Executive Summary

This project facilities to create their own tests. It would enable educational institute to

perform tests, quiz and create feedback forms. It asks faculty to create his/her set of

questions. Faculty then create groups and adds related students into the groups.

Further the tests ate associated with specific groups so that only associated students

can appear for the test. The results of the response would be available to the faculty of

the question set. Further the result would also be mailed to the student. This project

would be helpful for creating practice tests, say for educational institutes and as a

feedback form.

1
 1. TABLE OF
CONTENTAbstract………………………………………...……8
2. Objective………………………………………….....9-10

3. Scope of study……………………………………...11-12

4. Introduction………………………………….........13-14

5. The Problems…………………………………....…15

6. Purpose of study………………………………..…16-17

7. Research Methodology………………………..…..18-19

8. Introduction about the company……………..…..20-21

9. Sai computers Pvt. Ltd(overview)………………..22-29

10. Working capital management…………………….30-35

11. Classification of Working Capital……………..…36-49

12. Inventory management……………………………50-80

13. Company’s analysis………………………………..81-87

14. Conclusion Analysis…………………………...…..88-89

15. Suggestions and recommendations…………...…..90-91

16. Financial statements for Sai computers Pvt.Ltd…92-101

17. Bibliography…………………………………..…...102-103

2
ABSTRACT

This project is based on the study of working capital management in Sai Computer Pvt
Ltd. 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.

Sai Computer Pvt Ltd., is a leading domestic computer hardware and hardware
services company. Sai Computer Pvt Ltd. 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 firm’s working capital consists of its
investments in current assets, which includes short-term assets—cash and bank
balance, inventories, receivable and marketable securities.

This project tries to evaluate how the management of working capital is done in Sai
Computer Pvt Ltd.through inventory ratios, working capital ratios, trends,
computation of cash, inventory and working capital, and short term financing.

3
OBJECTIVES

4
 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 SAI COMPUTERS PVT LTD ., share company’s success, which
they make possible; to provide job security based on their performance; to
recognize their individual achievements; and help them gain a sense of satisfaction
and accomplishment from their work.

ALLIANCES and PARTNERSHIPS:

To provide world-class solutions and services to all our customers, Sai Computer Pvt.
Ltd. have formed Alliances and Partnerships with leading IT companies worldwide.

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.

5
SCOPE OF STUDY

6
 SCOPE OF THE STUDY

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.

7
INTRODUCTION

8
INTRODUCTION:

The project undertaken is on “STUDY OF WORKING CAPITAL MANAGEMENT

at Sai Computer Pvt Ltd.”.

It describes about how the company manages its working capital and the various steps
that are required in the management of working capital.

Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's
ability to fund operations, reinvest and meet capital requirements and payments.
Understanding a company's cash flow health is essential to making investment
decisions. A good way to judge a company's cash flow prospects is to look at its
working capital management (WCM).

Working capital refers to the cash a business requires for day-to-day operations or,
more specifically, for financing the conversion of raw materials into finished goods,
which the company sells for payment. Among the most important items of working
capital are levels of inventory, accounts receivable, and accounts payable. Analysts
look at these items for signs of a company's efficiency and financial strength.

The working capital is an important yardstick to measure the company’s operational

9
 and financial efficiency. Any company should have a right amount of cash and lines
of credit for its business needs at all times.

This project describes how the management of working capital takes place at
Sai Computer Pvt Ltd..

The Problems
In the management of working capital, the firm is faced with two key problems:

1. First, given the level of sales and the relevant cost considerations, what are the optimal
amounts of cash, accounts receivable and inventories that a firm should choose to maintain?

2. Second, given these optimal amounts, what is the most economical way to finance these
working capital investments? To produce the best possible results, firms should keep
no unproductive assets and should finance with the cheapest available sources of funds.
Why? In general, it is quite advantageous for the firm to invest in short term assets and to
finance short-term liabilities.

10
PURPOSE OF STUDY

11
 PURPOSE OF STUDY

The objectives of this project were mainly to study the inventory, cash and receivable
at Sai Computer Pvt Ltd., but there are some more and they are -

 The main purpose of our study is to render a better understanding of

the concept “Working Capital Management”.

 To understand the planning and management of working capital at Sai Computer Pvt
Ltd.

 To measure the financial soundness of the company by analyzing various ratios.

 To suggest ways for better management and control of working capital at the concern.

12
 RESEARCH
METHODOLOGY

13
 RESEARCH METHODOLOGY
 This project requires a detailed understanding of the concept – “Sai Computer Pvt
Ltd.”. Therefore, firstly we need to have a clear idea of what is working capital, how
it is managed in Sai Computer Pvt. Ltd., what are the different ways in which the
financing of working capital is done in the company.

 The management of working capital involves managing inventories, accounts

receivable and payable and cash. Therefore one also needs to have a sound knowledge
about cash management, inventory management and receivables management.

 Then comes the financing of working capital requirement, i.e. how the working
capital is financed, what are the various sources through which it is done.

 And, in the end, suggestions and recommendations on ways for better management
and control of working capital are provided.

Research Design: Exploratory and descriptive

Sample Design: Company-1
Period of Analysis – 5 years annual report highlighting financial performance
Data type: Secondary data
Location: Jail Chungi Office
Industry Type: Heavy electricals
Products: Transformers
14
INTRODUCTION ABOUT
THE COMPANY

15
SAI COMPUTER PVT LTD.
Our Company has an experience of over 25 years in providing business applications
and consultancy including surveys and digitization of maps & drawings. We have
developed our own technology for the Survey, GIS Mapping and Indexing. We are
well equipped for Mapping & Documentation of Transmission & Distribution
Network from 33 KV to LT system on base maps linked to GIS. We got empanelled
as GSP in 2009 and as MDASP in 2010 in Restructured Accelerated Power
Development and Reforms Program (R-APDRP) (Scheme of Government of India)
for providing automated systems for sustained collection of accurate base line data
and information upgrade for energy accounting.

Our Company develops the products based on our in-house design and engineering
capabilities. Our in-house software for designing transformers is frequently upgraded
to adapt to customer needs and further improve product quality. Our resource
planning software, ‘Production Management System’, helps to effectively streamline
the important processes of our business such as enquiry generation, order booking,
product planning, parts purchase, inventories management, orders tracking and sales
report.

