Summer Internship Project Report

On

A study on working capital

on

AUSTIN ENGINEERING COMPANY LIMITED

Submitted to

Institute Name

Dr. V. R. Godhania College of Engineering & Technology

Institute Code: 841

Under the Guidance of

Assistant Professor Vandana Sharama

In partial Fulfilment of the Requirement of the award of the degree of

Master of Business Administration (MBA)

Offered By

Gujarat Technological University

Ahmedabad

Prepared by:

Deven R. Joshi

Enrollment Number:

228410592012

M.B.A. (Semester – 3)

Academic year: 2022-24

1
 Student’s Declaration
I hereby declare that the Summer Internship Project Report titled “Working capital
management” in Austin engineering limited is a result of my own work and my
indebtedness to other work publications, references, if any, have been duly
acknowledged. If I am found guilty of copying from any other report or published
information and showing as my original work, or extending plagiarism limit, I
understand that I shall be liable and punishable by the university, which may include
‘Fail’ in examination or any other punishment that university may decide.

Enrollment No. Name Signature

228410592012 Deven R. Joshi

Place: Porbandar

Date:

2
Institute Certificate

3
 Examiners Certificate
This is to certify that project work embodied in this report entitled “working capital
management” was carried out by Student name: Deven R. Joshi, Enrollment no:
228410592012, Institute name: Dr. V. R. Godhania College of Engineering &
Technology, Porbandar, Institute Code: 841

The report is approved/ not approved.

Comment of external examiner:

This report is for the partial fulfillment of the requirement of the award of the degree
of Master of Business Administration offered by Gujarat Technological University.

----------------------------

(Examiner’s sign)

Name of Examiner:

External Examiner’s Institute Name:

External Examiner’s Institute Code:

Date:

4
Company Certificate

5
Plagiarisam Report

6
 Preface
Summer training is essential for the fulfillment of Master of Business Administration
(MBA) curriculum. It provides an opportunity to the student to understand the industrial
with special emphasis on the development of skill in analyzing interoperating practical
problem through application of management.

According to it is compulsory for every student of MBA sem-3 to take training under
any company or the industry for 4 weeks to get information knowledge and practical
learning about specific specialized filed and of industry at all.

I got opportunity to work with an esteemed organization like Austin Engineering ltd, a
leading player in bearing market. It is sincere attempt on my behalf to present the
information, facts and findings regarding bearing industry.

7
 Acknowledgement
I must first take opportunity to thank Austin Engineering Company Ltd. for giving
opportunity to complete my internship in reputed company.

I am grateful to the Gujarat Technological University and Dr. V. R. Godhania College

of Engineering & Technology for giving us this opportunity to experience the work of
practical learning in industrial environment.

I sincerely thankful to my guide Assistant Professor Mrs. Vandana Sharma for their
guidance in this report by providing help and motivation, great support with valuable
time and information.

I would like to thank Mr. Nasir Patta for their guidance in my research and giving me
intuitive information

THANK YOU

Yours faithfully,

Deven Joshi

8
Part: A

9
 MAIN INDEX OF PART -A

SR NO. PARTICULARS PAGE NO.

1 General Information
2 Production Department
3 Human Resource Department
4 Marketing Department
5 SWOT Analysis
6 Finance Department

10
MAIN INDEX OF PART - B

11
 Index

Sr. No. Particulars Page No.

1 Introduction
2 History of Company
3 Company Vision
4 Company Profile
5 Organizational Structure
6 Board of Directors
7 Achievements

13
 Introduction
Austin Engineering Company Limited (AEC) is an ISO 9001:2008 and ISO/TS 16949:2009
certified manufacturer of widest range of ball & roller bearings and its components in India
without any collaboration.

Founded by five technocrats as a partnership firm in 1973, today AEC has grown into
a public limited company, with full array of high quality and precision bearings for
various applications. From an outfit of 10 workers that manufactured cylindrical roller
bearings and deep groove ball bearings, with an outside diameter of up to 50 mm, today
AEC is a global force in the bearings industry. AEC manufactures almost the entire
range of rolling element bearings up to an outside diameter of 1800 mm.

