ASHWINI M REDDY Final Report - 111

PROJECT REPORT ON
“A STUDY ON ANALYSIS OF BILLS PAYABLES”
BY
ASHWINI M REDDY
1NH17MBA11
Submitted to
DEPARTMENT OF MANAGEMENT STUDIES
NEW HORIZON COLLEGE OF
ENGINEERING, OUTER RING ROAD,
MARATHALLI, BANGALORE
In partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of
Mr. S.N. Lokesh
Assistant professor
2017-19
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CHAPTER-1
INTRODUCTION
A bill payable is a document which shows the amount owed for goods or services received on
credit. Examples of a bill payable include a monthly telephone bill, electricity bill, a bill for
repairs or maintenance, the bill for merchandise purchased by a retailer on credit, etc.
Bills Payable (B/P) is a liability document which shows the indebtedness of an individual, an
organization, etc. When an individual or an organization makes a credit purchase of any goods or
avails service. Generally, in a transaction of sale and purchase of goods, during the credit term,
sellers of goods need money. So, it will draw a bill to purchaser of goods. Purchaser of goods
will accept the bill and returns to seller of goods. This becomes Bills Receivable for drawer of
bill / seller of goods and Bills Payable for drawee of bill / purchaser of goods.
Bills payable can be the funds that a bank borrows from other banks. These are typically due in
the very short term and are used to provide liquidity to the receiving bank.
Bills payable can be short-term notes issued by a business that are due on demand or by a
specific date. The duration of these forms of indebtedness tend to be quite short.
Bills payable can be the same as accounts payable, which are usually comprised of invoices from
suppliers that are received and recorded by a business within the current liabilities section of the
balance sheet. These liabilities may be recorded as accrued liabilities, if a liability is present as of
the end of a reporting period, but no invoice from a supplier has yet been received.
Bills payable is an older term, and is more commonly found in the English system of accounting
than the American system. Depending upon usage, bills payable is also known as accounts
payable, trade payables, and notes payable. Bills payable can be a synonym of accounts payable,
or it can refer specifically to short-term borrowing by banks from other banks, often the country's
central bank. Also known as a B/P book, bills payable book is a subsidiary or secondary book of
accounting where all bills of exchange, which are payable by the business, are recorded. The
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total value of all the bills payable for an accounting period is transferred to the books of
accounts.
In a mid to large sized business where the number of bills exchanging hands is large in number,
it is tough to journalize all bills drawn. All such bills are entered in an accounting ERP or a
register depending on the business, furthermore, all these entries are transferred to the respective
ledger accounts at a regular interval, often monthly.
A bill receivable for a “drawer” is a bill payable for a “drawee”. Bills payable account will
usually have a credit balance, as it is supposed to be paid at maturity; it acts as a liability for the
business. Generally, every bill has a 3-day grace period.
On the balance sheet, current liabilities are typically presented as follows: the principal portion
of notes payable due within one year, accounts payable, and then other current liabilities, such as
income taxes payable, interest payable.
Bills PayableIn the context of personal finance and small business accounting, bills payable are
liabilities such as utility bills. They are recorded as accounts payable and listed as current
liabilities on a balance sheet.
In the context of banking, bills payable refers to a bank's indebtedness to other banks, usually
a Federal Reserve Bank these loans are backed by collateral consisting of the bank's promissory
note and a pledge of government securities. In other words, bills payable is the money a bank
borrows, mainly on a short-term basis, and owes to other banks. Banks borrow this money in
order to maintain adequate liquidity levels.
A bill payable is a document which shows the amount owed for goods or services received on
credit. Examples of a bill payable include a monthly telephone bill, electricity bill, a bill for
repairs or maintenance, the bill for merchandise purchased by a retailer on credit, etc. The
provider of the goods or services is referred to as the supplier or vendor. Hence, the bill payable
is also known as an unpaid vendor invoice.
Under the accrual method of accounting or bookkeeping, a bill payable or unpaid vendor invoice
is recorded in Accounts Payable with a credit entry. When the bill is paid, Accounts Payable will
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be reduced with a debit entry. The credit balance in Accounts Payable is reported on the
company's balance sheet as a current liability.
Why is accounts payable so important?
How a company manages its bills payable processing affects two important business matters:
cash flow and supplier relationships. Companies that apply best practices manage bills payable
so that the process both contributes positively to cash flow and supports mutually beneficial
relationships with suppliers. Suppliers or vendors are the businesses from whom companies get
their inventory and other supplies. It is crucial that business operations maintain good
relationships with their suppliers. The single most important thing a company can do to maintain
good supplier relationships is to pay its bills on time
Bills Payable Department Functions:
Accounts payable departments often do more than simply pay incoming bills and invoices. In a
larger business, accounts payable employees are often responsible only for the accounts payable
side of finance, while in a smaller business, accounts payable and accounts receivable
responsibilities are often combined. Although the size of a business ultimately determines the
roles accounts payable plays, most fulfill at least three basic functions in addition to paying bills
Vendor Payments
Processing incoming invoices and paying the business‟s suppliers is a function of accounts
payable that most people think of first. A/P organizes and maintains vendor contact information,
payment terms and Internal Revenue Service W-9 information either manually or using a
computer database. Internal controls determine whether the A/P process starts with a pre-
approved purchase order or whether accounts payable verifies purchases after a purchase is
made. Vendor payments also include the end-of-month aging analysis reports that tell business
owners and the management team how much the business currently owes vendors.
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Internal Payments
Accounts payable often functions internally to distribute internal reimbursement payments,

control and administer petty cash, and control the distribution of sales tax exemptions
certificates. Internal reimbursement expenses follow business control procedures that require
employees to turn in a manual log report, receipts or both to substantiate reimbursement
requests. Petty cash is typically used for small expenses such as miscellaneous postage, out-of-
pocket office supplies or a company meeting luncheon. Accounts payable often maintains a
supply of sales tax exemption certificates it issues to department managers to ensure qualifying
business purchases don‟t include sales tax expense.
Business Travel Expenses
Larger business or businesses in which the owner frequently travels may add travel management
and payment responsibilities to the accounts payable function. Travel management
responsibilities can include making advance airline, car rental and hotel reservations. If internal
controls allow for advance travel payments, accounts payable processes requests and distributes
funds to cover travel expenses. When the traveler returns, accounts payable would then be
responsible for settling funds distributed versus funds actually spent or for processing travel
reimbursement requests.
Other Functions
The accounts payable department also functions to reduce costs by paying attention to details
that can save the business money when, for example, an invoice gets paid within the discount
period that many vendors provide. A/P is many times a front-line contact between the business
and vendor representatives. As a result, building and maintaining good relationships often falls to
accounts payable employees. Strong relationships can benefit the business when it comes to
working with vendors. For example, during a seasonal dip in sales, a good relationship might
lead to relaxed credit terms.
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Bills Payable duties and responsibilities:
As a vital team member of the finance team, it‟s important that an Accounts Payable
job description includes:
● Keeping track of all payments and expenditures, including payroll, purchase

orders, invoices, statements, etc.
● Reconciling processed work by verifying entries and comparing system reports
to balances
● Maintaining historical records
● Paying employees by verifying expense reports and preparing pay checks
● Paying vendors by scheduling pay checks and ensuring payment is received for
outstanding credit; generally responding to all vendor enquiries regarding
finance
● Preparing analyses of accounts and producing monthly reports
● Continuing to improve the payment process
The role of the Accounts Payable involves providing financial, administrative and clerical
support to the organization. Their role is to complete payments and control expenses by
receiving payments, plus processing, verifying and reconciling invoices.
5 tips to help you successfully manage your accounts payable:
1. Simplify Your Accounts Payable Process

➢ Reduce the number of check runs; two per month at most is plenty.
➢ When the accounting staff prepares check runs, they should have the invoice backup
ready and invoices approved by the appropriate department heads before coming to
you for signatures.
➢ Make Accounts Payable aware of any cash disbursement ceilings for each check run
so they can then select the most important invoices to pay.
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➢ Empower your staff with decisions that will make your life easier and are not dangerous
for them to make. The decision to make partial payments on larger balances, or delaying
payments to vendors who have a higher tolerance on due dates are a couple of
examples.
2. Use Technology
➢ Analyze and reduce errors such as paying incorrect amounts, incorrectly entering
check numbers used to pay vendors, and paying too early or too late.
➢ Make sure your accounts payable module is set up correctly so that transactions flow
properly. You may need to use a consultant to make sure your accounting software
and accounts payable module are correctly configured, or you could cause more
problems than you solve..
➢ Run aging reports so you know what is in the pipeline. You may have a small check run
this period, but could have a large one coming up that you didn‟t know about until
looking at these reports.
➢ Use laser printed checks, which will update the system automatically, marking which
invoices have been paid and with what check numbers.
3. Reduce Accounts Payable Fraud
➢ Anywhere cash/checks are handled (incoming or outgoing) can be a high-risk area for
company fraud.
➢ In Accounts Payable, this is often accomplished by setting up a “dummy vendor”.
Often times, this vendor is a company owned by a dishonest employee. Invoices for
services never provided are created, and your business pays these invoices, essentially
paying the employee.
➢ Implement policies & procedures to mitigate the risk. In the above example, have system
parameters set so that the person cutting checks does not have the ability to set up new
vendors. Each new vendor that is set up should require explanation to the owner prior to
creating them.
➢ Separation of duties, proper approval by department heads, and spot checks will
help reduce the risk of fraud.
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4. Vendor Terms May Be Negotiable
➢ Regardless of the terms given, you can call your vendors and negotiate terms for
your own company.
➢ Vendors will often give discounts or special terms to customers that purchase
large volumes and on a regular basis.
➢ Even if the normal terms can‟t be changed, if you run into an issue and must pay late,
it‟s best to call and discuss it with your vendor rather than avoiding them.
5. Reduce CFO Impact to Verification & Signature
➢ Typically the CFO signs checks but should not be assembling the check run.
➢ Accounts Payable should run the aging, choose which invoices to pay, assemble the
invoices, print the checks, and verify that all invoices are approved before bringing them
to the CFO.
➢ CFO simply checks the invoice amounts against the check before signing.
➢ If your company manages cash more actively, let Accounts Payable know up front
what their “budget” is. They will know best what vendors can wait until the next check
run.
Bills Payable Process:

The accounts payable process or function is immensely important since it involves nearly all of a
company's payments outside of payroll. The accounts payable process might be carried out by an
accounts payable department in a large corporation, by a small staff in a medium-sized company,
or by a bookkeeper or perhaps the owner in a small business.
Regardless of the company's size, the mission of accounts payable is to pay only the company's
bills and invoices that are legitimate and accurate. This means that before a vendor's invoice is
entered into the accounting records and scheduled for payment, the invoice must reflect:
● what the company had ordered

● what the company has received
● The proper unit costs, calculations, totals, terms, etc.
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To safeguard a company's cash and other assets, the accounts payable process should have
internal controls. A few reasons for internal controls are to:
● prevent paying a fraudulent invoice

● prevent paying an inaccurate invoice
● prevent paying a vendor invoice twice
● be certain that all vendor invoices are accounted for
Periodically companies should seek professional assistance to improve its internal controls.The
accounts payable process must also be efficient and accurate in order for the company's financial
statements to be accurate and complete. Because of double-entry accounting an omission of a
vendor invoice will actually cause two accounts to report incorrect amounts. For example, if a
repair expense is not recorded in a timely manner:
1. The liability will be omitted from the balance sheet, and

2. The repair expense will be omitted from the income statement.
If the vendor invoice for a repair is recorded twice, there will be two problems as well:
1. The liabilities will be overstated, and

2. Repairs expense will be overstated.
In other words, without the accounts payable process being up-to-date and well run, the
company's management and other users of the financial statements will be receiving inaccurate
feedback on the company's performance and financial position.A poorly run accounts payable
process can also mean missing a discount for paying some bills early. If vendor invoices are
not paid when they become due, supplier relationships could be strained. This may lead to
some vendors demanding cash on delivery. If that were to occur it could have extreme
consequences for a cash-strapped company.
Just as delays in paying bills can cause problems, so could paying bills too soon. If vendor
invoices are paid earlier than necessary, there may not be cash available to pay some other bills
by their due dates.
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UNDER BILLS PAYABLES:
● SERVICE CONTRACTS
● CIVIL CONTRACTS
● PURCHASE ORDERS
● IMPRESSED MONEY
● NOTE SHEETS
These play a very major role in Bills payables
Service contracts:
Service contracts are agreements for specific acts, such as painting your house or tuning your
car, and are distinguishable from contracts for goods. They're used predominantly by
contractors, freelancers, and consultants and, generally involve one party paying another party to
perform a certain act.
A business agreement between a contractor and customer covering the maintenance and
servicing of equipment over a specified period. A General Service Agreement, also referred to
as a contractor form, an independent contractor agreement, or a contractor agreement, is a
contract between a contractor who will provide services, and a property/business owner.
When a contractor agrees to perform a service in exchange for compensation, a service

contract defines the terms of that agreement. Service agreements can also be used by a
manufacturer to define the terms of an extended warranty, explaining the coverage or costs of
services provided for a product if it malfunctions during a specified period.
What's in a Service Contract?

