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A Summer Training Report

ON

³LIQUIDITY STUDY´
IN
³HINDUSTAN NATIONAL GLASS & INDUSTRIES LTD.
RISHIKESH´
Submitted in partial fulfillment of the requirement for the
Award of the degree of
Master of Business Administration
From
Uttarakhand Technical University, Dehradun

Supervised by: Submittedby:


Ms. Shivani Joshi Abhinav Sah
Lecturer M.B.AIIIsem.(Finance)
OIMT, Rishikesh

OMKARANANDA INSTITUTE OF MANAGEMENT


&TECHNOLOGY, RISHIKESH
2008-2010

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DECLARATION

I (ABHINAV SAH) hereby declare that the work which is being presented in the project report
entitled ³A study on LIQUIDITY in Hindustan National Glass Limited, Rishikesh´ for partial
fulfillment of the requirement for the degree of ³˜    
   MBA, of
Uttarakhand Technical University submitted in ³ Omkarananda Institute of Management and
Technology´ (OIMT), Rishikesh is record of my original work and was carried out under the
guidance of ˜     Lecturer, OIMT, Rishikesh. Calculations and suggestions in the
report are based on the information collected by me during the training in Hindustan National Glass
Limited, Rishikesh.

Date: ABHINAV SAH


M.B.A (Finance)

This is to certify that the above statement made by a candidate is correct to the best of my knowledge.

Dr. Rekha Agarawala Ms. Shivani Joshi


Director Lecturer
OIMT Rishikesh OIMT Rishikesh

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FOREWORD

In today¶s highly competitive and rapidly changing environment, the companies need well-trained

and skilled worker to survive. India is a very rich country in terms of resources, whether natural or

technical but it very sad to state that India, till now, has not perfectly learnt how to deploy its

manpower and its human resources for the betterment of its citizenry and business goal.

On the whole the condition of our nation is not as well as it should be the reason is that, we have a

great quantity of people but unfortunately it is not well trained. The only was to pull out India from

this condition is concerting the human resources of the country into human capital.

That¶s why management education has become more popular and important as well but no education

is complete without some practical Knowledge. So to get the student familiar with the real life

situation, a summer training of 6-7 weeks duration has been kept in the MBA course.

For my summer training, I chose the HINDUSTAN NATIONAL GLASS & INDUSTRIES LTD. It

is well established and renowned in its field and is serious about training its working and intend to

make it understood that they really care for them.

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ACKNOWLEDGEMENT

Any job in this world, however trivial or tough cannot be accomplished without the
assistance of other. I would hereby take the opportunity to express my indebtedness to
people who have helped me to accomplish this task.

I¶m very thankful to Ms Shivani Joshi (finance lecturer, OIMT) whose valuable
guidance helps me in preparing this project report and giving me suggestions and
guidelines for this project report.

I take this opportunity to place on my grateful thanks and sincere gratitude to the
organization HINDUSTHAN NATIONAL GLASS and INDUSTRIES LIMITED
for providing me a wonderful chance of working in a prestigious company.

I am also thankful to Shri. Rakesh Garg, the vice President of the unit, and Shri.
S.K. Thussu, GM Accounts, Shri. S.S. Kandari, DM Accounts, Shri. S.K.
Upadhaya, Head of HR, who helped me in this project, which not only increased my
awareness about the latest fields but also helped to increase my confidence level.
I am also thankful to Dr. Rekha Agarwala Director OIMT, Rishikesh for her
guidance and constant encouragement for my training.

Last but not the least I am indeed much grateful to all faculty member¶s , librarians and
all other staff of my esteemed institute for time to time all assistance an issue of books
etc. given most willingly.

Abhinav sah
M.B.A (Finance)


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PREFACE

As a part of my M.B.A. (Master in Business Administration) program I was


asked to under go forty five days summer training in any organization, so as to give
exposure to practical management and to get familiar with the various activities in the
organization.

I got an opportunity to undergo my summer training in the reputed organization


³Hindusthan National Glass& industries Limited´ in virbhadra (Rishikesh); it is the
leading genset manufacturing company in India. In Hindusthan National Glass And
Industries Limited. I was allowed to work on the project title ³interpretation of
financial statement of ³Hindusthan National Glass& industries Limited´.

Research gives an ample opportunity to apply once academic knowledge in the


field of substantiated by ones inactive and lesion capabilities.

The basic purpose of this project is to present the subject matter in simple
language and easily understandable style to assist the reader to develop through
understanding about the actual scenario of the financial position of the organization.

For analysis and interpretation, financial data has been taken from financial reports of
the concern and performance is evaluated by applying the tool of ratio analysis.

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EXPERIENCE DURING SUMMER TRAINING

²xperiences make life enjoyable and enriching just as my summer training in Hindusthan

National Glass And Industries Limited proved to be an asset for me. I got practical exposure in

various aspects of finance and I also learnt the dynamics of work related behavior of the people

working in the organization.

In the Hindusthan National Glass And Industries Limited, employees of all level are instructed to

use same dress, canteen and conveyance. I am very impress from this behavioral approach used by

organization. The employees of Hindusthan National Glass And Industries Limited are very

helpful and cooperative with everyone. I never face any problem during my training period.

The company provided me all type of facility that I needed in my training period. I learnt various

types of MIS reports like how to make profitability reports of various glasses. I understood the

process of glass manufacturing used by the organization. I also gained knowledge about the purchase

and payment system of factory.

Quality of every product is checked by senior officials of quality control department at every step that

provided me thorough learning about quality controlling mechanism. I hope all these experiences

would help me in near future. On the whole my summer training was an enriching experience for my

future and I am always obliged to them for giving me such type of knowledge.

