PROJECT REPORT

ON

“STUDY OF WORKING CAPITAL MANAGEMENT OF HCL

INFOSYSTEM, MIHAN, NAGPUR”

Submitted to

Rashtrasant Tukadoji Maharaj Nagpur University for Partial Fulfillment of the Degree of
Master in Business Administration (MBA)”

Submitted by

ANSHUL C. LANJEWAR

Guide

Prof. Vivek Katare

Shantiniketan Business School

Uppalwadi, Kamptee Road, Nagpur
2019-20

1
 SHANRINIKETAN BUSINESS SCHOOL
NAGPUR

CERTIFICATE

This is to certify that investigation described in this project entitled, “STUDY

OF WORKING CAPITAL MANAGEMENT OF HCL INFOSYSTEM MIHAN

NAGPUR” was carried out by Mr/Ms ANSHUL C. LANJEWAR in Shantiniketan

Business School, Nagpur under my guidance in partial fulfillment of the requirement

for the degree of Master of Business Administration of R.T.M. Nagpur University,

Nagpur.

This work is the own work of the candidate, complete in all respects and is of

sufficiently fulfill standard to justify its submission to the said degree. The assistance

and resources used for this work are duly acknowledged.

Prof._________________ Prof. Vivek Katare

(Guide) Officiating Principal
 DECLARATION

I hereby declare that this project titled “STUDY OF WORKING CAPITAL

MANAGEMENT HCL INFOSYSTEM MIHAN NAGPUR” is bonafide and authentic record of
work done by me under guidance of Prof. VIVEK KATARE during academic session 2019-20.
The work presented here is not duplicated from any other source & also not submitted
earlier for any other degree/diploma to any university. I understand that any such duplication is
liable to be punished in accordance with the university rules.
The source material, data used in this research study have been duly acknowledged.

Date:
Place: Signature of Student
 ACKNOWLEDGEMENTS

These is my privilege to express deepest sense of gratitude and in debt sense to my Guide
Prof. VIVEK KATARE, for his invaluable Supervision, unending support, constant
encouragement, keep interest, helpfulness and constructive criticism. All this provided us the
needed moral and confidence to carry out this project.

I am also thankful to all other faculty members of SBS for their help during my project
work.

I take pleasure in expressing heartiest thanks to my parents, colleagues and classmates for
their moral support and helpfulness through my project work. I am also thankful to my other friends
excluding SBS, for giving me full support in my project work.

____________________________
(Name of the student)
 INDEX

SR.NO. CHAPTER PAGE NO.

A) INTRODUCTION 1
INTRODUCTION OF TOPIC 7
B) LITERATURE SURVEY 17

C) RESEARCH METHODOLOGY
a)Type of research 18
b)Objective 19
c)Hypothesis 20
d)Data collection 21
e)Methodology of analysis 22
d)Limitation 25
D) DATA ANALYSIS 26

E) CONCLUSION 37

F) RECOMMENTATION AND FUTURE SCOPE 38

G) BIBLOGRAPHY 39
INTRODUCTION
The project undertaken is on “WORKING CAPITAL MANAGEMENT IN HCL INFOSYSTEMS
LIMITED”.
It describes about how the company manages its working capital and the various steps that are
required in the management of working capital.

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

Working capital refers to the cash a business requires for day-to-day operations or, more
specifically, for financing the conversion of raw materials into finished goods, which the company
sells for payment. Among the most important items of working capital are levels of inventory,
accounts receivable, and accounts payable. Analysts look at these items for signs of a company's
efficiency and financial strength.
The working capital is an important yardstick to measure the company’s operational and financial
efficiency. Any company should have a right amount of cash and lines of credit for its business
needs at all times.

This project describes how the management of working capital takes place at
HCL Infosystems.

AN OVERWIVE ABOUT COMPANY

 HCL Technologies has launched a campus at MIHAN in Nagpur, which was inaugurated by

Union Minister for Road Transport & Highways, Shipping and Water Resources, River

Development & Ganga Rejuvenation Nitin Gadkari and Maharashtra CM Devendra Fadnavis. The

50-acre HCL campus in Nagpur aims to create more than 2000 jobs after starting operations. said

that its foray in Nagpur is driven by quality local talent pool in the city and scalable infrastructure.

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HCL had launched its ‘Stay Rooted’ campaign for engineering and non-engineering students to be

equipped with IT skills in June last year. HCL has already rolled out 300 offer letters to candidates

and the first batch of nearly 100 candidates are currently undergoing training. Company said that

the creation of the centre in Nagpur is in line with HCL’s strategic vision to expand and create

opportunities in smaller cities across India.

“Nagpur has emerged as a significant talent hub over the few years and we are pleased to be a part

of the launch celebrations of the HCL campus in Mihan. The state of the art HCL campus would

offer locals an opportunity to develop global careers right in their own city, without having a need

to migrate from their hometown. We wish HCL the very best in their endeavour to bring about

change and positively impact quality of life in the city of Nagpur,” stated Gadkari.

