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Hindustan National

KantGlass & Industry
Nawan limited
Virbhadra , Rishikesh
2Project On Working Capital Management & Ratio Analysis

Title Page
Summer Project on Working Capital
Management & Ratio Analysis


Ravi Kant Nawani
INT.B.B.A + M.B.A (O&G)

Ravi Kant Nawani [Int. 2
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
3Project On Working Capital Management & Ratio Analysis

At the very outset, I would like to give my heartist

thanks , to the Management & staff of Hindustan
National Glass & Industries Ltd. Virbhadra ,
Rishikesh For giving me their co-operation, support and
guidance in my project .

I am greatly indebted to Shri Rakesh Garg(Vice-

President), Mr.Shammi Thasu(Head of Finance&
Account) , Mr.S.K.Upadhya , Mr.B.D.Joshi for guiding
me and helping me out to complete this dissertation. I
would also like to thank to my esteemed Faculty Mr.
Vipul Sharma(Finance), Course Co-coordinator
Respectively their constant support ,continued and
invaluable guidance at each step of this summer
internship project . I would like to thank my Parents for
what I am today.


Ravi Kant Nawani [Int. 3

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
4Project On Working Capital Management & Ratio Analysis

• Executive Summary
• Research Objectives
• Research Methodology
• Hindustan national Glass &
Industry Limited (A Review)
• Requisites for Glass manufacturing
Process & their Sources
• Manufacturing Process Of Glass
Glass Container Factories
Batch House
Hot End
Forming Process
Forming Machines
Internal Treatment
Cold End
Inspection Equipment
• Secondary Processing
Ravi Kant Nawani [Int. 4
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
5Project On Working Capital Management & Ratio Analysis

Ancillary Processes- Compressors

• Vision
• History , HNGIL
• Board of Directors
• Other Member
• Important Departments & Designation
• Reporting
• SWOT Analysis of the company
• Working Capital Management
Concept of Working capital Management
Importance Of Working Capital Management
Types of W.C.M
Components of W.C.M
Factor Affecting W.C.M
Sources Of W.C.M
Ravi Kant Nawani [Int. 5
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
6Project On Working Capital Management & Ratio Analysis

Operating cycle concept s of working capital

• Ratio Analysis
Advantages of Ratio Analysis
Limitation Of Ratio analysis
General profitability Ratios
Overall profitability Ratios
Activity Ratios
Liquidity Ratios
• Interpretation
• Recommendations
• Limitations
• Conclusion
• Bibliography

Ravi Kant Nawani [Int. 6

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
7Project On Working Capital Management & Ratio Analysis

Executive Summary

Cash is the lifeline of a company. Understanding a

company’s cash flow health is essential to making
investment decisions. A good way to judge a
company’s cash flow prospects is to look at its
Working capital management. Working Capital is
also known as operating capital. It represent the
day by day operating liquidity available to a
The goal of Working capital management is
to ensure that a firm is able to continue its
operations and that it has sufficient ability to
satisfy both maturing short-term debt and
upcoming operational. Expenses.

Ravi Kant Nawani [Int. 7

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
8Project On Working Capital Management & Ratio Analysis

Research Objectives
Objectives Of the study :
This research Project covers the Two most
important aspects or features of the functioning of
the Finance Accounts Department of the Hindustan
national Glass and Industries Ltd.(HNGIL).
The first part is both, an analytical as well as an
academic study that involves an analysis of the
Working Capital and Working Capital Management
Policies of the organization-HNGIL.
The Main Objectives of this study are :-
• To understand the working capital
management policies of the organization.
• To understand the importance of Working
Capital Management.
• To analyze the liquidity position of the
• To analyze the short-term financing policies
and patterns, which affect the working capital
of the organization.
• To study the factor that affects the
Working Capital Management at HNGIL.

Ravi Kant Nawani [Int. 8

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
9Project On Working Capital Management & Ratio Analysis

• To find out the Profitability and

Operational efficiency of the organization.

Research Methodology
The basic type of research used to prepare
this report is;
• Descriptive
The major purpose of descriptive research
is to give a description of the state of

Ravi Kant Nawani [Int. 9

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
10Project On Working Capital Management & Ratio Analysis

affairs, as it exists in the present. The

main characteristic of this method is that
researcher has no control over the
variables. The researcher can only report
what has happened or what is happening.
What , where , When , How are the
researcher and not “Why”. Descriptive
Report is that subscription which answers
or addresses all these questions.
The study mainly based on the secondary
data which refers to that form of
information that has been already
collected and is available.These include
some internal sources within the company
and externally these sources include
books and periodicals, published reports
and data of HNGIL and the annual reports
of the company. Interaction with the
various employees of the accounts
department has also been a major source
of information.
The Data & Financial result of the past
ten years have been taken into

