WORKING CAPITAL MANAGEMENT

BHEL (IP) , JAGDISHPUR

Submitted B ! ANKIT KUMAR SINGH B.Com (HONS.) 3rd Year, Vth Semester A !!"#$$!#% &INANC' U"de# t$e %uid&"'e ()! (Mr. G(r)reet S*+,h) A//o(+ts O00*/er BH'2 (-r. Ra.e+dra K(mar)
ASSISTANC' 1RO&'SSOR

ABS, 2(/3+o4

SUMM'R INT'RNSHI1 R'1ORT IN 1ARTIA2 &U2&I2M'NT O& TH' A5AR- O& &U22 TIM' BACH'2ORS O& COMM'RC' (6!$$76!$")

AMIT* BUSINESS SCHOOL AMITY UNIV'RSITY UTTAR 1RA-'SH

Page $

STATEMENT B* CANDIDATE

Cert*0*ed that th*s re)ort *s )re)ared 8ased o+ the s(mmer *+ter+sh*) )ro.e/t (+derta3e+ 89 me *+ BHEL (IP) JAGDISHPUR (+der the a8:e ,(*da+/e o0 DR. RAJENDRA KUMAR *+ )art*a: 0(:0*::me+t o0 the re;(*reme+t 0or a4ard o0 de,ree o0 BACHELOR O+ COMMERCE(HONOURS) 0rom Am*t9 U+*<ers*t9, Uttar 1radesh.

-ate7

(ANKIT KUMAR SINGH) B,COM(HONS,) A.//0122/13

(DR, RAJENDRA KUMAR) ASSITANCE PRO+ESSOR (ABS) .

( PRO+, -,P, SAHI) DIRECTOR (ABS)

+ACULT* CERTI+ICATE
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&or4arded here 4*th a s(mmer *+ter+sh*) re)ort o+ = W(#4i"% C&5it&6 M&"&%eme"t > o0 BH'2 (I1) ?a,d*sh)(r s(8m*tted 89 A+3*t K(mar S*+,h '+ro::me+t No A !!"#$$!#%, st(de+t o0 B.Com IIIrd Semester (6!$67$3). Th*s )ro.e/t 4or3 *s )art*a: 0(:0*::me+t o0 the re;(*reme+t 0or the de,ree o0 Ba/he:ors o0 Commer/e 0rom Am*t9 U+*<ers*t9 2(/3+o4 Cam)(s, Uttar 1radesh.

-r. Ra.e+dra 3(mar Ass*sta+/e 1ro0essor (ABS) Am*t9 U+*<ers*t9, 2(/3+o4 Cam)(s

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CERTI+ICATE O+ INDUSTR* GUIDE

Th*s *s to /ert*09 that a S(mmer I+ter+sh*) Re)ort o+ =5or3*+, Ca)*ta: Ma+a,eme+t> o0 BH'2 (I1) ?a,d*s)(r *s s(8m*tted 89 A+3*t K(mar S*+,h B.Com(Ho+s.) 3 rd 9ear o0 Am*t9 U+*<ers*t9 2(/3+o4. The /a+d*date has 8ee+ s*+/ere:9 do*+, her *+ter+sh*) (+der me 0or the )er*od o0 @ 4ee3s. Tha+3 9o(. Mr. G(r)reet S*+,h ACCOUNTS O&&IC'R BH'2 (I1) ?AG-ISH1UR.

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ACKNOWLEDGEMENT

I 4o(:d :*3e to /o+<e9 m9 heart*est ,rat*t(de to se<era: )eo):e, 0or the*r s())ort a+d ,(*da+/e 4h*/h he:)ed me *+ /om):et*o+ o0 the s(mmer *+ter+sh*) )ro.e/t .&*rst a+d 0oremost I 4o(:d :*3e to tha+3 BHEL (IP) JAGDISHPUR 0or ,*<*+, me a+ o))ort(+*t9 to ha<e the s(r<e9 a+d do*+, *+ter+sh*) *+ the*r esteemed or,a+*Aat*o+. M9 s)e/*a: a))re/*at*o+ eBte+ds to DR , RAJENDRA KUMAR 0or h*s /o+sta+t e+/o(ra,eme+t4h*/h he:)ed *+ /om):et*+, th*s re)ort *+ a s9stemat*/ 4a9. M9 s)e/*a: tha+3s to m9 i"du7t# %uide M#, Gu#5#eet Si"%$ a+ em):o9ee *+ BH'2 (I1) o+ the )ost o0 A//o(+ts o00*/er 4ho he:)ed me o(t *+ 0*+d*+, the a))ro)r*ate matter re,ard*+, th*s a+d 0or h*s s())ort thro(,ho(t m9 )ro.e/t re)ort. 5*th the*r he:) I /o(:d /om):ete m9 4or3 e00*/*e+t:9 a+d e00e/t*<e:9. 2ast 8(t +ot the :east, m9 e+d:ess a))re/*at*o+ ,oes to m9 0am*:9 4ho has stood 89 m9 s*de a+d ,*<e+ me mora: s())ort 4he+e<er I 4as :o4 a+d 8oosted m9 4*:: )o4er.

Page C

TABLE O+ CONTENTS
1AG' NO7 $. SYNO1SIS O& TH' R'1ORT 6. OB?'CTIV' O& TH' STU-Y 3. CHA1T'R $7 INTRO-UCTION % $!76!

". CHA1T'R 67 ORGANISATIONA2 1RO&I2' O& TH' COM1ANY C. CHA1T'R 37 1R'S'NTATION O& -ATA ANA2YSIS

6$7C$ C67C

#. CHA1T'R "7 &IN-INGS AN- CONC2USION

C@7#6

. BIB2IOGRA1HY

#3

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S*NOPSIS O+ THE REPORT

5or3*+, /a)*ta: *s the /a)*ta: re;(*red 0or the ma*+te+a+/e o0 da97to7da9 8(s*+ess o)erat*o+s. The )rese+t da9 /om)et*t*<e mar3et e+<*ro+me+t /a::s 0or a+ e00*/*e+t ma+a,eme+t o0 4or3*+, /a)*ta:. The reaso+ 0or that *s attr*8(ted to the 0a/t that a+ *+e00e/t*<e 4or3*+, /a)*ta: ma+a,eme+t ma9 0or/e the 0*rm to sto) *ts 8(s*+ess o)erat*o+s, ma9 e<e+ :ead to 8a+3r()t/9. He+/e the ,oa: o0 4or3*+, /a)*ta: ma+a,eme+t *s +ot .(st /o+/er+ed 4*th the ma+a,eme+t o0 /(rre+t assets a+d /(rre+t :*a8*:*t*es 8(t a:so *+ ma*+ta*+*+, a sat*s0a/tor9 :e<e: o0 4or3*+, /a)*ta:. Ho:d*+, o0 /(rre+t assets *+ s(8sta+t*a: amo(+t stre+,the+s the :*;(*d*t9 )os*t*o+ a+d red(/es the r*s3*+ess 8(t o+:9 at the eB)e+se o0 )ro0*ta8*:*t9. There0ore a/h*e<*+, r*s37ret(r+ trade7o00 *s s*,+*0*/a+t *+ ho:d*+, o0 /(rre+t assets. 5h*:e /ash 0:o4s are )red*/ta8:e *t r(+s /o+trar9 *+ /ase o0 /ash *+0:o4s. Sa:es )ro,ram o0 a+9 8(s*+ess /o+/er+ does +ot 8r*+, 8a/3 /ash *mmed*ate:9. There *s a t*me :a, that eB*st 8et4ee+ sa:e o0 ,oods a+d sa:e rea:*Aat*o+. The /a)*ta: re;(*reme+t d(r*+, th*s t*me :a, *s ma*+ta*+ed 89 4or3*+, /a)*ta: *+ the 0orm o0 /(rre+t assets. The 4ho:e )ro/ess o0 th*s /o+<ers*o+ *s eB):a*+ed 89 the o)erat*+, /9/:e /o+/e)t. Th*s st(d9 ,*<es *+ deta*: the 4or3*+, /a)*ta: ma+a,eme+t o0 BH'2. Ma+a,eme+t o0 ea/h /(rre+t assets +ame:9 *+<e+tor9 ma+a,eme+t, /ash ma+a,eme+t, a//o(+ts re/e*<a8:e ma+a,eme+t *s st(d*ed )erma+e+t to BH'2. S*m*:ar:9 ma+a,eme+t o0 a//o(+ts )a9a8:e *s st(d*ed to (+dersta+d the ma+a,*+, o0 /(rre+t :*a8*:*t*es. A )art 0rom th*s /o+/e)t o0 o)erat*+, /9/:e *s st(d*ed. The resear/h methodo:o,9 ado)ted 0or th*s st(d9 *s ma*+:9 0rom se/o+dar9 so(r/es o0 data 4h*/h *+/:(des a++(a: re)orts o0 BH'2, a+d 4e8s*te o0 the /om)a+9. The (se o0 )r*mar9 so(r/es *s :*m*ted to *+ter<*e4s 4*th 0e4 em):o9ees *+ the 0*+a+/e de)artme+t. The st(d9 o0 4or3*+, /a)*ta: ma+a,eme+t has sho4+ that BH'2 has a stro+, 4or3*+, /a)*ta: )os*t*o+. The /om)a+9 *s e+.o9*+, reaso+a8:e )ro0*ts. BH'2 em):o9s 0oreB 0(+ds *+stead o0 domest*/ :oa+s a+d 5C 0a/*:*t*es. BH'2 sa:es )os*t*o+ *s a:so <er9 ,ood.Its eB/e::e+t )er0orma+/e *s attr*8(ted to red(/ed /ost o0 )rod(/t.

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PURPOSE O+ THE STUD*

The ma*+ a*m o0 a+9 0*rm *s to maB*m*Ae the 4ea:th o0 shareho:ders. Th*s /a+ 8e a/h*e<ed o+:9 89 a stead9 0:o4 o0 )ro0*ts 4h*/h *+ t(r+ de)e+ds ()o+ s(//ess0(: sa:es a/t*<*t9. To ,e+erate sa:es, *+<estme+t o0 s(00*/*e+t 0(+ds *+ /(rre+t assets *s re;(*red. The +eed o0 /(rre+t assets sho(:d 8e em)has*Aed as the sa:es do+Dt /o+<ert *+to /ash *mmed*ate:9 8(t *+<o:<ed a /9/:e o0 o)erat*o+s, +ame:9 o)erat*+, /9/:e. BH'2 *s a m(:t* )rod(/t ma+(0a/t(r*+, (+*t 4*th <ar9*+, /9/:e o0 ea/h )rod(/t. The /a)*ta: re;(*reme+t o0 ea/h de)artme+t *+ a+ or,a+*Aat*o+ o0 BH'2 *s :ar,e 4h*/h(de)e+ds o+ )rod(/t tar,et 0or that )art*/(:ar 9ear) /a::s 0or a+ e00e/t*<e 4or3*+, /a)*ta: ma+a,eme+t. Mo+*tor*+, the o)erat*o+ o+ /9/:e d(rat*o+ *s a+ *m)orta+t as)e/t o0 4o3*+, /a)*ta:. Some )rom*+e+t *ss(es that are to 8e addressed are7 -(rat*o+ o0 ra4 mater*a: sta,e (de)e+ds o+ re,(:ar*t9 o0 s()):9, tra+sa/t*o+s t*me). -(rat*o+ o0 4or3 *+ )ro,ress (de)e+ds o+ :e+,th o0 ma+(0a/t(r*+, /9/:e, /o+s*ste+/9 *+ /a)a/*t9 (t*:*Aat*o+). -(rat*o+ at the 0*+*shed ,oods state (de)e+ds o+ )atter+ o0 )rod(/t*o+ a+d sa:e).

Th(s a deta*:ed st(d9 re,ard*+, the 4or3*+, /a)*ta: ma+a,eme+t *+ BH'2 *s to 8e do+e to /o+s*der the e00e/t*<e+ess o0 4or3*+, /a)*ta: ma+a,eme+t, *de+t*09 the short/om*+, *+ ma+a,eme+t a+d to s(,,est 0or *m)ro<eme+t *+ 4or3*+, /a)*ta: ma+a,eme+t.

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OBJECTI-E O+ THE STUD*

To st(d9 ,e+era: 4or3*+, /a)*ta: ma+a,eme+t )ro/ed(re *+ BH'2 (I1) ?a,d*sh)(r.

To a+a:9Ae a+d a)):9 o)erat*+, /9/:e /o+/e)t o0 4or3*+, /a)*ta: *+ BH'2 (I1) ?a,d*sh)(r.

To 3+o4 ho4 the 4or3*+, /a)*ta: *s 8e*+, 0*+a+/ed.

To 3+o4 the <ar*o(s methods to 8e 0o::o4ed 89 BH'2 0or *+<e+tor*es a+d a//o(+ts re/e*<a8:es.

To ,*<e s(,,est*o+s, *0 a+9, 0or 8etter 4or3*+, /a)*ta: ma+a,eme+t *+ BH'2.

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CHA1T'R $

INTRO-UCTION

Page $!

INTRODUCTION
Ca)*ta: *s esse+t*a: 0or sett*+, () a+d smooth r(++*+, o0 a+9 8(s*+ess. I+<estme+ts made o+ 0*Bed assets 4*:: 9*e:d eB/ess /ash *+0:o4s a)art 0rom the )a98a/3 amo(+t a+d *s s)read o<er a :o+, )er*od o0 t*me. He+/e /ash *+0:o4s or 8e+e0*ts asso/*ated are +ot *mmed*ate 8(t are eB)e/ted *+ the 0(t(re. Cash *+0:o4s a+d o(t0:o4s o//(r o+ a /o+t*+(o(s 8as*s *+ /ase o0 /(rre+t assets. Cred*t 0orms a+ esse+t*a: 0eat(re *+ the 8(s*+ess(/red*t ,*<e+ to /(stomers a+d /red*t 0rom s()):*ers). S*+/e there *s some t*me :a, 0rom the t*me sa:es a+d sa:es rea:*Aat*o+ /(rre+t assets a+d /(rre+t :*a8*:*t*es 4h*/h to,ether /o+st*t(te the +et 4or3*+, /a)*ta:, s())orts the 8(s*+ess *+ *ts +orma: o)erat*o+s. T.*s /a::s 0or a+ e00*/*e+t ma+a,eme+t o0 4or3*+, /a)*ta:. The )o:*/*es, )ro/ed(res a+d meas(res ta3e+ 0or ma+a,*+, o0 4or3*+, /a)*ta: ,a*+ 0(rther *m)orta+/e *+ a+ or,a+*sat*o+ :*3e BH'2 4here the 4or3*+, /a)*ta: re;(*reme+ts r(+s *+ /rores o0 r()ees. A+9 m*sma+a,eme+t o+ the )art o0 a(thor*t9 4*:: +ot .(st /a(se :oss 8(t ma9 e<e+ *m)a*r 8(s*+ess o)erat*o+s. It *s *+ th*s /o+teBt, 4or3*+, /a)*ta: has ,a*+ed *m)orta+/e. The ,ro4th o0 a+9 or,a+*sat*o+ de)e+ds ()o+ o<era:: )er0orma+/e o0 a:: de)artme+ts. A 0*rmDs 0*+a+/*a: )er0orma+/e re0:e/ts *ts stre+,th, 4ea3+esses, o))ort(+*t*es a+d threats o0 the or,a+*sat*o+ 4*th res)e/t to )ro0*ts ear+ed, *+<estme+ts, sa:es rea:*Aat*o+, t(r+o<er, t(r+ o+ *+<estme+t, +et 4orth o0 /a)*ta:. '00*/*e+t ma+a,eme+t o0 0*+a+/*a: reso(r/es a+d a+a:9s*s o0 0*+a+/*a: res(:ts are )er;(*s*te 0or s(//ess o0 a+ e+ter)r*se. I+ that 4or3*+, /a)*ta: ma+a,eme+t *s o+e o0 the ma.or areas o0 0*+a+/*a: ma+a,eme+t. Ma+a,*+, o0 4or3*+, /a)*ta: *m):*es ma+a,*+, the /(rre+t assets o0 the /om)a+9 :*3e /ash, *+<e+tor9, a//o(+ts re/e*<a8:es, :oa+s a+d ad<a+/es a+d /(rre+t :*a8*:*t*es :*3e7 s(+dr9 /red*tors, *+terest )a9me+t a+d )ro<*s*o+s.

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WORKING CAPITAL MANAGEMENT Cash *s the :*0e:*+e o0 a /om)a+9. I0 th*s :*0e:*+e deter*orates, so does the /om)a+9Es a8*:*t9 to 0(+d o)erat*o+s, re*+<est a+d meet /a)*ta: re;(*reme+ts a+d )a9me+ts. U+dersta+d*+, a /om)a+9Es /ash 0:o4 hea:th *s esse+t*a: to ma3*+, *+<estme+t de/*s*o+s. A ,ood 4a9 to .(d,e a /om)a+9Es /ash 0:o4 )ros)e/ts *s to :oo3 at *ts 4or3*+, /a)*ta: ma+a,eme+t (5CM). De)i"i"% W(#4i"% C&5it&6 5or3*+, /a)*ta: re0ers to the /ash a 8(s*+ess re;(*res 0or da97to7da9 o)erat*o+s, or, more s)e/*0*/a::9, 0or 0*+a+/*+, the /o+<ers*o+ o0 ra4 mater*a:s *+to 0*+*shed ,oods, 4h*/h the /om)a+9 se::s 0or )a9me+t. Amo+, the most *m)orta+t *tems o0 4or3*+, /a)*ta: are :e<e:s o0 *+<e+tor9, a//o(+ts re/e*<a8:e, a+d a//o(+ts )a9a8:e. A+a:9sts :oo3 at these *tems 0or s*,+s o0 a /om)a+9Es e00*/*e+/9 a+d 0*+a+/*a: stre+,th. The term 4or3*+, /a)*ta: re0ers to the amo(+t o0 /a)*ta: 4h*/h *s read*:9 a<a*:a8:e to a+ or,a+*Aat*o+. That *s, 4or3*+, /a)*ta: *s the d*00ere+/e 8et4ee+ reso(r/es *+ /ash or read*:9 /o+<ert*8:e *+to /ash (C(rre+t Assets) a+d or,a+*Aat*o+a: /omm*tme+ts 0or 4h*/h /ash 4*:: soo+ 8e re;(*red (C(rre+t 2*a8*:*t*es). Th(s, 5ORKING CA1ITA2 F CURR'NT ASS'TS7CURR'NT 2IABI2ITI'S I+ a de)artme+tEs Stateme+t o0 &*+a+/*a: 1os*t*o+, these /om)o+e+ts o0 4or3*+, /a)*ta: are re)orted (+der the 0o::o4*+, head*+,s G C(rre+t Assets 2*;(*d Assets (/ash a+d 8a+3 de)os*ts) I+<e+tor9 -e8tors a+d Re/e*<a8:es Page $6

C(rre+t 2*a8*:*t*es Ba+3 O<erdra0t Cred*tors a+d 1a9a8:es Other Short Term 2*a8*:*t*es

T$e7e &#e b&7i'&66 t8( '("'e5t7 () 8(#4i"% '&5it&6 G $. 6. Gross 4or3*+, /a)*ta: Net 4or3*+, /a)*ta:

C(rre+t assets are those 4h*/h /a+ 8e /o+<erted *+to /ash 4*th*+ a+ a//o(+t*+, 9ear a+d *+/:(de /ash, short7term se/(r*t*es, -e8tors, 8*::s re/e*<a8:es (a//o(+ts re/e*<a8:es or 8oo3 de8ts) a+d sto/3 (*+<e+tor9). C(rre+t :*a8*:*t*es are those /:a*m o0 o(ts*ders 4h*/h are eB)e/ted to mat(re 0or )a9me+t 4*th*+ a+ a//o(+t*+, 9ear a+d *+/:(de /red*tors (a//o(+ts )a9a8:e), 8*::s )a9a8:e a+d o(tsta+d*+, eB)e+ses. G#(77 8(#4i"% '&5it&6 G It re0ers to the 0*rmEs *+<estme+t *+ /(rre+t assets. Net 8(#4i"% '&5it&6 9 *t re0ers to the d*00ere+/e 8et4ee+ /(rre+t assets a+d /(rre+t :*a8*:*t*es. Net 4or3*+, /a)*ta: *s 5(7iti:e 5he+ /(rre+t assetsH/(rre+t :*a8*:*t*es Net 4or3*+, /a)*ta: *s "e%&ti:e 5he+ /(rre+t assetI/(rre+t :*a8*:*t*es T$e Im5(#t&"'e () G((d W(#4i"% C&5it&6 M&"&%eme"t G 5or3*+, /a)*ta: ma+a,eme+t *+<o:<es the re:at*o+sh*) 8et4ee+ a 0*rmEs short term assets a+d *ts short7term :*a8*:*t*es. The ,oa: o0 4or3*+, /a)*ta: ma+a,eme+t *s to e+s(re that a 0*rm *s a8:e to /o+t*+(e *ts o)erat*o+s a+d that *t has s(00*/*e+t a8*:*t9 to sat*s09 8oth mat(r*+, short term

Page $3

de8t a+d ()/om*+, o)erat*o+a: eB)e+ses. The ma+a,eme+t o0 4or3*+, /a)*ta: *+<o:<es ma+a,*+, *+<e+tor*es, a//o(+ts re/e*<a8:e a+d )a9a8:e, a+d /ash. 5or3*+, /a)*ta: /o+st*t(tes )art o0 the Cro4+Es *+<estme+t *+ a de)artme+t. Asso/*ated 4*th th*s *s a+ o))ort(+*t9 /ost to the Cro4+.(Mo+e9 *+<ested *+ o+e area ma9 J/ostJ o))ort(+*t*es 0or *+<estme+t *+ other areas.) I0 a de)artme+t *s o)erat*+, 4*th more 4or3*+, /a)*ta: tha+ *s +e/essar9, th*s o<er7*+<estme+t re)rese+ts a+ (++e/essar9 /ost to the Cro4+. &rom a de)artme+tEs )o*+t o0 <*e4, eB/ess 4or3*+, /a)*ta: mea+s o)erat*+, *+e00*/*e+/*es. I+ add*t*o+, (++e/essar9 4or3*+, /a)*ta: *+/reases the amo(+t o0 the /a)*ta: /har,e 4h*/h de)artme+ts are re;(*red to meet 0rom $ ?(:9 $%%$. T$e#e &#e m&" &75e't7 () 8(#4i"% '&5it&6 m&"&%eme"t 8$i'$ m&4e it &" im5(#t&"t )u"'ti(" () t$e )i"&"'i&6 m&"&%e#. $. 6. assets. 3. ". C#iti'&6it G 5or3*+, /a)*ta: ma+a,eme+t has ,reat s*,+*0*/a+/e 0or a:: 0*rms 8(t *t *s G#(8t$ 9 The +eed 0or 4or3*+, /a)*ta: *s d*re/t:9 re:ated to the 0*rmEs ,ro4th. <er9 /r*t*/a: 0or sma:: 0*rms. Time 9 5or3*+, /a)*ta: ma+a,eme+t re;(*res m(/h o0 the 0*+a+/*a: ma+a,erEs t*me. I":e7tme"t 9 5or3*+, /a)*ta: re)rese+ts a :ar,e )ort*o+ o0 the tota: *+<estme+ts *+