“The HCL campus in Mihan will offer a great platform to local talent in the city providing them

growth opportunities. I would like to congratulate HCL on being a part of this important journey

and investing in the upskilling and employment of the local youth,” said Fadnavis.

Once the MIHAN centre becomes operational, it will deliver a spectrum of services including

Infrastructure Management, Application Development, Product Engineering, BPO, IT Services

Management and HCL’s internal enabling functions.

“HCL has always been at the forefront of bringing new avenues across strata and geographies. With

the launch of the HCL Campus in MIHAN, we hope to reach out to the local talent, unlock

immense potential, enhance their skills and prepare them for Global IT careers. By optimization of

the skilled talent resource available in the city through the HCL Nagpur Campus, we aim to put

Nagpur on the global IT map. I thank the Government of Maharashtra for their continued support in

realizing our goals,” said Sanjay Gupta, Executive Vice President, HCL Technologies.

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Apart from giving opportunities to both engineering and non-engineering graduates, this centre also

aims to have a gender equal workforce, and giving women returning to work after a break an

opportunity to utilize their skills set and contribute meaningfully towards a bright future by working

with a global IT company.

HISTORY

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

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Y E AR H I G H L I G H T S

- Foundation of the Company laid

1976 - Introduces microcomputer-based programmable calculators with wide acceptance
in the scientific / education community

- Launch of the first microcomputer-based commercial computer with a ROM -based

Basic interpreter
1977
- Unavailability of programming skills with customers results in HCL developing
bespoke applications for their customers

- Formation of Far East Computers Ltd., a pioneer in the Singapore IT market, for SI
1980
(System Integration) solutions

- HCL launches an aggressive advertisement campaign with the theme ' even a typist
can operate' to make the usage of computers popular in the SME (Small & Medium
Enterprises) segment. This proposition involved menu-based applications for the first
1983 time, to increase ease of operations. The response to the advertisement was
phenomenal.
-HCL develops special program generators to speed up the development of
applications

- Zonal offices of banks and general insurance companies adopt computerization

- Purchase specifications demand the availability of RDBMS products on the
1986 supplied solution (Unify, Oracle). HCL arranges for such products to be ported to its
platform.
- HCL assists customers to migrate from flat-file based systems to RDBMS

- HCL enters into a joint venture with Hewlett Packard

1991 - HP assists HCL to introduce new services: Systems Integration, IT consulting,
packaged support services ( basic line, team line )

- HCL acquires and executes the first offshore project from IBM Thailand
1994
- HCL sets up core group to define software development methodologies

- Starts execution of Information System Planning projects

1995 - Execution projects for Germany and Australia
- Begins Help desk services

- Sets up the STP ( Software Technology Park ) at Chennai to execute software

1996 projects for international customers
- Becomes national integration partner for SAP

- Kolkata and Noida STPs set up

1997
- HCL buys back HP stake in HCL Hewlett Packard

1998 - Chennai and Coimbatore development facilities get ISO 9001 certification

- Acquires and sets up fully owned subsidiaries in USA and UK

1999 - Sets up fully owned subsidiary in Australia
- HCL ties up with Broadvision as an integration partner

2000 - Sets up fully owned subsidiary in Australia

- Chennai and Coimbatore development facilities get SEI Level 4 certification
- Bags Award for Top PC Vendor In India
- Becomes the 1st IT Company to be recommended for latest version of ISO 9001 :
4
 2000
- Bags MAIT's Award for Business Excellence
- Rated as No. 1 IT Group in India

-Launched Pentium IV PCs at below Rs 40,000

2001
-IDC rated HCL Infosystems as No. 1 Desktop PC Company of 2001

-Declared as Top PC Vendor by Dataquest

-HCL Infosystems & Sun Microsystems enters into a Enterprise Distribution
2002 Agreement
- Realigns businesses, increasing focus on domestic IT, Communications & Imaging
products, solutions & related services

- Became the first vendor to register sales of 50,000 PCs in a quarter

- First Indian company to be numero uno in the commercial PC market
2003
- Enters into partnership with AMD
- Launched Home PC for Rs 19,999

- 1st to announce PC price cut in India, post duty reduction, offers Ezeebee at Rs.
17990
- Maintains No.1 position in the Desktop PC segment for year 2003
- Becomes the 1st company to cross 1 lac unit milestone in the Indian Desktop PC
market
2004
- Partners with Union Bank to make PCs more affordable, introduces lowest ever
EMI for PC in India
- Registers a market share of 13.7% to become No.1 Desktop PC company for year
2004
- Crosses the landmark of $ 1 billion in revenue in just nine months