A service contract should generally include a description of the services provided and their
frequency, an identification of the parties in the contract, the schedule or frequency of
supervision/monitoring services (if necessary), the fees for the services provided, how and when
payments should be made, when and how a contract may be terminated, how disputes relating to
the contract will be resolved and a contingency plan when applicable. Some contracts also detail
provisions related to confidentiality or proprietary information. Service Agreement Law and
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Legal Definition. A service agreement is an agreement between two persons or businesses
where one agrees to provide a specified service to the other. A service agreement binds both the
parties to the agreement, whereas bond is one sided and binds the employee to the agreement
only.
Any duty or labor performed for another person. The delivery of a legal document that
notifies the recipient of the commencement of a legal action or proceeding in which he or she
is involved. The term service has various meanings, depending upon the context of the word.
When service agreements cover products, the contract may cover repairs, replacement of parts,
replacement of the product, diagnosis of the product, upgrading of parts or software, dispatching
of a service representative to perform repairs, refunds and/or returns.
Civil Contract:
A construction contract may be defined as, an agreement between two parties such that it is
enforceable by the law and must be agreed. A formal agreement between a company and an
employee in a high position about their pay and conditions of employment (= rules under which
they are employed) an agreement between a company and a customer, stating that the company
will check and repairequipment for an agreed price during a fixed period of time
A contract of mandate consists in an agreement to perform certain work within a specified period
as commissioned by the principal, in return for fixed remuneration. In this framework, the
contractor undertakes to perform certain activities for the principal. A contract of mandate is
therefore a due diligence contract. The contracting parties in the contract determine the nature of
the activity, its scope, organizational framework and remuneration - the amount listed in the
contract is the gross remuneration
It is a branch of Civil Engineering involved with the maintenance, design and construction of
both natural and physically built environments such as roads, railways, buildings, water
reservoirs, subdivisions, airports, bridges, sewer systems, tunnels and dams.
An agreement between two parties such that it is enforceable by the law and must be agreed.
The negotiation between owner and contractor for the cost control.
Contractor: The term contractor comes from the legal agreement. There will be a legal agreement
between the owner and the builder. A contractor may be a builder but a builder may or may not
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be a contractor.
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An agreement between management and the employees of a company or organization about
salary working condition.
Contractbetweenlaborandmanagementgoverningwagesandbenefitsandworkingconditions a
bindingagreementbetweentwo or morepersonsthat is enforceable by law.
An employment contract is an agreement between an employer and an employer regarding the

term of employment. An employment contract can range from a simple handshake agreement to
a lengthy written contract filled with legalese.An employment contract may be written, oral, or
implied. No matter what form the contract takes, its terms will depend on what the employer and
employee have agreed on (or, in the case of an implied contract, what each side expressed by
their words and actions
Wage labour (also wage labor in American English) is the socioeconomic relationship between a
worker and an employer, where the worker sells their labor power under a formal or informal
employment contract. These transactions usually occur in a labour market where wages or
salaries are market-determined.
In exchange for the money paid as wages (usual for short-term work-contracts) or salaries (in
permanent employment contracts), the work product generally becomes the undifferentiated
property of the employer, except for special cases such as the vesting of intellectual property
patents in the United States where patent rights are usually vested in the employee personally
responsible for the invention. A wage labourer is a person whose primary means of income is
from the selling of their labour in this way.
An employment contract or contract of employment is a kind of contract used in labour laws

to attribute rights and responsibilities between parties to a bargain. The contract is between an
"employee" and an "employer". It has arisen out of the old master-servant law, used before the
20th century. But generally, the contract of employment denotes a relationship of economic
dependence and social subordination.
"The relation between an employer and an isolated employee or worker is typically a relation
between a bearer of power and one who is not a bearer of power. In its inception it is an act of
submission, in its operation it is a condition of subordination, however much the submission and
the subordination may be concealed by the indispensable figment of the legal mind known as the
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'contract of employment'. The main object of labour law has been, and will always be a
countervailing force to counteract the inequality of bargaining power which is inherent and
must be inherent in the employment relationship."
A written contract is a document that sets form the terms of employment. As explained above,
some written contracts are for at-will employment. Others limit the employer‟s right to fire. For
example, it‟s not unusual for high-level executives to be hired pursuant to a written contract that
obligates them to stay with the company for a set period of time (two or three years, for
instance) and obligates the company to retain the executive for the same period absent an action
specified in the contract as grounds for termination. Grounds might include misconduct by the
executive, such as committing a felony or engaging in financial malfeasance; they might also
include outside events, such as a sale of the company.
Wage labour involves the exchange of money for time spent at work
Oral Contracts
An oral contract is simply an agreement that is spoken rather than written down. For example, an
employer might call a successful applicant on the phone, offer her the job, and settle on a
starting date, salary, and schedule. Once the employee says, “that sounds great; I accept,” there
is an oral contract of employment.
Oral contracts are just as enforceable as written contracts, but much harder to prove. If there‟s
a dispute, it will be your word against the employer‟s.
Like a written contract, an oral contract might be for at-will employment or it might limit the
employer‟s right to fire. If, for example, an employer says, “I need a one-year commitment from
you; during that time, the company won‟t fire you as long as you make your numbers,” and the
employee agrees, the employee can hold the employer to that one-year commitment.
Implied Contracts
An implied contract is one that has not been reduced to a formal document or even stated
explicitly, but is instead implied from a combination of the employer‟s oral and written
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statements and actions. Whether there‟s an implied contract typically comes up after an
employee has been fired. The employer argues that the employee was at will, and so can‟t sue
for breach of contract; the employee counters that the employer‟s actions and statements led the
employee to believe that the employee would be fired only for good cause, and were sufficient to
create a contract to that effect. Here are some of the factors courts consider in deciding whether
an implied employment contract was created
Whether the employer‟s policies limit its right to fire at will. For example, progressive
discipline policies that don‟t give the employer leeway to depart from the stated procedures,
policies providing that new employees become “permanent” after completing a probationary
period, policies promising regular promotions and raises if performance meets a certain
standard, and policies requiring good cause to fire might be used as evidence that the employer
had given up the right to fire at will.
The employee‟s tenure. A long-term employee who has received regular promotions, raises,
and positive performance evaluations has a better shot at making an implied contract claim than
a short-term employee.
Wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an

employer to an employee in exchange for work done. Payment may be calculated as a fixed
amount for each task completed (a task wage or piece rate), or at an hourly or daily rate (wage
labour), or based on an easily measured quantity of work done. Wages are part of the expenses
that are involved in running a business. Payment by wage contrasts with salaried work, in which
the employer pays an arranged amount at steady intervals (such as a week or month) regardless
of hours worked, with commission which conditions pay on individual performance, and with
compensation based on the performance of the company as a whole. Waged employees may also
receive tips or gratuity paid directly by clients and employee benefits which are non-monetary
forms of compensation. Since wage labour is the predominant form of work, the term "wage"
sometimes refers to all forms (or all monetary forms) of employee compensation.
The most common form of wage labour currently is ordinary direct, or "full-time". This is
employment in which a free worker sells their labour for an indeterminate time (from a few
years
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to the entire career of the worker), in return for a money-wage or salary and a continuing
relationship with the employer which it does not in general offer contractors or other irregular
staff. However, wage labour takes many other forms, and explicit as opposed to implicit (i.e.
conditioned by local labour and tax law) contracts are not uncommon. Economic history shows a
great variety of ways, in which labour is traded and exchanged. The differences show up in the
form of:
Employment status – a worker could be employed full-time, part-time, or on a casual basis.

They could be employed for example temporarily for a specific project only, or on a permanent
basis. Part-time wage labour could combine with part-time self-employment. The worker could
be employed also as an apprentice.
Purchase Orders:
A purchase order (PO) is a commercial document and first official offer issued by a buyer to
a seller indicating types, quantities, and agreed prices for products or services.
A purchase order (PO) is a commercial document and first official offer issued by a buyer to a
seller indicating types, quantities, and agreed prices for products or services. It is used to
control the purchasing of products and services from external suppliers. Purchase orders can be
an essential part of enterprise resource planning system orders.
Companies use purchase orders for several reasons. Purchase orders allow buyers to clearly and
explicitly communicate their intentions to sellers. They may also help a purchasing agent to
manage incoming orders and pending orders. Sellers are also protected by POs in case of a
buyer's refusal to pay for goods or services. Purchase orders provide benefits in that they
streamline the purchasing process to a standard procedure. Commercial lenders or financial
institutions may provide financial assistance on the basis of purchase orders
The purpose of purchase orders is to procure materials for direct consumption or for stock,
procure services, cover customer requirements using external resources, or procure a material
that is needed in plants from an internal source (Long distance intra-plant stock transfers). They
may also place once-only procurement transactions and optimize purchasing by taking full
advantage of negotiated conditions or for optimal utilization of existing transport capacities.[2]
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Creating a purchase order is typically the first step of the purchase to pay process in an ERP
system. Purchase orders may require a SKU code. Within an ERP system, a purchase order
can be created manually, and may require confirmation or changes via editing. Within an ERP
system (such as in SAP), manually creating a purchase order within the system may look
something like "Logistics -> Materials Management -> Purchasing -> Purchasing Order ->
Create" and providing a Transaction Code.
This document type will be chosen from the screen. A vendor code lookup may need to be
selected for a purchase order steps, as well as things like organization group and company code
the issue of a purchase order does not itself form a contract. If no prior contract exists, then it is
the acceptance of the order by the seller that forms a contract between the buyer and seller.
A purchase order or PO is prepared by a company to communicate and document precisely what

the company is ordering from a vendor. The paper version of a purchase order is a multi-copy
form with copies distributed to several people. The people or departments receiving a copy of the
PO include:
● The person requesting that a PO be issued for the goods or services