Ravi Kant Nawani [Int. 10

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
11Project On Working Capital Management & Ratio Analysis

consideration for analysis and





LIMITED is a capital intensive and
refurbishment of furnaces in a cycle of every
five years, on an average. Owing to this , the
industry is primarily restricted to large
Ravi Kant Nawani [Int. 11
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
12Project On Working Capital Management & Ratio Analysis

manufactures in the organized sector

accounting for about 85% of the melting
capacity. The industry is also sensitive to
fright. The glass manufacturing units
generally cater to the markets in the radius of
300-500 km.
The growth of containers glass industry is
derived demand from its user industries.
Major end – users, which together accounts
for more than 90% of the off take, are
manufacturers of carbonated & alcoholic
drinks, food processing , pharmaceuticals and
cosmetics. While the major user industries
like pharmaceuticals and alcoholic drinks
were having high growth rates, carbonated
drink industry slowed during financial year
2006 due to ongoing pesticide issue. Ace
glass containers limited had to concentrate
more on pharmaceuticals and alcoholic
Alternate forms of packaging like
flexible packing laminates and plastic
containers in applications like milk packaging,
Ravi Kant Nawani [Int. 12
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
13Project On Working Capital Management & Ratio Analysis

intravenous fluids, blister packs for tablets

and capsules have been posing threats to the
container glass industry. Moreover, aluminum
cans and pet bottles are being increasingly
used for the purpose of selling bottled soft

Requisites for Glass Manufacturing

Process & their sources
1.Raw Materials:-
• Broken Glass

Ravi Kant Nawani [Int. 13

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
14Project On Working Capital Management & Ratio Analysis

• Sand
Silica-Comes from Rajasthan
Soda Ash – Comes from Kenya
 Dolemite– Comes from Paunta Sahib

(Himanchal Pradesh)
 Limestone- Comes from Paunta Sahib

(Himanchal Pradesh)
1. Fuel And Gases :-
LPG (Liquefied Petroleum Gas)
1.Packing :-
• Corrugated Bags
• Gunny Bags
• Plastic Film

1. Required Temperature:- 1300-15000 c

Manufacturing Process of glass

Glass is common in everyday life, from glass

windows to glass containers. The manufacture of
Ravi Kant Nawani [Int. 14
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
15Project On Working Capital Management & Ratio Analysis

glass for everyday process may be a complex

process. The process of mass production of glass is
given below.

Glass Container Factories

Modern glass container factory are brodly divided
into three parts :- The batch house , the hot end
and the cold end. The batch house are concerned
with raw material. In hot end are the furnaces ,
machines that produce containers (forming) and
annealing ovens. In cold end there are inspection
and packaging equipments.

Ravi Kant Nawani [Int. 15

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
16Project On Working Capital Management & Ratio Analysis

Batch House
Ravi Kant Nawani [Int. 16
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
17Project On Working Capital Management & Ratio Analysis

The Batch House holds the raw materials for glass,

primarily sand , soda ash , feldspar (as we as
others).These materials are received (typically by truck
or rail transport) and elevated into storage silos. From
the silos they are weighed out into a batch of several
tones , using common glass batch calculation
procedures. The batch is mixed and sent to silos over
the furnace.

Hot End
The following table lists common viscosity fix points
applicable to large –scale glass production and
experimental glass melting in the laboratory.

Log10 Log1o
(n,Pa.s) (n,P) Description
1 2 Melting Point
3 4 Working Point
4 5 Flow Point
6.6 7.6 Littleton Softening Point
8.00 - 9.00-
Softening Point , Td,
10.00 11.00 depending on load
10.5 11.5 Deformation point
11.00- 12.00- Glass Transition
12.3 13.3 Temperature, Tg
12 13 Annealing Point
13.5 14.5 Strain Point

Ravi Kant Nawani [Int. 17

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
18Project On Working Capital Management & Ratio Analysis

The Hot end of a glassworks is where the molten
glass is formed into containers , beginning when
the batch is fed at a slow controlled rate into the
furnace. The furnace are natural gas or fuel oil
fired and operates at temperatures up to 16750C.
The temperatures is limited by the quality of the
furnace superstructure material and by the glass
composition. Glass furnaces typically operate an
energy recovery scheme known as regeneration.
The hot exhaust gas flow back over one of two
piles of loosely packed bricks, called regenerators.
These bricks Scheme known as regeneration. The
hot exhaust gas flow back over one of two piles of
loosely packed bricks, called regenerators. These
bricks become hot and every 20-30 minutes the
flow of the combustion system is changed over so
that the combustion air, which is mixed with the
gas, is drawn through the heated bricks, and
combustion exhaust flows through the other pile of
The batch melts inside the furnace which is
maintained as a pool of molten glass, perhaps
1200mm deep by 50 to 150 m2 . The molten glass
flows from a sub ducted channel known as the

Ravi Kant Nawani [Int. 18

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
19Project On Working Capital Management & Ratio Analysis

furnace throat into the refiner and fore hearth

channels. These channels, 1200mm wide and 400-
150 mm deep transport the glass to the glass
bottle forming machines. These channels cool the
glass very precisely so that the glass at the
forming machine is of a uniform and exact

Ravi Kant Nawani [Int. 19

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
20Project On Working Capital Management & Ratio Analysis

Forming Process
There are currently two primary methods of
making a glass container the blow and blow
method and the press and blow method. In all
cases a stream of molten glass at its plastic
temperature (10500 C – 12000 C) is cut by a
shearing blade to form a cylinder of glass
called a gob. Both of the processes start with
this gob falling by gravity and guided by
trough and chutes into the bank moulds . In
the blow and blow process, the glass first is
blown from below into the blank moulds to
create a parison or pre-container. This parison
is the flipped over into a final mould, where a
final blow blows the glass out in to the mould
to make the final container shape. In the case
of press and blow, the parison is formed by a
metal plunger which pushes the glass out into
the blank mould. The process then continues
as before, with the parison being transferred
to the mould, and the glass being blown out
into the mould.

