1. HISTORY OF THE COMPANY
INCORPORATION
A company is an association of both natural and artificial persons
incorporated under the existing law of a country. In terms of the Companies Act, a
company means a company formed and registered under the companies Act, 1956
or under the previous laws relating to comprises companies [section 3(1)(i)]. In
common law, a company is a “legal person” or “legal entity” separate from, and
capable of surviving beyond the lives of its members.
Any seven person or more persons, or where the company to be formed will
be a private company, any two or more persons, associated foe any lawful purpose
by subscribing their names to memorandum of association or otherwise complying
with the requirements of the companies act, 1956, in respect of registration, from
an incorporated company.
INCORPORATION OF CARBORUNDUM UNIVERSAL LIMITED
CUMI was incorporated in the year 1954 as a tripaetie collaboration between
Murugappa Group, the Carborundum Co., USA and the Universal Grinding Wheel
Co. Ltd., U.K.It was incorporated under the Indian Companies Act, UII of 1913,
and that the company is limited. The CUMI Company manufactured bonded
abrasives and coated refractories and ceramics. The company commenced business
in sixth day of December 1954. In the year 1974, the revenue of CUMI increases
by 78 million to 337 million.
With state-of-the art facilities and strategic alliances with global partners,
CUMI has achieved a reputation for quality and innovation.CUMI is one of the
five manufacturers in the world with fully integrated operations that include
mining, fusioning, wind and hydro power stations, manufacturing, marketing and
distribution.
Almost all of CUMI's ten manufacturing facilities have received the ISO
9001:2000 accreditation for quality standards. A well connected marketing and
distribution network of offices and warehouses in India and abroad ensure that

2. service to customers is given prime importance. CUMI's products are being
exported to 43 countries spread across North America, Europe, Australia, South
Africa and Asia.
OBJECTS
 To carry on the business of manufactures of abrasives in all the branches
 To carry on the business of manufactures, dealers and importers, exporters,
merchants, distributors and stockiest of coated abrasives, bonded abrasives,
Refractory materials and all materials, goods and ingredients used or that
could be used in the manufacture or processing of abrasives or refractory of
all kinds.
 To manufacture, sell or acquire air/water purification plants/machinery of all
kinds.
 To manufacture systems and materials for surface treatment and coating and
to use in commercial exploitation.
 To carry on the business of manufacture and sale of optical and ophthalmic,
ceramics and its allied products, organic and inorganic colouring agents,
carbon and graphite products and to do business in these as agents, traders or
otherwise.
 To establish and operate electric furnaces of all kinds.
 To carry on the business of mining in all its branches.
 To carry on the business of carriers, merchants, stockiest, distributors,
importers, exporters and general and commission agents of goods and
merchandise of all descriptions.
 To establish any workshop, factory, plant, machinery or other equipment
necessary for any of the process or business of the company.
 To sell, exchange, lease, mortgage, charge, develop, dispose of or otherwise
deal with the undertaking of the company or any part thereof upon such
terms and for such considerations as the Company may think fit.
 To employ experts to investigate and examine into the condition, prospects,
value, character and circumstances of any business concerns and
undertakings and generally of any asserts, property or rights.

3.  To advance and to lend money either with or without securing and generally
to such persons and upon such terms and conditions as the company may
think fit.
 To amalgamate with any other company or companies having objects
altogether or in part similar to those of this company.
 To open or keep a register or registers in any country or countries where it
may be deemed advisable to do so and allocate any number of shares in the
company to such registers or registers.
 To draw, accept and make, and to endorse, discount and negotiate
promissory notes, hundies, bills of exchange, bills of loading and to allocate
any number of shares.
 To improve, manage, work, develop, lease, mortgage, abandon or otherwise
deal with, all or any part of the property, rights and concessions of the
company.
 To place, to reserve or to distribute dividends or bonus among the members,
or otherwise to apply, as the company may from time to time think fit, any
moneys received by way of premium on shares or debentures issued at a
premium on shares and debentures.
 To do all or any of the above things and all such other things as are
incidental or may be thought conducive to the attainment of the above
objects.
And it is hereby declared that the word ‘company’ in this clause shall be
deemed to include any authority, partnership or other body of persons
whether incorporated or not and whether domiciled in India or elsewhere.
SUBSIDARY COMPANIES
 CUMI American Inc.
The principal business of this organization is to marketing a abrasives
products in the USA. Net income improved to US $27,512 (1.4million) from
US $ 10,170(0.5million).

4.  CUMI Australia Private Limited
The company acquired a 51% stake in CAPL, a company engaged in
the design, marketing and appreciation of industrial ceramicsand ceramiclined equipment used in the coal processing industry. Since CAPL procures
a significant requirement of industrial ceramics from CUMI, the investment
is expected to help CUMI increase its presence in Australia. For the year
ended 31st March 2004, the Company reported total revenues of AU$ 3.73
million (Rs. 123 million) and a profit after tax of AU$ 0.44 million (Rs. 20
million).
 Sterling Abrasives Limited
Turnover for the year under review was Rs. 105 million (previous
year Rs. 101 million). Profit after tax improved from Rs. 13 million to Rs.
15 million through cost reduction and enhanced operating efficiencies. A
dividend of 70 percent has been proposed for the year.
 CUMI Canada in
The Company was set up in 2006 to focus mainly for the Canadian
and North American markets. Together with CUMI America, the Company
serves as a Product Availability Point (PAP) for the CUMI's products for the
North and South American markets.
 CUMI Middle East FZE
The Company was incorporated in Dec. 2006 in RAK Free Trade
Zone, Ras Al Khaimah, UAE. It has been set up as a Product Availability
Point (PAP) to serve the African, Middle East and Russian markets. The
company has commenced operations in April 2006

5.  DAO Volzhky Abrasives Works
(VAW) established in 1961 is the only producer of silicon carbide in
Russia, the largest producer of silicon carbide in Europe and the
major producer of vitrified bonded abrasive tools in Russia and CIS.
INTERNAL MANAGEMENT
Internal management means when management controlled internally by the
organization. The aria of internal management is top management to lower
management that means only organization’s staff are main member of that
management. Outer people of the organization are not engaged in the internal
management. Sic racy is one of the most important factors of internal management.
BOARD OF DIRECTORS
Mr.M.M. Murugan
Chairman
Currently- chairman of Tube Investment of India Ltd,
Director Mahindra & Mahindra Ltd,
Infotech enterprises.
Mr. Subodh Kumar Bhargav
Non executive of Tata Commmunication ltd, and
Warstile India, director of Tata steel, SRF Ltd,.
Mr. Sridhar Ganesh
Non executive Director
Director- HR, Murgappa.
Mr.shobanthalore
Non executive director

6. Director of Alkyl Amines Chemical Ltd.,
Mr. M. Laskshminarayan
Non executive Director,
Director of Rane(Madras) Ltd.,
Mr. Sanjay Jayavarthanavelu
Non executive Director
Managing Director of Lakshmi Machine Works Ltd.,
Mr. K. Srinivasan
Managing Director
CEO of the company since Jan 2005.
Management committee
CUMI management committee steers the organization to meet overall
objectives within the boundries set by the board of director. The committee
comprises of
K. SrinivasanManaging director
V Ramesh
President,Abrasives.
R Sridharan
Chief financial Officer
M Muthiah
Senior Vice President
R Rajagopal
Senior vice President- Refractories
Deepak dorairaj
Senior Vice president- Abrasives
N Anathaseshan
Senior Vice president- Electominerals

7. GROWTH AND DEVELOPMENT
1954
The company was incorporated at Chennai. The company manufacture bonded
abrasives and coated abrasives, refractories, grains calcined bauxite etc.
1962
The company issued a 20000 no of Equity shares at Rs.25 each.
1974
The revenue of the CUMI increases by 78million to 337 million. In 1984-1993,
CUMI started a silicon carbide plant at koratty& Refractories plant Ranipet, Hosur.
In 1996, a new facility for manufacture of new generation monolithic for steel
plants was being established at Vishkapatnam.
1992
The company acquires 4740 preference share and 124800 equity shares WENDT
(India) and 10 lakhs unit of Unit Trust of India under the 1964 scheme.
1994
The Company commissioned a wind farm of 2 MW capacity at Perungudi and
Tamilnadu
1996
The new facility for manufacture of new generation monolithic for steel plants was
established at Visakhapatnam and Murugappa Morgan Thermal Ceramics Ltd. A
Subsidiary in which the Company held 70% shareholding has implemented a new
project for 3000 tons Spun Ceramic Fiber.
1997
The Ranipet unit manufacturing super refractories received the ISO
9002certification.

8. 1998
The Company established a wholly owned subsidiary in the U.S.A by name CUMI
America Inc. for marketing the Company's products in the American markets.
2003
The Company has acquired a 51% stake in CUMI Australia Pty Ltd
2005
Carborundum Universal Ltd sets up 100% subsidiary in Ras Al Khaimah U.A.E
for marketing its products namely Abrasives Ceramics Refractories and
Electrominerals in Middle East.
2006
Carborundum Universal enters into a Joint Venture with CEEB to take a 49%stake
in JingriYanjiao China
PRODUCTS AND SERVICES
PRODUCTS
The company pioneered the manufacture of Coated Abrasives, Bonded
Abrasives, Super Refractories, Electro minerals, Industrial Ceramics and Ceramic
Fibers.
The following Pie-chart shows the percentage of products produced by
CUMI.

