rajasekhar project

8/3/2019 Rajasekhar Project

1/92

A PROJECT REPORT ON

WORKING CAPITAL MANAGEMENTWith reference to

HBL POWER SYSTEMS LTD

PYDIBHEEMAVARAM, VZM.

A Project Report submitted in

Partial Fulfillment of the Requirement for the Award

ofThe Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By

B.RAJASEKHAR

Regd No.1009502045

Under the Guidance of

Mr.M.V.RAMESH MBA, (M.PHIL)

GAYATRI COLLEGE FOR PG COURSES

(Affiliated to Dr.B.R.Ambedkar University)

Etcherla, Srikakulam.

2010-2012


2/92

DECLARATION

I the undersigned do here by declare that this Project

entitled WORKING CAPITAL MANAGEMENT with

Reference to HBL POWER SYSTEMS, Pydibheemavaram,

Vzm. submitted by me on partial fulfillment for the

Requirement of the MASTER OF BUSINESS

ADMINISTRATION Degree in Gayatri college for pg

courses, Munasabpeta, Srikakulam. I also declare

that, This Project work is the Result of own Effort and that

it has been not submitted to any other institution or

published any where for the award of any Degree or

Diploma.

Place: SRIKAKULAM(B.RAJASEKHAR)

Date:


3/92

ACKNOWLEDGEMENT

I take this opportunity to express my sincere Gratitude tofollowing eminent Personalities without those help andGuidance, the Successful completion of my Project workwould have remained a dream.

I extend my heartful thanks to Mr. N.V.V.S MURTHYSir, P&A Manager of HBL power systems ltd ,Vzm .who gavethe permission to do the project on a Financial Topic

INVENTORY MANAGEMENT .

I also express my sincere thanks to Mr. P.RAMBABU Sir,senior F&A Manager of HBL power systems ltd. my Internalguide of the Project. With His Esteemed Guidance, support byproviding Project Data and valuable time for completion of theProject.

I express my gratitude to Professor Mr.V.MAHESH(HOD) and Mr.SWAMINAIDU Director of Gayatri college forpg courses for permitting me to pursue my Project Work.

I heart fully thank my parents, my friends for theircooperation in completing my project.

(B.RAJASEKHAR)


4/92

CONTENTS

CHAPTER 1 : Introduction of Financial Management

Objectives of Working Capital Management

Nature & Significance of the Study

Objectives of the Study

Methodology of the Study

Limitations

CHAPTER 2 : Organizational Profile of HBL power systems Ltd.

CHAPTER 3 : Theoretical Frame work of Working CapitalManagement

CHAPTER 4 : Analysis and Interpretation of Working CapitalManagement of HBL Power Systems Ltd

CHAPTER 5 : Summary, Suggestions & Findings(Bibliography)


5/92

CHAPTER-I


6/92

SIGNIFICANCE OF FINANCE:

Finance Management is one of the four important functional areas of the

Management. The major objective of any business firm is to make a profit for its owners by

producing goods or services for sale in the market. To reach this goal the firm purchases

the output and sell them the all process requires funds.

Finance Management is that administrative area or set of administrative

functions, which relates the arrangements of each and credit so that the organization may

have the means to carry out its objectives as satisfactorily as possible. The central feature

of financial management is its formulation of firm and in sales the most favorable sources

of additional funds that the firm will need in the forcible future. In the word of WESTON

and BROUGHAM financial management is an area of financial decision making harm

noshing individual motives and enterprise goals.

OBJECTIVES OF FINANCIAL MANAGEMENT:

The objectives of financial management are considered usually at two

levels, at micro level and at macro level. If micro level the chief objective of financial

management is to make an intensive and economical use of capital resources. The

objectives of financial management at macro level are considered at firm level since

business firms are profit-seeking organization, their objectives are frequently expressed in

terms of money.


7/92

Therefore three primary resources are commonly equally eneovantered

Maximization of Profit

Maximization of returns

Maximization of owners wealth

PROFIT MAXIMIZATION

The traditional emphasis in micro Economics has always been on the profit

it has been a more familiar as well as reasonable guidelines for the financial management

the earned sales and managerial efficiency. The duty of the manager is to achieve the

higher possible slow of the returns that will belong to the owners after all other delegations

have been meet.

MAXIMIZATION OF RETURNS

Some authorities on financial management conclude that maximization of

returns provides a basic guideline by which financial decision should be evaluated. But

returns are mainly based profits earned by the concern, if concern earns sufficient profits. It

will be able to satisfy the owner as well as its employment in the minimum possible extent.

MAXIMIZATION OF OWNERS WEALTH

According to Professor Solomon Ezra of Standard University the

Ultimate goal of financial management should be maximization of owners wealth.

According to him the maximization of profit is half unreal motive. The proper foal of

financial management is wealth maximization of equity shareholders as it is expressly

concerned with the relationship of profitability and the volume of capital being used on the

enterprises.

WORKING CAPITAL MANAGEMENT

Working capital Management is the functional area of finance that

covers all the current accounts of the firm. It is a discipline that seeks proper policies for

managing current assets and liabilities and practical techniques for maximizing the benefits

from managing working capital working capital is lifeblood of business.

Working Capital is concerned with the management of firms current assets

and current liabilities. Thus the working capital management is one of the most important

aspects of the firms overall financial management.


8/92

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

There are two important objectives of Working Capital Management i.e.

profitability and liquidity a financial management stick to only to either of these objectives.

There should be proper balance between the two so that one objective may not suffer at the

cost of other with regard to the Working capital management. There are two major

implications.

Firstly, decisions that affect the level of working capital are too frequent and

repetitive. Such decisions should be consistent with the objectives and goals and

framework of unambiguous rules should be created for implementation of those decisionsby lower operating levels.

Secondly, efficient management of one component of working capital

cannot be under taken with out simultaneous consideration of other components because of

a close interaction among them keeping in view those characteristics feature of Working

Capital management trade off between liquidity and profitability is to be achieved.

CLASSIFICATION OF WORKING CAPITAL:

Management of cash

Management of account receivables

Management of Inventory

Working capital may be classified into two ways.

On the basis of concept On the basis of time

On the basis of concept working capital is classified as gross and net working capital as

discussed earlier. This classification is important from that point of view of the financial

manager.

On the basis of time working capital may be classification.

Permanent or fixed working capital.

Temporary or variable working capital.


9/92

IMPORTENCE OF ADEQUAVY OF WORKING CAPITAL

Working capital is the lifeblood and nerve center of a business. Just ascirculation of blood is essential in the human body for maintaining life. Working capital is

very essential to maintain the smooth running of a business. No business can run

successfully without an adequate amount of working capital. The main advantage of

maintaining adequate amount of working capital is as follows.

1.Solvency of the Business

Adequate working capital helps on maintaining solvency of the business by

providing interrupted flow of production.

2.Good Will

Sufficient working capital enables a business concern to make prompt

payments and hence helps in creating and maintaining good will.

3. Easy loans

A concern having adequate working capital solvency and good credit

standing can arrange land from banks and others on easy favorable terms.

4. Cash discount

Adequate working capital also enables a firm to avail cash discounts on the

purchases and hence it reduces costs.

5. Regular supply of Raw materials

Sufficient working capital ensures regular supply of Raw materials and

continuous production.

6. Exploitation of favorable Market conditions

Only concerns with adequate working capital can exploit favorable market

condition such as purchasing it requirements in bulk when the prices are lower and by

holding it inventories for higher prices.


10/92

7. Ability to face crisis Adequate working capital enables the firm to face business

crisis in emergencies such as depression because during such period, generally there is

much pressure working capital.

THE NEED FOR WORKING CAPITAL

Every Business needs some amount of working capital. The need for

working capital arises due to the time gap between production and realization of cash from

sales.

The following are the needs of working Capital:

For the purpose of raw material.

To pay wages and salaries.

To incur day-to-day expenses and overheads.

To meet the selling costs.

To provide credit facilities to the customer

DETERMINATION OF WORKING CAPITAL:

There is no set rules or formula to determine working capital requirements of firm.A large number of factors influence working capital needs of firm. All factory are of

different factors should be made in order to determine total investment in working capital.

The following are the description of factors, which generally influence

the working capital need of a firm.

Manufacturing cycle

Sales growth.

Demand condition.

Production Policies

Price level changes.

Operating efficiency and performance.

Firm credit policies

Availability of credit.

Business fluctuations, growth and expansion activates.


