SUMMER INTERNSHIP PROJECT ON

“FINANCE &ACCOUNTING DEPARTMENT

Undertaken at

ENKAY ELECTRICAL.PVT LIMITED (SILVASSA)

Submitted in partial fulfilment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BATCH (2022-24)

Submitted by Name of the Industry Mentor

MANTU VINOD GUPTA MR.PRABHAT KUMAR MISHRA
MBA Semester III SR.ACCOUNTANT

Enrolment No. 2206142000290

Under the Guidance of

DR. PURVI DERASHRI

. ASSISTANT PROFESSOR

PARUL UNIVERSITY
FACULTY OF MANAGEMENT STUDIES
P.O. Limda, Tal. Waghodia, District Vadodara – 391760
 Declaration

I, Mantu Vinod Gupta , Enrolment No. 2206142000290 from PIET MBA, Semester III of the
Parul University, Vadodara hereby declare that the Summer Internship Report entitled In
Finance & accounting department. is an original work and the same has not been submitted
to any other Institute for the award of any other degree.
 INSTITUTE CERTIFICATE

It is hereby certified that Mr. MANTU VINOD GUPTA , Enrollment No-

2206142000290 has submitted the Summer Internship Project Titled:
FINANCE &ACCOUNTING DEPARTMENT in partial fulfillment of Master of
Business Administration ( PIET ) at Faculty of Management Studies – MBA, Parul
University, Vadodara, Gujarat.

The internship was carried out at Enkay Electricals Pvt Limited from
24/05/2023 to 24/08/2023. The report submitted is satisfactorily meeting all
laid out criteria.

Date: 06/08/2023

Signature of the Guide Signature

Dr. Purvi Derashri Dr. Bijal Zaveri

Associate Professor Dean and Director
Faculty of Management Studies.
Parul University
 PREFACE
As an MBA student and a project trainee/intern at Enkay Electrical, I have had the
incredible opportunity to delve into the realm of a study on organisational culture activities within
the organization. This research study has been under impact of technology in accounting practices
as part of my internship, with the aim of shedding light on the challenges faced by the culture to
adopt the accounting system as their technology change

Accounting management is a critical aspect of an industrial, particularly in the industry where

adherence to strict quality standards and timely delivery of materials are of paramount importance.
Effective management practices can significantly impact the overall efficiency, reliability, and
cost-effectiveness of the product. Conversely, challenges in this domain can pose risks and hinder
the seamless flow of materials and products.

The primary objective of this research is to examine the impact of technology in accounting
practices activities. By exploring the challenges encountered in management, we aim to identify
areas that can be improved to enhance the overall accounting system performance and strengthen
the company's competitive edge.
To achieve this objective, a rigorous research methodology has been employed, combining
quantitative and qualitative data collection methods. Surveys and interviews have been conducted
to gather insights from. The data collected will be analysed to understand the perceptions,
experiences, and suggestions of key technology.
The findings from this research will have significant implications for Enkay Electricals pvt ltd and
can guide managerial decision-making processes. The insights gained will help the organization
identify and address challenges management, optimize supplier relationships, and enhance supply
chain efficiency. Additionally, the research outcomes will contribute to the broader understanding
of vendor management practices and their impact on sourcing supply chain activities within the
engineering industry.
I would like to express my gratitude to the management team at Enkay Electrical Pvt ltd for
providing me with this valuable opportunity to conduct research on such a pertinent topic. I am
also immensely thankful to all the employees who generously shared their time and knowledge,
contributing to the success of this research project.
It is my sincere hope that the outcomes of this study will serve as a catalyst for positive change
within Enkay Electricals and contribute to the body of knowledge in the field of organisational
culture management practices and sourcing supply chain activities. This research endeavour has
been a remarkable learning experience for me as an intern, and I am excited to present the findings
to the organization and academic community.
 ACKNOWLEDGEMENT

I would like to extend our sincere appreciation and utmost respect to our guide, Dr. Purvi
Derashri and Mr Prabhat Kumar Mishra, for their exceptional guidance, supervision, and
unwavering support throughout the duration of this project. The invaluable blessings, assistance,
and advice provided by them at various stages have truly paved the way for our personal and
professional growth as we embark on the journey of life.
 Sr. No. PARTICULARS Page No

Chapter-1 INDUSTRY STUDY

1.1 Introduction Engineering industry in india

1.2 Growth and Evolution of Engineering Industry in India

Engineering Industry Analysis: Michael Porter’s Five Forces

1.3 Model

Chater-2 COMPANY STUDY

2.1 Introduction of Enkay Electrical Pvt Limited

2.2 Mission and Vision

2.3 Goals and Objectives

2.4 Organization’s Structure

2.5 Board of Directors and Key Executive Officers

2.6 Product and Services Offered

2.7 Key Milestones/Awards Achieved by the Organization

2.8 Key financial/operational results for last 5 years

Overall financial/operational Performance of the

2.9 Organization

2.10 SWOT Analysis of Organization

Chapter-3 DEPARTMENTAL STUDY

3.1 Introduction of the Finance/Account Department

3.2 Activities of Account Department

3.3 SWOT Analysis of the Department

Documents (Worked upon by the student while he/she was

3.4 Interning at the Organization)

Interdependence of department/Area under study with other

3.5 departments/operational areas

3.6 Analytical study of work/assignments/training

3.7 Conclusions

3.8 Suggestions

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3.9 Outcomes of the Summer Internship

Chapter-4 RESEARCH

4.1 THE INDIAN MONEY MARKET

4.2 Abstract of Indian money market

4.3 Introduction of the Indian money market

4.4 Literature Review

4.5 Define Research Problem/Research Objectives

4.6 Hypotheses

4.7 Research Methodology

4.7.1 Research Design

4.7.2 Sample Design and Sampling

Data Collection Instrument’s Selection, Preparation and

4.7.3 Collection

Research/Data Analysis (SPSS/AMoS/Advance

4.7.4 Excel/NViVo etc.)

4.8 Findings

4.9 Conclusions

4.10 Industrial/Managerial/Societal Implications

4.11 Limitations

4.12 References

4.13 Appendices

Page |2
 CHAPTER 1
INDUSTRY STUDY

1.1 Introduction

India’s Capital Goods manufacturing industry serves as a strong base for its engagement
across sectors such as Engineering, Construction, Infrastructure and Consumer goods,
amongst others.

The engineering sector is the largest of the industrial sectors in India. It accounts for 27%
of the total factories in the industrial sector and represents 63% of the overall foreign
collaborations. Demand for engineering sector services is being driven by capacity
expansion in industries like infrastructure, electricity, mining, oil and gas, refinery, steel,
automobiles, and consumer durables. India has a competitive advantage in terms of
manufacturing costs, market knowledge, technology, and innovation in various
engineering sub-sectors. India’s engineering sector has witnessed a remarkable growth
over the last few years, driven by increased investment in infrastructure and industrial
production. The engineering sector, being closely associated with the manufacturing and
infrastructure sectors, is of huge strategic importance to India’s economy.