9. percentage
Electro
Minerals
12%
Ceramics
18%
Abrasives
70%
ABRASIVES (70%)
An Abrasive is a hard, tough and wear resistant substance for grinding and
polishing operations. Manufactured through a complex and high technology
process, are used in metal removal cutting and finishing operations in almost all
industries. These can be
Coated Abrasives
Manufactured by a depositing grains over a backing materials like cloth or
paper and are used in light polishing applications, auto ancillaries and white goods.
Bonded Abrasives
These are divided into vitrified, retinoid and rubber products and
manufactured by mixing grains with bonding material, molding them to shape and
then subjecting the output to firing or baking in high temperature and finishing the
same to desired dimensions. It is mostly in the form of wheels but also in other
shapes such as segment, sticks etc.,
ELECTROMINERALS (12%)
CUMI Electro minerals group offers sintered aluminum order and silicon
carbide grains as the major line upon completion of acquisition in South Africa.

10. Electro minerals are used as basic raw material in the manufacture of abrasives
and refractories. They are also used for surface preparation and in tile and paint
industries.
CUMI range of electro minerals includes silicon carbide, brown aluminum
oxide and white aluminum oxide. It also manufactures mullite, bubble alumina and
certain other specialties in smaller quantities.
On a consolidated basis, captive sales to the abrasives and refractory units
account for about 15 per cent of the output of this business. The electro minerals
business operates several manufacturing facilities which have been certified for
process quality and environment protection.
CERAMICS (18%)
The Ceramics product group offers products which harness the heat
resistance / containment, wear resistance and insulation properties of ceramics and
also corrosion resistance properties of various materials.
The products lines are
Industrial ceramics materials are non-metalic, inorganic compounds.
Industrial ceramic products made mostly of high alumina. They have high melting
point, low wear resistance, and wide range of electrical properties.
SERVICES
The financial services arm of the CUMI Group is spearheaded by the
Cholamandalam Investment & Finance Company, a leading industry player
providing holistic financial services including vehicle finance, capital market
finance, mutual funds, securities broking, depository and distribution services,
while Cholamandalam MS Insurance provides insurance services.
The CUMI Group's IT services arm is comprised of two companies - Net
Access and Wend soft. Net Access provides quality IT infrastructure services and
customized software solutions to enterprises seeking to outsource their IT
requirements. Wend soft, part of Wendt India, has introduced two excise
management software packages and markets two exclusive software packages.

11. Additionally, GMD, a business division of Parry Enterprises India Limited,
forms the marketing services arm of the CUMI Group, marketing a range of food
products and ingredients. It has tie-ups with various Indian and multinational
companies for marketing their products, which find extensive application in enduse segments such as biscuits, dairy, bakery, processed foods and confectionery.
AWARDS
Frost and Sullivan India Manufacturing Excellence Awards (IMEA)
recognizes and applauds efforts of companies towards excellent to world class
manufacturing status. Based on the findings of the assessment and
recommendation of the panel, CUMI site at Thiruvottiyur was chosen for a special
Award for Growing through managing change. Out of the 37 companies audited,
17 companies were chosen for the award. The Award was given in a glittering
function on the 8th December 2004 at Hotel TajLands end, Mumbai.
Under Cost Management 03-04, abrasives division of CUMI gets National
Recognition in field of cost management from ICWAI. The award was handed
over by the Hon’ble Minister of Company Affairs Mr.Prem Chand Gupta. On
behalf of CUMI Abrasives, the award was received by Mr.R. Narayanan, DGM
Finance.
ORGANISATION STRUCTURE
“Structure is the established pattern of relationships among the component
parts of the organization. In this sense, Organization structure refers to the network
of relationships among individuals and positions in an organization.
-Kast & Rosenzweing.
The term organization can be studied as a structure and also a process. In a
static sense, organization is a structure. A group of people functions within the
structure and try to accomplish certain objectives. Organization is a structure for
the conduct of business activities efficiently. The typically hierarchical
arrangement of lines of authority, communications, rights and duties of an
organization. Organizational structure determines how the roles, power and
responsibilities are assigned, controlled, and coordinated, and how information
flows between the different levels of management.

12. A structure depends on the organization's objectives and strategy. In a
centralized structure, the top layer of management has most of the decision making
power and has tight control over departments and divisions. In a decentralized
structure, the decision making power is distributed and the departments and
divisions may have different degrees of independence.
IMPORTANCE
Importance of organization structure involves assisting business owners, CEOs,
and entrepreneurs to conceptualize, visualize, and construct a hierarchical system
to be implemented into their structure. For example, the building blocks of
organizational structures include a chain of command, span of control,
departmentalization, distribution of authority, and organization height. The
importance of functional organizational structure is to provide order and
accountability to an organization.
 Chain of command
An organizational structure involves a chain of command which determines
and defines: job positions, who makes the decisions, and who's accountable
for various duties.
 Span of Control
Span of control determines and quantifies the actual amount of employees a
manager supervises.
 Departmentalization
Departments within an organization structure are sections of the structure
divided into functional divisions (such as the Sales Department) relevant to
specific tasks. Determining what activities, tasks, and talents are to be
grouped to best achieve an origination's objective is called the
departmentalization process.

13.  Distribution of Authority
Distribution of authority determines if decision-making authority is
concentrated among a few high-level figures commonly seen in bureaucratic
organizations or is the authority shared and distributed throughout a variety
of departments working closet to the their corresponding tasks.
 Organization Height
Organization height defines how many departments, divisions, and layers
there are between the highest levels and the lowest levels of an organization.
ORGANIZATION STRUCTURE
The line of authority moves directly from the top level to the lowest level in
step by step manner. It is in the position of straight and vertical.
The Managing Director issues orders to General Manager. There after the
general manager issues instructions to various work managers. In this manner, the
order and instructions passed to the workers at the lowest level. Thus it moves
downwards and step-by-step position.
The above chart explains how the organization structure maintained by the
CUMI. As an organization whose products is to a number of customers and used in
diverse applications and geographies, CUMI is impacted by a number of variables.
The company’s various businesses are managed through a competence based
structure that comprises SUBs, subsidiaries and joint-ventures. This structure
facilitates the function of focused business, segment development and encouraging
specialization. CUMIs successful business presence over five decades is a
testimony to its business portfolio management capability and also for the good
organizational structure.
OFFICE LOCATION
A location defines models a generic type of location listing the attributes
whose values define a specific location of that type. Location definitions are
required in order to model location, or can be used to create structure and structure
definition.

14. IMPORTANCE
The important thing to be considered for location is its overall desirability as
well as the accessibility from highways and mass transit for employees and
customers
Not only does a business in the right location enjoy excellent corporate
presentation that accompanies the proper address, it also benefits from the
exposure afforded by neighboring business and their clients. A comprehensive
review of the potential location will certainly prove time well spent.
LOCATION
665, Thiruvottiyur High road,
Post Box No: 2272,
Thiruvottiyur,
Tamilnadu-600 019
Registered office
“Parry House”
43, Moore street,
Chennai 001.
Investor service @ cumi.murugappa.com
url:http://www.cumi.murugappa.com
Bonded abrasives division
plot no:48, SIPCOT Industries Complex,
Krishnagiri,
Tamilnadu 635 126.
Coated Abrasives

15. TambaramVelachery road,
Pallikaranai PO,
Super refractories Division
Plot No:102-103,
SIPCOT Complex (phase 2)
Ranipet, Tamilnadu 632 403.
Electrominerals Division
KalamaseryDevelopment plot,
Kalamasery P.O,
Eranakulam District,
Kerala 683 109.
IMPORTANCE OF OFFICE LOCATION AT CARBORANDUM
UNIVERSAL LIMTED
The location of Carborandum Universal limited at Thiruvottiyur is more
comfortable for the employers as well as their customers to reach the office.
ThiruvottiyurMunicipality is located to at a distance of 7 km north of Chennai at
13.75˚ latitude on North and 80.25˚ longitude. It is bound on the north by
Kattivakkam Municipality, east by Bay of Bengal, west by Manali.
Chennai Harbour is about 7km , and Chennai Airport is about 20km also
from the company which helps them to import and export their products. Big
landmark to the office is that the Thiruvottiyur Bus Terminal which helps to reach
the office quickly as well as without any difficulty. One more land mark to the
company is HP Petroleum Bunk. These help to locate the office efficiently.
OFFICE LAYOUT
Modern business rests not only on its personnel and equipment’s but also
how they arranged. Much of the efficiency of men and labor mostly depend on its
layout. In the modern office internal arrangements must take place on the basis of

16. office system and structure of organization. The size, shape, number of rooms,
corridors and other arrangements should be made on the base of departments and
layouts of the office. The departments may be situated on the same floor.
The office environment is one that can affect your employees work
productivity and is created by several different factors. Layout is more than just the
office set up; it also encompasses the overall look of the office.
An office layout is the way in which everything from the desk to the
watercolors is arranged within an office space. Office layout can have a big
influence on staff morale and can influence the way in which visitors, customers,
clients view the business. Different impressions of the business can create by a
rearrangement of the office layout. There are many principles of office layout that
can be adhered to ensure the best environment for the staff. These principles
include making sure there is plenty of light, break out areas are supplied equally
and workstations are comfortable and spacious. The layout of the office space
should reflect the needs of employees.
IMPORTANCE
 Office layout improves the efficiency of an organization,
 Proper office layout is crucial to efficiency of the business. Layout is
important to ensure the efficiency due to following factors:







To ensure proper utilization of work place.
To facilitate supervision.
To facilitate inter-communication.
To ensure better use of office machines and equipments.
To ensure better comfort and morale of workers.
To ensure favorable impressions on customers and visitors.
To ensure smooth work flow
 Proper layout is vital to optimizing the business for increase productivity.
 Standard office system will help to organize and deploy equipment in the
most efficient.

