A PROJECT REPORT ON

WORKING CAPITAL MANAGEMENT

With reference to HBL POWER SYSTEMS LTD PYDIBHEEMAVARAM, VZM. A Project Report submitted in Partial Fulfillment of the Requirement for the Award of The Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By

B.RAJASEKHAR
Regd No.1009502045
Under the Guidance of Mr.M.V.RAMESH MBA, (M.PHIL)

GAYATRI COLLEGE FOR PG COURSES (Affiliated to Dr.B.R.Ambedkar University) Etcherla, Srikakulam. 2010-2012

DECLARATION

I the undersigned do here by declare that this Project entitled WORKING CAPITAL MANAGEMENT with

Reference to HBL POWER SYSTEMS, Pydibheemavaram, Vzm. submitted by me on partial fulfillment for the Requirement of the MASTER OF BUSINESS

ADMINISTRATION Degree in Gayatri college for pg courses, Munasabpeta, Srikakulam. I also declare that, This Project work is the Result of own Effort and that it has been not submitted to any other institution or published any where for the award of any Degree or Diploma.

Place: SRIKAKULAM (B.RAJASEKHAR) Date:

ACKNOWLEDGEMENT

I take this opportunity to express my sincere Gratitude to following eminent Personalities without those help and Guidance, the Successful completion of my Project work would have remained a dream. I extend my heartful thanks to Mr. N.V.V.S MURTHY Sir, P&A Manager of HBL power systems ltd ,Vzm .who gave the permission to do the project on a Financial Topic INVENTORY MANAGEMENT . I also express my sincere thanks to Mr. P.RAMBABU Sir, senior F&A Manager of HBL power systems ltd. my Internal guide of the Project. With His Esteemed Guidance, support by providing Project Data and valuable time for completion of the Project. I express my gratitude to Professor Mr.V.MAHESH (HOD) and Mr.SWAMINAIDU Director of Gayatri college for pg courses for permitting me to pursue my Project Work. I heart fully thank my parents, my friends for their cooperation in completing my project.

(B.RAJASEKHAR)

CONTENTS
CHAPTER 1 : Introduction of Financial Management Objectives of Working Capital Management Nature & Significance of the Study Objectives of the Study Methodology of the Study Limitations

CHAPTER 2 CHAPTER 3

: :

Organizational Profile of HBL power systems Ltd. Theoretical Frame work of Working Capital Management Analysis and Interpretation of Working Capital Management of HBL Power Systems Ltd : Summary, Suggestions & Findings (Bibliography)

CHAPTER 4

CHAPTER 5

CHAPTER-I

SIGNIFICANCE OF FINANCE:
Finance Management is one of the four important functional areas of the Management. The major objective of any business firm is to make a profit for its owners by producing goods or services for sale in the market. To reach this goal the firm purchases the output and sell them the all process requires funds. Finance Management is that administrative area or set of administrative functions, which relates the arrangements of each and credit so that the organization may have the means to carry out its objectives as satisfactorily as possible. The central feature of financial management is its formulation of firm and in sales the most favorable sources of additional funds that the firm will need in the forcible future. In the word of WESTON and BROUGHAM financial management is an area of financial decision making harm noshing individual motives and enterprise goals.

OBJECTIVES OF FINANCIAL MANAGEMENT:

The objectives of financial management are considered usually at two levels, at micro level and at macro level. If micro level the chief objective of financial management is to make an intensive and economical use of capital resources. The objectives of financial management at macro level are considered at firm level since business firms are profit-seeking organization, their objectives are frequently expressed in terms of money.

Therefore three primary resources are commonly equally eneovantered Maximization of Profit Maximization of returns Maximization of owners wealth

PROFIT MAXIMIZATION The traditional emphasis in micro Economics has always been on the profit it has been a more familiar as well as reasonable guidelines for the financial management the earned sales and managerial efficiency. The duty of the manager is to achieve the higher possible slow of the returns that will belong to the owners after all other delegations have been meet. MAXIMIZATION OF RETURNS Some authorities on financial management conclude that maximization of returns provides a basic guideline by which financial decision should be evaluated. But returns are mainly based profits earned by the concern, if concern earns sufficient profits. It will be able to satisfy the owner as well as its employment in the minimum possible extent. MAXIMIZATION OF OWNERS WEALTH According to Professor Solomon Ezra of Standard University the Ultimate goal of financial management should be maximization of owners wealth. According to him the maximization of profit is half unreal motive. The proper foal of financial management is wealth maximization of equity shareholders as it is expressly concerned with the relationship of profitability and the volume of capital being used on the enterprises. WORKING CAPITAL MANAGEMENT Working capital Management is the functional area of finance that covers all the current accounts of the firm. It is a discipline that seeks proper policies for managing current assets and liabilities and practical techniques for maximizing the benefits from managing working capital working capital is lifeblood of business. Working Capital is concerned with the management of firms current assets and current liabilities. Thus the working capital management is one of the most important aspects of the firms overall financial management.

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

There are two important objectives of Working Capital Management i.e. profitability and liquidity a financial management stick to only to either of these objectives. There should be proper balance between the two so that one objective may not suffer at the cost of other with regard to the Working capital management. There are two major implications. Firstly, decisions that affect the level of working capital are too frequent and repetitive. Such decisions should be consistent with the objectives and goals and framework of unambiguous rules should be created for implementation of those decisions by lower operating levels. Secondly, efficient management of one component of working capital cannot be under taken with out simultaneous consideration of other components because of a close interaction among them keeping in view those characteristics feature of Working Capital management trade off between liquidity and profitability is to be achieved.

CLASSIFICATION OF WORKING CAPITAL: Management of cash Management of account receivables Management of Inventory

Working capital may be classified into two ways. On the basis of concept On the basis of time

On the basis of concept working capital is classified as gross and net working capital as discussed earlier. This classification is important from that point of view of the financial manager. On the basis of time working capital may be classification. Permanent or fixed working capital. Temporary or variable working capital.

IMPORTENCE OF ADEQUAVY OF WORKING CAPITAL Working capital is the lifeblood and nerve center of a business. Just as circulation of blood is essential in the human body for maintaining life. Working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantage of maintaining adequate amount of working capital is as follows. 1.Solvency of the Business Adequate working capital helps on maintaining solvency of the business by providing interrupted flow of production. 2.Good Will Sufficient working capital enables a business concern to make prompt payments and hence helps in creating and maintaining good will. 3. Easy loans A concern having adequate working capital solvency and good credit standing can arrange land from banks and others on easy favorable terms. 4. Cash discount Adequate working capital also enables a firm to avail cash discounts on the purchases and hence it reduces costs. 5. Regular supply of Raw materials Sufficient working capital ensures regular supply of Raw materials and continuous production. 6. Exploitation of favorable Market conditions Only concerns with adequate working capital can exploit favorable market condition such as purchasing it requirements in bulk when the prices are lower and by holding it inventories for higher prices.

7. Ability to face crisis

Adequate working capital enables the firm to face business

crisis in emergencies such as depression because during such period, generally there is much pressure working capital.

THE NEED FOR WORKING CAPITAL Every Business needs some amount of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. The following are the needs of working Capital: For the purpose of raw material. To pay wages and salaries. To incur day-to-day expenses and overheads. To meet the selling costs. To provide credit facilities to the customer DETERMINATION OF WORKING CAPITAL: There is no set rules or formula to determine working capital requirements of firm. A large number of factors influence working capital needs of firm. All factory are of different factors should be made in order to determine total investment in working capital. The following are the description of factors, which generally influence the working capital need of a firm. Manufacturing cycle Sales growth. Demand condition. Production Policies Price level changes. Operating efficiency and performance. Firm credit policies Availability of credit. Business fluctuations, growth and expansion activates.

SOURCES OF WORKING CAPITAL: Various sources for the financial of working capital are as follows: Permanent or Fixed Sources: NEED FOR THE STUDY Working capital is a form of investment in short term assets. Working capital management encompasses all the aspects of administration of both current assets and current liabilities has two main functions. To adjust to the changes in firms level of sales activities causes by cyclical and random factors. This function is important because a firm with long run prospects may experience sever difficulties and loses caused by short-term developments. To contribute to the maximizing the values of firm working capital management includes a number of aspects that make it an important topic for study. Shares Debentures Public Deposits Pouching back profits Loans from financial institutions. Temporary or variable sources: Commercial Banks. Indigenous Bankers. Trade Creditors Installment Credit Advances Account Receivables Commercial papers

The largest portion of financial managers time is devoted to the day-do-day internal operations of the firm. This can appropriately be subsumed under the handling of working capital management. Current assets represents more than half of the total assets of the firm current assets represents large investment and this investments tends to be relatively volatile and hence requires the careful attention of the financial manager. The relationship between sales growth and the need to finance current assets is closer and direct sales increase similar immediate need for additional investment and cash balance. All such needs mist be financial and since they are closely related to sales volume, it is imperative that the financial manager should be aware of the developments in working capital segment of the firm. OBJECTIVES OF THE STUDY To study the battery Industry in general. To know the profile of H.B.Ls To study the working capital management practices in H.b.L.s. To suggest corrective measures in any in working capital management. To study in general working capital mgt procedure in H.B.L LTD VIZIANAGRAM. TO know the how the Sources of long term working capital is being financed. To give suggestions if any for Sources of long term working capital management in H.B.L LTD VIZIANAGRAM. TO know various methods to be followed by H.B.L ltd VIZINAGRAM. Plant for invest and accounts receivables. METHODOLOGY The relevant information necessary for the study is collected from to sources namely. Primary data. Secondary data. Primary data:

It consists of information disclosed by the financial heads of various authorities of the conducting personal interviews with the concerned office of financial department of

respective departments of H.B.Ls. H.B.L battery ltd.

Secondary data: I consists of information obtained from annual reports. Balance sheets and other financial statement. Files and same other important documents maintained by the organization and Journals. Collection of required data from annual records of H.B.L battery ltd. Reference from textbook and journals relating to financial management

LIMITATIONS The study has been conducted is a systematic and comprehensive way so as to make the project work an enviable one. However the topic under my study not be free from limitations due to these factors. They working capital analyzed only with the help ratios others techniques such as fund flow analysis and operating cycle methods is not employed in this study. The major limitation of the project under study was time. Since it was to be completed with in a short period of time. Which is not sufficient to undertaking comprehensive study and Non-availability of complete information about cash sales and credit sales out of total sales is not available one more limitation is depreciation on assets individually is not available. In the highlight of the above factors, it is not possible for an analysis to calculate the exact working capital ratios.

CHAPTER-II

ORGANIZATION PROFILE :
Lead Acid Battery Industry- Profile An Overview The Widest range of specialized DC Power Systems HBL is The Largest Manufacturer of Specialized Batteries in India, for Industrial, Telecom, Railways and Defence applications. HBL offers its customers the most appropriate technology based on the requirement, from the wide range of batteriesNickel-cadmium, Silver Zinc, Lead-acid and Lithium batteries. Chargers for rechargeable batteries are also manufactured in both TR and SMR versions from 24V to 220V. The company has sales of about US$50 million and very substantial design and development capabilities, in-house. Over 25 years of experience in the domestic market and over 10 years in exporting to many countries including USA, South Korea, West Asia and South East Asia, has given HBL an understanding of the Customers special varied requirements, Several major customers have found the companys products to be reliable over the years and have placed repeat orders. The company has adequate marketing and service personnel who can support the customers at short notice. The Triumph-HP series is a premium design valve regulated lead acid battery based n features offered by world class companies. The battery works on the gas recombination principle and has been designed to meet the requirements of a wide range of applications. This product has been manufactured under the controls.

Established by a for quality/environmental management system that meets the requirements of ISO 9001-2000: ISO 14001:1996, which has been independently certified by BVQI.

