Papu

Working Capital Management
CHAPTER-1
1.1 INTRODUCTION
In the earlier years of its evaluation it was created rising of funds. In the current
year literal pertaining to financial management is a border scope. So as to include in
additional to procurement of funds efficient of funds efficient of resources in
universally recognized. The term nature as applied to financial management refers to
its relationship with the closely related fields of economics and accounting its
functions, scope.
DEFINITIONS:
“Financial management is concerned with the efficient use of an important
economic resources namely capital funds”. –Solomon.
“Financial management is the application of the planning and control
function to the finance functions”. –Howard and Upon
Scope of finance:
Firm create manufacturing capacities for production of goods some provide
service to customers. They sell their goods or services to earn profit. They raise funds to
acquire manufacturing and other facilities. Thus, the three most important activities of
business firm are:
 Production
 Marketing
 Finance
A firm as wheat ever capital it needs and employees it (finance activity) in activities
which generate returns on invested capital (production and marketing activities). So
financial management helps to the firm to take the correct decisions. And also helpful to
firm how to utilize the economic resources likely capital funds in the proper way. It is also
controlling tool to control the financial functions of the firm. So, it is very important
aspect in every organization.
Meaning and types of financial statements:
A financial statement is an organized collection of data according to logical and consistent
accounting procedures. It purposes is to convey in understanding of some financial;
aspects of a business firm.
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Thus, the term ‘financial statements’ generally refers to two basic statements.
1. Income statement
2. Balance sheet
1. Income Statement:
The income statement may be prepared in the form manufacturing account to find
out the cost of the production, in the form of trading account to determine the gross loss in
the form of profit & loss account to determine the net profit or net loss.
If the profit is increasing year after year or it is higher than the other
competitors, it means the business is a profitable one. Otherwise it is better to switch over
to other lines or to close down. Similarly, if the expenditure is more than the income then
there will be no loss. It means that the firm is losing the capital.
2. Balance sheet:
The balance sheet is one of the Important statement which shows the financial
position of the firm, measured in terms of assets & liabilities i.e., Balance sheet shows all
the assets owned by the firm on one side and on other side owner’s funds and other
external liabilities. The difference between the total assets and the external liabilities is
known as “Owners’ Equity”. If the owner’s equity is increasing over a period of time, it
means. Otherwis3 it will be a cause of financial insolvency
OBJECTIVES OF FINANCIAL STATEMENTS

Financial; statement are the sources of information on the basis of which
conclusions are drawn about the profitability and financial position of a concern. The
primary objective of the financial statement is to assist in decision making to those who
are interested in the financial affairs of the business enterprise. The accounting principles
board of America (APB) state that following objectives of financial statements.
To information about the working capital and other funds flow
To disclose, to the extent possible, other information related to the financial statements
that is relevant to its users.
To provide reliable financial information about economic resource and obligation of
a business firm i.e., cash inflows and cash outflows.
To provide other needed information about changes in such economic resource and
obligations. To provide a financial information the assist in estimating the earning of
potentials of the business
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1.2 INDUSTRY PROFILE
Product introduction
Glass:
Glass is an inorganic product that is typically produced by melting a mixture

of silica (sand, 75 per cent), soda (around 15 per cent) and calcium compound (lime,
10 per cent) with the desired metallic oxides that serve as colouring agents. The glass
industry covers products such as flat glass (including sheet glass, float glass, figured
and wired glass, safety glass and mirror), glass hollow wares and containers, vacuum
flasks, laboratory glassware and fibre glass. Glass products are used widely in
households, construction, laboratories and consumer items such as bangles, beads,
pearls, etc.
THE FOUR SEGMENTS OF THE GLASS INDUSTRY
Container Glass:
This is the largest segment in the glass sector and comprises of glass
packaging for drinks, food, perfumes and pharmaceuticals.
Specialty Glass:
This is the second largest segment and contributes to one-third of the

total global production. Specialty glass is mainly used for technical
applications such as optics, electronics, lighting, engineering, ophthalmic
lenses, etc. Borosilicate glasses are also included in this category.
Flat glass:
The flat glass industry accounts for 16 per cent of the total global glass
production. This segment comprises of floatglass, rolled glass, cast glass and
other flat glasses which are used mainly for architectural and automotive
applications.
The global market for flat glass was estimated at 41 million tonnes in 2015, with a
value of US$ 19 billion at the primary manufacturers’ level. Out of the total
production, 70 per cent was consumed in windows for buildings, 10 per cent in
glazing products for automotive applications and 20 per cent was used in furniture
and other interior applications.
Fiber glass:
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Fibre glass consists of thin filaments of glass fibre that are used primarily as
reinforcement material in polymer products. The resultant composite is called
Fibre Reinforced Polymer (FRP) or Glass Reinforced Plastic (GRP), commonly
referred to as fibre glass.
The major glass producing countries in the world are Germany, USA, UK, China and
Japan. The major importing countries are USA, Germany, Japan, France, Italy and
Australia. The main consuming regions are Europe, China and North America, that
together account for 74 per cent of global demand for glass. Europe is the most
mature glass market and has the highest proportion of value added products.
The global glass industry is quite concentrated, with four companies –

NSG/Pilkington, Saint-Gobain, Asahi and Guardian, producing 67 per cent of the
total high quality float glass in the world. Lower quality float and sheet glass
production is gradually being replaced by high quality float glass across the globe.
For automotive glazing, there are only three major players –

NSG/Pilkington, Asahi and Saint-Gobain – who, along with their respective
associates, meet nearly 75 per cent of the world’s Original Equipment (OE) glazing
requirements.
large way. However, mouth blown processes and handcrafted glassware continue
to play a role in developing innovative designs in decorative and table glassware
products that are exported in large quantities.
The Indian glass industry has been growing across all segments.
Sheet and float glass have recorded the fastest growth, at nearly 67 per cent CAGR
between 2011 and 2015.
This growth has been driven primarily by India’s booming
a number of strategic alliances have been formed in the automotive glass industry.
These include:
Pilkington and Nippon Sheet Glass (NSG) of Japan (now NSG Group): for a
joint Research, Development and Engineering (RD&E) agreement for automotive
products and processes. This also consists of a joint marketing approach for
Japanese vehicle manufacturers
Saint-Gobain and Central Glass of Japan have a joint marketing

agreement, including cooperation on product and technology developments in
2016, the glass industry was running at around 90 per cent capacity utilisation
globally and was heavily influenced by a strong demand in China.
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Indian Glass Industry
The glass industry in India is quite old and well

established. The first glass plant in India was set up in 1908. The glass makers
employed methods such as moulding, folding, twisting, double-stripping and wire-
winding to manufacture glass. It remained largely a cottage industry for a long time.
In recent years, the industry has transformed and developed. From rudimentary mouth
blown and hand working processes, the industry has evolved to adopt modern
processes and automation in automotive and construction sectors which have been
key drivers of the economy in the past five years. Other glassware such as bottles and
fibre glass has recorded more modest growth rates of about 5-6 per cent CAGR, over
the same period.
Exports and Imports
The domestic glass industry is facing increasing competition in the global, as