Ravi Kant Nawani [Int. 20

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
21Project On Working Capital Management & Ratio Analysis

Forming Machines

The forming machines hold and move the

container. Generally powered by compressed
air, the mechanisms are timed to coordinate
the movement of all these parts so that
containers are made.

The most widely used forming

machine arrangement is the individual section
machine invented in 1903 by Michael J Owens
in Illinois. This machine has a bank of 5-16
identical sections, each of which contains one
complete set of mechanisms to make
containers. The section are in a row, and the

Ravi Kant Nawani [Int. 21

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
22Project On Working Capital Management & Ratio Analysis

gobs feed into each section via a moving

chute, called the gob distributor. Section
make either one , two , three or four
containers simultaneously. In the case of
multiple gobs, the shears cut the gobs
simultaneously , and they fall into the blank
moulds in parallel.

Internal Treatment
After the forming process, some containers-
particulary those intended for alcoholic spirits
– undergo a treatment to improve the
chemical resistance of the inside , called

Ravi Kant Nawani [Int. 22

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
23Project On Working Capital Management & Ratio Analysis

internal treatment or dealkalization. This is

usually accomplished through the injection of
a suffer or fluorine- containing gas mixture
into bottles at high temperatures. The gas is
typically delivered to the container either in
the air used in the forming process or through
a nozzle directing a stream of the gas into the
mouth of the bottle after forming. The
treatment renders the container more
resistant to alkali extraction, which can cause
increases in product pH, and in some cases
container degradation.
As glass cools it shrinks and solidifies. Uneven
cooling causes weak glass due to stress. Even
cooling is achieved by Annealing. An
annealing oven (known in the industry as a
Lehr) heats the container to about 5800C then
cools it, depending on the glass thickness,
over a 20-60 minute period.

Ravi Kant Nawani [Int. 23

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
24Project On Working Capital Management & Ratio Analysis

Cold End
The role of the cold end is to inspect the containers
for defects, package the containers for shipment
and label the containers.


Ravi Kant Nawani [Int. 24

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
25Project On Working Capital Management & Ratio Analysis

Glass containers are 100% inspected; every

container is inspected. Automatic machines
inspect for a variety of faults. Typical faults include
small cracks in the glass called checks, foreign
inclusions called stones, bubbles in the glass called
blisters and excessively thin walls. In addition to
rejecting faulty containers, inspection equipment
gathers statistical information and relays it to the
forming machine operators in the hot end.
Computer system collect fault information to the
mould that produced the container. This is done by
reading the mould number on the container by the
mould that made it. Operators carry out a range of
checks manually on samples of containers, usually
visual and dimensional checks.

Secondary Processing
Sometimes container factories will offer services
such as labeling. Several labeling technologies are
available. Unique to glass is the Applied Ceramic
Labeling process (ACL ). This is screen – printing of
the decoration onto the container with vitreous
enamel paint, which is then baked on. Bottles have
various added services such as: Etching (Absolute

Ravi Kant Nawani [Int. 25

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
26Project On Working Capital Management & Ratio Analysis

Raspberry/ Ruby Red) and Applied Ceramic

Labeling (Absolute Blue/Pears/Red/Black).

Glass containers are packaged in various ways.
Popular in Europe are bulk pallets with between
1000 and 4000 containers each. This is out by
automatic machines(palletizes) which arrange and
stack containers separated by layer sheets. Other
possibilities include boxes and even hand sewn
sacks. Once packed the new “stock units” are
labeled and warehoused.

Glass containers typically receive two surface
coatings, one at the hot end, just before annealing
and at the cold end just after annealing . At the hot
end a very thin layer of tin oxide is applied either
using a safe organic compound or inorganic stannic
chloride. Tin based System are not the only ones
used, although the most popular. Titanium
Tetrachloride or organo – titanates can also be
used. In all cases the coating renders the surface
Ravi Kant Nawani [Int. 26
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
27Project On Working Capital Management & Ratio Analysis

of the glass more adhesive to the cold end

coating . At the cold end a layer of typically,
polythene wax is applied via a water based
emulsion. This makes the glass more adhesive to
the cold end coating. At the cold end a layer of
typically, polythene wax, is applied via a water
based emulsion. This makes the glass slippery,
protecting it from scratching and stopping and
stopping containers from sticking together when
they are moved on a conveyor. The resultant
invisible combined coating gives a virtually
unscratchable surface to the glass. Due to
reduction of in – service surface damage the
coating often are described as strengtheners,
however a more correct definition might be
strength retaining coatings.

Ancillary Processes - Compressors

Forming machines are largely powered by
compressed air and typical glass works will have
several large compressors (totaling 30k-60kcfm) to
provide the needed compressed air. Furnaces,
compressors and forming machines generate
quantities of waste heat which generally is cooled
water. Hot glass which is not used in the forming
machine is diverted glass (called cullet) is

Ravi Kant Nawani [Int. 27

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
28Project On Working Capital Management & Ratio Analysis

generally cooled by water, sometime even

processed and crushed in a water and sometime
even processed and crushed in a water bath
arrangements. Often cooling requirements are


Ravi Kant Nawani [Int. 28

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
29Project On Working Capital Management & Ratio Analysis

Ravi Kant Nawani [Int. 29
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
30Project On Working Capital Management & Ratio Analysis