Specifications at a glance Design and Construction Positive Plate: Flat pasted type with Lead-calcium High Tin alloy grid to resist corrosion & longer life. Negative Plate: Flat pasted type with Lead-calcium alloy grid for maintenance free characteristics Container: High impact Polypropylene co-polymer, ribbed jar design for better heat dissipation and strength. Flame retardant polypropylene UL 94V0/28% LOI is optional Separator: Low resistance, high porosity and highly absorbent type glass mat separator (AGM) Electrolyte: High purity Sulphuric acid to maximize shelf life Terminals: Lead plated Copper inserts high conductivity Safety Valve: Self resealing, pressure regulated and explosion proof Container and cover sealing: Heat Sealing Method for better joint strength. Performance: Conforms to: IEC 60896-2:1995, TEC Spec.#G/BAT-01/02, March 2000 BS 6290 Part-IV & IEEE 1188 Standards Float life: 20 Years designed life at 0 27 C on full float with recommended charging methods. Cyclic life at 27c: Wide range of operating Temperature:- 20 C to +55 C Unique Features of Triumph-HP batteries Applications:

Horizontal plate stacking consistent performance and longer life Better heat dissipation Eliminates acid stratification Ventilated module design Excellent thermal management of battery Resistant to thermal runaway Tank formation of plates Uniform cell voltages 100% capacity on shipment No additional cycling required 20 years designed life a practically tested and proven VRLA Battery suitable for 20 years life certified by independent testing agency Grid growth provision Enhancement of battery life by prevention of failure due to grid growth.

Benefits to our customers: No water top-up required throughout its life-Maintenance-free No special battery rooms, as no corrosive fumes Better foot print due to stack able design Customized solutions to address variety of applications Designed for high integrity and long life Safe to use-leak and explosion proof Enhanced performance Ease of installation and ready to use-supplied in factory charged condition Eco-friendly, cadmium-free alloy for case in recycling simple cell replacement capability. Certifications and Approvals Nickel Cadmium: A)Pocket Plate, Valve Regulated Pocket Plate, Fiber Plate ISO 9001 ISO 14001 IEC 60623 Certification CSA) Bump Test Vibration Test VRLA Seismic Test IEC 60623 Certification (Intertek ETL SEMKO Interim Report) OHSAS 18001 Certification (NCPP & IEC60896Certification (CSA) for Monoblocks Lithium: Single Cells IEC60896Certification (CSA) for ISO 14001 Lead Acid: VRLA Single Cells, VRLA Monoblocks LMLA,VRLA GEL ISO 9001

NCFP) B) Sintered Plate ISO 9001 Silver Zinc: ISO 9001

ISO 9001 Electronics: Thyristor Control Rectifiers,DC-DC Convertors, Defence Chargers

Products: Nickel Cadmium Pocket Plate Batteries: HBL offers a very wide range of Nickel Cadmium Pocket Plate Batteries that match diverse applications and operating conditions. These are available in tough polypropylene containers of single cell types and block battery types. Cells of Stainless Steel containers or structural foam molded containers are also offered as options. Incorporating variations in electrode design to meet different discharge requirements, HBL batteries are classified into three types L, M & H. These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Benefits: Range and Applications: Cell Type L-Low Rate KPL (Single) KBL (Block) Capacity Range 11 to 480 8 to 1540 Typical Typical Back- up Application Above 3 Fire Alarm Panels Emergency Hours Lighting Telecommunication Switchgear Protection Exceptionally long & reliable service life Adaptability to a wide temperature range No emission of corrosive gases, Safe from flame & explosion Minimal maintenance, Low life time cost, quick recharging

M-Medium Rate KPM (Single) KBM (Block) H-High Rate Starting KPM (Single) KBM (Block)

10 to 395 12 to 1460

60 Minutes to 3 Hours

Switchgear Protection Instrumentation And Process Control U.P.S Motive Power Emergency Lighting Generator U.P.S Diesel locomotive cracking

10 to 265 Below 60 minutes 9 to 930

NICKET CADMIUM FIBRE PLATE BATTERIES: These batteries use Fiber Plate electrodes. The three Dimensional Fiber Structure in the plate provides a very high conducting density. The Advantages of this technology is its low internal resistance, high rates of discharge, improved recharge capability and lower weight with a high cycle life. The Ni-Cad Fiber Plate batteries are designed as L, M,H and X types to suit customers requirements. These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Features: Consistent Voltage Output and stable Capacity over lifetime Long Service life and reliable Operation It Can be used in extreme temperature zones, Ease of recharging the battery Ease of handling due to lightweight, Low maintenance and low water Excellent for cyclic applications Typical Backup Typical Applications Fire alarms, Emergency Lighting, Telecom, Railway Signaling, Switchgear protection, Photovoltaic, Cathodic Protection.

consumption Range and Applications: ell Series Capacity Range Ah L-Low Rate KFL Range (Single & Block) 20 to 1500

Above 3 hours

M-Medium Rate KFM Range (Single & Block)

11 to 1391

60 minutes to 3 hours

Switchgear protection, Emergency lighting, Motive Power, Train lighting, Instrumentation and process

H-High Rate KFH Range (Single & Block)

11 to 1026

Below 60 minutes

Control, UPS, Electric vehicles Generator Starting, UPS, Diesel locomotive cranking, Aircraft/ Helicopter ground starting, Electro magnets. Diesel locomotive cranking, Genset starting AGVs

X Ultra High Rage KFX Range (Single & Block)

11 to 120

Below 10 minutes

Sealed Cylindrical Ni-Cd Battery Packs for Defence Communications: HBLs Sealed Cylindrical NICAD Batteries are designed incorporating the latest technology ensuring high standards. They are available in packs using a wide range of cells from 110mAH to 8000m Ah for various applications. Applications: Memory back-up for interface Digital Equipment RS.VPS-Mark-I LHP-219 Radio communications, Star-V, RS.VPS Mark II, Kiran Mark I/IA Range and Applications Compact High Reliability User friendly Easy re-chargeability Maintenance free Optimal Cell life Consistent Voltage Long Shelf life Enhanced Performance.

PURE LEAD-TIN VRLA MONOBLOCKS: The Pure Lead-Tin range offers the customer the highest energy density of any lead acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin grid which packages more power in a smaller space. The plates being made of high purity

lead last longer, offering excellent life. The proven benefits of this superior technology are high performance, quick recharge capability, high energy density and a long service life. The 6V & 12V monopoles are available in capacities ranging from 12Ah to 150Ah.

Benefits: Maintenance-free and spill-proof. This enables flexible mounting Wide operating temperature range (-40o C to + 50oC) High energy density (gravimetric and volumetric) Good charge retention leading to long storage life Low internal resistance ensures quick recharge Excellent high rate capability permits use of smaller capacity batteries Superior raw materials for good performance and life Excellent deep discharge recovery characteristics UL recognized plastic components These batteries conforms to IEC 60896 and are certified by Intertek ETL SEMKO

Tubular GEL VRLA Batteries: The solar powered shelter carry batteries that expose them to higher temperatures. Net result is the need for a heavy duty, robust, deep cycling battery that is also less sensitive to high temperature. To meet such rigors of temperatures and varying pattern of usage, HBL introduces Tubular Gel VRLA Battery with unbeatable combination of Tubular plate and gelled electrolyte. Applications: Wireless: Base Transceiver, station (BTS), Base Switches (MSO), CDMA/3G base stations, main switches. Transmission: Fiber optic systm, Digital Microwave radi, Satellite earth stations Switching: Local access switches, primary exchanges, Central Office/Secondary exchange, Point of inter connect switches, Internet & Gateway switches, Telecom collocation. Applications other than Telecom: Telecommunications, Solar energy systems, Wind energy systems, Power plants and substations. Train lighting, Coach Air conditioning and signaling in Railways, SCADA Systems,

Features & Benefits: Pressure die-cast spine grids-Longer float life, Very good cycling capability required for Indian conditions, Gelled Electrolyte Very good heat dissipation, suitable for out door installation, Antimony-free alloy long shelf life, Valve regulated No water additions during service life, 100% capacity on first discharge. Ready to install, Safe and economical transportation. No free acid, can be mounted both in horizontal and vertical orientation, ideal for Solar Powered telecom installations.

TUBULAR ULTRA LOW MAINTENANCE LEAD ACID BATTERY: Tubular LMLA battery is the combination of traditional advantage of tubular plate with ultra-low-maintenance feature. Tubular LMLA battery is a preferred choice for the applications with float, semi cyclic and cyclic operations along with long service life, high cycle life, Partial state of Charge (PSOC) & deep cycling requirements. Turus: The Turus Tubular plate low maintenance lead acid battery is the results of the strong R&D Expertise gained by HBL over a decade of supplying millions of lead acid batteries to various applications. Taurus batteries offer outstanding reliability over an expected service life of around 15 years in float applications. This battery offers very low maintenance, extended topping up frequency due to low antimony alloy & high acid reservoir. Stormz: Stormz motive power (Traction) batteries for material handling equipment provide a very high level of performance and reliability in all industrial truck applications. These batteries are designed according to the relevant DIN, BS Standards. Lithium Batteries: Primary: Lithium Thiony1 Chloride/Lithium Sulphur Di-Oxide Secondary: Lithium Ion Lithium batteries have been developed with support from DRDO in the year 1990

Features: Lithium ThionyI Chloride Batteries are highly reliable and offer numerous advantages High Voltage: Cell open circuit voltages is 3.6 correspondingly higher operating voltages than other conventional cells. Discharge Profile: At rated discharge, cell operating voltage remains constant at 3.3V throughout maximum discharge life High Energy Density: Offer unto 440 wh/kg Wide Operating Temperature: Can operate from-40oc to 70o and can withstand adverse environmental conditions Long Shelf Life: Offers shelf life up to 5 years, Safety: Minimized Pressure System

Defence Electronics: HBL Microwave is focused on defence electronics. Unlike Batteries and Railway products where almost all development was done in house, HBL has collaborated with companies abroad for most of its defence electronics products. Radar and Electronic Warfare: Joint venture with ELTA, Israel Several other such plans are under discussion. The companys infrastructure in manufacturing and national sales service network will be of value in each of these projects because it can be shared Thyristor Controlled Battery Chargers HBL Battery chargers uses Thyristor switching principle for achieving the desired DC output. The sophisticated power electronics design and production facilities in the company enables it to meet the specific requirements of its customers. Extensive Range: Available in a wide range-can be supplied in voltage outputs upto 500VDC and current outputs upto 1500Amps. Application: These chargers find use in a variety of applications such as Process Control,

Telecommunications, Emergency Lighting, Switch Gear Protection, Engine Starting and Power Station Control MINIMAL MAINTENANCE: These chargers can work for many years, without any special attention Long life through design and excellent thermal management.

High Reliability Superior design and high quality standards ensure absolute reliability of the equipment and fail safe operation Stackable design minimizes place requirement and enables faster installation. User Friendly: Cautiously conceived alarms and annunciations, easily accessible component layout, enable the users to quickly attend to the equipment, in u SEGMENTS NICAD Sintered Plate Batteries for Civil Aviation Nickel Cadmium Sintered Plate Batteries, the Power Source for independent starting of aircraft engines & emergency back up in the event of generator failure on board aircraft, HBL Aircraft batteries have been approved by the Director General of Civil Aviation India. The Company has obtained F.A.A. approvals for sale ofBatteries through their partners in the United States of America and other countries where this approval is recognized. NCSP- B 40060 D Rating: 24 Volts, 40 AMP,HR at 1 HR Rate Application: Aircraft Beach King-C90, B-200, B-100, 350, 1900 D, Cessna-S-406, Fokker F-27, Twin Otter DHC-6, Carvan-2, Bell 212, 412, Boeing 747 series, Falcon 2000 Helicopters: Dauphin, Cheetah, Chetak, Gulf Stream G1,G2,G3,G4, Gazalle S4341 NCSP-B 27060 Rating: 24 Volts, 27 Amp. HR at 1 HR Rate

Application: Aircraft, Dornier 228 NCSP-B 25150 Rating: 24 Volts, 25 AH at 150 mts. Rate Application: Helicopter, MI 172 NCSP-B 23060 Rating: 24 Volts, 23 AMP.HR at 1 HR Rate Application: Aircraft, Avro (HS748), Boeing 737-200,HS-125

Silver Start- Pure Lead Tin VRLA Monoblock Batteries for Civil Aviation: The Silver Sart range of On-board Aircraft starting batteries from HBL are designed using the Thin-plate Pure Lead tin Technology Features that make these batteries the right choice for Aircraft starting Applications: Sealed, maintenance-free: no filling of acid or water Excellent starting capability: very high peak power Fast-charge capability: 100% recharge in 2 hours More flying hours: long life Operation in very low temperature:-40o C to + 50o C Safety inside the aircraft: non-spllable absorbed electrolyte design Delivered fully charged, ready to use: no commissioning at site Shock and vibration resistant: ideal for aerobatic use IEC 60952-I MIL 8565J.