S(u#'e7 () 8(#4i"% '&5it&6 9 $. 6. &I&O Sa:e o0 +o+7/(rre+t assets a. 8. /. 3. a. 8. Sa:e o0 :o+, term *+<estme+ts (shares, 8o+dsKde8e+t(res et/.) Sa:e o0 ta+,*8:e 0*Bed assets :*3e :a+d, 8(*:d*+,, ):a+t or e;(*)me+ts. Sa:e o0 *+ta+,*8:e 0*Bed assets :*3e ,ood4*::, )ate+ts or /o)9r*,hts. 2o+, term 8orro4*+,sK*+st*t(t*o+s :oa+s, de8e+t(res, 8o+ds et/. Iss(a+/e o0 e;(*t9 a+d )re0ere+/e shares

2o+, term 0*+a+/*+,

". Short term 0*+a+/*+, s(/h as 8a+3 8orro4*+,s. Page $"

U7e7 () 8(#4i"% '&5it&6 $. 6. Ad.(sted +et :oss 0rom o)erat*o+s 1(r/hase o0 +o+7/(rre+t assets. a) 8) e;(*)me+t et/. /) 3. 8orro4*+,s) a) 8) Redem)t*o+ o0 redeema8:e )re0ere+/e shares. 1a9me+t o0 /ash d*<*de+d. 1(r/hase o0 *+ta+,*8:e 0*Bed assets :*3e ,ood 4*::, )ate+ts, /o)9r*,hts Re)a9me+t o0 :o+, term de8t (de8e+t(res or 8o+ds) a+d short term de8ts(8a+3 1(r/hase o0 :o+, term *+<estme+ts :*3e shares, 8o+dsKde8e+t(res et/. 1(r/hase o0 ta+,*8:e 0*Bed assets :*3e :a+d, 8(*:d*+,, ):a+t, ma/h*+er9,

+('u7i"% (" 6i;uidit m&"&%eme"t Net 4or3*+, /a)*ta: *s a ;(a:*tat*<e /o+/e)t. It *+d*/ates the :*;(*d*t9 )os*t*o+ o0 the 0*rm a+d s(,,ests the eBte+t to 4h*/h 4or3*+, /a)*ta: +eeds ma9 8e 0*+a+/ed 89 )erma+e+t so(r/es o0 0(+ds. C(rre+t assets sho(:d 8e s(00*/*e+t:9 *+ eB/ess o0 /(rre+t :*a8*:*t*es to /o+st*t(te a mar,*+or 8(00er 0or mat(r*+, o8:*,at*o+s 4*th*+ the ord*+ar9 o)erat*+, /9/:e o0 a 8(s*+ess. I+ order to )rote/t the*r *+terests, short7term /red*tors a:4a9s :*3e a /om)a+9 to ma*+ta*+ /(rre+t assets at a h*,her :e<e: tha+ /(rre+t :*a8*:*t*es. It *s a /o+<e+t*o+a: r(:e to ma*+ta*+ the :e<e: o0 /(rre+t assets t4*/e the :e<e: o0 /(rre+t :*a8*:*t*es. Ho4e<er, the ;(a:*t9 o0 /(rre+t assets sho(:d 8e /o+s*dered *+ determ*+*+, the :e<e: o0 /(rre+t assets <*s a7<*s a /(rre+t :*a8*:*t*es. A 4ea3 :*;(*d*t9 )os*t*o+ )oses a threat to the so:<e+/9 o0 the /om)a+9 a+d ma3es *t (+sa0e a+d (+so(+d. A +e,at*<e 4or3*+, /a)*ta: mea+s a +e,at*<e :*;(*d*t9 a+d ma9 )ro<e to 8e harm0(: 0or the /om)a+9Es re)(tat*o+. 'B/ess*<e :*;(*d*t9 *s a:so 8ad. It ma9 8e d(e to m*sma+a,eme+t o0 /(rre+t assets. There0ore )rom)t a+d t*me:9 a/t*o+ sho(:d 8e ta3e+ 89 ma+a,eme+t to *m)ro<e a+d /orre/t *m8a:a+/es *+ the :*;(*d*t9 )os*t*o+ o0 the 0*rm. Net 4or3*+, /a)*ta: /o+/e)t a:so /o<ers the ;(est*o+ o0 .(d*/*o(s m*B o0 :o+,7term a+d short7term 0(+ds 0or 0*+a+/*+, /(rre+t assets. &or e<er9 0*rm there *s a m*+*m(m amo(+t o0 +et4or3*+, /a)*ta: 4h*/h *s )erma+e+t. There0ore a )ort*o+ o0 the 4or3*+, /a)*ta: sho(:d 8e 0*+a+/ed 4*th the )erma+e+t so(r/es o0 0(+ds s(/h as e;(*t9, share /a)*ta:, de8e+t(res, :o+,7term de8t,

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)re0ere+/e share /a)*ta: or reta*+ed ear+*+,s. Ma+a,eme+t m(st de/*de the eBte+t to 4h*/h /(rre+t assets sho(:d 8e 0*+a+/ed 4*th e;(*t9 /a)*ta: or 8orro4ed /a)*ta:. B&6&"'ed 8(#4i"% '&5it&6 5(7iti(" 9 The 0*rm sho(:d ma*+ta*+ a so(+d 4or3*+, /a)*ta: )os*t*o+. It sho(:d ha<e ade;(ate 4or3*+, /a)*ta: to r(+ *ts 8(s*+ess o)erat*o+s. Both eB/ess*<e a+d *+ade;(ate 4or3*+, /a)*ta: )os*t*o+s are da+,ero(s 0rom the 0*rmEs )o*+t o0 <*e4. 'B/ess*<e 4or3*+, /a)*ta: mea+s ho:d*+, /osts a+d *d:e 0(+ds 4h*/h ear+ +o )ro0*ts 0or the 0*rm. 1a(/*t9 o0 4or3*+, /a)*ta: +ot o+:9 *m)a*rs the 0*rmEs )ro0*ta8*:*t9 8(t a:so res(:ts *+ )rod(/t*o+ *+terr()t*o+s a+d *+e00*/*e+/*es a+d sa:es d*sr()t*o+s. T$e d&"%e#7 () e<'e77i:e 8(#4i"% '&5it&6 &#e &7 )(66(87 $. 6. 3. ". It res(:ts *+ (++e/essar9 a//(m(:at*o+ o0 *+<e+tor*es. Th(s /ha+/es o0 *+<e+tor9 It *s a+ *+d*/at*o+ o0 de0e/t*<e /red*t )o:*/9 a+d s:a/3 /o::e/t*o+ )er*od. *+to m*sha+d:*+,, 4aste, the0t a+d :osses *+/rease. Co+se;(e+t:9, h*,her *+/*de+/es o0 8ad de8ts res(:t, 4h*/h ad<erse:9 a00e/ts )ro0*ts. 'B/ess*<e 4or3*+, /a)*ta: ma3es ma+a,eme+t /om):a/e+t 4h*/h de,e+erates ma+a,er*a: *+e00*/*e+/9. Te+de+/*es o0 a//(m(:at*+, *+<e+tor*es te+d to ma3e s)e/(:at*<e )ro0*ts ,ro4. Th*s ma9 te+d to ma3e d*<*de+d )o:*/9 :*8era: a+d d*00*/(:t to /o)e 4*th *+ 0(t(re 4he+ the 0*rm *s (+a8:e to ma3e s)e/(:at*<e )ro0*ts. I"&de;u&te 8(#4i"% '&5it&6 i7 &67( b&d &"d $&7 t$e )(66(8i"% d&"%e#7 $. 6. 3. ". C. #. It sta,+ates ,ro4th. It 8e/omes d*00*/(:t 0or the 0*rm to (+derta3e )ro0*ta8:e )ro.e/ts 0or +o+7a<a*:a8*:*t9 o0 4or3*+, /a)*ta: 0(+ds. It 8e/omes d*00*/(:t to *m):eme+t o)erat*+, ):a+s a+d a/h*e<e the 0*rmEs )ro0*t tar,et. O)erat*+, *+e00*/*e+/*es /ree) *+ 4he+ *t 8e/omes d*00*/(:t e<e+ to meet da9 to da9 &*Bed are +ot e00*/*e+t:9 (t*:*Aed 0or the :a/3 o0 4or3*+, /a)*ta: 0(+ds. Th(s the 0*rmEs 1a(/*t9 o0 4or3*+, /a)*ta: 0(+ds re+der the 0*rm (+a8:e to a<a*: attra/t*<e /red*t The 0*rm :oses *ts re)(tat*o+ 4he+ *t *s +ot *+ a )os*t*o+ to ho+ors *ts short term

/omm*tme+ts. )ro0*ta8*:*t9 4o(:d deter*orate. o))ort(+*t*es et/. o8:*,at*o+s. As a res(:t the 0*rm 0a/es t*,ht /red*t terms. Page $#

A+ e+:*,hte+ed ma+a,eme+t sho(:d, there0ore, ma*+ta*+ the r*,ht amo(+t o0 4or3*+, /a)*ta: o+ the /o+t*+(o(s 8as*s. O+:9 the+ a )ro)er 0(+/t*o+*+, o0 8(s*+ess o)erat*o+s 4*:: 8e e+s(red. So(+d 0*+a+/*a: a+d stat*st*/a: te/h+*;(es. s())orted 89 .(d,me+t, sho(:d 8e /a(sed to )red*/t the ;(a+t(m o0 4or3*+, /a)*ta: +eeded at d*00ere+t t*me )er*ods. A 0*rmEs +et 4or3*+, /a)*ta: )os*t*o+ *s +ot o+:9 *m)orta+t as a+ *+deB o0 :*;(*d*t9 8(t *t *s a:so (sed as a meas(re o0 the 0*rmEs r*s3. R*s3 *+ th*s re,ard mea+s /ha+/es o0 the 0*rm 8e*+, (+a8:e to meet *ts o8:*,at*o+s o+ d(e date. The :e+der /o+s*ders a )os*t*<e +et4or3*+, as a meas(re o0 sa0et9. A:: other th*+,s 8e*+, e;(a:, the more the +et4or3*+, /a)*ta: a 0*rm has, the :ess :*3e:9 that *t 4*:: de0a(:t *+ meet*+, *ts /(rre+t 0*+a+/*a: o8:*,at*o+s. 2e+ders s(/h as /ommer/*a: 8a+3s *+s*st that the 0*rm sho(:d ma*+ta*+ a m*+*m(m +et 4or3*+, /a)*ta: )os*t*o+. Dete#mi"&"t7 () 8(#4i"% '&5it&6 There are +ot set r(:es or 0orm(:ae to determ*+e the 4or3*+, /a)*ta: re;(*reme+ts o0 0*rms. A :ar,e +(m8er o0 0a/tors, ea/h ha<*+, a d*00ere+t *m)orta+/e, *+0:(e+/e 4or3*+, /a)*ta: +eeds o0 0*rms. The *m)orta+/e o0 0a/tors a:so /ha+,es 0or a 0*rm o<er t*me. There0ore, a+ a+a:9s*s o0 re:e<a+t 0a/tors sho(:d 8e made *+ order to determ*+e tota: *+<estme+t *+ 4or3*+, /a)*ta:. The 0o::o4*+, *s the des/r*)t*o+ o0 0a/tors 4h*/h ,e+era::9 *+0:(e+/e the 4or3*+, /a)*ta: re;(*reme+ts o0 0*rms. N&tu#e () bu7i"e77 5or3*+, /a)*ta: re;(*reme+ts o0 a 0*rm are 8as*/a::9 *+0:(e+/ed 89 the +at(re o0 *ts 8(s*+ess. Trad*+, a+d 0*+a+/*a: 0*rms ha<e a <er9 sma:: *+<estme+t *+ 0*Bed assets, 8(t re;(*re a :ar,e s(m o0 mo+e9 to 8e *+<ested *+ 4or3*+, /a)*ta:. Reta*: stores, 0or eBam):e, m(st /arr9 :ar,e sto/3s o0 a <ar*et9 o0 ,oods to sat*s09 <ar*ed a+d /o+t*+(o(s dema+ds o0 the*r /(stomers. A :ar,e de)artme+ta: store :*3e 4a::7mart ma9 /arr9, sa9, o<er 6!,!!! *tems. Some ma+(0a/t(r*+, 8(s*+esses, s(/h as to8a//o ma+(0a/t(rers a+d /o+str(/t*o+ 0*rms, a:so ha<e to *+<est s(8sta+t*a::9 *+ 4or3*+, /a)*ta: a+d a +om*+a: amo(+t *+ 0*Bed assets. I+ /o+trast, )(8:*/ (t*:*t*es ma9 ha<e :*m*ted +eed 0or 4or3*+, /a)*ta: a+d ha<e to *+<est a8(+da+t:9 *+ 0*Bed assets. The*r 4or3*+, /a)*ta: re;(*reme+ts are +orma: 8e/a(se the9 ma9 ha<e o+:9 /ash sa:es a+d s()):9 ser<*/es, +ot )rod(/ts. Th(s +o 0(+ds 4*:: 8e t*ed () *+ de8tors a+d sto/3 (*+<e+tor*es). &or the 4or3*+, /a)*ta: re;(*reme+ts most o0 the ma+(0a/t(r*+, /om)a+*es 4*:: 0a:: 8et4ee+ the t4o eBtreme re;(*reme+ts o0 trad*+, 0*rms a+d )(8:*/ (t*:*t*es. S(/h /o+/er+ ha<e to ma3e ade;(ate *+<estme+t *+ /(rre+t assets de)e+d*+, ()o+ the tota: assets str(/t(re a+d other <ar*a8:es.

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M&#4et &"d dem&"d '("diti("7 The 4or3*+, /a)*ta: +eeds o0 a 0*rm are re:ated to *ts sa:es. Ho4e<er, *t *s d*00*/(:t to )re/*se:9 determ*+e the re:at*o+sh*) 8et4ee+ <o:(mes o0 sa:es a+d 4or3*+, /a)*ta: +eeds. I+ )ra/t*/e, /(rre+t assets 4*:: ha<e to 8e em):o9ed 8e0ore ,ro4th ta3es ):a/e. It *s, there0ore, +e/essar9 to ma3e ad<a+/e ):a++*+, o0 4or3*+, /a)*ta: 0or a ,ro4*+, 0*rm o+ /o+t*+(o(s 8as*s. Gro4*+, 0*rms ma9 +eed to *+<est 0(+ds *+ 0*Bed assets *+ order to s(sta*+ ,ro4*+, )rod(/t*o+ a+d sa:es. Th*s 4*::, *+ t(r+, *+/rease *+<estme+t *+ /(rre+t assets to s())ort e+:ar,ed s/a:e o0 o)erat*o+s. Gro4*+, 0*rms +eeds 0(+ds /o+t*+(o(s:9. The9 (se eBter+a: so(r/es as 4e:: as *+ter+a: so(r/es to meet *+/reas*+, +eeds o0 0(+ds. These 0*rms 0a/e 0(rther )ro8:ems 4he+ the9 reta*+ s(8sta+t*a: )ort*o+ o0 )ro0*ts, as the9 4*:: +ot 8e a8:e to 1a9 d*<*de+ds to shareho:ders. It *s, there0ore, *m)erat*<e that s(/h 0*rms do )ro)er ):a++*+, to 0*+a+/e the*r *+/reas*+, o0 4or3*+, /a)*ta:. Sa:es de)e+d ()o+ dema+d /o+d*t*o+s. 2ar,e +(m8er o0 0*rms eB)er*e+/e seaso+a: a+d /9/:*/a: 0:(/t(at*o+s *+ the dema+d 0or the*r )rod(/ts a+d ser<*/es. These 8(s*+ess <ar*at*o+s a00e/t the 4or3*+, /a)*ta: re;(*reme+t, s)e/*a::9 the tem)orar9 4or3*+, /a)*ta: re;(*reme+t o0 the 0*rm. 5he+ there *s a+ ()4ard s4*+, *+ the e/o+om9, sa:es 4*:: *+/reaseL /orres)o+d*+,:9, the 0*rmEs *+<estme+t *+ *+<e+tor*es a+d de8tors 4*:: a:so *+/rease. U+der 8oom, add*t*o+a: *+<estme+t *+ 0*Bed assets ma9 8e made 89 some 0*rms to *+/rease the*r )rod(/t*<e /a)a/*t9. Th*s a/t o0 0*rms 4*:: re;(*re add*t*o+s o0 4or3*+, /a)*ta:. To meet the*r re;(*reme+ts o0 0(+ds 0or 0*Bed assets a+d /(rre+t assets (+der 8oom )er*od, 0*rms ,e+era::9 resort to s(8sta+t*a: 8orro4*+,. O+ the other ha+d, 4he+ there *s de/:*+e *+ the e/o+om9, sa:es 4*:: 0a:: a+d /o+se;(e+t:9M :e<e:s o0 *+<e+tor*es a+d de8tors 4*:: a:so 0a::. U+der re/ess*o+, 0*rm tr9 to red(/e the*r short term 8orro4*+,s. Seaso+a: 0:(/t(at*o+s +ot o+:9 a00e/t 4or3*+, /a)*ta: re;(*reme+t 8(t a:so /reate )rod(/t*o+ )ro8:ems 0or the 0*rms. -(r*+, )ea3 )er*ods o0 dema+d, *+/reas*+, )rod(/t*o+ ma9 8e eB)e+s*<e 0or the 0*rm. S*m*:ar:9, *t 4*:: 8e more eB)e+s*<e d(r*+, the s:a/3 )er*ods 4he+ the 0*rm has to s(sta*+ *ts 4or3*+, 0or/e a+d )h9s*/a: 0a/*:*t*es 4*tho(t ade;(ate )rod(/t*o+ a+d sa:es. A 0*rm ma9 th(s 0o::o4 a )o:*/9 o0 :e<e: )rod(/t*o+ *rres)e/t*<e o0 seaso+a: /ha+,es *+ order to (t*:*Ae *ts reso(r/es to the 0(::est eBte+t. S(/h a )o:*/9 4*:: mea+ a//(m(:at*o+ o0 *+<e+tor*es d(r*+, o00 seaso+ a+d the*r ;(*/3 d*s)osa: d(r*+, the )ea3 seaso+. The *+/reas*+, :e<e: o0 *+<e+tor*es d(r*+, the s:a/3 seaso+ 4*:: re;(*re *+/reas*+, 0(+ds to 8e t*ed () *+ the 4or3*+, /a)*ta: 0or some mo+ths. U+:*3e /9/:*/a: 0:(/t(at*o+s, seaso+a: 0:(/t(at*o+s ,e+era::9 /o+0orm to a stead9 )atter+. There0ore 0*+a+/*a: arra+,eme+ts 0or seaso+a: 4or3*+, /a)*ta: re;(*reme+ts /a+ 8e made *+ ad<a+/e.

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Te'$"(6(% &"d m&"u)&'tu#i"% 5(6i' The ma+(0a/t(r*+, /9/:e /om)r*se o0 the )(r/hase a+d (se o0 ra4 mater*a:s a+d the )rod(/t*o+ o0 0*+*shed ,oods. 2o+,er the ma+(0a/t(r*+, /9/:e, :ar,e 4*:: 8e the 0*rmEs 4or3*+, /a)*ta: re;(*reme+ts. There0ore the te/h+o:o,*/a: )ro/ess 4*th the shortest ma+(0a/t(r*+, /9/:e ma9 8e /hose+. O+/e a ma+(0a/t(r*+, te/h+o:o,9 has 8ee+ se:e/ted, *t sho(:d 8e e+s(red that ma+(0a/t(r*+, /9/:e m(st 8e /om):eted 4*th*+ the s)e/*0*ed )er*od. Th*s +eeds )ro)er ):a++*+, a+d /oord*+at*o+ at a:: :e<e:s o0 a/t*<*t9. A+9 de:a9 *+ the ma+(0a/t(r*+, )ro/ess 4*:: res(:t *+ the a//(m(:at*o+ o0 5I1 a+d 4aste o0 t*me. I+ order to m*+*m*Ae the*r *+<estme+t *+ 4or3*+, /a)*ta:, some 0*rms, s)e/*0*/a::9 those ma+(0a/t(r*+, *+d(str*a: )rod(/ts, ha<e a )o:*/9 o0 as3*+, 0or ad<a+/e )a9me+ts 0rom the*r /(stomers ma+(0a/t(r*+, /9/:e. C#edit 5(6i' The /red*t )o:*/9 o0 the 0*rm a00e/ts the 4or3*+, /a)*ta: 89 *+0:(e+/*+, the :e<e: o0 de8tors. The /red*t terms to 8e ,ra+ted to /(stomers ma9 de)e+d ()o+ the +orms o0 the *+d(str9 to 4h*/h the 0*rm 8e:o+,s. B(t a 0*rm has the 0:eB*8*:*t9 o0 sha)*+, *ts /red*t )o:*/9 4*th*+ the /o+stra*+t o0 *+d(str9 +orms a+d )ra/t*/es. The 0*rm sho(:d (se d*s/ret*o+ *+ ,ra+t*+, /red*t terms to *ts /(stomers. -e)e+d*+, ()o+ the *+d*<*d(a: /ase, d*00ere+t terms ma9 8e ,*<e+ to d*00ere+t /(stomers. A :*8era: /red*t )o:*/9, 4*tho(t rat*+, the /red*t 4orth*+ess o0 /(stomers, 4*:: 8e detr*me+ta: to the 0*rm a+d 4*:: /reate a )ro8:em o0 /o::e/t*o+ :ater o+. The 0*rm sho(:d 8e )rom)t *+ ma3*+, /o::e/t*o+s. A h*,h /o::e/t*o+ )er*od 4*:: mea+ t*e () o0 :ar,e 0(+ds *+ de8tors. S:a/3 /o::e/t*o+ )ro/ed(res /a+ *+/rease the /ha+/e o0 8ad de8ts. I+ order to e+s(re that (++e/essar9 0(+ds are +ot t*ed () *+ de8tors, the 0*rm sho(:d 0o::o4 a rat*o+a:*Aed /red*t )o:*/9 8ased o+ the /red*t sta+d*+, o0 /(stomers a+d other re:e<a+t 0a/tors. The 0*rm sho(:d e<a:(ate the /red*t sta+d*+, o0 +e4 /(stomers a+d )er*od*/a::9 re<*e4 the /red*t 4orth*+ess o0 the eB*st*+, /(stomers. The /ase o0 de:a9ed )a9me+ts sho(:d 8e thoro(,h:9 *+<est*,ated. A:&i6&bi6it () '#edit )#(m 7u556ie#7 The 4or3*+, /a)*ta: re;(*reme+ts o0 a 0*rm are a:so a00e/ted 89 /red*t terms ,ra+ted 89 *ts s()):*ers. A 0*rm 4*:: +eed:ess 4or3*+, /a)*ta: * :*8era: /red*t terms are a<a*:a8:e to *t 0rom s()):*ers. A 0*rm 4*:: +eed:ess 4or3*+, /a)*ta: *0 :*8era: /red*t terms are a<a*:a8:e to *t 0rom s()):*ers. S()):*ersE /red*t 0*+a+/es the 0*rmEs *+<e+tor*es a+d red(/es the /ash /o+<ers*o+ /9/:e. I+ the a8se+/e o0 s()):*ersE /red*t the 0*rm 4*:: 8orro4 0(+ds 0or 8a+3. The a<a*:a8*:*t9 o0 /red*t at reaso+a8:e /ost 0rom 8a+3s *s /r(/*a:. It *+0:(e+/es the 4or3*+, /a)*ta: )o:*/9 o0 the Page $%