17.  Proper office layout helps the employees to focus better on the right things
which will increase the amount of work they can get done in a amount of
time.
1. Recreation club
2. Football ground
3. Human Resource department
4. Four wheelers parking
5. Two wheelers parking
6. Weigh bridge
7. Water cooling furnace system
8. Finance department
9. General Manager office
10.Visitors cabin
11.Marketing department
12.System department
13.Godown (bauxite)
14.Chemical lab (quality checking)
15.Employee’s rest room
16.Pig yard
17.Furnace
18.Break yard
19.Crusher
20.Grain processing unit
21.Shipping document
22.Mechanical workshop
23.Maintenance department
24.Store
25.Safety equipment lab
26.Physical lab
27.Visitors Rest room
28.Time office
29.Security

18. 30.Shipping department office
31.Canteen
32.R&D department
33.Furnace testing lab
34.Electrical maintenance department
35.Employees rest room.
In the entrance of the company there is a recreation club and football ground for
the relaxation of the employees. There are various departments such as Human
resource department, finance department, marketing department, system
department maintenance department. There is also a place for parking two and four
wheelers. For visitors there will be a separate restroom and cabin for their
relaxation. Godown and safety equipments stores helps to store the goods and
products in an efficient manner which will help organization to make goods are in
a good position.
DEPARTMENTATION
Departmentation is concerned with grouping the various activities into
separate administrative units. It implies grouping activities and employees into

19. departments. Departments may thus be defined as “the process of grouping
activities into units with a view to ensuring effective management. Growth of
enterprises as well the principle of specialization is the genesis of depatmentation.
Span of management is a factor greatly restricting size of the enterprise and
through departmentation only any organization can expand to a reasonable degree.
In the same way, principle of specialization requires into separate units.
The process of departmentation takes place at all levels in the organization. It
may be noticed that the chief executives reporting directly to him. The common
process of grouping tasks into individual jobs, grouping units into larger units to
establish the departments is carried on in the whole process of the organization.
According to knootz and O’Donnell “Departmentation is a process of
dividing the large monolithic functional organization into smaller and flexible
administrative units.
According toLouise and Allen"a department is a distinct area, division or
branch of an enterprise over which a manager has authority for the performance of
specified activities or functions of enterprise are grouped homogenously into
different groups."
ADVANTAGES OF DEPARTMENTATION
 Advantages of managerial specialization
Departmentaion enables to avail of advantage of managerial specialization.
In fact in whatever way are department created; it is sure that each
departmental head is a specialist in matter pertaining to his department. This
specialization means increased efficiency of operation, leading to more
profit for their enterprise.
 Expansion and growth of enterprise facilitated
The device of departmentaion facilitates growth and development of an
enterprise. Depending on growth requirements of business, more

20. departments may be created in the enterprise; or within the same department,
more sub-departments may be created to handle additional work load.
 Decentralization facilitated
Departmentation facilitates the implementation of the policy decentralization
of authority. In fact, many departmental heads may be granted full power to
run their departments efficiently through systematic decentralization.
Decentralization is likely to motivate departmental heads and boost their
morale-all leading to higher efficiency and increased profits for the whole
organization.
 Fixation of responsibility facilitated
Departmentaion facilitates fixation of responsibility on departmental heads,
as their roles and functions are clearly defined. Management accordingly can
also introduce a system of “Responsibility Accounting” and ensure its
advantages to the organization.
 Performance appraisal and managerial development
On the basis at the functioning of departments, it is easier for the
management to undertake performance appraisal for departmental and their
subordinates. Performance appraisal findings may provide useful clues to
initiating schemes of managerial development.
 Facilitates intra-departmental coordination
Since people in a department perform inter-related jobs and tasks pertaining
to the subject matter of that department; it could be said that departmentation
facilitates intra-departmental coordination. Moreover people in the
department develop better social informal relation because of frequent
interaction.

21.  Administrative control facilitated
Departmentation facilitates administrative control on the top of the
management. In view of the nature and functioning of departments; top
management can devise and implement broad but suitable controls over
departments.
LISTS OF DEPARMENTS





PURCHASE DEPARTMENT
SALES DEPARTMENT
FINANCE DEPARTMENT
MARKETING DEPARTMENT
PERSONNEL DEPARMENT
PURCHASE DEPARTMENT
Purchasing is the process of procuring the required goods and materials, in
the correct amount, at the time needed, from a reliable source, for the best price
and value as possible.
Purchase Department deals with the clerical work in connection with the
purchase of material, stores, plant, machinery, fuel and stationery etc., These
department provides a service that is the backbone of many manufacturing, retail,
military and other industrial organization. To understand better the role of
purchasing department is consider some function it performs. It is a small business
need to shop around to find the best vendors at the most reasonable prices for the
company’s particular order.
When activities associated with each product or group of closely related
product are combined relatively autonomous and integrated units within the overall
framework of the company. Such an organization is described as product
departmentation.
The Purchasing Department has the authority and responsibility for
procuring the requirements for all materials and equipment within the County. This

22. Department is charged with the responsibility of conducting the purchasing
function in a manner which results in the most efficient, economical and effective
use of County funds. The Purchasing Department is organized to serve and
facilitate the objectives of the County; to make procurement commitments in a
consistent and orderly fashion; to maintain accurate and detailed records regarding
purchasing; and, to foster a high standard of business relations with the
Departments we support as well as our vendors and the general public.
FUNCTIONS
 Preparation of suppliers order
 Receipt checking and recording of supplier’sinvoices and delivery
notes.
 Maintenance of purchase journal and ledger.
 Checking and certification for payment of supplier’s bill.
 Monitor and control the use on materials for production process.
 To ensure production process are carry out according to plans.
 Preparation of yearly production plan based on market strategy.
 Serving as an information center on the materials’ knowledge i.e. their
prices, source of supply, specification and other allied matters.
SALES DEPARTMENT
Sales department is an important department in every manufacturing concern.
It generally deals with forms & records relating to sale of finished goods,
marketing & advertisement.
Sales are the activities involved in providing products or services in return
for money or other compensation. Sales department is the division of a business
that is responsible for selling products or services. Sales often form a separate
grouping in a corporate structure, employing separate specialist operatives known
as salesperson. Marketing department generates a potential customer list, it can be

23. beneficial for sales. Driving more customers “through the door” gives sales
department a better chance by ratio of selling their products to their customer.
FUNCTION






Receipt checking and recording of customer order.
Preparation of outward invoices.
Maintenance of sales journal and ledger.
To find appropriate agency to carry out the sales activities.
Preparation of sales statistics.
To help marketing department in meeting the sale volume forecasted by
them.
 Collection of outstanding bills
 To increase the sale volume considering a particular period of time.
FINANCE DEPARTMENT
To handle the financial affairs of the company the ministry of finance is
responsible for the financial functions activities of the board and managemen t of
financial policy of the organization.
Finance department is the part of an organization that manager its money.
The business functions of a finance department typically include planning,
organizing, auditing, accounting for and controlling its company’s finances. The
finance department also usually produces the company’s financial statement.
Ensures adequate funds are available for resources need to help achieve
organizational objective. Ensure costs are controlled and establish control
profitability.
HIERARCHY

24. AGM
(ACCOUNTS)
MANAGER
(ACCOUNTS)
2 JUNIOR
Dy
MANAGER
2
SUPERVISIOR
Duties of accounts assistant are cash transactions, account payable, payment
and vouchers etc., Duties of the supervisor are maintaining the trial balance, capital
expenditure and debt management etc., Responsibilities of the manager account are
monthly report, auditing and fund management etc., Accounts General Manager
has the full responsibility of accounts department.
FUNCTION
 Keeping record of the purchase and sales made by a business as well as
capital spending.
 Prepare profit and loss Account and Balance sheet.
 Managers require ongoing financial information to enable them to take
better decisions.
 The wages section of the finance department will be responsible for
calculating the wages and salaries for employees and organizing the
collection of Income Tax.
 It will also be responsible for the technical details of how a business raises
finance. For example through loans, and the repayment of finance.

