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A Summer Project Report On WORKING CAPITAL MANAGEMENT at

Hindustan Aeronautics Limited Engine Division, Koraput A Project report submitted in partial fulfilment for the award of the degree of Master of Business Administration Submitted by MANASWINI HOTTA Roll number: 1225111230 (2011-13) batch Guide: Dr.Y.V.V.S.S.S.Vara Prasad GITAM Institute of Management, GITAM University

Visakhapatnam, Andhra Pradesh

DECLARATION

I Manaswini Hotta do hereby declare that this project Working Capital Management in Hindustan Aeronautics Limited, being submitted by me is the result of my own effort, research and analysis & is an original piece of work done by me. This has not been published or presented anywhere else.

All findings & analysis are original and true to the best of my knowledge.

Date:

MANASWINI HOTTA MBA (2011-13) GITAM UNIVERSITY

CERTIFICATE

This is to certify that the project Report titled Working Capital Management is an original work carried out by Manaswini Hotta (Enrollment No 1225111230), under my guidance and supervision, in partial fulfillment for the award of the degree of Masters of Business Administration by GITAM Institute of Management, GITAM University, Visakhapatnam, during the Academic year 2011-12. This report has not been submitted to any other University or Institution for the award of any Degree/Diploma/Certificate.

Signature of Guide Name and Address of the Guide: Name of Faculty: Dr.Y.V.V.S.S.S.Vara Prasad Designation: Associate Professor GITAM Institute of Management Visakhapatnam

ACKNOWLEDGEMENT

The completion of this project report being successful and satisfactory outcome of some helping hands, who have helped me throughout of 4 weeks. It is with a sense of deep gratitude; I wish to thank our Prof. K. Siva Rama Krishna, Dean & Principal, GITAM Institute of Management, GITAM University, Visakhapatnam, for giving me this valuable opportunity to experience the work culture in an organization. I am under deep obligation to my internal guide Dr.Y.V.V.S.S.S.Vara Prasad,faculty of GITAM Institute of Management, Visakhapatnam, for his continuous guidance, help, suggestion and cooperation throughout the course of my project. I express my sincere gratitude to my external guide Mr.Alok Kumar Mohanty, Sr. Manager (Finance) for providing me all possible help to undertake this summer project in HAL. His valuable guidance helped me in completing my project successfully. I would like to thanks Mr. L.K. Jena, Deputy Manager, Training, for his cooperation and encouragement. Finally, my sincere thanks to all the workmen and officers of HAL who gave me their valuable time and played a major part in successful completion of the project.

Date:

MANASWINI HOTTA MBA (2011-13) GITAM UNIVERSITY

CONTENTS

CHAPTER

Theoretical Framework (a) Topic related concepts (b) Review of Literature

Pg: 6-17

CHAPTER

II

Organisational Profile (a) Industry Profile (b) Organisational Profile

Pg: 18-33

CHAPTER III

Present study/Methodology Need/ Significance of study Objective of the study Scope of study Research design Data collection method Limitations of the study

Pg: 34-37

CHAPTER CHAPTER

IV V

Analysis of study Findings, Suggestions & Conclusions

Pg- 38-48 Pg- 49-50

CHAPTER-I (1)THEORETICAL FRAMEWORK (2)REVIEW OF LITERATURE

(1) INTRODUCTION ABOUT FINANCE Finance is one of the major elements that activate the overall growth of the economy. Finance is the life blood of economic activity. A well - knit financial system directly contributes to the growth of the economy. An efficient financial system calls for the efficient performance of institution, financial instruments and financial markets. Finance which acts as the lifeblood in the modern business types is one of the most important consideration for an entrepreneur-company. While implementing, expanding, diversifying, modernizing or rehabilitating any project the meaning of finance is better understood. In this section we have covered finance related information and the process of managing the same. Finance is a science of managing money and other assets. It is the process of channelization of funds in the form of invested capital, credits, or loans to those economic agents who are in need of funds for productive investments or otherwise. E.g. On one hand, the consumers, business firms, and governments need funds for making their expenditures, pay their debts, or complete other transactions. On the other hand, savers accumulate funds in the form of savings deposits, pensions, insurance claims, and savings or loan shares, etc which becomes a source of investment funds. Here, finance comes to the fore by channelling these savings into proper channels of investment. In general, finance is that business activity which is concerned with acquisition and conservation of capital funds in meeting financial needs and overall objectives of a business entrepreneur. Finance is the common denominator for a vast range of corporate objects and the major part of any corporate plan must be expressed in financial terms. The main reasons a business needs finance are to: Start a business. Finance expansions to production capacity. To develop and market new products To enter new markets. Take-over or acquisition. Moving to new premises. To pay for the day to day running of business. MEANING OF WORKING CAPITAL The term working capital refers to current assets which may be defined as (i) those which are convertible into cash or equivalents within a period of one year and (ii) those which are required to meet day to day operations. Inotherwords, Working capital refer to that part of total capital which is used for carrying out the routine or regular business operation, i.e. it is the amount of funds used for financing the day-today operation. In short, it is the capital with which the business is worked over.

Thus, the capital invested and locked up in various current assets, such as stocks of raw material, work in progress, stocks of finished goods account receivable and cash and bank balances constitutes the working capital. Working capital may be regarded as life blood of a business. Its effective provision can do much to ensure the success of a business while its efficient management can lead not only to loss of profits but also to the ultimate downfall of what otherwise might be considered as a promising concern. According to shoo-in, Working Capital is the amount of funds necessary to cover the cost of operating the enterprise. Working Capital is also known as Revolving or Circulating Capital. According to Genesterberg, Circulating Capital means current assets of a company that are changed in the ordinary course of business from one to another form. Example: From cash to inventory, inventories to bills receivable and bills receivable to cash. The fixed asset as well as the current assets, both requires investment of funds. The very basics of fixed assets decision process (i.e. the capital budgeting) & the working capital decision processes are different. The fixed assets involve long period perspective & therefore, the concept of time value of money is applied in order to discount the future cash flows. Whereas in working capital takes into account that the fixed assets affect the longterm profitability of the firm while the current assets affect the short-term liquidity position. So in the working capital management there are some decisions to be taken, as 1. What should be the total investments in working capital of the firm? 2. What should be the level of individual current assets? 3. What should be the relative proportion of different sources to finance the working capital requirements? Thus, the working capital management may be defined as the management of firms sources and uses of working capital in order to maximize the wealth of the share holders. The proper working capital requires both the medium term planning and also the immediate adaptations to changes arising due to fluctuations in operating levels of the firm.

CONCEPT OF WORKING CAPITAL Capital required for a business can be classified under two main categories via, 1) 2) Fixed Capital Working Capital

Every business needs funds for two purposes for its establishment and to carry out its day- to-day operations. Long terms funds are required to create production facilities through purchase of fixed assets such as p&m, land, building, furniture, etc. Investments in these assets represent that part of firms capital which is blocked on permanent or fixed basis and is called fixed capital. Funds are also needed for short-term purposes for the purchase of raw material, payment of wages and other day to- day expenses etc. These funds are known as working capital. In simple words, working capital refers to that part of the firms capital which is required for financing short- term or current assets such

as cash, marketable securities, debtors & inventories. Funds, thus, invested in current assts keep revolving fast and are being constantly converted in to cash and this cash flows out again in exchange for other current assets. Hence, it is also known as revolving or circulating capital or short term capital. There are two concepts of working capital: 1. 2. Gross working capital Net working capital

The gross working capital is the capital invested in the total current assets of the enterprises. Current assets are those assets which can convert in to cash within a short period normally one accounting year. Constituents of current assets: 1) Cash in hand and cash at bank 2) Bills receivables 3) Sundry debtors 4) Short term loans and advances. 5) Inventories of stock as: a. Raw material b. Work in process c. Stores and spares d. Finished goods 6. Temporary investment of surplus funds. 7. Prepaid expenses 8. Accrued incomes. 9. Marketable securities. In a narrow sense, the term working capital refers to the net working capital. Net working capital is the excess of current assets over current liability, or, say: NET WORKING CAPITAL = CURRENT ASSETS CURRENT LIABILITIES. Net working capital can be positive or negative. When the current asset exceeds the current liabilities then it is known as positive working capital. If current assets are less than the current liabilities then it is known as negative working capital. Current liabilities are those liabilities, which are intended to be paid in the ordinary course of business within a short period of time normally one accounting year out of the current assts or out of the income of the business. Constituents of current liabilities 1. Accrued or outstanding expenses. 2. Short term loans, advances and deposits. 3. Dividends payable. 4. Bank overdraft. 5. Bills payable. 6. Sundry creditors.

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The gross working capital concept is financial or going concern concept whereas net working capital is an accounting concept of working capital. Both the concepts have their own merits. The gross concept is sometimes preferred to the concept of working capital for the following reasons: It enables the enterprise to provide correct amount of working capital at correct time. Every management is more interested in total current assets with which it has to operate, then the source from where it is made available. It take into consideration of the fact, every increase in the funds of the enterprise would increase its working capital. This concept is also useful in determining the rate of return on investments in working capital. The net working capital concept, however, is also important for following reasons: It is qualitative concept, which indicates the firms ability to meet to its operating expenses and short-term liabilities. IT indicates the margin of protection available to the short term creditors. It is an indicator of the financial soundness of enterprises. It suggests the need of financing a part of working capital requirement out of the permanent sources of funds.

