A) DOMESTIC (USER INDUSTRIES) Automotive Aviation Heavy & Light Machinery Hydraulic/Pneumatic Pumps Machine Tools, Jigs & Fixtures Railways Refrigeration & Air ConditioningB) INTERNATIONAL (COUNTRIES) Australia Germany Holland Hongkong Japan Singapore South Africa South Korea Sweden Switzerland United Kingdom United States of America


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CERTIFICATES

01. NABL02. ISO / TS 1694903. ISO 1400104. Volvo Global Supplier Certificate


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LAKSHMI PRECISION SCREWS LIMITED

HEAD OFFICE & FACTORY46/1, MILE STONE, HISSAR ROAD,

ROHTAK-124 001, HARYANA (INDIA)

Tel.: +91-1262-248288/248289/249920/249921

Fax : +91-1262-248297/249922

Email.: [email protected]; [email protected],

BANGALORE OFFICE305 A, Mittal Tower, 3rd floor, M G Road

Bangalore - 560 001 (India)Phone : +91-80-25588587Fax : +91-80-25597232

Email.: [email protected]

MUMBAI OFFICE153-A, Mittal Tower, Nariman Point

Bombay - 400 021 (India)Phone : +91-22-22821918/22843864/22325061/22325062

Fax : +91-22-22834492

Email : [email protected]. in

KOLKATA OFFICE

8, Canning Street,3rd floor, Room No.303,

KOLKATA-700 001.Phone :+91-33-2210754

Fax : +91-33-4739087/ 2107269 / 2210754

Email: [email protected]

NEW DELHI OFFICE146, New Cycle Market, Jhandewalan Extn.

New Delhi110 055 (India)

Phone : +91-11-23527642/23532135Fax : +91-11-27532138

Email: [email protected]


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REVIEW OF LITERATURE

Special Study on INAC's Funding Arrangements

A five-year program-funded Funding Agreement (2005-06 2009-10) is currently in

place through which INAC transfers annual grantsto MK for itself and for the

participating communities in each of the fiscal years covered by the agreement. Under

this agreement, Canada pays an annual grant, adjusted annually for price and volume in

accordance with a formula set out and subject to annual Parliamentary appropriations, to

MK on behalf of itself and the participating communities. Funding is disbursed on a

quarterly basis. The base amount of the agreement (2005-06) was a shade over $29

million and the average annual increase has been 6% for volume and price.

The service population targeted by the funding agreement includes:

1. Primary, elementary and secondary education for all members resident onreserves in the participating communities;

2. Post-secondary education for all members whether or not resident on reserves;and

3.

Primary, elementary and secondary education for all non-members resident onreserves in the participating communities.

The funding transferred to MK each year covers the following MK and participating

communities' expenditures:

1. Primary, elementary and secondary education, post-secondary support, IndianStudies Program, education facilities, education-related band support and tribal

council support and band employees benefits;

2. Capital funding for major repairs and replacement of existing education facilities;3. Operations and maintenance funding and classroom equipment for education

facilities; and

4. Governance funding for MK and the participating communities.


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OBJECTIVES OF THE STUDY

o To know the funds requirements of the company.o To study the sources of funds of the company.o To study the financial management process of the company.o To analyze the cost utilization for the business purposes.


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SCOPE OF THE STUDY

Itbecome quite difficult rather impossible to make judgment about the position of any

business by way of analyze the cost statements of one year. To get a view about thebusiness happenings, the past data of some years relating to the problem are studied and

is determined. The present study covers a period of two years from March 2006 to March

2008. A large period may prove inconvenient while a shorter period would not give

desired results. A period of four to six years is to be considered to be the optimum one.


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RESEARCH METHODOLOGY

The procedure adopted for conducting the research requires a lot of attention as it

has direct bearing on the accuracy, reliability and adequacy of results obtained. It is due

to this reason that research methodology, which we used at the time of conducting, the

research needs to be elaborated upon. It provides the researcher criteria by which we can

decide which techniques and procedures will be applicable to a given problem. At the

same times it helps the researcher to clearly state what course of action he selects at the

time of conducting the research and why he select then so that they can be evaluated by

others also.

RESEARCH PROBLEM: -

In research process, the first and foremost step happens to be that of selecting and

properly defining a research problem. A research problem, in general refer to some

difficulty which a researcher experiences in the context of either a theoretical or

practical situation and wants to obtain a solution for the same.