- Launch of HCL PC for India, a fully functional PC priced at Rs.9,990/-

- Rated as the No.1 Desktop PC company by IDC India -Dataquest
- 'Best Employer 2005' with five star ratings by IDC India -Dataquest.
- 'The Most Customer Responsive Company 2005'
-IT Hardware Category by The Economic Times -Avaya Global Connect.
-Top 50 fastest growing Technology Companies in India' & 'Top 500 fastest Growing
Technology Companies in Asia Pacific' by 'Deloitte & Touche'. by 'Deloitte &
Touche'
2005 -'7th IETE -Corporate Award 2005' for performance excellence in the field of
Computers & Telecommunication Systems by IETE.
-India 's 'No.1 vendor' for sales of A3 size Toshiba Multi Functional Devices for the
year '04 -'05 by IDC.
-Toshiba 'Super Award 2005 towards business excellence in distribution of Toshiba
Multifunctional products,
-Strategic Partners in Excellence' Award by In focus Corporation for projectors.
-'Most valued Business Partner' Award for projectors by In focus Corporation in
2005

2006 - 75, 000+ machines produced in a single month

- HCL Infosystems in partnership with Toshiba expands its retail presence in India by
(till unveiling 'shop Toshiba'
June) - HCL Infosystems & Nokia announce a long term distribution strategy
- HCL the leader in Desktops PCs unveils India's first segment specific range of
notebooks brand - 'HCL Laptops'
- IDBI selects HCL as SI partner for 100 branches ICT infrastructure rollout

5
 - HCL Infosystems showcases Computer Solutions for the Rural Markets in India
- HCL Support wins the DQ Channels-2006 GOLD Award for Best After Sales
Service on a nationwide customer satisfaction survey conducted by IDC
- HCL Infosystems First in India to Launch the New Generation of High
Performance Server Platforms Powered by Intel Dual - Core Xeon 5000 Processor
- HCL Forms a Strategic Partnership with APPLE to provide Sales & Service
Support for iPods in India

ALLIANCES and PARTNERSHIPS:

To provide world-class solutions and services to all our customers, HCL Infosystems
have formed Alliances and Partnerships with leading IT companies worldwide.

HCL Infosystems has alliances with global technology leaders like Intel, AMD,
Microsoft, Bull, Toshiba, Nokia, Sun Microsystems, Ericsson, nVIDIA, SAP,
Scansoft, SCO, EMC, Veritas, Citrix, CISCO, Oracle, Computer Associates,
RedHat, Infocus, Duplo, Samsung and Novell.

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

     
6
INTRODUCTION FOR TOPIC

A study of working capital is of major importance to internal and external analysis

because of its close relationship to current operations of the business. The term working capital
originated at the time when most industries were closely related to agriculture. The amount of fund
required for operating need varies from time to time in every business. But certain amount of assets
in the form of working capital is always required if the business has to carry out its function
efficiently and without a break.

The requirement of finance in business arises mainly due to two factors, acquisition of fixed
assets and provision of working capital. Fixed assets such as land, funds, broadly known as working
capital, buildings, plant and machinery, equipments, etc. are essential for carrying on sales and
production. The working capital is necessary to meet day to day revenue expenses like
purchase of materials, wage payment, meeting overhead expenses, etc. Working capital keeps the
business going. In short

Working Capital = Current Assets – Current Liability

CURRENT ASSETS CURRENT LIABILITY
Cash In Hand Sundry Creditors
Cash At Bank Bills Payable
Sundry Debtors Bank Overdraft
Bills Receivable Short Term Advances (loan)
Stock/ Inventories Outstanding Expenses
Short Term Investment Dividend Payable
Prepaid Expenses Provision For Taxation

Increase in Current Assets results in increase in W.C.

Decrease in Current Assets results in decrease in W.C.
Increase in Current Liability results in decrease in W.C.
Decrease in Current Liability increase in W.C.

7
DEFINITION:
According to Weston and Brigham “Working Capital refers to a firm’s investment in
short term assets, cash, short term securities, account receivable and inventories”.
According to Corine T. Norgard, “It is the difference between company’s current assets
and current liabilities. The accounts which belong to this group are usually the most active in the
company. Unlike fixed assets they reflect the company’s daily activities.
According to P.V. Kulkarni, “It is the excess of current assets over current liabilities and
provisions. It is net current assets or net working capital”.