Silver Start batteries conform to International Aviation Standards like:

Range of silver start 24V Aircraft Batteries (see Brochure for selection of battery for Aircrafts) 10Ah @ 1 hr 42Ah @ 1 h Nickel Cadmium Pocket Plate Batteries For Aircraft Ground Start: HBL offers vented type NICAD Pocket Plate High Rate Batteries for ground starting of MIG Aircrafts. The Batteries are mounted on an electrically driven trolley unit. It consists of two banks of KPH 140P, each bank consisting of 24 cells.

These Batteries are primarily used for meeting the ground starting and servicing electric power requirements for MIG Series of aircrafts. Additionally it supplies critical power to the DC motor as the prime mover of the electrically driven trolley. Benefits: Excellent resistance to shock, vibrations, temperature and corrosion. Exceptionally long and reliable service life Low maintenance and low life time cost Flame and explosion proof vent No sudden death and negligible annual ageing Quick Recharging and no memory effect Nicket Cadmium Fibre Plate Batteries for Aircraft Ground Start

HBL offers veneted type NICAD Fibre Plate Batteries for ground starting of MIG Aircrafts These Batteries are primarily used for meeting the starting and servicing electric power requirements for MIG Series of aircrafts. The Batteries are mounted on an electric driven trolley unit. It consists of two banks of KFH 160P each bank consisting of 24 cells. Additionally it supplies critical power to the DC motor as the prime mover of the electrically driven trolley. The Batteries use High Rate Fibre Nickel Electrodes thereby giving an excellent Electrical performance. The benefits of these batteries are low internal resistance, High rates of discharge and improved recharge capability coupled with long cycle life. Benefits: Consistent Voltage Output and stable capacity over life time Long Service Life Ease of handling due to light weight Fast recharge Long topping of interval due to low water consumption Can be used in extreme temperature zones Can withstand mechanical stress Most reliable

Defense Nickel Cadmium Pocket Plate Batteries for Aircraft Ground Start

HBL offers Vented type NICAD Pocket Plate High Rate Batteries for ground starting of MIG Aircrafts. The Batteries are mounted on an electrically driven trolley unit. It consists of two banks of KPH 140P, each bank consisting of 24 cells. These Batteries are primarily used for meeting the ground starting and servicing electric power requirements for MIG Series of aircrafts. Additionally it supplies critical power to the DCmotor as the prime mover of the electrically driven trolley. Benefits: Excellent resistance to shock, vibrations, temperature and corrosion. Exceptionally long and reliable service life Low maintenance and low life time cost Flame and explosion proof venNo sudden death and negligible annual ageing Quick Recharging and no memory effect. Nicket Cadmium Fibre Plate Batteries for Aircraft Ground Start H BL offers vented type NICAD Fibre Plate Batteries for ground starting of MIG

Aircrafts. These Batteries are primarily used for meeting the starting and servicing electric power requirements for MIG series of aircrafts. The Batteries are mounted on an electric driven trolley unit. It consists of two banks of KFH 160P each bank consisting of 24 cells. Additionally it supplies critical power to the DC motor as the prime mover of the electrically driven trolley. These Batteries use High Rate Fibre Nickel Electrodes there by giving an excellent Electrical performance. The benefits of these batteries are low internal resistance, High rates of discharge and improved recharge capability coupled with long cycle life. Benefits: Consistent Voltage Output and stable capacity over life time Long service Life Ease ofhandling due to light weight Fast recharge Can be used in extreme temperature zones Can withstand mechanical stress

Most reliable HBLs Sintered Plastic Bonded Batteries are best suited for applications

Sintered Plastic Bonded Batteries: requiring high reliability coupled with low maintenance and high performance. The sintered Plastic Bonded batteries are manufactured using sintered positive plates and Plastic Bonded negative plates. These are specially designed for High Power Density and Reduced Water Consumption. These batteries use polypropylene cell containers with thermally welded lids for high impact resistance. Flame Retardant containers and lids are optional. All-steel terminal and fasteners give these batteries the ruggedness required to meet the demanding application needs. The cells are also provided with reliable flame-arresting vents and are assembled in stainless steel crates (as an option) for easy handling. Benefits: Optimized performance to suit application requirements. Fits in a very small space Performs even at extremely low temperatures. No topping with water required for long periods. Long Life. Standards

These batteries conform to the following international standards: IEC 60623 UIC 854R BS 6260 IEC 60077 Din 40771 NFF 64018 Applications Industry KSH range Railways KRM, KRX, KRH ranges Telecommunications KSL range.

INDUSTRY

NICKEL CADMIUM POCKET PLATE BATTERIES HBL offers Avery wide range of Nickel Cadmium Pocket Plate Batteries that match diverse applications and operating conditions. These are available in tough polypropylene containers of single cell types and block battery types. Cells of Stainless Steel containers or structural foam molded containers are also offered as options. Incorporating variations in electrode design to meet different discharge requirements, HBL batteries are classified into three types L, M & H. These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, Din 40771 and other International Standards.

Benefits: Exceptionally long & reliable service life Adaptability to a wide temperature range No emission of corrosive gases, Safe from flame & explosion. Minimal maintenance, Low life time cost, quick recharging

RANGE AND APPLICATIONS: Cell Type L-Low Rate KPL (Single) KBL (Block) Capacity (Ah) 11 to 480 8 To 1540 Range Typical Back up Typical Applications Fire Alarm Panels Emergency Lighting Telecommunications Switchgear Protection Switchgear Protection Switchgear Projection Instrumentation And Process Control U.P.S Motive Power Emergency Lighting Generator Starting U.P.S. Diese Locomotive

Above 3 Hours

M-Medium Rate KPM (Single) KBM (Block) H_High Rate KPH (Single) KBH(Block)

10 to 395 12 to 1460

60 Minutes to 3 Hours

10 to 265 9 to 930

Below 60 Minutes

Cranking Electro Magnets

VALVE REGULATED POCKET PLATE BATTERIES: Ultra Low maintenance Nickel Cadmium Valve Regulated Pocket Plate Battery engineered by HBL redefines convenience. The VRPP has a pocket Plate construction to guaramtee the same reliability and performance as can be expected from a conventional Nickel Cadmium Pocket Plate battery. The design ensures no water top-up requirement during its lifetime under normal operating conditions.

Benefits: Accepts low float voltages, No water top-up during lifetime, Capable of giving high performance, Exceptionally long and reliable service life, Unsurpassed resistance to Electrical and Mechanical abuse, Safe from Flame and Explosion These batteries conform to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771 and other International Standards. Range: VRPP Batteries are available from 8 AH to 728 AH Applications: UPS Railway Signaling Telecommunications Switchgear Process Control Emergency Lighting Fire Alarm System

NICKEL CADMIUM FIBRE PLATE BATTERIES: These batteries use Fibre Plateelectrodes. The three Dimensional Fibre Structure in the plate provides a very high conducting density. The advantages of this technology is its

low internal resistance, high rates of discharge, improved recharge capability and lower weight with a high cycle life. The Ni-cad Fibre Plate batteries are designed as L, M,H and X types to suit customers requirements. These batteries conform to IEC 60623 and other international Standers Features: Consistent Voltage Output and stable Capacity over life time Long service life and reliable operation Can be used in extreme temperature zones, Ease of recharging the battery Ease of handling due to light weight, low maintenance and low water consumption Excellent for cyclic application

RANGE AND APPLICATION: Cell Type L-Low Rate KFL Range (Single & Block) Capacity (Ah) 0 to 1500 Range Typical Back- UP Above 3 hours Typical Application Firealarms, Emergency Lighting. Telecom, Railway signaling, Switchgear protection, Photovoltaic, Cathodic Protection

M- Medium Rate

Switchgear Protection Emergency lighting, Motive power, Train lighting Instrumentation and process control, UPS, Electric vehicles 11 to 1391 60 minutes Generator starting, UPS, Diesel locomotive cranking, Aircraft/ Helicopter ground starting, Electro man agent Diesel locomotive cranking, Genset

KFM Range KFH Range (Single & Block)

X- Ultra High Rate

11 to 120

Below 10 minutes

KFX Range (Single & Block) SINTERED PLASTIC BONDED BATTERIES:

starting, AGVs

HBLs Sintered Plastic Bonded Batters are best suited for application requiring high reliability coupled with low maintenance and high performance The sintered Plastic Bonded batters are manufactured using sintered positive plated and plastic Bonded negative plates. These are specialty designed for High Power Density and Reduced Water Consumption. These batteries use polypropylene cell containers with thermally welded lids for high impact resistance. Flame Retardant containers and lids are optional. All-steel terminals and fasteners give these batteries the ruggedness required to meet the demanding application needs. The cells are also provided with reliable flame arresting vents and are assembled in stainless steel crates for easy handling . Benefits: Applications Industry KSH range Railways-KRM, KRX, KRH ranges Telecommunications KSL range Valve Regulated Lead Acid Batteries 2 V cells Optimized performance to suit application requirements. Fits in a very small space Performs even at extremely low temperatures. No topping with water required for long periods. Long Life. Standards. These batteries conform to the following international standards: IEC 60623 UIC 854 R BS 6260 IEC 60077 DIN 40771, BFF 64018

Triumph HP is a premium design Valve Regulated Lead Acid Battery. The battery works on Gas Recombination Principle with AGM technology and heavy duty Lead Calcium Grids.