11/92

SOURCES OF WORKING CAPITAL:Various sources for the financial of working capital are as follows:

Permanent or Fixed Sources:

Shares

Debentures

Public Deposits

Pouching back profits

Loans from financial institutions.

Temporary or variable sources:

Commercial Banks.

Indigenous Bankers.

Trade Creditors

Installment Credit

Advances

Account Receivables

Commercial papers

NEED FOR THE STUDY

Working capital is a form of investment in short term assets. Working capital

management encompasses all the aspects of administration of both current assets and

current liabilities has two main functions.

To adjust to the changes in firms level of sales activities causes by cyclical

and random factors. This function is important because a firm with long run prospects

may experience sever difficulties and loses caused by short-term developments.

To contribute to the maximizing the values of firm working capital

management includes a number of aspects that make it an important topic for study.


12/92

The largest portion of financial managers time is devoted to the day-do-day

internal operations of the firm. This can appropriately be subsumed under the handling

of working capital management.

Current assets represents more than half of the total assets of the firm

current assets represents large investment and this investments tends to be relativelyvolatile and hence requires the careful attention of the financial manager.

The relationship between sales growth and the need to finance current assets

is closer and direct sales increase similar immediate need for additional investment and

cash balance. All such needs mist be financial and since they are closely related to sales

volume, it is imperative that the financial manager should be aware of the

developments in working capital segment of the firm.

OBJECTIVES OF THE STUDY

To study the battery Industry in general.

To know the profile of H.B.Ls

To study the working capital management practices in H.b.L.s. To suggest

corrective measures in any in working capital management.

To study in general working capital mgt procedure in H.B.L LTDVIZIANAGRAM.

TO know the how the Sources of long term working capital is being financed.

To give suggestions if any for Sources of long term working capital management in

H.B.L LTD VIZIANAGRAM.

TO know various methods to be followed by H.B.L ltd VIZINAGRAM. Plant for

invest and accounts receivables.

METHODOLOGY

The relevant information necessary for the study is collected from to sources

namely.

Primary data.

Secondary data.

Primary data:


13/92

It consists of information disclosed by the financial heads of various authorities of the

respective departments of H.B.Ls.

conducting personal interviews with the concerned office of financial department of

H.B.L battery ltd.

Secondary data:

I consists of information obtained from annual reports. Balance sheets and

other financial statement. Files and same other important documents maintained by the

organization and Journals.

Collection of required data from annual records of H.B.L battery ltd.

Reference from textbook and journals relating to financial management

LIMITATIONS

The study has been conducted is a systematic and comprehensive way so as to make

the project work an enviable one. However the topic under my study not be free

from limitations due to these factors.

They working capital analyzed only with the help ratios others techniques such as

fund flow analysis and operating cycle methods is not employed in this study.

The major limitation of the project under study was time. Since it was to be

completed with in a short period of time. Which is not sufficient to undertaking

comprehensive study and Non-availability of complete information about cash sales

and credit sales out of total sales is not available one more limitation is depreciationon assets individually is not available.

In the highlight of the above factors, it is not possible for an analysis to calculate

the exact working capital ratios.


14/92

CHAPTER-II


15/92

ORGANIZATION PROFILE :

Lead Acid Battery Industry- Profile An Overview

The Widest range of specialized DC Power Systems

HBL is The Largest Manufacturer of Specialized Batteries in India, for Industrial,

Telecom, Railways and Defence applications. HBL offers its customers the most

appropriate technology based on the requirement, from the wide range of batteries-

Nickel-cadmium, Silver Zinc, Lead-acid and Lithium batteries. Chargers for

rechargeable batteries are also manufactured in both TR and SMR versions from 24V

to 220V. The company has sales of about US$50 million and very substantial design

and development capabilities, in-house.

Over 25 years of experience in the domestic market and over 10 years in

exporting to many countries including USA, South Korea, West Asia and South East

Asia, has given HBL an understanding of the Customers special varied requirements,

Several major customers have found the companys products to be reliable over the

years and have placed repeat orders. The company has adequate marketing and service

personnel who can support the customers at short notice.

The Triumph-HP series is a premium design valve regulated lead acid

battery based n features offered by world class companies. The battery works on the

gas recombination principle and has been designed to meet the requirements of a wide

range of applications. This product has been manufactured under the controls.


16/92

Established by a for quality/environmental management system that meets

the requirements of ISO 9001-2000: ISO 14001:1996, which has been independently

certified by BVQI.

Specifications at a glance

Design and Construction

Positive Plate: Flat pasted type with Lead-calcium High Tin alloy grid to resist

corrosion & longer life.

Negative Plate: Flat pasted type with Lead-calcium alloy grid for maintenance free

characteristics

Container: High impact Polypropylene co-polymer, ribbed jar design for better heat

dissipation and strength. Flame retardant polypropylene UL 94V0/28% LOI is optional

Separator: Low resistance, high porosity and highly absorbent type glass mat separator

(AGM)

Electrolyte: High purity Sulphuric acid to maximize shelf life

Terminals: Lead plated Copper inserts high conductivity

Safety Valve: Self resealing, pressure regulated and explosion proof

Container and cover sealing: Heat Sealing Method for better joint strength.

Performance:

Conforms to: IEC 60896-2:1995, TEC Spec.#G/BAT-01/02, March 2000 BS 6290

Part-IV & IEEE 1188 Standards

Float life: 20 Years designed life at 0 27 C on full float with recommended charging

methods.

Cyclic life at 27c:

Wide range of operating Temperature:- 20 C to +55 C

Unique Features of Triumph-HP batteries Applications:


17/92

Horizontal plate stacking consistent performance and longer life Better heat

dissipation Eliminates acid stratification Ventilated module design Excellent thermal

management of battery Resistant to thermal runaway Tank formation of plates

Uniform cell voltages 100% capacity on shipment No additional cycling required 20

years designed life a practically tested and proven VRLA Battery suitable for 20 yearslife certified by independent testing agency Grid growth provision Enhancement of

battery life by prevention of failure due to grid growth.

Benefits to our customers:

No water top-up required throughout its life-Maintenance-free No special battery

rooms, as no corrosive fumes Better foot print due to stack able design Customized

solutions to address variety of applications Designed for high integrity and long life

Safe to use-leak and explosion proof Enhanced performance Ease of installation and

ready to use-supplied in factory charged condition Eco-friendly, cadmium-free alloy for

case in recycling simple cell replacement capability.

Certifications and Approvals

Nickel Cadmium: Lead Acid:

A)Pocket Plate, Valve Regulated Pocket VRLA Single Cells, VRLA Monoblocks

Plate, Fiber Plate LMLA,VRLA GEL

ISO 9001 ISO 9001

ISO 14001

IEC 60623 Certification CSA) ISO 14001

Bump Test

Vibration Test IEC60896Certification (CSA) for

VRLA

Seismic Test Single Cells

IEC 60623 Certification (Intertek ETL

SEMKO Interim Report) IEC60896Certification (CSA) for

Monoblocks

OHSAS 18001 Certification (NCPP & Lithium:


18/92

NCFP) ISO 9001

B) Sintered Plate Electronics:

ISO 9001

Silver Zinc: Thyristor Control Rectifiers,DC-DC

ISO 9001 Convertors, Defence Chargers

Products:

Nickel Cadmium Pocket Plate Batteries:

HBL offers a very wide range of Nickel Cadmium Pocket Plate Batteries that match

diverse applications and operating conditions. These are available in tough polypropylene

containers of single cell types and block battery types. Cells of Stainless Steel containers or

structural foam molded containers are also offered as options. Incorporating variations in

electrode design to meet different discharge requirements, HBL batteries are classified into

three types L, M & H. These batteries conform to IEC 60623 and are certified by Intertek

ETL SEMKO. They also conform to BS6260, DIN 40771 and other International

Standards.

