PROJECT REPORT

“WORKING CAPITAL”

BY

(PITAMBAR DEBBARMA)

(G-172100231)

THE B.B.A PROGRAM (2017-20)

H.N.B Garhwal University, Srinagar GarhwalUttarakhand

Doon College of Agriculture Science & Technology Camp

Road Selaqui, Dehradun(UK)

Submitted by: Submitted to:

Mr.Pitambar Debbarma Mr. Anil Pundir
BBA VIth Semester (Asst. Professor)

Doon College of Agri. Science & Tech. (Department of Business Management

1
 ACKNOWLEDGEMENT

This project report is a result of endless effort & immense degree of toil by many great minds.

I would like to thank all those people who graciously helped me by sharing their valuable time,

experience & knowledge Mr. Mukul Chinchalkar who have extended their sincere help

in accomplishing my project. I really want to thank the above mentioned persons for their

continuous support & guidance during the project, with out their help my project would

have been a distant dream.

I would like to dedicate this work to my revered institute Doon College of Agri. Science &
Technology where I am getting the shape of future business manager.

I express my sincere gratitude to honorable Mr. R.R Dwivedi Principal of D.C.A.S.T for their
support and guidance.

I also Thankful to Mr. Anil Pundir Asst.Professor (Department of Business Management)

D.C.A.S.T for their guidance on the ground of which I have acquired a new field of knowledge

Lastly, I express my gratitude to my Parents and Friends who financed this project and have been

a moral support to me during this project.

2
I am MR. PITAMBAR DEBBARMA hereby declare that the term paper entitled

“WORKING CAPITAL FINANCE FROM HDFC BANKS” submitted to Doon PG

Agriculture Science and Technology, Selaqui, Dehradun for partial fulfillment of the
requirement of the award of degree of “ BECHALORE OF BUSINESS
ADMISNISTRATION course is record of bonafide work carried out by me.

S.NO. Chapters Page.no.

3
1
5 to 14
Introduction
2
Introduction of topic 15 to 38

3
38
Objectives of study
4
40 to 62
Research methodology
5
46 to 62
Data analysis
6
63
Finding
7
Suggestion 64

8
Limitation of the study 65

9
Conclusion
10
Bibliography 66 to 67

11
69
Annexure

INTRODUCTION

4
The project undertaken is on “WORKING CAPITAL MANAGEMENT IN HDFC BANK”.

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

HDFC BANK.

A BRIEF HISTORY

5
 India Infoline was originally incorporated on October 18, 1995 as Probity
Research and Services Private Limited at Mumbai under the Companies Act, 1956 with
Registration No. 11 93797. India Infoline commenced operations as an independent
provider of information, analysis and research covering Indian businesses, financial
markets and economy, to institutional customers. India Infoline became a public limited
company on April 28, 2000 and the name of the Company was changed to Probity
Research and Services Limited. The name of the Company was changed to India
Infoline.com Limited on May 23, 2000 and later to India Infoline Limited on March 23,
2001.

In 1999, India Infoline.com identified the potential of the Internet to cater to a

mass retail segment and transformed our business model from providing information
services to institutional customers to retail customers. Hence India Infoline launched
Internet portal, www.HDFC BANK.com in May 1999 and started providing news and
market information, independent research, interviews with business leaders and other
specialized features.

In May 2000, the name of India Infoline was changed to India Infoline.com
Limited to reflect the transformation of our business. Over a period of time, India
Infoline.com has emerged as one of the leading business and financial information
services provider in India.

In the year 2000, India Infoline leveraged its position as a provider of financial
information and analysis by diversifying into transactional services, primarily for online
trading in shares and securities and online as well as offline distribution of personal
financial products, like mutual funds and RBI Bonds. These activities were carried on by

6
our wholly owned subsidiaries.

India Infoline broking services was launched under the brand name of
5paisa.com through our subsidiary, India Infoline Securities Private Limited and
www.5paisa.com, the e-broking portal, was launched for online trading in July 2000. It
combined competitive brokerage rates and research, supported by Internet technology
besides investment advice from an experienced team of research analysts, India Infoline
also offer real time stock quotes, market news and price charts with multiple tools for
technical analysis.