25.  The company has a special accounting policy, which is the basis of the
financial statement. It is in accordance issued by the Institute of Charted
Accounts of India.
MARKETING DEPARTMENT
CUMI has a team of making executives spread all over the country to
facilitate larger sales and customer services. The company has a traditional
marketing wing, which looks after sales and service operation. This department
also conducts market surveys and trend analysis, which helps the management to
make correct and important decision. It also helps in making modifications of
existing products and introduction of new products.
As a part of market research, the sales executives study the requirements of
their customers, both new and existing customers. They collected information from
the customer and prospective customers directly. The first 15 days of every month
they do the above-mentioned activities and the rest of the days they do the payment
follow up. There is a value target and based on this production is carried out.
FUNCTIONS
 Identifying the customer needs.
 Designing product that meets the needs.
 Communicating information about those goods and services to prospective
buyers.
 To know the needs and wants of the customer and fulfill them accordingly.
 Communicating with customers, general public and other customers,
through some type of advertising, public relation and sales promotion.
 Retaining the regular customers.
 Identifying new needs arising in the market.
 Deciding on the emphasis to place, as well as approach to take on societal
issues, global marketing on the web.
PERSONNEL DEPARTMENT
Personnel department has always been one of the focus points in business
strategy. Its strategy is carefully linked to the vision, mission and overall business

26. strategy of the company. In CUMI, the Personnel department is responsible for
putting together the Human Resource plan based on corporate plan. The basic
objective of this department is utilization of human resource, desirable working
relationship among all employees and maximum individual development.
FUNCTIONS
 Maintain close liaisonwith line organization.
 Plan, organize & control personnel relation programme.
 Ensure good employee moral & happy industrial relations as far as
practicable in the present content of insatiable demand.
 Assistline management, develop an effective appraisal system & evaluate
the performation of their respective employees.
 Provide a sound programme of wage & salary administration
 Ensure good employee moral & happy industrial relations as far as
practicable in the present content of insatiable demand.
 Arranging training and development programs for the employees.Collecting
data from all other factories to enable them prepare details for long term
negotiation.
 Collection data from all other factories to enable them prepare details for
long termnegotiation.
 Making daily attendance of the employees, pay and overtime, this
departmental so does all correspondence relating to the ESI and PF.
SECRETARIAL DEPARTMENT
The word secretary is derived from Latin word secreteus which means a
confidential officer. The basic idea behind keeping the secretary is that there
should be a person who can assist authorities in carrying out the details of their
works so that all matters could be handling in confidence and with utmost
efficiency. A person employed to handle correspondence, keep files, and do
clerical work for another person or an organization.

27. The Secretarial Department of a company delivering valuable services to the
shareholders of the company by providing consistent, timely and adequate
information and redressing their complaints in consultation with the register and
transfer agents of the company.
COMPANY SCRETARY
The word "Secretary" is derived from the Latin word "Secretarius" meaning
Confidential Officer. A secretary is defined by the Oxford Dictionary as "one
whose office is to write for another, especially one who is employed to conduct
correspondence, to keep records and to transact various other businesses for
another person or for a society, corporation or public body".
Secretary means a “company secretary within the meaning of clause (c) of the
subsection (1) of section 2 of the company Secretaries Act, 1980 and includes any
other individual possessing the prescribed qualification and appointed to perform
the duties which may be performed by a secretary under this Act or any other
ministerial or administrative duties”
Therefore the Secretary is one of the principal officers of the company with
the requisite qualifications to undertake secretarial work and management of the
affairs of the company as per the provisions of the Act and instructions laid down
by the Board of Directors. The Board, however, cannot alter the duties of the
secretary as they are determined by the law.
FUNCTIONS OF SECRETARIAL DEPARTMENT
 Supervision, coordination and control of clerical work Selection,
appointment and assignment of office work to the staff Maintaining office
discipline Supervising secretarial work relating to meetings etc..
 Handling staff matters, dealing personally with outside callers.
 Acting as a mouth piece of the management for communicating their
decision to the staff.
 Maintaining public relation that is keeping the pubic informed about the
activities of the organization.
 To participate in formulation of the company strategy and objective

28.  Memorandum Of Association, Articles Of Associations and other documents
are to be field with registrar
 The secretary helps the promoters in preparing, printing and filling of these
documents.
 Communicating to management the grievances of the staff, if any, or
reaction of the staff to management policies
 As an adviser to management, good secretaries are not only the recipient of
the order but also valued adviser
 To maintain minutes books, statutory register and executing instructions of
the board
 To deal with the matters relating to registration, transfer, transmission and
disposal of shares.
 To organize and provide secretarial support to full board, all board
committee, and annual general meeting
 To ensure effective support for public and investor relation and thus to
coordinate activities of public relation.
MEETINGS
Meetings may generally defined as a gathering or assembling or getting
together of number of persons for transacting any lawful business and not for
entertainment or the like purpose. There must be atleast two persons to constitute
meeting. In certain exceptional circumstances, even one person may constitute a
meeting. Therefore, one shareholder cannot constitute a company meeting even if
he holds proxies for other shareholders.
When two or more than persons come together to discuss matters of common
interest, there is said to be a meeting.
It is to noted that every gathering or it is that part of uncalled capital which
has been reserved by the company by passing a special resolution to be called only
in the event of its liquidation. This capital cannot be called up during the existence
of the company.It would be available only in the event of liquidation as an
additional security to the creditors of the company assembly does not constitute a
meeting. Company meeting must be convened and held in perfect compliance with
the various provisions of the Companies Act, 1956 and rules framed there under.

29. A meeting of any kind, to be valid, must satisfy the following conditions.
 It must be properly convened. That is, it should be called by the proper
authority entitled to call the meeting. The proper authority to convene the
meeting is Board of directors, shareholders or the company Law Board
 It must be legally constituted. This means that the meeting should have a
proper chairman; quorum must be presented.
 It should conduct according to the provisions of the Act and Articles.
 It should be properly conducted.
KINDS OF MEETING




Statutory meeting
Annual general meeting
Board meeting
Extra ordinary general meeting
STATUTORY MEETING
Statutory meeting It is the first meeting of the shareholders and this meeting is
held only once in the life time of the company.
Section 165 of companies act, 1956 lays down that
“Every company limited by shares, and every company limited by guarantee
and having a share capital, shall within a period of not less than one month nore
more than six months from the date at which the company is entitled to commence
business, hold general meeting of the members of the company, which shall be
called “statutory meeting”. The provisions of 165 are not applicable to a private
company.
The Board of directors shall, at least twenty-one days before the day on which
the meeting is held, forward a report to every member of the company.
The meeting must be duly convened by a proper authority . Notice must be
served in the prescribed manner to all the persons . A quorum must be present. A
chairman must be presiding. Minutes of the proceedings of the meeting shall be
kept.

30. This meeting provides an opportunity to members to discuss various matters
relating to the contents of statutory report. They can also effect any modification to
the contracts mentioned in the prospectus.
The meeting is convened to attend to the following






To afford an opportunity to the shareholders
Toknow the financial position and prospectus at an early date.
To know the important details of the company formation
To know the success of its capital issue and
To know the properties that have been acquired
It provides an opportunity to members to discuss various matters relating to
the contents of statutory report
 To discuss the success of flotation.
 To approve any modification in the contracts specified in the prospectus, if
need arises.
ANNUAL GENERAL MEETING
A meeting known as the annual general meeting is required to be held by
every company, public or private, limited or unlimited by shares or by guarantee,
with or without share capital or unlimited every year.
Section 166(1) of the companies Act, 1956 states that every company must, in
each calendar year hold an annual general meeting, so specified in the notice
calling it, provided that nor more than 15 months shall elapse between two annual
general meeting. However, a company may hold its first annual general meeting
within 18 months from the date of its incorporation.
The section contemplates two separate and distinct requirements
 Holding the meeting within 15 months
 Holding it in each calendar year.

31. In the event of any difficulty in holding an annual general meeting(except
the first annual general meeting), the /registrar may, for any special reason shown,
grant an extension of time for holding the meeting by a period not exceeding three
months. Application seeking extension of time should be made before the due date
for holding annual general meeting.
The meeting is convened to attend to the following
 To receive and consider the directors and auditors report, the account and
balance sheet
 To sanction the dividend (if any) recommended by the directors.
 Appointment of directors inplace of those retiring
 To appoint, or re-appoint, the auditors and fix their remuneration.
 Removal of a director of a company.
 Election of a person other than a retiring person.
 To review theperformance of the company.
 To discuss the affairs of the companyand to take steps necessary for
protecting their interests.
BOARD MEETING
The affairs of a company are managed by the board of directors. It is
therefore necessary that the director should often meet or discuss various matters
regarding the management and administration of the affairs of the company in the
best interest of the shareholders and public interest.
Section 292 lays down that the board shall exercise the following powers on
behalf of the company only by means of the resolution passed at the meetings of
board.
Section 285 of the Act prescribes that in case of every company, a meeting of
the board of directors shall be held at least once in every three months and atleast
four such meetings shall be held in every year.
The notice of every board meeting must be given in writing to every director
who is in present in India. The quorum for the board meeting shall be one third of
the total strength of the board or two directors whichever is higher.