The present project has been undertaken to analyse the various type of budget i.e.

sale budget variable/semi variable expenses budget, depreciation budget. Also to see

whether, there are deviation between budget and actual if yes, than what cause behind

this.

RESEARCH DESIGN: -

A research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with

economy in procedure. In fact research is the conceptual structure within which

research is conducted; it constitutes the blueprint for the collection, measurement and

analysis of data.

Different research designs can be categorized as: -


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Research design in case of exploratory research studies Research design in case of descriptive research studies Research design in case of diagnostic research studies Research design in case of hypothesis-testing research studies

The present study is Descriptive in nature. Descriptive research studies are those studies,

which are concerned with describing the characteristics of a particular individual, or of a

group. Studies concerned with specific predictions, with narration of facts and

characteristics concerning individual, group or situations are all examples of descriptive

research studies. The design in such studies must be rigid and not flexible and must focus

attention on the following: -

Formulating the objective of study Selecting the sample (how much material will be needed) Collecting the data (where can the required data be found) Analyzing the data Reporting the findings

SAMPLE DESIGN: -

A sample design is a definite plan determined before any data are actually

collected for obtaining a sample from a given population. The amount of research

work is always limited by shortage of time and resources. Due to these limitations

information should be such that it may be representative of entire universe. So only

alternative is of sampling.

In present project a sample size of past two years (2010-2011 and 2011-2012) is

taken to study the problem. It has been done due to the time constraint.


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DATA COLLECTION: -

In dealing with any real life problem it is often found that data at hand are inadequate,

and hence, it becomes necessary to collect data that are appropriate. The task of data

collection begins after a research problem has been defined and research designchalked out. While deciding about the method of data collection to be used for the

study, the researcher should keep in mind two types of data viz., primary and

secondary.

In present study we have made use of secondary data collected from accounts of

LPS.

DATA ANALYSIS AND INTERPRETATION


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Q.1 Are you aware ofthe companys financial targets?

Yes No

95% 5%

INTERPRETATION:

Most of the employees aware of the company financial targets. In the very

beginning all the financial targets which are set by the Co. they are conveyed to the

respective departments and the same are conveyed to the concerned lower grade

employees so that the from the very beginning employees are motivated toward the

achievement of the target of Co.

Q.2 How does it impact your company?

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No


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Effect on manpower Effect on ongoing project Effect of turnover

40% 30% 30%

INTERPRETATION:

Man power is the most effected object-: As the main asset of the Co. is its

manpower so this is the most effective object toward completion of the work is literate

and efficient man power because only if the man power is effective then all other

resources can be utilized in efficient way otherwise if we put the technology at its best

and inefficient man power then the machine can not be utilized at its best

Q.3 what are the main Resources of Finance?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Effect on manpower Effect on ongoing project Effect of turnover


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Internal External

35% 65%

INTERPRETATION:

External sources are the main resources of the finance-: As working of the Co. is

based on the external market so there is always a scope of fluctuation of the market based

on the external forces so to avoid and to cater this fluctuation Co. has decided to keep

external source as main source of finance such as financial instutions i.e. Banks

0%

10%

20%

30%

40%

50%

60%

70%

Internal External


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Q.4 Techniques for cost measurement?

Standard costing Budgetary costing Marginal costing

45% 25% 30%

INTERPRETATION:

Standard costing is the main techniques used .In Co. for costing standard costing

method is the main method for costing as Co. is well established so Co. is considering

actual cost method for costing purpose in place of other techniques of costing i.e.

budgetary or marginal costing

Q. 5 From which type of agency cost is incurred by the company?

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Standard costing Budgetary costing Marginal costing


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Government Private

60% 40%

INTERPRETATION:

Govt. agencies are the main sources of finance being a brand Co. in its segment

Govt. have full confidence in Co. policy hence govt. financial institutions are main source

of funds . in addition to that as co. is having overseas business then to keep confidence of

overseas customer Co. is also preferring Govt. institutes. For funding

Q.6 what are the main sources of income of the company?

0%

10%

20%

30%

40%

50%

60%

70%

Government Private


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Application

development

Product engineering SAP consulting Share point

services

60% 20% 10% 10%

INTERPRETATION:

Application Development is the main sources of income, as Co. is already having

long journey track of success so at present Co. is preferring application development as

main line of action so that the complete solution can be given to customer in place of just

supplying the items.