Benefits Applications:

Available in a wide range: 80Ah to 5800Ah Does not require water top-up throughout its life No corrosive fumes and hence no special battery rooms are required Stackable design minimizes space requirements. Designed for high integrity & long life Application specific designs Customized layouts for optimum space utilization Safe-Explosion-proof, leak-proof & flame-retardant material Consistent performance over life time Improved aesthetic Easy installation

Triumph-HP is the best choice for applications where no maintenance and minimal space Requirement is of utmost importance. Telecommunications Switch Gear Process Control Systems Railway Signaling & Communication Renewable Energy These Products Conform to: IEC 60896 part 2 Pure Lead-Tin VRLA Monoblocks

The Pure Lead-Tin range offers the customer the highest energy density of any lead acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin grid which packages more power in a smaller space. The plates being made of high purity lead last longer, offering excellent life. The proven benefits of this superior technology are high performance, quick recharge capability, high

energy density and a long service life. The 6V & 12V monoblocs are available in capacities ranging from 12Ah to 150Ah BENEFITS: Maintenance-free and spill-proof. This enables flexible mounting Wide operating temperature ranger(-40oC to +50oC) High energy density (gravimetric and volumetric) Good charge retention leading to long storage life Low internal resistance ensures quick recharge Excellent high rate capability permits use of smaller capacity batteries Superior raw materials for good performance and life Excellent deep discharge recovery characteristics UL recognized plastic components These batteries conforms to IEC 60896 and are certified by Intertek ETL SeMKO X-CellSealed Maintenance free GENERATOR Starting Unit The Battery The Pure Lead-Tin VRLA battery has an unmatched peak power performance due to its thin plate design. This is a sealed maintenance free battery with no topping up required for life.The Charger The sophisticated SMPS battery charger with in-built protections ensures optimum charging of the batteries always. The periodic running of the genset for charging of the batteries is eliminated. FEATURES & BENEFITS: Maintenance Free: No Topping up or Specific Gravity Checks1 Ready-to-use: Filled and Factory Charged Reliability: In-built Charger ensures that Battery is always Full Charges Cost Advantage: Low Cost of Ownership over itsLong Life time Xcell: Integrated Battery + Charger System Xcell Model Dimensions & Selection Chart Genset Rating KVA Weight (Apprx) In Kgs

Pure Load Power Dimensions in mm Pack Model L H W

XCL 12V 2000 XCL 12V 3200 XCL 24V 2000 XCL 24V 3200 XCL 24V 8000 XCL 24V 10000

330 182 330 235 405 182 405 235 600 290 600 320

175 15,20,25 175 30,40,50,62.5,82.5,100,125 240 50,62.5,70.100,110,125,14 0 240 160 to 500 450 625 to 1000 450 1250 to 1500

11.0 16.5 26.0 36.0 78.0 92.0

TUBULAR GEL VRLA BATTERIES: The solar powered shelters carry batteries that expose them to higher temperatures. Net result is the need for a heavy duty, robust, deep cycling battery that is also less sensitive to high temperature. To meet such rigors of temperatures and varying patterns of usage, HBL introduces Tubullar Gel VRLA Batterywith unbeatable combination of Tubular plate and gelled electrolyte. Applications: Wireless: Base Transceiver, station (BTS), Base Switches (MSO), CDMA/3G base stations, Main Switches Transmission: Fiber optic system, Digital Microwave radi, Satellite earth stations Switching: Local access switches, Primary exchanges, Central office/Secondary exchange, point of inter connect switches, Internet & Gateway switches, Telecom Co-location. Applications other that Telecom: Telecommunications, Solar energy systems, wind energy systems, Power Plants and substations, Train lighting, Coach Air conditioning and signaling in Railways, SCADA Systems.

Features & Benefits: Pressure die-cast spine grids Longer float life, Very good cycling capability required for Indian conditions, Gelled Electrolyte Very good heat dissipation, suitable for out door installation, Antimony free alloy Long shelf life, valve regulated No water additions during service life, 100% capacity on first discharge. No free acid, Can be mounted both in horizontal and Vertical orientation, Ideal for Solar Powered telecom installations. Tubular Ultra Low Maintenance Lead Acid Battery: Tubular LMLA battery is the combination of traditional advantage of tubular plate with ultra-low-maintenance feature. Tubular LMLA battery is a preferred choice for the applications with float, semi cyclic and cyclic operations along with long service life, high cycle life, partial State of Charge (PSOC) & deep cycling requirements.

Taurus: The Taurus Tubular plate low maintenance lead acid battery is the results of the strong R&D Expertise gained by HBL over a decade of supplying millions of lead acid batteries to various applications. Taurus batteries offer outstanding reliability over an expected service life of around 15 years in float applications. This battery offers very low maintenance, extended topping up frequency due to low antimony alloy & high acid reservoir. Telecommunication Valve Regulated Lead Acid Batteries 2V Cells Triumph HP is a premium design Valve Regulated Lead Acid Battery. The Battery works on Gas Recombination Principle with AGM technology and heavy duty Lead Calcium Grids. Available in a wide range: 80 Ah to 5800 Ah Benefits: Does not require water top-up throughout its life No corrosive fumes and hence no special battery rooms are required Stackable design minimizes space requirements Designed for high integrity & long life Application specific designs

Customized layouts for optimum space utilization Safe-Explosion-proof, lead-proof & flame-retardant material Consistent performance over life time Improved aesthetics Easy installation Applications: Triumph-HP is the best choice for applications where no maintenance and miminal space

REQUIREMENT ARE OF UTMOST IMPORTANCE: Telecommunications Switch Gear Process Control Systems Railway Signaling & Communication Renewable Energy

PURE LEAD-TIN VRLA MONOBLOCKS The Pure Lead Tin range offers the customer the highest energy density of any lead acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin grid which packages more power in a smaller space. The plates being made of high purity lead last longer, offering excellent life. The proven benefits of this superior technology are high performance, quick recharge capability, high energy density and a long service life. The 6V & 12V monoblocks are available in capacities ranging from 12Ah to 150Ah. Benefits: Maintenance-free and spill-proof. This enables flexible mounting Wide operating temperature range(-40oC to + 50oC) High energy density (gravimetric and volumetric) Good charge retention leading to long storage life Low internal resistance ensures quick recharge Excellent high rate capability permits use of smaller capacity batteries Superior raw materials for good performance and life Excellent deep discharge recovery characteristics UL recognized plastic components

These batteries conforms to IEC 60896 and are certified by Intertek ETL SEMKO

Company Profile COMPANY INTRODUCTION: HBL Power Systems Limited is a public limited company. It was established in 1977 as a Small Scale Industry but today it has grown into a well-diversified batteries technologies group. It has its units on the outskirts of Hyderabad. HBL Power Systems Limited is engaged in the manufacturing of widest range of specialized batteries, electronic equipment and other products for telecommunication, railways, aviation, defence, power and other industrial sectors. The company is headed by Dr.A.J.Prasad, who is the Chairman and Managing Director, The Company has its major units in the outskirts of Hyderabad. One unit is situated at Shamirpet, 20 KMs from Secunderabad, Second one at Nandigaon Village between Shamshabad and Shadnagar on the Hyderabad-Bangalore national highway, Third one at Bhoothpur Village Between Shadnagar and Mahaboob Nagar, Fourth one is Kandivalasa village near By Pusapatirega Mandal on the Visakhapatnam Srikakulam National Highway and another one is Duvvada Village at VSEZ, Visakhapatnam. The company has units in Assam, Nepal, UK,Egypt and Singapore. Apart from factory buildings, these units are occupied by vegetation, water amenities etc., and providing pollution free atmosphere. The Companys operations are divided into 3 Segments: Batteries Electronics Others

Further, the company is divided into various divisions depending upon the nature of the product; each division is treated as a separate company, each having its own funds allocation and manpower in various departments. The company manufactures various types of batteries viz., VRLA, Tubular, Monobloc, Nickel-Cadmium, Lithium, Silver-Zinc, and Thermal etc.

The electronics segment comprises of various divisions manufacturing electronic equipment like rectifiers, IPS, chargers, embedded systems, data loggers. Apart from batteries and electronics, the company also manufactures bulletproof jackets, windmills etc. The company has recently taken up railway signaling works contracts. The company has 3 divisions catering to the ancillary needs of the company, material components divisions at Shamirpet, Nandigaon, Bhoothpure, Kandivalasa and VSEZ (Duvvada) units indulge in various ancillary activities like sheet metal fabrication making of racks, cutting, bending, plating etc. Plastic mounding division at Nandigaon manufactures various types of boxes, and cell & battery containers. Annual turnover of the company is around 800 cores. PRODUCT PROFILE: Batteries: Nickel Cadmium Sintered Plated batteries Nickel Cadmium Pocket Plated batteries Nickel Cadmium Fibre Plated batteries Silver-zinc aircraft batteries Silver-zinc torpedo batteries Sealed Cylindrical Nicked Cadmium batteries Lithium batteries Valve Regulated Lead Acid batteries Sealed Lead Acid batteries Tubular Vent batteries Thermal batteries Monobloc batteries

Electronics: Switch Mode Rectifiers Integrated Power Supplies Universal Battery Chargers Rectifiers Data Loggers

Thyristor based charged HFTCs SSIs Fuzes Moving Target Detectors RF Power Amplifiers BIT Units Others: Bulletproof jackets Windmills Cell Containers Battery Containers Steel & Wooden racks Packing boxes etc. for in-house use

CHAPTER-III

INTRODUCTION OF WORKING CAPITAL:

Working Capital Management is the process of planning and controlling he level and the mix of the current assets of the firm as well as financing these assets. Specifically working capital management requires financial manager to decide what quantities of Cash, Other Liquid Assets, Account Receivables and Inventories the firm will hold at any point in time. In addition financial manager must decide how the current assets are to be financed. Finally choices include the mix of current as well as long-term liabilities. NATURE OF WORKING CAPITAL: Working Capital Refers to Current Assets Those, which are convertible into cash within 1 year. Those, which are required to meet day-to-day expenses.

The fixed assets as well as current asset require funds. The Management of working Capital Management involves differed concepts than the techniques used in fixed assets management. The fixed assets involve long period perspective and there from the concept

of time value of money are applied in order to discount the future cash inflows, where as Working Capital time horizon is limited 1 year and time value of money concept is considered. The fixed assets long term profitability of firm while current assets affect shortterm liquidity position. So, working capital Management, the financial manager is faced with decisions involving some of the considerations as follows: The working Capital Management may be defined as the management of firms sources and used of Working Capital in order to maximize the wealth of shareholders. The proper working capital management requires both medium terms planning (up to 3 years) and also the immediate adoptions to changes arising due to fluctuations in operating levels of firm. SIGNIFICANCE OF WORKING CAPITAL: The world in which real firms function is not perfect. It is characterized by the firms considerable uncertainty regarding the demand, market price, quality and availability of its own products and those of suppliers. These real world circumstances introduce problems to the firm must deal. While the firm has many strategies that utilize investment or financing with working capital accounts often offer a substantial advantage over the other techniques. The importance of working capital management is reflected in the fact that financial managers spend a great deal of time in managing current assets and current liabilities like. CLASSIFICATION OF WORKING CAPITAL: The Working Capital may be classified as follows: the basis of Concept: 1.GROSS WORKING CAPITAL: The total of current assets of the business is called Gross Working Capital Actually Gross Working Capital is the amount of capital blocked in the current assets of the entity is treated Gross Working Capital. 2. NET WORKING CAPITAL: If all the current liabilities of a firm are paid, the residual balance that would remain at hand dlout of the current assets is called as the Net Working Capital The Net Working Capital is helpful to find out the amount of fund to be collected from long-term sources. Net Working Capital = Current Assets Current Liabilities

ON THE BASIS OF TIME: 1.PERMANENT OR FIXED WORKING CAPITAL: Permanent or Fixed Working Capital is the minimum, amount, which is

required to ensure effective utilization of fixed facilities and for maintains the circulation of current assets. There is always a minimum level of current assets, which is continuously required by the enterprise to carryout its normal business operations. The minimum level of current assets is called Permanent or Fixed Working Capital as this part of capital is permanently blocked in current assets. As the business grow, the requirements or Permanent working capital also increase due to increase in current assets. The permanent Working Capital can further be classified as: Regular Working Capital Reserve Working Capital

Regular working Capital required ensuring circulation of current assets from cash to inventories, from inventories to receivables and from receivables to cash and so on. Reserve working capital, which may be provided for contingencies that may are at unstated periods such as strikes rise in prices depreciation, etc., 2. TEMPORARY OR VARIABLE WORKING CAPITAL: Temporary or Variable Working Capital is the amount of working capital which is required to meet the seasonal demands and some special exigencies. Variable working Capital can be further classified as: Seasonal Working Capital Special Working Capital Moat of the enterprises has to provide additional working capital to need the seasonable and special needs. The capital required to meet the seasonal needs of the enterprise is called Seasonal Working Capital. Special Working Capital is that part of the Working Capital which is required to meet special exigencies such as launching of extensive marketing campaigns for conducting research etc. IMPORTANCE OF ADEQUATE WORKING CAPITAL: Working Capital is the life and nerve center of a business. No business can run successfully without an adequate amount of working capital.