The development of the engineering sector of the economy is also significantly aided by
the policies and initiatives of the Indian government. The engineering industry has been
de-licensed and allows 100% foreign direct investment (FDI). Additionally, it has grown
to be the biggest contributor to the nation's overall merchandise exports.

India became a permanent member of the Washington Accord (WA) in June 2014. it is
now a part of an exclusive group of 17 countries who are permanent signatories of the
WA, an elite international agreement on engineering studies and mobility of engineers.

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1.2 Growth and Evolution of Engineering Industry in India
The engineering sector in India has experienced substantial growth and
transformation, establishing itself as a prominent global player in the industry. India's
engineering industry has a long-standing history that dates back to the early 20th century
when several domestic engineering companies were established.

A key factor contributing to the industry's growth is India's abundance of scientific and
technical talent. The country boasts a vast network of highly skilled professionals, including
techniques, and engineers, who have played a pivotal role in driving innovation and progress
in the field. This talented workforce has enabled India to build a robust infrastructure for
research and development, fostering the discovery of new and formulations.
Moreover, India's cost-effective manufacturing capabilities have played a crucial role in the
industry's expansion. The country has a well-established sector for manufacturing generic
electrical parts, allowing it to produce high-quality of electric equipment at affordable prices.
This not only enhances accessibility to engineering for the Indian population but also positions
India as a major supplier of product to countries worldwide.

Favourable government policies and initiatives have also been instrumental in the growth of
India's engineering industry. The government has implemented measures to promote research
and development, encourage investments in the sector, and safeguard intellectual property
rights. These policies have created an enabling environment for engineering companies to
thrive and attract both domestic and foreign investments.
Furthermore, the Indian engineering industry has undergone a notable shift from primarily
focusing on the manufacturing of electric product to exploring new avenues in research and
innovation. Many Indian companies are actively engaged in developing innovative of
transformers formulations and conducting engineering trials. This transition towards research-
based engineering has not only enhanced the industry's global competitiveness but also
contributed to advancements in engineering science .

The industry has embraced digital technologies and automation, leading to improved
efficiency in manufacturing, supply chain management, and quality control. The adoption of
technology has facilitated the development of personalized products .

In conclusion, India's engineering industry has experienced remarkable growth and evolution.
By leveraging its skilled talent pool, cost-effective manufacturing capabilities, favourable
policies, and focus on research and innovation, India has emerged as a significant player in
the global engineering landscape. The industry's progress has not only improved production
qualities outcomes for the Indian population but also contributed to scientific advancem

Page |4
Page |5
1.3 Engineering Industry Analysis: Michael Porter’s Five Forces Model

Michael Porter's Five Forces Model is a well-known framework used to analyse the
competitive dynamics and appeal of an industry. When applied to the engineering sector, it
provides valuable insights into the industry's structure and competitive forces. Let's explore
each of the five forces within the context of the engineering industry:

Threat of New Entrants:

The industry engineering presents substantial barriers to entry due to stringent

regulations, high research and development (R&D) costs, complex manufacturing processes,
and the need for extensive marketing and distribution networks. These factors make it
challenging for new players to establish themselves. Existing engineering companies often
benefit from economies of scale and strong brand recognition, which further discourages
potential entrants.
Bargaining Power of Suppliers:

Page |6
 Suppliers in the Engineering industry encompass raw material suppliers, contract
manufacturers, and providers of specialized equipment or services. Generally, suppliers wield
moderate bargaining power. While some suppliers may possess patents or unique capabilities,
Engineering companies typically have multiple supplier options and can negotiate favorable
terms due to their size and influence.

Bargaining Power of Buyers:

Buyers in the Engineering industry primarily consist of electric part providers like
transformers insulators ,bulb electric motors etc. as well as government agencies and
insurance companies. The bargaining power of buyers varies based on factors such as the
availability of alternative products, the product 's importance for industrial , and the volume
of purchases. In certain instances, buyers can exert significant bargaining power, particularly
for , leading to price pressures and cost containment efforts.

Threat of Substitute Products:

The Engineering industry faces a relatively low threat of substitute products. often
offer unique and specialized products that are not easily substitutable. However, within
therapeutic classes, there can be some substitution, where different address similar
conditions. Nonetheless, stringent regulatory requirements and extensive industrial trials
create significant barriers for substitute products.

Intensity of Competitive Rivalry:

The Engineering industry is highly competitive, with numerous companies vying for
market share. Competition arises from factors such as patent expirations, the introduction of ,
pricing pressures, and the constant need for innovation. Engineering companies invest heavily
in R&D to discover new products and develop improved formulations, intensifying the
competition. Nevertheless, strong intellectual property protections and regulatory barriers can
help mitigate direct competition for specific products

In summary, the Engineering industry exhibits high barriers to entry, moderate supplier power,
moderate buyer power, a low threat of substitutes, and intense competitive rivalry. Applying
Porter's Five Forces Model allows stakeholders to assess the industry's attractiveness,
formulate effective strategies, and navigate the intricate landscape of the Engineering sector

Page |7
 CHAPTER 2

COMPANY STUDY

2.1 Introduction of Enkay Electricals Pvt Limited

• The Enkay Electrical Company is Situated in Dadra and Nagar Haveli in Village
Masat Survey no 446/1&446/2 Plot no 113 Govt Industrial Estate Masat Silvassa
396230.
• The Enkay Electricals company is the leading and single company in dadra and
nagar haveli who manufacturer all the parts and give services for the insulator ,lt
switchgear and 6.6 kv Gernetors
1 .Manufacturer of 11kv epoxy insulator, 33kv Epoxty Insulator &66,kv insulator
offered by Enkay Electricals from Silvassa Established in 2008, Enkay Electricals Pvt
Limited is a well-known Engineering company headquartered in Silvassa India, and has a
strong international presence. The company focuses on two primary business segments:
production and services

Enkay Electricals has established a widespread manufacturing network across four

continents, encompassing eight manufacturing facilities. Notably, five of these facilities have
received approval from the States of Engineering & technology underscoring the company's
commitment to quality and regulatory standards. Additionally, the company operates two
manufacturing facilities dedicated to serving markets outside of the States.
The company boasts a dedicated research and development (R&D) facility in India, equipped
with global filing capabilities. This R&D centre enables Strides Engineering Science to
conduct innovative research, develop new product formulations, and seek regulatory
approvals for its products. With a robust presence in around 3000sqar meter of , the company
has successfully expanded its market footprint and reach, serving a diverse range of
customers worldwide.

Page |8
2.2 Mission and Vision

Mission

To design, manufacture, and deliver high-quality electrical parts and components that enable
innovation, reliability, and sustainability in diverse industries. We strive to exceed customer
expectations through technological expertise, exceptional service, and a commitment to
driving progress in the field of electrical engineering.

Vision

• To be recognized globally as the leading provider of electrical parts in south Gujarat

• Provide customer satisfaction by understanding their needs, delivering exceptional

service, and maintain quality of the products

2.3 Goals and Objective

GOALS
An Engineering, company called Enkay Electricals
pvt Limited is driven by a number of main objectives to operate and expand.
In order to find and create new, formulations, and technical solutions, one of its main goals is
to invest heavily in development.