Theory of Working Capital:

From the financial management point of view, the nature of fixed assets and
current assets differ from each other in following respects.
 The fixed assets are required to be retained in the business over a period of time and they
yield the returns over their life, whereas the current assets loose their identity over a short
period of time; say one year.
 In case of current assets, it is always necessary to strike a proper balance between the
liquidity and profitability principles which is not the case of the fixed assets. Eg. If the size
of the current assets is large, it is always beneficial from the liquidity point of view as it
ensures smooth and fluent business operations. Sufficient raw material is always to cater to
the production needs, sufficient finished goods are available to cater to any kind of demand
of customers, liberal credit period can be offered to the customers to improve the sales,
sufficient cash is available to pay off the creditors and so on. However, investments in
current assets more than ideally required, it affects the profitability as it may not be able to
yield sufficient rate of return on investment. On the other hand, if the size of current assets
is to small, it always involves the risk of frequent stock out, inability of the company to pay
its dues in time.
Working capital management is concerned with the problem arising out of the
attempts to manage current assets, current liabilities and inter-relationship between them. The
intention is not to maximize the investment of working capital nor is it to minimize the same.
The intention is to have optimum investment in working capital.

8
Effect of Inflation on Working Capital Requirement:

The phase of inflation can be identified with the situation of increasing price levels, increasing
demand and increasing supply. As such, the working capital requirements multiply during the
phase of inflation due to increasing cost of production and increasing level of sales turnover.

1. Possibility of using cheaper substitute raw material, without affecting the quality, should
be explored. For this purpose, research activities may be conducted.
2. Attempts should be made to reduce the production cost to the maximum possible extent.
For this purpose the techniques like time and motion study, intensive schemes, cost
reduction programmes etc. may be implemented.
3. Attempts should be made to reduce the operating cycle to the maximum possible extent.
Aiming at greater turnover at short intervals will go a long way to reduce the stress on
working capital requirements.
4. Attempt should be made to reduce the amount looked up in receivables. Quicker
realization of debts will go a long way to reduce the stress on working capital
requirements.
5. Attempts should be made to make the payments of the creditors in time. This helps the
business to build up good reputation and increases its bargaining power with respect to
period of credit for payment and other conditions.
6. Attempts should be made to match the projected cash inflows and projected cash
outflows. If they do not match, some of the payments should be postponed our
purchases of certain avoidable items should be deferred.

IMPORTANCE OF WORKING CAPITAL:

1. Adequacy of working capital creates a feeling of security and confidence:- The

proprietor of a concern or the officials of the company who can go home at night and can sleep
in peace and comfort without worrying about how wages and salaries are going to be met the
next day enjoy the position in business that can come only as a result of efficient management
that has provided adequate working capital.

9
2. Adequacy of working capital is must for maintaining solvency and to

continue production:- It is essential that sufficient amount of funds be available to

purchase raw materials, payment of wage and salary bills, stock, finished goods and meet other
administrative expenses. A manufacturing concern is bound to collapse in the absence of ready
cash available to pay the bills for materials, direct labour, advertising and distribution expenses
and other costs of doing business.

3. Creation of sound good-will:- It is a common experience of all prudent businessmen that

sound goodwill can be maintained only by promptness in payment. The prompt payment of bills
to suppliers of materials will not only ensure a continued but will establish credit for seasonal
operation

4. Easy availability of cash discount:- Advantage may be taken of cash discounts in the
purchase of raw materials or merchandise, resulting in a saving in interest charges on the
amount of working capital employed.

5. Steady work for the employees and efficiency in production:- A continuous

supply of raw materials and production means steady work for employees which raise their
morale, increases their efficiency, lower costs and creates goodwill in the community.

6. Easy loans from the bank:- Banks are also favorably inclined in granting seasonal loans
if the business is adequately financed in the first place and has good credit standing and trade
reputation. In order to borrow from banks, a business must keep itself in fairly liquid condition.
Thus the adequacy of working capital contributes a lot in raising the credit standing of
company.

7. Facility of off- season purchasing:- Only concerns with adequate working capital can
take advantages of purchasing the raw materials, coal and other factor supplies in a sharply
advancing market, or in off/seasons periods, resulting in substantial savings where storage costs
are not prohibitive.

10
8. Quick and steady return to the investor:- Everybody excepts quick return in his
investments in the form of a withdrawal (in the case of an owner), or dividend (in the case of a
share holder). In the case of insufficiency of working capital the profit to be retained in the
business, but the case of their adequacy, ample dividend can be paid to the shareholder.

WORKING CAPITAL CYCLE:

In any business there is bound to be a time lapse from the time funds are invested in
business for buying raw materials and the cash is finally recycled back in the business through
sales. This time span can be split into the following parts comprising the chronological sequence of
events:

 Time required for conversion of cash into raw materials.

 Time required for conversion of raw materials into work-in-progress.

 Time spend in conversion of finished goods into debtors and bills receivables
through sales.

 Time spend in conversion of finished goods into debtors into bills receivables
through sales.

 Finally, the time taken to convert debtors and bills receivables into cash.

11
 Credit
Debtors Debtors Finished Goods

Work -in-
progress

Crs. For purchase Raw Material

Cash Wages and

Overheads
Crs. For expenses

12
Working capital cycle can also be represented in the following manner:

Receivable Work
s In
Progress

Finished Raw
Goods Material

Cash/Bank

The cycle shows that the current assets are acquired either for resale or for conversion into finished
goods which are converted into cash. Thus, once the cycle is complete, the current assets become
cash. In other words, the current assets are self-liquidating in nature.

