1

Project Report
On
Working Capital Management of HCL
Infosystem Ltd.
POST GRADUATE DIPLOMA IN
MANAGEMENT
SUBMITTED TO: SUBMITTED BY:
MRS.MAMTA SHAH MEHAK RAHEJA
ROLL 6568

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GURU NANAK INSTITUTE OF MANAGEMENT,
PUNJABI BAGH (w), NEW DELHI


Certificate of Origin


This is to certify that Ms. Mehak Raheja of Guru Nanak Institute Of
Managemeny has completed project work on Working Capital Management of
HCL. Under my guidance and supervision

I certify that this is an original work and has not been copied from any source.





Signature of the guide_________________




Name of the project guide






MRS .MAMTA SHAH
















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ACKNOWLEDGEMENT




The satisfaction that accompanies the successful completion of the task
would be incomplete without mentioning the people who made it possible
and whose constant guidance and encouragement crown all the efforts of
success. My experience with each one of them has been enriching and
provided me with a lot of insights about corporate culture. I si ncerel y
hope that t hese acquaintances develop further in the future.

I wish to take great pleasure in recording my profound gratitude and to my guide
Mrs Mamta Shah who has guided me through this project, with invaluable
insights despite their busy schedule to continuously push me harder for better
efforts. His supervision with valuable advice, his inspiring guidance keen interest
and critical evaluation of the work for the successful completion of the project
work.









Mehak Raheja




Date :




4





Table Of Contents
Serial No Subject Page No.
1
Introduction about study
7
2
Objectives of study
8
3
Scope of study
9
4
Research Methodology
10-12
5
Data Source

13
6
HCL

7
Company profile
15
8
Vision and core values
16 , 17
9
Alliance & Partnership
18
10
Corporate Information
19 , 20
11
Working Capital Management
21
11.1
Introduction Of the topic
23 , 24
11.2
Significance
25
11.3
Risk Return Trade Off
26
11.4
Classification of Working Capital
27
11.5
Types OF WCM
28 , 29
11.6
Financing Of Working Capital
30 32
11.7
Working Capital Cycle
33 , 34
11.8
Sources Of WC
35
12
HCL Financial
36 38
13
Inventory Management
39 45
14
Cash Management
46 50
15
Receivable Management
51 55
16
Payable Management
56 59
17
Findings and suggestions
60
18
Limitations
61
19
Conclusions
62
20
Bibliography
63
21
Annexure
64 68











5


6





HCL
Infosystem
Ltd.

7



This project is based on the study of working capital management in HCL Infosystems. An
insight view of the project will encompass what it is all about, what it aims to achieve, what
is its purpose and scope, the various methods used for collecting data and their sources,
including literature survey done, further specifying the limitations of our study and in the last,
drawing inferences from the learning so far.
HCL Infosystems Limited (HCL) is a leading domestic computer hardware and hardware
services company. HCL is engaged in selling manufactured (like PCs, servers, monitors and
peripherals) and traded hardware (like notebooks, peripherals) to institutional clients as well
as in retail segment. It also offers hardware support services to existing clients through annual
maintenance contracts, network consulting and facilities management.
The working capital management refers to the management of working capital, or precisely to
the management of current assets. A firms working capital consists of its investments in
current assets, which includes short-term assetscash and bank balance, inventories,
receivable and marketable securities. This project tries to evaluate how the management of
working capital is done in HCL Infosystems through inventory ratios, working capital ratios,
trends, computation of cash, inventory and working capital, and short term financing.







8




OBJECTIVES OF STUDY

To formulate out the need of actual working capital requirements in the enterprise

To determine whether we need short-term or long term financing of funds.

To determine the liquidity position n the enterprise.

To determine the actual current asset level requirements.

In judging out the true and trustworthy clients of the company.











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This project is vital to me in a significant way. It does have some importance for the
company too. These are as follows

This project will be a learning device for the finance student.

Through this project I would study the various methods of the working capital
management.

The project will be a learning of planning and financing working capital.

The project would also be an effective tool for credit policies of the companies.

This will show different methods of holding inventory and dealing with cash and
receivables.

This will show the liquidity position of the company and also how do they maintain a
particular liquidity position.


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HYPOTHESIS
Let us assume that the working capital position of the company is sound and the various
sources through which it is funded are optimal. The company has used its dividend policy,
purchasing, and financing and investment decisions efficiently.

RESEARCH METHODOLOGY
Methodology includes the overall research procedures, which are followed in the research
study. This includes Research design, the sampling procedures, and the data collection
method and analysis procedures. To broad methodologies can be used to answer any research
question-experimental research and non-experimental research. The major difference between
the two methodologies lies in the control of extraneous variables by the intervention of the
investigator in the experimental research









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6.3 TYPE OF METHODOLOGY USED
The research is done through secondary source of data, which has been collected through
press release & other sources.




A research design is defined, as the specification of methods and procedures for acquiring the
Information needed. It is a plant or organizing framework for doing the study and collecting
the data. Designing a research plan requires decisions of all the data sources, research
approaches, Research instruments, sampling plan and contact methods.







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METHOD OF DATA COLLECTION
PRIMARY DATA
These data are collected first time as original data. The data is recorded as observed or
encountered. Essentially they are raw materials. They may be combined, totaled but they
have not extensively been statistically processed. For example, data obtained by the
peoples.


SECONDARY DATA

Sources of Secondary Data
Following are the main sources of secondary data:
1. Official Publications: Publications of the HCL INFOSYSTEM LTD. or the by the
corporate office of HCL INFOSYSTEM LTD.
2. Publications Relating to Trade: Publications of the trade associations, stock
exchange, trade union etc.
3. Journal/ Newspapers etc.: Some newspapers/ Journals collect and publish their own
data, e.g. Indian Journal of economics, economist, Economic Times.
4. Data Collected by Industry Associations: For example, data available with HCL
INFOSYSTEM LTD.
5. Unpublished Data: Data may be obtained from several companies, organizations,
working in the same areas. For example, data on HCL INFOSYSTEM LTD. by magazine


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DATA SOURCES

The following sources have been sought for the preparation of this report:

Secondary sources such as business magazines, current annual reports, book on
Financial Management by various authors and internet websites the imp amongst
them being: www.hcl.com, www.indiainfoline.com, www.studyfinance.com .
Secondary sources like previous years annual reports, reports on working capital for
research, analysis and comparison of the data gathered.
While doing this project, the data relating to working capital, cash management,
receivables management, inventory management and short term financing was
required.
This data was gathered through the companys websites, its corporate intranet, HCLs
annual reports of the last five years.
A detailed study on the actual working processes of the company is also done through
direct interaction with the employees and by timely studying the happenings at the
company.
Also, various text books on financial management like ICFAIs book, Ravi M.
kishore, Prasanna Chandra and I.M.Pandey were consulted to equip ourselves with the
topic.