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CONTENTS

9cPreface
9cIntroduction of HNGIL
9cHNG¶s vision
9cHNG¶s group profile
½c Board of Directors of the Company
½c Other Members
½c History
½c Hindusthan National Glass& industries Limited
½c Location Of The Company
½c Location & Organizational Set up of company
½c Location & Organizational Set up of company

9c Salient Features of the Company:


½c Raw Material Used & Its Sources
½c Main Customers or Clients of the Company
½c ²xport-Import Policy
½c SWOT Analysis of the Company

9c HNG Policy:
½c Purchase Policy
½c Sales Policy
½c Finance Department Chart
½c Welfare Activities
½c Safety Measures
½c Human Resource Development Activities
½c Company Quality Policies
½c Quality Assurance and Quality Control
½c ISO Awareness

9c Research Methodology
½c What is research
½c Research objective

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½c Research done in the project
9c Introduction to Topic - Liquidity ratio
½c Current ratio
½c Quick ratio
½c Cash position ratio
½c Net working capital ratio
½c Working capital turnover ratio

9c Objective and advantage of using ratio analysis


9c Fund flow analysis
½c Statement of changing working capital
½c Fund flow statement
½c Object or importance of fund flow statement
9c Ratio analysis
½c Liquidity ratio
½c Current ratio
½c Quick ratio
½c Cash position ratio
½c Net working capital ratio
½c Overall liquidity position of the unit
9c Fund flow statement
½c Schedule of changing working capital
½c Fund from operation
½c Fund flow statement
9c Findings
9c Recommendation
9c Conclusion
9c Annexure
9c bibliography


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PREFACE

As a part of my M.B.A. (Master in Business Administration) program I was asked to under go

forty five days summer training in any organization, so as to give exposure to practical management

and to get familiar with the various activities in the organization.

I got an opportunity to undergo my summer training in the reputed organization ³Hindusthan

National Glass & Industries Limited´ in Virbhadra (Rishikesh); it is the leading genset manufacturing

company in India. In Hindusthan National Glass and Industries Limited I was allowed to work on the

project title ³Inventory Management and Ratio Analysis´ of ³Hindusthan National Glass & Industries

Limited´.

Research gives an ample opportunity to apply once academic knowledge in the field of

substantiated by ones inactive and lesion capabilities.

The basic purpose of this project is to present the subject matter in simple language and easily

understandable style to assist the reader to develop through understanding about the actual scenario of

the financial position of the organization.

For analysis and interpretation, financial data has been taken from financial reports of the concern and

performance is evaluated by applying the tool of ratio analysis.

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HINDUSTAN NATIONAL GLASS &


INDUSTRIES LIMITED

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INTRODUCTION TO HNGIL

HNGIL is manufacturer of all varieties of glass bottles. Manufacturing facilities are strategically
located at Rishra near Calcutta (since 1ÔJÚ) and Bahadurgarh near Delhi (since 1Ô6), Rishikesh,
Pondicherry and Nashik with state-of-the-art induction furnace for manufacturing of castings in its
own foundry. HNGIL has incorporated its technology from the best suppliers in ²urope and USA.
HNG Group operates 10 furnaces and Ú production lines with fully automatic IS (Individual
Section) machines up to 1Ú Sections operating on Double and Triple Gob.

All the Plants have a thorough electronic inspection system right from the batch mixing till the final
packing. Quality control and R&D Sections are well equipped with sophisticated instruments
enabling production of international quality glassware.

Well-equipped workshop to manufacture moulds for bottles of all designs & shapes, backed up by
own Power Generating Plants.
The far-sighted and dynamic approach of Mr. C.K. Somany, the highly focused management
strategies and the leadership qualities of his sons Mr. Sanjay Somany and Mr. Mukul Somany have
turned every challenge into a winning formula.

VISION
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³To strive to be a major international producer of quality containers

glass by consistently following and adopting the most modern methods and

techniques in an environment friendly manner with active involvement of

its employees to meet the needs of its customers and stakeholders so as to

achieve sustainable development and long term growth.´

HNGIL GROUP PROFILE

A NAME TO RECKON WITH: HNGIL, the largest and most prolific producer of glass
containers, operating at present 10 furnaces at five locations (RishraP BahadurgarhP PondicherryP
RishikeshP  Nasik) and production lines In addition HNG has acquired a Glass Container


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manufacturing unit of M/s Haryana Sheet Glass Limited at Neemrana, Rajasthan.A fully integrated
Group having its own foundry for casting, well equipped workshop for moulds and spare parts and
captive power plants and quarries for sand with fleet for finished goods movement has
given competitive advantage to its customers.

A MARKET LEADER : In the J ml - {Ú00 ml segment, HNG Group is the undisputed


market leader catering to around 70% of the Domestic Market in the pharmaceutical, beverage,
processed food, cosmetic and liquor sectors covering industry majors like, Coca-Cola, Dabur, Glaxo
Smith Kline Beecham, Nestle, Pepsi, Reckitt Benckiser (India) Ltd., Smith Kline Beecham, UB
Group etc. ²xports to South ²ast, Middle ²ast, Africa and First World Countries in ²urope & North
America.

ON SUPER FAST GROWTH TRACK: Its spirit to ascend newer parameters


remains as insatiable as ever. The days ahead are gleaming with promise. With modernization, up
gradation and foresight to meet the emerging and more distinctive demands of the customers, the
Group is all set for unprecedented achievements. With projected planned investment of Rs.{000
million in the next three years. Touching life in more ways than one and in total tune with the
harmony of nature.

MILESTONES : In order to keep pace with changing technology and demands, the Group
has acquired the Glass Division of L & T at Nasik in October Ú00J, having one furnace of {Ú0 TPD
melting capacity. HNGIL has also entered into a scheme of amalgamation with Ace Glass
Containers (AC²) which scheme has been sanctioned by the Honorable High Courts of Kolkata and
Delhi. Post amalgamation HNGIL's un-audited turnover as on {1.0{.Ú00 stands at a figure more
than Rs. 1100 crore.

Rishikesh
Ú Furnaces; Combined melting capacity of {0 MT per day
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Furnace II used for manufacturing of Green glass.