Benefits:

Exceptionally long & reliable service life

Adaptability to a wide temperature range

No emission of corrosive gases, Safe from flame & explosion

Minimal maintenance, Low life time cost, quick recharging

Range and Applications:

Cell Type Capacity Range TypicalBack- up

TypicalApplication

L-Low RateKPL (Single)KBL (Block)

11 to 4808 to 1540

Above 3Hours

Fire Alarm Panels EmergencyLighting TelecommunicationSwitchgear Protection


19/92

M-MediumRateKPM (Single)KBM (Block)

10 to 39512 to 1460

60 Minutes to 3Hours

Switchgear ProtectionInstrumentation And ProcessControl U.P.S Motive PowerEmergency Lighting

H-High RateStartingKPM (Single)KBM (Block)

10 to 265

9 to 930Below 60 minutes

GeneratorU.P.SDiesel locomotivecracking

NICKET CADMIUM FIBRE PLATE BATTERIES:

These batteries use Fiber Plate electrodes. The three Dimensional Fiber Structure

in the plate provides a very high conducting density. The Advantages of this technology isits low internal resistance, high rates of discharge, improved recharge capability and

lower weight with a high cycle life. The Ni-Cad Fiber Plate batteries are designed as L,

M,H and X types to suit customers requirements. These batteries conform to IEC 60623

and are certified by Intertek ETL SEMKO. They also conform to BS6260, DIN 40771

and other International Standards.

Features:

Consistent Voltage Output and stable Capacity over lifetime

Long Service life and reliable Operation

It Can be used in extreme temperature zones, Ease of recharging the battery

Ease of handling due to lightweight, Low maintenance and low water

consumption

Excellent for cyclic applications

Range and Applications:

ell Series

L-Low RateKFL Range(Single & Block)

Capacity Range

Ah

20 to 1500

Typical Backup

Above 3 hours

Typical Applications

Fire alarms, EmergencyLighting, Telecom, RailwaySignaling,Switchgear protection,Photovoltaic, CathodicProtection.

M-Medium RateKFM Range(Single & Block)

11 to 1391 60 minutes to 3hours

Switchgear protection,Emergency lighting, Motive

Power, Train lighting,Instrumentation and process


20/92

H-High RateKFH Range(Single & Block)

X Ultra HighRageKFX Range(Single & Block)

11 to 1026

11 to 120

Below 60 minutes

Below 10 minutes

Control, UPS, ElectricvehiclesGenerator Starting, UPS,Diesel locomotive cranking,Aircraft/Helicopter ground starting,

Electro magnets.

Diesel locomotive cranking,Genset starting AGVs

Sealed Cylindrical Ni-Cd Battery Packs for Defence Communications:

HBLs Sealed Cylindrical NICAD Batteries are designed incorporating the latest

technology ensuring high standards. They are available in packs using a wide range of cells

from 110mAH to 8000m Ah for various applications.

Applications:

Memory back-up for interface Digital Equipment

RS.VPS-Mark-I LHP-219

Radio communications, Star-V, RS.VPS Mark II,

Kiran Mark I/IA

Range and Applications

Compact

High Reliability

User friendly

Easy re-chargeability

Maintenance free

Optimal Cell life

Consistent Voltage

Long Shelf life

Enhanced Performance.

PURE LEAD-TIN VRLA MONOBLOCKS:

The Pure Lead-Tin range offers the customer the highest energy density of any lead

acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin

grid which packages more power in a smaller space. The plates being made of high purity


21/92

lead last longer, offering excellent life. The proven benefits of this superior technology are

high performance, quick recharge capability, high energy density and a long service life.

The 6V & 12V monopoles are available in capacities ranging from 12Ah to 150Ah.

Benefits:

Maintenance-free and spill-proof. This enables flexible mounting

Wide operating temperature range (-40o C to + 50oC)

High energy density (gravimetric and volumetric)

Good charge retention leading to long storage life

Low internal resistance ensures quick recharge

Excellent high rate capability permits use of smaller capacity batteries

Superior raw materials for good performance and life

Excellent deep discharge recovery characteristics

UL recognized plastic components

These batteries conforms to IEC 60896 and are certified by Intertek ETL SEMKO

Tubular GEL VRLA Batteries:

The solar powered shelter carry batteries that expose them to higher temperatures. Net

result is the need for a heavy duty, robust, deep cycling battery that is also less sensitive to

high temperature.

To meet such rigors of temperatures and varying pattern of usage, HBL introduces

Tubular Gel VRLA Battery with unbeatable combination of Tubular plate and gelled

electrolyte.

Applications:

Wireless: Base Transceiver, station (BTS), Base Switches (MSO), CDMA/3G base

stations, main switches.

Transmission: Fiber optic systm, Digital Microwave radi, Satellite earth stations

Switching: Local access switches, primary exchanges, Central Office/Secondary exchange,

Point of inter connect switches, Internet & Gateway switches, Telecom collocation.

Applications other than Telecom: Telecommunications, Solar energy systems, Wind

energy systems, Power plants and substations. Train lighting, Coach Air conditioning andsignaling in Railways, SCADA Systems,


22/92

Features & Benefits:

Pressure die-cast spine grids-Longer float life, Very good cycling capability required for

Indian conditions, Gelled Electrolyte Very good heat dissipation, suitable for out door

installation, Antimony-free alloy long shelf life, Valve regulated No water additionsduring service life, 100% capacity on first discharge. Ready to install, Safe and economical

transportation. No free acid, can be mounted both in horizontal and vertical orientation,

ideal for Solar Powered telecom installations.

TUBULAR ULTRA LOW MAINTENANCE LEAD ACID BATTERY:

Tubular LMLA battery is the combination of traditional advantage of tubular plate with

ultra-low-maintenance feature.

Tubular LMLA battery is a preferred choice for the applications with float, semi cyclic and

cyclic operations along with long service life, high cycle life, Partial state of Charge

(PSOC) & deep cycling requirements.

Turus:

The Turus Tubular plate low maintenance lead acid battery is the results of the strong

R&D Expertise gained by HBL over a decade of supplying millions of lead acid batteries

to various applications. Taurus batteries offer outstanding reliability over an expected

service life of around 15 years in float applications.

This battery offers very low maintenance, extended topping up frequency due to low

antimony alloy & high acid reservoir.

Stormz:

Stormz motive power (Traction) batteries for material handling equipment provide a

very high level of performance and reliability in all industrial truck applications. These

batteries are designed according to the relevant DIN, BS Standards.

Lithium Batteries:

Primary: Lithium Thiony1 Chloride/Lithium Sulphur Di-Oxide

Secondary: Lithium Ion Lithium batteries have been developed with support from

DRDO in the year 1990


23/92

Features:

Lithium ThionyI Chloride Batteries are highly reliable and offer numerous

advantages

High Voltage: Cell open circuit voltages is 3.6 correspondingly higher operatingvoltages than other conventional cells.

Discharge Profile: At rated discharge, cell operating voltage remains constant at

3.3V throughout maximum discharge life

High Energy Density: Offer unto 440 wh/kg

Wide Operating Temperature: Can operate from-40oc to 70o and can withstand

adverse environmental conditions

Long Shelf Life: Offers shelf life up to 5 years, Safety: Minimized Pressure System

Defence Electronics:

HBL Microwave is focused on defence electronics. Unlike Batteries and Railway products

where almost all development was done in house, HBL has collaborated with companies

abroad for most of its defence electronics products.

Radar and Electronic Warfare: Joint venture with ELTA, Israel

Several other such plans are under discussion. The companys infrastructure inmanufacturing and national sales service network will be of value in each of these projects

because it can be shared

Thyristor Controlled Battery Chargers

HBL Battery chargers uses Thyristor switching principle for achieving the desired DC

output. The sophisticated power electronics design and production facilities in the company

enables it to meet the specific requirements of its customers.

Extensive Range:

Available in a wide range-can be supplied in voltage outputs upto 500VDC and current

outputs upto 1500Amps.

Application:

These chargers find use in a variety of applications such as Process Control,


24/92

Telecommunications, Emergency Lighting, Switch Gear Protection, Engine Starting and

Power Station Control

MINIMAL MAINTENANCE:

These chargers can work for many years, without any special attention Long life throughdesign and excellent thermal management.

High Reliability

Superior design and high quality standards ensure absolute reliability of the equipment and

fail safe operation Stackable design minimizes place requirement and enables faster

installation.

User Friendly:

Cautiously conceived alarms and annunciations, easily accessible component layout,

enable the users to quickly attend to the equipment, in u

SEGMENTS

NICAD Sintered Plate Batteries for Civil Aviation

Nickel Cadmium Sintered Plate Batteries, the Power Source for independent starting of

aircraft engines & emergency back up in the event of generator failure on board aircraft,

HBL Aircraft batteries have been approved by the Director General of Civil Aviation India.

The Company has obtained F.A.A. approvals for sale ofBatteries through their partners in

the United States of America and other countries where this approval is recognized.

