CERTIFICATE
Certificate
This is to certify that Amanjyot kaur and research report
entitled WORKING CAPITAL MANAGEMENT IN HCL INFOSYSTEM LTD. is
approved and is acceptable in quality and form.
_______________Faculty Guide
date:________________
Place: :_______________DECLARATION
I hereby declare that the project report entitled:
A Research Report on WORKING CAPITAL MANAGEMENT IN HCL
INFOSYSTEM LTD. submitted in partial fulfillment of the requirement
for the degree of BBA, is my original work and not submitted for
the award of any other degree, diploma, fellowship, or any other
similar title or prizes.
Place: Noida
Date: _________
ACKNOWLEDGEMENT
I wish to express my gratitude to all that concerned persons who
have extended their kind help, guidance and suggestions without
which it could not have been possible for me to complete this
project report.
I am deeply indebted to my guide Mr. Atul Sahu and Mr. Gaurav
for his valuable guidance and support at all time.
My sincere thanks to all those people who has provided me all
the necessary information throughout this research report has been
successfully completed at time.
TABLE OF CONTENTS Page No PART 1 CHAPTER 1
1.1Introduction of the problem.
5
1.2 Title of the project.
6
1.3 Executive Summary
7
1.4Background of the problem undertaken.
91.5Rationale of the study.
101.6Limitations and Scope of the study.
11
CHAPTER 2
2.1 HYPOTHESIS
13
2.2SWOT ANALYSIS
13
CHAPTER 3
3.1RESEARCH METHODOLOGY
16
3.2Research Design
16
3.3Data Collection Instrument
18
CHAPTER 4
4.1Review of Literature Working Capital Management.244.2Finding
Analysis
25
4.3Working Capital Financing.
53
4.4Cash Management.
63
4.5Receivables Management.
79
4.6Inventory Management.
87
4.7 HCL Infosystems Ltd.
97
CHAPTER 5
5.1Conclusion
5.2Recommendation
CHAPTER 6
Bibliography.
CHAPTER 1PROFILE OFTHE COMPANYTITLE OF THE PROJECTThe title of
the project is Working Capital Management and the management of its
components at HCL InfosystemsLtd.
Born in 1976, HCL has a 3 decade rich history of inventions and
innovations. In 1978, HCL developed the first indigenous
micro-computer at the same time as Apple and 3 years before IBM's
PC. During this period, India was a black box to the world and the
world was a black box to India. This micro-computer virtually gave
birth to the Indian computer industry. The 80's saw HCL developing
know-how in many other technologies. HCL's in-depth knowledge of
Unix led to the development of a fine grained multi-processor Unix
in 1988, three years ahead of Sun and HP.
HCL's R&D was spun off as HCL Technologies in 1997 to mark
their advent into the software services arena. During the last
eight years, HCL has strengthened its processes and applied its
know-how, developed over 28 years into multiple practices -
semi-conductor, operating systems, automobile, avionics,
bio-medical engineering, wireless, telecom technologies, and many
more.
Today, HCL sells more PCs in India than any other brand, runs
Northern Ireland's largest BPO operation, and manages the network
for Asia's largest stock exchange network apart from designing zero
visibility landing systems to land the world's most popular
airplane.
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.
In the early 70s a group of young and enthusiastic and ambitious
technocrats embarked upon a venture that would make their vision of
IT revolution in India a reality. Shiv nadir and five of his
colleagues got together and 1975 set up a new company MICROCOMP to
start with; they started to capitalize on their marketing skills.
Micro comp marketed calculators and within a few month of starting
operation, the company was out selling its major competitors.
On 11th August, 1976 HINDUSTAN COMPUTERS LIMITED was
incorporated as joint venture between the entrepreneurs and UPSCE,
with an initial equity of Rs.1.83 Lacs.
Also I have gathered information from financial bulletin, annual
reports and company magazines.
With the valuable information and time imparted by executives
and employees to me and from the informations gathered by me from
secondary sources, I have been able to make a complete analysis of
the components of working capital.
