Summer T in Hindalco

SUMMER INTERNSHIP PROJECT REPORT
ON
WORKING CAPITAL MANAGEMENT
RENUKOOT, UTTAR PRADESH

Submitted in partial fulfillment of the requirements of the Two Year Full Time Post Graduate Diploma in Management
By: Name: Pratyush Kumar Dubey Roll No: 2012111 Batch: 2012-14
Under the Guidance of: 1. Dr. Vikas Saxena I.T.S, Ghaziabad 2. Mr. Vimal Raheja Sr. Manager
Institute Of Technology & Science

Mohan Nagar, Ghaziabad 201007 Session: 2012-14
Working Capital Management of Hindalco Industries Limited
CERTIFICATE OF ORIGINALITY
I hereby declare that this Summer Internship Project is my own work and that, to the best of my knowledge and belief, it reproduces no material previously published or written that has been accepted for the reward of any other degree or diploma, except where due acknowledgment has been made in the text.
(Signature) Student Name: PRATYUSH KUMAR DUBEY Roll No Batch Date: : : 2012111 2012-14
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CERTIFICATE
This is certify that Mr. PRATYUSH KUMAR DUBEY, PGDM (2012-14) batch a student of Institute of Technology & Science, Mohan Nagar Ghaziabad has undertaken the project on WORKING CAPITAL MANAGEMENT. The survey, data collection & analysis work for preparing the project has been carried out by the student in the partial fulfillment of the requirements for the award of PGDM, under my guidance and supervision.
I am satisfied with the work of Mr. PRATYUSH KUMAR DUBEY
(Signature) Faculty Mentor Name: Dr. VIKAS SAXENA Designation Date : FACULTY (STATISTICS&OPERATION REASERCH) :
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ACKNOWLEDGEMENT
In an organization, is it an industry, a school or society, no outcomes can be achieved by one man working in isolation. Its always a group working and achieving the outcome in totality. It is the outcome of all the guidance and support that I received from this organization. This project has been an endeavor to integrate my knowledge, skill and ability in the pursuit of excellence in my chosen fields. I would take this opportunity to acknowledge a debt of deep gratitude to many people for their valuable assistance and continuous support during the course of my summer Internship Program. I convey my sincere thanks to Mr. S.K.Das, General Manager (Training and Development) for allowing pursuing summer training in this prestigious organization. I am also thankful to Mr. Ajay Joshi, Vice president (Finance & Accounts), and other members of the accounts department for providing necessary help whenever required for the completion of the project. I am thankful to our guide Mr. Vimal Raheja, Senior Manager (Finance & Accounts), for his valuable guidance and his precious time he develop for mentoring us, without which this project would not have been successful. I sincerely express my thanks to my Finance faculty Prof. Mayank kumar for his valuable guidance and intellectual suggestions during this project. I also express my sincere thankfulness to my mentor Dr. Vikas Saxena for his kind advice, suggestions and constant help in a lot of various ways during project course. I would be failing in my duty if I dont express my profound gratitude to the entire respondent who has spent their valuable time to answer the questionnaire. Last but not the least; I would also like to expand my thanks to my parents and family and all faculty members of Institute of Technology and Science, Ghaziabad, who have helped a lot during the course of my project. I am also thankful to the librarian for allowing us access to valuable journals and reports which gave life-blood to our project.
PRATYUSH KUMAR DUBEY I.T.S., Mohan Nagar, Ghaziabad
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PREFACE
The report has been intended to reflect some of the basic issue covered under the Working Capital Management of Hindalco Industries Ltd., a first truly MNC in India. All the aspects have been formulated and presented on the basis of the idea and information gathered by the investigator during the span of project training. This gives a practical exposure of the content, under topic what has already been studied in the classroom in theoretical form. This report has been written in response to comprehensive study conducted on the topic. The reports mentions and evaluate various aspects, pertaining to the working capital management of the company. After the thorough analysis of various facts and stand figures, a set of conclusion has been given the prime consideration, while compiling the report and are authoritative and authentic. I make sure that anyone who goes through the report will learn how much we have learn so for, and can get the benefit of the same.
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EXECUTIVE SUMMARY
This project has been great learning experience for me; at the same time it given me enough scope to implement my analytical ability. This project as a whole can be divided into two parts:
1. The first part gives an insight about the working capital and its various aspects. It is purely based on whatever I learn at HINDALCO INDUSTRIES LTD. One can have a brief knowledge about working capital and all its basic through the project. All the topics have been covered in a very systematic way. The language has been simple so that even a layman could understand. All the datas have been well analyzed with the help of charts and graphs. 2. The second part consist of datas and their analysis, it covers the topic Management of Working Capital. The data has well organized and presented. Hope the research findings and conclusion will be of use.
3. The research is conducted by the use of financial reports (Annual report) of the company. The data is secondary and is made available by the organization for conducting the research.
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TABLE OF CONTENT
CONTENT
ABOUT ADITYA BIRLA ABOUT HINDALCO PRODUCTION CAPACITY MANAGEMENT TEAM HISTORY MILESTONES SWOT ANALYSIS WCM LITERATURE RESEARCH METHODOLOGY ANALYSIS OF WCM WORKING CAPITAL TURNOVER DEBTORS MANAGEMENT CREDITORS MANAGEMENT INVENTORY MANAGEMENT CASH MANAGEMENT SUBSEQUENT OBSERVATIONS RATIO ANALYSIS FINDINGS RECOMMENDATIONS BIBLIOGRAPHY ANNEXURE
PAGE NO.
8 12 17 19 22 23 26 29 50 51 54 56 59 60 63 70 75 80 81 82 i - iii
ADITYA BIRLA GROUP: GNENRAL OVERVIEW

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Working Capital Management of Hindalco Industries Limited A US $40 billion corporation, the Aditya Birla Group is in the League of Fortune 500. It is anchored by an extraordinary force of over 136,000 employees, belonging to 42 different nationalities. The Group has been ranked Number 4 in the Global 'Top Companies for Leaders' survey and ranked Number 1 in Asia Pacific for 2011. 'Top Companies for Leaders' is the most comprehensive study of organizational leadership in the world conducted by Aon Hewitt, Fortune Magazine and RBL (a strategic HR and Leadership Advisory firm). Over 53 per cent of its revenues flow from its overseas operations. The Group operates in 36 countries Australia, Austria, Bangladesh, Brazil, Canada, China, Egypt, France, Germany, Hungary, India, Indonesia, Italy, Ivory Coast, Japan, Korea, Laos, Luxembourg, Malaysia, Myanmar, Philippines, Poland, Russia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tanzania, Thailand, Turkey, UAE, UK, USA and Vietnam. The Aditya birla group enjoys a front runner position:
Globally
A metals powerhouse among the worlds most cost efficient Alluminium and copper producers. HindalcoNovelis from its fold in fortune 500 company. Aluminium rolling company. It ranks as No.1 in viscose staple fibre The largest single location palm oil producer The third largest producer of insulators The third largest producer of carbon black The eleventh largest producer of cement and the largest in single geography The largest single location copper smelter Among the worlds top 15 BPOs and among Indias top three Among the best energy efficient fertilizer plants
In ASIA
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Working Capital Management of Hindalco Industries Limited The largest integrated aluminum producer
IN INDIA
A premier branded garment player The second largest chore alkali sector Among the top five mobile communication company Among the top three supermarket chains in the retail market Second largest player of viscous filament yarn Second largest private sector insurance company and a leading assets management company.
GROUP VISION
To be the premium metals major, global in size and reach, with a passion for excellence
GROUP MISSION
To relentlessly pursue the creation of superior shareholder value by exceeding customer expectations profitability, unleashing employee potential and being a responsible corporate citizen adhering to our values.
GROUP VALUES
Integrity, Commitment, Passion, Seamlessness, Speed
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ADITYA BIRLA GROUP- THE GLOBAL SCENERIO
Around the world the group is known for:
A metals powerhouse, among the world's most cost-efficient aluminium and copper producers. Hindalco-Novelis is the largest aluminium rolling company. It is one of the three biggest producers of primary aluminium in Asia, with the largest single location copper smelter.
No.1 in viscose staple fibre. No.1 in carbon black. The fourth-largest producer of insulator. The fifth-largest producer of acrylic fibre. Among the top 10 cement producers. Among the best energy-efficient fertilizer plants. The largest Indian MNC with manufacturing operations in the USA.
ADITYA BIRLA GROUP - THE INDIAN SCENERIO.

In India, here's what we have accomplished:

The largest fashion (premium branded apparel) and lifestyle player. The second-largest manufacturer and largest exporter of viscose filament yarn. The largest producer in the chlor-alkali sector. Among the top three mobile telephony companies. A leading player in life insurance and asset management.
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Among the top two supermarket chains in the retail business. Among the top 6 BPO companies. The largest manufacturer of linen fabric.
Rock solid in fundamentals, the Aditya Birla Group nurtures a culture where success does not come in the way of the need to keep learning afresh, to keep experimenting.
ADITYA BIRLA GROUP BEYOND BUSINESS

Works in 3,000 villages Reaches out to seven million people, annually through the Aditya Birla Centre for Community Initiatives and Rural Development, spearheaded by Mrs. Rajashree Birla
Focuses on healthcare, education, sustainable livelihood, infrastructure and espousing social reform in India, Asia, Egypt, Philippines, Thailand, Laos, Indonesia, Korea and Brazil
IN INDIA:
The Aditya Birla Group runs 42 schools across India providing quality education to 45,000 children including 18,000 students from the underprivileged segment. Merit scholarships are given to an additional 8,500 children from the interiors
Its 18 hospitals tend to more than a million villagers In line with its commitment to sustainable development, the Group has partnered with the Columbia University in establishing the Columbia Global Centre's Earth Institute in Mumbai
To embed CSR as a way of life in organizations, the Group has set up of the FICCI Aditya Birla CSR Centre for Excellence, in Delhi
Transcending the conventional barriers of business because we believe it is our duty to facilitate inclusive growth.
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HINDALCO: GENERAL OVERVIEW