NCSP- B 40060 D

Rating: 24 Volts, 40 AMP,HR at 1 HR Rate

Application: Aircraft Beach King-C90, B-200, B-100, 350, 1900 D, Cessna-S-406,

Fokker F-27, Twin Otter DHC-6, Carvan-2, Bell 212, 412, Boeing 747 series,

Falcon 2000 Helicopters: Dauphin, Cheetah, Chetak, Gulf Stream G1,G2,G3,G4,

Gazalle S4341

NCSP-B 27060

Rating: 24 Volts, 27 Amp. HR at 1 HR Rate


25/92

Application: Aircraft, Dornier 228

NCSP-B 25150

Rating: 24 Volts, 25 AH at 150 mts. Rate

Application: Helicopter, MI 172

NCSP-B 23060

Rating: 24 Volts, 23 AMP.HR at 1 HR Rate

Application: Aircraft, Avro (HS748), Boeing 737-200,HS-125

Silver Start- Pure Lead Tin VRLA Monoblock Batteries for Civil Aviation:

The Silver Sart range of On-board Aircraft starting batteries from HBL are

designed using the Thin-plate Pure Lead tin Technology

Features that make these batteries the right choice for Aircraft starting

Applications:

Sealed, maintenance-free: no filling of acid or water

Excellent starting capability: very high peak power

Fast-charge capability: 100% recharge in 2 hours

More flying hours: long life

Operation in very low temperature:-40o C to + 50o C

Safety inside the aircraft: non-spllable absorbed electrolyte design

Delivered fully charged, ready to use: no commissioning at site

Shock and vibration resistant: ideal for aerobatic use

Silver Start batteries conform to International Aviation Standards like:

IEC 60952-I

MIL 8565J.

Range of silver start 24V Aircraft Batteries (see Brochure for selection of battery for

Aircrafts)

10Ah @ 1 hr 42Ah @ 1 h

Nickel Cadmium Pocket Plate Batteries For Aircraft Ground Start:

HBL offers vented type NICAD Pocket Plate High Rate Batteries for ground

starting of MIG Aircrafts. The Batteries are mounted on an electrically driven trolley unit.

It consists of two banks of KPH 140P, each bank consisting of 24 cells.


26/92

These Batteries are primarily used for meeting the ground starting and servicing electric

power requirements for MIG Series of aircrafts. Additionally it supplies critical power to

the DC motor as the prime mover of the electrically driven trolley.

Benefits:

Excellent resistance to shock, vibrations, temperature and corrosion.

Exceptionally long and reliable service life

Low maintenance and low life time cost

Flame and explosion proof vent

No sudden death and negligible annual ageing

Quick Recharging and no memory effect

Nicket Cadmium Fibre Plate Batteries for Aircraft Ground Start

HBL offers veneted type NICAD Fibre Plate Batteries for ground starting of MIG

Aircrafts

These Batteries are primarily used for meeting the starting and servicing electric

power requirements for MIG Series of aircrafts. The Batteries are mounted on an electric

driven trolley unit. It consists of two banks of KFH 160P each bank consisting of 24 cells.

Additionally it supplies critical power to the DC motor as the prime mover of the

electrically driven trolley.

The Batteries use High Rate Fibre Nickel Electrodes thereby giving an

excellent Electrical performance. The benefits of these batteries are low internal resistance,

High rates of discharge and improved recharge capability coupled with long cycle life.

Benefits:

Consistent Voltage Output and stable capacity over life time

Long Service Life

Ease of handling due to light weight

Fast recharge

Long topping of interval due to low water consumption

Can be used in extreme temperature zones

Can withstand mechanical stress

Most reliable

Defense

Nickel Cadmium Pocket Plate Batteries for Aircraft Ground Start


27/92

HBL offers Vented type NICAD Pocket Plate High Rate Batteries for ground starting of

MIG Aircrafts. The Batteries are mounted on an electrically driven trolley unit. It consists

of two banks of KPH 140P, each bank consisting of 24 cells.

These Batteries are primarily used for meeting the ground starting and servicing electric

power requirements for MIG Series of aircrafts. Additionally it supplies critical power to

the DCmotor as the prime mover of the electrically driven trolley.

Benefits:

Excellent resistance to shock, vibrations, temperature and corrosion.

Exceptionally long and reliable service life

Low maintenance and low life time cost

Flame and explosion proof venNo sudden death and negligible annual ageing

Quick Recharging and no memory effect.

Nicket Cadmium Fibre Plate Batteries for Aircraft Ground Start

H BL offers vented type NICAD Fibre Plate Batteries for ground starting of MIG

Aircrafts.

These Batteries are primarily used for meeting the starting and servicing electric power

requirements for MIG series of aircrafts. The Batteries are mounted on an electric driven

trolley unit. It consists of two banks of KFH 160P each bank consisting of 24 cells.

Additionally it supplies critical power to the DC motor as the prime mover of the

electrically driven trolley.

These Batteries use High Rate Fibre Nickel Electrodes there by giving an excellent

Electrical performance. The benefits of these batteries are low internal resistance, High

rates of discharge and improved recharge capability coupled with long cycle life.

Benefits:

Consistent Voltage Output and stable capacity over life time

Long service Life

Ease ofhandling due to light weight

Fast recharge

Can be used in extreme temperature zones Can withstand mechanical stress


28/92

Most reliable

Sintered Plastic Bonded Batteries:

HBLs Sintered Plastic Bonded Batteries are best suited for applications

requiring high reliability coupled with low maintenance and high performance.

The sintered Plastic Bonded batteries are manufactured using sintered positiveplates and Plastic Bonded negative plates. These are specially designed for High Power

Density and Reduced Water Consumption.

These batteries use polypropylene cell containers with thermally welded lids for

high impact resistance. Flame Retardant containers and lids are optional. All-steel terminal

and fasteners give these batteries the ruggedness required to meet the demanding

application needs. The cells are also provided with reliable flame-arresting vents and are

assembled in stainless steel crates (as an option) for easy handling.

Benefits:

Optimized performance to suit application requirements.

Fits in a very small space

Performs even at extremely low temperatures.

No topping with water required for long periods.

Long Life.

Standards

These batteries conform to the following international standards:

IEC 60623

UIC 854R

BS 6260

IEC 60077

Din 40771

NFF 64018

Applications

Industry KSH range

Railways KRM, KRX, KRH ranges

Telecommunications KSL range.

INDUSTRY


29/92

NICKEL CADMIUM POCKET PLATE BATTERIES

HBL offers Avery wide range of Nickel Cadmium Pocket Plate Batteries that match

diverse applications and operating conditions. These are available in tough polypropylenecontainers of single cell types and block battery types. Cells of Stainless Steel containers or

structural foam molded containers are also offered as options. Incorporating variations in

electrode design to meet different discharge requirements, HBL batteries are classified into

three types L, M & H. These batteries conform to IEC 60623 and are certified by Intertek

ETL SEMKO. They also conform to BS6260, Din 40771 and other International Standards.

Benefits:

Exceptionally long & reliable service life

Adaptability to a wide temperature range

No emission of corrosive gases, Safe from flame & explosion.

Minimal maintenance, Low life time cost, quick recharging

RANGE AND APPLICATIONS:

Cell Type

L-Low RateKPL (Single)KBL (Block)

M-MediumRateKPM (Single)KBM (Block)

H_High RateKPH (Single)KBH(Block)

Capacity Range(Ah)

11 to 4808 To 1540

10 to 39512 to 1460

10 to 2659 to 930

Typical Back up

Above 3 Hours

60 Minutes to 3Hours

Below 60Minutes

Typical ApplicationsFire Alarm PanelsEmergencyLightingTelecommunicationsSwitchgearProtectionSwitchgear

ProtectionSwitchgearProjectionInstrumentationAndProcess ControlU.P.SMotive PowerEmergencyLightingGenerator Starting

U.P.S.Diese Locomotive


30/92

CrankingElectro Magnets

VALVE REGULATED POCKET PLATE BATTERIES:

Ultra Low maintenance Nickel Cadmium Valve Regulated Pocket Plate Battery

engineered by HBL redefines convenience. The VRPP has a pocket Plate construction to

guaramtee the same reliability and performance as can be expected from a conventional

Nickel Cadmium Pocket Plate battery. The design ensures no water top-up requirement

during its lifetime under normal operating conditions.