0*rm. A 0*rm 4*tho(t the s()):*ersE /red*t, 8(t 4h*/h /a+ ,et 8a+3 /red*t eas*:9 o+ 0a<o(ra8:e /o+d*t*o+s, 4*:: 8e a8:e to 0*+a+/e *ts *+<e+tor*es a+d de8tors 4*tho(t m(/h d*00*/(:t9. O5e#&ti"% e))i'ie"' 9 The o)erat*+, e00*/*e+/9 o0 the 0*rm re:ates to the o)t*m(m (t*:*Aat*o+ o0 a:: *ts reso(r/es at m*+*m(m /osts. The e00*/*e+/9 *+ /o+tro::*+, o)erat*+, /osts a+d (t*:*A*+, 0*Bed a+d /(rre+t assets :eads to o)erat*+, e00*/*e+/9. The (se o0 4or3*+, /a)*ta: *s *m)ro<ed a+d )a/e o0 /ash /o+<ers*o+ /9/:e *s a//e:erated 4*th o)erat*+, e00*/*e+/9. Better (t*:*Aat*o+ o0 reso(r/es *m)ro<es )ro0*ta8*:*t9 a+d th(s, he:)s *+ re:eas*+, the )ress(re o+ 4or3*+, /a)*ta:. A:tho(,h *t ma9 +o 8e )oss*8:e 0or a 0*rm to /o+tro: )r*/es o0 mater*a:s or 4a,es o0 :a8or, *t /a+ /erta*+:9 e+s(re e00*/*e+t a+d e00e/t*<e (t*:*Aat*o+ o0 mater*a:s, :a8or a+d other reso(r/es. P#i'e 6e:e6 '$&"%e7 The *+/reas*+, sh*0t *+ )r*/e :e<e: ma3e 0(+/t*o+s o0 0*+a+/*a: ma+a,er d*00*/(:t. He sho(:d a+t*/*)ate the e00e/t o0 )r*/e :e<e: /ha+,es o+ 4or3*+, /a)*ta: re;(*reme+t o0 the 0*rm. Ge+era::9, r*s*+, )r*/e :e<e:s 4*:: re;(*re a 0*rm to ma*+ta*+ a h*,her amo(+t o0 4or3*+, /a)*ta:. Same :e<e:s o0 /(rre+t assets 4*:: +eed *+/reased *+<estme+t 4he+ )r*/es are *+/reas*+,. Ho4e<er, /om)a+*es that /a+ *mmed*ate:9 re<*se the*r )rod(/t )r*/es 4*th r*s*+, )r*/e :e<e:s 4*:: +ot 0a/e a se<ere 4or3*+, /a)*ta: )ro8:em. &(rther, &*rms 4*:: 0ee: e00e/ts o0 *+/reas*+, ,e+era: )r*/e :e<e: d*00ere+t:9 as )r*/es o0 *+d*<*d(a: )rod(/ts mo<e d*00ere+t:9. Th(s, *t *s )oss*8:e that some /om)a+*es ma9 +ot 8e a00e/ted 89 r*s*+, )r*/es 4h*:e others ma9 8e 8ad:9 h*t. W(#4i"% C&5it&6 C '6e Cash 0:o4s *+ a /9/:e *+to, aro(+d a+d o(t o0 a 8(s*+ess. It *s the 8(s*+essEs :*0e 8:ood a+d e<er9 ma+a,erEs )r*mar9 tas3 *s to he:) 3ee) *t 0:o4*+, a+d to (se the /ash :o4 to ,e+erate )ro0*ts. I0 a 8(s*+ess *s o)erat*+, )ro0*ta8:9, the+ *t sho(:d, *+ theor9, ,e+erate /ash s(r):(ses. I0 *t does+Et ,e+erate s(r):(ses, the 8(s*+ess 4*:: e<e+t(a::9 r(+ o(t o0 /ash a+d eB)*re. The 0aster a 8(s*+ess eB)a+ds the more /ash *t 4*:: +eed 0or 4or3*+, /a)*ta: a+d *+<estme+t. The /hea)est a+d 8est so(r/es o0 /ash eB*st as 4or3*+, /a)*ta: r*,ht 4*th*+ 8(s*+ess. Good ma+a,eme+t o0 4or3*+, /a)*ta: 4*:: ,e+erate /ash 4*:: he:) *m)ro<e )ro0*ts a+d red(/e r*s3s. Bear *+ m*+d hat the /ost o0 )ro<*d*+, /red*t to /(stomers a+d ho:d*+, sto/3s /a+ re)rese+t a s(8sta+t*a: )ro)ort*o+ o0 a 0*rmEs tota: )ro0*ts. There are t4o e:eme+ts *+ the

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8(s*+ess /9/:e that a8sor8 /ash. I":e"t(# 9o( mo+e9). The ma*+ so(r/es o0 /ash are

(sto/3s a+d 4or37*+7)ro,ress) a+d (de8tors o4*+,

P& &b6e7(9o(r /red*tors) a+d E;uit &"d L(&"7,

CHAPTER =

Page 6$

ORGANISATIONAL PRO+ILE O+ THE COMPAN*

C(m5&" b&'4%#(u"d
$%C#7 Com)a+9 4as set () at Bho)a: *+ the +ame o0 MKs Hea<9 e:e/tr*/a: (I+d*a) 2td. *+ /o::a8orat*o+ 4*th A'I, UK. S(8se;(e+t:9, three more ):a+ts 4ere set () at H9dera8ad, Hard4ar a+d Tr*/h9. The Bho)a: U+*t 4as /o+tro::ed 89 the /om)a+9, the other three 4ere (+der the /o+tro: o0 Bharat Hea<9 ':e/tr*/a:s 2td.7 The Com)a+9Es o8.e/t *s to ma+(0a/t(re o0 hea<9 e:e/tr*/a: e;(*)me+ts. $% 67 I+ ?(:9 the O)erat*o+s o0 a:: the 0o(r ):a+ts 4ere *+te,rated. $% "7 I+ ?a+(ar9 Hea<9 e:e/tr*/a: (I+d*a)2td 4as mer,ed 4*th BH'2.7 &or the ma+(0a/t(re o0 a 4*de <ar*et9 o0 )rod(/ts, the /om)a+9 has de<e:o)ed te/h+o:o,*/a: *+0rastr(/t(re, s3*::s a+d ;(a:*t9 to meet the str*+,e+t re;(*reme+ts o0 the )o4er ):a+ts, tra+s)ortat*o+, )etro /hem*/a:s, o*: et/.7 BH'2L has e+tered *+to /o::a8orat*o+ 4h*/h are te/h+*/a: *+ +at(re. U+der these a,reeme+ts, the /o::a8orators ha<e tra+s0erred, 0(r+*shed the *+0ormat*o+, do/(me+tat*o+, *+/:(d*+, 3+o4 ho4 re:at*+, to des*,+, e+,*+eer*+,, ma+(0a/t(r*+, assem8:9 et/. $%@67 BH'2 a:so e+tered *+to )o4er e;(*)me+ts, to red(/e *ts de)e+de+/e o+ the )o4er se/tor. BH'2 I+s(:ator 1:a+t (I1), ?a,d*sh)(r set () *+ $%@". BHEL $&7 $. 6. I+sta::ed e;(*)me+t 0or o<er $,!!,!!! M5 o0 )o4er ,e+erat*o+ 0or (t*:*t*es /a)t*<e a+d S()):*ed o<er 66C!!! M5 a tra+s0ormer /a)a/*t9 a+d other e;(*)me+t o)erat*+, *+ *+d(str*a: (sers 4or:d4*de. tra+sm*ss*o+ a+d d*str*8(t*o+ +et4or3 () to "!!3< (A/ N -/).

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3. ". C.

S()):*ed o<er 6C!!! motors 4*th dr*<e /o+tro: s9stem to )o4er )ro.e/ts, S()):*ed tra/t*o+ e:e/tr*/s a+d ACK-C :o/os to )o4er o<er $6!!! 3ms S()):*ed o<er o+e m*::*o+ <a:<es to )o4er ):a+ts a+d other *+d(str*es. ra*:4a9

)etro/hem*/a:s, re0*+er*es, stee:, a:(m*+(m, 0ert*:*Aers, /eme+t ):a+ts et/. +et4or3.

BH'2 /aters to /ore se/tors o0 the I+d*a+ e/o+om9 <*AL )o4er ,e+erat*o+ N tra+sm*ss*o+, *+d(str9, tra+s)ortat*o+, te:e/omm(+*/at*o+, re+e4a8:e e+er,9, de0e+se et/. the 4*de +et4or3 o0 BH'2Es $" ma+(0a/t(r*+, d*<*s*o+s, 0o(r )o4er se/tor re,*o+a: /e+ters, o<er $!! )ro.e/t s*tes, e*,ht ser<*/e /e+ters a+d $" re,*o+a: o00*/es e+a8:es the /om)a+9 to 8e /:oser to *ts /(stomers a+d )ro<*de them 4*th s(*ta8:e )rod(/ts, s9stems a+d ser<*/es e00*/*e+t:9 a+d at /om)et*t*<e )r*/es. Ha<*+, atta*+ed ISO %!!! /ert*0*/at*o+, BH'2 *s +o4 4e:: o+ *ts .o(r+e9 to4ards tota: ;(a:*t9 ma+a,eme+t (TOM), O+ the e+<*ro+me+ta: ma+a,eme+t 0ro+t, the ma.or (+*ts o0 8he: ha<e " a:read9 a/;(*red the ISO$"!!$ /ert*0*/at*o+, P(8e# 7e't(# 1o4er ,e+erat*o+ se/tor /om)r*ses therma:, ,as, h9dro a+d +(/:ear )o4er ):a+t 8(s*+ess. As o0 3$7376!!@, BH'2 s()):*ed sets a//o(+t o0 +ear:9 @C, @# M5 or #"P o0 the tota: *+sta::ed /a)a/*t9 o0 $,3",#% # M5 *+ the /o(+tr9, S*,+*0*/a+t:9, there sets ,e+erated a+ a:: t*me h*,h "C".C% B*::*o+ U+*ts o0 e:e/tr*/*t9 /o+tr*8(t*+, 3P o0 the tota: )o4er ,e+erated *+ the /o(+tr9. BH'2 has )ro<e+ t(r+3e9 /a)a8*:*t*es 0or eBe/(t*+, )o4er )ro.e/t s 0rom /o+/e)ts to /omm*ss*o+*+,. The /om)a+9 has *+trod(/ed +e4 rat*+, therma: set o0 6 ! M5,C6C M5, #!! MV *+ s(8 /r*t*/a: ra+,e a+d )ossesses the te/h+o:o,9 N /a)a8*:*t*es to )rod(/e :ar,e /a)a/*t9 therma: set 4*th s()er /r*t*/a: )arameters a+d ,as t(r8*+e7,e+erator sets. Co7Ge+erat*o+ a+d /om8*+ed7/9/:e ):a+ts ha<e 8ee+ *+trod(/ed to a/h*e<e h*,her ):a+t e00*/*e+/*es. To ma3e e00*/*e+t (se o0 the h*,h ash /o+te+t /oa: a<a*:a8:e *+ I+d*a, BH'2 s()):*es /*r/(:at*+, 0:(*d*Aed 8ed /om8(st*o+ 8o*:ers to 8oth therma: a+d /om8*+ed7/9/:e )o4er ):a+ts. The /om)a+9 ma+(0a/t(res 66!K63CKC!!KC"! M5, +(/:ear t(r8*+e ,e+erator sets, C(stom7made h9dro sets o0 &ra+/*s, 1e:to+ a+d Ka):a+ t9)es 0or d*00ere+t head d*s/har,e /om8*+at*o+ sare a:so e+,*+eered a+d ma+(0a/t(red 89 BH'2. I+ a::, orders 0or more tha+ !! (t*:*t9 sets o0 therma:, h9dro, ,as a+d +(/:ear ha<e 8ee+ ):a/ed o+ the /om)a+9 as o+ date. The )o4er ):a+t e;(*)me+t ma+(0a/t(red 89 BH'2 *s 8ased o+ /o+tem)orar9 te/h+o:o,9 /om)ara8:e to the 8est *+ the 4or:d, a+d *s a:so *+ter+at*o+a::9 /om)et*t*<e. The /om)a+9 has )ro<e+ eB)ert*se ):a+t )er0orma+/e *m)ro<eme+t thro(,h re+o<at*o+, moder+*Aat*o+ a+d Page 63

(),rad*+, o0 <ar*et9 o0 )o4er ):a+t e;(*)me+t, 8es*des s)e/*a:*Aed 3+o4 ho4 o0 res*d(a: :*0e assessme+t, hea:th d*a,+ost*/s a+d :*0e eBte+s*o+ o0 ):a+ts. T#&"7mi77i(" BH'2 a:so s()):*es a 4*de ra+,e o0 tra+sm*ss*o+ )rod(/ts a+d s9stems o0 () to "!! KV /:ass. These *+/:(de h*,h <o:ta,e )o4er N *+str(me+t tra+s0ormers, dr9 t9)e tra+s0ormers, sh(+t N ser*es rea/tors s4*t/h ,ear, 33 K5 ,as *+s(:ated s(87stat*o+ /a)a/*tors, *+s(:ators et/. 0or e/o+om*/ tra+sm*ss*o+ o0 8(:3 )o4er o<er :o+, d*sta+/es, a+d H*,h Vo:ta,e -*re/t C(rre+t (HV-C) s9stems are s()):*ed. Ser*es a+d sh(+t /om)e+sat*o+ s9stems, to m*+*m*Ae tra+sm*ss*o+ :oses, ha<e a:so 8ee+ s()):*ed.

I"du7t# 7e't(# I"du7t#ie7 BH'2 *s a ma.or /o+tr*8(tor o0 e;(*)me+t a+d s9stems to *+d(str*esG /eme+t, s(,ar, 0ert*:*Aer, re0*+er*es, )etro/hem*/a:s, stee:, )a)er et/. the ra+,e o0 s9stems a+d e;(*)me+t s()):*ed *+/:(desG /a)t*<e )o4er ):a+ts, d, )o4er ):a+ts, h*,h s)eed *+d(str*a: dr*<e t(r8*+es, *+d(str*a: 8o*:ers a+d aB*::ar*es, 4aste heat re/o<er9 8o*:ers, ,as t(r8*+es, heat eB/ha+,ers a+d )ress(re <esse:s, /e+tr*0(,a: /om)ressors, e:e/tr*/a: ma/h*+es, )(m)s, <a:<es, seam:ess stee: t(8es a+d )ro/ess /o+tro:s, /o+tro: s9stems 0or )ro/ess *+d(str*es, a+d /o+tro: a+d *+str(me+tat*o+ s9stems 0or )o4er ):a+ts, de0e+se a+d other a)):*/at*o+s. The /om)a+9 has /o++e/ted ma+(0a/t(re o0 :ar,e s/a:e desa:*+at*o+ ):a+ts to he:) a(,me+t the s()):9 o0 dr*+3*+, 4ater to )eo):e T#&"75(#t&ti(" Most:9 o0 the tra*+s o)erated 89 the ra*:4a9s, *+/:(d*+, the metro *+ Ca:/(tta, are e;(*))ed 4*th BH'2ES tra/t*o+ e:e/tr*/s a+d tra/t*o+ /o+tro: e;(*)me+t. The /om)a+9 s()):*es e:e/tr*/ :o/omot*<es to I+d*a+ Ra*:4a9s a+d d*ese: sh(+t*+, :o/omot*<es to <ar*o(s *+d(str*es. C!!!K"#!! h) a/Kd/ :o/omot*<es de<e:o)ed a+d ma+(0a/t(red 89 BH'2 ha<e 8ee+ s()):*ed to I+d*a+ ra*:4a9s. Batter9 )o4ered road <eh*/:es are a:so ma+(0a/t(red 89 the /om)a+9. BH'2 a:so s()):*es tra/t*o+ e:e/tr*/s a+d tra/t*o+ /o+tro: e;(*)me+t 0or e:e/tr*/ :o/os, d*ese: e:e/tr*/ :o/os, a+d 'MUsK-'MUs to the ra*:4a9s. Te6e'(mmu"i'&ti(" Page 6"

BH'2 a:so /aters to te:e/omm(+*/at*o+ se/tor 89 4a9 o0 sma::, med*(m, a+d :ar,e s4*t/h*+, s9stems. Re"e8&b6e e"e#% Te/h+o:o,*es that /a+ 8e o00ered 89 BH'2 0or eB):o*t*+, +o+7/o+<e+t*o+a: a+d re+e4a8:e reso(r/es o0 e+er,9 *+/:(desG 4*+d e:e/tr*/ ,e+erators, so:ar )o4er 8ased 4ater )(m)s, :*,ht*+, a+d heat*+, s9stems. The /om)a+9 ma+(0a/t(res 4*+d e:e/tr*/ ,e+erators o0 (+*t s*Ae () to 6C! K5 0or 4*+d 0arms, to meet the ,ro4*+, dema+d 0or har+ess*+, 4*+d e+er,9. I"te#"&ti("&6 (5e#&ti("7 BH'2 has, o<er the 9ears esta8:*shed *ts re0ere+/es *+ o<er C! /o(+tr*es o0 the 4or:d, ra+,*+, 0rom the U+*ted States *+ the 4est to +e47Qea:a+d *+ the 0ar east. These re0ere+/es e+/om)ass a:most the e+t*re )rod(/t ra+,e o0 BH'2, /o<er*+, t(r+3e9 )o4er )ro.e/ts o0 therma:, h9dro a+d ,as 8ased t9)e s(87stat*o+ )ro.e/ts, reha8*:*tat*o+ )ro.e/ts, 8es*des a 4*de <ar*et9 o0 )rod(/ts, :*3e s4*t/h ,ear, tra+s0ormer heat eB/ha+,ers, *+s(:ators, /ast*+,s a+d 0or,*+,s. A)art 0rom o<er $$!! M5 o0 8o*:er /a)a/*t9 /o+tr*8(ted *+ Ma:a9s*a, some o0 the other ma.or s(//esses a/h*e<ed 89 the /om)a+9 ha<e 8ee+ *+ Oma+, Sa(d* a Ara8*a, 2*89a, Gree/e, C9)r(s, Ma:ta, ',9)t, Ba+,:adesh, AAer8a.a+, Sr*:a+3a, Ira; et/. eBe/(t*o+ o0 o<erseas )ro.e/ts has a:so )ro<*ded BH'2 the eB)er*e+/e o0 4or3*+, 4*th 4or:d re+o4+ed /o+s(:t*+, or,a+*Aat*o+a: a+d *+s)e/t*o+ a,e+/*es. Te'$"(6(% U5 %#&d&ti(" &"d #e7e&#'$ &"d de:e6(5me"t To rema*+ /om)et*t*<e a+d meet /(stomersE eB)e/tat*o+s, BH'2 :a9s ,reat em)has*s o+ the /o+t*+(o(s () ,radat*o+ o0 )rod(/ts a+d re:ated te/h+o:o,*es, a+d de<e:o)me+t o0 +e4 )rod(/ts. The /om)a+9 has (),raded *ts )rod(/ts to /o+tem)orar9 :e<e:s thro(,h /o+t*+(o(s *+ ho(se e00orts as 4e:: as thro(,h a/;(*s*t*o+s o0 +e4 te/h+o:o,*es 0rom :ead*+, e+,*+eer*+, or,a+*Aat*o+s o0 the 4or:d. The /or)orate RN- d*<*s*o+ at H9dera8ad :eads BH'2ES resear/h e00orts *+ a +(m8er o0 area o0 *m)orta+/e to BH'2Es resear/h e00orts *+ a +(m8er o0 area o0 *m)orta+/e to BH'2Es )rod(/t ra+,e. Resear/h a+d )rod(/t de<e:o)me+t /e+ters at ea/h o0 the ma+(0a/t(r*+, d*<*s*o+s ):a9 a /om):eme+tar9 ro:e. BH'2Es *+<estme+t *+ RN- (s amo+,st the :ar,est *+ the /or)orate se/tor *+ I+d*a. 1rod(/ts de<e:o)ed *+ ho(se d(r*+, the :ast 0*<e 9ears /o+tr*8(ted a8o(t @P to the re<e+(es *+ 6!!37!". PRODUCTS THERMAL POWER PLANTS Page 6C

Steam t(r8*+es, 8o*:ers a+d ,e+erators o0 () to @!! M5 /a)a/*t9 0or (t*:*t9 a+d /om8*+ed /9/:e a)):*/at*o+sL Ca)a/*t9 to ma+(0a/t(re 8o*:ers a+d steam t(r8*+es 4*th s()er/r*t*/a: s9stem /9/:e )arameter a+d mat/h*+, ,e+erator () to $!! M5 (+*t s*Ae. Steam t(r8*+es, 8o*:ers a+d ,e+erators o0 C11 a)):*/at*o+sL /a)a/*t9 to ma+(0a/t(re /o+de+s*+,, eBtra/t*o+, 8a/3 )ress(re, *+.e/t*o+ or a+9 /om8*+at*o+ o0 these t9)es o0 steam t(r8*+es. NUCLEAR POWER PLANTS Steam ,e+erator N T(r8*+e ,e+erator () to !! M5 /a)a/*t9. GAS!BASED POWER PLANTS Gas t(r8*+es o0 () to 6@! M5(ISO) ad<a+/e /:ass rat*+,. Gas t(r8*+e 8ased /o7,e+erat*o+ a+d /om8*+ed /9/:e s9stems o0 *+d(str9 a+d (t*:*t9 a)):*/at*o+s.