Hindustan National Glass &

Industries Limited
It was in 1952 that visionary entrepreneur Chandra
Kumar Somany laid the foundations for the HNG
Group, with the inauguration of Eastern India’s fully
automatic glass container manufacturing plant at
Rishra,near Kolkata (Calcutta).
Hindustan National Glass & Industries Ltd. (HNGIL)
is a rare breed in the international glass container
community of the 21st century . With a total
melting capacity of 2300 tons/day , the company is
constantly in search of improvements. In total, 38
highly productive lines are operated, from which
pack efficiencies of better than 90% are now

In the organized segment of the domestic glass

container industry , AGCL is the second largest
glass manufacturer after HNG with a market
share of about 25%. It manufacturer about 300
types of glass containers, at an average of 15
lakh pieces per day, for industrial customers.
Its major customers include United Breweries,
Ravi Kant Nawani [Int. 30
B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
31Project On Working Capital Management & Ratio Analysis

Mcdowell & Company, Bacardi Martini India,

Nestle, GlaxoSmithKline and Seagram. AGCL
uses state-of-the-art technology for glass
manufacturing. In Financial Year 2006, the
major user industries comprised of Beer &
Liquor, Food & Dairy products and beverage &
aerated water, with beer & liquor containing to
be the dominant end user of industry.
Aggregate net sales
declined by about 20% in the Financial year
2006 from Financial year 2005 primarily due to
decline in the production ( about 60300 MT) an
account of shutdown of furnances at Rishikesh
and Nasik units for refurbishment and lockout
at Pondicherry unit , resulting about 23% fall in
the quantity sales during this period. Although
the net sales price Realization (ANSPR) during
financial year 2006 increased by about 4% ,
but the container glass industry had an
adverse impact in financial year 2006 on
account of fall in the carbonated drink sales
arising out of pesticide issue.
Glass industry is capital
intensive, thus requiring refurbishment of
future after five years involving shutdown. In
the Financial Year 2006, Ace Glass Containers
Limited refurbished the second furnance at
Ravi Kant Nawani [Int. 31
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Rishikesh unit at a cost of Rs. 33 Crore and the

furnance of the newly acquired Nasik unit at a
cost of Rs.2o Crore.
Since 28th April 2008 M/ACE
Glass Containers, Rishikesh merged with HNGIL
and name has been changed from M/ACE


It is the pioneer in glass container manufacturing in
AGCL was formed in 1994 as Owens Bilt Ltd.
(OBL), a joint venture between Owens-Illinois inc.
(OI), USA and Ballarpur Industries Ltd. (BILT), is
currently owned by the C.K.Somany Group. After

Ravi Kant Nawani [Int. 32

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
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the takeover, OBIL was renamed as Ace Glass

Containers Ltd. Since inception , AGCL is engaged
in manufacturing plants at Rishikesh
(Uttarakhand), Pondicherry and Nasik
(Maharashtra) with an aggregate capacity of
366825 TPA. All the three units have ISO
9001:2001 accreditations.
Prior to the takeover by the C.K.Somany
Group , the company had suffered huge
operational losses mainly on account of substantial
overheads and tremendous competition from HNG
in respect of product pricing. The new
management was able to address the overhead
issue effectively by adopting various cost cutting
measures and leveraging on group’s strong
position in the container glass market.
In the organized
segment of the domestic glass container industry ,
AGCL is the second largest glass manufacturer
after HNG with a market share of about 25%.

Ravi Kant Nawani [Int. 33

B.B.A+M.B.A(O&G) II Sem.] (C.M.E.S)
34Project On Working Capital Management & Ratio Analysis

Board Of Directors

Chairman : Mr.C.K.Somany
Mr. C.K.Somany is acknowledged expert in
glass technology and is providing policy
guidelines for the management and
administration for the company. He holds an
F.B.I.M (London) Degree and a degree in glass
plant instrumentation from Honeywell
Managing Director : Mr.Sanjay Somany
Mr. Sanjay Somany is a commerce graduate
and has obtained a Diploma in Diesel

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35Project On Working Capital Management & Ratio Analysis

Engineering and vast knowledge of the glass

Manufacturing Technology. At the present he
is the Managing Director of the company.
Joint Managing Director :Mr.Mukul
Mr.Mukul Somany is commerce graduate . He
is a noted industrialist in the glass
manufacturing industry .

Other Members
Mr. J.P.Kasera Senior
Mr.R.R.Soni Senior
Mr.R.L.Khandelia President
Mr.K.C.Jain President
Mr. S.Chaudhary Vice President
Mr.S.Bhende Vice
Mr.V.Sharan Vice
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Mr.A.C.Jain Vice President(Glass

Mr.N.K.Kabra Vice President
Mr.Devdutta Hoare Vice President

Important Departments &


In HNGIL (Virbhadra)
ℜ Stores :
➢ Commercial Senior manager – Mr. Rajeev
➢ Executive Stores -
Mr.Ramesh Sharma
➢ Officer store - Mr.Umesh
ℜ Production :
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➢ DGM Production -
➢ Managing production - Mr.Ratan
➢ Machine Manager Production - Mr.Vikas
➢ Assistant Manager -
Mr.R.P.Dimri, Mr.S.B.Singh, Mr.V.k.Gupta &
➢ Executive -
➢ Officers - Mr.H.S
Rawat &

ℜ Sales :
➢ Commercial Senior Manager -
Mr.Rajeev Gaur
➢ Assistant Manager -
Mr.Om Pal Singh
➢ Executive Sales - Mr.Manohar
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➢ Officer Sales - Mr.B.K.Tyagi &

➢ 4 Clerical Staff & 7 Verifiers

ℜ Purchase :
➢ Senior Manager Purchase : -
➢ Officers - Mr.Sharvan Kumar & Mr.

