A

PROJECT REPORT ON

RECEIVABLES MANAGEMENT

IN

HINDUJA FOUNDRIES LTD .(DCU)

Submitted to

JAWAHAR LAL NEHRU TECHNOLOGICAL UNIVERSITYIn partial fulfillment of the requirement

For the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY

Mr.V.VIJAYA BHASKARAM REDDY

HI-TECH COLLEGE OF ENGINEERING & TECHNOLOGY

Gandipet, Himayath Nagar, C.B.Post Hyderabad 500075

2008-2010CERTIFICATE This is to certify that Mr.V.VIJAYA BHASKAR REDDY bearing Roll No. 08J11E0058 has submitted the project title RECIEVABLES MANAGEMENT in HINDUJA FOUNDRIES(DCU),HYD-39,for the partial fulfillment of requirements for the award of the Degree of Master of Business Administration (M.B.A) with FINANCE specialization form Hi Tech College of Engineering & Technology, Hyderabad (affiliated to JNTU, Hyderabad), during the academic year 2008-2010. It is a bonafied work done and has been found worthy of acceptance according to the requirements of the University.

(G.VEERESH REDDY) (Prof. P.BALA ANJI REDDY)MBA.Asst.Professor professor & Head, Internal Guide

Dept. of Management ACKNOWLEDGEMENTI wish to express my deep sense of gratitude to all those people who have encouraged me by giving their valuable suggestions during the project period and motivated me towards my goal.My thanks to our Head of Department, Dr.P.BALANJI REDDY without whose help and encouragement I would have not completed my project.

I wish to express my sincere thanks to Mr.K.UDAYA BABU- A.G.M (FIN & ACC) of M/S HINDUJA FOUNDRIES LTD(DCU),HYD-39.Who have provided me an opportunity to do my project work in HINDUJA FOUNDRIES (DCU), HYDERABADI am grateful to my external guide Mr.A.V.UMA MAHESHWAR RAO - A.M(FIN & ACC) of M/S HINDUJA FOUNDRIES LTD(DCU),HYD-39.For his whole hearted cooperation during my project work at M/S HINDUJA FOUNDRIES LTD(DCU),HYD-39.

I wish to express my thanks to my internal guide, Mr.G.VEERESH REDDY, Assistant Professor of MBA Department for his valuable suggestions and guidance during the course of my project work.

My expressible gratitude to my parents and my friends who have provided me worth all the facilities and are always supportive to me in completing my project work successfully.

PLACE:

DATE:

(V. VIJAYA BHASKAR REDDY)

DECLARATIONI here by declare that the project report title, RECEIVABLES MANAGEMENT in M/S HINDUJA FOUNDRIES LTD(DCU).Submitted by me to the Department of Business Management, Hi-Tech Engineering College, JNTU, Hyderabad, is a Bonafide work undertaken by me and it is not submitted to any other University or Institution for the award of any degree diploma certificate published anytime before.

(V.VIJAYA BHASKAR REDDY)

H.T.NO:-(08J11E0058)CONTENTS

ChaptersParticularsPage no

I INTRODUCTION

Introduction

Objectives of Study

Scope of the Study

Research methodology

Limitations

IIIndustry &

company profile

IIITHEORTICAL CONCEPTS

IVDATA ANALYSIS & Interpretation

VFINDINGS

SUGGESTION

CONCLUSION

VIBIBLIOGRAPHY

Chapter-1

Introduction

Introduction

Accounts receivable

Money owed to a business by customers who have bought goods or services on credit. Accounts receivables are current assets that continually turn into cash as customers pay their bills. Also calledreceivables.Money owed by customers (individuals or corporations) to vendors in exchange for goods or services rendered. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short period, ranging from a few days to a year. On a balance sheet, AR often is recorded as an asset because it represents cash legally owed by a customer.

Investopedia explains Accounts Receivable (AR)

When a company has receivables, that means that it has made a sale but has not collected the money from the purchaser yet. Most companies operate this way. This allows frequent customers to avoid the hassle of making cash payments for each transaction. In other words, the company receives an IOU for goods or services rendered. People have ARs as well in the form of a monthly or biweekly paycheck. It's the company's IOU for services (work) rendered. ARs are the opposite of APs (accounts pay

Theclassificationof anoption contractas either aputor a call.

Receivables Management means planning, organizing, directing and controlling of receivables.Definition:In the accounting system, the entries in the accounts receivable ledger represent amounts of money you are owed. These amounts are usually the result of the sale of assets or for services you have provided.

A separate accounts receivable ledger is used if your business sells to customers on credit.

Moneywhich is owed to acompanyby acustomerfor productsandservicesprovided oncredit. This is treated as a currenton abalance sheet. A specificsaleis generally only treated as anaccountreceivableafter the customer is sent aninvoice.Also Known As:A current asset on your balance sheet.Common Misspellings:Accounts receivable; accounts receivable.

Examples:A customer who purchases your product on credit would be listed in your accounts receivable ledger. This ledger would list each customer by name alphabetically, and contain a running total of his or her charges.OBJECTIVES OF THE STUDY To study the current receivables management policy of the company.

To maintain investment in debtors at optimum level.

To study the average credit period in order to prevent undue credit exposure.

To maintain good customer relationship.

METHODOLOGY

The study is not aimed at collecting information from source, the players of the industry with sample survey.

Secondary data is the main source i.e., information from industry fro the effective study of the receivables management.

The basic date for the study from industry will be the profit and loss accounts and Balance sheet of the unit for the past Four Years.

The database so collected will be analyzed using different accounting ratios to find out how effective the receivables management in the organization is.

