Chapter 1

CHAPTER-1
INTRODUCTION
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INTRODUCTION
Working capital is the capital need at to satisfy the day-to-day operation of the company. It
concerns the short-term funding of the subject or the business, which is a intently related
exchange between productivity and liquidity it enables to full fill the fast time period liquidity
consequently had a look at operating capital control is not always most effective a crucial a
part of financial control but also common management of the commercial enterprise problem.
Running capital is termed as the investment which is not constant however the more
commonplace usage of the operating capital is to take into account it as the difference among
eBook value of contemporary property and current liabilities.
Finance is one of the vital and crucial resources and without economic no enterprise activity
may be pursed. Its far manual for regulating funding division and expenditure. Monetary
control research about the procuring of procuring and most advantageous usages monetary
resources a good way to exploit the value of the firm their period of the price of the
proprietors i.e., equity shareholders.
Finance is existence blood of any commercial enterprise and holds the important thing to all
business in addition to human activities the authorities also treats as a sign and healthy
indicator to govern and degree its steps. Finance place a position in each monetary situation in
which there is a gift are future price of cash.
Working capital to a organization is just like the blood to a body. it's miles the maximum
important aspect of a business. Operating capital is important to maintain the clean jogging of
a commercial enterprise. No commercial enterprise can run without an adequate quantity of
operating capital.
An enterprise invests its price range for long – term cause and for brief – time period
operations. That portion of business enterprise’s capital invested in brief - term or a present
day asset to carry out its day- to - day operations smoothly is called the working capital.
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Working capital Relates to that element of Corporate Capital Needed to Finance Short term or
Current Assets Along with coins, Security markets Borrowers and stocks. Operating capital is
the Amount of Resources Essential to cowl the Importance of the Employers Operation in
Distinct Sentences. The Efficient Operating capital Control is Important to Keep a Stability of
Liquidity and Profitability.
Working capital might be viewed as the existence blood of business. Working capital is of
real significance to inside and outside investigation in view of its cozy association with the
present everyday activities of a business. Each business needs assets for two purposes.
• Long term assets are required to make creation offices through buy of fixed resources,
for example, plants, apparatuses, lands, structures &etc.
• Short term assets are required for the buy of crude materials, installment of wages, and
other everyday costs.
It is also called rotating or coursing capital. It is only the contrast between current resources
and current liabilities. For example
Working Capital = Current Assets – Current Liabilities.
Associations use capital for improvement, redesign, furniture, programming, apparatus, or
equipment.
It is moreover consistently used to purchase stock, or to make money. Capital is in like
manner used much of the time by associations to put an underlying portion down on a touch
of business land. Working capital is fundamental for any business to succeed. It is winding up
dynamically basic to approach all the all the more working capital when we need it. In direct
words working capital is the plenitude of current Assets over current liabilities. Working
capital has regularly been portrayed as the excess of current assets over current liabilities.
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Need for the study
● Effective, efficient and consistent implementation of the working capital policies will ensure
the health of the organization.
● Working capital management is very useful because it helps in meeting the short-term
requirements and helps to fill gap between production and realization of cash from sales.
● Short run performance of a firm always reflects its long run performance. Hence, firms should
concentrate on short run performance and that can be through working capital management.
● Analogous to the circulatory system of the human body, smooth working capital management
ensures that the business operating cycle keeps moving without any glitches in terms of
payments of liabilities and/or procurement of inventories, In the event of an inefficient
working capital management, the flow of money get choked supplies are interrupted and
payments delayed.
● Only if liquidity is maintained then the company can do well in long run by maintaining the
debt-equity ratios and profitability of the organization. The management can also implement
certain managerial practices to improve the performance of the organization.
● About, all the study of working capital management and analysis in HINDUSTAN
SHIPYARD LIMITED helps to gain practical knowledge of academic study.
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SCOPE OF THE STUDY
The present study is confined to analyze the WORKING CAPTIAL management

practices at HINDUSTAN SHIPYARD LIMITED,VIZAG. It also focuses on analyzing the
efficiency of inventory and receivables management of the organization. Current study is
confined to 6 years data only i.e; from 2016-2022
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OBJECTIVES OF THE STUDY
● To know about WORKING CAPITAL practices in general
● To understand the Theoretical Concepts of Working Capital Management.
● To study the Working Capital trends and its Utilization in HINDUSTAN SHIPYARD
LIMITED.
● To analyze the inventory, receivables, and payables management practices of HINDUSTAN

SHIPYARD LIMITED.
● To give suggestions if necessary for the financial performance of the organization
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METHODOLOGY
Research methodology is a 'way to systematically solve the research problem. It may be

understood as a science of studying now research is done systematically. In that various step,
those are generally adopted by a researcher in studying his problem along with the logic
behind them.
It is important for research to know not only the research method but also know methodology.
The procedures by which researchers go about their work of describing, explaining and
predicting phenomenon are called methodology. Methods comprise the procedures used for
generating, collecting and evaluating data. All this means that it is necessary for the researcher
to design his methodology for his problem as the same may differ from problem to problem.
Data collection is important step in any project and success of any project will be largely
depend upon now much accurate you will be able to collect and how much time, money and
effort will be required to collect 'that necessary data, this is also important step.
Data collection plays an important role in research work. Without proper data available for
analysis, you cannot do the research work accurately.
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Types of data collection:
There are two types of data collection methods available
a. Primary Data
b. SecondaryData
a. Primary data:
The primary data is that data which is collected fresh or first hand, and for first time which is
original in nature. Primary data can collect through personal interview, questionnaire etc. to
support the secondary data.
b. Secondary data:
The secondary data are those which have already collected and stored. Secondary data easily
get those secondary data from records, journals, annual reports of the company etc. It will
save the time, money and efforts to collect the data. Secondary data also made available
through trade magazines, balance sheets, books etc.
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LIMITATIONS OF THE STUDY
● The time period of 45 days for the analysis is not sufficient to conduct in detailed analysis.
● Some of the information regarding the financials was not revealed due to confidential issues.
● Another limitation of the study is data collected has some hurdles due to large size of the
organization.
● The limitation of the financial tools applies for the study.
● External factors that affect the financial performance of company have not given much
importance.
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INDUSTRIAL PROFILE
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PROFILE OF SHIPBUILDING INDUSTRY
In India shipping and ship building industry have had an unbroken relation extending over
6000 years since the days of the Indus valley civilization to the advert of the British rule. Under
foreign domination the shipping industry suffered a serious setback even during those dark
days some Indian industrialist of vision and will power continued a relentless war against
vested interest to save the industry from complete collapse, India shipbuilding industry is laid
by these pioneers it is gain in ground and recognition too. The people of MOHENJODARO
and HARAPPA manifested amazing energy in maritime enterprise slat biggest mentions that
“Harappa’s traders carried considerable business with Sumerian cities” Archaeological
excavations carried out during the past decade have brought to light a dozen Harappa parts
dating back to 2450 B.C to 1900 B.C.
THE HISTORY OF SHIPBUILDING IN INDIA

In the present era, the shipbuilding industry is being dominated by players from the US,
European, and Eastern Asia. But there was a time in the ancient past, when shipbuilding in
India was a major and thriving industry. Some of the most important aspects of the Indian
maritime history can be recounted as follows.
Ancient India
The maritime history of Indian shipbuilding begins right from the time of civilization in
Harappa and Mohenjo-Daro. The Rig-Veda – one of the four Vedas (Hindu holy writings) –
documents about the variously termed parts of a vessel in the oldest existing Indian language:
the Sanskrit. Also, other detailing about the ancient marine industry is documented in the
Arthashastra and various other writings of the ancient Indian folk-lore. In the context of these
documentations, it needs to be noted that the ancient maritime India was also majorly
influenced by the then- prevailing system of societal superiority. Since the boats of that era
were built of wood, there were stringent specifications and protocols laid down for the
materials to be used. There were also numerous other superstitious beliefs that were
documented in a book known as the Yuktikalpataru, regarded to be published around the 6th
century AD. The shipbuilding industry in India was mainly carried on in the coastal territories
like Bombay, Cochin, Tuticorin, Mandvi and Cuddalore. The ships and the shipyards that
existed in Ancient India were used to carry out and further the existing international trade with
the then existing European empires. In addition to the European empires, trading through the
oceanic routes also existed between India and some of the other South Asian territories
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Colonization:
With the advent of the European voyagers like Vasco da Gama in the 13th century,
shipbuilding in India suffered as these voyagers laid the foundation stone of colonization in the
country. However due to the political alliance formed between the Indian rulers in the Western
part of the country to counter the shipbuilding and naval efforts of the Westerners, shipbuilding
in India saw a resurgence of sorts towards the 17th century. But during the British colonization
of the country in the 17th and 18th century, because of lack of competent rulers to hold the
Indian maritime industry fort, Indian shipbuilding suffered. This lack of competence from the
Indian perspective also ensured a further oppression for the Indians from the British rulers. But
while on one hand the Indian shipbuilding industry suffered a backlash, construction of several
British ships was awarded to the Indian ship yards which kept alive the hopes and promises of
the Indian ship construction industry in the chaotic times.
Present Scenario:
The Indian shipbuilding industry does not feature among the top Asian nations in the shipping sector.
This deficit in its international contribution has been taken as a majorly problematic area by the Indian
government and all efforts are being made to change these debilitative statistics. A very important
aspect of the Indian shipbuilding sector however, is about its ship breaking yard located in the
Western state of Gujarat. Along as around 170 yards of which 50 are currently functional as ship
breaking yards. Yet, because of lack of proper infrastructural support from the government
authorities, the condition of the workers in the ship breaking yard is really poor and remains an arena
needing to be addressed as a priority. The Indian peninsula enables a strong viability for the marine
industry. Owing to certain factors, while the full potential of the same has been failed to be capitalized
contemporarily, it can be hoped that in the days to come, the situation will be substantially reversed.
GLOBAL TRENDS IN SHIPPING INDUSTRY

The shipping industry is almost always in a state of flux, with frequent and sweeping changes.
The challenges and opportunities of 2016 have led to very specific changes in key areas:
 Hanjin collapse: One of the major service providers applied for bankruptcy in light of
overcapacity and intense competition. This proved to be a cathartic and traumatic event for the
industry since Hanjin was previously perceived to be an industry leader.
 Falling freight rates: In an effort to attract more demand and accept the realities of a changed
global economy, freight rates were drastically reduced. This meant that key players in the
shipping industry have to come up with creative ways for keeping the bottom-line steady.
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New alliance formations: One of the responses to the crises within the industry was to form
strategic alliances as a means of sharing expertise and markets. The future of the industry
seems to be gearing towards this particular type of industry model.
The New Year brings new challenges and opportunities. That is why it is imperative for
shippers to be very aware of what is happening in the industry in terms of trends and potential
risks. The biggest emerging challenge is the management of capacity, demand and supply.
According to industry analyst Stifel Nicolaus; non-compensatory rates are no longer
acceptable. Therefore, it is anticipated that there will be a pricing trough in 2017. Accordingly,
“carriers grappled with persistently weak spot market pricing and contract customers who
abandoned talk of collaboration and reverted to aggressive, Neanderthal style pricing tactics”.
The results will be price increases that range anywhere from 3% to 4%; whereas in 2016 the
price inflations hovered around 2%.
Key Trends:
1. Increased Consolidation:
This has become an important tactic for most industry players and it is bound to continue in
2017. The impact on the market is to squeeze the space for small players. However, there will
still be some room for these individual shippers to create new business opportunities. For
purposes of illustration, one need not look further than Maersk Line’s purchase of Hamburg
Sud. Given the $5-10 billion losses that arose in 2016, it is likely that the consolidation moves
will lead to bankruptcies, acquisitions, and mergers. A recent survey of industry observers
indicated that up to 77% anticipated an increase in consolidation for 2017. The structure of the
industry will change drastically with only 14 major global carriers expected to make it through
to 2018. That means that 7 major players will control 65% of the entire world capacity.
2. U.S. China Trade Relations:

The new U.S. presidential administration and the forthcoming Brexit movement are likely to
affect US-China trade relations. Because these two economic giants are the bedrock of
international trade, the shipping industry will not be spared the aftermath. The new U.S.
administration, in particular, prefers a protectionist stance that could lead to trade wars. Others
like Nariman Behaves of IHS Market; hope that Trump will eventually pursue a pragmatic
economic policy which focuses on growth. In any case, global GDP might achieve a modest
growth rate of 2.8%. As Europe struggles with the threat of populist movements, the US might
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emerge as the remaining reliable trading partner for China. Hence, it is expected that routes to
the US will remain very popular.
3. Labour and Unions:

The labour unions are watching the developments with interest and are likely to react in order
to protect their own existence. A case in point are the two large shipping labour unions in the
US (International Long shore and Warehouse Union) which want to renegotiate contracts in
2017, taking into account the looming threat of corporate bankruptcy. There are also indicators
that the International Longshoremen’s Association will follow suit on the East Coast. The
ILWU and the Pacific Maritime Association will be negotiating their current contract which is
due for review in 2019.If these industrial relations escalate into conflict, there could be a
significant disruption to service delivery. We only have to look back to the West Coast dispute
of 2014/2015 to realize the potential damage to the industry as a whole. US dockworker
unions are gearing up for more aggressive stances towards employers. The key points of
contention may include health, safety, and insurance as well as the threat of automated
container terminals which necessarily take away jobs from human workers.
4. Uncertain pricing:
The base rates for the industry are bound to be volatile given the large number of
consolidations. In any case, the demand for higher rates in 2017 is logical given the evidence
of bankruptcy that was provided by the likes of Hanjin. There is a mismatch between capacity
and traffic. For example, between 2008 and 2016; capacity growth outstripped traffic by 5%.
This is one of the reasons why Hanjin met a sticky end. The fleet growth of 1.1% in 2016 was
lower than demand growth; setting the stage for imbalances in 2017. There will inevitably be
some regional quirks such as the increase in spot rates for Asia-Europe routes. It is anticipated
that contract rates on different trades will increase. A recent survey of shippers showed that
46% were preparing for increments in the trans-Pacific contract rates.
5. Increased Number of Alliances:

Not only will new alliances be formed; they could also face significant adjustments to account
for market dynamics. The use of vessel-sharing agreements will fundamentally change the way
in which the industry is run. Some of the great alliances anticipated include the Transport High
Efficiency, Ocean and the 2M Alliance + HMM group. That automatically means changes in
vessel rotations as well as terminal locations. Some shippers have expressed concern that some
of the changes will cause significant organizational and logistical challenges. According to a
recent survey, up to 47% of shippers anticipate these disruptions.
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INDIAN TRENDS IN SHIPPING INDUSTRY:
India has 23 shipyards, of which 7 are under administrative control of the central government,
2 with state governments, and the rest in the private sector. The present shipbuilding capacity
of India is only 2, 81, 000 DWT, which is small according to global shipbuilding standards,
and inadequate given the country's requirements. Owing to lack of mechanization, productivity
levels of all Indian shipyards are also low. Till recently, most Indian shipyards were incurring
losses. However, the current uptrends in the global shipbuilding industry and the government’s
shipbuilding subsidy have led to a turnaround in this sector.
Increase in Fleet Size and Improvement in Fleet Quality:

The average age of Indian ships is over 16 years compared to a global average of around 12
years. To reduce this disparity, it is crucial that Indian companies acquire a younger fleet. At
the same time, Indian companies would have to increase their fleet size to gain market share.
Recent government initiatives like introducing tonnage tax and improving the processes for
acquiring vessels have increased shipping tonnage. However, continuous strengthening of
related measures can help Indian players increase their fleet size and quality.
Need for Supporting Policies and Incentives:

Indian ship owners are statutorily required to insure their fleet with Indian insurance
companies for hull and machinery. The premium rates (fixed by the tariff advisory committee)
have traditionally been much higher than international rates. Apart from this, the industry has
been seeking revaluations of withholding tax on ECBs. The policy framework requires a
modification to provide Indian shipping players a level field vis-à-vis international player.
Policy initiatives are also required to retain and forge talent While Indians are considered to be
highly qualified for sea-faring jobs; Indian ship owners face a shortage of personnel. One of
the reasons is that the Indian taxation regime for companies and ship personnel imposes
additional costs, making employment on Indian ships unattractive. Hence, a large number of
Indian nationals work on foreign ships.
Simplification of Tax Structure:
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The taxation regime applicable to the Indian shipping industry comprises multiple taxes
including service tax and fringe benefit taxes. These reduce the competitiveness of the Indian
shipping industry. Introduction of simplified tax procedures and incentives to ensure Indian
players are competitive.
SHIPBUILDING INDUSTRIES IN INDIA
Public sector
1 Mazagon Dock Limited-Mumbai India's prime shipyard
2 Cochin Shipyard Limited
3 Hindustan Shipyard Limited- Visakhapatnam
4 Garden Reach Shipbuilders and Engineers- Kolkata
5 Goa Shipyard Limited
6 Naval Dockyard(Bombay)
7 Naval Dockyard(Visakhapatnam)
Private sector
1 Pipavav Shipyard(currently Reliance Defence and Engineering company Limited)
2 Bharathi Shipyard Limited
3 Ashkam Energy Pvt Ltd, Ranchi, Jharkhand
4 Navgathi Shipbuilding & Heavy Industries
5 Kanethara Group Inc.
6 Lavgan Dockyard Pvt Ltd. India's newest ship repair facility operational from June 2014
7 Trinitech infrastructure Pvt ltd
8 ABG Shipyard Limited
9 Aiswarya Marine Pvt
10 Calex Marine and Industrial Services Pvt Ltd
11 Century Shipyard Pvt Ltd
12 Dempo Engineering Works, Goa
13 L&T Shipbuilding Limited, Hazira
14 L&T Shipbuilding Limited, Kattupalli, Chennai
15 MandoviDrydocks, Goa
16 Master Shipyard Pvt Ltd.
17 Modest Infrastructure Lt
18 Nigel Shipyard Private Limited
19 North Star Shipbuilding Pvt Limited
20 Pande Shipyard Pvt Ltd- Run by eminent ship designer, AarshPande
21 Sea Blue Shipyard Ltd
22 Submarine Kakinada Limited
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FOUR SHIP BUILDING CENTRES UNDERTAKEN BY DEFENCE:
1.Hindustan Shipyard Ltd., Vishakhapatnam
It was set up by M/s Scindia Steam Navigation Company in 1941 and the first ship was
launched on 14th March, 1948. It was taken over by Government on 21st Jan., 1952 and was
renamed as Hindustan Shipyard Ltd. In 1962, the shipyard became a central public sector
enterprise. The shipbuilding capacity of the yard is 3.5 pioneer class vessels of 21,500 DWT
each. The maximum size of the vessel that could be built is 50,000 DWT. The yard has
slipways, covered building dock, wet basin and outfit jetty. This is the first shipbuilding yard in
the country which was awarded ISO: 9001 certifications by Lloyds Register of Quality
Assurance, London for international standard of quality assurance. So far as repair of ships is
concerned, the yard has facilities of modern dry dock, wet basin repair shops, etc. and it can
repair tankers, ships and submarines up to 70,000 DWT. It has so far constructed and
delivered 123 vessels of various types.
2. Goa Shipyard Limited, Goa:
Goa Shipyard Limited (GSL) is one of India's best shipyards and designated "mini-Ratna" by
the government of India. It is located on the West Coast of India at Vasco da Gama, Goa. It
was established in 1957, originally by the colonial government of the Portuguese in India, as
the "Estaleiros Navias de Goa", to build barges to be used in Goa's growing mining industry,
which took off after the establishment of India's blockade of Goa in 1955. In the wake of
Portugal's defeat and unconditional surrender to India following the invasion of Goa by the
Indian Armed Forces in 1961, it was requisitioned to manufacture warships for the Indian
Navy and the Indian Coast Guard.
GSL is undergoing a modernization of its yard to adapt to the latest technology in

shipbuilding. To this purpose it is negotiating with well-known shipbuilders for an
arrangement to collaborate. To date it has built 167 vessels, including barges, tugs, landing
craft, offshore patrol vessels and other vessels for the Indian Navy and Coast Guard and for
export to countries like Yemen. A new slipway has been commissioned to take up major
repair jobs of ships in the dry dock area. A damage control simulator and two double boom
level luffing cranes for heavy lifting have been constructed.
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3. Garden Reach Shipbuilders & Engineers Limited, Kolkata.
Garden Reach Shipbuilders & Engineers Ltd abbreviated as GRSE, is one of India's leading
shipyards, located in Kolkata, West Bengal. It builds and repairs commercial and naval vessels.
Presently GRSE has also started building export ships in a mission to expand its business.
Founded in 1884 as a small privately owned company on the eastern bank of the Hooghly
River, it was renamed as Garden Reach Workshop in 1916. The company was nationalized by
the Government of India in 1960. It was awarded the Miniratna status, with accompanying
financial and operational autonomy in September 2006. It is first Indian shipyard to build 100
warships.
4. The Mazagon Dock, Mumbai

The Mazagon Dock at Mumbai builds dredgers, dock cranes, cruisers, frigates, etc. for the
Indian Navy. It can also build ocean-going vessels up to 27,000 DWT. It is capable of building
cargo ships, passenger ships and dredgers. It has sub-units at Nhava and Mangalore. Recently it
has started constructing submarines, missile boats, destroyers of the Navy and off-shore supply
vessels etc. for ONGC.
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CHAPTER-2
COMPANY PROFILE
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PROFILE OF HINDUSTHAN SHIP YARD
Hindustan Shipyard Ltd., strategically located on the East Coast of the Indian peninsula, at
Visakhapatnam, Andhra Pradesh, is the nation’s premier shipbuilding organization catering to
the needs of shipbuilding, ship repairs, submarine construction and refits as well as design and
construction of sophisticated state-of-the-art offshore and onshore structures. Direct sea access,
excellent infrastructure, skilled work force, rich expertise garnered over the years in building
179 vessels and repairing 1951 vessels of various types enable HSL to offer competent services
for the defence and maritime sectors. Considering the strategic requirements, the yard was
brought under the administrative control of the Ministry of Defense on 22 Feb 2010. The
Registered Office of the company is located in Visakhapatnam and has regional office at New
Delhi.
VISION:
To be an internationally competitive Shipyard for building & repairs of ships & submarines.
MISSION:
To strive to continuously innovate and improve upon its performance for timely completion of
construction and repair of ships and submarines within the budgeted cost and fulfilling the
requirements of quality that is expected by its customers.
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OBJECTIVES:
To construct and repair of Naval ships and Strategic / Conventional submarines
 To modernize the yard for efficient construction of Naval ships and submarines
 To augment technological capabilities for the design and construction of ships and
Submarines
 To develop the expertise and adequately skilled manpower necessary for the anticipated
future orders
 To incorporate 'Best Practices' in all key activities of the yard including production
planning, purchase, marketing and human resource management
 To upgrade welding, cutting, plumbing and outfitting technologies
 To upgrade ERP and IT systems for efficient information management and transparent
operations
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History
In anentirely indigenous pre-Independence effort, history was made in 1941 when Shri
Walcand Hira Chand, the second Chairman of the famous Scindia Company chose to launch a
shipyard at Visakhapatnam. The shipyard was setup in the name ‘Scindia Steam Navigation
Co. Ltd'. Itsfoundation was laid in the thick of the freedom struggle in June 1941 by Indian
National Congress President, Dr.BabuRajendra Prasad. Prime Minister, Pandit Jawaharlal
Nehru launched India’sfirst steam ship ‘Jala Usha’ in 1948 which is first ship launched in India
after Independence. AfterIndependence, two thirds of its holdings were acquired by Govt. of
India in 1952 and the shipyard was renamed as Hindustan Shipyard Ltd on 21 Jan 1952.
Balance one third share was acquired by GoI in Jul 1961 and Hindustan Shipyard Ltd. became
a fully owned Govt. of India undertaking under the administrative control of Ministry of
Shipping.
Existing Infrastructure and Facilities:
Sprawling in an area of 117 acres, the shipyard has an ergonomic layout that ensures
unidirectional material flow. 2000 T / month of steel can be processed in the yard with a
stockyard that can hold 30,000 tons of steel, modern plate and section treatment plant, NC
Cutting Machines, heavy duty presses, self-elevating trucks capable of handling blocks up to
250 tons and large prefabrication shops with EOT cranes of adequate capacity. The hull
construction facilities include a fully-covered Building Dock (240 x 53 M) equipped with
cranes of max. Capacity of 300 T and three Slip Ways capable of launching up to 33000 DWT.
Indeed, the first ever 30000 DWT launch in India was done in 2007 in HSL. The Yard has a
long outfitting quay (460 m) of 10 M clear depth equipped with self-contained services and
facilities.
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Slipway
Ship Repairs
The Dry dock, constructed in the year 1971, is an important adjunct to the Shipyard for
undertaking repairs of ships and oil rigs. With a size of 244 x 38 M, it is capable of handling
vessels up to 70,000 DWT. The Dry Dock, the biggest and modern dock in the East Coast, with
544 meters of berths with a depth of 10 M, enable intricate repair jobs on a variety of Naval
Ships including Submarines, Merchant Ships and Oil Rigs.
Submarine Refit:
HSL happens to be the only yard in India to have carried out the refits of three classes of
submarines (refit of two Egyptian submarines in 1971, refit of F-class (INS Vagli) and EKM
class (INS Sindhukirti) submarine). The Medium Repair-cum-Modernizations of Russian made
INS Sindhukirti, was successfully completed and handed over to the Navy on 26 Jun 2015.
This has earned many accolades for the shipyard. During the refit, nearly 100 Km of cabling
and 30 Km of high-pressure piping was renewed, thereby making this the most advanced
platform ever to be undertaken in an Indian yard proving
The Yard’s capability to take up orders to construct generation next submarines. Incidentally,
this was the only instance where retrofitting of missile system in an existing submarine was
undertaken in the country. The submarine achieved RPM of 350 during its very first sea sortie
for Full Power Trials.
INS Sindhukirti:
Considering the proven expertise gained in refit of INS Sindhukirti, HSL has been nominated
by MoD for undertaking Normal Refit of INS Sindhu Vir, the refit of which is scheduled to
start from Jun 2017.
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Performance
Over the past 15 months, since the current incumbent C&MD RADM LV SaratBabu has taken
over charge of the Shipyard, the yard has implemented many innovative and constructive
initiatives which have resulted in the turnaround of the Yard. The VOP of the Shipyard during
the last quarter of 2015-16 more than doubled and the Company earned a profit of Rs 19.00 Cr
in 2015-16. During the last financial year (2016-17), the yard posted a profit of around Rs 30
Cr (prov.) in 2016-17. The shipyard has achieved highest VoP of around Rs 625 Cr since its
inception 75 years ago. The other operational indices Man Hour per CGT, VoP per employee,
employee cost as a percentage of VOP during this period have also improved significantly.
With these measures and improved morale, motivation and work discipline the company has
made operational profit in the last financial year 2016-17 which is the first in the last 35 years.
The shipyard has set a record by delivering five vessels (3 Nos. 25 T tugs - Sahayak, Balwan,
Buland for Indian Navy, 01 No IPV – ICGS Rani Gaidinliu for Coast Guard and 01 No. 50 T
tug – Jyestha for Kandla Port Trust) in the calendar year 2016.
HSL has been selected for RakshaMantri’s Awards for Excellence for the year 2015-16 in the
category of ‘Innovation’ for the following works. Award Presentation Ceremony is scheduled
to be held on 30 May 17.
 Innovative Shafting Work