T$e#e &#e (t$e# 5#(du't7 %i:e" &7 )(66(879 H*DRO POWER PLANTS DG POWER PLANTS INDUSTRIAL SETS BOILERS BOILER AU>ILIARIES PIPING S*STEMS HEAT E>CHANGERS AND PRESSURE -ESSELS PUMPS POWER STATION CONTROL ?UIPMENT SWITCHGEAR BUS DUCTS TRANS+ORMERS INSULATORS INDUSTRIAL AND SPECIAL CERAMICS CAPACITORS ELECTRICAL MACHINES COMPRESSORS CONTROL GEAR Page 6#

SILICON RECTI+IERS TH*RISTO GTO@IGBT E?UIPMENT POWER DE-ICES TRANSPORTATION E?UIPMENT OIL +IELD E?UIPMENT GASTINGS AND +ORGINGS SEAMLESS STEEL TUBES DISTRIBUTED POWER GENERATION AND SMALL H*DRO PLANTS S*STEMS AND SER-ICES

ACHIE-EMENTS BHEL $&7 5ut i" 56&'e & "umbe# () i"iti&ti:e7, &7 )(66(87 $. Stre+,the+*+, /om)a+9Es /ore 8(s*+esses o0 1o4er Ge+erat*o+, Tra+sm*ss*o+ N -*str*8(t*o+, Tra+s)ortat*o+ a+d I+d(str*a: S9stems N 1rod(/ts, thro(,h a//e:erated )ro.e/t# /om):et*o+ a+d /o+se;(e+t 8e+e0*ts to /(stomers, a:o+,4*th +e4 *+*t*at*<es *+ mar3et*+,, te/h+o:o,9, 0a/*:*t9 ()7,radat*o+ a+d moder+*Aat*o+, e+ha+/*+, o)erat*o+a: e00e/t*<e+ess et/. *. 6. B(s*+ess -e<e:o)me+t e00orts *+ re:ated a+d a::*ed areas (t*:*A*+, the or,a+*Aat*o+a: stre+,ths a+d 0orm*+, /(stomer 0o/(sed s)e/*a:*Aed 8(s*+ess ,ro()s e.,. 0ormat*o+ o0 O*: Se/tor R N M B(s*+ess Gro() to address 8(s*+ess *+ Re+o<at*o+ a+d Moder+*Aat*o+ o0 o007 shore a+d o+7shore o*: ):at0orms, do4+stream )etro:e(m re0*+*+, areas a+d 1o4er 1:a+t O)erat*o+a: Ser<*/es Gro() to )ro<*de O)erat*o+s a+d Ma*+te+a+/e (ONM), Ser<*/es 0or 1o4er 1:a+ts. 3. A0ter Mar3et Ser<*/es 8e*+, the areas 0or 0(t(re ,ro4th, s)ares a+d R N M ser<*/es 8(s*+ess ha<e 8ee+ *+te,rated *+to o+e 0o/(sed ,ro(), RN M 0or h9dro sets *s a+ area ha<*+, ma.or ,ro4th o))ort(+*t9 4h*/h BH'2 *s )o*sed to ta).a. ". C. 'B):or*+, B(s*+ess o))ort(+*t*es *+ areas :*3e '+er,9 Co+ser<at*o+, 5ater 1os*t*o+*+, 0or I+0ormat*o+ te/h+o:o,9 B(s*+ess :e<era,*+, the doma*+ 3+o4:ed,e *+ Ma+a,eme+t, 1o::(t*o+ Co+tro: a+d 5aste Ma+a,eme+t, 1orts, 2NG term*+:s et/. 1o4er Se/tor N '+,*+eer*+, 0*e:d to )ro<*de IT e+a8:ed ser<*/es 0or 1o4er Se/tor a+d so0t4are Page 6

ser<*/es 0or '+,*+eer*+, I+d(str9. S(sta*+ a+d '+ha+/e 'B)orts 0or )rod(/ts a+d ser<*/es thro(,h m(:t*7)ro+,ed a))roa/hes :*3e e+ter*+, +e4 terr*tor*es, 0o/(s o+ )rod(/t sa:es, e+tr9 *+to I11 se,me+t, o00er*+, ONM a+d 2TSA, '1C, 8e/om*+, a ser<*/e /e+ter 0or *+ter+at*o+a: Or*,*+a: ';(*)me+t Ma+(0a/t(rers (O'Ms) a+d sett*+, () to ma+(0a/t(r*+, assem8:9 a+d re)a*r /e+ters *+ the re,*o+s o0 dema+d et/. BH'2 *s a:so ta3*+, ste)s to re)os*t*o+ *tse:0 to meet the dema+ds o0 the +e4 mar3et e/o+om9 thro(,h s(*ta8:e strate,*es 3ee)*+, *+ <*e4 the (:t*mate o8.e/t*<e o0 e+ha+/*+, <a:(e 0or *ts sta3eho:ders. RISKS AND CONCERNS $. S*+/e most o0 the )ro.e/ts *+ *+d(str9 are 8e*+, /o+tem):ated o+ BOOKBOOT 8as*s, <ar*o(s *ss(es <*A, 8(s*+ess mode: o0 the 1ro.e/t, re<e+(e /o::e/t*o+, o)erat*o+ a+d ma*+te+a+/e et/. 4o(:d +eed to 8e s(*ta8:9 addressed to ,a*+ e+tr9 *+ the 8(s*+ess. 6. Ra*:4a9s ha<e *+d*/ated 3P ,ro4th *+ $!th ):a+ as a,a*+st #P ,ro4th d(r*+, the %th

):a+, 4h*/h 4o(:d res(:t *+ s/a+t9 order 0:o4 0or ':e/tr*/ :o/os a+d d*) *+ dema+d 0or e:e/tr*/s 0or 2o/os. 3. Co::a8orators *+/reas*+,:9 restr*/t*+, eB)ort terr*tor*es (+der :*/e+se a,reeme+ts *+

order to )rote/t the*r mar3et share *+ terr*tor*es o(ts*de I+d*a )art*/(:ar:9 4here BH'2 has 8(*:t () re0ere+/es a+d stre+,ths. RECENT ACHIE-EMENTS O+ BHEL 2, BHEL %(t S$#&m B$u7$&" A8&#d =, BHELA7 +i"&"'e %(t ICWAI A8&#d )(# E<'e66e"'e i" C(7t M&"&%eme"t B, BHELA7 RCD '("t#ibuted R7, D/,=./ '#(#e tu#"(:e# i" =//.!/E 0, BHEL m&"u)&'tu#ed E// MW t$e#m&6 7et7 D, BHEL "et 5#()it u5 1/ 5', INSULATOR PLANT!BHEL, JAGDISHPUR The *+s(:ator ):a+t BH'2, ?a,d*sh)(r 4as set () *+ $%@", /ater*+, to e:e/tr*/ )o4er tra+sm*ss*o+ 8(s*+ess 89 4a9 o0 ma+(0a/t(re a+d s()):9 o0 d*s/ *+s(:ator. 1rese+t:9 the ):a+t *s ,eared to )rod(/e $% tho(sa+d to+s o0 d*s/ *+s(:ators a++(a::9 a+d o+e tho(sa+d to+s o0 29. o0 *+s(:ators. O<er the 9ear :ot o0 te/h+o:o,*/a: *++o<at*o+ ha<e ta3e+ ):a/e *+ the ):a+t 4h*/h has Page 6@

stream:*+*+, o0 ma+(0a/t(r*+, )ro/esses N has ta3e+ *t *+to the :e<e: o0 8est *+d(str9. Ne4 t9)e o0 d*s/ *+s(:ator has a:so 8ee+ *+trod(/ed )er*od*/a::9 a+d toda9 *t ma+(0a/t(res d*s/ *+s(:ators ()to $#!7K+.Ste+,th ra+,*+, 0rom +orma: to a+t* 0o, t9)e. The ):a+t has t*:: date eBe/(ted ma+9 )rest*,*o(s eB)ort /o+tra/ts a+d has s()):*ed d*s/ *+s(:ators to T(r3e9, 2a:9s*a, Tr*+*dad N To8a,o, Gha+a, a+d N*,er*a et/. S*+/e $%%", :o4 te+s*o+ t9)es o0 *+s(:ators ha<e a:so 8ee+ *+trod(/ed *+ the )rod(/t ra+,e *+ add*t*o+ *t s()):*es to domest*/ mar3et ;(a+t*t*es ha<e a:so 8ee+ eB)orted to /o(+tr*es :*3e UK N So(th A0r*/a. I+ )rese+t area o0 :*8era:*Aat*o+ the /om)a+9 has +ot o+:9 ,o+e 0or d*<ers*0*/at*o+ 8(t a:so has ta3e+ /o+/rete meas(re 0or or,a+*Aat*o+a: a+d )rod(/t *m)ro<eme+t 89 ISO7%!!$ /ert*0*/at*o+ a+d ado)t*+, *;m a))roa/h. I+ the )rese+t 4or:d a+ attem)t has 8ee+ made to s9stem erot*/a::9 a+a:9Ae the eB)ort mar3et re;(*reme+ts o0 *+s(:ators a+d *de+t*09 the )rod(/t 0orm*+, 8(:3 eB)orts. The 4or:d mar3et s/e+ar*o o0 *+s(:ators *m)orts ha<e 8ee+ )rese+ted 4*th a <*e4 to )ro<*de strate,*/ ,:o8a: mar3et *+0ormat*o+ 0or *+s(:ator eB)orts. O+ 3rd mar/h $%@" the )r*me m*+*ster o0 I+d*a Smt. I+d*ra Ga+dh* *+a(,(rated BH'2Es $$th ma+(0a/t(r*+, (+*t *+ ?a,d*sh)(r S(:ta+)(r d*str*/t, @ 3*:ometers a4a9 0rom 2(/3+o4, o+ the 2(/3+o4 S(:ta+)(r h*,h4a9. INSULATOR PLANT!BHEL, JAGDISHPUR The *+s(:ator ):a+t BH'2, ?a,d*sh)(r 4as set () *+ $%@", /ater*+, to e:e/tr*/ )o4er tra+sm*ss*o+ 8(s*+ess 89 4a9 o0 ma+(0a/t(re a+d s()):9 o0 d*s/ *+s(:ator. 1rese+t:9 the ):a+t *s ,eared to )rod(/e $% tho(sa+d to+s o0 d*s/ *+s(:ators a++(a::9 a+d o+e tho(sa+d to+es o0 29. o0 *+s(:ators. O<er the 9ear :ot o0 te/h+o:o,*/a: *++o<at*o+ ha<e ta3e+ ):a/e *+ the ):a+t 4h*/h has stream:*+*+, o0 ma+(0a/t(r*+, )ro/esses N has ta3e+ *t *+ to the :e<e: o0 8est *+d(str9. Ne4 t9)e o0 d*s/ *+s(:ator has a:so 8ee+ *+trod(/ed )er*od*/a::9 a+d toda9 *t ma+(0a/t(rers d*s/ *+s(:ators () to $#!73+.ste+,th ra+,*+, 0rom +orma: to a+t* 0o, t9)e. The ):a+t has t*:: date eBe/(ted ma+9 )rest*,*o(s eB)ort /o+tra/ts a+d has s()):*ed d*s/ *+s(:ators to T(r3e9, Ma:a9s*a, Tr*+*dad N To8a,o, Gha+a, a+d N*,er*a et/. S*+/e $%%", :o4 te+s*o+ t9)es o0 *+s(:ators ha<e a:so 8ee+ *+trod(/ed *+ the )rod(/t ra+,e *+ add*t*o+ *t s()):*es to domest*/ mar3et ;(a+t*t*es ha<e a:so 8ee+ eB)orted to /o(+tr*es :*3e UK N So(th A0r*/a. I+ )rese+t area o0 :*8era:*Aat*o+ the /om)a+9 has +ot o+:9 ,o+e 0or d*<ers*0*/at*o+ 8(t a:so has ta3e+ /o+/rete meas(res 0or or,a+*Aat*o+a: a+d )rod(/t *m)ro<eme+t 89 ISO7%!!$ /ert*0*/at*o+ a+d ado)t*+, *;m a))roa/h. I+ the )rese+t 4or:d a+ attem)t has 8ee+ made to s9stem erot*/a::9 a+a:9Ae the eB)ort mar3et re;(*reme+ts o0 *+s(:ators a+d *de+t*09 the )rod(/t 0orm*+, 8(:3 eB)orts. The 4or:d mar3et Page 6%

s/e+ar*o o0 *+s(:ators *m)orts ha<e 8ee+ )rese+ted 4*th a <*e4 to )ro<*de strate,*/ ,:o8a: mar3et *+0ormat*o+ 0or *+s(:ator eB)orts. O+ 3rd mar/h $%@" the 1r*me M*+*ster o0 I+d*a Smt, I"di#& G&"d$i *+a(,(rated BH'2Es $$th ma+(0a/t(r*+, (+*t *+ ?a,d*sh)(r S(:ta+)(r d*str*/t, @ 3*:ometers a4ar9 0rom 2(/3+o4, o+ the 2(/3+o4 S(:ta+)(r h*,h4a9.BH'2Es more tha+ "! 9ears eB)er*e+/e *+ the /eram*/ 0*e:d, 8:e+ded 4*th that o0 NKG, ?a)a+Es 4or:d :eader *+ *+s(:ator te/h+o:o,9, set the )a/e 0or 8ee+ )ro<*ded 4*th the most moder+ a+d so)h*st*/ated 0a/*:*t*es, a+d 4as /omm*ss*o+ed *+ a re/ord :*+e o0 $@th mo+ths. I+s(:ator ):a+t ?a,d*sh)(r has de<e:o)ed *+to o+e o0 the I+d*aEs d*s/ *+s(:ator ma+(0a/t(r*+, /e+ters 4*th the most stream:*+ed :a9o(t a+d moder+ te/h+o:o,9. It has )ro<*s*o+s to /o)e 4*th :atest ad<a+/es *+ the /eram*/ 0*e:d.

MAJOR RI-ALS O+ ABHELA INSULATOR PLANT, JAGDISHPUR JAI SHREE INSULATORS, KOLKATA (BIRLA GROUP) WS INSULATORS, KOLKATA (WEST BENGAL) MODERN INSULATORS, CHENNAI IEC, KOLKATA (WEST BENGAL) BATHINDA CERAMICS, PUNJAB JI!TECH, KHURJA (U,P,) POWER TECH, KHURJA (U,P,) MAJOR CUSTOMER O+ ABHELAIP JAGDISHPUR ?a,d*sh)(r *+s(:ator ):a+t has some *m)orta+t /(stomer 4h*/h are state e:e/tr*/*t9 8oard, ,o<er+me+t or,a+*Aat*o+s, )(8:*/ se/tor (+*ts a+d )r*<ate /(stomer a+d I+d*a+ ra*:4a9s. STATE ELECTRICIT* BOARD SUPPCL MPSEB GEB PSEB KSEB KPTCL TNEB Page 3!

MSEB PUBLIC SECTOR UNITS POWER GRID NTPC NHPC D-C NLC G(:e#"me"t O#%&"iF&ti("7 G(:t, () T#i5u#& G(:t () J C K G(:t () MiG(#&m G(:t, () M&"i5u# P#i:&te Cu7t(me#7 J (ti St#u'tu#e7 Ltd,, JSPL (Ji"d&6 Stee6 P(8e# Ltd) A77('i&ted T#&"7#&i6 St#u'tu#e7 Ltd RPG T#&"7mi77i(" 6td, T&t& P#(Ge't R&mGi P(8e# C("7t#u'ti(" EMC (E6e't#i'&6 M&"u)&'tu#i"% C(m5&" ) KPTL(K&65ut#& P(8e# T#&"7mi77i(" Ltd,) De:&"% E6e't#i'&67, PROCESS O+ MANU+ACTURING INSULATORS The <ar*o(s ma+(0a/t(r*+, (+*ts thro(,h 4h*/h the *+s(:ator )asses 8e0ore ,ett*+, /o+<erted *+to the 0*+*shed )rod(/t are as 0o::o4sG 2)STORAGE9 The d*00ere+t ra4 mater*a:s 0or ma+(0a/t(re o0 *+s(:ators are stored *+ the *de+t*0*ed 8*+s. The ra4 mater*a:s that are re;(*red are G a) 8) /) d) e) /a:/*+ed /ha*8asa /:a9 do:om*te ma+,a+ese d*oB*de /horme ore /a:/*te Page 3$

0) ,) h) *) .) 3) :) m) +) o) ))

ta:e e::(r /:a9 tha+ /:a9 ;(artA 0or 8ro4+ /:a9 ;(artA 0e:ds)ar 8*3a+er /:a9 )9ro)h9::*te 0e:/*te ser*/*te ?a)a+ 8a:: /:a9

A:: these mater*a:s are (sed *+ d*00ere+t ;(a+t*t*es 0or d*00ere+t t9)e o0 *+s(:ators that are ma+(0a/t(red a+d dema+ded 89 the /(stomers. 6)SLIP HOUSE The s:*) ho(se )er0orms the 0o::o4*+, o)erat*o+s G a) WEIGHING G -*00ere+t ra4 mater*a:s 0rom the stora,e 8*+s are /o::e/ted a+d 4e*,hed

a//ord*+, to the )er/e+ta,e /om)os*t*o+ ,*<e+ 89 the 'N- a+d a//ord*+, to the 8a:: m*:: /a)a/*t9 to 8e /har,ed. The+ the 4e*,h*+, /ard *s atta/hed to the :ot. A sam):e data 0or )re)arat*o+ o0 s(s)e+s*o+ 8od9 s:*) *+ a C to+ 8a:: m*:: 0or the 0*rst /har,e are as 0o::o4s G O(artA &e:ds)ar 19ro)h9:*te B*3a+er /:a9 &e:e*te 1e88:es $!C3 3, #!3 3, #C3 3, 3@ 3, 6!$ 3, $C 3, (d(e the )rese+/e o0 )re<*o(s:9 /har,ed )e88:es *+ the 8a:: m*::)

B) RIV'R 71'BB2' CHARGING L &or *+*t*a: /har,*+, o0 r*<er )e88:e *+ the 8a:: m*:: a0ter ro::*+, :ar,e, med*(m a+d sma:: )e88:es are /o::e/ted as )er s)e/*0*/at*o+ +(m8er (11S2G !$!! R76) a+d )e88:es are /har,ed as )er the ;(a+t*t9 s)e/*0*ed. C) 1R'1ARATION O& &IRST CHARG' BO-YS2I1G 5e*,hed ;(a+t*t9 o0 0*rst /har,ed ra4 mater*a:s *s /har,ed *+to the 8a:: m*:: 89 atta/h*+, /o+e to *ts ho:e 0rom the /har,*+, ho:e o+ the ):at0orm. The )e88:es are /:ea+ed 4*th 4ater 8e0ore /har,*+, a+d the+ s)e/*0*ed ;(a+t*t9 o0

Page 36

4ater *s /har,ed *+to the 8a:: m*::. Ge+era::9 /har,*+, ta3es $76 ho(rs a+d 8a:: m*::s r(+s $"7$# ho(rs. -) 1R'1ARATION O& S'CON- CHARG' BO-Y S2I1 L 5e*,hed ;(a+t*t9 o0 se/o+d /har,e *s /ha+r,ed *+to the 8a:: m*:: 4*th re;(*red ;(a+t*t9 o0 4ater a0ter )re)arat*o+ o0 0*rst /har,e 8od9 s:*) a+d the 8a:: m*:: *s r(+ 0or s)e/*0*ed t*me. The+ the s:*) *s d*s/har,ed *+to the m*B*+, ta+3 a+d *s a,*tated /o+t*+(o(s:9. ') B2UNGING R'TURN S2I1 G s/ra) a+d 4ater ret(r+ed 89 the )ro/ess *s /har,ed *+to the 8:(+,er *+ s)e/*0*ed )ro)ort*o+s to ,et re;(*red s)e/*0*/ ,ra<*t9 o0 the s:*). The+ *t *s 8:(+,ed to ah*e<e homo,e+eo(s s:*). &) 1R'1ARATION O& CAK' G The s:*) 0rom the *+*t*a: ta+3 *s )(m)ed *+to the )ress (s*+, ):(+,er )(m) a+d the+ ade;(ate )ress(re *s a)):*ed to t(r+ *t *+to a /a3e. Here the s:*) ho(se 4or3 *s /om):ete. 3) JIGGERING UNIT 9 The /a3e 0rom the s:*) ho(se *s 0ed *+to the ):(+,m*::. 1:(+,m*:: ma3es do(,h o0 the /a3e a+d re:eases *t *+ /o+t*+(o(s /9:*+dr*/a: mo(:ds. These mo(:ds are the+ made *+to re;(*red sha)ed 89 a(tomat*/ .*,,er*+, ma/h*+es. 36 ") +INISHING UNIT9 the art*/:e *s ):a/ed o+ the rotat*+, 4hee: a+d ade;(ate :a9er o0 mass *s remo<ed 4*tho(t a00e/t*+, d*e 0ormat*o+. The+ the art*/:es are ):a/ed o+ t(++e: dr*er /ars a+d the /ard are :ed *+to the tem)erat(re dr9*+,s /ham8ers. C) GLAHING UNIT G the ,:aA*+, (+*t /arr*es o(t the 0o::o4*+, o)erat*o+s a) CMC so:(t*o+ )re)arat*o+ 8) Sa+d*+, ,:aAe )re)arat*o+ /) Bro4+ ,:aAe )re)arat*o+ d) G:aA*+, o)erat*o+ e) Sa+d*+, o)erat*o+ 0) Stam)*+, a+d :oad*+, #) +IRING UNIT G the 0*r*+, 4or3 *s do+e *+ the 3*:+. It *s a /o+t*+(o(s )ro/ess a+d the 3*:+ tem)erat(re a+d /9/:e *s ma*+ta*+ed a//ord*+, to the *+str(/t*o+s o0 the 'N-. Th*s *s do+e to test a+d /he/3 the s(*ta8*:*t9 o0 the )rod(/t a//ord*+, to the s)e/*0*/at*o+s me+t*o+ed d(r*+, the 4ho:e )ro/ess. .) ASSEMBL* SECTION 9 the <ar*o(s o)erat*o+s )er0ormed d(r*+, assem8:9 are G a) 8) /) a)):*/at*o+ o0 8*t(m*+o(s )a*+t )re)arat*o+ o0 /eme+t mortar assem8:9 o0 *+s(:ators Page 33

E) TESTING SECTION G here the test*+, o0 the 0*+*shed )rod(/t *s do+e 8e0ore the d*s)at/h 89 the RN- o0 the /om)a+9. Th*s *s (s(a::9 do+e 89 ta3*+, a+9 sam):e 0rom the :ot a+d the+ test*+, *t. 3) DISPATCH SECTION 9 a0ter a:: the a8o<e )ro/esses are 0*+*shed a+d the test*+, *s /om):ete a ,ree+ /h*t *s mar3ed 4h*/h /o+0*rms that the )rod(/t *s +ot de0e/t*<e a+d r*,ht 0or d*s)at/h.