The goal of an electrical parts manufacturing company is to design, produce, and

distribute high-quality electrical components and devices for various industries. The company
aims to meet the growing demand for reliable and efficient electrical solutions while adhering
to industry standards and regulations The Enkay electricals wants to enhance production and
on innovation the new product as per customer demand
Upholding high standards for manufacturing and quality assurance is a key objective for the
company. Enkay Electrical Pvt limited is dedicated to creating electricals products that are
both safe and effective while enforcing strict quality control standards and regulatory
compliance. They work to live up to the standards set by customer’s professionals by
constantly enhancing manufacturing procedures and abiding by rigid regulations.

Enkay.Electricals also has a big focus on global expansion.By forming strategic alliances, par
tnerships, and acquisitions, the company aims to increase its market demand in foreign markt
s.
With the help of this expansion strategy, they can access a larger customer base, strengthen th
eir distribution networks, and expand into new geographic areas, ultimately expanding

Page |9
OBJECTIVE

The Enkay Electricals Pvt Limited has many important goals that drive its business
and shape its strategic direction. One of their main goals is to be at the forefront of
engennring innovation. The company's goal is to invest in strong research and development
activities to discover and develop new product, formulations and solutions. With a focus on
innovation, strives to meet unmet customer product needs, improve production quality
outcomes and contribute to electricals progress.
Superior manufacturing quality is also an important goal of our company. Enkay Electricals
is committed to maintaining high quality standards in our manufacturing processes. This goal
includes strict adherence to legal guidelines, implementation of stringent quality control
measures, and continuous improvement of manufacturing practices. The company's goal is to
provide safe, effective and reliable products professionals and worldwide by adhering to strict
quality standards.
Global expansion is an important strategic goal for Enkay Electricals. The company aims to
expand its presence in international markets by building a strong global presence. This goal
requires establishing strategic collaborations, partnerships, and acquisitions to develop new
geographic regions, strengthen distribution networks and gain access to a diverse customer
base. By expanding globally, Enkay Electricals to seize opportunities in various markets and
increase market share and revenue.
Ensuring regulatory compliance is a key goal of Enkay Electrical The company attaches great
importance to This goal includes adherence to strict quality assurance practices, rigorous
testing and documentation practices, and adherence to regulatory guidelines. By meeting our
regulatory obligations, Enkay Electricals aims to demonstrate our commitment to safety,
efficacy, and quality while instilling confidence in our products.

• Product Development: 2) Cost Efficiency:

• Quality Assurance: 4) Customer Satisfaction:

• Supply Chain Management 5) Employee Development and Safety

In summary, Enkay Electricals Pvt Limited has many important goals focused on innovation,
manufacturing excellence, global expansion, regulatory compliance, and portfolio
diversification. By pursuing these goals, the company seeks to position itself in the
engineering industry, drive growth, and have a positive impact on market

P a g e | 10
 2.4 ORGNATIONAL STRUCTURE
Enkay Electricals organizational structure is designed to empower efficient operations
and effective corporate governance. At the top of the structure is the CEO, made up of senior
executives responsible for overseeing strategy and governance for the unrestricted company.

The Chief Executive Officer (CEO) leads the management team and is responsible for
executing the company's strategic vision and ensuring its successful execution. There are
several key functional areas within the CEO reporting organization.

The Commerce and Sales division focuses on marketing and sales activities such as product
promotion, market research and customer relationship management. This business plays a
key role in driving our sales growth and expanding our market presence.

The Manufacturing and Operations department is responsible for electricals parts and
transformer production and quality assurance. This division includes manufacturing facilities,
quality control laboratories and supply chain management. attaches great importance to
maintaining high quality standards and complying with legal requirements in the
manufacturing process.
Support functions such as finance, human resources, and legal play an important role in
providing necessary resources, managing finances, recruiting and developing talent, and
ensuring that legal and compliance issues are addressed. Overall,organizational structure
facilitates effective collaboration and coordination among the various departments, enabling
the company to achieve its goals of research and development, manufacturing excellence,
global reach, and regulatory compliance

CEO
PRESIDENT HR- HEAD VICE-PRESIDENT

PRODUCTION FINANCE-HEAD MARKETING-HEAD

HEAD

SUPERVISOR WORKER SALES MAN

..

P a g e | 11
2.5 Board of Directors and Key Executive Officers

Kishorilal katiyar
Executive Chairperson & Managing Director

Mr. kishorilal katiyar is a first-generation entrepreneur and is

known for his intellect of picking “difficult to operate” domains
with high scarcity value.
Mukesh Katiyar
Executive Director & Group Chief Financial Officer

Mukesh katiyar is the Executive Director & Group Chief

Financial Officer and is associated with Strides since February
2010.
Mr GULVENDER SINGH
VICE-PRESIDENT

Mr. Gulvender Singh is the vice-president of the Company and is

the Chairman of the Audit Committee. He is associated with
Strides since July 2012.

MR Manish harit
HR-HEAD

Mr. Manish Harit is the Hr head of the Company a is associated

with Strides since July 2014.
Lalit Patel
Adviser

Mr. lalit Patel is the Independent adviser of the Company and is

associated with the Company since May 2017.

(https://strides.com/corporate-board.html) with proper permission.

P a g e | 12
2.6 PRODUCTS OFFERED
The Enkay Electricals Pvt Limited wide variety of Electrical products in different
Electricals parts categories. Their range of offerings includes branded Transformers, and
specialty products. They offer the high quality product and various forms like insulators
transformers and electricals parts formulations.
Within the company Enkay Electricals Pvt Limited provides a comprehensive selection of
affordable alternatives to branded electricals part that are no longer under patent protection.
These products are designed to have the same active strength, and effectiveness as their
branded counterparts, while being more accessible and cost-effective for patients.

Furthermore, the company develops branded which are their own proprietary formulations
marketed under unique brand names. These products may have additional features like
modified-release formulations or distinct combinations of active, giving physicians and
patients a wider range of choices within specific therapeutic areas products, which are
medications specifically tailored for areas or complex formulations.
These products often require specialized manufacturing capabilities and cater to specific
patient populations with unique product needs. Examples of specialty products.
By offering a diverse range of electric products, their goal is to contribute to the Indian
economy

1) HIGH VOLTAGE INSULATORS 2) SWITCHGER INSULATOR

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 3) LT PIN INSULATORS

4) KRIPSON BUSBAR

P a g e | 14
2.6.2 RAW MATERIAL REQURIED FOR INSULATOR

• 1.GLASS
• 2. PLASTICS
• 3. RUBBERS
• 4. CERAMICS
• 5.POLYETHYLENE
• 6.CLAY MINERAL
• 7.RED CLAY

5) PROCESS OF MAKING NSULATORS

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 3) FINAL PRODUCT OF ENKAY ELECTRICALS

6) 360KV TRANSFORMER

7) 480KV TRANSFORMER

P a g e | 16
2.7 Key Milestones/Awards Achieved by the Organization

0
2018 2019 2020 2021 2022
production expenses net profit

2.8 Key financial/operational results for last 5 years

2.9 Overall financial Performance of the Company

To assess the overall financial performance of the company, let's analyse the provided
data for various parameters.