Benefits:

Accepts low float voltages, No water top-up during lifetime, Capable of giving high

performance, Exceptionally long and reliable service life, Unsurpassed resistance to

Electrical and Mechanical abuse, Safe from Flame and Explosion These batteries conform

to IEC 60623 and are certified by Intertek ETL SEMKO. They also conform to BS6260,

DIN 40771 and other International Standards.

Range: VRPP Batteries are available from 8 AH to 728 AH

Applications:

UPS

Railway Signaling

Telecommunications

Switchgear

Process Control

Emergency Lighting

Fire Alarm System

NICKEL CADMIUM FIBRE PLATE BATTERIES:

These batteries use Fibre Plateelectrodes. The three Dimensional Fibre Structure inthe plate provides a very high conducting density. The advantages of this technology is its


31/92

low internal resistance, high rates of discharge, improved recharge capability and lower

weight with a high cycle life. The Ni-cad Fibre Plate batteries are designed as L, M,H and

X types to suit customers requirements. These batteries conform to IEC 60623 and other

international Standers

Features:

Consistent Voltage Output and stable Capacity over life time

Long service life and reliable operation

Can be used in extreme temperature zones, Ease of recharging the battery

Ease of handling due to light weight, low maintenance and low water consumption

Excellent for cyclic application

RANGE AND APPLICATION:

Cell Type Capacity Range(Ah)

Typical Back- UP Typical Application

L-Low RateKFL Range(Single & Block)

0 to 1500 Above 3 hours Firealarms, EmergencyLighting. Telecom,Railway signaling,Switchgear protection,

Photovoltaic, CathodicProtection

M- MediumRate

Switchgear ProtectionEmergency lighting,Motive power, TrainlightingInstrumentation and

process control, UPS,Electric vehicles

KFM RangeKFH Range(Single & Block)

11 to 1391 60 minutes Generator starting,UPS, Diesellocomotive cranking,Aircraft/Helicopter groundstarting, Electro managent

X- Ultra HighRate

11 to 120 Below 10 minutes Diesel locomotivecranking, Genset


32/92

KFX Range(Single & Block)

starting, AGVs

SINTERED PLASTIC BONDED BATTERIES:

HBLs Sintered Plastic Bonded Batters are best suited for application

requiring high reliability coupled with low maintenance and high performance

The sintered Plastic Bonded batters are manufactured using sintered positive plated and

plastic Bonded negative plates. These are specialty designed for High Power Density and

Reduced Water Consumption.

These batteries use polypropylene cell containers with thermally welded lids for high

impact resistance. Flame Retardant containers and lids are optional. All-steel terminals and

fasteners give these batteries the ruggedness required to meet the demanding application

needs. The cells are also provided with reliable flame arresting vents and are assembled in

stainless steel crates for easy handling .

Benefits:

Optimized performance to suit application requirements.

Fits in a very small space

Performs even at extremely low temperatures.

No topping with water required for long periods.

Long Life.

Standards.

These batteries conform to the following international standards:

IEC 60623

UIC 854 R

BS 6260

IEC 60077

DIN 40771, BFF 64018

Applications

Industry KSH range

Railways-KRM, KRX, KRH ranges

Telecommunications KSL range

Valve Regulated Lead Acid Batteries 2 V cells


33/92

Triumph HP is a premium design Valve Regulated Lead Acid

Battery. The battery works on Gas Recombination Principle with

AGM technology and heavy duty Lead Calcium Grids.

Available in a wide range: 80Ah to 5800Ah

Benefits

Does not require water top-up throughout its life

No corrosive fumes and hence no special battery rooms are required

Stackable design minimizes space requirements.

Designed for high integrity & long life

Application specific designs

Customized layouts for optimum space utilization

Safe-Explosion-proof, leak-proof & flame-retardant material

Consistent performance over life time

Improved aesthetic

Easy installation

Applications:

Triumph-HP is the best choice for applications where no maintenance and minimal

space

Requirement is of utmost importance.

Telecommunications

Switch Gear

Process Control Systems

Railway Signaling & Communication

Renewable Energy

These Products Conform to:

IEC 60896 part 2

Pure Lead-Tin VRLA Monoblocks

The Pure Lead-Tin range offers the customer the highest energy density of any lead acid

battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin grid

which packages more power in a smaller space.

The plates being made of high purity lead last longer, offering excellent life. The proven

benefits of this superior technology are high performance, quick recharge capability, high


34/92

energy density and a long service life. The 6V & 12V monoblocs are available in capacities

ranging from 12Ah to 150Ah

BENEFITS:


Wide operating temperature ranger(-40oC to +50oC)








These batteries conforms to IEC 60896 and are certified by Intertek ETL SeMKO

X-CellSealed Maintenance free GENERATOR Starting Unit

The Battery

The Pure Lead-Tin VRLA battery has an unmatched peak power performance due

to its thin plate design. This is a sealed maintenance free battery with no topping up

required for life.The Charger

The sophisticated SMPS battery charger with in-built protections ensures optimum

charging of the batteries always. The periodic running of the genset for charging of the

batteries is eliminated.

FEATURES & BENEFITS:

Maintenance Free: No Topping up or Specific Gravity Checks1

Ready-to-use: Filled and Factory Charged

Reliability: In-built Charger ensures that Battery is always Full Charges

Cost Advantage: Low Cost of Ownership over itsLong Life time

Xcell: Integrated Battery + Charger System

Xcell Model Dimensions & Selection Chart

Pure Load Power

Pack Model

Dimensions in mm

L W

H

Genset Rating

KVA

Weight (Apprx)

In Kgs


35/92

XCL 12V 2000 330 175

182

15,20,25 11.0

XCL 12V 3200 330 175

235

30,40,50,62.5,82.5,100,125 16.5

XCL 24V 2000 405 240

182

50,62.5,70.100,110,125,14

0

26.0

XCL 24V 3200 405 240

235

160 to 500 36.0

XCL 24V 8000 600 450

290

625 to 1000 78.0

XCL 24V 10000 600 450

320

1250 to 1500 92.0

TUBULAR GEL VRLA BATTERIES:

The solar powered shelters carry batteries that expose them to higher temperatures. Net

result is the need for a heavy duty, robust, deep cycling battery that is also less sensitive to

high temperature.

To meet such rigors of temperatures and varying patterns of usage, HBL introduces

Tubullar Gel VRLA Batterywith unbeatable combination of Tubular plate and gelled

electrolyte.

Applications:

Wireless: Base Transceiver, station (BTS), Base Switches (MSO), CDMA/3G base

stations, Main Switches

Transmission: Fiber optic system, Digital Microwave radi, Satellite earth stations

Switching: Local access switches, Primary exchanges, Central office/Secondary exchange,

point of inter connect switches, Internet & Gateway switches, Telecom Co-location.

Applications other that Telecom:

Telecommunications, Solar energy systems, wind energy systems, Power Plants and

substations, Train lighting, Coach Air conditioning and signaling in Railways, SCADA

Systems.


36/92

Features & Benefits: Pressure die-cast spine grids Longer float life, Very good cycling

capability required for Indian conditions, Gelled Electrolyte Very good heat dissipation,

suitable for out door installation, Antimony free alloy Long shelf life, valve regulated

No water additions during service life, 100% capacity on first discharge. No free acid,Can be mounted both in horizontal and Vertical orientation, Ideal for Solar Powered

telecom installations.

Tubular Ultra Low Maintenance Lead Acid Battery:

Tubular LMLA battery is the combination of traditional advantage of tubular plate with

ultra-low-maintenance feature.

Tubular LMLA battery is a preferred choice for the applications with float, semi cyclic and

cyclic operations along with long service life, high cycle life, partial State of Charge

(PSOC) & deep cycling requirements.

Taurus:

The Taurus Tubular plate low maintenance lead acid battery is the results of the strong

R&D Expertise gained by HBL over a decade of supplying millions of lead acid batteries

to various applications. Taurus batteries offer outstanding reliability over an expected

service life of around 15 years in float applications.

This battery offers very low maintenance, extended topping up frequency due to low

antimony alloy & high acid reservoir.

Telecommunication

Valve Regulated Lead Acid Batteries 2V Cells

Triumph HP is a premium design Valve Regulated Lead Acid Battery. The Battery works

on Gas Recombination Principle with AGM technology and heavy duty Lead Calcium

Grids.

