Kaleem Project New

Working Capital management
CHAPTER 1
INTRODUCTION
INDUSTRY PROFILE
COMPANY PROFILE
S.D.G.S PG COLLEGE, HINDUPUR

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INTRODUCTION
Management. It forms a major function of the finance manager and accountant.
Working capital management or administration of all aspects of working capital, which
manage the firms current assets an Working Capital Management is one of the most
important aspects of financial d current liabilities in such a way that a satisfactory level
of working capital is maintained.

Current Assets include:
- Stocks of raw materials
- Work-in-progress
- Finished goods
- Trade debtors
- Prepayments
- Cash balances
Current Liabilities include:
- Trade creditors
- Accruals
- Taxation payable
- Dividends payable
- Short term loans
Every business needs adequate liquid resources in order to maintain day-to-day cash flow.
It needs enough cash to pay wages and salaries as they fall due and to pay creditors if it is to
keep its workforce and ensure its supplies.
Maintaining adequate working capital is not just important in the short-term. Sufficient
liquidity must be maintained in order to ensure the survival of the business in the long-term
as well.
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Even a profitable business may fail if it does not have adequate cash flow to meet its
liabilities as they fall due.
INDUSTRY PROFILE
The Indian Hume Pipe Industry

OUR FOUNDER
WALCHAND HlRACHAND
(1882-1953)
Seth Walchand Hirachand

The last quarter of the 19th century ushered in the Industrial Renaissance of India.
Prominent among the men who took initiative to build a modem India was
Walchand Hirachand, hailed as the pioneering architect of modem industrial India.
Walchand was born on 23rd November, 1882 in Sholapur. His patriotic fervor broke
through from the shackles of the conventional modes of business. It became a matter of
challenge to him to prove India's competence to the world at large. In spite of negligible
moral and financial support from his family, Walchand's first step to wardshis stupendeously
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successful entrepreneurial career was a small railway contract. He joined hands with Tata
Sons in the starting of the Tata Construction Company, which executed major projects for
Bombay Municipal Corporation and Bombay Port Trust. Subsequently, Walchand completed
the construction of Bhor Ghat tunnels, a Project considered to be beyond the capabilities of
any Indian company.
He formed The Premier Construction Company and its fully owned subsidiary
called. Hindustan Construction Company was incorporated to build dams, power houses,
jetties, bridges, docks, etc. One of the most challenging and prestigious project executed by
this company was the construction of the Power House of the Koyna Project, deep in the
heart of a solid granite mountain. Walchand with his foresight and a multidimensional talent
forged success after success.
Success in the highly competitive field of construction and contracting spurred

Walchand to venture into another killingly competitive field, Shipping. Walchand's infectious
enthusiasm was sufficient persuasion for his friends, who joined him to form the Scindia
Steam Navigation Company. Thirty years later when Walchand retired as its Chairman, the
company had a fleet of 54 steamers. Not content with sailing the high seas, Walchand took
the lead in shipbuilding as well and a Shipbuilding yard was setup at Vishakhapatnamand in
a true Walchand
style the first 8,000 tons steamship, 'JAL USHA was launched in March 1948. Being an
industry of importance to national defence this was nationalised and rechristened as
Hindustan Shipyard Limited.
For a man always on the move, Walchand's accidental meeting with Mr. Pawley, the
President of an American Aircraft Company took him to establish an aero plane manufacturing
company in India called Hindustan Aircraft Limited and the plant was erected in a record
time of 6-months. The first Harlow Trainer plane built by this company had its test flight in
July 1941. On Nationalization this company is today known as Hindustan Aeronautics
Limited.
With the encouragement and support of another architect of modem India, Sir.
M.Vishweswarayya, Walchand established The Premier Automobiles Limited and in
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October 1947,the first Indian made trucks and cars rolled on the roads of a free India.
The Phoenix-like rise of the present Hume Pipe enterprise from the ashes of its
predecessor-The Hume Pipe and Concrete Construction Company (India) Ltd., is a tribute to
the man's dogged perseverance in a industry almost written off, as dead. He decided to revive
the industry and in 1926 the present The Indian Hume Pipe Co. Ltd. was formed and the
company has never had any occasion to look back.
Realizing the interdependence of industry and agriculture, Walchand established the
Ravalgaon Sugar Farm Limited to manufacture sugar of international quality. Walchand's
success in agriculture prompted him to start another sugar factory and workshop at a small
place called Kalamb which is today known as Walchandnagar. The small workshop grew into
a centre of heavy engineering company called Wa1chandnagar Industries Limited, which
today manufactures machinery for complete sugar plants and cement plants, industrial boilers
up to 200 tons per hour capacity precision gears and hardware for India's nuclear reactors and
space vehicles.
During this era, there was no national association or body, where businessmen and
industrialists could get together for the pursuits of common interest and objectives. Once
again Walchand took the lead in establishing new bodies like the Indian Merchants' Chamber,
Maharashtra Chamber of Commerce, Federation of Indian Chamber of Commerce and
Industries etc.
A man of rare talent, Walchand believed with total conviction that his life's mission
was to free India from her economic bondage. To comprehend the magnitude of his
achievement, the circumstances prevailing must be highlighted. The facility of a developed
capital market was non-existent. The attitude of the British Government towards Indian
entrepreneur was almost hostile. Imported products and foreign companies in India had the
upper hand. To compete with such established giants in terms of experience, expertise and
finance appeared futile.
Walchand was not daunted by all this. People called him foolhardy. Yet he had the vision and
the courage to go ahead and eventually prove that Indian entrepreneurship, enterprise, skill
and dedication cannot be under-estimated and is second to none.

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MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. INDUSTRY STRUCTURE & DEVELOPMENT:
We all know that water is a prime natural resource and a basic human need for
survival an existence.
Indeed water is fundamental to our life.
In view of the vital
importance of water for human animal and plant life for maintaining ecological balance and
for economic and developmental activities of all kinds and considering its increasing scarcity
the planning and management of this resource and its optimal economical and equitable use
has become a matter of national importance.
Your company has been in the business of manufacturing laying and jointing of
pipelines of various pipe materials such as RCC pipes, steel pipes, prestressed concrete pipes,
penstock pipes, Bar wrapped steel cylinder pipes (BWSC), prestressed concrete cylinder
pipes (PCCP) etc. which provide infrastructure facility and development for drinking water
supply projects, irrigation projects, Hydro electric projects, sanitation and sewerage systems.
For the past few years as a part of nation building, your company has also been undertaking
infrastructure development programmes by way of executing on turnkey basis the combined
water supply from source to distribution centres which apart from manufacturing,
Laying and joining of pipelines included construction of intake well, water sump, water
treatment plan, water pumping stations, installation of pumping machineries electromechanical works branch mains, ground level reservoirs, elevated reservoirs, leading to
development of complete system for water supply to various towns and villages of India.
2. OPPRTUNITIES AND THREAT:

The population of the country is expected to reach a level of around 139 crores by
year 2025 (source:- National water policy 2002) which will further aggravate the scarcity of
water to the people of India. As it is with the growing population demanding more food,
more products and higher standards of living the shortage of drinking water can only get
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worse. Thus there is a vast scope for improvement in infrastructural developmental activities
in water supply, drainage scheme, for companys manufacturing and contracting activities on
this field.
Growth of population and the expansion of economical activities inevitably lead to
increasing demands for water for diverse purposes i.e. domestic, industrial, agricultural,
hydro-power, thermal power, navigation, recreation etc. Domestic and industrial water needs
have been largely concentrated in or around major cities, however the demand in rural areas
is expected to increase sharply as the development programmes of state Governments
improve the economic conditions of the rural mass. Demand for water for hydro and thermal
power generation and for other industrial uses is also increasing substantially. As a result
water which is already scarce will become even scarer in future. This underscores the need
for the utmost efficiency in water utilization and its distribution. Through awareness of
efficient water supply system and water quality, we can keep our water supply adequate and
provide clean and healthy water for our children. It is their fundamental right. Hence there is
a good scope for many water supply projects coming up in near future and this auger well for
your company.
Increased competition from medium/large scale construction entities and availability
of substitutes such as alternative pipe materials like ductile iron pipes spirally welded steel
pipes, GRP, and DHPE pipes are perceived as one of the threat/competition to your company
another cause is prices of key raw materials namely steel, steel wires, HT wires and cement
which had remained high in the first three quarters of the year under review resulting into
considerable shrinkage of margins on orders secured on firm prices in respect of orders
having escalation provision but linked to whole sale price index the price escalation has fallen
short of full recovery due to WPI not rising in direct proportion to the price increase.
3. SEGMENT-WISE ACTIVITY:
The company is considered a pioneer in the field of water industry, it being in this line
for last more than 82 years. The company presence is there in almost all water supply related
activities viz urban and rural large diameter irrigation pipelines, overhead tanks and other
allied civil construction. The company also supplies concrete railway sleepers to Indian
railways. The segment wise report is as under.
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(a) WATER SUPPLY AND SEWERAGE PROJECTS:

(i) Some prominent pipeline project works successfully completed by your company
during the year are: From Tamilnadu water supply and drainage (TWAD) board, western region
Coimbatore for combined water supply scheme to 6 town panchayats and 1399 rural
habitations in pattinam and seerpalli in namakkal district of the value of
Rs.6,723Lacs.
From panchayat raj engineering department, medak for CPWS Gajwel involving
1000mm,450mm,400mm and 350mm dia BWSC pipes of the value of
Rs.3,990.99Lacs.
Clarifloculator at Gajwel Phase-I Project.
From M/s. Larsen and Toubro Ltd, Chennai for implementation of combined water
supply scheme to 5 municipalities, 11 town panchayats and 3163 rural habitations in
Ramanathapuram, sivagangai and pudukkottai districts package VII R.S. Mangalam
cross to sayalkudi of the value of Rs.2,303Lacs.
From I.V.R.C.L. infrastructure and projects limited for supply of PSC pipes for
Bisalpur Dudu water supply project (Transmission - main II) in Rajasthan of the value
of Rs.2,170Lacs.
From M/s. IVRCL infrastructure and projects limited for supply of various diameters
pipes ranging from 350mm dia to 1600mm dia PSC pipes for purandar lift irrigation
scheme of Maharashtra Krishna valley Development corporation, pune of the value of
Rs.2,061Lacd.
From Andhra Pradesh state irrigation Development corporation limited, Nirmal for
supply, laying, jointing, testing and commissioning with civil works of PSC pipes for
Kanakapur lift irrigation scheme of the value of Rs.1,634.94Lac.
(ii) Companys works on many pipeline projects are progressing will and or nearing
completion and the noteworthy amongst then are: From panchayat Raj Engineering Department, Anantapur for supply, laying, joining,
testing and commissioning of BWSC, DI,GRP and MS pipes with allied civil works
including the construction of sumps, intake will cum pump house with foot bridge and
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ground level balancing reservoir etc. J.C. Nagi Redddy Drinking water supply project
in Anantapur of the value of Rs.11,589.71Lacs.
From public Health engineering project division, Paipur, Chhattisgarh for desigh,
manufacturing, providing, laying, jointing, testing, commissioning and one year
operation and maintenance of steel cylinder pipeline wigh concrete lining and coating
under Raipur Augmentation water supply scheme consisting 1700mm dia and
1400mm dia M.S. pipeline 15.20kms and 3.60kms, respectively, of the value of Rs.
6,147Lacs.
1700mm and 1400mm dia M.S. pipeline for Raipur Augmentation

water supply scheme.
(iii) Some of the New orders secured by the company during the year are: From the superintending Engineering, public Health Division, Anantapur for
investigation, survey, design and execution of Dharmavaram water supply scheme
with chitravathi Balancing reservoir as source under UIDSSMT scheme of the value
of Rs.6,553.80Lacs.
From TWAD Board, Coimbatore for implementation of combined water supply
scheme to Madathukulam of the value of Rs.2, 590Lacs.
From the superintending engineer, irrigation and CAD department. AVR HNSS
Circle No.3, Madanapalli for survey, investigation designs, drawings, estimation,
construction and commissioning on turnkey basis including maintenance for 15
years(including 2 years liability period) of pulikanuma L.I scheme on right bank of
Tungabadra river near satanur (V),Kosigi (M) in Kurnool district with two stage
pumping consisting of (a) construction of approach channel (b) jack well cum pump
house including manufacture, supply, erection of pumps, motors, panels, soft starters,
capacitors, E.O.T. & H.O.T cranes and all other electrical equipment (c) 33/11 KV
sub-stations (d) H.T power lines (e) pressure mains (f) cisterns (g) Reservoir/Storage
tank of capacity 1.232TMC including Head regulator and surplus arrangements (h)
Approach and link canal to join the T.B.P. L.L.C main canal @ km 270.00 etc.

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complete in joint venture with M/s. Flow more
pvt. Ltd. of the value of Rs.
26,309.92Lacs and our companys share is 86% i.e. Rs.22,626.53Lacs.

From the superintending Engineering, RWS&S, Anantapur for J.C. Nagi Reddy
Drinking water supply scheme phase II&III in Anantapur District of the value of
Rs.13,592.90Lacs.
1000mm&600mm dia M.S. pipe lines for J.C. Nagi Reddy Drinking water supply
scheme, Phase II&III, Anantapur District, Andhra Pradesh.
CORPORATE SOCIAL RESPONSIBILITY:

In keeping with the noble and rich tradition of charity inculcated by our founder late
seth walchand Hirachand an industrialist and a legendary, visionary and philanthropist of his
era, the company had donated Rs.50Lacs in 2004-05 as corpus donation to the ratanchand
foundation, a trust promoted and sponsored by the promoters of the company, for carrying out
charitable activities such as educational grant to needy students and institutions medical aid
to the patients as well as to the hospitals/ charitable trusts and donation of costly medical
equipments to the hospitals.
During the year under review, some part of the income earned out of the corpus
donation made by the company was applied for payment of educational grant to 19 students
and 4 institutions including donation to SOS childrens village of india, medical aid to needy
patients and institutions hospitals, further one Anesthesia machine of around Rs.11Lacs was
donated to lokmanya tilak municipal medical college and general hospital, sion,
Mumbai(LTMG Hospital,Sion).
Anesthesia Machine
Similarly, the walchand foundation, a trust promoted and sponsored by the promoters of the
company has provided educational grant to 72 students and medical aid to16 patients and also
donated ventilator system costing Rs.9.62 Lacs to LTMG Hospital, sion.

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In all, these foundations had donated over Rs.50Lacs towards charitable purpose
during the financial year under review.
Ventilator System
TYPES OF DEPARTMENTS:
Each manufacturing unit of the company consists following departments:1. Production Department.
2. Quality Department.
3. Accounts Department.
4. Stores Department.
5. Market Department.
6. Project Execution Department.
1. Production Department:
The company is producing pre-stressed concrete pipes which are used in water supply
schemes, Drainage schemes, etc.
2. Quality Department:
A standard is fixed by Indian standard institute for manufacture of above pipes. The
quality control department of the company looks after that the pipes are manufactured
according to norms fixed by the Indian standard institution.
3. Accounts Department:
The Accounts Department maintaining the records of income and expenditure of
company keep track over the financial requirements, Maintain control, gets the record
audited, prepare the Balance Sheet, there after Profit and Loss account and Annual Report.
4. Stores purchase Department:
Purchase Department looks after the requirement of Raw Materials and other indirect
materials required for the manufactures. Their job is to find out the Reliable suppliers who
can supply best quality of materials with low cost. Arrange the materials as required by the
production Department.
5. Marketing and sale Department:
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The orders are procured by submission of tenders called for by the state and central
Governments. When companys tendered amount is lowest compared to other competitors
tenders, the work is allotted to this company.
6. Project Execution Department:
After the work orders are received, this department starts executing the projects of
water supply line along with required connected works like collection well, water Treatment
plant, sumps, service reservoirs and pump sets including Distribution systems for the main
pipe line. Thus, the company fulfills the need of the nations drinking water.

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COMPANY PROFILE
The Indian Hume Pipe Company Limited (IHP) 'was established in the year 1926,
with the object of manufacturing, popularizing and marketing Hume Pipes (Reinforced
Cement Concrete Pipes) and allied products.
Today, the Company has a wide spread out and a wide network of over forty factories
all over India manufacturing a wide range of products. It has earned a reputation for all round
excellence reputation earned through employing modem technology, stringent quality control
measures, timely execution and continuous research and development. As a result, the
company's products have found acceptance in the highly competitive Domestic and
International markets. The Company's expertise is at work right from designing of custommade pipes to manufacturing and commissioning of the pipeline Project. This expert
consultancy is an integral part of the Company's total engineering package offered.
The company has a separate Research & Development Division which is recognized
by the Ministry of Science & Technology, Department of Science & Industrial Research,
Govt. Of India, New Delhi.
It is a measure of IHP's all round competence that the Company has supplied
technical consultancy services in preparing layouts, construction, choice of supplies,
operation expertise and technicians for major projects abroad. The Company has exported its
manufacturing knowhow and operational expertise on R.C.C. Pipes and PSC Mono block
Railway Sleepers to Burma, Sri Lanka and Iraq.

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From a very moderate beginning decades ago, today the company is an acknowledged
leader of the industry with an unbeatable track record in the following areas.
Precast Prestressed Concrete Pipes

(Cylinder and Non-Cylinder Type)
Precast Reinforced Cement Concrete Pipes (Hume Pipes)
Steel Pipes & Specials
Bar Wrapped Steel Cylinder Pipes (BWSC)
Penstock pipes
Prestressed Concrete Sleepers and prestressed
Concrete Turnout Sleepers
Air Rifles & Air Pistols (Pneumatic
and spring loaded)
The company is a member of several internationally reputed organizations like,
American Concrete Pipes Association, U.S.A.
Indian Concrete Institute
American Water Works Association, Denver- U.S.A.
Indian Water Works Association
Bureau of Indian Standards.
RESEARCH AND DEVELOPMENT IN INDIAN HUME PIPE COMPANY

LIMITED.
The company has a separate Research and Development division situated at Govandi
in Mumbai, which is recognized by the ministry of science and Technology, Department of
scientific and industrial Research, Government of india New Delhi.
(1) Specific areas in which R&D carried out by the company are the following:
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- New product Development

- Import substitution
- Technology Up-gradation
- Evaluation of Alternate Raw-materials
- Designing and improving manufacturing process and quality of products
- Improvement of designs of plant and machinery
(2) Benefits derived as a result of the above R&D:
Research and Development provide valuable support to the business through
innovation of new products and process, which are transferred to the factories\project
works.
(3) Future plan of Action:
The company endeavors to continue research on areas set out in (1) above:
(4) Expenditure on R&D:
The total expenditure on research and Development during the year was
Rs.182.88Lcs(0.28% of the turnover ) as compared to
Rs.153.31Lacs(0.34%oftheturnover)of previous year.
Registered office of the company
Construction house,2nd Floor,
5,Walchand Hirachand Road,
Ballard Estte,Mumbai-400 001
Tel N0:022-22618091/92,022-40748181
Fax No:022-22656863,email:info@indianhumepipe.com
Website:www.indianhumepipe.com
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Registrar &Share Transfer Agent:

M/s. Link Intime India Pvt.Ltd.
C-13, Pannalal silk mills compound,
L.B.S. Marg
DIRECTORS REPORT:
PERFORMANCE REVIEW:
Your companys operations of its various projects under execution continued to be
profitable, with continued efforts to reduce costs and improve yield as also bettering the
productivity levels. During the year under review, the income from operations has grown by
47.27%from Rs.45,180.13Lacs to Rs.66,534.80Lacs. The profit after tax for the year at
Rs.2,530.89Lacs was considerably higher as compared to Rs.1,501.76Lacs for the previous
year signifying a growth of 68.53%. The prior years adjustments and exceptional items on
account of income tax refund of earlier years was much higher at Rs.398.53Lacs as compared
to Rs.18.94Lacs of the previous year.
DIVIDEND:
Your Directors are pleased to recommend a dividend of Rs.8.50per share(85%) as
against Rs.7 per share (70%) for the previous year; payable to those equity shareholders
whose names stand registered in the books of your company as on the book closure date.
The total equity dividend together with the dividend tax will absorb Rs.481.79Lacs.
FINANCE:
During the year under review, the liquidity position of your company was maintained
satisfactorily and optimum utilization of financial resources was achieved. The company has
inducted HDFC Bank Ltd. And corporation Bank as its Bankers in its consortium of Banks.
Due to firming up of interest rates and increase in level of borrowings for achieving higher
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sales turnover, the interest costs on the barrowed funds have gone up. The company has been
prompt in meeting the obligations towards its bankers and other trade creditors.
INCOME TAX ASSESSMENT:
The Income Tax assessment of your company has been completed till financial year
2005-06. The companys appeals against the assessment orders for various financial years
are pending with the appellate authorities.
The amount involved in the appeal is
Rs.3,048.70Lacs, for which necessary provision has been made in the accounts.
FACTORIES/PROJECTS:
During the year, the company has established a factory at Chilamathur in Andhra
Pradesh for manufacturing prestressed concrete pipes(PSC), Bar wrapped steel cylinder
pipe(BWSC) and M.S.(Mild steel) pipes to execute the work of Ananthapur project, Andhra
Pradesh and become a source for other projects.
During the year, the company has closed down its factory at shimoga and also the
project at Varahi, both in Karnataka state. Thus the total number of factories/project
established of the company as at the end of period under report stand at 29.
CORPORATE GOVERNANCE:
The company has implemented the procedures and adopted practices in conformity
with the code of corporate governance as provided in the amended clause 49 of the listing
agreement with the stock exchange. The management discussion and analysis report and
corporate governance report, appearing elsewhere in this annual report forms part of the
directors report. A certificate from the statutory auditors of the company certifying the
compliance of conditions of corporate governance is also annexed thereto.
In compliance with one of the amended clause 49 of the listing agreement, the
company has implemented a code of conduct for all its Non-Executive directors and for
executive directors and senior management personnel of the company, who have affirmed
compliance thereto. The said codes of conduct have been posted on the website of the
company
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PUBLIC DEPOSITS AND LOANS/ADVANCES:

An aggregate amount of Rs.7,65,000/-representing 46 fixed deposits had matured but
remained unpaid/unclaimed as at 31st march,2013 pending instructions from the depositors
concerned. Since then 13 fixed deposits aggregating Rs.1,95,000/-have been repaid/renewed.
The company has no loans/advances and investments in its own shares by listed
companies, their subsidiaries, associates etc. As required to be disclosed in the annual
accounts of the companies pursuant to clause 32 of the listing agreement.
Further, in conformity with the aforesaid clause, the csh flow statement for the year
indeed 31st march 2013 is annexed hereto.
CONSERVATION OF ENERGY, TECHNOLOGY ABXORPTION AND FOREIGN
EXCHANGE EARNINGS AND OUTGO:
Information pursuant to section217(1)(e) of the companies act,1956 read with the
companies (Disclosure of particulars in the report of board of directors) Rules,1988 relating
to foregoing matters, wherever applicable, is give by way of an annexure and forms part of
this report.
1. Conservation of Energy:
Effective control measures/systems to conserve energy are already in force at
companys establishments.
Consciousness of energy conservation is also cultivated among
the employees to optimize the use of electricity/Fuel etc.

2. Technology absorption, Adaptation and Innovation:
The required information in the prescribed form under the companies Act,1956 in
respect of technology absorption is given in the annexure forming part of this report.
3. Foreign Exchange Earnings and Outgo:
The required information in respect of foreign exchange earnings and outgo has been
given in the notes forming part of the accounts for the financial year ended 31st march,2013.
BOARD OF DIRECTORS:
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Name Designation
Mr. Rajas R. Dhoshi Chairman & Managing Director
Mr. Ajit Gulabchand
Mr. Jyoti R. Doshi
Mr. Rajendra M. Gandhi
Mr. Rameshwar D. Sarda
Mr.N. Balakrishnan
Mr. Anima B. Kapadia
DIRECTORS
In accordance with the provisions of the companies Act, 1956 and Article 152 of the
Articles of Association of the company, Mr. Ajit Gulabchand, Mr. N. Balakrishnan and Mr.
Vijay kumar Jatia Directors of the company, retire by rotation and being eligible, offer
themselves for re- appointment.
DIRECTORS RESPONSIBILITY STATEMENT:
As required under section 217(2AA)of the companies Act,1956 the Board or Directors
hereby confirm:
1.
that in the preparation of the Annual accounts for the financial year ended 31 st
march,2013 the applicable accounting standards have been followed along with
proper explanation relating to material departures;
2.
that the Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the company as at 31 st march,2013
and of the profit of the company for the ended on that date;
3.
that the Directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the companies

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Act,1956 for safeguarding the assets of the company and fot preventing and detecting
fraud and other irregularities;
4.
that the Annual accounts for the financial year ended 31st march, 2013 have been
prepared on a going concern basis.
PARTICULARS OF EMPLOYEES:
Information as per section 217(2A)of the companies Act, 1956 read wit The
companies (particulars of employees) rules,1975 forms part of this repor However, as per
provisions of section 219(1)(b)(iv)of the companies Act, 1956 the report and accounts are
being sent to the shareholders excluding the aforesaid information.
Any shareholder
interested in obtaining such particulars may write toe the company secretary at the registered
office of the company.
AUDITORS:
M/s. K.s. Aiyar & co., Chartered accountants retire s auditors of the company and
have given their consent for re-appointment.
As required under section 224(2A) of the companies act.1956, the company has
obtained a written certificate from m/s. K.s. Aiyar & Co. Statutory auditors proposed to be
re-appointment to the effect that their re-appointment, if made, would be in conformity with
the limits specified in the said section.
You are requested to r-appoint the retiring statutory auditors of the company for the
financial year 2013-14.
BRANCH AUDITORS:
M/s. Brahmayya & Co., Chartered accountants at somajiguda, Hyderabad,(Andhra
Pradesh) retire as branch auditors of the company and have given their consent for reappointment. You are requested to re-appoint M/s. Brahmayya & Co., Chartered accountants
as branch auditors u/s228 of the companies act, 1956, to carry out branch audit, limited

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review and tax audit of the companys factories, project offices in the state of Andhra Pradesh
for the financial year 2013-14.
COST AUDITOR:
The application for the appointment of M/r.V.V.Deodhar, cost auditor, to do the cost
audit in respect of one of the companys products, viz. Steel pipes for the financial year
2013-14 will be submitted to the central Government, ministry of corporate affairs, New
Delhi for their approval.
As required under the provision of section 224(1B) of the companies Act, 1956, the
company has obtained a written certificate from the cost auditor proposed to be appointed to
the effect that his appointment, if made, would be in conformity with the limits specified in
the said section.
INDUSTRIAL RELATIONS:
The company is having total strength of 1,482 employees as on 31 st march,2013
working at various locations such as factories/projects/Head office and Research and
Development Department(R&D Divn), Mumbai.
Industrial relations with the workmen at various units of the company were by and
large peaceful and cordial.
ACKNOWLEDGEMENTS:
Your Directors record their gratitude to the customer, Bankers, Government
Departments, Vendors and works sub-contractors for their continued support and cooperation during the year.
Your Directors also wish to place on record their appreciation of the services rendered
by the employees of the company. Wishing you all good health, wealth and prosperity.
Our Achievements

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PrestressedConcretePipeProjects695Nos.7045KmsofPipeline
HumeSteelPipeFactories/Projects 432Nos.2111.32Kmsof Pipeline
PenstockFactories/Projects 51Nos. 1,35,195MetricTonnes
BarWrappedSteelCylinderProjects 35Nos.236.16Kmsof Pipeline
PrestressedConcreteRailwaySleepers 29,95,401 Nos.
PrestressedConcreteCylinderPipeProject...2 No.8.95Kms
BOARD PROCEDURES:
A detailed agenda folder is sent to each Director in advance of board and committee
meetings, to enable the Board to discharge its responsibilities effectively. The managing
director briefs the board at every meeting on the overall performance of the company.
The following information is regularly provided to the board as part of the agenda
papers:
Annual operating plans and budgets and any updates.
Capital budgets and any updates.
Quarterly results for the company and its operating divisions or business segments.
Minutes of meetings of audit committee and other committees of the board.
The information on recruitment and remuneration of senior officers just below the
board level, including appointment or removal of chief financial officer and the
company secretary.
Show cause, demand, prosecution notices and penalty notices, which are materially
important.
Fatal or serious accidents, dangerous occurrences, any material effluent or pollution

problems.
Any material default in financial obligations to and by the company or substantial non
payment for goods sold by the company.
Details of any joint venture or collaboration agreement.
Transactions pertaining to purchase/ disposal of fixed assets properties of the

company.

Page 23
Transactions that involve substantial payment towards goodwill, brand
equity, or intellectual property.
Major accounting provisions and write-offs and write back.
Review of major legal issues.
Sale of material nature of investments assets, which is not in the normal

Course of business.
THE INDIAN HUME PIPE COMPANY LIMITED NOTICE:

ORDINARY BUSINESS:
1.
To consider and adopt the audited Balance Sheet as at 31st march,2013, profit &Loss
account for the year ended on that date and the reports of the board of directors and
the auditors thereon.
2.
To declare a dividend on equity shares f the company.
3.
To appoint a director in place of Mr. Ajit Gulabchand, who retires by
rotation and
being eligible, offers himself for re-appointment.

4.
To consider and if thought fit, to pass with or without modifications(s) the following
resolution as an ordinary resolution.
RESOLVED THAT pursuant to the provisions of section 224 and other applicable
previsions, if an of the companies act, 1956, M/s. K.S. Aiyar & Co,. Chartered
accountants, the retiring auditors of the company, be and they are herby reappointment as the auditors of the company, to hold office from the conclusion of this
annual general meeting until the conclusion or the next annual general meeting, to do
statutory audit of the companys accounts including its branches for the financial year
2013-14 on a remuneration as may be fixed by the board of directors of the company
and that they be paid in addition, any out of pocket and or travelling expenses they
may incur in carrying out their duties as such auditors.
SPECIAL BUSINESS:

Page 24
5.
To consider and if thought fit, to pass with or without modifications(s) the following
resolution as a special resolution.
RESOLVED THAT subject to provisions of section 198 and 309 of the companies
Act,1956 and other applicable provisions if any, the Non Executive directors of the
company be paid, in addition to the sitting fees for attending the meetings of the board
or committees thereof, a commission not exceeding 1% of the net profits of the
company or and amount not exceeding Rs.16Lacs in aggregate, whichever is less, per
financial year, for a period of 3years commencing from the financial year 2013-14.
RESOLVED FURTHER THAT the quantum of commission payable to each of Non
Executive directors be decided by the board as it may deem fit.
NOTE:1. Transfer of funds to Investor Education & Protection Fund:

i)
In terms of te provisions of section 205A read together with section 205C of the
companies Act,1956 unpaid and unclaimed dividend for the financial year ended 31st
march,2005 had been transferred by the company to the investor education and
protection fund (IEPF) established by the central Government under section 205C of
the Act.
ii)
It may be noted that pursuant to the provisions of above mentioned section, the
amount of dividend which has remained unclaimed and unpaid for a period of 7years from
the date it became due for payment is required to be transferred to the IEPF constituted by the
central Govt.
Accordingly, the amount of dividend for the financial year 2005-2006 which remain
unclaimed and unpaid as aforesaid shall be due for transfer to the IEPF on 24-09-2013 and no
claim shall lie against the members who have not yet enchased their dividend warrants for the
financial year 2005-06 and onwards to write immediately to the company claiming dividends
declared by the company for the said financial years.
iii)
It may be noted that unpaid dividend for the following financial years are due for
transfer to IEPF on the following respective due dates:

Page 25
Financial year
Date of declaration of Date
of
Payment Due date of transfer
Dividend
Dividend
2005-06
31-07-2006
07-08-2006
05-09-2013
2006-07
30-07-2007
07-08-2007
04-09-2014
2007-08
30-07-2008
106-08-2008
04-09-2015
2008-09
27-07-2009
01-08-2009
01-09-2016
2009-10
29-07-2010
01-08-2010
01-09-2017
2010-11
27-07-2011
01-08-2011
01-09-2018
2011-12
25-07-2012
30-07-2012
31-08-2019
2012-13
25-07-2013
30-07-2013
31-31-2020
2013-14
25-07-2014
30-07-2014
31-08-2021
*Interim Dividend
ACCOUNTING POLICIES
The accounts have been prepared primarily on the historical cost convention
and in
accordance with the mandatory accounting standards. The significant accounting policies
followed by the company are sated below:
Fixed assets:
Fixed assets are shown at cost or valuation less depreciation. Cost comprises of the purchase
price and the expenses including cost of borrowings till the date of capitalization in the case
of assets involving material investment material investment and substantial lead time.
Depreciation on fixed assets:
Depreciation for the year has been provided on the straight line method. Depreciation on all
assets (except certain plant and machinery, vehicles and equipment) has been provided over
the useful life of the assets as determined by the management or derived from the rates
prescribed in schedule-XIV of the companies
Foreign currency transactions:
Page 26
Transactions made during the year in foreign currency are recorded at

the exchange rate prevailing at the time of transactions. Assets and liabilities related to
foreign currency transactions remaining unsettled at the year end are translated at contract
rates, when covered by foreign exchange contracts and at year end rate in other cases.
Realized gains and losses on foreign rates, when covered by foreign exchange contracts and
at year end rate in other cases.
Investments:
Long term investments are valued at cost of acquisition including related expenses. Provision
is made when there is permanent fall in valuation of long term investments.
Inventories:
All inventories are valued at cost and.
Raw Material: First in first out method. Cost includes purchase cost and attributable
expenses.
Finished Goods and Work-In-Process: at cost of production which comprises of direct
material costs, direct wages and appropriate overheads.
Goods for Resale: Weighted average cost.

Page 27
CHAPTER 2
REVIEW OF LITERATURE
&
THE ORITICAL FRAME WORK
WORKING CAPITAL MANAGEMENT:

Working capital management the management of current assets and current liabilities
in order to maintain liquidity and there by solvency. There fore the working capital
management of the liquidity and solvency. Liquidity means degree of convertibility; solvency
means capacity to accept the obligation. There fore the main object of working capital
management to maintain adequate level of solvency by managing current assets and current
liabilities.
Second object of working capital management is to maintain low investment to
current assets so has maintained high level of returns.
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Optimum Working Capital Policy:

When a company maintain more levels of working capital it was resulting high degree
of cost of capital. As a result profit will decline. When a company maintains low level of
working capital it is likely to become insolvency because low degree of liquidity and
affective working capital management a trade off between liquidity and profitability this is
known as optimum working capital.
OPTIMUM WORKING CAPITAL

Why working capital increase liquidity term increase profitability term decrease these
to be interesting at a point called optimum level of working capital that is "OP".
Working Capital Require:
A found to have inadequate of working capital due to the following
1.
To maintain the require liquidity and solvency and there by run the business on a smut
bases.
2.
When there is over liquidity, it will result in under trading under trading means
generating low levels of sales with more amounts of working capital or liquidity there
fore the profits are less.
3.
When there is no inadequate working capital the firm may face operating
problems which may result loosing it repetition of goodwill.
4.
Do the low level of working capital fixed assets may not be effectively utilize,
resulting in low level of rate of returns on invest.

Page 29
5.
Poor working capital policies in resulting loosing future opportunities of a company.
There are the basic concept of working capital:

1.
Gross Working Capital
2.
Net Working Capital
1. Gross working capital:

This is also know as quantitative approach, gross working capital define the planning
and management of the investment in current asset to run the business smoothly. Refers to the
investment made in cash, inventory, debtors.
2. Net working capital:
It is the relationship between current asset and current liabilities N.W.E refers to the
difference between CA-CL. In the other words NET WORKING CAPITAL is the based on
the fixed liability (equity + long term loans) to finance the current asset when net working
capital increase the depend on fixed liabilities those are and vice versa (when net working
capital reduce the depend on fixed liabilities reduce).
Approach Policy:
Working capital is finance by three sources:
1. Bank credit
2. Trade credit
3. Long term finance (which includes equity)
A firm matches any one of or any combination of above to finance current asset this is
knows working capital financing policy or approach.
There are three important policies follow are adapted in finance current asset.

Page 30
1. Conservative approach
2. Aggressive approach
3. Matching approach
1. Conservative Approach:
Under this policy a firm depends more on a long term funds to financing the current
asset. Under this policy liquidity is more and risk is less. As a result the cost of funds is more.
There fore the profit is less.
2. Aggressive Approach:
A company depend more on current liability in financing current asset liquidity is low
solvency low, risk is higher at the result profit is higher.
3. Matching Approach :
It is one where the risk and return traded off (balance) under this policy company follow
an intermediate approach which is popularly knowing hiding approach. One the bases of
these analyses all current asset are classified in to two categories.
1. Permanent current assets
2. Temporary current assets
1. Permanent Current Asset:
Permanent current asset are though which are maintain longer period by company.
EX: The maintain balance of a bank book.
2. Temporary Current Assets :

These are also known as seasonal or variable current asset this asset will value change time to
time.
Matching process:
Page 31
Under these process fixed current asset are financed by long term source of finance, where as
temporary current asset are finance current liabilities by adapting these method a company
always maintain working capital being equal to fixed current asset there fore risk is
minimize.
Working capital planning factors:
1. Sales
2. Size
3. Nature
4. Machine cycle
5. Business cycle
6. Credit policy
7. Seasonal of sale
8. Book policy
9. Efficiency
10.Working capital cycle
Working capital gap:

Difference between current assets and current liabilities will exclude bank credit.
Working Capital Cycle\ Operation Cycle:
It is also know as operating cycle is the primary determine factor of working capital
needs of a company along with sales is also know as cash cycle is define as "time taken to
convert the cash in to cash" it means once cash invested in operation they are recycle back in
to cash after certain stages all these stages put together is operating cycle period more
investment the working capital is require other wise the investment are low.
Page 32
Working capital planning:

It is done with a due to know working capital gap and working capital margin.
Working capital margin:
The portion of working capital which is expected to finance either by long term
loan or equity capital.
WORKING CAPITAL CYCLE:
The operating cycle is complete force cash to get converted in to raw materials work
in progress finished good debtors and finally cash.
Working capital is required because of the time gap between the sales and their actual
realization in cash. This time gap is technically terms as operating cycle of the business. In
case manufacturing company, the operating cycle of time necessary to complete the following
cycle of event.

Page 33
Conversion of cash into raw materials.

Conversion of raw materials into work in progress.
Conversion of work in progress into finished goods.
Conversion of finished goods into accounts receivables.
Conversion of accounts receivable into cash.
This cycle is continuous phenomena. In case of "Trading Firm" the operating
cycle
will include the length of time required to :

a) Cash into inventories.
b) Inventories into accounts receivables..
c) Accounts receivables into cash.
In case of "Financing Firm" the operating cycle includes the length of time taken for 1 year.
a) Conversion of cash debtors, and
b) Conversion of debtors into cash.
Rate of Stock Turnover:
There is a high degree of inverse co-relationship between the quantum of working capital and
the velocity or speed with which the sales are affected. A firm that has a high rate of turnover.
Business cycles:
Business cycle refers to alternate expansion and contraction in general business activity. In a
period of boom i.e., when the business is prosperous, there is a need for larger amount of
working capital due to increase in sales, rise in prices, optimistic expansion of business, etc.
Rate of Growth of Business:
The working capital requirements of a concern increase with the growth and
expansion of its business activities. Although, it is difficult to determine the relationship
Page 34
between the growth in the volume of business and the growth in the working capital of a
business, yet it may be concluded that for normal rate of expansion in the volume of business.
We may have retained profits to provide
Management of Working Capital:
They are two types of assets in each concern.
Current Assets
Fixed Assets
Both are necessary for profit running of business. Working capital is difference of
current assets and current liabilities. Management of working capital is concerned with
problems that arise in attempting to manage current assets current liabilities and the inter
relationship between them.
In case of inadequacy of working capital the firm may lead to insolvency. In this
context working capital management is three dimensional in nature.
Objective of Working Capital Management:
There are two fold objectives of the management of working capital.
1. Maintenance of working capital at appropriate level and
2. Availability of employee funds as and when they are needed.
In accomplishment of these two objectives the management has to consider the
composition of current assets pool.
Study of Working Capital Management:
The management of working capital has been studied under the three following
headings:
Management of Cash Balances

Page 35
Management of Account Receivables

Management of Inventory
Importance or Advantages of Adequate Working Capital:
Working capital is the life blood and nerve center of a business. No business can run
successfully without an adequate amount of working capital. The main advantages of
adequate amount of working capital are as follows:
1.
Goodwill: Sufficient working capital enables a business concern to make prompt

payments and hence helps in creating and maintaining goodwill.
2.
Easy Loans: A concern having adequate working capital, high solvency and good
credit standing can arrange loans from banks and others on easy and favorable
terms.
Cash Discounts: Adequate working capital also enables a concern to avail cash
discounts on the purchases and hence it reduces costs.
4.
Regular Supply of Raw Materials: Sufficient working capital ensures regular

supply of raw materials and continuous production.
5.
Regular Payment of Salaries, Wages and Other Day to Day Commitments: A

company which has ample working capital can made regular payment of salaries,
wages and other day-to-day commitments which raises the morale of its
employees, increases their efficiency, reduces wastages and costs and enhances
production and profits.
Inadequate Working Capital:

Every business concern should have adequate working capital to run its business
operations. It should have neither redundant or excess working capital nor inadequate nor
shortage of worming capital. Both excess as well as shortage of working capital. Both excess
as well as short working capital positions are bad for any business.