At the core of AEC technical advancement is the involvement of the top management,
which itself endeavors and supports new developments. We are driven by the belief that
Indian technology has come of the age and is now well on its way to taking its place
under the sun of global excellence.

14
 History of Company

 1973

Austin engineering ltd. formed by five technocrats with partnership. Started

manufacturing needle roller cage assemblies with a manpower of 10 and a capital
investment of US $3,500.

 1975

Austin engineering ltd. started manufacturing cylindrical roller bearings, deep

groove ball bearings, and single-row spherical roller bearings.

 1978

Austin engineering converted Partnership firm into Private Limited Company.

Started manufacturing tapered roller bearings.

 1983

Austin engineering developed bearings for gear-box application for Premier

Automobiles Limited (FIAT). Developed case-carburized, specially heat treated
bearings for light and heavy commercial vehicles for TELCO.

 1985

Austin engineering converted private limited company into public limited company
and issued initial public offering (IPO).

 1986

Austin engineering Started the new plant in Patla with machinery and testing &
measuring equipment from Germany. Started exporting bearings to UK, USA, and
Italy.

 1990

Austin engineering developed double-row tapered roller bearings and spherical

roller bearings. Increased manufacturing capacity to 600 mm diameter.

15
 1994

Austin engineering developed flexible roller bearings. Increased manufacturing

capacity to 800 mm diameter.

 1997

Austin engineering developed multi-row cyindrical and tapered roller bearings for
Steel Mill applications. Developed flush ground angular contact ball bearings for
US and EU markets.

 1999

Austin engineering ltd. achieved ISO 9001 certification (TUV Rheinland).

 2000

Austin engineering ltd. established AEC Europe S.r.l in Milan, Italy to cater our
customers in the region

 2003

Austin engineering developed screw-down bearing (tapered roller thrust bearing).

Developed stainless steel bearings (grade 440C) for Atomic Energy Plant.

 2004

Austin engineering developed thin (constant) section bearings up to 18 inch

diameter. Incorporated Austin Engineering Company USA (a WOS of AEC Ltd.).

 2006

Austin engineering achieved ISO/TS 16949 certification (TUV Rheinland) for

design and manufacturing of all types of roller bearings.

 2008

Austin engineering developed cylindrical and tapered crossed roller bearings.

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 2010

Austin engineering developed large diameter bearing weighing 3,500 kg with

segmented cage.

 2012

Austin engineering ltd. achieved ISO 14001:2004 and OHSAS 18001:2007

certifications (TUV Rheinland).

 2015

Austin engineering developed super-high precision bearings for Space applications.

developed high precision axial-radial roller bearings.

 2017

Austin engineering established AEC GmbH in Schweinfurt, Germany to cater our

customers in the region.

 2019

Austin engineering developed super-high precision angular contact ball bearings for
aircraft applications.

17
 Company Vision and Mission

Vision:

To attain organizational excellence by developing and inspiring the true potential of

company’s human capital and providing opportunities for growth, well being and
enrichment.

Mission:

To create a value and knowledge based organization by inculcating a culture of learning

innovation and term working and aligning business priorities with aspiration of
employees leading to a development of an empowered, responsive and competent
human capital.

18
 Company Profile

Name of the Austin Engineering Company Limited

company:
Establishment: 1973

Type: Large Scale

Company Location: AEC Ltd.

Village: Patla
Taluka: Bhesan
Junagadh- 362 003,
Gujarat, India
Registered Office: Austin Engineering company Limited
District: Junagadh
Taluka: Bhesan
Post: Hadmatiya
Patla – 362 003
Phon Numbers: +91 2872 252223
+91 2872 252224
Fax Numbers: +91 285 2661505

E-mail Address: info@acc.com

Website: www.acc.com

Bankers: Bank of Baroda, Junagadh.

Auditors: J. C. Ranpura & Co.

