A

SUMMER TRAINING REPORT

ON

‘A Comprehensive Study Of Working Capital Dynamics’

For the training undergone at

HINDUSTHAN NATIONAL GLASS AND INDUSTRIES LIMITED

Submitted for the partial fulfillment of the requirement for the award of the

Degree of Master in Business Administration (2023-25)

MBA 3RD Semester

SUBMITTED BY:

Tushar Rawal

Class Roll No. – 83

University Roll No. - 2023003106

SUBMITTED TO:

UNIVERSITY SCHOOL OF MANAGEMENT

KURUKSHETRA UNIVERSITY,
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KURUKSHETRA HARYANA- 136119 (INDIA)

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 PREFACE

For a management student, training plays an important role during his / her study. Training provides a
corporate or real – world platform to learn practically. MBA degree without any training or corporate
world experience is just like life without oxygen. So industrial training provides a great learning
experience about management concepts and its applicant.

This training provides an opportunity to know the current market, prevailing competition in the
market etc. It provides us a platform whereby we can apply our theoretical knowledge and we can
solve many practical problems. And hence it can help us to be a successful manager in near future.

For this, I undertook 52 days summer training in Hindusthan National Glass & Industries Ltd. Thanks,
to all those who helped me directly or indirectly to complete this project within a short span of time. For
preparation of this report, I would like to thanks to faculty members of our department and staff
members of University School of Management and Hindusthan National Glass & Industries Ltd.

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 ACKNOWLEDGEMENT
I feel immense pleasure to give the credit of my training report entitled “A Comprehensive Study Of
Working Capital Dynamics" not only to one individual but efforts of all those who concern with it. I want
to thanks to all those individual who guided me to move on the track.

I am gratefully indebted to Prof. Sushil Sharma for providing me all the necessary help and requirement
guidelines for the completion of my training and also for the valuable time that he gave me from his
schedule.

Signature

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 DECLARATION
I, Tushar Rawal declare that the training report entitled " A Comprehensive Study Of Working
Capital Dynamics", assigned by University School Of Management, Kurukshetra University,
Kurukshetra, for the partial fulfillment of MBA (2Yr.) course is the original work done by me and the
information provided in the study is authentic to the best of my knowledge and belief which is carried
out under the supervision guidance of Prof.

This training report has not been submitted to any other institute or university for award of any other
degree.

Place: Signature

Date: Tushar Rawal

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6
 EXECUTIVE SUMMARY

This internship is a bridge between the institute and organization. This training program is designed to
give the future manager a feel about the corporate happenings and work culture of an organization.
These real life situations are entirely different from the stipulated exercise enacted in an artificial
environment inside the classroom and it is precisely because of this reason that this summer training
program is designed, so that managers of tomorrow get ideas about the real time business operations.

The summer internship program helps us to apply our theoretical knowledge into the practical field.
Working capital is the most important part of the current assets of an organization. Management of
working capital is important because it has a direct impact on the financial resources of the
organization. Excess investment on the part of inventory is not viable because the funds then will be
held up in inventories and will not be available for other important segment of the business. Less
investment is also detrimental because the company might face a huge problem in fulfilling the
requirement of the business. Therefore, proper working capital management is very essential for an
organization.

This project explains in details of working capital management and how it is operated in an
organization. Various ratio analysis have been taken out on the basis of the data provided so as to find
out the trends of working capital requirements in Hindusthan National Glass & Industries Ltd, a
leading manufacturer of the glass in the world. A brief study of glass manufacturing company has been
carried out with a comparative analysis of last five years data. Thus analysis studies the different
techniques used by different companies and how effective those prove in this competitive environment.

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 CONTENTS
Chapter No. Title of the chapter Page No.
Preface 2
Acknowledgement 3
Declaration 4
Organization Certificate 5
Executive Summary 6
1. Industry Profile 10-12

2. Company Profile 13-19

2.1 Introduction 15
2.2 Vision 15

2.3 Focus Value 15

2.4 History 15

2.5 Board of Directors 16

2.6 Products 16-17

2.7 SWOT Analysis 17-19
2.8 Location 19
3 Research Methodology 20-22

3.1 Justification of the topic 21

3.2 Statement of problem 21
3.3 Objectives of the study 21
3.4 Period of Study 21
3.5 Sample size 22
3.6 Technique of analysis 22
3.7 Limitations of study 22
4 Data Analysis and Interpretation 23-47
5 Findings, Suggestions and Conclusion 49
6 Learning 51
References 52
Appendix 53-62

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 LIST OF TABLES
Table no. Description Page No.

1 Current Ratio 30

2 Quick Ratio 31

3 Working Capital Turnover Ratio 35

4 Inventory Turnover Ratio 36

5 Trade Receivables Turnover Ratio 39

6 Trade Payables Turnover Ratio 41

7 Net Operating Cycle 43

8 Net Profit Ratio 44

9 Changes in Working capital for the year ended (2023-24) 46

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 LIST OF FIGURES
Table no. Description Page No.

1 Current Ratio 31

2 Quick Ratio 32

3 Comparison of Current Assets and Current Liabilities 33

4 Inventory 34

5 Working Capital Turnover Ratio 36

6 Inventory Turnover Ratio 37

7 Inventory Holding Period 38

8 Trade Receivables Turnover Ratio 39

9 Average Collection Days 40

10 Trade Payables Turnover Ratio 41

11 Average Payment Period 42

12 Net Profit Ratio 45

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CHAPTER – 1
Industry Profile

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 1.1 INTRODUCTION
Hindustan National Glass & Industries Limited (HNGIL) is an Indian container glassmaker based in
Kolkata. The company is the largest and one of the oldest glass manufacturing companies in India.

Largest manufacturers of Glass worldwide:

 Asahi India Glass

 HNGL
 Borosil
 Empire Industries
 Saint Gobain
 PPG Industries
 AGC
 Haldyn Glass Limited
 Triveni Glass
 Banaras Beads

The Global Glass Manufacturing market is anticipated to rise at a considerable rate during the forecast
period, between 2023 and 2031. In 2022, the market is growing at a steady rate and with the rising
adoption of strategies by key players, the market is expected to rise over the projected horizon.