6 Lines of Glass making IS Machines


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Off-site printing facility with { decorating lines

BOARD OF DIRECTORS OF HIDUSTHAN


NATIONAL GLASS AND INDUSTRIES LIMITED

Shri C.K. Somany Chairman


Shri Sanjay Somany Managing Director
Shri Mukul Somany JointManaging Director

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Other members:

Shri Kishore Bhimani

Shri Sujit Bhattacharya

Shri R. K. Daga

Shri Dipankar Chatterji

Shri S. K. Bangur

Shri Supriya Gupta

Shri I. K. Saha

History
It was in 1ÔJÚ that visionary entrepreneur Chandra Kumar (CK) Somany laid the foundations for the
HNG Group, with the inauguration of ²astern India's fully automatic glass container manufacturing
plant at Rishra, near Kolkata (Calcutta). Today, a family dynasty has been created that leads the way
in the local market, catering to the needs of a diverse range of industries, from liquor and
pharmaceuticals to soft drinks and cosmetics. The far-sighted and dynamic approach of Mr. Somany,
coupled with the highly focused management strategies and leadership qualities of his sons Sanjay
and Mukul have turned HNG into a recognized international player.

Hindusthan National Glass & Industries Ltd (HNGIL) is a rare breed in the international glass
container community of the Ú1st Century, an extremely successful family-owned and run business,

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market leader and owner of four significant manufacturing plants. With a total melting capacity of
Ú{00 tones/day, the company is constantly in search of improvements. In total, { highly productive
lines are operated, from which pack efficiencies of better than Ô0% are now standard. Introduction of
the latest automation practices has also led to reduced labour costs, workforce having dropped by
two-thirds in the past 1J years to approximately 000.

DIVERSIFIED PRODUCTION CAPABILITIES


Alongside the original Rishra factory near Kolkata, since 1Ô6 HNG has operated a plant at
Bahadurgarh, close to New Delhi. Flint, amber and green colors are produced on 1{ Lines at Rishra,
while the larger Bahadurgarh facility melts flint, amber and cosmetic-grade compositions, operating
a total of 1J lines. Associate company Ace Glass Containers Ltd has manufacturing capacity at
Rishikesh (flint and green, six lines) and Pondicherry (flint, four lines). Formerly a 100% subsidiary
of USA-based Owens-Illinois Inc, Ace was acquired in Ú00Ú, when 0-1 took the unexpected decision
to exit the Indian market. Prior to the HNG takeover, production at a third factory in Pune had
ceased. With the recent acquisition of the container glass unit of Larsen & Turbo, situated
at Nashik in Western India, HNG has now established its presence in all the four zones of India. The
Nashik plant has a melting capacity of {{0 tones per day, operating a total of four lines (flint).

Future plans
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HNG¶s endeavor to cater for the entire Indian market has been successful but the quest for further
expansion has not ended as plans for a new facility between Mumbai and Baroda are expected to be
progressed within the next two years. When operational, this plant will be larger than any of HNG's
existing facilities, although precise details are still under wraps.

The origins of this collaborative approach stem from CK Somany's plans to develop the business in
the 1ÔJ0s.

Alongside HNG¶s expansion of glass manufacturing expertise is a commitment to maximize the


capabilities and efficiencies of its support services. Apart from owning sand quarries, the company
operates a state-of-the-art induction furnace to make castings in its own foundry. Located at
Bahadurgarh, this operation complements a well-equipped mould production shop and the latest
CAD/CAM facility to design articles in a variety of shapes.

Also situated at Bahadurgarh is subsidiary company Glass ²quipment (India) Ltd. G²IL was created
in 1Ô7 and specializes in the manufacture of glass forming equipment. Currently operating at full
capacity to keep pace with HNG's own requirements as well as satisfying orders from other
glassmakers, G²IL produces complete IS machines as well as conversions, electronic timing
systems, feeders, conveyors, ware transfers, stackers, motor-driven presses and spare parts.

Future successes
In recent years, the HNG group has emerged as India's leading glass container manufacturer,
expanding and modernizing its production expertise to keep pace with growth in the local market.
Demand is expected to grow by a further % in the next 1Ú months and while smaller players
become increasingly regionalized and unable to compete on an effective level, there can be little
doubt that HNG--led by the Somany family-can look forward to continuing success in the future.

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HIDUSTHAN NATIONAL GLASS AND INDUSTRIES


LIMITED

It is the pioneer in Glass container manufacturing in India.


AGCL was formed in 1ÔÔ 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 the takeover, OBIL was renamed as Ace Glass Containers Ltd. Since inception, AGCL is
engaged in manufacturing container glass & tumblers. Currently, the company has three
manufacturing plants at Rishikesh (Uttranchal), Pondicherry and Nasik (Maharashtra) with an
aggregate capacity of {66ÚJ TPA. All the three units have ISO Ô001:Ú000 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. Consequently, AGCL started earning profits immediately after takeover (from
financial year Ú00{ onwards). However in FY¶Ú006, the company had suffered a loss on account of
production loss, rise in the raw material prices and increase in the capital charge.

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 ÚJ%. It manufactures about {00 types of glass
containers, at an average of 1J lakh pieces per day, for industrial customers. Its major customers
include United Breweries, McDowell & company, Bacardi Martini India, Nestle, GlaxoSmithKline
and Seagram. AGCL uses state-of-the-art technology for glass manufacturing. Since AGCL alone
has a market share of about ÚJ% and along with its parent company, HNG, the group has a share of
6J% in the domestic market.

In the FY¶06, AGCL refurbished the second furnace at Rishikesh Unit at a cost of Rs. {{ crore.

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LOCATION OF THE COMPANY

The picturesque surroundings against the backdrop of Himalayas on side and the shivalik hill on
others, the healthy river Ganga flanking the area abundant supply of pure and cool water, coupled
with the low dust contained and negligible bacterial count of the atmosphere makes the site on ideal
one for the manufacturing and finishing of the bottles.
This plan is ÚÚÚ km from Delhi. It is located at Haridwar- Rishikesh road near I.D.P.L. This is about
6 km from Rishikesh & 17 km from Haridwar. In India, except Rishikesh unit AC² Glass Container
(I) Ltd. has Ú more units that are Pune and Pondicherry.


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ORGANISATIONAL SET UP OF HIDUSTHAN NATIONAL


GLASS AND INDUSTRIES LIMITED GLASS CONTAINER
LIMITED

In the functioning of any organization, the role of human being is an important factor. According to

the size of an industrial unit, the workforce is placed into different position. Their areas of

responsibilities and accountabilities and the channels of communication are defined and recorded for

display so that everyone in the organization understands the clarity regarding horizontal & vertical

communication. This clarity else the way to whom help in carrying out the respective function.