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1. HCL INFOSYSTEMS AN OVERVIEW












4.1 Companys history

4.2 HCL at a glance

4.3 Alliances and partnerships

4.4 Corporate information.



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AN OVERVIEW ABOUT THE COMPANY


HCL Infosystems is no flash in the Information Technology pan. Founded in 1976, the firm
has climbed into pantheon of India's corporate giants on the strength of its IT products and
services. HCL Infosystems specializes in IT hardware (PC's and servers, as well as
networking, imaging and communications products), and system integration services serving
the domestic Indian market. In addition to its consumer products, the company provides
commercial IT products, facilities management, network services, and IT security services for
clients in such industries as government, financial services, and education. HCL Corporation
owns significant stakes in HCL Infosystems (about 44%) and sister company HCL
Technologies.
HCL Infosystems Ltd, a listed subsidiary of HCL, is an India-based hardware and systems
integrator. It claims a presence in 180 locations and 332 service centres. Its manufacturing
facilities are based in Chennai, Pondicherry and Uttarakhand .Its headquarters is in Noida.
HCL Peripherals (A Unit of HCL Infosystems Limited) Founded in the year 1983, has
established itself as a leading manufacturer of computer peripherals in India, encompassing
Display Products, Thin Client solutions, Information and Interactive Kiosks. HCL Peripherals
has two Manufacturing facilities, one in Pondicherry (Electronics) and the other in Chennai
(Mechanical) .The Company has been accredited with ISO 9001:2000, ISO 14001, TS 16949
and ISO 13485.


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HCL Infosystems Ltd is one of the pioneers in the Indian IT market,
with its origins in 1976. For over quarter of a century, we have
developed and implemented solutions for multiple market segments,
across a range of technologies in India. We have been in the forefront
in introducing new technologies and solutions. The highlights of the
HCL saga are summarized below:
4.2 HCL AT A GLANCE


VISION STATEMENT:

"Together we create the Enterprises of Tomorrow"


MISSION STATEMENT:

"To provide world-class Information Technology solutions and services
in order to enable our customers to serve their customers better"



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CORE VALUES:

Nothing transforms life like education.
We shall honor all commitments
We shall be committed to Quality, Innovation and Growth in every endeavor
We shall be responsible corporate citizens



QUALITY POLICY:

"We shall deliver defect-free products, services and solutions to meet the requirements of our
external and internal customers, the first time, every time."

COMPANY OBJECTIVES
MANAGEMENT OBJECTIVES
To fuel initiative and foster activity by allowing individuals, freedom of action and
innovation in attaining defined objectives.
PEOPLE OBJECTIVES
To help people in HCL Infosystems Ltd., share companys success, which they
make possible; to provide job security based on their performance; to recognize
their individual achievements; and help them to gain a sense of satisfaction and
accomplishment from their work.



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ALLIANCES AND PARTNERSHIPS

To provide world-class solutions and services to all our customers, HCL
Infosystems have formed Alliances and Partnerships with leading IT companies
worldwide.
HCL Infosystems has alliances with global technology leaders like AMD, Toshiba,
Nokia, Sun Microsystems, SAP, EMC, Veritas, Citrix, CISCO, Oracle, Red Hat,
Duplo, Samsung and Novell.

These alliances on one hand give us access to best technology & products as well as
enhancing our understanding of the latest in technology. On the other hand they
enhance our product portfolio, and enable us to be one stop shop for our customers.


















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4.4 CORPORATE INFORMATION

BOARD OF DIRECTORS Chairman & Chief Executive Officer
Harsh Chitale

Whole-time Director
J.V. Ramamurthy

Directors
S. Bhattacharya
D.S. Purl
R.P. Khosla
E.A. K shirsagar
Anita Ramachandran
T.S. Purushothaman
Narasimhan Jegadeesh
V.N. Koura

COMPANY SECRETARY Sushil Kumar Jain

REGISTERED OFFICE 806, Siddhartha, 96, Nehru Place, New Delhi - 110 019.

CORPORATE OFFICE E - 4, 5, 6, Sector XI, Noida - 201 301 (U.P.)






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Hindustan Computers Limited, also known as HCL Enterprise, is one of India's largest
electronics, computing and information technology company. Based in Noida, near Delhi, the
company comprises two publicly listed Indian companies, HCL Technologies and HCL
Infosystems.HCL was founded in 1976 by Shiv Nadar, Ajai Chowdhry and four of their
colleagues. HCL was focused on addressing the IT hardware market in India for the first two
decades of its existence with some sporadic activity in the global market. In 1981, HCL
seeded a company focused on addressing the computer training industry, NIIT, though it has
currently divested its stake in the company. In 1991, HP took minority stake in the company
(26%) and the company was known as HCL HP for the five years of the joint venture. On
termination of the joint venture in 1996, HCL became an enterprise which comprises HCL
Technologies (to address the global IT services market) and HCL Infosystems (to address the
Indian and APAC IT hardware market). HCL has since then operated as a holding company.
Type Public
(BSE: 500179,BSE: 532281)
Founded 11
th
August 1976
Headquarters Noida, India
(Delhi metropolitan area), India
Key People Shiv Nadar, Founder, Chairman & CEO
Sanjay Kumar Choudhary , Vineet Nayar
Industry Information Technology Services
Revenue R2095 crore
Website www.hclinfosystems.in

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CONCEPTUAL FRAMEWORK
5.1 Introduction
5.2 Significance of working capital management
5.3 Liquidity Vs profitability: Risk Return trade off
5.4 Classification of working capital
5.5 Types of working capital needs
5.6 Financing of working capital
5.7 Factors determining working capital requirements
5.8 Working capital cycle
5.9 Sources of working capital
5.10 HCL financials
5.11 Working capital position
5.12 Inventory management
5.13 Cash management
5.14 Receivables management
5.15 Managing payables (Creditors)
5.16 Financing current assets
5.17 Working capital & short-term financing



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5.1 INTRODUCTION TO WORKING CAPITAL

Working Capital is the Life-Blood and Controlling Nerve Centre of a business
The working capital management precisely refers to management of current assets. A
firms working capital consists of its investment in current assets, which include short-
term assets such as:

Cash and bank balance,
Inventories,
Receivables (including debtors and bills),
Marketable securities.
Working capital is commonly defined as the difference between current assets and current
liabilities.
WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES
There are two major concepts of working capital:
Gross working capital
Net working capital







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Gross working capital:
It refers to firm's investment in current assets. Current assets are the assets, which can be
converted into cash with in a financial year. The gross working capital points to the need of
arranging funds to finance current assets.