 Rudder Carrier Bearings Modification
 Innovative Welding technique
Product profile:
Since inception, the Shipyard has built 179 ships including 11 wellhead platforms and repaired
1951 vessels till date. The product profile includes cargo liners, bulk carriers, passenger
vessels, offshore platform vessels, inshore platform vessels, survey vessel, mooring Vessel,
HSD oiler, landing ship tanks, training Ship, tugs, supply vessels, drill ship, dredgers, oil
recovery and pollution control vessel, research vessel, floating cranes, barges etc. for varied
number of customers like Indian Navy, Indian Coast Guard, ONGC, GML, Port trusts, DCI,
SCI, Andaman & Nicobar administration etc.
Future Projects:
The Shipyard has received Letters of Offer for construction of five Fleet Support Ships worth
Rs 10,000 Cr and two Strategic Operating Vessels (also called Midgets) amounting to Rs 6000
Cr. The Shipyard is also actively pursuing orders for construction of 2 Nos. Cadet Training
Ships and 09 Nos. 25 T Bollard Pull Tugs for Indian Navy and 08 Nos. IPV for Indian Coast
Guard.
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Quality and Certification
HSL is the first yard in the country to obtain ISO 9001 accreditation. The yard is ISO 9001 -
2008 certified from IRQS for undertaking construction of ships up to 80,000 DWT. The
Quality Control Department of HSL has developed comprehensive ‘Quality Management
System’ which ensured successful completion of the MR of INS Sindhukirti conforming to
stringent quality norms stipulated in Russian Repair Documents.
Strategic initiatives for ‘Make in India’
HSL is contributing in a big way to this flagship programme of the GoI. To implement this in
real sense, the Yard had gone for Consortium with two PSUs (BHEL – expert in heavy
machinery and equipment, MIDHANI – specialized in flat products and forgings of special
steel and non-ferrous alloys, welding materials etc.). This will complement the unique strength
of three PSUs in realizing indigenous products. The consortium will jointly bid for the P 75(I)
Submarine project for Indian Navy.
To strengthen the capability of Indian shipbuilding industry towards achieving the strategic
objectives under the ‘Make in India policy’, the Indian govt. has entered into an Inter-
governmental agreement (IGA) with Republic of Korea (RoK) on 21 Apr 17. Recognizing the
strategic importance of the yard, HSL has been nominated by MoD for collaboration with one
of the leading shipyards of South Korea under this IGA.This serves as an enabling agreement
for HSL to get tied up with one of the major shipbuilding giants which will be designated by
the Korean government. In line with the initial proposal, HSL will enter into a strategic
partnership agreement with the selected Korean company for Transfer of Technology & joint
execution of shipbuilding projects ordered on HSL and also for modernization of the yard at
par with global shipbuilding giants. It is planned to construct the Fleet Support Ship (6 Nos.)
project nominated on HSL under collaboration with the designated Korean shipbuilding
company realizing the Make in India vision of the nation. Further, HSL has set up Make in
India Cell with an objective of ensuring maximum indigenization. ‘Make in India’ Portal is
also launched to attract vendors.
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CSR activities:
Despite loss making, the yard is committed to CSR activities. The Yard has identified some of
the need-based CSRinitiativesFor the betterment of the local people with limited financial
commitment. Activities like Swachh Bharat Campaign, blood donation Camp, free medical
camp and participation in International coastal cleanup day have been undertaken. HSL also
supports seven educational institutions set up in the colony. As a part of Community based
project, the yard has provided a spacious area with amenities, which gives a platform to small
farmers, fishermen, traders to market their products besides making available fresh market
produce and essentials at economical price for employees and resident of neighboring colonies/
townships. Hindustan Shipyard Ltd, Visakhapatnam was set up in the year 1941 by the Scindia
Steam Navigation Company. The Shipyard was partially taken over by Govt. of India in 1952,
and HSL became a fully Government of India owned enterprise in Jul 1961.
Presently, this is the largest public sector shipyard in the country and the first yard to obtain
ISO 9001-2000 accreditation. Recently, the yard has obtained certificate of approval of ISO
9001-2008 Certification from IRQS on 09 Nov 2012. Since inception, the yard has delivered
173 vessels various types and repaired over 1920 vessels. The yard has three slipways, a
covered building dock, a wet basin and a dry dock along with necessary facilities required for
shipbuilding, ship repairs and submarine repairs. Over a period of time the yard has been able
to emerge as a one of the major players in the Indian maritime sector. The factors that make
HSL stand out are as under:
(a) Largest shipyard on the East coast of India.
(b) Well laid out facilities with steel throughput capacity of 20000 tons/ year.
(c) Only shipyard with submarine repair capability on the East coast.
(d) Large covered building dock for un-interrupted work round the year.
(e) Strategically located at harbor entrance (water depth of about 10 mt).
(f) Located close to major customers viz. ENC, DCI and VPT.
(g) Capable of building ships up to 80,000 DWT.
(h) Excellent Quality of work with low rejection rates.
(i) 850 m of wharf age with adequate carnage.
(j) Large drydock& wet basin with exclusive workshops to facilitate ship repairs.
(k) Cranage to handle blocks / loads up to 300 tons.
(l) Three low bed transporters up to 200 tons capacity.
(m) ISO 9001 / 2008 certified yard
(n) Good quality assurance system & test facilities.
DEPARTMENTS IN HSL
The departments can be mainly categorized as follows;
1. PRODUCTION DEPARTMENTS
2. ADMINISTRATION DEPARTMENTS
3. SERVICE DEPARTMENTS
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LIST OF BOARD OF DIRECTORS
1. Rear Admiral L V Sarat Babu, NM, IN (Retd)

Chairman & Managing Director,
Hindustan Shipyard Limited,
Visakhapatnam – 530 005
2. CmdeHemantKhatri, IN (Retd) Director (Strategic Project),

3. Cmdre A S Mitra, IN (Retd.) Director (Ship Building),

4. Shri M Naga Raj Director (Finance & Commercial),

5. Cmde PHM Salih Director (Corporate Planning & Personnel)

6. Ms SurinaRajan, IAS Part-Time Official Directors (Govt. Directors) 32

7. Dr CA Bijaya Kumar Sahoo Part-Time non-official Directors (Independent Directors)

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ACTIVITIES OF HINDUSTAN SHIPYARD LIMITED:
According to the 51st annual general meeting of the company held for the year 2002-
2003, the division wise performance of the Hindustan Shipyard Limited is as follows
1. SHIP BULDING:
Ever since the shipyard’s first ship “S.S. JALA USHA”, an 8000 DWT stream ship was
launched on 14th march, 1948 by the Prime minister of India PANDIT JAWAHARLAL
NEHRU. Hindustan Shipyard Limited has come a long way in building a range ship numbering
more than 144 aggregating to over 1 million weighted tonnages, the range varied from
conventional bank carries to general cargo and supply vessels, petrol vessels to highly
sophisticated drill ship Iceland defense sectors. Apart from conventional merchant shipping
“SAGAR BHUSHAN” a highly sophisticated and complex drill ship was constructed first time
in India. ONGC is just an example of shipyard’s capability for hi-tech products. Each
assignment is taken up a new challenge to meet the requisite standard quality, time and cost
constraints, technology of gradation, methods improvement, well- coordinated input services
and efforts made for the achievements of Hindustan Shipyard Limited.
2. INFRA STRUCTURE OF SHIP BULDING:

The Hindustan Shipyard Limited is spread over an area of about 300000 meters work
shop and facilities are systematically planned and functionally laid out to ensure
unidirectional flow of material. The steel processing material consists of a stock yard to
hold 30000 tones
Of steel. The hull construction facilities include a modern covered building dock with
intermediated gat facility and three shipways. Cutting and welding and assembling of
steel to any specification are handling with care and accuracy by skilled operation,
which are continuously trained to upgrade their skills.
3. SHIP REPAIR DIVISIONS:
Hindustan Shipyard Limited established full-fledged Ship repair division with the
community of dry dock during the year 1971. It has capability for handling vessels up
to 7000DWT. Hindustan shipyard limited ship repair department has accomplished
intricate jobs on variety of naval vessels which include sub marines, merchant ships, oil
rigs, foreign and Indian flag vessels totalling about 1600 ships.
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4.0FF SHORE PLATFORM DIVISION
Hindustan Shipyard Limited set up exclusive offshore platform grid (open) adjacent to main
ship building yard during the year 1985 as a captive yard to construct well held platform for
ONGC. The OPE yard has facilities for fabrication of two platforms per year. The man power
exclusively trained for fabrication of platforms was diverted to main yard to carry out ship
building and ship repair works.
HUMAN RESOURCE IN HSL:
Hindustan Shipyard Limited is a heavy engineering industry under public sector which
is under the administration control of ministry of Defence. The employees are broadly
categorized as officers, staff and workmen. The present strength of the officers is 382.
Staffs are 397 and workmen are 997, making a total of 1776 as on 11th May 2017.
CURRENT ORDERS:
The ailing defence-controlled shipyard, Vizag-based Hindustan Shipyard Ltd (HSL),