In the analysis of components of working capital, a detailed
analysis of current assets current liabilities have been done.HCL
infosystems ltd. HCL technologies ltd.(corporate office)
(Registered Office)Address AddressHCL Infosystems Ltd. 806,
Siddharth,E-4,5 & 6, Sector 11, 96, Nehru Place,NOIDA 201 301,
UP New Delhi,110019India India
Tel & Fax Tel & faxTel: +91 120 2526518/19, 2520977 Tel:
011-26444812Fax: 2550923
Fax: 011-26436336Prefix from Delhi: 95120
Email-id:[email protected] Web Id:
http://www.hcltech.comThe HCL of Today
This year (2007-08), IT industry is expected to grow by 20% over
2007, as per IDC, which is amongst the highest rates of growth in
the world. With employment to 2.13 crore households already in
place, the National e-Governance Plan (NEGP) is surging ahead with
investments of Rs. 23,000 crores planned for initial five years,
for identified core projects.
HCL Infosystems Ltd, with annual revenue of US$ 2.7 Bn
(Rs.11,855 crores) is Indias premier information enabling and ICT
System Integration company offering a wide spectrum of ICT products
that includes Computing, Storage, Networking, Security, Telecom,
Imaging and Retail. HCL is a one-stop-shop for all the ICT
requirements of an organization.
Indias leading System Integration and Infrastructure Management
Services Organization, HCL has specialized expertise across
verticals including Telecom, BFSI, E-Governance & Power.
HCL has Indias largest distribution and retail network, taking
to market a range of Digital Lifestyle products in partnership with
leading global ICT brands, including Nokia, Apple, Casio, Kodak,
Toshiba, Bull, Ericsson, Cisco, Microsoft, Konica Minolta and many
more.
HCL today has Indias largest vertically integrated computer
manufacturing facility with over three decades of electronic
manufacturing experience HCL desktops is the largest selling brand
into the enterprise space.
With Indias largest ICT services network that reaches to every
corner of India, HCLs award winning Support Services makes it the
preferred choice of enterprise and consumers alike.HCL Enterprise
is a leading global technology and IT enterprise with annual
revenues of US $4.1 Bn (Rs. 17,889 crores). The HCL Enterprise
comprises two companies listed in India - HCL Technologies &
HCL Infosystems. The 3-decade-old enterprise, founded in 1976, is
Indias original IT garage start-up. Its range of offerings span
Product Engineering, Technology and Application Services, BPO,
Infrastructure Services, IT Hardware, Systems Integration, and
distribution of ICT products. The HCL team comprises over 47,000
professionals of diverse nationalities, who operate from 17
countries including 360 points of presence in India. HCL has global
partnerships with several leading Fortune 1000 firms, including
leading IT and Technology firms.
HCLS BUSINESS MODEL
1.2 NATURE OF THE ORGANISATIONHCL Infosystems manufacturing
facilities are ISO 9001 - 2000 & ISO14001 certified and adhere
to stringent quality standards and global processes. With the
largest installed PC base in the country, HCL Infosystems owns the
brand of indigenously developed and manufactured,most popular PC
'Ezeebee', 'Busybee' 'Beanstalk' and 'Infiniti' -and its robust
manufacturing facilities; HCL Infosystems aims to further leverage
its dominance in the PC market. It has been consistently rated as
Top player in PC industry by IDC. A strong dominance also prevails
in verticals like Finance, Government, and Education &
Research. The Channel Business ofHCL Infosystems has an extensive
network of over 2500+ resellers across 300 locations. It has
actively promoted the penetration of PCs and Laptops in the home
and the small office/home office (SOHO) segments.
As a leading information enabler, HCL infosystems has long
standing relationships with world technology leaders such as SUN
for enterprise computing solutions, Intel and AMD for PCs & PC
Servers; Microsoft, Novell and SCO for operating systems and
software solutions; Toshiba Corp. for business automation equipment
;SAP AG for specialist ERP solutions; and Oracle, Sybase and
Informix for RDBMS platform, EMC, Veritas for storage solutions.
The aim is to straddle the entire landscape ofinformation enabling
technology far more comprehensively, effectively and competitively.
Indeed, a vision to create enterprises of tomorrowScope of the
study
Vision Statement
It is the most preferred employer and principal taking leading
edge IT & Telecom products and services to the masses through
sustained excellence.