Glass manufacturing market from the packaging segment is expected to reach over USD 177 billion by 2032
owing to the rising consumer preference for sustainable and eco-friendly packaging solutions. Glass is
considered an attractive, non-toxic material that preserves the quality and taste of food and beverages better
than plastic or metal, making it popular in the packaging industry. The cosmetic and pharmaceutical
industries also favor the chemical resistance of glass packaging and its ability to protect its contents from
contamination and damage.

Market Size and Growth

Glass Manufacturing Market was valued at over USD 277.23 billion in 2023 and is anticipated to observe a
CAGR of 7.5% between 2024 and 2032 driven by the rising demand from the construction and automotive
industries.

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Industry Trends
 Construction: The construction sector is a major driver of demand, with increasing urbanization and
the shift towards green building and sustainable architecture.
 Automotive: The automotive industry's demand for advanced glass materials, such as laminated
safety glass and tempered glass, is growing due to the production of lighter, more fuel-efficient
vehicles and the rise of electric vehicles (EVs).
 Solar Energy: The installation of solar panels is creating lucrative opportunities for the glass industry,
particularly for solar photovoltaic (PV) glass.
 Smart Glass Technologies: Innovations in smart glass technologies, which offer functions like light
reduction and heads-up displays, are gaining traction.

Challenges
 High Energy Consumption: Glass production is energy-intensive, leading to significant operating
costs and greenhouse gas emissions.
 Raw Material Costs: Fluctuations in the prices of raw materials, such as silica sand and soda ash, can
disrupt the supply chain and limit market growth.
 Environmental Regulations: Stricter environmental regulations aimed at reducing carbon footprints
impose additional compliance costs on manufacturers.

Major Market Players

Prominent companies in the glass industry include:
 Saint-Gobain: A leader in flat glass production.
 AGC Inc.: Known for its innovations in glass technology.
 Nippon Sheet Glass Co., Ltd.: Specializes in automotive and specialty glass.
 Guardian Glass LLC: Major player in construction and architectural glass.

Future Outlook
The glass industry's future looks promising with continued innovations and growing applications in
sustainable and high-tech sectors. However, addressing energy consumption and environmental impact

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will be crucial for sustainable growth.

CHAPTER-2
Company Profile

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2.1 INTRODUCTION

Founded by Late Shri C.K. Somany in 1946, Hindusthan National Glass established India’s first fully
automated glass manufacturing plant at Rishra (near Kolkata); currently having a pan India presence.

Today, HNG is the key player in India’s container glass industry, offering a complete packaging solution to
improve overall productivity and line performance at customers' end, with its plants located at Rishra,
Bahadurgarh, Rishikesh, Neemrana, Sinnar, Naidupeta and Puducherry. HNG has not only dominated a
large share of the Indian market, but it has had a far client base reach, extending to more than 23
countries.The company manufactures containers for pharmaceuticals, liquor, beer, beverages, cosmetics and
processed food.
We’re a group of entrepreneurs, driven every day to find answers to our customers’ challenges by
combining our strengths in production and technologies and offering a global network of research and
development centers with enormous transformative power.

2.2 Vision And Mission

To create a world-class manufacturing plant that pursues Quality, Cost Reduction, and Productivity
Improvement measures in a truly holistic manner, leading to Customers’, Shareholder’, Employees’ and
Suppliers’ Satisfaction; this integrated effort will result in the Company becoming an industry Benchmark and
a role model for systems. processes and results.

2.3 Focus Values

At HNG, we believe in valuing one another, along with posing operational
excellence, constantly innovating and keeping our integrity intact. And, to
remain grounded and focused towards our goals, giving us a definite purpose
and enabling us to make most of our resources are our core values.

2.4 History

Founded by Late Shri C.K. Somany in 1946, Hindusthan National Glass established India’s first fully
automated glass manufacturing plant at Rishra (near Kolkata); currently having a pan India presence.

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 2.5 Board of Directors

Director- Shri Sanjay Somany

Additional Director- Shri Mukul Somany

Managing Director- Smt. Rita Bhimani

2.6 PRODUCTS

2.6.1 Food Beverage

Choosing glass for food and beverages will help you stay away from potential risks that come with
consuming food products from containers that leach chemicals. As India’s leading glass container market, we
at HNG supply glass bottles that made from 100% natural sustainable raw materials, which is completely
recyclable. Using glass container is not just eco-friendly but it also helps in reducing additional waste, which
is an ideal benefit of all product packaging since recycling is becoming an even bigger topic and action for
many consumers

2.6.2 Pharmaceutical And Wellness

India is rich in large raw material base and availability of skilled workforce, making it third-largest pharmaceuticals
in terms of volume and thirteenth most significant in terms of value. Indian pharmaceutical sector is estimated to
account for 3.5% of the global pharmaceutical industry in value terms and 10% in volume terms. India's cost of
production is significantly lower than that of the US and almost half of that of Europe. India is among the fastest
growing pharmaceutical markets in the world. Some of the key clients of HNG include Pfizer, Dabur, Cipla,
Ranbaxy, GlaxoSmithKline, Bayer, Himalaya, Baidyanath, AstraZeneca, Dr. Reddy's, Cadila, Aurobindo Pharma,
etc. HNG has 4 furnaces and 16 lines with total installed capacity of 1360 TPD dedicated to the production of
amber bottles. Pharma Packaging market is growing at 6-7% driven by growth in pharma industry and its need for
bulk drugs, formulations and trial drug packaging. Considering potential risks that arise from storing medicines in
plastic bottles, glass packaging in liquid formulations is most preferred. With increasing medical awareness, there is
a visible change in consumers’ demand for safe packaging of their products, especially their medicines. Glass being

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 the most secured container for all types of contents, it definitely is the most trusted packaging for medical purposes
as well.

2.6.3 Beer And Liquor

Currently in India, higher disposable income, rising preference of consumer for low alcohol beverage and
increasing youth population has led to an increase in socializing in pubs, going out for drinks and hanging out
in bars, making it a social phenomenon, in Metro and Tier two cities. This has led to an increase in beer
consumption. As demand for beer and liquor consumption increases, the supply increases with it. This raise in
demand has given a solid boost to beer and liquor industry. Besides, the rising number of pubs and bars are
another factor which has helped in increasing beer consumption. Some state governments, for instance
Maharashtra, Uttar Pradesh and Kerala, offered separate licenses for beer sale, further boosting growth
prospects for the industry. The beer industry has seen various mergers and acquisitions in India, which has
consolidated the market place and lead to increased market competition during the last five years, which has
led to deep market penetration.