Opp. Rajkumar College, Rajkot 360
001Gujarat.
Bankers: Bank of Baroda

19
Organization Structure:

20
 Board of Directors
Mr. N. C. Vadgama : Chairman & Executive Director

Mr. S. M. Thanki : Managing Director

Mr. R. N. Bambhania : Joint Managing Director

Mr. J. R. Bhogayta : Executive Director

Mr. S. V. Vaishnav : Non- Executive Director

Mr. B. R. Sureja : Non- Executive Director

Mr. K. J. Mehta : Non- Executive Director

Mr. D. B. Nakum : Non- Executive Director

21
 Achievements

 Backup roller bearing for sendzimir cold strip mills.

 Multi – row cylindrical roller bearing and four row tapered roller bearing for
roll neck applications in rolling mills.
 Flush ground single row angular contact ball bearings.
 Thin section series ball bearing 618... and 619… series.
 Engine crank and other application bearing for battle tanks and armored.
 Flexible roller bearings.
 ISO/TS certification for quality management.

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 Index

Sr. No Particulars Page No.

1 Introduction
2 Products
3 Raw Materials and Storage
4 Production Process
5 Production Capacity
6 Quality Control

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 Introduction

Production is the basic activity of all industrial units of the organization. Production is
concerned with the processes which convert the input into the output. The inputs are
various resources like raw materials, men, machine, methods, etc. and the outputs are
goods and services.

According to E. L. Brech “Production Management is the process of effective planning

and regulating the operations of that section of an enterprise which is responsible for
the actual transformation of materials into finished products.”

AEC’S manufacturing plant located in Patla in the state of Gujarat, India. Built over
8500sq.m, AEC manufacturing over 3 million bearings a year spread 6000 different
types, AEC have many machineries. AEC has continuously upgraded the skills, the
production capacities, the infrastructure, and the services.

25
 Products
Austin engineering limited manufacture large verity of bearing. Company mainly
produce four type bearing and further offer verities into it.

Which are as below

1. Ball Bearings 2. Roller Bearings

 Deep Groove Bearings  Cylindrical Roller Bearings

 Angular Contact Ball Bearings  Needle Roller Bearings
 Self- Aligning Ball Bearings  Tapered Roller Bearings
 Thin Section Ball Bearings  Spherical Roller Bearings
 Thrust Ball Bearings  Flexible Roller Bearings
 Angular Contact Thrust Ball  Crossed Roller Bearings
Bearings  Cylindrical Roller Thrust
Bearings
 Tapered Roller Thrust Bearings
 Spherical Roller Thrust Bearings

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 3. Super Precision Bearings 4. Plain Bearings

 Angular Contact Ball Bearings  Spherical Plain Bearings

 Cylindrical Roller Bearings
 Axial-Radial Roller Bearings

Products

1. Ball Bearing:

Ball bearings are simple and the most versatile rolling bearings used in a wide variety
of applications. Ball bearings are classified into radial and thrust ball bearings based on
their primary load carrying direction. Radial ball bearings are primarily designed to
carry load in the radial direction. However, depending on the design, ball bearings can
also support significant axial load in addition to radial load. The inner and outer ring
feature raceway grooves on the circumference that closely conform to the balls. Thrust
ball bearings are designed to carry load in the axial direction with no radial load
capacity. The rings feature raceway grooves on the opposing faces that closely conform
to the balls.

2. Roller Bearings:

Roller bearings are similar to ball bearings except that the rolling element is a roller
instead of a ball. The roller can be cylindrical, tapered, or spherical in shape with
matching raceway profiles on the rings or the washers. Since the contact area between
a roller and its corresponding raceway is more than the contact area between a ball and
its corresponding raceway, the load carrying capacity of a rolling bearing is generally
much higher than that of a ball bearing. Depending on the roller shape and dimensions,
rolling bearings are classified into cylindrical roller bearings, needle roller bearings,

27
tapered roller bearings, and spherical roller bearings. Roller bearings are further
classified into radial and thrust bearings based on their primary load carrying direction

3. Super Precision Bearings:

AEC super precision bearings are designed and manufactured using top-of-the-line
engineering, extensive manufacturing expertise, as well as stringent quality assurance
systems. AEC super-precision bearings are designed and manufactured to provide high
dimensional and running accuracy, high speed and optimized load carrying capacity,
high rigidity, low frictional losses, low noise and vibration, and prolonged service life.