P a g e | 17
1. Sales:
- The sales of the company have shown a consistent growth trend over the years, increasing
in Mar-22.
- However, there was a slight decline in sales in Mar-20 and 2021 compared to the previous
year.

2. Profitability:
- The net profit of the company has been fluctuating. It was positive in Mar-18 and Mar-22
but negative in Mar-20, Mar-21, .

- The company suffered losses in Mar-20 and Mar-21 because of COVID-19, indicating a
decline in profitability during those periods.

3. Expenses:
- Raw material costs have generally increased over the years, except for a slight decrease in
Mar-21. However, the cost in Mar-22 is higher compared to the previous year.
- Employee costs have consistently increased from Mar-22 indicating a rise in workforce
expenses.
- Other expenses have shown fluctuations but increased significantly in Mar-22.
- Power and fuel costs, as well as selling and administrative expenses, have incomplete data.

4. Liquidity:
- Cash flow from operating activities has shown fluctuations, with positive cash flow in most
years. However, there was a negative cash flow in Mar-22.
- Cash flow from investing activities has been volatile, with negative values in Mar-19 and
Mar-21 but positive values in other years.

- Cash flow from financing activities has shown both positive and negative values over the
years.

5. Balance Sheet:
- Equity share capital has remained relatively stable, with minor increases each year.
- Reserves have fluctuated, reaching the highest in Mar-22 and then declining in Mar-21 and
Mar-20.

- Borrowings have increased initially and remained relatively stable in the later years.
- Net block, investments, and other assets have shown fluctuations over the years.

P a g e | 18
2.10 SWOT analysis of Strides Pharma Science Limited

Strengths
Expertise and Weaknesses:
Experience. High- Dependence on Key
Quality Customers:
ProductsStrong Technological
Relationships with Obsolescence
Suppliers

Opportunities:
Technological Threats:
Advancements Volatile Raw Material
.International Prices:
Expansion Economic Instability
Growing Demand for Intense Competition
Renewable Energy:

Strengths:

• Expertise and Experience: The company may have a team of skilled engineers
and technicians with extensive knowledge and experience in transformer
manufacturing
• High-Quality Products: The company may have a reputation for producing
high-quality transformers that meet industry standards and customer
requirements
• Strong Relationships with Suppliers: The company may have long-term
relationships with reliable suppliers, ensuring a steady supply of quality raw
materials and components
Diverse Product Portfolio: Strides engineering Science offers a comprehensive range of
electricals products across various types of segments, as per different market needs.

P a g e | 19
Weaknesses:
• Dependence on Key Customers: If the company relies heavily on a few major
customers, losing any of them could significantly impact revenue and
profitability.

• Technological Obsolescence: Rapid advancements in transformer technology

require continuous investment in research and development to stay competitive.
Limited Patent Protection: As a primarily generic-focused company, Enkay Electricals faces
pricing pressures and intense competition due to limited patent protection, potentially
affecting profit margins.

Opportunities:
• Technological Advancements: Investing in research and development can enable
the company to develop innovative and efficient transformer designs, enhancing
its competitive edge.
• International Expansion: Exploring new markets and expanding operations
internationally can help the company tap into emerging economies and diversify
its customer base.

• Growing Demand for Renewable Energy: The shift towards renewable energy
sources such as wind and solar power presents opportunities for the company to
supply transformers for these sectors.
Increasing Demand for Generics: The global demand for affordable products an opportunity
for Enkay Electricals to leverage its cost-effective manufacturing capabilities and cater to this
expanding market..

Threats:
• Volatile Raw Material Prices: Fluctuations in the prices of raw materials such as
copper and steel can impact the company's manufacturing costs and
profitability.

• Economic Instability: Economic downturns or recessions can reduce overall

demand for transformers and affect the company's sales and revenue.

• Intense Competition: The transformer manufacturing industry may be highly

competitive, with the presence of established players and new entrants. This can
result in price pressures and reduced profit margin Price Pressure and Regulatory
Changes: Government policies, pricing regulations, and changes in systems can exert
price pressure and impact the profitability of engineering companies

P a g e | 20
 Chapter-3
DEPARTMENTAL STUDY
3.1 Introduction of the Finance Department
The Finance Department, also known as the Procurement Department or Procurement
Division, is a critical function within an organization responsible for managing the
acquisition of goods, services, and raw materials required for the smooth operation of the
business. It plays a crucial role in ensuring that the organization obtains the necessary
resources at the right book keeping, tax, gst

The primary objective of the account Department is Accounting, also known as accountancy,
is the measurement, processing, and communication of financial data about economic entities
such as businesses and corporations.

Accounting, also known as the “language of business,” measures the outcomes of an

organization’s economic activities and communicates this information to a wide range of
users, including investors, creditors, management, and regulators

Key Responsibilities of the Purchase Department include:

1. Financial Reporting: Preparation and analysis of financial statements, such as the
balance sheet, income statement, and cash flow statement. This involves recording and
summarizing financial transactions, ensuring accuracy, and compliance with
accounting standards.
2. Budgeting and Forecasting: Collaborating with other departments to develop annual
budgets, setting financial goals, and creating forecasts to guide financial decision-
making.
3. Accounts Payable: Managing the payment of invoices and bills owed by the company
to suppliers, vendors, and service providers. This includes verifying the accuracy of
invoices, maintaining vendor records, and ensuring timely payment.

4. Accounts Receivable: Overseeing the collection of payments from customers and

clients. This involves generating and sending invoices, tracking outstanding balances,
managing customer accounts, and pursuing collections if necessary.
5. Payroll Processing: Calculating employee salaries, benefits, and deductions, and
ensuring accurate and timely payroll processing. This includes complying with tax
regulations, managing employee records, and addressing payroll-related queries.
6. Financial Analysis: Conducting financial analysis and performance evaluations to
assess the company's financial health, identify trends, and provide insights for
management decision-making. This may involve analyzing financial ratios, conducting
variance analysis, and preparing management reports.
7. Compliance and Audit: Ensuring compliance with financial regulations and company
policies. This includes coordinating and assisting with internal and external audits,

P a g e | 21
 maintaining financial records and documentation, and implementing internal controls
to safeguard company assets.
8. Taxation: Managing tax-related activities, such as calculating tax liabilities, filing tax
returns, and ensuring compliance with tax laws and regulations. This may involve
working with tax advisors or consultants to optimize tax strategies and minimize tax
liabilities.
9. Financial Systems and Software: Overseeing the implementation and maintenance of
financial systems and software, such as accounting software, enterprise resource
planning (ERP) systems, and other tools to streamline financial processes and enhance
efficiency.
10. Financial Planning and Analysis: Collaborating with senior management to develop
financial strategies, evaluate investment opportunities, and support long-term financial
planning initiatives.
11. Risk Management: Identifying and assessing financial risks faced by the company,
developing risk mitigation strategies, and implementing internal controls to minimize
risks related to financial operations.
12. Cash Management: Monitoring cash flow, optimizing working capital, and ensuring
adequate liquidity to meet the company's financial obligations and support ongoing
operations.