2.6.4 Household

If you store your food in a plastic container, there are high chances the chemicals from the plastic container
will migrate into your food, damaging it and causing health hazards to ones consuming the food from it. This
especially happens when you serve hot food into a plastic. But there is no leakage of any unwanted or
poisonous chemicals in a glass food container, making it safe and secured for using it over and over again.
Glass is made of natural raw materials and is non-porous. Other benefits of glass packaging include its top
performance at different temperatures. So, in case you want to store food and heat it in the same container,
then you can do it in a glass container, without having to stress about it. Storing food in clear glass also helps
you identify what is stored inside it, without having to open its lid. Unless dropped, they will last a lifetime
and still hold up well.
2.6.5 Cosmetics
Glass is one of the oldest packaging materials. The biggest advantage of glass packaging is that it is
nonporous and is chemically inert. Because of these features, glass doesn’t not allow its contents to get mixed
with moisture and oxygen, keeping the product inside it as safe and secured. Thus, cosmetic industry highly
depends on glass for its packaging.

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Quality and premium look determines market appeal of cosmetic products. Since aesthetically pleasing
product gets noticed by consumers faster. Glass container used for cosmetics packaging assures the
consumers that product hasn’t been tempered because the only way to damage a glass is by physically
breaking it and a dent in a glass container is easily noticeable.

2.7 SWOT ANALYSIS OF THE COMPANY

Automobile industry is growing at least at the rate of 8% per annum for the past few years. Growth of
auto ancillary industry depends on the growth of automobile industry.

Jamna Auto Industries Ltd (SFS Solutions pvt ltd) is an auto ancillary industry manufacturing spring
leaf for the four-wheeler segment of auto industry.

Global vehicle manufactures and auto ancillary majors have increased their presence in India due to
several such as India’s commitment to WTO, removal of quantitative restrictions on auto ancillary
imports, and reduction in import tariffs. This increased presence is felt through their subsidiaries and or
marketing outlets. However, the increased foreign presence in auto ancillary segment has not adversely
much affected the SFC group as this company manufacture only, he leaf spring of four wheelers.

In future, the input costs of auto ancillary manufactures are expected to rise, as aluminum and steel
prices are expected to rise, this is expected to have an impact on the margin of auto ancillary
manufacturers since they will have limited flexibility to pass on the increase to their customers,
especially in the OEM segment. Through the manufactures are expected to implement cost
rationalization measure and higher capacity utilization to achieve lower overhead cost, margins are
expected to remain under pressure.

SWOT Analysis of Hindusthan National Glass & Industries Ltd.

STRENGTHS

 Strong Momentum: Price above short, medium and long term moving averages

 Rising Net Cash Flow and Cash from Operating activity

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  Strong Annual EPS Growth

 Annual Profit Growth higher than Sector Profit Growth

 Efficient in managing Assets to generate Profits - ROA improving since last 2 year

 Growth in Net Profit with increasing Profit Margin (QoQ)

 Strong cash generating ability from core business -Improving Cash Flow from operation for last 2 year.

 Company able to generate Net Cash - Improving Net Cash Flow for last 2 years

 Annual Net Profits improving for last 2 years

WEAKNESSES

 Companies with High Promoter Pledge

 Fall in Quarterly Revenue and Net Profit (YoY)
 High volume, top losers
 High promoter stock pledges
 Stocks Underperforming their Industry Price Change in the Quarter

OPPORTUNITIES

 Companies with Upcoming Results

 Undervalued Growth Stocks

THREATS

 Top Losers

2.8 LOCATION
Our business integrates 7 plants in 7 States and allows us to employ 4,000 employees.

 Rishra
 Bahadurgarh
 Rishikesh
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 Neemrana
 Sinnar
 Naidupeta
 Puducherry

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 CHAPTER-3
Research Methodology

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 3.1 JUSTIFICATION OF TOPIC

In today’s competitive world maintaining financial strength on a day to day basis has become a
challenge. Every firm wants to see themselves financially sound. The financial attributes like
liquidity, solvency and profitability can be improved by effective implementation of the working
capital management. Working capital supports the day to day operations of the firm. As it
includes items like cash, inventory, receivables, payables etc the working capital shows the
activities of the companies. Empirical studies have shown that ineffective management of
working capital as one of the major cause of industrial sickness. So, efficient management of
working capital is one of the important indicators of financial soundness.

3.2 STATEMENT OF PROBLEM

This Project report tries to evaluate how the management of working capital is carried out in Hindusthan
National Glass & Industries Ltd.

3.3 OBJECTIVES OF THE STUDY

 To understand the concept of Working Capital Management.

 To study the components of Working Capital Management.

 To analyze the efficiency of working capital management in Hindusthan National

Glass & Industries Ltd. using Intra Firm Ratio Analysis.
 To find out the changes in working capital of Hindusthan National Glass & Industries
Ltd. using Comparative Financial Statement Analysis.

3.4 PERIOD OF STUDY

Data of 5 years (2019-20 to 2023-24) has been collected for the study.
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 3.5 SAMPLE SIZE

The sample for the study has been selected a company named Hindusthan National Glass &
Industries Ltd., which is one of the market leader in Glass Manufacturing.

3.6 TECHNIQUE OF ANALYSIS

The study is based on secondary data which is collected from the annual reports and other proprietary
reports of Hindusthan National Glass & Industries Ltd..
Ratio Analysis and Comparative Statement Analysis is used for analysis of the data. The data is
presented using various graphs and charts.

3.7 LIMITATIONS OF STUDY

This study is based on secondary data. The period of study is restricted to 5 years.

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CHAPTER – 4
Analysis and
Interpretation

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4.1 CONCEPT OF WORKING CAPITAL MANAGEMENT

Financial management can be divided into two broad areas of responsibility as the management
of long-term capital and the management of short-term funds or working capital. Working
capital means the funds available and used for day-to-day operations of an enterprise. It consists
broadly of that portion of assets of a business which are used in or related to its current
operations.
Efficient management of working capital is an essential pre–requisite for the successful
operation of a business enterprise and improving its rate of return on the capital invested in
short-term assets.

