CHAPTER NO.

1INTRODUCTION
1.1EXECUTIVE SUMMARY
Management is an art of anticipating and preparing for risks, uncertainties and overcoming
obstacles. An essential precondition for sound and consistent assets management is establishing
the sound and consistent assets management policies covering fixed as well as current assets. In
modern financial management, efficient allocation of funds has a great scope, in finance and profit
planning, for the most effective utilization of enterprise resources, the fixed and current assets
have to be combined in optimum proportions.

Working capital in simple terms means the amount of funds that a company requires for financing
its day-to-day operations. Finance manager should develop sound techniques of managing current
assets.

This Project title is “AN ANALYSIS OF WORKING CAPITAL MANAGEMENT”. This

study was conducted at the Prakash automobile, Yeola (authorized showroom and service center
of Hero Moto Corp Ltd). The duration of this project was two months. During the project I
interviewed the executives & staff to collect the data, & also made use of company records &
annual reports. The data collected were then compiled, tabulated and analyzed.

Working Capital Management is a very important aspect of financial management due to

investments in current assets represents a substantial portion of total investment. Investment in
current assets & the level of current liabilities have to be geared quickly to change sales.

This project is carried to analyze the working capital management of Hero Moto Corp Ltd co. Ltd.
for the last three years from 2011 to 2013.

1.2 NEED OF THE STUDY

As per mandatory requirement of Savitribai Phule Pune University, I have undertaken this project
as a part fulfillment of Bachelor of Business Administration curriculum within 2 months training at
Prakash automobile..

1
Each management student learns a lot during his three years of BBA course, but the perfection in
his learning can’t be even imagined until & unless there is a practical training. The project report
provides required practical training to student.

The scope of the project is related to working capital management. In this study, I analyze the
working capital management of Hero Moto Corp Ltd. The aim of the study was to know, how an
organization make the arrangement about day to day expenditure via working capital management.
Analysis of the data and interpretation of information has been done with help of table and graph.
The validity of the study of this project limited for two months

1.3 SELECTION OF THE TOPIC

The importance of working capital management is reflected in the fact that financial managers
spend a great deal of time in managing current assets and current liabilities. Arranging short term
financing, negotiating favorable credit terms, controlling cash movement, managing accounts
receivable and monitoring investment in inventories consume a great deal of time of financial
managers. Hence, the main intention behind selecting this topic was to know the financial position
of funds invested in working capital.
It was a great pleasure in studying the working capital management of Hero Moto Corp Ltd co.
Ltd. Selecting this topic has not only helped to know the financial facts but also the efficient
financial management especially the various elements of working capital.

2
 CHAPTER NO.2 OBJECTIVE OF THE STUDY

To understand the working capital cycle of organization

To study the financial statements of the Hero Moto Corp Ltd.

To know organizational structure of the Hero Moto Corp Ltd.

To understand the meaning and objectives of working capital management.

To know various tools for working capital management and their uses.

3
 CHAPTER NO.3 ORGANISATION PROFILE

Hero Moto Corp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest manufacturer of
two - wheelers, based in India. In 2001, the company achieved the coveted position of being the
largest two-wheeler manufacturing company in India and also, the 'World No.1' two-wheeler
company in terms of unit volume sales in a calendar year. Hero Moto Corp Ltd. continues to
maintain this position till date.

VISION:-
The story of Hero Honda began with a simple vision - the vision of a mobile and an empowered
India, powered by its two wheelers. Hero Moto Corp Ltd., company's new identity, reflects its
commitment towards providing world class mobility solutions with renewed focus on expanding
company's footprint in the global arena.

MISSION:-
Hero Moto Corp’s mission is to become a global enterprise fulfilling its customers' needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts
its customers into its brand advocates.
The company will provide an engaging environment for its people to perform to their true
potential. It will continue its focus on value creation and enduring relationships with its partners.

STRATEGY:-
Hero Moto Corp’s key strategies are to build a robust product portfolio across categories, explore
growth opportunities globally, continuously improve its operational efficiency, aggressively
expand its reach to customers, continue to invest in brand building activities and ensure customer
and shareholder delight.