Wariyan Singh
➢ Senior Assitant & 4 Clerical Staff

ℜ Finance/ Accounts :
➢ General Manager - Mr. Shammi Thusu

➢ Deputy Manager – Mr.Shiv Singh kandari ,

Mr.Sanjay Chaurasiya
➢ Assistant Manager – Mr.A.k.Saxena

➢ Officers -Mr.Rakesh Joshi, Mr.Alam

Singh Negi
➢ Clerical Assistant – Mr.Ramesh Bisht ,

Mr.Vinay Saklani, Mr. Manoj Semwal ,

Mr.Anil Negi.

ℜ Personnel Department :
➢ Personnel Manager – Mr.S.K.Upadhyay

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39Project On Working Capital Management & Ratio Analysis

➢ Officer(Training & placement in charge)-

➢ Safety Officer (Sanitation & Gardening in
Charge)-Mr.Rajeev Sharma

ℜ I.T :
➢ Software Engineer – Mr.Rajeshwar
➢ Hardware Engineer- Mr.Subhash Singh

Following are the persons along with their
designation who will directly report to
Mr.Rakesh Garg Who Is The Vice
President Of The Unit ;-
➢ General Manager (Finance)- Mr.Shammi
➢ Deputy General Manager(Production)-
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40Project On Working Capital Management & Ratio Analysis

➢ Senior Manager Commercial - Mr.Rajeev

➢ Senior Manager Purchase -Mr.V.C.Gupta
➢ Senior Manager Glass -
➢ Manager Personnel -
➢ Manager Instrument - Mr.Sandeep
➢ Manager Electrical - Mr.S.S.Chopra
➢ Manager General Maintenance-Mr.Swaroop
➢ Deputy Manager Workshop& Design-
Mr.Gyandera Garg

Swot Analysis of The Company

For more than 5000 years, civilizations across the
globe have discovered the wonder and beauty of
glass as a primary packing material. As the primary
packing material glass assures the preservation,
safe delivery and attractive presentation of vast
array of consumer products, supplied to Indian and

Ravi Kant Nawani [Int. 40

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world markets. Whether it is used for drinks, food,

cosmetics, perfumes , or pharmaceuticals, glass
plays a vital role in supporting domestic trade and
In waste Management Hindustan National
Glass & Industries Limited has demonstrated a
responsible approach, ever since it took the
initiative to launch the collective and recycling of
used glass packaging. As a result, today major part
of glass container consumption is not sent for
disposal in landfills after use, but it is used as an
important starting material for producing new glass

• HNG is a leading player in the Indian glass
containers industry which is largely derived out
of its investments for development in process
and technology in line with global standards
and progressive improvement in facilities. This
has enabled the company to adapt to changes
in customer taste and preferences.

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• Glass Equipment(India) LTD, a 100% subsidiary

of the company is the largest glass machine
manufacturer in the country, providing
complete engineering & technical support.
• HNGIL have 2 furnaces having approximately a

capacity of 400 MT/Day , nearly 7 – 8 lakhs

bottles per day.
• It is one of the biggest plants in the Northern
• HNG’s customers include companies like Mc-

Dowell, United Breweries, Smith Kline

Beecham, Nestle, Dabour , Pfizer. Zandu , Dr.
Morepen, Seagram, Glaxo , IPCA, PepsiCo,
Coca-Cola and others.

• The chances for the scope of expansion of the
Glass unit are very lass because the locality
nearby is very densely populated and hence
leading to scarcity of land. Invitations and
innovative techniques furthermore requires the
sufficient area of land which indirectly affects
the progress of the unit.

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• The rate of land is also very high which

disturbs the whole budgetary estimate of the

In the era of Globalization , it would be
challenge for the Indian Packaging industry as
the years ahead would witness its integration
with global channels , thus to match
International standards and quality. It is
therefore necessary that the Indian packaging
industry upgrades its infrastructures and
invests more in research to have holistic
approach towards packaging. The Industry has
tremendous potential in coming years and
would also see exponential growth of more
than 12-15% annually.

The material used in packaging are paper,
plastic, glass, metal and others. Among these
materials glass accounts for nearly 10-12% of
total consumption globally. In India same trend
is prevailing.
The competition from other
materials used for packaging the materials

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specifically plastic and PET bottles is

negligible. Change in life style demands more
safe and convenient food products. The
growing demand for disposable bottles is
providing some competition specifically where
Indian laws are yet to provide very high weight
age to the ecological factor wherein glass
scores the highest compared to other
packaging medium as because of 100%
recyclable and inert nature.