Q.7 Why do you prefer Govt. agencies to raise the funds?

0%

10%

20%

30%

40%

50%

60%

70%

Application

development

Product

engineering

SAP consulting Share point

services


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Low rate of interest Low processing charges Less time consuming

75% 10% 15%

INTERPRETATION:

Low rate of interest is the main reason to adopt the govt. agencies.As compared to the

private institutions which generally tries to take maximum margin in place of considering

best co-operation to client Co. has decided to keep Govt institutions as main source ofraising funds.

0%

10%

20%

30%

40%

50%

60%

70%

80%

Low rate of interest Low processing charges Less time consuming


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Q.8 Are you satisfied with the current financial institution?

Yes No

80% 20%

INTERPRETATION:

Most of the people are satisfied with the current financial agencies.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes No


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Q.9 Are you satisfied with the techniques used for cost measurement?

Yes No

80% 20%

INTERPRETATION:

Most of the people are satisfied with the cost measurement technique. Most of the

techniques being followed for costing as relevant and satisfactory enough to meet the

goal of Co.

FINDINGS OF THE STUDY

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes No


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1. Companies raise the more of its funds from the Govt. Agencies.2. Standard costing is the method used in the costing measurement.3. More of the employees satisfied with the cost measurement techniques.4. External sources are the main sources to raise the funds.5. Manpower is the most affected by the costing.

SUGGESTIONS AND RECOMMENDATIONS


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Company should have control over the cost of sale. To do this Company shouldgo through the cost effective management.

They should control over the fixed expenses. Because in every year actual valuefounded more than budgeted value and there is high deviation between actual &

budgeted.

Motivation level of casual labour can be boosted up by offering them the betterwages overtime and attractive and other facilities

Low level management should be qualified and experienced Give the proper guide line to the Accountants Company should adopt the reliable sources to raise funds. Cost measurement techniques should be adopt carefully. Company should forecast the capital required and cost of goods to make the more

profits.

LIMITATIONS OF THE STUDY


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Although every effort has been made to collect the relevant information through

the sources available, still relevant and adequate information could not be gathered. The

reasons are as follows: -

Time factor: The time duration could not provide ample opportunities and studydetails.

Sample size: Sample size (50 employees) may be small so that results may not berealistic.

Co-operation: employees are not willing to share their views.


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BIBLIOGRAPHY

BOOKS: -

Kothari C.R., Research Methodology, New Age International Publication,New Delhi, 2nd Edition (2004).

Finance Management Magazine. Management of Indian Financial Institution

Prof. R.M. Srivastav

WEB SITE: -

www.financewikipedia.comwww.whereincity.com/Aboutlps/Careers.aspxwww.chetanasinterview.com/categories/funds/www.whereincity.com/yellow-pages/38403.html

SEARCH ENGINE: -

www.google.com
http://www.financewikipedia.com/http://www.financewikipedia.com/http://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.chetanasinterview.com/categories/funds/http://www.chetanasinterview.com/categories/funds/http://www.chetanasinterview.com/categories/funds/http://www.chetanasinterview.com/categories/funds/http://www.whereincity.com/Aboutlps/Careers.aspxhttp://www.financewikipedia.com/


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QUESTIONNAIRE

Q.1 Are you aware of the companys financial targets?

o YESo NO

Q.2 How does it impact your company?

o EFFECT ON MANPOWERo EFFECT ON ONGOING PROJECTo EFFECT ON TURNOVER

Q.3 what are the main Resources of Finance?

o INTERNALo EXTERNAL

Q.4 Techniques for cost measurement?

o STANDARD COSTINGo BUDGETARY COSTINGo MARGINAL COSTING

Q. 5 From which type of agency cost is incurred by the company?

o GOVERNMENTo PRIVATE

Q.6 what are the main sources of income of the company?

o APPLICATION DEVELOPMENTo PRODUCT ENGINEERINGo SAP CONSULTINGo SHARE POINT SERVICES


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Q.7 Why do you prefer Govt. agencies to raise the funds?

o LOW RATE OF INTERESTo LOW PROCESSING CHARGESo LESS TIME CONSUMING

Q.8 Are you satisfied with the current financial institution?

o YESo NO

Q.9 Are you satisfied with the techniques used for cost measurement?

o YESo NO

arrangement of funds lps

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