13
 CLASSIFICATION OF WORKING CAPITAL:

Working Capital

Fixed Working Capital Variable Working Capital

Regular Reserve Margin Seasonal Special

1. Fixed Working Capital:- As is apparent from the objective permanent is

that part of the capital which is permanently locked up in the circulation of the
current asset and in keeping it in moving. For example, every manufacturing
concern has to maintain stock of materials, work-in-progress, finished
products, loose tools and equipments it also requires money for the payment
of wages and salaries thought the years. Net working capital minus fixed working
capital will be the variable working capital; it is also called as fluctuating working
capital.

i) Regular Working Capital is minimum amount of liquid capital needed to

keep up the circulation of the capital from cash to inventories to receivable and
back again to cash. This would include a sufficient cash balance in the bank to
discount bills, maintain an adequate supply of raw material for processing,
carry a sufficient stock of finished goods to give prompt delivery and effect the
lowest manufacturing costs, and enough cash to carry necessary accounts
receivable for the type of business engaged in.

14
 ii) Reserve margin is the excess over the need for regular working capital that
should be provided for contingencies that arise at unstated periods.

iii) The contingencies include (a) rising price, which may make advisable to
increase inventories (b) business depression, which may arise the amount

iv) of cash required to ride out usually stagnant periods (c) strikes, fires and
unexpectedly serve competition, which use up extra supplies of cash (d)
special operation such as experiments with products or with methods of
distribution war contracts, to supply new business and the like, which can be
undertaken only if sufficient funds are available which in many cases mean the
survival of business.

2. Variable Working Capital: The variable working capital changes with the
volume of business. In many lines of business (e.g., Gur or Khandsari making an fur
industry) operations are highly seasonal and as a result, working capital requirement
vary greatly during the year. The capital required to meet the distinction between
permanent and variable working capital should be raised in same way as fixed
capital is procured, through a permanent investment of the owner or through long-
term borrowing. As business expands, this regular capital will necessarily expand.

15
 Variable Working
Capital

A
M
O
U
N
T
Fixed Working
Capital

Period

The fixed working capital may not be fixed at all times. It may also increase depending on the size
and growth of a business.

16
LITERATURE REVIEW
Review of literature is an important part of a research study. It like a magnify glass which can see
problem in broad and clear vision. Literature review provides research gape to researcher. Review
of literature also assist to researcher to choose what type of research methodology can be use to
solve the problem and in the past what was the implication of past studies on present studies

1. (Vijay, 2016) Director, Invenio Business solutions in his article “Times of India” titled “The IT
professional trade off “ Analyzing the career traction tradeoffs from a different perspective provide
professionals an opportunity to showcase their business acumen. He observed that experienced IT
professionals who now perceive IT consulting as the preferred career path. He also observed that
Potential candidates from established firms apply with an anticipation of landing a larger role
within the organization and having a bigger scope of work. According to him India will be a hot
bed for talent in the years to come.
2. (Sunita Shukla, 2016) In their research article they pointed out that to meet the unique need of
the organization, retention policies to be kept in mind. The researcher has concluded that employee
friendly policies and systems and other innovative methods of employee welfare programs are must
to retain the employees and minimize attrition. In her research she pointed out that transparent and
fare appraisal system is the first rank and need to looked into
3. (Yongqiang 2015) in their survey the influence of collectivist human resource management
practices on team-level identification collecting empirical data from firms in different regions of
China, we found that the collectivism-oriented HRM approach has a positive effect on employees'
team-level relational identification
4. (Srinivas P S, 2015) in their research paper published in Journal of health research and reviews
in 2015 “ IT professionals are subjected to high level of stress which affects their mental health by
doing yoga job anxiety and perceived stress modifiable in Indian IT professionals has reduced . The
IT companies must ensure to reduce stress levels among their employees.
5. (Babu G R, 2013) His study on software professionals reported that 74.3% reported that workers
with high stressors had 6 times odds of having paid sex in last 3 months. His study revealed about
the sexual behavior of the software professionals.
6. (Mathew, 2013) The researcher discussed about the employee challenges in Information
Technology , workforce productivity is influenced by changing environment , it is inevitable to
expect challenges out of such working conditions, later on such challenges becomes very important
for better work environment, she concluded that employees are facing lot of challenges . 7.
(Dilshad, 2013) Their research was found that there exist a linkages between

17
RESEARCH METHODOLOGY

The research is conducted totally based on the secondary data, websites, annual reports,
journals, announcements by the companies are taken into consideration as the research
design of the study

TYPE OF RESEARCH

Types of research methods can be broadly divided into two quantitative and qualitative
categories.
 Quantitative research “describes, infers, and resolves problems using numbers.
Emphasis is placed on the collection of numerical data, the summary of those data
and the drawing of inferences from the data .
 Qualitative research, on the other hand, is based on words, feelings, emotions,
sounds and other non-numerical and unquantifiable elements. It has been noted that
“information is considered qualitative in nature if it cannot be analyzed by means of
mathematical techniques. This characteristic may also mean that an incident does
not take place often enough to allow reliable data to be collected”

18
OBJECTIVES

 To study the accounting system followed by HCL

 To study recording transactions in journal and ledger

 To study regarding all the documents required for various transactions and the need of it

 To understand the flow of funds through working capital in such a way that the firm would

always be able to meet its financial obligations when due.