CLASSIFICATION OF WORKING CAPITAL Working capital may be classified in two ways: o On the basis of concept. o On the basis of time. On the basis of concept working capital can be classified as gross working capital and net working capital. On the basis of time, working capital may be classified as: Permanent or fixed working capital. Temporary or variable working capital PERMANENT OR FIXED WORKING CAPITAL Permanent or fixed working capital is minimum amount which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. Every firm has to maintain a minimum level of raw material, work- in-process, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital as this part of working is permanently blocked in current assets. As the business grow the requirements of working capital also increases due to increase in current assets. 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 further be classified as seasonal working capital and special working capital.

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(a) (b)

The capital required to meet the seasonal need of the enterprise is called seasonal working capital. Special working capital is that part of working capital which is required to meet special exigencies such as launching of extensive marketing for conducting research, etc.

Temporary working capital differs from permanent working capital in the sense that is required for short periods and cannot be permanently employed gainfully in the business. NATURE OF WORKING CAPITAL In ordinary parlance, Working Capital is taken to be the fund available for meeting day-today requirements of enterprises. It cannot be denied that a part of the fixed or permanent capital is invested in assets, which are kept in the business or for a long period for the purpose of earning profit. These are usually known as fixed assets viz. Land & buildings, plant & machinery, furniture & fitting & intangibles like goodwill, patents, trademarks & long-term investment. Another part of permanent capital left in the business for supporting the day-to-day normal operation is known as the Working Capital. This Working Capital generates the important element of cost viz. Material, wages & expenses. These cost usually lead to production & sales in case of manufacturing concerns & sales alone in others. These costs occur gradually in a flow & do not come into being abruptly at a given moment. Hence the initial investment of cash as working capital for this specific purpose has to be continued until the sales revenue commences flowing in substantially & in a regular way. From this stage the business is found to acquire a momentum of its own. The flow of revenue is expected to continue to replace the cost lost in its day-to-day out flow for the generation of the revenue mentioned above.

SOURCE OF WORKING CAPITAL The financial manager is always interested in obtaining the working capital at the right time, at a reasonable cost and at the best possible favourable terms. A part of the working capital investment are permanent investments is fixed assets. The following is snapshot of various source of working capital. Sources of working capital divided into two Long -term Short term Sources of long term working capital Issue of shares Floating of debentures Ploughing back of profit Loans Public deposit

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Sources of short-term working capital Internal sources Depreciation Accrued expenses External sources Trade credit Credit papers Bank credit Customers credit Govt. Assistances Loans from director Security of employees WORKING CAPITAL CYCLE:The working capital of a concern goes on changing in shape and volume. For instance, a concern may have some cash in the beginning, the cash may be used by the concern for the purpose of purchase of raw material, payment of wages and other expenses. These elements of cost or items of expenses, raw material, wages and overheads, will result in work- in-progress during the process of manufacture. On the in compilation of the production process, the workin progress becomes finished goods. MEANING The length of time involved in this cycle of conversion of cash into raw material, raw material into work-in progress, work-in-progress into finished goods, finished goods into debtors and debtors into cash again is called the operating cycle or working capital cycle of the firm, in other words, it is the period between the date on which raw material are purchased and the date on which the sale proceeds of finished goods are realized by concern. INTER-DEPENDENCE AMOUNG COMPONENTS OF WORKING CAPITAL OPERATING CYCLE A company starting with cash purchase raw materials, components etc., on a cash or credit basis. These materials will be converted into finished goods after undergoing various stages of work-in-process. For this purpose the company has to make payments towards wages, salaries and manufacturing costs. Payments to suppliers have to be made on purchases in the case of cash purchases and on the expiry of the credit purchases. Further, the company has to meet other operating costs such as selling and distribution costs, general administration costs and non-operating costs described as financial costs (interest on borrowed capital). In case the company sells its finished goods on cash basis, it will pass through one more stage, viz, accounts receivable and gets back cash along with profit on expiry of credit period. Once again the cash will be used for the purchase of materials and / or payments to suppliers and the whole cycle is termed as working capital or operating cycle repeats itself. This process indicates the dependents of each stage or components of working capital on its previous stage or component.

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BASIC OBJECTIVE OF WORKING CAPITAL MANAGEMENT The basic objective of working capital management is to manage the firms working capital (i.e., currents assets and currents liabilities) in such a way that a satisfactory level of working capital (i.e., neither excessive nor inadequate working capital) is maintained. This is necessary because, if the working capital is excessive or large, the liquidity position of the firm would, no doubt, improve, but its profitability would be adversely affected, as funds would remain idle. Conversely, if the working capital is too small, the, profitability of the firm may improve, but the liquidity position of the firm would be adversely affected. IMPORTANCE OR ADVANTAGE OF ADEQUATE WORKING CAPITAL SOLVENCY OF THE BUSINESS: Adequate working capital helps in maintaining the solvency of the business by providing uninterrupted of production. GOODWILL: Sufficient amount of working capital enables a firm to make prompt payments and makes and maintain the goodwill. EASY LOANS: Adequate working capital leads to high solvency and credit standing can arrange loans from banks and other on easy and favourable terms. CASH DISCOUNTS: Adequate working capital also enables a concern to avail cash discounts on the purchases and hence reduces cost. REGULAR SUPPLY OF RAW MATERIAL: Sufficient working capital ensures regular supply of raw material and continuous production. REGULAR PAYMENT OF SALARIES, WAGES AND OTHER DAY TO DAY COMMITMENTS: It leads to the satisfaction of the employees and raises the morale of its employees, increases their efficiency, reduces wastage and costs and enhances production and profits. EXPLOITATION OF FAVOURABLE MARKET CONDITIONS: If a firm is having adequate working capital then it can exploit the favourable market conditions such as purchasing its requirements in bulk when the prices are lower and holdings its inventories for higher prices. ABILITY TO FACE CRISES: A concern can face the situation during the depression. QUICK AND REGULAR RETURN ON INVESTMENTS: Sufficient working capital enables a concern to pay quick and regular of dividends to its investors and gains confidence of the investors and can raise more funds in future. HIGH MORALE: Adequate working capital brings an environment of securities, confidence, high morale which results in overall efficiency in a business.

EXCESS OR INADEQUATE WORKING CAPITAL Every business concern should have adequate amount of working capital to run its business operations. It should have neither redundant or excess working capital nor inadequate nor shortages of working capital. Both excess as well as short working capital positions are bad for any business. However, it is the inadequate working capital which is more dangerous from the point of view of the firm.

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DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL Excessive working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments. Redundant working capital leads to unnecessary purchasing and accumulation of inventories. Excessive working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts. It may reduce the overall efficiency of the business. If a firm is having excessive working capital then the relations with banks and other financial institution may not be maintained. Due to lower rate of return on investments, the values of shares may also fall. The redundant working capital gives rise to speculative transactions.

FACTORS DETERMINING THE WORKING CAPITAL REQUIREMENTS 1. NATURE OF BUSINESS: The requirements of working is very limited in public utility undertakings such as electricity, water supply and railways because they offer cash sale only and supply services not products, and no funds are tied up in inventories and receivables. On the other hand the trading and financial firms requires less investment in fixed assets but have to invest large amt. of working capital along with fixed investments. 2. SIZE OF THE BUSINESS: Greater the size of the business, greater is the requirement of working capital. 3. PRODUCTION POLICY: If the policy is to keep production steady by accumulating inventories it will require higher working capital. 4. LENGTH OF PRODUCTION CYCLE: The longer the manufacturing time the raw material and other supplies have to be carried for a longer in the process with progressive increment of labour and service costs before the final product is obtained. So working capital is directly proportional to the length of the manufacturing process. 5. SEASONALS VARIATIONS: Generally, during the busy season, a firm requires larger working capital than in slack season. 6. WORKING CAPITAL CYCLE: The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.

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7. RATE OF STOCK TURNOVER: There is an inverse co-relationship between the question of working capital and the velocity or speed with which the sales are affected. A firm having a high rate of stock turnover will needs lower amt. of working capital as compared to a firm having a low rate of turnover. 8. CREDIT POLICY: A concern that purchases its requirements on credit and sales its product / services on cash requires lesser amt. of working capital and vice-versa. 9. BUSINESS CYCLE: In period of boom, when the business is prosperous, there is need for larger amt. of working capital due to rise in sales, rise in prices, optimistic expansion of business, etc. On the contrary in time of depression, the business contracts, sales decline, difficulties are faced in collection from debtor and the firm may have a large amt. of working capital. 10. RATE OF GROWTH OF BUSINESS: In faster growing concern, we shall require large amt. of working capital. 11. EARNING CAPACITY AND DIVIDEND POLICY: Some firms have more earning capacity than other due to quality of their products, monopoly conditions, etc. Such firms may generate cash profits from operations and contribute to their working capital. The dividend policy also affects the requirement of working capital. A firm maintaining a steady high rate of cash dividend irrespective of its profits needs working capital than the firm that retains larger part of its profits and does not pay so high rate of cash dividend. 12. PRICE LEVEL CHANGES: Changes in the price level also affect the working capital requirements. Generally rise in prices leads to increase in working capital.

Others factors, these are: Operating efficiency. Management ability. Irregularities of supply. Import policy.

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Asset structure. Importance of labour. Banking facilities, etc.