HINDALCO Industries Limited is the flagship company of the Aditya Birla Group. Among India's largest business houses, the Aditya Birla Group has been operating in India for over 5 decades with global experience spanning nearly 30 years. Hindalco Industries Limited is a non-ferrous metals powerhouse, in the country. Its operations are organized into two Strategic Business Units Aluminium and Copper Incorporated in 1958, Hindalco commenced production of Aluminium in 1962 at Renukoot Uttar Pradesh. With an initial capacity of 20,000 MTPA of aluminium metal, it has grown continuously and at present has a primary aluminium smelting capacity of 342,000 MTPA. Accounting for 40% of India's primary aluminium production, Hindalco enjoys a leadership position in India for aluminium and downstream products. Furthermore, synergies of operations with its wholly owned subsidiary Indal have enhanced the Company's share in value-added segments, where the Hindlaco-Indal combination accounts for over 50% of the market share. Hindalco's integrated operations include a power generation capacity of 779 MW and a 660,000 MTPA Alumina Refinery. Hindalco's semi-fabrication facilities comprise Rolled Products, Redraw Rods, Extrusions, Foils & Wheels. Wheels & Foils manufacturing unit is located at Silvassa. The company's product range includes Primary Aluminium Ingots, Billets, Rolling Slabs, Redraw Rods, Alloy Wire Rods, Sheet Products, Extruded Profiles, Foils and Alloy Wheels. The revenue (Turnover) of HINDALCO in 2012 is 816.04 crores (US$ 14 billions).
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VISION
To strengthen our position as a premium Aluminium company, sustaining Domestic Leadership and Global Competitiveness through Innovation, Quality and Value Added Growth
MISSION
To pursue the creation of value for our Customers, Shareholders, Employees and society at large
STRATEGY
Efficiency Focus: - To be one of the largest cost producers globally. Effectiveness focus: - To be continued to remain market leader domestically. Growth focus: - To peruse value adding growth opportunities in Aluminium.
QUALITY POLICY
We, at Hindalco, shall aim to achieve and sustain excellence in all our activities. We are committed to total customer satisfaction by providing products and services, which meet or exceed the customers expectations. Modernization of the manufacturing facilities, stress on technological innovation and training of employees at all levels shall be a continuous process in Hindalco. A motivated workforce with a sense of pride in the organization shall lead us towards total quality.
HINDALCO INDUSTRIES LIMITED AN INDUSTRY LEADER IN ALUMINIUM AND COPPER

Hindalco Industries Limited, the metal flagship company of the Aditya Birla Group is the worlds largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the worlds largest custom smelter at a single location.
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Working Capital Management of Hindalco Industries Limited Established in 1958, they commissioned their aluminium facility at Renukoot in Eastern Uttar Pradesh, India in 1962. Later merger and acquisitions, with Indal, Birla copper and the Nifty and Mt. Gordan copper mines in Australia, strengthened their position in value-added alumina, aluminium and copper products.
The acquisition of Novelis Inc. In 2007 positioned them among the top five aluminium majors worldwide and the largest vertically integrated aluminium company in India. Today they are a metal powerhouse with high-end rolling capabilities and a global footprint in 13 countries. The consolidated turnover of USD 15.85 billion (Rs. 72,078 crore) places them in the Fortune 500 league.
Hindalco is one of the leading producers of aluminium and copper. Its aluminium units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines.
Copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other By-products, such as gold, silver and DAP fertilizers.
The various Aluminium products manufactured by the Hindalco Industries are: Primary Aluminium Alumina Chemicals Wire Rods Rolled Products Alloy Wheels Foils
The various Copper products manufactured by the Hindalco Industries are: Copper Cathodes Precious Metals Rods of Cast Copper
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ALUMINIUM
Hindalco's major products include standard and specialty grade alumina and hydrates, aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil. The integrated facility at Renukoot houses an alumina refinery and an aluminium smelter, along with facilities for the production of semi-fabricated products; namely, redraw rods, flat rolled products and extrusions. The plant is backed by a co-generation power unit and a 742 MW captive power plant at Renusagar to ensure the continuous supply of power for smelter and other operations. A strong presence across the value chain and synergies between operations has given us a dominant share in the value-added products market. As a step towards expanding the market for value-added products and services, we have launched various brands in recent years ever last roofing sheets, Freshwrapp kitchen foil and Freshpakk semi-rigid containers.
COPPER
Birla Copper, Hindalcos copper unit, is located at Dahej in Gujarat, India. The unit has the unique distinction of being the largest single-location copper smelter in the world. The smelter uses state-of-the-art technology and has
A capacity of 500,000 TPA. Birla Copper also produces precious metals, fertilizers and sulphuric and phosphoric acid. The unit has captive power plants for continuous power generation and a captive jetty to facilitate logistics and transportation.
Birla Copper upholds its longstanding reputation for quality copper cathodes and continuous cast copper rods by assuring its management processes meet the highest standards. It has acquired certifications such as ISO-9001:2000 (Quality Management Systems), ISO-14001:2004 (Environmental Management System) and OHSAS18001:2007 (Occupational Health and Safety Management Systems).
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MINES
Hindalco acquired two Australian copper mines, Nifty and Mt. Gordon, in 2003. The Birla Nifty copper mine consists of an underground mine, heap leach pads and a solvent extraction and electro winning (SXEW) processing plant, which produces copper cathode. The Mt. Gordon copper operation consists of an underground mine and a copper concentrate plant. Until recently, the operation produced copper cathode through the ferric leach process. In 2004, a copper concentrator was commissioned to provide concentrate for use at Hindalco's operations in Dahej. Both Nifty and Mt. Gordon have a long-term life of mine off-take agreement with Hindalco for supply of copper concentrate to the copper smelter at Dahej.
PRODUCTION CAPACITY
ALUMINA
700000 TPA 350000 TPA 450000 TPA RENUKOOT BELGAUM MURI
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ALUMINIUM
345000 TPA 161400 TPA RENUKOOT HIRAKUD
EXTRUSIONS
230000 TPA 8000 TPA RENUKOOT ALUPURAM
FLAT ROLLED PRODUCTS

80000 TPA 45000 TPA 50000 TPA 30000 TPA RENUKOOT BELUR TALOJA MOUDA
REDRAW RODS
56400 TPA RENUKOOT
FOIL & PACKING

30000 TPA 4000 TPA SILVASSA KOLLUR
CAPTIVE POWER
742 MW 638 MW 84 MW 30 MW RENUKOOT HIRAKUD RENUKOOT COGEN MURI
SHARE OF NET SALES VALUE 2011-12
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MANAGEMENT TEAM
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BOARD OF DIRECTORS
Mr. Kumar Mangalam Birla, Chairman Mrs. Rajashree Birla Mr. C. M. Maniar Mr. M. M. Bhagat Mr. K. N. Bhandari Mr. A. K. Agarwala Mr. N. J. Jhaveri Mr. Ram Charan Mr. Jagdish Khattar Mr. D. Bhattacharya, Managing Director Mr. M. Damodaran
CHIEF FINANCIAL OFFICER

Mr. Praveen Maheshwari
HEAD CORPORATE PROJECTS & PROCUREMENT CELL

Mr. B.B Jha
COMPANY SECRETARY
Mr. Anil Malik
CHIEF PEOPLE OFFICER

Mr. Vineet Kaul
BUSINESS / UNIT HEAD

Mr. Dilip Gaur, Group Executive President, Copper Mr. Sachin Satpute, Chief Marketing Officer, Aluminium Mr. Satish M Bhatia, President, Foil and Packaging Mr. R. S. Dhulkhed, Senior President, Operations Mr. Sanjay Sehgal, President, Chemicals Mr. D. K. Kohly, Chief Officer Operations, Renukoot Unit & Renusagar Units
UTKAL ALUMINA INTERNATIONAL LTD

Mr. Rajesh Jha, CEO
NOVELIS INC.
Mr. Philip Martens, President and Chief Executive Officer
ADITYA BIRLA MINERALS LIMITED

Mr. D. Bhattacharya, Chairman Mr. Sunil Kulwal, CEO and MD
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Working Capital Management of Hindalco Industries Limited Mr. Peter Torre, Company Secretary
STRUCTURE OF FINANCE DEPARTMENT