16
SAI COMPUTER PVT LTD
– AN OVERVIEW

17
AN OVERVIEW ABOUT THE COMPANY

Our Company has an experience of over 25 years in providing business applications

and consultancy including surveys and digitization of maps & drawings. We have
developed our own technology for the Survey, GIS Mapping and Indexing. We are
well equipped for Mapping & Documentation of Transmission & Distribution
Network from 33 KV to LT system on base maps linked to GIS. We got empanelled
as GSP in 2009 and as MDASP in 2010 in Restructured Accelerated Power
Development and Reforms Programme (R-APDRP) (Scheme of Government of
India) for providing automated systems for sustained collection of accurate base line
data and information upgrade for energy accounting.

Our Company develops the products based on our in-house design and engineering
capabilities. Our in-house software for designing transformers is frequently upgraded
to adapt to customer needs and further improve product quality. Our resource
planning software, ‘Production Management System’, helps to effectively streamline
the important processes of our business such as enquiry generation, order booking,
product planning, parts purchase, inventories management, orders tracking and sales
report.

18
 History
Our Company was started by Mr. Hemant Kumar and Mr. Girish Kumar and
commenced its business with IT Consultancy Services in the Power Sector in the year
1984 with batch billing system of electricity consumers with a base of one lakh
consumers. . With a mindset to streamline the operations of our Company, in the year
1986, we entered the transformers segment by acquiring licenses, plant, goodwill and
name of Sai Lectric Private Limited (“SLPL”), incorporated by Mr. Hemant Kumar in
the year1980 SLPL was in the business of transformers maintenance for UP State
Electricity Board and Delhi Electric Supply Undertaking (DESU) upto 1000KVA.

In the year 2000, our Company developed Geographical Information System

software; thereby paving way for undertaking GIS based spot/handheld billing first
time ever in India. Currently, we are managing handheld electricity billing system for
more than 20 lacs consumers in about 25 towns of Uttar Pradesh. We have also
developed HT Consumer’s MRI Billing Software ‘Smriti’ that has been installed in
160 Divisions of UP Power Corporation limited headed by Executive Engineer. To
clarify, there are 68 districts in U.P .& every District is divided in to one or more
divisions. Overall there are around 200 divisions.
In addition to this, our Company also provides computer technology to power utilities
or their vendor undertakes consultancy, actual energy accounting and audit as well as
develops new technologies and equipments for energy conservation. Our end to end
software services includes installation, startup, training and maintenance with
managed operations.

Promoters
Mr. Girish Kumar

19
 Our Managing Director, Mr. Girish Kumar is an IITian from Kanpur and thus a
technocrat who has experience of over 35 years in the transformer industry and has
continually advanced in developing & innovating new products and technologies.He
has over 3 decades of technical, financial & top management experience and operates
the company hands on as the MD. His associations are also highlighted in the next
slide.

S.P. Singh, Director

Science graduate, he handles the critical functions of materials planning, production

planning, procurement & cash-flow management. He has over 45 years management
experience.

Nirmal Goel, Director:

  Aged 61 years, is one of the Promoters of our Company. He has over 40 years of
experience in the business of marketing and liasoning in electricity billing.

20
Quality Policy:

We have continued to maintain satisfactorily the quality management system within

the organization. We design, manufacture, supply and repair transformers, voltage
controllers, motor controllers and power factor controllers in conformity to the
standard requirements of ISO 9001:2008. We follow quality assurance plan to ensure
delivery of quality products and services

Awards:
Mr.GIRISH KUMAR-“BEST ENTERPRENEUR AWARD” FROM MSME, GOI IN
2007

Human Resource Development:

Our employee strength is our asset and we have retained with us

qualified and trained personnel over the years. Internal & external
training and development programs for manpower has improved
efficiency and effectiveness of production techniques like lean
manufacturing, quality circles, 5S, Kaizen that are already implemented in our
organization.

21
Our Approach: 
Our approach is towards sustainability through an integrated approach to health &
safety of all the employees & continually imparting them training in diverse areas. 

Sai Computers Ltd., Corporate Office-Sai Dhaam, Victoria Park, Meerut was
incorporated on 18-07-1984 by Technical Entrepreneur from I.I.T. Kanpur to provide
computer technology to business and industries, to undertake consultancy and actual
energy accounting and audit, to develop new methods and equipments for energy
conservation accounting and audit and as well as to develop new software systems
specifically for their application in power sector  like Spot Billing , Online Billing,
MIS, Meter Reading, Bill Generation and Bill Distributions through Hand Held
Machines / Mobiles and reduction of line losses and maintain power factor etc. Sai
Computers Pvt. Ltd. is providing business applications and consultancy including
survey, digitization of maps and drawings and have developed their own technology
for Survey, GIS Mapping, and Indexing. Electrical Mapping and Linking of
consumers from 33/11 KV SS to LT Pole

Energy Billing and Accounting Services

Loading of a set of Consumers as per the GIS and route sequencing done through one
time activity from the Billing Counters
Reading of Meter reading with the Hand Held terminal
Generation of the Bill and Printing of the Bill at Site
Collection of Payment through Cheque and generation of Receipt
Uploading of the Billed Consumer Data at the Billing Counters

22
CMRI/AMR Based Billing Services
Seamless Data import from CMRI
All Categories Billing as per tariff
Payment Collections
Load Analysis
Tamper Analysis
Double Meter Comparison
Energy Accounting

GIS Mapping and Indexing of Electrical Network and Consumers

Creation of Base Maps
DGPS/GPS Based Electrical Network Survey
Collection of Electrical Assets Attributes
Consumer Survey and Indexing
Matching of Consumer Survey Database with Billing Database
Plotting of Electricals Network and Consumers

23
 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"

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."

24
WORKING CAPITAL
MANAGEMENT

25
 CONCEPTUAL FRAMEWORK

INTRODUCTION TO WORKING CAPITAL

“Working Capital is the Life-Blood and Controlling Nerve Center of a business”

The working capital management precisely refers to management of current

assets. A firm’s 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

26
 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.