 To understand the adequate working capital maintained for the operations of the business.

19
HYPOTHESIS

H0 There is recording transaction in journal and ledger is fisible.

H1 There is recording transaction in journal and ledger is not fisible.

20
DATA COLLECTION
The data serve as the bases or raw material for analysis. Data collection is a term
used to describe a process of preparing and collecting data - for example as part of a process
improvement or similar project. The purpose of data collection is to obtain information to keep on
record, to make decisions about important issues, to pass information on to others. Primarily, data is
collected to provide information regarding a specific topic.
There are mainly 2 types of data:-

1. PRIMARY DATA – This includes the data collected directly by the researcher. They
are those which are collected afresh and for the first time and thus happen to be original in
character.

2. SECONDARY DATA –This

–This includes data that are readily available which is used by
the researcher for studies. This are those which are collected by some one else and which
have already been passed through the statistical process.

SECONDARY DATA:-

1. HCL Balance sheet (2017-2019 )

2. Profit and loss Statement.

21
METHODOLOGY OF ANALYSIS
1) Ratio Analysis of Working Capital Management

The Ratio of Gross Working Capital to Asset Determined the relationship between gross
working capital to total asset. Gross working capital Represent total amount of investment in
current asset. Total asset include current asset and Fixed Asset.

Gross Working Capital

Gross W. C. to total Assets = x 100
Total Assets

2) Current Ratio

Current Ratio is a liquidity ratio which measures a company's ability to pay its current
liabilities with cash generated from its current assets. It equals current assets divided by
current liabilities.

Current Assets
Current Ratio =
Current Liability

3) Gross Working Capital to fixed Asset Ratio :

The Ratio described the relationship between gross working capital and fixed assets.

Gross Working Capital

Gross W. C. and Fixed Asset Ratio = x 100
Fixed Asset

4) Sales to Networking Capital Ratio :

22
 The Ratio show the number of items, working capital is turnover in stated period. This ratio
can also be called as working capital turnover ratio. The higher the ratio, the lower is the amount of
networking capital.
Sales
Sales to Net Working Capital = x 100
Net Working Capital

5) Inventory to Net Working Capital Ratio :

The Ratio is calculate to as certain leave of inventories. Increased in the value of sale
requires proportionate increase in inventory should not exceed the amount of net working capital an
equal ratio disables.

Inventory
Inventory to Net Working Capital Ratio = x 100
Net Working Capital

6) Inventory to Current Asset Ratio :

The Ratio explain the relationship of inventory to current asset.

Inventory
Inventory to Current Asset Ratio = x 100
Current Asset

7) Net Working Capital to Total Asset Ratio :

Net Working Capital

Net Working Capital Ratio =
Total Asset

23
Key Parameters of Financial structure

BALANCE SHEET

The accounting balance sheet is one of the five major financial statements used by accountants and
business owners. (The other major financial statements are the income statement, statement of
comprehensive income, statement of cash flows, and statement of stockholders' equity) The balance
sheet is also referred to as the statement of financial position. The balance sheet presents a
company's financial position at the end of a specified date. Some describe the balance sheet as a
"snapshot" of the company's financial position at a point (a moment or an instant) in time. For
example, the amounts reported on a balance sheet dated December 31, 2019 reflect that instant
when all the transactions through December 31 have been recorded. Because the balance sheet
informs the reader of a company's financial position as of one moment in time, it allows someone—
like a creditor—to see what a company owns as well as what it owes to other parties as of the date
indicated in the heading. This is valuable information to the banker who wants to determine
whether or not a company qualifies for additional credit or loans. Others who would be interested in
the balance sheet include.
We will begin our explanation of the accounting balance sheet with its major components,
elements, or major categories:

Assets
Liabilities
Owner's (Stockholders') Equity

Profit & Loss Account

The account that shows annual net profit or net loss of a business is called Profit and Loss Account.
It is prepared to determine the net profit or net loss of a trader. P&L account is a component of final
accounts. The following items usually appear on the debit and credit side of a Profit and Loss
Account.
On the debit side:
1. Gross Loss (Transferred from Trading Account)
2. All Indirect Expenses
On the credit side:
1. Gross Profit (Transferred from Trading Account)
2. All Indirect Revenues

Net Profit or Net Loss

Net Profit or Net Loss is the difference between the total revenue of a certain period and the
total expenses of the same period. Net profit is made when the total revenues exceed the total
expenses. If the total of revenues is less than the total expenses, the net loss is incurred. The
balance of Profit and Loss Account which represents either net profit or net loss is transferred to
the capital account.