well as domestic markets. State-of-the-art technology in manufacturing is becoming
increasingly important in the industry. Modern technology and operations are
replacing traditional methodologies in fibre glass composites. Such upgradation is
driven by healthy demand for fibre glass products, particularly due to growth in
petrochemical sector and allied products.
Some segments, like vacuum flasks, have been adversely affected by stiff
competition in the international market. India’s exports in this segment declined from
US$ 111.2 million in 2012-13 to US$ 64. million in 2016-17.
However, some segments have faced up to the competition from global
players well. For instance, the glass container production more than doubled, from
approximately 0.8 million tonnes in 2012-13 to around 1.7 million tonnes in 2016-
017. This is despite the stiff competition faced from alternative packaging materials.
Exports of glassware from India have been growing at a rate of 17
per cent CAGR over the period 2011-12 to 2016-17. From US$ 19 million in
2011, exports increased to US$ 07 million in 2017. The products exported have
been primarily bottles, jars, fibre glass and glass beadwork, which together
accounted for more than half of all glassware exports in 2016-17.
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Glass Exports
The global market for Indian glassware is fragmented and spread across several
countries, with no dominant market. USA is the biggest market for Indian glass
products and accounted for 14 per cent of exports in 2016-17. UAE with 8 per
cent and Poland with 6 per cent, were the other key markets.
Country - wise Exports (2016-17)
USA 14%
UAE 8%
Poland 6%
Italy 5%
Belgium 5%
PRP China 5%
Brazil 4%
Turkey 3%
Saudi Arabia 3%
Mexico 3%
Spain 3%
UK 3%
Others 38%
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Exports of Glass Items (2016-17)
Bottles and Jars 19%
Glass Fibres 19%
Glass Beads 15%
Float Glass, Sheets 10%
Glass Bulbs and Tubes, Electrical Fittings 9%
Glass Blocks & Slabs 6%
Glass Mirrors 4%
Others 18%
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Key Success Factors In the Indian Glass Industry
Technological Capability:
The growth in India’s glass industry is being driven

by user segments such as manufacturing, construction and petrochemicals. These
segments are highly competitive, demanding and well integrated with global
trends. Supplying to key players in these segments will require the glass
manufacturers to be capable of developing technically advanced products and
customising specifications to user requirements. Hence, technological capability is
a key success factor in the industry today.
Players like Saint-Gobain (please see case study on Saint-Gobain provided later
in this document) have successfully leveraged their state-of-the-art technological
capability to differentiate themselves and grow.
Supply Chain Management:
User segments such as automotive OEMs and

construction companies work on tight schedules and project plans and this requires
just in time supplies. Glass suppliers need to have capabilities in managing the
distribution chain to ensure on time delivery every time.
Given the increasing trend in glass exports, managing global supply chains is the
new challenge for exporters. This will involve developing the right structure,
processes and technology support for supply chain management.
Branding:
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Experience of companies like Saint-Gobain and Asahi in India

indicate that having a strong brand is a major asset to ensure customer demand.
Depending on the user segment, customers today look for quality, product range,
technology and reliability. A brand that has been built to incorporate these values
can be a major differentiator.
Energy Efficient Manufacturing:
The glass industry is highly energy intensive

and energy consumption is a major cost driver. Energy costs include power
consumption and running costs of furnaces. Safety and environmental
requirements are also key drivers of costs in this area. The average energy cost as
a percentage of manufacturing cost is 0 per cent.
Amid these constraints, glass manufacturers need to find innovative ways for
improving energy efficiency and also explore alternate sources of energy. Energy
saving strategies such as higher temperature refractories could be adopted. Re-
using waste heat to pre-heat new batches is another option that has been estimated
to yield upto18 per cent savings in energy. The recycling of glass also leads to an
estimated savings of 15-5 per cent.
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About HNGI Group:
The HNG group, headquartered in Kolkata, was founded

by Mr. C.K. Somany, a visionary entrepreneur, in 1946. HNG is India’s
largest container glass manufacturer enjoying about 55% market share. Listed
on BSE, NSE and CSE, it has a present market capitalization of around Rs
22.80 Billion and net sales of around Rs. 13.60 billion, as recorded in FY 09 –
10. Its Pan-India manufacturing operations are spread over six centres Rishra,
Bahadurgarh, Rishikesh, Puducherry, Nashik and Neemrana, and its products
available in more than 23 countries. HNG has a production capacity of 2825
TPD through 11 furnaces and 44 production lines spread across six plants.
Diversifying into the float glass segment very recently, HNG has been a
turnaround specialist. It has successfully acquired and converted sick units of
Owens Brockway (World’s largest Glass Manufacturing Company) at
Rishikesh and Puducherry, L&T’s Nashik plant and Neemrana unit of
Haryana Sheet Glass to profitable businesses. In order to consolidate its
leadership position, HNG has embarked on a very aggressive growth plan
wherein it would double its existing capacity in next 30-35 months through
greenfield and brownfield expansions entailing investment of ~ Rs. 25 billion.
HNG group: The other companies under the HNG wing are Glass Equipment
(India) Ltd. (GEIL), Quality Minerals Ltd. (QML) and HNG Float Glass Limited.
Vision:
“To create a world- class manufacturing plant that pursues Quality Cost
Reduction, and productivity improvement measures in a truly holistic manner,
leading to customers, shareholders, employees and supplier’s satisfaction; this
integrated effort will result in the company becoming an industry Benchmark
and a role model for systems, processes and results.”
Strategy:
We are the largest container glass solutions provider in India and we look
forward to be a global leader in container glass packaging industry. Our
strategy is to create world class products, so that we can satiate the demands
of our consumers and thus, surpass our contemporaries in competition. It is
with our integrated efforts and customer service that we have managed to keep
our growth rate on an upward swing; in spite of the present economic turmoil,
which has adversely affected people's lives and ways in which business is
being conducted.
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Objectives:
At HNG, we look forward to customer satisfaction. Our main objective

is to ameliorate our customers and stakeholders, and in the process strengthen
the roots of our organization, so that we can emerge as a behemoth in the glass
packaging industry.
Values:
As we climb the success ladder, it is becoming increasingly important

for us to define our core values, as it is our values that help us remain
grounded and focused towards our goals. It gives us a definite purpose and
enables us to make the most of our resources.
At HNG, we believe in the core values of people, operational excellence, innovation

and integrity.
It is our people that give us the gusto to move forward, keeping all the
obstacles at bay. With our diligent workforce, production has become so much
easy!
Our operational excellence has given us the strength to launch our products
with even more confidence. We have an installed capacity of 4395 TPD and
this is what distinguishes us from our competitors.
Innovation and integrity are two important things that drive the HNG team.
These values are like assets that consolidate us in our march towards a greater
future.
About HNGI Naidupeta Plant
On 10th February 2011: Hindustan National Glass &

Industries Ltd., India’s largest glass container manufacturing company with a
market share of 55%, kick started the first phase of construction of the largest
glass manufacturing complex in South East Asia at Naidupeta with an initial
investment of more than Rs 700 crore.
This Mega Greenfield Glass manufacturing complex is the first step

towards HNG’s quest to double its capacity in next 3 years. Spread across 210
acres, the complex is set to house the largest batch house in the world, the
single largest furnace in India having a capacity of 650 MT per day and the
world’s largest container glass end port fired furnace of 175 sq.mt. The
facility, on completion, will house three Container Glass and two Float Glass
plants, and is expected to be largest glass complex in South East Asia having a
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capacity of 3500 MT per day. It will employ the latest NNPB technology for
the production of light weight glass containers.
HNG strategically decided to establish this project at Naidupeta in the