PERIOD OF STUDY

For the Financial periods of 4 years

1. 2005-2006

2. 2006-2007

3. 2007-2008

4. 2008-2009

(STUDY AND ANALYSIS FOR 45 DAYS)

SCOPE OF THE STUDY

The impact of receivables management in the castings industry is to promote better quality of castings and expand the casting industry to give better quality components to the automotive industry and tractors industry at reasonable price

NEED OF THE STUDY

Need of Receivable Management arises only when merchandise is sold on credit. If a company makes all sales for cash, it would have no accounts receivable and therefore, the question of management of such assets does not arise at all. Although concessions like price discount are granted to include customers to make immediate cash payment, practice of extending credit to the customers is very popular. If other concerns engaged in the same line of business activity are selling goods on liberal credit terms, the firm will have to pursue liberal lending policy to maintain volume of sales. Since trade credit device is used too stimulate sales, there is a greater possibility of business profits to expand.

The customers from whom receivables or book debts have to be collected in future are Called trade debtors or simply as debtors and represent the film` s claim or asset.

Receivable Management is to maximize the value of the firm by achieving the trade off between liquidity and profitability. In fact the firm should manage its credit in such way that sales are expanded to an extent to which risk remains within and acceptable limit. Thus, to achieve the goal of maximizing the value, the firm should manage its trade credit:

The aim of credit management should be to regulate the control these costs. A dynamic credit policy and management will help to optimize sales at a minimum cost. Thus the objective of receivable management to promote sales and profits until that point is reached where the return on investment in future funding receivables is less than the costs of funds raised to finance that additional credit.

LIMITATIONS OF THE STUDY

This study is based on records of past four years company Profit & Loss Account, Balance Sheets and other records.

Decisions taken for better relation with big customers to continue the better business relations.

Government policies and tax system on the business condition in respective years will have much influence on business decisions. (Increase in power Tariff etc.).

Liberal credit policies in the recession period to survive in the industry will have impact strategic decisions like price reduction, installment system of payment. Zero percent interest system etc.

Maintenance of international standards in quality and price impact of competitive market. (High quality & low price).

Shortage of raw materials & Consumables due to natural calamities during the study period will have impact.

Chapter-2

INDUSTRY&COMPANY PROFILEINDUSTRY PROFILE

Casting Industry is the foundation of the automobile and tractor industry. This industry is playing very important role in catering the growth of our economy.

In recent years India playing a key role in the world economy by producing high power engine machinery, heavy trucks fro industrial requirement & trucks for goods as well as public transportation.

From M/s. Kirlaskar Cummins Ltd., Pune and supplying to all parts of the world including Korea and Japan. Ashok Leyland and Telco are making heavy trucks for goods transportation and passenger Trucks for public transportation. These companies are selling their trucks in all parts of the world. There are many casting foundries in the country. M/s. Ennore Foundary limited, Chennai is the foundary which is a sister concern of Ashok Leyland supplies 90% of components required by Ashok Leyland. M/s. Kirloskar Foundries Ltd at Hospet, supplies some portion of castings required for their engines.

India is basically an agricultural country. For better out put from the agriculture sector the tractor industry is providing the easy methods of cultivation to the formers with well equipped instruments. Now-a-days Tractors are helping the framers in planting, Spraying pesticides and ploughing the land. Once crop is over, the tractors are helping the former in cutting the crop and in transporting to the required place. In this way directly or indirectly casting industry is talking the leading role in the countrys economy. For this achievement M/S. HINDUJA FOUNDRIES LTD (DUCTRON CASTINGS UNIT) is playing major role in providing required requirements to the tractor producers.

COMPANY PROFILEMANAGEMENT: - Founded In 1948, Ashok Leyland has emerged to be a leading manufacturer of commercial vehicles in India. From 7.5 T GVW to 125 T GTW for goods transport and from 19 seaters to 80 seaters forpassengertransport, Ashok reliability, ruggedness, superior performance and durability. With the entry of the Hinduja Group and European trucking giant IVECO as principal shareholders in 1987,

Program. Today, it has an installed annual capacity of 50,000 vehicles and 60,000 engines. Employing 14.500 people, it has six manufacturing plants: Ennore and Housur (two plants) in Tamilnadu, Alwar in Rajasthan, Bhandara in Maharashtra and a castings unit i.e., DUCTRON CASTINGS UNIT at Hyderabad, Andhra Pradesh. The registered office of the company is at Rajaji Salai, Chennai.

UNIT LOCATION: - This unit is spread over 15 acres in Uppal Industrial Development Area, Uppal Hyderabad. This Unit manufactures of SPHEROIDAL GRAPHITE IRON CASTINGS (popularly known as SG Castings) & GRAY IRON CASTINGS (popularly known as GI castings) required for the automobile and tractor industries.

CAPACITY AND CAPABILITY:- In line with the high growth levels in the Indian automobile industry, DCU plans to expand its production capacity and widen its customer base both within India and in the overseas market. DCU has an installed capacity of 3000 MT/MONTH.

STRENGTH:-Ductron castings is a jobbing foundry is well-equipped with:

Electric induction melting, and Heat-treatment furnaces,

Simultaneous jolt squeeze molding and machines, shot-blasting facilities,

A state-of-the-art high pressure molding line (box dimension1150x750x350/350with production rate of 60 boxes/hour),

In-house pattern making facility,

Fully automated high speed sand mixers(2 sand plants each of 60Tones/hour),

Sand conditioning equipment that includes sand cooler together with process instrumentation,

Chemical, Sand and metallurgical laboratories.

Spectra meter for metallurgical testing

The latest core making facilities that are available

Hot box process (max.core dimn.450x700c200/100mm, 60 liters magazine capacity).