Net working capital:
It refers to the difference between current assets and current liabilities. Net working capital
can be positive or negative. A positive net working capital will arise when current assets
exceed current liabilities. And vice-versa for negative net working capital. Net working
capital is a qualitative concept. It indicates the liquidity position of the firm and suggests
the extent to which working capital needs may be financed by permanent sources of funds.
Net working capital also covers the question of judicious mix of long-term and short-term
funds for financing current assets.






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Significance of Working Capital
Management
The management of working capital is important for several reasons:
For one thing, the current assets of a typical manufacturing firm account for half of its
total assets. For a distribution company, they account for even more.
Working capital requires continuous day to day supervision. Working capital has the
effect on company's risk, return and share prices,

There is an inevitable relationship between sales growth and the level of current assets.
The target sales level can be achieved only if supported by adequate working capital
Inefficient working capital management may lead to insolvency of the firm if it is not in
a position to meet its liabilities and commitments.






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LIQUIDITY VS PROFITABILITY:
RISK - RETURN TRADE OFF
Another important aspect of a working capital policy is to maintain and provide sufficient
liquidity to the firm. Like the most corporate financial decisions, the decision on how much
working capital be maintained involves a trade off- having a large net working capital may
reduce the liquidity risk faced by a firm, but it can have a negative effect on the cash flows.
Therefore, the net effect on the value of the firm should be used to determine the optimal
amount of working capital.
Sound working capital involves two fundamental decisions for the firm. They are the
determination of:
The optimal level of investments in current assets.
The cost advantage
Flexibility
The appropriate mix of short-term and long-term financing used to support this
investment in current assets, a firm should decide whether or not it should use short-
term financing. If short-term financing has to be used, the firm must determine its
portion in total financing. Short-term financing may be preferred over long-term
financing for two reasons:
But short-term financing is more risky than long-term financing. Following table will
summarize our discussion of short-term versus long-term financing.






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CLASSIFICATION OF WORKING
CAPITAL
Working capital can be classified as follows:
On the basis of time
On the basis of concept


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TYPES OF WORKING CAPITAL NEEDS

Another important aspect of working capital management is to analyze the total working
capital needs of the firm in order to find out the permanent and temporary working capital.
Working capital is required because of existence of operating cycle. The lengthier the
operating cycle, greater would be the need for working capital. The operating cycle is a
continuous process and therefore, the working capital is needed constantly and regularly.
However, the magnitude and quantum of working capital required will not be same all the
times, rather it will fluctuate.
The need for current assets tends to shift over time. Some of these changes reflect
permanent changes in the firm as is the case when the inventory and receivables increases as
the firm grows and the sales become higher and higher. Other changes are seasonal, as is the
case with increased inventory required for a particular festival season. Still others are
random reflecting the uncertainty associated with growth in sales due to firm's specific or
general economic factors.

The working capital needs can be bifurcated as:
Permanent working capital
Temporary working capital






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Permanent working capital:
There is always a minimum level of working capital, which is continuously required by a
firm in order to maintain its activities. Every firm must have a minimum of cash, stock and
other current assets, this minimum level of current assets, which must be maintained by any
firm all the times, is known as permanent working capital for that firm. This amount of
working capital is constantly and regularly required in the same way as fixed assets are
required. So, it may also be called fixed working capital.

Temporary working capital:
Any amount over and above the permanent level of working capital is temporary,
fluctuating or variable working capital. The position of the required working capital is
needed to meet fluctuations in demand consequent upon changes in production and sales as
a result of seasonal changes.
The permanent level is constant while the temporary working capital is fluctuating
increasing and decreasing in accordance with seasonal demands as shown in the figure.
In the case of an expanding firm, the permanent working capital line may not be horizontal.
This is because the demand for permanent current assets might be increasing (or decreasing)
to support a rising level of activity. In that case line would be rising.


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FINANCING OF WORKING CAPITAL
There are two types of working capital requirements as discussed above. They are:
Permanent or Fixed Working Capital requirements
Temporary or Variable Working Capital requirements
Therefore, to finance either of these two working capital requirements, we have long-term
as well as short-term sources.

5.7 FACTORS DETERMINING WORKING CAPITAL
REQUIREMENTS
There are many factors that determine working capital needs of an enterprise. Some of these
factors are explained below:
Nature or Character of Business.
The working capital requirement of a firm is closely related to the nature of its
business. A service firm, like an electricity undertaking or a transport corporation,
which has a short operating cycle and which sells predominantly on cash basis, has a
modest working capital requirement. Oh the other hand, a manufacturing concern
like a machine tools unit, which has a long operating cycle and which sells largely
on credit, has a very substantial working capital requirement.
HCL Infosystems carry on activities related to computer systems. Though they are
primarily an assembling firm they also have manufacturing facilities in Chennai and
Pondicherry. This requires them to keep a very sizeable amount in working capital.




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Size of Business/Scale of Operations.
HCL is the leader in its segment in both consumer as well as commercial market
share. They have increased their share in the consumer segment notably in the last
four years. This they have achieved through retail expansion. The scale of operations
and the size it holds in the Indian IT market makes it a must for them to hold their
inventory and current asset at a huge level.


Figure :2 Representation of market share


Rate of Growth of Business.
The rate of growth of sales indicates a need for increase in the working capital
requirements of the firm. As the firm is projected to increase their sales by 80%
from what it was in 2011 it is required to guard them against the increasing
requirements of the net current asset by way of efficient working capital

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management. The sales and projected sales level determine the investment in
inventories and receivables.

HCL Infosystems Limited 2013 2012 2011 2010 2009
PROJECTED
Gross Sales/Income from
Operations
5000 4100 3478 2895 2222.03




Price Level Changes.
Changes in the price level also affect the working capital requirements. It was the
reduced margins in the price of the raw materials that had prompted them to go for
bulk purchases thus making on additions to their net current assets. They might have
gone for this large-scale procurement for availing discounts and anticipating a rise in
prices, which would have meant that more funds are required to maintain the same
current assets.








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Working Capital Cycle
The term operating cycle refers to the length of time necessary to complete the following
cycle of events:
1. Conversion of cash into inventory.
2. Conversion of inventory into receivables.
3. Conversion of receivables into cash.
Cash flows in a cycle into, around and out of a business. It is the business's life blood
and every manager's primary task is to help keep it flowing and to use the cash flow to
generate profits. If a business is operating profitably, then it should, in theory, generate
cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash
and expire.
The faster a business expands the more cash it will need for working capital and
investment. The cheapest and best sources of cash exist as working capital right within
business. Good management of working capital will generate cash will help improve
profits and reduce risks. One must bear in mind that the cost of providing credit to
customers and holding stocks can represent a substantial proportion of a firm's total
profits.