Facilities

India Infoline’s main offices are located in approximately 4,000 square feet of
office space located in Mumbai, India. India Infoline Branches collectively occupy an
additional 10,000 square feet of office space located throughout India, As on March 31,
2005, India Infoline has 73 branches across 36 locations in India.

Terminals

Almost 52% of the terminals in the sample are based in the Western region of
India, followed by 25% in the North, 13% in the South and 10% in the East. Mumbai has
got the maximum representation from the West, Chennai from the South, New Delhi

7
from the North and Kolkata from the East.

Branches & Sub-Brokers

The maximum concentration of branches is in the North, with as many as 40% of

all branches located there, followed by the Western region, with 31% branches. Around
24% branches are located in the South and East constitutes for 5% of the total branches
of the total sample.

In case of sub-brokers, almost 55% of them are based in the South. West and
North follow, with 30% and 11% sub-brokers respectively, whereas East has around 4%
of total sub-brokers.

Financial Markets

The financial markets have been classified as cash market, derivatives market,
debt market and commodities market. Cash market, also known as spot market, is the
most sought after amongst investors. Majority of the sample broking firms are dealing in

8
the cash market, followed by derivative and commodities. 27% firms are dealing only in
the cash market, whereas 35% are into cash and derivatives. Almost 20% firms trade in
cash, derivatives and commodities market. Firms that are into cash, derivatives and debt
are 7%. On the other hand, firms into cash and commodities are 3%, cash & debt market
and commodities alone are 2%. 4% firms trade in all the markets.

In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at
both exchanges. In the equity derivative market, 48% of the sampled broking houses are
members of NSE and 7% trade at BSE, while 45% of the sample operate in both stock
exchanges. Around 43% of the broking houses operating in the debt market, trade at
both exchanges with 31% and 26% firms uniquely at NSE and BSE respectively.

9
 Products

The survey also revealed that in the past couple of years, apart from trading, the
firms have started offering various investment related value added services. The
sustained growth of the economy in the past couple of years has resulted in broking
firms offering many diversified services related to IPOs, mutual funds, company research
etc. However, the core trading activity is still the predominant form of business, forming
90% of the firms in the sample. 67% firms are engaged in offering IPO related services.
The broking industry seems to have capitalized on the growth of the mutual fund
industry, which was pegged at 40% in 2006. More than 50% of the sample broking
houses deal in mutual fund investment services. The average growth in assets under
management in the last two years is almost 48%. Company research is another lucrative
area where the broking firms offer their services; more than 33% of the firms are
engaged in providing company research services. Additionally, a host of other value
added services such as fundamental and technical analysis, investment banking,
arbitrage etc are offered by the firms at different levels.

10
Of the total sample of broking houses providing trading services, 52% are based in the
West, followed by 25% from North, 13% from South and 10% from the East. Around 50%
of the firms offering IPO related services are based in the West as compared to 27% in
North, 13% in South and 10% in East. In providing mutual funds services, the Western
region was dominant amounting to 49% followed by 27% from North; The South and the
East are almost at par with 13% and 11% respectively.

RBI Guide Lines

(Updated as per Master Circular dated 01.07.2012)

* this is only a brief extract and for details kindly refer to above Master Circular and Amendments, if any, thereto
in RBI website – www.rbi.org.in

Authorized Dealer Category-II Money Changers can undertake

11
 Purchase – from Residents / Non- Residents
 Sales to Residents for Private Travel and Business Travel.
 AD-Category II can undertake specified Non- Trade Current A/C

Transactions in addition to the above.

For limits and conditions – kindly refer to the table under "Forex Limits"

Bringing in and taking out of Foreign Exchange

 Foreign Exchange can be brought into India without limit;

 Declaration in form CDF necessary if the Amount > USD 10,000 (FC notes + TCs) and / or FC notes exceed
USD 5000;
 Taking out Foreign Exchange other than that obtained from AD/AMC prohibited;
 Non- residents can take out Foreign Exchange up to the amount originally brought in;

Purchases of Foreign Currency from Public /Foreign Nationals:

 Purchase from Residents / Non – Residents/foreign nationals FC Notes/ Coins/ TC's subject to submission
of CDF (wherever applicable) to be taken;
 Facility to avail INR against International Credit Cards by foreign tourists
 Encashment Certificate to be issued in all cases of Encashments;
 No limit for encashment is prescribed, if declared on the Currency Declaration Form (CDF) on arrival to
the customs authorities.
 No declaration in CDF is required for Foreign Currency with aggregate value upto US 5000 or equivalent;
 No declaration in CDF is required for FC + TC with aggregate value upto US 10000 or equivalent;
 For purchase of foreign currency notes and/ or Travellers' Cheques from customers for any amount less
than Rs. 50,000/-, or its equivalent, copies of identification documents not required. However, details of the
identification document to be furnished by the customer/ to be kept on record by the AMC;
 For purchase of foreign currency notes and/ or Travellers' Cheques from customers for any amount equal
to or in excess of Rs.50,000/-, or its equivalent, documents, as mentioned at (F-Part-II) annexed to the A.P. (DIR
Series) Circular No.17 {A.P.(FL/RL Series) Circular No.4} dated November 27, 2009, should be verified and
copies retained.
 Permissible limit for cash payments against encashment:
 a) Foreign Nationals up to -- US $ 3000
 b) Residents up to -- US $ 1000

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 All other cases of encashments, payment to be made by way of Account Payee Cheque or demand draft
only.
 Payment to be made only by Cheque / DD, if purchases are from other FFMC/AD's;

Sale of foreign exchange Private Visits / Business Visits:

 Sale against application, identification documents and declaration regarding Foreign Exchange availed
during the financial year;
 Private visit- up to USD 10,000 per financial year.
 .Business visit-up to USD 25,000 per trip for Business / Conference / Training etc.
 TC issue subject to conditions of TC issuing company;
 Traveler to sign on the TC in the presence of Authorized official of AMC;
 Payment in excess of Rs.50, 000 to be received by Cheque / DD;
 Foreign Currency Notes up to USD 3000 and balance in TC's/Travel cards;
 Exemptions - Travelers visiting
 Libya & Iraq up to US $ 5000
 Islamic Republic of Iran, Russian Federation and commonwealth of Independence States – Entire
exchange to be released in FC notes;

6. Sales against Reconversion of Indian Currency

 Non-residents are allowed to reconvert unspent INR at the time of their departure subject to production
of a valid Encashment Certificate;
 Non-residents are allowed to reconvert INR up to Rs.10,000 without a valid Encashment Certificate, for
bonafide reasons, if departure is scheduled to take place within the following seven days.
 Facility for reconversion of Indian Rupees to the extent of Rs. 50,000/- to foreign tourists (not NRIs)
against ATM Receipts, are allowed subject to submission of the following documents:

o Valid Passport and VISA

o Ticket confirmed for departure within 7 days.

o Original ATM slip (to be verified with the original debit/ credit card).

13
 OBJECTIVE OF STUDY

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

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

14
 the concept “Working Capital Management”.

 To understand the planning and management of working capital at HDFC BANK.

 To measure the financial soundness of the company by analyzing various ratios.
 To suggest ways for better management and control of working capital at the
concern.

RESEARCH METHODOLOGY

 This project requires a detailed understanding of the concept – “Working Capital

Management”. Therefore, firstly we need to have a clear idea of what is working
capital, how it is managed in HDFC BANK, what are the different ways in
which the financing of working capital is done in the company.

15
  The management of working capital involves managing inventories, accounts
receivable and payable and cash. Therefore one also needs to have a sound
knowledge about cash management, inventory management and receivables
management.

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

 And, in the end, suggestions and recommendations on ways for better

management and control of working capital are provided.

SCOPE OF THE STUDY

This project is vital to me in a significant way. It does have some importance for the
company too. These are as follows –

 This project will be a learning device for the finance student.

16
  Through this project I would study the various methods of the working capital
management.

 The project will be a learning of planning and financing working capital.

 The project would also be an effective tool for credit policies of the companies.

 This will show different methods of holding inventory and dealing with cash and
receivables.

 This will show the liquidity position of the company and also how do they
maintain a particular liquidity position.