for the first time after 1981, registered a profit of substantial amount in 2016; the
platinum jubilee years completes 75 years of existence on June 21, this year. At present,
HSL has an order book of Rs 1,200 crore for the next two years. Also, the Ministry of
Defence (MoD) has placed Rs 20,000 crore worth orders on nomination to HSL. The
MoD had placed orders for five fleet support vessels (FSV), two landing platform docks
(LPD) and two mini-submarines for the Indian Navy. The contract for these new orders
is expected to be signed with the MOD and begin work by the end of 2017 or early
2018.During 2015-16, the HSL registered a turnover of Rs 650 crore and an unaudited
profit after tax of Rs 20 crore. The MOD controlled yard had also set its sights on
increasing turnover and also profit in the coming years.
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CHAPTER –3
WORKING CAPITAL MANAGEMENT –
A CONCEPTUAL APPROACH
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WORKING CAPITAL MANAGEMENT
MEANING OF WORKING CAPITAL MANAGEMENT
Working capital to a company is like the blood to the body. It is the most vital
ingredient of a business. Working capital management is carried out effectively, efficiently and
consistently, will ensure the health of the organization. A company invest it funds for long-
term purpose and for short-term operations. That portion of company’s capital, invested in
short-term or current assets to carry on its day-to-day operations smoothly, is called the
‘working capital’.
Working capital refers to a firm’s investment in short-term assets like cash, short-term
securities amounts to all aspects of current assets and current liabilities. The efficient working
capital management is necessary to maintain a balance of liquidity and profitability. If the
funds are tied-up idle current assets represent poor and inefficient working capital management
which affects the firm’s liquidity as well as profitability.
The management of current assets is similar to that of fixed assets in the sense that in
both cases a firm analyses their effects on its return and risk. The management of fixed and
current assets, however, differs in three important ways: First, in managing fixed assets, time is
a very important factor: consequently, discounting and compounding techniques play a
significant role in capital budgeting and a minor one in the management of current assets,
Second, the holding of current assets, especially cash, strengthens the firm’s liquidity position
(and reduces riskiness), but also reduces the overall profitability. Thus, a risk- return tradeoff is
involved in holding current assets. Third, levels of fixed as well as current assets depend upon
expected sales, but it is only current assets which can be adjusted with sales fluctuations, in the
short run. Thus, the firm has a greater degree of flexibility in managing current asset.
The key difference between long-term financial management and working capital
management is in terms of the timing of cash. While long-term financial decisions like buying
capital equipment or issuing debentures involve cash flows over a extended period of time (5 to
15 years or even more,) short-term financial decisions typically involve cash flows within a
year or within the operating cycle.
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DEFINATION
Working capital is defined as ‘the excess of current assets over current liabilities. All
elements of working capital are quick moving in nature and therefore, require constant
monitoring for proper management. For management of working capital, it is required that a
proper assessment of its requirement is made. Working capital is also known as circulating
capital, fluctuating capital and revolving capital the magnitude and composition keep on
changing continuously in the course of business. If the working capital level is not properly
maintained and managed, then it may result in unnecessary blockage of scarce resources of the
company. Therefore, the finance Managers should give utmost care in management of working
capital.
OBJECTIVES OF WORKING CAPITAL MANAGEMENT
The basic objects of working capital management are as follows. By optimizing the
investment in current assets and by reducing the level of current liabilities, the company can
reduce the locking-up of funds in working capital there by, it can improve the return on capital
employed in the business.
The second important objective of working capital management is that the company
should always be in a position to meet its current obligations which should properly be
supported by the current assets available with the firm. But maintaining excess funds in
working capital means locking of funds without return.
The firm should manage its current assets in such a way that the marginal return on
investment in the assets is not less than the cost of capital employed to finance the current
assets.
The firm should maintain proper balance between current assets and current liabilities
to enable the firm to meet its day-to-day obligations.
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CONCEPT OF WORKING CAPITAL
There are two concepts of working capital.
a) Gross working capital

b) Net working capital
a) Gross working capital refers to the firm’s investment in current assets. Current assets
are the assets which can be converted into cash within an accounting year.
Current Assets:
1) Cash in hand
2) Cash at bank
3) Bills receivable
4) Sunday debtors
5) Stock
6) Prepaid Expenses
7) Accrued Income
8) Short term Investment.
b) Net working capital refers to the difference between current assets and current liabilities
current liabilities are these claims of outsiders which are expected to manure for
payment with in an accounting year.
Current Liabilities
1) Bills payable
2) Sundry creditors
3) Accrued Expenses
4) Short term loans
5) Dividends payable
6) Bank overdraft
7) Provision for Taxation
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PROFORMA OF GROSS AND NET WORKING CAPITAL
Particulars Previo Curre Working capital

us nt Increas Decreas
Year Yea e e
r
Current Assets
Current XXX XX XX XX
Investments X XX XX XX
Inventories XXX XX XX XX
Trade XXX X X X
Receivables X XX XX XX
Cash and Cash XXX X X X
Equivalents XXX XX XX XX
Short- X XX X X
termLoans&Advance XXX XX XX XX
X XX X X
s Other current Assets
Total Current Assets -(CA) XX XX XX
X X X
XXXX XX
X
Current Liabilities X X X X
Short-term X X X X
borrowings X X X X
Trade Payables X X X X
Other Current Liabilities X X X X
Short term Provisions X X X X
X X X X
X X X X
X X X X
X X X X
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X X X X
X X X X
X X X X
X X X X
X X X X
X X X X
X X X X
X X X X
Total Current liabilities -(CL) XXX XX

X
Working-capital(CA-CL) X X
Increase/Decrease in working X X
capital X X
X X
X X
X X
OPERATING CYCLE CONCEPT
Working Capital is the life blood of any business, without with the fixed assets are in
operative. Working capital circulates in the business, and the current assets change from one
form to another. Cash is used for procurement of raw materials and stores items and for
payment of operating expenses, then converted into work-in-process, then to finished goods.
When the finished goods are sold on credit terms receivables balances will be formed. When
the receivables are collected, it is again converted into cash.
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The need of working capital arises because of time gap between production of goods
and their actual realization after sales. This time gap is called technically called as ‘operating
cycle’ or ‘working capital’.
The operating cycle of a company consists of time period between the procurement of
inventory and the collection of cash from receivables. The operating cycle is the length of time
between three company’s outlay on raw materials, wages and other expenses and inflow of
cash from sale of goods. Operating cycle is an important concept in management of cash and
management of working capital.
The time lag between the purchase of raw material and the sale of finished goods in the
inventory period. The operating cycle is the sum of the inventory period and the accounts
receivable period, whereas the cash cycle is equal to the operating cycle less the accounts
payable period.
The working capital requirement can be estimated with the help of duration of operating
cycle. The longer the operating cycle, the larger the working capital requirement. If
depreciation is excluded from expenses in the operating cycle, the net operating cycle
represents ‘cash conversion cycle’. The length of operating cycle is the indicator of efficiency
in management of short-term funds and working capital.
DIAGRAM OF OPERATING CYCLE
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Changes in government policies like taxation, import restrictions, credit policy of central bank
etc. will have impact on the length of operating cycle. It is the task of financial manager to
manage the operating cycle effectively and efficiently.
Based on the length of the operating cycle, operating cycle will improve the cash conversion
cycle and ultimately improve the profitability of the firm.
Sources of working capital:

A large-scale manufacturing company may procure funds from various sources to meet
its working capital and they may be classified under two heads.
Sources of long term or regular working capital
Sources of short term or seasonal working capital

Sources of working capital
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Long term Sources short term sources
a) Issue of shares
b) Issue of debentures
c) Sale of fixed asset Internal External
a) Depreciation fund a) Normal trade
b) Provision of taxation b) Credit papers
c) Accrued expenses c) Bank credit
Factors of working capital:

⮚ Nature of business
⮚ Manufacturing cycle
⮚ Seasonality of operations
⮚ Production policy
⮚ Market conditions
⮚ Conditions of supply
⮚ Credit policy.
Nature of business:
The working capital requirement of a firm is closely needed to the nature of a business a
service firm, like an electricity undertaking transport, like an electricity undertaking transport
corporation, which has a short operating cycle and which sells predominantly on cash basis,
has a modest working requirement on the other hand a manufacturing concern like a machine
tools unit, which has a long operating cycle and which sales largely on credit, has a very
substantial working capital requirement.
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Manufacturing cycle:
Time span required for conversion of raw material into finished goods is a block period.
This period, in reality, extends a little before and after the WIP. This cycle determines the need
of working capital. In case of industries with long manufacturing process or production cycle,
more funds are required for working capital.
Seasonality of operations:
Firms which have marked seasonality in their operations usually have highly
fluctuating working capital requirements.
To illustrate, consider a firm manufacturing ceiling fans reaches a peak during the
summer months drops sharply during the winter period. The working capital requirements of
such a firm are likely to increase considerably in summer months and decrease significantly the
winter period. On the other hand, a firm manufacturing a product like lamps, which have fairly
even sales round the year, tends to have stable working capital requirements.
Production policy: A firm marked by pronounced seasonal fluctuations in its sales may
pursue a production policy which may reduce the sharp variations in working capital
requirements. For example, A manufacturer of ceiling fans may maintain a steady production
throughout the year, rather than intensify the production activity during the peak business
season. Such a production policy may dampen the fluctuations in working capital requirements.
Market conditions: The degree of competition prevailing in the market place has an
important bearing on working capital needs. When competition is keen, a larger inventory of
finished goods is required to promptly serve customers who may not be inclined to wait
because other manufacturers are ready to meet their needs. Further, generous credit terms may
have to be offered to attract customers in a highly competitive market.
If the market is strong and competition weak, a firm can manage with a small inventory of
finished goods because customers can be served with some delay. Further, in such a situation
the firm can insist on cash payment and avoid lock-up funds in accounts receivable-it can even
ask for advance payment, partial or total.
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Conditions for supply: The inventory of raw material, spares and stores depends on the
conditions of supply. If the supply is prompt and adequate, the firm can manage with small
inventory. However, if the supply is unpredictable and scant, then the firm, to ensure continuity
of production, would have to acquire stocks as and when they are available and carry large
inventory, on an average. A similar policy may have to be followed when the raw material is
available only seasonally and production operation are carried out round the year.
Credit policy: The credit policy of the firm affects the working capital by influencing the
level of debtors. The credit terms to granted to customers may depend upon the norms of the
industry to which the firm belongs. But a firm has the flexibility of shaping its credit policy
with in the constraint of industry norms and practices. The firm should use discretion in
granting credit terms to its customers. A high collection period will mean tie-up of large funds
in debtors. Slack collection procedures can increase the chance of bad debts.
In order to ensure that unnecessary funds are not tied up in debtors, the firm should follow a
rationalized credit policy based on the credit standing of customers and other relevant factors.
The firm should evaluate the credit standing of new customers and periodically review the
credit-worthiness of the existing customers. The case of delay payments should be thoroughly
investigated.
Advantages of Adequate working capital:
1) Solvency of a business: Adequate working capital helps in maintaining solvency of

a business by providing uninterrupted flow of production.
2)Goodwill: Sufficient working capital enables a business concern to make prompt

payments and hence helps in creating and marinating goodwill.
3)Easy loans: A concern having adequate working capital, high solvency and good credit
standing can arrange loans from banks and other an easy and favorable terms.
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4)Cash discounts: Adequate working capital also enables a concern to avail cash discounts
on the purchases and hence it reduces costs.
5)Regular Supply of view materials: Sufficient working capital ensures regular supply
of raw materials and continuous production.
6) Regular payment of salaries wages and other day-to-day commitments:
A Company which has ample working capital can make regular payment of salaries,
Wages and other day-to-day commitments which raise the reduces of its employees, increases
their efficiency, reduces wastages and costs and enhances production and profits.
7) Exploitation of favorable market conditions: Only concerns with adequate

working capital can exploit favorable market conditions such as purchasing its requirements in
bulk when the prices are lower and by holding its inventories for higher prices.
8)Ability to face crisis: Adequate working capital enables a concern to face business crisis
in emergencies such as depression because during such periods, generally, there is much
pressure on working capital.
Disadvantages of Inadequate working capital:
1. A concern which has inadequate working capital cannot pay its short-term liabilities in
time. Thus, it will lose its reputation and shall not be able to get good credit facilities.
2. It cannot buy its requirement in bulk and cannot avail of discounts etc.
3. It becomes difficult for the firm to exploit favorable market conditions and undertake
profitable projects due to lock of working capital.
4. The firm cannot pay day-to-day expenses of its operations and it creates inefficiencies,
increases costs and reduces the profits of the business.
5. It becomes impossible to utilize efficiently the fixed assets due to non-availability of
liquid funds.
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6. The rate of return on investments also falls with the shortage of working capital.
Working capital includes the following
1. Cash Management
2. Receivables Management
3. Inventory Management.
CASH MANAGEMENT
INTRODUCTION
Cash is the important current assets for the operations of the business. Cash is the basic
input need to keep the business running on a continuous basis: it is also the ultimate output
expected to be realized by selling the service or product manufactured by the firm. The firm
should keep sufficient cash, neither more nor less. Cash shortage will disrupt the firm’s
manufacturing operations while excessive cash will simply remain idle, without contributing
anything towards the firm’s profitability. Thus, a major function of the financial manager is to
maintain a sound cash position.
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FACTS OF CASH MANAGEMENT:
The firm should evolve strategies regarding the following four aspects of cash
management.
● Cash planning Cash flows and outflows should be planned to project cash surplus or
deficit for each period of the planning period. Cash budget should be prepared for this
purpose.
● Managing the cash flows the flow of cash should be properly managed. The cash
inflows should be accelerated while, as far as possible, the cash out lays should be
decelerated.
● Optimum cash level the firm should decide about the appropriate level of cash
balances. The cost of excess cash and danger of cash deficiency should be matched to
determine the optimum level of cash.
● Investing surplus cash,the surplus cash balances should be properly invested to
earn profits. The firm should decide about the division of such cash balance between
alternative short-term investment opportunities such as bank deposits, marketable
securities, or inter corporate lending...
MOTIVES FOR HOLDING CASH

The firm’s needs to hold cash may be attributed to following three motives:
1. The transactions motive