3.2Activities of Account Department

The account Department performs a variety of activities to ensure the smooth
functioning of the accounting process. Some key activities typically carried out by the
account Department:

• 1. 1) Financial Planning: Developing short-term and long-term financial plans,

setting financial goals, and forecasting future financial needs.
• 2) Budgeting: Creating budgets for various departments and projects, allocating
resources, and monitoring budget adherence.
• 3) Financial Reporting: Preparing financial statements, including balance sheets,
income statements, and cash flow statements, to know about the financial status of the
organization or business,

• Capital Management: Assessing and managing the organization's capital structure,

including decisions related to equity financing, debt financing, and dividend policies.

• Tax Compliance: The account department ensures compliance with tax laws and
regulations. They prepare and file various tax returns, such as income tax, sales tax,
and payroll tax, and coordinate with tax authorities as necessary.

P a g e | 22
 • Financial Planning and Strategy: The account department often participates in
financial planning and strategic decision-making. They provide financial insights,
evaluate investment opportunities, and contribute to the development of financial
strategies to achieve organizational goals.

• Financial Analysis: The account department conducts financial analysis to assess the
organization's financial performance, identify trends, and provide insights to
management. This may involve ratio analysis, trend analysis, and benchmarking
against industry standards.

• Payroll Processing: The account department handles the calculation and processing
of employee salaries, wages, bonuses, and deductions. They ensure compliance with
tax regulations and maintain accurate payroll records.

• Financial Record-keeping: The account department is responsible for maintaining

accurate and up-to-date financial records. This includes recording transactions, such
as sales, purchases, and expenses, in the company's general ledger or accounting
software.

• Payroll Processing: The account department handles the calculation and processing
of employee salaries, wages, bonuses, and deductions. They ensure compliance with
tax regulations and maintain accurate payroll records.
• Accounts Payable: The account department manages the organization's accounts
payable process, which involves recording and paying invoices from suppliers and
vendors. They verify the accuracy of invoices, reconcile statements, and ensure timely
payment.

By performing these activities effectively, the Account Department ensures that the
organization to know about the financial status of the company and all debtors and creditors
of the company and show the assets and liabilities of the company and the account
department is contributing to the overall success and performance of the business.

P a g e | 23
3.3 SWOT Analysis of the Department

Strengths:
Weaknesses:
1. ) Financial expertise
1.Overreliance on
2.) Accurate financial manual processes
reporting
2.Limited technological

Opportunities:
Threats:
1)Data analytics:
1.Increased competition
2. 2)Strategic financial
2.) Cybersecurity risks
planning

SWOT analysis is a useful tool for assessing the strengths, weaknesses, opportunities,
and threats of a department or organization. Here's a SWOT analysis specifically for the
Account Department:

Strengths:
• 1) Financial expertise: The finance department typically consists of professionals
with strong financial knowledge and expertise,
• 2) Accurate financial reporting: The department ensures accurate and timely
financial reporting

Weaknesses:
1. 1) Financial expertise: The finance department typically consists of professionals
with strong financial knowledge and expertise,

2. 2) Accurate financial reporting: The department ensures accurate and timely

financial reporting

3. Identifying and on boarding new vendors often requires collaboration with various
departments, such as quality assurance, legal, and finance.

P a g e | 24
Opportunities:
• 1) Data analytics: Utilizing data analytics tools and techniques can provide valuable
insights into financial trends, risks, and opportunities, enabling proactive decision-
making.

• 2)Strategic financial planning: The finance department can actively contribute to

strategic planning provided a good working environments and learning of new new
things

Threats:
• 1. 1) Increased competition: The finance industry is constantly evolving, with new
players and disruptive technologies entering the market.

• 2) Cyber security risks: The finance department handles sensitive financial data,
making it a potential target for cyber attacks.

• It's important to note that this SWOT analysis is a general framework, and the specific
strengths, weaknesses, opportunities, and threats may vary depending on the
organization, industry, and or business unit

1.4 Documents (Worked upon by the student while he/she was Interning at the
Organization).

Due to privacy policies, organizations have not offered project trainees and
interns a lot of work and access. but they have allocated the duty of creating the
account department's process chart. In order to make it easier for the next intern or
project trainee to comprehend the account department's attachment process.

• 1) Assisting with bookkeeping: The intern may have been responsible for maintaining
financial records, such as recording transactions, reconciling bank statements, and updating
general ledgers

P a g e | 25
 • 2) Accounts payable and receivable: The intern could have helped with processing
invoices, verifying transactions, and managing the organization's accounts payable and
receivable systems.

• 3) Payroll processing: The student may have assisted in calculating employee wages,
preparing payroll records

• 4) Financial statement preparation: the preparation of financial statements, including

income statements, balance sheets, and cash flow statements.

5) The work is given me till date is like

1. book keeping
2. purchase entries in tally software
3. bank entries
4. all patty cash transaction entry
5. sales records
6. and records of all the money related transaction in the company

• And at last a big thanks to Parul University to provide the big

education with experience opportunities to us .

• It’s important to note that in some cases, advance payment or a letter of credit
may be issued after the creation and issuance of the transaction

3.5 Interdependence of department/Area under study with other

departments/operational areas
The account department or area of? An organization to be examined is highly
dependent on various other departments and areas of operation. The efficient of the Account
department depends on effective collaboration and coordination with these interconnected
departments. Here are some important examples of the interdependence between the account
department and other departments/areas:
1. Supply Chain Management: The Account department plays a fundamental role in
managing a company's transports expenses. He works closely with logistics and
procurement teams to ensure timely and cost-effective procurement of components
and services. The account department relies on accurate demand forecasts from the

P a g e | 26
 sales and operations cost planning departments to optimize cost and maintain an
uninterrupted supply of goods.
2. Purchase department: The account department works closely with the finance and
accounting department to manage purchase orders, invoices and payment processes.
The finance team ensures that the necessary budget allocations are in place for
procurement activities and verifies the accuracy of supplier invoices. Effective
communication between purchasing and finance departments is essential to ensure
financial controls, compliance and accurate expense tracking.
3. Legal and Compliance: the account department works closely with Legal and
Compliance to ensure that tax related activities comply with applicable laws,
regulations, and company policies. This collaboration includes drafting and reviewing
supplier contracts, managing intellectual property rights, and mitigating legal and
compliance risks associated with procurement processes.
4. Supplier Management: Effective supplier management requires collaboration between
the account department and departments that interact directly with suppliers, such as.
Supplier performance evaluation, supplier relationship management and continuous
improvement initiatives. Close cooperation ensures that supplier selection and
management and payment related issues.

3.6 Analytical study of work/assignments/training

The analytical Study conducted during my internship/project training involved a
restricted level of access to due to the organisation’s confidentiality and Internal policies.
However, I was provided the essential details regarding the department such as SAP ECC-
ERP and Plan Visage, which are used for planning purpose. Main objective was to
comprehend the process of accounting, specifically in context of account of the company
During the internship, I focused on acquiring a solid understanding of the fundamentals that
Trainee or account executive should be familiar with, including payment terms and the
necessary documentation involved in the process. Additionally, given my previous
Experience in Engenirnning Company I had learn about the electrical product that company
manufacturing in plant transformers and insulators of different types.
As part of my assigned task, I worked with the provided data, which included information
about a specific molecule, daily or day to day expenses activities in the company

This analytical study allowed me to apply my knowledge and skills to analyse the given data
assess the availability of the my work ness how to work in software , and to explore potential
alternatives. By completing the task, I gained practical experience in accounting evaluation,
sourcing strategies.
• As an account intern receive various types of training to develop your skills and
knowledge in the field of account management.
• 2) How to maintain data , prepare ledger, making balance sheet, record of financial
transatation of payment and receipt use of tally software . Etc.