The components of Working Capital Management are as follows:

 Cash Management

 Inventory Management

 Receivables Management

 Payables Management

4.2 TYPES OF WORKING CAPITAL

According to the needs of business, the working capital may be classified as follows:

WORKING

BASIS OF
BASIS OF TIME
CONCEPT

GROSS PERMANENT VARIABLE

NET WORKING
WORKING WORKING WORKING

RESERVE REGULAR SEASONAL SPECIAL

MARGIN 25
WORKING WORKING WORKING
A. ON THE BASIS OF PERIODICITY:

On the basis of periodicity working capital can be divided under two categories as under:

1) Permanent working capital: This refers to that minimum amount of investment in

all current assets which is required at all times to carry out minimum level of business
activities.

The Tandon Committee has referred to this type of working capital as ―Core current assets.
Fixed working capital can further be divided into two categories as under:

i) Regular Working capital: Minimum amount of working capital required to keep the
primary circulation. Some amount of cash is necessary for the payment of wages, salaries etc.

ii) Reserve Margin Working capital: Additional working capital may also be required for
contingencies that may arise any time. The reserve working capital is the excess of capital over
the needs of the regular working capital is kept aside as reserve for contingencies, such as
strike, business depression etc.

2) Variable or Temporary Working Capital: The amount of such working capital

keeps on fluctuating from time to time on the basis of business activities. In other words, it
represents additional current assets required at different times during the operating year. For
example, extra inventory has to be maintained to support sales during peak sales period. The
variable working capital may also be subdivided into following two sub-groups:

i) Seasonal Variable Working capital: Seasonal working capital is the additional amount
which is required during the active business seasons of the year. Raw materials like raw-cotton
or jute or sugarcane are purchased in particular season. The industry has to borrow funds for
short period. It is particularly suited to a business of a seasonal nature. In short, seasonal
working capital is required to meet the seasonal liquidity of the business.

ii) Special variable working capital: Additional working capital may also be needed to
provide additional current assets to meet the unexpected events or special operations such as
extensive marketing campaigns or carrying of special job etc.

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B. ON THE BASIS OF CONCEPT:
On the basis of concept working capital is divided into two categories as under:

1) Gross Working Capital: Gross working capital refers to total investment in current
assets. The current assets employed in business give the idea about the utilization of
working capital and idea about the economic position of the company. Gross working
capital concept is popular and acceptable concept in the field of finance.

2) Net Working Capital: Net working capital means current assets minus current liabilities.
The difference between current assets and current liabilities is called the net working capital.
If the net working capital is positive, business is able to meet its current liabilities. Net
working capital concept provides the measurement for determining the creditworthiness of
company.

4.3 FACTORS DETERMINING WORKING CAPITAL

The following factors determine the requirement of working capital:

1. Nature of Companies: Needs for working capital are determined by the nature of an
enterprise. Small companies have smaller proportions of cash, receivables and inventory than
large corporation. This difference becomes more marked in large corporations. A public
utility, for example, mostly employs fixed assets in its operations, while a merchandising
department depends generally on inventory and receivable.

2. Nature and Size of Business: The working capital requirements of a firm are basically
influenced by the nature of its business. Trading and financial firms have a very less
investment in fixed assets, but require a large sum of money to be invested in working capital.
Retail stores, for example, must carry large stocks of a variety of goods to satisfy the varied
and continues demand of their customers.

3. Time: The level of working capital depends upon the time required to manufacturing goods.
If the time is longer, the size of working capital is great. Moreover, the amount of working
capital depends upon inventory turnover and the unit cost of the goods that are sold.

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 4. Volume of Sales: This is the most important factor affecting the size and components of
working capital. The volume of sales and the size of the working capital are directly related
to each other. As the volume of sales increase, there is an increase in the investment of
working capital-in the cost of operations, in inventories and receivables.

5. Terms of Purchases and Sales: If the credit terms of purchases are more favourable and
those of sales liberal, less cash will be invested in inventory. With more favourable credit
terms, working capital requirements can be reduced.

6. Business Cycle: Business expands during periods of prosperity and declines during the period
of depression. Consequently, more working capital required during periods of prosperity and
less during the periods of depression.
7. Liquidity and Profitability: If it is interested in improving its liquidity, it can increase the
level of its working capital. However, this policy is likely to result in a reduction of the
sales volume, and therefore, profitability. A firm should choose between liquidity and
profitability and decide about its working capital requirements accordingly.

4.4 COMPONENTS OF WORKING CAPITAL MANAGEMENT

1. CASH MANAGEMENT

Cash management is one of the most important areas in the day-to-day management of the firm’s
deals with the management of working capital, which is defined as all the short-term assets used
in daily operations. This consists primarily of cash, marketable securities, accounts receivable
and inventory. The balances in these accounts can be highly volatile as they respond very
quickly to changes in the firm’s operating environment. Healthy circulation of cash in the entire
business operation is the basis of business solvency. Ultimately every transaction in a business
result

either in an inflow or an outflow of cash. There should be sufficient cash with a firm all the time
to meet the needs of the business. If the cash balance with a firm at any time is surplus or deficit,
it is obvious that the finances are mismanaged. Cash Management needs strategies to deal with
various facets of cash. Following are some of its facets.

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 2. INVENTORY MANAGEMENT

Inventory constitutes an important item in the working capital of many business concerns.
Inventory is a major item of current assets. The term inventory refers to the stocks of the product
of a firm is offering for sale and the components that make up the product Inventory is stores of
goods and stocks. This includes raw materials, work-in-process and finished goods. Raw
materials consist of those units or input which are used to manufactured goods that require
further processing to become finished goods. Finished goods are products ready for sale. The
classification of inventories and the levels of the components vary from organisaion to
organisation depending upon the nature of business.

3. RECEIVABLES MANAGEMENT

Management of Receivables refers to planning and controlling of debt owed to the firm from
customer on account of credit sales.