BRAND
The new Hero is rising and is poised to shine on the global arena. Company's new identity "Hero
Moto Corp Ltd." is truly reflective of its vision to strengthen focus on mobility and technology and
creating global footprint.
Building and promoting new brand identity will be central to all its initiatives, utilizing every
opportunity and leveraging its strong presence across sports, entertainment and ground-level
activation

MANUFACTURING
4
Hero Moto Corp two wheelers are manufactured across 4 globally benchmarked manufacturing
facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of
Haryana in northern India. The third and the latest manufacturing plant are based at Haridwar, in
the hill state of Uttrakhand.

DISTRIBUTION
The Company's growth in the two wheeler market in India is the result of an intrinsic ability to
increase reach in new geographies and growth markets. Hero Moto Corp’s extensive sales and
service network now spans over to 6000 customer touch points. These comprise a mix of
authorized dealerships, service & spare parts outlets, and dealer-appointed outlets across the
country.

AWARDS:-
1. Green Pioneer Award - 2013
2. "Business Leader of the Year" Award by Hon'ble President of India, Shri. Pranab Mukherjee,
at the AlMA Managing India Awards 2013 on April 11, 2013 (Conferred on Mr. Pawan
Munjal)
3. "Business Leader of the Year" Award in the Auto (Two Wheelers) category by Deputy
Chairman of the Planning Commission Mr. Montek Singh Ahluwalia, at the NDTV Business
Leadership Awards 2013 (Conferred on Mr. Pawan Munjal)
4. CFO of the year Award (Conferred on Mr. Ravi Sud)
5. Business Leader in Moto Corp Ltd (two-wheelers) at the NDTV Profit Business Leadership
Awards 2012 (Conferred upon Mr. Pawan Munjal)
6. Best value for Money Bike Maker and Best Advertising in Two Wheelers Category at the
Auto India Best Brand Awards 2012
7. Digital Advertiser of the year at the Indian Digital Media Awards (IDMA) 2012
8. Three awards (Launch Event of the year, Rural Engagement Progamme and Live Patron
Award for Marketing Excellence) at the WOW Awards organised by EventFAQs
9. Advertiser of the year 2012 by Indian Digital Media Awards 2012
10. Innovation in Loyalty Marketing Award (Initiative: Hero GoodLife Utsav) by Colloquy
Loyalty Awards
11. TPM Excellence Award 2012 by JIPM (Japan Institute of Plant Maintenance)
12. Best Learning & Development Award
13. Asias Third Best Employer Brand Award
14. ET Now Talent & HR Leadership Award
15. 8th Recruiting and Staffing Best-in-Class Award
5
16. Global HR Excellence Award
17. India Human Capital Award by Human Capital
18. Business Technology Excellence Awards 2012
19. Business Technology Innovation Awards 2012
20. Top Green IT Enterprise Award
21. IT Transformers Award
22. Quality Circle Excellence Award at National QC Convention - 2012
23. Two-wheeler Manufacturer of the Year award by Bike India magazine.
24. Adjudged the "Bike Manufacturer of the Year" at the Economic Times ZigWheels Car and
Bike Awards
25. CNBC Awaaz - Storyboard special commendation for "Effective rebranding of a new
corporate entity" by CNBC Awaaz Consumer Awards
26. "Most Recommended Two-Wheeler Brand of the Year" award by CNBC Awaaz Consumer
Awards
27. Colloquy Loyalty Awards "Innovation in Loyalty Marketing International 2011" for Hero
GoodLife
28. "Best Activity Generating Short or Long-Term Brand Loyalty" by the Promotion Marketing
Award of Asia Order of Merit for Hero GoodLife
29. Ranked No 1 brand in the Auto (Two-Wheelers) category in the Brand Equity "Most Trusted
Brand" 2011 survey
30. Rated as Top Indian Company in Automobile - Two Wheelers sector by Dun & Bradstreet -
Rolta Corporate Awards 2009
31. Most Preferred Brand of Two-Wheelers" award at the CNBC Awaaz Consumer Awards.
32. Adjudged at top of the two-wheeler category in the Brand Equity Most Trusted Brands 2010
Survey.
33. Ranked No. 3 Most Trusted Brand across categories amongst Young Adult Males
34. Company of the Year awarded by Economic Times Awards for Corporate Excellence 2008-09.
35. CNBC TV18 Overdrive Awards 2010 'Hall of Fame' to Splendor
36. NDTV Profit Car & Bike Awards 2010
37. Two-wheeler Manufacturer of the Year
38. Car and Bike Viewers' Choice Two-wheeler of the Year (Karizma ZMR)
39. Bike Maker of the Year by ET-ZigWheels Car & Bike of the Year Awards 2009

