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ON
WORKING CAPITAL
MANAGEMENT
OF
HERO CYCLES LTD.
INTRODUCTION TO HERO CYCLES LIMITED
OBJECTIVES OF STUDY:
On the Basis of
On the Basis of Time
Concept
Amount
of
Working
Capital
Permanent
Time
FACTORS DETERMINING THE WORKING CAPITAL
Strengths:-
Good brand equity
High quality standards
High production capacity
Own research & development centre
Weaknesses:-
The composition of current assets is not good
Inventory control is not proper.
Non up gradation of foreign technology
Advertisement of the products are not done regularly.
Opportunity:-
Exports of Cycles from India have high growth potential.
Government is also helping in promoting their business as its R& D
center is being recognized by government.
HCL has become a generic name for cycle. So, company has great
opportunities in such market.
Company can secure more share in the International Market.
Threats:-
Smaller players in the market are using Hero’s prices as a shield to
push their products at lower prices.
Growing competition in the unorganized sector, which are able to
price their products cheaper because of low overheads.
Increase in steel prices.
LIMITATIONS OF STUDY:
Only the printed data about the company will be available and
not the back–end details.
Future plans of the company will not be disclosed to the trainees.
The company has a long working capital cycle which means that
large amount of funds are tied up in the working capital cycle.
HERO CYCLES LIMITED they follow the moderate policies of
working capital. They enjoy the benefits of both conservative and
aggressive policy.
The acid test ratio would be 1:1 but they are achieving 1.40
The optimum current ratio would be 2:1 but co. is achieving 1.92
From the above finding it can conclude that they have an efficient
management of working capital. So they are achieving more than the
projected ratio’s of working capital.
SUGGESTIONS AND RECOMMENDATIONS:
The company should keep more cash for the liquidity position of the
company.
Inventory control is not proper. The company has not defined the minimum
and the maximum stock level scientifically. Therefore there is blockage of
funds.
The company is enjoying a good current position. It should take steps to
further improve its position by repositioning the composition of current
assets.
Large amounts of funds are blocked in debtors. Company should reduce its
debtors so that the blocked amount is properly utilized.
The company should negotiate with bank on the interest rate issue. 70% of
the total working capital need is filled from Canara Bank and IDBI, Punjab
national bank.
THANKYOU