When large amounts of money is tied up in receivables, there are chances of bad debts. On the
contrary, if the investment in receivables is low, the sales may be low since competitors offer
liberal terms. Therefore, management of receivables require proper policies and their
implementation.

There are basically three aspects of receivables management:

1. Credit Policy

2. Credit Analysis

3. Control of Receivables

4. PAYABLES MANAGEMENT

A considerable segment of procurement of products and services in a company are on credit

conditions to a certain extent. Account Payables Management refers to the set of policies,
procedures, and practices employed by a company with respect to managing its trade credit
purchases. They consist of seeking trade credit lines, acquiring favorable terms of purchase, and
29
 managing the flow and timing of purchases so as to efficiently control the company’s working
capital

4.5 WORKING CAPITAL CYCLE

Every business organisation needs adequate working capital because the conversion of cash into
finished goods to debtors and back to cash is not instantaneous. The continuing flow from cash
to suppliers, to inventory, to accounts receivable and back into cash is called the working capital
cycle or operating cycle. In other words, the term operating cycle refers to the length of time
which begins with the acquisition of raw materials of a firm and ends with the final realisation
of cash from debtors. The amount of working capital depends upon the length of working
capital cycle. Longer the working cycle, higher is the need of working capital to be maintained.
This is because the fund will then remain tied-up in various items of current assets for a longer
period. The length of operating cycle varies from industry to industry and from business to
business.

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A. ANALYSIS AND INTERPRETATION

1) LIQUIDITY RATIOS

Liquidity ratios are calculated to measure the short-term solvency of the business, i.e. the firm’s
ability to meet its current obligations. These are analysed by looking at the amounts of current
assets and current liabilities in the balance sheet.

1) CURRENT RATIO

A Current Ratio is that liquidity ratio with which we can identify a company's ability to pay its short-
term obligations or those that are to be due within one year.

Current Ratio = Current assets

Current Liabilities

Conventionally, a current ratio of 2:1 is considered satisfactory. This ratio can be considered as
safe and conservative because even if the current assets get reduced to half, then also the
company will be able to clear off its short-term debts and liabilities. A very high current ratio
indicates that a company is unable to utilize its assets efficiently. A persistent trend of poor
current ratio (of less than 1) is a warning signal of impending sickness.

Year Current Assets Current Liabilities Current Ratio (in times)

(Amt.) (Amt.)
2019-20 1081.22 1,965.86 0.55
2020-21 1,057.71 2,555.68 0.41
2021-22 1,093.06 3,484.13 0.31
2022-23 1,101.20 3,816.01 0.29
2023-24 1,325.20 3,707.94 0.36

Table 1 (Amounts in Crore Rupees)

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 FIGURE-1

INTERPRETATION

It can be seen from the above graph that the company’s liquidity position is not ideal as per the standard
ratio 2:1 but it is lower than 1 which indicates the company’s inability to pay off its current obligations.
A low ratio means the company faces uncertainty in funding its day-to-day operations. The less working
capital a company has, the more it’s likely to have to take on debt to fund the growth of its business. In
the years 2019-20 and 2020-21, the company has Rs. 0.55 & 0.41 of assets to clear its debt of Rupee 1
respectively part of which can be attributed to business downturn due to Covid-19. The year 2022-23
had the most unsatisfactory current ratio as compared to the current ratios of other years. The ratio 0.36
shows there are 1/3rd of current assets when compared with liabilities.

2) QUICK RATIO

The ratio provides a measure of the capacity of the business to meet its short-term obligations. It is
calculated to serve as a supplementary check on liquidity position of the business and is therefore,
also known as ‘Acid-Test Ratio’. While calculating quick assets we exclude the inventories. The
quick assets are defined as those assets which are quickly convertible into cash.

Quick Ratio = Quick Assets

Current Liability

Normally, it is advocated to be safe to have a ratio of 1:1 as unnecessarily low ratio will be very
32
 risky and a high ratio suggests unnecessarily deployment of resources in otherwise less
profitable short-term investments.

Year Current Inventory Quick Assets Current Quick

Assets (A) (B) (Amt.) (A-B) (Amt.) Liabilities Ratio(in
(Amt.) (Amt.) times)

2019-20 1080.44 455.40 625.04 1965.86 0.31

2020-21 1057.71 449.80 607.91 2555.68 0.23
2021-22 1093.06 424.09 668.97 3484.13 0.19
2022-23 1101.20 425.16 676.04 3816.01 0.18
2023-24 1325.20 503.99 821.21 3707.94 0.22

Table 2 (Amounts in Crore Rupees)

Total
0.35
0.31
0.3
0.25 0.23 0.22
0.19 0.18 Total
0.2
0.15
0.1
0.05
0
2019-20 2020-21 2021-22 2022-23 2023-24

Figure-2

INTERPRETATION
In all the years, Hindusthan National Glass & Industries Ltd has ratio less than 1. A company which
has a quick ratio of less than 1 may not be able to fully pay off its current liabilities in the short term.
Higher the ratio result, the better a company's liquidity and financial health and the lower the ratio, the
more likely the company will struggle with paying debts.

33
A COMPARISON OF CURRENT ASSETS AND CURRENT LIABILITIES

Positive working capital is the excess of current assets over current liabilities. In other words, when
the net working capital is a positive figure, it is said that the firm has a positive working capital.
Working capital can be negative if a company's current assets are less than its current liabilities.

Comparison Of Current Assets And Liability

1,800.00 1677.38 1643.5

1,600.00 1500.62
1,404.49
1,400.00 1,305.99 1281.39 1274.78
1,193.32
1,200.00 1,113.75
977.19
1,000.00
800.00
600.00
400.00
200.00
0.00
2019-20 2020-21 2021-22 2022-23 2023-24
Current Assets Current Liability

Figure -3

INTERPRETATION

The company has more current liability than current assets, which means it has negative working
capital. Having enough working capital ensures that a company can fully cover its short-term liabilities
as they come due in the next twelve months. This is a sign of a company's financial strength.

34
ANALYSIS OF WORKING CAPITAL COMPONENTS

1. INVENTORY

Inventory

485.02
625.89

600.92
629.77

606.21

2023-24 2022-23 2021-22 2020-21 2019-20

Figure - 4

INTERPRETATION
 Advantages of Higher Side (Profitability):

Ensures adequate stockholding and increases profitability. The highest inventory was in 2019-20
at 625.89.