● The accounts payable department
● The receiving department
● The vendor
● The person preparing the purchase order
The purchase order will indicate a PO number, date prepared, company name, vendor name,
name and phone number of a contact person, a description of the items being purchased, the
quantity, unit prices, shipping method, date needed, and other pertinent information.
One copy of the purchase order will be used in the three-way match, which we will discuss later.
Imprest Money:
Imprest money. A sum of money paid, immediately upon their entering service, to men who have
been impressed. A fund used by a business for small items of expenditure and restored to a fixed
amount periodically. This petty cash is kept on the impresssystem a sum of money advanced to a
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person for a particular purpose. An impress is a cash account that a business uses to pay for
small, routine expenses. A fixed balance is maintained in the account, and it is replenished
routinely to maintain that balance. Alternatively, an impress can refer to a monetary
advance given to a person for a specific purpose.
The most well-known type of impress is a petty cash account. Petty cash is used for transactions
for which it doesn't make sense to go through the hassle of writing a check. It is typically a set
amount of cash held on-site that a business can use to reimburse employees and pay for small
expenses. Petty cash funds are typically handled by a custodian, who monitors the account and
hands out cash to employees in exchange for business-related receipts.
Impress are also used for purposes such as employee payroll, dividends, employee travel and
bonuses. Once the expenses are paid, the fund is reimbursed by the company's primary bank
account. The benefit of impress is that it's harder to use their funds for unauthorized expenses
because they are set aside for specific purposes. They usually pay out the same amount of money
on a regular basis, which ideally brings the account close to a zero balance, and then they are
automatically replenished with that set amount. If there are discrepancies, it's not hard to
pinpoint what went wrong. It is an easy way to both closely monitor expenses and protect
against fraud.
The impress system was developed to track and document cash expenses and how they are used,
following a general process:
● A petty cash fund is established, with a set amount of cash. This is recorded in the
company's ledger.
● Any expenses paid through the petty cash fund must be documented with receipts.
● The fund is replenished regularly with disbursement receipts to maintain a fixed balance.
● The fund is monitored closely for any discrepancies between expected cash (based
on documentation) and actual cash. If any discrepancies exist, they are investigated.
The Future of Impress
As companies transition to heavier reliance on electronic transactions, the imprest system is

falling out of favor. It can be much easier to just use a company credit card than to use an
imprest, since the success of the imprest system depends on the accuracy of its documentation.
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Also, it is important to know and monitor the exact amounts paid through the imprest on a
regular basis so that replenishment amounts are sufficient.
Note Sheets:
A note, often called a promissory note, is a written promise to pay a specific amount of money at
a future date. In other words, a note is a loan contract between the maker and the payee. Some
notes are also payable on demand of the maker.
The maker of a note is the entity that creates and initiates the note to borrow money from the
payee. The payee of a note is the entity that loans the money to the maker and must be repaid.
Some people have a hard time remembering the difference between the maker and payee.
Just remember that the maker makes the note and borrows the money. The payee lends the
money and gets paid back in the future. Makers borrow and payees get paid back. Make
sense?
Notes can be used for a ton of different business transactions. Some companies use notes to help
finance expansions and others use then to purchase their annual inventory quantities. It‟s
basically just a loan, so it could be used to finance anything.
Method of payment:
The work done could be paid "in cash" (a money-wage) or "in kind" (through receiving
goods and/or services), or in the form of "piece rates" where the wage is directly dependent on
how much the worker produces. In some cases, the worker might be paid in the form of credit
used to buy goods and services, or in the form of stock options or shares in an enterprise.
Method of hiring:
The worker might engage in a labour-contract on their own initiative, or they might hire
out their labour as part of a group. But they may also hire out their labour via an intermediary
(such as an employment agency) to a third party. In this case, they is paid by the intermediary,
but works for a third party which pays the intermediary. In some cases, labour is subcontracted
several times, with several intermediaries. Another possibility is that the worker is assigned or
posted to a job by a political authority, or that an agency hires out a worker to an enterprise
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together with means of production.
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Performance-related pay or pay for performance, not to be confused with performance-related
pay rise, is a salary or wages paid system based on positioning the individual, or team, on their
pay band according to how well they perform. Car salesmen or production line workers, for
example, may be paid in this way, or through commission.
Many employers use this standards-based system for evaluating employees and for setting
salaries. Standards-based methods have been in de facto use for centuries among commission-
based sales staff: they receive a higher salary for selling more, and low performers do not earn
enough to make keeping the job worthwhile even if they manage to keep the job. In effect, the
salary would be re-evaluated up, or down, periodically (usually annually) based on the
performance of the individual or team. The reward is the salary: with an expectation to be high
on the pay band for high performance and low on the band for low performance.
In comparison, the performance-related pay rise system would see the reward given in the form
of a pay rise. The better the performance of the individual or team the larger the rise, likewise,
if the performance was poor the associated rise would be minimal, if any at all. The reward is
the pay rise: with an expectation of a high pay rise for high performance and a low or zero rises
for low performance.
Labour economics seeks to understand the functioning and dynamics of the markets for wage
labour.
Labour markets or job markets function through the interaction of workers and employers.
Labour economics looks at the suppliers of labour services (workers) and the demanders of
labour services (employers), and attempts to understand the resulting pattern of wages,
employment, and income.
In economics, labour is a measure of the work done by human beings. It is conventionally

contrasted with such other factors of production as land and capital. There are theories which
have developed a concept called human capital (referring to the skills that workers possess, not
necessarily their actual work).
If you sign an at-will agreement, a court will not allow you to argue that you actually had a
contradictory implied contract; the written agreement will be the final word on the subject. An
21
employment contract should clearly define all terms and conditions of the employment
relationship. The most common elements to any employment contract include the following:
● Terms of employment
● Employee responsibilities
● Employee benefits
● Employment absence
● Dispute resolution
● Nondisclosure agreements
● Ownership agreements
● Assignment clauses
● Employment opportunity limitations
● Grounds for termination
A wage may be defined as the sum of money paid under contract by an employer to worker
for services rendered Wages is the payment to labour for its assistance to production Wage
rate is the price paid for the use of labour A wage is price, it is the price paid by the employer
to the worker on account of labour performed.
Labour Contract types:-
Full-Time Permanent Employment Contract
This is probably the most common type of employment contract. Full-time permanent
employees are often the cornerstone of a business and many employers are incredibly reliant
upon this type of worker. This type of contract can be based upon the employee being hourly
paid or salaried and should set out the employees working hours, holiday entitlements, position
within the organization, and various other aspects of the employee‟s working arrangements.
A contract of this type can be simple or complicated depending upon the employee‟s
seniority. For instance, an employer may want to prevent a more senior employee from going
to work for competitors by adding restrictive covenants into the employment contract.
22
Alternatively, it may wish to ensure that the confidentiality requirements its senior
employees have to abide by are suitable and appropriate for their proximity to confidential
business information.
Part-Time Employment Contract
Normally, a part-time employment contract would contain much of the same information as the
contract of a full-time employee. In the part-time employment contract, employers need to have a
particular focus on the employee‟s working hours and pay. It is also important to ensure that the
holiday entitlement for part-time employees is clearly and accurately reflected in the contract and
meets the relevant statutory requirements. The law protects part-time workers from being treated
unfavorably on the basis that they are employed part-time. It is important to make sure that the
terms and conditions of employment for part-time employees are comparable to those of full-
time employees in the same organization. Part-time workers are contracted to work for fewer
hours than the employer's normal full-time hours.
Director‟s Service Agreement
A service agreement is generally the most detailed and heavy duty type of employment
contract. Normally this document would contain specific details about how the director should
behave within the business and the scope and extent of their duties. Service agreements are
often very comprehensive documents.
As a director would usually have unlimited access to a company‟s financial and confidential
information, a service agreement almost always contain restrictive covenants and thorough
confidentiality requirements.
Fixed-Term Employment Contract
A fixed-term employment contract is normally for temporary employees. The duration of the
contract can be anything from a couple of weeks to a few years. This type of contract can
vary dramatically in its scope and extent.
23
Temporary staff who are expected to be with your business for a few weeks may only require a
very basic set of terms and conditions whereas employees undertaking specific projects over the
course of a year or two can sometimes need very carefully drafted and prescriptive employment
contracts.
Zero Hours Contract
The zero hour‟s contract has proved to be somewhat controversial in recent times. The
government is currently in the process of implementing certain restrictions on how zero hours
contracts can be used. The zero hour‟s contract can however be a very effective tool for
employers.
A normal employment contract would create a mutual obligation between the employer and the
employee. The employer agrees to provide a certain amount of work and the employee agrees to
go and carry that work out. The zero hours contract waters this obligation down by allowing the
employer to require the employee to come to work without guaranteeing to provide work to the
employee. This means that the employer can call upon the services of the employee as and when
required.
Zero hours contracts can often require a great deal of consideration and it is important
that arrangements with employees are such that a zero hour‟s contract can be used.
Casual Work Contract
Casual working arrangements can sometimes be confused with zero hours arrangements.
There is however some fundamental differences between the two. A casual work contract is
generally applicable to a person who is classed as being a „worker‟ rather than an „employee‟.
Workers have fewer employment rights than employees. The casual contract is not normally a
permanent employment contract and would, for instance, be used for seasonal workers who work
only a few weeks of the year.
Unlike the zero hours model, a casual worker would not normally be obliged to accept work
offered to them and may not qualify to be paid statutory payments such as statutory sick pay.
24
Consultancy Agreement
A consultancy agreement is normally used when an organization wants to engage the

services of an individual who will not be employed. Where an individual will be self-
employed, they will normally need to be provided with a consultancy agreement.
This document can take a variety of forms. It can be a simple letter or it can be a lengthy
contract. A consultancy agreement is often a key tool in protecting the parties from
complicated tax issues. Perhaps more importantly, the consultancy agreement is essential to
protect the organization engaging the consultant from being susceptible to challenge from on
the basis that the consultant is actually an „employee‟.
Without a consultancy agreement in place the consultant may allege that they are
employed and consequently should be given normal employment rights, including the right
not to be unfairly dismissed. This could create a very troublesome and expensive situation for
the organization engaging the consultant.
Retention Money:
Retention is a percentage (often 5%) of the amount certified as due to the contractor on an
interim certificate, that is deducted from the amount due and retained by the client. The purpose
of retention is to ensure that the contractor properly completes the activities required of them
under the contract.
Retention money is described as the sum of money held by the employer as a safeguard for
any defective or non-conforming work by the contractor. Retention money safeguards the
employer by defects which can occur during the defects liability period if the contractor
doesn‟t response according to the contract terms.
Purpose of Retention Money
In general, Retention Money provides protection to the employer. Retention money gives the
idea of importance of completing the signed project as per it‟s terms and designs.
25
With such retention held, the contractor takes the responsibility to complete the construction
project as per the design and quality stated in the initial contract.
How to deduct Retention Money from the progress claim?
In most of the construction contracts, the amount of Retention Money to held in each progress
claim is 10% of the work done and up to 5% of the contract sum.
(However these figures can be different from contract to contract and you may need to refer the
contract document for the construction project that you work for before deducting any amount.)
Here is how to deduct retention money from the progress claim.
The sum due to Interim Payment Certificate shall be calculated at the rate of 90% for the value
of work done & at the rate of 80% for the properly protected materials or goods delivered on site.
(Generally)
Therefore the percentage of the sum not paid is known as „Retention Money‟ for the contract.
What is the „Limit of Retention Money?
Retention sum is subjected to limit as per the stated percentage in the contract which is known as
„Limit of Retention‟.
In general, „Limit of Retention‟ is 5% of the contract sum. Therefore once the Limit of
Retention is reached, Further Retention Money cannot be deducted from the next interim
certificates.
Release of Retention in Construction Contracts
Release of retention is another important item or milestone in any construction contract which is
also an indication of completion of the scope of the project up to the mentioned stages.
Usually, retention monies are released in 2 stages of the project.
26
The first half of the Retention Monies needs to be certified and released at the time of issuing
the Completion Certificate. If there is any outstanding work for the project, those will be stated
in the Completion Certificate. A reasonable cost will be deducted from the retention money to
cover the costs of completing the remaining work by a 3rd party if the contractor doesn‟t accept
to complete the rejected work or any outstanding work.
The second half of Retention Monies will be certified and released upon the expiry of defects
liability period. In most construction contracts, the Defects Liability period is 12 months
which the contractor is liable to complete any defects arise due to the poor workmanship.
Upon issuance of Maintenance Certificate, the 2nd half of Retention Money will be released.
How long can retention money be held for?
The first payment provides half the money held upon the subcontractor's completion of their
portion of the work. This is known as the first moiety of retention. The second moiety of
retention is paid once the defects liability period has ended. This period can last anywhere from
six months to over a year.
There are 2 components in retention money:
● EMPLOYEES PROVIDENT FUND (PF):

● EMPLOYEES STATE INSURANCE(ESI):
EMPLOYEES PROVIDENT FUND (PF):

All salaried employees are eligible for Employee‟s Provident Fund (EPF). This is a retirement
benefit scheme that saves a portion of the salary every month. It helps to have a corpus of
savings for emergencies or retirement.
Employee‟s Provident Fund (EPF) is a retirement benefit scheme that‟s available to all salaried
employees. This fund is maintained and overseen by the Employees Provident Fund
27
Organization of India (EPFO) and any company with over 20 employees is required by law
to register with the EPFO.
It‟s a savings platform that helps employees save a fraction of their salary every month that can
be used in the event that you are rendered unable to work, or upon retirement.
When you start working, you and your employer both contribute 12% of your basic salary
(plus dearness allowances, if any) into your EPF account. The entire 12% of your contribution
goes into your EPF account along with 3.67% (out of 12%) from your employer, while the
balance 8.33% from your employer‟s side is diverted to your EPS (Employee‟s Pension
Scheme) . It‟s important to note that if your basic pay is above Rs. 6,500 per month, your
employer can only contribute 8.33% of 6,500 (i.e. Rs. 541) to your EPS and the balance goes
into your EPF account.
These funds are pooled together from many employees like yourself and invested by a trust.
This generates an interest of 8% - 12%, which is decided by the government and the central
board of trustees.
What is the purpose of provident fund?
A provident fund is created with a purpose of providing financial security and stability to
employees. A person starts his contribution in the PF fund once he joins a company as an
employee. The contributions are made on a regular basis.
Why provident fund is important?