DATA ANALYSIS AND INTERPRETATION

The following sources have been sought for the preparation report:

 Primary sources such as business magazines, current annual reports, book on

Financial Management by various authors and internet websites the imp amongst
them being : www.HDFC BANK schems.com, www.HDFC BANK.com,

17
 www.studyfinance.com .
 Secondary sources like previous years annual reports, CMA Data, reports on
working capital for research, analysis and comparison of the data gathered.
 While doing this project, the data relating to working capital, cash management,
receivables management, inventory management and short term financing was
required.
 This data was gathered through the company’s websites, its corporate intranet,
HDFC BANK’s annual reports and CMA Data of the last three years.
 A detailed study on the actual working processes of the company is also done
through direct interaction with the employees and by timely studying the
happenings at the company.
 Also, various text books on financial management like Khan & Jain, Prasanna
Chandra and I.M.Pandey were consulted to equip ourselves with the topic.

WORKING CAPITAL POSITION ANALYSIS IN HDFC BANK

 Net working Capital ( CURRENT ASSETS – CURRENT LIABILITIES)

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

18
CURRENT ASSETS

INVENTORIES 180.26 291.14 653.95

SUNDRY DEBTORS 114.33 390.84 219.79

CASH AND BANK 10.81 34.30 28.22

OTHER CURRENT ASSETS 6.67 28.08 21.99 -

LOANS & ADVANCES 21.44 78.74 83.92

-------------- -------------- ---------------

TOTAL CURRENT ASSESTS 333.51 823.09 1008.67

-------------- -------------- ---------------

LESS:-

CURRENT LIABILITIES AND PROVISIONS

Short term borrowing 94.54 336.70 315.76

Sundry creditors 159.49 256.33 305.99

Advanced received 25.30 18.16 59.88

Provisions 21.56 59.05 64.05

Instalments of term loan 14.66 21.13 72.00

Other current liabilities 16.82 29.36 70.34

-------------- -------------- --------------

TOTAL CURRENT LIABILITIES 332.37 720.71 888.02

---------------- ---------------- ---------------

NET WORKING CAPITAL 1.15 102.38 120.65

19
 NET WORKING CAPITAL
150
120.65
AMOUNT(IN LACKS)

102.38
100

50
1.14
0
2013 2014 2015
YEAR

Data Interpretation

If we analysis the three years working capital position of the company, we find out that company has
sufficient working capital to meets its short term liability, it is good indicator for the company but in 2013,
working capital is increased by 101.24 lacs which shows that a sufficient amount has been blocked in
working capital which could be used for some other more beneficial purpose.

INVENTORY ANALYSIS

Inventory means stock of three things :-

1. Raw materials

2. Semi finished goods.

3. Finished goods.

20
Position of inventory in HDFC BANK.

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

Stores, Spare Parts etc. 10.10 .87 25.57

Stock In trade-

Finished Goods 37.04 26.93 41.76

Raw Materials 78.74 184.53 340.08

Material under process 54.38 78.80 246.54

--------------- ---------------- ---------------

180.26 291.14 653.95

------------------- ---------------- ------------- Analysis

through chart

700
600
500
AMOUNT (IN 400
LACKS) 300
200
100
0
2013 2014 2015
INTERPRETATION
YEAR

By analyzing the 3 years data, We are looking increasing pattern in inventories. We can see that
inventories are increased from 180.26 lacs to 291 lacs in the year 2013 and in the year 2014 it is
increased from 291 lacs to 653 lacs. By seeing this pattern we can say that the company is managing
the inventory according to the sale. Company have a great demand for the pump in the year 2010 that is
biggest reason for increase in inventories. From other point of view we can say that the liquidity of firm is
blocked in inventories but to stock is very good due to uncertainty of availability of raw material in time.

21
SUNDRY DEBTORS ANALYSIS

Debtors or an account receivable is an important component of working capital and fall under current
assets. Debtors will arise only when credit sales are made.

Position of HDFC BANK.

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

Sundry Debtors 114.33 390.84 219.79

------------- ------------- --------

114.33 390.84 219.79

--------------- ---------------- ----------

Analysis through chart

400
350
300
AMOUNT ( IN 250
200
LACKS) 150
100
50
0
2013 2014 2015
YEAR

22
INTERPRETATION

In the table and figure we see that there is rise in the debtors in the year 2013 and decrease in the year
2014. A simple logic is that debtors increase only when sales increase and decrease if sales decrease.
In the year 2013, sales is increased by 72.30% and decreased by 19.24% in the year 2014.