2. The precautionary motive
3. The speculative motive
Transaction Motive:
The transaction motive requires a firm to hold cash to conduct its business in the
ordinary course. The firm needs cash primarily to make payments for purchases, wages,
and salaries, other operating expenses, taxes dividends etc. the need to hold cash would not
arise if there were perfect synchronization between cash receipts and cash payments i.e.,
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enough cash is received when then payment has to be made. But cash receipts and payments
are not perfectly synchronized. For those periods, when cash payments exceed cash receipts,
the firm should maintain some cash balance to be able to make required payments.
Precautionary Motive
There may be some uncertainty about the magnitude and timing of cash inflows form sale of
goods and service, sale of assets, and sale of securities. Likewise, there may be uncertainty
about cash outflows on account of purchases and other obligations. To itself against such
uncertainties, a firm may require some cash balance.
Speculative Motive
The speculative motive relates to the holding of cash for investing in profit –making
opportunities as and when they arise. The opportunity to make profit may arise when the
security prices change. The firm will hold cash, when it is expected that interest rates will rise
and securities will fall. Securities can be purchased when the interest rate is expected to fall:
the firm will benefit by the subsequent fall in the interest rates and increase in securities prices.
The firm may also speculate on materials’ prices. If it is expected that materials’ prices will
fall, the firm can postpone materials’ purchasing and make purchases in future when price
actually falls.
CASH PLANNING.
Cash planning is a technique to plan and control the use of cash. It helps to anticipate
the further cash flows and needs the firm to reduces the possibility of idle cash balances (which
lowers firm’s profitability) and cash benefits (which can causes the firm’s failure).
Cash forecasting
To overcome the cash problems, we should have the proper cash forecast. Cash forecast
can be done on short-term or long-term basis. Generally, forecast covering periods of one
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year or less are consider short-term: those extending beyond one year are consider as long-
term.
The important functions of carefully developed short-term
Cash forecast are:

● To determine operating cash requirements
● To anticipate short-term financing
● To manage investment on surplus cash
The important functions of carefully developed long-term cash forecast are:
● It indicates as company’s future financial needs, especially for its working capital
requirements.
● It helps to evaluate proposed capital projects. It pinpoints the cash required to finance
these projects as well the cash to be generated by the company to support them.
● It helps to improve the corporate planning. Long-term cash forecast compels each
division to plan for future and to formulate projects carefully.
Long-term cash forecast may be done for two, three, or five years. As with the short-term
forecast, company’s practices may differ on the duration of long-term forecast to suit their
particular needs.
RECEIVABLES MANAGEMENT
INTRODUCTION
Trade credit arises when a firm sells its products or services on credit and does not
receive cash immediately. It is an essential marketing tool, acting as a bridge for the movement
of goods through production and distribution stages to customers. A firm grants trade credit to
protect its sales from the competitors and to attract the potential customers to buy its products
at favourable terms. Trade credit creates accounts receivable or trade debtors that the firm is
expected to collect in the near future. The customers from whom receivables or book debts
have to be collected in the future are called trade debtors.
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A credit sale has three characteristics: First, it involves an element of risk that should be
carefully analyzed. Cash sales are totally riskless, but not the credit sales as the cash payment
are yet to received. Second, it is based on economic value. To the buyer, the economic value in
goods or services passes immediately at the time of sale, while the seller expects an equivalent
value to received later on Third, it implies futurity. The buyer will make cash payment for
goods or services received by him in a future period.
CREDIT POLICY VARIABLES

In establish an optimum credit policy, the financial manager must consider the
important decisions variables which influence the level of receivables. The major controllable
decision variables include the following:
● Credit standards and analysis

● Credit terms
● Credit policy and procedures
Financial manager or the credit manager may administer the credit policy of the firm. It
should, however, be appreciated that the credit policy has important implications for the firm’s
production marketing and finance functions.
Credit standards and analysis
Credit standards are the criteria which a firm follows in selecting customers for the purpose
of credit extension. The firm may have tight credit standards; that is, it may sell mostly on cash
basis, and may extend credit only to the most reliable and financially strong customers. Such
standards will result on bad-debt losses, and less cost on credit administration.
Credit analysis Credit standards influence the quality of the firm’s customers. There are
two aspects of the quality of customers: (i) the time taken by the customers to repay credit
obligations and (ii) the default rate. The Average Collection Period (ACP) determines the
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speed of payment by customers. Default rate can be measured in terms of bad-debt losses ratio-
the proportion of uncollected receivable.
Credit terms
The stipulations under which the firm sells on credit to customers are called credit terms. These
stipulations include: (a) the credit period, and (b) the cash discount.
Credit period
The length of timer for which credit is extended to customers is called credit period. A
firm’s credit policy can be governed by the industry norms but depending on the objective, the
firm can lengthen the credit period. On the other hand, the firm may tighten its credit period if
customers are defaulting too frequently and bad-debts losses are building up.
Credit discounts
A cash discount is a reduction in payment offered to customers to induce them to repay

credit obligations within a specified period of time, which will be less than the normal credit
period. It is usually expressed as percentage of sales. Cash discount terms include t6he rat6e of
discount and the period for which it is available. If the customers don’t avail the offer, he must
make payment within the normal credit period. The firm uses discount as a tool to increase
sales and accelerate collections from customers.
INVENTORY MANAGEMENT
INTRODUCTION
Inventories constitute the most significant part of current assets of a large majority of
companies in India. On an average, inventories are approximately 60 percent of current assets
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in public limited companies in India. Because of the large size of inventories maintained by
firms, a considerable amount of funds is required to be committed to them.
It is possible for a company to reduce its levels of inventories to a considerable degree,

e.g., 10 to 20 percent, without any adverse effect of production and sales, by using simple
inventory planning and control techniques. The reduction in ‘excessive’ inventories carries a
favorable impact on a company’s profitability.
NATURE OF INVENTORIES
The various forms in which inventories exist in a manufacturing company are: raw
materials, work-in- process and finished goods.
● Raw materials are those basic inputs that are converted into finished product
through the manufacturing process. Raw materials inventories are those units which
have been purchased and stored for future productions.
● Work-in-process inventories are semi-manufactured products. They represent
products that need more work before they become finished products for sale.
● Finished goods inventories are those completely manufactured products which are
ready for sale. Stocks of raw materials and work-in-process facilitate production, while
stock of finished goods is required for smooth marketing operations. Thus, inventories
serve as a link between the production and consumption of goods.
The levels of three kinds of inventories for a firm depend on the nature of its business.
OBJECTIVES OF INVENTORY MANAGEMENT.
In the context of inventory management, the firm is faced with the problem of meeting two
conflicting needs.
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● To maintain a large size of inventories of raw materials and work-in-process for
efficient and smooth production and of finished goods for uninterrupted sales
operations
● To maintain a minimum investment in inventories to maximize profitability.
The aim of inventory management, thus, should be to avoid excessive and inadequate levels of
inventories and to maintain sufficient inventory for the smooth production and sales operations.
Efforts should be made to place an order at the right time with the right source to acquire the
right quantity at the right price and quality. An effective inventory management should.
● Ensure a continuous supply of raw materials to facilitate uninterrupted production.

● Maintain sufficient stock of raw materials in periods of shot supply and anticipate price
changes.
● Maintain sufficient finished goods inventory for smooth sales operation, and efficient
customers service.
● Minimize the carrying cost and time, and
● Control investment in inventories and keep it at an optimum level.
INVENTORY MANAGEMENT TECHNIQUES
In managing inventories, the firm’s objective should be in consonance with the

shareholder wealth maximization principal. To achieve this, the firm determines the optimum
level inventory. Efficient controlled inventories make the firm flexible. Inefficient inventory
control results in unbalanced inventory and inflexibility.
Economic order quantity (EOQ)
One of the major inventory management problems to be solved is how much

inventory should be added when inventory is replenished. If the firm is buying raw
materials, it has to decide lots in which it has to be purchased on replenishment.
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Determining a optimum inventory level two type of costs: (a) ordering costs and (b)
carrying costs. The economic order quantity is that inventory level that minimizes the
total of ordering and carrying costs.
Ordering costs: The term ordering costs is used in case of raw materials (or supplies) and
includes the entire costs of acquiring raw materials. They include costs incurred in the
following activities: requisitioning, purchasing order, transporting, receiving, inspecting and
storing (store replacement). Ordering costs increase in proportion to the number of orders
placed.
Ordering costs increase with the number or orders: thus, the more frequently inventory
is acquired, the higher the firm’s ordering costs. On the other hand, if the firm maintains larges
inventory levels, there will be few orders placed and ordering costs will be relatively small.
Thus, ordering decreases with increasing size of inventory.
Carrying costs: Cost incurred for maintaining a given level of inventory are called carrying
costs. They include storage, insurance, taxes, deterioration and obsolescence. The carrying
costs vary with inventory size. This behavior is contrary to that of ordering costs which decline
with increase in inventory size. The economic size of inventory would thus depend on trade-off
between carrying costs and ordering costs.
Ratios to measure the efficiency of working capital.
CURRENT RATIO:
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The current ratio is a liquidity ratio that measures a company's ability to pay short-term
and long-term obligations. To gauge this ability, the current ratio considers the current total
assets of a company (both liquid and illiquid) relative to that company ‘s current total
liabilities. The formula for calculating a company‘s current ratio is:
Current Ratio = Current Assets / Current Liabilities
The current ratio is mainly used to give an idea of a company's ability to pay back its
liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory,
accounts receivable). As such, current ratio can be used to make a rough estimate of a
company‘s financial health. The current ratio can give a sense of the efficiency of a company's
operating cycle or its ability to turn its product into cash. Companies that have trouble getting
paid on their receivables or that have high inventory turnover can run into liquidity problems if
they are unable to alleviate their obligations.
A ratio under 1 indicates that a company‘s liabilities are greater than its assets and
suggests that the company in question would be unable to pay off its obligations if they came
due at that point. While a current ratio below 1 show that the company is not in good financial
health, it does not necessarily mean that it will go bankrupt. There are many ways for a
company to access financing, and this is particularly so if a company has realistic expectations
of future earnings against which it might borrow. For example, if a company has a reasonable
amount of short-term debt but is expecting substantial returns from a project or other
investment not too long after its debts are due, it will likely be able to stave off its debt.
QUICK RATIO:
The quick ratio is an indicator of a company‘s short-term liquidity, and measures a

company‘s ability to meet its short-term obligations with its most liquid assets. Because we're
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only concerned with the most liquid assets, the ratio excludes inventories from current assets.
Quick ratio is calculated as follows:
Quick ratio = (current assets – inventories) / current liabilities, or
Quick ratio = (cash and equivalents + marketable securities + accounts receivable) /

current liabilities
The quick ratio is also known as the acid-test ratio
The quick liquidity ratio, also known as the acid-test ratio, is a liquidity ratio that
further refines the current ratio by measuring the level of the most liquid current assets
available to cover current liabilities. The quick ratio is more conservative than the current ratio
because it excludes inventory and other current assets, which generally are more difficult to
turn into cash. A higher quick ratio means a more liquid current position.
The quick liquidity ratio is an important measure of an insurance company ‘s ability to