Employee Provident Fund is a very important tool of retirement planning. The tax free interest
(compounding) and the maturity ensures a good growth of your money. At this moment EPF
can be helpful due to certain benefits it provides which most of us are unaware of.
EMPLOYEES STATE INSURANCE(ESI):

Employees' State Insurance (abbreviated as ESI) is a self-financing social security and health
insurance scheme for Indian workers. This fund is managed by the Employees' State Insurance
Corporation (ESIC) according to rules and regulations stipulated in the ESI Act 1948. ESIC is an
28
autonomous corporation by a statutory creation under Ministry of Labour and Employment,
Government of India.
Employees‟ State Insurance Corporation (“ESIC”) is a statutory corporate body set up under the
ESI Act 1948, which is responsible for the administration of ESI Scheme. The ESI scheme is a
self-financed comprehensive social security scheme devised to protect the employees covered
under the scheme against financial distress arising out of events of sickness, disablement or
death due to employment injuries.
Employees' State Insurance Corporation (ESIC), established by ESI Act, is an autonomous

corporation under Ministry of Labour and Employment, Government of India. As it is a legal
entity, the corporation can raise loans and take measures for discharging such loans with the
prior sanction of the central government and it can acquire both movable and immovable
property and all incomes from the property shall vest with the corporation. The corporation
can set up hospitals either independently or in collaboration with state government or other
private entities, but most of the dispensaries and hospitals are run by concerned state
governments.
Employees State Insurance Scheme of India is a multidimensional social security system

tailored to provide socio-economic protection to worker population and their dependents
covered under the scheme. Besides full medical care for self and dependents, that is admissible
from day one of insurable employment, the insured persons are also entitled to a variety of cash
benefits in times of physical distress due to sickness, temporary or permanent disablement etc.
Objectives of ESI scheme are:
To protect the employees in the organization against the events of sickness, maternity,
disablement, and death due to employment injury and To provide medical care to the insured
employees and their family
The ESI Scheme is administer by a corporate body called the „Employees State Insurance
Corporation‟ (ESIC). ESIC works accordingly the rules and regulation stipulated by ESI act,
1948.
ESI contribution consists of employee‟s share (1.75% wages) and employer‟s share (4.75% of
29
wages). The existing wage limit for ESI coverage is 15,000.
30
COMPANY PROFILE
COMPANY NAME: Hindustan Aeronautics Limited (HAL)
FOUNDER: Seth Walchand Hirachand
HEADQUATERS: Bangalore, Karnataka, India
PRODUCTS: AIRCRAFT, HELICOPTERS, POWER PLANT
BRANCHES: Nasik, Korwa, Kanpur, Koraput, Luck

now, Bangalore, Hyderabad and Kasaragod
WEBSITE: www.hal-india.com
HAL
Hindustan Aeronautics Limited (HAL) is an Indian state-

owned aerospace and defense company headquartered in Bangalore, India. It is governed under
the management of the Indian Ministry of Defense.
The government-owned corporation is primarily involved in the operations of the aerospace and
is currently involved in the design, fabrication and assembly of aircraft, jet
engines, helicopters and their spare parts.
It has several facilities spread across India

including Nasik, Korwa, Kanpur, Koraput, Lucknow, Bangalore, Hyderabad and Kasaragod. HA
L HF-24 Marut fighter-bomber was the first fighter aircraft made in India. HAL has 20
Production Units and 11 Research & Design Centers in 8 locations in India.
31
PRODUCTS OF HAL:
I. AIRCRAFT – HAWK, LCA, SU-30 MKI, IJT, DORNIER
II. HELICOPTERS – DHRUV, CHEETAH, CHETAK, LANCER, CHEETAL, RUDRA
III. FUTURE PRODUCTS – LCH, LUH, FGFA, MTA, HTT-40, IMRH, MMRCA,
UAV
IV. POWER PLANT – ADOUR MK 871, GARRETT TPE 331-5, RD 33, AL 31 FP,
SHAKTI, ARTOUSTE III B, PTAE-7, LM 2500
V. AVIONICS - Inertial Navigation System, Auto Stabilizer, Head up Display, Laser Range
system, Flight Data Recorder, Communication equipment, Radio Navigation Equipment, Air
Borne Secondary Radar, Missile Inertial Navigation, Radar Computers etc
1. System and Accessories – Hydraulic system, Wheels and Brake System, Flight
Control System, Ejector Release Units, Panel Instruments, Gyroscopic/Barometric
instruments, Oxygen System, Fuel Management System, Hydraulic Pumps
VI. AEROSPACE – Structures, Tanks, Cryogenic Engines
VII. „MATERIALS – Castings, General Forgings, Precision Forgings, Powder

Metallurgy, Rubber Products, Rolled Rings, composites
DIVISIONS AND LOCATIONS OF HAL UNITS:
I. Bangalore Complex
1. Aircraft Division Bangalore

2. Engine Division Bangalore
3. Overhaul Division Bangalore
4. Foundry & Forge Division Bangalore
5. Aerospace Division Bangalore
6. IMGT Division Bangalore
32
7. Airport Services Centre Bangalore
8. Facilities Management Division Bangalore
9. LCA-Tejas Division Bangalore
II. Mig Complex
1. Aircraft Manufacturing Division, Nasik

2. Aircraft Overhaul Division Nasik
3. Engine Division Koraput
4. Sukhoi Engine Division Koraput
III. Accessories Complex

1. TAD-Kanpur Division
2. Accessories Division Luck now
3. Avionics Division Hyderabad
4. Avionics Division Korwa
IV. Helicopter Complex

1. Helicopter Division Bangalore
2. Helicopter MRO Division Bangalore
3. Barrackpore Division
4. Aerospace Composites Division
HAL VISION
To become a significant global player in the aerospace industry.
HAL MISSION
To achieve self reliance in design, development, manufacture, upgrade and maintenance of

aerospace equipment diversifying into related areas and managing the business in a climate of
growing professional competence to achieve world class performance standards for global
competitiveness and growth in exports.
33
HAL VALUES
1. Customer satisfaction
HAL is dedicated in building a relationship with their customers where they become
partners in fulfilling their mission. HAL strives to understand their customers' needs and
to deliver products and services that fulfill and exceed all their requirements.
2. Commitment to total quality
HAL is committed to continuous improvement of all our activities. They supply products
and services that conform to highest standards of design, manufacture, reliability,
maintainability and fitness for use as desired by our customers.
3. Cost and time consciousness
HAL believes that success depends on our ability to continually reduce the cost and
shorten the delivery period of our products and services. They achieve this by eliminating
waste in all activities and continuously improving all processes in every area of our work
4. Innovation and creativity
HAL believes in striving for improvement in every activity involved in our business by
pursuing and encouraging risk-taking, experimentation and learning at all levels within
the company with a view to achieving excellence and competitiveness.
5. Trust and team spirit
HAL believes in achieving harmony in work life through mutual trust, transparency, co-
operation and a sense of belonging. It strives for building empowered teams to work
towards achieving organizational goals.
34
6. Respect for the individual
HAL values their people. They treat each other with dignity and respect and strive for
individual growth and realization of everyone's full potential.
7. Integrity
HAL believes in a commitment to be honest, trustworthy and fair in all our dealings.
They commit to be loyal and devoted to our organization. They practice self-discipline
and own responsibility for our actions. HAL will comply with all requirements so as to
ensure that our organization is always worthy of trust.
Facilities Management Division (FMD)
Facilities Management Division (FMD) has formed during October 2009, from erstwhile
Common Engineering Service, operating under aegis of Aerospace Division. A board outline of
activities of FMD is:
a) Project management
b) Facilities management
c) Estate management
Planning and design: carrying out preliminary survey to assess topography of the area, water
line pattern, sewage disposal, soil characteristics and preparing architectural and structural
drawing based on the inputs provided by the division
Engineering and estimation: preparation of rough cost estimate for sanction of fund. On
approval, preparation of detailed estimate, design and drawings for processing admin, Approval,
engagement of consultants for major projects in the project demands
Contract management: on obtaining admin. Approvals, processing of tendering activities,

technical evaluation and placement of order for civil, electrical and service contract required for
Bangalore based division and township
35
Project execution: execution of major projects, additional/ alterations in Bangalore based
division and township incl. electrical, air conditioning, fire alarm system, cranes, compressed
airline and allied services.
Organization Structure:
SERVICES:
Facilities Management
Power Supply & Distribution:
36
Energy received from BESCOM at 66 KV and stepped down to 11 KV at Main Receiving
Station (MRS). The power is distributed to various divisions/ townships of HAL, Bangalore
through 12 feeders. Maintenance of 11 KV distribution system through 35 Kms of overhead lines
and underground cables including support structures, 30 nos. of transformers located in various
townships and O & M of 08 nos. DG sets installed at filter house and at main receiving station
premises.
Water Supply & Distribution:
Sourcing / generation and distribution of around 6600 KL of drinking water per day to various
divisions and townships of HAL, Bangalore. Collection, treatment and recycling of sewage
(around 7000 KLD).Generation and distribution of treated water for non portable use.
Transport Management:
Monitoring the charted service of BMTC for HAL employees, Insurance cover and Tax
payments for vehicles, Fuel Management, Day-to-day services and minor repairs of vehicles (for
around 350 four wheelers and 500 two wheelers of various categories), Allocation of in house
vehicles for the needs of Bangalore based Divisions, HAEA, HAOG etc., and Hiring of taxis for
day-to-day requirements by the Divisions.
Telephones:
Maintenance of direct telephones/ mobiles, data card, fax, internet facilities (of around 4500
lines) in all divisions and townships of HAL, Bangalore. Attending day to day faults,
maintenance of telephone cables, internal wiring, batteries etc., processing monthly telephone
bills/ advice for recovery to respective divisions
Environment Management:
Collection, transportation, treatment and disposal of municipal solid waste from townships, HAL
Market &KalyanMantap as per KSPCB norms.Treatment of waste through Biogas plant and
Organic Waste Convertor (OWC).
Quarter‟s maintenance:
37
Day-to-day repairs and maintenance of quarters (for around 3750 quarters) such as carpentry,
plumbing, sanitation etc., maintenance of roads & drains and periodical services like painting,
arresting roof leakages, replacement of doors & windows, tile replacement etc., Housekeeping
and Landscape management: Up-keeping of townships, road cleaning, developing and
maintaining parks, jogging track, children play area, lawns & gardens.
Public amenities Management:
Day-to-day maintenance of public amenities like Heritage Centre and Aerospace Museum,
Convention centre, KalyanMantap and Guesthouse. Processing for allotment of Convention
centre, KalyanMantap and Guest house.
Event Management:
Arrangements for official functions for Seminars, conferences, VIP visits, Aero India shows and
other events. Estate Management Quarters allotment: Processing the requests for allotment of
quarters for Employees and Officers on Seniority basis, medical /essential grounds and out-of-
turn basis. Attending grievances/ complaints from colony residents. Fixation of market rent for
Company quarters.
Lease & Rent Management:
Allotment of land and building for lease/ rent for Govt. establishments including JVs in HAL
estate, shops & stalls for vendors in HAL market and execution of lease deeds and agreements.
Land and land records Management:
Maintaining the details of land including area, ownership of land and other details.Liaison with
BBMP, BDA, KIADB, BMRCL and other govt. departments towards compliances and other
issues.
Open space Management & Security:
Construction of boundary walls in HAL Estate to avoid encroachments, leveling & cleaning the
area, construction of storm water drains to ensure proper drainage. Providing round the clock
security coverage to HAL townships, HAL hospital, HMA, CTH, FWA, Convention
38
centre&Heritage centre.Providing necessary assistance to the estate department in preventing the
encroachments and to ensure eviction of unauthorized people from HAL estate.Attending
township complaints on security issues to avert any unusual occurrence and liaisoning with
police department from time to time in preventing untoward incidents in HAL estate and
townships.Co-ordination with dog catching team in controlling dog menace in HAL townships.
CUSTOMERS:
DEFENCE & SPACE CIVIL
Indian Air Force Border Security Force