32. The board is entitled to exercise all such powers and to do all such acts as the
company is authorized to do.
The meeting is convened to attend to the following








To make calls on shareholders in respect of unpaid money on their shares.
To issue debenture.
To borrow money other than a debenture.
To have the power to make funds.
To have the power to invest the funds of the company.
To determine the polices of the company.
To make transfer and transmission
To be committed to serve public interested.
EXTRA ORDINAY GENERAL MEETING
All the general meetings of a company with the exception of the statutory and
annual generals meeting are called extra ordinary general meeting.All business
transacted at extraordinary meetings is called special business.
At extra ordinary general meeting only special business which arises between
two annual general meetings are being urgent and cannot be deferred to the next
annual general meeting, is transacted.
Meeting is usually called by the Board of Directors for some urgent business
which cannot wait to be decided till the next AGM. Every business transacted at
such a meeting is special business. The Articles of Association of a Company may
contain provisions for convening an extraordinary general meeting.
An extraordinary general meeting can be called by the





Board of Directors, or
By the Directors on requisition, or
By the shareholders,
By the requisition's themselves
By the Company Law

33. The meeting is convened to attend to the following
 The consideration of the accounts, balance sheet and report of the board of
directors.
 The declaration of dividend
 The appointment of directors in place of those retiring
 The appointment of and the fixing of remuneration of, the directors.
 Alteration to be made in memorandum of association and articles of
association.
 Alteration of share capital if any (or) any changes in the capital structure of
the company.
 To pass any resolutions (or) to decide on any matter, this could not be
delayed.
 Changes to the registered office.
SHARES
For carrying on its business, a company collects money from the public. The
money so collected is called the capital of the company which is usually divided
into different units of fixed amount. These fixed units are called the “Shares”.
The term “share” is defined as a share in the capital of accompany. An
exhaustive definition of “share” is given by Justice Farewll as “ A share is the
interest of a shareholder in the company measure by a sum of money for the
purpose of liability and dividends in the first place, and of interest in the second;
and also consisting of a series of contacts as contained in the articles of
association”
In simple words a share indicate the pecuniary interest of shareholders and
their rights and liabilities. In this sense it may be defined as an “existing bundle of
rights and liabilities”.
According to Section 2(46) of the companies Act, a share means a share in
the share capital of the company and includes stock, except where a distinction
between stock and shares is express or implied. Shares indicate certain rights and
liabilities.

34. SHARE CERTIFICATE
Share Certificate is a certificate issued by a company under its common seal
signed by one or more of its directors and its secretary, specifying the number of
shares held by the named member and showing the distinctive number of the
shares. It is an evidence of title to the shares. It can be issued even when the shares
are partly paid up. A holder of a share certificate is a member of a company
enjoying all the rights of membership.
Share certificate certifies a
 Nature of shares i.e equity or preference shares
 Members in whose names it is issued are the rightful owners of the
shares with distinctive numbers
 Amount paid to the company by each shareholder on each share at
various stage i.e on application, on allotment, on first call and on
second and final call.
Share certificate must be issued within three months from the date of
allotment of shares.
SECRETARIAL DUTIES REGARDING ISSUE OF SHARE CERTIFICATE
 The resolution for allotment of share certificate will be passed at the duly
convened board meeting.
 To make an approve of share certificate and printing of the share certificate
 To ensure that, all blank forms are consecutively numbered and engraving
etc.,
 To make an entry in register of member of the share certificate will be
delivered within a specified tome.
 To ensure that each share certificate is contains a seal and signature.

35. TRANSFER OF SHARES
Shares are movable property and transferable like any other property. Transfer
of shares is one of the beneficial features of a public company. Transfer is a
voluntary act of parties which results in transfer of ownership.
Under sec 82 of the companies act,1956 “the shares of any member in a
company are movable property, transferable in manner provided by the articles of
association”. The company shall not register the transfer of shares unless a proper
instrument of transfer duly stamped and signed.
A shareholder cannot withdraw his money from the company as the amount
received on shares is the permanent capital of the company. This is the reason why
transferability of shares has been given importance from the very beginning of the
company. A shareholder can only convert their shares into cash by transferring
them to any other person either in share market or by private sales.
For an effective transfer, the ‘Transfer Deed’ which contains the particulars of
transferor and transferee and is duly signed by both of them is sent to the company
along with the Share Certificates. The company will examine the particulars and on
getting satisfied with the particulars, company will enter the name of transferor in
the ‘Register of Members’ and remove the name of transferee will be removed
from the Register.
SECRETARIAL DUTIES
 The secretary has to ascertain that there is adequate provision regarding
transfer of shares in the Articles of Association of the company.
 On receipt of proper instrument of transfer, called the 'Transfer Deed' duly
stamped and executed by the transferor and the transferee together with the
transfer fee, if payable, he has to see that it is accompanied by a share
certificate in the name of the transferor or the transfer should be a 'certified'
one and that it is submitted within the prescribed limit as required under
Section 108.
 It is the responsibility thereafter to scrutinize the instrument of transfer and
the relevant share certificate, giving particular attention to the following
points:

36. 



(a) The signature of the transferor must tally with the specimen signature as
recorded with the company, if the transferor is the registered holder of the
shares.
(b) The details of the transferee have been correctly completed.
(c) The signature and address of the witness are in order.
(d) The stamp of the delivering broker and the lodging agent (if this is not
the same as the delivering broker).
(e) Any alteration in the 'Transfer Deed' is properly initialed by both the
transferor and transferee.
(f) The distinctive numbers of shares both in the Instrument of Transfer and
the Share Certificate agree.
(g) The consideration for the transfer as shown in the 'Transfer Deed' is
reasonable.
(h) Share transfer stamps have been affixed on the Transfer Deed at the rate
50 paisa for every Rs. 100 or part thereof calculated on the amount of
consideration.
(i) The fact that there is no restraint on transfer or that no duplicate share
certificate has been issued must be checked from the Register of Members.
If the transferee is a company incorporated under the Companies Act, the
secretary must confirm that the company is authorized to acquire shares by
its Memorandum and Articles of Association.
If everything is well after the scrutiny of 'Transfer Deed' etc., the secretary
should issue 'Notices of Lodgment of Transfer' to the transferee and
transferor and wait for atleast a fortnight to see whether any objections are
received from them.
If no objection is received, all transfers must then be recorded in the
Transfer Register.
The secretary should convene a Board meeting to pass the necessary
resolution for the registration of transfers.
After the resolution is passed, the secretary must see that the name of the
transferee is recorded in the Register of Members and the name of the
transferor is removed therefrom. Necessary endorsement is made on the
back of the share certificate(s) and the same is issued to the transferee.

37. TRANSMISSION OF SHARES
Transfer of shares by the operation of law is known as Transmission of Shares.
Transmission of shares takes place in case of death, insolvency or insanity of
members of the company. In case of transmission of shares, there is no need to fill
the ‘Transfer Deed’.
On the happening of the any of the above events i.e. death, insolvency or
insanity, the shares are transferred to the legal representatives of shareholders. The
legal representatives may also differ depending on the existence of ‘Will’ of the
deceased partner. If the deceased shareholder has left behind any ‘Will’, then the
shares will be transferred to the person mentioned in it. In the absence of such
‘Will’, the transfer of shares will be made in favor of legal heir of the deceased
member. ‘Official Receiver’ or ‘Official Assignee’ becomes the legal
representative of insolvent member. In case of Insanity of shareholder, his guardian
becomes the legal representative.
As legal representative is entitled to become the member of the company, he
files an application to the company for the transmission of shares on his name. He
may also choose to sell the shares instead of becoming a member of the company.
SECRETARIAL DUTIES REGARDING TRANSMISSION OF SHARES
The secretarial duties in connection with transmission are :

The secretary has to check up that the 'Letter of Request' is a proper one.
Letter of Request is the request of legal representative to register his name in
place of the deceased subject to the conditions on which the deceased held
the shares.
 He has to ensure that satisfactory proof of title has been attached to the
Letter of Request. He should also see the 'Letter of Probate' if the member
had died testate, i.e., leaving a 'will,' or the 'Letter of Administration' if the
member has died intestate. In case of bankruptcy, his estate is vested to the
Assignee appointed by the Court and in case of lunacy, his estate is vested to
the Administrator appointed by the Court. The secretary must check that the

38. Administrator has produced the documentary proof of their appointment
from a competent Court.
 If the legal representative has to transfer the shares, he must attach any
'Probate', 'Succession Certificate' or 'Letter of Administration' with the
'instrument of transfer.' On receipt of proper 'instrument of transfer' the
duties of a secretary are as same as while in transfer of shares.
 Finally, the secretary should convene a Board meeting to pass the resolution
and thereafter he should introduce necessary alteration in share certificates
and Register of Members. He should enter the details of the Probate, Letters
of Administration, Succession Certificates in the Register of Probates .
DIVIDEND
“Dividend”
means a distribution of any sums to Members out of profits or
reserves available for the purpose and, in the context of this Standard, refers to
Dividend recommended by the Board and declared by Members, i.e. ‘final’
Dividend.
The term dividend has been defined under Section 2(14) of the companies
act, 1956. The term “Dividend” includes any interim dividend. It means the profit
of a company, which is not retained in the business and is distributed among the
shareholders in the proportion to the amount paid-up on the shares held by them
Dividends are usually payable for a financial year after the final accounts are
ready and distribution of profits is available. Dividends for the financial year of the
company can be payable only if it is declared by the company at its annual general
meeting on the recommendation of two of its directors.
SECRETARIAL DUTIES
 To arrange notification regarding the interest falling due: This he has to
nearabout the time the interest become due. The notification must contain
the following:
 The date of payment
 The place of payment