cover its liabilities with relatively liquid assets. A company with a low quick liquidity ratio that
finds itself with a sudden increase in liabilities may have to sell off long-term assets or borrow
money in order to cover its liabilities. For example, imagine if an insurer that has covered a lot
of property and then there is a hurricane. That insurer is now going to have to find more money
than it would normally anticipate to pay claims. If such an insurer has high quick liquidity
ratio, they will be in a better position to make payments than an insurer with a lower ratio.
DEBTORS TURNOVER RATIO:
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The receivables turnover ratio is an accounting measure used to quantify a firm's
effectiveness in extending credit and in collecting debts on that credit. The receivables turnover
ratio is an activity ratio measuring how efficiently a firm uses its assets.
Receivables turnover ratio can be calculated by dividing the net value of credit sales
during a given period by the average accounts receivable during the same period. Average
accounts receivable can be calculated by adding the value of accounts receivable at the
beginning of the desired period to their value at the end of the period and dividing the sum by
two.
AVERAGE COLLECTION PERIOD:
The average collection period is the amount of time it takes for a business to receive
payments owed in terms of accounts receivable. The average collection period is calculated by
dividing the average balance of accounts receivable by total net credit sales for the period and
multiplying the quotient by the number of days in the period.
The average collection period represents the average number of days between the date a
credit sale is made and the date payment is received from the credit sale. The average balance
of accounts receivable is calculated by adding the beginning balance in accounts receivable
(AR) and ending balance in accounts receivable and dividing the total by 2. When calculating
the average collection period for an entire year, 360 may be used as the number of days in one
year for simplicity.
Debtors divided by annual credit sales and the resulting figure multiplied by 365. This
ratio indicates how many days of credit are being obtained from the suppliers.
Average collection period = 360 days/Debtors Turnover Ratio
WORKING CAPITAL TURNOVER RATIO:
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Working capital turnover is a ratio which measures how efficiently a company is using
its working capital to support a given level of sales. Also referred to as net sales to working
capital, it shows the relationship between the funds used to finance a company's operations and
the revenues a company generates as a result.
The working capital turnover ratio is calculated by dividing net annual sales by the
average amount of working capital – current assets minus current liabilities — during the same
12-month period.
A high turnover ratio shows that management is being very efficient in using a
company ‘s short-term assets and liabilities for supporting sales, i.e., it is generating a higher
number of sales for every rupee of the working capital used. In contrast, a low ratio may
indicate that a business is investing in too many accounts receivable and inventory to support
its sales – which could lead to an excessive number of bad debts or obsolete inventory.
AVERAGE PAYMENT PERIOD:
Average payment period (APP) is a solvency ratio that measures the average number of
days it takes a business to pay its vendors for purchases made on credit.
Average payment period is the average amount of time it takes a company to pay off
credit accounts payable. Many times, when a business makes a purchase at wholesale or for
basic materials, credit arrangements are used for payment. These are simple payment
arrangements that give the buyer a certain number of days to pay for the purchase.
Oftentimes, discounts for paying in a shorter period of time are given.
The average payment period calculation can reveal insight about a company‘s cash flow
and creditworthiness, exposing potential concerns. For example, is the company meeting
current obligations or just skimming by? Or, is the company using its cash flows effectively,
taking advantage of any credit discounts? Therefore, investors, analysts, creditors and the
business management team should all find this information useful.
To calculate, first locate the accounts payable information on the balance sheet, located
under current liabilities section. The average payment period is usually calculated using a
54 | P a g e
year‘s worth of information, but it may also be useful evaluating on a quarterly basis or over
another period of time. So, the desired period of time may dictate which financial statements
are necessary.
Here is how to calculate the average payment period equation.
The average payment period formula is calculated by dividing the period‘s average
accounts payable by the derivation of the credit purchases and days in the period.
Average Payment Period = Average Accounts Payable / (Total Credit Purchases / Days)
To calculate, first determine the average accounts payable by dividing the sum of
beginning and ending accounts payable balances by two, as in this equation:
Average Accounts Payable = (Beginning + Ending AP Balance) / 2
Now, use the answer to solve for average payment period:
Average Payment Period = (Beginning + Ending AP Balance) / 2 / (Total Credit

Purchases / Days)
INVENTORY TURNOVER RATIO:
Inventory turnover is a ratio showing how many times a company has sold and
replaced inventory during a period. The company can then divide the days in the period by the
inventory turnover formula to calculate the days it takes to sell the inventory on hand. It is
calculated as sales divided by average inventory.
Inventory turnover measures how fast a company sells inventory and analysts compare
it to industry averages. Low turnover implies weak sales and, excess inventory. A high ratio
implies either strong sales or large discounts.
REVIEW OF LITERATURE:
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Rao K.V. and Rao Chinta (1991) observed that strong and weak point of conventional
techniques of working capital analysis. Outcomes of this study shows that some of the
conventional techniques which could realize the working capital behavior well. And some of
them fail to do so. And thus, authors suggest proper working capital management with
conventional method i.e., ratio analysis. Study suggests further inclusive factors which are
decisive yardstick in working capital efficiency
Fazzari Steven M. and Petersen Bruce C. (1993) focused on financial restrain on investment
by giving focus the ignoring role of working capital in both as use and source of funds. As per
the views of author liquidity can be maintain by maintaining working capital on smooth
manner means to be investment in a manner which does not create cash flow constrain.
Through the research found that working capital investment should be ―excessively sensitive‖
with summing up that controlling on smoothing working capital create a long-term impact of
finance constraints and reported in many other studies also.
Siddharth and Das (1994) tried to determine efficient use of working capital in selected
pharmaceutical firms in India. 10 years data has concluded that overall turnover ratio was 90.3
time. the finely analysis of the data shows that the selected companies have done well in terms
of employment of working capital. Furthermore study discovered the working capital turnover
ratio cried off staidly over the stage from 1981 – 1990.
Vijayakumar and Venkatachalam (1995) an attempt was made on observed analysis in

working capital and profitability. Study was carried with 13 firms belonging sugar industry for
the 10 years period from 1982-1983 to 1991-92. The correlation and regression statistical
method has been used to analyze the impact of working capital ratios on profitability. In this
study total four ratios have been taken in to consideration; Liquidity ratio, inventory turnover
ratio, receivable turnover ratio and cash turnover ratio. The discovery of the study said that
liquid ratio and cash turnover ratio have harmful impact on profitability on the other hand
inventory turnover ratio and receivables Have positive impact on profitability.
Ahmed Habib (1998) evaluated that the interest rate of fund reducing money power on output.
For the study rational expectation model is used to find out relation between production
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decisions and debt finance. As working capital having immense important factors and its cost,
the rate of interest, affects the supply of goods, this study revealed that this model helps to
identify the alarming situation when interest rate is used. This model also revealed that effects
of monetary policy on the price level and supply side.
Jain P. K. and Yadav Surendra S. (2001) tried to understand the relationship of working
capital management and current assets and current liabilities. In other hand, authors have
revealed the analysis liquidities ratios like current assets and current liabilities. Every sample of
study have been pertained these ratios for the management of working capital. In a sum up of
the paper the data of samples of three countries confirm that there were wide inter-industry
variations in liquidity ratios.
Chowdhury Anup and Amin Md. Muntasir (2007) carried a study on pharmaceutical
companies listed in Dhanka Stock Exchange. Observation of the study based on the financial
management, according to this major problem found in area of working capital management. It
is true that working capital effects go on business performance and growth. The main objective
of the study is to evaluate working capital practicability and implication of working capital
policy and strategies in the targeted industry. To obtain the goal, evaluation was made
regarding principles, procedures and techniques of stock management, creditors‘ management,
and debtors‘management.
Kushwah, Mathur&Ball (2009) evaluated the working capital management and direction in
selected five major cement companies i.e. ACC, Grasim, Ambuja, Prism and Ultra- Tech.. For
the research purpose secondary data are used like authors collected the financial statement of
selected cements companies for the years from 2007 to 2009. There is liquidity ratios and
activities ratios are used to analyze the condition of working capital of the companies. The
study revealed the truth of study is that, most companies not maintain their working capital in a
systematic way while overall ACC shows appropriate management of working capital
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Rao and Rao Ramachandran (2010) evaluated the trends and parameters of effectiveness of
working capital and its utilization in terms of volume of the firms of cotton textiles industry in
India. For that three parameters are taken i.e., different indices first one performance Index,
utilization index and efficiency Index. For the study industry is divided in three category means
small, medium and large. The output of the study is like that linear growth rate model is used to
find out the significance with working capital and PI, UI and EI are significant in respect of
small size companies while in medium size only UI is significant. On an average we can say
that working capital efficiency was not so satisfied despite having PI in growth mode. The
reason behind is that continuous factors are declining.
Rahman Mohammad M. (2011) made an attempt to find out correlation among working
capital and profitability. To analyze the effectiveness of working capital management of the
selected textile companies. Conclusion of the study found that overall good management in
working capital management of selected textile companies and thus most of the companies are
profitable way going on.
DrArbab Ahmed and DrMatarneh Bashar (2011) carried research with registration
technique which is very powerful statistical tool to forecast the working capital. the area of
working capital management, that is possible to make the projection after starting the average
relationship in the past. For the purpose different components are used and to be finalized
result. And it is presented in diagrammatic way as well mathematical way.
Kaur Harsh V. and Singh Sukhdev (2013) focused on cash conversion efficiency and setting
up the operating cycle days. The study tests the relationship between the working capital attain
and profitability calculated by income to current assets and income to average total assets.
Authors did study with companies listed in BSE 200 that is spread over 19 industries for the
period 2000 to 2010.At the end, the study lay emphasis on that proficient management of
working capital notably affects profitability.
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CHAPTER – 4
DATA ANALYSIS &

INTERPRETATION
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STATEMENT SHOWING THE CHANGES IN THE WORKING CAPITAL
DURING THE YEAR 2016-2017 (in lakhs)
CHANGE IN WORKING
PARTICULARS AMOUNT (in lakhs)
CAPITAL
2016 2017 INCREASE DECREASE
CURRENT ASSETS
INVENTORIES 39,265.95 40,436.19 1,170.24
TRADE RECEIVABLES 44,176.37 48,866.87 4,690.50
CASH AND CASH

1,379.29 303.15 1,076.14
EQUIVALENTS
CURRENT
- 1.31 1.31
INVESTMENTS
OTHER CURRENT
5,276.64 6,298.00 1,021.36
ASSETS
TOTAL CURRENT
90,098.25 95,905.52
ASSETS
CURRENT LIABILTIES
SHORT TERM
41,549.43 43,009.15 1,459.72
BORROWINGS
TRADE PAYABLES 16,368.24 16,545.68 177.44
SHORT TERM
1660.60 1,720.74 60.14
PROVISIONS
OTHER CURRENT
4,649.71 2,959.51 1,690.20
LIABILITIES
TOTAL CURRENT
64,227.98 64,235.08
LIABILITIES
NET WORKING
25,870.27 31,670.4
CAPITAL
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INCREASE/DECREASE 5800.17
5,814.37
TOTAL 31,670.4 31,670.4 8,580.71 8,580.71
INTERPRETATION:
● During the year 2016 and 2017 the firm current assets like current inventories, trade
receivables, current investments & other current assets are increased by Rs.1,170.24 , Rs.
4,690.50,Rs. 1.31 and Rs. 1,021.36 respectively.
● The current liabilities like other current short term provisions, trade payables, short term
provisions have been increased by Rs. 1,459.72 ,Rs. 177.44,Rs.60.14.
● From the above analysis it is observed that there is increase in Net Working Capital in the
year 2016-2017 amount to Rs.5800.17.

DURING THE YEAR 2017-2018(in lakhs)
CHANGE IN WORKING
CAPITAL
INCREAS DECREAS
2017 2018
E E
CURRENT ASSETS
INVENTORIES 40,436.19 36,411.46 4,024.73
CASH AND CASH

303.15 557.21 254.06
EQUIVALENTS
CURRENT
1.31 2.00 0.69
INVESTMENTS
OTHER CURRENT
6,298.00 3,535.18 2,762.82
ASSETS
TOTAL 95,905.52 87,156.85
CURRENT LIABILTIES
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SHORT TERM
43,009.15 33,819.82 9,189.33
BORROWINGS
TRADE PAYABLES 16,545.68 12,388.05 4,157.63
SHORT TERM
1,720.74 1,370.26 350.48
PROVISIONS
OTHER CURRENT
2,959.51 2,255.85 703.66
LIABILITIES
TOTAL 64,235.08 49,833.98
NET WORKING
31,670.44 37,322.87
CAPITAL
INCREASE/DECREASE
5,652.43 23,149.77
TOTAL 37,322.87 37,322.87 23,404.52 23,404.52
INTERPRETATION:
● During the year 2017 and 2018 the firm current assets like current cash and cash equivalents &
current investments are increased by Rs. 254.06 & Rs. 0.69 respectively.
● The year 2017 and 2018 there is no increase in current liabilities.
year 2017-2018 amount to Rs.5,652.43.
CHANGE IN WORKING
CAPITAL
INCREAS DECREAS
2018 2019
E E
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CURRENT ASSETS
INVENTORIES 36,411.46 32,076.05 4,335.41
TRADE
46,651.00 37,931.57 8,719.43
RECEIVABLES
CASH AND CASH

557.21 939.96 382.75
EQUIVALENTS
CURRENT
2.00 2.03 0.03
INVESTMENTS
OTHER CURRENT
3535.18 1466.23 2068.95
ASSETS
TOTAL 87,156.85 72,415.84
CURRENT LIABILTIES
SHORT TERM
33,819.82 20,851.12 12,968.70
BORROWINGS
TRADE PAYABLES 12,388.05 7,642.15 4,745.90
SHORT TERM
1,370.26 1,552.45 182.19
PROVISIONS
OTHER CURRENT
2,255.85 2,168.09 87.76
LIABILITIES
TOTAL 49,833.98 32,213.81
NET WORKING
37,322.87 40,202.03
CAPITAL
INCREASE/
DECREASE 2,879.16 32,361.18
TOTAL 40,202.03 40,202.03 32,926.15 32,926.15
INTERPRETATION:
● During the year 2018 and 2019 the firm current assets like current cash and cash equivalents
63 | P a g e
& current investments are increased by Rs. 382.75 and Rs.0.03 respectively.
● The current liabilities like other current short-term provisions have been increased by Rs.
182.19.
year 2018-2019 amount to Rs. 2,879.16.
CHANGE IN WORKING
CAPITAL
INCREAS DECREAS
2019 2020
E E
CURRENT ASSETS
INVENTORIES 32,076.05 30,261.13 1,814.92
CASH AND CASH