ADVANTAGES OF ADEQUATE WORKING CAPITAL: The Main advantages of adequate amount of working capital are as follows: Good Will: Sufficient Working capital enables a business concern to make prompt payments and hence helps in creating and maintaining good will. Easy Loan: A concern having adequate working capital, high solvency and good credit standing can arrange loans from banks and others on easy and favorable terms. Cash Discounts: Adequate working capital also enables a concern to avail discounts on the purchases and hence it reduces costs. Regular supply of Raw Material: Sufficient Working Capital ensures regular supply of raw materials and continues production. Regular payment of salaries, wages and other day to day commitments: A company which has sample Working Capital can made payment of salaries wages and other day to day commitments which raises the morale of its employees, increases their efficiency, reduces wastage, costs and enhances production and profits. INADEQUATE WORKING CAPITAL: Every business concern should have adequate working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortage of working capital. Both excess as well as short working capital positions are bad for any business. However, out of the two, it is the inadequacy of working capital, which is more dangerous from the point of view of the firm. DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL: Excessive Working capital means idle funds which earn no profits for the business and hence the business cannot earn a proper rate on its investment. When there is a redundant working capital, it may lead to unnecessary purchasing and accumulation of inventories causing chances if waste and losses. Excessive working capital implies excessive debtors and defective credit policy, which may cause higher incidence of bad debts.

When there is excessive working capital, relations with banks and other financial institutions may not be maintained. Due to low rate of return on investments ,the value of shares may also fall. NEED FOR WORKING CAPITAL: The need of working capital cannot be over emphasized. Every business needs some amount of working capital. The need for working capital arises due to the time gap between production and realization of cash from sales. There is an operating cycle involved in the sales and realization of cash. There are time gaps in purchase of raw materials and production, production and sales, and realization of cash. Thus, working capital is needed for the following purposes. For the purchase of raw materials, components and spares. To pay wages and salaries. To incur day to day expenses and overhead costs such as fuel, power and office expenses etc. To meet the selling costs as packing, advertising etc., To maintain the inventories of raw material, work-in-process, stores and spares and finished stock. DETERMINANTS OF WORKING CAPITAL: The working capital requirements of a concern depend upon a large number of factors such as nature and size of business, the character of their operations, the length of productions cycles , the rate stock turnover and the state of economic situation. It is not possible them because all such factors are of different important factors generally influencing the working capital requirements. NATURE OR CHARACTER OF BUSINESS: The working capital requirements of a firm basically depend upon the nature of its business. Public utility undertaking like electricity , Water Supply and Railways need very limited working capital because they offer cash sales only and supply services, not products and as such no funds are tied in inventories and receivables. On the other hand trading and financial in fixed assets but have to invest large amounts in current assets like inventories, receivables and cash as such they need large amount of working capital.

1.

SIZE OF BUSINESS OF SCALE OF OPERATIONS: The Working capital requirements of a concern are directly influenced by the size

of a business, which may be measured in terms of scale of operations. Greater the size of a business unit, generally larger will be the requirements of working capital. However in some cases even a smaller concern may need more working capital due to high overhead charges inefficient use of available resources and other economic disadvantages of small size. 2. MANUFACTURING PROCESS OR LENGTH OF PRODUCTION CYCLE: In manufacturing business, the requirement of working capital increase in direct proportion to length of manufacturing process. Longer the process period of manufacture, larger is the amount of working capital required. The long the manufacturing time, the raw materials and other supplies have to be carried for a longer period in the pores for finished product. Therefore, if there are alternative of production, the process of production, and the process with the shortest production period should be chosen. 3. SEASONAL VARIATIONS:

In certain industries raw material is not available throughout the year, They have to buy raw materials in bulk during the season to ensure an uninterrupted flow and process them during the entire year. A huge amount is, thus block in the form of material inventories during such season which gives rise to more working capital requirements. 4. 5. WORKING CAPITAL CYCLE: In a manufacturing concern, the working capital starts with the purchase of raw material and ends with the realization of cash from the sales of finished goods. The cycle involves purchase of raw material and stores, its conversion into stocks of finished goods through work-in-process with progressive increment of labor and services costs, conversion of finished stock into sales, debtors and receivables and ultimately realization of cash and this cycle continues again from cash to purchase of raw material and so on.

6.

RATE OF STOCK TURNOVER:

There is high degree of inverse co-relationship between the quantum of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover will need lower amount of working capital as compared to firm having a low rate of stock turnover. For example, in case of precious stone dealers, the stock turnover is very low. They have to maintain a large variety of stocks and the movement of stocks is very low. 7. BUSINESS CYCLE:

Business cycle refers to alternate expansion and contraction in general business activity. In a period of boom i.e. when the business is prosperous, there is a need for larger amount of working capital due to increase in sales, rise in prices, optimistic expansion of business, etc. On the contrary in the times of depression i.e. when there is a down swing of the cycle, the business contracts, sales decline, and difficulties are faces in collections from debtors and firms may have a large amount of working capital lying idle.

8.

RATE OF GROWTH OF BUSINESS:

The working capital requirements of a concern increase with the growth and expansion of its business activities. Although it is difficult to determine the relationship between the growth in the volume of business and the growth in the working capital of business, yet it may be concluded that for normal rate of expansion in the volume of business. We may have retained profits to provide for more working capital but in fast growing concerns. APPROACHES FOR FINANCING WORKING CAPITAL: There are three approaches to financing the working capital: 1. 2. 3. Matching approach Conservation approach Aggressive approach Matching approach:

The firm can adopt a financial plan , which matches the expected life of asset with the excepted life of the source of funds raised to finance asset. The firm follows , matching approach ,long term financing will be used to finance fixed asset and permanent current Assets and short term financing temporary or variable current assets. However, it should be realized that exact matching is not possible because of the uncertainty about the expected lives of asset. Conservation approach: A firm is practice may adopt a conservative approach in finance ng its current and fixed assets. The financing policy of the firm is said to be conservative when it depends more on long-term funds for financing needs. In clear a conservative plan, the firm finances its permanent assets and also a part of temporary current assets with long term financing in the periods. Aggressive approach A firm may be aggressive in financing its assets. A firm follows aggressive policy when it uses more short term financing than warranted by the matching plan. Under an aggressive policy.

SOURCES OF WORKING CAPITAL: After determining the level of working capital on the basis of various determinants the next step is to consider how it will be financed. A large manufacturing concern may Procure funds from various sources to meet its working capital requirements from time to time. For the convenience of study the sources of working capital may be classified under two heads. A. Sources of long term working capital B. Sources of short term working capital SOURCES OF LONG TERM WORKING CAPITAL: The long term working capital requirements can be met from the following sources.

1.

ISSUE OF SHARES: It is the safest way of procuring permanent and regular working capital without

any fixed charges. 2. ISSUE OF DEBENTURES: Regular and long term working capital may be obtained at lower cost of trade on equity. 3. RETAINED PROFITS: Accumulated large profits are also considered to be a good sources of financing long term working capital requirements. It is the best and the cheapest source of finance. It creates no change in future profits. SOURCES OF SHORT TERM WORKING CAPITAL: The sources of short term working capital may be classified in two heads. Internal sources External sources INTERNAL SOURCES: Under this category the sources of working capital are tapped from within the internal sources are depreciation funds, provision for taxation and accrued expenses. 1.Depreciation fund: Depreciation fund created out of profits provided they are invested in represented by assets. 2.Provision for taxation: There remains a time lag between making the provision for and payment of taxation. A company may utilize such provision during the intermittent period temporarily. EXTERNAL SOURECES: External sources means the sources providing finance for companys working capital other than those of internal sources. These may be enumerated as given below. 1.Normal trade credit: Creditors provide short term finance to the company by selling the goods, inventories and equipment on the basis of deferred payment. It is a very common source of short term finance and normally every concern use this source as a normal trade practice.

2. Credit papers: Bills payable or promissory note, which may be discounted from bankers for meeting short term capital by the drawer. WORKING CAPITAL FORECAST: There are number of methods to determine the working capital needs. 1. The Balance Sheet Method: The Balance sheet method of forecast is made up of the various assets and liabilities of the business. Afterwards, the difference between the two is taken which will indicate either cash surplus or deficiency. 2. Profit and Loss adjustment Method: Under this method the forecasted profits are adjusted after adding the cash inflows and deducting the cash outflows. The basic idea under this method is to adjust the estimated profit on cash basis. 3. Working capital as a percentage of sales: Under this method the working capital is to be related to sales and calculated as a percentage of sales. MANAGEMENT OF WORKING CAPITAL: Working capital is the firms holdings of current assets such as cash receivables, inventory and marketable securities. Every firm required working capital for its day to day transactions such as purchasing raw material, for meeting salaries wages, rents, rates, advertisements etc. But there is much disagreement among various financial authorities

CHAPTER-IV

INTRODUCTION
Financial analysis is the process of identifying the finance strengths and weakness Of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. The study on financial analysis help in assessing corporate excellence judging credit worthiness and it also helps in determining the financial performance of the company of this purpose date are collected for period of the 5 years. Various ratios are used in the study to find out the liquidity position of the company. The organization has to submit its true picture of financial position to potential lender of money and to the up coming partners for that it wanted to have the first utilize of the anlysis to rectify the problem if any. The process of identifying the finance strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm or by parties out side of the firm viz. owners, creditors investors

and others to form judgment about the operating performance and financial position of the firm. Users of the financial statements can get insight about the financial strength in the statements. Management should be interested in the exact meaning of the term working capital. There are two types of assets in every business concerns: Current Assets Fixed assets Both are necessary for profit running of business. Working capital is the difference of current assets and current liabilities. Management of working capital is concerned with problems that arise in attempting to manage current assets, current liabilities and the inter-relationship between them. Working Capital must be adequate. In case of excess working capital that is idle funds that are not profits for business. In case of inadequacy of working capital the firm may lead to insolvency. In this context working capital management is three dimensional in nature.

OBJECTIVES OF WORKING CAPITAL MANAGEMENT: There are two blood objectives of the management of working capital: Maintenance of working capital at appropriates level and when they are needed. In accomplishment of these two objectives the management has to consider the composition of current assets pool. The working capital position sets the various policies in the business with respect to general operations such as financing expansion, purchasing and dividends etc. STUDY OF WORKING CAPITAL MANAGEMENT: The Management of working capital management has been studied under the three following heads: MANAGEMENT OF CASH BALANCES Availability of ample funds as

MANAGEMENT OF ACCOUNT RECEIVABLES MANAGEMENT OF INVENTORY MANAGEMENT OF ACCOUNT RECEIVABLES Receivables result from credit sales. A concern is required to allow credit sales in order to expand its sales volume. It is not always possible to sell goods on cash basis only. ARRENGING SHORT TERM FINANCING Negotiating favorable credit terms Controlling the movement of cash Administering accounts receivables Monitoring investment in receivables Decisions concerning the above area play an important role in maximizing overall value of the firm. Once decisions concerning these areas are reached, the level of working capital is also determined in active decision sense, but falls out as residual from the decision just made. The management of working capital plays an important role in maintaining the financial health during the normal course of business. This critical role can be enunciated by examining the flow of resources through the firm. By far the major flow if the working capital cycle. MEANING OF RECEIVABLES: Receivables represent amounts owed to the firm as a result of sale of goods or service in the ordinary course of business. These are claims of the firm against its customers and from, trade receivables, customer receivables or book debts. The receivables are carried for the customers. The period of credit and extent of receivables depends upon the credit policy followed by the firm. The purpose of marinating or investing in receivables is to meet competition and to sales and profits. DETERMINANTS OF ACCOUNT RECEIVABLES: In most of business enterprise, investments in accounts receivables from major part of their assets. Accounts Receivable is one of the major components of working capital. The financial manager should pay attention to management of receivables so that each rupee invested in accounts receivables may contribute to net worth of firm.