In Hindusthan National Glass And Industries Ltd. Rishikesh, whole activity is under the control of

chief General Manager, who has Deputy General manager under him and then we have horizontal

line of authorities like production manager, commercial manager, accounts manager, design &

workshop manager, sales & purchase manager, personnel manager, quality control manager, chief

glass technologist, chief engineer & many more also.

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IMPORTANT DEPARTMENT AND DESIGNATION

Department Designation
9c Plant Head Vice President

9c Production Department Senior Production Manager

9c Quality Assurance Department General Manager

9c Finance Department DGM Finance

9c Personal & Administration Personal Manager

9c Purchase Department Purchase Manager

9c Sales & Warehouse Senior Manager Sales &


Department Warehouse

9c Batch House ,Furnace& Batch House ,Furnace &


Cullet Manager Cullet

9cStore(Warehouse) Store Manager

9cSecurity& Safety Department Security & Safety Officer

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SALIENT FEATURE OF THE


COMPANY

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RAW MATERIAL USED FOR FORMATION OF GLASS &


ITS SOURCES

Raw Materials required in the organization are ore obtained from various mines & other
places or areas:-

Gc Silica sand (mineral) ±former material (main agent) > SIOÚ from Allahabad, Ghaziabad,
Faridabad and jaipur.

Gc Soda ash (chemical)-flux material to lower down melting > AlÚO{, FeÚO{
from jaipur and other places also.

Gc Lime stone + dolomite (mineral): both are used as stabilizers (stability)> Cao+ MgO from jaipur
& dehradun.

Gc Feldspar ±used for durability>Na, KÚ0 from jaipur;

Gc Fine Chemicals-De->Selenium from special markets; and

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MAIN CUSTOMERS OR CLIENTS OF THE COMPANY

The clientele includes leading companies like:


Gc Pepsi Company;
Gc Coca-Cola Company;
Gc Cadbury Company;
Gc Nestle India Ltd.;
Gc Rain Pollack;
Gc Dabur India Ltd.;
Gc Lakme Lever;
Gc Glaxo Wellcome;
Gc Pfizer;
Gc Reckitt & Coleman;
Gc Shaw- Wallace;
Gc Smith Kline Beecham
Gc UB Group;
Gc Hamdars Wakf laboratories ;
Gc Mount shivalik ltd.
Gc Albert David Ltd.;

Gc United Sprit Limited(Mc-Dowell group)


Gc Bayer group; and
Gc Pernod Record India Private Limited
Gc Radico Khaitan Limited
Gc Other leading companies.

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EXPORT-IMPORT POLICY OF THE COMPANY

Hindusthan National Glass And Industries Limited exports their glass products to South ²ast,
Middle ²ast, Africa & First Word Countries in ²urope &North America. It follows the ² IM Policy
which has some principal objects:

a)c To accelerate the country¶s transition to a globally vibrant economy with a view to
drives maximum benefit from expanding global market opportunities;

b)c To stimulated sustained economic growth by providing access to essential raw materials,
components, consumable and capital goods required for augmented production.

c)c To enhance the technological strength and efficiency of Indian industry and services, there by
improving their competitive strength while generating new employment opportunities and encourage
the attainment of internationally accepted standard of quality; and

d)c To provide consumer with good quality product at reasonable price.

SWOT ANALYSIS OF THE COMPANY

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²very organization has some strength, weakness, opportunities and threats: Hindusthan National
Glass And Industries Limited has some strength, weakness, opportunities and threats. These are
follows.

Vc STRENGTHS

½c The company is strong and well established company;

½c The company is customer oriented company;

½c It exists From {0 years;

½c Company produces good quality of glass bottles;

½c It has dynamic and forward looking management;

½c Up gradation & modernization of existing machine resulted in higher speed


& efficiencies;

½c Company has attained ISO-Ô001 certificate for quality; and

½c Goodwill in the eyes of public.

Vc WEAKNESS

½c At present the factory business strategies are not driven by core competency;

½c Absence of long terms planning;

½c Absence of raw material near the factory place;

½c Locus of control is absent;

½c Less space & less number of godowns;

½c Financial weakness (lack of working capital);

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½c Overstaffing; and

½c Lack of good marketing strategies.

Vc OPPORTUNITIES

½c Suitable glass factory norms of government;

½c Increase in demand in existing line of business; and

Vc THREATS

½c ²mergence of new competitive pressure example L&T ;

½c Due to the introduction of plastic & disposable cold drinks & beer bottles, glass
product demand somewhat decreases;

½c Companies based on single product (bottles) only; and

½c Import of finished product to India due to less government regulation.

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HINDUSTHAN NATIONAL GLASS


POLICY

PURCHASE POLICY

The purchase policy of the AC² Glass Containers Limited includes the following:
a)c Company maintains the goodwill of approval vendor.

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b)c Purchase preference is given to those who have adopted internationally known quality
management system.
c)c There are continues checks on inventory levels so as to avoid the situation of overstock.
d)c Purchases are done keeping the quality aspect in view.

The company aims at producing the higher quality of glass to satisfy his customers. This is achieved
by:

Adoption and implement of quality utilization of requirement of ISO: Ô001.


Continuous up gradation of technology for optimum utilization of resources and manufacturing
products in cost effective manner.
Imbibing the cultural of continues quality improvement through motivation and plant training of all
employees.

Specimen of carious standardizes forms being used in this company for carting out the carious
functions of purchase dept. as describe is enclosed at the end.

SALES POLICY

The sales policy of AC² Glass Containers Limited includes the following:
a) Company maintains the goodwill of all the customers;
b) Sales preference is given to those who have adopted internationally known quality management
system;
c) There are continuous checks on inventory levels so as to avoid the situation of overstock; and
d) Sales are done keeping the quality aspect in view.

FINANCE DEPARTMENT CHART

General Manager (Mr. S. Thusu)

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Depti Manager(Mr. S. S. Kandari)

Asst. Manager(Mr. P. P. Thapliyal)

²xecutive manager (Mr. A. K. Saxena)

A/C Manager
(Mr. A.S. Negi & Mr. Rakesh Joshi)

Clerk asst. Clerk asst.

Clerk asst.