 Advantages of lower side (Liquidity):

Lower Inventory requires less capital but holding low stocks can affect goodwill adversely if the
demands of customers is not met. Lowest inventory holding was in 2023-24 at 485.02

 Trade off between Profitability and liquidity:

Using techniques like Economic Ordering Quantity(EOQ), Just in Time(JIT) can help to carry
optimum level of inventory.

35
 A. EFFICIENCY RATIOS

Efficiency ratios are metrics that are used in analyzing a company’s ability to effectively employ
its resources, such as capital and assets, to produce income. The following ratios are presented in
this study:

1. Working Capital Turnover Ratio

2. Inventory Turnover Ratio

3. Trade Receivables Turnover Ratio

4. Trade Payables Turnover Ratio

1. WORKING CAPITAL TURNOVER RATIO

It is defined as the difference between the current assets and current liabilities and working capital
turnover ratio establishes a relationship between the working capital and net sales generated by the
business.

Working Capital turnover Ratio = Net Sales

Net Working Capital

Year Net Sales Net Working Ratio (in

(Amt.) Capital (Amt.) times)

2017-18 17212.231 908.369 18.94

2018-19 18230.387 1151.287 15.83

2019-20 19345.627 2432.490 7.95

2020-21 22234.860 2323.561 8.47

2021-22 20970.322 2688.143 7.80

Table - 3

36
 Working Capital Turnover Ratio (in times)
18.94
20
15.83

15

10 8.47
7.95 7.8

Ratio
5

2017-182018-192019-202020-212021-22
Year

Figure - 5

INTERPRETATION

It can be seen from the graph that the ratio is continuously fluctuating. The year 2017-18 had the highest
working capital turnover ratio amongst the other years. A high turnover ratio shows that management is
being very efficient in using a company’s short-term assets and liabilities for supporting sales. Over the
years, the ratio has come to 7.801 in 2021-22 which signifies a shortage of working capital in the
company which is not favorable. A low ratio indicates that a business is investing in too many accounts
receivable and inventory assets to support its sales, which could eventually lead to an excessive amount
of bad debts and obsolete inventory.

2. INVENTORY TURNOVER RATIO

It determines the number of times inventory is converted into revenue from operations during the
accounting period under consideration. It expresses the relationship between the cost of revenue
from operations and average inventory. A higher ratio indicates effective inventory management and
robust sales, while a lower ratio may suggest overstocking or sluggish sales. The inventory turnover
ratio can help businesses make better decisions on pricing, manufacturing, marketing,
and purchasing. It is one of several common efficiency ratios that companies can use to measure
how effectively they use their assets.

37
 Year Net Opening Closing Average Ratio (in Inventory
Sales (Amt. Inventory Inventory Inventory times) Holding
Table in crore) -4
(Amt.) (Amt.) (Amt.) Period
(Days)
2019-20 2,286.37 383 455 419 5.45 66.97
2020-21 1,898.95 455 450 452.5 4.19 87.11
2021-22 2,097.00 455 424 439.5 4.77 76.51
2022-23 2,457.35 424 439 431.5 5.69 64.14
2023-24 2,552.35 439 512 475.5 5.36 68.09

Average Inventory = Opening Inventory + Closing Inventory

2
Inventory Turnover Ratio = Net Sales

Average Inventory

Inventory Holding Period = Days in a year i.e

365
Ratio

Inventory Turnover Ratio (in times)

6 5.69
5.45 5.36
5 4.77
4.19
4

0
Ratio (in times)

2019-20 2020-21 2021-22 2022-23 2023-24

Figure - 6

38
 INTERPRETATION

In the year 2022-23 the company had inventory ratio of 5.69 which was the highest compared to the
other years. This signifies strong sales and that the company is able to sell its stocks. In 2020-21, the
ratio is the lowest which is 4.19. The ratio vary from year to year. This can be a sign of poor selling
or inventory policy which can lead to working capital blockage, piling up of inventory and quality
deterioration of inventory.

INVENTORY HOLDING PERIOD

Inventory Holding Period

100
90
80
70
60
50
40
30
20
10
0
2019-20 2020-21 2021-22 2022-23 2023-24

Figure -7

INTERPRETATION
In the year 2022-23, the company took approximately 64.14 days to clear its inventory. A shorter
period means that the inventory is moving at a fast pace. It shows efficient inventory management.
In 2020-21, the company took 87.11 days to clear its inventory which means that the company
holds the inventory for a long period of time and signifies poor management of inventory.

39
 1. TRADE RECEIVABLES TURNOVER RATIO
The receivables turnover ratio is an accounting measure used to quantify a company's
effectiveness in collecting its accounts receivable, or the money owed by customers or clients.
This ratio indicates the number of times the receivables are turned over and converted into
cash in an accounting period.

Receivables Turnover Ratio = Net Sales

Average Accounts Receivable

Year Opening Trade Closing Trade Average Net Sales Ratio (in Average
Receivables (Amt.) Receivables (Amt.) Receivables (Amt.) times) Collection
(Amt.) Days
2019-20 369 321 345 2,286.37 6.62 55.13
2020-21 321 345 333 1,898.95 5.70 64.03
2021-22 345 347 346 2,097.00 6.06 60.23
2022-23 347 300 323.5 2,457.35 7.59 48.08
2023-24 300 305 302.5 2,552.35 8.43 43.29
Table – 5

Average Collection Days = Days in a year i.e 365

Ratio

Average Receivables = Opening Receivables + Closing Receivables

2

Ratio (in times)

9 8.43
8 7.59
7 6.62
5.7 6.06
6
5
4
3
2
1
0
2019-20 2020-21 2021-22 2022-23 2023-24

Ratio (in times)

Figure – 8
40
 INTERPRETATION
In the year 2020-21, the company collected its average receivables approximately 5.7 times in a year. A
low ratio indicates the company’s collection process is poor. However, this ratio has increased steadily
and in the year 2023-24 it was at 8.43 which is the highest among the other years. A high ratio is
desirable as it indicates that the company’s collection of receivables is frequent and efficient.