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.

3.7 Conclusions
Overall, the summer the summer internship has been an enriching and valuable
experience. I have gained valuable insights and practical knowledge. This internship has
provided me with deeper understanding of the complexities and the intricacies involved in
these areas, particularly within the engineering industry.

3.8 Suggestions
Based on my observations and experiences during the internship, I would like to offer
a suggestion for further improvement in exploring digital solutions or automation tools for
accounting activities could optimize processes and improve overall accounting activites

3.9 Outcomes of the Summer Internship

As a result of this internship. I have developed a comprehensive understanding
account management of company have big amount of profit and loss activities. I have gained
practical skills in analysing and interpreting the data related to account evaluation, , and
alternative sourcing. Furthermore, I have enhanced my knowledge of key concepts of such as
payment terms, required documentation, regulatory aspects specific to the engineering
industry.
I am grateful for the opportunity to the capital management of the company team at Enkay
Limited, and I believe that the insights and outcomes from this internship will prove
beneficial to both my professional and the organisation’s ongoing endeavours in account
management capital management of the company

P a g e | 28
 Chapter-4
RESEARCH

INDIAN MONEY MARKET

Abstract of Research
In India the money market plays a vital role in the progress of economy. But it is not well
developed when compared to American and London money markets. In this market short
term funds are borrowed and lent among participants permitted by RBI. Money Market
ensures that institutions which have surplus funds earn certain returns on the surplus.
Otherwise these funds will be idle with the institutions. Similarly, the money market ensures
funds for the needy at reasonable interest. This way liquidity position is assured by money
market operations. Let us now discuss the various money market instruments in India. In
India the Money Market is regulated by RBI. Hence, the instruments traded and the players in
the market require to be approved by RBI.
India's time-tested institutions offer foreign investors a transparent environment that
guarantees the security of their long-term investments. These include a free and vibrant press,
a judiciary which can and does overrule the government, a sophisticated legal and accounting
system and a user-friendly intellectual infrastructure. India's dynamic and highly competitive
private sector has long been the backbone of its economic activity. It accounts for over 75%
of its Gross Domestic Product and offers considerable scope for joint ventures and
collaborations.
Today, India is one of the most exciting emerging money markets in the world. Skilled
managerial and technical manpower that match the best available in the world and a middle
class whose size exceeds the population of the USA or the European Union, provide India
with a distinct cutting edge in global competition.
The average turnover of the money market in India is over Rs. 40,000 crores daily. This is
more than 3 percent of the total money supply in the Indian economy and 6 percent of the
total funds that commercial banks have let out to the system. This implies that 2 percent of
the annual GDP of India gets traded in the money market in just one day. Even though the
money market is many times larger than the capital market, it is not even fraction of the daily
trading in developed markets.

Introduction of the Research Area : The research area for the assignment on the Indian
money market focuses on understanding the structure, functioning, and regulation of the
financial market in India that deals with short-term borrowing, lending, buying, and selling of

P a g e | 29
financial instruments. The Indian money market plays a crucial role in facilitating liquidity
management and channeling funds between surplus and deficit units in the economy.

Literature Review
Rastogi Nikhil (2008) Article: Money Market Integration in India: A Time Series Study Says
that Indian financial markets have achieved much from the highly controlled pre-
liberalization era. He denotes that the main focus is on achieving efficiency, which is the
trade mark of any developed financial market. This research paper tests the efficiency and
extent of integration between financial markets observed at the short end of the market.
Rusty Sadananda (2007) Article: Market efficiency and financial markets integration in India
in their work examined the impact of economic reforms on the integration of various
segments of the financial market in India over the time series tools during the period from
March 2006 to March 2012.
Sukhmoy Chakravarty Committee (1982) Articles: - Recommended for call money market.
Examined the study of call money market for India was first recommended by the Sukhmoy
Chakravarty. Committee was set up in 1982 to review the working of the monetary system.
Narasimham Committee (1998) Articles: - observation on call/money/term money market
examined the Narasimham Committee II (1998) concurred with the Vaghul Committee as it
also observed that call/notice/term money market in India, like in most other developed
markets, should be strictly restricted to banks.
Reserve Bank of India (2010) in his discussion paper “Deregulation of Savings bank Interest
rates: A Discussion paper” try to put the pros and cons of deregulation of savings deposits
interest rates in India. Regulation of interest rates imparts rigidity to the instrument/product
as rates are either not changed in response to changing market conditions or changed
slowly.
Define Research Problem/Research Objectives
To define the research problem and research objectives for an assignment on the Indian
money market, it is important to understand the key aspects of the topic and identify specific
areas of investigation. The research problem refers to the gap in knowledge or understanding
that needs to be addressed, while the research objectives outline the specific goals and
outcomes that the study aims to achieve.

Research Problem:
The research problem for the assignment on the Indian money market could be defined as
follows:

"To analyze and evaluate the functioning, structure, and challenges of the Indian money
market, with a focus on understanding its role in facilitating monetary policy transmission,
promoting financial stability, and supporting economic growth."

This research problem highlights the need to explore various aspects of the Indian money

P a g e | 30
market, including its structure, functioning, and impact on monetary policy transmission,
financial stability, and economic growth.

Research Objectives:
Based on the defined research problem, the following research objectives can be formulated:

1. To examine the structure and components of the Indian money market: This objective
involves studying the different segments of the Indian money market, such as call money
market, treasury bills market, commercial paper market, certificate of deposit market, etc. It
aims to understand how these segments operate and interact with each other.

2. To analyse the role of the Indian money market in monetary policy transmission: This
objective focuses on investigating how changes in monetary policy by the Reserve Bank of
India (RBI) are transmitted through the money market to influence interest rates, liquidity
conditions, and credit availability in the economy.

3. To assess the contribution of the Indian money market in promoting financial stability:
This objective aims to evaluate how well-regulated and efficient functioning of the money
market contributes to maintaining financial stability by ensuring smooth liquidity
management, risk mitigation, and efficient allocation of funds within the financial system.

4. To explore the impact of the Indian money market on economic growth: This objective
involves examining how a well-developed and vibrant money market facilitates efficient
allocation of financial resources, promotes investment, and supports overall economic growth
in India.

5. To identify the challenges and potential reforms for the Indian money market: This
objective focuses on identifying the key challenges faced by the Indian money market, such
as regulatory issues, market infrastructure limitations, and liquidity management concerns. It
aims to propose potential reforms or policy measures that can enhance the efficiency and
effectiveness of the money market.

By addressing these research objectives, the assignment on the Indian money market can
provide a comprehensive understanding of its functioning, significance, and potential areas
for improvement.

