This document provides a project study on working capital management at HMT Machine Tools in Kalamassery, Kochi. It includes an introduction to working capital management and its importance. The objectives of the study are to ensure continuous supply and demand fulfillment while keeping inventory levels optimal. The methodology involves collecting secondary data from annual reports and the internet. Analysis of working capital and ratios from 2010-2014 found fluctuating levels and decreasing ratios over time. Suggestions include more careful working capital handling and liability control. The conclusion notes that HMT is a pioneer in the market.

1. HMT
HINDUSTAN MACHINE TOOLS
KALAMASSERY,KOCHI
Presented By
JIBU.AB
Reg No: 0113514029
MBA
NOORUL ISLAM UNIVERSITY

2. A PROJECT STUDY ON
WORKING CAPITAL MANAGEMENT
IN
HMT MACHINE TOOLS
KALAMASSERY.KOCHI.

3. INTRODUCTION
Working Capital Management is important part in firm financial management decision
improper management makes on the WIP- Working In Process to the develop on the
various development of working financial process on the basis of managing on
developing the financial statements. Working capital management the develop mentation
of the manufacturing their goods on the basis of short term liabilities and non-short
liabilities.

4. NEED OF THE STUDY
 The study has been conducted for gaining particular knowledge about working capital
management & activities of HMT MACHINE TOOLS LIMITED,KALAMASSERY.

5. STATEMENT OF THE PROBLEM
 The current problem of HMT machine tools is generally explain giving less attention
has been paid in the area of short term finance. In particular to the working capital
but the effective working capital has a crucial play in the enhancing the profitability
and growth of the firm.

6. OBJECTIVES OF THE STUDY
 To ensure that the supply of raw material & finished goods will remain continuous so that
production process is not halted and demands of customers are duly met.
 To keep investment in inventory at optimum level.
 To study and analyze the various inventory policies through various methods and techniques
of inventory control.
 To classify the various components based on its value and movements.
 To decide which item to stock and which item to procure on demand.
 To keep inventory at sufficiently high level to perform production and sales activities
smoothly.
 To minimize investment in inventory at minimum level to maximize profitability.

7. SCOPE OF THE STUDY
Since the decision regarding working capital are of an operating nature not one time
decision the scope of the study is geared toward identifying important areas of control and to
establish model for better control of the various components of working capital.
The study would also attempt to identify the various source available for financing of
working capital.
The study gives a fair idea of improvement in efficiency of working capital management and
also to have control over the components of working capital and managing of efficiency.

8. COMPANY PROFILE
 Machine Tools Business group, to concentrate on metal cutting machines.
 Industrial machinery business group, to deal with printing machines, Die
casting and plastic injection moldings machines, food processing
machines, and metal forming machines.
 Agricultural business group, to concentrate on tractor.
 Engineering components business groups, to deal with watches & Lamps.
 Consumer products business groups, to deals with watches and lamps.

9. HMT (International).Ltd which undertakes overseas projects and
topics.
Praga Tools.Ltd which manufactures machine tools.
HMT Bearings.Ltd which manufactures precision bearings in
collaboration with M/s KOYO of Japan.

10. THE PRODUCT RANGE OF MACHINE TOOLS BUSINESS GROUP
Banglore
Heavy duty lathes
Single and multi-spindle automates
Radial drilling machines
Multi Spindle Drills
Cylindrical and Surface Grinders
Gear Cutting Machines
Laser Cutting Habbers
CNC Turn Mill Centres
Fine Boring Machines / SPM’s

11. Kalamassery
CNC Turning Centres
Turn Mills Centres
Flexible Turning Cells
Copying Lathes
Centre Lathes
Offset Printing Presses
Cutting Machines
Hydreabad
Special Purpose Machines
Horizontal Machining Centres
FMS
CNC Horizontal Boring Machines
Bed Type and Floor Boring Machines

12. Major Machines/Inspection Facilities Available In Different MTBS Units
1) CNC ram type Plano millers
2) Horizontal machining centres
3) Vertical Machining centres
4) Horizontal jig boring machines
5) Vertical jig boring machines
6) CNC turning machines
7) Turn mill centres
8) Slide way grinders
9) Cylindrical grinders
10)Internal grinders
11)Precision gear shapers
12)Precision gear hoppers