COMPANY QUALITY POLICY

Customer satisfaction has been the key to sustained market leadership. It is, therefore, our policy to:
Vc Consistently provide services in time along with Quality products meeting the
expectations of our customers at competitive prices.
Vc Actively pursue ever ± improving Quality Through programmes that enable all
employees to do their job right the first time.

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In order to maintain the above stated level of Quality and to prosper in today competitive Glass
market we must constantly seek more efficient ways to produce Glass containers. To sustain our
organization which is customer oriented, we must focus upon our customers, both internal and
external, and make customer satisfaction by achieving Quality as a primary goal.

The world of Mr. C.K. SOMANY, Managing Director,

³To me, more important than the size and volume of production, is the Quality and
Productivity.´

To accomplish this, everyone in this organization must be committed to improvement in Quality and
to the use of effective methods.

³GLASS IS ENVIRONMENT FRIENDLY & WHOLLY RECYCLABLE´

QUALITY ASSURANCE AND QUALITY CONTROL IN


BOTTLE FORMING

In Quality Assurance,
-c Dimensional:
-c Performance;
-c Weight; and
-c Capacity.
In Quality Control

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-c Annealing (Temperature Setting) & Monitoring;
-c Lehr Speed Adjustments;
-c Online Inspection (Sorting);
-c Lehr ²nd Cavity(Mould) Inspection by Lehr checkers;
-c Lot Sampling;
-c Weight & Capacity;
-c Pressure Testing;
-c Thermal Shock Testing;
-c Bottles Dimensions Checking; AND
-c Resorting.

Process Control <--------------------------> Product Control

Forming Process Final QC


(At I.S. Machines)

Quality
Assurance

ISO AWARENESS

Standard System Significance


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System to ensure quality objective for
ISO the process in totality to achieve
001:Ú000 Quality Management System customer satisfaction through
(QMS) continual; improvements in the
process & having proper methodology
to assess & measure the results.

System co related with QMS; to


ISO 1001 ²nvironmental Management System measure & controls the effects of the
(²MS) process, its products & the wastages on
the environment; with a view to
conserve & preserve energy &
environment.

Safety System co related with QMS; to


ISO 1001 Occupational Health & Safety ensure health & safety conditions in the
Assessment Series process & its products which calls for
(OHSAS) proper working conditions for everyone
involved in the process.

System co related with QMS; to detect


ISO ÚÚ000 Hazard Analysis of Critical Control & control critical points in the process
Points (HACCP) & sub process and establish a standard
to ensure its prevention with a view of
complete safety.

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RESEARCH METHODOLOGY

WHAT IS RESEARCH

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Research is a process of investigation. An examination of a subject from different points of view. It¶s not
just a trip to library to pick up a slack of materials, or picking the first five hits from a computer search.
Research is a hunt for the truth.

True research is a quest driven by a specific question that needs an answer. Paul Leedy, in his book
³Practical Research: Planning and Design´ lists eight characteristics of research which serve us well in
defining research for the student. Here are those characteristics.

³Research in common parlance refers to a search for knowledge. Once can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of
scientific investigation.´

According to Cliff Woody ´Research comprises defining and redefining problems, formulating
hypothesis or suggested solutions; collecting , organizing and evaluating data; making deductions and
reaching conclusions, at last carefully testing the conclusions to determine whether they fit the
formulating hypothesis

1.c Research originates with the question or a problem.

Ú.c Research requires a clear articulation of a goal.

{.c Research follows a specific plan or procedure.

.c Research usually divides the principal problem into more manageable sub- problems.

J.c Research is guided by the specific research problem, question or hypothesis.

6.c Research accepts certain critical assumptions. These assumptions are underlying theories or ideas
about hoe the world works.

7.c Research requires the collection and interpretation of data in attempting to resolve the problem
that initiated the research.

.c Research is, by its nature, cyclical; or more exactly, spiral or helical.

Research objectives

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Research is one of the most exciting intellectual journey students can take. A student can have following
benefits: -
1.c It¶s a new way of learning international affairs.

Ú.c It helps clarify career goals.

{.c It allow student to be a part of the incredible research happening at Tech.

.c It gives student tired of traditional lectures a way to make learning exciting.

J.c Students work one-on-one with faculty.

There are two types of data in research process

Collection of data:
Collection of data is one of the important aspects of research methodology. This consists of gathering
the data from various sources. Data is important to collect the necessary information. Data may be of
two types: primary and secondary data.

Primary data: No primary research is done in making of this project.

Secondary data: Secondary data is one of the parts of research methodology through which
information about the project can be collected. For this project data is
on them collected through internet and various books. Different financial data are collected through
various sources like annual report, balance sheet, books and bank manual, books and budget manual
were used.
In the preparations of this project report all data used is Secondary data i.e. balance sheets, profits & loss
statement of HNGL year Ú00J, Ú006, Ú007 and Ú00. Major emphasis was given on working capital
calculation and analysis & interpretation based.

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RESEARCH DONE IN THE PROJECT


In the preparation of this project report containing the financial analysis of the balance sheet profit or

loss statement of HNGL ltd, major emphasis was given on ratio calculation and analysis and

interpretation based on them. However in addition to the ratios calculated in the financial year ending

on {1 march Ú006. Ratios are also calculated for the previous year viz. Ú00J, 06, 07, & 0. Thus

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comparisons of ratio to major the liquidity position of the co. for the year has been shown as very

well, tell us about the growths success story of unit in the past year. It explain us how the financial

state of the concern has moved in the last years in the different liquidity positions viz. current ratios,

quick ratio, net working capital ratio, cash ratio. Talking to different ratios calculated let us first

understand what do u mean by ratios which is defined as the ³the indicated quotient of two

mathematical expressions´. In the financial analysis ratio is used as an index or fad stick for

evaluating the financial position and performance of the firm it is the process of identifying the

financial strength and weakness of the firm.

Now to talk of the ratios calculated for the assessing the financial position and performance of the

unit on the behalf of the liquidity positions which are as follows:-

LIQUIDITY RATIO:

They major a firm¶s ability to meet the current obligations major ratios calculated under this heads
are:

(1)c CURRENT RATIO:- The current ratio is a financial ratio that measures whether or not a
firm has enough resources to pay its debts over the next 1Ú months. It compares a firm's current
assets to its current liabilities.
CURR²NT RATIO = CURR²NT ASS²TS/ CURR²NT LIABLITY

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Satisfactory Current Ratio: As a conventional rule, a current of Ú:1 is considered to be


satisfactory.