Shell process (450x225x1000mm).

Cold box process (900x700x100mm, 60 liter magazine capacity) .

This unit is also blessed with 5 power generators with a capacity 1000kva each for continuous production even in the summer when power cut is imposed.

Final castings after various processes of fetting, grinding, shot-blasting are averaged and painted before shipment. Inspection marks every stage of the process. The unit is equipped with non-destructive testing facilities like ultra-sonic and x-ray. It is also ell staffed with qualified, trained and experienced personnel at every level. The unit has installed an effective system for dust and fume extraction.CERTIFICATION: - Having complied with the requirements for quality and testing, the foundry has been recognized by LLOYDS REGISTER OF SHIPPING, LONDON, an internationally reputed independent inspection agency, for manufacture of items like crankshafts in SG iron.

DCU received the coveted ISO 9002 Accreditation in 1995. In 1998, the QS 9000 certification was achieved.

OBJETCIVE: - It is the objective of HINDUJA FOUNDRIES (DCU) Quality Policy to achieve customer satisfaction by meeting customer expectations in relation to the products and services offered by the company

Towards this objective, the Quality Policy of HINDUJA FOUNDRIES is: 1) To make continuous improvement in the products manufactured by the company as also in the services offered by the company.

2) To enhance employee potential to contribute to quality by improving the knowledge and skills of the employees as appropriate to their functions.

3) To induce in vendors commitment to continuous improvement to meet quality standards.

TO GATHER WE CAN is the slogan of HINDUJA FOUNDRIES.

Produced in bulk volumes, the products typically weigh about 25 to 90 Kgs per piece in SG iron Castings and 70 to 120 Kgs per piece in GI Castings. More efficient melting, molding and core-making facilities have been added to keep pace with the ever increasing demand for heavier and complicated castings.

BUSINESS PLANS IN FUTURE:-

This unit is planning to provide 100% machined castings to the customers to enable them to send the components directly to the assembling line of machine by customer. For this purpose the machining plant has been installed in the premises of the company. 90% of the installation work is completed by the end of this year . AS customers are demanding for fully machined castings for their production top management has taken this decision. Earlier we use to supply raw castings and proof machined castings. The company is also planning to increase its production capacity.

CHAPTER-3

THEORITICAL CONCEPTPOLICY IN RELATION TO RECEIVABLES MANAGEMENT:

RECEIVABLES MANAGEMENT Comprises of COSTS OF RECEIVABLES:

1) Cost of Financing: The credit sales delays the time of sales realization and therefore the time gap between incurring the cost and the sale realization in extended. This results in blocking of funds for a longer period. The firm on the other hand, has to arrange funds to meet its own obligation towards payment to the suppliers, employees etc. These funds are to be produced at some explicit or implicit costs. This is known as the cost of financing the receivables. 2) Administrative cost : A firm will also be required to incur various costs in order to maintain the record of credit customers both before the credit sales as well as after the credit sales. Before credit sales, costs are incurred on obtaining information regarding credit worthiness of the customers; while after credit sales, the cost are incurred o maintaining the record of credit sales and collection thereof.

3) Delinquency Costs: Over and above the normal and administrative cost of maintaining and collection of receivables, the firm may have to incur additional costs known as delinquency costs, if there is delay in payment by a customer. The firm may have to incur cost on reminders, phone calls, postage, legal notices etc, Moreover, there is always an opportunity cost of the funds tied up in the receivables due to delay in payment.

4) Cost of Default by Customers: If there is a default by a customer and the receivable becomes, partly or wholly, unrealizable, then this amount, known as bad debt, also becomes a cost to the firms. This cost does not appear in case of cash sales.

The total cost of receivables consists of costs of finanacing, which is a factor of time, plus cost of administration plus cost of delinquency plus of default. But, the receivables does not result in increasing the cost only, rather they bring some benefits also to the firm.

INCREASE IN PROFITS: Increase in sales will help the firm

(i) To easily recover the fixed expenses and attaining the break-even level, and

(ii)Increase the operating profit of the firm. In a normal situation, there is a positive relation between the sales volume and profit.

EXTRA PROFIT: Sometimes, the firms make the credit sales at a price which is higher than the usual cash selling price. This brings an opportunity to the firm to make extra profit over and above the normal profit.

BENEFITS OF RECEIVABLES:

INCREASE IN SALES: Expect a few monopolistic firms; most of the firms are required to sell goods on credit, either because of trade customers or other conditions. The sales can further be increased by liberalizing the credit terms. This will attract more customers to the firm resulting in higher sales and growth of the firm,Thus, the receivables bring some costs as well as benefits to the firm. Both the cost and the benefits are to be looked carefully and a trade-off between then m should be attempted.

The receivable management must be attempted by adopting a systematic approach and considering the following aspects

1. THE CREDIT POLICY

2. THE CREDIT EVALUATION

3. THE CREDIT CONTROL

1. CREDIT POLICY: The credit policy is the set of parameters and principles that govern the extension of credit to the customers. This requires the determination of

I. The credit standard

II. The credit Terms.

I. CREDIT STANDARDS are criteria to decide the types of customers to whom goods could be sold on credit. If a firm has more slow-paying customers, its investment in accounts receivable will increase. The firm will also be exposed to higher risk of default. If the standards are set loosely, it may make the firm to bear loses. Therefore, the problem is to balance the benefits of additional sales against the cost of increasing bad depts.

The firms credit standards are influenced by three C of credit:

Character of customer to pay

Capacity of customer to pay and

Customers economic condition.