27
 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.

28
 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:

 Flexibility

 But short-term financing The optimal level of investments in current assets.

 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:

 The cost advantage is more risky than long-term financing. Following table
will summarize our discussion of short-term versus long-term financing.

29
 Maintaining a policy of short term financing for short term or temporary
assets needs (Box 1) and long- term financing for long term or permanent
assets needs (Box 3) would comprise a set of moderate risk –profitability
strategies. But what one gains by following alternative strategies (like by box
2 or box 4) needs to weighed against what you give up.

30
CLASSIFICATION OF
WORKING CAPITAL

CLASSIFICATION OF WORKING CAPITAL

31
 Working capital can be classified as follows:

 On the basis of time

 On the basis of concept

32
 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

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

33
 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.

FINANCING OF WORKING CAPITAL

34
 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.

35
 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.

Sai is a manufacturing concern so this requires them to keep a very sizeable

amount in working capital.

 Size of Business/Scale of Operations.

Sai has a good position in its segment and they are also spending their
operations in the domestic market as well as in foreign market. The scale of
operations and the size it holds in the market makes it a must for them to
hold their inventory and current asset at a huge level.

 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 69% from what it was in 2009, it is required to guard them against
the increasing requirements of the net current asset by way of efficient
working capital management. The sales and projected sales level determine
the investment in inventories and receivables.

36
 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.

WORKING CAPITAL CYCLE

The upper portion of the diagram above shows in a simplified form the chain
of events in a manufacturing firm. Each of the boxes in the upper part of the
diagram can be seen as a tank through which funds flow. These tanks, which
are concerned with day-to-day activities, have funds constantly flowing into
and out of them.

 The chain starts with the firm buying raw materials on credit.

 In due course this stock will be used in production, work will be carried out on
the stock, and it will become part of the firm’s work-in-progress.

 Work will continue on the WIP until it eventually emerges as the finished
product.

 As production progresses, labor costs and overheads need have to be met.

 Of course at some stage trade creditors will need to be paid.

 When the finished goods are sold on credit, debtors are increased.

37
 They will eventually pay, so that cash will be injected into the firm.

Each of the areas- Stock (raw materials, WIP, and finished goods), trade
debtors, cash (positive or negative) and trade creditors – can be viewed as
tanks into and from which funds flow.

Working capital is clearly not the only aspect of a business that affects the
amount of cash.

 The business will have to make payments to government for taxation.

 Fixed assets will be purchased and sold

 Lessors of fixed assets will be paid their rent

 Shareholders (existing or new) may provide new funds in the form of cash

 Some shares may be redeemed for cash

 Dividends may be paid

 Long-term loan creditors (existing or new) may provide loan finance, loans
will need to be repaid from time-to-time, and

 Interest obligations will have to be met by the business.

Unlike, movements in the working capital items, most of these ‘non-working

capital’ cash transactions are not every day events. Some of them are annual
events (e.g. tax payments, lease payments, dividends, interest and, possibly,

38
 fixed asset purchases and sales). Others (e.g. new equity and loan finance and
redemption of old equity and loan finance) would typically be rarer events.

SOURCES OF WORKING CAPITAL

SAI COMPUTERS PVT LTD has the following sources available for the
fulfillment 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.
 Societe Generale
 Standard Chartered Bank
 State Bank of Patiala
 State Bank of Saurashtra

 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.

Sai Computer Pvt Ltd financials issues Commercial Papers and had 4000
commercial papers in the year 2016.

39
SAI COMPUTER PVT LTD FINANCIALS:

CONSOLIDATED FINANCIAL PERFORMANCE

40
 WORKING CAPITAL POSITION :

CURRENT ASSET – TOTAL ASSET

PARTICULARS 2006 2005 2004 2003 2002

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

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 Sai Computer Pvt Ltd reveal the reason
behind it. How far their preference to current assets has affected the sales is
shown below.

NET CURRENT ASSET – SALES

PARTICULARS 2006 2005 2004 2003 2002

NET CURRENT 40343 34742 14301 18752 27065
ASSETS
SALES 238136 199886 154295 166604 127003
WORKING 16.12 142.93 -23.736 -30.7 -0.46
CAPITAL
%
INCREAS
E
SALES % 19.14 29.54 -7.38 31.18 8.7
INCREAS
E

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

41
 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

CURRENT ASSET – FIXED ASSET

PARTICULARS 2006 2005 2004 2003 2002

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.

COMPUTER and MICRO PROCESSOR BASED SYSTEMS

YEAR INSTALLED ACTUAL % CAPACITY

42
 CAPACIT PRODUCTI UTILIZATI
Y ON ON
2014 1150000 581805 50.59
2015 600000 448121 74.69
2016 525000 295192 56.23

DATA GRAPHIC/DISPLAY MONITOR/TERMINALS/HUBS

YEAR INSTALLED ACTUAL % CAPACITY

CAPACIT PRODUCTI UTILIZATI
Y ON ON
2014 250000 267326 106.93
2015 250000 259617 103.85
2016 350000 297991 85.14

That the fixed assets of the firm are being put to efficient use and the firm is
trying for optimum capacity utilization is something that can be easily
deduced. Whether the current assets or the working capital of the firm has
anything to do with it is for us to see. An increased production in normal
circumstances means better raw material to finished goods conversion rate, i.e.
the firm is taking less of time in the production process and this happens when
the current asset employed in relation with the fixed ones are at optimum. The
other notable feature here is that though the firm has added on to its installed
capacity in all three years, they were still able to increase the capacity
utilization. That they have been able to do it shows that the more current
assets, especially inventory used in relation to the fixed assets, i.e., plant and
machinery and their management has only helped in increasing their
utilization to the maximum.