24
LIMITATION

 We cannot do comparisons with other companies unless and until we

have the data of other companies on the same subject.
 Only the printed data about the company will be available and not the
back–end details.
 Future plans of the company will not be disclosed to the trainees.
 Lastly, due to shortage of time it is not possible to cover all the factors
and details regarding the subject of study.
 The latest financial data could not be reported as the company’s websites
have not been updated

25
DATA ANALYSIS
Mar '19 Mar '18 Mar '17

12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 2.35 2.20 2.20
Equity Share Capital 2.35 2.20 2.20
Share Application Money 0.99 0.00 0.00
Preference Share Capital 0.00 0.00 0.00
Reserves 47.84 44.12 34.39
Revaluation Reserves 0.00 0.00 0.00
Net worth 51.18 46.32 36.59
Secured Loans 25.75 23.79 8.80
Unsecured Loans 27.21 22.23 21.93
Total Debt 52.96 46.02 30.73
Total Liabilities 104.14 92.34 67.32
Mar '19 Mar '18 Mar '17

12 mths 12 mths 12 mths

Application Of Funds
Gross Block 69.68 61.40 55.91
Less: Accum. Depreciation 35.41 29.68 25.36
Net Block 34.27 31.72 30.55
Capital Work in Progress 13.04 10.36 4.60
Investments 0.28 0.28 1.65
Inventories 61.42 45.80 27.39
Sundry Debtors 23.63 15.56 16.02
Cash and Bank Balance 1.02 2.88 3.30
Total Current Assets 86.07 64.24 46.71
Loans and Advances 11.46 10.83 5.56
Fixed Deposits 17.54 20.49 12.80
Total CA, Loans & Advances 115.07 95.56 65.07
Deffered Credit 0.00 0.00 0.00
Current Liabilities 55.62 43.61 31.42
Provisions 2.89 1.98 3.13
Total CL & Provisions 58.51 45.59 34.55
Net Current Assets 56.56 49.97 30.52

26
Miscellaneous Expenses 0.00 0.00 0.00
Total Assets 104.15 92.33 67.32

Contingent Liabilities 4.84 2.67 1.62

Book Value (Rs) 213.58 210.54 166.31

Balance Sheet of HCL ------------------- in Rs. Cr. -------------------

Working Capital Statement of HCL

(Rs. In Crore)

Particular 2019 (Mar) 2018 (Mar) 2017 (Mar)

A. CURRENT ASSETS

Inventories 61.42 45.80 27.39

Sundry Debtors 23.63 15.56 16.02

Cash and Bank Balance 1.02 2.88 3.30

Loans and Advances 11.46 10.83 5.56

Total Current Assets 97.53 75.07 52.27

B. CURRENT LIABILITIES

Current Liability 55.62 43.61 31.42

Provisions 2.89 1.98 3.13

Total Current Liability 58.51 44.59 34.55

C. Net Working Capital

(A – B) 39.02 30.48 17.72

27
1) Ratio Analysis

Gross Working Capital

Gross W. C. to total Assets = x 100
Total Assets

Year 2019 :
58.39
x 100
104.15

= 56.06%

Year 2018 :

34.83
x 100
92.33

= 37.72%

Year 2017 :

26.73
x 100
67.32

= 39.71%

Gross Working Capital To Total Asset

28
 60

50

40
2019
30 2018
20 2017

10
0
2019 2018 2017

An Examination of the table reveals the following :-

a) Gross Working Capital to total asset ratio varied between 39.71 to 56.06 during three years
period of review.

2) CURRENT RATIO :.

Current Assets
Current Ratio =
Current Liability

Year 2019:
92.53
=
58.51

= 1.67%

Year 2018 :

75.07
=
44.59

= 1.68%

Year 2017 :
29
 52.27

34.55

= 1.51%

Current Ratio :

1.7

1.65

1.6
2019
1.55
2018
1.5 2017
1.45

1.4
2019 2018 2017

INTERPRETATION :-

Ideal Current Ratio is 2:1 Thus from the above we can say that company was almost in its ideal
position in the year 2017– 2018, but current ratio in 2018 – 2019 has decrease.

3) Gross Working Capital to fixed Asset Ratio :

The Ratio described the relationship between gross working capital and fixed assets.