Available in a wide range: 80 Ah to 5800 Ah

Benefits:

Does not require water top-up throughout its life

No corrosive fumes and hence no special battery rooms are required

Stackable design minimizes space requirements

Designed for high integrity & long life

Application specific designs


37/92

Customized layouts for optimum space utilization

Safe-Explosion-proof, lead-proof & flame-retardant material

Consistent performance over life time

Improved aesthetics

Easy installation

Applications:

Triumph-HP is the best choice for applications where no maintenance and miminal

space

REQUIREMENT ARE OF UTMOST IMPORTANCE:

Telecommunications

Switch Gear

Process Control Systems

Railway Signaling & Communication

Renewable Energy

PURE LEAD-TIN VRLA MONOBLOCKS

The Pure Lead Tin range offers the customer the highest energy density of any lead

acid battery anywhere. The battery is constructed around a complex thin plate, pure lead-tin

grid which packages more power in a smaller space. The plates being made of high purity

lead last longer, offering excellent life. The proven benefits of this superior technology are

high performance, quick recharge capability, high energy density and a long service life.

The 6V & 12V monoblocks are available in capacities ranging from 12Ah to 150Ah.

Benefits:


Wide operating temperature range(-40oC to + 50oC)









38/92


39/92

The electronics segment comprises of various divisions manufacturing electronic

equipment like rectifiers, IPS, chargers, embedded systems, data loggers.

Apart from batteries and electronics, the company also manufactures bulletproof jackets,

windmills etc. The company has recently taken up railway signaling works contracts.

The company has 3 divisions catering to the ancillary needs of the company, material

components divisions at Shamirpet, Nandigaon, Bhoothpure, Kandivalasa and VSEZ

(Duvvada) units indulge in various ancillary activities like sheet metal fabrication making

of racks, cutting, bending, plating etc. Plastic mounding division at Nandigaon

manufactures various types of boxes, and cell & battery containers.

Annual turnover of the company is around 800 cores.

PRODUCT PROFILE:

Batteries:

Nickel Cadmium Sintered Plated batteries

Nickel Cadmium Pocket Plated batteries

Nickel Cadmium Fibre Plated batteries

Silver-zinc aircraft batteries

Silver-zinc torpedo batteries

Sealed Cylindrical Nicked Cadmium batteries

Lithium batteries

Valve Regulated Lead Acid batteries

Sealed Lead Acid batteries

Tubular Vent batteries

Thermal batteries

Monobloc batteries

Electronics:

Switch Mode Rectifiers

Integrated Power Supplies

Universal Battery Chargers

Rectifiers

Data Loggers


40/92

Thyristor based charged

HFTCs

SSIs

Fuzes

Moving Target Detectors

RF Power Amplifiers

BIT Units

Others:

Bulletproof jackets

Windmills

Cell Containers

Battery Containers for in-house use

Steel & Wooden racks

Packing boxes etc.

CHAPTER-III


41/92

INTRODUCTION OF WORKING CAPITAL:

Working Capital Management is the process of planning and controlling he level and

the mix of the current assets of the firm as well as financing these assets. Specifically

working capital management requires financial manager to decide what quantities of Cash,

Other Liquid Assets, Account Receivables and Inventories the firm will hold at any point

in time. In addition financial manager must decide how the current assets are to be

financed. Finally choices include the mix of current as well as long-term liabilities.

NATURE OF WORKING CAPITAL:

Working Capital Refers to Current Assets

Those, which are convertible into cash within 1 year.

Those, which are required to meet day-to-day expenses.

The fixed assets as well as current asset require funds. The Management of working

Capital Management involves differed concepts than the techniques used in fixed assets

management. The fixed assets involve long period perspective and there from the concept


42/92

of time value of money are applied in order to discount the future cash inflows, where as

Working Capital time horizon is limited 1 year and time value of money concept is

considered. The fixed assets long term profitability of firm while current assets affect short-

term liquidity position. So, working capital Management, the financial manager is faced

with decisions involving some of the considerations as follows:The working Capital Management may be defined as the management of firms sources

and used of Working Capital in order to maximize the wealth of shareholders. The proper

working capital management requires both medium terms planning (up to 3 years) and also

the immediate adoptions to changes arising due to fluctuations in operating levels of firm.

SIGNIFICANCE OF WORKING CAPITAL:

The world in which real firms function is not perfect. It is characterized by the

firms considerable uncertainty regarding the demand, market price, quality and availability

of its own products and those of suppliers. These real world circumstances introduce

problems to the firm must deal. While the firm has many strategies that utilize investment

or financing with working capital accounts often offer a substantial advantage over the

other techniques. The importance of working capital management is reflected in the fact

that financial managers spend a great deal of time in managing current assets and current

liabilities like.

CLASSIFICATION OF WORKING CAPITAL:

The Working Capital may be classified as follows:

the basis of Concept:

1.GROSS WORKING CAPITAL:

The total of current assets of the business is called Gross Working Capital

Actually Gross Working Capital is the amount of capital blocked in the current assets of

the entity is treated Gross Working Capital.

2. NET WORKING CAPITAL:

If all the current liabilities of a firm are paid, the residual balance that would remain

at hand dlout of the current assets is called as the Net Working Capital The Net Working

Capital is helpful to find out the amount of fund to be collected from long-term sources.

Net Working Capital = Current Assets Current Liabilities


43/92

ON THE BASIS OF TIME:

1.PERMANENT OR FIXED WORKING CAPITAL:

Permanent or Fixed Working Capital is the minimum, amount, which is

required to ensure effective utilization of fixed facilities and for maintains thecirculation of current assets. There is always a minimum level of current assets, which

is continuously required by the enterprise to carryout its normal business operations.

The minimum level of current assets is called Permanent or Fixed Working Capital

as this part of capital is permanently blocked in current assets. As the business grow,

the requirements or Permanent working capital also increase due to increase in current

assets.

The permanent Working Capital can further be classified as:

Regular Working Capital

Reserve Working Capital

Regular working Capital required ensuring circulation of current assets from cash to

inventories, from inventories to receivables and from receivables to cash and so on.

Reserve working capital, which may be provided for contingencies that may are at

unstated periods such as strikes rise in prices depreciation, etc.,

2. TEMPORARY OR VARIABLE WORKING CAPITAL:

Temporary or Variable Working Capital is the amount of working capital which is

required to meet the seasonal demands and some special exigencies. Variable working

Capital can be further classified as:

Seasonal Working Capital

Special Working Capital

Moat of the enterprises has to provide additional working capital to need the

seasonable and special needs. The capital required to meet the seasonal needs of the

enterprise is called Seasonal Working Capital. Special Working Capital is that part of

the Working Capital which is required to meet special exigencies such as launching of

extensive marketing campaigns for conducting research etc.

IMPORTANCE OF ADEQUATE WORKING CAPITAL:

Working Capital is the life and nerve center of a business. No business can run

successfully without an adequate amount of working capital.


44/92

ADVANTAGES OF ADEQUATE WORKING CAPITAL:

The Main advantages of adequate amount of working capital are as follows:

Good Will:

Sufficient Working capital enables a business concern to make prompt payments and

hence helps in creating and maintaining good will. Easy Loan:

A concern having adequate working capital, high solvency and good credit standing

can arrange loans from banks and others on easy and favorable terms.

Cash Discounts:

Adequate working capital also enables a concern to avail discounts on the purchases

and hence it reduces costs.

Regular supply of Raw Material:

Sufficient Working Capital ensures regular supply of raw materials and continues

production.

Regular payment of salaries, wages and other day to day commitments:

A company which has sample Working Capital can made payment of salaries wages

and other day to day commitments which raises the morale of its employees, increases

their efficiency, reduces wastage, costs and enhances production and profits.

INADEQUATE WORKING CAPITAL:

Every business concern should have adequate working capital to run its business

operations. It should have neither redundant or excess working capital nor inadequate

nor shortage of working capital. Both excess as well as short working capital positions

are bad for any business. However, out of the two, it is the inadequacy of working

capital, which is more dangerous from the point of view of the firm.

DISADVANTAGES OF REDUNDANT OR EXCESSIVE WORKING CAPITAL:

Excessive Working capital means idle funds which earn no profits for the

business and hence the business cannot earn a proper rate on its investment.

When there is a redundant working capital, it may lead to unnecessary purchasing

and accumulation of inventories causing chances if waste and losses.

Excessive working capital implies excessive debtors and defective credit policy,

which may cause higher incidence of bad debts.


45/92

When there is excessive working capital, relations with banks and other financial

institutions may not be maintained.

Due to low rate of return on investments ,the value of shares may also fall.