Mission Statement
We shall increase the awareness of HCL PALOMINO-IP PBX and
increase the sale of EAPBX product of HCL INFOSYSTEM.
Advantage of DGS&D
Finding the needs of customer through mailing
Quality Policy Statement
We will deliver defect-free products, services and solutions to
meet the requirements of our external and internal customers the
first time, every time.
mAN-POWER SIZE OF THE ORGANIZATION
HCL Infosystems continues to invest in strong people management
initiatives. The total employee strength was 6165. HCL was rank
no.3 in Best Companies to Work For in India conducted by
BT, TNS, Mercer.
Employee engagement continues to be a key focus area with many
initiatives organized during this quarter towards 'Celebrating
Diversity' & encouraging appreciation for individual strengths.
In response to modern day lifestyle changes, various programmes
have been adopted to improve the wellbeing & fitness of the
employees.
TURNOVER SIZE OF THE ORGANIZATION
Consolidated
Revenue at Rs. 3140 crores.
Services revenue at Rs. 172 crores, a growth of 41% Y-o-Y.
Profit before tax at Rs. 81 crores.
Profit after tax at Rs. 55 crores.
EPS at Rs. 3.2 per share.
Computer Systems
Revenue at Rs. 818 crores. PBIT at Rs. 37 crores.
Telecommunication & Office Automation
Revenue at Rs. 2325 crores. PBIT at Rs. 61 crores.
Second Interim dividend of Rs. 1.5/- per share (75%% on an
equity share of par value of Rs. 2/- each) declared for the
quarter.product range of the company Computing Products
Offering an entire range of Computing Products for Corporate,
Businesses and Small to Large Setups.
Office Automation Imaging & Printing Solutions
Introducing world class imaging products and solutions to meet
business requirements Display Products
Introducing great display products that you would love setting
your eyes on.
Office Automation Telecom & AVSI Solutions
Introducing world class telecom products and AVSI solutions to
meet business requirements.
Storage Solutions
Offering an entire range of storage solutions. Office Automation
Document Management Solutions & System Integration
Wide Range of turnkey solutions which cater to the requirement
of Document Management, Homeland Security & Vehicle
Tracking.
Software Licenses
Enjoy benefits of genuine software licenses through HCL
Iinfosystems.
Networking Products
Enjoy fast data transfer with our exclusive range of Networking
Products.
POS, KIOSK, Customer Service Counter Products
Offering an entire range of POS products and solutions.
Software Solutions
Bringing to you world class software solutions.
Racks & Enclosures
HCL offers a comprehensive range of 19 racks with standard
accessories for Computer networking applications and IP Enclosures
of all standards.
CURRENT LEADERSHIP
Technology Leadership:
HCL Infosystems is known to harbinger of technology in the
country. The company has done technology introductions in the
country either through research and development or through
partnerships with world technology leaders. Using own research and
development the company has:
Created own UNIX and RDBMS capability (in80s).
Developed firewalls for enterprise and personal system
security.
Launched own range of enterprise storage products.
Launched own range of enterprise networking products.
HCL Infosystems Ltd. has initiated several pioneer technologies.
Some of them are as under:
.Countrys first desktop PC- Busy Bee in 1985.
Countrys first home PC- Beanstalk in 1995
Countrys first Pentium IV based PC at sub 40k price point.
Countrys first media centre PC.
CHAPTER 2
SWOT ANALYSIS OF THE COMPANY
Hypothesis
In my view my study of the working capital management has
certain limitation. Because I just spent only four weeks in the HCL
INFOSYSTEM LTD. And whatever information during that short period I
could gather, I working upon that. Thus my study does not present
and overall view of the working capital management at HCL
INFOSYSTEM LTD..
SWOT ANALYSIS
STRENGTH & WEAKNESSES
STRENGTH
Strong technological base.
Highly skilled professionally qualified workforce.
Adoption of innovative fuel optimization.
Outage management.
WEAKNESSES The manpower at HCL INFOSYSTEM LTD. is in excess that
is a burden.
OPPORTUNITIES & THREATSOPPORTUNITIES
HCL INFOSYSTEM LTD. has become a generic name in the power
generation. So, company has great opportunities in such market if
services will be regular with reasonable prices.
Diversification in the areas of conventional and
non-conventional power generation.