There are two elements in the business cycle that absorb cash - Inventory (stocks
and work-in-progress) and Receivables (debtors owing you money). The main sources of
cash are Payables (your creditors) and Equity and Loans.

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Each component of working capital (namely inventory, receivables and payables) has
two dimensions........ Time ......... and Money. When it comes to managing working capital
Time is Money. If you can get money to move faster around the cycle (e.g. collect
monies due from debtors more quickly) or reduce the amount of money tied up (e.g. reduce
inventory levels relative to sales), the business will generate more cash or it will need to
borrow less money to fund working capital. As a consequence, you could reduce the cost of
bank interest or you'll have additional free money available to support additional sales
growth or investment. Similarly, if you can negotiate improved terms with suppliers e.g. get
longer credit or an increased credit limit; you effectively create free finance to help fund
future sales.








35

SOURCES OF WORKING
CAPITAL
HCL Infosystems has the following sources available for the fulfilment of its working
capital requirements in order to carry on its operations smoothly:
Banks:
These include the following banks
State Bank of India
Canara Bank
HDFC Bank Ltd.
ICICI Bank Ltd.
Standard Chartered Bank
State Bank of Patiala

Commercial Papers:
Commercial Papers have become an important tool for financing working
capital requirements of a company.
Commercial Paper is an unsecured promissory note issued by the company to
raise short-term funds. The buyers of the commercial paper include banks,
insurance companies, unit trusts, and companies with surplus funds to invest
for a short period with minimum risk.
HCL issues Commercial Papers and had 4000 commercial papers in the year
2010.




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HCL FINANCIALS

CONSOLIDATED FINANCIAL PERFORMANCE

Particulars 2013 2012
Gross Business Income 11855 11455
less: Excise Duty 170 87
Net Business Income 11685 11368
Total Expenditure
Cost of Sales (Net) 10801 10589
Staff Cost 227 181
Administration, Selling and Others 253 221
Depreciation 15 12
Operating Profit 389 365



WORKING CAPITAL POSITION
CURRENT ASSET TOTAL ASSET

PARTICULARS 2013 2012 2011 2010 2009
CURRENT ASSETS 100970 81533 54091 45042 55985
NET BLOCK 7970 5329 4925 4954 5552
TOTAL ASSETS 122479 99139 87076 71285 75205
CA/TA 82.44 82.24 62.12 63.18 74.43



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The current asset percentage on total asset is the highest over the years. This increasing
percentage of current assets to the total assets at first might indicate a preference for
liquidity in place of profitability, but a look into the nature of the business carried on by
HCL Infosystems reveal the reason behind it. How far their preference to current assets has
affected the sales is shown below.

NET CURRENT ASSET SALES
PARTICULARS 2013 2012 2011 2010 2009
NET CURRENT
ASSETS
40343 34742 14301 18752 27065
SALES 238136 199886 154295 166604 127003
WORKING
CAPITAL %
INCREASE
16.12 142.93 -23.736 -30.7 -0.46
SALES %
INCREASE
19.14 29.54 -7.38 31.18 8.7

The sales has increased and the profits risen despite the 16.12% increase in working capital.
But what is noteworthy here is that the firm has managed to maintain the trend of an
increase in net current assets. Whether the change has worked for the company has to be
analysed in the context of the growth in sales as compared to the previous year. There has
been a 19.14% rise in the sales or revenue generated. This would automatically suggest
towards a very efficient working capital management where the assets of the firm which are
short-term in nature have been utilized optimally in connection to their fixed assets. The
firm has gone towards such a dramatic shift in their working capital position might be
because of the tremendous growth witnessed in the domestic IT market.

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PARTICULARS 2013 2012 2011 2010 2009
NET CA/NET BLOCK 5.062:1 6.519:1 2.903:1 3.785:1 4.875:1

The ratio of the net current asset to the fixed ones is an indicator as to the liquidity position of
the firm. This ratio has declined for the firm compared to the previous year. There could be
an argument as to whether the increased ratio of working capital to net block is a conservative
policy and whether it would be detrimental to the interest of the company. Or whether it
would have been proper if the company invested more into the capital expenditure in the
form of plant and machinery or invested in any other form that would have got them an
internal rate of return. What has to be kept in mind before coming to a conclusion as to the
policy of the company is the fact that the firm being primarily into assembling, its investment
in the fixed asset segment need not be high. A look into the capacity utilization of the plant
would reaffirm this point. It would be ideal for the firm to continue in the same line and not
have excessive investment in the fixed asset as they can easily add onto this part.






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Inventories
Inventories constitute the most important part of the current assets of large majority of
companies. Because of the large size of inventories maintained by the firms, a considerable
amount of funds is committed to them. It is therefore, imperative to manage the inventories
efficiently and effectively in order to avoid unnecessary investment.

Nature of Inventories
Inventories are stock of the product of the company is manufacturing for sale and
components make up of the product. The various forms of the inventories in the
manufacturing companies are:
Raw Material: It is the basic input that is converted into the finished product through
the manufacturing process. Raw materials are those units which have been purchased
and stored for future production.
Work-in-progress: Inventories are semi-manufactured products. They represent
product that need more work they become finished products for sale.
Finished Goods: Inventories are those completely manufactured products which are
ready for sale. Stocks of raw materials and work-in-progress facilitate production,
while stock of finished goods is required for smooth marketing operations. Thus,
inventories serve as a link between the production and consumption of goods.
Inventory Management Techniques
In managing inventories, the firms objective should be to be in consonance with the
shareholder wealth maximization principle. The firm should determine the optimum level of
inventory. Efficiently controlled inventories make the firm flexible. Inefficient inventory

40

control results in unbalanced inventory and inflexibility-the firm may sometimes run out of
stock and sometimes pile up unnecessary stocks.

Economic Order Quantity (EOQ): The major problem to be resolved is how much
the inventory should be added when inventory is replenished. If the firm is planning a
production run, the issue is how much production to schedule. These problems are
called order quantity problems, and the task of the firm is to determine the optimum
or economic lot size.
EOQ = (2AO/C)1/2
A = Annual Consumption of materials in units
O = Cost of placing an order (ordering cost per order )
C = Cost of interest and storing one unit of material for one year ( carrying cost
per unit p.a).