Plain Bearing

Spherical plain bearings have matching sphered inner ring and outer ring without
rollers. The center of the spherical curvature on the inner ring and the outer ring
coincides with the bearing center and therefore, are internally self - aligning. These
bearings are suitable for applications where the shaft relative to the housing bore is
prone to angular misalignments and the relative speed of rotation is low.

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 Raw Material and Storage

Raw Material:

 Rasis
 CRS C2
 Still Sheet
 Roller
 Shield
 Plastic cage
 Pipe
 Still ball
 Races
 Steel tube

Raw Material Storage:

Man material, money etc. are the basic elements required to produce any product.
Among them, materials i.e. raw material is the thing by which the whole production
process stats. So the procurement of raw material plays an important role here.

Austin Engineering Company Limited. It purchases its raw material from domestic as
well as international units. The raw materials are bought from different places of
Junagadh, Rajkot, Jaipur All the purchases raw materials are purchase with same order
of quantity with the different suppliers.

29
Austin Engineering Company Limited to lot of stock available 3 to 4 lakh finished
goods in the warehouse. Company available extra parts are available for suitable
machineries in the company.

Austin Engineering Company Limited is to maintain advanced planning system. In

austin engineering there is one year raw material purchase in advance.

Production Process

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 Production Capacity

Production capacity is defined as the maximum production rate of a facility or a plant.

Capacity indicates the ability of a firm to meet market demand. Production capacity of
Austin Engineering Company Ltd. is as follows.

 Installed capacity

At the time of installing plant, the capacity that is installed is called installed capacity.
It is determined by on the basis of capacity as indicated by suppliers plant and
machinery in technical quotient. Austin Engineering Company Ltd.’s installed
capacity: 3500 pieces per day. And production capacity of monthly is 2,00,000.

 Utilized capacity

This is the actual output achieved during a particular time period. The actual output
may be less than the rated output because of short range factors such as actual demand,
employee absenteeism, labour inefficiency and low productivity levels. Austin
Engineering Company Ltd.’s utilized capacity 3500 pieces per day. And production
capacity of monthly is 2,00,000. Austin Engineering Company Limited have 300
machineries and 200 instruments.

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 Quality Control
Quality defined as the sum total of features of product which influence its ability to
satisfy given demand. Basically the quality of product is not defined by manufacturing
firm it is determined by customers. The quality of product is a consumers perception of
the degree to which the products meet his/her expectation.

Austin engineering follows government rules & regulations as well follows

international standard organization (ISO) rules for quality management. Company
achieve ISO certificates for quality management. Company achieve 4 ISO certificates.
In Austin engineering used daily machinery maintainance like daily oiling in machinery
and checking its parts. Company has many spare parts of machinery if any part of
machinery is destroyed so that workers immediately change that part. So that
production run without any stoppage.

ISO certificate of company:

 ISO 9001:2015 – Design and manufacture of cylindrical roller bearing and

antifrication bearings.
 ISO 14001:2015 – Design and manufacture of antifrication rolling bearing and
components.
 IATF 16949:2016 – Design and manufacture of cylindrical roller bearings.
 ISO 45001:2018 – Design and manufacture of antifrication rolling bearing and
components.

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 Index

Sr. No. Particulars Page No.

1. Introduction

2. Classification of Employees

3. Recruitment and Selection

4. Training and Development

5. Welfare Activities

34
 Introduction

Organizations are made up of people and functions through people. Without people
organization cannot exist. Among the various factors of production like money,
material, men and machines in an organization, human resources is considered to be the
most important factor. This is because the efficient use of other physical resources like
land and capital is dependent on how human factor is used on various operations.

According to Michel J. Jucius, “Human resource are a whole consisting of their inter
– related, inter – dependent, and interacting phycological, psychological, sociological,
and ethical components”.

Classification of Employees

There are 524 employees are working in the Austin engineering limited. Classification
of the employees are as below.