Working Capital

Aim Of Working Capital Management

(W.C.M) : The aim of the working capital
management is to manage the current assets, the
current liabilities and the interrelationship that
exists between them.
Meaning Of W.C.M : Decision relating to working
capital and short term financing are referred to as

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working capital management. This involves

managing the relationship between a firm’s short-
term assets and its short-term liabilities. The goal
of W.C.M is to ensure that the firm is able to
continue its operations and that it has sufficient
cash flow to satisfy both maturing short-term debt
and upcoming operational expenses.
According to Shubin – “Working capital is
the amount of funds necessary to cover the
cost of operating of the enterprise.”
Working Capital is a measurement of an entity’s
current assets, after subtracting its liabilities.
Sometimes referred to as operating capital , it is a
valuation of the amount of liquidity a business or
organization has for running and building of the
business. Company with higher amount of working
capital are better positioned for success. They
have enough liquid assets needed to expand their
business operations as desired. Working capital
can be expressed as a positive or negative
number. When a company has more debts than
current assets , it has negative working capital.
When current assets outweigh debts, a company
has positive working capital.
Significance : The significance is as follows .
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 In a typical manufacturing firm, current assets

exceed one - half of total assets.
Excessive levels can result in a substandard
return on investment(ROI).
Current liabilities are the principal source of
external financing for small firms.
Requires continuous, day-to-day managerial
Working capital management affects the
company’s risk, return, and share price.

Concepts of Working Capital

The main concepts of Working capital are as
A. Quantitative Concept : This is also
known as “Gross Working Capital Concept”
according to this concept working capital is the
total of all current assets. The argument given
in support of this view is that as all current
assets assist in the conduct of business
operations, it does not make any difference

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whether they are financed by long term funds

or by current or by short term liabilities.
B. Qualitative Concepts : This is also known
as “Net Working Capital Concept”. According
to this concept the excess of the current
assets over current liabilities is known as
working capital. If the amount of the current
liabilities exceeds the amount of current
assets, such a situation knows as deficit of
working capital.

Importance Of Working Capital

No business can run successfully without an
adequate amount of working capital.
i. Solvency of the Business : Adequate
working capital helps in maintaining solvency
of the business by providing uninterrupted flow
of production.

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ii. Goodwill : It Helps in creating and

maintaining goodwill.
iii. Regular Supply of raw materials: It
ensures regular supply of raw materials and
continuous production.
iv.Regular payment of salaries, wages
and other day to day commitments.
v.Exploitation of favorable market
vi. Ability to face crisis : Adequate working

capital enables a concern to face business

crisis in emergencies such as depression.
vii. Quick and regular return on
investments : Sufficiency of working capital
enables a concern to pay quick and regular
dividend to its investors as there may not be
much pressure to plough back profits. This
gains the confidence of its investor and creates
a favorable markets to raise additional funds in
viii.Build high morale : Adequacy of working

capital creates an environment of security ,

confidence , high morale and creates overall
efficiency in a business.

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Types of working Capital

Working Capital can be classified on the following
two basis:
i. On the basis of concepts.
ii.On the basis of necessities.
On The Basis of Concepts: On the basis of
concepts, working capital can be of two types.

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 Gross Working Capital : Gross working

capital is the capital, which is invested , in the
total current assets of the company. Thus
Gross working capital = Total current

 Net Working Capital : NetWorking capital

means excess of current assets over current
assets over current liabilities.
Current assets are resources , which are in
cash or will soon be converted into cash in
“ordinary course of business.”
Net Working Capital = Current assets
– Current Liabilities
On The Basis Of Necessities : Working
capital can be divided into two categories.

 Permanent Working Capital : It also

refers to the hard core working capital. It is
that minimum level of investment in the
current assets that is carried by the business at
all times to carry out minimum level of its
 Temporary Working Capital: It refers to
that part of total working capital which is

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required by a business over and above

permanent working capital. It is also called
variable working capital. The volume of
temporary working capital keeps on fluctuating
from time to time according to the business
activities it may be financed from short term

Components of Working Capital

There are two components of Working Capital :
ℜ Current Assets
ℜ Current Liabilities

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Current Assets : Current Assets are those

which can be converted into cash in the normal
course of business within a short-period of say
one year.
 Cash in hand and bank balance.
 Bills receivables.
Sundry Debtors ( less provision for
bad debts).
 Short term loans and advances.
Inventories of stocks , as : Raw
material, Work-in-progress, stores
and spares, finished goods.
Temporary investments of surplus
Prepaid expenses.
Accrued Incomes.
ℜ Current Liabilities : Current Liabilities

are those liabilities which are intended to be

paid in the ordinary course of business within
a short period of time normally one
accounting year out of the current assets or
the income of the business.
 Bills payable.

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Sundry debtors or account

Accrued or outstanding
Short-term loans advances and
Dividend Payable.
Provision For taxation, if it does
not amount to appropriation of

Factor Affecting Working Capital

1. Nature Of Business : The working capital
requirements of a firm basically depend upon
the nature of firm. Such as generally public
utility undertaking require small amount of

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working capital, trading and financial firms

require relatively very large amount.
2. Size Of Business : As per Size of the
business the requirements of working capital
3. Manufacturing Process : As the length of
this process the requirement of working capital
would be flexible.
4. Rate of Stock Turnover : As per the
manufacturing cycle and holding period of
inventory and economic order quantity the
requirement of working capital varies for
different companies.
5. Earning Capacity and Dividend policy:
The Company- paying to its shareholders must
have more cash with them.
6. Price level Changes : Fluctuation in
market and changes in economy is also very
important factor , as if company is dealing with
that product where frequent change in
technology or change in prices of components
require manufacturing the product.
7. Availability of credit : The company getting
the providing more credit to its dealers ,
suppliers and customers need more
working capital.
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8. Production Policy: The production could be

kept either steady by accumulating inventories
during slack periods with a view to meet high
demand during the peak season or the
production could be curtailed during the slack
season and increased during the peak season.