Page 36
Disadvantages of Redundant or Excessive Working Capital:

1.
Excessive working capital means idle funds which earn no profits for the business
and hence the business cannot earn a proper rate of return on its investments.
2.
Excessive working capital implies excessive debtors and defective credit policy
which may cause higher incidence of bad debts.
3.
When there is excessive working capital, relations with banks and other financial
institutions may not be maintained.
4.
Due to low rate of return on investments, the value of shares
Dangers of Inadequate Working Capital:

It cannot by its requirement and cannot avail of discounts.
The firm cannot pay day-to-day expenses of its operations and it reduces the profits of
the business.
The fixed assets cannot be properly utilized.
Net Working Capital Is a Qualitative Concept
It indicates liquidity position of firm.
Suggests the extent to which working capital needs may be financed by permanent
sources. Always,
Current Assets > Current Liabilities
So there is a ratio called current ratio 2:1 where assets are twice of liabilities. A
negative working capital position posses treat to solvency of company and I
unsound.
Excessive liquidity is also bad as it may lead to mismanagement of current assets.

Net working capital also covers the question of judicious mix of long term and short
term funds of financing current assets. There fore working capital should be financed with the
permanent sources of funds such as owner's capital debentures, long term debt and preference
capital.
Page 37
In summary it is emphasized that both gross and net concepts of working capital are
equally important for efficient management of working capital. The data and problems of
each company should be analyzed to determine the amount of working capital. It is not
feasible in practice to finance current assets by short term sources only.
Objects of Working Capital:
. For the purchase of raw materials, components and spares.
2.
To pay wages and salaries.
3.
To incur day to day expenses and overhead costs such as fuel, power and office
expenses etc.
4.
To meet the selling costs as packing, advertising etc.
5.
To maintain the inventories of raw material, work in progress,

For studying the need of working capital in a business, one has to study the business
under varying circumstances such as a new concern, as a growing concern and as one which
has attained maturity has attained maturity. A new concern requires a lot of liquid funds to
meet initial expenses like promotion, formation etc. these expenses are called preliminary
expenses and are capitalized.
1.
In introductory stage the amount of working capital is high because they want to
give good publicity to the company.
2.
In growth stage they require high capital, as they want to expand or develop
branches and use advanced technology.
3.
At maturity stage they may faced break even point stage i.e., no loss and no profit
and it may be hard for the management to develop company so capital required is
normal.
4.
At decline stage the capital is low as they may wind up company due to heavy
competition.
Operating Cycle:
Page 38
Operating cycle is the time duration required to convert sales, after the conversion of
resources into inventories into cash. The operating cycle of a manufacturing company
involves three phases.
1.
Acquisition of resources, such as raw material, lab our, power and fuel, etc.
2.
Manufactured of the product which includes conversion of raw material into workin-progress into finished goods.
3.
Sales of the product either for cash or on credit. Credit sale creates book debts for
collection.
Groups:
1.
Raw Material Conversion Period (RMCP).
2.
Work in Progress Conversion Period (WIPCP)
3.
Finished Goods Conversion Period (GGCP)
4.
Book Debts or Receivables Conversion Period (BDCP)
The length of the operating cycle of manufacturing firm is the seem of.
1. Inventory conversion period (ICP)
2. Book debts or receivables conversion period (BDCP)
The total of inventory conversion period and book debts conversion period
referred to as
gross operating cycle (GOC).

The duration of the cycle for the purpose of estimating the working capital requirement is
equivalent to the sum of the durations of each of the stages less the credit period allowed by
the suppliers of the firm i.e., payables deferral period (PDP).
MANAGEMENT OF RECEIVABLES
Receivables result from credit sales. A concern is required to allow credit sales in order to
expand its sales volume. It is not always possible to sell goods on cash basis only.

Page 39
Meaning of Receivable
Receivables represent amounts owed to the firm as a result of sale of goods or services
in the ordinary course of business. These are claims of the firm against its customers and
form part of its current assets. Receivables are also known as accounts receivables, trade
receivables, customer receivables or book debts. The receivables are carried for the
customers. The period of credit and extent of receivables depends upon the credit policy
followed by the firm. The purpose of maintaining or investing in receivables
Factors Influencing Size of Receivables:
The problem of receivables is basically a problem of balancing profitability and liquidity.
Soft credit terms are attraction of sales and the longer the time a company allows to pay to its
customers, the greater the sales and higher the profits. However on the other hand, the longer
the period of credit, the greater the risk, the greater the level of debt and greater the strain on
the liquidity
1. Expansion Plans:
When a concern wants to expand its activities, it will have to enter new markets.
To attract customers, it will give incentives in the form of credit facilities.
2. Relations with Profits:
The credit policy is followed with a view to increase sales. When sales increase
beyond a certain level the additional costs incurred are less than the increase in revenues. It
will be beneficial to increase sales beyond a point because it will bring more profits.
3. Credit Collection Efforts:
The collection of credit should be streamlined. The customers should be sent
periodical reminders if they fail to pay in time. On the other hand, if adequate attention is not
paid towards credit collection then the concern can land itself in a serious financial problem.
Efficient credit collection machinery will reduce the size of receivables
Costs of Maintaining Receivables:
The following of credit to customers means giving of funds for the customer's use. The
Page 40
concern incurs the following costs on maintaining receivables.

1. Cost of Financing Receivables:
When goods and services are provided on credit then concern's capital is allowed to
be used by the customers. The receivables are financed from the funds supplied by
shareholders for long term financing and through retained earnings. The concern incurs some
cost for collecting funds which finance receivables.
2. Cost of Collection:
A proper collection of receivables is essential for receivables management. The customers
who do not pay the money during a stipulated credit period are sent reminders for early
payments. Some persons may have to be sent for collecting these amounts. In some cases
legal recourse may have to be taken for collecting receivables. All these costs are known as
collection costs which a concern is.
3. Default Costs:
Some customers may fail to pay the amounts due towards them. The amounts which
the customers fail to pay are known as bad debts through efficient collection machinery but
one cannot altogether rule out this cost.
POLICY FOR MANAGING RECEIVABLES:
The credit policy of any firm should be estimated in such a way that the benefits likely to
accrue from it, the credit policy should incorporate the following:
1. Credit Standards:
The credit standards of any customer firm are usually determined by 5C's namely:
Capacity: It refers to ability of the specific customer to manage the required scales of
business
Character: It refers to integrity of customer i.e., his willingness to pay dues.
collateral: It refers to the security in form of assets owned by customers, which can be
offered by the customer to secure the amount of credit extended to him.
Page 41
Capital: It refers to the financial soundness of customer i.e., his capacity to raise required
funds.
Condition: It refers to the impact of economic environment of the country on the firm or
special circumstances offered by the government or local agencies which may affect the
customer's profitability and his ability to meet obligations.
2. Credit Terms:
This refers to the stipulations under which the goods are sold on credit i.e., terms and
conditions of trade relating to repayment. The two components are:
A) Credit Period:
It refers to the duration of time for which trade credit is extended. This period is available
to the customer to pay off his dues. Even though it is a fact that any extension in credit period
stimulates the sales but it also increases the cost on account of more held up of funds.
B) Cash Discount:
It refers to that amount of discount which is given to customer on paying off his debts
within the stipulated period. Attractive cash discounts terms help in reduction of average
collection period and in turn reduce amount of investment in receivables.
C) Collection Procedures:
The third decision area in the management ofrecce3ivables is the collection policies. The
policy must be strict and lenient.
Sending a reminder for payments.
Personal request through telephone.
Personal visits to customers.
Taking help of collecting agencies.
INVENTORY MANGEMENT
Every enterprise needs inventory for smooth running of its activities. It serves as a
Page 42
link between production and distribution processes. The greater the time lag, the higher the
requirements for inventory, it also provides a cushion for future price fluctuations.
The purpose of inventory management is to ensure availability of materials in
sufficient quantity as and when required and also to minimize investment in inventories.
The investment in inventory is very high in most of the undertakings engaged in
manufacturing wholesale and retail trade. The amount of investment is sometimes more in
inventory than in other assets. In India a study of 29 major industries has revealed that the
average cost of materials is 64 price and the cost of lab our and overheads is 36 price in a
rupee. About 90% of working capital is invested in inventories. An efficient system of
inventory management will determine.
(a) What to purchase.
(b) How to purchase.
(c) From where to purchase.
Objectives:
The main objectives of inventory management are operational and financial. The
operational objectives mean that the materials and spares should be available in sufficient
quantities so that work is not disrupted for want of inventory. The financial objective means
that investments in inventories should not remain idle and minimum working capital should
be locked in it. The following are the objectives of inventory management.
1.
To ensure continuous supply of materials, spares and finished goods so that

production should not suffer at any time and the customers demand should also be
met.
2.
To avoid both overstocking and under stocking of inventory.
3.
To maintain investment in inventories at the optimum level as required by the

operational and sales activities.
4.
To keep material cost under control so that they contribute in reducing cost of
production and overall costs.

Page 43
5.
To eliminate duplication in ordering or replenishing stocks. This is possible with

the help of centralizing.
6.
Purchases.
Meaning and Nature to Inventory:

The dictionary meaning of inventory is stock of goods or list of goods. The work
inventory is understood different by various authors. In accounting language it may mean
stock of finished goods only.
A) Raw Material:
Raw material form a major input into the organization. They are required to carry out
production activities uninterruptedly. The quantity of raw materials required will be
determined by the rate of consumption and the time required for replenishing the supplies.
The factors like the availability of raw materials and government regulations, etc,, too affect
the stock of raw materials.
B) Work-in-Progress:
The work-in-progress is that stage of stocks which are in between raw materials and
finished goods. The raw materials enter the process of manufacture but they are yet to attain a
final shape of finished goods.
C) Finished Goods:
These are the goods which are ready for the consumers. The stock of finished goods
provides a buffer between production and market.
Valuation of Inventories under The Indian Hume pipes company Limited:
Inventories are valued at cost or net realizable value whichever is less.
Materials and other supplies held for use in production are valued at cost.
Various items of inventories are valued on the following basis
Page 44
1. Valuation of stores and spares

2. Valuation of raw material
3. Valuation of finished product
4. Exclusion from the cost of inventories (others).
Management of Cash:
Cash management is one of the important functions of finance management, cash
management comprehensive of two functions, i.e., planning and controlling of the cash.
Cash includes currency, bank balance, gold, marketable securities.
Need for Cash:
There are four major considerations or motives holding cash.
1.
Transactions motives
2.
Speculative motives
1. Transactions Motives:
This is very important need arising out of business transaction occurring in level of
cash, it should maintain to meet day to day needs or payments normally occurring in the
business.
Factors of Cash Management:
1.
Cash Planning
2.
Optimum Cash Levels
3.
Managing Cash Flows
2. Speculative Need:
Cash may be held in order to take advantages of profitable opportunity which other
wise may be loss.
Objectives of Cash Management:
Page 45
1. Maintaining adequate liquidity and there by solvency.