We can say that it is a good sign as well as negative also. Company policy of debtors is very good but a
risk of bad debts is always present in high debtors. when sales is increasing with a great speed the profit
also increases. If company decreases the Debtors they can use the money in many investment plans.

CASH AND BANK BALANCE ANALYSIS

Cash is called the most liquid asset an vital current assets, it is an important component of working
capital. In a narrow sense, cash includes notes, bank draft, cheque etc while in a broader sense it
includes near cash assets such as marketable securities and time deposits with bank.

Position of Cash and Bank Balance in HDFC BANK

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

23
Cash Balance in hand 1.45 27.30 2.90

Bank Balance-

With Scheduled Banks 9.36 7.00 26.13

------------- ------------- ------------

10.81 34.30 29.02

------------- ------------- ------------

Analysis through chart

35
30
25
AMOUNT ( IN 20
LACKS ) 15
10
5
0
2013 2014 2015
YEAR

INTERPRETATION

If we analyze the above table and chart we find that it follows a uneven pattern. In the year 2012 it had
maintained a low amount of cash and bank balance. But in the year 2013, cash and the bank balances
has increased from 10.81 lacs to 34.30 lacs which is not a good sign for the company because it shows
that company is not using its cash for beneficial activities. Although, in the year 2014, cash has reduced
from 34.30 lacs to 29.02 lacs but this is very good sign for company because they are not holding the
cash in hand but using the cash for better projects, but still it is not conducive. From the other point of
view, company will not face the problem of liquidity as company is maintaining the cash balance.

24
LOANS AND ADVANCES ANALYSIS

Loans and Advances here refers to any to amount given to different parties, company, employees for a
specific period of time and in return they will be liable to make timely repayment of that amount in
addition to interest on that loan.

Position of Other Loans & Advances in HDFC BANK

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

Advances to suppliers 10.91 39.69 44.62

Advances 10.53 39.05 39.30

Deposits 6.67 28.08 21.99

--------------- --------------- ------------

28.13 106.82 105.91

-------------- ---------------- -----------

Analysis through chart:

120
100
80
AMOUNT ( IN
60
LACKS )
40
20
0
2013 2014 2015
YEAR

25
INTERPRETATION

If we analyze the table and the chart we can see that it follows an increasing trend which is a good sign
for the company. We can see that from the year 2012 to 2013 it increased more than triple. We can see
that the increase of 275% and 6.08% in 12-13 and 13-14 respectively from previous year.

The increasing pattern shows that company is giving advances for the expansion of plants and
machinery which is good sign for better production of pumps and other goods. Although company’s cash
is blocked but this is good that company is doing modernization of plants In time to compete with other
competitors in market.

CURRENT LIABILITIES ANALYSIS

Current liabilities are any liabilities that are incurred by the firm on a short term basis or current liabilities
that has to be paid by the firm with in one year.

Position of Other Current Liabilities in HDFC BANK

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

26
Current Liabilities –

Sundry Creditors 159.49 256.33 305.99

Bank Loan 94.54 336.70 315.76

Advance Received 25.30 18.16 59.88

Provisions for taxes 21.56 59.05 64.05

Other Liabilities 16.82 29.36 70.34

----------------- ----------------- -----------------

332.37 720.71 888.02

----------------- ----------------- -----------------

INTERPRETATION

If we analyze the above table then we can see that it follow an uneven trend. The important component
of current liabilities is sundry creditors and other liabilities. In 12-13 it decreased from 359.41 lacs to
256.33 lacs and in 13-14 it increased from 256.33 lacs to 305.99 lacs. This is liability for company so this
should be less. when company have minimum liabilities it creates a better goodwill in market. High
current liabilities indicate that company is using credit facilities by creditors.

SUNDRY CREDITORS ANALYSIS

Creditors or an account payable is an important component of working capital and fall under current
liability. Creditors will arise only when credit purchases are made.