Hypotheses
Hypothesis: "The size of the Indian money market has grown steadily over the past decade,
driven by factors such as economic growth, financial sector reforms, and increased
participation of institutional investors."
Economic growth: India has experienced significant economic growth over the past decade,
which typically correlates with an expansion of the financial sector, including the money
market.

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Financial sector reforms: The Indian government and regulatory bodies have implemented
various reforms to enhance the efficiency, transparency, and stability of the financial sector.
These reforms are likely to have had a positive impact on the growth of the money market.
Institutional investor participation: The participation of institutional investors, such as banks,
mutual funds, insurance companies, and pension funds, has increased in the Indian money
market. This indicates growing confidence in the market and suggests potential growth in its
size.
Regulatory developments: The Reserve Bank of India (RBI) and other regulatory authorities
have introduced measures to develop the money market infrastructure and expand the range
of financial instruments available. Such developments are expected to contribute to the
growth of the market.
Market indicators: Analysing secondary data on market size, trading volumes, and the
number of participants in the money market over the past decade can provide insights into its
growth trajectory.
By collecting and analysing secondary data related to market size, trading volumes,
regulatory changes, and institutional investor participation in the Indian money market, it is
possible to evaluate whether the hypothesis holds true and determine the factors influencing
its growth.
Research Methodology
Methodology is an essential part of research to find answer to the research objective that
initiate the same. Therefore, it figures as an important part of the study.
Type of research:-
My research is based on descriptive research. It helps to know qualitative and quantitative
aspects of study. It studies the characteristics of Indian Money Market and see to it that how
we can bring more agencies in India. It is used because this topic is being studies only to
understand the concept and the problem it faces. However, my research also studies Review
of Literature which acts as a base for Descriptive study.

Research designs
 Descriptive research is a type of research that describes the characteristics of a
population or phenomenon. It is often used in market research to understand the
behavior of consumers or to identify trends in the market.

 Descriptive research can be used to study the Indian money market in a number of
ways. For example, you could use descriptive research to:

 Identify the key players in the Indian money market. This means gathering data on the
different types of institutions that participate in the Indian money market, such as
banks, financial institutions, and corporates. You could also gather data on the size
and relative importance of each player in the market.

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  Analyze the trends in the Indian money market. This means collecting data on the
interest rates, liquidity, and economic activity in the Indian money market over time.
You could then use this data to identify the trends that are shaping the market.

 Assess the impact of monetary policy on the Indian money market. This means
collecting data on the changes in monetary policy by the Reserve Bank of India (RBI)
and the impact of these changes on the Indian money market. You could then use this
data to assess the effectiveness of monetary policy in the Indian context.

 Descriptive research can be a valuable tool for understanding the Indian money
market. However, it is important to note that descriptive research does not provide
any causal explanations. For example, if you find that there is a correlation between
interest rates and the liquidity of the Indian money market, you cannot conclude that
interest rates cause liquidity. To establish causality, you would need to conduct
experimental research.

Sample Design and Sampling

Cluster sampling can be used to study the Indian money market in a number of ways. For
example, you could use cluster sampling to:
 Survey a large number of market participants: Cluster sampling can be used to survey
a large number of market participants, such as banks, financial institutions, and
corporates. This can be done by dividing the population of market participants into
clusters, such as by region or industry, and then randomly selecting a sample of
clusters to survey.

 Assess the impact of monetary policy on different segments of the market: Cluster
sampling can be used to assess the impact of monetary policy on different segments of
the market. For example, you could divide the market into clusters based on the size
of the institution or the type of instrument traded. You could then randomly select a
sample of clusters to survey and assess the impact of monetary policy on each cluster.

 Identify the key trends in the money market: Cluster sampling can be used to identify
the key trends in the money market. For example, you could divide the market into
clusters based on the type of instrument traded or the level of liquidity. You could
then randomly select a sample of clusters to survey and identify the key trends that are
affecting each cluster.

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Data Collection Instrument’s Selection, Preparation and Collection
The data collection instruments that can be used for research of the Indian money market
based on secondary data collection include:
 Government reports: Government reports can provide a wealth of information about
the Indian money market. They can provide data on the size and structure of the
market, the activities of the participants, and the regulatory framework.

 Financial reports: Financial reports of banks, financial institutions, and corporates can
provide information on the activities of these entities in the Indian money market.
They can provide data on the amount of money they borrow and lend, the interest
rates they charge, and the risks they face.

 News articles: News articles can provide information about recent developments in
the Indian money market. They can provide insights into the factors that are driving
these developments, and the impact they are having on the market.

 Academic journals: Academic journals can provide a more in-depth analysis of the
Indian money market. They can provide insights into the theoretical underpinnings of
the market, and the empirical evidence on its operation.

The selection of the data collection instrument will depend on the specific research question.
For example, if the research question is to understand the factors that influence the interest
rates in the Indian money market, then government reports and financial reports would be a
good choice. If the research question is to understand the impact of the Indian money market
on the Indian economy, then news articles and academic journals would be a good choice.

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Research/Data Analysis
Interpretation and Presentation:
1) What is your annual income?

Interpretation: -
There were total 100 responses out of which 7% respondents have annual income of below 1
lakh. 10% respondents have an annual income between 1 lakh to 3 lakhs, between 3 lakhs to
5 lakhs were of 15%, above five lakhs were 38% and for no income there are 30%.

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 2) How do you invest in your saving?

Interpretation: -
From the above data we can see that 49% of the respondents invest in capital market, 54% of
respondents invest in money market mutual fund, 60% invest in banks and 20 % invest in real
estate.

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 3)Do you have any knowledge about money market instruments?

Interpretation: -
From the above analysis we can see that 75% have heard about money market and knows
about that, while there are 6% people who aren't sure about this, 11% people have heard
about the term money market but have no knowledge about that and then about 8% of the
respondents don't know anything about money market.

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 4) How long would you like to hold your money market instruments?

Interpretation: -
From the above data 78% of the people like to keep money market instruments for long
term method while other people which are about 22 % keep it for the short-term method.
We can see that most of them are willing to keep their investment for long term.

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 5) How much risk will you be willing to take?

Interpretation: -
From the above data we can see that 13% respondents will take low level of risk, while
17% of respondents will take high amount of risk. 19% of respondents will take risk at
average level. Most of the respondents are willing to take average number of risks.

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 6) How would you rate your experience with Indian money market?

Interpretation: - From the above analysis we can see that 10% respondents didn't have a
good experience with Indian market while 14% respondents had excellent experience
with Indian Market.

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 7) Is recession had affected your investment decision?

Interpretation: - From the above data we can see that 86% respondents experienced that
recession has affected their investment decision while 14% respondents were not affected
by recession.

8) For fixed income what type of instrument would prefer?

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 Interpretation: - From the above data we can see that 51% of respondent invest in
corporate bonds, 57% in treasury bills, 53% in government securities and 47% of
respondents invest in commercial paper.

Findings: -
1) Is past price affect the present price?
► *There may be change in the price because of change in demand or change in the
economic condition due to this price can increase or decrease as the demand changes or
there can be no change in price even the demand changes.
8) Is there any change in economic growth?