Nellore district of Andhra Pradesh to consolidate its foothold in Southern
India as well as cater to the growing demand in this region, especially Andhra
Pradesh, which is the fastest developing region in India with very high per
capita consumption of beer, liquor and soft drinks. As per the 2009-10 survey,
all 5 southern states of India, including Tamil Nadu, Andhra Pradesh, Kerela,
Karnataka and Pondicherry, consume about 1395 lac cases of IMFL (Indian
made foreign liquor) and 700 lac cases of beer annually out of which sales in
Andhra Pradesh account for 412.55 lac cases of IMFL and 249.92 lac cases of
beer.
Located at the crossroads of Chennai, Venkatagiri, Nellore and Tirupathi

on NH5, the complex lies in close proximity to Ennore and Krishnapatnam
ports, which makes it most suited for both imports and exports. Through this
project, HNG aims to capture the market demands from Middle East, South
East Asia, the US and Europe.
At the ground breaking ceremony - Mr. C. K. Somany, Chairman,

Hindusthan National Glass and Industries Ltd. said “We are proud to start the
construction work on this state of the art glass manufacturing project at
Naidupeta. About 65% of the demand for glass arises from Southern &
Western Indian regions. Industry analysts predict the demand to increase at
the rate of 10-12% driven by growing consumer awareness about health and
hygiene, and eco-friendly products. This new plant is expected to have
comfortable proximity to address this demand with high quality products that
matches the international standards. Vicinity to major ports will help us serve
the market demands from the US, Europe, Middle East and South East Asia”.
HNG believes in growth through technological advancements and

process control; hence it has been making strategic investments in the field of
glass technology and sciences. For the Naidupeta project, the company has
earmarked an investment of nearly Rs 250 cores for bringing the best
technology to meet global quality standards.
The Naidupeta project would be housing world's largest batch house and
world's largest furnace for container glass designed by ZIPPE (Germany) and
HORN (Germany) respectively. Emhart Glass, world's leading supplier of
equipment’s, controls and parts to the glass container industry, would be
supplying the latest glass bottle forming machines and state of the art BIS
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machines to be installed for the first time in Asia. The annealing leers is being
procured from Penne kemp – a leading supplier of technically advanced
solutions around the globe. Besides, the Company has also collaborated with
Siemens for technological innovations in the areas of automation, drive, and
energy efficiency.
Naidupeta glass manufacturing complex is expected to generate an

employment of over 2000 people. For the same, a housing colony to
accommodate over 600 families will be established, within the campus, over
15 acres of the industrial land. Naidupeta will be a flagship plant in the
country in terms of eco-friendly technologies. Some of the major highlights in
terms of eco-friendly initiatives would be using 40% to 50% of recycled glass
as raw material, and using waste heat from exhaust flue gas for generating
1.5MW of captive power. The project would also be using fuels like Natural
Gas, LPG & CNG as a part of its clean fuel technology initiatives. In addition
to these, rain water harvesting techniques will be deployed on campus and a
full-fledged sewage treatment plant will be set up to treat and reuse waste
water.
Headquarters
Hindusthan National Glass & Industries Ltd.
2, Red Cross Place, Kolkata - 700001
Telephone - 033 2254 3100
Fax - 22543130
Email - kol@hngil.com
Email us at cosec@hngil.com for Shareholders queries & Grievances.
GROUP COMPANIES OF HNGI
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The following are the two group companies under HNGI
HNG Float Glass Limited:
HNG Float Glass Limited was incorporated in 2006

inHalol (Gujarat) under the flagship of the HNG Group to manufacture the
different varieties of float glass. The company started with a capital outlay of
INR 550 Cr and has an installed capacity of 600 TPD. HNG Float Glass
Limited was established by the HNG Group for a synergic diversification of
their line of business. This business initiative gave the Group an opportunity
to explore the new arenas of the glass business, which is booming at present.
AMCL Machinery Limited:
AMCL Machinery Limited is based in Butibori (

Nagpur ) on a prolific area of 5000 square meters. It is one of the well-known
companies in India that deals with the design and production of machineries
for the Rubber & Tyre Industry, Transit Mixers, Cement Industry and Bulk
Handling System. It also accounts for the supply and installation of
mechanical equipment’s in the given industries. The company is certified with
ISO 9001:2000
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ABOUT BOARD OF DIRECTORS
1) Shri Sanjay Somany:
Shri Sanjay Somany, aged 59 years, is the Chairman &

Managing Director of the Company and Ex-Managing Director of Glass
Equipment (India) Limited, a subsidiary of HNG. Having gained more than three
decades of experience in glass industry, Shri Somany has led the evolution of
HNG to the forefronts of technological excellence. He presently oversees the
operations and management of the Company. A Commerce Graduate, Shri
Somany, also holds a diploma in diesel engineering. Previously, he has also held a
host of notable positions in industry bodies, such as the President of All India
Glass Manufacturers' Federation. At HNG, Shri Somany is a member of the
Treasury Management Committee, Stakeholders Relationship Committee and
Corporate Social Responsibility Committee.
2) Shri Mukul Somany:
Shri Mukul Somany, aged 52 years, is the Vice Chairman &

Managing Director of the Company. A second-generation entrepreneur, he holds
more than 25 years of experience in the glass industry. At HNG, he has been the
driving force behind Company’s acquisitions, marketing and branding strategies
over the years. He also oversees the administration function in the Company. He
holds a Bachelors of Commerce (Hons.) degree. He was the Ex -Chairman,
Eastern Region of CII and also a Member of the Bengal Rowing Club. At HNG,
Shri Somany is a member of the Treasury Management Committee, Stakeholders
Relationship Committee and Corporate Social Responsibility Committee.
3) Shri Dipankar Chatterji:
Shri Dipankar Chatterji, aged 69 years, is an

Independent Director of the Company. He is a Chartered Accountant and the
senior partner of the firm, L. B. Jha & Co. Chartered Accountants. He is also
Former Chairman of the Confederation of Indian Industry (CII- eastern region)
and is currently a Member of the National Council of CII. He was the Former
President of Indo American Chamber of Commerce (eastern region). At HNG,
Shri Chatterji is a member of the Audit Committee, Treasury Management
Committee, Stakeholders Relationship Committee and Nomination &
Remuneration Committee.
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4) Mrs. Rita Bhimani:
Smt. Rita Bhimani is the Founder-CEO of Ritam

Communications, a Corporate Public Relations Consultancy firm. Master’s degree
holder from the University of Georgia, U.S.A, Rita Bhimani is one of the veterans
of the Public Relations profession where she has spent 41 years. She was
nominated to the Board of Directors of the International Public Relations
Association, a worldwide body of PR professionals, and was the Chairman of its
Education and Research Committee in which capacity she conducted workshops
around the world on Educating the PR Educators – in Helsinki, Toronto,
Melbourne and Mumbai. She has authored two books on Public Relations – The
Corporate Peacock – New Plumes for Public Relations and FACE up! Tenets,
Techniques Trends, of Public Relations in the 21st Century. Mrs. Rita Bhimani is
a prolific columnist for mainline dailies and magazines. She is a soft-skills trainer
and is frequently invited to speak at conferences on HR, PR and Marketing in
Bangladesh. She is a well-known anchor-person for industry meets and book
releases and a speaker at professional conferences. She is a visiting faculty
member at the Pailan School of International Studies where she teaches a three-
year degree course in Media Studies. She was commissioned by the Ministry of
External Affairs, Public Diplomacy Division, to do a documentary on Raja
Rammohun Roy. At HNG she is a member of the Corporate Social Responsibility
Committee.
5) Shri Ratna Kumar Daga:
Shri Ratna Kumar Daga, aged 77 years, is an