MANAGEMENT OF WORKING CAPITAL Management of working capital is concerned with the problem that arises in attempting to manage the current assets, current liabilities. The basic goal of working capital management is to manage the current assets and current liabilities of a firm in such a way that a satisfactory level of working capital is maintained, i.e. it is neither adequate nor excessive as both the situations are bad for any firm. There should be no shortage of funds and also no working capital should be ideal. WORKING CAPITAL MANAGEMENT POLICES of a firm has a great impact on its probability, liquidity and structural health of the organization. So working capital management is three dimensional in nature as 1.It concerned with the formulation of policies with regard to profitability, liquidity and risk. 2.It is concerned with the decision about the composition and level of current assets. 3.It is concerned with the decision about the composition and level of current liabilities. (2) REVIEW OF LITERATURE

Studies on Working Capital Management studies adopting a new approach towards working capital management are reviewed here. Sagan in his paper (1955), emphasized the need for management of working capital accounts and warned that it could vitally affect the health of the company. He discussed mainly the role and functions of money manager inefficient working capital management. Sagan pointed out the money managers operations were primarily in the area of cash flows generated in the course of business transactions. He also said that the money manager must be familiar with what is being done with the control of inventories, receivables and payables because all these accounts affect cash position. Thus, Sagan concentrated mainly on cash component of working capital. Walker in his study (1964) made a pioneering effort to develop a theory of working capital management by studying the effect of the change in the level of working capital on the rate of return in nine industries for the year 1961 and found the relationship between the level of working capital and the rate of return to be negative. Vanhorne in his study (1969), attempted to develop a framework in terms of probabilistic cash budget for evaluating decisions concerning the level of liquid assets and the maturity composition of debt involving risk-return trade-off, the opportunity cost and the probability of running out of cash. He proposed calculation of different forecasted liquid asset requirements along with their subjective probabilities under different possible assumptions of sales, receivables, payables and other related receipts and disbursements.

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Welter, in his study (1970), stated that working capital originated because of the global delay between the moment expenditure for purchase of raw material was made and the moment when payments were received for the sale of finished product. This study mainly concerned only with return aspect of working capital management ignoring risk. Lambrix and Singhvi (1979) adopted the working capital cycle approach to the working capital management, also suggested that investment in working capital could be optimized and cash flows could be improved by reducing the time frame of the physical flow from receipt of raw material to shipment of finished goods, i.e. inventory management, and by improving the terms on which firm sells goods as well as receipt of cash. However, the further suggested that working capital investment could be optimized also (1) by improving the terms on which firms bought goods i.e. creditors and payment of cash, and (2) by eliminating the administrative delays i.e. the deficiencies of paper-work flow which tended to extend the time-frame of the movement of goods and cash. Warren and Shelton (1971) applied financial simulation to simulate future financial statements of a firm, based on a set of simultaneous equations. Financial simulation approach makes it possible to incorporate both the uncertainty of the future and the many interrelationships between current assets, current liabilities and other balance sheet accounts. . However, individual working capital accounts can also be forecasted in a larger simulation system. Cohn and Pringle in their study (1973) illustrated the extension of Capital Asset Pricing Model (CAPM) for working capital management decisions. They tried to interrelate longterm investment and financing decisions and working capital management decisions through CAPM. They emphasized that an active working capital management policy based on CAPM could be employed to keep the firms shares in a given risk class. By risk, he meant unsystematic risk, the only risk deemed relevant by CAPM. Owing to the lumpy nature for long-term financial decisions, the firm is continually subject to shifts in the risk of its equity. The fluid nature of working capital, on the other hand, can be exploited so as to offset or moderate such swings. Abramovitz (1950) and Modigliani (1957) highlighted the impact of capacity utilization on inventory investment. Existing stock of inventories is expected to take account of adjustment process to the desired levels. Thus the variable, existing stock of inventories, is postulated to be negatively related with the desired stock. The ratio of inventory to sales may affect inventory investment positively because a high ratio of stocks to sales in the past suggests the maintenance of high levels of inventories in the past and thus also calling for high investment in inventories in the current period. (Working capital is a part of inventory).

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CHAPTER-II (1) INDUSTRY PROFILE (2) ORGANISATIONAL PROFILE

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(1)INDUSTRY PROFILE OVERVIEW Indian industry today is on the threshold of entering into a new era where it will assume greater responsibility in making the nation self-reliant in Defence Production. The resurgence of Indias manufacturing sector has been remarkable. Not only are the profits soaring, the sector is also making its presence felt abroad as many Indian firms are becoming transnational companies. The Indian manufacturing sector is internationally competitive with international quality standards, efficiency and manufacturing facilities. India is fast developing into a manufacturing hub for world corporations wanting to leverage the sectors proven skills in product design, reconfiguration and customization with creativity, assured quality and value addition. India, also keen to strengthen its own aerospace industry and has asked major weapon exporting countries to transfer technology to India. Aerospace manufacturing is a high technology industry that produces "aircraft,space vehicles, aircraft engines, propulsion units, and related parts". Its value chain is characterized by a long project life cycle spanning R&D, engineering design, manufacturing, assembly, maintenance, repair and overhaul. Intensive technology and safety requirements mandate significant investments in R&D and quality control. India is one of the fastest-growing aerospace markets.Bangalore is a major centre of the aerospace industry with Hindustan Aeronautics Limited, the National Aerospace Laboratories and the Indian Space Research Organization.The three segments of the Industry are: Defence,Civil and Space. Defence: India has embarked on major defence acquisition and development programmes comprising Medium Multi Role Combat Aircraft (MMRCA), Fifth Generation Fighter Aircraft (FGFA), Multirole Transport Aircraft (MTA), Medium Lift Helicopters (MLH) and Light Utility Helicopters (LUH). The industry will witness more than double the number of aircraft and helicopters to be produced during the next decade. Civil Aviation: Globally, the aviation industry has till recently been driven by technology developed for military purposes. But of late, civil aviation requirements are driving dedicated technology development. Indian civil aviation industrys rapid growth is driving modernization of airports, communications, radars and facilities for Maintenance Repair and Overhaul (MRO) of aircraft and subsystems.The civil aviation market is expected to register more than 16 per cent CAGR during 2010-2013. The Indian commercial aerospace market is estimated to absorb about 1,100 commercial jets worth Rs.585,000crore over the next 20 years. Space: India is ranked sixth globally, in terms of (Source: Centre for Asia Pacific Aviation

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space budget and technological and Indian Ministry of Civil aviation published in Feb 2011)capabilities. India's space industry is different from its defence industry, content. The current major space programmes are PSLV, GSLV, INSAT and IRS. Defence companies in India

Bharat Earth MoversLimited Bharat Dynamics Limited Hindustan Aeronautics Limited (HAL) BrahMos Aerospace Private Limited Gun Carriage Factory Jabalpur Heavy Vehicles Factory Hindustan Aeronautics Limited Ishapore Rifle Factory Ordnance Clothing Factory Ordnance Factories Board Tata Motors Mahindra Group Defence Systems

(2) HINDUSTAN AERONAUTICS LIMITED HAL AN OVERVIEW The origin of Hindustan Aeronautics Limited can be traced back to 1940 where Hindustan Aeronautics Limited was started at Bangalore as a private concern by Seth WalChandHirachand in association with the Government of Mysore in collaboration with USA. The unit was controlled by American air force. In June 1942, the managing agent resigned and the government of India purchased their interest and took over the management. The company commenced its operation with the internal continental aircraft company of USA. Due to exigencies of the Second World War the management of the company was handed over to the US Air force in September 1942. Hindustan Aeronautics Limited as the principle overhaul base for the south Asia command of the allied force. After the close of the Second World War the management of the company reverted to the Government of India in December 1945. Soon after independence, the policy to manufacture aircraft was received by the Government of India. An agreement was entered into it in 1947 for the manufacture of the perceive prentice trainer aircraft. Shortly thereafter in October 1948, a project was sanctioned for the design of the HT-2 elementary piston engine trainer aircraft. Dr. V.M.Ghatage was the chief designer of the HT-2 and the designing team comprised mainly young Indian engineers, mostly from the colleges. A total of 166 HT-2 aircraft was delivered by 1964. After the Indo-Sino war in 1962, the Government of India paid more emphasis in strengthening the defence power of India. Therefore the Government of India formed an autonomous body during the year 1963-64 known as Aeronautics India Limited. At last the Government of India combined both Hindustan Aircraft Limited, and Aeronautics India