JOINT EXECUTIVE PRESIDENT (FINANCE & ACCOUNTS)
VICE PRESIDENT (FINANCE & ACCOUNTS)
GENERAL MANAGER
SENIOR MANAGER
DEPUTY MANAGER
ASSISTANT MANAGER
ACCOUNTS OFFICER
ASSIST.ACCOUNTS OFFICER
SENIOR ASSISTANT & ASSISTANT HINDALCO INDUSTRIES MANUFACTURING UNIT,
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RENUKOOT
Renukoot plant was commissioned in 1962, with one pot line and a smelter of 20,000 TPA capacities. Over the years the plant has increased its capacity through various Brownfield expansions and asset sweating measures. Today Hindalco, at Renukoot operates the aluminium value chain from bauxite mining, alumina facility houses a 700,000 tpa alumina refinery and a 345,000 tpa aluminium smelter along with facilities for production of semifabricated products namely conductor redraw rods, sheet and extrusions. In 1967 Hindalco established a captive power plant at Renusagar, the first captive power plant (CPP) for aluminium industry in India. This along with a co-generation power unit ensures continuous supply of power for the smelter and other operations. Renukoot has earned the Integrated Management System (IMS) certification combining quality, environment and occupational health and safety into one business excellence model. The sprawling 1056 acre Renukoot complex located near the Rihand Dam, 160 Kms from the city of Varanasi, includes beautifully landscaped gardens with residential colony cum mini township for management and staff members, a full-fledged hospital for employees and the community around along with schools, clubhouses, banks, sports and cultural facilities, supermarkets and the Renukeshwar Mahadev Temple. As a responsible corporate citizen Hindalco Renukoots Community Development Cell plays a leading and exemplary role in social projects on health care, womens empowerment, education, and sustainable livelihood schemes and espouses social causes. Hindalco Renukoots CSR cell has taken up various innovative rural development projects in 385 neighbouring villages around its operating sites in the states of Uttar Pradesh, Jharkhand and Chhattisgarh. These social projects are carried out under the aegis of Aditya Birla Centre for Community Initiatives and Rural Development spearheaded by Mrs. Rajshree Birla.
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HISTORY
The Hindalco story dates back to the young Indian democracy of the 1950s. Ready to take a giant leap, India was geared to make it big, especially in terms of innovation and industrialization. Hindalco embarked on its journey in 1958. Its first real contribution to the vision of an industrial India occurred four years later, when the visionary late Mr. G.D.Birla set up Indias first integrated aluminium facility at Renukoot, in the eastern fringe of Uttar Pradesh, India. It was backed by a captive thermal power plant at Renusagar in 1967. Hindalco attained its leadership position in the aluminium industry under the dynamic leadership of the late Mr. Aditya Vikram Birla a formidable force in the Indian industry. And it was through the vision and guidance of Mr. Kumar Mangalam Birla, the Group Chairman that the business segments of aluminium and copper are consolidated to make Hindalco the non-ferrous metals powerhouse it is today. This was achieved in part by expansion through mergers and acquisitions with companies such as Indal and Birla Copper. Hindalco also secured copper reserves and amplified its operating base by acquiring the Australian Nifty and Mt. Gordon copper mines. Over the years Hindalco has grown into the largest vertically integrated aluminium company in the country and among the largest primary producers of aluminium in Asia. Its copper smelter is today the worlds largest custom smelter at a single location. In 2007, the landmark acquisition of Novelis Inc, the worlds largest aluminium rolling company, placed Hindalcos footprint across the globe, securing it a rank amongst the top five global aluminium majors and also placing it in the Fortune 500 league.
MAJOR MILE STONES

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Working Capital Management of Hindalco Industries Limited 1959- Incorporation of Hindalco Industries Limited. 1962- Commencement of production at Renukoot with an initial capacity of 20000 mpta of aluminium metal and 40000 mpta of alumina. 1965- Downstream capacities commissioned (Rolling & extrusion mills at Renukoot). 1967- Commissioning of Renusagar Power Plant. 1991- Beginning of major expansion. 1994- A huge expansion, modernization and diversification programme takes off. 1995- Mr. Kumar Mangalam Birla takes over as a Chairman of Indal Board. 1998- Foil plant at Silvassa goes on stream & Hindalco attains ISO 14001 certification. 1999- Brownfield expansion of metal capacity at Renukoot to 242000 tpa. 2000- Acquisition of controlling stake in Indal with 74.6% equity holding. 2002- Open offer to acquire additional equity to make Indal a wholly owned subsidiary. 2003- Hindalco acquires Nifty copper mine through Aditya Birla Minerals Ltd. 2004- Scheme of arrangement announced to merge Indal with Hindalco. 2005- The company split its shares in a ratio of 10:1 to enhance liquidity. 2006- Joint Venture with Almex USA for manufacturing of high strength aluminium alloys and acquired an aluminium rolling plant from Asset Reconstruction Company (India) Ltd, belonging to Pennar Aluminium Company ltd. 2007- Novelis became a Hindalco subsidiary with the completion of acquisition process and acquisition of Alcans 45% equity stake in Utkal Alumina Project. 2008- Raised a total of Rs 4,426 crore for re-financing bridge loan taken for Novelis acquisition. 2009- Raised USD 600 million for projects, the largest QIP in India. 2010- NIPM Gold Award for Best HR Practices" for the year 2010 by National Institute of Personal Management (NIPM). 2011- Hindalco bagged the prestigious CII EXIM Bank Business Excellence Award 2011 for its "strong commitment to excel on the journey towards business excellence".
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MAJOR ALUMINIUM PRODUCER INDUSTRIES IN INDIA

COMPANY
Hindalco
OWNERSHIP
A B Group
LOCATION
Renukoot Alpuram Hirakud Belgaum Angul Kobra Mettur
CAPACITY
345,000 14,000 65,000 31,000 345,000 350,000 40,000
NALCO BALCO MALCO
Public sector Sterlight Sterlight
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HINDALCOS PRODUCT RANGE
Primary aluminium Ingots
Alloy Ingots
Billets
Slab
Aluminium Sheet
Wire rods Sheet
Circle
Alloy Wheel
Watch
Blister Pack
Ladder
Doors
Handles
Cans
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SWOT ANALYSIS
STRENGTH
Global brand image. Cost effective producer. Sound financial position. A high degree quality consciousness is the core competence of the company, ISO 9001 and ISO 14001 have added more prestige to the company. Integrated production facility at Renusagar Power Plant. Company has a well-established distribution network, covering a
geographically wide and scattered market. A number of Brownfield & Greenfield Projects. Industrial peace as, there has been no major strike in last 22 year. A well focused human resources development. Serve maximum customer satisfaction.
WEAKNESS
Present production capacity is not adequate to meet the rising high demand. Technology is not upgraded to mark as compare to global giants in aluminium industry.
OPPORTUNITY
R & D collaboration with universities and another research organisation. More emphasis on downstream production of value added products. Recycling should be adopted as routine production. Raising more finance from marketing for more acquisition and merger for consolidating position in the global market. Aluminium, continuous to be strong with a growth in transportation sector 16%, Construction 15%, passenger car 25%, two wheeler segments 14% respectively.
THREATS
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Working Capital Management of Hindalco Industries Limited Strong domestic and global competitors, such as TATA, POSCO, MITTLE, ESSAR. Innovative revolution in plastic and steel industry. Reduce in Excise duty. Fall in price of Aluminium in neighboring countries.
PERFORMANCE REVIEW IN 2011-12

Metal major Hindalco Industries, the flagship company of the Aditya Birla Group, on Wednesday reported a consolidated net profit of Rs. 3,397 crore for 2011-12, registering a 38% growth over the previous fiscal. On the back of strong performance of its overseas subsidiary Novelis and its copper business in India, Hindalco reported 12% growth in consolidated revenue at Rs. 80,821 crore the highest ever for the company in financial year 2011-12. Novelis, Atlanta-based aluminium manufacturers that Hindalco has acquired, showed 5% growth in revenues at Rs. 63,439 crore ($11.1 billion). During the last fiscal, Novelis completed the acquisition of 31.3% of the outstanding shares of its Korean subsidiary for $344 million, raising its ownership to 99%. In the domestic business, higher London Metal Exchange prices helped copper business report a rise of 16% to Rs. 18,379 crore. Hindalcos three aluminium smelters will be commissioned this year. Hindalco board of directors recommended dividend of Rs. 1.55 per share aggregating to Rs.344.9 crore (including dividend distribution tax of Rs. 48.1 crore) for the year ended 31st March, 2012, said a company release. Despite economic headwinds, the balanced portfolio approach, low cost operation and strong value added businesses resulted in commendable performance, said the release. Hindalco announced to the BSE that the completed issuance of secured redeemable non-convertible debentures worth Rs. 1,500 crore on private placement basis at the coupon of 9.55%. The proceeds will be used for capital expenditure, working capital and refinancing the existing debt.
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WORKING CAPITAL
Every business needs investment to procure fixed assets, which remain in use for a longer period. Money invested in these assets is called long term funds or fixed capital. Business also needs funds for short-term purposes to finance current operations. Investment in short term assets like cash, inventories debtors etc. is called short term funds or working capital. The working capital is categorized as fund needed for carrying out day-to-day operations of the business smoothly. The management of the working capital is equally important as the management of long term financial investment. Every running business needs working capital. Even a business which is fully equipped with all types of fixed assets required is bound to collapse without1. Adequate supply of raw materials for processing. 2. Cash to pay for wages, power and other costs. 3. Creating a stock of finished goods to feed the market demand regularly. 4. The ability to grant credit to its customers. All these require working capital. Working capital is like the lifeblood of a business The business will not be able to carry on day-to-day activities without the availability of adequate working capital. Working capital, also known as net working capital, is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. if current assets are less than current liabilities, an entity has a working capital deficiency, also called as working capital deficit.
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Working Capital Management of Hindalco Industries Limited A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivables and payable and cash.
CALCULATIONS
Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of business where the managers have the most direct impact Accounts receivable (current assets) Inventory (current assets), and Accounts payable (current liabilities)
The current portion of debt (payable within 12 months) is critical, because it represent a short term claim to current assets and is often secured by long term assets. Common types of shortterm debts are bank loans and lines of credit. An increase in working capital indicates that the business has either increased current assets (that is received cash, or other current assets) or has increased current liabilities, for example paid off some short-term creditors. CURRENT ASSETS- this is any cash or assets that can be quickly turned into cash. This includes prepaid expenses, accounts receivables, most securities and your inventory. Constituents of current assets Cash in hand and bank balances Bill receivables Sundry debtors (less provision for bad debts) Short term loans and advances Inventories of stock:
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Working Capital Management of Hindalco Industries Limited Raw material Work in process Stores and spares Finished goods Coal and fuel
Temporary investments of surplus funds Prepaid expenses Accrued expenses
CURRENT LIABILITIES- this is a liability in the immediate future. This includes wages, taxes and accounts payable. Constituents of current liabilities Bills payable Sundry creditors or accounts payable Short term loans, advances & deposits. Dividend payable Bank overdraft Provision for taxation, if it does not amount to appropriation of profits
IMPLICATION ON M & AThe common commercial definition of working capital for the purpose of a working capital adjustment in an M & A transaction (i.e. For a working capital adjustment mechanism is a
sale and purchase agreement) is equal toCurrent assets current liabilities (excluding deferred tax assets/liabilities, excess cash, surplus assets and/or deposit balances)
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Decision relating to working capital and short term financing are referred to as working capital management. These involves managing the relationship between a firms short term assets and short term liabilities. The goal of working capital management is to ensure that the firm is able to continue its operations and that it has sufficient cash flows to satisfy both maturing short-term debt and upcoming operational expenses.
DECISION CRITERIA
By definition, working capital management entails short term decisions- generally related to next one year period- which are reversible. These decisions are therefore not taken on the same basis as capital investment decisions (NPV or related, as above) rather they will be based on cash flows and/or profitability. One measure of cash flow is provided by the cash conversion cycle- the net number of days from the outlay of cash for raw material for receiving payment from the customers. As a management tool this metric makes explicit the inter-relatedness of decision relating to inventories, accounts receivables and payables and cash. Because this number effectively corresponds to the time that the firms cash is tied up in operations and unavailable for other activities, management generally aims at a low net count. In this context, the most useful measure of profitability is return on capital (ROC). The result is shown as a percentage, determined by dividing relevant income for the 12 months by capital employed; return on equity (ROE) shows this result for the firms shareholders. Firm value is enhanced when, and if, the return on capital, which results from working capital management, exceeds the cost of capital, which results from capital investments decisions as above. ROC measures are therefore useful as a management tool, in that they link short-term policy with long-term decision making. See economic value added (EVA).
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MANAGEMENT OF WORKING CAPITAL