AVERAGE COLLECTION PERIOD

Average Collection Days

70
64.03
60.23
60 55.13
50 48.08
43.29
40

30

20

10

0
2019-20 2020-21 2021-22 2022-23 2023-24

Figure - 9

INTERPRETATION
In the year2020-21, the customer took approximately 64.03 days to repay their debt. This is the
longest duration among the 5 years. A longer period of repayment is generally not favourable. It

can be because of liberal credit policies. The year 2023-24 had the lowest collection period
which indicates that the organization collects payments faster. The company may have imposed
shorter payment terms on its customers. Management may restrict the granting of credit to
customers for a number of reasons, such as in anticipation of a decline in economic conditions
or not having enough working capital to support the current level of accounts receivable. A
shorter collection is preferred and it represents efficient collection policies.

41
 2. TRADE PAYABLES TURNOVER RATIO
Trade payables turnover ratio indicates the pattern of payment of trade payable. As trade
payable arise on account of credit purchases, it expresses relationship between credit purchases
and trade payable. It is calculated as follows:

Trade Payables Turnover Ratio = Net Purchases OR COGS

Average Trade Payables

Average Trade Payables = Opening Trade Payables + Closing Trade Payables

2

Year Opening Trade Closing Trade Average Trade Net Ratio (in Average
Payables (Amt.) Payables (Amt.) Payables (Amt.) Purchases or times) Payment
COGS(Amt.) Period
2019-20 354 221 287.5 728.04 2.53 144.26
2020-21 221 278 249.5 631.98 2.53 144.2
2021-22 278 449 363.5 775.40 2.13 171.36
2022-23 449 559 504 953.35 1.89 193.12
2023-24 559 441 500 830.25 1.66 219.87

Table - 6

Trade Payables Turnover Ratio (in times)

3
2.53 2.53
2.5
2.13
2 1.89
1.66
1.5

0.5

0
Ratio (in times)

2019-20 2020-21 2021-22 2022-23 2023-24

Figure – 10
42
 INTERPRETATION

In 2019-20 and 2020-21, the ratio is stable at 2.53. From 2020-21 it showed an decreasing trend.
Decreasing accounts payable turnover ratio could be an indication that the company is not
managing its debts and cash flow effectively. A decreasing turnover ratio indicates that a
company is taking longer to pay off its suppliers than in previous periods.

AVERAGE PAYMENT PERIOD

Average Payment Period

250
219.87

200 193.12
171.36

150 144.26 144.2

100

50

0
2019-20 2020-21 2021-22 2022-23 2023-24

Figure – 11

INTERPRETATION

The year 2020-21 had the shortest payment period of 144.42 days. A shorter payment period
indicates prompt payments to creditors. Like accounts payable turnover ratio, average payment
period also indicates the creditworthiness of the company. In the 2021-22, it increased to reach
171.36 days. Companies having long payment period can use the available cash for short-term
investments and to increase their working capital and cash flow. Companies that obtain
favorable credit terms usually report a relatively longer payment period.

43
NET OPERATING CYCLE

The Net Operating Cycle or the Cash Conversion Cycle (CCC) is a metric that expresses the
length of time (in days) that it takes for a company to convert its investments in inventory and
other resources into cash flows from sales. The shorter the cash conversion cycle, the better, and
the less time cash is in accounts receivable or inventory. Net operating cycle measures the
number of days a company’s cash is tied up in inventories and receivables on average. It equals
days inventories outstanding plus days sales outstanding minus days payable outstanding. It is
also called cash conversion cycle.

The Net Operating Cycle can be calculated as follows:

Net Operating Cycle = (Inventory Holding Days + Receivables Collection Days) – Payables
Payment Days

Year Inventory Receivables Payables Gross Net Operating

Holding Days Collection Payment Operating Cycle(A+B)-C
(A) Days(B) Days(C) Cycle(A+B)

2019-20 66.97 55.13 144.26 122.1 (22.16)

2020-21 87.11 64.03 144.2 151.14 6.94

2021-22 76.51 60.23 171.36 136.74 (34.62)

2022-23 64.14 48.08 193.12 112.22 (80.9)

2023-24 68.09 43.29 219.87 111.38 (108.49)

INTERPRETATION
Sometimes, businesses can have a negative working capital cycle where they collect money faster
than they pay off bills. Hindusthan National Glass and Industries Ltd. have negative working capital
around all the year. Positive working capital denotes the company pay their bill faster than
collecting the money from debtors.

44
 A. PROFITABILITY RATIOS

Profitability ratio is used to evaluate the company’s ability to generate income as compared to its
expenses and other cost associated with the generation of income during a particular period.
There is a close relationship between the profit and the efficiency with which the resources
employed in the business are utilized.

1. NET PROFIT RATIO

This ratio measures the overall profitability of company considering all direct as well as indirect
cost. Generally, net profit refers to profit after tax (PAT). As companies mention the net profit
ratio as a percentage rather than an amount, it is possible to compare the profitability of two
businesses even if their sizes are different. With the help of the net profit ratio, investors can
evaluate whether a company's management is generating enough profit from the sales.

Net Profit
Net Profit Ratio = X 100
Revenue from Operations

Year Net Profit Revenue from Ratio (%)

(Amt.) Operations (Amt.)

2019-20 (103.11) 2286.36 -4.50

2020-21 (304.14) 1898.94 -16.01

2021-22 (348.52) 2087.14 -16.69

2022-23 (232.89) 2457.35 -9.47

2023-24 162.48 2552.35 6.36

Table - 9

45
 Net Profit Ratio (%)
10
6.36
5

0
2019-20 2020-21 2021-22 2022-23 2023-24
-5
-4.5

-10
-9.47

-15
-16.01 -16.69
-20

Figure - 14

INTERPRETATION
The Net Profit Ratio has declined over the years. In the year 2021-22 it was -16.69, the lowest among
the 5 years. From next year onwards it showed an increasing trend. In 2023-24, It was the highest at
6.36. A higher ratio shows the overall profitability of the business and efficient management of the
business affairs. A high net profit margin means that a company is able to effectively control its costs
and/or provide goods or services at a price significantly higher than its costs. Therefore, a high ratio
can result from efficient management, low costs and expenses or strong pricing strategies.