THREATS
If competitor is providing electricity at more reasonable prices
than HCL INFOSYSTEM LTD. , then the customers of the company are
attracted towards them.
Expansion of thermal power plants and hydro power plants.
CHAPTER 2
OBJECTIVE &RESEARCH METHODOLOGY
RESEARCH METHODOLOGY
Methodology includes the overall research procedures, which are
followed in the research study. This includes Research design, the
sampling procedures, and the data collection method and analysis
procedures. To broad methodologies can be used to answer any
research question-experimental research and non-experimental
research. The major difference between the two methodologies lies
in the control of extraneous variables by the intervention of the
investigator in the experimental research.
RESEARCH DESIGN
A research design is defined, as the specification of methods
and procedures for acquiring the Information needed. It is a plant
or organizing framework for doing the study and collecting the
data. Designing a research plan requires decisions all the data
sources, research approaches, Research instruments, sampling plan
and contact methods.
Research design is mainly of following types: -
1. Exploratory research.
2. Descriptive studies
3. Casual studiesEXPLORATORY RESEARCH
The major purposes of exploratory studies are the identification
of problems, the more precise Formulation of problems and the
formulations of new alternative courses of action. The design of
exploratory studies is characterized by a great amount of
flexibility and ad-hoc veracity.
DESCRIPTIVE STUDIES
Descriptive research in contrast to exploratory research is
marked by the prior formulation of specific research Questions. The
investigator already knows a substantial amount about the research
problem. Perhaps as a Result of an exploratory study, before the
project is initiated. Descriptive research is also characterized by
a Preplanned and structured design.
Data Collection Methods
PRIMARY DATA
These data are collected first time as original data. The data
is recorded as observed or encountered. Essentially they are raw
materials. They may be combined, totaled but they have not
extensively been statistically processed. For example, data
obtained by the peoples.
SECONDARY DATA
The Secondary data collected has been collected from books,
journals, broachers, internet and other secondary sources.
Official Publications,
Publications Relating to Trade
Journal/ Newspapers etc Industry Associations: CHAPTER 4
FINDINGS AND DATA ANALYSIS
FINDING
There has been a significant decline in volume over the years
from 2001-02 to 2005-06 as can be seen in the graph below:
The volume decreased by 17005 in 20002-03 as compared to that in
2001-02. There has been increased in the volume by 4539 in 2003-04
as compared to that in 2002-03. There has been increased in the
volume by 6146 in 2004-05 as compared to that in 2003-04. The
volume decreased by 2271 in 2005-06 as compared to that in 2004-05.
The Net Contribution Per Tractor has increased considerably from
the year 2001-02 to 2003-04 which can be seen in the graph
below:
The Net Contribution Per Tractor has increased considerably from
2001-02 to 2002-03,
that is an increase of Rs.5077 per tractor. This can be mainly
attributed to changes in
Variable and material costs and in the price.
The Net Contribution Per Tractor has decreased considerably from
2002-03 to 2003-04,
that is an decrease of Rs.7216 per tractor. This can be mainly
attributed to changes in
Variable and material costs and in the prices.
This increasing Net Contribution Per Tractor signifies that
efficiencies have been achieved and had there been not such a
drastic drop in volume. It could have lead to profits.
The AMG could only achieve the following percentage of its
budgeted volumes :
YEAR% of BUD. VOLUME
2001-0276
2002-0350.03
2003-0473
2004-0576
These percentages can be explained by the graph.
These differences can be explained due to drop in actual sales
as per the following reasons:
Slump in the market
Stiff competitions
Emergence of foreign players
HCL Infosystems ltd.
INTRODUCTION OF THE COMPANY
HCL Infosystems Ltd. Is one of the pioneers in the It market,
with its origin in 1976. the company has been in the forefront in
introducing new technologies and solutions. It has drawn its
strength since 30 years of experience in handling the ever changing
IT scenario, strong customer relationships, ability to provide the
cutting edge technology at best value for money and on the top of
it, an excellent service and support infrastructure. Today HCL is
the countrys premier information enabling company. It offers one
stop shop convenience to its diverse customers having a diverse set
of requirements.
Since, last 30 years HCL has been continuing the relationship
with the customer, thereby increasing customer confidence in
it.