2. Minimum ideal cash balance and there by profitability. The finance manager has to plan
the entire motive on the prioritize bases and accordingly maintain cash balance.
More the cash balance to maintain more would be liquidity and solvency but less will
be profitability and vise versa. There fore ever finance manager has to plan for optimum cash
balance were liquidity profitability same
P
Cash Planning:
It is process are estimating cash requirements and there by determining cash deficient
or cash surplus for this purpose cash budgets require to be the effective liquidity management
lies in managing the defecate or surplus of cash. There fore cash budget is an essential tool in
the process of cash plan.
Cash Budget:
It is a fore cost of cash inflows and cash out flows and there by project in cash
requirements for a different period of time, usually cash budget is short term budget prepare
for quarterly or half yearly.

Page 46
CHAPTER-3
RESEARCH DESIGN
&
METHODOLOGY

Page 47
RESEARCH & METHODOLOGY

Introduction
Research methodology is a to systematical solve the research problem .it may be understood
as a science of studying how research is done scientifically.
RESEARCH DESIGN
Research design is the arrangement of condition for collection and analysis of data in a
manner that aims to the research purpose with economy in procedure.
WORKINING CAPITAL RATIO FORMULA:
The gross profit ratio in relation to sales in termed as gross profit margin or simply gross
profit ratio. Gross profit can be calculated by dividing by the gross profit by sales .Gross
profit nothing but subtracting cost of goods sold.
Gross Profit
Gross Profit Ratio =
Net Sales
x 100
Gross Profit = Net sales Cost of goods Sold

Net profit is obtained when operating expenses, interest and taxes are subtracted from
the gross profit. The net profit margin ratio is measure by dividing profit after tax by sales.
Net profit
Page 48
Net Sales
Net Profit Ratio
x 100
The ratio shows the number of times working capital is turnover in a stated period. It
is calculated as follows:
Working Capital Turnover Ratio =
Sales
Networking Capital
Networking capital = current assets current liabilities

A current ratio may be defined as the relationship between Current Assets & Current
Liabilities, this ratio also known as working capital ratio
Current Assets
Current Ratio = Current Liabilities
Quick ratio
current assets inventory / current liabilities
NEED FOR THE STUDY

The need of working capital can not be over emphasized every business needs some
amount of working capital arises due to the time gap between production and realization of
cash from sales. there is time gap in purchases of raw material and production: production
and sales and realization of cash :
thus ,working capital needed for the following purposes .
1. for the purchases of raw materials, components and spares
2. To pay wages and salaries
3. To incur day to day expenses and over head costs such as fuel, power and office
expenses etc..
Page 49
4. To meet the setting cost as packing advertising etc..

5. To provide credit facilities to the customers
SCOPE OF THE STUDY
The scope of my study is constitutes to be one of the interesting and key
areas of
working capital management.

The study concentrates on the financial status or affairs of the company and the
management of working capital in the company which involves the study of operating cycle
and ratios of different periods and their comparison over the last three years. It helps to
present broader picture of the financial position of the company.
The required data for the study of the working capital management is collected from
the finance department, cost accounting and store system of the firm.
OBJECTIVE OF THE STUDY
To study the existing system of working capital management in THE INDIAN HUME
PIPE COMPANY LIMITED and to examine the relation between various components
of working capital.
1. To evaluate the working capital requirement of the company.
2. To make comparisons between the ratios during different periods.
3. To know the profitability and liquidity position of the company.
SOURCES OF DATA:
Methodology is a systematic procedure for collecting information in order to analyze
and verify the phenomenon. For the study of all the objectives the following methodology is
adopted. The collection of information is done through two principle sources.
1. Primary data:
The
information was collected from personal interviews and discussions with various

Page 50
officials in the firm.

2. Secondary data:
The rest of the information was collected from annual reports of the company for the
relevant period. Annual reports include Profit & loss statements and Balance sheets. In those
reports contains the results of the past performance have been considered to be the most
important reliable source of financial data of the concern.
LIMITATIONS TO THE STUDY:

The present study is done with sincerity and earnestness it has its share of limitations.
By calculating various ratios we can know the firm's position better and can compare with
other firms. It is also a major constraint.
The study is based on the present situation and only change in the firms operations may affect
the results and finding of the study. Limited time is a limitation to get the entire information.
The accounts for the current year are not finalized. So the information during the current
period was not collected.

Page 51
CHAPTER 4
DATA ANALYSIS
&
INTERPRETATION
Page 52
Determination of working capital

Working capital calculations:
Components of working capital during the period 2011-12 to 2014-15 (crores)
Particulars
2011-12
2012-13
2013-14
2014-15
A) Current assets
Inventories
158.85
Sundry debtors
13.85
Cash
and
bank 11.84
247.50
12.320
27.91
317.87
27.00
17.35
428.04
17.75
19.84
417.17
20.87
27.66
balances
Loans and advances
58.70
88.37
92.17
124.71
346.43
450.59
557.8
590.41
Liabilities
Current liabilities & 103.50
134.35
171.25
278.71
269.45
provisions
4.17
7.59
7.59
11.01
Total
2010-11
57.87
current 242.41
Assets(A)
B)Current
3.31

Page 53
Total
Current 106.81
138.52
178.84
287.00
280.46
Liabilities(B)
Gross
Working 242.41
346.43
450.59
557.8
590.41
Capital
Net Working Capital 135.6
207.91
271.75
270.8
309.945
(A-B)
INTERPRETATION:
From the above table it is shown clearly, that the net working capital has been increasing year
by yaer . In the year of 2010 it is Rs 242.41 crores it has increased to Rs 590.41 crores in the
year of 2014 In 2014 working capital has been increased as the loans and advances ,cash
and Bank balance collections are increased.
Statement showing the changes in working capital for the year 2011 to 2012
(CRORES)
Particulars
2011
2012
Increase in Decrease in
W.C
W.C
A)Current Assets
Inventories
Sundry Debtors
Cash & Bank Balance
Loans & Advances
Total
158.85
13.85
11.84
57.87
247.50
12.32
27.91
58.70
Current 242.40
346.43
Assets(A)
B)Current Liabilities
Current liabilities &
Provisions
Total
88.65
16.07
0.83
103.50
134.35
30.85
3.31
Current 106.81
4.17
138.52
0.86
1.53
-
Liabilities(B)
Working Capital(A-B)
135.6
Increase/Decrease in
72.31
207.91
72.31
Working Capital
Total
207.91

Page 54
207.91
137.26
73.84
INTERPRETATION:
The Above Table Shows that there Is Net Increase In The Working capital
of Rs
135.6crores during the Year of 2011 ,This is because Of Significant Increase In Cash, Loan
And Advances. But there is a significant downfall In the Sundry debtors On Other hand
Current Liabilities are decreased .
Statement Showing The changes in working capital for the year 2012-13
(CRORES)
Particulars
2012
2013
Increase
W.C
A)Current Assets
Inventories
Sundry debtors
Cash &Bank Balance
Loans &Advances
247.50
12.32
27.91
58.70
317.87
27.00
17.35
88.37
70.37
14.68
29.37
current 346.43
450.59
134.35
4.17
171.25
7.59
36.9
3.42
Current 138.52
178.84
Working Capital(A- 207.91
271.75
Total
Assets(A)
Current Liabilities(B)
Current Liabilities
Provisions
Total
in Decrease
in W.C
10.56
-
Liabilities(B)
B)
Increase /Decrease in 63.84
63.84
W.C
Total
271.75
INTERPRETATION:
Page 55
271.75
155.04
74.4
The above table shows that there is a gradual decrease in the net working capital of Rs
63.84 crores during the year of 2013 Compare to the year of 2012. This is the because of the
significant increase in loans & advances on the Other hand Current liabilities are
decreasing .The net effect of the above changes has brought an increase net working capital.
Statement showing the changes in working capital for the year 2013-14(CRORES)
Particulars
2013
2014
Increase in Decrease in
W.C
W.C
9.25
-
A)Current Assets
Inventories
317.87
Sundry debtors
27.00
Cash
&
Bank 17.35
428.04
17.75
19.84
110.17
2.49
Balances
Loans &Advances
92.17
3.8
557.8
107.46
278.71
8.29
107.46
0.7
0.33
0.33
271.16
274.62
Total
88.37
Current 450
Assets(A)
B)Current
Liabilities
Current Liabilities
Provisions
Total
171.25
7.59
Current 178.84
287
liabilities(B)
Working capital(A- 271.6
270.8
B)
Increase/Decrease in
Working capital
Total
271.16
INTERPRETATION:
9.25
The above table Shows that there is net decrease of Working capital of Rs 0.33 crores during
the year 2014 compare to the year of 2013. This is because of significant increase in cash &
Bank balance but there is gradual down fall in the Sundrydebtors . on the other hand Current
liabilities are increased the net effect of the above changes has bought an increase in Working
capital of the organization.
Page 56
Statement showing the changes in Working capital 2014-2015

Particulars
2014
2015
(Crores)
Increase in Decrease
W.C
in W.C
3.12
17.82
32.54
10.87
-
A) Current Assets
Inventories
Debtors
Cash & Bank Balance
Loans &Advances
Total
Current 557.8
Assets(A)
B)Current liabilities
Current Liabilities
Provisions
Total
428.04
17.75
19.84
92.17
278.71
8.29
Current 287
417.17
20.87
27.66
124.71
590.41
269.45
11.01
9.26
2.72
280.46
Liabilities(B)
Working capital(A-B)
Increase/Decrease
270.8
in 39.15
309.95
39.15
309.95
85.35
20.13
W.C
Total
309.95
INTERPRETATION:
The above table shows that there is net increase in the Working Capital of Rs39.15 crores
during the year 2015 Compare to the year 2014. This is because of Significant increase in
cash & Bank balance . But there is a gradual Down fall in the inventories . on the other hand
current Liabilities are increased, The net effect of the above changes has bought an increase
in net Working capital.