Independent Director of the Company. He has vast experience in the field of
engineering and finance. During his tenure as the Chairman of Indian Institute of
Materials Management, Kolkata, the professional body made significant strides in
its activities. Calcutta Junior Chamber was adjudged the best unit in India under
his Presidentship. He then headed a three-member team to Sri Lanka to conduct
leadership development courses. As a President of Federation of Small and
Medium Industries (FOSMI), he led a business delegation comprising of 15-
member team to Singapore, Malaysia and Hong Kong. He holds a Post Graduate
degree in Business Management from the UK. He is the Honorary Secretary of
Satyanand Yoga Kendra (Kolkata branch) of Bihar School of Yoga. At HNG, Shri
Daga is the Chairman of the Audit Committee, Stakeholders Relationship
Committee, Nomination & Remuneration Committee and a member of the
Treasury Management Committee.
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6) Shri Narayanaswami Sitaraman:
Shri N. Sitaraman, aged 78 years, is an

Independent Director of the Company. He is a Fellow member of the Institute of
Company Secretaries of India, Fellow member of the Institute of Chartered
Secretaries and Administrators, London, Fellow member of the British Institute of
Management and Barrister at Law-London. He is a noted consultant and has a
wide range of experience in handling legal, secretarial, administration and
personnel matters. He was the ex-whole time Director of ITC Limited. At HNG
he is a member of the Audit Committee.
RATINGS RANKINGS AND ACCREDITATIONS
1) Business Standard Ranking (Out of 1000 top listed corporates, as of Feb

‟16)
◊ In terms of Revenue – 299th
◊ On Operating Profit Quantum – 265th
◊ On Net Profit Quantum – 253rd
2) Rating by CARE (Credit Analysis & Research Ltd.)
◊ Long Term credit rating of AA+ (implying high safety for timely
servicing of debt obligations and carrying very low credit risk).
◊ Short Term credit rating of PR1(+) (implying the lowest credit risk).
3) CRISIL Equity Rating
◊ On „Fundamental‟ side 4/5 meaning „Superior Fundamentals‟
◊ On „Valuation‟ Side 5/5 meaning „Strong upside‟
4) Rated as the best Indian Company in the Glass & Ceramics category by
Dun & Bradstreet in year 2009
5) Accredited with ISO 9001:2008 certification, ensuring stringent quality
standards and ISO 22000 for food and safety
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6) Rated at No.35, out of the best 500 companies by Inc. India

(Comprehensive ranking of India’s best performing mid-sized companies)
in their Sep-Oct, 2010 issue.
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CHAPTER-2
2. REVIEW OF LITERATURE
INTRODUCTION:
The term Working Capital refers to firm’s investment in short term assets such
as short-term securities, accounts receivables and inventories.
Working capital is the fund available for meeting the Day-to-day requirements
of an enterprise.
CONCEPTS OF WORKING CAPITAL:

There are two concepts of Working Capital. They are:
 Gross Working Capital.
 Net Working Capital.
GROSS WORKING CAPITAL:

It refers to firm’s investment in total current (or) circulating assets. This
concept focuses attention on two aspects of current assets management.
 Optimum Investment in Current Assets.
 Financing of Current Assets.
NET WORKING CAPITAL:

The term Net Working Capital has been defined in two different ways:
1. It is the excess of current assets over current liabilities.
Net Working Capital can be Positive (or)Negative:

 A Positive Net Working Capital will arise when Current Assets
exceeds Current Liabilities.
 A Negative will arise when current liabilities exceed Current assets.
2. It is that portion of firm’s Current Assets which is financed by long-term
funds.
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KINDS OF WORKING CAPITAL:

Working Capital can be classified under the following heads Permanent of
Regular and Variable Working Capital:
The need for current assets arises because of the operating cycle. The
operating cycle is a continuous process, and therefore, the need for current assets is
felt constantly. But the magnitude of current assets needed is not always same it
increases over time. However, there is always a minimum level of current assets,
which is continuously required by the firm to carry on its business operations. This
minimum level of current assets is referred to as permanent of fixed working capital.
Depending upon changes in production and sales, the need for working capital, over
and above permanent working capital, will fluctuate.
Short-term or Temporary or Variable Working Capital is the amount of

working. Capital which is required to meet the seasonal demand and some special
exigencies. Variable working capital can be further classified as seasonal working
capital and special working capital. Most of the enterprises have to provide additional
working capital to meet the seasonal a special need. The capital required to meet the
seasonal needs of the enterprise is called seasonal working capital. Special working
capital is that part of working capital which is required to meet special exigencies.
Permanent working capital stables over time, while temporary working capital
fluctuate according to the volume of production and sales. But permanent working
capital need not be fixed always; when the firm is continuously growing fixed capital,
needs may also increase. The position with regard to the permanent working capital
and variable working capital can be shown with the help of the following figures.
Amount of Working
Temporary
Permanent
Time
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Amount of Working
Temporary
Permanent
Time
Permanent and Temporary Working
Balance Sheet Working Capital:
The balance sheet Working Capital is calculated from the items appearing in
the balance sheet. Gross Working Capital is represented by current assets, and the
excess of current assets over current liabilities represents net working capital.
Cash Working Capital:

Cash Working Capital is calculated form the items appearing in the profit and
loss account. It shows the real flow of money or value at a particular time and is
considered to be the most realistic approach in working capital management.
Negative Working Capital:

When current liabilities exceed current assets, such a situation is termed a
deficit of Working Capital. Kennedy and McMullen observe. “A working Capital
deficit exists if current liabilities exceed current assets”.
Nature of Working Capital:

Working Capital Management is connected with its problems that arise in
attempting to manage the current assets, the current liabilities and the interrelation
ship that exists between them the term current assets refer to those assets, which in the
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ordinary course of business can be converted into cash within one year with the
undergoing of the firm. The major.
Current Assets are: Cash, Marketable Securities, Accounts receivables, Inventory,

prepaid expenses etc.
Current Liabilities are: Accounts payable, bills payable, Bank overdraft,
outstanding expenses etc.
The goal of working capital management is to manage the firm’s current
assets, and liabilities in such a way that a satisfactory level of working capital is
maintained. This is so because if the firm cannot maintain a satisfactorily level of
working capital, it is likely to become and may even be forced into bankruptcy. The
current assets should be large enough to cover its current liabilities in order to ensure
a reasonable margin of safety.
NEED FOR WORKING CAPITAL:

The need for 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; sales and realization of cash.
Thus, working capital is needed for the following purposes:

1. For the purchase of raw materials, components spare.
2. To pay wages and salaries.
3. To incur day-to-day expense and overhead costs such as fuel, power and office
expenses etc.,
4. To meet the selling costs as packing and advertising etc.
5. To provide credit facilities to the customers.
6. To maintain the inventories of raw materials, work –in –progress, stores and
spare and finished stock.
22
CONCEPT OF OPERATING CYCLE:

Operating cycle is a process of investing cash in raw materials and converting
them into semi-finished goods them finished goods then into receivable through sale
and transforming receivable into cash as illustrated in the following diagram:
Cash
Receivables Raw Material
Work in Process
Finished Goods
The operating cycle of a manufacturing company involves 3 phases:
1. Acquisition of Resources: Such as raw material, labor, power etc.