IT DEPARTMENT The /om)a+9 a:so has a+ IT de)artme+t 4h*/h ,*<es 0(:: te/h+*/a: s())ort to a:: e;(*)me+ts re:ated to *+0ormat*o+ te/h+o:o,9. No4 a da9 IT ):a9s a 8*, ro:e *+ tra+sm*tt*+, *+0ormat*o+ *+ a+9 /om)a+9. It *s m(/h more e00*/*e+t a+d 0ast tha+ the /o+<e+t*o+a: s9stem. BH'2 IT de)artme+t sets a ,ood eBam):e o0 *t. Here 4e /a+ see the /om):ete s9stem thro(,h 4h*/h /om)a+9 *s *+ter:*+3ed as 4e:: as 4*th '1- Ba+,a:ore (A 8ra+/h o0 BH'2). The9 )ro<*de ser<*/es to a:: the de)artme+ts <*a 2AN (:o/a: area +et4or3) a+d 5AN (5*de area +et4or3). 33 A SHORT HISTOR* O+ INSULATOR INTRODUCTION 9 A tra+s*t*o+ o0 *+s(:ator /a+ 8e see+ *+ <ar*o(s t9)es o0 )*+ *+s(:ator s(s)e+s*o+ :o+, road *+s(:ators et/. The h*stor9 o0 e:e/tr*/ )o4er *+d(str9 *s more tha+ $!! 9ear a+d *+ th*s :*+e s)a+ the *+d(str9 has )er0ormed the *+d*s)e+sa8:e ro:e o0 s()):9 o0 e+er,9 to <ar*o(s *+d(str9 N *s st*:: de<e:o)*+, at a tra+s*t*o+ o0 *+s(:ator /a+ 8e see+ *+ <ar*o(s t9)es o0 )*+ *+s(:ators a+d *+ th*s s)a+ /o+d(/tor s(s)e+ded 0rom s*:3 threads to *+s(:ate them 0rom ,ro(+d. SUSPENSION INSULATOR 1*+ t9)e *+s(:ators /o+t*+(ed to 8e (sed 0or tra+sm*ss*o+ o0 <o:ta,es () to ! KV. Ho4e<er, )*+ t9)e *+s(:ators 4ere a:read9 8e/om*+, too :ar,e to 8e (sed 4*th tra+sm*ss*o+ <o:ta,es o<er $!! KV. A+d 4as ;(*/3:9 8e/om*+, *m)ra/t*/a: 0or :ar,e <o:ta,es. Th*s :ead to the de<e:o)me+t o0 s(s)e+s*o+ *+s(:ator 89 Mr. 2o/3, o4+er o0 the :o/3 *+s(:ator m0,.Co, 4ho )rod(/ed the 4or:dEs 0*rst s(s)e+s*o+ *+s(:ator *+ $%!3. Th*s *so:ator soo+ had *ts sha)e *m)ro<ed to 8e/ome the -(+/a+ *+s(:ator. Th*s *+s(:ator had the ad<a+ta,e that *t /o(:d 8e /o)*es 0or (se 4*th h*,her tra+sm*ss*o+ <o:ta,es. I+ '(ro)e, the 0*rst s(s)e+s*o+ *+s(:ator 4as

Page 3"

de<e:o)ed *+ $%!@ 89 the Hermsdor0 )ro8:em 0a8r*/. These *+s(:ators had sha)ed 4h*/h 4ere a+ ad<a+/ed o<er those o0 )*+ t9)e *+s(:ator. I+ $%! the Amer*/a+ '.M. He4:ett de<e:o)ed the *+s(:ator 4h*/h *s 3+o4+ as the *+ter7:*+e, or 0*sh7t9)e *+s(:ator. These *+s(:ators soo+ /ame to 8e 3+o4+ as He4:ett *+s(:ators a+d 4ere 4*de:9 (sed a:: o<er the 4or:d 0or ma+9 9ears $%$C 8o(,ht the de<e:o)me+t the ?.-. *+s(:ators 89 the Amer*/a+ /om)a+9 o0 ?e00er9 -e4*tt, th*/3+ess, thoro(,h+ess a+d +o deter*orat*o+ ad<o/ated 89 th*s *+s(:ator attra/ted the atte+t*o+ o0 the e:e/tr*/ )o4er *+d(str9, 8(t *ts ad<a+ta,e o0 hea<9 4e*,ht res(:ted *+ the*r d*sa))eara+/e a0ter $! 9ears. Toda9Es s(s)e+s*o+ *+s(:ators are a+ *m)ro<eme+t o0 the -(+/a+ t9)e a+d (se the /o++e/t*+, method 0or *+s(:ator, 4h*/h has de<e:o)ed aro(+d $%$! 89 the :oo3 /o. th*s de<e:o)ed *+to the /:ea<es t9)e s(s)e+s*o+ *+s(:ator as 4e 3+o4+ *t toda9. A8o(t the some t*me, The Oh*o Brass Co. de<e:o)ed the t4o t9)e o0 s(s)e+s*o+ *+s(:ator. Ma+9 *m)ro<eme+ts 4ere :ater made o+ these t4o t9)es o0 s(s)e+s*o+ *+s(:ator to )ro<*de the sta+dard 0orm o0 s(s)e+s*o+ *+s(:ator *+ (se toda9. The te+s*:e stre+,th o0 the sta+dard 6C!7mm s(s)e+s*o+ *+s(:ator *+ $%6$ are so 4as at :e<e: o0 "!!!7C!!! K,. 5*th a+ eBtreme:9 )oor a++(a: deter*orat*o+ rate o0 !. C :ater *m)ro<eme+ts to the )or/e:a*+ 8od9 a+d the *+trod(/t*o+ 3*:+s a+d the *m)ro<ed des*,+ o0 the )or/e:a*+ )art, the *++er s(r0a/e o0 the /a)e a+d the )*+ head )art as 4e:: as /o+te+t *m)ro<eme+t res(:ted *+ a ,rad(a: ad<a+/e *+ ;(a:*t9 a+d )er0orma+/e. I+ $@C! the Germa+ /om)a+9 S*eme+s de<e:o)ed a )or/e:a*+ )*+ t9)e o0 *+s(:ator 4*th a s*+,:e :a*r. The de<e:o)me+t o0 the 0*rst ,:ass )* t9)e o0 *+s(:ator 0o::o4ed *+ $@C@. The )aths o0 de<e:o)me+t 4h*/h sha)es o0 *+s(:ators o+ o))os*tes o0 the At:a+t*/ too3 4ere 0a*r:9 d*00ere+t. The 0*rst *+s(:ator had *+/reased th*/3+ess o0 )or/e:a*+ 0or h*,her <o:ta,e 4*th d*ameter o0 )or/e:a*+ 8ee+ *+/reased to ma3e the :ea3a,e d*sta+/e :o+,er. The ra+,e o0 *+/rease :ea3a,e d*sta+/e or res*sta+/e or res*sta+/e 4h*/h 4as made )oss*8:e 89 *+/reased d*ameter 4as <er9 :*m*ted. It 4as at th*s sta,e that do(8:e :a*r )*+ t9)e *+s(:ator 4as de<e:o)ed *+ the USA. The s(r0a/e o0 )*+ t9)e *+s(:ator 4as o0te+ short7/*r/(*ted 4*th atmos)her*/ mo*st(res a+d th*s :ed to the hast9 de<e:o)me+t o0 o*: )*+ *+s(:ators *+ '(ro)e. Ho4e<er, e<e+ the )ra/t*/a: (se o0 th*s /o+/e)t 4as soo+ o(t moded 89 m(:t* :a*r )*+ t9)e *+s(:ators. The s*Ae o0 )or/e:a*+ *+s(:ators 8e/ome eBtreme:9 :ar,e 4*th h*,h tra+sm*ss*o+ <o:ta,e a+d the )rod(/t*o+ o0 :ar,e )*e/es o0 )or/e:a*+ o0 4as o0 89 mea+s s*m):e. Th*s 8ro(,ht a8o(t the ma+(0a/t(re o0 :a*r )*+ t9)e *+s(:ators *+ order to *+s(:ator tra+sm*ss*o+ <o:ta,e 6!KV, a tra+sm*ss*o+ o0 CCKV 4as s(//ess0(: o)erated *+ the USA *+ $%!6. The tra+sm*ss*o+ 4as 0*rst

Page 3C

):a++ed to (se the tr*):e :a*r )*+ *+s(:ators, 8(t as these 4ere 0o(+d to 8e me/ha+*/a::9 4ea3, ;(adr():e, th*s res(:ted *+ there e<e+t(a: ado)t*o+. Co+se;(e+t:9, 4he+ /om)ared 4*th the 0*rst s(/h *+s(:ators, toda9Es *+s(:ators are 0o(r t*mes as stro+, a+d ha<e a+ a++(a: deter*orat*o+ rate o0 a8o(t $K$!!!. L("%!R(d I7 I"7u6&t(#7 The ear:9 s(s)e+s*o+ *+s(:ators had a h*,h deter*orat*o+ rate. O+e o0 the /a(se 4as the eB)a+s*o+ o0 the /eme+t /o++e/t*+, the )*+ o0 the s(s)e+s*o+ *+s(:ators to the )or/e:a*+ /a<*t9 )arts 4h*/h res(:ted *+ a+ *+ter+a: 0or/e te+d*+, to )(sh the *+s(:ators o)e+ a+d the /orres)o+d*+, *+/rease *+ the te+s*o+ stress *+ the )or/e:a*+, 8r*+,*+, a8o(t the e<e+t(a: destr(/t*o+ o0 the *+s(:ators stress th*s 4as re,arded a 0(+dame+ta: str(/t(ra: )ro8:em *+ 8oth Germa+9 N S4*tAer:a+d, *t 4as /o+s*dered that a+9 *m)ro<eme+t o+ the /o+<e+t*o+a: str(/t(re 4o(:d +ot amo(+t to a+9 /om):ete erad*/at*o+ o0 the )ro8:em. There0ore, a str(/t(re, 4h*/h d*d +ot ,e+erate *+/reased te+s*o+ *+ the )or/e:a*+, e<e+ *0 the /eme+t eB)a+ds, 4as st(d9. The *+s(:ator 4h*/h 4as 0orer(++er o0 toda9Es :o+, road *+s(:ators 4as de<e:o)ed *+ S4*tAer:a+d 89 the Motors7Co:(m8(s Co. *+ $%$ . At the t*me, the (se o0 /eme+t 0*::er 4as o(t o0 0a<or, so the str(/t(re had a meta: 0*tt*+,. 5h*/h 4as me/ha+*/a::9 /o+ster+ated 0rom the o(ts*deR Th*s 4as :ater mod*0*ed to the +orma: meta: /a) /o++e/t*o+. The *+s(:ators ma+(0a/t(red 89 Motor7 Co:(m8(s Co. are /a::ed motor *+s(:ators. S(/h *+s(:ators )arts 8e/ome sort 4he+ /o)ra to the :e+,th o0 *+s(:ators *+ *ts /o++e/t states. Th*s *s to da9 that 0or a /om)ar*so+ o0 motor *+s(:ator a+d s(s)e+s*o+ *+s(:ators *+ /ase o0 same. Th*s +e/ess*tated *+/reas*+, :e+,th o0 )or/e:a*+ *+ )ort*o+ o0 the motor *+s(:ators a+d /o+se;(e+/e ,a<e r*se aro(+d. These *+s(:ators a:so /ome to 8e made *+ 0a*r:9 :o+, a+d :et to the de<e:o)me+t a+d ma+(0a/t(re o0 the :o+, sta8 *so:ator 4h*/h /o(:d 4*th sta+d $$! KV a+d a :e+,th o0 more tha+ o+e meter. Th*s *+s(:ator 4as de<e:o)ed 89 the Hermsdor07S/ha(m8((r, Co. *+ $%3# a+d 4as 0orer(++er o0 toda9Es :o+, rod *+s(:ators. A55&#&tu7 I"7u6&t(#7 These are to4 ma*+ t9)e o0 *+s(:ator 0or a))arat(s at s(8 stat*o+s. The9 are the ho::o4 )or/e:a*+ (sed 0or the tra+s0ormer 8(sh*+,s, a+d the s(8.e/t *+s(:ators (sed 0or s())ort*+, the 8(s :*+es. E7tim&ti"% 8(#4i"% '&5it&6 "eed7 2, Li;uidit -@7, P#()it&bi6it 9 Ri74 Retu#" T#&de O)), The 0*rm 4o(:d ma3e .(st e+o(,h *+<estme+t *+ /(rre+t assets *0 *t 4ere )oss*8:e to est*mate 4or3*+, /a)*ta: +eeds eBa/t:9. U+der )er0e/t /erta*+t9, /(rre+t assets ho:d*+,s 4o(:d 8e at the m*+*m(m :e<e:. A :ar,er *+<estme+t *+ /(rre+t assets (+der /erta*+t9 4o(:d mea+ a Page 3#

:o4 rate o0 ret(r+ o0 *+<estme+t 0or the 0*rm, as eB/ess *+<estme+t *+ /(rre+t assets 4*:: +ot ear+ e+o(,h ret(r+. A sma:: *+<est *+ /(rre+t assets, o+ the other ha+d, 4o(:d mea+ *+terr()ted )rod(/t*o+ a+d sa:es, 8e/a(se o0 0re;(e+t sto/37/(ts a+d *+a8*:*t9 to )a9 to /red*tors *+ t*me d(e to restr*/t*<e )o:*/9. As *t *s +ot )oss*8:e to est*mate 4or3*+, /a)*ta: +eeds a//(rate:9, the 0*rm m(st de/*de a8o(t :e<e:s o0 /(rre+t assets to 8e /arr*ed. A d*00ere+t 4a9 o0 :oo3*+, *+to the r*s3 ret(r+ trade o00 *s *+ terms o0 the /ost o0 ma*+ta*+*+, a )art*/(:ar :e<e: o0 /(rre+t assets. 6. The Cost Trade O00 G A d*00ere+t 4a9 o0 :oo3*+, *+to the r*s3 ret(r+ trade o00 *s *+ term o0 the /ost o0 ma*+ta*+ :e<e: o0 /(rre+t assets. There are t4o t9)es o0 /ost *+<o:<edG I. II. Cost o0 :*;(*d*t9 II. Cost o0 *::*;(*d*t9.

I0 the 0*rmEs :e<e: o0 /(rre+t assets *s <er9 h*,h, *t has eB/ess*<e :*;(*d*t9. Its ret(r+ o+ assets 4*:: 8e :o4, as 0(+ds t*ed () *+ *d:e /ash a+d sto/3s ear+ +oth*+, a+d h*,h :e<e: o0 /(rre+t assets. The /ost o0 *::*;(*d*t9 *s the /ost o0 ho:d*+, *+s(00*/*e+t /(rre+t assets. The 0*rm 4*:: +ot 8e *+ a )os*t*o+ to ho+or *ts o8:*,at*o+s *0 *t /arr*es to :*tt:e /ash. Th*s ma9 0or/e the 0*rm to 8orro4 at h*,h rates o0 *+terests. Th*s 4*:: a:so aderse:9 a00e/t the /red*t 4orth*+ess o0 the 0*rm a+d *t 4*:: 0a/e d*00*/(:t*es *+ o8ta*+*+, 0(+ds *+ the 0(t(re. A:: th*s ma9 0or/e the 0*rm *+to *+so:<e+/9. S*m*:ar:9, the :o4 :e<e:s o0 sto/3 4*:: res(:t *+ :oss o0 sa:es a+d /(stomers ma9 sh*0t to /om)et*tors. A:so, :o4 :e<e: o0 de8tors ma9 8e d(e to r*,ht /red*t )o:*/9 4h*/h 4o(:d *m)a*r sa:es 0(rther. Th(s the :o4 :e<e: o0 /(rre+t assets *+<o:<es /ost that *+/rease as th*s :e<e: 0a::s. P(6i'ie7 )(# )i"&"'i"% 'u##e"t &77et7 9 T$e )(66(8i"% 5(6i'ie7 )(# )i"&"'i"% t$e 'u##e"t &77et7 i" (IP) J&%di7$5u# LONG TERM +INANCING9 The so(r/es o0 :o+, term 0*+a+/*+, *+/:(de ord*+ar9 shares /a)*ta:, )re0ere+/e share /a)*ta: de8e+t(res, :o+, term 8orro4*+,s 0rom 0*+a+/*a: *+st*t(t*o+s a+d reser<es a+d s(r):(s. Th' (I1) ?a,d*sh)(r ma+a,es *ts :o+, term 0*+a+/*+, 0rom /a)*ta: reser<e, share )rem*(m AK/, 0ore*,+ )ro.e/t reser<e, 8o+d redem)t*o+ reser<e a+d ,e+era: reser<e. SHORT TERM +INANCING The short term 0*+a+/*+, *s o8ta*+ed 0or a )er*od :ess tha+ o+e 9ear ,It *s arr+a,ed *+ ad<a+/e 0rom 8a+3s a+d other s()):*ers o0 short term 0*+a+/e *+/:(de 4or3*+, /a)*ta: 0(+ds 0rom 8a+3s, )(8:*/ de)os*ts, /ommer/*a: )a)er, 0a/tor*+, o0 re/e<a8:eset/. Page 3

The BH'2 (I1) ?AG-ISH1UR ma+a,es se/(red :oa+s as G $) 6) 2oa+s a+d ad<a+/es 0rom 8a+3s Other :oa+s a+d ad<a+/es G (*) (**) (***) 3) -e8e+t(resK8o+ds 2oa+s 0rom state ,o<t. 2oa+s 0rom 0*+a+/*a: *+st*t(t*o+s (se/(red 89 ):ed,e o0 1SU

8o+ds a+d 8*::s a//e)ted ,(ara+teed 89 8a+3s) I+terest a//r(ed a+d d(e o+ :oa+s (a) (8) (/) $) 6) &rom State Go<t. &rom 0*+a+/*a: *+st*t(t*o+s 8o+ds a+d other 1a/3*+, /red*t 1(8:*/ de)os*ts Short term :oa+s a+d ad<a+/es G $) &rom 8a+3s (a) Commer/*a: )a)ers 6) &rom others (a) &rom /om)a+*es (8) &rom 0*+a+/*a: *+st*t(t*o+s 3) Other :oa+s a+d ad<a+/es (a) (8) (*) (**) (***) (*<) (<) (<*) ") (a) (8) (/) (d) (e) &rom 8a+3s &rom others &rom ,o<t. o0 I+d*a &rom state ,o<t. &rom 0*+a+/*a: *+st*t(t*o+s &rom 0ore*,+ 0*+a+/*a: *+st*t(t*o+ 1ost sh*)me+t /red*t eB*m 8a+3 Cred*t 0or assets ta3e+ o+ :ease 1ost sh*)me+t /red*t Go<t. /red*t State Go<t. :oa+s Cred*ts 0or assets ta3e+ o+ :ease &*+a+/*a: *+st*t(t*o+s a+d others Page 3@

The (I1) ?AG-ISH1UR ma+a,es (+se/(red :oa+s as G

I+terest a//r(ed a+d d(e o+

(0) (,)

&ore*,+ 0*+a+/*a: *+st*t(t*o+s 1(8:*/ de)os*ts

SPONTANEOUS +INANCING9 S)o+ta+eo(s 0*+a+/*+, re0ers to the a(tomat*/ so(r/es o0 short term 0(+ds ar*s*+, *+ the +orma: /o(rse o0 a 8(s*+ess. Trade Cred*t a+d o(tsta+d*+, eB)e+ses are eBam):es o0 s)o+ta+eo(s 0*+a+/*+,. A 0*rm *s eB)e/ted to (t*:*Ae these so(r/es o0 0*+a+/es to the 0(::est eBte+t. The rea: /ho*/e o0 0*+a+/*+, /(rre+t assets, o+/e the s)o+ta+eo(s so(r/es o0 0*+a+/*+, ha<e 8ee+ 0(::9 (t*:*Aed, *s 8et4ee+ the :o+, term a+d short term so(r/es o0 0*+a+/es. W$&t 7$(u6d be t$e mi< () 7$(#t &"d 6("% te#m 7(u#'e7 i" )i"&"'i"% 'u##e"t &77et7R -e)e+d*+, o+ the m*B o0 short a+d :o+, term 0*+a+/*+,, the a))roa/h 0o::o4ed 89 a /om)a+9 ma9 8e re0erred to as G $. 6. 3. Mat/h*+, a))roa/h Co+ser<at*<e a))roa/h A,,ress*<e a))roa/h