Measurement will use a combination of policies and techniques for the management of working capital. These policies aims at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing, such as cash flows and returns are acceptable.
CASH MANAGEMENT- Identify the cash balance which allows for the business to meet day to day expenses, but reducing cash holdings costs. INVENTORY MANAGEMENT- Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials- and minimizes reordering costs- and hence increases cash flows; see supply chain management; just in time (JIT); economic order quantity (EOQ); Economic production quantity. DEBTORS MANAGEMENT- Identify the appropriate credit policy, i.e. credit terms which will attract customers, such that any impact on cash flows and the cash conversion cycle will be offset by increased revenue and hence return on capital (or vice versa) see discount and allowances. CREDITORS MANAGEMENT- Accounts payable is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. SHORT TERM FINANCING- Identify the appropriate source of financing, given the cash conversion cycle; the inventory is ideally financed by credit granted by the supplier; however, it may be necessary to utilize a bank loan (or overdraft), or to convert debtors to cash through factoring.
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CLASSIFICATION OF WORKING CAPITAL

1. On the basis of concept 2. On the basis of time
Classification of working capital
On the basis of concept
On the basis of time
Gross working capital
Net working capital
Permanent working capital
Temporary working capital
Regular Working capital
Reserve working capital
Seasonal working capital
Special working capital
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ON THE BASIS OF CONCEPT
1. GROSS WORKING CAPITAL

Gross working capital refers to the firm investment in current assets. Current assets are assets, which can be converted into cash within an accounting year. The main components of current assets are cash, debtors, marketable securities and stock. The gross working capital concept focuses attention on two aspects of current assets management Optimum investment in current assets. Financing of current assets
The considerations of level of investments in current assets should be to avoid two-danger point: excessive and inadequate in current assets. Investment in current assets should be just adequate, not more not less to the need of business firm. Excessive investment in current assets should be avoided as its impairs firms profitability. On the other hand inadequate amount of working capital can threaten solvency of the firm. Another aspect of gross working capital points to the need of arranging funds to finance current assets. Whenever a need for working capital arises, financing arrangement should be made quickly. Similarly arising shall be invested in short-term securities.
2. NET WORKING CAPITAL

Net working capital refers to the difference between current assets and current liabilities. Net working capital can be positive or negative. 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 source of funds such as shares, debentures and long term debts etc. it covers the question of judicial mix of long and short term funds for financing current assets. In order to protect their interests, short-term creditors like a company to maintain a positive NWC. Conventionally the ratio of CA and CL is 2:1. A
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Working Capital Management of Hindalco Industries Limited negative NWC means a negative liquidity, which may prove to be harmful to companys reputation. It poses a threat on the company solvency and makes it unsafe and unsound.
Net working capital= CA - CL
ON THE BASIS OF TIMEOn the basis of time, we may be classified as Permanent working capital Temporary or variables working capital
I.
PERMANENT WORKING CAPITAL
Permanent or fixed working capital is the minimum amount, which is required to ensure effective utilization of fixed facilities and for maintaining the circulation of current assets. There is always a minimum level of current assets, which is currently required by the enterprise to carry out normal business operations. Every firm has to maintain a minimum level of raw material, work in process, finished goods and cash balance. This minimum level of current assets is called permanent or fixed working capital as this part of capital is permanently blocked in current assets.
Characteristics of permanent working capital

Amount of permanent working capital remains in the business in one form or the other. The suppliers of such WC should not accept its returns during the lifetime of the firm. It grows with the size of the firm. Permanent WC is permanently needed for the business.
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II.
TEMPORARY OR VARIABLE WORKING CAPITAL
Temporary working capital is the extra working capital needed to support the changing production and sales activity of the firm.
NEED OF WORKING CAPITAL

For the purchase of raw material: components and spares. To incur day-to-day expenses and overhead costs such as fuel, power and office expenses etc. To meet the selling costs as packing, advertising etc. To provide credit facility to the customers. To maintain the inventories of raw materials, work-in-progress, stores and spares and finished stock. To pay wages and salaries.
IMPORTANCE OF ADEQUATE WORKING CAPITAL

Working capital is the life blood of a business. Working capital is very important for smooth running of the business. Business cant run successfully without an adequate working capital.
THE MAIN ADVANTAGES OF MAINTAINING ADEQUATE AMOUNT OF WORKING CAPITAL

Adequate working capital helps in maintenance of the business by providing uninterrupted flows of production. Sufficient working capital enables a business concern to make prompt payments and hence help in creating and maintaining goodwill. High solvency can arrange loans and advances from banks due to adequate working capital. Sufficient working capital ensures regular supply of raw materials and continuous production. A company that has adequate working capital can make regular payments of salaries, wages and other day-to-day commitments that raise the morale of its employees. Adequate working capital enables a concern to face business crisis in emergencies.
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Working Capital Management of Hindalco Industries Limited Adequacy of working capital creates an environment of security, confidence and high morale and creates overall efficiency in a business.
CONSEQUENCES OF UNDER ASSESSMENT OF WORKING CAPITAL

1. Growth may be stunted. It may become difficult for the enterprise to undertake profitable projects due to non availability of working capital. 2. Implementation of operating plans may become difficult and consequently the profit goals may not be achieved. 3. Cash crisis may emerge due to paucity of working funds. 4. Optimum capacity utilization of fixed assets may not be achieved due to non availability of working capital. 5. The business may fail to honor its commitment in time, thereby adversely affecting its credibility. This situation may lead to business closure. 6. The business may be compelled to buy raw materials on credit and sell finished goods on cash. In the process it may end up with increasing cost of purchases and reducing selling prices by offering discounts. Both these situation would affect profitability adversely. 7. Non-availability of stocks due to non-availability of funds may result in production stoppage. 8. While underassessment of working capital has disastrous implications on business, over assessment of working capital also has its own danger.
CONSEQUENCES OF OVER ASSESSMENT OF WORKING CAPITAL

a) Excess of working capital may result in unnecessary accumulation of inventories. b) It may lead to offer too liberal credit terms to buyers and very poor recovery system and cash management. c) It may make management complacent leading to its inefficiency. d) Over-investment in working capital makes capital less productive and may reduce return on investment.
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Working capital is very essential for success of a business so it requires efficient management and control. Each of the components of the working capital needs proper management to optimize profit.
WORKING CAPITAL CYCLE

Under this Working capital is represented by the excess of current assets over current liabilities identifying the relatively liquid portion of the total enterprise capital which constitutes a margin for meeting obligation within the ordinary operating cycle of the business The duration or time required to complete the sequence of events right from purchase of raw materials / goods for cash to the realization of sales in cash is called the Working Capital Cycle. During this cycle, capital converted from one form to another form such as cash----------raw material----------finished goods----------debtors or bill receivable----------cash. Working capital cycle also called circulating capital. The speed with which the working cycle completes one cycle determines the requirements of working capital. Longer the cycle larger is the requirement of working capital.
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PRODUCTION CYCLE
Production cycle is concern with procurement of raw materials to the completion of manufacturing process leading to the production of finished goods. Funds have to be necessarily ties up during the process of manufacturing necessitating enhanced to working capital. The long time span production cycle will be longer span of time, therefore larger working capital needed. The production cycle of HINDALCO industries ltd. is near about 30 days. It breaks up in following waysRaw material storage period Work-in-progress period Finished goods storage period = = = 21 days 05 days 04 days
Total
30 days
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PRODUCTION POLICY
A production policy also determines the quantum of working capital. Production policy may be of two types-
1. Speedy production policy 2. Variable production policy

In case of Hindalco, demand for aluminium and aluminium product manufactured by Hindalco is prevailing throughout the year. The company produce primary product continuously and semi product and extrusions are produced as the order of the customers. So there is no question of seasonal demand of product, hence production continues throughout the year thereby no extra working capital is involved.
CREDIT POLICY
Credit policy is relating to sales and purchase of product, which also affect the working capital. The policies influence the requirement of working capital in two ways1. Through credit terms granted to customers/buyers of goods. a. It gives more credit to customer/buyer, and then needed more working capital. b. It gives less credit to customer/buyer, then needed less working capital. 2. Credit terms available to a firm. a. If this is liberal then needed less working capital. b. If this is not liberal then needed more working capital. The prevailing trade policies are as well as the changing economic condition affect the credit terms fixed by an enterprise. In Hindalco credit period are as follows-
Buyers Direct customer Agent/stockiest
Product(primary) Nil 15 days
Product(semi fabricated) 45 days 45 days
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Credit period received as Raw materials Stores and spares 15-30 days 30 days
GROWTH AND EXPANSION

If company grows it is logical to expect that a larger amount of working capital is required. In case of expansion also large amount of working capital is required.
AVAILABILITY OF RAW MATERIAL