2. Manufacturing of the Product: Conversion of raw material into work into
work in progress into finished goods.
3. Sale of the Product: Time required to convert raw material into finished
foods and to convert receivable into cash determines the amount of working
capital required – Time.
FACTORS DETERMINING WORKING CAPITAL

Nature of Industry: Based on the size of the industry, a company requires assets.
Small companies have smaller amounts of inventory and have smaller proportions of
cash than large companies.
Demand of Industry: Creditors want that their demands be taken care of as the
fluctuating nature of demand of the industry.
23
Cash requirements: Cash is one of the current assets, which is essential for
successful operating of the production cycle. Hence, cash should be utilized properly.
Nature of business: Working capital requirements very much demand upon the
general nature or type of business.
Time: The level of working capital is depending upon the time required to
manufacturing goods. If the time is longer, the size of working capital will increase.
Volume of Sales: The volume of sales and size of working capital are directly related
to each other. As volume of sales increases, investment in working capital increases.
Inventory Turnover: A better inventory control will help the firm reduce its
working capital requirements.
Business Cycle: Working capital requirements increase when the business is doing
well or on a use and less during periods of depression.
Attitude of Risk: The greater the amount of working capital, the lower the risk of
liquidity.
Size of the firm: Bigger firms, with many sources of funds, may need less working
capital as compared to their total assets or sales.
Operational and Financial Efficiency: Working capital turnover is improved with

better operational and financial efficiency of a firm with more turnover, working
capital requirements can be reduced.
Seasonal fluctuation: Seasonal fluctuations increase or decrease the working capital

requirement.
Inflation: As inflation uses, working capital size is increased in order for firms to
achieve better cash inflows.
24
TYPES OF WORKING CAPITAL

Working capital can be divided into two categories on the basis of time.
1. Permanent (or) Fixed Working Capital

2. Temporary (or) Variable Working Capital
Working Capital
Permanent (or) Fixed Temporary (or) Variable
Regular Seasonal Special

Reserve
1. PERMANENT WORKING CAPITAL
This refers to that minimum amount of investment in all current assets which
is required at all times to carry out minimum level of business activities. In other
words, it represents the current assets required on a continuing basis over the entire
year.
A. Regular Working Capital:

It is the minimum amount of working capital required to ensure circulation of
current assets from cash to inventories, from inventories to receivables and
receivables to cash and so on.
B. Reserve Working Capital:

It is the excess amount over the requirement for the regular working capital
which may be provided for contingencies that may arise at unstated periods such as
strikes, arise in prices, depression etc.,
25
2. TEMPORARY WORKING CAPITAL

The amount of working capital keeps on fluctuating from time to time on the
basis of business activities. In other words, it represents additional current assets
required at different times during the operating year.
A. Seasonal Working Capital

The capital requires to meet the seasonal needs of the enterprise is called
seasonal working capital.
B. Special Working Capital
Special working capital is that part of working capital which is required to
meet special exigencies such as launching of extensive marketing companies for
conducting research etc.,
ESTIMATION OF WORKING CAPITAL REQUIREMENTS

Estimation of working capital requirements is not an easy task and a large
number of factors have to be considered before starting this exercise. For a
manufacturing organization, the following factors have to be taken into consideration
while making an estimate of working capital requirements.
1. Total cost incurred on materials, wages and overheads.

2. The length of time for which raw materials are to remain in stores before they
are issued for production.
3. The length of the production cycle or work-in-process, i.e., the time taken for
conversion of raw materials into finished goods.
4. The length of sales cycle during which finished goods are to be kept waiting
for sales.
5. The average period of credit allowed to customers.
FINANCING OF WORKING CAPITAL
The working capital requirements of a concern can be classified as:
a. Permanent of Fixed working capital requirements.

b. Temporary or Variable Working Capital requirements.
26
The various sources for the financing of working capital are as follows:
SOURCES OF WORKIING CAPITAL
Permanent or Fixed Temporary or Variable
1. Shares 1. Commercial Banks

2. Debentures 2. Trade Credits
3. Public Deposits 3. Installment Credit
4. Plugging back of profits 4. Advances Accounts
5. Loans from Financial receivable credit
Institutions
ESTIMATION OF CURRENT ASSETS
Raw Material Inventory: The investment in raw materials inventory is estimated on

the basis of the following formula.
Budgeted Cost of Raw Material Average Inventory

Production Per Unit Holding Period (Month/Days)
_____________________________________________________________________
12 Months / 365 Days
Work in Process (W-I-P) Inventory: The relevant costs to determine work-in-

progress, inventory is the proportionate share of cost of raw materials and conversion
cost labour charges and manufacturing overheads excluding depends.
Budgeted Production Estimated work- in-progress Average Time

(Units) Cost per Unit Work-in-Progress
Inventory (Month / Days)
___________________________________________________________________
12 Months / Days
Finished Goods Inventory: Working Capital Required to finance the finished goods
inventory is given by the following equation.
27
Budgeted Cost of goods Product Finished Goods

Production (Units) Per Unit (Excluding Depression) Holding Period (Month/days)
_____________________________________________________________________
Debtors: The Working Capital tied up in debtors should be estimated in relation to

total price (excluding depression) symbolically.
Budgeted Cost of Sales Average Debt Collection

Credit Sales Per unit excluding Period (Months / Days)
Depression
____________________________________________________________________
Cash and Bank Balances

A part from working capital needs for financing inventories and debtors, firms
also find it useful to have some minimum cash balances with them. It is different to
lay down the exact procedure of determining such an amount this would primarily be
based on the motives for holding cash balances of the business firm, attitude of
management towards risk, the access to the borrowing sources in time of need and
past experience, and so on.
DESTIMATION OF CURRENT LIABILITIES

The working capital needs of business firms are met through. The current
liabilities (Other than Bank Credit) arising in the ordinary course of business. The
important current liabilities, in this context are creditors, wages and overheads.
Trade Creditors
Budgeted Yearly Raw Material Credit Period allowed

Production Requirement per unit by Creditors (Months / Days)
_____________________________________________________________________
28
Direct Wages
Budgeted Yearly Direct Labour Average time lay in

Production Cost per unit Payment of wages (Month / Days)
_____________________________________________________________________
12 Months / Days
The average credit period for the payment of wages approximates to a half-a-
month in the case of monthly wage payment.
CONSTITUENTS OF WORKING CAPITAL

Working Capital has two constituents i.e.,
1. Current Assets and
2. Current Liabilities
CURRENT ASSETS
Current assets refer to those assets, which are easily convertible into cash
within a year.
Examples of Current Assets Are:
1. Cash in Hand
2. Bills Receivable
3. Cash & Bank Balances
4. Short-term loans and advances
5. Sundry Debtors
6. Inventories of Stocks
a. Raw Materials
b. Work-in-Progress
c. Stores and Spares
d. Finished Goods
7. Temporary Investments of Surplus funds
8. Prepaid Expenses
9. Accrued Incomes
29
CURRENT LIABILITIES
Current Liabilities are those liabilities, which are due to payable within a year.
EXAMPLES OF CURRENT LIABILITIES
1. Bills Payable
2. Sundry Creditors (or) Accounts Payable
3. Accrued (or) Outstanding Expenses
4. Short-term loans, Advances and Deposits
5. Dividends payable
6. Bank overdrafts
7. Provision for taxation if it does not amount to appropriation of profits.
CASH MANAGEMENT CONCEPT AND MEANING

Cash is the important current assets for the operation. Its efficient
management is crucial to the solvency of the business because cash is the focal point
of funds flow in a business. It is referred to as “Life Blood of an Enterprise”.
There are 2 primary reasons for a firm to hold cash:
1. To meet the needs of day-to-day transactions.