Sources Of Working Capital

1) Long Term Sources
2)Short Term Sources

Long Term Sources

1.Owned sources:
(i) Issue of shares : Arrangement of
working capital through issue of share
does not create a fixed obligation on
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income of the business. Thus it is

preferable to arrange the permanent
working capital through issue of
(ii) Retained earnings : A firm can
meet its working capital requirement
by reinvesting the profits earned by it.
Reinvestment of the earned profit is a
regular and costless source of fund.
(iii)Reserves: Like retained earnings, the

use of reserves for financing the

working capital requirement is also
costless source of finance.

1. Borrowed Sources
It mainly :
includes the issue of debentures or long
term loans.

Short- Term Sources :

a) Internal sources : It mainly includes
depreciation provision , outstanding liabilities
and provision for taxation.
b)External Sources :
i) Trade Credit.
ii) Bank Credit.
iii)Public Deposits.
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iv)Advance from Customers.

Operating Cycle concept of

working capital

Operating cycle concept of working capital is

gaining importance in recent years. It is also
known as working capital cycle. The operating
cycle refers to the average time elapses between
the acquisition of raw material and the final cash
realization. In case of manufacturing company,
the operating cycle is the length of time
necessary to complete the following events :

• Conversion of cash into raw materials.

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• Conversion of raw materials into work-in-

• Conversion of work-in-progress into finished
• Conversion of finished goods into accounts
• Conversion of accounts receivable into cash.

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Ravi Kant Nawani [Int. 59

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A Ratio is an arithmetical expression of
relationship between two related and inter-
dependent items. It expresses a magnitude by
which one quantity is a multiple or a part of
another similar quantity. When the concept of ratio
is explained with references to the items shown in
the financial statement, then it is called
“Accounting ratio”.
According to J.Betty, “The term accounting ratio is
used to describe significant relationship which exist
between figures shown in a balance Sheet , in a
profit and loss account , in a budgetary control
system or in any part of the accounting
Meaning Of Ratio Analysis
While the profit and loss(P&L) account of a
company essentially contains revenue items,
appropriation and provisions, the balance-sheet
lists out the assets and liabilities.
While it is useful to understand the absolute
quantum of each asset, liability and revenue item
in isolation, far greater understanding of the

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company can be archived by a “relationship”

The Relationship study referred has two faces.
1.The relationship of item to another for the
current or Pervious years, but in respect of the
same company.
2.The relationship of these parameters with
industry figure of competitors or of firm of
similar size and operations.
The first set enables one enables to understand the
performance of the company in isolation, while the
second gives an insight as to where the company
stands vis-à-vis the industry.
The Liquidity ratios give a clear indication of the
extent to which a company liquid. Liquidity and
Profitability are two separate yardsticks to gauge a
company’s performance. The current ratio gives
an indication of the number of times by which the
current assets multiply the current liabilities.
In the healthy industry, the current ratio should be
upwards of 1.75 . A figure of less than 1.25 would
indicate that the company’s working capital
management has to be pretty rigid to keep the
liquidity afloat.

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The quick and acid test ratio is a modification of

the current ratio in that only the “Quick” assets are
considered in the numerator, and inventory, which
is the slowest of the current assets , is ignored.
Liquidity is the level of profitability. The Debt
ratio can ascertain the extent of reliance of
external financing. The Debt-Equity ratio
gives the proportion of debt to equity. In
capital intensive industries, this ratio can be as
high as four –that is , debt can be up to four
times the equity portion. Normally , a debt
equity ratio of two is considered acceptable.
The Time Interest ratio is a matter to the
reassurance to the lenders that their interest
dues are protected.
By comparing the various ratios with those of
the previous year or years, the areas where the
company has improved can be identified; as
also the spheres where finances display a fall
in the performance. This will act as a good
planning tool.

Advantages of Ratio Analysis

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Ratio analysis is an important technique of

financial analysis. It is an accounting tool which
presents complicated accounting variables in
simple, concise and understandable form. The
following are the main advantages of ratio

1) Useful in Simplifying accounting figures:

Accounting ratios simplify summarize and
systemize the accounting figures so that they
may be understood properly and conveniently.

2) Useful in Financial position Analysis:

Accounting Ratios provide the knowledge of the
financial position of the concern, on one hand ,
is useful in taking decision by the firm itself and
on the other hand provides necessary
information to banks, financial institution and
investors required for making investment

3) Helpful in Financial Forecasting and

Planning : If accounting ratios of several years
are available, then a trend is established. This
trend helps in setting up future financial plans
and forecasting.

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4) Useful in locating the weak spots of the

business: The weak spots in the working of
business can easily be located with the help of
accounting ratios. These weakness may be in
liquidity, profitability or in any other area of
working operation.

5) Useful in Assessing operational

efficiency : Accounting ratio are useful in
assessing the efficiency, profitability and
performance of the firm.

6) Useful in Control : Ratio analysis helps in

making effective control of the business. After
calculation of ratio variances, can be found by
comparing them with standard or ideal level of
these ratios and necessary corrective actions
may be taken for resolving these variances.

Limitation of Ratio Analysis

1) It is significant only when the ratios are

compares with relevant ratios of other firms or
of previous period.
2)It far not is used as a technique in itself .
3)It is only a means.
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4)It may give false result.