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limited to form a new organization on the 1st October 1964 named as Hindustan Aeronautics Limited popularly known as HAL. Aeronautics India Ltd. was set up by the Government of India on the 16th august 1964,& reached an agreement with U.S.S.R for the production of MIG planes. Through merger and expansions HAL has become a large national complex with 19 divisions in eight locations. Hindustan Aeronautics Ltd. is now a public sector undertaking under the administrative control of Ministry of Defence, Department of defence production. It is incorporated under the provision of the Indian Companys Act, 1956. Hindustan Aeronautics Limited is now a days marching towards commercialization and diversifications of its products in view to contribute to the national economy. Hindustan Aeronautics Limited is an organization working to serve the nation and help to reinforce the national security by strengthening the Indian Air force and Indian navy. Hindustan Aeronautics Limited has blossomed into a major player in the global aviation arena and is today among the elite Navaratna companies. It is now ranked 34th in the list of worlds top 100 defence companies (Defence News, 2007). The company has 19 production Divisions. HALS expertise encompasses design, development, production, repair, overhaul and upgradation of Aircraft, Helicopters, Aero-engines, Accessories, Avionics and systems. HAL has also diversified into Industrial and Marine gas turbine engines, and structures for Aerospace vehicles. HAL is the largest PSU under the Department of Defence Production, GOI and has been declared as the Nava Ratna company (2007). HAL, with its wide spectrum of expertise in design, development and Manufacture of Aircraft, Helicopters, Engines, Accessories and Avionics, has emerged as a major aeronautical complex in Asia. All the production division of HAL have ISO 9001-2000 accreditation and ten Divisions have ISO-1401-1996 Environment Management System Certification. Core Business Design and development of fixed and rotary wing aircraft and accessories, manufacture, maintenance, repair and overhaul of fighter, transport and trainer Aircraft, Helicopters, Aero-engines, avionics, accessories, ground support equipment, structures for satellites/launch vehicles and development of aeronautical software. Projects Over the last six decades, HAL has grown progressively into an integrated Aerospace Organization with the indigenous design, development and manufacture of Advanced Light Helicopter (ALH - Dhruv), Intermediate jet Trainer (IJT) and Light Combat Aircraft (LCA-Tejas). The ongoing major projects and programmes include: ALH (both in military and civil roles), IJT, LCA, Pilot less Target Aircraft (PTA), SU-30MKI and Hawk-Advanced Jet Trainer. Aligning with the emerging future requirements. HAL has initiated the indigenous development of Light Combat Helicopter (LCH), as well as naval and trainer versions of LCA, a dedicated attack helicopter. The following quotation is used for this organization:

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Hindustan Aeronautics Limited The back bone of Indias Air defence. EVOLUTION OF ORGANISATION

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BASIC OBJECTIVES OF HAL To serve as an instrument of the national policy to achieve self reliance in the design, development and production of aircraft and aeronautical equipments to meet the countrys changing and growing needs with special emphasis in military equipments. In fulfilment of these objectives, the company shall regard its self-fundamental responsibility and for designing and development it rely upon relevant facilities which are available in other institutions. It is basically responsible for the growth and furtherance of the country aeronautical capability. To conduct its business economically and efficiently that it can contribute its due share to the national effort to achieve a self-reliant and selfgenerating economy. Towards this end to develop and maintain all organization, which shall readily respond to and adopt the changing matrix of socio technical, economic relationship and where in a climate of growing professional competence, self discipline, mutual understanding, deep commitment and a sense of belonging will be fostered and each employee will be encouraged to grow in accordance with this potential for the furtherance of the organizational goal. Some of the objectives of HAL are as follows :To ensure availability of Total Quality People to meet the organizational Goals and objectives. To have a continuous improvement in knowledge, skill and competence (Managerial, Behavioural and Technical). To promote a culture of Achievement and Excellence with emphasis on integrity, credibility and quality. To maintain a motivated workforce through empowerment of individual and team building. To enhance Organizational learning. To play a pivotal role directly and significantly to enhance productivity, profitability and improve the quality of work life. To ethically and socially responsible to the needs of the society. To increase the fullest the employees job satisfaction and self- actualisation. To employ the skills and the ability of the work force efficiently. To improve the production capacity and to produce the best of their products with the aim of maximizing the profit of the company.

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HALS MISSION To become globally competitive aerospace industry while working as an instrument achieving self reliance in design, manufacture & maintenance of aerospace, defence equipment &diversifying, related area managing the business on commercial in a climate of growing professional competence.

ORGANISATIONAL VALUE OF HINDUSTAN AERONAUTICS LIMITED HAL is committed in the following values to guide in all the activities. The values are as follows Customers satisfaction: HAL is dedicated in building a relationship with its customers where it becomes the partner in fulfilling their mission. HAL strive to understand the customers needs and to deliver products and services that fulfil and exceed all their requirements . Commitment to total quality: HAL is committed to continuous improvement of all its activities. HAL supply products and services that conform to highest standards of design,manufacture,reliability, maintainability and fitness for use as desired by the customers. Cost and time consciousness: HAL believe that its success depends on its ability to continuously reduce the cost and shorten the delivery period of its products and services. It achieves it by eliminating waste in all activities and continuously improving all processes in every areas of its work. Innovation and creativity : HAL believes in striving for improvement in every activity involved in its business by pursuing and encouraging risk taking, experimentation and learning at all levels within the company with a view to achieve excellence and competitiveness. Trust and team spirit: HAL believe in achieving harmony in work life through mutual trust, transparency, cooperation and sense of belonging. HAL strives for building empowered teams to work towards achieving organisational goals. Respect for the individual: HAL has a value for its people. It treats its customers with dignity and respect for individual growth and realization of everyones full potential. Integrity: HAL believe in a commitment to be honest, trust worthy and fair in all its dealings. It commits to be loyal and devoted to its organization .It practices self discipline and own responsibility to its actions. It complies with all its requirements so as to ensure that the organisation is always worthy of trust.

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LOCATIONS OF THE HAL DIVISION HAL has 19 production division spread over 8 locations. The locations are as follows. Kanpur Lucknow Korwa Nasik Koraput Hyderabad Bangalore Barrackpore COMPLEXES OF HAL Bangalore Complex MIG complex Accessories complex Design complex Bangalore complex A B C D E F G H Aircraft Division Engine Division Forge & Foundry Division Overhaul Division Aero Space Division IMGT Division Airport Service Centre LCA Division Manufacturing Jaguar aircraft Engines Manufacturing of Jaguar engines Manufacturing high precision casting & forging Overhaul of Jaguar & other engines Manufacturing of light alloy structures. Manufacture & Overhaul of marine engines For providing common service to all division Production of Light Combat Aircraft.

MIG Complex A B C D Aircraft Division, Nasik Aircraft Overhaul Division, Nasik Engine division, Koraput Sukhoi Engine Division, Koraput Manufacturing of Su 30 MKI & MIG Series A/C Overhaul of MIG series Aircraft. Manufacturing & overhaul of MIG engines Manufacturing of AL-31FP Engines

Accessories Complex A B C Avionics division, Hyderabad Transport division, Kanpur Accessories division, Lucknow Manufacturing of electronic & navigation equipments Manufacturing of passenger aircraft Manufacturing of hydraulic pumps, fuel pumps &

26

Avionics division, Korwa

starter generator Manufacturing of advanced navigational equipments

Design Complex A B C Helicopter Division Barrackpore Division Composite Division Manufacturing of ALH . Manufacturing & Overhaul of Helicopters. Manufacturing of Composite structures of Aircrafts.

HAL PRODUCTS & THEIR INDIGENOUS NAMES SL.NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Aircraft Name MIG-21 FL MIG-21-BIS MIG-21-BIS MIG-23 MF MIG-23 BN MIG-25 MIG-27 M MIG-29 GNAT HJT-16 HF-14 JAGUAR HS-748 (AVRO) MIRAGE-2000 ALLOUTTEE AN-32 MI-B MI Engine R-11-F2 R-11-F2S/F2SK R-25 R-29 R-29 B R-29 B R-29 B RD-33 ORPHEUS-701 VIPER-11 ORPHEUS 703 ADOVRMK 803 DART-531 M-53 ARTOUSTE IIIB ------Indigenous BADAL TRISHUL VIKRAM RAKSHAK GARUD GARUD BAHADUR VAJ AJEET KIRAN MARUT SHAMSHER CHITRA VAJRA CHETAK,CHEETAH SUTLAJ PRATAP AKBAR

PRODUCTS OF HAL(ENGINE DIV, KORAPUT) Repair & overhaul of R11/ R25/ R29B/ R33 New projects: RD33 Sr Mfg. Sukhoi engine division, Koraput Mfg, Repair & Overhaul of SU 30 MKI (AL-31FP) GTRDC: Gas Turbine R & D Centre.

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BRIEF HISTORY OF HAL KORAPUT DIVISION An agreement was signed in Aug 1962 with the soviet union for manufacturing of MIG 29, E7FL aircraft under license .The aero engine facility at Koraput (Orissa), the airframe factory at Nasik (Maharashtra) & the Avionics factory at Hyderabad (Andhra Pradesh) have been set up to up to meet this requirement under the name of Aeronautics India limited which was formed on 1st April 1964, the company was later merged with Hindustan Aircraft Limited. On 1st October 1964 a new company under the name of Hindustan Aeronautics Limited was formed. The government sanctioned for the first phase of aero engine at Sunabeda ,Koraput was accorded in march 1964 & the factory started manufacturing of R11F2-300, series III engine for fitment on MIG 21 FL Aircraft from 1968-69 onwards . The first engine of imported category was manufactured in December 1960 & various categories of engine were produced during the subsequent years. The first raw material engine was produced in February 1971. The floor area of factory building (1.08019 square meters) as well as plant & machinery have been provisioned for manufacture of 120 engines of F2 series & overhaul of 160 engines per annum on 2 shift basis. After producing 418 engines of R11 series (180 numbers R11 F2-300 & 238 numbers of 211F2s/F2SK series). The programme was concluded on December 1980 with the handling over the last engine of the series. The production programmer for the factory also includes manufacture of foreign casting required for MIG 21 M aircraft. To meet the air force requirement for improved fighter intercepted aircraft an agreement was signed within August 1976 for manufacturing MIG 21 BIS aircraft. The power part of this aircraft is R 25 Turbo jet engine. The government approval for setting for capital facilities has been accorded in October 1977. The first engine of imported category was delivered to HAL Nasik division in the year 1978-79. Under this project a total of 300 engine series were delivered in different important categories. The first raw material engine was scheduled to be delivered in the year 1982-1983. In August 1966 an agreement was signed with Soviet Union to set up overhaul project in this division & the government sanction was accorded in 1967.The factory started overhaul of RF-300 series III, R 11F series IX & X & R11F2S/F2SK series engine. The division till the end of March 1982 has overhauled o total of 1067 engines. This division is currently engaged in setting of facilities for taking up the overhaul of R 25 series engine for the year 1982-83 onwards, with the signing of internal governmental agreement for the manufacture of 285 numbers of the engines from the 1984-85 onwards . In order to attend the self sufficiency & to avoid difficulties regarding the supply of the raw materials & other bought out items from USSR, it was decided to provide indigenous support to spare manufacturing for the overhaul / maintenance of: ARS & fast moving spare parts. Metallic Material Non metallic material Readymade Articles

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A corporate plan of this division for the next 10 years has been worked out basing on the delivery / production tasks.