39.  The manner of payment
 The closure of transfer register in case of Registered Debenture
 To prepare a list of debenture holder containing the following particulars:
 Name of the debenture holder




Number of debentures held
Distinctive number of debentures
The amount of interest due to be paid
The period for which it has fallen due.
 To send a copy of the list to the Bank where payment of interest is made.
 To open a separate account of the company with the Bank and to arrange the
transfer of requisite amount therein.
 To prepare interest warrant and send the same to the debenture holder in
case they are registered.
 To arrange for the payment and list of debentures, interest warrants, interest
coupons, together with endorsement of Bank.
 To verify the amount paid with the interest warrants etc.,
 To check the entries made in the Pass book or Bank statement.
 To make an entry in respect of the payment made in the list.
REGISTER TO BE MAINTENED
The following are some of the registers are to be maintained under the
companies act 1956. They are




Copy of every instrument creating any charge requiring registration.
Register of charges.
Register of members
Index of members in the case of a company having more than 50 members
unless register itself is in index form.
 Register of debenture-holders

40.  Index of debenture-holders in the case of a company having more than 50
debenture-holders unless register itself is in an index form.
 Foreign register of members and of debenture –holders, if any
 Duplicate of such foreign register of members and debenture holders.
 Copies of annual returns prepared under sections 159 and 160 together with
copies of
 Certificates and documents required to be annexed thereto under secs.160
and 161.
 Minutes of board of directors and committees of the board and of
proceedings of general meetings.
 Books of account and other cost records.
 Proper books of account relating to transactions effected at branch office.
 Register of contracts, companies and firms in which the directors of the
company are interested.
 Register of directors, managing director, manager and secretary.
 Register of director’s shareholdings.
 Register of loans made to the companies under the same management.
 Register of investment in shares and debentures of other body corporate.
CAPITAL STRUCTURE
The term capital structure refers to the percentage of capital (money) at work
in a business by type. Every business enterprise, whether big, medium or small
needs capital to carry on its operations smoothly and to achieve its targets.
The Capital structure of a business enterprise is related to the long-term
financial requirements of the business enterprise. It is determined by the long-term
debt and equity capital used by the business enterprise. It should be ideal i.e
according to the requirements of the company or organization.
Capital structure is the composition of long-term liabilities, specific shortterm liabilities like bank notes, common equity, and preferred equity which makes
up the funds with which a business firm finances its operations and its growth. The
capital structure of a business firm is essentially the right side of its balance sheet.

41. DIFFERENT TYPES OF CAPITAL STRUCTURE






Authorized or Nominal Capital
Issued Capital
Subscribed capital
Called Up Capital
Paid-up capital
Reserve Capital
Authorized or Nominal Capital
It is the amount of capital specified in the capital clause of the
memorandum. It is the maximum amount which the company can issue during its
life time and shown on the liabilities side of the balance sheet without adding its
amount in the total of the balance sheet. The total amount has to be divided into
shares of various classes. This capital is also called ‘Registered Capital’. Again, as
the actual issued capital of the company is usually different (i.e. less) from the
authorized capital, it is also known as 'Nominal' capital.
Issued Capital
It is that part of authorized capital which is offered to the public, allotted to
directors as qualification shares and issued to vendors as purchase consideration. If
the whole of the authorized capital is offered to the public, the authorized and
issued capital will be issued.
Subscribed Capital
It is that part of the issued capital which is subscribed by the public.Itcan not
be said that the entire issued capital will be taken up or subscribed by the public. It
may be subscribed in full or in part. The part of issued capital, which is subscribed
by the public, is known as subscribed capital.
Called up Capital
It is that part of subscribed capital, which is called by the company to pay on
shares allotted. It is not necessary for the company to call for the entire amount on

42. shares subscribed for by shareholders. The amount, which is not called on
subscribed shares, is called uncalled capital.
Paid up Capital
It is that part of called up capital, which actually paid by the shareholders.
Therefore it is known as real capital of the company. Whenever a particular
amount is called and a shareholder fails to pay the amount fully or partially, it is
known unpaid calls or calls in arrears.
Reserve capital
A company can reserve part of its uncalled capital to be called up only at the
time of winding up. A special resolution has to be passed for that purpose. This is
called Reserve Capital. It is not disclosed in the company balance sheet.
It is that part of uncalled capital which has been reserved by the company by
passing a special resolution to be called only in the event of its liquidation. This
capital cannot be called up during the existence of the company.It would be
available only in the event of liquidation as an additional security to the creditors
of the company
CAPITAL STRUCTURE OF THE CARBORANDUM UNIVERSAL
LIMITED
Capital structure of Carborandum Universal Limited for the current period is
as follows
(in crores)
Authorized share capital
25.0
Issued capital
18.7

43. (in million)
PARTICULARS
AS AT
31.3.2011
AS AT
31.3.2012
250.00
250.00
187.40
186.94
Authorize share capital
250000000 equity shares@ Rs. 1 each
Issued Share capital
187395562 shares @ Rs.1 each fully paid
Subscribed and Paid up share capital
93470993 shares @ Rs.2 fully paid
EQUITY SHARES HAVING VOTING RIGHTS
PARTICULARS
NO OF
SHARES
93470993
VALUE
186.94
NO OF VALUE
SHARES
93356232 186
Add: shares issued against ESOP
scheme during the year before
split
156022
0.32
14761
0.23
Total shares before shares split
93627015
187.26
No of shares consequent to “share
split”
187254030 187.26
9347093
186.94
No of shares at the beginning
Add: Shares issued against ESOP
scheme
Total no of shares outstanding at
the end of the year
141532
0.14
187395562 187.40

44. RATIO ANALYSIS
Ratio analysis is one of the most common tools of managerial decision
making. It involves the comparison of various figures from the financial statements
in order to gain information about the company’s performance. It is the
interpretation, rather than the calculation, that makes financial ratio a useful tool
for business managers. Ratio may serve as indicators, clues or red flags regarding
noteworthy relationships between variables used to measure the firm’s
performance in terms of profitability, assets utilization, liquidity, and leverage or
market valuation
Ratio is relationships expressed in mathematical terms between figures which
are connected with each other in some manner. Ratio is called ‘accounting ratio’ or
‘financial ratio’ is used to describe significant relationship between figures shown
on a balance sheet, in a profit & loss account, in a budgetary control system or in
any part of accounting organisation. In other words, accounting ratios is a
quantitative relationship between two or more items of the financial statements
connected with each other. Arithmetically ratio is a comparison of the numerator
with the denominator.
A ratio is defined as “The indicate quotient of two mathematical
expressions” and as “the relationship between two or more thing”.
Modes of expressions of ratios
Ratios may be expressed in any one or more of the following ways:
 In proportion
 In rate or times or co-efficient
 In percentage
Ratio analysis is the process of determining relationships based on financial
statements. It is technique of interpretation of financial statements with the help of
accounting ratio derived from the balance sheet and profit and loss account. To

45. evaluate the financial condition and the performance of a firm, the financial
executive’s needs a certain yardstick, which is provided by ratio analysis, is that
any one item of financial statements means little by itself. A ratio is, therefore, a
symptom, such as blood pressure, pulse rate or temperature of an individual. Ratios
analysis is a useful tool device to diagnose the financial condition of the enterprise.
It will indicate whether the financial position is very strong, good, questionable or
poor; the use of ratio analysis has increased considerably in recent years as a
financial tool. Its technique is often equivalent to the detective story investigation.
The significant of individual ratio can be best known only when we study the
behaviour over a period of time.
The term financial ratio is used to describe significant relationships between
figures shown on a balance sheet, in a profit and loss account, in a budgetary
control system or in any other part of the accounting operations.
J Batty.
Ratio analysis can be defined as “Ration analysis involves comparisons. A
company’s ratio is compared with those of other firms in the some industry, that is,
to industry average ratios”.
Brigham & Houston
It is defined as the systematic use of ratio to interpret the financial statements
so that the strengths and weakness of a firm as well as its historical performance
and current financial conditions can be determined.
IMPORTANCE
As a tool of financial management, ratios are of crucial
significant.Theimportance of ratio analysis lies in the fact that it presents facts on
acomparative basis & enables the drawing of interference regarding
theperformance of a firm. Ratio analysis is relevant in assessing the performanceof
a firm in respect of the following aspects:
 Liquidity position
 Long-term solvency
 Operating efficiency