Page 57
Calculation of working capital:

Total working capital for 4 years
Particulars
Increase in w.c
2011-2012
72.31
2012-2013
63.84
2013-2014
----------
2014-2015
39.15
Decrease in w.c
----------------
-------------
0.33
------------
INTERPRETATION:
Above table shows that fluctuation of the working capital in the year 2011-2012 has
been increased. But in the year of 2013-2014 it is decreased , because of increase in current
liabilities and debtors in the year of 2014.

Page 58
RATIO ANALYSIS:
1. Liquidity ratios:
A) Current ratio:
It measures short term debt paying ability.
Current ratio=
Current assets /current Liabilities
Table Showing Current Ratio

Years
31/03/2011
31/03/2012
31/03/2013
31/03/2014
31/03/2015
Current Assets
242.41
346.43
450.49
557.8
590.41
(Crores)
Current Liabilities
103.50
134.35
171.25
278.71
269.45
Current Ratio
2.34
2.57
2.63
2.00
2.19
INTERPRETATION:
From the above analysis it is stated that In the year 2011 current ratio was 0.11 where as In
2012,2013,2014,2015 the Current ratios are 0.20, 0.10 ,0.07 ,0.10 respectively . Current ratio is
gradually fluctuatating due to the increase in Cash & Bank balance year by year .There is fluctuation
is in the investment of current Assets . where as our standard ratio is 2:1, company has failed to
investment
and now the company has to utilize the Current assets efficiently and improve the
profitability of the organization

Page 59
B) Quickratio:
The ratio termed as liquidity ratio. The ratio is ascertained
comparing the liquidity assets to Current liabilities.
Quick ratio = Current assets inventory
* 100
Current Liabilities
Computation of quick ratio
Year
31/03/2011
31/03/2012
31/03/2013
31/03/2014
31/03/2015
Quick assets
83.56
98.93
132.62
129.72
173.76
(Crores)
Quick Liabilities
103.50
134.35
171.25
278.71
269.71
Quick ratio
0.80
2.57
0.77
0.46
0.64
INTERPRETATION:
Generally quick ratio is 1:1 considered to be satisfactory, from the
above table it is Observed that in the year of 2011 the ratio is 0.80 its fluctuations indicates
that the company is Not in a favorable position I,e , the firm is liquidity position is not good
and it is unable to meet the current obligation. .

Page 60
C) Cash Ratio:
It is a short term incentive .
Cash ratio=
Cash in hand &bank/ Current liabilities

The table showing the Cash ratio
Year
Cash
31/03/2011
31/03/2012
31/03/2013
31/03/2014
31/03/2015
&Bank
11.84
27.91
17.35
19.84
27.66
in
(Crores)
hand Current Liabilities

103.59
134.35
171.25
278.71
269.45
Cash Ratio
0.11
0.20
0.10
0.07
0.10
INTERPRETATION:
The above table shows that cash ratio is showing fluctuating trend. But
in 2012 it has been increased and not reaching the Standard ratio of 1:1 so it might have
faced the difficulty of short liquidity terms of Cash. So the firm has to maintain its cash
reserves effectively in order to cover its current Liabilities.
D)Net working capital ratio:

Page 61
It is defined as relationship (or) the ratio between net working capital

And net assets
Net working capital
Net working capital ratio=
Net assets
Computation of net working capital

Year
31/03/2011
31/03/2012
31/03/2013
31/03/2014
31/03/2015
Net working capital

135.6
207.91
271.75
270.8
309.95
Net Assets
207.04
254.40
333.41
356.66
394.76
(Crores)
Ratio
0.65
1.22
1.22
0.75
0.78
INTERPRETATION:
The above table shows that the net working capital ratio in the year of
2011 is 0.65 and the Sub sequent working capital ratio is gradually increasing but in the year
of 2014-15
investment is decreasing and increasing in the current assets
20012-13 1.22 , 1.22, respectively .

Page 62
for the year
2) Turnover ratios:
A) TOTAL ASSET TURNOVER RATIO:
Total asset turn over ratio=
sales/ total assets
COMPUTATION OF TOTAL ASSET TURN OVER RATIO
(Crores)
YEAR
SALES
TOTAL ASSETS
TOTAL ASSET TURNOVER
2011
2012
2013
2014
2015
345.19
392.26
593.09
596.03
691.06
207.04
254.40
333.41
356.66
394.76
1.66
1.54
1.77
1.67
1.75
INTERPRETATION:
The above table shows that the value of total assets turnover ratio has
been
increased in the year of 2011 i.e 1.66 and it also shows that subsequently assets
turnover ratio is gradually increasing and total turnover ratio has reached the standard ratio
of 1:1 .

Page 63
FIXED ASSETS TURNOVER RATIO:

This ratio indicates the extent to which the investment in fixed assets
contribution towards the sales.
Fixed assets turnover ratio =
Net sales / Net assets
Computation of Fixed asset turnover ratio
Year
2011
2012
2013
2014
2015
Net sales
345.19
392.26
593.09
596.06
691.09
(Crores)
Net assets
207.04
254.40
333.41
356.66
394.76
Fixed assets
1.66
1.54
1.77
1.67
1.75
INTERPRETATION:
In the year of 2011 the value of fixed assets ratio was 1:66 , even in the year
of 2013 ,14,15 the ratio s are increasing because of all assets are effectively utilized for
creating the net sales. It shown that the ratio was gradually increasing due to the increase in
sales and net fixed assets.

Page 64
Current assets turnover ratio:

It measure the short term debt paying ability.
Current asset turnover ratio= Net sales / Current assets
Computation of current assets turnover ratio

Year
Net sales
(Crores)
Current assets
Current
assets
2011
345.19
242.41
turnover ratio
1.42
2012
392.26
346.43
1.13
2013
593.09
450.49
1.31
2014
596.06
557.8
1.06
2015
691.09
590.41
1.17
INTERPRETATION:
In the year of 2011 the value of current ratio was 1.42 .The ratios are
Fluctuations because of all assets are effectively utilized for creating net sales. It shown that
the ratio was gradually increasing in the year of 2014and 2015.

Page 65
Working capital turnover ratio:

It also known has working capital leverage ratio . this ratio indicates whether
(or) not working capital has been effectively utilized in making sales.
Working capital turnover ratio= Net sales / Net working capital

Computation working capital ratio:
Year
Net sales
Net working capital
Ratio
2011
345.19
135.6
2.54
2012
392.26
207.91
1.88
2013
593.09
271.75
2.18
2014
691.09
270.8
2.20
2015
691.09
309.95
2.22
INTERPRETATION:
The above table shows that the higher working capital turnover is 2.54 .In
the year of 2011 the profits are greator. A low working capital turnover ratio 1.88 in year
2012 it indicates that working capital is effectively utilized and the standard ratio is1:1.
Page 66
Profitability ratio:
A] Gross profit ratio :
It is defined as the ratio (or) the relation ship between gross profit and
Net sales it is usually represented as percentage.
Gross profit ratio= ( gross profit / Net sales) * 100
Computation of gross profit ratio
Year
Gross profit
Net sales
Ratio
2011
24.77
345.19
0.07
2012
26.63
392.26
0.06
2013
38.33
593.09
0.06
2014
57.32
596.06
0.09
2015
49.75
691.09
0.07
INTERPRETATION:

Page 67
From the above table it is observed that the higher gross profit ratio is 0.06
in the year 2013 and it indicates profitability is more. A low gross profit ratio is 0.09 in the
year 2014 and It indicate that gross profit and net sales are is not effectively utilized.
B) Net profit ratio:

It is defined as the relation ship (or) the ratio between net profit
after tax and sales.
Net profit ratio =
( Net profit after tax / Net sales)*100
Computation of net profit ratio

Year
Net Profit
Net sales
Ratio
2011
16.71
345.19
0.04
2012
15.02
392.26
0.03
2013
25.31
593.09
0.04
2014
28.57
596.06
0.04
2015
27.97
691.09
0.04

Page 68
INTERPRETATION
From the above table it shown that the higher net profit ratio is 0.04 in the year
of 2011 ,13,14,15 and indicates greater profitability. A low net profit ratio of 0.03 in year of
2008 indicates that the net profit & net sales are is not effectively utilized.
C). Net Working Capital turn over Ratio :
Net working capital turn over ratio=
Net sales / working capital
Computation of Net Working Capital Ratio

Year
Net
Working Net Assets
2011
Capital
135.6
207.04
0.65
2012
209.91
254.4
0.82
2013
271.75
333.41
0.81
2014
270.8
356.66
0.75
2015
309.95
394.76
0.78

Page 69
Ratio
INTERPRETATION:
The above table shows that the net working capital is gradually Fluctuating f
rom 2012 to 2015 0.65, 0.82, 0.89, 0.75, 0.78 respectively. So company has not effectively
utilized those assets.
D)Operating Expenses to total income ratio:
Operating expenses to total income ratio= Operating expenses / total income
COMPUTATION OF OPERATING EXPENSES RATIO

Year
Operating expenses
Total income
O.E/TI
2011
342.63
375.80
0.91
2012
423.80
461.33
0.91
2013
615.84
675.25
0.91
2014
604.82
685.25
0.88
2015
585.23
656.18
0.89

Page 70
INTERPRETATION:
The above table shows that the total income ratio is increased aswell as
decreased in year of 2011 the value is 0.91&in 2015 the value is decreased to 0.89. so
the company need to decrease the operating expenses and utilize those assets effectively.
6) current assets to fixed asset ratio:
Current assets to fixed assets ratio= Current assets / fixed assets
Computation of current assets to fixed ratio

Year
Current assets
Fixed assets
Ratio
2011
242.41
61.54
3.93
2012
346.43
44.93
7.71
2013
450.59
59.24
7.60
2014
557.8
82.79
6.73
2015
590.41
73.61
8.02

Page 71
INTERPRETATION:
In the year of 2011 current assets turnover ratio was 3.93 where as in 2012,13,the
current ratio 7.1,7,60 has increased respectively . But again there is decrease In 2014 6.73
due to change occur on current assets and it has gradually increased in the year of 2015.
CASH MANAGEMENT:
Cash and current assets ratio = Cash & bank balance / Current assets
Computation of cash current assets ratio

Year
Cash& bank
Current assets
%cash to ca
2011
11.84
242.41
0.04
2012
27.91
346.43
0.08
2013
17.35
452.59
0.03
2014
19.84
557.8
0.03
2015
27.66
590.41
0.04
Av=0.22