CURRENT ASSET – CURRENT LIABILITY

PARTICULARS 2016 2014 2013 2012 2011

43
CURRENT ASSETS 100970 81533 54091 45042 55985
CURRENT LIABILITES 60627 46791 39790 26290 28920
% CURRENT ASSETS 23.84 50.7 20.09 -19.54 8.9
INCREASE
%CURRENT LIABILITES 29.57 17.6 51.35 -9.1 19.45
INCREASE

The 16.12% increase in Net Current assets despite of the fact that there has
been an increase in the Current Assets by 23.84% and increase in Current
Liability has been by 29.57% over that of the previous year has to be
attributed to the fact that in 2005, the company showed such a high increase in
CA, that it is still being offset. This is an indication as to the expanding
operations of the firm. Sai computers Pvt Ltd has increased its current assets
in order to meet the increasing sales. The firm’s level of liquidity being high,
we need a check on whether it affects the return on assets.

44
Inventory Management

INVENTORY MANAGEMENT

Inventories

Inventories constitute the most important part of the current assets of large
majority of companies. On an average the inventories are approximately 60%
of the current assets in public limited companies in India. Because of the large
size of inventories maintained by the firms, a considerable amount of funds is

45
 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 firm’s objective should be to be in consonance

with the shareholder wealth maximization principle. To achieve this, the firm
should determine the optimum level of inventory. Efficiently controlled
inventories make the firm flexible. Inefficient inventory control results in
unbalanced inventory and inflexibility-the firm may sometimes run out of
stock and sometimes pile up unnecessary stocks.

46
 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 buying raw materials, it has to decide lots in which it has to
purchase on replenishment. 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. 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

Ordering cost increase with the number of orders placed; thus the more
frequently inventory is acquired, the higher the firm’s ordering costs. On the
other hand, if the firm maintains large inventory’s 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

47
 Carrying costs are varying with inventory size. This behavior is contrary to
that of ordering costs which decline with increase in inventory size. The
economic size of inventory would thus depend on trade-off between carrying
costs and ordering cost.

Composition 2006 2005 2004

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

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. And the low
composition of work-in-progress is understandable as because of the nature of
the business firm is involved in.

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 Sai Computers Private
Ltd. retail expansion. Sai Computers pvt Ltd. caters to the need of the two
separate segments:

a) Institutions for which they manufacture against orders and,

b) Retail segment of the market.

They are more into retail than earlier and at present more than 650 retail outlets
branded with Sai Computers pvt Ltd. sign ages and more are in the pipeline

48
 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. It is not desirable the same degree of control all
the items. The firm should pay maximum attention to those items whose value
is highest. The firm 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 Sai Computers pvt Ltd. 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

49
 threat involved in default and accidental breakdowns. The levels of safety
stock usually vary according to the usage.

Conversion Periods Analysis

Raw Material

Particulars 2014 2015 2016

Raw Material Consumption 1176.73 682.05 592.92
Raw Material Consumption/day 3.32 1.86 1.62
Raw Material Inventory 129.29 184.53 340.08
Raw Material Holding Days 40.15 99.20 209.92

The raw material conversion period or the raw material holding cost has
increased from 40 to 100 days, because in e 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. It would be
to the benefit of the firm to reduce the production process and increase the
conversion rate still as the firm is required to meet the increasing demand.

Work-in-progress

Particulars 2014 2015 2016

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

50
 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. More the time it spends lesser its
efficiency would be in the market. Here the firm has been able to bring down
its WIP conversion periods.

Finished Goods

Particulars 2014 2015 2016

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. Sai Computers pvt Ltd. has around 15% of the market in desktop and it
is the market leader in this segment. So it is only natural that they are able to
better their conversion rate of finished goods to sales.

Operating Cycle

Particulars 2014 2015 2016

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

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. That the firm has been able to reduce
the ratio is in itself an achievement as they were having huge stocks of
inventory. But the reduction in the cycle could also be attributed to the boom
in the market and the growth it is expected to reach. This boom automatically

51
 ensures the demand for the finished goods and thus helping in it to garner sales
for the firm.

Raw Material Consumption

Particulars 2014 2015 2016

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 Taiwan and is purchased
in US$. 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. But this is the scenario witnessed in the industry
as a whole and though Sai Computers is into expanding its operation to
Uttaranchal it in the present state is would be affected by a change in the
import duty structure.

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.

52
 CASH MANAGEMENT

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

If you have insufficient working capital and try to increase sales, you can
easily over-stretch the financial resources of the business. This is called
overtrading.

53
 Early warning signs include:

 Pressure on existing cash

 Exceptional cash generating activities e.g. offering high discounts for early
cash payment

 Bank overdraft exceeds authorized limit

.
 Seeking greater overdrafts or lines of credit

 Part-paying suppliers or other creditors

 Paying bills in cash to secure additional supplies

 Management pre-occupation with surviving rather than managing

 Frequent short-term emergency requests to the bank (to help pay wages,
pending receipt of a cheque).

CASH MANAGEMENT IN SAI COMPUTERS:

The cash management system followed by the Sai Computer 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.

54
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.

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.

In cash management the collect float taken for the cheques to be realized into
cash is irrelevant and non-interfering because banks such as Standard
Chartered, HDFC and CitiBank who give credit on the basis of these cheques
after charging a very small amount. These credits are given to immediately
and the maximum time taken might be just a day. The amount they charge is
very low and this might cover the threat of the cheque sent in by two or three
customers bouncing. Even otherwise the time taken for the cheques to be
processed is instantaneous. Their Cash Management System is quite efficient.

Cash-Current Liability

Particulars 2014 2015 2016

Absolute Liquid Ratio 0.24:1 0.31:1 0.11:1

55
 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.

Dividend Policy-Cash

Particulars 2014 2015 2016

Dividend Policy% 210 310 400
Shift in Sales 154295 199886 238136
Cash Balance 4463.43 14582.65 14529.29
Cash in Hand 118.33 128.97 128.97

CASH BALANCE
16000

14000

12000

10000

8000 Cash Balnce

6000 Cash in hand

4000

2000

0
2004 2005 2006

56
 The other notable feature in Sai Computer statements has been the growing
dividend policy of the firm. The payment of dividend means a cash outflow.
Thus cash position is an important criterion at the time of paying dividends.
There is a theory that greater the cash position and ability to pay dividends.
The firm has adopted a policy of disbursing the revenue earned as profits to
the shareholders as dividends as could be seen from the increasing % of
dividends declared.