While setting the credit standards for a firm the following points are to be noted:

Effect of a particular standard on the sales volume

Effect of a particular standard on the total bad depts. Of the firms, and

Effects of a particular standard on the total collection cost.

II. CREDIT TERMS: The credit terms refer to the set of stipulations under which the credit is extended to the customers. The credit terms specify how the credit will be the offered, including the length of the period for which the credit will be the offered, the interest rest on the credit, and the cost of default.

The credit terms may relate to

a. Credit period

b. Discount terms

a) CREDIT PERIOD: Credit period is an important aspect of the credit policy. It refers to the lengthy of time over which the customers are to allowed to delaying the payment. The credit period generally varies from 3 days to 6 days. Lengthening the credit period increases the sales by attracting more and more customers. The effect of changing the credit period is similar to that of changing the credit standard and hence requires careful analysis. The firm mists consider the cost involved in increasing the credit period which will result in increase in the investment in receivables.

b) DISCOUNT TERMS: The customers are generally offered cash discount to induce them to make prompt payment. Different discount rates may be offered for different periods. Eg.3/10, 2/20,net 30 means that 3% cash discount if payment made within 10 days:2% discount if payment made with 20 days; otherwise full payment by the end of 30 days from the date of sale. This will result in shortening of the average collection period.

2.CREDIT EVALUATION: Credit evaluation involves determination of the type of customers who are going to qualify for the trade credit. Several costs are associated with extending credit to less credit-worthy customers. When more time is spent investigating the less credit worthy customers, the cost of credit investigation increases. Default costs also very directly with the quality of the customers. As the customers credit rating declines, the chance that the amount will not be paid on time increases. Collection costs also increases as the quality of the customers declines. More delinquent customers force the firm to spend more time and money collecting them. In nutshell, the decline in customers quality results in increased cost of default, collection and credit investigation.

Assessment of the credit worthiness of a customer is subjective matter and a lot depends upon the experience and judgment of the person taking the decision, there are three basic factor of credit worthiness of a customer.

First, the character i.e., the willingness and the practice of the customer to honor his obligations by paying as agreed.

Second, the capacity i.e., the financial ability of the customer to pay as agreed, and

Third, the collateral i.e., the security offered by the customer against the credit. Evaluation of credit worthiness of a customer is a two steps procedure

(I) Collection of Information and

(II) Analysis of information.

COLLECTION OF INFORMATION: In order to better decisions, the firm may collect information from various sources on the prospective credit customers. The following are sources of information which can provide sufficient data or information about the credit worthiness of a customer:

Bank Reference: Trough the banks may be reluctant to give financial information of its customers, yet may be asked to comment on the financial position of a particular customer. The customer may also be required to ask his bank to provide necessary information in this respect.

Credit Agency Report: There are certain credit ratings agencies which provide independent information on the credit worthiness of different parties. These agencies gather information on the credit history of different businessman and sell it to the firms, which want to extend credit. Obviously, people who have failed to pay their bills in the past are viewed as greater credit risk than those who have an un-blemished credit record.

Published Information: The published financial statements of the customers for few preceding years may also be taken as a source of information, as they contain a lot of details regarding the operations. Various ratios calculated on the basis of these financial statements maybe throw light on the profitability, liquidity, and debt service capacity of a customer.

Credit Scoring: If the credit request is large enough, then the firm can send its own representatives/employees to collect information about the customer. In this case, the customer may be evaluated through the use of credit scoring which involves the numerical evaluation of each of the new customers who receive a score based on his answers to a simple set of questions. This score is then evaluated accounting to a predetermined standard, its level relative to the standard determining whether credit should be extended. The major benefit of credit scoring is that it is relatively inexpensive and less time consuming.

Information collected is often costly and therefore, firms also weigh the benefits of gathering information against its costs. It should, in particular, gather only as much as information is required and necessary to find out the credit worthiness of the customer with a reasonable degree of accuracy.

ANALYSIS OF INFORMATION: Once all the available credit information about a potential customer has been gathered, it must be analyses to reach at some conclusion regarding the credit worthiness of customer. The five well known C`s of credit: Character

Capacity Capital

Collateral

Conditions Provide a frame work for the evaluation o a customer.

These characteristics can throw light on the credit worthiness of a default0-risk of the customer. Step-by-step analysis of information may be made and assessment would be made at various to ascertain whether further analysis is required or not. The firm should go further information and analysis only if required. If it is evident at any state that the customer has a satisfactory accredit worthiness, then there is no need to go for costly exercise of further analysis. Where a customers credit standing is either favorable or far below e-established credit standards, the selection or rejection of a customer is an easy job. The difficult arises in case f those, customer who are marginally credit worth. In such a a situation, the financial manager must attempt to balance the potential profitability against the potential loss for the default.

CONTROL OF RECEIVABLES: If the credit has been extended to a customer as per the credit policy, the next important step in the management of receivables is the control of these receivables. Merely setting of standards and framing a credit policy is not sufficient; equally important is their effective implementation to control the receivables. In this reference, the efforts may be required in two directions as below:

1)THE COLLECTION PROCEDURE: Once the firm decides to extend credit and defines the terms of credit sales, it must develop a policy for dealing with delinquent or show paying customers. There is a cost of both Delinquent customers create bad debts and other costs associated with repossession of goods, where as the slow paying customers cause more cash being tied up in receivables and the increased interest cost. The firm should have a built in system under which the customer may be reminded a few days in advance about the bill becoming due. After the expiry of due date of the payment, he firm should make statements, reminders, telephone calls and even personal visits to the paying customer. Ultimately legal action for recovery of due amount may also be resorted to; through it can be very costly and time consuming. No doubt, those legal actions may have little effect on the ability of the customer to pay, but it can definitely speed up the legal relief.