5)It is not useful when different company follow
different accounting policy.
6)Frequently price level changes affect ratio
analysis. So it is necessary to adjust past years
figure in the line of price level changes.
7) On the basis of ratio analysis it is very difficult
to forecast future on the basis of past data.
8) There is no standard ratio against which the

actual ratio is measurable.

General Profitability Ratios

 Gross Profit Ratio = Gross profit* 1oo

Net Sales

 Net Profit Ratio = Net profit* 100

Net Sales

 Net Operating Profit Ratio= Net operating

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Net sales

 Operating Ratio=Cost of goods sold +Operating

Net sales

Overall Profitability Ratios

➢ Share Holders Investment = Net profit(after

interest & tax)*100

➢ Return on equity shareholders funds=Net

profit after interest &
tax-preference dividend*100
shareholders funds
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Return on equity capital = Net profit after

interest & tax-

Paid up equity

Activity Ratios

➢ Stock Turnover Ratio = Cost of goods sold

Average stock

➢ Debtors Turnover Ratio = Net Credit sales

Average debtors/

➢ Average Collection period= Average

Net Credit sales

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➢ Creditor Turnover ratio = Net credit purchases

➢ Average Payment period = Average creditors /

Net credit purchases
➢ Working Capital Turnover ratio= Sales or cost of

goods sold
Working Capital
➢ Total Assets turnover ratio = Net sales or cost of

goods sold
Total Assets

➢ Fixed Assets turnover ratio = Net sales

Fixed assets

➢ Current Asset turnover ratio = Cost of goods or sales

Current Assets

Liquidity Ratios

 Current Ratio = Current Assets


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 Liquid Or quick or Acid test Ratio = Liquid

t Assets

 Absolute Liquid Ratio = Absolute Liquid


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 Net Profit or Paid capital = Net profit

* 100
Paid up –

 Solvency Ratio = Total Assets

Total outside

 Debt –Equity Ratio = Outside Funds


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HNGIL shows a decrease in ratio from
1998 to 2007 which indicates a good
inventory position for HNGIL.
Year Ratio
1998 o.45
1999 0.52
2000 0.41
2001 0.48
2002 0.47
2003 0.45
2004 0.53
2005 0.51
2006 0.47
2007 0.49


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The policy employed by the company with

regard to its working capital should clearly
defined and documented. An adequate
organization installed as meta-management can
have impact across all functions and processes.
Responsibilities and processes have to be
defined, whereby working capital objectives
have to be integrated into the company’s
incentive system. For monitoring the financial
flows, it is advisable to set adequate working
capital targets periodically on the company’s
wide basis and to institutionalized control and
reporting mechanism. Many companies consider
working capital as very important. It has been
seen that size of company can also be related to
working capital of the company. The main
objectives of every business is maintaining
liquidity. A high level of trading activity
characterizes liquidity. It is safer to invest in
liquid assets than illiquid ones because it is
easier for you to get money out of the


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The Glass industry is a capital intensive industry.

The industry requires a huge infusion of capital
investment for upgrading and rebuilding of its
Furnaces and machines. To keep pace with the
latest technological development for up gradation
of technology, a constant review is also required
since this industry is very elastic in terms of cost
and any upward revision in cost has a big toll on its
profitability. Major investment are in fixed capital
or working capital. It is not an easy task to gather
such a huge capital for setting up a glass industry.
Relatively the process of setting of Glass Industry
is very time consuming as it requires huge
technical set up taking much longer period of
gestation before the final production.
Moreover, the glass industry has a
wide spectrum of customers with a wide range of
requirement of bottles in size and shapes. This
requires maintaining a high level a high level of
inventory of bottles as well as the limit of credit
period is also very wide. All these factors affect the
working capital requirement of an industry.
In terms of usage there are many uses that
glass can be put to. Glass can serve as containers
to many things, such as medicines, liquors,
cosmetics etc. The Float glasses are used by
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realtors for use in housing and other commercial

However it is not possible for a single glass
manufacturing company to produce such a wide
range of glass. As the nature of industry changes
the entire spectrum changes requiring a complete
new set up for each type of product.
Glass has a peculiar industry where the
customer are majority big industry, who require the
product as packaging material for themselves
especially like Liquor, Soft drink industry and

The company seems to be plagued with high
inventory and poor liquidity position which is
rendering the company its position where the
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company has to resort borrowing from financial

institution adding to interest cost of production.
The company has also has a very low turnover
ratio indicating that inventory holding is very high
as can be seen from the aging of the inventory.
The Companies will concentrate on
optimizing the individual process chains as well as
on the subject of reporting and incentive system.
The main task is to develop an enterprise – wide
concept in view with working capital management.
The key components of this approach are as
 Performance : Releasing liquidity, reducing
the amount of capital tied up by the way of
shortening the time span during which working
capital is required.
 Process Optimizing : Standardization and
automation of processes covering all functions,
minimizing media gaps, measuring the through
efficiency of the procedure , measuring the
production in performance figure.
 Creation of awareness : Creation of
awareness for the relevance of working
capital in the corresponding alternative

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 Implementation of the Guidelines :

Documentation of the working capital
management in the form of specific
instruction of action.
Corporate short term cash management is
a difficult task. In a few hours each
morning , cash managers must review
overnight transaction , asses the corporate
cash position, and make determinations on
whether to invest or borrow, with whom and
for whom and for what terms.

1. www.hngindia.com
2. www.google.co.in

3.Financial Management
4. www.yahoo.com

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