GEOGRAPHICAL LOCATION OF HAL (KORAPUT ENGINE DIVISION) While installing on an industry an entrepreneur has to choose the location properly considering the per requisites like availability of land, power, raw material, communication facilities etc. If these factors are taken as units of a measuring road then the HAL, Koraput division is located in a very advantageous position. This company of HAL is located at Sunabeda in the Koraput district of Odisha, which is adjacent to the National Highway No-23 linking Visakhapatnam Raipur. The nearest railway station is at Koraput which is just 20 Kilometres from Sunabeda. The river Kerandi which acts as a perennial source for supplying water is flowing in north eastern side of HAL Township & the proposal for construction of a permanent air field is under progress in the township. Already there is a helipad facility at HAL Township, Sunabeda itself. The location of the factory has got many advantages. The hilly area of Koraput is a high strategic from defence point of view. The forest provides camouflage of the factory from aerial view & from this angle an enemy plane may miss the location of the plant .Water supply is available round the year. Excellent power facility is provided by Orissa State Electricity Board (O.S.E.B) which is having a separate grid on HAL, Koraput division. The labour force is available at a cheaper rate. Overhaul the atmosphere of SBD is cold &pollution free which is an important advantage for locating an aeronautics factory. The aero engine plant was setup at Sunabeda because it is a backward area and its development can be modernized by the establishment of the factory. It was also the selection of this place by the collaborators as one of the best location for the security and geographical climatic condition. The place become a reality by the establishment of aero engine factory at Sunabeda and the place has been developed and meet the needs of our defence as well as the local people & other to a great extent. The factory & township of HAL comes on area of about 7400 acres of land.

MAIN CUSTOMERS OF HAL (KORAPUT ENGINE DIVISION) The Indian Air force is HALS principle customers. Around 95 % of the total sale is to Indian air force. The other customers for aircraft and helicopters produced by the company are Indian Navy (Kiran jet trainer indigenous developed) Chetak helicopters & advanced light helicopters etc. Others (HS-7481 to BSF, DGCA etc, HT Puspak to civil clubs, Basant-agricultural air craft indigenously produced for directorate of agriculture, Chetak helicopters to state governments, Coast guard, private firms, ONGC etc).

29

Overseas customer-supplies sub contracted work to world leaders like air bus industries, Boeing & Rolls Royce besides these other exports customers are like UK, France, Italy, Nepal, Malaysia, Mauritius, Canada, Chile.

MISSION OF HAL KORAPUT DIVISION The Mission of HAL (Koraput Division) is as follows: Achieving excellence in the manufacturing of aero engines & spare parts. Offering matchless overhaul & repair services. Providing total customer support through continuing pursuit of technical excellence, understand product quality, reliability & services Striking constantly self reliance & self sufficiency in all operations. Becoming the Asian leader in aero engine production, ready to share technical knowhow for setting up project abroad. Maintaining & developing a team of highly motivated trained professionals. Making forays in to the export market as on ISO-9002 Company.

Some more information about HAL Koraput division. Year of Establishment: 1964 Township Area: 3000 Acres Factory Area: 185 Acres Total no. of regular Employees: 3947 (including all workmen and officers)

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ORGANISATION STRUCTURE

Chairman Managing Director Executive Director General Manager Additional General Manager Deputy General Manager Chief Manager Senior Manager Manager Deputy Manager Officer Assistant Officer

The organisation structure of HAL, Koraput division doesnt consist of Chairman, MD & ED.

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FUNCTIONS OF DIFFERENT SECTIONS UNDER FINANCE DEPARTMENT NEED FOR FINANCE AND ACCOUNTS DEPARTMENT IN HAL Both finance and accounting has a very vital role to play in a business organisation. The main function of the finance department in HAL is to see whether there is optimum utilization of money, to verify the genuineness of the files and then decide whether to give a green signal or not, to shortlist and suggest the best possible offer, to practice cost control wherever necessary etc. Every file needs a green signal from the finance department to get approved or in other words financial concurrence is a must for a file approval. Thus, finance department is concerned with the proper utilization of every single rupee. The function of accounts section is to maintain proper and systematic records of the financial data and to prepare financial statements. Money is a very scarce resource and is the most sought after commodity because all the transaction of human society is settled in terms of money. Thus it should be properly utilized. Based upon the requirement, the HAL, Koraput division has formed the following section for smooth running of the finance department and also to maintain the liquidity position of the company: 1. 2. 3. 4. 5. 6. 7. 8. 9. Finance section Bills payable section Bills receivable section Provident fund section Payroll section Costing section Book keeping section Cash office Material section

FINANCE SECTION The main function of finance section is verification and finance concurrence as per the delegation of power of proposal for: a. Capital expenditure. b. Revenue expenditure. c. Purchase of material.

32

d. e. f. g. h.

Manpower requirement. Cases involving relaxation of rules Selling of company assets. Contracts entered into with suppliers/contractors/subcontractors. Estimating and awarding the contracts in respect of civil/electrical/plant order.

BILLS PAYABLE SECTION This section is mainly divided into three sub-sections, such as: a. Bills payable (inland)-This section deals with the payment and accounting of supplies and services rendered by inland vendor to the company. b. Bills payable (civil works) - This section deals with the services rendered by the contractors to the company. c. Bills payable (foreign)-This section deals with the payment and accounting of supplies and services rendered by the foreign contractor to the company. BILLS RECEIVABLESECTION This section is responsible for preparation and submission of invoices to customers for the supplies made and services rendered & follow up for the recovery of the amounts and accounting of the same. PROVIDENT FUND SECTION This function mainly deals with the transaction relating to provident fund such as: a. Accounting of provident fund transactions. b. Remittance of amount recovered from employees to a fund called provident fund trust. c. Provident refundable and non-refundable loan and there adjustment thereof. PAYROLL SECTION Following are the functions of the payroll section: a. b. c. d. e. f. g. Placement of time punching card in the time card racks for recording attendance. Receipt of approved leave application, overtime authorization. Disbursement of salary and wages. Payment and recovery of advances. Recovery of dues from employees. Accounting of all payroll transaction. Maintenance of employee punching cards, etc.

COSTING SECTION Some of the main functions of this section are: a. Fixation of fixed cost quotation.

33

b. c. d. e. f. g.

Fixation of standard man hour rate. Accounting and adjustment of different revenue expenditure. Preparation of man hour rate. Accounting of work in progress. Setting of sales. Submission of monthly reports to various agencies.

BOOK KEEPING SECTION This section is the section in which the financial position of the organisation can be reflected through the preparation of profit and loss account & balance sheet, following are the functions of this department: a. b. c. d. e. f. g. h. i. j. k. Co-ordination of all sections for relevant functions. Maintenance of journal and general ledger. Preparation of trail balance, profit and loss account, balance sheet. Maintenance of capital assets and depreciation schedule. Furnishing of data for determining of income tax liability. Preparation of performance budgets. Dealing with sales tax matter. Disposal of surplus/ condemned plant and machinery & other assets. Reconciliation of control accounts of other division/ corporate office. Liaison with audit authority. Submission of various types reports/ returns as and when required by corporate office/ MD (MIG) & other agencies.

CASH OFFICE SECTION This section deals with all the receipts and payments of cash/ cheque & accounting of the same in the books. a. b. c. d. e. f. g. Receipt of cash, cheque, bank draft and issue of receipt for the same. Banking of all receipts. Withdrawal of cash from bank to cater for daily needs. Payment of vouchers by cash/ cheque. Writing off cash/ bank book. Preparation of bank reconciliation statement. Safe custody of cash, cheque books, bank guarantees, fixed deposit receipts and other investment etc.

MATERIAL SECTION Following are the functions of the material section: a. Maintenance of material ledger cards for all materials held in stores. b. Accounting of receipt of all material by various classes and issue of materials drawn on work order and expenses accounts.

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c. d. e. f.

Reconciliation of balances with general ledger. Quality reconciliation of bin card balances with material ledger balances. Accounting of inter-divisional transfer of material and its reconciliation. Scrutiny of slow, non-moving inventories.