The overall collection procedure of the firm should neither be too lenient (resulting in mounting receivables) nor too strict (resulting sometimes even loss of customers). Strict collection policy can affect the good will and damage the growth prospects of the sales. If a firm has a lenient credit policy, the customer with a natural tendency towards slow payments, may become eve slower to settle his accounts. Overly aggressive collection policy may offend good customers who inadvertently have failed to pay in time. One possible way of ensuring early payments from customers may be to change interest on over due balances. But this penal interest and the rate thereof must be agreed in advance and better written in the sale document. Thus, the objective of collection procedure and policies should be to speed up the slow paying customer and reduce the incidence of bad2)MONITORING OF RECEIVABLES: In order to control the level of receivables, the firm should apply regular checks and there should be a continuous monitoring system. The financial managers should keep a watch n the credit worthiness of all individual customers as well as on the total credit policy of the firm. For this, numbers of measures are available as follows:

a) A common method to monitor the receivables is the collection period or number of days outstanding receivables. The average collection period may be found by dividing the average receivables by the amount of credit sales per day i.e.

Average collection period = average receivables/credit sales per day Number of days sales outstanding may be calculated,

b) Aging Schedule: Is another technique available for monitoring the receivables. The quality of the receivables of a firm can be measured by looking at the age of receivables. The order the receivables, the lower is the quality and greater the likelihood of a default. In the aging schedule, the total outstanding receivables on a particular day (at the end of a month or a year) are classified with percentage of total receivables that fall in each age group. By comparing the aging schedules fro different periods, the financial manager can get ideal of any required change I the collection procedure and can also point out these customers, which require special attention. However, a basic shortcoming of the aging schedule is that it is influenced by the change in sales volume.

c) Lines of Credit: Another control measure for receivables management is the line of credit which refers to the maximum amount a particular customer may have as due to the firms at any time. Different lines credit may be allowed to different customers. As long as the customers unpaid balance remain within this maximum limit, the account may be routinely handled. However, if a new order is going to increase the indebtedness of a customer beyond his line of credit, then the case must be taken for a approval for a temporary increase in the line of credit.

The lines of must be reviewed periodically fro all the customers. This review of credit lines, however, need not necessarily mean that credit lines must be changed. Rather, the credit line may remain unchanged or may increase or reduced. In a extreme case, the credit lines after a review may even be suspended if the experience request for a review of credit line order to obtain more credit or more liberal credit terms. Such a request should be looked into properly and costs and benefits of extending credit terms should be evaluated.

d) Accounting Ratios: Accounting information may be of good help in order to control the receivables. Though, several ratios may be calculated in this regard, two accounting ratios, in particular may be calculated to find out the changing pattern of receivables. These areI. Receivables Turnover Ratio, and

II. Average collection periodReceivables Turn Over: This is also called as Debtors Turnover or debtors Velocity. Of the various methods of sales adopted by business concerns, one most common method is t6o sell on credit. Every concern formulates a credit policy and goods are sold to customers on credit in accordance with such credit policy. Customers to whom goods are sold on credit are called Debtors or Book-Debts in accounting language. In America, they are called asAcconts Receivables. Sometimes, goods are sold to such customers who are prepared to give their acceptance for bill or Hundi in consideration of sales payments. The bills or Hundies received from such customers are called Bills Receivables. In America, these are called as Notes Receivables. Thus, total receivables of a concern include book-debts or debtors and bills receivables. In short, these two will be termed Recei Average collection period:

It is most essential that a reasonable quantitative relationship between outstanding Receivables and Sales should always be maintained. While analyzing the operational efficiency of the concern, it is useful to compare those debtors and bills receivables with sales. For this purpose, Receivables turnover is found out. Receivables turnover measures the number of times the receivables rotate in a year in terms of sales Since it is calculated to measure the efficiency of credit policy and credit collection, it is also sometimes expressed in terms of period [ no. of days, weeks or months]

CHAPTER-4

FINDINGS,CONCLUSIONS &SUGGESTIONSSALES FOR THE PERIOD 2005-2009PER DAY SALES IN LAKSPARTICULARS2005-062006-072007-082008-09

CUSTOMER PROFILE

OTHER CUSTOMER

Carraro india2.913.323.592.03

Caterpiller0.340.641.020.85

Escorts ltd1.562.913.633.62

HV Axles1.321.080.730.49

JCB India ltd0.020.080.140.09

New Holland tractors2.373.826.226.07

Shakthi Prec-others2.140.370.20.55

TAFE2.321.273.572.14

TATA Motors1.261.231.391.68

Sub trotal-A14.2414.7220.0617.53

ASHOK LEYLANDS

AL-Ennore5.757.337.594.68

AL-Hosur16.174.774.71.93

AL-HOsur22.14.11.761.49

AL-Bhandara-others0.91.110.850.69

Sub total-B14.9217.3014.908.80

TOTAL29.1632.0335.3626.32

PER DAY SALES (OUTSIDE CUSTOMERS)

X-AXIS-companies

Y-AXIS-rs in lakhsPER DAY SALES (A L CUSTOMER PROFILE)

X-AXIS-companies

Y-AXIS-rs in lakhsINTERPRETATION (TOTAL SALES)

The company has sold goods worth RS 29.16 lakhs during 2005-06, RS 32.03 lakhs during 2006-07 and RS 35.36 lakhs during 2007-08 but there is only sale of 26.32 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 9.04 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.