Gross Working Capital

Gross W. C. and Fixed Asset Ratio = x 100
Fixed Asset

30
Year 2019:
58.39
x 100
14.78

= 395.06%

Year 2018 :

34.83
x 100
11.17

= 311.82%

Year 2017:

26.73
x 100
08.78

= 304.44%

Gross Working Capital to fixed assets ratio :-

400
350
300
250
2019
200
2018
150
2017
100
50
0
2019 2018 2017

a) Gross Working capital to Fixed Asset Ratio is decrease row 304.44 in 2017 to 395.06 in
2018

b) The fixed asset were continually decrees from 0.78 crore in 2012 Rs. 395.06 crore in 2019.

31
4) Sales to Networking Capital Ratio :

Sales
Sales to Net Working Capital = x 100
Net Working Capital

Year 2019 :
22.08
x 100
39.02

= 56.59%

Year 2018:

22.45
x 100
30.48

= 73.65%

Year 2017 :

24.06
x 100
17.72

= 135.78%

140
120
100
80 2019
60 2018
40 2017
20
0
2019 2018 2017

32
5) Inventory to Net Working Capital Ratio :
Inventory
Inventory to Net Working Capital Ratio = x 100
Net Working Capital

Year 2019 :
61.42
x 100
39.02

= 157.41%

Year 2018

45.80
x 100
30.48

= 150.26%

Year 2017 :

27.39
x 100
17.72

= 154.57%

Inventory to Net Working Capital Ratio :

33
 158
156
154
2019
152
2018
150 2017
148
146
2019 2018 2017

The Ratio of inventories to Net Working Capital varied between 154.57 to 157.41 during the three
years review period the inventory to Net Working Capital ratio is highest of 157.41.

6) Inventory to Current Asset Ratio :

The Ratio explain the relationship of inventory to current asset.

Inventory
Inventory to Current Asset Ratio = x 100
Current Asset

Year 2019 :
61.42
x 100
97.53

= 62.98%

Year 2018 :

45.80
x 100
75.07

= 61.00%

Year 2017 :

34
 27.39
x 100
52.27

= 52.40%

70
60
50
40 2019
30 2018
20 2017

10
0
2019 2018 2017

Interpretation :

The Ratio is highest at 62.98 in 2019 an lower at 52.14 in 2017. The inventory to current
ratio is continuously increasing year by year.

7) Net Working Capital to Total Asset Ratio :

Net Working Capital

Net Working Capital Ratio =
Total Asset

Year 2019 :
39.02

104.15

= 0.375

Year 2017 :

30.48

35
 92.33

= 0.330

Year 2018:

17.72

67.32

= 0.263

Net Working Capital to Total Asset Ratio :

Interpretation :
2009

Higher the ratio, higher will be the effective utilization of working capital. Net Working
capital ratio in 2017 less then that of the year 2018 and 2019. Thus we can says that working
capital in the year 2018 - 2017 has not been effectively utilized.

36
CONCLUSION

The working capital position of the company is sound and the various sources
through which it is funded are optimal.
The company has used its dividend policy, purchasing, financing and
investment decisions to good effect can be seen from the inferences made
earlier in the project.
The debts doubtful have been doubled over the years but their percentage on
the debts has almost become half. This implies a sales and collection policy
that get along with the receivables management of the firm.
The returns have been affected by a marked growth in working capital and
though a 29.75% in 2006 return on investment is good, but it got reduced as
compared to 39.01% return in 2005.
The various ratios calculated are an indicator as to the fact that the profitability
of the firm and sales are on a rise and also the deletion of the inefficiencies in
the working capital management.
The firm has not compromised on profitability despite the high liquidity is
commendable.

37
 HCL Infosystems has reached a position where the default costs are as low as
negligible and where they can readily factor their accounts receivables for
availing finance is noteworthy.

RECOMMENDATIONS AND FUTURE SCOPE

The management of working capital plays a vital role in running of a successful business. So,
things should go with a proper understanding for managing cash, receivables and inventory.
HCL Infosystems is managing its working capital in a good manner, but still there is some scope
for improvement in its management. This can help the company in raising its profit level by
making less investment in accounts receivables and stocks etc. This will ultimately improve the
efficiency of its operations. Following are few recommendations given to the company in
achieving its desired objectives:

The business runs successfully with adequate amount of the working capital but the
company should see to it that the cash should not be tied up in excessive amount of
working capital.
Though the present collection system is near perfect, the company as due to the increasing
sales should adopt more effective measures so as to counter the threat of bad debts.
The over purchasing function should be avoided as it could lead to liquidity problems.
The investment of cash in marketable securities should be increased, as it is very
profitable for the company.
Holding of excessive and insufficient stock must be avoided as it creates a burden on the
cash resources of a business and results in lost sales, delays for customers, etc
respectively.

38
BIBLIOGRAPHY

Following sources have been sought for the preparation of this report:
 Corporate Intranet
 Financial Statements (Annual Reports)
 Internet www.hclinfosystems.in
 www.moneycontrol.com

39
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