2. To protect the firms against uncertainties.
While cash serves these functions, it is an idle resource which has an opportunity cost.
The liquidity provided by case holding is at the expense of profits sacrificed by
foregoing alternative investment opportunities. Hence, the financial manager should
carefully plan and control cash.
MOTIVES OF HOLDING CASH

There are 4 primary motives for maintaining cash balances.
1. Transaction Motive: This refers to the holding of cash to meet routine cash
requirements to finance the transactions, which a firm carries on in the
ordinary course of business to accomplish its objectives. They may be cash
payments for purchases, wages, inters, taxes, and individual etc. This motive
refers to the holding of cash to meet anticipated obligations whose timing is
not perfectly synchronized with cash receipts.
30
2. Precautionary Motive: The cash balance held in reserve for random and
unforeseen fluctuations in cash flows are called are called as precautionary
balances. Egg: Bills may be presented for settlement earlier than expected,
sharp increase in cost of raw materials, floods, strikes, failure of important
customers.
3. Speculative Motive: It refers to the desire of a firm to take advantage of
opportunities which present themselves at unexpected movements and which
are typically outside the normal course of business. It represents appositive
and aggressive approach. Firms aim to exploit profitable opportunities a keep
cash in reserve to do so.
Egg: Make purchase at favorable prices buying securities when interest rates
are expected to decline in order to speculate on interest rate movements.
4. Compensating Motive: It is compensating banks for providing certain
services loans. Banks provide a variety of services to business firms such as
clearance of chequeen, supply of credit information while for some of these
services banks charge a commission. Usually clients are required to maintain
a minimum balance of cash at the bank.
CASH MANAGEMENT MODELS:

The financial manager need not necessarily follow cash management models
exactly but a familiarity with them provides an insight into the normative framework
as to how cash management should be conducted.
1. BAUMOL MODEL: The purpose of this model is to determine the minimum

cost amount of cash that a financial manager can obtain by converting securities to
cash, considering the cost of conversion &the counter – balancing cost of keeping idle
cash balances which otherwise could be invested in securities.
The total cost associated according to this model has 2 elements.
1. Cost of converting marketable securities into cash.
2. The lost opportunity cost.
The optimal conversion amount = √2BT/I

Where T = Projected cash requirement during planning period.
B = Cost of conversion into cash per lot / transaction.
31
I = Interest rate that could be earned per planning period.

This model is not able to realistically reflect to the actual situation in any firm.
Also, the model is concerned with only transaction balances and not precautionary
balances. The model can only be used in certainty and regularity conditions.
2. MILLER - ORR MODEL: The objective is to determine the optimum cash

balance level, which minimizes the cost management. This model assumes that cash
balances randomly fluctuate between an upper bound (H) and a lower bound (O).
When cash balances hit:

(1) Upper bound, the firm has too much cash and should buy enough marketable
securities to bring cash balances back to optimal bound (Z).
(2) Lower bound, (zero), the financial manager should sell / convert securities
into cash to return to optimal bound.
So, the optimal cash balance (z) can be
Z = 3√2br2 / 4i
R2 = the variance of daily changes in cash balance.

I = lost opportunity costs.
B = fixed cost per conversion.
Thus, there are economics of scale in cash management and the 2-basic cost of
conversion and interest that have to be minimized.
This model also specifies the optimum upper boundary as 3 times optima; cash
balance level (h=3z).
Business Operations
Cash
Payments
32
Deficit Borrow
Information and Surplus Invest
Control
CHAPTER-3
3. RESEARCH METHODOLOGY
The objective of the study is to analyze the working capital position of the company
for the past five years from 2010-15 from and to achieve those objectives the following
methodology was adopted.
o Firstly, to find out liquidity and solvency position of the company through
working capital ratios.
o Secondly, to estimate the working capital requirement of the company by
using Operating cycle.
o Finally, Analysis of current assets and current liabilities.
PRIMARY DATA
Primary data is collected by approaching financial officials of the company.
SECONDARY DATA
The major source of data for this project was collected through annual reports, profit and loss
account of 5 years period from 2014-2018 & some more information collected from internet
and text sources.
3.1 NEED FOR THE STUDY
Working capital is considered to be lifeblood of a business organization.

Success and failure of a business depends on the management of firm’s working
capital.
The study is on internal financing pattern of the working capital management

which deals with determining size of working capital needs to achieve certain long-
term operating goals. Therefore, an analysis is to be made to know the reasons & find
out the measures to be taken to make successful.
3.2 SCOPE OFTHE STUDY
The contests of the evaluation of current assets and current liabilities and their
percentage contribution in the total turnover. The yearly increase or decrease of
currents assets or current liabilities in the budget of HUNDUSTHAN NATIONAL
GLASS & INDUSTRIES LTD is being reviewed. From this one would be in a
33
position to glance the performance of current assets and current liabilities of the
company.
This project greatly deals with the working capital requirements of

HUNDUSTHAN NATIONAL GLASS & INDUSTRIES LTD & emphasizes on the
yearly composition of working capital in the total turnover of the company. This also
deals with key ratios to obtain a clearer picture of different resources available and at
the disposal of the organization, which will enable one to give appropriation
suggestion to the company to improve is performance, if any.
3.3 OBJECTIVES OF THE STUDY
The main objectives of the study of working capital management in HINDUSTHAN

NATIONAL GLASS & INDUSTRIES Ltd. are as follows:
 To Measures the short-term liquidity position of HINDUSTHAN
NATIONAL GLASS & INDUSTRIES LTD.
 To understand working capital management of the company.
 To Analyze the changes in working capital position of the company.
3.4 RESEARCH DESIGN
Source of Data:
The data required for the project work is collected from the period 2014-2018.
Primary Data:
Firsthand information was collected from experts of financial department, on
the basis of which actual position of the company is identified.
Secondary Data:
The secondary data is collected from the following sources:
 Annual financial reports of the company.
 Internal reports of the company.
 Broachers and Books of the company.
34
35
3.5 LIMITATIONS OF THE STUDY
 Considering the information provided by the company to be true and the

correct the study works conducted.
 Some of the needed secondary data were not provide by the company.
 Primary Data is collected only in Finance and Accounts Department of the
HINDUSTHAN NATIONAL GLASS & INDUSTRIES Ltd.
 The information available in the balance sheets has been taken from the
published Annual Reports, so it has its own limitation in form of non-
availability of information of exceptional transaction.
36
CHAPTER-4
4. DATA ANALYSIS & INTERPRETATION
STATEMENT OF CHANGES IN WORKING CAPITAL