CHAPTER-III METHODOLOGY

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METHODOLOGY Generally the most of the data are gathered from the accounts manual, profit-loss account of balance sheet, HAL inventory manual, stores ledger and different material consumption record etc of different periods i.e. 2008-2009, 2009-2010, 2010-2011, 20112012. Primary data are those that are collected for the first time by the investigator and the primary data used and collected for this study are: Direct Personal Interview with my project guide at HAL and other concerned employees at HAL. Information through e-mail about the components of operating cycle from the HAL manufacturing units in Koraput, Odisha. Primary data was used to know about the the company &operations in finance department. NEED FOR WORKING CAPITAL Every business undertaking requires funds for two purposes, investments in fixed assets & investment in current assets. Funds required for investing in inventory, debtors & other current assets keep changing in shape & volume. Company has some cash in the beginning; this cash may be the source of raw material, keeping the labour cost & other overheads. These three combined would generate work in progress, which will be converted into finished goods on the completion of the production process into debtors & when the debtor pay, the firm may generate cash. Working capital is needed for sustaining (i.e., maintaining) the sales activities. If adequate working capital is not maintain for this period, the firm will not be able to sustain or maintain the sales, since it may not be in a position to purchase raw material and pay wages and other expenses and produce the goods required for the sales. From the above it is clear that every business needs some amounts 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 sales and realization of cash. There are time gaps in purchase of raw material and production; production and sales; and realization of cash.

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Thus working capital is needed for the following purposes: For the purpose of raw material, components and spares. To pay wages and salaries To incur day-to-day expenses and overload costs such as office expenses. To meet the selling costs as packing, advertising, etc. To provide credit facilities to the customer. To maintain the inventories of the raw material, work-in-progress, stores and spares and finished stock. For studying the need of working capital in a business, one has to study the business under varying circumstances such as a new concern requires a lot of funds to meet its initial requirements such as promotion and formation etc. These expenses are called preliminary expenses and are capitalized. The amount needed for working capital depends upon the size of the company and ambitions of its promoters. Greater the size of the business unit, generally larger will be the requirements of the working capital. The requirement of the working capital goes on increasing with the growth and expensing of the business till it gains maturity. At maturity the amount of working capital required is called normal working capital. OBJECTIVE 1. To conduct its business economically and efficiently so that it can contribute its due share to the national effort for achieving reliant and self generating economy. 2. To study the components, determinants of working capital. 3. To study how to keep the capital that is tied up in the working Capital cycle at a minimum and maximizing profit. 4. To study how HAL finances working capital requirements of the firms. 5. Interpreting, analyzing based on the various ratios, the liquidity position of HAL. 6. To determine the amount of W.C requirement & to calculate various ratios relating to W.C. 7. To make an item wise study of the component of the W.C. 8. To suggest the steps to be taken to increase the efficiency in management of W.C.

SCOPE OF STUDY Keeping the magnitude of the work in mind, the scope of the study has been determined. It covers at the outset, a description of the role played by the corporation in improving financial strength of Odisha. The study has emphasized financial statement analysis and its application in different enterprise. RESEARCH DESIGN

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A research is an arrangement of conditions for the collection & analysis of data in a manner that aims the research purpose and achievements of goal with economy in procedure depending on research problem. The study of Working Capital is generally based on documentary evidences. The research design that has been adopted for the study offers basis of drawing conclusion from the data collected from a firm which is a descriptive research.

DATA COLLECTION METHOD For analyzing the working management, secondary data are used. Generally the most of the data are gathered from the accounts manual, profit-loss account of balance sheet, HAL inventory manual, stores ledger and different material consumption record etc of different periods i.e. 2008-2009, 2009-2010, 2010-2011, 2011- 2012. These works with the information contained in the data bank and interpret it in accordance with the result required. The data bank consists of number of files. Cost sheet Profit & loss account Balance sheet Accounts manual Performance budget etc Other information from area office in HAL, libraries & HALS official website.

LIMITATION There is a gap between the theoretical analysis and its practical and real life application. The data available is limited to the Koraput division. The overall data of HAL is not available. The actually working figure may slightly differ from the study. The inaccuracy in the data, which could not be avoided, imposed some more restriction on the study. The data collected was purely a secondary source of data. This study was restricted to the extent possible of data received as HAL was a Defense Sector. Detailed information about certain parameters could not be obtained due to confidentiality. Time factor was a limitation as only a stipulated period has been ascertained to me while the personnel had little time to my queries due to their daily busy schedule.

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CHAPTER-IV ANALYSIS OF STUDY

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CURRENT RATIO: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firms current assets to its current liabilities. Current Ratio formula = Current Assets / Current Liabilities (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 A Current Assets 258006.95 375667.75 287192.30 320242.71 B Current Liabilities 431084.28 534733.62 515814.69 555897.18 C Current Ratio(A/B) 0.60 0.70 0.55 0.57

Source:

HAL Engine Division, Koraput

Current Ratio
0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Current Ratio

Current Ratio

2008-09 0.6

2009-10 0.7

2010-11 0.55

2011-12 0.57

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INTERPRETATION: A relatively high current ratio is an indication that the firm is liquid & has the ability to pay its current obligation in time as and when they became due. As a convention the minimum of 2:1 is referred to as a bankers rule of thumb or arbitrary standard of liquidity for a firm. But from the above calculation we came to know that the Koraput division has relatively low current ratio which represent the liquidity position of the division is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. LIQUID RATIO: In finance, the Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets include those assets that presumably can be quickly converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cant currently pay back its current liabilities. Liquid Ratio Formula= Current Assets-(Inventories+Prepaid Expenses) Current Liabilities (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-2012 Source: A Liquid Assets 103809.68 119134.28 77090.08 69503.45 HAL Engine Division, Koraput B Current Liabilities 431084 534733.62 515814.69 555897.18 C Liquid Ratio(A/B) 0.24 0.22 .14 0.12

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Liquid Ratio
0.25 0.2

Liquid Ratio

0.15 0.1 0.05 0 2008-09 0.24 2009-10 0.22 2010-11 0.14 2011-12 0.12

Liquid Ratio

INTERPRETATION: Usually, a high acid test ratio is an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a quick ratio represents that the firms liquidity position is not good. As a rule of thumb or as a convention quick ratio of 1:1 is considered satisfactory. But from the above calculation we came to know that the firm has relatively low liquid ratio which represent the liquidity position is not good and the firm shall not be able to meet its current obligation. ABSOLUTE LIQUID RATIO OR CASH POSITION RATIO: The ratio of a companys total cash and cash equivalents to its current liabilities. The cash ratio is most commonly used as a measure of company liquidity. It can therefore determine if, and how quickly, the company can repay its short-term debt. A strong cash ratio is useful to creditors when deciding how much debt, if any, they would be willing to extend to the asking party. Absolute Liquid Ratio Formula= Cash in hand & bank+ marketable securities Current liabilities (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 A Absolute Liquid Asset 11.95 16.88 8.97 B Current Liabilities 431084.28 534733.62 515814.69 C Absolute Liquid Ratio(A/B) 0.002 0.003 0.001

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2011-12 Source:

13.64 HAL Engine Division, Koraput

555897.18

0.002

Absolute Liquid Ratio

0.0035 Absolute Liquid Ratio 0.003 0.0025 0.002 0.0015 0.001 0.0005 0 Absolute Liquid Ratio 200809 0.002 200910 0.003 201011 0.001 201112 0.002

INTERPRETATION: Although receivables, debtors and bills receivables are generally more liquid than inventories, yet there may be doubts regarding their realisation into cash immediately or in time. Hence, some authorities are of the opinion that the absolute liquid ratio should also be calculated together with current ratio and acid test ratio so as to exclude even receivables from the current assets and find out the absolute liquid assets. The acceptable norm for this ratio is 50% or 0.5:1 or 1:2 i.e. Rs. 1 worth absolute liquid assets are considered adequate to pay Rs 2 worth current liabilities in time as all the creditors are not expected to demand cash at the same time and the cash may also be realised from debtors and inventories. From the above calculation we came to know that the cash position of the firm is low because it is .002%, .003%, .001%, .002% for the year 2008-09, 2009-10, 2010-11, 2011-12 respectively, where as accepted standard is 0.5. As I only suggest that the firm must improve its short-term financial position. INVENTORY TURNOVER RATIO: (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 A Sales 140991.83 133541.46 B Average Inventory 154197.27 256533.47 C ITR(Times) (A/B) 0.91 0.52

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2010-11 2011-2012 Source:

176195.89 128407.26

311483.61 250739.26

0.56 0.51

HAL Engine Division, Koraput

ITR
1 0.8 ITR 0.6 0.4 0.2 0 ITR 2008-09 0.91 2009-10 0.52 2010-11 0.56 2011-12 0.51

INTERPRETATION: From the above calculation we came to know that the inventory turnover ratio is low which is a signal of inefficiency, since inventory usually has a rate of return of zero. It also implies either poor sales or excess inventory. A low turnover rate can indicate poor liquidity, possible overstocking and obsolesce. DEBTORS TURNOVER RATIO: An accounting measure used to quantify a firms effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 Source: A Total Sales 140991.83 133541.46 176195.89 128407.26 B Debtors 14655.86 23918.95 24198.85 44257.77 C DTR(Times) (A/B) 9.62 5.58 7.28 2.90

HAL Engine Division, Koraput

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DTR
10 8 DTR 6 4 2 0 DTR 2008-09 9.62 2009-10 5.58 2010-11 7.28 2011-12 2.9

INTERPRETATION: Debtors velocity indicates the number of times the debtors are turned over during a year. Generally, the higher the value of debtors turnover the more efficient is the management of debtors/sales or more liquid are the debtors. From the above calculation we came to know that the debtors turnover ratio is decreasing from year to year. Compared to 200809, 2009-10, 2010-11 the DTR for 2011-12 is very low i.e. 2.9 which is not a good signal.