Page 72
INTERPRETATION:
The above table shown that the average value for cash to current asset ratio is0.022
this ratio indicates that 0.22% of current assets are in the form of cash.
Cash and bank balance have been registered a fluctuating trend . It is
observed that the cash and bank balances are worst.
Cash and sales ratio:
Cash & sales ratio = Cash & bank / sales
Computation of Cash to Sales ratio

YEAR
CASH&BANK
SALES
%OF CASH TO SALES
2011
11.84
345.19
0.03
2012
27.91
392.26
0.07
2013
17.35
593.09
0.02
2014
19.84
596.06
0.03
2015
27.66
691.09
0.04
Avg 0.19

Page 73
INTERPRETATION:
The ratio of cash to sales provided a deep insight of cash balance holds by the
company and an average value 0.19 of the sales in the company has remained cash in the
firm.
Cash to Current liabilities ratio:
Cash to Current liabilities ratio=
Cash & bank / Current liabilities
Computation of cash to current liabilities

Year
2011
2012
2013
2014
2015
Cash &bank
11.84
27.91
17.35
19.84
27.66

Page 74
Current liabilities
Ratio
106.81
0.1
138.52
0.20
178.84
0.09
287
0.06
280.46
0.09
average=0.54
INTERPRETATION:
Another way of looking at the variation in cash balance is to compare with current
liabilities. The above table depicts that cash and bank balance on an average as constituted
0.54 of current liabilities.
CHAPTER 5
FINDINGS
SUGGESTIONS
CONCLUSION

Page 75
FINDINGS
o The current assets are more than current liabilities. But in the year 2007-08 and 2008-09
current assets less than current liabilities in these years current ratio is not satisfactory.
o The quick ratio of the IHP is sufficient as the quick assets are more than the current
liabilities quick ratio of IHP is satisfactory.
o The inventory turnover ratio is not satisfactory as the ratio is decreasing year by year and
inventory conversion period is increasing.
o As the sales are increasing continuously so the debtors turnover ratio is satisfactory and
average collection period is not satisfactory.
o Working capital turnover is of the IHP is not satisfactory in the year 2009-10, 2011-12,
2012-13, 2013-14. But turnover is increased. So over all performance is good.
o The current assets turnover ratio is increasing year by year. So current assets turnover
ratio is satisfactory.
o The creditors turnover ratio is satisfactory. But average payment period is decreased,
which is not good for the company.
o Raw material turnover ratio is also satisfactory.
.

Page 76
SUGGESTIONS
The company is unable to maintain the required standard norm i.e.,

2:1 ratio .
The company cash portion is lower than current liabilities. It suggests that proper steps
should be initiated to maintain adequate level of cash.
To increase the inventory turnover ratio of the company by increasing the sales.
To decrease the average collection period of the debtors.
Creditors turnover ratio is good, if the average payment period is increased, the company
would relaxed in paying the debts.
Finished goods inventory ratio is to be improved.
To improve the work in progress inventory.

Page 77
CONCLUSION
The company's plants continue to operate efficiently and the fertilizer operations of
the company are viable and profitable. The fertilizer operations of the company are profitable
and the charging of the recoveries is extra an ordinary item of a non-recurring nature. The
company proposes to improve profitability by taking measures for better efficiency and
profitability.
Company was maintaining adequate stock of inventory in order to meet the demand
of output which needs some sort of improvement. The company can gain more if it can get
cheaper financial resources by decreasing its interest component. Even though the company
is producing urea at its full capacity the sales to fixed Assets and sales to total assets are less
than one because the company is capital intensive industry.
In these company resources of working capital has been obtained from the long term
sources. In this company percentage occupied by the loans and advances. The company has
nearly similar working capital turn over ratio in all year because the company has been
maintaining similar percentage of cash and bank balances and inventory in total current
assets for the requirement of generating sales which increased.

Page 78
CHAPTER-6
BIBLIOGRAPHY

Page 79
BIBLIOGRAPHY
Text books:
I.M. Pander, Financial Management, New Delhi, Vikas Publishing house Pvt., Ltd.,
fourth edition, 1999.
Prasanna Chandra, Financial Management, Tata Mc Graw Hill Publishing Company
Limited, New Delhi, 2005.
V.K. Ballaa, working Capital Management, Anmol Publications Pvt., Ltd., New Delhi,
1995.
S.P. Jain and K.L. Narang, Financial Cost Accounting, Kalyani Publishers, 1999.
Financial management - I.M.Pandey A mol Publications Pvt., Ltd., New Delhi, 1995.
Financial management
Kalyani Publishers, 1999
- M.Y.Khan & P.K.Jain
EMAIL AND WEBSITE

Email:info@indianhumepipe.com
Website:www.indianhumepipe.com

Page 80
Balance sheet
Mar ' 15
Mar ' 14
Mar ' 13
Mar ' 12
Mar ' 11
4.84
4.84
4.84
4.84
4.84
Share application money
Preference share capital
205.31
182.97
160.07
139.58
128.53
107.22
108.72
142.65
61.69
54.77
77.38
60.11
25.84
48.29
18.89
394.76
356.65
333.40
254.41
207.04
108.64
94.74
72.25
69.40
Sources of funds
Owner's fund
Equity share capital
Reserves & surplus
Loan funds
Secured loans
Unsecured loans
Total
Uses of funds
Fixed assets
Gross block

Page 81
123.58
Mar ' 15
Mar ' 14
Mar ' 13
Mar ' 12
Mar ' 11
Less : accumulated depreciation
51.47
44.54
38.66
34.25
32.15
Net block
72.11
64.10
56.08
37.99
37.25
Capital work-in-progress
0.09
1.19
0.64
4.46
2.43
Investments
1.41
17.50
2.52
2.47
21.86
Less : revaluation reserve
Net current assets

Current assets, loans & advances
601.61
560.87
453.01
348.00
252.30
Less : current liabilities & provisions
280.46
287.01
178.85
138.52
106.81
Total net current assets
321.15
273.86
274.16
209.48
145.50
394.76
356.65
333.40
254.41
207.04
Miscellaneous expenses not written

Total
Notes:
Book value of unquoted investments
1.12
0.62
0.72
14.09
Market value of quoted investments
3.02
19.96
2.19
4.23
9.57
59.92
49.50
50.18
32.94
17.01
242.24
48.45
48.45
48.45
48.45
Contingent liabilities
Number of equity sharesoutstanding (Lacs)

Page 82
Profit & Loss account of Indian Hume Pipe

Company
------------------- in Rs. Cr. -------------------
Mar '15
Mar '14
Mar '13
Mar '12
Mar '11
12 mths
12 mths
12 mths 12 mths 12 mths
691.86
596.56
593.09
392.26
345.77
42.80
35.63
40.75
28.34
23.10
649.06
560.93
552.34
363.92
322.67
2.81
1.94
3.32
1.43
5.43
Stock Adjustments
-39.17
86.08
77.84
65.84
22.22
Total Income
612.70
648.95
633.50
431.19
350.32
121.33
145.23
205.23
119.53
108.81
3.70
3.29
3.05
2.33
2.62
37.98
33.62
29.41
23.06
20.01
358.81
367.86
319.76
235.97
174.39
16.00
16.85
14.90
13.35
11.36
Miscellaneous Expenses
5.04
2.52
2.43
0.88
0.47
Preoperative Exp Capitalised
0.00
0.00
0.00
0.00
0.00
542.86
569.37
574.78
395.12
317.66
Income
Sales Turnover
Excise Duty
Net Sales
Other Income
Expenditure
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Selling and Admin Expenses
Total Expenses

Page 83
Mar '15
Mar '14
Mar '13
12 mths
12 mths
12 mths 12 mths 12 mths
Operating Profit
67.03
77.64
55.40
34.64
27.23
PBDIT
69.84
79.58
58.72
36.07
32.66
Interest
21.20
23.11
21.09
10.33
8.40
PBDT
48.64
56.47
37.63
25.74
24.26
Depreciation
7.40
6.72
4.91
4.06
3.86
Other Written Off
0.00
0.00
0.00
0.00
0.00
Profit Before Tax
41.24
49.75
32.72
21.68
20.40
1.11
-3.20
4.71
1.01
3.39
PBT (Post Extra-ord Items)
42.35
46.55
37.43
22.69
23.79
Tax
14.39
17.98
12.09
7.68
7.07
Reported Net Profit
27.97
28.57
21.32
14.89
13.17
Total Value Addition
421.53
424.14
369.56
275.59
208.85
Preference Dividend
0.00
0.00
0.00
0.00
0.00
Equity Dividend
4.84
4.84
4.12
3.39
2.91
Corporate Dividend Tax
0.79
0.82
0.70
0.58
0.49
242.24
48.45
48.45
48.45
48.45
11.55
58.98
44.01
30.73
27.19
100.00
100.00
85.00
70.00
60.00
86.76
387.68
340.40
298.10
275.29
Extra-ordinary items
Mar '12
Mar '11
Per share data (annualised)

Shares in issue (lakhs)
Earning Per Share (Rs)
Equity Dividend (%)
Book Value (Rs)

Page 84

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Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

of working capital is maintained.

Working Capital management

The Indian Hume Pipe Industry

Seth Walchand Hirachand

Working Capital management

Success in the highly competitive field of construction and contracting spurred

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Indeed water is fundamental to our life.

In view of the vital

2. OPPRTUNITIES AND THREAT:

Working Capital management

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

(a) WATER SUPPLY AND SEWERAGE PROJECTS:

Working Capital management

1700mm and 1400mm dia M.S. pipeline for Raipur Augmentation

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

complete in joint venture with M/s. Flow more

pvt. Ltd. of the value of Rs.

26,309.92Lacs and our companys share is 86% i.e. Rs.22,626.53Lacs.

CORPORATE SOCIAL RESPONSIBILITY:

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

Precast Prestressed Concrete Pipes

American Concrete Pipes Association, U.S.A.

Indian Concrete Institute

American Water Works Association, Denver- U.S.A.

Indian Water Works Association

Bureau of Indian Standards.

RESEARCH AND DEVELOPMENT IN INDIAN HUME PIPE COMPANY

Working Capital management

- New product Development

Working Capital management

Registrar &Share Transfer Agent:

Working Capital management

The amount involved in the appeal is

Working Capital management

PUBLIC DEPOSITS AND LOANS/ADVANCES:

Consciousness of energy conservation is also cultivated among

the employees to optimize the use of electricity/Fuel etc.

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management

S.D.G.S PG COLLEGE, HINDUPUR

Working Capital management