13. INDUSTRY PROFILE
The Machine tool industry constitutes backbone of the industrial sector and is vital
for the growth of the Indian machine tools industry. Even though the Indian machine
tools industry is a small segment of the engineering industry it plays a very
important role in the development and technology of up graduation of the
engineering industry. The quality of mother machine tools and their automation
level. The development of the machine tools industry is therefore of paramount
importance for a competitive and self-industrial structure

14. HMT ORGANIZATIONAL CHART
President Of India
Ministry Of Heavy Industries
Board Of Directors
Chairman & Managing Director
Departments

15. Finance Department
Joint Finance Manager(JGM)
Cost Accounts
Officers
Junior Officers
Office Staffs
FINANCE DEPARTMENT CHART

16. Following are the major functions of finance department in HMT Machine Tools, Kalamassery.
 To provide strategic financial support regarding operational and general business planning.
 To meet internal and external needs and financial reporting requirements of the company at large.
 Providing financial information guidance and advising to other departments.
 Vetting and appraisal of capital expenditure investment proposals to ensure their financial
viability.
 Budgeting and monitoring variance.
 Management of taxes.
 Ensuring timely payment of employee’s salary and other welfare expenses.
 Working capital management.

17. HMT Finance Department Has the Following Sections
1. Outward Bills Section (OBS)
2. Inward Bills Section (IBS)
3. Wages/Time Office
4. Provident Fund
5. Main Accounts & Cost Accounts
6. Cash
7. Concurrence

18. 1) Outward Bills Section (OBS)
OBS maintains the records of sundry debtor’s accounts of sales of machines special
accessories spares and job order. OBS monitors and follow up with debtor for
realization of outstanding dues. OBS also prepares the provision entries servicing
invoices. All the works related to sales tax, excise duty and service tax comes under the
ambit of OBS.
2)Inward Bills Section (IBS)
IBS is concerned with purchase accounting and authorizing payments to creditors
contractors and also variance expenses. Like water, Electricity, Hire charges, Insurance,
Welfare expenses, Legal charges, AMC’s. This section also handles import proceedury
like LC opening, authorizing direct transfer to foreign customer (TT) monitoring
exchange rate variations arranging for forward cover from bank etc.

19. 3.Wages / Time Office
Wages prepares payrolls of officers, workers, trainees on the basis of muster roll given by the time office given by the time
office. Payroll preparations is computerized and the salary/wages are also engage with the work of leave of employees,
conveyance reimburse settlement, calculation and disbursement of retirement benefits etc.
4. PROVIDENT FUND
Provident Fund section arranges for the recovery of Provident Fund from the employee salary. Present statutory, minimum
recovery is 12% of basic salary + Dearness allowance ( DA ) .The employees re allowed to contribute higher amount
voluntary (VPF).Out of 12% contribution made by employer an amount equal to 8.33% is transferred to employees’
pension fund. Provident Fund section also provides the loan facility to employees as per stipulated terms and conditions.
5. MAIN ACCOUNT AND COST ACCOUNTS
All cost data required by financial accounts such as SIT, WIP are prepared by cost accounts section. Main accounts related
to material accounts. Weighted average rate is following for inventory valuation .Half yearly periodical physical
verification of stock is conducted by main accounts and whenever discrepancies occurred they are analyzed and rectified.
This section prepares monthly and annual financial statements (balance sheet, P & L account, notes to accounts, cash flow
statements etc.) and co-ordinates with internal / statutory auditors and also with comptroller and auditor general of India.