40. 'Two-wheeler Manufacturer of the Year' by NDTV Profit Car & Bike Awards 2009 and
Passion Pro adjudged as Car and Bike Viewers' Choice two-wheeler
6
41. Top Indian Company under the 'Automobile - Two-wheelers' sector bythe Dun & Bradstreet-
Rolta Corporate Awards
42. Won Gold in the Reader's Digest Trusted Brand 2009 in the 'Motorcycles' category
43. NDTV Profit Business Leadership Awards 2009 - two-wheeler category
44. NDTV Profit Business Leadership Award 2008 - Hero Honda Wins the Coveted "NDTV
Profit Business Leadership Award 2008"
45. Top Gear Design Awards 2008 - Hunk wins Bike of the Year.
46. NDTV Profit Car India & Bike India Awards - NDTV "Viewers' Choice Award" to Hunk in
Bike category
47. IndiaTimes Mindscape and Savile Row ( A Forbes Group Venture ) Loyalty Awards -
"Customer and Brand Loyalty Award" in Automobile (two-wheeler) sector
48. Asian Retail Congress Award for Retail Excellence (Strategies and Solutions of business
innovation and transformation) - Best Customer Loyalty Program in Automobile category
49. NDTV Profit Car India & Bike India Awards - Bike Manufacturer of the year
50. Overdrive Magazine - Bike Manufacturer of the year
51. TNS Voice of the Customer Awards: No.1 executive motorcycle Splendor NXG No.1 standard
motorcycle CD Deluxe No. premium motorcycle CBZ Xtreme

7
GLOBAL EXPANSION OF BUSINESS:-
Hero Streets Globally
1. Guatemala
2. Kenya
3. India
4. Honduras
5. Turkey
6. El Salvador
7. Ivory Coast
8. Egypt
9. Peru
10. Tanzania
11. Sri Lanka
12. Uganda
13. Nepal
14. Mozambique
15. Bangladesh
16. Democratic Republic of Congo
17. Ecuador
18. Burkina Faso
19. Uganda
20. Angola
21. Sri Lanka
22. Mozambique

8
9
ORGANIZATION CHART
10
 CHAIRMAN INDEPENDENT NON
DIRECTOR EXECUTIVE
DIRECTOR

JOINT
DEPUTY MANAGING MANAGING
MANAGER DIRECTOR DIRECTOR

REGIONAL ZONAL
MANAGER MANAGER AREA
MANAGER

BRANCH DEALER DISTRICT

MANAGER MANAGER

SALES SALES
MANAGER EXECUTIVE

YEAR WISE PERFORMANCE

11
SR. NO PARTICULARS 2011-12 2012-13 2013-14

1 Sales in units 6,235,205 6,075,583 6,245,960

2 Profit before tax 2,865 2,529 2,867

Rs. in Crores

3 Earnings per share 119.1 106.1 105.6

Rs.

4 Return on capital employed 58.9 47.8 52.7

%

5 Profit after tax 2378 2118 2109

Rs. in Crores

6 Total net income 23944 24166 25722

Rs. in Crores

7 Economic value added 1677 1334 1228

Rs. in Crores

8 Dividend per share 45 60 65

Rs.

CHAPTER NO.4 THEORETICAL BACKGROUND

INTRODUCTION:-

12
Working capital is defined as the excess of current assets over current liabilities and provisions. In
other words it is the Net Current Assets or Net Working Capital. Working capital refers to the
investment by the company in short terms assets such as cash, marketable securities. Net current
assets or net working capital refers to the current assets less current liabilities. Symbolically, it
means,
Net working capital = Current Assets -- Current Liabilities

Working capital is the difference between the inflow and outflow of funds. In other words it is the
net cash inflow. Working capital represents the total of all current assets. In other words it is the
Gross working capital, it is also known as Circulating capital or Current capital for current assets
are rotating in their nature.

IMPORTANCE OF WORKING CAPITAL:-

Working capital may be regarded as the lifeblood of the business. Without insufficient working
capital, any business organization cannot run smoothly or successfully.
In the business the Working capital is comparable to the blood of the human body. Therefore the
study of working capital is of major importance to the internal and external analysis because of its
close relationship with the current day to day operations of a business.
The inadequacy or mismanagement of working capital is the leading cause of business failures. To
meet the current requirements of a business enterprise such as the purchases of services, raw
materials etc. working capital is essential. It is also pointed out that working capital is nothing but
one segment of the capital structure of a business.
In short, the cash and credit in the business, is comparable to the blood in the human body like
finance s life and strength i.e. profit of solvency to the business enterprise.