Particulars 2014 2015 2016

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 of cash in hand
maintained by the firm as a source of liquidity could be reduced, i.e. the

57
 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)(Basic EPS declined from 8 in 2005 to 6.74 in 2006). 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 2014 2015 2016

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 firm’s inflows from
operations primarily due to the reason that the cash generated from the
operations is the lowest in three years. And the firm’s growing dividend policy
has contributed to the outflows in financing activities.

Cash Flow in Operating Activities

Working Capital Changes

58
Working Capital Changes 2014 2015 2016
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

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. That the cash from operations has declined has
affected the current liability index of the firm.

Cash Flow in Investing Activities

Investments in Mutual Funds 2014 2015 2016

Investments (year end) 13539 12277.44 28059.88
Purchase of Investment -65992 -53075.99 -59249.81
Disposal/Redemption of Investment 65312 65489.84 52087.36

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. That is
the firm has redeemed to realize cash as to meet its expanding operations, fund
the inventory procurement and meet the obligations.

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. This disposal creates a fund, which can be used
by the company as and when the need arises.

59
 Cash vs. Marketable Securities

The investment in marketable securities rather than having large cash balances
in something that has been given thought for by the firm. This is because
while a firm gets revenue in the form of interests by investments, it actually
has to pays certain amount money to the banks for maintaining current
accounts and fixed deposits usually have a longer maturity period. That is, the
problem with high investments is that the opportunity to earn is lost, thus a
firm has to maintain an optimal cash balance. But the investment in mutual
funds or other marketable securities might create a problem of investment, as
they might not be readily realizable as say liquid cash or the amount deposited
in the current account. The investments in say fixed assets say may earn a
fixed rate of interest but they have a maturity period attached to them.

In Sai Computers, Standard Chartered is the concentration bank in which all

the inflows from the deposit banks are concentrated and passed on to the
disbursement banks for further disbursement.

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.

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.

60
 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.

RECEIVABLES MANAGEMENT

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

61
 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.
6. Establish credit limits for each customer and stick to them.
7. Continuously review these limits when you suspect tough times are coming or if
operating in a volatile sector.
8. Keep very close to your larger customers.
9. Invoice promptly and clearly.

10. Consider charging penalties on overdue accounts.

11. Consider accepting credit /debit cards as a payment option.

12. Monitor your debtor balances and aging schedules, and don't let any debts get
too old.

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.

62
 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.

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
 Get external help if you own efforts fail.
 Don’t 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, it
lessens the problem.
 When asking for your money, be hard on the issue – but soft on the person. Don’t give
the debtor any excuses for not paying.
 Make that your objective is to get the money, not to score points or get even.

63
 RECEIVABLES MANAGEMENT IN SAI COMPUTERS PVT LTD:

PARTICULARS 2016 2015 2014 2013

DEBTORS TURNOVER RATIO 5.21 5.80 5.53 6.62
AVERAGE COLLECTION PERIOD 70 63 66 55

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

PARTICULARS 2016 2015 20144

PROVISION FOR DOUBTFUL DEBTS(CASH FLOW) 3 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

64
 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
 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 debtor’s 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 2016 2015 2014 2013

CREDITORS TURNOVER RATIO 16.44 15.68 21.29 21.14

PAYMENT PERIOD 22 23 17 16

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.

65
 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)

MANAGING PAYABLES (Creditors)

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?

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!).

66
 Remember that a good supplier is someone who will work with you to enhance the
future viability and profitability of your company.

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

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

67
 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 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.

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 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.

WORKING CAPITAL & SHORT-TERM FINANCING

CONSORTIUM BASED FINANCING

Current Working Capital Limits

NAME OF THE BANK FUND BASED NON-FUND BASED

INDIAN BANK 300 250
SYNDICATE BANK 200 100
TOTAL 500 350
In order to finance the working capital needs of the firm in the form of Working
Capital Demand Loan, there is a consortium of nine banks. The consortium if banks
provide a fund based limit of 125 Crores which comprises of cash credit and working
capital demand loans and non-fund based limits which has bank gurantee and letter of
credit subject to a limit of 1375 Crores. The Lead Bank in this consortium of banks is
State Bank of India and the second lead bank is ICICI. It is SBI, which fixes the
limit on the basis of consortium. They, in consultation of the company decide the
allocation of limit to various member banks. The allocation cannot be higher than the

69
 limits fixed by it. SBI is the biggest contributor in the consortium for both fund and
non-fund based limits with about

31.30 in funds and 34.02 in non-fund limits. The ratio of both limits for the year
2006 is 0.23:0.77

It is on the basis of the accounts receivable that the banks come to an agreement with
regards to the limits imposed. Though it is the fund based limits that finance the
working capital requirements, the non-fund based limits are important for the
management of the working capital as there might be clients who are not willing to
sell on open credit and might be demanding letters of credit before any advances.

RENEWAL OF LIMITS

LIMITS 2016 2015 2014

FUND BASED 11500 11500 11500
NON FUND BASED 48500 38500 28500
TOTAL 60000 50000 40000

All banks sanction the limits for a period of one year. Thereafter it is to be renewed
every year. SBI appraises the limit on the basis of consortium. The individual banks
appraise for their own individual limit. The non fund based limits of the firm in
consortium financing has been subjected to change for the past two years as per the
requirements of the firm and the consent of the lead bank to its proposal. It was
around 385 Crores in 2005 and had been risen to around 485 Crores in 2006.

A proposal has been made by the firm to further appraise the limits by 100 Crores
to 585 Crores in view of the growing operations of the firm with full
interchangeability between letter of credit and bank guarantee limits for operational
flexibility. Allocation of the fund based and non based limits among the banks based
on operational convenience rather than allocating the fund based and non fund based
on the same ratio is also among the proposals made by the firm.

The company needs to provide the following information to bank for appraisals:

 Credit Monitoring Appraisal

 Write Up on company

70
 Share holding pattern
 List of the directors

CONSORTIUM MEETING :

All the members of the consortium are required to meet to discuss various issues
relating to the working facilities. As per RBI guidelines, the lead bank, i.e., SBI
should ensure that one consortium meeting is held every quarter and this meeting has
to be arranged by Sai Computer.