20. 6. CASH
Cash section keeps cash day book a bank day book. The payment vouchers prepared by
wages / IBS are sent to cash department for payments. Generally payments are made though
NEFT or RTGS. This section also prepares bank reconciliation statement and daily cash flow
statement and also monitor that cash credit does not exceed the permitted limit.
7. CONCURRENCE
All purchase proposals are sent to concurrence section for financial department. They make it
sure that all purchase is made according to the purchase manual. In short all purchase
(whatever it may be) can be made only with the approval of finance department.
Total Employees Strength – 25

21. REVIEW OF LITERATURE
• Sheridan, John W (2008) describes that besides its ability to signal changes in the business
cycle the inventory-to-sales (I/S) ratios is also looked upon as an indicator of economic health.
While the manufacturing I/S ratio are currently outstanding and the system ratio appear good,
smart buyers are continuing go view these ratios with caution. Although the low level of
inventories currently kept by manufactures significantly reduces the possibly of an economic
downturn stimulated by this sector, the retail sector is a cause for concern. A number of factors
reinforce the idea that there has been a fundamental shift in the structural relationship between
manufacturing and retail. This new inventory relationship is as yet untested. If inventories have
been shifted to the retail level and not actually lowered, then the benefits are mainly to
manufacturing and will not be realized by the system over all. It could be that the current
system I/S ratios are too high.

22. RESEARCH METHODOLOGY
The process used to collect information and data for the purpose of making financial decisions. The
methodology may include publication research, interview, surveys and other research techniques and
could both present and historical information.
Type of research is based on descriptive and analytical research.
• Sources of data collection:
• Secondary data means the data which has already been collected by some other persons at some other
time for the other purpose.
• Important source of secondary collections are:
1. Annual reports of HMT for the past five years.
2. Internet
3. Project reports
• Period of the study- two months

23. DATA ANALYSIS & INTERPRETATION
• Working Capital Management is important part in firm financial management decision improper management
makes on the WIP- Working In Process to the develop on the various development of working financial process
on the basis of managing on developing the financial statements. Working capital management the develop
mentation of the manufacturing their goods on the basis of short term liabilities and non-short liabilities.
• The working capital requirements is the minimum amount of resources that a company requires to effectively
cover the usual costs and expenses necessary to operate the business. Since the capital needs of each company
will be a little different there is no ideal amount of working capital there is a universally applicable to all business
or even to companies engaged in the same industry. Even so new companies can develop an idea of what type of
requirement there will need to operate at given levels of researching the cost and expenses associated with other
corporations engaged in similar operations.

24. Working Capital Ratio = Current Assets
Current Liabilities
Working Capital Ratio or WCR is used to rat ionize between the capitals ratios used in every year. In every
financial year the working capital ratio where calculated by the HMT.CO.LTD. The working capital ratio is the
same as the current ratio. It is the relative proportion of an entity current assets to its current liabilities, and is
intended to show the ability of a business to pay for its current liabilities with its current assets. A working
capital ratio of less than
1.0 is an stronger indicator that there will be liquidity problems in the future while a ratio in the vicinity of 2.0 is
considered to represent good short term liquidity.
To calculate the working capital ratio or WCR divided all current assets by all current liabilities.
The Formula is:

25. Calculation of working capital and working capital ratio of the year 2010
Current Liabilities Current Assets
Current Liabilities 219973407
Provisions 199157643
Inventories 152601938
Sundry Debtors 180633762
Cash & Bank Balances 2774449
Other Current Assets 4495952
Loans & Advances 93908483
Total Liabilities = 419131050 Total Assets = 434414584
Working Capital = Current Assets – Current Liabilities
WC = 434414584-419131050
WC = 15283534
Working Capital Ratio = Current Assets
Current Liabilities
WCR = 434414584
419131050
WCR = 1.03646

26. Calculation of Working Capital and Working Capital Ratio Of the year 2011
Current Liabilities Current Assets
Short Term Borrowings 81127245
Trade Payables 71701944
Other Current Liabilities 175501961
Short Term Provisions 109739156
Inventories 152052469
Trade Receivables 171843630
Cash & Receivables 73197
Short Term Loans & Advances 99043367
Other Current Assets 5873224
Total Liabilities = 438070306 Total Assets = 428885887
Working Capital = Current Assets – Current Liabilities
WC = 428885887-438070303
WC = -9184419
Working Capital Ratio = Current Assets
Current Liabilities
WCR = 428885887
438070306
WCR = 0.97903