M&t'$i"% &55#(&'$ The 0*rm /a+ ado)t a 0*+a+/*a: ):a+ 4h*/h mat/hes the eB)e/ted :*0e o0 assets 4*th the eB)e/ted :*0e o0 the so(r/e o0 0(+ds ra*sed to 0*+a+/e assets. Th(s, a te+ 9ear :oa+ ma9 8e ra*sed to 0*+a+/e a ):a+t 4*th a+ eB)e/ted :*0e o0 te+ 9ear, sto/3 o0 ,oods to 8e so:d *+ th*rt9 da9s ma9 8e 0*+a+/ed 4*th a th*rt9 da9 /ommer/*a: )a)er or a 8a+3 :oa+. The .(st*0*/at*o+ 0or the eBa/t mat/h*+, *s that, s*+/e the )(r)ose o0 0*+a+/*+, *s to )a9 0or assets, the so(r/e o0 0*+a+/*+, a+d the asset sho(:d 8e re:*+;(*shed s*m(:ta+eo(s:9. Us*+, :o+, term 0*+a+/*+, 0or short term assets *s eB)e+s*<e as 0(+ds 4*:: +ot 8e (t*:*Aed 0or the 0(:: )er*od. S*m*:ar:9, 0*+a+/*+, :o+, term assets 4*th short term 0*+a+/*+, *s /ost:9 as 4e:: as *+/o+<e+*e+t as arr+a,eme+t 0or the +e4 short term 0*+a+/*+, 4*:: ha<e to 8e made o+ a /o+t*+(*+, 8as*s. 5he+ the 0*rm 0o::o4s mat/h*+, a))roa/h (a:so 3+o4+ as hed,*+, a))roa/h) :o+, term 0*+a+/*+, 4*:: 8e (sed to 0*+a+/e 0*Bed assets a+d )erma+e+t /(rre+t assets a+d short term 0*+a+/*+, to 0*+a+/e tem)orar9 or <ar*a8:e /(rre+t assets. Ho4e<er, *t sho(:d 8e rea:*Aed that eBa/t mat/h*+, *s +ot )oss*8:e 8e/a(se o0 the (+/erta*+t9 a8o(t the eB)e/ted :*<es o0 assets. The 0*rm 0*Bed assets a+d )erma+e+t /(rre+t assets are 0*+a+/ed 4*th :o+, term 0(+ds a+d as the :e<e: o0 these assets *+ *+/reases, the :o+, term 0*+a+/*+, :e<e: a:so *+/reases. The tem)orar9 or <ar*a8:e /(rre+t assets are 0*+a+/ed 4*th short term 0(+ds a+d as the*r :e<e: *+/reases, the :e<e: o0 short term 0*+a+/*+, Page 3%

a:so *+/reases. U+der mat/h*+, ):a+, +o short term 0*+a+/*+, 4*:: 8e (sed *0 the 0*rm has a 0*Bed /(rre+t assets +eed o+:9. C("7e#:&ti:e &55#(&'$ A 0*rm *+ )ra/t*/e ma9 ado)t a /o+ser<at*<e a))roa/h *+ 0*+a+/*+, *ts /(rre+t a+d 0*Bed assets. The 0*+a+/*+, )o:*/9 o0 the 0*rm *s sa*d to 8e /o+ser<at*<e 4he+ *t de)e+ds more o+ :o+, term 0(+ds 0or 0*+a+/*+, +eeds. U+der a /o+ser<at*<e ):a+, the 0*rm 0*+a+/es *ts )erma+e+t assets a+d a:so a )art o0 tem)orar9 /(rre+t assets 4*th :o+, term 0*+a+/*+,. I+ the )er*od 4he+ the 0*rm has +o +eed 0or tem)orar9 /(rre+t assets, the *d:e :o+, term 0(+ds /a+ 8e *+<ested *+ the trada8:e se/(r*t*es to /o+ser<e :*;(*d*t9. The /o+ser<at*<e ):a+ re:*es hea<*:9 o+ :o+, term 0*+a+/*+, a+d, there0ore, the 0*rm has :ess r*s3 o0 0a/*+, the )ro8:em o0 shorta,e o0 0(+ds. The /o+ser<at*<e 0*+a+/*+, )o:*/9 *s sho4+ 8e:o4. Note that 4he+ the 0*rm has +o tem)orar9 /(rre+t assets, the :o+, term 0(+ds re:eased /a+ 8e *+<ested *+ mar3eta8:e se/(r*t*es to 8(*:d () the :*;(*d*t9 )os*t*o+ o0 the 0*rm. A%%#e77i:e A55#(&'$ A 0*rm ma9 8e a,,ress*<e *+ 0*+a+/*+, *ts assets. A+ a,,ress*<e )o:*/9 *s sa*d to 8e 0o::o4ed 89 the 0*rm 4he+ *t (ses more short term 0*+a+/*+, tha+ 4arra+ted 89 the mat/h*+, ):a+. U+der a+ a,,ress*<e )o:*/9, the 0*rm 0*+a+/es a )art o0 *ts )erma+e+t /(rre+t 4*th short term 0*+a+/*+,. Some eBtreme:9 a,,ress*<e 0*rms ma9 e<e+ 0*+a+/e a )art o0 the*r 0*Bed assets 4*th short term 0*+a+/*+, ma3es the 0*rm more r*s39. The a,,ress*<e 0*+a+/*+, *s *::(strated *+ 0*, 8e:o4. S$(#t te#m :@7 6("% te#m )i"&"'i"% 9 A Ri74 Retu#" T#&de ()) A 0*rm sho(:d de/*de 4hether or +ot *t sho(:d (se short term 0*+a+/*+,. I0 short term 0*+a+/*+, has to 8e (sed, the 0*rm m(st determ*+e *ts )os*t*o+ *+ tota: 0*+a+/*+,. Th*s de/*s*o+ o0 the 0*rm 4*:: 8e ,(*ded 89 the r*s3 ret(r+ trade o00. Short term 0*+a+/*+, ma9 8e )re0erred o<er :o+, term 0*+a+/*+,. &or t4o reaso+sG $. The /ost ad<a+ta,e 6. &:eB*8*:*t9. B(t short term 0*+a+/*+, *s more r*s39 tha+ :o+, term 0*+a+/*+, CostL term 0*+a+/*+, sho(:d ,e+era::9 8e :ess /ost:9 tha+ :o+, term 0*+a+/*+,. It has 8ee+ 0o(+d *+ de<e:o)ed /o(+tr*es :*3e USA, the rate o0 *+terest *s re:ated the mat(r*t9 o0 de8t. The re:at*o+sh*) 8et4ee+ the mat(r*t9 o0 de8t a+d *ts /ost *s /a::ed the term str(/t(re o0 *+terest rates. The /(r<e, re:at*+, to mat(r*t9 o0 de8t a+d *+terest rates, *s /a::ed the 9*e:d /(r<e. The Page "!

9*e:d /(r<e ma9 ass(me a+9 sha)e, 8(t *t *s ,e+era::9 ()4ard s:o)*+,. &*, 8e:o4 sho4s the 9*e:d /(r<e. The 0*, *+d*/ates that more the mat(r*t9 ,reater the *+terest rate. The .(st*0*/at*o+ 0or the h*,her /ost o0 :o+, term 0*+a+/*+, /a+ 8e 0o(+d *+ the :*;(*d*t9 )re0ere+/e theor9. Th*s theor9 sa9s that s*+/e :e+ders are r*s3 a<erse, a+d r*s3 ,e+era::9 *+/reases 4*th the :e+,th o0 :e+d*+, t*me (8e/a(se *t *s more d*00*/(:t to 0ore/ast the more d*sta+t 0(t(re), most :e+ders 4o(:d )re0er to ma3e short term :oa+s. The o+:9 4a9 to *+d(/e these :e+ders to :e+d 0or :o+,er )er*od *s to o00er them h*,her rates o0 *+terest. The /ost o0 0*+a+/*+, has a+ *m)a/t o+ the 0*rmEs ret(r+. Both short a+d :o+, term 0*+a+/*+, ha<e a :e<era,*+, e00e/t o+ shareho:dersE ret(r+. B(t the term 0*+a+/*+, o(t to /ost:ess tha+ the :o+, term 0*+a+/*+,L there0ore, *t ,*<es re:at*<e:9 h*,her ret(r+ to shareho:ders. It *s +ot*/ea8:e that *+ I+d*a short term :oa+s /ost more tha+ the :o+, term :oa+s. Ba+3s are the ma.or s()):*ers o0 the 4or3*+, /a)*ta: 0*+a+/e *+ I+d*a. The*r rates o0 *+terest o+ 4or3*+, /a)*ta: 0*+a+/e are ;(*te h*,h. The ma*+ so(r/e o0 :o+, term :oa+s are 0*+a+/*a: *+st*t(t*o+s 4h*/h t*:: re/e+t:9 4ere +ot /har,*+, *+terest at d*00ere+t*a: rates The )r*me rate o0 *+terest rate /har,ed 89 0*+a+/*a: *+st*t(t*o+s *s :o4er tha+ the rate /har,ed 89 8a+3s. +6e<ibi6it G It *s re:at*<e:9 eas9 to re0(+d short term 0(+ds 4he+ the +eed 0or 0(+ds d*m*+*shes. 2o+, term 0(+ds s(/h as de8e+t(re :oa+ or )re0ere+/e /a)*ta: /a++ot 8e re0(+ded 8e0ore t*me. Th(s, *0 a 0*rm a+t*/*)ates that *ts re;(*reme+t 0or 0(+ds 4*:: d*m*+*sh *+ +ear 0(t(re, *t 4o(:d /hoose short term 0(+ds. Ri749 A:tho(,h short term 0*+a+/*+, ma9 *+<o:<e :ess /ost, *t *s more r*s39 tha+ :o+, term 0*+a+/*+,. I0 the 0*rm (ses short term 0*+a+/*+, to 0*+a+/e *ts /(rre+t assets, *t r(+s the r*s3 o0 re+e4*+, 8orro4*+, a,a*+ a+d a,a*+. Th*s *s )art*/(:ar:9 so *+ the /ase o0 )erma+e+t assets. As d*s/(ssed ear:*er, )erma+e+t /(rre+t assets re0er to the m*+*m(m :e<e: o0 /(rre+t assets 4h*/h a0*rm sho(:d a:4a9s ma*+ta*+. I0 the 0*rm 0*+a+/es *t )erma+e+t /(rre+t assets 4*th short term de8t, *t 4*:: ha<e to ra*se +e4 short term 0(+ds as de8t mat(res. Th*s /o+t*+(ed 0*+a+/*+, eB)oses the 0*rm to /erta*+ r*s3s. It ma9 8e d*00*/(:t 0or the 0*rm to 8orro4 d(r*+, str*+,e+t /red*t )er*ods. At t*me, the 0*rm ma9 8e (+a8:e to ra*se a+9 0(+ds a+d /o+se;(e+t:9, *t o)erat*+, a/t*<*t*es ma9 8e d*sr()ted. I+ order to a<o*d 0a*:(re, the 0*rm ma9 ha<e to 8orro4 at most *+/o+<e+*e+t terms. These )ro8:ems are m(/h :ess 4he+ the 0*rm 0*+a+/es 4*th :o+, term 0(+ds. There *s :ess r*s3 o0 0a*:(re 4he+ the :o+, term 0*+a+/*+, *s (sed. R*s3 ret(r+ed trade7o00G Th(s, there *s /o+0:*/t 8et4ee+ :o+, term a+d short term 0*+a+/*+,. Short term 0*+a+/*+, *s :ess eB)e+s*<e tha+ :o+, term 0*+a+/*+,, 8(t, at the somet*me, short term 0*+a+/*+, *+<o:<es ,reater Page "$

r*s3 tha+ :o+, term 0*+a+/*+,. The /ho*/e 8et4ee+ :o+, term a+d short term 0*+a+/*+, *+<o:<es a trade o00 8et4ee+ r*s3 a+d ret(r+. 2, HANDLING RECEI-ABLES(DEBTORS) =, MANAGING PA*ABLES( CREDITORS) B, IN-ENTOR* MANAGEMENT 0, KE* WORKING CAPITAL RATIOS

HANDLING RECEI-ABLES (DEBTORS) Cash 0:o4 /a+ 8e s*,+*0*/a+t:9 e+ha+/ed *0 the amo(+ts o4*+, to a 8(s*+ess are /o::e/ted 0aster. '<er9 8(s*+ess +eeds to 3+o4 4ho o4es them mo+e9............... ho4 m(/h *s o4ed....... ho4 :o+,*t *s o4+*+,......... 0or hat *t *s o4ed. L&te 5& me"t7 e#(de 5#()it7 &"d '&" 6e&d t( b&d debt7, S:o4 )a9me+t has a /r*)):*+, e00e/t o+ 8(s*+essL *+ )art*/(:ar o+ sma:: 8(s*+essesL *+ )art*/(:ar o+ sma:: 8(s*+esses 4ho /a+ :east a00ord *t. I) (u d("At m&"&%e debt(#7, t$e 8i66 be%i" t( m&"&%e (u# bu7i"e77, As 9o( 4*:: ,rad(a::9 :ose /o+tro: d(e to red(/ed /ash 0:o4 a+d, o0 /o(rse, 9o( /o(:d eB)er*e+/e a+ *+/reased *+/*de+/e o0 8ad de8t. It *s <er9 d*00*/(:t 0or the or,a+*Aat*o+ to se:: a:4a9s o+ /ash 8as*s *+ toda9Es /om)et*t*<e mar3et. I+ a:most e<er9 8(s*+ess, 4e ha<e to se:: o+ /red*t 8as*s. The 8as*/ o8.e/t*<e o0 ma+a,eme+t o0 s(+dr9 de8tors *s to o)t*m*Ae the ret(r+ o+ *+<estme+t o+ th*s asset. It *s o8<*o(s that *0 there are :ar,e amo(+ts t*ed () *+ s(+dr9 de8tors, 4or3*+, /a)*ta: re;(*reme+t 4o(:d 8e h*,h a+d /o+se;(e+t:9 *+terest /har,es 4*:: 8e h*,h. I+ s(/h /ases, the 8ad de8ts a+d /ost o0 /o::e/t*o+ o0 de8ts 4o(:d 8e h*,h. O+ the other ha+d *0 the /red*t )o:*/9 *s <er9 t*,ht, *+<estme+t *+ s(+dr9 de8tors *s :o4 8(t the sa:e ma9 8e restr*/ted, s*+/e the /om)et*tors ma9 o00er more :*8era: /red*t term. 5e ha<e :*m*ted reso(r/es a+d there0ore e<er9 reso(r/e has *ts o4+ o))ort(+*t9 /ost. There0ore the ma+a,eme+t o0 s(+dr9 de8tors *s a+ *m)orta+t *ss(e a+d re;(*red )ro)er )o:*/*es a+d e00*/*e+t eBe/(t*o+ o0 s(/h )o:*/*es. -e8tors a+d /ost o0 de8tors ha<e d*re/t re:at*o+L /ost 4*:: *+/rease d(e to *+/rease *+ de8tors a+d <*/e7<ersa. It de)e+ds o+ the /red*t sa:e o0 /o+/er+ a+d /red*t )er*od (/o::e/t*o+ )er*od) a::o4ed to /(stomer. It *s *+terest o0 /(stomer to )a9 as :ate as )oss*8:e a+d /om)a+9, 4ho made sa:es, 4o(:d :*3e to /o::e/t the*r de8tor as ear:9 as )oss*8:e. There *s a /o+0:*/t 8et4ee+ the t4o as)e/ts. -e8tor ma+a,eme+t *s Page "6

the )ro/ess o0 0*+d*+, the 8a:a+/e at 4h*/h /om)a+9 a,rees to re/e*<e *ts )a9me+t 4*tho(t ham)er*+, or ha<*+, a+9 ad<erse e00e/t o+ *ts sa:es a+d /(stomer a,rees to re/e*<e *ts )a9me+t 4*tho(t ham)er*+, or ha<*+, a+9 ad<erse e00e/t o+ *ts sa:es a+d /(stomer a,ree to )a9 at the*r e/o+om*/a: 8(9*+, /o+/e)t. S(+dr9 de8tor :e<e: de)e+ds o+ t4o meas(re *ss(es G Vo:(me o0 Cred*t sa:es Cred*t )er*od a::o4ed to /(stomers.

&o::o4*+, 0a/tors ma9 8e /o+s*dered 8e0ore a::o4*+, /red*t )er*od to the /(stomer G $. Nat(re o0 )rod(/t 6. Cred*t 4orth*+ess o0 the /(stomer, 4h*/h <ar*es 0rom /(stomer to /(stomer 3. O(a+t(m o0 ad<a+/e re/e*<ed 0rom /(stomers ". Cred*t )o:*/9 o0 /om)a+9, sa9 +(m8er o0 da9s a::o4ed to /(stomer 0or )a9me+t to the /(stomers. C. Cost o0 de8tors #. Ma+(0a/t(r*+, /9/:e t*me o0 the )rod(/t et/. C#edit 5(6i' 9 The term /red*t )o:*/9 *s (sed to re0er to the /om8*+at*o+ o0 three de/*s*o+ <ar*a8:es G Cred*t sta+dard are /r*ter*a to de/*de the t9)es o0 /(stomers to 4hom ,oods /o(:d 8e so:d o+ /red*t. I0 a 0*rm has more s:o4 )a9*+, /(stomers, *ts *+<estme+t *+ a//o(+ts re/e*<a8:e 4*:: *+/rease. The 0*rm 4*:: a:so 8e eB)osed to h*,her r*s3 o0 de0a(:t. Cred*t terms s)e/*09 d(rat*o+ o0 /red*t a+d terms o0 )a9me+t 89 /(stomers. I+<estme+t *+ a//o(+ts re/e*<a8:e 4*:: 8e h*,h *0 /(stomers are a::o4ed eBte+ded t*me )er*od 0or ma3*+, )a9me+ts. Co::e/t*o+ e00orts determ*+e the a/t(a: /o::e/t*o+ )er*od. The :o4er the /o::e/t*o+ )er*od, the :o4er the *+<estme+t *+ a//o(+ts re/e*<a8:e a+d <*/e7<ersa. C#edit P(6i' -&#i&b6e7 G These are G $. 6. 3. Cred*t sta+ders a+d a+a:9s*s Cred*t terms Co::e/t*o+ )o:*/9 a+d )ro/ed(res

The 0*+a+/*a: ma+a,er or the /red*t ma+a,er ma9 adm*+*ster the /red*t )o:*/9 o0 a 0*rm. Cred*t )o:*/9 has *m)orta+t *m):*/at*o+s 0or the 0*rmEs )rod(/t*o+, mar3et*+, a+d 0*+a+/e 0(+/t*o+s. The *m)a/t o0 /ha+,es *+ the ma.or de/*s*o+ <ar*a8:es o0 /red*t )o:*/9 areG

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C#edit 7t&"d&#d7 These are the /r*ter*a 4h*/h a 0*rm 0o::o4s *+ se:e/t*+, /(stomers 0or the )(r)ose o0 /red*t eBte+s*o+s. The 0*rm ma9 ha<e t*,ht /red*t sta+dardsL that *s, *t ma9 se:: most:9 o+ /ash 8as*s a+d ma9 eBte+d /red*t o+:9 to the most re:*a8:e a+d 0*+a+/*a::9 stro+, /(stomers. S(/h sta+dards 4*:: res(:t *+ +o 8ad de8t :osses a+d :ess /ost o0 /red*t adm*+*strat*o+. B(t the 0*rm ma9 +ot 8e a8:e to eB)a+d sa:es. The )ro0*t sa/r*0*/ed o+ :ost sa:es ma9 8e more tha+ the /osts sa<ed 89 the 0*rm. O+ the /o+trar9, *0 /red*t sta+dards are :oose, the 0*rm ma9 ha<e :ar,er sa:es. B(t the 0*rm 4*:: ha<e to /arr9 :ar,er sa:es. B(t the 0*rm 4*:: ha<e to /arr9 :ar,e re/e*<a8:es. The /ost o0 adm*+*strat*+, /red*t a+d 8ad de8t :osses 4*:: a:so *+/rease. Th(s, the /ho*/e o0 o)t*m(m /red*t sta+dards *+<o:<es a trade7o00 8et4ee+ *+/reme+ta: ret(r+ a+d *+/reme+ta: /osts. Cred*t sta+dards *+0:(e+/e the ;(a:*t9 o0 the 0*rmEs /(stomers. There are t4o as)e/ts o0 the ;(a:*t9 o0 /(stomersL (I) The t*me ta3e+ 89 /(stomers to re)a9 /red*t o8:*,at*o+ a+d (**) The de0a(:t rate. The a<era,e /o::e/t*o+ )er*od determ*+es the s)eed o0 )a9me+t 89 /(stomers. It meas(res the +(m8er o0 da9s 0or 4h*/h /red*t sa:es rema*+ o(tsta+d*+,. The :o+,er the a<era,e /o::e/t*o+ )er*od, the h*,her the 0*rmEs *+<estme+t *+ a//o(+ts re/e*<a8:es. -e0a(:t rate /a+ 8e meas(red *+ terms o0 8ad de8t :osses rat*o7the )ro)ort*o+ o0 (+/o+tro::ed re/e*<a8:e. Bad de8t :osses rat*o *+d*/ates de0a(:t r*s3. -e0a(:t r*s3 *s the :*3e:*hood that a /(stomer 4*:: 0a*: to re)a9 the /red*t o8:*,at*o+. O+ the 8as*s o0 )ast )ra/t*/e a+d eB)er*e+/eL the 0*+a+/e ma+a,er sho(:d 8e a8:e to 0orm a reaso+a8:e .(d,me+t re,ard*+, the /ha+/e o0 de0a(:t. To est*mate the )ro8a8*:*t9 o0 de0a(:t, the 0*+a+/*a: or /red*t ma+a,er sho(:d /o+s*derG Chara/ter re0ers to the /(stomerEs 4*::*+,+ess to )a9, The 0*+a+/*a: or /red*t ma+a,er sho(:d .(d,e 4hether the /(stomers 4*:: ma3e ho+est e00orts to ho+or the*r /red*t o8:*,at*o+s. The mora: 0a/tor *s o0 /o+s*dera8:e *m)orta+/e *+ /red*t e<a:(at*o+ *+ )ra/t*/e. Ca)a/*t9 re0ers to the /(stomerEs a8*:*t9 to )a9. A8*:*t9 to )a9 /a+ 8e .(d,e 89 assess*+, the /(stomerEs /a)*ta: a+d assets 4h*/h he ma9 o00er as se/(r*t9. Ca)a/*t9 *s e<a:(ated 89 the 0*+a+/*a: )os*t*o+ o0 the 0*rm as *+d*/ated 89 a+a:9s*s o0 rat*os a+d tre+ds *+ 0*rmEs /ash a+d 4or3*+, /a)*ta: )os*t*o+. The 0*+a+/*a: or /red*t ma+a,er sho(:d determ*+e the rea: 4orth o0 assets o00ered as se/(r*t9. Co+d*t*o+ re0ers to the )re<a*:*+, e/o+om*/ a+d other /o+d*t*o+s 4h*/h ma9 a00e/t the /(stomerEs a8*:*t9 to )a9. Ad<erse e/o+om*/ /o+d*t*o+s /a+ a00e/t the a8*:*t9 or 4*::*+,+ess o0 a /(stomer to )a9. The 0*rm ma9 /ate,or*Ae *ts /(stomers at :east *+ the 0o::o4*+, three /ate,or*es $. Good a//o(+tsL 0*+a+/*a::9 stro+, /(stomers 6. Bad a//o(+ts L 0*+a+/*a::9 <er9 4ea3, h*,h r*s3 /(stomers. 3. Mar,*+a: a//o(+tsL /(stomers 4*th moderate 0*+a+/*a: hea:th a+d r*s3. Page ""