35
 Office Staff 46

Engineer 28

Quality Department 76

Production Department 338

Others 36

Recruitment and Selection

 Recruitment:

Recruitment can be defined as the process of finding out prospective candidates for
filling actual or projected vacancies in an organization. Recruitment enables the
organization to obtain the number and types of individuals required for its continuous
working. Normally it is an effort to gain the interest of the candidates looking for jobs,
find the candidates interested in the job and create a group of potential employees, with
the help of which the management can choose the suitable person for the job.

According to Edwin B. Flippo, “Recruitment is the process of searching for

prospective employees and stimulating them to apply for jobs in the organization”.

Austin engineering limited recruit candidate based on resume of the candidate for
suitable post of the recruitment.

36
  Selection:

Selection refers to a process in which individuals are picked-up from the pool of job
applicants possessing the required knowledge and skills for the job to be performed in
an organization. Selection is a process which includes various phases such as exploring
the applicants in order to check whether they are suitable for the job or not, picking-up
the right ones from the pool of applications and eliminating the rests.

According to Terrie Nolinske, “Selection is the process of making a hire or non-hire

decision regarding each applicant for a job”.

 Recruitment & Selection of AEC Ltd.

 Quality Department – BE
 Office Staff – Based on graduation qualification
 Manager – Based on Supportive Skill
 Production Department – Based on Resume
 Others – Based on S.S.C and H.S.C qualification
 Based on required Skills

Training and Development

Training can be defined as the systematic attempt to enhance the specific skills, desired
behaviour, and knowledge of employee which are necessary for performing a job
effectively. Employee training begins soon after orientation process. It is for a short
time period and it is for non – managerial personnel. It is essential for growth of the
organization as well as for the employees.

According to Dale S. Beach “Training is the organized procedure by which people

learn knowledge and skill for a definite purpose.”

AEC Ltd. No special training program is conducted because, they select mostly trained
and experienced employees. But, in case of fresh candidate on the job training is
provided by senior officer and experienced manager. This company gives the training
duration of six month by the experts of experienced engineers. This company provide
only on the job training to middle level and bottom level employees. Besides the

37
seminars and also held and group discussion is also arranged for the top level officers
for the solving particular problems.

Welfare Activities
The term employee or labour welfare is a broad term which comprises of numerous
services, facilities and benefits that the employer offers to the employees. It includes
joy, comfort, contentment, protection and growth of human capital. It helps employees
to set minimum desirable standards like housing, health, clothing, education, job,
insurance and fun for themselves.

Autin engineering limited welfare activities are as below

38
 Welfare Activities:
 Free transportation
 Loan facility with 0% interest
 Employee child education allowances
 Housing allowances
 Medical allowances
 Gratuity
 Sports facility
 Canteen facility
 Leave facility
• 18 P.L.
• 12 C.L.
• 8 M.

 Time Keeping System:

1st shift: 6:00A.M. TO 2:00P.M. Break: 10:00A.M. TO 10:30A.M.

2nd shift: 2:00P.M. TO 10:00P.M. Break: 6:00P.M. TO 6:30P.M.

General shift: 8:00A.M. TO 4:00P.M. Break: 12:00P.M. TO 12:30P.M.

Office shift: 10:00A.M. TO 6:00P.M. Break: 1:00P.M. TO 1:30P.M.

39
 Index

Sr. No. Particulars Page No.

1. Introduction

2. Production Planning and Pricing Policy

3. Market Segmentation

40
 4. Channel of Distribution

5. Competitors

Introduction

Marketing is the performance of the business activities that directs the flow of goods
and services from producer to the consumer in the process of distribution.

According to CUNDIFF and STEEL, “Marketing is the managerial process by which

products are matched through which consumer is enable to use and enjoy the product.”

According to Paul mazur, “Marketing as the creation and delivery of standard of leaving
to the society.”

41
Here in Austin engineering limited, there is a separate marketing department at head
office. The study of marketing management is essential for concern responsible officer
or every organization for successful operation because without effective management
of marketing, organization goal cannot be achieved.