27. Calculation of Working Capital and Working Capital Ratio Of the year 2012
Current Liabilities Current Assets
Short term borrowings 68567606
Trade Payables 103898347
Other Current Liabilities 195229138
Short term provisions 84414779
Inventories 169780425
Trade Receivables 170327794
Cash & Cash equivalents 76067
Short terms loans & Advances 85224046
Other Current Assets 8289345
Total liabilities = 452109870 Total Assets = 433697677
Working Capital = Current Assets – Current Liabilities
WC = 433697677-452109870
WC = 18412193
Working Capital Ratio = Current Assets
Current Liabilities
WCR = 433697677
452109870
WCR = 0.95927

28. Calculation of Working Capital and Working Capital Ratio of the year 2013
Current Liabilities Current Assets
Short Term Borrowings 82653264
Trade Payables 70888197
Other Current Liabilities 281591160
Short Term Provisions 91140691
Inventories 143657435
Trade receivables 251713881
Cash & Cash Equivalents 1409201
Short Term Loans & Advances 91245052
Other Current Assets 7835561
Total Liabilities = 5262736312 Total Assets = 495861130
Working Capital = Current Assets-Current Liabilities
WC = 495861130-5262736312
WC = -30412182
Working Capital Ratio = Current Assets
Current Liabilities
WCR = 495861130
5262736312
WCR = 0.94221

29. Calculation of Working Capital and Working Capital Ratio of the year 2014
Current Liabilities Current Assets
Short Term Borrowings 83083395
Trade Payables 111659326
Other Current Liabilities 300623164
Short Term Provisions 78282871
Incentives 191003844
Trade Receivables 221851604
Cash & Cash Equivalents 17509886
Short Term Loans & Advances 82211666
Other Current Assets 7465983
Total Liabilities = 573648756 Total Assets = 520042983
Working Capital = Current Assets-Current Liabilities
WC = 520042983-573648756
WC = -53605773
Working Capital Ratio = Current Assets
Current Liabilities
WCR = 520042983
573648756
WCR = 0.90655

30. Year Working Capital (WC) Working Capital Ratio (WCR)
2010 15283534 1.03646
2011 -9184419 0.97903
2012 18412193 0.95927
2013 -30412182 0.94221
2014 -53605773 0.90655
TABLE SHOWING WORKING CAPITAL & WORKING CAPITAL RATIO OF FIVE
YEARS FROM 2010-2014

31. -60000000
-50000000
-40000000
-30000000
-20000000
-10000000
0
10000000
20000000
30000000
2010 2011 2012 2013 2014
Graphical representation of working capital &working capital ratio of
past five years (2010-2014)
Working Capital (WC) Working Capital Ratio (WCR)

32. FINDINGS
 Working capital ratio of the company decrease every year as per the calculation of
working capital ratio of past five years.
 Working Capital of the company fluctuate every year.
 Working capital management of the company is efficient in managing the working
capital.
 Every year increase the company’s working capital.
 WC & WCR levels are fluctuate every year and make improvement for company’s future
growth.

33. SUGGESTIONS
 More care in the handling of working capital of the company.
 The lower the inventories to working capital ratio, the higher the liquidity of the
company.
 HMT is a heavy consumer of electricity and in the recent past the electricity tariff
increased many folds.
 More care in the controlling of liabilities with assets.
 The company working capital is used efficiently and effectively.

34. CONCLUSION
HMT is pioneer in the market and has created reliability and credibility among the customers. It has an excellent
transporting facilities and proximity to national high way, railway line, sea port and airport as well. A better
inventory management will surely be helpful in solving the problem that the company is facing with respect to
inventory and will pave the way for reducing the huge investment or blocking of investment in inventory.
Inventory management is vitally important to almost every type of business, whether product or service oriented.
Inventory control touches almost every facets if operation. A proper balance must be struck to maintain proper
inventory with the minimum financial impact on the customer. Inventory control is the activities that maintain
stock keeping items at desired level. In manufacturing since the focus is on physical product, inventory control
focus on material control. The goal of the wealth maximization is affected by the efficiency with which inventory
is managed. Inventories constitute about 60% of current assets of companies in India. The manufacturing
companies hold inventories smooth production and sales operation to guard against the risk of unpredictable
changes in usage.

35. THANK YOU