►*Yes, there can be change in the economic condition as in the above itself say that
change in the economic condition tends to change the price, therefore there can be
positive, negative, or no change in the economic growth.
►* Recession may have positive or negative impact on economy
9) How can one manage the short-term deficit?

►*One can overcome the short-term deficit by managing the funds

► *Managing the funds means there can be issue of money market securities or,
►*One can do nothing i.e. (under come ofshort term deficit).
4) Does recession tend to liquidate the money market instruments?
►* From the above question at the time of recession, the investor may liquidate their
investment from the market, purchase the instrument or do nothing (hold).
►*Recession have an impact on the liquidity.
5) Is there a risk in money market instruments?

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 ►*Money market instruments is a minimal risk or no risk instruments in the market as
they are for shorter period i.e. (a year or less than one year).it has low risk or no risk
instrument in the market.
►*The instrument is divided in various risk categories elevated risk, minimal risk, or no
risk instruments.

Conclusion: -
► The money market is a vibrant market, affecting our everyday lives. As the short-term
market for money, money changes hands in a short time frame and the players in the market
have to be alert to changes, up to date with news and innovative with strategies and products.
► The withdrawal of non-bank entities from the inter-bank call-money market is linked to
the improvement of settlement systems.
► Any time-bound plan for the evolution of a pure inter-bank call/notice money market
would be ineffective till the basic issue of settlements is addressed.
► In brief, various policy initiatives by the Reserve Bank have facilitated development of a
wider range of instruments such as market repo, interest rate swaps, CDs and CPs.
► This approach has avoided market segmentation while meeting demand for various
products.
► These developments in money markets have enabled better liquidity management by the
Reserve Bank.
► The money market specializes in debt securities that mature in less than one year.
► Money market securities are very liquid, and are considered very safe. As a result, they
offer a lower return than other securities.
► The easiest way for individuals to gain access to the money market is through a money
market mutual fund.

Industrial/Managerial/Societal Implications

Industrial implications
The money market provides a source of short-term funds for businesses, which can be used to
finance working capital requirements, meet seasonal demands, or cover unexpected expenses.
This can help businesses to grow and expand their operations, which can have a positive
impact on the economy as a whole.
Managerial implications
The money market can also be used by businesses to manage their cash flow. By investing in
money market instruments, businesses can earn a return on their excess cash while still

P a g e | 43
maintaining liquidity. This can help businesses to improve their financial performance and
reduce their risk.
Societal implications
The money market also has a number of societal implications. For example, the money
market can be used to finance government debt, which can help to reduce the government's
borrowing costs and free up funds for other purposes. Additionally, the money market can
provide a source of investment for individuals and businesses, which can help to promote
economic growth.
Here are some specific examples of the industrial, managerial, and societal implications of
the Indian money market:
 Industrial implications:

o The money market helps businesses to finance their working capital

requirements, which can help them to grow and expand their operations.

o The money market helps businesses to manage their cash flow, which can
improve their financial performance and reduce their risk.

o The money market provides a source of investment for businesses, which can
help them to grow and expand their operations.

 Managerial implications:

o The money market helps managers to make informed decisions about their
cash flow management.

o The money market helps managers to identify and evaluate investment

opportunities.

o The money market helps managers to hedge against interest rate risk.

 Societal implications:

o The money market helps to finance government debt, which can help to
reduce the government's borrowing costs and free up funds for other purposes.

o The money market provides a source of investment for individuals and

businesses, which can help to promote economic growth.

o The money market helps to stabilize the financial system, which can protect
businesses and individuals from financial shocks.

Overall, the Indian money market has a significant impact on the industrial, managerial, and
societal sectors of the economy. It provides a source of short-term funds for businesses, helps
businesses to manage their cash flow, and provides a source of investment for individuals and
businesses. The money market also helps to finance government debt and stabilize the
financial system.

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LIMITATIONS
1. Lack of depth and liquidity: One of the key limitations of the Indian money market is
its relatively shallow depth and limited liquidity. This means that there is a scarcity of
financial instruments with varying maturities, which restricts the ability of market
participants to efficiently manage their short-term funding requirements.

2. Dominance of government securities: The Indian money market is heavily reliant

on government securities, particularly treasury bills. This dominance limits the
diversity of investment options available to market participants and can lead to
concentration risks.

3. Inadequate participation from non-banking entities: The participation of non-

banking entities, such as mutual funds, insurance companies, and pension funds, in
the Indian money market is relatively low. This lack of participation restricts the
overall depth and efficiency of the market.

4. Limited range of money market instruments: The Indian money market primarily
consists of treasury bills, certificates of deposit, commercial paper, and call money
markets. While these instruments serve specific purposes, there is a limited range of
instruments available compared to more developed money markets.

5. Regulatory constraints: The regulatory framework governing the Indian money

market can be complex and restrictive at times. This can hinder innovation and limit
the development of new financial products and services.

6. Lack of transparency: Transparency in pricing and trading mechanisms is crucial

for a well-functioning money market. However, in India, there have been instances
where lack of transparency has been observed, leading to concerns about fair pricing
and efficient trading.

7. Inefficient clearing and settlement systems: The clearing and settlement systems in
the Indian money market are not as advanced as those in more developed markets.
This can result in delays and inefficiencies in transaction processing.

8. Limited integration with global markets: The Indian money market has limited
integration with global markets, which can restrict access to international capital
flows and limit opportunities for diversification.

9. Interest rate volatility: The Indian money market is susceptible to interest rate
volatility, which can impact the cost of borrowing and lending. This volatility can
make it challenging for market participants to plan and manage their short-term
funding requirements effectively.

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 10. Lack of a well-developed secondary market: The secondary market for money
market instruments in India is relatively underdeveloped. This limits the liquidity and
tradability of these instruments, making it difficult for investors to exit their positions
before maturity.

References

When we conducting research on the Indian money market, we rely on a combination of

primary and secondary sources. Primary sources include official reports, data from regulatory
bodies, and interviews with industry experts. Secondary sources encompass academic
journals, books, research papers, government publications, and reputable financial news
websites.
Some websites like:
■ National Stock Exchange site
■ RBI site
■ Financial News Websites
■ Government Publications - Ministry of Finance and other government bodies related to
the financial sector
■ Books and Textbooks:
AUTHOR SOURCE
R.S. Aggarwal emerging money market
M.S. GOPALAN Indian money market structure, operation and development
Prasanna Chandra Financial management
P.K. Bandgar securities management and portfolio management

Appendices
Several other questions were asked to expert as well as to the people to better understand.
To people
 What are the different types of instruments traded in the Indian money market?

 What are the key players in the Indian money market?

 What are the main factors that influence the Indian money market?

 What are the risks associated with investing in the Indian money market?

 What are the opportunities for investors in the Indian money market?

 What are your thoughts on the future of the Indian money market?

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To Expert
 What are your thoughts on the current state of the Indian money market?

 What are the key trends that you are seeing in the Indian money market?

 What are the challenges that the Indian money market is facing?

 What are the opportunities for growth in the Indian money market?

 What advice would you give to investors who are considering investing in the Indian
money market?

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