AVERAGE DEBTORS IN LAKS

2005-062006-072007-082008-09

CUSTOMER PROFILE

OTER CUSTOMER

Carraro india364.69429.47437.83261.61

Caterpiller32.5234.3143.330.3

Escorts ltd218.53260.72299.81291.94

HV Axles74.5698.8769.1854.92

JCB India ltd0.693.045.777.5

New Holland Tractors161.8212.87348.07430.56

Shakthi Prec-Others125.0226.9313.8450.97

TAFE185.09129.33259.2287.5

TATA Motors52.8861.93111.61138.48

Sub total-A1216.391257.451585.621553.78

ASHOK LEYLAND

AL-Ennore378.48439.11462.45275.35

AL-Hosur1302.73332.95295.43125.15

AL-HOsur2266.62289.8198.0153.11

AL-Bhandara-Others130.11142.62140.7976.12

Sub total -B1077.921204.481096.69529.74

TOTAL2294.312461.932682.312083.52

AVERAGE DEBTORS (OUTSIDE CUSTOMERS)

X-AXIS-companies

Y-AXIS-rs in lakhsAVERAGE DEBTORS (A L CUSTOMERS)

X-AXIS-companies

Y-AXIS--rs in lakhsINTERPRETATION (TOTAL SALES)The company has sold goods worth RS 2294.31 lakhs during 2005-06, RS 2461.91 lakhs during 2006-07 and RS 2682.31 lakhs during 2007-08 but there is only sale of 2083.52 Lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 598.79 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.

AVERAGE COLLECTION PERIOD (DAYS)PARTICULARS2005-062006-072007-082008-09

CUSTOMER PROFILE

OTHER CUSTOMERS

Carraro india125129123129

Caterpiller96534236

Escorts ltd140908381

HV Axles576291112

JCB India ltd42364285

New Holland Tractors68565671

Shakthi Prec-Others59726992

TAFE8010273135

TATA Motors42508082

ASHOK LEYLAND

AL-Ennore66606159

AL-Hosur149706365

AL-HOsur21277111236

AL-Bhandara-Others145129166110

AVERAGE COLLECTION PERIOD (OUTSIDE CUSTOMERS)

X-AXIS-companies

Y-AXIS--rs in lakhsASHOK LEYLAND CUSTMORS

X-AXIS-companies

Y-AXIS--rs in lakhsNUMBER OF DELAY DAYS

PARTICULARSCREDIT PERIOD2005-062006-072007-082008-09

CUSTOMER PROFILE

OTHER CUSTOMERS

Carraro India90 DAYS35393339

Caterpillar30 DAYS6623126

Escorts ltd72 DAYS6818119

HV Axles30 DAYS 27626182

JCB India ltd30 DAYS1261255

New Holland Tractors30 DAYS 38262641

Shakthi Prec-Others60 DAYS0282547

TAFE45 DAYS35572890

TATA Motors30 DAYS12205052

ASHOK LEYLAND

AL-Ennore30 DAYS36303129

AL-Hosur130 DAYS19403335

AL-HOsur230 DAYS 9741826

AL-Bhandara-Others30 DAYS1159913680

NUMBER OF DELAY DAYS(OUTSIDE CUSTOMERS)

X-AXIS-companies

Y-AXIS-rs in lakhs ASHOK LEYLAND CUSTOMERS

X-AXIS-companies

Y-AXIS-rs in lakhs INTERPRETATI0ON OF DELAY DAYS

The finance deportment informed that the company has taken several steps in action to collect the money as per due date.

Step 1

The company has appointed local resident representative in order to collect the money as per due date As and When amount are due.

Step 2

Company has demanded for AT-PAR cheques DEMAND DRAFT S against their payments from customers in order to credit the payment immediately soon after deposit of payments received.

Step 3

Company has taken further steps in collecting payments through RTGS\ ELECTRONIC TRANSFER from customer account to supplier account in the banks.

Step 4

There is a time to time reconciliation with the customers in order to confirm the due amounts from the customer.

Step 5

In case of differences in due amount, the disputed amounts are informed to the marketing department with a copy to head of marketing , head of the plant and a copy to resident representative to take necessary action to clear the disputed supplier or payment. DATA & INTERPRETATIONSSALES VALUE FOR THE FINANCIAL YEAR 2005-2009 (TOTAL SALES)

PERIOD VALUES

2005-200610643.00

2006-200711691.08

2007-200812906.34

2008-20099610.38

INTERPRETATION (TOTAL SALES)

The company has sold goods worth RS 10643 lakhs during 2005-06, RS 11691.08 lakhs during 2006-07 and RS 12906.34 lakhs during 2007-08 but there is only sale of 9610.38 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS3295.96 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.

.SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(OUTSIDE CUSTMERS)PERIODVALUES

2005-20065195.95

2006-20075374.93

2007-20087466.96

2008-20096398.1

INTERPRETATION (OUT SIDE CUSTOMERS)

The company has sold goods worth RS 5195.95 lakhs during 2005-06, RS 5374.93 lakhs during 2006-07 and RS 7466.96 lakhs during 2007-08 but there is only sale of 6398.10 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS1068.86 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(ASHOK LEYLAND CUSTOMERS)PERIODVALUES

2005-20065447.05

2006-20076316.15

2007-20085439.38

2008-20093212.28

INTERPRETATION (ASHOK LEYLAND (units))

The company has sold goods worth RS 5447.05 lakhs during 2005-06, RS 6316.15 lakhs during 2006-07 and RS5439.38 lakhs during but there was out side company demanded more material. Hence ashok Leyland sales have come down. And 2007-08 but there is only sale of 3212.29lacs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS2227.09 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.