AVERAGE COLLECTION PERIOD: The approximate amount of time that it takes for a business to receive payment owed, in terms of receivables, from its customers and clients. (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 Source: A No. of working days 360 360 360 360 HAL Engine Division, Koraput B DTR 9.62 5.58 7.28 2.90 C Average Collection Period (A/B) 37 Days 64 Days 49 Days 124 Days

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INTERPRETATION: Here the average collection period is shorter, which is quite good sign for the firm. As the firm is able to collect its debt in time. But a precaution is needed while interpreting a very short collection period because a very low collection period may imply a firms conservative policy to sell on credit or its inability to allow credit to its customers(due to lack of resources) and thereby losing sales and profit. HAL is moreover doing its business in credit with most of its customer. In the year 2011-12 the average collection period is 124 days because the data collected were not audited. CREDITORS TURNOVER RATIO: It is a ratio of net credit purchases to average trade creditors. Creditors turnover ratio is also known as payables turnover ratio. It is on the pattern of debtors turnover ratio. It indicates the speed with which the payments are made to the trade creditors. It establishes relationship between net credit annual purchases and average accounts payables. (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 Source: A Purchases 164013.35 172636.22 184831.57 104257.19 HAL Engine Division, Koraput B Creditors 32264.15 27001.20 15428.09 12358.72 C CTR (A/B) 5.08 6.39 11.98 8.44

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CTR
12 10 8 CTR 6 4 2 0 CTR 2008-09 5.08 2009-10 6.39 2010-11 11.98 2011-12 8.44

INTERPRETATION: Shorter average payment period or higher payable turnover ratio indicates less period of credit enjoyed by the business it may be due to the fact that either business has better liquidity position; believe in availing cash discount and consequently enjoys better credit standing in the market.

AVERAGE PAYMENT PERIOD: The number of days a company takes to pay off credit purchases. Average payment period ratio is used to measure the rate at which the company is able to pay its creditors. It is also known as Creditors payment period or Average credit taken. (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-2012 Source: A No. Of working days 360 360 360 360 B CTR 5.08 6.39 11.98 8.44 C AVP(A/B) 70 Days 56 Days 30 Days 43 Days

HAL Engine Division, Koraput

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INTERPRETATION: The average payment period ratio is lower which implies that the firm has a better liquidity position. To make correct interpretation of this ratio, a comparative analysis of different firms in the same industry and the trend may be found for various years, which is quite difficult in case of HAL.

WORKING CAPITAL TURNOVER RATIO: A measurement comparing the depletion of working capital to the generation of sales over a given period. This provides some useful information as to how effectively a company is using its working capital to generate sales. Working Capital Turnover Ratio=Sales/Net Working Capital (Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 A Current Assets 258006.95 375667.75 287192.30 320242.71 B Current Liabilities 431084.28 534733.62 515814.69 555897.18 C Net working capital(A-B) (173077.33) (159067.87) (291233.40) (235654.47)

48

(Rs. in Lakhs) SLNO PARTICULARS 2008-09 2009-10 2010-11 2011-12 Source: A Sales 140991.83 133541.46 176195.81 128407.26 HAL Engine Division, Koraput B Net working capital (173077.33) (159067.87) (291233.40) (235654.47) C WCTR (A/B) (0.81) (0.83) (0.60) (0.54)

WCTR
0 -0.1 -0.2 -0.3 -0.4 -0.5 -0.6 -0.7 -0.8 -0.9 WCTR

WCTR

2008-09 -0.81

2009-10 -0.83

2010-11 -0.6

2011-12 -0.54

INTERPRETATION: Working capital turnover ratio indicates the velocity of the utilisation of net working capital. This ratio indicates the number of times the working capital is turned over in a year. This ratio measures the efficiency with which the working capital is being used by a firm. But from the calculation we came to know that the firm is running its business with negative working capital turnover ratio. Working capital is always negative as the company takes 65% advance before taking up production of engines. Due to manufacture of certain engines the operating cycle for such takes a lot of time due to which cash is being held up.

49

CHAPTER-V FINDINGS, SUGGESTIONS & CONCLUSIONS

50

FINDINGS 1. HAL sale is increasing from year to year and the growth is remarkable.Overall ratio of the company are good and company need to work with more efficiency. 2. The additional capacity of air craft production at Odisha will create new milestones for HAL ltd. 3 .HAL investment policies are very much reliable. 4. Position of stock is increasing per year that is good sign to face the competition coming ahead. 5. The DTR & the Liquid ratio is decreasing from year to year. 6. HAL is a defence related organisation,so production is made on contract basis. 7. Working capital is always negative as the company takes 65% advance before taking up production of engines. Due to manufacture of certain engines the operating cycle for such takes a lot of time due to which cash is being held up. SUGGESTIONS 1. The company should improve the working capital position of the company as the working capital of an organization has a great importance in the day-to day activities of an organisation.If the working capital is not properly meet than the organization will suffer from serious crisis. 2. The organization must take necessary steps to raise advances inorder to make the working capital of HAL positive i.e. more than 65%. 3. To maintain a good current ratio, it must try to increase the amount of current assets. 4. As the analysis reveals, the division is facing a problem of liquidity due to the reason that the payment to be received from the debtors is not realized in time.That is the collection period is much more than the required.So, the HAL, Engine Division, Koraput has to be strict to its debtors by reducing the credit period allowed so as to improve its efficiency by managing work.

CONCLUSIONS Working capital of a business reflects the short-term use of funds. These are cash shortterm securities, amount receivable, and inventories of raw materials, work in progress & finished goods.It is also referred as to the funds required for operations of thebusiness. It follows a cyclic process of conversion of cash into inventory, inventory into receivables & receivable into cash.The determinates of working capital are nature of businessmanufacturing cycles, credit policy, availability of raw material,availability of credit, growth & expansion activities & other factors.The working capital of an organization mainly depends on the analysis of the management of receivable, cash & inventory &finally the organization profit & loss account, balance sheet .This all highlights the working capital status whether it is healthy or not.

51

BIBLIOGRAPHY

BOOKS: Pandey, I.M., (2010), Financial Management,Noida city:Vikas Publishing House. HRISHIKES BHATTACHARYA, (2004), Working Capital Management, Kolkata: Prentice-Hall of India Pvt.Ltd.

REPORTS: Annual Accounts (Engine Division) Koraput 2008-09, 2009-10, 2010-11, 2011-12.

ARTICLES: MathuvaD.M., 2010, The influence of working capital management components on corporateprofitability: A survey on Kenyan listed firms, Research Journal of

Business Management(4), 1-11.

Kaiser K. and Young S.D., 2009, Need cash? Look inside your company, Harvard

Business Review (87), 64-71.

Reilly G.P. and Reilly R.R., 2002, Performance measurement for improved working-capital management, Journal of Cost Management (16), 13-20. WEBSITE: http://hal-india.com http://investopedia.com

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ANNEXURE
Balance Sheet For the year ended 2008-09 & 2009-10 of Hindustan Aeronautics Limited, Koraput Division (Rs. In Lakhs). PARTICULARS 2008-09 2009-10 SOURCES OF FUNDS Share holders Funds: Head office control A/C 4712.75 16992.37 Reserve & Surplus 11968.86 12934.88 16681.61 Loan Funds: Secured Loans Unsecured Loans Deferred Liabilities ( Net ) Deferred Tax Liabilities APPLICATION OF FUNDS Fixed Assets: Gross Block Less :Depreciation Net Block Capital work in progress Special tools &equipments Investments Deferred Tax assets Current Assets, Loans & Advances: Inventories Sundry Debtors Cash & Bank balances Loans & Advances 259.75 0 259.75 0.44 0 29927.25 364.54 0 364.54 0.12 0

60432.55 23502.14 36930.41 7143.75 44074.16 113380.82 0 0 154197.27 14655.86 11.95 89141.87 258006.95 408546.14 22538.14 431084.28 (173077.33) 44467.53 11903.38 32564.15 16941.80

67432.44 27738.48 39693.96 3147.59 42841.55 115159.33 0 0 256533.47 23918.95 16.88 95198.45 375667.75 508682.10 26051.52 534733.62 (159065.87) 46904.69 15547.79 31356.90 30291.91

Less: Current liabilities & Provisions Liabilities Provisions Net current Assets Intangible Assets: Gross carrying amount Less :Cumulative Amortization & Impairment loss Net carrying amount Total Application of Funds