46.  Overall profitability
 Inter firm comparison
 Trend analysis.
Liquidity position
With the help of Ratio analysis conclusion can be drawn regarding theliquidity
position of a firm. The liquidity position of a firm would be satisfactory if it is able
to meet its current obligation when they become due. A firm can besaid to have the
ability to meet its short-term liabilities if it has sufficient liquidfunds to pay the
interest on its short maturing debt usually within a year as wellas to repay the
principal. This ability is reflected in the liquidity ratio of a firm.The liquidity ratio
are particularly useful in credit analysis by bank & other suppliers of short term
loans.
Long-term solvency
Ratio analysis is equally useful for assessing the long-term financialviability
of a firm. This respect of the financial position of a borrower is of concern to the
long-term creditors, security analyst & the present & potentialowners of a business.
The long-term solvency is measured by the leverage/capital structure &
profitability ratio. Ratio analysis is that focus on earning power & operating
efficiency.
Ratio analysis reveals the strength & weaknesses of a firm in thisrespect.
The leverage ratios, for instance, will indicate whether a firm has areasonable
proportion of various sources of finance or if it is heavily loaded withdebt in which
case its solvency is exposed to serious strain. Similarly thevarious profitability
ratios would reveal whether or not the firm is able to offer adequate return to its
owners consistent with the risk involved.
Operating efficiency
Yet another dimension of the useful of the ratio analysis, relevant fromthe
viewpoint of management, is that it throws light on the degree of efficiencyin
management & utilization of its assets. The various activity ratio measuresthis kind
of operational efficiency. In fact, the solvency of a firm is, in theultimate analysis,

47. dependent upon the sales revenues generated by the use of its assets- total as well
as its components.
Overall profitability
Unlike the outsides parties, which are interested in one aspect of thefinancial
position of a firm, the management is constantly concerned aboutoverall
profitability of the enterprise. That is, they are concerned about theability of the
firm to meets its short term as well as long term obligations to itscreditors, to
ensure a reasonable return to its owners & secure optimumutilization of the assets
of the firm. This is possible if an integrated view is taken& all the ratios are
considered together.
Inter-firm comparison
Ratio analysis not only throws light on the financial position of firm butalso
serves as a stepping-stone to remedial measures. This is made possibledue to inter
firm comparison & comparison with the industry averages. A singlefigure of a
particular ratio is meaningless unless it is related to some standard or norm. One of
the popular techniques is to compare the ratios of a firm with industry averages. An
inter-firm comparison would demonstrate the firm’s position vis-à-vis its
competitors. If the results are at variable either with the industry average or with
those of the competitors, the firm can seek to identify the probable reason and, in
that light take remedial measures.
Trend analysis
Finally ratio analysis enables a firm to take the time dimensions into
account. In other words whether the financial position of a firm is improving or
deteriorating over the years. This is made possible by use of trend analysis. The
significance of trend analysis of ratios lies in the fact that the analyst can know the
directions of movement that is movement is favourable or unfavourable. For
example, though the present level may be satisfactory but the trend may be
declining one.
ADVANTAGES

48. Ratio analysis is one of the set of weapon that anyone wishing to understand
a company and its accounts should add to their armoury-has its own particular
advantages. The following are advantages of ratio analysis:
 Simplicity
 Comparison
 Trends
 Clues to further investigation
 Better financial analysis
 Performance analysis
 Forecasting
Simplicity
Ratios are simply to calculate. They are generally one num,ber divided by
another, using figures that can be taken directly from the accounts. Only a few
ratios cannot be immediately calculated using such figures. Also the majority of
ratios have a consistent formula, with only few being subject to variation in
definition people. This simplicity also makes ratios easy to calculate.
Comparison
Ratios are excellent for making comparisons between companies especially
those in the same industry that could be expected to operate under the same or
similar environment conditions. They may be company’s different sizes and shape,
but ratio analysis is one way of looking at them in the same light. Although insome
respects it can be misleading to try and compare companies operating in different
industries, specific ratios can have a comprehensive application in some business
areas. For example, dividend yield is a dividend yield regardless of the size, type or
field of operations of the company that provides the return.
Trends
By calculating the ratios over a number of years, trends may become more
apparent using ratios rather than absolute numbers. For instance, the dividend
payment may be constant at per share, but if the share price si raising, there sis
subsequent decline in the dividend yield.

49. Clues to further investigation
Ratio analysis does not provide the answers to why the results finished as
they did- it is simply the messenger. But the message it conveys can indicate which
areas should be investigated further.
Better financial analysis
Ratio analysis is also helpful to recluses, in addition to shareholders,
debenture holders, and creditors. Besides, bankers are also able to know the
profitability of the company to find out whether they are able to pay the dividend
and interest under a specific period.
Performance analysis
Ratio analysis is also helpful in analysing the performance of a company
through financial analysis; companies can review their performance in the past
years. This is also helpful in identifying their weakness and improving ion them.
Forecasting
At present, many companies use ratio analysis to reveal the trends in
production. This provides them as opportunity for estimation of future trends and
thus the foundation for budget planning so as to determine the course of action for
the growth and development of the business.
CLASSIFICATION OF RATIOS
The ratios can be broadly classified into
 Profitability Ratios
 Turnover Ratios
 Solvency Ratios
PROFIATABILITY RATIOS
Profitability ratios measure a company’s ability to generate earnings relative
to sales, assets and equity. These ratios assess the ability of a company to generate
earnings, profits and cash flow relative to relative some metric, often the amount of

50. money invested. They highlight how effectively the profitability of company is
being managed.
A common profitability ratio include










Net Profit Ratio
Gross Profit Ratio
Operating Profit Ratio
Operating ratio
Return on capital employed
Earnings per share
Dividend yield ratio
Dividend payout ratio
Return on equity capital
Return on shareholders’ investment
All of these ratios indicate how well a company is performing at generating
profit or revenues relative to certain metric.Different profitability ratio provides
different useful insight into the financial health and performance of a company. For
most of these ratios, a higher value means that the company is doing well and it is
good at generating profits, revenues and cash flows.
Profitability ratios give meaningful information only when they are analysed
in comparison to competitors or compared to the ratios in previous periods.
Therefore, trend analysis is required to draw meaningful conclusion about the
profitability of a company.
TURNOVER RATIOS
The turnover ratio may be called efficiency ratio and also activity ratios.
These ratios, thus, may be called the told of projecting the relationship between
sales and assets that have been acquired by the firm in connection with the
activities under discussion planned for the purpose of earning revenues. This ratio
will take different shapes on the basis of considering as components of calculation.
The reason behind such different appearance of ratios is that different business
may be required to employ different type of assets. A few examples of such ratios
are

51.  Inventory turnover Ratio
 Working Capital turnover Ratio
 Debtor Turnover Ratio
 Creditor turnover Ratio
 Fixed Assets Turnover Ratio
SOLVENCY RATIOS
Solvency ratios ability of the business is to repay its outside liabilities. These
liabilities categorised as short term liabilities and long-term liabilities.
Solvency ratio has been used to mean long term financial position of the
business. It is an accepted financial truth that the company must have sufficient
long-term funds to meet its long-term liabilities. Long-term funds include longterm loans and shareholders’ funds. Solvency ratio also measures the relationship
between external and internal equities.
It’s important objective is to ascertain the capability to honour long-term
obligation, such as repayment of loans and enters there on
Under this ratio
 Debt-equity Ratio
 Proprietary Ratio
 Current ratio
 Liquidity Ratio
PROFITABILITY RATIOS
NET PROFIT RATIO
Net Profit ratio measure the relationship between net profit and the Sales. It
shows the amount of each sale left after all expenses have been paid. Net profit is
the indicator of margin available over cost of production and other operating
expenses from sales revenue. Net profit ratio is a key ratio of profitability. It is
very useful when comparing companies in similar industries.
Formula
Net Profit Ratio
Net Profit/Net Sales * 100

52. Significance
Low volume of net profit points out the insatisfactory state of marginal
performance. A firm with low profit margin can earn a high rate of return on
investment if it has a higher inventory.
Table showing Net Profit Ratio
Particulars
2009-2010
2011-2012
7.85
Net Profit Ratio
( in percentage)
Years
2010-2011
13.5
13.03
Inference
The Net profit ratio is 7.85% in the year 2009-2010 and increased to 13.5%
in the year 2010-2011 and the ratio marginally decreased to 13.03% in the year
2011-2012.This decline is due to increase in operational cost of the company.
OPERATING PROFIT RATIO
Operating Profit Ratio indicates the operational efficiency of the firm and is
a measure of the firm’s ability to cover the total operating expenses. It also
represents the amount of profit earned for each rupee of sale after dividing the net
sales to net operating profit. 15% to 20% operating ratio is considered as normal
standard.
Formula
Operating Profit Ratio
Operating Profit/Net Sales * 100
Significance
Operating profit indicates the earning capacity of the concern on the basis of
its business operation and not from earning from the other sources. It shows
whether the business is able to stand in the market or not.
Table showing Operating Profit Ratio

53. Particulars
2009-2010
Years
2010-2011
2011-2012
19.61
24.61
22.24
Operating Profit
Ratio
( in percentage)
Inference
In the year 2009-2010 the operating profit ratio is 19.61% and it increased to
24.61% in the year 2010-2011 and there be a decline in the ratio to 22.24% in the
year 2011-2012. This decline is due to increase in operational expenses. It shows
the company company’s operational efficiency.
TURNOVER RATIOS
WORKING CAPITAL TURNOVER RATIO
Working capital turnover ratio measures the efficiency with the working
capital is being used by the firm. This ratio represents the liquidity position of a
firm. It establishes a relationship between cost of sales and net working capital.
Working capital is a common measure of company’s liquidity, efficiency and
overall growth.
Formula
Working capital turnover Ratio
Net sales/Working capital
Significance
Working capital turnover ratio is an index to know whether the working
capital has been effectively used or not in making sales. A high working capital
turnover ratio indicates either the favourable turnover of inventories and receivable