C#edit te#m7 G The st*)(:at*o+s (+der 4h*/h the 0*rm se::s o+ /red*t to /(stomers are /a::ed /red*t terms. These st*)(:at*o+s *+/:(de (A) /red*t )er*od (B) Cash d*s/o(+t. Cred*t )er*odG the :e+,th o0 t*me 0or 4h*/h /red*t *s eBte+ded to /(stomers *s /a::ed the /red*t )er*od. It *s ,e+era::9 stated *+ term o0 a +et date. A 0*rmEs /red*t )er*od ma9 8e ,o<er+ed 89 the *+d(str9 +orms. B(t de)e+d*+, o+ *ts o8.e/t*<es the 0*rms /a+ :e+,the+ the /red*t )er*od. O+ the other ha+d, the 0*rm ma9 t*,hte+ *ts /red*t )er*od *0 /(stomers are de0a(:t*+, too 0re;(e+t:9 a+d 8ad de8ts :osses are 8(*:d*+, (). C&7$ di7'(u"t 9 It *s a red(/t*o+ *+ )a9me+t o00ered to /(stomers to *+d(/e them to re)a9 /red*t o8:*,at*o+s 4*th*+ a s)e/*0*ed )er*od o0 t*me, 4h*/h 4*:: 8e :ess tha+ the +orma: /red*t )er*od. It *s (s(a::9 eB)ressed as a )er/e+ta,e o0 sa:es. Cash d*s/o(+t terms *+d*/ate the rate o0 d*s/o(+t a+d the )er*od 0or 4h*/h *t *s a<a*:a8:e. I0 the /(stomer does +ot a<a*: the o00er, he m(st ma3e )a9me+t 4*th*+ the +orma: /red*t )er*od. A 0*rm (ses /ash d*s/o(+t as a too: to *+/rease sa:es a+d a//e:erate /o::e/t*o+s 0rom /(stomers. Th(s, the :e<e: o0 re/e*<a8:es a+d asso/*ated /osts ma9 8e red(/ed. The /ost *+<o:<ed *s the d*s/o(+ts ta3e+ 89 /(stomers. C(66e'ti(" 5(6i' &"d 5#('edu#e7 A /o::e/t*o+ )o:*/9 *s +eeded 8e/a(se a:: /(stomers do +ot )a9 the 0*rmEs 8*:: *+ t*me. Some /(stomers are s:o4 )a9ers 4h*:e some are +o+7)a9ers. The /o::e/t*o+ e00orts sho(:d, there0ore, a*m at a//e:erat*+, /o::e/t*o+s 0rom s:o4 )a9ers a+d red(/*+, 8ad7de8t :osses. A /o::e/t*o+ )o:*/9 sho(:d e+s(re )rom)t a+d re,(:ar /o::e/t*o+. 1rom)t /o::e/t*o+ *s +eeded 0or 0ast t(r+o<er o0 4or3*+, /a)*ta:, 3ee)*+, /o::e/t*o+ /osts a+d 8ad de8ts 4*th*+ :*m*ts a+d ma*+ta*+*+, /o::e/t*o+ e00*/*e+/9. The /o::e/t*o+ )o:*/9 sho(:d :a9 do4+ /:ear /(t /o::e/t*o+ )ro/ed(res. The /o::e/t*o+ )ro/ed(res 0or )ast d(es or de:*+;(e+t a//o(+ts sho(:d a:so 8e esta8:*shed *+ (+am8*,(o(s terms. The s:o4 )a9*+, /(stomers sho(:d 8e ha+d:ed <er9 ta/t0(::9. Some o0 them ma9 +ot 8e )erma+e+t /(stomers. The 0*rm sho(:d de/*de a8o(t o00er*+, /ash d*s/o(+t 0or )rom)t )a9me+ts. Cash d*s/o(+t *s a /ost to the 0*rm 0or e+s(r*+, 0aster re/o<er9 o0 /ash. Some /(stomers 0a*: to )a 4*th*+ the s)e/*0*ed d*s/o(+t )er*od, 9et the9 ma9 ma3e )a9me+t a0ter ded(/t*+, the amo(+t o0 /ash d*s/o(+t. S(/h /ases m(st 8e )rom)t:9 *de+t*0*ed a+d +e/essar9 a/t*o+ sho(:d 8e *+*t*ated a,a*+st them to re/o<er the 0(:: amo(+t. MEASUREMENTS O+ DEBTORS G Page "C

The 0o::o4*+, meas(res 4*:: he:) ma+a,e 9o(r de8torsG $. 6. 3. /(stomers.. ". C. #. . @. %. $!. $$. $6. Be )ro0ess*o+a: 4he+ a//e)t*+, +e4 a//o(+ts, a+d es)e/*a::9 :ar,er o+es. Che/3 o(t ea/h /(stomer thoro(,h:9 8e0ore 9o( o00er /red*t. Use /red*t 'sta8:*sh /red*t :*m*ts 0or ea/h /(stomer.... a+d st*/3 to them. Co+t*+(o(s:9 re<*e4 these :*m*ts 4he+ 9o( s(s)e/t to(,h t*mes are /om*+, or *0 Kee) <er9 /:ose to 9o(r :ar,er /(stomers. I+<o*/e )rom)t:9 a+d /:ear:9. Co+s*der /har,*+, )e+a:t*es o+ o<erd(e a//o(+ts. Co+s*der a//e)t*+, /red*tKde8*t /ards as a )a9me+t o)t*o+. Mo+*tor 9o(r de8tor 8a:a+/es a+d a,e*+, s/hed(:es, a+d do+Et :et a+9 de8ts ,et Ha<e the r*,ht me+ta: att*t(de to the /o+tro: o0 /red*t a+d ma3e s(re that *t ,ets 'sta8:*sh /:ear /red*t )ra/t*/es as a matter o0 /om)a+9 )o:*/9. Ma3e s(re that these )ra/t*/es are /:ear:9 (+derstood 89 sta00, s()):*ers a+d the )r*or*t9 *t deser<es

a,e+/*es, 8a+3 re0ere+/es, *+d(str9 so(r/es et/.

o)erat*+, *+ a <o:at*:e se/tor.

too :ar,e or too o:d. Re/o,+*Ae that the :o+,er someo+e o4es 9o(, the ,reater the /ha+/e 9o( 4*:: +e<er ,et )a*d. I0 the a<era,e a,e o0 9o(r de8tors *s ,ett*+, :o+,er, or *s a:read9 <er9 :o+,. Yo( ma9 +eed to :oo3 0or the 0o::o4*+, )oss*8:e de0e/ts G $. 6. 3. ". C. #. 5ea3 Cred*t ?(d,me+t 1oor Co::e/t*o+ 1ro/ed(res 2aB '+0or/eme+t o0 Cred*t Terms S:o4 Iss(e o0 I+<o*/es or Stateme+ts 'rrors I+ I+<o*/es Or Stateme+ts C(stomer -*ssat*s0a/t*o+.

-e8tors d(e o<er %! da9s ((+:ess 4*th*+ a,reed /red*t terms) sho(:d ,e+era::9 dema+d *mmed*ate atte+t*o+. 2oo3 0or the 4ar+*+, s*,+s o0 a 0(t(re 8ad de8t. &or eBam):e.......... 2o+,er /red*t terms ta3e+ 4*th a))ro<a:, )art*/(:ar:9 0or sma::er orders (se o0 )ost dated /he/3s 89 de8tors 4ho +orma::9 sett:e 4*th*+ a,reed terms e<*de+/e o0 /(stomers s4*t/h*+, to add*t*o+a: s()):*ers 0or the same ,oods +e4 /(stomers 4ho are re:(/ta+t to ,*<e /red*t re0ere+/es re/e*<*+, )art )a9me+ts 0rom de8tors.

Page "#

P#()it7 ("6 '(me )#(m 5&id 7&6e7, The a/t o0 /o::e/t*+, mo+e9 *s o+e 4h*/h most )eo):e d*s:*3e 0or ma+9 reaso+s a+d there0ore )(t o+ the :o+, 0*+,er 8e/a(se the9 /o+<*+/e themse:<es there *s someth*+, more (r,e+t or *m)orta+t that dema+d the*r atte+t*o+ +o4. T$e#e i7 "(t$i"% m(#e im5(#t&"t t$&" %etti"% 5&id )(# (u# 5#(du't (# 7e#:i'e, A 'u7t(me# 8$( d(e7 "(t 5& i7 "(t & 'u7t(me#, Here area 0e4 *deas that ma9 he:) 9o( *+ /o::e/t*+, mo+e9 0rom de8tors G $. 6. 3. ". C. #. . -e<e:o) a))ro)r*ate )ro/ed(res 0or ha+d:*+, :ate )a9me+ts. Tra/3 a+d )(rs(e :ate )a9ers. Get eBter+a: he:) *0 9o(r o4+ e00orts 0a*:. -o+Et 0ee: ,(*:t9 as3*+, 0or mo+e9 ......... *ts 9o(rs a+d 9o( are Ma3e that /a:: +o4. A+d 3ee) as3*+, (+t*: 9o( ,et some I+ d*00*/(:t /*r/(msta+/es, ta3e 4hat 9o( a+ +o4 a+d a,ree terms 5he+ as3*+, 0or 9o(r mo+e9, 8e hard o+ the *ss(e78(t so0t o+ the )erso+ -o+Et ,*<e the de8tor a+9 eB/(ses 0or +ot )a9*+,. @. Ma3e *t 9o(r o8.e/t*<e *s to ,et the mo+e97+ot to s/ore )o*+ts or ,et e<e+. 0or the

e+t*t:ed to *t. sat*s0a/t*o+. rema*+der. It :esse+s the )ro8:em.

MANAGING PA*ABLES (CREDITORS) Cred*tors are the 8(s*+esses or )eo):e 4ho )ro<*de ,oods a+d ser<*/es *+ /red*t terms. That *s, the9 a::o4 (s t*me to )a9 rather tha+ )a9*+, *+ /ash. There are ,ood reaso+s 4h9 4e a::o4 )eo):e to )a9 o+ /red*t e<e+ thro(,h :*tera::9 *t do+Et ma3e se+seS I0 4e a::o4 )eo):e t*me to )a9 the*r 8*::s, the9 are more :*3e:9 to 8(9 0rom 9o(r 8(s*+ess tha+ 0rom a+other 8(s*+ess that does+Et ,*<e /red*t. The :e+,th o0 /red*t )er*od a::o4ed *s a:so a 0a/tor that /a+ he:) a )ote+t*a: /(stomer de/*des 4hether to 8(9 0rom 9o(r 8(s*+ess or +otL the :o+,er the 8etter, o0 /o(rse. I+ s)*te o0 4hat 4e ha<e .(st sa*d, /red*tors 4*:: +eed to o)t*m*Ae the*r /red*t /o+tro: )o:*/*es *+ eBa/t:9 the same 4a9 that 4e d*d 4he+ 4e 4ere assess*+, o(r de8torsE t(r+o<er rat*o7a0ter a::, *0 9o( are m9 de8tor I am 9o(r /red*torS 5e ,*<e /red*t 8(t 4e +eed to /o+tro: ho4 m(/h 4e ,*<e, ho4 o0te+ a+d 0or ho4 :o+,. The 0orm(:a 0or th*s rat*o *sG Page "

Cred*torEs T(r+o<erF A<era,e Cred*tors (Cost o0 Sa:esK3#C) Cred*tors are a <*ta: )art o0 e00e/t*<e /ash ma+a,eme+t a+d sho(:d 8e ma+a,ed /are0(::9 to e+ha+/e the /ash )os*t*o+. 1(r/has*+, *+*t*ateEs /ash o(t0:o4s a+d a+ o<er7Aea:o(s )(r/has*+, 0(+/t*o+ /a+ /reate :*;(*d*t9 )ro8:ems. Co+s*der the 0o::o4*+, G $. 6. 3. ". C. #. . @. de:a9R %. Ca+ 9o( arra+,e (4*th /o+0*de+/eS) to ha<e de:*<er9 o0 s()):*es sta,,ered or o+ a .(st7 There *s a+ o:d ad a,e *+ 8(s*+ess that *0 9o( /a+ 8(9 4e:: the+ 9o( /a+ se:: 4e::. Ma+a,eme+t o0 9o(r /red*tors a+d s()):*ers *s .(st as *m)orta+t as the ma+a,eme+t o0 9o(r de8tors. It *s *m)orta+t to :oo3 a0ter 9o(r /red*tors7 s:o4 )a9me+t 89 9o( ma9 /reate *::7 0ee:*+, a+d /a+ s*,+a: that 9o(r /om)a+9 *s *+e00*/*e+t (or *+ tro(8:eS). Remembe#, & %((d 7u556ie# i7 7(me("e 8$( 8i66 8(#4 8it$ (u t( e"$&"'e t$e )utu#e :i&bi6it &"d 5#()it&bi6it () (u# '(m5&" , IN-ENTOR* MANAGEMENT I+<e+tor*es /o+s*t(te the most s*,+*0*/a+t )art o0 /(rre+t assets o0 a ma.or*t9 o0 /om)a+*es *+ I+d*a. O+ a+ a<era,e, *+<e+tor*es are a))roB*mate:9 #! )er/e+t o0 /(rre+t assets *+ )(8:*/ :*m*ted /om)a+*es *+ I+d*a. Be/a(se o0 the :ar,e s*Ae o0 *+<e+tor*es ma*+ta*+ed 89 0*rms, a /o+s*dera8:e amo(+t o0 0(+ds *s re;(*red to 8e /omm*tted to them. It *s, there0ore, a8so:(te:9 *m)erat*<e to ma+a,e *+<e+tor*es e00*/*e+t:9 a+d e00e/t*<e:9 *+ order to a<o*d (++e/essar9 *+<estme+t. A 0*rm +e,:e/t*+, the ma+a,eme+t o0 *+<e+tor*es 4*:: 8e .eo)ard*A*+, Page "@ *+7t*me 8as*sR 5ho a(thor*Aes )(r/has*+, *+ 9o(r /om)a+97 *s *t t*,ht:9 ma+a,ed or s)read amo+, a Are )(r/hase ;(a+t*t*es ,eared to dema+d 0ore/astsR -o 9o( (se order ;(a+t*t*es 4h*/h ta3e a//o(+t o0 sto/37ho:d*+, a+d )(r/has*+, /ostsR -o 9o( 3+o4 the /ost to the /om)a+9 o0 /arr9*+, sto/3R -o 9o( ha<e a:ter+at*<e so(r/es o0 s()):9R I0 +ot, ,et ;(otes 0rom ma.or s()):*ers a+d Ho4 ma+9 o0 9o(r s()):*ers ha<e a ret(r+s )o:*/9R Are 9o( *+ a )os*t*o+ to )ass o+ /ost *+/reases ;(*/3:9 thro(,h )r*/e *+/reases to 9o(r I0 a s()):*er o0 ,oods or ser<*/es :ets 9o( do4+ /a+ 9o( /har,e 8a/3 the /ost o0 the +(m8er o0 (.(+*or) )eo):eR

sho) aro(+d 0or the 8est d*s/o(+ts, /red*t terms, a+d red(/e de)e+de+/e o+ a s*+,:e s()):*er.

/(stomersR

*ts :o+, r(+ )ro0*ta8*:*t9 a+d ma9 0a*: (:t*mate:9. It *s )oss*8:e 0or a /om)a+9 to red(/e *ts :e<e: o0 *+<e+tor*es to a /o+s*dera8:e de,ree, e.,., $! to 6! )er /e+t, 4*tho(t a+9 ad<erse e00e/t o+ )rod(/t*o+ a+d sa:es, 89 (s*+, s*m):e *+<e+tor9 ):a++*+, a+d /o+tro: te/h+*;(es. The red(/t*o+ *+ eB/ess*<e *+<e+tor*es /arr*es a 0a<ora8:e *m)a/t o+ /om)a+9Es )ro0*ta8*:*t9. N&tu#e () I":e"t(#ie7 9 I+<e+tor*es are sto/3 o0 the )rod(/t a /om)a+9 *s ma+(0a/t(r*+, 0or sa:e a+d /om)o+e+ts that ma3e () the )rod(/t. The <ar*o(s 0orms *+ 4h*/h *+<e+tor*es eB*st *+ a ma+(0a/t(r*+, /om)a+9 are G R&8 M&te#i&67 G These are those 8as*/ *+)(ts that are /o+<erted *+to 0*+*shed )rod(/t thro(,h the ma+(0a/t(r*+, )ro/ess. Ra4 mater*a:s *+<e+tor*es are those (+*ts 4h*/h ha<e 8ee+ )(rhased a+d stored 0or 0(t(re )rod(/t*o+s. W(#4 i" P#('e77 9 These *+<e+tor*es are sem* ma+(0a/t(red )rod(/ts. The9 re)rese+t )rod(/ts that +eed more 4or3 8e0ore the9 8e/ome 0*+*shed 0or sa:e. +i"i7$ed G((d7 9 These *+<e+tor*es are those /om):ete:9 ma+(0a/t(red )rod(/ts 4h*/h are read9 0or sa:e. Sto/3s o0 ra4 mater*a:s a+d 4or37*+7)ro/ess 0a/*:*tate )rod(/t*o+, 4h*:e sto/3 o0 0*+*shed ,oods *s re;(*red 0or smooth mar3et*+, o)erat*o+s. Th(s, *+<e+tor*es ser<e as a :*+3 8et4ee+ the )rod(/t*o+ a+d /o+s(m)t*o+ o0 ,oods. The :e<e:s o0 three 3*+ds o0 *+<e+tor*es 0or a 0*rm de)e+d o+ the +at(re o0 *ts 8(s*+ess. A ma+(0a/t(r*+, 0*rm 4*:: ha<e s(8sta+t*a::9 h*,h :e<e:s o0 a:: three 3*+ds o0 *+<e+tor*es. 5*th*+ ma+(0a/t(r*+, 0*rms, there 4*:: 8e d*00ere+/es. 2ar,e hea<9 e+,*+eer*+, /om)a+*es )rod(/e :o+, )rod(/t*o+ /9/:e )rod(/tsL there0ore the9 /arr9 :ar,e *+<e+tor*es. &*rms a:so ma*+ta*+ a 0o(rth 3*+d o0 *+<e+tor9, s()):*es or stores a+d s)ares. S()):*es *+/:(de o00*/e a+d ):a+t /:ea+*+, mater*a:s :*3e soa), 8rooms, o*:, 0(e:, :*,ht 8(:8s et/. these mater*a:s do +ot d*re/t:9 e+ter )rod(/t*o+, 8(t are +e/essar9 0or )rod(/t*o+ )ro/ess. Us(a::9, these s()):*es are sma:: )art o0 the tota: *+<e+tor9 a+d do +ot *+<o:<e s*,+*0*/a+t *+<estme+t. There0ore a so)h*st*/ated s9stem o0 *+<e+tor9 /o+tro: ma9 +ot 8e ma*+ta*+ed 0or them. Need T( H(6d I":e"t(#ie7 The ;(est*o+ o0 ma+a,*+, *+<e+tor*es ar*ses o+:9 4he+ the /om)a+9 ho:ds *+<e+tor*es. Ma*+ta*+*+, *+<e+tor*es *+<o:<es t9*+, () o0 the /om)a+9Es 0(+ds a+d *+/(rre+/e o0 stora,e a+d ha+d:*+, /osts. I0 *t *s eB)e+s*<e to ma*+ta*+ *+<e+tor*es, 4h9 do /om)a+*es ho:d *+<e+tor*esR There are three ,e+era: mot*<es 0or ho:d*+, *+<e+tor*esG Page "%

TRANSCATIONS MOTI-E 9 It em)has*Aes the +eed to ma*+ta*+ *+<e+tor*es to 0a/*:*tate smooth )rod(/t*o+ a+d sa:es o)erat*o+s. PRECAUTIONAR* MOTI-E 9 It +e/ess*tates ho:d*+, o0 *+<e+tor*es to ,(ard a,a*+st the r*s3 o0 (+)red*/ta8:e /ha+,e *+ dema+d a+d s()):9 0or/es a+d other 0a/tors. SPECULATI-E MOTI-E G It *+0:(e+/es the de/*s*o+ to *+/rease or red(/e *+<e+tor9 :e<e:s to ta3e the ad<a+ta,e o0 )r*/e :e<e: 0:(/t(at*o+s. A /om)a+9 sho(:d ma*+ta*+ ade;(ate sto/3 o0 mater*a:s 0or a /o+t*+(o(s s()):9 to the 0a/tor9 0or a+ (+*+terr()ted )rod(/t*o+. It *s +ot )oss*8:e 0or a /om)a+9 to )ro/(re ra4 mater*a:s 4he+e<er *t *s +eeded. A t*me :a, eB*sts 8et4ee+ dema+d 0or mater*a:s a+d *ts s()):9. A:so there eB*sts (+/erta*+t9 *+ )ro/(r*+, ra4 mater*a:s *+ t*me o+ ma+9 o//as*o+s. The )ro/(reme+t o0 mater*a:s ma9 8e de:a9ed 8e/a(se o0 s(/h 0a/tors as str*3e, tra+s)ort d*sr()t*o+ or short s()):9. There0ore, the 0*rm sho(:d ma*+ta*+ s(00*/*e+t sto/3 o0 ra4 mater*a:s at a ,*<e+ t*me to stream :*+e )rod(/t*o+. Other 0a/tors 4h*/h ma9 +e/ess*tate )(r/has*+, a+d ho:d*+, o0 ra4 mater*a:s *+<e+tor*es are ;(a+t*t9 d*s/o(+ts a+d a+t*/*)ated )r*/e *+/rease. The 0*rm ma9 )(r/hase :ar,e ;(a+t*t*es o0 ra4 mater*a:s tha+ +eeded 0or the des*red )rod(/t*o+ a+d sa:es :e<e:s to o8ta*+ ;(a+t*t9 d*s/o(+ts o0 8(:3 )(r/has*+,. At t*mes, the 0*rm 4o(:d :*3e to a//(m(:ate ra4 mater*a:s *+ a+t*/*)at*o+ o0 )r*/e r*se. 5or3 *+ )ro/ess *+<e+tor9 8(*:ds () 8e/a(se o0 the )rod(/t*o+ /9/:e. 1rod(/t*o+ /9/:e *s the t*me )a+ 8et4ee+ *+trod(/t*o+ o0 ra4 mater*a:s *+to )rod(/t*o+ a+d emer,e+/e o0 0*+*shed )rod(/t at the /om):et*o+ o0 )rod(/t*o+ /9/:e. T*:: )rod(/t*o+ /9/:e /om):etes, sto/3 o0 5I1 has to 8e ma*+ta*+ed. Sto/3 o0 0*+*shed ,oods has to 8e he:d 8e/a(se )rod(/t*o+ a+d sa:es are +ot *+sta+ta+eo(s. A 0*rm /a++ot )rod(/e *mmed*ate:9 4he+ /(stomers dema+d ,oods. There0ore, to s()):9 0*+*shed ,oods o+ a re,(:ar 8as*s, the*r sto/3 has to 8e ma*+ta*+ed. ObGe'ti:e () I":e"t(# M&"&%eme"tG I+ the /o+teBt o0 *+<e+tor9 ma+a,eme+t, the 0*rm *s 0a/ed 4*th the )ro8:em o0 meet*+, t4o /o+0:*/t*+, +eedsG $. 6. To ma*+ta*+ a :ar,e s*Ae o0 *+<e+tor*es o0 ra4 mater*a:s a+d 5I1 0or e00*/*e+t a+d To ma*+ta*+ a m*+*m(m *+<estme+t *+ *+<e+tor*es to maB*m*Ae )ro0*ta8*:*t9. smooth )rod(/t*o+ a+d o0 0*+*shed ,oods 0or (+*+terr()ted sa:es o)erat*o+s. Both eB/ess*<e a+d *+ade;(ate *+<e+tor*es are +ot des*ra8:e. These are t4o da+,er )o*+ts 4h*/h the 0*rm sho(:d a<o*d. The o8.e/t*<e o0 *+<e+tor9 ma+a,eme+t sho(:d 8e determ*+e a+d Page C!