53

PROFIT & LOSS A/C for the year ended 2008-09 & 2009-10 of Hindustan Aeronautics Limited, Koraput Division (Rs. In Lakhs). PARTICULARS 2008-09 2009-10 INCOME Sales 140991.83 133541.46 Transfer to Inter Divisional Units 754.03 58.47 Charges in WIP/SIT/Scrap 36766.73 62722.61 Other Income 4748.82 4337.46 Charges received on Inter Divisional Transfer 75.40 5.85 Total EXPENDITURE Consumption of Raw Material, Components Amortization Salaries & Wages Other Expenses Charges paid on Inter Divisional Transfers Interest Depreciation Provisions Inter Services/ Common Services Transfer of IDT Total Less: Expenditure relating to capital A/C & Others Net Expenditure Profit for the year Less: Provision for current taxation ( MAT ) Provision for deferred taxation Provision for taxation of earlier years no longer required withdrawn 183336.81 123733.77 15214.51 21104.93 8461.99 3.30 1.41 3686.46 9218.99 1585.90 0 183011.26 11643.31 171367.95 11968.86 0 0 0 0 11968.86 0 11968.86 0 0 0 0 0 11968.86 11968.86 200665.85 139591.47 14942.84 18003.49 9367.95 18.46 0.12 4242.48 5914.89 940.12 0 193021.82 5290.85 187730.97 12934.88 0 0 0 0 12934.88 0 12934.88 0 0 0 0 0 12934.88 12934.88

Profit after Tax Balance brought forward from last year Profit available for appropriation APPROPRIATION Debenture redemption reserve Research & Development reserve Proposed dividend Tax on distributed profits General reserve Balance carried to balance sheet Total of appropriation

54

Balance Sheet For the year ended 2009-10 & 2010-11 of Hindustan Aeronautics Limited, Koraput Division (Rs. In Lakhs) HINDUSTAN AERONAUTICS LIMITED BALANCE SHEET As at 31st March 2011 Particulars SOURCES OF FUNDS Shareholders' Funds Head Office Control Account Reserves and Surplus -107434.10 12216.51 -95217.59 Loan funds Secured Loans Unsecured Loans Deferred Liabilities (Net) Deferred tax liabilities -95122.66 APPLICATION OF FUNDS Fixed Assets Gross Block Less : Depreciation Less : Impairment Loss Net block Intangible assets Gross Carrying amount Less :Cumulative amortisation & impairment loss Net carrying amount Capital Work-in-progress Special tools and equipments Investments Deferred tax assets Current Assets, Loans & Advances Inventories 30291.91 16992.37 12934.88 29927.25 KORAPUT (Rupees in Lakhs) 31st March '10

31st March '11

95.11 95.11 -0.18

364.54 364.54 0.12

70371.36 32056.39 38314.97 60364.03 18251.77 42112.26 2519.11 113164.02

67432.44 27738.48 39693.96 46904.69 15547.79 31356.90 3147.59 115159.33

311483.61

256533.47

55

Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current liabilities and provisions Liabilities Provisions

24198.85 8.97 40860.92 376552.35 634488.37 33297.00 667785.37

23918.95 16.88 95198.45 375667.75 508682.10 26051.52 534733.62 -159065.87

Net Current Assets Miscellaneous Expenditure

-291233.02

-95122.66 Notes on Accounts For ANIL MIHIR &ASSOCIATES., Chartered Accountants

30291.91

(CA.TAPAS KUMAR PANIGRAHI) PARTNER M.NO.500961 Place: Sunabeda Dt.20.05.2011 HINDUSTAN AERONAUTICS LIMITED PROFIT AND LOSS ACCOUNT For the year ended 31st March 2011 Particulars INCOME Gross Sales Less Excise Duty Net Sales Transfer to inter Divisional Units Changes in WIP/SIT/Scrap

General Manager

KORAPUT (Rupees in Lakhs) Current Year Previous Year

176195.89 176195.89 423.90 30647.01

133541.46 133541.46 58.47 62722.61

56

Other Income Charges Received on Inter Divisional Transfers Transfer from R&D Reserve

2666.59 42.39

4337.46 5.85

209975.78 EXPENDITURE Consumption of Raw Material,Components, etc. Amortisation & Other Charges Salaries and wages Other expenses Charges Paid on inter Divisional Transfers Interest Depreciation Provisions Inter Services / Common Services Transfer of IDT Deduct :Expenditure relating to Capital account & others Net Expenditure Profit for the year Less : Provision for current taxation Provision For Fringe Benefit Tax Provision for deferred taxation (Net) Provision for taxation of earlier years no longer required withdrawn Profit after tax Profit available for appropriations APPROPRIATIONS 15543.69 197759.27 12216.51 140419.70 23091.98 22520.58 11710.81 24.33 4324.04 10061.40 1150.12 213302.96

200665.85

139591.47 14942.84 18003.49 9367.95 18.46 0.12 4242.48 5914.89 940.12 193021.82

5290.85 187730.97 12934.88

12216.51

12934.88

12216.51

12934.88

57

Debenture Redemption Reserve Interim Dividend Proposed Final Dividend Tax on Dividend (Interim & Final) General Reserve Balance carried to Balance Sheet Total of Appropriations Notes on Accounts Subject to our report of even date For ANIL MIHIR &ASSOCIATES., Chartered Accountants

12216.51 12216.51

12934.88 12934.88

(CA.TAPAS KUMAR PANIGRAHI) PARTNER M.NO.500961 Place: Sunabeda Dt.20.05.2011

General Manager

Balance Sheet For the year ended 2010-11 & 2011-12 of Hindustan Aeronautics Limited, Koraput Division (Rs. In Lakhs) HINDUSTAN AERONAUTICS LIMITED ENGINE DIVISION ,KORAPUT Balance Sheet as at 31st March 2012 Particulars I. Equity and Liabilities (1) Shareholders' Funds (a) Share Capital (b) Reserves and Surplus Note No. 31st March 2012 (Rs. In Lakhs) 31st March 2011

1 2

-152150.07 24150.07

-107457.42 12239.45

58

(c) Money Received Against Share Warrants Sub Total (2) Share Application Money Pending Allotment (3) Non-Current Liabilities (a) Long-Term Borrowings (b) Deferred Tax Liabilities (Net) (c) Other Long Term Liabilities (d) Long Term Provisions Sub Total (4) Current Liabilities (a) Short Term Borrowings (b) Trade Payables (c) Other Current Liabilities (d) Short Term Provisions Sub Total Total I (1+2+3+4) II. Assets (1) Non-Current Assets (a) Fixed Assets (i) Tangible Assets Gross Block Less: Accumulated Depreciation Less: Impairment Net Block (ii) Capital Work-InProgress (b) Non-Current Investments Deferred Tax Assets (c) Long Term Loans and Advances (d) Other Non-Current Assets Sub Total (2) Current Assets (a) Current Investments (b) Inventories (c) Trade Receivables (d) Cash and Cash Equivalents

-128000.00

-95217.97

3 4 5 6

63.89

68.56

165303.41 4138.65 169505.95 8.32 12358.72 501997.03 41533.11 555897.18 597403.13

160517.36 3574.82 164160.74 95.11 9774.25 471426.52 34518.81 515814.69 584757.46

7 8 9 10

11A 11B 11C

75058.59 36489.81 38568.78

70371.36 32056.39 38314.97 2519.11

12 13

1538.16

14 15

13438.12 223615.36 277160.42

12754.41 243976.67 297565.16

16 17 18 19

250739.26 44257.77 13.64

246044.45 24198.85 8.95

59

(e) Short Term Loans and Advances (f) Other Current Assets Sub Total Total II( 1+2)

20 21

16330.05 8901.99 320242.71 597403.13

8425.97 8514.08 287192.30 584757.46

Statement of Profit and Loss for the year ended 31st March 2012 (Rs. In Lakhs) 31st March 2011 176327.59 176327.59 423.90 2534.89 42.39 179328.77 140419.70 -30647.01 21719.87 12766.99 12511.90 24.33 4016.28 10061.40 1126.80 172000.26 4910.94 167089.32 12239.45

S. No. I.

Particulars Revenue from Operations Less: Excise Duty Net Revenue from Operations IFD sale Other Income Charges Received on Inter Divisional Transfers Total Revenue (I + II) Expenses: Cost of Materials Consumed Changes in Inventories of Finished Goods, Work-in-Progress and Stock-inTrade Employee Benefits Expense Finance Costs Depreciation and Amortisation Expense Other Expenses Charges Paid on Inter Divisional Transfers Direct Input to WIP / Expenses Capitalised Provisions for Redundancy and Doubtful Debts / Claims Inter Services and Common Services Total Gross Expenses Deduct: Expenses relating to Capital and Other Accounts Total Net Expenses Profit before exceptional and extraordinary items and tax (III - IV) Exceptional items

Note No. 22

31st March 2012 152557.33 152557.33 1360.63 1921.83 136.06 155975.85

II.

22A 23 23A

III. IV.

24 25 26 27 28 29 29A 30 31 31A 32

77891.73 -7052.02 22886.76 11443.36 15444.46 11.76 1560.28 8837.76 1181.33 132205.42 379.64 131825.78 24150.07

V. VI.

60

VII. VIII. IX. X.

XI. XII. XIII. XIV. XV. XVI.

Profit Before Extraordinary Items and Tax (V - VI) Extraordinary Items Profit Before Tax (VII - VIII) * * includes Prior Period Tax expenses (1) Current Tax (2) Deferred Tax Pofit / (Loss) for the period from Continuing Operations (IX - X) Profit/(Loss) from Discontinuing Operations Tax expense of Discontinuing Operations Profit/(Loss) from Discontinuing Operations (After Tax) (XII - XIII) Profit(Loss) for the Period (XI + XIV) Earnings per Equity Share (1) Basic (2) Diluted Notes on Accounts

24150.07 24150.07 -207.93

12239.45 12239.45 -361.94

33

24150.07

12239.45

24150.07

12239.45

34