The position of receivables is basically a problem of balancing profitability and liquidity. Soft credit terms are attraction of sales and the longer the time a company allows to pay its customers, the greater the sales and higher the profits. However on the other hand, the longer the period of credit, the greater the risk, the greater the level of debt, greater the strain on the liquidity of company. EXPANSION PLANS: When a concern wants to expand its activities, it will have to enter new markets. To attract customers it will give incentives in the form of credit facilities. The periods of credit can be reduced when the firm is able to get permanent customers. In the early stage of expansion more credit becomes essential and size of receivables will be more. RELATION WITH PROFITS: The credit policy is followed with a view to increase sales. When sales increase beyond a certain level the additional costs incurred are less than the increase in revenues. It will be beneficial to increase sales beyond a point because it will bring more profits. The increase in profits will be followed by an increase in the size of receivables or vice-versa. CREDIT COLLECTION EFFORTS: The collection of credit should be streamlined. The customers should periodical reminders if they fail to pay in time. On the other hand, if adequate attention is not paid towards credit collection then the concern can land itself in a serious problem. Efficient credit collection machinery will reduce the size of receivables. If theses efforts are slower then outstanding amounts will be more. HABITS OF CUSTOMERS: The paying habits of customers also have a bearing on the size of receivables. The customers may be in habit of delaying payments even though they are financially sound. The concerned should remain in touch will such customers and should make them realized the urgency of their needs.

COST OF MAINTAINING RECEIVABLES: When goods and services are provided on credit then concerns capital is allowed to be used by the customers. The receivables are financed from the funds supplied by shareholders for long term financing and through retained earning. The concern incurs some cost for collecting funds, which finance receivables. COST OF COLLECTION: A proper collection of receivables is essential for receivables management. The customers who do not pay the money during a stipulated credit period are sent reminders for early payments. Some persons have to be sent for collecting these amounts. In some cases legal recourse may have to be taken for collecting receivables. All these costs are known as collection costs which is a concern is generally required to incur. DEFAULT COSTS: Some customers may fail to pay amounts due towards them. The amounts which the customers fail to pay are known as bad debts. Though a concern may be able to reduce bad debts through efficient collection machinery but one cannot altogether rule this cost. POLICIES FOR MANAGING RECEIVABLES: The credit policy of any firm should be estimated is such a way that the benefits likely to accrue from it, the credit policy should incorporate the following: CREDIT STANDARDS: The term credit standards represent the basic criteria for the extension of credit to any customer. This is done with the help of factors such as credit rating, credit references and various financial ratios. The level of sales and the amount of account are fairly liberal as compared to sales under the restructure to tight credit standards. The credit standards of any firm are usually determined by 5 aces namely: CAPACITY: It refers to ability of the specific customer to manage the required scales of business. COLLATERAL:

It refers to the security in form of assets owned by customers, which can be offered by the customer to secure the amount of credit extended to him. CAPITAL: It refers to the financial soundness of customer i.e. his capacity to raise required funds. CONDITION: It refers to the impact of economic environment of the country on the firm or special circumstances offered by government or local agencies, which may affect the customers profitability and his ability to meet obligations. CREDIT TERMS: This refers to the stipulations under which the goods are sold on credit i.e. terms and conditions of trade relating to repayment. The two components are: CREDIT PERIOD: It refers to the duration of time which trade credit is extended. This is the period available to th4e customer to pay off his dues.

CASH DISCOUNT: It refers to that amount of discount, which is gives to customer on paying off his debts within the stipulated period. Attractive cash discounts terms help in reduction of average collection period. COLLECTION PROCEDURES: The third decision are in the management of receivables is the collection policies. The policy must be strict and lenient. Sending a reminder for payments Personal request through telephone Personal visits to customers Taking help of collecting agencies

MANAGEMENT OF INVENTORY: Every enterprise needs inventory for smooth running of its activities. It serves as a link between production and distribution processes. The greater the time tag, the higher the requirements for inventory. It also provides a Cashion for future price fluctuations. The investment in inventories constitutes the most significant part of current assets working capital in most of the undertakings. Thus, it is very essential to have proper control and management of inventories. The purpose of inventory management is to ensure availability of materials in sufficient quantity as and when required and also to minimize investment in inventories. The investment in inventory is very high in most of the undertakings engaged in manufacturing. Wholesale and retail trade. The amount of investment is sometimes more in inventory than in other assets. In India a study of 29 major industries has received that the average cost of materials in 64 paisa and the cost of labour and overheads is 36 paisa in rupee. About 90% of working capital is invested in inventories. An efficient system of inventory management will determine. What to purchase How to purchase From where to purchase Where to store etc. The purpose of inventory management is to keep the stocks in such a way that nether is overstocking nor under stocking. The over stocking will mean a reduction of liquidity and starving of other production processes, under stocking, on the other hand will result stoppage of work. The investments in inventory should be kept in reasonable limits. NATURE OF INVENTORIES: The dictionary meaning of inventory is stock of goods or list of goods. In accounting languages it may mean stock of finished goods only. A)RAW MATERIAL: Raw material form a major input into the organization. They are required to carry out production activities uninterruptedly. The quantity of raw materials required will be

determined by the rate of consumption and the time required for replenishing the supplies. The factors like the availability of raw materials and government regulations, etc., to affect the stock of raw materials. B)WORK-IN-PROCESS: The work-in-process is that stage of stocks, which are in between raw materials and finished goods. The raw materials enter the process of manufacture but they are yet to attain a final shape of finished goods. C)FINISHED GOODS: These are the goods, which are ready for the consumers. The stock of finished goods provides a buffer between production and market. NEED TO HOLD INVENTORIES: The question of managing inventories arises only when the company holds inventories. Maintaining inventories involves typing up of the companys funds and incurrence of storage and handling cost. If it is expensive to maintain inventories, why do companies hold inventories? There are three general motivates for holding inventories.

TRANSACTIONS MOTIVE: Emphasizes the need to maintain inventories to facilitate smooth production and sales operations. PRECAUTIONARY MOTIVE: Necessitates holding of inventories to guard against the risk of unpredictable changes in demand and supply forces and other factors. SPECULATIVE MOTIVE: Influences the decision to increase or reduces inventory levels to take advantage of price fluctuations. OBJECTIVES OF INVENTORY MANAGEMENT:

The main advantage of inventory management is operational and financial. The operational objectives mean that the materials and spares should be available in sufficient quantities so that work not disrupted for want of inventory. The financial objective means that investments in inventories should not remain idle and minimum working capital should be locked in it. The following are the objectives of inventory management: To ensure continues supply of materials, spares and finished goods so that production should not suffer at any time and the customers demand should also be met. To avoid both overstocking and under stocking of inventory. To maintain investments in inventories at the optimum level as required by the operational and sales activities. To keep material cost under control so that they contribute in reducing cost of production and overall costs. To eliminate duplication in ordering stocks, this is possible with the help of centralizing. To design proper organization for inventory management a clear-cut accountability should be fixed at various levels of the organization.

TECHNIQUES OF INVENTORY MANAGEMENT: The following are the important tools and techniques of inventory management and control: Determination of Stock Levels Determination of Economic Order Quantity ABC Analysis Vital Essential Desirable (VED) Analysis Inventory Turnover Ratios CASH MANAGEMENT INTRODUCTION:

Cash is the important current assets for the operations of the business. Cash is the basis input needed to keep the business running on a continues basis; it is also the ultimate output expected to be realized by selling the service or product manufactured by the firm. The firm should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firms manufacturing operations while excessive cash will simply remain idle, without contributing anything towards the firms profitability. Thus, a major function of the financial manager is to maintain a sound cash position. Cash is the money, which a firm can disburse immediately without any restriction. The term includes coins, currency and cheques held by the firm, and because in its accounts. Sometimes near-cash items, such as marketable securities or bank times deposits, are also included in cash. The basic characteristics of nearcash assets are that they can readily be converted into cash. Generally, when a firm has excess cash, it invests it in marketable securities. This kind of investment contributes some profit to firm .

MOTIVES FOR HOLDING CASH: The firms needs for cash may be attributed to the following needs: Transactions motive, Precautionary Motive and Speculative Motive. Some people are of the view that a business requires cash only for the first two motives while other feel that speculative motive also remain. TRANSACTION MOTIVE: A firm needs cash for making transactions in the day-to-day operations. The cash is needed to make purchases, pay expenses, taxes, dividend etc. The cash needs arise due to the fact that there is no complete synchronization between cash receipts and payments. Sometimes cash receipts exceed cash payments or viceversa. If more cash is needed for payments than receipts it may be raised through

bank overdraft. On the other hand if there are cash receipts than payments it may be spent on marketable securities. PRECAUTIONARY MOTIVE: A firm is required to keep, cash for meeting various contingencies. Though cash inflows and cash outflows are anticipated but there may be variations in these estimates. For example a debtor who was pay after 7 days inform of his inability to pay; on the other hand a supplier who used to give credit for 15 days may not have the stock to supply or he may not be in a position to give credit at present. In these situations cash receipts will be less than expected and cash payments will be more, as purchases may have to be made per cash instead of credit. Such contingencies often arise in a business. A firm should keep some cash for such contingencies. SPECULATIVE MOTIVE: The speculative motive relates to holding of cash for investing in profitable opportunities as and when they arise. Such opportunities do not come in regular manner. For example, the prices of shares and securities may be low at a time with an expectation that these will go up shortly. The prices of raw materials may fall temporarily and a firm may like to make purchases at these prices. Such opportunities can be availed of if a firm has cash balance with it. These transactions are speculated because prices may not move in a direction in which we suppose them to move. OBJECTIVES OF CASH MANAGEMENT: There are two basic objectives of cash management. These are To meet the cash disbursement needs as per the payment schedule. To meet the amount of funds help up as cash balance. 1. MEETING CASH DISBURSEMENT: The basic objective of cash management is to meet all payment obligations in time. This requires the maintenance of sufficient cash funds to meet the payment schedules of raw materials suppliers, workers and banks, etc. In fact the production activitiy can come to a half of these schedules are not maintained and the firm may

even go to insolvency or bankruptcy. It is for that cash has been described as the oil lubricates the ever turning wheels of business without which the process grinds to a stop. 2.MINIMUM FUNDS HELD UP AS CASH BALANCE: The second objective of cash management is to minimize cash balances. A large amount of cash balance ensures the liquidity and all its advantages but it also implies very high cost, as large funds remain idle because cash is a non earning asset. On the other hand a low level of cash balance leads to the production held up and all its associated disadvantages. Therefore the objective of cash management is to maintain an optimum level of cash balance i.e. sufficient cash instead of excessive cash. DETERMINING OPTIMUM CASH NEEDS: There are three approaches to work out the optimum cash balances to be maintained by any firm. These are: Minimum cash model Minimum cash model with precautionary balances Cash budget The first two approaches are mathematical and are outside our scope. Therefore, we look at only cash budget. CASH BUDGET. Cash Budget is probably the most important device for planning and controlling the use of cash. It aims at maintaining adequate cash balance to meet all obligations but at the same time avoiding excessive balances. It involves the estimation of all future cash inflows and cash outflows of the firm over various intervals of time. It highlights the net cash position i.e. surplus or deficiency at the end of each cash budget period so that necessary arrangements can be made from other sources in case of deficiency or the amount could be employed else where aim fully in case of surplus balance. WORKING CAPITAL MANAGEMENT OF HBL

In time with the first objective of the study of this chapter position of HBL during the period under study that is 2004-09 The working capital is the amount of funds, which a company must have to finance its day to day operation. It can also be regarded as that proportion of the companies total capital which is employed in short term operation. It can take from of cash near cash and other assets of stock raw material and supplies needed for manufacturing, stock of finished goods awaiting sale semi-process items or components that will soon emerges as final products sundry debtors spending collection against credit sales and short terms investment if any.

STATEMENT OF CHANGES INWORKING CAPITAL OF HBL BATTERY LTD FOR YEAR 2004-2005. PARTICULARS Current assets Cash bank balance Inventories Receivables Loan&advances Total current assets 120869122 331697808 658179117 94546989 1205293036 123870215 531872572 1156229650 109037572 1921010009 3001093 200174764 498050533 14490583 --------------------------------------------------------2004 2005 INCREASE DECRESE

Current liabilities Current liabilities provisions Total current liabilities 386257547 38937920 425195467 567167003 48188105 615355108 --------------------------180909456 9250185

NET INCREASE IN WORKING CAPITAL

525557332

TOTAL

715716973

715716973

INTERPRETATION

There is a net increase in working capital of 525557332 due to the increase in all current assets. Cash bank balance, inventories, receivables and loan & advances and also increased in current liablities.but the increase in current liabilities is lower than the current assets. So the net effect is net increase in working capital.