939.96 2,548.02 1,608.06
EQUIVALENTS
CURRENT
2.03 1.02 1.01
INVESTMENTS
OTHER CURRENT
1466.23 2177.17 710.94
ASSETS
TOTAL 72,415.84 66,704.90
CURRENT LIABILTIES
SHORT TERM
20,851.12 13,959.00 6,892.12
BORROWINGS
TRADE PAYABLES 7,642.15 9,008.70 1,366.55
SHORT TERM 1,552.45 1,747.19 194.74
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PROVISIONS
OTHER CURRENT
2,168.09 2,325.60 157.51
LIABILITIES
TOTAL 32,213.81 23,217.58
NET WORKING
40,202.03 43,487.32
CAPITAL
INCREASE/DECREASE
3,285.29 10,884.26
TOTAL 43,487.32 43,487.32 14,922.06 14,922.06
INTERPRETATION:
● During the year 2019 and 2020 the firm current assets like cash and cash equivalents & other
current assets are increased by Rs. 1,608.06 and Rs. 710.94 respectively.
● The current liabilities like other current trade payables, short term provisions and other
current liabilities have been increased by Rs. 1,366.55, Rs. 194.74, Rs. 157.51.
year 2019-2020 amount to Rs. 3,285.29.
CHANGE IN WORKING
CAPITAL
INCREAS DECREAS
2020 2021
E E
CURRENT ASSETS
INVENTORIES 30,261.13 28,354.86 1,906.27
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CASH AND CASH
2,548.02 1061.08 1,486.94
EQUIVALENTS
CURRENT
1.02 2.59 1.57
INVESTMENTS
OTHER CURRENT
2177.17 2,137.88 39.29
ASSETS
TOTAL 66,704.90 58,936.37
CURRENT LIABILTIES
SHORT TERM
10,136.09 4724.10 5,411.99
BORROWINGS
TRADE PAYABLES 9,008.70 6,691.17 2,317.53
SHORT TERM
1,747.19 1,865.97 118.78
PROVISIONS
OTHER CURRENT
2,325.60 3,146.21 820.61
LIABILITIES
TOTAL 23,217.58 16,427.45
NET WORKING
43,487.32 42,508.92
CAPITAL
INCREASE/DECREASE
978.40 14,558.66
TOTAL 43,487.32 43,487.32 15,499.62 15,499.62
INTERPRETATION:
● During the year 2020 and 2021 the firm current assets like current investments are increased
by Rs.1.57
● The current liabilities like other current liabilities trade &short-term provisions have been
increased by Rs.820.61&Rs. 118.78.
● From the above analysis it is observed that there is decrease in Net Working Capital in the
year 2020-2021 amount to Rs.978.40.
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CHANGE IN WORKING
CAPITAL
INCREAS DECREAS
2021 2022
E E
CURRENT ASSETS
INVENTORIES 28,354.86 30,153.55 1,798.47
TRADE
27,379.06 30,765.85 3,385.89
RECEIVABLES
CASH AND CASH

1061.08 4,779.73 3,718.65
EQUIVALENTS
CURRENT
2.59 2.58 0.01
INVESTMENTS
OTHER CURRENT
2,137.88 3,116.13 978.25
ASSETS
TOTAL 58,936.37 68,817.62
CURRENT LIABILTIES
SHORT TERM
4,724.10 2,206.54 2530.95
BORROWINGS
TRADE PAYABLES 6,691.17 8,585.76 1,894.59
SHORT TERM
1,865.97 2,591.94 725.97
PROVISIONS
OTHER CURRENT
3,146.21 2,582.82 563.39
LIABILITIES
TOTAL 16,427.45 15,967.06 460.39
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NET WORKING
42,508.92 57,147.85
CAPITAL
INCREASE/
DECREASE 14,638.93 3,554.74
TOTAL 57,147.85 57,147.85 22,382.6 22,382.6
INTERPRETATION:
● During the year 2021 and 2022 the firm current assets like current inventories, trade
receivables, cash and cash equivalents & other current assets are increased by Rs.1798.47,
Rs. 3,385.89, Rs.3,718.65 and Rs. 978.25 respectively.
● The current liabilities like trade payables, short term provisions have been increased by
Rs.1,894.56, Rs.725.97.
year 2021-2022 amount to Rs.14,638.93.
ANALYSIS OF WORKING CAPITAL THROUGH RATIO:

Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of the
ratio to interpret the financial statements so that the strengths and weakness of a firm as well as
historical and current financial condition can be determined.
The ratio analysis or ratio technique is one of the tools available to the financial analyst to analyze
the financial statements. A financial analyst can diagnose the financial condition of the enterprise
through ratio analysis.
CURRENT RATIO: -
Current ratio may be defined as the relationship between current assets and current liabilities. This
ratio, also known as working capital ratio, is a measure of general liquidity and is most widely used
to make the analysis of a short-term financial position or liquidity.
Current ratio = Current Assets

Current liabilities
– shows Current Ratio

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Current Current Current
Years
Assets Liabilities Ratio
2016-
95,905.52 64,235.08 1.49
2017
2017-
87,156.85 49,833.98 1.74
2018
2018-2019 72,415.84 32,213.81 2.24
2019-
64,370.57 23,217.58 2.77
2020
2020-
58,936.37 16,427.45 3.58
2021
2021-
68,817.62 15,967.06 4.30
2022
GRAPHICAL REPRESENTATION
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Current Ratio
5.00
4.50
4.00
3.50
3.00
2.50 Current Ratio
2.00
1.50
1.00
0.50
0.00
2016- 2017- 2019- 2020- 2021-
2017 2018 2018- 2020 2021 2022
2019
INTERPRETATION:
As a conventional rule, ratio of 2:1 (or) more is considered satisfactory. Hindustan shipyard
limited (Vizag) has current ratio of 1.49 in 2016 – 17 and 1.74 in 2017–18 and 2.24 in 2018–19
and 2.77 in 2019-20 and 3.58 in 2020-21 and 4.30 in 2021-22. Hence the current ratio of
Hindustan shipyard limited(vizag) is increased year by year and that shows how the firm
maintains margin of safety.
QUICK RATIO: Quick ratio is also known as Liquid Ratio or Acid Test Ratio. The term
liquidity reforms to the ability of a firm to pay its short-term obligation as and when they become
70 | P a g e
due. Quick ratio may be defined as the relationship between Quick/liquid assets and current or liquid
liabilities.
Quick assets = Quick assets
Current liabilities
Obj100
Quick assets = current assets – (stock + prepaid expenses)
QUICK RATIO
Quick Current
Years QuickRatio
Assets Liabilities
2016-
49,170.02 64,235.08 0.76
2017
2017-
47,208.21 49,833.98 0.94
2018
2018-2019 38,871.53 32,213.81 1.20
2019-
31,931.25 23,217.58 1.37
2020
2020-
28,441.04 16,427.45 1.73
2021
2021-
35,545.58 15,967.06 2.22
2022
71 | P a g e
QuickRatio
2.5
1.5
QuickRatio
0.5
0
2016- 2017- 2018- 2019- 2020- 2021-
2017 2018 2019 2020 2021 2022
INTERPRETATION:
This ratio establishes a relationship between quick (or) liquid, assets and current
liabilities. As a common rule, a quick ratio of 1:1 (or) more is considered satisfactory. The quick
ratio of Hindustan shipyard limited (Vizag) was 0.76 in 2016–17, and 0.94 in 2017–18, and 1.20
in 2018–19, 1.37 in 2019-20, 1.73 in 2020-21 and 2.22 in 2020-21. The quick ratio of this
company is increased year by year.
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ABSOLUTE LIQUID RATIO:
Absolute
cash&cash Current
Years Liquid
equivalents Liabilities
Ratio
2016-
303.15 64,235.08 0.004
2017
2017-
557.21 49,833.98 0.011
2018
2018-2019 939.96 32,213.81 0.029
2019-
213.69 23,217.58 0.009
2020
2020-
1061.08 16,427.45 0.064
2021
2021-
4,779.73 15,967.06 0.099
2022
Absolute Liquid Ratio

0.12
0.1
0.08
Absolute Liquid Ratio
0.06
0.04
0.02
0
2016- 2017- 2018- 2019- 2020- 2021-
2017 2018 2019 2020 2021 2022
INTERPRETATION:
As a conventional rule, standard ratio is 1:2 (or) more is considered satisfactory. Hindustan shipyard
73 | P a g e
limited(Vizag) has Absolute liquid ratios are.0.004 in 2016-17, 0.011 in 2017 -18, 0.029 in 2018-
19,0.009 in 2019-20, 0.064 in 2020-21 and 0.099 in 2021-22. This shows the absolute liquid ratio is
below the standard ratio. In the year 2021-22, absolute liquid ratio has reduced to 0.099. Hence it
shows that the liquid position of the company is not good.
INVENTORY TURNOVER RATIO: This ratio establishes relationship between costs of goods
sold and average inventory. It indicates the no. of times the stock has been turned over during the
period.
Formula: Inventory turnover ratio Costs of goods sold

Obj101
Average inventory
Where, costs of goods sold = sales- gross profit
(Or)
= opening stock+ purchases + direct expenses – closing stock
Where, average inventory = opening stock + closing stock
shows Inventory turnover ratio
Inventory
Years Net sales Inventory Turnover
Ratio
2016-
1,52,986.23 40,436.19 3.7
2017
2017-
1,62,411.26 36,411.46 4.4
2018
2018-2019 1,25,720.03 32,076.05 3.9
2019-
1,07,709.15 30,261.13 3.5
2020
2020- 90,894.59 28,354.86 3.2
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2021
2021-
1,22,149.53 30,153.33 4.0
2022
GRAPICAL REPRESENTATION:
Inventory Turnover Ratio

5
4.5
4
3.5
3
Inventory Turnover Ratio
2.5
2
1.5
1
0.5
0
2016- 2017- 2018- 2019- 2020- 2021-
2017 2018 2019 2020 2021 2022
INTERPRETATION:
A higher inventory turnover ratio indicates that more sales are affected i.e., the business is
expending and such there is affective inventory management. The business activity of HSL
isManufacture,repair,maintenance of boats and ships etc. This company‘s inventory turnover is
fluctuating year by year as it was high in 2017-2018 and comparatively low in 2020-2021 and
75 | P a g e
again increased in 2021-2022.
DEBTORS TURNOVER RATIO=This ratio establishes a relationship between net credit sales and
average trade debtors. Debtors’ turnover ratio indicates the velocity of debt collection of firms.
Formula: debtors turnover ratio = Net credit sales

Obj102
Average trade debtors
Where, Trade debtors = Sundry Debtors + Bills Receivables+ Accounts Receivables
Where, average trade debtors = opening trade debtors + closing trade debtors
shows Debtors Turnover Ratio
Debtors
Years Net sales Debtors Turnover
Ratio
2016-
1,52,986.23 46,521.62 3.2
2017
76 | P a g e
2017-
1,62,411.26 47,758.93 3.4
2018
2018-2019 1,25,720.03 42,291.28 2.9
2019-
1,07,709.15 34,824.56 3.0
2020
2020-
90,894.59 29,548.76 3.0
2021
2021-
1,22,149.53 29,072.45 4.2
2022
Debtors Turnover Ratio

4.5
4
3.5
3
2.5 Debtors Turnover Ratio
2
1.5
1
0.5
0
2016- 2017- 2018- 2019- 2020- 2021-
2017 2018 2019 2020 2021 2022
INTERPRETATION:
77 | P a g e
The debtor ‘s turnover ratios indicate the number of times debt ‘s turnover in each year.
Generally the higher the value of debt ‘s turnover the more efficient in the management of the
credit actually it depends upon the company‘s policies towards credit management. These
company products are having good demand and these are going to hsl (vizag) ltd.
DEBTORS COLLECTION PERIOD: Debtors Collection Period= 365 days

Debtors
Turnover ratio
Debtors Collection Period
Debtors
Debtors Turnover
Years Days Collection
Ratio
Period
2016-
365 3.2 114.06
2017
2017-
365 3.4 107.35
2018
2018-2019 365 2.9 125.86
2019-
365 3.0 121.66
2020
78 | P a g e
2020-
365 3.0 121.66
2021
2021-
365 4.2 86.90
2022
Debtors Collection Period