Determine an optimum level involves two types of costs:-
Ordering Costs: This term is used in case of raw material and includes all the
cost of acquiring raw material. They include the costs incurred in the
following activities:
Requisition
Purchase Ordering
Transporting
Receiving
Inspecting
Storing

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Ordering cost increase with the number of orders placed; thus the more
frequently inventory is acquired, the higher the firms ordering costs. On the
other hand, if the firm maintains large inventorys level, there will be few
orders placed and ordering costs will be relatively small. Thus, ordering costs
decrease with the increasing size of inventory.

Carrying Costs: Costs are incurred for maintaining a given level of
inventory are called carrying costs. These include the following activities:
Warehousing Cost
Handling
Administrative cost
Insurance
Deterioration and obsolescence
Carrying costs are varying with inventory size. This behaviour is contrary to
that of ordering costs which decline with increase in inventory size. The
economic size of inventory would thus depend on trade-off between carrying
costs and ordering cost.


Composition 2013 2012 2011
Raw Material 6349 7749 6127
Stores and Spares 3713 2987 2622
Finished Goods 13374 7245 6506
Work-in-progress 595 784 871


42

The increasing component of raw materials in inventory is due to the fact that the
company has gone for bulk purchases and has increased consumption due to a fall in
prices and reduced margins for the year. Another reason might be the increasing sales,
which might have induced them to purchase more in anticipation of a further increase
in demand of the product.
To the question as to whether the increasing costs in inventory are justified by the
returns from it the answer could be found in the HCL retail expansion. HCL caters to
the need of the two separate segments:

a) Institutions for which they manufacture against orders and,
b) Retail segment of the market.

The company in order to meet its raw materials requirements could have gone for
frequent purchases, which would have resulted in lesser cash flows for the firm rather
than the high expenditure involved when procuring in at bulk. The reason why the
firm has gone for these bulk purchases because of the lower margins and the discounts
it availed because of procuring in bulk quantities.
A negative growth in WIP could be because:
a) The time taken to convert raw materials to finished goods is very minimal
b) This is also due to capacity being not utilized at the optimum.

ABC System: ABC system of inventory keeping is followed in the factories. Various
items are categorized into three different levels in the order of their importance. For
e.g. items such as memory, high capacity processors and royalty are placed in the A
category. Large number of firms has to maintain several types of inventories. The
firm should pay maximum attention to those items whose value is highest. The firm

43

should therefore, classify inventories to identify which items should receive the most
effort in controlling. The firm should be selective in approach to control investment in
various types of inventories. This analytical approach is called ABC Analysis. The
high-value items are classified as A items and would be under tightest control. C
items represent relatively least value and would require simple control. B items
fall in between the two categories and require reasonable attention of management.
JIT: The relevance of JIT in HCL Info system can be questioned. This is because
they procure materials on the basis of projections made at least two or three months
before. Even at the time of procurement they ensure that they procure much more
than what actually is required by the firm that is they hold significant amount of
inventory as safety stock. This is done to counter the threat involved in default and
accidental breakdowns. The levels of safety stock usually vary according to the
usage.
Conversion Periods

Raw Material
Particulars 2013 2012 2011
Raw Material Consumption 121077 97971.31 57775.14
Raw Material Consumption/day 332 268.41 158.28
Raw Material Inventory 7072 6960.275 4364.735
Raw Material Holding Days 21 26 27.57

The raw material conversion period or the raw material holding cost has reduced from
26 to 21. This is despite an increase in its consumption. This indicates that the firm is able to
convert the raw material at its disposal to the work-in-progress at a lesser time as compared to
the last year.



44

Work-in-progress
Particulars 2013 2012 2011
Cost of Production 191911 159651.19 113500.33
Cost of Production/day 525.78 437.4 310.95
Work in progress inventory 689.5 827.52 679.455
WIP Holding days 1.31 1.89 2.19

The work-in-progress holding time is important for a firm in the sense that it determines the
rate of time at which the production process will be complete or the finished goods will be
ready for disposal by the firm. The firm as it is in the process of assembling should take the
least possible time in conversion to finished goods unlike a hard core manufacturing firm, as
any firm would like to have its inventory in the work-in-progress at the minimum. There
would also be less of stock out costs as due to better conversion rates the firm is able to meet
the rise in demand situations..

Finished Goods
Particulars 2013 201 2010
Cost of goods sold 228177 178438.85 124768.92
Cost of goods sold/day 625 488.87 341.832
Finished goods inventory 10310 6875.725 5026.505
Finished goods inventory Holding days 16 14.06 14.8

The time taken for the firm to realize its finished goods as sales has increased as compared to
last year. This growth in sales could be traced back to the growing domestic IT market for the
commercial as consumer segment in India



45

Operating Cycle
Particulars 2013 2012 2011
Inventory conversion period 38 42 45
70 63 66
Gross operating cycle 108 105 111
Average payment period 22 23 17
Operating cycle 86 82 94

Operating Cycle = Inventory conversion period + Average collection period - Average
payment period
The operating cycle of the firm reveals the days within which the inventory procured gets
converted to sales or revenue for the firm. This time period is of importance to the firm as a
lag here could significantly affect the profitability, liquidity, credit terms, and the policies of
the firm. All the firms would like to reduce it to such extend that their cash inflows are timely
enough to meet their obligations and support the operations.
Raw Material Consumption
Particulars 2013 2012 2011
Imported 92007 70784.27 42129.63
Indigenous 29070 27187.04 15645.51
% Imports 75.99 72.25 72.92

A major chunk of the imports come from Korea and Japan . The value of imported and
indigenous raw material consumed give a clear picture that if there is a change in the EXIM
policy of the government it is bound to affect the company adversely as more than 70% of
their consumption is from imports. A major chunk of their current assets are in the form of
inventory and the change in technology will invariably be a threat faced by the firm. The
question of technology applying here like says a certain device going say out of fashion or
outdated. For e.g. TFT monitors being in demand more than CRT.

46

Sources of Cash:
Sources of additional working capital include the following:
Existing cash reserves
Profits (when you secure it as cash!)
Payables (credit from suppliers)
New equity or loans from shareholders
Bank overdrafts or lines of credit.
Long-term loans



CASH MANAGEMENT IN HCL INFOSYSTEMS:
The cash management system followed by the HCL Infosystems is mainly lock box
system.
Cash Management System involves the following steps:
1. The branch offices of the company at various locations hold the collection of cheques
of the customers.
2. Those cheques are either handed over to the CMS agencies or bank of the particular
location take charge of whole collection.
3. These CMS agencies or bank send those cheques to the clearing house to make them
realized. These cheques can be local or outstation.
4. The CMS agencies or bank send information to the central hub of the company
regarding realization/cheque bounced.

47

5. The central hub passes on the realized funds to the company as per the agreed
agreements.
6. The CMS agencies or concerned bank provides the necessary MIS to the company as
per requirement.