STATEMENT OF CHANGES INWORKING CAPITAL OF HBL BATTERY LTD FOR YEAR 2005-2006. PARTICULARS Current assets Cash bank balance Inventories Receivables Loan & advances Total current assets 123870215 531872572 1156229650 109037572 1921010009 247174264 676792146 1383434338 1920297532 2497698280 123304049 144919574 227204688 81259960 --------------------------------------------------------2005 2006 INCREASE DECRESE

Current liabilities Current liabilities provisions Total current liabilities 567167003 48188105 615355108 649181826 73230789 --------------------------82014823 121418894

NET INCREASE IN WORKING CAPITAL

373254554

TOTAL

576688271

57668827

INTERPRETATION

There is a net increase in working capital of 373254554 due to the increase in all current assets. Cash bank balance, inventories, receivables and loan & advances and also increased in current liablities.but the increase in current liabilities is lower than the current assets. So the net effect is net increase in working capital.

STATEMENT OF CHANGES INWORKING CAPITAL OF HBL BATTERY LTD FOR YEAR 2006-2007. PARTICULARS Current assets Cash bank balance Inventories Receivables Loan & advances Total current assets 247174264 676792146 1383434338 1920297532 2497698280 251539265 723168191 174202450 294878595 3041628501 4365001 76376045 358608112 104581063 --------------------------------------------------------2006 2007 INCREASE DECRESE

Current liabilities Current liabilities provisions Total current liabilities 649181826 73230789 722412615 944599335 77503964 1022103299 --------------------------295417509 4273175

NET INCREASE IN WORKING CAPITAL

244239537

TOTAL

543930221

543930221

INTERPRETATION There is a net increase in working capital of 244239537 due to the increase in all current assets. Cash bank balance, inventories, receivables and loan & advances and also increased in current liablities.but the increase in current liabilities is lower than the current assets. So the net effect is net increase in working capital.

STATEMENT OF CHANGE IN WORKING CAPITAL OF HBL BATTERY LTD FOR THE YEAR 2007-2008. PARTICULARS Current assets Cash bank balance Inventories Receivables Loan & advances 251539265 753168191 1742042450 294878595 479295683 1724665368 2730055876 420927088 227756418 971497177 988013426 126048493 ---------------------------------------------------2007 2008 INCREASE DECRESE

Total current assets Current liabilities Current liabilities provisions Total current liabilities

3041628501

5354944015

944599335 77503964 1022103299

1465520910 139057135 1604578045

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

520921575 61553171

NET INCREASE IN WORKING CAPITAL 1730840768 TOTAL 2313315514 2313315514

INTERPRETATION There is a net increase in working capital of 1730840768 due to the decrease in current liabilities. Cash bank balance and inventories increased receivables and loan & advances dicreased.the decreased in liabilities is greater than current assets. So the net effect is net increase in working capital.

STATEMENT OF CHANGES INWORKING CAPITAL OF HBL BATTERY LTD FOR YEAR 2008-2009. PARTICULARS Current assets Cash bank balance Inventories Receivables Loan & advances 479295683 1724665368 2730055876 420927088 817027695 1799826192 2826356247 424571156 337732012 75160824 96300371 3644068 ---------------------------------------------------2008 2009 INCREASE DECRESE

Total current assets Current liabilities Current liabilities provisions Total current liabilities

5354944015

5867781290

1431360910 173217135 1604578045

1535339746 240883615 1776223361

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

103978836 67666480

NET INCRESE IN WORKING CAPITAL

341191959

TOTAL

512837275

512837275

INTERPRETATION: There is a net increasing in working capital of 341191959 due to the increase in current assets. Cash bank balance and inventories and increase in current liabilities (provisions).Increased current assets receivables and loan & advances and also increased in current liabilities. The net effect is net increase in working capital.

STATEMENT OF GROSS WORKING CAPITAL OF HBL BATTERY LTD YEARS 2004-05 2005-06 2006-07 2007-08 2008-09 (in Rs) GROSS WRKING CAPITAL 1921010009 2497698280 3041628501 5354944015 5867781290

gross working capital

6000000000 5000000000

gross working capital

4000000000 3000000000 2000000000 1000000000 0

years

INTERPRETATION: The observed from the above graph grass working capital of the hbl battery ltd. n he year 200405 gross working capital is 1921010009 the year 2005-06 gross working capital is 2497698280 it is increase with compared to 2004-05In the year 2006-07 gross working capita is 3041628501 it is increase with compared to 2005-06. In the year 2007- 08 gross working capital is5354944015it is increase with compared to 2006-07. In the year 2008-09 gross working capital is it is 5867781290 increase with compared to 2007-08.

STATEMENT OF NET WORKING CAPITAL OF HBL BATTERY LTD NET WORKINSG CAPITAL = CURRENT ASSET- CURRENT LIABLITIES YEARS 2004-05 2005-06 2006-07 2007-08 2008-09 (in Rs) NET WRKING CAPITAL 1305654901 1775285665 2019525202 1730840768 341191959

NET WORKING CAPITAL 2500000000 2000000000 net wc 1500000000 1000000000 500000000 0 years
INTERPRETATION :

The observed from the above graph net working capital of Hbl battery ltd. In the year 2004-05 net working capital is 1305654901. In the year 2005-06 net working capital is 1775285665 it is increase with compared to 2004-05. In the year 2006-07 net working capital is 2019525202. it is increase with compared to 2005-06. In the year 2007-08 net working capital is 1730840768 it is decrease with compared to 2006-07. In the year 2007-08 net working capital is it is decrease with compared to 2006-07.In the year 2008-09 net working capital is 341191959 it is decrease with compared to 2007-08.

COMPONENTS OF CURRENTS ASSET OF HBL BATTERY LTD :

Particulars Current asset Cash &bank balance Inventorie s Receivabl es Loans&ad

2004-05

20005-06

2006-07

2007-08

2008-09

123870215 531872572 109037572 1156229650

247174264 676792146 190297532 138343433

251539265 753168191 294878595 1742042450

479295683 1724665368 2730055876 420927088

817027695 1799826192 2826356247 424571156

vances

Total current asset

1921010009

2497698280

3041628501

5867781290

5354944015

CURRENT ASSETS

TOTAL CURRENT ASSETS

2004-05

2005-06

2006-07

2007-08

2008-09

YEARS

NTERPRETATION: The current assets statement in the year 2004-05 is , 1921010009 is increased in the year 2005-06 is 2497698280 and also increased in the year 2006-07 is 30411628501 ,and also increased and in the year 2007-08 is 5354944015 is increased and also increased 5867781290 in the year 2008-09.

COMPONENTS OF CURRENT LIABILITIES OF HBL BATTERY LTD: Particulars 2004-05 20005-06 2006-07 2007-08 (in Rs) 2008-09

Current liabilities 567167003 Provisions 48188105

649181826 73230789

944599335 77503964

1431360910 173217135

1535339746 240883615

Total Current liabilities

615355108

722412615

102210329

1604578045

1776223361

CURRENT LIABLITIES

TOTAL CURRENT LIABLITIES

YEARS
INTERPRETATION: The current liabilities statement in the year 2004-05, is 615355108 . In the year 2005-06 is 722412615 and also increased in the year 2006-07 is 102210329 ,and also increased and in the year2007-08is 1604578045 is increased and also increased 1776223361 in the year 2008-09.

COMPONENTS OF QUICK ASSET OF HBL BATTERY LTD: (in Rs) Particulars 2004-05 20005-06 2006-07 2007-08 2008-09

Cash &bank balance Receivables Loans&advance s Total quick asset

123870215 109037572 1156229650

247174264 190297532 138343433

251539265 294878595 1742042450

479295683 2730055876 420927088

817027695 2826356247 424571156

1389137437

182090613

2288460310

3630278647

4067955098

Quick Assets
total quicvk assets
2004-05

2005-06

2006-07

2007-08

2008-09

years
INTERPRETATION: The quick assets statement in the year 2004-05 is 1389137437 is increased in the year 2005-06 is 182090613 and also increased in the year 2006-07 is 2288460310 ,and also increased and in the year2007-08 is 3630278647 is increased and also increased 4067955098 in the year 2008-09.

STATEMENT SHOWING CURRENT RATIO IN HBL BATTERY LTD : Current ratio= Current assets --------------------Current liabilities

(in Rs) particulars Current assets Current liabilities Current ratio 2004-05 1921010009 615355108 3.1:1 2005-06 249769820 722412615 3.4:1 2006-07 3041628501 1022103299 3.03:1 2007-08 5354944015 1604578045 3.337:1 2008-09 5867781290 1776223361 3.3:1

Graph representation

current ratio
3.4 3.3 3.2 current ratio 3.1 3 2.9 2.8

2004-05 2005-06 2006-07 2007-08 2008-09

years
INTERPRETATION: The current assets statement in the year 2004-05 was 3:1:1,which increased to 3.4:1 in the year 2005-06 and increased to 3:03:1 in the year 2006-07 and also increased to 3.337:1 in the year 2007-08 and decreased 3:3:1is in the year 2008-09.

STATEMENT SHOWING QUICK RATIO IN HBL : Quick assets ------------------Current liabilities 2005-06 2006-07 2007-08 (in Rs) 2008-09

Acid test ratio Particulars 2004-05

Quick assets Current liabilities Current ratio

1389137437 615355108 2.25:1

1820906134 722412615 2.52:1

2288460310 1022103299 2.23:1

3630278647 1604578045 2.26:1

4067955098 1776223361 2.29:1

quick ratio
2.6 2.5

quickratio

2.4 2.3 2.2 2.1 2 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION:

years

The quick ratio statement in the year 2004-05 as 2:25:1 was increased to 2:52:1,in the year 2005-06 and decreased to 2:23:1, in the year 2006-07 and also increased to 2:26:1, in the year 2007-08 and also increased to 2.29:1, in the year 2008-09.

STATEMENT SHOWING TOTAL CURRENTS ASSETS TO TOTAL ASSETS IN HBL BATTERY LTD: Particulars Total current asset Total assets Percentage of current assets to total assets 2004-05 1921010009 2357494335 81 20005-06 2497698280 3380558385 73 2006-07 3041628501 4264271417 71 2007-08 5354944015 6678467900 80 2008-09 5867781290 7675559166 76

(in Rs)

% OF TOTAL CURRENT ASSETS

TOTAL %CURRE NT ASSE TS

85 80 75 70 65 2004-05 2005-06 2006-07 2007-08 2008-09

years

INTERPRETATION: The current assets as % of total assets as show as increase in trend from 71% to 80% up to 2006-2007 and decreased in trend from 80% to76% this is sign of efficiency in employing in working funds

Working capital turnover ratio in HBL: Working capital turnover ratio = Sales ------------Net working capital (in Rs) 2008-09 12438957853 40911557929 3.04:1

particulars Sales Net working capital Working capital turnover

2004-05 2837981749 1305654901 2.17:1

2005-06 3679835532 1775285665 2.07:1

2006-07 5118490030 2019525202 2.5:1

2007-08 9727564484 3750365970 2.59:1

ratio

working capital turnover ratio

3.5 3 2.5 Turnover 2 1.5 ratio 1 0.5 0

2004-05 2005-06 2006-07 2007-08 2008-09

years
INTERPRETATION: The working capital turnover ratio has been increased from 2:17:1 to 2:07:1 and during the period of in that year 2004-05 to in the year 2005-06 after it rises to 2:5:1 in the year 200607 and decreased in the year 2007-08 2:59:1 and increased 3:04:1 in the year 2008-09

ANALYSIS OF EACH MANAGEMENT IS HBL BATTERY LIMITED STATEMENT SHOWING CASH TO CURRENT RATIO IN HBL BATTERY LIMITED: Particulars Cash and bank balance Current assets Percentage of cash and bank balance to current assets 2004-05 123870215 1921010009 6.04 2005-06 247174264 2497698280 10.97 2006-07 251539265 3041628501 8.26 2007-08 479295683 5354944015 8.9 (in Rs) 2008-09 817027695 5867781290 13.92

% of cash bank balance to current ratio

% cash and bank balance to current assets
15 10 5 0 2004-05 2005-06 2006-07 2007-08 2008-09

years
INTERPRETATION: Cash to current assets ratio indicates what % of current assets in the form of cash . It should be kept as low as possible because by itself does not yield profit the above table presents the percentage of cash and bank balance to current assets in HBL battery limited. The cash and bank balance as % of total firm assets the % decreased due to decrease in cash sales from 13 % to 6.04% form the years 2004-05 to 2005-06 and increased 6.04% to 10.97% in 2004-05 this primarily on a Account of cash inflows .