NEED FOR WORKING CAPITAL:The need of working capital cannot be over emphasized. Every business needs

some amount of working capital. The need for working capital arises due to the time

gap between production and realization of cash from sales. There is an operating cycle

involved in the sales and realization of cash. There are time gaps in purchase of raw

materials and production, production and sales, and realization of cash. Thus, working

capital is needed for the following purposes.

For the purchase of raw materials, components and spares.

To pay wages and salaries.

To incur day to day expenses and overhead costs such as fuel, power and

office expenses etc.

To meet the selling costs as packing, advertising etc.,

To maintain the inventories of raw material, work-in-process, stores and

spares and finished stock.DETERMINANTS OF WORKING CAPITAL:

The working capital requirements of a concern depend upon a large number

of factors such as nature and size of business, the character of their operations, the

length of productions cycles , the rate stock turnover and the state of economic

situation. It is not possible them because all such factors are of different important

factors generally influencing the working capital requirements.

NATURE OR CHARACTER OF BUSINESS:

The working capital requirements of a firm basically depend upon the nature of

its business. Public utility undertaking like electricity , Water Supply and Railways

need very limited working capital because they offer cash sales only and supply

services, not products and as such no funds are tied in inventories and receivables. On

the other hand trading and financial in fixed assets but have to invest large amounts in

current assets like inventories, receivables and cash as such they need large amount of

working capital.


46/92

1. SIZE OF BUSINESS OF SCALE OF OPERATIONS:

The Working capital requirements of a concern are directly influenced by the size

of a business, which may be measured in terms of scale of operations. Greater the size

of a business unit, generally larger will be the requirements of working capital.However in some cases even a smaller concern may need more working capital due to

high overhead charges inefficient use of available resources and other economic

disadvantages of small size.

2. MANUFACTURING PROCESS OR LENGTH OF PRODUCTION

CYCLE:

In manufacturing business, the requirement of working capital increase in

direct proportion to length of manufacturing process. Longer the process period of

manufacture, larger is the amount of working capital required. The long the

manufacturing time, the raw materials and other supplies have to be carried for a longer

period in the pores for finished product. Therefore, if there are alternative of

production, the process of production, and the process with the shortest production

period should be chosen.

3. SEASONAL VARIATIONS:

In certain industries raw material is not available throughout the year, They have to buy

raw materials in bulk during the season to ensure an uninterrupted flow and process

them during the entire year. A huge amount is, thus block in the form of material

inventories during such season which gives rise to more working capital requirements.

4.

5. WORKING CAPITAL CYCLE:

In a manufacturing concern, the working capital starts with the purchase of raw

material and ends with the realization of cash from the sales of finished goods. The

cycle involves purchase of raw material and stores, its conversion into stocks of

finished goods through work-in-process with progressive increment of labor and

services costs, conversion of finished stock into sales, debtors and receivables and

ultimately realization of cash and this cycle continues again from cash to purchase of

raw material and so on.


47/92

6. RATE OF STOCK TURNOVER:

There is high degree of inverse co-relationship between the quantum of working capital

and the velocity or speed with which the sales are affected. A firm having a high rate of

stock turnover will need lower amount of working capital as compared to firm having a

low rate of stock turnover. For example, in case of precious stone dealers, the stockturnover is very low. They have to maintain a large variety of stocks and the movement

of stocks is very low.

7. BUSINESS CYCLE:

Business cycle refers to alternate expansion and contraction in general business

activity. In a period of boom i.e. when the business is prosperous, there is a need for

larger amount of working capital due to increase in sales, rise in prices, optimistic

expansion of business, etc. On the contrary in the times of depression i.e. when there is

a down swing of the cycle, the business contracts, sales decline, and difficulties are

faces in collections from debtors and firms may have a large amount of working capital

lying idle.

8. RATE OF GROWTH OF BUSINESS:

The working capital requirements of a concern increase with the growth and

expansion of its business activities. Although it is difficult to determine the

relationship between the growth in the volume of business and the growth in the

working capital of business, yet it may be concluded that for normal rate of expansion

in the volume of business. We may have retained profits to provide for more working

capital but in fast growing concerns.

APPROACHES FOR FINANCING WORKING CAPITAL:

There are three approaches to financing the working capital:

1. Matching approach

2. Conservation approach

3. Aggressive approach

Matching approach:


48/92

The firm can adopt a financial plan , which matches the expected life of asset with

the excepted life of the source of funds raised to finance asset. The firm follows , matching

approach ,long term financing will be used to finance fixed asset and permanent current

Assets and short term financing temporary or variable current assets. However, it should be

realized that exact matching is not possible because of the uncertainty about the expectedlives of asset.

Conservation approach:

A firm is practice may adopt a conservative approach in finance ng its current and

fixed assets.

The financing policy of the firm is said to be conservative when it depends more on

long-term funds for financing needs. In clear a conservative plan, the firm finances its

permanent assets and also a part of temporary current assets with long term financing in the

periods.

Aggressive approach

A firm may be aggressive in financing its assets. A firm follows aggressive

policy when it uses more short term financing than warranted by the matching plan. Under

an aggressive policy.

SOURCES OF WORKING CAPITAL:

After determining the level of working capital on the basis of various determinants the

next step is to consider how it will be financed. A large manufacturing concern may

Procure funds from various sources to meet its working capital requirements from time

to time. For the convenience of study the sources of working capital may be classified

under two heads.

A. Sources of long term working capital

B. Sources of short term working capital

SOURCES OF LONG TERM WORKING CAPITAL:

The long term working capital requirements can be met from the following sources.


49/92

1. ISSUE OF SHARES:

It is the safest way of procuring permanent and regular working capital without

any fixed charges.

2. ISSUE OF DEBENTURES:

Regular and long term working capital may be obtained at lower cost of trade onequity.

3. RETAINED PROFITS:

Accumulated large profits are also considered to be a good sources of financing

long term working capital requirements. It is the best and the cheapest source of finance. It

creates no change in future profits.

SOURCES OF SHORT TERM WORKING CAPITAL:

The sources of short term working capital may be classified in two heads.

Internal sources

External sources

INTERNAL SOURCES:

Under this category the sources of working capital are tapped from within the

internal sources are depreciation funds, provision for taxation and accrued expenses.

1.Depreciation fund:

Depreciation fund created out of profits provided they are invested in represented

by assets.

2.Provision for taxation:

There remains a time lag between making the provision for and payment of

taxation. A company may utilize such provision during the intermittent period temporarily.

EXTERNAL SOURECES:

External sources means the sources providing finance for companys working

capital other than those of internal sources. These may be enumerated as given below.

1.Normal trade credit:

Creditors provide short term finance to the company by selling the goods,

inventories and equipment on the basis of deferred payment. It is a very common source of

short term finance and normally every concern use this source as a normal trade practice.


50/92

2. Credit papers:

Bills payable or promissory note, which may be discounted from bankers for

meeting short term capital by the drawer.

WORKING CAPITAL FORECAST:

There are number of methods to determine the working capital needs.1. The Balance Sheet Method:

The Balance sheet method of forecast is made up of the various assets and

liabilities of the business. Afterwards, the difference between the two is taken which will

indicate either cash surplus or deficiency.

2. Profit and Loss adjustment Method:

Under this method the forecasted profits are adjusted after adding the cash inflows and

deducting the cash outflows. The basic idea under this method is to adjust the estimated

profit on cash basis.

3. Working capital as a percentage of sales:

Under this method the working capital is to be related to sales and calculated as a

percentage of sales.

MANAGEMENT OF WORKING CAPITAL:

Working capital is the firms holdings of current assets such as cash receivables,

inventory and marketable securities. Every firm required working capital for its day to day

transactions such as purchasing raw material, for meeting salaries wages, rents, rates,

advertisements etc. But there is much disagreement among various financial authorities


51/92

CHAPTER-IV

INTRODUCTION

Financial analysis is the process of identifying the finance strengths and weakness

Of the firm by properly establishing relationship between the items of the balance sheet

and the profit and loss account.

The study on financial analysis help in assessing corporate excellence judging

credit worthiness and it also helps in determining the financial performance of the company

of this purpose date are collected for period of the 5 years. Various ratios are used in the

study to find out the liquidity position of the company.