Indian Army Oil & Natural Gas Cooperation of India
Indian Navy Govt. of Karnataka
Indian Coast Guard Govt. of Jharkhand
Indian Space Research Organization Govt. of Maharashtra
Defense Research & Development Geological Survey of India
Organization
Ordnance Factory Board Bharat Heavy Electricals Ltd.
Major International Customers
EXPORTS:
Airbus Industries, France
Boeing, USA
Coast Guard, Mauritius
Ecuadorian Air Force, Ecuador
ELTA, Israel
GE Aviation, USA
39
Hamilton Sundstrand, USA
Honeywell International, USA
Israel Aircraft Industries, Israel
Mauritius Police Force, Mauritius
Moog Inc. USA
Namibian Air Force, Namibia
Nepal Army, Nepal
RAC MIG, Russia
Rolls Royce Plc, UK
Royal Air Force, Oman
Royal Malaysian Air Force, Malaysia
Royal Thai Air Force, Thailand
Ruag, Germany
Rosoboronexport, Russia
Suriname Air Force
Turbomeca, France
Vietnam Air Force, Vietnam
Swot Analysis:
Strengths:-
Design capability.
40
Modern manufacturing infrastructure.
Skilled and committed man power.
Good understanding of the Indian defense market.
Weaknesses:-
Dependence on foreign sources for raw materials and critical

technologies. Limited customer base.
Lack of flexibility in fixing compensation.
Weak in financial position.
Opportunities:-
New customers
New customers industries.

New market.
Threats:-
Lack of skilled labour in market.
New technologies are used for manufacturing

Competition from manufactures
International customers.
Competitors:-
Boeing.
RTI International, Metal Inc.

Silvester company.
Triumph Group.
41
FINANCIAL STATEMENTS:
Hindustan Aeronautics Limited

Statement of Profit and Loss for the period ended 31st March 2018
Division : FacilitiesManagement Division (Rs in Lacs)
31st March 31st March
S.No Particulars
2018 2017
1 REVENUE:- Revenue from Operations 539.00 119.00
Revenue from Operations 539.00 119.00

IFD Sale 0.00 0.00
2 Other Income 986.00 803.00
Charges Received 0.00 0.00
3 Total Incomes (1+2) 1525.00 922.00
4 EXPENSES
Cost of materials Consumed 0.00 0.00
Purchases of stock-in-trade 0.00 0.00
Excise Duty 0.00 0.00
Changes in inventories of finished Goods, stock-in-trade, Work-in-
progress and Scrap 0.00 0.00
Employee Benefits Expense 10049.00 8852.00
Finance Costs 0.00 0.00
Depreciation, Amortization Expense 1174.00 967.00
Impairment Loss 0.00 0.00
Other Expenses 14085.00 13923.00
Charges Paid on Inter Divisional Transfers 0.00 0.00
Direct Input to WIP/ Expenses Capitalized 22.00 9.00
Provisions 93.00 124.00
Inter Services and Common Services 23863.00 22767.00
Total Gross Expenses 1560.00 1108.00

Less: Expenses relating to capital and Other Account 22.00 9.00
Total Expenses (4) 1538.00 1099.00
5 Profit /loss before Exceptional items and Tax (3-4) -13.00 -177.00
6 Exceptional Items 0 0
7 Profit/Loss before Tax (5-6) -13.00 -177.00

8 Tax Expenses:
42
(1) Current Tax 0 0
(2) Mini Alternate Tax Credit (Entitlement)/Utilization 0 0
(3) Earlier Tax 0 0
(4) Deferred Tax 0 0
9 P/L for the period from continuing Operations(7-8) -13.00 -177.00

10 P/L from discontinued Operations
11 Tax Expensesofdiscontinued Operations
12 P/L from discontinued Operations (after tax) (10-11) 0 0
13 Profit/Loss for the period(9+12) -13.00 -177.00

14 Other Comprehensive Income
A (1) Items that will not be reclassified to P/L 0.00 0.00
(2) Income tax relating items that will not be reclassified to P/L 0.00 0.00
B(1) Items that will be reclassified to P/L 0.00 0.00
(2) Income tax relating items that will be reclassified to P/L 0.00 0.00
0.00 0.00
Total comprehensive income for the period (13+14) (comprising -13.00 -177.00
15 profit (loss) and other comprehensive income for the period)
16 Earnings per Equity Share (for Continuing Operations)
(1) Basic
(2) Diluted
17 Earnings per Equity Share (for Discontinued Operations):
(1) Basic
(2) Diluted
18 Earnings per Equity Share (for continuing & discontinued Operations)
(1) Basic
(2) Diluted
43
Balance Sheet as on 31st March 2018
Division : FMD (Rs in lakhs)
S.No Particulars
2018 2017
ASSETS
1 A. Non-current assets
(a)i Property, Plant and Equipment
Gross Block 36380.00 26696.00
Less: Accumulated Depreciation 14431.00 13281.00
Less: Impairment 0.00 0.00
Net Block 21949.00 13415.00
ii Property, Plant and Equipment-Customer Funded 0.00 0.00

Gross Block 0.00 0.00
Net Block 0.00 0.00
(b) Capital Work-in-progress 8072.00 9699.00

(c ) Investment Property
Net Block 3.00 3.00
(d) Goodwill
Less: Accumulated Amortization 0.00 0.00
0.00 0.00
(e) Other Intangible Assets
Net Block 22.00 10.00
(f) Intangible Assets under Development

Net Block 0.00 0.00
(g) Investments in Joint Ventures and Subsidiary 0.00 0.00
(h) Financial Assets
(i) Investments-Others 0.00 0.00
44
(ii) Trade Receivables 0.00 0.00
(iii) Loans 1092.00 1089.00
(iv) Others 0.00 0.00
(i) Deferred Tax Assets (Net) 0.00 0.00

(j) Other Non-Currents Assets 0.00 0.00
Sub Total - A 31138.00 24216.00
2 B. Current Assets
(a) Inventories 69.00 114.00
(b) Financial Assets
(i) Investments 0.00 0.00
(iii) Cash and Cash Equivalents 1.00 12.00
(iv) Bank Balances Other Than (iii) above 0.00 0.00
(v) Loans 67.00 76.00
(vi) Other Financial Assets 317.00 254.00
C. Current Tax Assets (Net) 0.00 0.00

D. Other Current Assets 18.00 17.00
Sub Total - B 472.00 473.00

Total Assets (A+B) 31610.00 24689.00
EQUITY AND LIABILITIES

1 A. Equity
(a) Equity Share Capital 20707.00 15738.00
(b) Other Equity -13.00 -177.00
Sub Total - A 20694.00 15561.00
LIABILITES
1 B. Non-Current Liabilities
(a) Financial Liabilities
(i) Borrowings 0.00 0.00
(ii) Trade Payables 0.00 0.00
(iii) Other Financial Liabilities 50.00 50.00
(b) Provisions 686.00 709.00

(c ) Deferred Tax Liabilities (Net) 0.00 0.00
(d) Other Non-Current Liabilities 0.00 0.00
45
Sub Total -B 736.00 759.00
2 C. Current Liabilities
(b) Other Current Liabilities 255.00 423.00

(c ) Provisions 547.00 552.00
(d) Current Tax Liabilities (Net) 0.00 0.00
Sub Total - C 10180.00 8369.00
Total Equity and Liabilities - (A+B+C) 31610.00 24689.00
46
CHAPTER-2
LITERATURE REVIEW
Meaning:
A literature review is an evaluative reports of information found in the literature related to

selected area of study. The review should describe, summarize, evaluate and clarify the
literature.
Functions of Literature Review:
1) Bring clarity and focus to your research problem.

2) Improve your research methodology.
3) Broaden your knowledge base in your research area.
4) Contextualize your findings.
Accounts payable analysis.Payable turnover. Divide total annual purchases by the average total
payables balance to arrive at the payables turnover rate. Then divide the turnover rate into 365
days to determine the average number of days that the company is taking to pay its bills
CREDITORS TURN OVER RATIOS:
The accounts payable turnover ratio shows investors how many times per period a company pays
its accounts payable. In other words, the ratio measures the speed at which a company pays its
suppliers. Accounts payable is listed on the balance sheet under current liabilities.
Investors can use the accounts payable turnover ratio to determine if a company has enough
cash or revenue to meet its short-term obligations. Creditors can use the ratio to measure
whether to extend a line of credit to the company.
47
A Decreasing Accounts Payable Turnover Ratio
A decreasing turnover ratio indicates that a company is taking longer to pay off its suppliers than
in previous periods. The rate at which a company pays its debts could provide an indication of
the company's financial condition. A decreasing ratio could signal that a company is in financial
distress. Alternatively, a decreasing ratio could also mean the company has negotiated different
payment arrangements with its suppliers.
An Increasing Accounts Payable Turnover Ratio
When the turnover ratio is increasing, the company is paying off suppliers at a faster rate than in
previous periods. An increasing ratio means the company has plenty of cash available to pay off
its short-term debt in a timely manner. As a result, an increasing accounts payable turnover ratio
could be an indication that the company managing its debts and cash flow effectively.
However, an increasing ratio over a long period could also indicate the company is not
reinvesting back into its business, which could result in a lower growth rate and lower earnings
for the company in the long term. Ideally, a company wants to generate enough revenue to pay
off its accounts payable quickly, but not so quickly the company misses out on opportunities
because they could use that money to invest in other endeavors.Ratio between credit sales that are
not paid and the sum of the credit sales. This illustrates how effective credit policy is. The formula
for the creditors' turnover ratio is credit purchase / average trade creditors.
Accounts payable turnover is a ratio that measures the speed with which a company pays its
suppliers. If the turnover ratio declines from one period to the next, this indicates that the
company is paying its suppliers more slowly, and may be an indicator of worsening
financial condition.
Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers,
or cost of sales, and dividing it by the average accounts payable amount during the same period.
The accounts payable turnover ratio is a short-term liquidity measure used to quantify the rate
at which a company pays off its suppliers. Accounts payable turnover shows how many times a
company pays off its accounts payable during a period.
48
Accounts payable is short-term debt that a company owes to its suppliers and creditors. The
accounts payable turnover ratio shows how efficient a company is at paying its suppliers
and short-term debts.
Nature of Ratio Analysis:
Ratios, by themselves, are not an end but only one of the means of understanding the financial
health of a business entity. Ratio analysis is not capable of providing precise answers to all the
problems faced by any business unit. Ratio analysis is basically a technique of:
1. Establishing meaningful relationship between significant variables of

financial statements and
2. Interpreting the relationships to form judgment regarding the financial affairs of the unit.
Usefulness of Ratio Analysis:
Usefulness of ratio analysis depends upon identifying:
1. Objective of analysis
2. Selection of relevant data
3. Deciding appropriate ratios to be calculated
4. Comparing the calculated ratios with norms or standards or forecasts; and
5. Interpretation of the ratios
To Calculate the Accounts Payable Turnover Ratio
1. Calculate the average accounts payable for the period by subtracting the accounts
payable balance at the beginning of the period from the accounts payable balance at the
end of the period.
2. Divide the result by two to arrive at the average accounts payable. Take total
supplier purchases for the period and divide it by the average accounts payable for
the period.
BILLS PAYABLE ACTIVITIES:

49
Days payable outstanding (DPO) is a financial ratio that indicates the average time (in days)
that a company takes to pay its bills and invoices to its trade creditors, which include suppliers,
vendors, or other companies.
Accounts payable (AP) is an accounting entry that represents a company's obligation to pay off
a short-term debt to its creditors or suppliers. It appears on the balance sheet under the current
liabilities.
On account is an accounting term that denotes partial payment of an amount owed or the
purchase/sale of merchandise or services on credit.
Accounts payable and its management is a critical business process through which an entity
manages its payable obligations effectively. Accounts payable is the amount owed by an entity to
its vendors/suppliers for the goods and services received. To elaborate, once an entity orders
goods and receives before making the payment for it, it should record a liability in its books of
accounts based on the invoice amount. This short-term liability due to the suppliers, vendors, and
others is called accounts payable. Once the payment is made to the vendor for the unpaid
purchases, the corresponding amount is reduced from the accounts payable balance.
Accounts payable and its management is vital for the smooth functioning process of any
business entity. It is important for any business because:
● It primarily takes charge of paying the entity‟s bills on a timely basis. This is
important so that strong credit and long-term relationship with the vendors can be
maintained.
● Only when invoices are paid on time, vendors will ensure an uninterrupted flow
of supplies and services; which in turn will help in the systematic flow of
business.
● A good accounts payable process ensures there are no overdue charges, penalty or late
fees to be paid for the dues.
● The organized accounts payable process ensures all that the invoices due are tracked
and paid properly. This will help avoid missing payments and making a payment twice.
● It also enables business entities to manage better cash flows (i.e. making payments
only when due, using the credit facility provided by the vendor, etc.)
50
● Frauds and thefts can be avoided to a greater extent by following a stringent
accounts payable process.
51
For a company‟s financial statements to be complete and accurate, the accounts payable
balances should be recorded with accuracy. These payables must be dealt with efficiently and
accurately. If there is a double-entry of an expense or omission of a particular invoice, the
financial statements will not report the correct amounts and the loss will be huge when the
numbers involved are big. Hence, proper recording of the expense and tracking of the payment is
necessary.
Making timely payment:
As and when the due dates arrive (based on a mutual understanding with the
vendor/supplier/creditor), the payments need to be processed. Here, the required documents need
to be prepared and verified. Details entered on the cheque, vendors bank account details,
payment vouchers, the original bill, purchase order/agreement, etc., need to be scrutinized. Often
the signature of the authorized person may be required.
Once the payments are made, the vendors/suppliers/creditors ledger account has to be closed in
the books of accounts. This will reduce the liability earlier created. In simpler words, the amount
showed as payable, will no longer be seen as a liability.
The procedures mentioned above are organization specific. They can be stricter for large
companies with more approvals required. However, the basic steps are needed to be considered
before payments are made in order to avoid errors and frauds.
The process of paying vendors is one of the final steps in the Purchase to pay cycle. Briefly,
when company orders goods from a supplier it raises a Purchase Order (PO), when the goods or
services arrive they will receive an invoice from the supplier.
Process of paying vendors is one of the final steps in the Purchase to pay cycle. Briefly, when
company orders goods from a supplier it raises a Purchase Order, when the goods or services
arrive they will receive an invoice from the supplier. If the goods or service matches the PO the
details of the invoice are entered into the Account Payable system. When you pay a bill, to help
you keep track of outstanding values, you need to record this against the relevant bill. You can
record the payment from within the relevant invoice. You can also create a remittance advice,
which you can send to your vendors so they know which invoice you‟re paying.
52
If you want to pay multiple bills for the same vendor at the same time, or want to record a small
discount to offset the payment, you can do so. If you send your vendor an overpayment, you
can also record the remaining amount as a payment on account using this option.
Accounts payable and its management is a critical business process through which an entity
manages its payable obligations effectively. Accounts payable is the amount owed by an entity
to its vendors/suppliers for the goods and services received.Accountspayableis money owed by a
business to its suppliers shown as a liability on a company's balance sheet. It is distinct from
notes payable liabilities, which are debts created by formal legal instrument documents.
The payment to the contractors for works or supply or material, road metal and plants etc. are
made on the basis of measurements recorded in the measurement books. When the work or
supply is completed or sufficiently progressed, the detailed measurements are taken usually by
the section officer and recorded in the measurement book and an abstract of quantities are
prepared and the cost is calculated at the rate of the contract agreement. From the abstract of
quantity and the rate, a bill is prepared for payment.
2. Bill and Voucher
Bill: Bill is the account of work done or supply of materials made and includes the
particulars and quantities of work done or material supplied and amount due. Reference to the
agreement number, order number is also given in the bill.
Voucher: Voucher is a written document with details which is kept in record as a proof of
payment. For any payment, a bill is prepared and payment is made on the bill, duly checked
and acknowledged by the payee, by signature or revenue stamp as required and after payment is
made, bill becomes voucher which is kept in record.
3. Types of Bills
the various standard forms of bills and vouchers are used for payment, according to the
nature of works. White forms are used for running bills and yellow forms are used for final
bills. The following are the different types of bills.
➢ First and Final bill

➢ Running account Bill – form A
➢ Running account Bill – form c
53
➢ Lump sum contract Bill
➢ Hand receipt
➢ First and Final Bill: This form is used for making payment to the contractor both for
works and suppliers, when a single payment is to be made on the completion of the whole
work or supply as final payment. This type of bill is generally adopted for petty works or
split up works in projects.
➢ Running Account Bill – Form A: This form is used for advance payment without any
measurement. It may be used for running bill payment for advance for unmeasured work
only or combination of unmeasured work and measured work or if „on account‟ payment
is to be made but an advance payment already made for the same work is outstanding.
➢ Running Account Bill – Form C: This form is used for contracts both for works executed on
piece work system and for suppliers received. This form is widely used specially for medium
sized works executed through K2 contract or split up works or projects entrusted on
nomination to a number of contractors.
➢ Lump Sum Contract Bill: In the L.S. contract methods, a number of intermediate
payments are made in L.S. contract running account bill form before final payment is
made. Intermediate payment is made for (i) value of measure up items of work executed
forming part of the contract. (ii) Value of authorized extra work done on account of
additions or modifications in the work executed supported by details in either case.
In the final L.S. bill, the full amount as entered in the contract is paid adding the amount of
authorized extras and deducting authorized omission and the intermediate payments already
made.
1. Hand Receipt: Hand receipt is a simple form of voucher intended to be used for small
miscellaneous payments and advances for which none of the above forms is suitable. The
purpose of payment and the designation of the officer making payment duly supported by
measurement book entry should be furnished on the hand receipt No agreement is necessary
for payments made through Hand receipt form.
54
4. Types of payment
Payment to contractors are made in a variety of ways, as listed below:
1. First and Final Payment

2. Running on Interim or „on account‟ payment.
3. Final payment
4. Advance payment
5. Secured Advance payment
6. First and Final Payment: The term indicates a single payment made for a job or contract on
its completion. In this case the payment finished by one payment after the completion of the
work. This is usually applicable for small work.
7. Running or interim „on account‟ payment: This means payment made on a running account
to a contractor for works done or supplies made by him, duly measured and entered in
measurement book. This is affected when only a part of the whole work or supply has been
done and the work or supply is in progress. During the progress of the work, the contractor is
paid from time to time.
8. Final Payment: This is the last payment made to a contractor on a running account,
on completion of this contract and the full settlement of the account.
9. Advance Payment: This means the payment made on a running account to a contractor for
work done by him but not measured. Advance payment is not generally made to the
contractor, but may be made under special circumstances when the work is sufficiently
progressed, but measurement cannot be taken for certain valid reasons. The value of work
done shall not be less than the advance proposed. Detailed measurements shall be taken as
soon as possible and advance payment adjusted in the final bill.
10. Secured Advance Payment: This payment is made on the security of materials brought by
the contractor to the site of work, when the contract is for the completed items of work. This
type of payment may be allowed by the Executive Engineer in the interest of work up to an
amount not exceeding 75% of imperishable materials. Lime, sand, paint and varnishes are
considered as perishable materials and no advance is permissible.
5. Preparation, Examination and Payment of Bills

The bills for payment shall be prepared with respect to the measurements recorded in the
55
measurement book. All entries in the measurement book with regard to the description and
quantities of work or supplies made are checked. Arithmetical calculations of the contents or
area are verified. When, the bill is on running account then it is compared with the quantities
etc. with the previous bill. It is checked whether deduction in respect of the following have been
properly made.
1. Recovery for advance payment

2. Recovery in respect of departmental materials issued to the contractors.
3. Hire charges for departmental materials issued to the contractors.
4. Amount to be withheld towards security deposit.
5. Recovery towards penalty for slow progress, non-return of empty gunny bags etc.
In case of final bills the field officers should certify about the due fulfillment of contract and
satisfactory completion of work.
The memorandum of payment is then made. The competent officer records a formal pay order
specifying both in words and figures the net amount payable. However the contractor is required
to acknowledge the gross amount payable inclusive of recoveries proposes in the bill.
When the bill is passed for payment, every page containing the detailed measurement will be
scored out by a diagonal red ink line. The number and date of the voucher for payment will be
entered in the measurement book.
CREDITORS VELOCITY:
Accounts payable turnover ratio (also known as creditor‟s turnover ratio or creditors' velocity)
is computed by dividing the net credit purchases by average accounts payable. It measures the
number of times, on average; the accounts payable are paid during a period.
A business concern may not purchase it‟s all items on cash basis. Sometimes, there may be
credit purchase. This ratio is calculated to find the time taken in paying the creditors‟ amount. It
is very similar to Debtors / Inventory Turnover Ratio. This ratio is otherwise called as creditor‟s
velocity.
56
This ratio indicates the degree of efficiency of management in paying creditors amount.
Generally, lower the ratio, the liquidity of the business concern is in better position and vice
versa. In other words, higher the ratio, the company enjoys the credit period allowed by the
suppliers and the amount may be used for some other productive purpose. At the same time, the
higher ratio may also imply lesser discount facilities availed or higher prices paid for the goods
purchased on credit.
Creditors Velocity It indicates the number of times sundry creditors have been paid during a
year. It is calculated by dividing the net credit purchases by average creditors.
57
CHAPTER -3
RESEARCH METHODOLOGY
INTRODUCTION:
The word “Research” is derived from French meaning to say “to investigate thoroughly”.
Research in common parlance refers to a search for knowledge. It can also define research
as scientific and systematic search for pertinent information on specific “Topic”
Research comprises defining and redefining problems, formulating hypothesis or suggested

solutions, collecting, organizing, and evaluating data, making deductions and reaching
conclusions, and at last carefully testing the conclusions to determine whether they fit the
formulation hypothesis.
Research Methodology deals with aspects of how effectively researcher uses its various steps,
methods, techniques. The Researcher must conduct it with certain amount of logic behind it so
that results are capable of being evaluated either by the researcher or investigator himself or by
others.
According to Henry Manheim:-
“Research designs not only anticipates and specifies the seemingly countless decisions connected
with carrying out data collections processing and analysis but it present a logical basis for
decisions”.
NEED FOR THE STUDY
In the current scenario to know the creditors turnover ratio in working capital. So in the present
prevailing conditions it is essential to understand the financial conditions of the company and
analyze the financial statements to measure the company‟s ability towards the bills payables.
58
OBJECTIVES OF THE STUDY:
➢ To understand the impact of the Bills payables activities of creditors resources.