OUTSIDE CUSTOMERSSALES VALUE FOR THE FINANCIAL YEAR 2005-2009

(CARRAO INDIA)

PERIODVALUES

2005-20061063.76

2006-20071211.68

2007-20081301.22

2008-2009742.67

INTERPRETATION (CARRARO INDIA)The company has sold goods worth RS 1063.76 lakhs during 2005-06, RS 1211.68 lakhs during 2006-07 and RS 1301.22 lakhs during 2007-08 but there is only sale of 742.67 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 558.55 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(CATERPILLAR)PERIODVALUES

2005-2006124.14

2006-2007234.57

2007-2008372.72

2008-2009310.52

INTERPRETATION (CATERPILLER)

The company has sold goods worth RS 124.14 lakhs during 2005-06, RS 1234.57 lakhs during 2006-07 and RS 372.72 lakhs during 2007-08 but there is only sale of 310.52 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 62.2 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession.SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(ESCORT LTD)PERIODVALUES

2005-2006569.18

2006-20071062.22

2007-20081324.88

2008-20091321.49

INTERPRETATION (ESCORTS LIMITED)The company has sold goods worth RS 569.18 lakhs during 2005-06, RS 1062.22 lakhs during 2006-07 and RS 1324.88 lakhs during 2007-08 but there is only sale of 1321.49 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 3.39 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(HV AXLES)PERIODVALUES

2005-2006480.17

2006-2007392.94

2007-2008265.56

2008-2009179.56

INTERPRETATION (HV AXLES)

The company has sold goods worth RS 480.17 lakhs during 2005-06, RS 392.94 lakhs during 2006-07 and RS 265.56 lakhs during 2007-08 but there is only sale of 179.56 lakhs during the year 2008-09. There is a decrease of sale in continuously fall down. Why because, as per company the decrease in sale was due to market recession

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009

(JCB INDIA LTD)PERIODVALUES

2005-20066.00

2006-200762.325

2007-200850.02

2008-200932.34

INTERPRETATION ( JCB INDIA LIMITED )The company has sold goods worth RS 6 lakhs during 2005-06, RS 30.45 lakhs during 2006-07 and RS 50.02 lakhs during 2007-08 but there is only sale of 32.34 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 17.68 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recession

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(NEW HOLLAND TRACTORS)PERIODVALUES

2005-2006864.41

2006-20071395.65

2007-20082269.77

2008-20092216.26

INTERPRETATION (NEW HOLLAND TRACTORS)

The company has sold goods worth RS 864.41 lakhs during 2005-06, RS 1395.65 lakhs during 2006-07 and RS 2269.77 lakhs during 2007-08 but there is only sale of 2216.26 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 53.51 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to market recessionSALES VALUE FOR THE FINANCIAL YEAR 2005-2009(SHAKTHI PREC & OTHERS)

PERIODVALUES

2005-2006781.64

2006-2007136.26

2007-200872.97

2008-2009202.08

INTERPRETATION (SHAKTHI PREC & OTHERS)

The company has sold goods worth RS 781.64 lakhs during 2005-06,but here compare to other products are demanded fallowing 2 years RS 136.26 lakhs during 2006-07 and RS 72.97 lakhs during 2007-08 but there is only sale of 202.08 lakhs during the year 2008-09. There is a increase of sale in the year 2008-09 worth RS 129.11 lakhs when compare to the sale of 2007-08.As per company the increase in sale was demand of product.

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009

(TAFE)PERIODVALUES

2005-2006846.70

2006-2007462.61

2007-20081302.05

2008-2009780.09

INTERPRETATION (TAFE )

The company has sold goods worth RS 846.70 lakhs during 2005-06,but here compare to other products are demanded so sale are fall down. RS 462.61 lakhs during 2006-07 and RS 1302.05 lakhs during 2007-08 but there is only sale of 780.09 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 521.96lacs when compare to the sale of 2007-08.As per company the increase in sale was due to market recession.

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(TATA MOTORS)PERIODVALUES

2005-2006459.95

2006-2007448.56

2007-2008507.76

2008-2009613.1

INTERPRETATION (TATA MOTERS)

The company has sold goods worth RS 459.95 lakhs during 2005-06,but here compare to other products are demanded so this year sales are fall down. RS 448.56 lakhs during 2006-07 and RS 507.76 lakhs during 2007-08 but there is only sale of 613.10 lakhs during the year 2008-09. There is a increase of sale in the year 2008-09 worth RS 105.34 lakhs when compare to the sale of 2007-08.As per company the increase in sale was demand of product.

ASHOK LEYLAND COMPANYSSALES VALUE FOR THE FINANCIAL YEAR 2005-2009(AL-Ennore)PERIODVALUES

2005-20062099.99

2006-20072675.00

2007-20082770.32

2008-20091708.00

INTERPRETATION (ASHOK LEYLAND (ENNORE))

`The company has sold goods worth RS 2099.99 lakhs during 2005-06, RS 2675 lakhs during 2006-07 and RS 2770.32 lakhs during 2007-08 but there is only sale of 1708 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 1062.32 lakhs when compare to the sale of 2007-08.As per company the decrease in sale was due to out side company demanded more material. Hence ashok Leyland sales have come down

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(AL-Hosur I)

PERIODVALUES

2005-20062253.72

2006-20071741.60

2007-20081714.92

2008-2009706.08

INTERPRETATION (AL-HOSUR I)The company has sold goods worth RS 2253.72lacs during 2005-06, RS 3893.755 lakhs during but there only sales are fall down of 2 years. 2006-07 and RS 3486.710 lakhs during and 2007-08r RS 706.08 lakhs during the year 2008-09. As per company the decrease in sale was due to out side company demanded more material. Hence ashok Leyland sales have come downSALES VALUE FOR THE FINANCIAL YEAR 2005-2009(AL-Hosur II)

PERIODVALUES

2005-2006764.89

2006-20071495.66

2007-2008646.93

2008-2009544.72

INTERPRETATION (AL-HOSUR II)

The company has sold goods worth RS 764.89 lakhs during 2005-06, RS 1495.66 lakhs but here compare to other products are demanded so sale are fall down during 2006-07 and RS 643.93 lakhs during 2007-08 but there is only sale of 544.72 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 99.21lacs when compare to the sale of 2007-08.As per company the increase in sale was due to market recession.