ma*+ta*+ o)t*m(m :e<e: o0 *+<e+tor9 *+<estme+t. To o)t*m(m :e<e: o0 *+<e+tor9 4*:: :*e 8et4ee+ the t4o da+,er )o*+ts o0 eB/ess*<e a+d *+ade;(ate *+<e+tor*es. The 0*rm sho(:d a:4a9s a<o*d a s*t(at*o+ o0 o<er *+<estme+t or (+der *+<estme+t *+ *+<e+tor*es. The ma.or da+,ers o0 o<er *+<estme+t are G U++e/essar9 t*e () o0 the 0*rmEs 0(+ds :oss o0 )ro0*t 'B/ess*<e /arr9*+, /osts. R*s3 o0 :*;(*d*t9 The eBe/ess*<e :e<e: o0 *+<e+tor*es /o+s(mes 0(+ds o0 the 0*rm, 4h*/h /a++ot 8e (sed 0or a+9 other )(r)ose, a+d th(s, *t *+<o:<es a+ o))ort(+*t9 /ost. The /arr9*+, /osts s(/h as the /osts o0 stora,e, ha+d:*+,, *+s(ra+/e, re/ord*+, a+d *+s)e/t*o+, a:so *+/reases *+ )ro)ort*o+ to <o:(me o0 *+<e+tor9. These /osts 4*:: *m)a*r the 0*rmEs )ro0*ta8*:*t9 0(rther. 'B/ess*<e *+<e+tor*es /arr*ed 0or :o+, )er*od *+/reases /ha+,es o0 :oss o0 :*;(*d*t9. It ma9 +ot 8e )oss*8:e to se:: *+<e+tor*es *+ t*me a+d at 0(:: <a:(e. Ra4 mater*a:s are ,e+era::9 d*00*/(:t to se:: as the ho:d*+, )er*od *+/reases. A+other da+,er o0 /arr9*+, eB/ess*<e *+<e+tor9 *s the )h9s*/a: deter*orat*o+ o0 *+<e+tor*es 4h*:e *+ stora,e. Ma*+ta*+*+, a+ *+ade;(ate :e<e: o0 *+<e+tor*es *s a:so da+,ero(s. The /o+se;(e+/es o0 (+der *+<estme+t *+ *+<e+tor*es are 1rod(/t*o+ ho:ds ()s &a*:(re to meet de:*<er9 /omm*tme+ts I+ade;(ate ra4 mater*a:s a+d 5I1 *+<e+tor*es 4*:: res(:t *+ 0re;(e+t )rod(/t*o+ *+terr()t*o+s. The a*m o0 *+<e+tor9 ma+a,eme+t *s to a<o*d eB/ess*<e a+d *+ade;(ate :e<e:s o0 *+<e+tor*es a+d to ma*+ta*+ s(00*/*e+t *+<e+tor9 0or the smooth )rod(/t*o+ a+d sa:es o)erat*o+s. A+ e00e/t*<e *+<e+tor9 ma+a,eme+t sho(:dG '+s(re a /o+t*+(o(s s()):9 o0 ra4 mater*a:s to 0a/*:*tate (+*+terr()ted )rod(/t*o+. Ma*+ta*+ s(00*/*e+t sto/3 o0 ra4 mater*a:s *+ )er*ods o0 short s()):9 a+d a+t*/*)ate )r*/e /ha+,es. Ma*+ta*+ s(00*/*e+t 0*+*shed ,oods *+<e+tor9 0or smooth sa:es o)erat*o+ a+d e00*/*e+t /(stomer ser<*/e. M*+*m*Ae the /arr9*+, /ost a+d t*me. Co+tro: *+<estme+t *+ *+<e+tor*es a+d 3ee) *t at a+ o)t*m(m :e<e:. &o::o4*+, ste)s ha<e 8ee+ ta3e+ to /o+tro: *+<e+tor9G A+ *+<e+tor9 mo+*tor*+, /e:: *s /o+st*t(ted at the /or)orate o00*/e. The )(r/hases 4ere /o+tro::ed 89 the mater*a:s ma+a,eme+t ,ro() re)ort*+, to the -*re/tor o0 &*+a+/e. The /om)a+9 )ro<*ded 0or 4ee3:9 meet*+, 8et4ee+ mater*a: ):a++*+,, )rod(/t*o+ /o+tro: a+d )(r/hase de)artme+ts 0or 8etter mater*a: a<a*:a8*:*t9.

Page C$

Mo+th:9 re<*e4 o0 tota: *+<e+tor9 at the :e<e: o0 /h*e0 eBe/(t*<es o0 ):a+ts a+d /or)orate ma+a,eme+t *s *+trod(/ed. I+<e+tor9 /o+tro: *s deta*:ed 4*th the 8(d,et*+, s9stem. To) $!! *+<e+tor9 *tems are *de+t*0*ed 0or /:oser s/r(t*+9 a+d /o+tro:.

CHAPTER B

Page C6

PRESENTATION O+ DATA AND ANAL*SIS

RESEARCH METHODOLOG*
Methodo:o,9 *s sa*d to 8e the )ro/ed(re or 4a9 *+ 4h*/h the )ro.e/t 4or3 has 8ee+ do+e. I+ the )ro.e/t 4or3, the methodo:o,9 a d o ) t e d * s data /o::e/t*o+ a+d s(r<e9 thro(,h ;(est*o++a*re. SOURCE O+ DATA9 The data 0or the st(d9 has 8ee+ /o::e/ted 0rom <ar*o(s 5#im&# 7(u#'e7, PRIMAR* DATA9 It re0ers to the stat*st*/a: mater*a: 4h*/h the *+<est*,ator or*,*+ates 0or h*mse:0 0or the )(r)ose o0 the e+;(*r9 *+ ha+d. I+ other 4ords, *t *s o+e 4h*/h *s /o::e/ted 89 the *+<est*,ator 0or the 0*rst t*me e.,. *0 the /ost o0 :*<*+, o0 4or3ers *+ a /*t9 are to 8e /om)(ted, the+ the *+0ormat*o+ re,ard*+, the 0a/ts /o::e/ted 89 the *+<est*,ators or e+(merators 4o(:d 8e termed as 1r*mar9 data. I+ I+d*a there are <ar*o(s a,e+/*es 4h*/h /o::e/t )r*mar9 data e.,.. Nat*o+a: Sam):e S(r<e9 (NSS), State 2e<e: '/o+om*/ a+d Stat*st*/a: -e)artme+ts et/. 5he+ 4e (se )r*mar9 data, *t *s /a::ed ra4 mater*a:. A//ord*+, to 5esse:, J-ata or*,*+a::9 /o::e/ted *+ the )ro/ess o0 *+<est*,at*o+ are 3+o4+ as )r*mar9 data.J

Page C3

The (se o0 )r*mar9 so(r/es *s :*m*ted to *+ter<*e4s 4*th some o0 the em):o9ees *+ the 0*+a+/e de)artme+t. The reaso+ 8e*+,, *t *s a,a*+st the /om)a+9Ds )o:*/*es a+d )ro/ed(res to re<ea: the se+s*t*<e 0*+a+/*a: *+0ormat*o+.

AD-ANTAGES

-e,ree o0 a//(ra/9 *s ;(*te h*,h. It does +ot re;(*re eBtra /a(t*o+. It de)*/ts the data *+ ,reat deta*:. 1r*mar9 so(r/e o0 data /o::e/t*o+ 0re;(e+t:9 *+/:(des de0*+*t*o+s o0 <ar*o(s terms

a+d (+*ts (sed.

&or some *+<est*,at*o+s, se/o+dar9 data are +ot a<a*:a8:e.

SECONDAR* SOURCES O+ DATA!

Se/o+dar9 so(r/es o0 data *+/:(de a++(a: re)orts o0 BH'2. Stateme+t o0 /ha+,es *+ 4or3*+, /a)*ta: 0or the )ast 0*<e 9ears *s do+e (s*+, the data ta3e+ 0rom these 0*+a+/*a: re)orts. S*m*:ar:9 t*me ser*es a+a:9s*s o0 o)erat*+, /9/:e a+d /a:/(:at*o+s o0 rat*os *s do+e. A)art 0rom th*s, the 4e8s*te o0 BH'2 *s re0erred to 3+o4 the )rod(/ts, )rod(/t 0a/*:*t*es, +et4or3 et/. I+d(str9 a+a:9s*s *s do+e 8ased o+ the *+0ormat*o+ ,athered 0rom +e4s)a)ers, 4e8s*tes o0 I+d*a+ Stee: m*+*str9 a+d other se/tor re:ated 4e8s*tes.

TURNO-ER

Page C"

As 4e /a+ see /:ear:9 *+ the d*a,ram BH'2 t(r+o<er *+/reases 0rom 9ear to 9ear *+ *+ 6!!"7!C *t 4as $!!!! N *+ 6!!C7!# *ts $C!!! N *+ 6!! 7!@ *ts *+/reased 6$"!$ a0ter that *+ 9ear 6!!%7 $! *t *+/reases to 3"$C" that ta(r+o<er .(st 8e/a(se ado)t*o+ o0 +e4 te/h+o:o,9 a+d *+ 9ear 6!$$7$6 *t *+/reases to "%C$!.

-ALUE ADDED
50000 40000 30000 20000 10000 0 2003- 2004- 2005- 2006- 200704 05 06 07 08

Va:(e added ser<*/es has 8ee+ a:so mar3ed ad *+/reas*+, *.eL *+ 9ear 6!!37!" *t 4as *+/reases to $@!!! a+d *+ 6!!C7!# *t 4as *+/reased to 6C!!! N *+ 9ear 6!! 7!@ *ts *+/reased to C!!!!. Page CC

NET WORTH PER SHARE

Net 4orth )er share *+ 9ear 6!! 7!@ *t 4as "".!6 a0ter that *+ 9ear 6!!%7$! *t *+/reased to @6.3" a+d a0ter at the 9ear 6!$$7$6 *t 4as *+/reased to $!3.# .

EARNING PER SHARE

'ar+*+, )er share 4as $$.#@ *+ 9ear 6!! 7!@ a+d *t 4as *+/reased to $$6.@6 *+ 9ear 6!!@ a+d a0ter that *t 4as *+/reased to 6@. # *+ 9ear 6!$$7$6. Page C#

DEBTORS TURNO-ER RATIO

2 1.5 1 DTR 0.5 0 2005- 2006-072007-082008-092009-10 06

-TR 4as $.@ *+ 6!!C7!# a+d the+ *t de/reased to $. *+ 6!!#7! a+d a0ter that *t 4as /o+tro::ed *+ 9ear 6!! 7!@ *.eL $.C a+d 9ear 6!!%7$! *t 4as $.#.

DEBT COLLECTION PERIOD

300 200 100 0 200506 200607 200708 200809 200910 DC P DC P

-e8t /o::e/t*o+ )er*od 4as $C! *+ 6!!C7!# 8(t *+/reased to 6!! *+ 6!!%7$! . BH'2VS BS' (S'NS'T)

Page C

Page C@

CHAPTER 0

+INDINGS ,CONCLUSION C SUGGESTIONS

SUMMAR* AND SUGGESTIONS

The /o+/e)t o0 4or3*+, /a)*ta: *s (sed *+ t4o 4a9s *.e., ,ross a+d +et. Gross 4or3*+, /a)*ta: re0ers to the 0*rms *+<estme+ts *+ /(rre+t assets. Net 4or3*+, /a)*ta: mea+s the d*00ere+/e 8et4ee+ /(rre+t assets a+d /(rre+t :*a8*:*t*es, a+d there0ore re)rese+ts the )os*t*o+ o0 /(rre+t assets, 4h*/h *s 0*+a+/ed e*ther 0rom :o+, term 0(+ds or 8a+3 8orro4*+,s. Cash *s re;(*red to meet a 0*rmEs tra+sa/t*o+s a+d )re/a(t*o+ar9 +eeds. A 0*rm +eeds /ash to ma3e )a9me+ts 0or a/;(*s*t*o+s o0 reso(r/es a+d ser<*/es 0or +orma: /o+d(/t o0 8(s*+ess. Cash *s a:so he:d to meet emer,e+/9 s*t(at*o+s. Some 0*rms ho:d /ash to ta3e ad<a+ta,e o0 s)e/(:at*<e /ha+,es *+ )r*/es o0 *+)(t a+d o(t)(t. M&"&%eme"t () '&7$ i":(6:e7 t$#ee t$i"%7, &) M&"&%i"% '&7$ )6(87 i" &"d (ut () & )i#m Page C%

b) ')

M&"&%i"% '&7$ )6(87 8it$i" & )i#m +i"&"'i"% de)i'it (# i":e7ti"% 7u#56u7 '&7$

A+d th(s /o+tro::*+, /ash 8a:a+/e sat a+9 )o*+t o0 t*me. &*rms )re)are /ash 8(d,et to ):a+ a+d /o+tro: a+d /ash 0:o4s. Cash 8(d,et /a+ ser<e *ts )(r)ose o+:9 4he+ 0*rm /a+ ma+a,e *ts /o::e/t*o+ a+d )a9me+ts 4*th*+ the a::o4ed :*m*ts. A 0*rm sho(:d ho:d o)t*m(m amo(+t o0 ash at a+9 t*me a+d *+<est the tem)orar9 eB/ess amo(+t *+ short term se/(r*t*es. Trade /red*t /reates 8oo3 de8ts a//o(+ts re/e*<a8:e. It *ss(ed as a mar3et*+, too: to eB)a+d or ma*+ta*+ the 0*rmEs sa:es. A 0*rmEs *+<estme+t o+ a//o(+t re/e*<a8:e de)e+ds o+ <o:(me o0 /red*t sa:es a+d /o::e/t*o+ )er*od thro(,h /red*t )o:*/9. Cred*t )o:*/9 *+/:(des /red*t terms a+d /o::e/t*o+ e00orts the 0*rmEs /red*t )o:*/9 4*:: 8e /o+s*dered o)t*m(m at the three methods mo+*tor 8oo3 de8ts. T$e &#e 9 &) A:e#&%e '(66e'ti(" 5e#i(d b) &%ei"% 7'$edu6e ') '(66e'ti(" e<5e#ie"'e m&t#i<, The 0*rst t4o methods are 8ased o+ the sho4*+, )a9me+ts )atter+s a+d he+/e do+Et )ro<*de mea+*+,0(: *+0ormat*o+ 0or /o::e/t*+, 8oo3 de8ts. The th*rd a))roa/h (ses the dese/rated data a+d *t *s 8etter method tha+ 0*rst t4o methods. I+<e+tor*es /o+st*t(te a8o(t #!P o0 /(rre+t assets to )(8:*/ :*m*ted /om)a+*es o0 I+d*a. The ma+(0a/t(r*+, /om)a+*es ho:d *+<e+tor*es *+ the 0orm o0 ra4 mater*a:s 4or3 *m)resses a+d 0*+*shed ,oods. The9 are three mot*<es 0or ho:d*+, *+<e+tor*es. The9 are tra+sa/t*o+ mot*<e, )re/a(t*o+ar9 mot*<e a+d s)e/(:at*<e mot*<e. BH'2 (I1) *s a m(:t* )rod(/t re)a*r*+, (+*t 4*th <ar9*+, /9/:e t*me 0or ea/h )rod(/t. The /a)*ta: re;(*red 89 ea/h re)a*r*+, (+*t o0 I1 de)e+ds o+ the *+d*<*d(a: )rod(/ts /9/:e o0 ea/h *tem. The de)artme+t 4*se /a)*ta: 4hose /a)*ta: re;(*reme+t /o():ed 4*th the*r )rod(/t*o+ tar,et 0or a 9ear *+<*tes a+d e00e/t*<e 4or3*+, /a)*ta: ma+a,eme+t. I+ 0*+a+/e, 4or3*+, /a)*ta: *s s9+o+9mo(s 4*th /(rre+t assetsL BH'2 *s a m(:t* )rod(/t :ar,e or,a+*Aat*o+ 4*th h(,e /a)*ta: t(r+o<er 4here the 4or3*+, /a)*ta: re;(*reme+t de)e+ds o+ the :e<e: o0 o)erat*o+ a+d the :e+,th o0 o)erat*o+ /9/:e. Mo+*tor*+, the d(rat*o+ o0 the o)erat*+, /9/:e *s a+ *m)orta+t as)e/t o0 /(rre+t assets ma+a,eme+t a+d /o+tro:. S/o)e o0 e+ha+/*+, d(r*+, the 9ear 6!!C7!# the t(r+o<er *s Rs. C33% /orers a+d )ro0*t *s Rs. $" 3 /orers, d(r*+, the 9ear 6!!#7! t(r+o<er *s Rs.$!"$! /orers a+d )ro0*t *s Rs. 33@% /orers a+d d(r*+, 6!! 7!@ t(r+o<er *s Rs. $3$#% /orers a+d )ro0*t *s Rs.3%3# /orers. It *+d*/ates that the +et )ro0*t 0orms +ear:9 6CP o0 the tota: sa:es t(r+o<er. I+ s(/h s*t(at*o+ the /om)a+9 Page #!

sho(:d tr9 to ,o 0or eB)a+s*o+, s(/h as )rod(/t*o+ e+ha+/eme+t s9stem, so that the /om)a+9 /omes to a )os*t*o+ 0or 0(rther *+/reas*+, *ts )ro0*ts.

RECOMMENDATIONS

There *s a ,reat +eed 0or e00e/t*<e ma+a,eme+t o0 4or3*+, /a)*ta: *+ a+9 0*rm. There *s +o )re/*se 4a9 to determ*+e the eBa/t amo(+t o0 ,ross or +et 4or3*+, /a)*ta: 0or a+9 0*rm. The data a+d )ro8:ems o0 ea/h /om)a+9 sho(:d 8e a+a:9Aed to determ*+e the 4or3*+, /a)*ta:. There *s +o s)e/*0*/ r(:es as to ho4 /(rre+t assets sho(:d 8e 0*+a+/ed. It *s +ot 0eas*8:e *+ )ra/t*/e to 0*+a+/e /(rre+t assets 89 short7term so(r/es o+:9. Kee)*+, *+ <*e4 the /o+stra*+ts o0 the /om)a+9, a .(d*/*o(s m*B o0 short a+d :o+, term 0*+a+/e sho(:d 8e *+<ested *+ /(rre+t assets. S*+/e /(rre+t assets *+<o:<e /ost o0 0(+ds, the9 sho(:d 8e )(t to )rod(/t*<e (se.

LIMITATIONS O+ THE STUD*

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A:tho(,h e<er9 e00ort has 8ee+ made to st(d9 the =5or3*+, Ca)*ta: Ma+a,eme+t> *+ deta*: *+ a+ or,a+*sat*o+ o0 BH'2 s*Ae, *t *s +ot )oss*8:e to ma3e a+ eBha(st*<e st(d9 *+ a :*m*ted d(rat*o+ o0 three 4ee3s. It *s +ot )oss*8:e to *+/:(de data o0 6!!@76!!%, as the a(d*ted 0*+a+/*a: re)ort has +ot /ome 9et (at the t*me o0 )re)arat*o+ o0 th*s re)ort). Ho4e<er the data o0 6!!@76!!% *s *+/:(ded )art*a::9 0rom the (+a(d*ted 0*+a+/*a: re)orts o0 BH'2. A)art 0rom the a8o<e /o+stra*+t, o+e ser*o(s :*m*tat*o+ o0 the st(d9 *s, that *t *s +ot )oss*8:e to re<ea: some o0 the 0*+a+/*a: data o4*+, to the )o:*/*es a+d )ro/ed(res :*d do4+ 89 BH'2. Ho4e<er the a<a*:a8:e data *s a+a:9Aed 4*th ,reat e00ort to ,et a+ *+s*,ht *+to 5or3*+, Ca)*ta: Ma+a,eme+t *+ BH'2.

CONCLUSION
2et (s s(mmar*Ae o(r d*s/(ss*o+ o+ the str(/t(re a+d 0*+a+/*+, o0 /(rre+t assets. The re:at*<e :*;(*d*t9 o0 the 0*rmEs assets str(/t(re *s meas(red 89 /(rre+t to 0*Bed assets or /(rre+t asset to tota: asset rat*o. The ,reater th*s rat*o, the :ess r*s39 as 4e:: as the :ess )ro0*ta8:e 4*:: 8e the 0*rm a+d <*/e <ersa. S*m*:ar:9, the re:at*<e :*;(*d*t9 o0 the 0*rmEs 0*+a+/*a: str(/t(re /a+ 8e meas(red 89 short7term 0*+a+/*+, to tota: 0*+a+/*+, rat*o. The :o4er th*s rat*o the :ess r*s39 as 4e:: as )ro0*ta8:e 4*:: 8e the 0*rm a+d <*/e <ersa. I+ sha)*+, *ts 4or3*+, /a)*ta: )o:*/9, the 0*rm sho(:d 3ee) *+ m*+d these t4o d*me+s*o+s G re:at*<e asset :*;(*d*t9 (:e<e: o0 /(rre+t assets) a+d re:at*<e 0*+a+/*+, :*;(*d*t9 (:e<e: o0 short term 0*+a+/*+, o0 the 4or3*+, /a)*ta: ma+a,eme+t. A 0*rm 4*:: 8e 0o::o4*+, a <er9 /o+ser<at*<e 4or3*+, /a)*ta: )o:*/9 *0 *t /om8*+es a h*,h :e<e: o0 /(rre+t assets 4*th a h*,h :e<e: o0 :o+, term 0*+a+/*+, (or :o4 :e<e: o0 short term 0*+a+/*+,). S(/h a )o:*/9 4*:: +ot 8e r*s39 at a:: 8(t 4o(:d 8e :ess )ro0*ta8:e. A+ a,,ress*<e 0*rm o+ the

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other ha+d 4o(:d /om8*+e :o4 :e<e: o0 /(rre+t assets 4*th a :o4 :e<e: o0 :o+, term 0*+a+/*+, (or h*,h :e<e: o0 short term 0*+a+/*+,). Th*s 0*rm 4*:: ha<e h*,h )ro0*ta8*:*t9 a+d h*,h r*s3. I+ 0a/t, the 0*rm the 0*rm ma9 0o::o4 a /o+ser<at*<e 0*+a+/*+, )o:*/9 to /o(+ter *ts re:at*<e:9 :*;(*d asset str(/t(re *+ )ra/t*/e. The /o+/:(s*o+ o0 a:: th*s *s that the /o+s*derat*o+s o0 assets a+d 0*+a+/*+, m*B are /r(/*a: to the 4or3*+, /a)*ta: ma+a,eme+t.

BIBLIOGRAPH* 9

&*+a+/*a: ma+a,eme+t &*+a+/*a: ma+a,eme+t &*+a+/*a: Ma+a,eme+t 5or3*+, /a)*ta: Ma+a,eme+t &*+a+/*a: Ma+a,eme+t

I.M. 1a+de9 1resa++ a Cha+dra M9 Kha+ I.M. 1a+de9 R.K. Sharma N S.K. G()ta Page #3

&*+a+/*a: Ma+a,eme+t

R.1. R(sta,*

A++(a: Re)orts o0 BH'2 Ge+era: Art*/:es o0 BH'2 (I1), ?AG-ISH1UR 5e8s*te G 444.8he:./om, 444.*+d*a*+0o:*+e./om, Ne4s)a)ersG '/o+om*/ T*mes o0 I+d*a, The H*+d(.

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