DOCUMENTATION and JOINT DOCUMENTATION:

There are various documents that need to be signed at the time of renewal or
inducting any bank to the consortium. The various documents are as follows:

 Loan agreement
 Hypothecation agreement for movable machinery
 Hypothecation agreement for movables and book debts
 Counter Indemnity

The above are the standard agreements asked for by the banks. The common seal has
to be witnessed by the company secretary and one of the directors of the company.

As of 2005, no additions or deletions were made to the consortium of the banks. But
over the years the number of banks in the consortium have been reduced. Indian
Banks and State Bank of Hyderabad are the two banks which were earlier a part of the
consortium.

Joint Documentation is executed between the company and the consortium of banks
for the working capital facilities extended by the consortium to the company. The
joint documentation is valid for three years. The documents comprising joint
documentation are:

 Working Capital consortium agreement

 Joint deed of documentation
 Inter se agreement between bankers

71
 Letter of authority to lead bank by other consortium banks
 Letter of authority to second lead bank by other consortium banks
 Undertaking to create charge on the assets of the company.

ALLOCATION OF LIMIT BY LEAD BANK

SBI appraises the limit on behalf of the consortium. It in consultation with the
company decided the allocation of the limit to various member banks. The allocation
of any member bank cannot be higher than the limit sanctioned by it. The drawing
power for it fund based limits out of the consortium are determined on the basis of the
stock statement submitted by the company. Sai Computer is required to submit the
stock statement to all member banks in consortium for every month.

FINANCIAL FOLLOW UP REPORTS ( FFRI & FFRII):

Every quarterly and half quarterly intervals, the firm submits Financial Follow Up
Reports I and II. FFR I is an extract of the balance sheet. In this report, the company
is required to submit the details of sales, current assets and current liabilities for the
quarter and the estimates for the current year. FFR II – the company is required to
prepare P&L, B/S and Cash Flow in a different format. The information is to be
provided for the last year (actual), current year half yearly results (actual) and the
estimates for the next year.

SHORT TERM FINANCING

Other than the investment in current assets, the firm also has to be concerned with
short-term to long-term debt as this plays a very important role in determining the
amount of risk undertaken by the firm. That is , the firm not only has to be concerned
about current assets but also the sources through which they are financed. A firm
before financing in either of the two, has to take into consideration various aspects.
While short term might seem the ideal way to finance your assets than the long term
due to shorter maturity period and also less of costs are involved, there is an inherent
risk in short term financing due to fluctuating interest rates and due to the reason that
the firm might be unable to reay the amount in a shorter span of time.

72
SECURED LOANS 2016 2015 2014 2013
SHORT TERM 3849 4991.28 6903.7 4987.52
LONG TERM 0 530.07 0 3461.36
TOTAL 3849 5521.35 6903.7 8448.88
%SHORT TERM 100 90.4 100 59.03

Under secured loan cash credit, along with non fund based facilities, foreign currency
term loan from banks are secured by way of hypothecation of stock-in-trade, book
debts as first charge and by way of second chanrge on all the immovable and movable
assets of the parent company. Term loan in Indian rupees from a bank is subject to a
prior charge in favour of company’s bankers on book debts and stock in trade for
working capital facilities.

UNSECURED LOANS 2016 2015 2014 2013

SHORT TERM 15104 2593.39 63.94 76.84
LONG TERM 11 17 169.51 3261.42
TOTAL 15115 2610.39 233.45 3338.26
% SHORT TERM 99.93 99.348 27.38 2.3

Here Sai Computer has a major portion of their financing done through short term
financing than long term financing. The preference of short term financing to long
term as such is not the part of any policy employed by the firm but it was due to the
reason that the interest rates in short term were more investor friendly and the cost
involved in them were also low. At present, we can see that the firm is moving more
towards long term financing as the interest terms in the long term has reduced
compared to the short term.

YEAR- END COMMERCIAL PAPERS

PARTICULARS 2016 2015 2014 2013

COMMERCIAL 4000 2500 --- 3000
PAPERS

73
 The credit rating by ICRA continued at ‘A1+’indicating highest safety to company’s
commercial paper program of Rs. 75 Crores. It acts as an effective tool in reducing
the interst cost and is used for financing inventories and other receivables. As and
when the firm issues commercial papers, it sends a letter to the leader of the
consortium, i.e., SBI to reduce from the fund based limits the amount it has issued in
the form of the commercial papers. Suppose the firm issues 30 Crores as commercial
papers and the fund based limits are say 115 Crores. Then firm sends a letter to SBI to
reduce the existing fund based limits from 115 to 85 Crores.

In terms of desirability, the commercial papers are cheaper and advantageous to the
firm compared to the consortium financing. The main advantage being the interest
rate which is lower than the bank rates existing under consortium financing. But the
firm depends on both and for working capital financing, it is dependent on the banks
for funds sich as working capital demand loans and cash credits. There is no point in
the firm not making use of the fund based limits in the consortium banking as their
commercial papers are restricted to 75 Crores.

MERITS OF COMMERCIAL PAPERS:

 It is an alternative source of raising short-term finance, and proves to be handy during

periods of tight bank credit.
 It is a cheaper source of finance in comparison to the bank credit.

DEMERITS OF COMMERCIAL PAPERS:

 It is an impersonal method of financing.

 It is always available to the financially sound and highest rated companies.
 The amount of lonable funds available in the commercial paper market is limited to
the amount of excess liquidity of the various purchasers of commercial paper.

74
COMPANY’S ANALYSIS

COMPANY STRUCTURE
AND DEVELOPMENTS

75
 FINANCIAL GRAPHS

 Gross Business Income:

Consolidated Revenue for the year grew to Rs. 11855 crores. Services revenue grew
by 31%, from Rs. 274 crores to Rs. 360 crores in the current year. The Compounded
Annual Growth Rate (CAGR) for the preceding five years is 45%.

76
 Profit before Tax:

PBT grew by 11% from, Rs. 385 crores in the previous year to Rs. 429 crores in the
current year. The Compounded Annual Growth Rate (CAGR) for the preceding five
years is 53%.