Table: 4.1
WORKING CAPITAL TURNOVER RATIO:
WORKING CAPITAL TURNOVER RATIO= (SALES OR COST OF GOODS

SOLD /WORKING CAPITAL)
YEAR SALES WORKING WORKING

CAPITAL CAPITAL
TURNOVER
RATIO
2013-14 181438.51 (39090.50) -4.64
2014-15 199770.80 (24523.59) -8.14
2015-16 197868.00 (7876.43) -25.12
2016-17 206434.00 (16103.35) -12.81
2017-18 198061.00 (52343.00) -3.78
GRAPHICAL REPRESENTATION:
WORKING CAPITAL TURNOVER RATIO
0
2013-14 2014-15 2015-16 2016-17 2017-18
-5
WORKING CAPITAL RATIO
-10
-15
-20
-25
-30
YEAR
37
Interpretation:
Working capital turnover ratio is an activity ratio that

measures dollars of revenue generated per dollar of investment in working
capital. Working capital is defined as the amount by which current assets
exceed current liabilities.
A higher working capital turnover ratio is better. It means that the

company is utilizing its working capital more efficiently i.e. generating more
revenue using less investment.
If ye observe the ratio, in every year it is in negative by that we can

conclude that company is struggling in utilizing its working capital to generate
turnover.
RATIOS
1. CURRENT RATIO
The current ratio is a measure of the firm’s short-term solvency. It indicates
the availability of current assets in rupees for every one rupee of current liability. A
ratio of greater than one means that the firm has more current assets than current
claims against them.
Current Ratio = Current Assets
Current Liabilities
TABLE:4.2
CURRENT RATIO = (CURRENT ASSETS/CURRENT LIABILITIES)
YEAR CURRENT ASSETS CURRENT CURRENT RATIO

LIABILITIES
2013-14 111111.63 150202.13 0.73
2014-15 126205.20 150546.79 0.83
2015-16 108344.82 116221.25 0.93
2016-17 111374.50 127477.85 0.87
2017-18 97719.00 150062.00 0.65
38
CURRENT RATIO
current ratio
current ratio
2013-14 2014-15 2015-16 2016-17 2017-18

year
Interpretation:
As a rule, the current assets with 2:1 (or) more is considered as satisfactory
position of the firm.
The company failed to maintain the standard ratio of 2:1 all the above years and it is
low in the year 2017-18 due to decrease in trade receivables and it is increased
slightly in 2015 due to increase in cash and cash equals and other current financial
assets and decrease in short term barrowings and provisions.
2. QUICK RATIO
Quick Ratio, also called acid-test ratio, establishes a relationship between
quick, or liquid, assets and current liabilities. An asset is liquid if it can be converted
into cash immediately or reasonable soon without a loss of value. Cash is the most
liquid asset and other assets that are considered to be relatively liquid. Inventories are
considered to be less liquid. The quick ratio is found out by dividing quick assets by
current liabilities.
Quick Ratio = Current Assets – Inventories
Current Liabilities
39
TABLE: 4.3
QUICK RATIO = (CURRENT ASSETS-INVENTORIES) / CURRENT
LIABILITIES
YEAR QUICK ASSETS CURRENT QUICK RATIO

LIABILITIES
2013-14 59444.76 150202.13 0.40
2014-15 72891.54 150546.79 0.48
2015-16 57049.76 116221.25 0.49
2016-17 51282.26 127477.85 0.40
2017-18 49271.00 150062.00 0.33
QUICK RATIO
1
0.8
QUICK RATIO
0.6
0.4
0.2
0
2013-14 2014-15 2015-16 2016-17 2017-18
YEAR
QUICK RATIO
Interpretation:
Quick assets are those assets which can be converted into cash within a short
period of time, say six months. so, here the sundry debtors which are with the long
period does not included in the quick assets.
The quick ratio is very low it does not exceed 0.49 all these years it shows that
the company is struggling to pay the short term borrowings, trade payables instantly.
This is because the company is not maintaining much liquid assets.
3. CASH RATIO
Cash Ratio establish relation between cash and current Liabilities. It indicates the
proportion of cash in current Liabilities. It is calculated by dividing cash by current
Liabilities.
40
Cash Ratio = Cash and cash equivalents

Current Liabilities
TABLE: 4.4
ABSOLUTE LIQUIDITIY RATIO= (CASH AND BANK BALANCES +

MARKETABLE SECURITUES/ CURRENT LABILITIES)
YEAR ABSOLUTE QUICK CURRENT ABSOUTE LIQUIDITY

ASSETS LIABILITIES RATIO
2013-14 2912.48 150202.13 0.1
2014-15 12901.47 150546.79 0.08
2015-16 858.81 116221.25 0.007
2016-17 623.19 127477.85 0.004
2017-18 107.00 150062.00 0.0007
ABSOLUTE LIQUIDITY RATIO
0.14
0.12
LIQUIDITY RATIO
0.1
0.08
0.06
0.04
0.02
0
2013-14 2014-15 2015-16 2016-17 2017-18
YEAR
QUICK RATIO
Interpretation:
The absolute liquidity ratio/cash ratio measures the absolute liquidity of the
business. This ratio considers only the absolute liquidity available with the firm. The
absolute liquidity/cash ratio tests short term liquidity in terms of cash and bank
balance, marketable securities or current investments. An absolute liquid ratio of
0.5:1(Accepted standard) is considered ideal for most of the companies.
When compared to the standard ratio of absolute liquidity ratio the company
failed to meet the standards in 2015-16 ,2016-17 and 2017-18 due to absence of
investments and less cash and bank balance but in the year 2013-14 and it satisfies the
standard ratio with the presence of the current investments in that year.
41
4. NET WORKING CAPITAL TURNOVER RATIO

A firm may also like to relate net current assets (or net working capital gap) to
sales. It may thus compute net working capital turnover by dividing sales by net
working capital is
Net Working Capital Turnover Ratio = Sales

Net Working Capital
TABLE: 4.5
WORKING CAPITAL TURNOVER RATIO= (SALES OR COST OF GOODS
SOLD /WORKING CAPITAL)
YEAR SALES WORKING WORKING
CAPITAL CAPITAL
TURNOVER
RATIO
2013-14 181438.51 (39090.50) -4.64
2014-15 199770.80 (24523.59) -8.14
2015-16 197868.00 (7876.43) -25.12
2016-17 206434.00 (16103.35) -12.81
2017-18 198061.00 (52343.00) -3.78
0
2013-14 2014-15 2015-16 2016-17 2017-18
-5
WORKING CAPITAL RATIO
-10
-15
-20
-25
-30
YEAR
42
Interpretation:
Working capital turnover ratio is an activity ratio that

measures dollars of revenue generated per dollar of investment in working
capital. Working capital is defined as the amount by which current assets
exceed current liabilities.
A higher working capital turnover ratio is better. It means that the

company is utilizing its working capital more efficiently i.e. generating more
revenue using less investment.
If ye observe the ratio, in every year it is in negative by that we can

turnover.
5). NET LOSS RATIO:

It is a popular probability ratio that shows relationship between net profit after tax and
net sales.
Net loss Ratio = Net loss after tax

Net Sales
TABLE:4.6
YEAR NET LOSS NET SALES NET LOSS
RATIO
2013-14 (23917.26) 181438.51 -0.13
2014-15 (23611.98) 199770.80 -0.11
2015-16 (18560.13) 197868.00 -0.09
2016-17 (12713.00) 206434.00 -0.06
2017-18 (29815.00) 198061.00 -0.15
43
NET LOSS RATIO
0
2301-14 2014-15 2015-16 2016-17 2017-18
-0.02
-0.04
NET LOSS RATIO
-0.06
-0.08
-0.1
-0.12
-0.14
-0.16
year
Interpretation:
It measures the relationship between net profit and sales of the
business.Net Profit ratio finds the proportion of revenue that finds its way into profits.
A high net profit ratio will ensure positive returns of the business.
By observing the above data, we can say that company is getting net loss and that loss
is high during 2013-14 and 2017-18.
5. CURRENT ASSETS TURN OVER RATIO:

The firm may wish to know its efficiency of utilizing fixed assets and current assets
separately.
Current Assets Turnover Ratio = Sales
Current Assets
TABLE 4.7
YEAR SALES CURRENT ASSETS CURRENT ASSETS
TURNOVER RATIO
2013-14 181438.51 111111.63 1.63
2014-15 199770.80 126205.20 1.58
2015-16 197868.00 108344.82 1.82
2016-17 206434.00 111374.50 1.85
2017-18 198061.00 97719.00 2.02
44
CURRENT ASSETS TURNOVER RATIO

2.5
1.5
0.5
0
2013-14 2014-15 2015-16 2016-17 2017-18
YEAR
Interpretation:
As a rule, the current assets with 2:1 (or) more is considered as satisfactory position of
the firm.
The company failed to maintain the standard ratio of 2:1 all the above years and it is
low in the year 2017-18 due to decrease in trade receivables and it is increased
slightly in 2018 due to increase in cash and cash equals and other current financial
assets and decrease in short term barrowings and provisions.
6 . CURRENT ASSETS TO FIXED ASSETS:

Current assets to fixed assets ratio is disclose the relationship between Current
Assets and fixed assets.
Current Assets to Fixed Assets = Current Assets

Fixed Assets
TABLE: 4.8
YEAR CURRENT FIXED ASSETS CURRENT ASSETS TO
ASSETS FIXED ASSETS RATIO
2013-14 111111.63 265066.48 0.41
2014-15 126205.20 253554.71 0.49
2015-16 108344.82 228024.86 0.47
2016-17 111374.50 239455.87 0.46
2017-18 97719.00 227094.00 0.43
45
CURRENT TO FIXED ASSETS TURNOVER RATIO

0.5
CURRENT TO FIXED ASSETS RATIO
0.48
0.46
0.44
0.42
0.4
0.38
0.36
2013-14 2014-15 2015-16 2016-17 2017-18
YEAR
INTERPRETATION:
The fixed asset turnover ratio is an efficiency ratio that measures a
company's ability to generate sales from its fixed assets by comparing current assets
with average total fixed assets. In other words, this ratio shows how efficiently a
company can use its fixed assets to generate sales.
By observing the fixed assets turnover ratio, it can be concluded that the company is
gradually decreasing the efficiency in using the fixed assets in these years.
46
CHAPTER-5
5.1 FINDINGS
 The statement of working capital in every year it is in negative by that we can
turnover.
 The current ratio value is too low and it went down in 2013-14 and later on it
raised slowly and went in the year 2017-18 which indicates continuous
increase in current assets and decrease in current liabilities up to 2016-17 and
it decline to 0.65 in 2017-18. But as a whole these current assets are not able
to satisfy companies current financial requirements.
 The quick ratio is showing low values as 0.40, 0.48, 0.49, 0.33 over the years
of study it indicates that the company is maintaining very low amount of quick
assets due to high current liabilities in its balance sheet.
 In case of absolute liquidity ratio, due to too many fluctuations in absolute

liquidity assets and current liabilities it recorded a sharp rise and fall down at
the end and it is also showing low values.
 Fixed assets turnover is also not satisfactory over the years and it is also in
decreasing trend which is not good sign.
 Working capital turnover ratio is in negative trend it means company is

utilizing fixed funds than working capital to daily activities.
47
5.2 SUGGESTIONS
1.The company have to maintain healthy working capital because it is in

negative trend proper measures are to be taken to improve the condition.
2. The portion of equity is very low in the capital structure. If it continuing at the
time of maturity of debt company have to face severe liquidation problem.
3. The company is not utilizing effectively its assets to generate revenue it has to
find out new ways for effective utilization.
4. The company is raising required fund by long term debts it’s not good for the
company instead the company should try to rise its equity funds.
5. Proper measures have to be taken to increase the revenue of the company by

focusing more on sales and reducing the financial costs.
48
5.3 CONCLUSION
Company performance is not at all good as it is making continues losses

from its incorporation due to high long term debt share in its capital structure and this
trend may continue for few more years.
49

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Papu

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Working Capital Management

OBJECTIVES OF FINANCIAL STATEMENTS

1.2 INDUSTRY PROFILE

Glass is an inorganic product that is typically produced by melting a mixture

THE FOUR SEGMENTS OF THE GLASS INDUSTRY

This is the second largest segment and contributes to one-third of the

The global glass industry is quite concentrated, with four companies –

For automotive glazing, there are only three major players –

Saint-Gobain and Central Glass of Japan have a joint marketing

Indian Glass Industry

The glass industry in India is quite old and well

Exports and Imports

The domestic glass industry is facing increasing competition in the global, as

Country - wise Exports (2016-17)

Exports of Glass Items (2016-17)

Bottles and Jars 19%

Glass Fibres 19%

Glass Beads 15%

Float Glass, Sheets 10%

Glass Bulbs and Tubes, Electrical Fittings 9%

Glass Blocks & Slabs 6%

Key Success Factors In the Indian Glass Industry

The growth in India’s glass industry is being driven

Supply Chain Management:

User segments such as automotive OEMs and

Experience of companies like Saint-Gobain and Asahi in India

Energy Efficient Manufacturing:

The glass industry is highly energy intensive

About HNGI Group:

The HNG group, headquartered in Kolkata, was founded

At HNG, we look forward to customer satisfaction. Our main objective

As we climb the success ladder, it is becoming increasingly important

At HNG, we believe in the core values of people, operational excellence, innovation

About HNGI Naidupeta Plant

On 10th February 2011: Hindustan National Glass &

This Mega Greenfield Glass manufacturing complex is the first step

HNG strategically decided to establish this project at Naidupeta in the

Located at the crossroads of Chennai, Venkatagiri, Nellore and Tirupathi

At the ground breaking ceremony - Mr. C. K. Somany, Chairman,

HNG believes in growth through technological advancements and

Naidupeta glass manufacturing complex is expected to generate an

Hindusthan National Glass & Industries Ltd.

2, Red Cross Place, Kolkata - 700001

Telephone - 033 2254 3100

Email us at cosec@hngil.com for Shareholders queries & Grievances.

GROUP COMPANIES OF HNGI

The following are the two group companies under HNGI

HNG Float Glass Limited:

HNG Float Glass Limited was incorporated in 2006

AMCL Machinery Limited:

AMCL Machinery Limited is based in Butibori (

ABOUT BOARD OF DIRECTORS

1) Shri Sanjay Somany:

Shri Sanjay Somany, aged 59 years, is the Chairman &

2) Shri Mukul Somany:

Shri Mukul Somany, aged 52 years, is the Vice Chairman &

3) Shri Dipankar Chatterji:

Shri Dipankar Chatterji, aged 69 years, is an

4) Mrs. Rita Bhimani:

Smt. Rita Bhimani is the Founder-CEO of Ritam

5) Shri Ratna Kumar Daga:

Shri Ratna Kumar Daga, aged 77 years, is an

6) Shri Narayanaswami Sitaraman:

Shri N. Sitaraman, aged 78 years, is an

RATINGS RANKINGS AND ACCREDITATIONS

1) Business Standard Ranking (Out of 1000 top listed corporates, as of Feb