46
COMPARATIVE ANALYSIS OF WORKING CAPITAL

CHANGES IN WORKING CAPITAL FOR THE YEAR 2023-24

Particulars 31 March 24 31 March 23 Increase/Decreas % Change
e
Current Assets:
Inventories 503.98 425.16 78.82 0.18
Financial
Assets:
1)Trade Receivables 305.34 299.61 5.73 0.019
2)Cash & 387.93 212.87 175.06 0.82
Cash
Equivalents
3)Other Bank Balance 12.09 12.03 .06 0.004
4)Other Financial 8.92 6.52 2.4 0.36
Assets
5)Current Tax 4.59 5.95 (1.36) (0.22)
Assets
Other Current Assets 102.31 139.03 (36.72) (0.26)
Total Current Assets 1325.16 1101.17 223.99
Gross Working 1325.16 1101.17 223.99 0.20
Capital

(-) Current Liabilities

Financial Liabilities:
1)Borrowings 2263.64 2263.64 0 1
2)Trade
Payables
i)MSME 114.51 122.11 7.6 0.06
ii)Others 326.90 437.13 110.23 0.25
Other
Financial
Liabilities 884.25 876.15 (8.1) (0.009)
Other Current 79.51 80.06 .55 0.006
Liabilities
Provisions 38.15 35.93 (2.22) (0.06)
Total 3706.96 3815.02 108.06 0.02
Current
Liabilities
Net Working Capital 2381.8 2713.85 332.05
Table - 10

47
 INTERPRETATION

We can see from the above table that there is a decrease of332.05 in the Net Working Capital. If the
Net Working capital is decreasing, we can conclude that the company’s liquidity is decreasing. It
could indicate that the company is unable to utilize its existing resources in a good way. This can be
attributed to the major decrease in the Cash & Cash Equivalents(C & CE) and Other Financial
Assets. Cash & Cash Equivalents were at 396.85 Mn. Rs. in 2020-21 which decreased to 219.39
Mn. Rs in 2021-22..Companies with a healthy amount of cash and cash equivalents can reflect
positively in their ability to meet their short-term debt obligations. Other Financial Assets
registered a fall of 0.36%

48
 CHAPTER - 5
FINDINGS,
SUGGESTIONS AND
CONCLUSION

49
1.1 FINDINGS
 The Current Ratio shows that the company’s liquidity position is not ideal as per the
standard ratio 2:1 but it is even less than 1 which indicates the company’s inability to
pay off its current obligations.

 The working capital ratio has been steadily declining over the years, from 18.94 in 2017-18
to 7.80 in 2021-22. Although in decline the ratio suggests that company is on solid ground in
terms of liquidity

 The Quick Ratio has declined over the years from 0.31 in 2019-20 to 0.18 in 2022- 23
& increasing to 0.22 in 2023-24 which although is not ideal however we can say that it
will touch the ideal limit of 1:1in coming years
 Net profit ratio is in negative throughout the years 2019-20 to 2022-23, indicating net loss,
however the company has made a recovery in financial year 2023-24 at 6.36, indicating
that company is on road to recovery

1.2 CONCLUSION
The Project Report was initiated with the objective to study the working capital management
in Hindusthan National Glass & Industries Ltd. We can conclude that the company’s
profitability has increased over the years. The Ratios of the company are satisfactory and the
company enjoys a balance of liquidity and profitability. On the basis of the analysis, we can
further conclude that the overall management of working capital is sound.

1.3 SUGGESTIONS
There are no major deficiencies in the management of working capital, however, there is a
need for improvement in some ratios like Receivables and Working Capital Turnover in order
to enhance the liquidity and profitability position to the greater level. The Working Capital
Turnover Ratio can also be improved by maintaining an optimal level of working capital
without incurring liquidity risks which will be beneficial to the company’s daily operations
and long-term investments and the company can reduce the average collection days by
reviewing its credit terms and policies with an aim to shorten its Net Operating Cycle.

50
CHAPTER- 6
Learning

51
 LEARNING
 I have done my summer internships in the company which is Hindusthan National
Glass & Industries Ltd This company is basically offering the glass products like
glass storage bottles for medicine, beverages, liquor etc.

 I had joined Hindusthan National Glass & Industries Ltd as a intern on 19 June 2024
for 2 month. There my work was to prepare a company profile and analyze their
financial working capital.

 They taught me checking of the statements of balance sheet, profit loss account
&various files. There I came to know a brief information about various department
like HR, Sales dept., R&D dept., account dept.Quality dept.

 During my project they not only gave me the information about sales & purchase but
also taught me how to deal a customer & how to negotiate in the deal.

 I Study financial statement of company & I calculate various ratios which are
mentioned in data analysis. That shows the complete working capital position of the
company & on the basis of the analysis, we can further conclude that the overall
management of working capital is sound.

52
 BIBLIOGRAPHY

Books:

1. Financial Management, Theory and Practice 10th Edition by Prasanna Chandra.

2. Financial Management for CA Intermediate by Institute of Chartered Accountants of India.

3. Financial Analysis & Control for M.Com by Nirali Prakashan.

Research Papers:

1. MANISHA B, RATHOD. "Financial Performance Analysis." Global Journal For Research

Analysis 3, no. 5 (June 15, 2012)
2. Thakur, Neelam, and J. S. Bhatnagar. "Financial analysis of HDFC Bank." Scientific Journal of
India 2, no. 2 (December 31, 2017)
3. Alshowishin, Aown. "Financial Analysis." International Journal of Scientific and Research
Publications (IJSRP) 11, no. 4 (April 12, 2021)
4. K., Dr Siva Nageswararao. "Financial Performance Analysis of Andhra Bank." International
Journal of Psychosocial Rehabilitation 24, no. 5 (March 31, 2020)
5. De Moraes, Claudio Oliveira, José Americo Pereira Antunes, and Adriano Rodrigues.
"Financial intermediation analysis from financial flows." Journal of Economic Studies 46, no. 3
(August 2, 2019)

Websites:

www.moneycontrol.com

HNG | HNG

53
APPENDIX

54
 STATEMENT OF PROFIT & LOSS FOR THE YEAR 2022-23&
2023-24 COMBINED
-

55
56
57
58
59
60
61
62
63