54. and/or the inadequacy of net working capital accompanied by low turnover of
inventories and receivables.
Table showing Working capital turnover Ratio
Particulars
2009-2010
Working Capital
turnover Ratio
( in times )
3.6
Years
2010-2011
3.7
2011-2012
6.5
Inference
In the year 2009-2010 the working capital turnover ratio is 3.6 times and
there is a marginal decrease to 3.7 times in the year 2010-2011 and there is a
drastic increase in the ratio to 6.5 times in the year 2011-2012.This drastic increase
indicates efficient use of working capital by the firm.
STOCK TURNOVER RATIO
Stock turnover ratio measures the velocity of conversion of stock into sales.
This ratio can be measure by dividing cost of goods sold by average stock. Use of
cost of goods sold instead using the value of sales effected may appear misleading.
It discloses the relationship between the goods sold and the level of stock
maintained by the business.
Formula
Stock Turnover Ratio
Cost of Goods Sold/Average Stock
Significance
A high stock turnover ratio indicates efficient management of stock because
more frequently the stock is sold; the lesser amount of money is required to finance

55. the inventory. A stock turnover implies over investment in inventories, poor
quality of goods.
Table showing Stock Turnover Ratio
Particulars
2009-2010
Stock turnover
Ratio (in times)
2.63
Years
2010-2011
2.75
2011-2012
2.67
Inference
In the year 2009-2010 the stock turnover ratio is 2.63 times and there is
marginal increase in the year 2010-2011 to 2.75 times. This ratio further
marginally decreased to 2.67 times in the year 2011-2012.This is because the
company has larger amount of stock remaining unsold. It indicates that the
company has locked up more funds in the stock.
SOLVENCY RATIOS
CURRENT RATIO
The current ratio is the ratio that subsists between the total current assets and total
current liabilities. It gives the relationship between current assets and current
liabilities of a concern for which the same is calculated. The ratio is very important
for a firm, as it indicates the extent to which short-term creditors are safe in terms
of liquidity of current assets.
Formula
Current Ratio
Current Asset/Current liabilities

56. Significance
The higher the value of current ratio, the more liquid the firm is, and more
ability it has its pay its bills. A low value of current ration means that the firm may
find it difficult to meet its current obligation getting matured.
Table showing Current Ratio
Particulars
2009-2010
Years
2010-2011
2.63
2.70
Current Ratio
( in proportion)
2011-2012
1.63
Inference
The ideal ratio is 2.In the year 2009-2010 the current ratio is 2.63, and there
is a marginal increase in the ratio 2.70 in the year 2010-2011. The ratio decreased
to 1.64 in the year 2011-2012.The calculated ratio in the year 2011-2012 are less
than the ideal ratio which indicate the company is trading beyond its resources and
the current assets are not sufficient to meet its current liabilities. Hence the shortterm solvency of the company is not satisfactory.
DEBT-EQUITY RATIO
Debt-equity ratio is a popular ratio to measure the relationship that subsists
between the long-term creditorship capital (borrowed capital) and the ownership of
the capital contributed to develop the capital structure. This ratio is to indicate the
extent of operating profit that covers fixed interest charges. The fixed interest
charges will signify the long-term solvency of the firm.
Formula
Debt-equity Ratio
Significance
long-term debts/Shareholders’ funds

57. The significance of this ratio depends upon the financial and business policy
of the company. Ratio 1:1 usually considered to be satisfactory ratio although there
are cannot be rule of thumb or standard norm for all type business. Theoretically if
the owner’s interest is greater than that of creditors, the financial position is high
insolvent.
Table showing Debt - Equity Ratio
Particulars
2009-2010
Debt-equity Ratio
( in proportion)
0.8
Years
2010-2011
0.5
2011-2012
0.2
Inference
In the year 2009-2010 the debt-equity ratio is 0.8 and it decreased to 0.5 in
the year 2010-2011 and further it is decreases to 0.2 in the year 2011-2012. Since
the ratios of the three years are less than the ideal ratio. It indicates that the
company relies more on equity rather than on debt. Hence the long-term solvency
position of the company is satisfactory.
OVERALL PERFORMANCE OF THE COMPANY
A profitability ratio has been measured with the help of Net Profit Ratio and
Operating profit Ratio. These ratios indicates slight fall in the operational
efficiency of the company in 2011-2012 where compared to previous years.
Turnover Ratios are determined with the help of Stock and Working capital
of a firm. It indicates efficient use of working capital and inefficient investment
made in stock.
The solvency position has been measure with the help of Current and Debtequity Ratios. It indicates that current assets of the company are not sufficient to
meet its current liabilities. Hence short term solvency position is not satisfactory
and long-term solvency position of the company is satisfactory.

58. Hence, overall performance of the company is not satisfactory. The company
should ensure that take necessary steps in efficiency of the company.
SUMMARY AND CONCLUSION
Industrialisation is a process in which a society or country transforms itself
from a primarily agriculture society into one based on the manufacturing of goods
and services. It is the overall changes in circumstances accompanying a society’s
movement population and resources from farm production to manufacturing
production and associated services. The manufacturing industry is not only
propelling the country’s growth, but is also helping the other sector like agriculture
and service to enhance their capabilities. The developments made on the
manufacturing canvas over the last five years have made the sector in global
market.It is an innovative and high tech industry that generates many job
opportunities.
Carborundum Universal Limited was incorporated in the year April 1954,
under the Indian Companies Act, UII of 1913 as a tripartite collaboration between
the Murugappa Group. Further, CUMI commenced its business on 6th December,
1954. The company pioneered the manufacture of coated abrasives, bonded
abrasives, super refractories, electrominerals, industrial ceramics and ceramic
fibres. CUMI sit at Thiruvottiyur was chosen for special Award for Growing
though managing concern. It also received the ISO 9001:2000 accreditation for
quality standards.The organization structure of CUMI facilitates the functions of
focused business, segment development and encouraging specialization.
Departmentation is concerned with grouping the various activities into
separate administrative units. The various departments of Carborundum Universal
Limited are Purchase department, Sales department, Finance department,
Marketing department and Personnel department. The functions of these
departments are Purchase-to ensure production process are carry out according to
plans, Sales- to increase the sale volume considering a particular period of time,
Finance-to keep recording of the purchase and sales made by a business as well as
capital spending, Marketing- To know the needs and wants of the customer and
fulfil them accordingly, Personnel- to provide a sound programme of wage &
salary administration. These departments help the managerial task simple.

59. Performance appraisal findings provide useful clues to initiating schemes of
managerial development.
Ratio Analysis is one of the techniques of financial analysis where ratios are
used as yardstick for evaluating the financial condition and performance of a firm.
A profitability ratio has been measured with the help of Net Profit Ratio and
Operating profit Ratio. These ratios indicates slight fall in the operational
efficiency of the company in 2011-2012 where compared to previous
years.Turnover Ratios are determined with the help of Stock and Working capital
of a firm. It indicates efficient use of working capital and inefficient investment
made in stock.The solvency position has been measure with the help of Current
and Debt-equity Ratios. It indicates that current assets of the company are
notsufficient to meet its current liabilities. Hence short term solvency position is
not satisfactory and long-term solvency position of the company is satisfactory.
Hence, overall performance of the company is not satisfactory. The company
should ensure that take necessary steps in efficiency of the company.
Future prospects
Manufacturing exports from India could increase from US $ 40 billion in
2002 to about US $ 300 billion by 2015, according to reported titled, “Made in
India – the nest big Manufacturing Export Story”, jointly prepared by CII and
Mc Kinsey. The report assesses that such an expansion would make. There is also
hope that with the growth of developing economies, more companies in other
industries are able to expand or upgrade their facilities and other capital
investments, or even construct more facilities. This is good news for the industry
that supplies with the necessary industrial products and machinery.India garners a
share of approximately 3.5 percent in the world manufacturing trade. Chennai
based Carborundum Universal Limited part of the $ 31 billion Murugappa Group,
is planning to expand its production capacity and create new products with an
investment of Rs. 150 core. The company is planning to form two joint ventures,
said srinivasan, and would attract investment of around Rs. 50 core. CUMI brings
to the Isithebe business, along with capital and echonoligist, its brands, market
areas, applications engineering expertise and global management practices.“This
will enable the Isthibe plant- to be renamed as Thugela Refractories, Isthibe (TRI)
- to grow its electro-minerals and refractories business“.

60. BIBLIOGRAPHY
Books
Battacharya Sisirkumar & Kumar Roy Sujit., “Management Accounting”.
New Delhi, Sultan Chand &sons.
Gupta, C.B., “ Business Management”
New Delhi, Sultan Chand&sons.
Khan & Jain., “ Management Accounting”.
New Delhi, Tata McGraw- Hill Publishers Ltd.
Kumar Arun& Sharma Rachan., “ Secretarial Practice and Company Law”.
New Delhi, Atlantic Publishers and distributors.
Kumar Ashok., “ Company law & Secretarial Practice”.
New Delhi, V.K. India Enterprise.
Website
www.cumi.murugappa.com
www.google.com
www.murugappa.com