Cash-Current Liability
Particulars 2013 2012 2011
Absolute Liquid Ratio 0.24:1 0.31:1 0.11:1

The absolute liquid ratio is the best for three years and the cash balances as to the current
liability has improved for the firm. Firm has large resources in cash and bank balances. While
large resources in cash and bank balances may seem to affect the revenue the firm could have
earned by investing it elsewhere as maintenance of current assets as cash and in near cash

assets and marketable securities may increase the liquidity position but not the revenue or
profit earning capacity of the firm.

Particulars 2013 2012 2011
PBIDT 14284 15634 14523
Equity Dividend% 400 310 210

This could mean two things for the firm the amount of cash retained in the business for
capital expenditure purposes are minimal or nil. But rather than investing more in plant and
machine which they can at any point in time by adding on a additional line if need they would
like to optimize their utilization in fixed assets at present. This also means that the percentage


48

of cash in hand maintained by the firm as a source of liquidity could be reduced, i.e. the
amount of idle cash in the business could be made to a level which the firm feels optimum.
The firm feels that they should retain cash and it would be in the interest of the firm as well
as the shareholders. This would automatically mean as decrease in Earning/share (EPS). It
would prompt more of investors being interested in the shares of the company, which would
boost the purchase of the securities and increase the market price/share thus being beneficial
for the firm.

Cash Flows
Cash Flows 2013 2012 2011
Net Cash from Operating activities 6924 2675.57 13706.34
Net Cash from Investing activities -3515 15661.29 -2169.16
Net Cash from Financing activities -3512 -8217.68 -11412.1

The firm has disposed of investments worth around 655 Crores to meet its growing needs.
The other notable feature is decline is the firms inflows from operations primarily due to the
reason that the cash generated from the operations is the lowest in three years. And the firms
growing dividend policy has contributed to the outflows in financing activities.

Cash Flow in Operating Activities
Working Capital Changes
Working Capital Changes 2013 2012 2011
Trade and other receivables -14166 -14510.69 -7106.68
Inventories -5221 -2683.92 -7221.11
Trade Payables and other Liabilities 13026 6419.13 14311.5



49

The cash from the operation has been subject to considerable change due to the changes that
could be adjusted towards trade receivables and trade payables. The outflows in inventory
have become as low as 37% of what it was last year despite an increase in the inventory
consumption by 16.64%. The resulting reduction in the cash outflows might be because of the
inventories being procured more on credit.

Cash Flow in Investing Activities
Investments in Mutual Funds 2013 2012 2011
Investments (year end) 65458.8 53010.16 59169.04
Purchase of Investment -65992 -53075.99 -59249.81
Disposal/Redemption of Investment
-533.20
-65.83 80.77

The investments have reduced from the last year due to the redemption of investments taken
place to meet various needs such as increasing demand in stock or inventory and to ensure
better credit and receivables policy. We can see that the firm has in these three years
increased their cash inflow from the investing activities by way of disposal of investments
when in need.
The investments in mutual funds are beneficial to the firm in the context that they contain
interest bearing securities which add up as a source of revenue for the firm unlike cash which
remains idle and unproductive when not in use. This reduction of dividend could be attributed
to disposal of investments in mutual funds and subsidiary

Liquid Cash Balance
The liquid cash maintained in the business is only that much as is required to satisfy the daily
requirements of the firm and not more. The rest of the cash is invested into mutual funds and
also held in fixed deposits and current accounts.


50

Instruments Used
The instrument used here are primarily cheques comprising of around 97% of what is used in.
The rest 2-3% comprise of the letters of credit.
Thus working capital is the lifeline for every business. The main advantages of sufficient
working capital are:
It helps in prompt payment
Ensures high solvency in the company and good credit standing.
Regular supply of material and continuous production.
Ensures regular payment of salaries and wages and day to day commitments.



51


Cash flow can be significantly enhanced if the amounts owing to a business are collected
faster. Every business needs to know.... who owes them money.... how much is owed.... how
long it is owing.... for what it is owed.

Late payments erode profits and can lead to bad debts.
Slow payment has a crippling effect on business; in particular on small businesses whom
can least afford it. If you don't manage debtors, they will begin to manage your business as
you will gradually lose control due to reduced cash flow and, of course, you could
experience an increased incidence of bad debt.



The following measures will help manage your debtors:
1. Have the right mental attitude to the control of credit and make sure that it gets the
priority it deserves.
2. Establish clear credit practices as a matter of company policy.
3. Make sure that these practices are clearly understood by staff, suppliers and customers.
4. Be professional when accepting new accounts, and especially larger ones.
5. Check out each customer thoroughly before you offer credit. Use credit agencies, bank
references, industry sources etc.

52

6. Establish credit limits for each customer and stick to them.
7. Consider charging penalties on overdue accounts.
8. Consider accepting credit /debit cards as a payment option.
Recognize that the longer someone owes you, the greater the chance you will never get
paid. If the average age of your debtors is getting longer, or is already very long, you may
need to look for the following possible defects.
Poor collection procedures.
Lax enforcement of credit terms.
Slow issue of invoices or statements.
Errors in invoices or statements.
Customer dissatisfaction.
Weak credit judgement.

Debtors due over 90 days (unless within agreed credit terms) should generally demand
immediate attention. Look for the warning signs of a future bad debt. For example..
1. Longer credit terms taken with approval, particularly for smaller orders.
2. Use of post-dated checks by debtors who normally settle within agreed terms.
3. Evidence of customers switching to additional suppliers for the same goods.
4. New customers who are reluctant to give credit references.
5. Receiving part payments from debtors.

53


Profits only come from paid sales.
The act of collecting money is one, which most people dislike for many reasons and therefore
put on the long finger because they convince themselves that there is something more urgent or
important that demand their attention now. There is nothing more important than getting paid
for your product or service. A customer who does not pay is not a customer.
HERE ARE FEW WAYS IN COLLECTING MONEY FROM DEBTORS: -
Develop appropriate procedures for handling late payments.
Track and pursue late payers
Dont feel guilty asking for money. Its yours and you are entitled to it.
Make that call now. And keep asking until you get some satisfaction.
In difficult circumstances, take what you can now and agree terms for the remainder.
When asking for your money, be hard on the issue but soft on the person. Dont give the
debtor any excuses for not paying.
Make sure that your objective is to get the money, not to score points.