77
 Profit after Tax:

Profit after tax grew by 13%, from Rs. 280 crores in the previous year to Rs. 316
crores. The Compounded Annual Growth Rate (CAGR) for the preceding five years is
36%. Profits for the current year are after a provision for Rs. 106 crores for current tax
expense, Rs. 3 crores for deferred tax expense and Rs. 4 crores for Fringe Benefit
Tax.

 Earnings Per Share:

Basic EPS grew from Rs. 16.7 in the previous year to Rs. 18.7 in the current year.
Diluted EPS grew from Rs. 16.5 in the previous year to Rs. 18.6 in the current year.

78
 Dividend:

The Company distributed dividends @ 100% per share in each of the first three
quarters of the current year. The company proposes to pay a final dividend of 100%
per fully paid up equity share of Rs. 2/- each. The interim dividends paid together
with proposed final dividend total to 400% for the current year, entailing an outflow
of Rs. 156 crores, including distribution tax.

79
 Net worth/ Shareholders Fund:

Net Worth grew from Rs. 698 crores as at previous year-end to Rs. 860 crores as on
June 30, 2007. Share capital as at year-end is Rs. 34 crores divided into 16.9 crores
shares of Rs. 2/- each. Reserves & surplus as at year-end are Rs. 826 crores after
appropriating Rs 156 crores for dividends. Book value per share grew from Rs. 41.3
as at June 30, 2006 to Rs.50.8 as at June 30, 2007.

During the year, the Company allotted 4.2 lakh shares under Employee Stock Option
Scheme realizing Rs. 4.4 crores.

 Borrowings:

Year-end loan balances increased from Rs. 85 crores as on June 30, 2006 to Rs. 236
crores as on June 30, 2007. The increase in loan balances was mainly to fund growth

80
 in Computing Business including System Integration. Debt-Equity ratio [Debt / (Debt
+ Equity)] is 22%.

 CURRENT ASSET RATIO:

81
CONCLUSION ANALYSIS

82
 CONCLUDING ANAYSIS

 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 debts doubtful 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 2016 return on investment is good, but it got reduced as compared to
39.01% return in 2015.
 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.

 Sai Computer 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.

83
SUGGESTIONS AND
RECOMMENDATIONS

84
 SUGGESTIONS AND RECOMMENDATIONS
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.

Sai Computer 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.

85
 FINANCIAL STATEMENTS FOR SAI
COMPUTERS PVT LTD.

Last 4 year Balance Sheet:

Although debt as a percent of total capital increased at Sai computers over the last
fiscal year to 21.53%, it is still in-line with the IT Services industry's norm.
Additionally, even though there are not enough liquid assets to satisfy current
obligations, Operating Profits are more than adequate to service the debt. Accounts
Receivable are among the industry's worst with 28.44 days worth of sales outstanding.
This implies that revenues are not being collected in an efficient manner. Last,
inventories seem to be well managed as the Inventory Processing Period is typical for
the industry, at 21.29 days.

Currency in As of: Jun 30 Jun 30 Jun 30 Jun 30

Millions of Indian Rupees 2 20 2006 2
0 05 Recla 0
0 Re ssifie 0
4 st d 7
R at
e ed
st
a
t
e
d

Assets        

Cash and Equivalents 1,452.3 2,512.7 2,149.2 1,976.5

Short-Term Investments 114.8 1,573.6 3,137.7 2,939.9

86
TOTAL CASH AND SHORT TERM
1,567.1 4,086.3 5,286.9 4,916.4
INVESTMENTS

10,520.
Accounts Receivable 4,390.4 6,103.1 7,691.4
0

Other Receivables 228.2 400.5 468.1 593.4

11,113.
TOTAL RECEIVABLES 4,618.7 6,503.6 8,159.5
4

Inventory 2,804.2 3,493.9 4,696.1 7,918.8

Prepaid Expenses 107.0 163.0 146.0 287.8

Other Current Assets 23.8 56.4 86.8 84.8

24,321.
TOTAL CURRENT ASSETS 9,120.8 14,303.2 18,375.3
2

Gross Property Plant and Equipment 1,406.1 1,404.7 1,731.9 2,431.0

Accumulated Depreciation -749.1 -744.9 -852.4 -966.5

NET PROPERTY PLANT AND

657.0 659.8 879.5 1,464.5
EQUIPMENT

Goodwill -- -- 0.2 0.8

Long-Term Investments 2,190.9 -- -- --

Deferred Tax Assets, Long Term 59.1 -- -- --

Other Intangibles -- 95.3 32.4 30.9

Other Long-Term Assets -- 5.1 71.8 16.0

87
 25,833.
TOTAL ASSETS 12,027.9 15,063.4 19,359.2
4

       

LIABILITIES & EQUITY        

Accounts Payable 3,390.6 4,100.9 5,964.8 8,298.5

Accrued Expenses 100.4 101.0 140.4 209.8

Short-Term Borrowings -- 307.9 784.9 1,182.4

Current Portion of Long-Term

690.4 499.6 0.4 892.5
Debt/Capital Lease

Current Income Taxes Payable 30.1 80.9 77.4 252.8

Other Current Liabilities, Total 2,914.6 3,377.3 4,687.9 5,216.6

Unearned Revenue, Current 536.4 965.8 557.9 775.2

16,827.
TOTAL CURRENT LIABILITIES 7,662.6 9,433.4 12,213.7
8

Long-Term Debt 15.8 7.2 60.1 284.0

Deferred Tax Liability Non-Current 109.0 73.5 107.6 124.8

Other Non-Current Liabilities 13.9 3.8 1.0 --

17,236.
TOTAL LIABILITIES 7,801.3 9,517.9 12,382.4
6

Common Stock 328.9 334.4 337.5 338.3

Additional Paid in Capital 673.9 883.7 1,044.5 1,087.9

88
Retained Earnings 3,193.2 4,297.3 5,565.2 7,141.4

Comprehensive Income and Other 30.6 30.1 29.6 29.2

TOTAL COMMON EQUITY 4,226.6 5,545.5 6,976.8 8,596.8

TOTAL EQUITY 4,226.6 5,545.5 6,976.8 8,596.8

TOTAL LIABILITIES AND 25,833.