I availability is irregular then a large amount of working capital is needed because a lot of amount is invested in the raw material for the smooth production process and vice-versa.
PROFIT LEVEL
In the Hindalco maximum working capital is arranged by the internal source. So the change of profit level does not affected by the working capital level.
PRICE LEVEL CHANGE

Changes in the price level also affect the requirement of working capital. Rising price necessitates the use of more funds for maintaining the existing level of activity. However the price rise does not have uniform affect on all commodities. The implication of changing price level on working capital position varies from company to company depending on the nature of its operations, standing in the market and their relevant considerations. Change in the price level of crude oil also make a deep impact on working capital of Indian industries, so its also affect the working capital of Hindalco Industries.
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OPERATING EFFICIENCY
The operating efficiency of the management is also an important determinant of the level of working capital, though management cannot control rise in price, it can ensure the efficient utilization of resources by eliminating waste, improving co-ordination etc. Efficiency of operations accelerates the pace of cash cycle and improves the working capital turnover.
ESTIMATION OF WORKING CAPITAL REQUIREMENT

There is no set rule or formula to determine working capital requirement of the firm. The quantum of working capital requirement of a company largely depends upon aforesaid factors. A finance manager in order to estimate the working capital requirement of the firm has to keep in mind the above factors. Besides he can apply any of the following techniques for assessing working capital requirement 1. Estimation of component of working capital 2. Percentage of sales method 3. Operating cycle approach
TECHNIQUE (1): - Estimation of component of working capital

Since working capital is the excess of current assets over current liabilities, estimating amount of different constituents of working capital can makes an assessment of working capital requirement. For example, inventories, account receivables, cash, debtors, creditors etc.
1. Inventories: - The average amount of raw material to be kept in stock will depend
upon quality of raw material required for production during a particular period and average time taken in obtaining fresh delivery. Suitable adjustment may have to be made for incontinency and seasonal factor. It can be calculated by following formula : Budget Production Cost of Raw material Average inventory holding period (Units) (Per unit) (Months or days) 12(months) OR 365 (Days)
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2. Work-in-progress: - The cost of work-in-progress includes raw material,

wages and other overheads in determining the amount of work-in-progress the time period for which the goods will be in process, is most important. Work-in-process is normally equivalent to 50% of total cost of production. Symbolically; Budget production Estimated WIP Average WIP time span (Units) (Per unit) (Month or days) 12(months) OR 365 (Days)
3. Finished Goods: - The period for which finished goods have to remain in the
warehouse before is an important factor determining the amount locked up in finished goods. It summed up as: Budget Production cost of goods produced finished goods holding period (Units) (Per unit)(Exclude DEP.) (Months or Days) 12(months) OR 365 (Days)
4. Sundry Debtors: - The amount of fund locked up in sundry debtors will be

computed on the basis of credit sales and time lag in collection payment. It should be estimated in relation to total cost price as follows:Budgeted credit sales (Units) Cost of sales Average collection period Excl. Dep. (Per unit) (Months or Days) 12(months) OR 365 (Days)
5. Cash or Bank balance: - The amount of money which to be kept as cash in

hand or cash at bank can be estimated on the basis of past experience.
6. Sundry creditors: - The lag in payment of supplier of raw materials, goods etc
and the likely credit purchases made during them to help in estimating the amount of creditor
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Working Capital Management of Hindalco Industries Limited Budgeted creditor raw mat. Requirement Credit period allowed (Units) (Units) (Months or days) 12(months) OR 365 (Days)
7. Outstanding Expenses: - The time lag in payment of wages and other

expenses will help in estimating the amount of outstanding expenses as follow
Budgeted production Labor cost Time lag in paymt. of Exp. (Units) (Per unit) (Months or Days) 12(months) OR 365 (Days)
TECHNIQUE (2): - Percentage of sale method

This is a traditional and simple method of estimating working capital requirement. According to this method, on the basis of past experience between sales and working capital requirement, a ratio can be determined for estimating the working capital requirement in future. For Example, if in the past experience shows that working capital has been 30% of sales and it is sales for the next year would amount to 1, 00,000, the amount of
working capital can be estimated to Rs. 30,000 , the basic criticism of this method is that its presumes a linear relationship between sales and working capital. This is neither true in all cases nor the method is universally accepted. The following table shows how the companies estimate their working capital requirement by using percentage of the sale method for the year 2011-12: -
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PERCENTAGE OF SALE METHOD Items Rs. (in millions) Sales 26597.00 Inventories 7742.86 Sundry debtors 1427.45 Cash & bank Bal. 722.30 Other current assets 355.78 Loan & advances 1647.65 Total 38493.04 Less : Liabilities 9115.16 Provisions 919.88 Total 10035.04 Net current assets 16479.44 Miscellaneous Exp. 730.28 ANALYSIS:-
% of sales 29.11 5.36 2.71 1.33 6.19 144.72 34.27 3.45 37.72 61.95 2.74
From this method we can conclude the data, how much working capital (in percentage) Hindalco need in the next year. This gives help to control the working capital level. This is an important aspect to control the cost of finished goods through reduce the cost of inventories.
OPERATING CYCLE APPROACH:According to this approach working capital requirement is depends upon the operating cycle business. The operating cycle begins with the acquisition of raw material and with the collection of receivables. It may be broadly classified into four stages: Raw material and store storage stage Work-in-progress stages Finished goods storage stage Receivable collection stage
The duration of operating cycle for the purposes of estimating working capital requirements equivalent to the sum of the duration of each of these stages less credit period allowed by the superior of the firm.
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SYMBOLICALLY:
Here, O = Duration of operating cycle R = Raw material storage period W = Work-in-progress period F = Finished goods storage period D = Debt collection period C = Creditors payment period
THE ABOVE CAN BE CALCULATED AS FOLLOWS:

R= Average stock of raw material 365 days Average raw material store consumption
W = Average Work in progress inventory 365 days Average cost of production F = Average finished goods inventory 365 days Average cost of goods sold Average books of debts 365 days Average credit sales C= Average trade creditor 365 days Average credit purchases After completing the period of one operating cycle total number of operating cycle that can be completed during a year can be computed by dividing 365 days with the number of operating days in a cycle.
D=
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SYMBOLICALLY:
N = 365/O Here, N = numbers of operating cycles O = duration of operating cycles
WCR =
Total operating expenditures Number of operating cycles in a year
The working capital has the following components, which are in several forms of current assets: Cash in hand Cash at bank Stock of raw material Stock of finished goods Value of debtors Miscellaneous current assets(short term investment, loans & advances)
Components of working capital

1. Stock of raw material 2. Stock of work in progress
Basis of valuation
Purchase cost of raw material At cost or market value, whichever is lower Cost of production
3. Stock of finished goods Cost of sales or sales value 4. Debtors Working expenses 5. Cash
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OBJECTIVE OF THE STUDY

To determine the ratios relating to working capital. To understand the significance of working capital in Hindalco Industries Ltd. To assess the liquidity of the firm. To study about the growth and profitability of the organization. To understand the financial position of the company by analyzing the financial ratios.
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RESEARCH METHODOLOGY
The methodology adopted for the present study was discussed with my instructor and coordinator Mr. Vimal Raheja, Sr. Accounts & Finance Manager at Hindalco Industries Ltd. Renukoot. The main focus was to gain knowledge and experience during the training period that will help to understand the whole process of tendering in procurement management and analyze the profitability of the company.
RESEARCH DESIGN:
A research design specifies the methods and procedures for conducting survey. Research design is the plan and structure of investigation so conceived as to obtain answer to research questions. The plan is overall scheme of the research. Descriptive Research Design has been adopted while doing the research.
DATA COLLECTION METHOD:

Data or information required for the project was gathered from the respective annual report of Hindalco Industries Ltd. All the figures are taken from their balance sheet, profit & loss account of the respective years and other internal documents which were personally shown by the members of the company in our interest. Besides for explanation of several issues, different articles, internet datas, books etc. were consulted. The data collected is a secondary data.
TYPE OF THE PROJECT:

The project is Descriptive and Analytical in nature.
DATA ANALYSIS:
For data analysis different tools like MS-WORD and MS-EXCEL is used. Simple tables and diagrams are used for the purpose of comparison and help of graphs and pictures are also taken for making the interpretation easier.
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STATEMENT OF WORKING CAPITAL

A statement presenting the information relating to the changes in the various items/accounts within the current area of the balance sheet is called a Statement /Schedule of changes in working capital.
Particulars Inventories Debtors Cash & bank Bal. Loan & advances Total Liabilities Provisions Total Working capital Increase/Dec. in W.C
2011-12 7742.86 1427.45 722.3 1647.65 11896.04 9115.16 919.88 10035.04 1861.00 957.24
2010-11 7652.19 1268.99 233.39 1344.75 10746.40 9027.21 815.43 9842.64 903.76 -1812.11
2009-10 5921.41 1311.87 140.21 1437.37 8864.29 5246.93 721.49 6148.42 2715.87 -
(A) Current assets
(B) Current liabilities
(Note: The value of loan & advance in the year 2009 and 2010 is showing different figures as per the annual report; I assume the bigger figure is correct)
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GRAPHICAL INTERPRETATION
14000 12000 10000 8000 6000 4000 2000 0 Current assests Current liabilities Working Capital
2011-12 2010-11 2009-10
ANALYSIS:
The above data shows that working capital is increasing in comparison to last year which is good for the liquidity of the company. Current assets are increased by 9.66% and current liabilities are increased by 0.96% only, in 2012. This means that current assets are adequate to meet its currents liabilities as there is slight increase in current liabilities. The current ratio of the company is 1.3. It shows that company is having good liquidity position but they should try to improve it. Another way to describe it is that the working capital is increased to Rs.1861cr. from Rs.903.76cr. it directly affect the cash flow statement of the company.
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WORKING CAPITAL SOURCE AT HINDALCO