➢ To know is there any inflow or outflow of Bills payables during the year.
➢ To analyze the bills payables component.
➢ To evaluate the creditors Turnover ratio.
➢ To analyze the Creditors velocity.
➢ To analyze the performance growth by comparing past financial statements of
HAL(FMD)
➢ To study company‟s profitability and give necessary recommendations.
SCOPE OF THE STUDY:
Financial statements contains large number of financial figures and also there are many ratios
and there in analyzing Bills payables. From the study of these absolute figures and analyzing
the creditors turnover ratio in working capital. It is important to derive a precise idea about how
to avoid high credit in future.
DURATION OF RESEARCH:
Data collected from all the available sources will be tabulate, collated and interpreted dully
supported with charts, tables, graphs etc. whenever necessary data collected will be subjected to
such authenticity test as deemed Necessary and the duration of the research is two months.
No effect will be spread in ensuring a complete of detail study, given the limitations to study.
Based on findings on the study and result conclusion, recommendations will be offered.
59
DATA TYPE:
Data refers to the fact that some existing information or knowledge is represented or coded in
some form suitable for better usage or processing.
The research of this work made extensive use of different sources of data collection. For this
purpose data were collected from both the primary and secondary sources so as to present a more
objective view in the end.
Sources of data:
There are two sources of data, namely:

A. Primary data
B. Secondary data
A) Primary data:
It is the data which is collected for the first time for a specified purpose. Generally primary data
is originally and specific in nature. This study is collected through the records maintained by
company through direct interview & questionnaires with the staff of HAL.
B) Secondary data:
Secondary data refers to data that was collected by someone other than the user. Secondary data
covers the data which might have been previously published and which might have been existing
before the need for the study.
DATA COLLECTION TOOLS:
The tools and techniques are used for the analyzing the data, which includes tables, bar-chart and
simple percentage method have been used for the purpose of analysis and presentations. For the
data analysis the subsequent interpretations has been interpreted
60
ANALYTICAL TOOLS:
Excel based information is been provided. All the necessary information which the company must have
semiannually, annually reports everything is provided through Excel tool.
LIMITATIONS OF THE STUDY:
As far as possible I have put my best efforts to collect the data in the course of the entire study.
Throughout the study, I found some of the limitations, which are:
● Due to the short period of time of project works, the study was confined only too
few components of the cost control.
● The finding is substantially based on information given by the guide report of
the company.
● Due to strict policy of the company they did not provide al the information.
61
CHAPTER -4
DATA ANALYSIS AND INTERPRETATIONS
4.1 TABLE SHOWING TOTAL EXPENDITURES:
TOTAL EXPENDITURES ITEMS( IN

YEARS TRENDS IN %
LAKHS)
2015-16 2023.31 43.42
2016-17 1099 23.58
2017-18 1538 33.00
ANALYSIS:
From the following table it can be seen that the company‟s total expenditures
items in trend is in the year 2015-2016 was 43.42% and it has decreased in 2016-
2017 it is decreased by 23.58% and after that there was slightly increase in 2017-
2018 it was increased suddenly increased by 33.00%
62
4.1 GRAPH SHOWING THE TOTAL EXPENDITURES
2023.31
2000
1750 1538
1500
1250
1099
1000
750
500
250
0
2015-16 2016-17 2017-18
TOTAL EXPENDITURES ITEMS( IN LAKHS)

Poly. (TOTAL EXPENDITURES ITEMS( IN LAKHS))
INTERPRETATION:
The above graph indicates that the performance of the total expenditures items. In
the year 2015-2016, the expenses of the company were high. The company had
2023.31(43.42%) and in the next year 2016-2017 the expenses of the company
decreased to 1099(23.58%) and in the year 2017-2018 the expenses are again
raised when compared to the previous year it has increased to 1538(33.00%)
because the company has too much of expenses due to this it is increased.
63
4.2 TABLE SHOWING THE NET CREDITORS (CURRENT
LIABILITIES):
YEARS TOTAL SUNDRY CREDITORS ITEMS( IN LAKHS) TRENDS IN %
2015-16 6552.6 28.09
2016-17 7394 31.70
2017-18 9378 33.00
ANALYSIS:
From the following table it can be seen that the company‟s total sundry creditor
items in trend is in the year 2015-2016 it is 28.09% and then after that in the next
year it is increased. In 2016-2017 it is 31.70% it is slightly increased. And then in
the year 2017-2018 it is slightly increased by 33.00%
64
4.2GRAPH SHOWING THE NET CREDITORS (CURRENT
LIABILITIES):
10000 9378
8500
7394
7000 6552.6
5500
4000
2500
28.09 31.70 33.00
1000
-500
2015-16 2016-17 2017-18
TOTAL SUNDRY CREDITORS ITEMS( IN LAKHS)

TRENDS IN %
Log. (TOTAL SUNDRY CREDITORS ITEMS( IN LAKHS))
INTERPRETATION:
The above graph indicates that the performance of the total net sundry creditor
items. In the year 2015-2016 it was 6552.6 (28.09) the sundry creditors was less.
when compare to 2016-2017 and in the year 2016-2017 there is increase in trends
by (31.70%) 7394 and in the year 2017-2018 it is increased for (33.00%) by 9378
because due to increase in the number of contracts, so the creditors increased.
65
4.3 TABLE SHOWING TOTAL CREDITORS EXPENDITURES
TURNOVER RATIOS:
YEARS TOTAL CREDITORS TURNOVER ITEMS( IN LAKHS) TRENDS IN %
2015-16 0.3186 48.30
2016-17 0.1576 23.89
2017-18 0.1834 27.80
ANALYSIS:
From the following table it can be seen that the company‟s total creditor‟s
turnover ratio is in trend and in the year 2015-2016 it is 48.30% in this year the
creditors turnover ratio is high and after that there is decreased in 2016-2017 and it
is reduced to 23.89% and again there is slightly increase in the creditors turnover
ratio in 2017-2018 by 27.80%
66
4.3 GRAPH SHOWING TOTAL CREDITORS EXPENDITURES
TURNOVER RATIOS:
45
39.94
40
35
33.01
30 27.05
25
20
15
10
5
0.0685 0.0566 0.0464

0
2015-16 2016-17 2017-18
TOTAL CURRENT RATIOS ITEMS( IN LAKHS) TRENDS IN % Log. (TRENDS IN %)
INTERPRETATION:
The above graph indicates that the performance of the total creditors turnover
items. In this graph in the year 2015-2016 it is 0.0685(39.94%) when compare to
next year because the expenditures of the company are very high but the creditors
are low. In the year 2016-2017 it is 0.0566(33.01%) it is decreased from previous
year and in 2017-2018 it is 0.0464 (27.05%) it is decreased when compare to the
previous year.
67
4.4 TABLE SHOWING THE TOTAL REVENUE INCOME:
YEARS TOTAL REVENUE INCOME ITEMS( IN LAKHS) TRENDS IN %
2015-16 1322.31 35.08
2016-17 922 24.46
2017-18 1525 40.45
ANALYSIS:
From the following table it can be seen the company‟s total revenue income is in
trends and in the year 2015-2016 it is 35.08% and after this there is gradual
decrease in the next year. In the year 2016-2017 is decreased to 24.46% and then in
the next year it is increased. In the year 2017-2018 it is increased by 40.45%
68
4.4 GRAPH SHOWING THE TOTAL REVENUE INCOME:
1600 1525
1322.31
1350
1100
922
850
600
350 24.46 40.45

35.08
100
-150 1 2 3 4
YEARS
TOTAL REVENUE INCOME ITEMS( IN LAKHS) TRENDS IN %
Poly. (TOTAL REVENUE INCOME ITEMS( IN LAKHS))
INTERPRETATION:
The above graph indicates that the performance of the total revenue income of the
company items in the year 2015-2016 it is1322.31(35.08%) and in the year 2016-
2017 it is decreased to 922 (24.46%) and in the next year 2017-2018 it is increased
to 1525(40.45%) because the company is getting the revenue income. And it
performing good when compare to previous year. It is earning profit.
69
4.5 TABLE SHOWING THE TOTAL CURRENT ASSETS AND
CURRENT LABILITIES
ANALYSIS:
From the following table it can be seen that the company‟s current assets and
current liabilities are in the trend in the year 2015-2016 current assets is 33.90%
and current liabilities is 27.64% in the next year 2016-2017 the current assets is
33.09% and current liabilities is 32.65% and in the year 2017-2018 the current
assets is 33.02 and current liabilities is 39.71% the current assets is been decreased
in every year the current liabilities is been slightly increased in every year.
70
4.5 GRAPH SHOWING THE TOTAL CURRENT ASSETS AND
CURRENT LABILITIES TREND
150%
130%
110%
90% 31/Ma 71%
70% r/18 472. 00 10180 .00 33.0 2% 39.
50%
30% 31/Ma r/17 473. 00 8369 .00 33.0 9% 32.6 5%
10% 31/Ma r/16 484. 61 33.9 0%
-10% 7083 .89 27.6 4%
YearCurrent Asset Current Trend in Current Trend in Current

Total Liabilities Total Assets Liablities
Series1 Series2 Series3
INTERPRETATION:
The above graph indicates that the performance of the total current assets and
current liabilities items. In the year 2015-2016 the current assets is 484.61(33.89%)
in the year 2016-2017 it is 473(33.08%) it is decreased when compare to previous
year and in the year 2017-2018 it is 472(33.01%) again it is decreased. The
company‟s current assets is been decreasing there is no much income from the
current assets.
In the year 2015-2016 the current liabilities is 7083.89(27.63%) in the next year it
is increased. In the year 2016-2017 it is 8369.00(32.64%) it is increased when
compare to previous year and in the next year it is 10180.00(39.71%) when
compare to previous two years it is increased. Because the company has too much
of expenses and creditors
71
4.6 TABLE SHOWING THE TOTAL CURRENT RATIOS:
YEARS TOTAL CURRENT RATIOS ITEMS( IN LAKHS) TRENDS IN %
2015-16 0.0685 39.94
2016-17 0.0566 33.01
2017-18 0.0464 27.05
ANALYSIS:
From the following table it can be seen that the company‟s the total current ratio
items is in the trends in the year 2015-2016 it is 39.94% and it is high when
compare to next year. And in the year 2017-2018 it is 33.01% it is decreased. And
in the year 2017-2018 it is again decreased by 27.05%
72
4.6 GRAPH SHOWING THE TOTAL CURRENT RATIOS:
45
39.94
40
35 33.01
30 27.05
25
20
15
10
5 0.0685 0.0566 0.0464

0
2015-16 2016-17 2017-18
TOTAL CURRENT RATIOS ITEMS( IN LAKHS) TRENDS IN % Log. (TRENDS IN %)
INTERPRETATION:
The above graph indicates that the performance of the total current ratios of the
company items. In the year 2015-2016 it is 0.0685(39.94%) in the year 2016-2017
it is 0.0566(33.01%) it has decreased when compared to previous year and in the
year 2017-2018, it further decreased to 0.0464(27.05%) .
73
CHAPTER -5
SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
Findings:
 The earnings from the operating activities is too less.