(2) Acid Test or Quick Ratio: - Acid test or quick ratio is similar to the current ratio accept for
the fact that it exclude inventory and prepaid expenses from the firm's current assets. It is
calculated by dividing liquid assets by current liabilities.

Quick ratio= liquid assets /current liabilities

(3) Cash Position Ratio:-it is variation of quick ratio is similar to the current ratio accept for
the fact that it exclude inventory and prepaid expenses from the firm¶s current assets. It is calculated
by dividing liquid assets by current liabilities
Cash + Marketable securities/liquid liabilities

Satisfactory Cash Ratio: .J0:1 ratio is considered to be satisfactory.

(4) Net working Capital Ratio:-The difference between current assets and current liabilities
excluding short- term borrowing is called net working capital or not current assets. NWC is
sometimes used as a measure of a firm's liquidity. It is considered that between two firms, the one
having the larger NWC has the greater ability to meet its current obligations; it is calculated by
dividing Net working capital by net assets

i.c Net working capital Ratio = Net working capital/net assets


ii.c Fixed assets turnover = cost of good sold/ fixed assets
iii.c Capital turnover = cost of good sold/ capital employed
iv.c Current assets turnover = Cost of goods sold/ Current assets.

(5)Working capital Turnover Ratio: - This ratio indicates the efficiency of working capital
utilization. This ratio is calculated by dividing Cost of goods sold or Net sales by net working
capital.

Working capital Turnover ratio= Cost of goods sold or net sales/net working capital


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OBJECTS AND ADVANTAGES OR USES OF RATIO


ANALYSIS

Financial statements, i.e., profit and Loss account and Balance sheet prepared at the end of the year
do not always convey to the reader the real profitability and financial health of the business. They
contain various facts and figures and it is for the reader to conclude, whether these facts indicate a
good or bad managerial performance. Ratio analysis is the most important tool of analyzing these
financial statements. It helps the reader in giving tongue to the mute heaps of figures given in
financial statements. The figures then speak of liquidity, solvency, profitability etc of the business

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enterprise. Some important objects and advantages derived by a firm by the use of accounting
rations are:

(1) Helpful in Analysis of Financial Statements: Ratio analysis is an extremely useful device for
analyzing the financial statements. It helps the bankers, creditors, investors, shareholders etc. in
acquiring enough knowledge about the profitability and financial health of the business. In the light
of the knowledge so acquired by them, they can take necessary decisions about their relationships
with the concern.
(2) Simplification of Accounting Data: Accounting ratio simplifies and a summary a long array of
accounting data and makes them understandable. It discloses the relationship between two such
figures which have a cause and effect relationship with each other.
(3) Helpful in Comparative Study: With the help of ratio analysis comparison of profitability and
financial soundness can be made between one firm and another in the same industry. Similarly,
comparison of current year figures can also be made with those of previous years with the help of
ratio analysis

(4) Helpful in Locating the Weak Spots of the Business: Current year's ration are compared with
those of the previous years and if some weak spots are thus located , remedial measures are taken to
correct them.
(5) Helpful in Forecasting: Accounting ration is very helpful in forecasting and preparing the plans
for the future. For example, if sales of a firm during this year are Rs. 10 Lakes and the average
amount of stock kept during the year was Rs. Ú Lakes, i.e., Ú0%of sales' and if the firm wishes
to increase sales next year to Rs.1J Lakes it must be ready to keep a stock of Rs. {00000, i.e.
Ú0% of 1J Lakhs, similar other estimates for future can be worked out by establishing between
capital and sales, debtors and sales, expenses and sales etc.
(6) Estimate about the Trend of the Business: If accounting ratios are prepared for a number of
years, they will reveal the trend of costs, sales, profits and other important facts.

(7) Fixation of Ideal Standards: Ratios help us in establishing ideal standards of the different items
of the business. By comparing the actual ratios calculated at the end of the year with the ideal
ratios. The efficiency of the business can be easily measured
(8) Effective Control: Ratios analysis discloses the liquidity, solvency and profitabilty of the
business enterprise such information enables management to asses the changes that have taken
place over a period of time in the financial activities of the business. It helps them in discharging
their managerial factions, e.g. planning, organizing, directing, communicating and controlling
more effetively.

(9) Study of Financial Soundness: Ratios analysis discloses the position of business with different
view points it discloses the position of business with the liquidity point of view, solvency point of

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view, profitability point of view etc. with the help of such study we cash draw conclusions
regarding the financial health of the business enterprise.

FUND FLOW ANALYSIS:

Fund flow analysis is a modern technique of analyzing the movement of "funds"of a firm. A.
statement, known as the fund flow statement is prepared for this purpose. The statement shows the
movement of funds between two balance sheets. The inclusion of such a statement in the set of


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financial statement is very helpful to improve the understanding of the operations and activities of an
enterprise for the reporting period. The effectiveness of the financial management is generating funds
from various resources and using them effectively for generating income without scarifying the
financial health of the entity is reflected in this statement. Therefore this statement is of great
significance to all creditors, shareholders and management of the business.
The statement of changes in financial position, prepared to determine only the sources and uses of
working capital between dates of two balance sheets, is known as the funds flow statement, working
capital is defined as the difference between current assets and current liabilities. Working capital
determines the liquidity position of the firm.
As historical analysis, the statement of changes in working capital reveals to management the way in
which working capital was obtained and used. With this insight, management can prepare the
estimates of the working capital flows. A statement reporting the changes in working capital is, useful
in the firm's long-range planning.
Management, for example, wants to anticipate the working capital flows in order to plan the
repayment schedules of its long-term debt. For a fast growth and expansion, a firm needs larger
amount of working capital. Therefore, estimates of working capital on a long -term basis are also
required to determine whether or not adequate working capital will be generated to meet the firm's
expansion. If not, the firm can make arrangements in advance to procure funds from outside to meet
its needs.