In Hindalco working capital requirement is finance basically through following sources: Internal funds Short term liabilities Bank loan
A. INTERNAL FUNDS: An internal fund denotes the funds generated through operation of the firm. This is the major source of financing working capital requirement of the firm. B. SHORT TERM SECURITIES: On account of uncertainties attached with generation of funds through sales or through day to day operations, the company has invested in several short term securities to meet its day to day requirement of funds. The maturity of these securities is form source of financing working capital requirement.
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WORKING CAPITAL TURNOVER AT HINDALCO

Working capital turnover ratio is a financial analysis tool used to measure how well a business is using its working capital to support a given sales level. This ratio shows you how many times your working capital turned over to produce the sales volume for the given period. It can be compared to your own previous records or against companies in the same industry to gauge your efficiency in using working capital to generate sales. The main advantage of looking at the working capital position is being able to foresee future financial difficulties caused by short-term cash flow and capitalization requirements. Working capital turnover = sales/working capital
Particulars Inventories Debtors Cash & bank Bal. Loan & advances Other C.A. Total Liabilities Provisions Total Working capital Sales Working capital turnover
2011-12 2010-11 (A) Current assets 7742.86 7652.19 1427.45 1268.99 722.3 233.39 1647.65 1344.75 355.78 247.08 11896.04 10746.40 (B) Current liabilities 9115.16 9027.21 919.88 815.43 10035.04 9842.64 1861.00 903.76 26597 23589 14.2 times 26.39 times
2009-10 5921.41 1311.87 140.21 1437.37 53.43 8864.29 5246.93 721.49 6148.42 2715.87 19522 7.18 times
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GRAPHICAL REPRESENTATION
Working capital turnover

30 25 20 15 10 5 0 2011-12 2010-11 2009-10
Working capital turnover
INTERPRETATION:
The higher your working capital turnover ratio is, the more efficient you are in using working capital to generate sales In the year 2009-10 the working capital is 2715.87, in 2010-11 it increases to 903.76, and in 2011-12 it increases to 1861.00. It means that in the last year the companys liquidity is improve and the company become more efficient to pay its current obligations. At the same time if we compare no. of times of net working capital to turnover, it has come down to 14.2 times from 26.39 times in previous year. This is showing good profitable condition in this year. The sale is increased but working capital is not increasing with the same rate as sales increases, it means that the liquidity position is somehow affected this year.
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DEBTORS TURNOVER RATIO

Receivables turnover ratio measures company's efficiency in collecting its sales on credit and collection policies. This ratio takes in consideration ONLY the credit sales. If the cash sales are included, the ratio will be affected and may lose its significance. It is best to use average accounts receivable to avoid seasonality effects. If the company uses discounts, those discounts must be taken into consideration when calculate net accounts receivable. Accounts receivable represents the indirect interest free loans that the company is providing to its clients. Therefore, it is very important to know how "costly" these loans are for the company. A high receivables turnover ratio implies either that the company operates on a cash basis or that its extension of credit and collection of accounts receivable are efficient. Also, a high ratio reflects a short lapse of time between sales and the collection of cash, while a low number means collection takes longer. The lower the ratio is the longer receivables are being held and the risk to not be collected increases. A low receivables turnover ratio implies that the company should re-assess its credit policies in order to ensure the timely collection of credit sales that is not earning interest for the firm.
DEBTORS MANAGEMENT IN HINDALCO

Hindalco is one of the leading producers of aluminium and copper. Our aluminium units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines. Its debt policy is not very flexible. It has been observed that there is no exceeding six months in past few years. The reason behind this may be that most of its customers are big corporate over the world. In most of the contracts, payments of Hindalco are made in following stages: Payment Terms: Advance from customers At the time of dispatch of goods At the time of MRC (Material Receipt at Site)
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However, the above terms may vary from contract to contract. Based on the above payment terms, Hindalcos past three years debtors data is as follows:
YEAR Particular Sales Debtors Debtor turnover Debtors conversion period 2011-12 26597 1348.22 19.72 times 18 days 2010-11 23859 1290.43 18.48 times 20 days 2009-10 19522 1256.54 15.53 times 23 days
GRAPHICAL REPRESENTATION
Debtor turnover
25
20
15 Debtor turnover 10
0 2011-12 2010-11 2009-10
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INTERPRETATION:
Here, In spite of increase in sales in 2011-12, total debtors have been increased, which indicated that the company is not having very effective credit policy. But the same case is not for the previous years. Whereas if we analyze the debtors turnover ratio, we can say that the company is capable of reducing the period of debtors conversion. Higher the debtors turnover ratio, lesser time it will take to collect debts. In 2012, Period of Debtors conversion is reduced to approx 18 days. Last year debtor conversion is found at 20 days in the research, it implies that there is very slight improvement in turnover in spite of increase in sales. Although the balance of debtor comes
down considerably but still there is scope in Debtors Management for the Company.
STEPS INVOLVED IN MANAGEMENT OF DEBTORS:

The following steps are involved in debtors management o There should be close contact with the customers. o There should be proper age-wise analysis of the debtors. There should be proper classification between collectible Debtor and Bad Debts. Bad debts should be written off as early as possible after making all efforts for its collection. Product cycle should be minimized so that cost of the product should not become high to the agreed amount because of time factor. There must be a provision of discount for early payment of debts by the customers. Regular checking of the records of the debtors is essential so as to analyze the current position of that organization. While making a policy, regarding the debtors the point should be considered that customers having excellent past record, follow the lenient policy which is adopted for doubtful customers.
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Working Capital Management of Hindalco Industries Limited Manage the working capital according to need as recovering the debt from customer as early as possible while, get extension of payment of dues on the company of others as suppliers of raw material as late as possible.
CREDITORS MANAGEMENT
You rely on good relations with creditors for the smooth operation of your business. Suppliers (trade creditors), the bank, and statutory bodies such as HM Revenue & Customs (HMRC) all affect the cash flow of most businesses. When your cash flow is tight, you may not be able to pay your bills on time. If you manage the situation well, your creditors will have more trust and confidence in you than before. But managed badly, the situation can develop into a crisis.
CREDITORS TURNOVER RATIO

A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period.
YEAR Particular Credit purchase Avg. creditors creditors turnover Creditors payment period 2011-12 23583.46 6701.24 3.51 times 103 days 2010-11 22436.05 6192.47 3.62 times 100 days 2009-10 18423.27 3773.22 4.88 times 74 days
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INTERPRETATION:
In the year 2010-11 the creditors turnover has decreased from 4.88 to 3.62 it indicate that the credit worthiness of companies has decreased and they are unable to pay their creditors efficiently than the previous year. During this year the cash equivalent items has been increased to 3094.21 cr. from 2942.88 cr. In this year 2011-12, the ratio has been decreased from 3.62 to 3.51 which show that the company credit worthiness has again decreased & in this year also the company delays the payment of their creditors.
INVENTORY MANAGEMENT IN HINDALCO

Hindalco produces normal production cycle items against the firm orders from customers. Because of this as well as sizeable raw materials and compulsory bulk purchase of items, the company has to carry high level of inventories.
Inventory Turnover Ratio:

A ratio showing how many times a companys inventory is sold and replaced over a period. It is calculated as: Inventory Turnover = Cost of Goods Sold / Average Inventory
YEAR Particular Cost of goods sold Avg. Inventory Inventory turnover Days of turnover 2011-12 23492 7697.13 3.052 times 120 days 2010-11 20705 6786.8 3.050 times 120 days 2009-10 16572 4995.77 3.31 times 110 days
A low inventory turnover ratio is a signal of inefficiency, since inventory usually has a rate of return of zero. It also implies either poor sales or excess inventory. A low turnover rate can indicate poor liquidity, possible overstocking, and obsolescence, but it may also reflect a planned inventory buildup in the case of material shortages or in anticipation of rapidly rising prices.
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Working Capital Management of Hindalco Industries Limited A high inventory turnover ratio implies either strong sales or ineffective buying (the company buys too often in small quantities, therefore the buying price is higher).A high inventory turnover ratio can indicate better liquidity, but it can also indicate a shortage or inadequate inventory levels, which may lead to a loss in business.
INVENTORY TURNOVER
3.35 3.3 3.25 3.2 3.15 3.1 3.05 3 2.95 2.9 2011-12 2010-11 2009-10 INVENTORY TURNOVER
Interpretation: The turnover increases due to increase in sales and minimizing the inventory level. In my research, I find that there is very minor change in the turnover in year 2011 and 2012. The inventory turnover is 3.052 and 3.050 in 2010-11 and 2011-12 respectively. The days of turnover are 120 days in 2011-12 and also in 2010-11. But if we see the turnover of year 2009-10 then we came to know that in 2009-10 the turnover is 3.31, the days of turnover is 110 days. This suggests that the company is not able to increase their sales in last two years and company will take more days to convert their inventory into sales.
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Working Capital Management of Hindalco Industries Limited NEED OF INVENTORY MANAGEMENT Stiff competition, globalization of trade and liberalization Achieving, increasing and positive EVA (Economic Value Added) Cost reduction Energy conservation Conservation of natural resources Better, work environment Improved health and safety Enhanced public image
There is direct relation of working capital requirement with Debtors and Inventory. Above data indicates that company has taken certain strategic measures to manage its Debtor and Inventory. Following are the measures: Special task forces were built up from Debtors and Inventory Management at senior level. Regular follow up at senior level. A close contact with the customers. Proper age-wise analysis of the debtors. Proper classification between collectible debtors and bad debts. Bad debts written off as early as possible after making all efforts of its collection. Product cycle minimized so that cost of the product does not become high to the agreed amount because of time factor. Formation of specific group in each area to identify the wastage elements and seek participation of all. Formulation of action plan to eliminate/minimize wastage. Identification of corrective actions and their implementation.
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CASH MANAGEMENT IN HINDALCO

It is the duty of the finance manager to provide adequate cash to all segments of the organization. At the same time, he/she has also to ensure that no funds are blocked in idle cash as this will involve cost in terms of interest to the concern. A sound cash management scheme has to maintain the twin objective of liquidity and cost.
MEANING OF CASH MANAGEMENT