 This division indicates that there is too much of expenses has it is providing services
to other division.
 The performance of the divisioncreditor‟s turnovers was high in 2015-2016 and it
is decreased in 2016-2017 and again it is increased in 2017-2018.
 The performance of the division revenue income fluctuates has the revenue in the 2016-
2017 it was decreased and in the year 2017-2018 it is increased.
 The performance of the current assets in the year 2015-2016 it was increased and in the
next year it is decreased
 The performance of the Current liabilities it is increasing from year to year.
 The performance of the current ratios is been gradually decreasing from years
Suggestions and Recommendations:-
1. Facilities management division should concentrate on the debtors and they should
concentrate on the increase in collecting the outstanding receivables.
2. Facilities management division provides services to the other divisions and on obtaining
admin approvals, processing of tendering activities, Technical evaluation and placement
of order for civil, electrical and Service contracts required for Bangalore based divisions
and townships. And it provides the services like Power Supply & Distribution Water
Supply & Distribution Transport Management Telephones Environment Management
Quarters maintenance Housekeeping and Landscape management Public amenities
74
Management Event Management. So as it is providing all the services so the expenses
aremore.
3. Facilities management division should concentrate on reducing the payment cycle because
it delays for making payments and it is more time consuming.
4. Facilities management division should concentrate on revenue income and mainly
collect all the bills receivables and debts.
5. Facilities management division is having miscellaneous expenses like payment to
contractor‟s causal, payment to security services, guest house expenses,
ceremonial
expenses, hiring of vehicles. Seminars and conferences, Hindi training expenditures office
contingences.
6. The operating activities are too less because this division provides service to other
divisions and income less when compare to expenditures.
75
Conclusion:-
The study on bills payable analysis was mainly under taken to study the out flow and inflow of
cash from various financial elements in practical condition. This is an opportunity, which helped
me in understanding cash flows and practical knowledge with respect to company‟s
performance.
Hindustan Aeronautics Limited (HAL) was setup in 1940 and it carries very important
responsibilities towards the Indian armed force. HAL produces the major proportion of aircraft,
upon which they depend to meet their commitments to national defense Indian arm force (IAF) is
one of the major customers of HAL. Other customers are Non (IAF), CIVIL and EXPORTS for
which they provide equal efficient effective services.
Through the study of statements of the company I found that the reason for too much of current
liabilities and there is a lot of expenses and much of creditors because they provide services to
other divisions. They also provide services to employees how stay in HAL premises.
In the year 2015-2016, the expenses of the company were high. The company had
2023.31(43.42%) and in the next year 2016-2017 the expenses of the company decreased to
1099(23.58%) and in the year 2017-2018 the expenses are again raised when compared to the
previous year it has increased to 1538(33.00%) because the company has too much of expenses
due to this it is increased.
By the organization study, I found that the organization has most depended on the external
services and resources. Executives are satisfied with present organizations rules and regulations
and modernized. The system needs to change according to the changing to the conditions of the
business. So it is suggested for Facilities Management Division to concentrate on debtors and
collect all the bills receivables and outstanding.
76
Annexure
Statement of Profit and Loss for the period ending 31st March 2016
Division : FacilitiesManagement Division (Rs in Lacs)
31st
31st March
S.No Particulars March
2015
2016

IFD Sale 0.00 0.00
2 Other Income 1168.21 835.53
3 Total Revenue Incomes (1+2) 1322.31 940.76
4 EXPENSES
Changes in inventories of finished Goods, stock-in-trade, Work-in-
progress and Scrap 3.40 0.00
Provisions for redundancy and doubtful debts 706.70 39.12
Inter Services and Common Services -22316.73 -22021.27

Total Expenses (4) 2023.31 932.30
5 Profit /loss before Exceptional items and Tax (3-4) -701.00 8.46
7 Profit/Loss before Tax (5-6) -701.00 8.46
77
8 Tax Expenses:
(1) Current Tax 0 0
(3) Earlier Tax 0 0
9 P/L for the period from continuing Operations(7-8) -701.00 8.46

13 Profit/Loss for the period(9+12) -701.00 8.46

0.00 0.00
Total comprehensive income for the period (13+14) (comprising -701.00 8.46
15 profit (loss) and other comprehensive income for the period)
(1) Basic -0.51 0.00
(2) Diluted
(1) Basic
(2) Diluted
(1) Basic
(2) Diluted
78
Statement of Profit and Loss for the period ending 31st March 2018
(Rs in
Division : FacilitiesManagement Division
Lacs)
31st
31st March
S.No Particulars March
2018 2017

IFD Sale 0.00 0.00
2 Other Income 986.00 803.00
3 Total Revenue Incomes (1+2) 1525.00 922.00
4 EXPENSES
Changes in inventories of finished Goods, stock-in-trade, Work-in-progress
and Scrap 0.00 0.00
Provisions for redundancy and doubtful debts 93.00 124.00
Inter Services and Common Services 23863.00 22767.00

Total Expenses (4) 1538.00 1099.00
5 Profit /loss before Exceptional items and Tax (3-4) -13.00 -177.00
7 Profit/Loss before Tax (5-6) -13.00 -177.00

8 Tax Expenses:
(1) Current Tax 0 0
79
(3) Earlier Tax 0 0
9 P/L for the period from continuing Operations(7-8) -13.00 -177.00

13 Profit/Loss for the period(9+12) -13.00 -177.00

0.00 0.00
Total comprehensive income for the period (13+14) (comprising profit -13.00 -177.00
15 (loss) and other comprehensive income for the period)
(1) Basic
(2) Diluted
(1) Basic
(2) Diluted
(1) Basic
(2) Diluted
80
Balance sheet for the period ended 31st March 2016 & 2015
Division : FacilitiesManagement Division (Rs in Laks)
S.No Particulars 31st March 2016 31st March 2015

I Equity and Liabilities
(1) Shareholders funds
(a) Share Capital 11457.54 8141.19
(b) Reserves and Surplus -701.00 -463.60
(c ) Money Received Against Share warrants
Sub Total 10756.54 7677.59
(2) Share Application Money Pending Allotment
(3) Non- Current Liabilities
(a) Long- Term Borrowings
(b) Deferred Tax Liabilities
(C ) Other Long Term Liabilities 50.52 50.92
(d) Long Term Provisions 684.25 639.47
Sub Total 734.77 690.39
(4) Current Liabilities
(a) Short Term Borrowings
(b) Trade Payables
Sub Total- Trade Payables
(c ) Other Current Liabilities 6552.6 6151.19
(d) Short Term Provisions 531.29 544.32
Sub Total 7083.89 6695.51
TOTAL 1(1+2+3+4) 18575.2 15063.49
II Assets
1 Non- Current Assets
(a) Fixed Assets
(i) Tangible Assets
Gross Block 18813.10 17550.10
Less: Impairment
Net Block 10746.90 10053.93
(ii) Intangible Assets
Gross Carrying Amount 6.80 4.75
Less: Cumulative Amortization& Impairment loss 3.34 2.43
Net Carrying Amount 3.46 2.32
(iii) Capital Working-in progress 6219.88 2914.27
(iv) Intangible Assets Under Development
(b) Non-Current Investments
Deferred Tax Assets
81
(C ) Long Term Loans and Advances 1051.23 982.64
(d) Other Non-Current Assets 69.12 67.02
Sub Total 18090.59 14020.18
2 Current Assets
(a) Current Investments
(b) Inventories 83.08 91.17
(c ) Trade Receivables
(d) Cash and Cash Equivalents 9.72 87.48
(e) Short Term Loans and Advances 81.94 52.38
(f) Other Current Assets 309.87 812.28
Sub Total 484.61 1043.31
TOTAL II(1+2) 18575.20 15063.49
82
Balance Sheet as on 31st March 2017 & 2018
Division : FMD (Rs In laks)
S.No Particulars
2018 2017
ASSETS
1 A. Non-current assets
(a) i Property, Plant and Equipment
Gross Block 36380.00 26696.00
Net Block 21949.00 13415.00
ii Property, Plant and Equipment-Customer Funded 0.00 0.00

Net Block 0.00 0.00
(b) Capital Work-in-progress 8072.00 9699.00

(c ) Investment Property
Net Block 3.00 3.00
(d) Goodwill
0.00 0.00
(e) Other Intangible Assets
Net Block 22.00 10.00
(f) Intangible Assets under Development

Net Block 0.00 0.00
(g) Investments in Joint Ventures and Subsidiary 0.00 0.00
(h) Financial Assets
83
(i) Investments-Others 0.00 0.00
(iii) Loans 1092.00 1089.00
(iv) Others 0.00 0.00
(i) Deferred Tax Assets (Net) 0.00 0.00

(j) Other Non-Currents Assets 0.00 0.00
Sub Total - A 31138.00 24216.00
2 B. Current Assets
(a) Inventories 69.00 114.00
(b) Financial Assets
(i) Investments 0.00 0.00
(iii) Cash and Cash Equivalents 1.00 12.00
(iv) Bank Balances Other Than (iii) above 0.00 0.00
(v) Loans 67.00 76.00
(vi) Other Financial Assets 317.00 254.00
C. Current Tax Assets (Net) 0.00 0.00

D. Other Current Assets 18.00 17.00
Sub Total - B 472.00 473.00

Total Assets (A+B) 31610.00 24689.00
EQUITY AND LIABILITIES

1 A. Equity
(a) Equity Share Capital 20707.00 15738.00
(b) Other Equity -13.00 -177.00
Sub Total - A 20694.00 15561.00
LIABILITES
1 B. Non-Current Liabilities
84
(b) Provisions 686.00 709.00
(c ) Deferred Tax Liabilities (Net) 0.00 0.00
(d) Other Non-Current Liabilities 0.00 0.00
Sub Total -B 736.00 759.00
2 C. Current Liabilities
(b) Other Current Liabilities 255.00 423.00

(c ) Provisions 547.00 552.00
(d) Current Tax Liabilities (Net) 0.00 0.00
Sub Total - C 10180.00 8369.00
Total Equity and Liabilities - (A+B+C) 31610.00 24689.00
85
BIBLIOGRAHY
BOOKS:
TABLE OF THE BOOKS REFFERED
Sl.No Name Author Name Publication

1 ANNUAL REPORTS HAL HAL
2 ACCOUNTS MANUAL HAL HAL
3 FINANCIAL C.paramasivan New age international

MANAGEMENT T. subramanian limited
4 MANGEMENT M.N Arora Himalaya
ACCOUNTING Publishing
House
Websites:
➢ www.hal-india.com
➢ www.google.com
➢ www.wikipedia.com
ANNUAL REPORTS:
➢ Annual reports of HAL, for the year 2015-2016

86

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PROJECT REPORT ON

“A STUDY ON ANALYSIS OF BILLS PAYABLES”

DEPARTMENT OF MANAGEMENT STUDIES

NEW HORIZON COLLEGE OF

ENGINEERING, OUTER RING ROAD,

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

Mr. S.N. Lokesh

Why is accounts payable so important?

Bills Payable Department Functions:

Accounts payable often functions internally to distribute internal reimbursement payments,

Business Travel Expenses

● Keeping track of all payments and expenditures, including payroll, purchase

5 tips to help you successfully manage your accounts payable:

1. Simplify Your Accounts Payable Process

3. Reduce Accounts Payable Fraud

5. Reduce CFO Impact to Verification & Signature

Bills Payable Process:

● what the company had ordered

● prevent paying a fraudulent invoice

1. The liability will be omitted from the balance sheet, and

1. The liabilities will be overstated, and

These play a very major role in Bills payables

When a contractor agrees to perform a service in exchange for compensation, a service

What's in a Service Contract?

An employment contract is an agreement between an employer and an employer regarding the

An employment contract or contract of employment is a kind of contract used in labour laws

Wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an

Employment status – a worker could be employed full-time, part-time, or on a casual basis.

A purchase order or PO is prepared by a company to communicate and document precisely what

● The person requesting that a PO be issued for the goods or services

The Future of Impress

As companies transition to heavier reliance on electronic transactions, the imprest system is

In economics, labour is a measure of the work done by human beings. It is conventionally

Labour Contract types:-

Full-Time Permanent Employment Contract

Part-Time Employment Contract

Director‟s Service Agreement

Fixed-Term Employment Contract

Zero Hours Contract

Casual Work Contract

A consultancy agreement is normally used when an organization wants to engage the

Purpose of Retention Money

How to deduct Retention Money from the progress claim?

Here is how to deduct retention money from the progress claim.

What is the „Limit of Retention Money?

Release of Retention in Construction Contracts

Usually, retention monies are released in 2 stages of the project.

How long can retention money be held for?

There are 2 components in retention money:

● EMPLOYEES PROVIDENT FUND (PF):

EMPLOYEES PROVIDENT FUND (PF):

What is the purpose of provident fund?

Why provident fund is important?

EMPLOYEES STATE INSURANCE(ESI):

Employees' State Insurance Corporation (ESIC), established by ESI Act, is an autonomous

Employees State Insurance Scheme of India is a multidimensional social security system

Objectives of ESI scheme are:

COMPANY NAME: Hindustan Aeronautics Limited (HAL)

FOUNDER: Seth Walchand Hirachand

HEADQUATERS: Bangalore, Karnataka, India