Procedure of Fund Flow Analysis:


Broadly speaking, the fund flow analyses requires the preparation of the two statements

1 Statement of Changes in working capital,


Ú Fund flow statement.

STATEMENT OF CHANGES IN WORKING CAPITAL:

This statement is prepared with current assets and current liabilities items as preparing in the balance
sheets under consideration. Its shows the change in individual items of current assets and current
liabilities and their effect on working capital. As working capital represents the excess of current

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assets over current liabilities, this statement shows the aggregate of current assets over current
liabilities at the and of two years and then increase or decrease in working capital is measured by
comparing the net working capital of the two periods.
Following rules are important in relation to the above statement:

1)
a) Increase in current asset item increases working capital.
b) Decrease in current asset item decreases working capital.
c) Increase in current liability item decreases working capital.
d) Decrease in current liability item decreases working capital.

Ú). This difference of total current assets and total current liabilities of a year is its net working
capital. If the working capital at the end of the current year is more then the working capital at end of
previous year, the excess is called as 'Increase in working capital. On the contrary, if previous year's
working capital is more than the current year's working capital, the excess is called as 'Decrease in
working capital'. Increase in working capital is shown as application of funds and decreases in
working capital as sources of funds flow statement.

Fund Flow Statement:

This statement is prepared with the help of noncurrent assets, long term liabilities capital reserves as
appearing in the true balance sheets and with the additional information given after the balance
sheets. This statement consists of two parts:

a) Sources of funds
b) Application of funds.

The difference of the two shows the net change in the working capital during the period. It is to be
remembered that only those transaction can find place the period. It is to be remembering ere that
only those transactions, can find place in this statement, which affects the net working of the firm.
Only those transactions can affect working capital which affects on the one hand a current asset or a
current liabilities or share holders fund, the transaction which increases. Working capital are sources
of funds and the transaction which decreased working capital is application of funds. But if a
transaction does not affect the working capital e.g. payment of creditor, conversion of debentures into
shares, issue of shares and debentures in consideration of some fixed assets etc. it will not be shown
in the fund flow statement.

Format:


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The funds statement is still in developing process and such number universally accepted form of
presentation has been adopted. It may be prepared Report form or account form in the report form all
items of sources of funds are shown first and there after items of applications are shown whereas in
account form sources of funds are shown on the left hand side and application of fund on the right
hand side, under both these forms, items may be presented in either remainder type, self balancing
type or reconciling type.

OBJECTS OR USES OF IMPORTANCE OF FUNDS FLOW


STATEMENTS

This statement discloses what the main sources of funds were and how these funds were
utilized, during the year. Thus, by preparing this statement, the management can find out the basic
reasons for changes in the assets, liabilities and capital of the firm between the dates of two balance
sheets.
The term 'fund' dose not mean 'cash'. It is generally used to denote the difference between current
assets and current liabilities. In other words, the term 'fund' stands for net working capital. Thus a
fund flow statement indicates the causes of changes in the working capital of a company during the
year. It also provides certain other information's which cannot be obtained from profit & loss account
and balance sheet.

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1. Helpful in Finding the answers to some Important Financial Questions: A fund flow statement is
prepared to give satisfactory to the following questions:
9c Who much funds has been generated from business operations?
9c Where did the profits go?
9c Why are dividends not larger?
9c Who was is possible to distribute dividends in excess of current earnings or in the presence of
net loss for the period?
9c Why are the net current assets down though the net income is up?
9c How is it that the net current assets are up even though there is a net loss for the
period?
9c How was the expansion in plant and equipment financed?
9c How was the repayment of long term debt accomplished?
9c How was the increase in working capital financed?

Ú. Helpful in Financial Analysis: A fund flow statement provides a complete analysis of the financial
position of a firm. This objective is not achieved by the balance sheet because it gives a static view of
the financial position of a business by showing the assets and liabilities at a particular point of time. It
does not show the reasons for statement helps in such analysis.

{. It provides more reliable figures of profit and loss of the Business: A fund flow statement gives a
much more reliable figure of the profits of the business than the figure shown by profit and loss
account because the figure of profit shown by profit and loss account is affected by the personal
decisions of management in deciding the amount of depreciation and other adjustments regarding the,
writing off of preliminary expenses etc. If the amount depreciation is reduced profits will increase.
On the contrary; if the depreciation is reduced The profits will increase. But the figure of profits
shown by fund flow statement is hot affected by depreciation and other adjustments at all. Because
while calculating profits from operations for preparing a fund flow statement the amount of
depreciation already debited in profit and loss account is added back to profits.

. It enables to Know whether the Funds have been Properly Used: The funds flow statement enables
the management to know whether the funds have been properly used in purchasing various assets or
repaying loans etc. For efficient financial management only long term funds should be used for the
purchase of fixed assets or for the repayment of long term loans. Short term funds should never be
used for this purpose otherwise it will create problems in paying the current liabilities in time. Funds
flow statement helps in the determination of such policy.

J. Proper Management of Working Capital: While managing working capital in a business, it


becomes essential to ensure that it should neither be excessive nor inadequate. A fund flow statement
indicates the excessiveness or inadequacy of working capital.

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6 .It helps in the preparation of budget for the Next Period: If a fund flow statement is prepared for
next year, it will enable the managements to plan its financial resources properly. The firm will know
how much funds it requires, how much the firm can manage internally and how much it should
arrange from outside sources. This is helpful in preparing the budgets for the future period.

7. It Helps a Firm in Borrowing Operations: Bankers and others financial institutions insist of filing
of fund flow statement along with loan applications. This is because they want to judge the credit-
worthiness working capital position and funds generating capacity of the borrowing enterprise.

. It helpful in Determining Dividend Policy: Sometimes, there may be sufficient profits but the
distribution of dividend may not be possible due to its adverse effect on the liquidity and working
capital of the business. In such cases a fund flow statement helps in deciding whether to distribute the
dividend or not because a fund flow statement will reveal from where and how much funds can be
managed for distributing the dividends.