SALES VALUE FOR THE FINANCIAL YEAR 2005-2009(AL-Bhandara & Others)

PERIODVALUES

2005-2006328.45

2006-2007403.89

2007-2008310.21

2008-2009253.48

INTERPRETATION (AL BHANDARA & OTHERS)

The company has sold goods worth RS 328.45 lakhs during 2005-06, RS 403.89 lakhs but here compare to other products are demanded so sale are fall down during 2006-07 and RS 310.21 lakhs during 2007-08 but there is only sale of 253.48 lakhs during the year 2008-09. There is a decrease of sale in the year 2008-09 worth RS 56.73lacs when compare to the sale of 2007-08.As per company the increase in sale was due to market recession.

CHAPTER-4FINDINGS

During the project study we examine that the Receivables Management performs it activities of how the various credit policies are been maintained and controlled and how the various credits are been provided to various individual performing its functions.

The study generally refer to how the various credit polices, costs, floats and aging schedules operates its functions and manages in an organization structure and in order to develop the performance of various policies and standards. which in orderly develop and increases the organization structure and develops its production.

The receivables management also study of how various cost features and standards are handled and maintained in order to provide credit various individuals and help in developing its performance and maximizing its profits.

The HINDUJA FOUNDRIES LTD(DCU),HYD, as it is the one of the largest casting unit in allover india which is in orderly has to maintain the Receivables and to develop the cost of various structures by providing the credits to various individuals and institutions in order to perform its activities well.

This Receivables management work efficient in an organizational unit and also enhances the individuals and other organizational units by providing the credit and by properly maintaining the cost structure in an organization .It also found that they are various Floats which helps in performing of activities efficiently and effectively by properly maintaining the Floats structure which helps in understanding individuals properly in re-paying of its debts and bills which are been incurred and have to re-pay at the time of due date. Thus this type of proper maintenance will help in developing the performance and maximizing the profits of an organizational structure.

SUGGESTIONS

The receivables management which is generally laid out and maintained in an organization for the maintaining the relationship of various credit policies and other costs. So when maintain receivables management maintained in providing credit I suggest the HINDUJA FOUNDRIES LTD(DCU), must have to do credit analysis through obtaining credit information from banks, credits bureaus internal external sources etc. with the help of which the organization can maintain a sustainable and attain profit maximization.

According to me view I suggest the HINDUJA FOUNDRIES LTD(DCU), must have to open a internet banking mechanism in order to reduce the cost of collections and credits lended and various float in cheque receipt, cheque deposit and its clearance.

The organization HINDUJA FOUNDRIES LTD(DCU), while maintaining the receivables management while providing the credit to various individuals and owes assets to others must also have to maintain a proper records and must have to carry out the credit evolution of the customers by studying the credit worthiness certificate from the bankers or any other consultants etc, to know that how far the credit can be allowed to the customers. By maintaining this proper records of various individuals to whom the credit has been provided the organization must maximize its profits and also enhance its development in production.

As the various forms of acquiring the Assets & Liabilities has been increasing the organization there will be various opportunities of developing the production and maximizing the profits can be enabled and can also lead to the development of organization sector by enhancing more credits and evaluating the cost structure.

To generate more profits in an organizational context management of receivables whose main function is to provide the credit forms to various individuals and organizations, I would suggest that while providing the credit they must have to provide the cash discounts. So that they can make a effective and early recoveries and enhance in the development of the organization and also to play a key role in developing the organization in maximizing its profits and achieving its goals.

CONCLUSIONAs we observed during the project study of Receivables Management in the HINDUJA FOUNDRIES LTD (DCU), organization which the main function is to operate various forms of credits to various institutions and individuals and performing the various costs related functions in the organization structure. The receivables management owes a credit to various individuals in the form of the credit and will improve its various forms of performance in an organizational unit. This receivables management will function according to the developing the various forms by outlaying the credit to different structure in an organizational limit .HINDUJA FOUNDRIES LTD(DCU), is also with the receivables management is obtaining lot of loans for working capital requirements and incurring lot of expenditure towards interest payment due to which the cost per unit of generating is gradually increasing. During the study of receivables management the credit which has been given to various institutions shall be retained with less than six months can be said as the good debts and from the provided float chart in the study we can be said that HINDUJA FOUNDRIES LTD (DCU), is taking lot of time for billing float and the credit period float are found very large. Except these two floats all other floats can be said to be reasonable. The receivables management while providing the credit for the up liftment and developing the performance at the same time it must have to recover it in time and improve its performance in order to develop the production and maximize the profits and achieve its goals.CHAPTER-5biboliography

BIBLIOGRAPHY1) References:

1. Financial Management by I.M.Pandey 2.Cost and Financial mgmt by S.N.Maheshwari

3.Financial Management by K.Prasanna Chandra

2) HINDUJA FOUNARIES ANNUAL REPORTS: ANNUAL REPORT 2005-2006 ANNUAL REPORT 2006-2007

ANNUAL REPORT 2007-2008

ANNUAL REPORT 2008-2009

3)WEBSITES: www.Hindujafoundaries.com