140
120
100
80 Debtors Collection
Period
60
40
20
0
2016- 2017- 2019- 2020- 2021-
2017 2018 2018- 2020 2021 2022
2019
INTERPRETATION:
The above graph indicates that there are continue increase in the HSL (vizag) ltd average
accounts receivable period. During the year 2016-17 the average accounts receivable period is
114.06 which indicate increase in average receivable period. During the year 2019-20 and 2020-
21 the average receivable period is 121.66 and in 2018-19 it is 125.86 which indicate increase in
average receivable period, which implies that the debtors were taking too much time to get
collected. In the year 2021-21 the average accounts receivable period is 86.90. This indicates the
79 | P a g e
weakness of the company in collecting debts and there are chances of those debts becoming bad
debts.
WORKING CAPITAL TURNOVER RATIO: Working capital refers to the capital required by the
firm to run its day-to-day operations. To run the day-to-day operations, the company needs certain
type of assets.
Formula: working capital turnover ratio=net sales/ working capital
Where, net working capital = current assets – current liabilities.
Working Capital Turnover Ratio
80 | P a g e
Working Working Capital
Years Net sales
Capital Turnover Ratio
2016- 1,52,986.
31,670.44 4.8
2017 23
2017- 1,62,411.
37,322.87 4.3
2018 26
2018-2019 1,25,720.03 40,202.03 3.1
2019- 1,07,709.
43,487.32 2.3
2020 15
2020-
90,894.59 42,508.92 2.1
2021
2021-
1,22,149.53 57147.85 2.1
2022
Working Capital Turnover Ratio

6
4
Working Capital Turnover
3 Ratio
0
2016- 2017- 2018- 2019- 2020- 2021-
2017 2018 2019 2020 2021 2022
INTERPRETATION:
81 | P a g e
A higher working capital turnover ratio indicates the efficiency and the lower working capital
turnover ratio indicates the inefficiency of the management for utilization of the working capital.
The working capital turnover ratio of HSL(vizag) ltd is ranging from 4.1 to 2.1. In the years
2016-17 and 2021-22, when compared to 2021-22 the working capital turnover ratio is lower.
AVERAGE INVENTORY: Average Inventory =
82 | P a g e
shows Average Inventory
Opening Average
Years Closing stock
stock Inventory
2016- 39,265.95 40,436.19
39,851.07
2017
2017- 40,436.19 36,411.46
38,423.82
2018
36,411.46 32,076.05
2018-2019 34243.75
2019- 32,076.05 30,261.13
31,168.59
2020
2020- 30,261.13 28,354.86
29,307.99
2021
2021- 28,354.86 30,153.55
29,254.20
2022
Average Inventory
45000.00
40000.00
35000.00
30000.00
25000.00 Average Inventory
20000.00
15000.00
10000.00
5000.00
0.00
2016- 2017- 2019- 2020- 2021-
2017 2018 2018- 2020 2021 2022
2019
83 | P a g e
INTERPRETATION:
The above graph indicates that there are increase and decrease in HSL(vizag) pvt ltd
average inventory. During the year 2016-17 the average inventory is 39,851.07 which indicate
increase in average inventory. During the year 2017-18 the average inventory is
38,423.82which indicate also increase in that year also in average inventory. During the year
2021-22 the average inventory is 29,254.20 which indicate decrease in average inventory.
84 | P a g e
85 | P a g e
CHAPTER –5
SUMMARY
FINDINGS
SUGGESTIONS
CONCLUSION
86 | P a g e
SUMMARY
The concept of working capital is used in two ways i.e. Gross working capital and Net working
capital. Gross working capital refers to the firm investments in current assets and Net working
capital means the difference between Current assets and Current liabilities. Therefore, it represents
the position of current assets which are financed either by long term funds or by bank borrowings.
Cash is required to meet firms day to day and precautionary needs. A firm also needs cash to meet its
creditors for normal conduct of business. Cash is also held to meet unexpected emergency situations.
Some firms hold cash to take advantage of speculation changes in prices of input and output.
Management of cash involves three things.
● Managing Cash Flows in and out of a firm.

● Managing Cash Flows with in the firm.
● Financing deficit or investing surplus cash.
Financial management is important because it has impact on all the activities of a firm. Its primary
responsibility is to discharge the finance function successfully. It touches on all the other business
functions. Financial performance is a managerial activity, which is concerned with the planning and
controlling the financial sources of firm. Financial sources are of the life blood of the business
organization. We cannot imagine a business without finance because it is the central point of all
business activities because of all decisions are financial implications. These finance function of the
management is equally important for profit and non profit organizations.

On occasion of "75 Years of Azadi Ka Amrit Mahotsav", Telangana State Pollution Control Board
has nominated HSL and issued appreciation certificate for adopting best practices in environmental
protection.
As of November 2022 Hindustan shipyard limited has a market cap of $0.35 Billion. This makes
HSL Power Systems the world's 5720th most valuable company by market cap according to our
data. The market capitalization, commonly called market cap, is the total market value of a publicly
traded company's outstanding shares and is commonly used to measure how much a company is
worth.
87 | P a g e
The project entitled working capital management HINDUSTAN SHIPYARD LIMITED was
divided into 5 chapters. It deals with introduction of working capital, need for the study, objectives,
methodology and limitations of the study. It deals with the industry profile and company profile of
HINDUSTAN SHIPYARD LIMITED .organizations structure and various functional departments
headed by managing director and functional departments and accounts department, production
department and personnel department headed by managers. It deals with the theoretical background
of working capital management which includes introduction, definitions, needs, management and
process of working capital management, problems of working capital management. It includes
calculation of different ratios and schedule of changes in working capital for 2016-2017, 2017-2018,
2018-2019, 2019-2020, 2020-2021, 2021-2022. It contains summary, findings and suggestions. The
suggestions were based on the findings. important for profit and non-profit organizations.
88 | P a g e
FINDINGS
● The improved performance of HSL was due to the constant development work in the areas of
production, in plant modification, maintenance and above all the financial policies
● The company is maintaining more than satisfactory relation between current assets and current
liabilities.
● Most of working capital in quick assets
● By observing the current assets total assets, it shows the efficiency in employing working funds.
● By observing cash to current assets abnormally increased
● Debtor’s ratio decreased due to credit sales.
● The debtor’s ratio decreased due to credit sales deceasing.
● The inventory turnover ratio is increased due to the finished stock is rapid turnover.
● The % of inventory to current assets has been decreased.
89 | P a g e
SUGGESTIONS
● The high working capital turnover ratio is sign of over trading and put the concern in financial
difficulties.
● The high cash velocity is desirable but at the same time it adversely effects the short-term
liquidity position of the business unit.
● By implementation of strict collection policies, the average collection period can be brought
down.
● The company should take necessary steps for minimizing debtor’s collection period.
● The company should be stringent regarding is credit policies as receivables comprises most in
current assets.
90 | P a g e
Conclusion:
As the study completed with a feeling of satisfaction leaving behind. It can be amicably
concluded that the company’s performance in the period of study is good and overall working
capital position is good. There is always scope of improvement and growth. therefore, with due
consideration to analysis summary and suggestions of the company can achieve greater success
in terms of increase in sales, profitability and continuity of growth and build more stronger
equity .
91 | P a g e
BIBLOGRAPHY
BOOKS:
I. M. Pandey, Financial Management (Theory And Practice), Vikas Publishing House Pvt Ltd,
2007.
R.K. Sharma, Management Accounting, Kalyani Publishers, New Delhi.
R.M.Srinivatsava, Financial Management (Management And Policy), Himalaya Publishing

House, 2009.
REPORTS:
ANNUAL REPORTS
WEBSITE:
● www.google.com
● www.worldfertilizer.com
● www.moneycontrol.com
REFERENCES:
1) Pedro Juan García‐Teruel, Pedro Martínez‐Solano, (2007) "Effects of working capital

management on SME profitability", International Journal of Managerial Finance, Vol. 3
Issue: 2, pp.164-177, https://doi.org/10.1108/17439130710738718.
92 | P a g e
2) A.K.Sharma, Satish Kumar, (2011) “Effect of Working Capital Management on Firm
Profitability, Empirical Evidence from India”. Article first published online: December 23,
2010; Issue published: February 1, 2011, Volume: 12 issue: 1, page(s): 159-173
https://doi.org/10.1177%2F097215091001200110.
3) SushmaVishnani, BhupeshKr.Shah, (2007), “Impact of Working Capital Management
Policies On Corporate Performance, An Empirical Study, Reasearch Article”, Issue
published: December 1, 2007, Volume: 8 issue: 2, page(s): 267-281
https://doi.org/10.1177%2F097215090700800206.
4) Singhania.M, Sharma.N&YagneshRohit.J. (2014), “Working Capital Management And
Profitability: Evidence From Indian Manufacturing Companies”, Issue published: September
2014, Volume 41, Issue 3, pp 313–326 https://doi.org/10.1007/s40622-014-0043-3.
5) MelitaCharitou, Petros Lois, Halim Budi Santoso, (2012), “The Relationship Between
Working Capital Management and Firms Profitability, An Empirical Investigation For An
Emerging Asian Country”, International Business & Economics Research Journal (IBER):
Volume: 11, No 8, 2012, https://doi.org/10.19030/jber.v14i3.9750.
6) Morris Lamberson, (1995) "Changes in Working Capital of Small Firms in Relation to
Changes in Economic Activity", American Journal of Business, Issue published: 1995
Volume: 10, Issue: 2, pages: 45-50, https://doi.org/10.1108/19355181199500015.
7) Amarjit Gill, (2011), “Factors That Influence Working Capital Requirements In Canada”,
Economics and Finance Review. Volume: 1(3) pages: 30 – 40, Issue published: May, 2011,
ISSN: 2047 – 040, http://wwww.businessjournalz.org/efr.
8) Steven M. Fazzari and Bruce C. Petersen (1993), The RAND Journal of Economics, Issue
published: Autumn, 1993, Volume: 24, No. 3, pages: 328-342,
https://www.jstor.org/stable/2555961.
9) BanosCaballero.S, Garcia Teruel.P.J.Y, MartínezSolano.P (2009), “Determinants of working
capital management. En Administrando en entornosinciertos”, XXIII CongresoAnual
AEDEM (1-15), Sevilla: ESIC.
10) Harsh Pratap Singh, Satish Kumar, (2014), "Working capital management: a literature review
and research agenda", Qualitative Research in Financial Markets, Volume: 6, Issue: 2, pages:
173-197,https://doi.org/10.1108/QRFM-04-2013-0010.
93 | P a g e

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CHAPTER-1

The present study is confined to analyze the WORKING CAPTIAL management

● To know about WORKING CAPITAL practices in general

● To understand the Theoretical Concepts of Working Capital Management.

● To analyze the inventory, receivables, and payables management practices of HINDUSTAN

● To give suggestions if necessary for the financial performance of the organization

Research methodology is a 'way to systematically solve the research problem. It may be

There are two types of data collection methods available

● The limitation of the financial tools applies for the study.

THE HISTORY OF SHIPBUILDING IN INDIA

GLOBAL TRENDS IN SHIPPING INDUSTRY

2. U.S. China Trade Relations:

3. Labour and Unions:

5. Increased Number of Alliances:

Increase in Fleet Size and Improvement in Fleet Quality:

Need for Supporting Policies and Incentives:

Simplification of Tax Structure:

SHIPBUILDING INDUSTRIES IN INDIA

1.Hindustan Shipyard Ltd., Vishakhapatnam

2. Goa Shipyard Limited, Goa:

GSL is undergoing a modernization of its yard to adapt to the latest technology in

4. The Mazagon Dock, Mumbai

Existing Infrastructure and Facilities:

 Innovative Shafting Work

Strategic initiatives for ‘Make in India’

The departments can be mainly categorized as follows;

1. Rear Admiral L V Sarat Babu, NM, IN (Retd)

2. CmdeHemantKhatri, IN (Retd) Director (Strategic Project),

3. Cmdre A S Mitra, IN (Retd.) Director (Ship Building),

4. Shri M Naga Raj Director (Finance & Commercial),

5. Cmde PHM Salih Director (Corporate Planning & Personnel)

6. Ms SurinaRajan, IAS Part-Time Official Directors (Govt. Directors) 32

7. Dr CA Bijaya Kumar Sahoo Part-Time non-official Directors (Independent Directors)

2. INFRA STRUCTURE OF SHIP BULDING:

3. SHIP REPAIR DIVISIONS:

HUMAN RESOURCE IN HSL:

The ailing defence-controlled shipyard, Vizag-based Hindustan Shipyard Ltd (HSL),

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

There are two concepts of working capital.

a) Gross working capital

Particulars Previo Curre Working capital

Total Current liabilities -(CL) XXX XX

OPERATING CYCLE CONCEPT

DIAGRAM OF OPERATING CYCLE

Sources of working capital:

Sources of long term or regular working capital

Sources of short term or seasonal working capital

b) Provision of taxation b) Credit papers

c) Accrued expenses c) Bank credit

Factors of working capital:

Advantages of Adequate working capital:

1) Solvency of a business: Adequate working capital helps in maintaining solvency of

2)Goodwill: Sufficient working capital enables a business concern to make prompt

6) Regular payment of salaries wages and other day-to-day commitments:

7) Exploitation of favorable market conditions: Only concerns with adequate

Disadvantages of Inadequate working capital:

Working capital includes the following