In Austin engineering limited marketing department is managed by experience

manager, officers and staff. There are presently two divisions for marketing.

 Market Division
 Sales Division

Marketing is a social and managerial process that involves identifying unsatisfied need
or wants of consumer, producing goods or services to satisfy those needs or wants,
determining appropriate price, promotion and distribution and maintaining relation with
market.

In today’s modern era each & every firm gives priority to have a different marketing
department. Marketing involves the activities such as advertising, publishing, market
research, distribution aspect, sales promotion etc.

Production Planning and Pricing Policy

Production Planning:

The base of any product before launching into market is its marketing strategies, which
depends on the analytical survey of the similar kind of product with the competitive
companies.

42
In Austin engineering limited whether they want to take any decision regarding
products, they always perform product research and accordingly they formulate
strategies.

A well planned product strategy depends on the analytical data from the market which
in turn give the benefit to both the customer and the sellers along with the stock holder
of the company, in consideration.

Pricing Policy:

Price is the exchange value of the product and services expressed in terms of money.
Decision about pricing is considered important aspect for success of marketing of any
product for an organization. Various factors are taken into consideration while pricing.

Austin engineering used various pricing policy according to customer demands.

 Cost Plus Pricing

 Estimating Demand
 Competition
 Cost of Production
 Distribution Policy

Market Segmentation

Marketing segmentation is based upon market-oriented strategy and philosophy

segmentation gives special emphasis on the demand side of the market.

“Market segmentation is a method of achieving maximum market response from

limited marketing resources.”

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Market consists of buyers, and buyers differ in one or more respects. They may differ
in their wants, purchasing power, geographical locations, buying attitudes and buying
practices. Any of the variables can be used to segment market.

It is process of dividing the total market for goods and services into small groups, such
that the members of each group are similar with respect to factors that influence
demand.

In Austin engineering they have selected target market to satisfy the needs of customers.
They have divided the market in different division.

 Indian defense department

 Steel plants and steel rolling mills
 Power plant
 Indian railways
 Process industries
 Oversea customer in the USA, the UK

Channel of Distribution
Distribution channel is the combination and sequence of agencies through which
one or more of marketing flows move. The most important factor for channel choice
and channel management is economic criteria i.e. cost & profit. There are two types
of channels.

 Direct
 Indirect

In Austin engineering limited they are producing bearing & i.e. industrial goods. So in
this case, direct channel will be more effective than indirect channel. So the company
use direct channel of distribution & i.e. manufacturer to consumer.

Competitors

44
Competition has increased in almost every field now days. A healthy competition may
beneficial but cut throat competition may create hazardous effect on the company.
Competition affects the customers, sales figures & other aspects of marketing.

As far as Austin engineering limited faces no close competition because it is having the
largest range of bearings in Asia. The competitors are:

 SKF
 FAG
 KOYO
 RHP
 NTN

SWOT Analysis
Here now see strength, weakness, opportunity, threat (SWOT) about Austin engineering
limited.

Strength (S):

 Skilled employees experience based

45
  In house whole facilities
 Produce with low batch quantity
 In house bearing tax
 Quick decision
 Strong customer focus
 Combination of young & old age employees
 Strong quality control
 Recyclable product
 Customer retention
 Engineering manufacturing process so no environment issue

Weakness (W):

 High process time

 Minor accident during process
 High production cost
 More numbers of manufacturing process for single job
 Process cost increase
 Price reduction

Opportunity (O):

 More demand from export market

 High growth potential
 Quick responses to customer needs
 To increase domestic sales contribution
 Reduce minor accident

Threat (T):

 Plant at remote place location

 No fully autometic for manufacturing process
 More development time
 More time require for new customer addition
 Waste generation during process

46
 Air pollution
 Heat generating

Finance Department

47
 Index

Sr. No. Particulars Page No.

1. Introduction

48
 2. Source of Finance

3. Capitalization

4. Management of Fixed Assets

5. Responsibilities

Introduction

All the functions of management like personnel, production; marketing etc. requires
finance for implementation. Financial management is that activity which is concerned
with planning, improving and controlling of the firms financial resources.