The organization has to submit its true picture of financial position to potential

lender of money and to the up coming partners for that it wanted to have the first utilize of

the anlysis to rectify the problem if any. The process of identifying the finance strengths

and weakness of the firm by properly establishing relationship between the items of the

balance sheet and the profit and loss account. Financial analysis can be undertaken bymanagement of the firm or by parties out side of the firm viz. owners, creditors investors


52/92

and others to form judgment about the operating performance and financial position of

the firm. Users of the financial statements can get insight about the financial strength in the

statements. Management should be interested in the exact meaning of the term working

capital.

There are two types of assets in every business concerns:

Current Assets

Fixed assets

Both are necessary for profit running of business. Working capital is the

difference of current assets and current liabilities. Management of working capital is

concerned with problems that arise in attempting to manage current assets, current

liabilities and the inter-relationship between them.

Working Capital must be adequate. In case of excess working capital that is idle

funds that are not profits for business.

In case of inadequacy of working capital the firm may lead to insolvency. In this

context working capital management is three dimensional in nature.

OBJECTIVES OF WORKING CAPITAL MANAGEMENT:

There are two blood objectives of the management of working capital:

Maintenance of working capital at appropriates level Availability of ample funds as

and when they are needed.

In accomplishment of these two objectives the management has to consider the

composition of current assets pool. The working capital position sets the various

policies in the business with respect to general operations such as financing expansion,

purchasing and dividends etc.

STUDY OF WORKING CAPITAL MANAGEMENT:

The Management of working capital management has been studied under the

three following heads:

MANAGEMENT OF CASH BALANCES


53/92

MANAGEMENT OF ACCOUNT RECEIVABLES

MANAGEMENT OF INVENTORY

MANAGEMENT OF ACCOUNT RECEIVABLES

Receivables result from credit sales. A concern is required to allow credit sales in order

to expand its sales volume. It is not always possible to sell goods on cash basis only.

ARRENGING SHORT TERM FINANCING

Negotiating favorable credit terms

Controlling the movement of cash

Administering accounts receivables

Monitoring investment in receivables

Decisions concerning the above area play an important role in maximizing overall

value of the firm. Once decisions concerning these areas are reached, the level of

working capital is also determined in active decision sense, but falls out as residual

from the decision just made.

The management of working capital plays an important role in maintaining the

financial health during the normal course of business. This critical role can be

enunciated by examining the flow of resources through the firm. By far the major flow

if the working capital cycle.MEANING OF RECEIVABLES:

Receivables represent amounts owed to the firm as a result of sale of goods or

service in the ordinary course of business. These are claims of the firm against its

customers and from, trade receivables, customer receivables or book debts. The

receivables are carried for the customers. The period of credit and extent of receivables

depends upon the credit policy followed by the firm. The purpose of marinating or

investing in receivables is to meet competition and to sales and profits.

DETERMINANTS OF ACCOUNT RECEIVABLES:

In most of business enterprise, investments in accounts receivables from major

part of their assets. Accounts Receivable is one of the major components of working

capital. The financial manager should pay attention to management of receivables so

that each rupee invested in accounts receivables may contribute to net worth of firm.


54/92

The position of receivables is basically a problem of balancing profitability and

liquidity. Soft credit terms are attraction of sales and the longer the time a company

allows to pay its customers, the greater the sales and higher the profits. However on the

other hand, the longer the period of credit, the greater the risk, the greater the level of

debt, greater the strain on the liquidity of company.

EXPANSION PLANS:

When a concern wants to expand its activities, it will have to enter new

markets. To attract customers it will give incentives in the form of credit facilities. The

periods of credit can be reduced when the firm is able to get permanent customers. In

the early stage of expansion more credit becomes essential and size of receivables will

be more.

RELATION WITH PROFITS:

The credit policy is followed with a view to increase sales. When sales increase

beyond a certain level the additional costs incurred are less than the increase in

revenues. It will be beneficial to increase sales beyond a point because it will bring

more profits. The increase in profits will be followed by an increase in the size of

receivables or vice-versa.

CREDIT COLLECTION EFFORTS:

The collection of credit should be streamlined. The customers should periodical

reminders if they fail to pay in time. On the other hand, if adequate attention is not paid

towards credit collection then the concern can land itself in a serious problem. Efficient

credit collection machinery will reduce the size of receivables. If theses efforts are

slower then outstanding amounts will be more.

HABITS OF CUSTOMERS:

The paying habits of customers also have a bearing on the size of receivables. The

customers may be in habit of delaying payments even though they are financially

sound. The concerned should remain in touch will such customers and should make

them realized the urgency of their needs.


55/92

COST OF MAINTAINING RECEIVABLES:

When goods and services are provided on credit then concerns capital is allowed to

be used by the customers. The receivables are financed from the funds supplied by

shareholders for long term financing and through retained earning. The concern incurs

some cost for collecting funds, which finance receivables.

COST OF COLLECTION:

A proper collection of receivables is essential for receivables management. The

customers who do not pay the money during a stipulated credit period are sent

reminders for early payments. Some persons have to be sent for collecting these

amounts. In some cases legal recourse may have to be taken for collecting receivables.

All these costs are known as collection costs which is a concern is generally required to

incur.

DEFAULT COSTS:

Some customers may fail to pay amounts due towards them. The amounts which

the customers fail to pay are known as bad debts. Though a concern may be able to

reduce bad debts through efficient collection machinery but one cannot altogether rule

this cost.

POLICIES FOR MANAGING RECEIVABLES:

The credit policy of any firm should be estimated is such a way that the benefits

likely to accrue from it, the credit policy should incorporate the following:

CREDIT STANDARDS:

The term credit standards represent the basic criteria for the extension of credit to any

customer. This is done with the help of factors such as credit rating, credit references

and various financial ratios. The level of sales and the amount of account are fairly

liberal as compared to sales under the restructure to tight credit standards.

The credit standards of any firm are usually determined by 5 aces namely:

CAPACITY:

It refers to ability of the specific customer to manage the required scales of business.

COLLATERAL:


56/92

It refers to the security in form of assets owned by customers, which can be offered by

the customer to secure the amount of credit extended to him.

CAPITAL:

It refers to the financial soundness of customer i.e. his capacity to raise required funds.

CONDITION:

It refers to the impact of economic environment of the country on the firm or

special circumstances offered by government or local agencies, which may affect the

customers profitability and his ability to meet obligations.

CREDIT TERMS:

This refers to the stipulations under which the goods are sold on credit i.e. terms and

conditions of trade relating to repayment. The two components are:

CREDIT PERIOD:

It refers to the duration of time which trade credit is extended. This is the period

available to th4e customer to pay off his dues.

CASH DISCOUNT:

It refers to that amount of discount, which is gives to customer on paying off his debts

within the stipulated period. Attractive cash discounts terms help in reduction of

average collection period.

COLLECTION PROCEDURES:

The third decision are in the management of receivables is the collection policies.

The policy must be strict and lenient.

Sending a reminder for payments

Personal request through telephone

Personal visits to customers

Taking help of collecting agencies


57/92

MANAGEMENT OF INVENTORY:

Every enterprise needs inventory for smooth running of its activities. It serves as

a link between production and distribution processes. The greater the time tag, thehigher the requirements for inventory. It also provides a Cashion for future price

fluctuations. The investment in inventories constitutes the most significant part of

current assets working capital in most of the undertakings. Thus, it is very essential to

have proper control and management of inventories.

The purpose of inventory management is to ensure availability of materials in sufficient

quantity as and when required and also to minimize investment in inventories.

The investment in inventory is very high in most of the undertakings engaged in

manufacturing. Wholesale and retail trade. The amount of investment is sometimes

more in inventory than in other assets. In India a study of 29 major industries has

received that the average cost of materials in 64 paisa and the cost of labour and

overheads is 36 paisa in rupee. About 90% of working capital is invested in inventories.

An efficient system of inventory management will determine.

What to purchase

How to purchase

From where to purchase

Where to store etc.

The purpose of inventory management is to keep the stocks in such a way that

nether is overstocking nor under stocking. The over stocking will mean a reduction of

liquidity and starving of other production processes, under stocking, on the other hand

will result stoppage of work.

The investments in inventory should be kept in reasonable limits.

NATURE OF INVENTORIES:

The dictionary meaning of inventory is stock of goods or list of goods. In accounting

languages it may mean stock of finished goods only.

A)RAW MATERIAL:

Raw material form a major input into the organization. They are required to carry

out production activities uninterruptedly. The quantity of raw materials required will be


58/92

determined by the rate of consumption and the time required for replenishing the

supplies. The factors like the availability of raw materials and government regulations,

et

rajasekhar project

Documents