Position of Sundry Creditors in HDFC BANK

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

27
Sundry Creditors 159.49 256.33 305.99

------------- ------------- ---------

159.49 256.33 305.99

--------------- ---------------- ----------

Analysis through chart

350
300
250
AMOUNT ( IN 200
LACKS) 150
100
50
0
2013 2014 2015 2014
YEAR

INTERPRETATION

In the table and figure we see that there is continuous rise in the creditors in the company
in the successive years. A simple logic is that creditors increase only when purchases increase and if
purchase increases on credit it is not good sign for growth. This is liability for company so this should be
less. when company have minimum liabilities it creates a better goodwill in market. High current liabilities
indicate that company is using credit facilities by creditors.

BANK LOANS AND ADVANCES ANALYSIS

28
Position of Bank Loans & Advances in Birla Corporation Limited

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

Bank Loan 94.54 336.70 315.76

Advances from the customers 25.30 18.16 59.88

--------------- --------------- ------------

122.84 354.86 375.64

-------------- ---------------- -----------

Analysis through chart

400
350
300
250
AMOUNT ( IN
200
LACKS )
150
100
50
0
2013 2014 2015
YEAR

29
INTERPRETATION

If we analyze the table and the chart we can see that it follows an increasing trend which is not a good
sign for the company. We can see that from the year 2012 to 2013 it increased more than double. The
increasing pattern shows that company is taking loan for the expansion of plants and machinerecy which
is not a good sign because company depends on the external source. On the other hand, company has
reduced the bank loan in 2014 and increase in advances received from the customer, this is good sign
for company.

PROVISIONS ANALYSIS

Position of Other Provisions in HDFC BANK

(Rs.in lacks)

YEAR 31.03.13 31.03.14 31.03.15

Provision for Taxes 21.56 59.05 64.05

--------------- --------------- -------------

21.56 59.05 64.05

--------------- ---------------- ------------

Analysis through chart:

30
 70
60
50

AMOUNT ( IN 40
LACKS ) 30

20
10
0
2013 2014 2015
YEAR

INTERPRETATION

From the above table we can see that provision shows an increasing trend and the huge amount is
being kept in these provisions. Though the profits of the company are increased income tax is also
increased which is good that company is creating goodwill in market by paying income tax in time.
Although company is paying more income tax but also they are earning more. Other provisions are also
for the benefit of employees and public. This is good sign for Company growth.

LIMITATIONS OF THE STUDY

 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.

31
  The latest financial data could not be reported as the company’s websites have not
been updated.

CONCLUDING ANAYSIS

 The working capital position of the company is sound and the various sources
through which it is funded are optimal.
 The company has used its 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 various ratios calculated are an indicator as to the fact that the profitability

32
 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.
 HDFC BANK. 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.

FINDING

 Making available just adequate quantum of working capital. Some of the existing
machinery is new with absolute equipments requiring modernization and rebuilding.

 The company should administrate their credit on the basis of certain well recognized
and established principle of credit administration.

 The company should maintain an optimum level of cash in the business in order to
maintain a proper liquidity in the business.

 The basic limitation of ratio analysis is that it may be difficult to find a basis
for making the comparison

33
 Normally, the ratios are calculated on the basis of historical financial

statements. An organization for the purpose of decision making may

need the hint regarding the future happiness rather than those in the past.

 The external analyst has to depend upon the past which may not

necessary to reflect financial position and performance in future.

 The technique of ratio analysis may prove inadequate in some situations if there is
differs in opinion regarding the interpretation of certain ratio.

 As the ratio calculates on the basis of financial statements, the basic

limitation which is applicable to the financial statement is equally

SUGGESTIONS AND RECOMMENDATIONS

The management of working capital plays a vital role in running of a successful

business. So, things should go with a proper understanding for managing cash,
receivables and inventory.

HDFC BANK. 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

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 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.

BIBLIOGRAPHY

Following sources have been sought for the preparation of this report:

Corporate Intranet

Financial Statements (Annual Reports)

CMA Data

Direct interaction with the employees of the company

Internet ----

o www.hdfc bank schems.co.in

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 o www.scribd.com

o www.indianpumpsindustry.com

Textbooks on financial management -

 I.M.Pandey
 Khan and Jain

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