The term cash management refers to the management of cash and near cash assets while cash includes coins, currency notes, cheques, bank drafts, and the demand deposits, the near cash assets include marketable securities and time deposits with banks. Such securities and deposits are easily convertible into cash.
MOTIVES FOR HOLDING CASH

In spite of the fact that cash does not earn any substantial return for the business, it is held by the concern with the following motives. 1. Transaction motive: A company enters a variety of business transactions resulting both inflow and outflow of cash; at times the cash outflow exceed the cash inflow. In order to meet the business obligations in such situation, it is necessary to maintain adequate cash balance. Thus, a firm with the motive of making routine business payments maintains cash balance. 2. Precautionary motive: A firm holds cash balance to meet sudden cash needs arising out of unexpected contingencies such as floods, strikes, obsolesces; sharp increase in prices of raw materials, presentation of bills of payment earlier than expected date more amount of cash will be kept by the firm if there is more possibility of such contingencies. 3. Speculative motive: Hindalco also keeps cash balance to take advantage of unexpected business opportunities. Such motive is there of speculative nature.
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Working Capital Management of Hindalco Industries Limited 4. Compensation motive: Banks provide certain services to their customers free of charge. So they usually require the customers to keep minimum cash balance with them which enables them to earn interest and compensate for the free services rendered.
REASONS OF CASH MANAGEMENT

Cash management involves the following four basic problems. 1. Controlling level of cash: One of the basic objectives of cash management is to minimize the level of cash balances with the firm. This objective is sought to be achieved by means of the following: A. Preparing cash budget: Cash budget is the most important device for planning and controlling the use of cash. It involves the future receipts and payments of the firm. On the basis of this information the finance manager can determine the future cash needs of the firm. B. Providing for unpredictable discrepancies: Cash budget shows
discrepancies between cash receipts and payments on the basis of normal business activities. C. Availability of alternative source of funds: a firm may not required keep large cash balance, if it has arrangements with banks for borrowing money in times of emergencies.
2. Controlling of cash inflow: In order to prevent fraudulent diversion of cash receipt and speeding up collections of cash, an adequate control on cash inflow is necessary. A properly installed check system can, to a great extent, minimize the possibility of fraudulent diversion of cash. Speedier collection of cash can be made possible by adoption of the following two techniques: i) Concentration banking system: It is a system of decentralizing collection of account receivables. According to this system, Hindalcos branch offices are auth orized to collect the payment from the customers, and deposit in the local bank accounts. This system facilities fast movement of funds. This system is good in case of the firms having their spread over a large area.
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Working Capital Management of Hindalco Industries Limited ii) Lock box system: This system is more popular in the U.S.A. and is further step in speeding up collection of cash. This system has been devised to element delay arising in cash of the concentration banking system on account of a time gap between actual receipt of cheques by the regional collection centers and its deposits in the local bank account. Under this system company hire a post office box and instruct its customers for their remits to the box. It also reduces the chances of frauds in the cash collection process and controls the cash inflows better. In order to avoid the unnecessary pockets of idle funds, the company should maintain minimum number of bank accounts.
3. Controlling outflows of cash: An efficient control over cash outflows is equally important for conserving cash and reducing financial requirements. Control over cash outflows signifies slow disbursement. In order to control the outflows of cash efficiently, a firm should keep in view the following considerations: i) Centralized system for cash payments: should be followed as compared to decentralized system in cash of collections. All payments should be made from a single control account, i.e. from the central office of the company. However, the local office of the company may pay local expenses. ii) Payment should be made on the due dates, neither before nor after. The company should neither lose cash discount nor its prestige on account of delayed payments. The company should, therefore, made payments within the terms offered by the suppliers.
iii) Playing float, technique should be used by the company for maximizing the availability of funds. The term float means the account tied up in checks which have been issued by company but not have been presented for payment by the creditors. As a result of a time lag between issue of a cheque and its actual presentation, the actual bank balance of a firm may be more than the balance shown in the books. The difference is called payment of float. The longer the float period the greater would be the benefit of the firm.
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TOOLS OF THE CASH CONTROL

i) Cash Budget: It is the most significant tool of controlling the use of cash. It provides a comparison between actual and budgeted cash receipts and disbursements locating the points of deviations, if any. The financial manager, after ascertaining the reasons for deviations between the actual and budgeted figures, can take the necessary action to remove. ii) Inflows and outflows of cash: In order to check the change in cash position of the firm from one period to another, a cash flow statement is prepared. It helps management in controlling inflows and outflows of cash. iii) Ratio analysis: Ratio analysis is also an important tool of cash control. Different financial ratios are used for this purpose. These ratios include current ratio, liquidity ratio, receivables turnover ratio, and inventory turnover ratio and cash position ratios.
ANALYSIS OF CASH MANAGEMENT WITH THE HELP OF CERTAIN RATIOS

YEAR Particular Current assets Current liabilities Inventories Current ratios Quick ratios 2011-12 11896.04 9115.16 7742.86 1.3 0.45 2010-11 10746.40 9027.21 7652.19 1.1 0.34 2009-10 8864.29 5246.93 5921.41 1.6 0.56
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Current Ratio
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2011-12 2010-11 2009-10 Current Ratio
INTERPRETATION:
In 2011-12, the current ratio of the company is 1.3, which is higher than the previous year. It indicates that the companys current liabilities were increased but with the lower rate as compared to current asset. Due to increase in the current liabilities at lower rate and increase in current assets with higher rate as compared to previous year, there is little improvement in current ratio, it is favorable for the company because it indicates the company is in position to meet its liabilities.
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QUICK RATIO
Quick Ratio
0.6 0.5 0.4 0.3 0.2 0.1 0 2011-12 2010-11 2009-10
Quick Ratio
INTERPRETATION:
Now we compare the companys position according to the liquidity ratio. As we know the standard of the liquid ratio is 1:1. In 2011-12 the liquid ratio of the company is 0.45 which is less than the standard ratio this indicates the liquidity position of company is not optimum. But if we compare the data with previous year (0.34) then there is some improvement observed in the quick ratio. The liquidity ratio follows the same trend in the year further due to large amount of inventories is kept with the company and there is not any improvement in the inventory conversion period.
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HINDALCO HAS SHORT TERM INVESTMENT IN:

1. Debenture of HPCL unit of UTI, HDFC, ICICI, IDBI, Franklin Templeton Funds, Birla mutual funds, GIC mutual funds and alliance mutual funds, DSP Merrill lynch mutual funds, standard chartered mutual funds, Zurich India mutual funds. The total current investment of the company for the year ended 31.03.12 amount to Rs. 4583.40 cr. 2. Besides above, the company has various credit arrangements with banks to finance the daily working capital requirement. These are of following types: Cash credit Purchase/discounting of bills Working capital term loans Letter of credit
1) Cash credit:
The company has cash credit facilities with various banks. The administrative of this is done at the principle office at Renukoot. However its Regional and area offices are authorized to utilize the cash credit facilities up to the limit described by the principle office.
2) Purchase/discounting of bill:
The company has also purchase and discounts the bills issued by its customers to meet daily requirements. 3) Working capital term loans 4) Letter of credit: the companies Export/Import operations are done through letter of credit.
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SUBSEQUENT OBSERVATIONS
In this section all those things are mentioned that the companys accounts department assigned us to do during the summer internship period. The following are the work I done during summer training: Learn about the functioning of warehousing department. Data entry of Hindalco super bazaar bill receipts. Data entry of commercial tax form (FORM XXXVIII) in the excel sheet.
PROCESSESSING OF WAREHOUSING DEPARTMENT

Warehousing involves: 1. Receivable of Finished goods from Inspection and Packaging department. 2. Procuring of finished goods. 3. Dispatch of Finished goods on time. The entire process is as under
Godown Customer Agent
Production
Inspection& Packaging
Warehousing
Godown Customer Agent
Dispatching
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Working Capital Management of Hindalco Industries Limited Dispatching involves Grouping of trucks according to: 1. Type of material. 2. Size of truck or the loading capacity. 3. Location to which the goods are to be transported.
Process inside the Warehouse
Finished goods received form Production department
Allocation
Grouping
Clearence
Consignment tracking
Physical nature complaints
Tracking the dispatched material: 1. There is no system to track the goods dispatched from one department to another within the plant. Hindalco management has been thinking of implementation of RFI system for this purpose. But the cost of installation and maintenance is the cause of delay.
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Working Capital Management of Hindalco Industries Limited 2. Installation of GPS system in trucks used in delivery of order is under consideration. But the main hindrance is the lack of availability of dedicated freight. So card swiping system is currently used. Addressing Physical nature complaints: 1. Any physical nature complaint such as Corrosion, Accident or any Quality related issues are regarding alloys is handled by the Production Department. 2. Complaints regarding packaging and interleaving are handled by Quality and Inspection Department. Key Customers are provided Login Id so as to make direct complaints while other customers have to complain to nearest the Zonal office. There are about 23 zonal offices of Hindalco Industries in India. After the dispatch of the finished goods a Daily Production Sheet is produced. Production Product Receiving Product Dispatching Total Handling
Rolled Ingot Extrusion Wire
240 530 80 250
240 530 80 250
480 530 160 500
Problems: 1. Nearest market is 160 km far from the plant. 2. Daily minimum 80 trucks are required. 3. Raw material incoming is by rail while finished goods outgoing is by trucks. 4. Availability of 6 wheelers trucks is poor.
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PROCESSING OF INDIRECT TAX DEPARTMENT

Indirect tax is a tax which is indirectly exposed on the goods and services, in this department my work is to entry of the form details in excel sheet. The department gives me 100 forms on daily basis and I have supposed to do the entry of all forms in one day.
ABOUT FORM ( XXXVIII )

Form 38 is a form which is issued by commercial tax department for those industries who buy goods or raw material interstate. The seller has to fill the form and send the original copy of the form with the driver of the truck or any other mean of transportation; it is checked at every police check post for the sake of transparency of goods in the sense of legal status. In case of non availability of form 38 with the driver, the whole consignment will be ceased and 40% of the consignment is charged as a penalty.
IN CASE OF FILLING THE COMMERCIAL TAX