12,027.9 15,063.4 19,359.2
EQUITY 4

Last 4 year Cash Flow Statement:

In 2007, cash reserves at Sai Computer fell by 172.7M. However, as a percent of
revenues, this change was similar to the IT Services industry median. By looking at
the Cash Flow Statement, analysts can easily see the sources and use of cash
generated throughout the year.

Currency in As of: Jun 30 Jun 30 Jun 30 Jun 30

Millions of Indian Rupees 2 20 2006 2
0 05 Recla 0
0 Re ssifie 0
4 st d 7
R at
e ed
s
t

89
 a
t
e
d

NET INCOME 1,751.1 2,277.0 2,803.6 3,159.5

Depreciation & Amortization 180.1 152.4 124.3 144.0

Amortization of Goodwill and Intangible

-- -- -- 4.1
Assets

DEPRECIATION & AMORTIZATION,

180.1 152.4 124.3 148.1
TOTAL

(Gain) Loss from Sale of Asset -0.4 -1.6 0.5 0.6

(Gain) Loss on Sale of Investment -79.6 -84.9 -61.5 -55.2

Asset Writedown & Restructuring Costs 0.0 0.5 -- --

Other Operating Activities 292.8 31.2 79.6 271.8

Provision & Write-off of Bad Debts 14.8 14.4 7.2 9.2

-
3
,
1
Change in Accounts Receivable -1,593.4 -1,993.4 -1,724.7
5
8
.
8

Change in Inventories -423.3 -689.7 -1,202.2 -

3

90
 ,
2
2
2
.
7

Change in Accounts Payable 1,471.8 1,561.6 2,759.5 3,112.2

CASH FROM OPERATIONS 1,614.0 1,267.5 2,786.3 264.7

Capital Expenditure -180.7 -267.8 -424.3 -674.5

Sale of Property, Plant, and Equipment 3.5 10.7 80.3 1.6

Investments in Marketable & Equity

73.7 841.4 -1,453.6 289.0
Securities

CASH FROM INVESTING 30.8 622.4 -1,683.3 -231.9

Short-Term Debt Issued 41.1 169.5 -- --

Long-Term Debt Issued 200.8 231.3 200.5 1,837.2

TOTAL DEBT ISSUED 241.9 400.8 200.5 1,837.2

Short Term Debt Repaid -- -- -172.3 -74.7

Long Term Debt Repaid -707.9 -302.7 -- -250.0

TOTAL DEBT REPAID -707.9 -302.7 -172.3 -324.7

Issuance of Common Stock 283.3 215.2 163.9 44.2

Common Dividends Paid -866.2 -1,047.4 -1,526.6 -

1

91
 ,
5
4
6
.
1

-
1
,
5
TOTAL DIVIDEND PAID -866.2 -1,047.4 -1,526.6
4
6
.
1

Other Financing Activities -98.9 -95.4 -132.0 -216.1

CASH FROM FINANCING -1,147.8 -829.5 -1,466.5 -205.5

NET CHANGE IN CASH 497.1 1,060.4 -363.5 -172.7

Last 4 year Income Statement:

Year over year, Sai Computers Ltd. has seen revenues remain relatively flat (113.7B
to 116.9B), though the company was able to grow net income from 2.8B to 3.2B. A
reduction in the percentage of sales devoted to cost of goods sold from 93.21% to
92.53% was a key component in the bottom line growth in the face of flat revenues.

Currency in As of: Jun 30 Jun 30 Jun 30 Jun 30

Millions of Indian Rupees 2 2 2006 20

92
 0 0 Recla 07
0 0 ssifie
4 5 d
R
R es
e ta
s te
t d
a
t
e
d

77,478. 116,853.
Revenues 43,064.4 113,683.1
9 0

Other Revenues -- -35.7 61.6 63.8

77,443. 116,916.
TOTAL REVENUES 43,064.4 113,744.7
2 8

71,496. 108,121.
Cost of Goods Sold 38,701.3 105,964.4
1 4

GROSS PROFIT 4,363.1 5,947.1 7,780.3 8,795.4

Selling General & Admin Expenses,

2,268.8 3,305.9 3,764.3 4,527.1
Total

Depreciation & Amortization, Total 180.6 152.4 124.3 148.1

Other Operating Expenses -- -84.0 84.8 91.2

OTHER OPERATING EXPENSES,

2,449.4 3,374.3 3,973.4 4,766.4
TOTAL

93
OPERATING INCOME 1,913.7 2,572.8 3,806.9 4,029.0

Interest Expense -82.8 -77.6 -132.6 -214.6

223.8

Interest and Investment Income 132.1 146.1 208.0

NET INTEREST EXPENSE 49.4 68.5 75.4 9.2

Currency Exchange Gains (Loss) 37.9 145.0 -144.4 189.6

Other Non-Operating Income (Expenses) 32.0 -- -- --

EBT, EXCLUDING UNUSUAL ITEMS 2,033.0 2,786.3 3,737.9 4,227.8

Gain (Loss) on Sale of Investments 79.6 85.0 61.5 55.2

Gain (Loss) on Sale of Assets 0.4 1.6 -0.5 -0.6

Other Unusual Items, Total 2.3 87.2 4.0 4.7

Insurance Settlements 2.3 3.7 4.0 4.7

Other Unusual Items -- 84.0 -- --

EBT, INCLUDING UNUSUAL ITEMS 2,115.1 2,960.1 3,802.9 4,287.1

Income Tax Expense 364.0 683.1 999.3 1,127.6

Earnings from Continuing Operations 1,751.1 2,277.0 2,803.6 3,159.5

NET INCOME 1,751.1 2,277.0 2,803.6 3,159.5

NET INCOME TO COMMON 1,751.1 2,277.0 2,803.6 3,159.5

94
 INCLUDING EXTRA ITEMS

NET INCOME TO COMMON

1,751.1 2,277.0 2,803.6 3,159.5
EXCLUDING EXTRA ITEMS

BIBLIOGRAPHY

95
 BIBLIOGRAPHY

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
 Internet ----www.hclinfosystems.in
 Textbooks on financial management -
 I.M.Pandey
 Khan and Jain
 Prasanna Chandra

96