PRESENTED BY
RAKESH KUMAR BARAL

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EXECUTIVE SUMMERY
The major objective of the study is to proper understanding the working capital of NALCO & to suggest measures to overcome the shortfalls if any.
Funds needed for short term needs for the purpose like raw materials, payment of wages and other day to day expenses are known as working capital. Decisions relating to working capital (Current assets-Current liabilities) and short term financing are known as working capital management. It involves the relationship between a firm’s short-term assets and its short term liabilities. By definition, working capital management entails short-term definitions, generally relating to the next one year period.
The goal of working capital management is to ensure that the firm is able to continue its operation and that it has sufficient cash flow to satisfy both maturing short term debt and upcoming operational expenses.
Working capital is primarily concerned with inventories management, Receivable management, cash management & Payable management.
Inventories management at NALCO:
NALCO is a large scale manufacturing company involved in mining of Bauxite and production of Aluminum. Therefore, it has to maintain large quantity of inventories at production units for its smooth running and functioning.
Cash management at NALCO:
NALCO has been accumulating huge cash surpluses over last several years, which enables the organization to maintain adequate cash reserves and to generate required amount of cash.
Receivables management at NALCO:
NALCO has set up its marketing office at all metro cities in India i.e. Mumbai, Kolkata, New Delhi, Chennai, Bangalore, and Pondicherry. This marketing office obtains sales order from Aluminum users in India as well as globally. On the basis of order received for different products it marks production planning of different i.e. Ingot sow ingot, Billets, Wire etc.
INTRODUCTION
Working Capital:-
The life blood of business, as is evident, signified funds required for day-to-day operations of the firm. The management of working capital assumes great importance because shortage of working capital funds is perhaps the biggest possible cause of failure of many business units in recent times. There it is of great importance on the part of management to pay particular attention to the planning and control for working capital. An attempt has been made to make critical study of the various dimensions of the working capital management of NALCO, a Star Trading House with NAVRATNA Status.
Decisions relating to working capital and short term financing are referred to as working capital management. These involve managing the relationship between a firm's short-term assets and its short-term liabilities. The goal of Working capital management is to ensure that the firm is able to continue its operations and that it has sufficient money flow to satisfy both maturing short-term debt and upcoming operational expenses.
Objective of the study:-
The following are the main objective which has been undertaken in the present study:
1. To determine the amount of working capital requirement and to calculate various ratios relating to working capital.
2. To make an item wise study of the components of the working capital.
3. To suggest the steps to be taken to increase the efficiency in management of working capital.
Place of study:-
The project study is carried out at the Finance Department of NALCO Corporate office Situated at Bhubaneswar, ORISSA. The study is undertaken as a part of the PGDM curriculum from 02 MAY 2009 to 02 JULY 2009 in the form of summer placement.
Study design and methodology:-
Two types of data are collected, one is primary data and second one is secondary data. The primary data were collected from the Department of finance, NALCO. The secondary data were collected from the Annual Report of NALCO, NALCO website, etc.
Limitations:-
There may be limitations to this study because the study duration (summer placement) is very short and it’s not possible to observe every aspect of working capital management practices.
INDIAN ALUMINIUM INDUSTRY
Aluminium Industries in India is one of the leading industries in the Indian economy. The growth of the aluminum Metal industry in India would be sustained by the diversification and exploration of new horizons for the industry. India has huge deposits of natural resources in form of minerals like copper, chromite, iron ore, manganese, bauxite, gold, etc. The India aluminum industry falls under the category of non iron based which include the production of copper, tin, brass, lead, zinc,aluminum,andmanganese.
The main operations of the of the India aluminum industry is mining of ores, refining of the ore, casting, alloying, sheet, and rolling into foils. At present, Hindalco and Nalco are one of the most economical in the production of aluminum in the world. For the sustenance of the growth the aluminum industry in India has to develop research and development units to assist the production and improve on the quality measures to keep a stringent quality control.
The India aluminum Metal Industries sector in the previous decade experienced substantial success among the other industries. The India aluminum industry is developing fast and the advancement in its technologies is boosting the growth even faster. The utilization of both international and domestic resources was significant in the rapid development of the India aluminum industry. This rapid development has made the India aluminum industry prominent among the investors. The India aluminum industry has a bright future as it can become one of the largest players in the global aluminum market as in India the consumption is fairly low, the industry may use the surplus production to cater the international need for aluminum which is used all over the world for several applications such as aircraft manufacturing, automobile manufacturing, utensils, etc.
The per capita consumption of aluminium in India is only 0.5 kg as against 25 kg. In USA, 19 kg.in Japan and 10 kg. In Europe , Even the World’s average per capita consumption is about 10times of that in India. One reason of low consumption in the country could be that consumption pattern of aluminium in India is vastly different from that of developed countries. The demand of aluminium is expected to grow by about 9 percent per annum from present consumption levels. This sector is going through a consolidation phase and existing producers are in the process of enhancing their production capacity so that a demand supply gap expected in future is bridged. However, India is a net exporter of alumina and aluminium metal at present.
ALUMINIUM-STRUCTURE
• The aluminium industry in India can be classified as:
(a) The primary producers who produce ingots and billets (primary form of aluminium) using bauxite.
(b) The secondary producers who add value to the ingots and billets to produce semi-fabricated products.
• At present there are only five companies in the primary aluminium market viz. Hindalco, Indian Aluminum (Indal), Madras Aluminum (Malco), National Aluminum (Nalco) and Bharat Aluminum (Balco). The former three are private sector companies while the latter two are government owned.
• All the primary producers have integrated forward into the manufacture of high value semi-fabricated products like rods, rolled products, extrusions and foils.
Regulated till 1989
o Until 1989, the Aluminum Control Order (ACO) required all domestic manufacturers to ensure that atleast 50% of their ingot production was electrical grade, for use by the transmission power industry. The government fixed ingot prices on the basis of a Retention Pricing Mechanism, taking into consideration the average retention prices of all producers and a minimum return on equity.
o The above control resulted in a skewed product mix and shortages of aluminum for other sectors. The problem was further compounded by the vulnerable financial position of State Electricity Boards (the main users of electrical grade aluminum) and high import and excise duties. The producers resorted to inflated prices for other types of aluminium to compensate for the disadvantages they suffered because of this regulation.
o The ACO was scrapped in 1989 and in 1991 the government lifted restrictions on capacity additions resulting in a free market environment.
Aluminium – Inputs
• The aluminium industry in India can be classified as: Captive power, ample bauxite reserves, coupled with cheap labour costs make Indian companies amongst the most competitive aluminium producers globally.
• The main raw material for the manufacture of aluminium includes bauxite, caustic soda, calcined petroleum coke, coal tar pitch, and LS/FS furnace oil. The production process for manufacture of aluminium is briefly outlined below.
• The mined bauxite ore is mixed with caustic liquor and is refined to produce alumina. This is then smelted (through electrolysis in a smelter) to obtain aluminium. Depending on the quality of bauxite, 2.5 – 3 tonnes are required for manufacture of 1 tonne of alumina. In turn, 2 tonnes of alumina are required for manufacture of 1 tonne of aluminium.