RECEIVABLES MANAGEMENT IN HCL INFOSYSTEMS:


Debtor Turnover Ratio = Net Credit Sales / Average Debtors
A better turnover ratio implies for the firm, more efficiency in converting the accounts receivable
to cash. A firm with very high turnover ratio can take the freedom of holding very little balances
PARTICULARS 2013 2012 2011 2010
DEBTORS TURNOVER RATIO 5.21 5.80 5.53 6.62
AVERAGE COLLECTION PERIOD 70 63 66 55

54

in cash, as their debtors are easily realizable. In case of HCL, the collection period for the firm is
70 days.


PARTICULARS 2013 2012 2011
PROVISION FOR DOUBTFUL DEBTS(CASH FLOW) 30 49.85 25
DEBTS DOUBTFUL(EXCEEDING 6 MONTHS) 47 134.09 69.8

The debts doubtful have doubled but their percentage on the debts has almost become half. This
implies a sales and collection policy that get along with the receivables management of the firm.

COLLECTION POLICIES:
It refers to the collection procedures such as letters, phone calls and other follow up mechanism
to recover the amount due from the customers. It is obvious that costs are incurred towards the
collection efforts, but bad debts as well as average collection period would decrease. Further, a
strict collection policy of the firm is expensive for the firm because of the high cost is required to
be incurred by the firm and it may also result in loss of goodwill. But at the same time it
minimizes the loss on account of bad debts. Therefore, a firm has to strike a balance between the
cost and benefits associated with collection policies.
The steps usually followed in collection efforts are:
Sending repeated letters and reminders to the customers
Personal visits
Using agencies involved in collection process
Making telephonic reminders

55

Initiating legal actions
Real Time Gross Settlement (RTGS)

Real Time Gross Settlement as such is a concept new in nature and though the firm uses the
system with all the members of the consortium, it is still in its primal stage and will take time
before all of the clients of the firm are willing to accept it. The firm has made a proposal to the
consortium of the banks during appraisal for faster implementation of internet based banking
facility by all the banks and adoption of RTGS payment system through net.
The debtors turnover ratio is completely dependent upon the credit policy followed by the firm.
The credit policy followed by the firm should be such that the threat of bad debts and the default
rate involved should be terminated.


PARTICULARS 2013 2012 2011 2010
CREDITORS TURNOVER RATIO 16.44 15.68 21.29 21.14
PAYMENT PERIOD 22 23 17 16

CREDITORS TURNOVER RATIO = Net Credit Purchase / Average Account Payable

That the creditors turnover ratio has declined and payment period has increased indicate that the
company has got a leeway in making the payment to the creditors by way of increased time.
With creditors they are having pre-agreements and have undertaken arrangements with them,
which they believe to be the best in the business and these are fixed.
(NOTE: Acceptances are not included in the computation of creditors turnover)

56



Creditors are a vital part of effective cash management and should be managed carefully to
enhance the cash position.
Purchasing initiates cash outflows and an over-zealous purchasing function can create liquidity
problems.

Consider the following: -
Who authorizes purchasing in your company - is it tightly managed or spread among a
number of (junior) people?
Are purchase quantities geared to demand forecasts?
Do you use order quantities, which take account of stock holding and purchasing costs?
Do you know the cost to the company of carrying stock?
Do you have alternative sources of supply? If not, get quotes from major suppliers and shop
around for the best discounts, credit terms as it reduces dependence on a single supplier.
How many of your suppliers have a return policy?
Are you in a position to pass on cost increases quickly through price increases to your
customers?
If a supplier of goods or services lets you down can you charge back the cost of the delay?
Can you arrange (with confidence!) to have delivery of supplies staggered or on a just-in-
time basis?


57

There is an old adage in business that "if you can buy well then you can sell well".
Management of your creditors and suppliers is just as important as the management of your
debtors. It is important to look after your creditors- slow payment by you may create ill feeling
and can signal that your company is inefficient (or in trouble!).

FINANCING CURRENT
ASSETS
The firm has to decide about the sources of funds, which can be availed to make investment in
current assets.
Long term financing:
It includes ordinary share capital, preference share capital, debentures, long term borrowings
from financial institutions and reserves and surplus.
Short term financing:
It is for a period less than one year and includes working capital funds from banks, public
deposits, commercial paper etc.
Spontaneous financing:
It refers to automatic sources of short-term funds arising in normal course of business. There is
no explicit cost associated with it. For example, Trade Credit and Outstanding Expenses etc.

Depending on the mix of short and long term financing, the company can follow any of the
following approaches.
Matching Approach

58

In this, the firm follows a financial plan, which matches the expected life of assets with the
expected life of source of funds raised to finance assets. When the firm

Follows this approach, long term financing will be used to finance fixed assets and permanent
current assets and short term financing to finance temporary or variable current assets.


Conservative Approach
In this, the firm finances its permanent assets and also a part of temporary current assets with
long term financing. In the periods when the firm has no need for temporary current assets, the
long-term funds can be invested in tradable securities to conserve liquidity. In this the firm has
less risk of facing the problem of shortage of funds.

Aggressive Approach
In this, the firm uses more short term financing than warranted by the matching plan. Under an
aggressive plan, the firm finances a part of its current assets with short term financing.
Relatively more use of short term financing makes the firm more risky.

Current asset to fixed asset ratio:
The financial manager should determine the optimum level of current assets so that the wealth
of shareholders is maximized. A firm needs fixed and current assets to support a particular level
of output.
The level of current assets can be measured by relating current assets. Dividing current assets
by fixed assets gives CA/FA ratio. Assuming a constant level of fixed assets, a higher CA/FA

59

ratio indicates a conservative current assets policy and a lower CA/FA ratio means an
aggressive current assets policy assuming other factors to be constant. A conservative policy
i.e. higher CA/FA ratio implies greater liquidity and lower risk; while an aggressive policy i.e.
lower CA/FA ratio indicates higher risk and poor liquidity. The current assets policy of the
most firms may fall between these two extreme policies. The alternative current assets policies
may be shown with the help of the following figure.
In this figure the most conservative policy is indicated by alternative A, where as CA/FA ratio is
greatest at every level of output. Alternative C is the most aggressive policy, as CA/FA ratio is
lowest at all levels of output. Alternative B lies between the conservative and aggressive policies
and is an average policy.


60




The management of working capital plays a vital role in running of a successful business. So,
things should go with a proper understanding for managing cash, receivables and inventory.
HCL Infosystems is managing its working capital in a good manner, but still there is some
scope for improvement in its management. This can help the company in raising its profit level
by making less investment in accounts receivables and stocks etc. This will ultimately
improve the efficiency of its operations. Following are few recommendations given to the
company in achieving its desired objectives:
The business runs successfully with adequate amount of the working capital but the
company should see to it that the cash should not be tied up in excessive amount of
working capital.
Though the present collection system is near perfect, the company as due to the
increasing sales should adopt more effective measures so as to counter the threat of bad
debts.
The over purchasing function should be avoided as it could lead to liquidity problems.
The investment of cash in marketable securities should be increased, as it is very
profitable for the company.
Holding of excessive and insufficient stock must be avoided as it creates a burden on
the cash resources of a business and results in lost sales, delays for customers, etc
respectively.