49
Prof. DHAVAL has rightly said “Money is the pivot around which all economic
activities cluster”

Finance management is that management activity which is concern with planning and
controlling of the firm’s financial resources.

Finance function means procurement of find and their effective utilization in the
business. In other word, the finance function is concerned with solution of three major
problem relations to the financial operation of the firm and i.e. investment, financing
and dividend decision.

We know from the above fact that all activities require finance for their
implementations. So finance function is the most important for every organization.

In Austin engineering limited there is a separate financial department and manage all
the financial activities like,

 Estimating the requirements of capital for company.

 Distribution of the profit.
 Determining the capital structure.
 Find out new sources of finances.
 Working of cash and bank management.
 Control overall financial activities.
 Recording of transactions.
 Maintenance of accounts.

In Austin engineering limited the capital is procured by issuing equity shares. The
authorized capital is 40,00,000 equity shares of Rs. 10 each. Out of which issued,
subscribed and paid up shares are 35,11,250 equity shares of Rs. 10 each fully paid up.

“AECL” operates primarily in bearings and related components segments which are
used in a wide range of applications across industries. The government policy appears
to be on positive front. The macro environment has improved. Your company has been
consistently practicing prudent finance and working capital management. The strong
focus on working capital and liquidity management has helped timely generation of
sufficient internal cash flow to invest in long-term strategic objectives of the company.

50
 Source of Finance

Financial management involves the three important areas: investment decision,

financing decision and dividend policy decision. Among them, the investment decision
is the first step to be taken up by the owners. This involves the decisions regarding the
procurement of funds. So it is necessary to study the different sources of finance
available. This decides the cost of capital. So the sources you select to procure the funds
should be such that they would minimize the cost of capital. The terms and conditions
of different institutions should be studied and compared while taking the decision about
borrowed capital. The balance between owned and borrowed capital should also be kept
in mind at that time.

At the initial stage of business firm, generally capital is brought by the owner and some
outside institutions, banks etc. But when the business starts growing, the reinvestment
of profits becomes also an important source of capital.

Here, Austin is a public limited company. So it is having share capital as a major source
of finance. Some borrowed capital is also brought in the company. Moreover, now the
retained earnings have also become an important source of finance for the company.
The sources of finance are as under:

 Equity Share Capital

 Bank of Baroda
 ICICI Bank
 Retained earnings
 HDFC Bank
 CHOLAMANDALAM DBS Fin. Ltd.

Capitalization
Capitalization means total among of long term funds available to the company which
includes shares and debentures, issued by the company and also long term loans taken
from financial institutions. As far as earned profits remained to be distributed are
concerned or it is necessary to classify them as either capital surplus or revenue surplus.
The amount of capitalization should be only that much which can be justified by the
profits and by the normal rate of return for the industry.

51
  Over Capitalization:
A company is said to be over capitalized if its earnings are less in relation to its capital
investment. The company may be having a low earning capacity. Thus, it results in over
capitalization.

 Under Capitalization:
A company is said to be undercapitalized if its earnings are more in relation to its capital
investment. Under capitalization is an indication of effective and proper utilization of
funds employed in the business. Under capitalization indicates sound financial position
and good management of the company. Austin’s earnings are Rs. 3, 73, 10,646 and
investment is Rs. 12, 47, 61,492. Thus, earnings are less than investment. So we can
say that the company is over capitalize.

Management of Fixed Assets

Assets, representing economic resources, are the valuable possessions owned by the
firm. These possessions owned by the firm should be capable of being measured in
monetary terms. Assets are of two types:

 TANGIBLE ASSETS:
They are the assets which have physical existence and generate goods and services. It
includes land, machinery, equipment, furniture etc.

 INTANGIBLE ASSETS:
They are the assets, which do not generate goods and services directly and have no
physical existence. It includes patents, copyrights, goodwill, trademarks etc.

Responsibilities
 Responsible for management to solve the week points of balance sheet.
 Responsible for reporting monthly report to MD of the company.
 Responsible for billing of quarterly with GST.
 Responsible for payment.
 Responsible for management for account fulfilment.

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