In case of filling the commercial tax, the company has to show all details of the consignment along with the supplier TIN number so that the avoidance of tax in any case will be avoided.
IN CASE OF MISSING OF FORM ORIGINAL COPY

In case the form is missed, the following expenses are occurred: Fine of Rs.1, 00000 paid by the company for reissue of duplicate copy. The company has to file F.I.R to their respective police station. Company has to advertise for the same in the local newspaper. An additional fine of Rs.25000 also paid by company.
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STANDARD OPERATING PRACTICES OF BANK SECTION, HINDALCO, RENUKOOT
Financial institutions/banks are playing a very vital role in industrial development of India, Bank section, HINDALCO Renukoot works as an interface between the financial institution/Banks. Although the responsibility of making a broad policy frame work of guidelines to interact with Financial institution in HINDALCO is looked after by HINDALCO CFD, Mumbai but the responsibility of executing the policy and guidelines applicable to Renukoot operation solely lying with the Bank section Renukoot, HINDALCO Bank Section, Renukoot in addition to compliance of the guidelines of CFD, Mumbai involved in different financial activities which are necessary for smooth running of financial activities at Renukoot. The company is operates with the link up of following banks to which they have bank accounts also: Name of Bank State Bank of India Allahabad Bank IDBI Bank UCO Bank HDFC Bank ICICI Bank Place Renukoot Renukoot Renukoot Renukoot Renukoot Renukoot
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RATIO ANALYSIS
1. MARGIN RATIOS
It is the amount of profit (at the gross, operating, pre tax or net income level) generated by the company as a percent of the sales generated. The objective of margin analysis is to detect consistency or positive/negative trends in a companys earnings. Positive profit margin analysis translates into positive investment quality. To a large degree, it is the quality, and growth, of a companys earnings that drive its stock price.
GROSS MARGIN PERCENTAGE (GMP):

A financial metric used to assess a firms financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. GMP = (Gross Profit/Sales)*100 (Rs. In Crores) Particulars SALES 2237 GROSS PROFIT 8.41 GMP 10.92 11.64 2595 2265 2011-12 26,597 2010-11 23859 2009-10 19522
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GMP
14 12 10 8 6 4 2 0 2011-12 2010-11 2009-10 GMP
INTERPRETATION:
In the above case a decline can be seen in the GP ratio which is due to the reason that increase in sales has not resulted in an increase in GP which has gone down year after year, due to the increase in the cost of production.
OPERATING PROFIT MARGIN (OPM):

A ratio used to measure a companys pricing strategy and operating efficiency. Operating margin is a measurement of what proportion of a companys revenue is left over after paying for variable costs of production such as wages, raw materials etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. Operating margin gives analysts an idea of how much a company makes (before interest and taxes) on each dollar of sales. When looking at operating margin to determine the quality of a company, it is best to look at the change in operating margin over time and to compare the companys yearly or quarterly figures to those of its competitors. If a companys margin is increasing, it is earning more per dollar of sales. The higher the margin, the better. OPM= (Operating Profit/Sales)*100
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(Rs. In Crores) Particulars SALES OPERATING PROFIT OPM 3105 3155 2950 2011-12 26,597 2010-11 23859 2009-10 19522
11.67
13.22
15.11
OPM
16 14 12 10 8 6 4 2 0 2011-12 2010-11 2009-10 OPM
INTERPRETATION:
As the ratio measures the quantum and extent of expenditure incurred in producing and selling the goods. The operating profit margin has decreased as compared to the previous years. The Operating profit has not been able to match the increase in sales. It means the level of operating expenses have not been able to match the increase in sales. High operating profit margin shows that company is in good state and has healthy margins. But due to inflation the operating expenses has increased considerably.
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NET PROFIT MARGIN (NPM):

A ratio of profitability calculated as net income divided by revenues or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Looking at the earnings of a company often doesnt tell the entire story. Increased earnings are good, but an increase does not mean that the profit margin of a company is improving. For instance, if a company has costs that have increased at a greater rate than sales, it leads to a lower profit margin. This is an indication that costs need to be under better control. NPM = (Profit After Tax/ Sales)*100 (Rs. In Crores) Particulars SALES PAT NPM 2011-12 26,597 2237.20 8.41 2010-11 23,859 2136.92 8.96 2009-10 19,522 1915.63 9.81
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NPM
10 9.5 9 8.5 8 7.5 2011-12 2010-11 2009-10 NPM
INTERPRETATION:
The reduction in Net profit margin primarily is due to high increase in interest paid during the year and cost of sales has increased considerably with the increase in sales.
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FINDINGS:
The working capital is increasing in comparison to last year (2011-12) is good for the liquidity of the company. The working capital turnover is decrease in 2011-12; this is showing good profitable condition in this year. The sale is increased but working capital is not increasing with the same rate as sales increases, it means that the liquidity position is somehow affected this year. The inventory turnover is not much varying from previous year, this shows that the company is not able to do much for inventory management. But if we compare the data with 2009-10 then they efficiently manage their inventory and able to increase its sale in 2009-10 The sale is increase in 2011-12; total debtors have been increased, and turnover is also increasing it indicates that the company is having very effective credit policy and they are efficiently manage their debtors. The companys current ratio is increasing in comparison to previous year it shows that the companys is able to improve its liquidity position in comparison to previous year. The companys liquidity position is lower than the standard liquid ratio, in 2011-12 the quick ratio is 0.45; the ideal liquid ratio is 1:1 but, the goodness of liquid ratio is vary as per the nature of the business. So, we take it as improvement in quick ratio in comparison to previous year. Despite the increasing cost pressure and the fluctuating demand, the operating profit and the net sales has increased. For the year ended March , 2012 net sales at Rs. 26,597 cr. were almost 11% higher than the previous years sales. The production volume has increased in the current financial year overcoming the Hirakud setback in the previous financial year.
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RECOMMENDATION
Expenses in stock, compensation of raw material, employees cost, power and fuel and depreciation including impairment has increased continuously. Measures should be taken for the improvement of inventory levels so that the extra expenses could be reduced. Due to increase in the cost pressure because of increase in cost of raw materials and transportation so the company should focus on increasing the operational efficiency in production.
As we have analyzed that the company is running more on its equity and has scope for increasing its financial leverage so that it can generate more revenue by investing in more profitable ventures.
Inventory levels are high which has reduced the profitability of the company and it needs to be maintained at an optimum level.
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Working Capital Management of Hindalco Industries Limited BIBLIOGRAPHY
BOOKS REFERRED Financial Management I.M.Pandey, 9th edition; New Delhi:Vikas Fundamentals of Financial Management R.P.Rustagi, 3rd edition; New Delhi: Galgotia Publishing Company; 2002. Financial Management Prassanna Chandra
MAGAZINE AND JOURNALS Annual Report of FY 2010-11, 2011-12 of Hindalco Industries Ltd. Aditya Kiran Hindalco Sandesh Induction Guide (Training Centre)
WEBSITES REFERRED www.hindalco.com www.workingcapital.org www.investopedia.com www.adityabirla.com
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Summer T in Hindalco

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SUMMER INTERNSHIP PROJECT REPORT

WORKING CAPITAL MANAGEMENT

RENUKOOT, UTTAR PRADESH

Institute Of Technology & Science

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

I am satisfied with the work of Mr. PRATYUSH KUMAR DUBEY

Working Capital Management of Hindalco Industries Limited

PRATYUSH KUMAR DUBEY I.T.S., Mohan Nagar, Ghaziabad

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

ADITYA BIRLA GROUP: GNENRAL OVERVIEW

Working Capital Management of Hindalco Industries Limited

ADITYA BIRLA GROUP- THE GLOBAL SCENERIO

Around the world the group is known for:

ADITYA BIRLA GROUP - THE INDIAN SCENERIO.

Working Capital Management of Hindalco Industries Limited

ADITYA BIRLA GROUP BEYOND BUSINESS

Working Capital Management of Hindalco Industries Limited

HINDALCO: GENERAL OVERVIEW

Working Capital Management of Hindalco Industries Limited

HINDALCO INDUSTRIES LIMITED AN INDUSTRY LEADER IN ALUMINIUM AND COPPER

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

FLAT ROLLED PRODUCTS

FOIL & PACKING

SHARE OF NET SALES VALUE 2011-12

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

CHIEF FINANCIAL OFFICER

HEAD CORPORATE PROJECTS & PROCUREMENT CELL

CHIEF PEOPLE OFFICER

BUSINESS / UNIT HEAD

UTKAL ALUMINA INTERNATIONAL LTD

ADITYA BIRLA MINERALS LIMITED

STRUCTURE OF FINANCE DEPARTMENT

VICE PRESIDENT (FINANCE & ACCOUNTS)

SENIOR ASSISTANT & ASSISTANT HINDALCO INDUSTRIES MANUFACTURING UNIT,

Working Capital Management of Hindalco Industries Limited

Working Capital Management of Hindalco Industries Limited

MAJOR MILE STONES

Working Capital Management of Hindalco Industries Limited

MAJOR ALUMINIUM PRODUCER INDUSTRIES IN INDIA

NALCO BALCO MALCO

Public sector Sterlight Sterlight

Working Capital Management of Hindalco Industries Limited

HINDALCOS PRODUCT RANGE

Primary aluminium Ingots

Wire rods Sheet

Working Capital Management of Hindalco Industries Limited

PERFORMANCE REVIEW IN 2011-12

Working Capital Management of Hindalco Industries Limited

WORKING CAPITAL MANAGEMENT

Working Capital Management of Hindalco Industries Limited

Temporary investments of surplus funds Prepaid expenses Accrued expenses

Working Capital Management of Hindalco Industries Limited

WORKING CAPITAL MANAGEMENT

Working Capital Management of Hindalco Industries Limited

MANAGEMENT OF WORKING CAPITAL

Working Capital Management of Hindalco Industries Limited

CLASSIFICATION OF WORKING CAPITAL