61




We cannot do comparisons with other companies unless and until we have the
data of other companies on the same subject.

Only the printed data about the company will be available and not the backend
details.

Future plans of the company will not be disclosed to the trainees.

Lastly, due to shortage of time it is not possible to cover all the factors and details
regarding the subject of study.

The latest financial data could not be reported as the companys websites have not
been updated.











62


The working capital position of the company is sound and the various sources through
which it is funded are optimal.
The company has used its dividend policy, purchasing, financing and investment
decisions to good effect can be seen from the inferences made earlier in the project.
The doubtful debts have been doubled over the years but their percentage on the debts
has almost become half. This implies a sales and collection policy that get along with the
receivables management of the firm.
The returns have been affected by a marked growth in working capital and though a
29.75% in 2012 return on investment is good, but it got reduced as compared to 39.01%
return in 2011.
The various ratios calculated are an indicator as to the fact that the profitability of the
firm and sales are on a rise and also the deletion of the inefficiencies in the working
capital management.
The firm has not compromised on profitability despite the high liquidity is commendable.
HCL Infosystems has reached a position where the default costs are as low as negligible
and where they can readily factor their accounts receivables for availing finance is
noteworthy



63


Following sources have been sought for the preparation of this report:
Corporate Intranet

Financial Statements (Annual Reports)

Direct interaction with the employees of the company

www.hclinfosystems.in

www.treasury.govt.nz/publicsector/workingcapital/further.asp

www.planware.org/workingcapital.htm

www.wikipedia.org

Textbooks on financial management -
I.M.Pandey 9
th
edition 577
Ravi M .Kishore 6
th
edition 336



FINANCIAL STATEMENTS FOR HCL INFOSYSTEMS LTD.

64

12.1 Last 5 years Balance Sheet:
Balance sheet
(Rs crore)

Jun ' 13 Jun ' 12 Jun ' 11 Jun ' 10 Jun ' 09
Sources of funds
Owner's fund
Equity share capital 44.58 44.58 44.58 43.65 34.24
Share application money - - - 17.67 -
Preference share capital - - - - -
Reserves & surplus 1,791.25 1,872.58 1,902.46 1,860.94 1,098.12
Loan funds
Secured loans 502.01 65.94 110.43 152.02 101.85
Unsecured loans 453.97 534.62 467.11 357.91 125.00
Total 2,791.81 2,517.72 2,524.58 2,432.19 1,359.21
Uses of funds
Fixed assets
Gross block 414.94 389.29 364.05 274.88 234.10
Less : revaluation reserve - - - - -
Less : accumulated depreciation 154.67 137.13 131.99 103.66 83.47

65


Jun ' 13 Jun ' 12 Jun ' 11 Jun ' 10 Jun ' 09
Net block 260.27 252.16 232.06 171.22 150.63
Capital work-in-progress 38.91 46.06 19.95 25.69 9.50
Investments 1,059.10 549.59 705.05 911.19 276.10
Net current assets
Current assets, loans & advances 4,065.93 4,019.39 3,620.19 3,625.87 2,904.68
Less : current liabilities & provisions 2,632.40 2,349.48 2,052.67 2,301.78 1,981.70
Total net current assets 1,433.53 1,669.91 1,567.52 1,324.09 922.98
Miscellaneous expenses not written - - - - -
Total 2,791.81 2,517.72 2,524.58 2,432.19 1,359.21
Notes:
Book value of unquoted investments 1,000.67 610.66 648.46 911.19 276.10
Market value of quoted investments 58.43 56.75 56.59 - -
Contingent liabilities 562.79 - 338.98 113.65 57.18
Number of equity sharesoutstanding (Lacs) 2228.80 2228.80 2228.80 2182.59 1712.12




Profit And Loss account


66

(Rs crore)

Jun ' 13 Jun ' 12 Jun ' 11 Jun ' 10 Jun ' 09
Sources of funds
Owner's fund
Equity share
capital 44.58 44.58 44.58 43.65 34.24
Share application
money - - - 17.67 -
Preference share
capital - - - - -
Reserves &
surplus 1,791.25 1,872.58 1,902.46 1,860.94 1,098.12
Loan funds
Secured loans 502.01 65.94 110.43 152.02 101.85
Unsecured loans 453.97 534.62 467.11 357.91 125
Total 2,791.81 2,517.72 2,524.58 2,432.19 1,359.21
Uses of funds
Fixed assets
Gross block 414.94 389.29 364.05 274.88 234.1
Less : revaluation
reserve - - - - -
Less :
accumulated
depreciation 154.67 137.13 131.99 103.66 83.47
Net block 260.27 252.16 232.06 171.22 150.63
Capital work-in-
progress 38.91 46.06 19.95 25.69 9.5
Investments 1,059.10 549.59 705.05 911.19 276.1
Net current assets
Current assets,
loans & advances 4,065.93 4,019.39 3,620.19 3,625.87 2,904.68
Less : current
liabilities &
provisions 2,632.40 2,349.48 2,052.67 2,301.78 1,981.70
Total net current
assets 1,433.53 1,669.91 1,567.52 1,324.09 922.98
Miscellaneous
expenses not
written - - - - -
Total 2,791.81 2,517.72 2,524.58 2,432.19 1,359.21
Notes:

67

Book value of
unquoted
investments 1,000.67 610.66 648.46 911.19 276.1
Market value of
quoted
investments 58.43 56.75 56.59 - -
Contingent
liabilities 562.79 - 338.98 113.65 57.18
Number of equity
sharesoutstanding
(Lacs) 2228.8 2228.8 2228.8 2182.59 1712.12



























68

Cash flow Statement

(Rs crore)

Jun ' 13 Jun ' 12 Jun ' 11 Jun ' 10 Jun ' 09
Profit before tax -126.87 61.54 237.1 368.65 373.86
Net cashflow-operating
activity 275.24 183.55 18.12 24.6 267.55
Net cash used in
investing activity -533.2 -65.43 80.77 -730.78 -73.62
Netcash used in fin.
Activity 259.37 -128.12 -156.81 795.8 -309.08
Net inc/dec in cash and
equivlnt 1.41 -10 -57.92 89.62 -115.15
Cash and equivalnt
begin of year 220.5 230.5 292.61 202.99 318.14
Cash and equivalnt end
of year 221.91 220.5 234.69 292.61 202.99