Ratio Analysis

This Part of report will analyzes each end every ratio that has been first discussed individually I and
at the last situation as a whole has been discussed upon Ratios for previous year i.e. for year ending
Ú006 and Ú00J were also calculated but he results
Obtained were directly used for trend analysis and hence has not been discussed individually

Liquidity Ratio:

This measure the ability of the firm to meet its current obligations. Liquidity ratios are a relationship
between cash and others assets to current obligations. The firm must ensure that its financial
structure is neither highly liquid nor lacks liquidity, as lack of liquidity will result in bad credit

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image on the other hand high liquidity means idle assets. Thus need is to strike a proper balance
between high liquidity and lack of liquidity. The ratios calculated under this head are.

Current Ratio:


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Ú

Ú
 

Ú  Ú 





Ú  Ú  Ú 

Interpretation: Working capital ratio is used to analyze the short term solvency of the company.
Usually a ratio of Ú:1 is considered to be the best ratio of current assets. This however does not mean
that a company should always display ratio of Ú:1. Higher the ratio, greater is the ability of the firm to
meet its short obligations.

Liquid Ratio:


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 Ú


 


 


Ú  Ú  Ú 

Interpretation: Measures the company¶s ability to pay off its short-term obligations from current
assets, excluding inventory.

Inventory to Net Working Capital Ratio:

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Ú  Ú  Ú 

Interpretation: A measure of inventory balance; measures the extent to which the cushion of excess
current assets over current liabilities may be threatened by unfavorable changes in inventory.

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Particulars 2005-06 2006-07 2007-08


Inventory 258290874 256571715 267392219
Current Assets 403353203 500289899 573126715
Current Liabilities 156380184 188926607 168932779
Liquid Assets 145062329 243718184 305734496
Working Capital 301352432 329648875 394267400
Net Sales 550174236 1260644505 241521320
Gross Profit 142095364 92601002 241521320

Gross Profit Ratio:



Ú

Ú


Ú
Ú

 

 Ú


Ú  Ú  Ú 

Interpretation: Indicates the total margin available to cover other expanses beyond cost of goods
sold, and still yield a profit.


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SCHEDULE OF CHANGES IN WORKING CAPITAL
(for the year ended 31st March,2007)

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PARTICULARS SCHEDULE YEAR WORKING CAPITAL


CHANGES

Ú006 Ú007 INCR²AS² D²CR²AS²

Rs. Rs. Rs. Rs.

(A) CURRENT
ASSETS:

1.Sundry Debtors  0 ÚÔÚ617 ÚÔÚ617

Ú.Cash & Bank Ô J6Ô7{ {Ú1 11J0Ú


Balance

{.Other Current 10 1Ú606 66ÔJÚ J{6


Assets

.Loans and 11 1ÔÚ71 177601 Ú17{


Advances

TOTAL (A) Ú076660 7Ú{6

(B)CURRENT
LIABILITIES:

1.Current Liabilities 1Ú 177Ú7Ú Ú00Ú7 {1J{0{

Ú. Provisions 1{ 107{0Ô ÔÔÚJ6 1Ú{7Ô{

TOTAL (B) ÚJ77{ {0{7Ú{

Working Capital -76Ô11{ 166J1


(A-B)

Increase in ÚJJ6Ô 2455694


Working

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Capital

¸ ¸c cc 166J1 166J1 ÚÔJÚÔÔ ÚÔJÚÔÔ

FINDINGS
1. In the past few years current ratio is going more than Ú:1 which indicates that some part of current
assets is not being used properly.

Ú Quick ratios is also more than its ideal ratio viz. 1: 1 which also shows that HNGL is not making
proper utilization of available resources.

{. Company should adopt policies to Increase its efficiency in the utilization of assets both current as
well as fixed.

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RECOMMENDATIONS

1. If possible money squeezed from liquidation of assets can be utilized for


enhancing sales by adopting a vibrant marketing strategy.

Ú. ²xcessive investments in fixed assets should be liquidated so that financial resources can be
utilized properly.

{. To increase efficiency and effectiveness of company they should motivate technical advancement.

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CONCLUSION

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. This is possibly the reason that companies are
starting to focus on internal financing opportunities i.e. working capital management.

The main objective of every business is maintaining liquidity. The degree to which an asset
or security can be bought or sold in the market without affecting the asset¶s price. A high level of
trading activity characterizes liquidity. The ability to convert an asset to cash quickly is also known as
³marketability´.

It is safer to invest in liquid assets than illiquid ones because it is easier for you to get
money out of the investment. ²xamples of assets that are easily converted into cash into cash market
securities.

The companies shall have to evolve a method whereby an early liquidation of inventory of products
so that an early generation of fund are made. Moreover the industry will have to evolve an
arrangement with their customers whereby the loading of inventory of finished goods could be done
at their end. This will release huge amount pressure of holding inventory on behalf of their customers
thereby saving of precious working capital as well savings in cost of storage.

Industry can plan for cash incentive schemes where an early liquidation of debts will be
rewarded with discounts and other form of incentive.

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ANNUXURE

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BIBLIOGRAPHY

To co mp let e t his summer t raining project report t he fo llowing sources were


referred :

Õc Bo oks and budget manual

Õc www.google.co m

Õc www. hnglindia. co m

Õc www. indiat imes.co m

Õc Annual report of HNGL.


BOOKS

1.c Pandey, I.M. ³Financial Management´, {rd edition, New Delhi, Vikas Publication House Pvt.
Ltd. P-7{toÔ7(long term financial position or solvency in this I studied about debt ratio, fund
debt to total capitalization ratio, equity ratio etc.)1
2.c Maheshwari, ³S.N, Advanced Accounting´,th edition Sultan Chand & Sons Publication, New
Delhi, Ú00, P.No. (b0-b)(tools of financial analysis)Ú
3.c Kothari C.R., ³Resea rch Methodology Methods and Techniques´ (Second ²dition) New Age
International Publishers, Ansari Road, Daryaganj, New Delhi-11000Ú. Chapter , Page JJ-J.
Chapter 6, Page ÔJ,100,111. (Methods of data collection, collection of data, and collection of
secondary data´ are referred before the data collection´.)6
4.c Jain, ,T.R., and Aggarwal, Dr. S.C., ³Statistics For M.B.A´,VK publication, PP1-{ Part b, ,
Únd ²dition ,PP 1{1-1{ Part (³Correlation´ is studied to use these test in study.)7
5.c K.L Gupta ³Management Accounting´ Swati publications.

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