The strengths of the company are:
Ability to understand customers business and offer right
technology. Long standing relationship with customers. Best value
for money offerings.
WORKING CAPITAL POSITION2006200520042003
CURRENT ASSETS81533540914504255985
NET FIXED ASSETS5329492549545552
TOTAL ASSETS99139870767128575205
CA / TA82.2462.1163.1874.44
NET CURRENT ASSETS34742143011875227065
The 143 percent increase in Net Current Assets is due to the
fact that there has been an increase in the Current Assets by
50.73% and increase in Current Liability has been only 17.50% over
that of the previous year. The firms level of liquidity being high
we need a check on whether it affects the return on assets. Now
there is a substantial increase in the current assets to total
assets. This could be less profitable on the assumption that
current assets generate lesser return as compared with return on
fixed assets.
RISK-RETURN ANALYSIS
200620052004
SALES199886154295166604
EBIT156341452311491
RETURN ON INVESTMENT (%)3975.5
In case instead of Net Current assets and net block if total
assets had been used in computation of ROI then
TOTAL ASSETS5234847286
RETURN ON INVESTMENT (%)60.3630.3
CHAPTER 5CONCLUSIONS, LIMITATIONS AND SUGGESTIONS
CONCLUSION
Sales are decreasing during the year 2006-07. Hence
profitability has declined over this time period
Due to increase in the time period for the realization of
debtors, cash and bank balance has decreased.
Stock turn over ratio is decreasing, it shows that capital is
blocked into the inventory.
Fixed asset turnover ratio has decreased this year, which shows
that assets have not been used efficiently as they had been used in
the previous year.
All the above ratios show a decreased or unfavorable situation
because of the work of entire replacement of coolant channel, due
to which the production process had been stopped.
RECOMMENDATION
Loans & Advances
Special efforts should be made to analyze loans & advances,
which are between 35% to 56% of current assets. This can be
classified between production / operation relation related and
non-production / operation related. No production related cases
might be financed from other sources like debenture etc. and
treated separately.
Inventory
Inventory should be reviewed constantly to identify show / dead
/ obsolete item and then disposed until 2000-01 level is again
achieved.
Optimum level should be revised periodically, keeping in view,
distance of suppliers, production lead time of supplier, transport
problem if any and reliability of suppliers. This will help to
avoid obsolesce and dead inventory.
Debtors
A study may be conducted if required by experts to pinpoint
reason behind HCL INFOSYSTEM LTD. high correction period of 95 days
in 2004-05 against 50 days of TCS It is due to quality of products,
quality of customer, the segment of customers marketing effort,
distribution pattern or other reasons.
Creditors
Though high payout days may be apparently beneficial for the
company. It has it very heavy long term cost like high interest
cost, bad credit ratings and shyness of good quality / standard
suppliers.
Cash & Bank
This is the most liquid element in current asset and target
shall be fixed most cautiously. Too low a figure of 4.4% of total
current assets of HCL INFOSYSTEM LTD. in 2003-04 as against 15.5%
of TCS may be apparently too good to look at, but this may be lead
to payment crisis at various sorts.
Ratios
The company should try to improve its current situation. The
ratios, which are taken in this research to evaluate the companys
position, are Current ratio, Quick ratio and Activity ratio. These
ratios show the actual position of the company. The Quick ratio is
declining since 2001-02 till now. There is a drastic declining in
the working capital turnover ratio. This ratio goes to ve position
in current year compared to previous. The Debts collection period
is 359 days for Exporters. This shows the poor collection policy.
The current ratio is 1.02 in 2005-06, which is not upto the ideal
ratio. This shows that the current assets are equal to the current
liabilities. Not satisfactory.
CHAPTER 6
BIBLIOGRAPHYMagazines & Newspapers
1. Business World
2. Business Today
3. The Economic Times
4. The Hindu Business Standard Lines
5. The Times of India
Referred Sites
www.financehcl.com www.hcleconomic.org www.google.com
www.hclinfosystems.com EMBED Excel.Sheet.8
EMBED Excel.Sheet.8
Balance Sheet for the Year Ended as on 31st march 2006
2006 2005
Profit and Loss Account for the Year Ended as on 31st march
2006
20062005
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