STATEMENT SHOWING RATIO OF CASH AND BANK BALANCE TO CURRENT LIABILITIES IN HBL BATTERY LIMITED: (in Rs) 2008-09 817027695 1776223361 45.99

particulars Cash and bank balance Current liabilities % of cash bank balance to current liabilities

2004-05 123870215 615355108 20.12

2005-06 247174264 722412615 34.21

2006-07 251539265 102210329 24.60

2007-08 479295683 1604578045 29.87

% of cash bank balance to current liabilities ratio

50 40 % of cash bank 30 balance to current 20 liabilities 10 0 2004-05 2005-06 2006-07 2007-08 2008-09

INTERPRETATION:

years

The % of cash to current liabilities was highest in the year 2004-05 i.e. 20.12% which increased to 34.21% in the year 2005-06 and again decreased to 24.60% in the year 2006-07 and again increased to 29.87% in the year 2007-08.Cash the first and most liquid assets intend to meet quick liabilities in view of this it is proposed to compare the trends in cash holding with the trend in quick liabilities.

STATEMENT SHOWING CASH VELOCITY RATIO IN HBL BATTERY LIMITED Cash velocity ratio = Particulars Sales Cash Cash velocity ratio 2004-05 2837981743 83870215 33.83 Sales ___________ Cash 2005-06 3679835532 177174264 20.76 2006-07 5118490030 161539265 31.68 2007-08 9727564484 479295683 20.29 (in Rs) 2008-09 12438957853 817027695 15.22

cah velocity ratio

35 30 25 20 15 10 5 0

cash velocity ratio

2004-05 2005-06 2006-07 2007-08 2008-09

years
INTERPRETATION: The high cash velocity is desirable but at the same time adversely effects the short term liquidity position of the business unit in the year 2004-05 Generation Rs.283791743of sales the company having only 83870215 worth of cash resource with the merge cash balance the sample unit is unable to discharge it liabilities so that there is high average payment period. When that company is following a too liberal credit policy.

STATEMENT SHOWING PERCENTAGE OF RECEIVABLE TO TOTAL CURRENT ASSETS RATIO IN HBL: Particulars 2004-05 Total debtors 1156229650 Total current assets 1921010009 % of receivables to current asset 60.18 2005-06 1383434338 2497698280 58.38 2006-07 1742042450 2007-08 2730055876 (in Rs) 2008-09 2826356247 5867781290 48.16

3041628/502 5354944015 57.27 50.98

% of receivables to current assets 70 60 % of 50 receivables to 40 current 30 20 assets 10 0

2004- 2005- 2006- 2007- 200805 06 07 08 09 years

INTERPRETATION : The above statement of debtors to total current assets as shown increasing trend during the year 2004-05 to 2005-06 the debtors have increasing 1156229650 to 1383434338 but the % increasing 2004-05 60.18% and also 2005-06 is small decrease 58.38% and 2006-07 is also decreased 57.27% because the portion of debtors have no high up movement proportion with the current assets.

Debtors Sales Sundry debtors to sales ratio

2004-05 115229650 2837981749 40.74

2005-06 138343433 3679835532 37.59

2006-07 174204245 511849003 34.03

2007-08 2730055276 9727564484 28.06

2008-09 2826356247 12438957853 22.72

%of sundry debtors to sales ratio 45 40 35 % of sundry 30 debtors to 25 20 sales 15 10 5 0

2004- 2005- 2006- 2007- 200805 06 07 08 09 years

INTERPRETATION: From the above statement we can say that initially the company used to sell their products 40% on credit and remaining by cash however they have decreased their credit sales 2004-05 and 2005-06 increased and same as up to 2009 the credit sales has increased.

STATEMENT SHOWING AVERAGE COLLECTION PERIOD HBL Average book debtors Average collection period = ------------------------------- x 365 Sales (in Rs) 2008-09 365 22.76 16

Particulars Days in a year Debtors turn over ratio Average collection

2004-05 365 40.74 08

2005-06 365 35.59 09

2006-07 365 34.06 10

2007-08 365 28.05 13

period

Avearage collection period

16 14 12 avearage 10 collection 8 6 period 4 2 0

2004- 2005- 2006- 2007- 200805 06 07 08 09

years

INTERPRETATION: Concerned it was earlier in the 2004-05 and for year 2005-06 9days it comes down to 8 days, 9 days, 10days ,13days,16days.2004-05, 2005-06, and 2006-07,2007-08&200809S. Due to various methods used by the company implementation strict collection policies.

STATEMENT SHOWING % OF INVENTORIES CURRENT ASSETS IN HBL: Particulars Inventory Current assets % of inventor to current assets 2004-05 531872572 192101000 9 27.68 2005-06 676792146 149769828 0 27.07 2006-07 753168191 304162850 1 24.76 2007-08 172466536 8 535494401 5 32.20 (in Rs) 2008-09 1799826192 5867781290 30.67

% of inventory to current assets

% of inventory to current assets

35 30 25 20 15 10 5 0

20 20 20 20 20 04- 05- 06- 07- 0805 06 07 08 09

years

INTERPRETATION: The total % of inventor to total current assets has been decreased from 29.59% to 27.52% during the period of 2002-03 to 2003.-04 after it raises to 27.68% in 2004-05 and decreases 2005-06 27.09% and also decreases 24.76% in 2006-07 because the company changes it inventor management policies.

STATEMENT SHOWING % OF INVENTORY TO TOTAL ASSETS IN HBL: Particulars Inventory Total assets 2004-05 531872527 2357494335 2005-06 676792146 3380558385 2006-07 753168191 4264271478 2007-08 1724665368 6678467900 (in Rs) 2008-09 1799826192 7675559166

% of inventory to total assets

22.56

20.02

17.16

25.82

23.44

% of inventory on total assets

30 25 20 % of inventory to 15 total aasets 10 5 0 2004-05 2005-06 2006-07 2007-08 2008-09
INTERPRETATION:

years

Inventory to total assets on year2004-05 22.56% which decreased to22.02% in the year 2005-06 and decreased to 17.16% in2006-07 and increased in the year 2007-08 25.82% and also decrease in 2008-09. Because the company changes it inventory management.

STATEMENT SHOWING INVENTORY TURNOVER RATIO IN HBL: Particulars Sales inventory 531872570 2004-05 2836798174 9 2005-06 3679835532 676792146 2006-07 5118490030 753168191 2007-08 9727564484 1724665368 (in Rs) 2008-09 12438957853 1799826192

% of inventory turnover ratio

4.3

5.4

6.7

5.6

6.9

Inventory turnover ratio

7 6 5 Inventory 4 turnover ratio 3 2 1 0

2004- 2005- 2006- 2007- 200805 06 07 08 09

years

INTERPRETATION: The above statement inventory turnover ratio 2004-05 was 4.3% which increase to 5.4% in the year 2005-06 and increased 6.7% in 2006-07 and decreased 5.6%and also 6.9% increased in 2007-08. Because the company changes inventory turnover management policies.

CHAPTER-V

SUMMARY
The 1ST Chapter deals with introduction to financial management, Objectives of Financial Management. Resources of Financial Management there are Maximization of profit Maximization of owners wealth. Meaning of Working Capital Management, objectives of Working Capital and Classification of Working Capital Management. Working Capital is classified into 2 types. i) on the basis of concept ii) on the basis of time. Importance of Working Capital , Need for the Working Capital , Determinants of Working Capital , Sources of Working capital. limitations of study. The 3rd Chapter deals with Working Capital Management theory & practices in HBL Power Systems Ltd. Which is includes Introduction of Working Capital, nature of Working Capital, classification of Working Capital. The Working capital classified into 2 types. i) On the basis of concept. a) Gross Working Capital b) net Working Capital ii) on the basis of time a) Fixed Working Capital b) Variable Working Capital , advantages of Working Capital , nee for Working Capital ,determinants of Working Capital Sources of Working Capital, Working Capital fore cast. Management of. Working Capital objectives of Working Capital management of account valuables management of inventories, nature of inventory management, objectives of inventory management, techniques of inventory management cash management objectives of cash management The 4th chapter deals with analysis and interpretation of Working Capital management practices in hbl power systems ltd. Analysis and interpretation has been done on Working Capital practices in hbl power systems ltd with the help of labile and graphs. Finally in the 5th chapter the summary the overall project is given based on summary and other information findings and conclusions are drawn them the suggestion are given for the improvement of HBL power systems. Need for the study, Methodology and

FINDINGS, SUGGESTIONS AND CONCLUSIONS

FINDING AND SUGGESTIONS: 1. The improved performance of HBL Battery Ltd was due to policies 2. The company is maintaining more than satisfactory relation current liabilities. 3. Most of working capital in quick assets 4. By observing the current assets total assets it shows the efficiency in employing working funds. 5. The high working capital turnover ratio is sign of over trading and put the concern in financial difficulties. 6. By observing cash to current assets abnormally increased 7. The high cash velocity is desirable but at the same time it adversely effects the shot term liquidity position of the business unit. 8. Debtors ratio decreased due to credit sales. Decreasing. 9. The debtors ratio decreased due to credit sakes deceasing. 10. By implementation the strict collection policies the average collection period is came between current assets and the constant development work

in the areas of production, in plant modification, maintenance and above all the financial

down. 11. The inventory turnover ratio is increased due to the finished stock is rapid turn over. 12. The % of inventory to current assets has been decreased. The study conducted in the insight into the financial health of HBLs the company over the 2 years period has been performing well in term of liquidity, profitability and activity this is interpreted from the study of the various ratios. Basing on the analysis of

financial statements it could be concluded that the overall positions are satisfactory in terms of the ratio.

There has been a phenomenon growth in the financial position in company over the 2 years which has been the result of the reforms and liberalization in the economy. This increase also let to serve competition among the companies .these companies have properly designing the investment and lending policies. Otherwise they have to face sever financial troubles. In the light of competition these companies have to plan and implement suitable, appropriate policies in order to strengthen their financial variability which is seen through the financial statement and its analysis. The study has tabulated the performance of HBL BATTERY Limited. It enables the company in evaluating in various areas like liquidity profitability of the company.

The overall performance of HBL BATTERY limited has been satisfactory.

CONCLLUSION:

There has been a phenomenon growth in the financial position in company over the 2 years which has been the result of the reforms and liberalization in the economy. This increase also let to serve competition among the companies .these companies have properly designing the investment and lending policies. Otherwise they have to face sever financial troubles. In the light of competition these companies have to plan and implement suitable, appropriate policies in order to strengthen their financial variability which is seen through the financial statement and its analysis. The study has tabulated the performance of HBL BATTERY Limited. It enables the company in evaluating in various areas like liquidity profitability of the company.

The overall performance of HBL BATTERY limited has been satisfactory.

BIBLIOGRAPHY

Name of the book 1. Financial management 2. Management accounting 3 Financial management (Theory practice)

Authors I.M.Pandey S.N Maheswari Prasanna Chandra

Periodicals: 1. Annual reports of HBL battery ltd.: 2.www.HBL.in 3.www.google.com