Financial management is called upon to maintain always the right cash balance so that flow of
fund is maintained at a desirable speed not allowing slow down. Thus enterprise can have a
balance between liquidity and profitability. Therefore the management of working capital is
essential in each and every activity.

NATURE AND TYPE OF WORKING CAPITAL: -

The term of working capital refers to current assets which may be defined as (i) those are
convertible into cash or equivalents fixed assets as well as the current assets, both requires
13
investment of funds. So, the management of working capital and of fixed assets, apparently seem to
involve same types of considerations but it is not so. The management of working capital involves
different concepts and methodology than the techniques used in fixed assets management. The
reason for this difference is obvious. The very basis of fixed assets decision process and the working
capital decision process are different. The fixed assets involve long period perspective and therefore,
the concept of time value of money is applied in order to discount the future cash flows; whereas in
working capital the time horizon is limited, in general to one year only and the time value of money
concept is not considered. The fixed assets affect the long term profitability of the firm while the
current assets affect the short liquidity position.

Gross Working Capital: The gross working capital refers to the firm’s investment in all the
current assets taken together. The total of investments in all the individual current assets is the gross
working capital. This concept implies the total of all current assets of a business firm. A current
asset is that which can be converted into cash within an according year or an operating cycle. The
current assets include cash and bank balance, debtors, bills receivables, inventories, expenses
prepaid and short-term investments.

Net Working Capital: This concept of working capital is the difference between current assets and
current liabilities. While current assets have been defined above, current liabilities can be explained
as those liabilities which are expected to mature for payment within an accounting year and include
creditors, bills payable, outstanding expenses, bank overdraft and short-term loans. The net working
capital may either be positive or negative. If the total current assets are more than total current
liabilities, then the difference is known as positive net working capital, otherwise the difference is
known as negative net working capital.

FACTORS DETERMINING WORKING CAPITAL REQUIREMENT:-

14
 The working capital needs of a firm are determined and influenced by various factors. A wide
variety of considerations may affect the quantum of working capital required and these
considerations may vary from time to time. The working capital needed at one point of time may not
be good enough for some other situation. The determination of working capital requirement is a
continuous process and must be undertaken on a regular bas9s in the light of the changing situations.
Following are some of the factors which are relevant in determining the working capital needs of the
firm
1. Basis Nature of Business: In some business organizations, the sales are mostly on cash basis and
the operating cycle is also very short. In these concerns, the working capital requirement is
comparatively less. Mostly service giving companies come in this category. In such cases, the
working capital requirement is more.
2. Production policy: Working capital requirements also fluctuate according to the production
policy. Some products have a seasonal demand but in order to eliminate the fluctuations in
working capital, the manufacturer plans the production in a steady flow throughout the year. This
policy will even out the fluctuations in working capital.

3. Market conditions: Due to competition in the market, the demands for working capital
fluctuate. In a competitive environment, a business firm has to give liberal credit to customers.
Similarly, it will have to maintain a large inventory of finished goods to service the customers
promptly. In this situation, larger amount of working capital will be required.
4. Seasonal fluctuations: A firm which is producing products with seasonal demands, requires
more working capital during peak seasons while the demand for working capital will go down
during slack seasons.
5. Growth and expansion activities : The working capital needs of the firm increase as it grows
in terms of sales or fixed assets. A growing firm may need to invest funds in fixed assets in order
to sustain its growth production and sales. This will in turn increase investments in current assets
which will result in increase in working capital needs.
6. Operating efficiency: The operating efficiency of the firm relates to the optimum utilization of
resources at minimum cost. The firm will be effectively contributing to its working capital if it is
efficient in controlling operating costs. The working capital is better utilized and cash cycle is
reduced which capital needs.
7. Credit policy: The working capital requirements of a firm depend to a great extent on the credit
policy followed by a firm for its debtors. A liberal credit policy followed by a firm will result in
huge funds blocked in debtors which will enhance the need for working capital. The situation will
15
 be further deteriorated if the collection procedure is also slack. If a liberal credit policy is followed
without inquiring into the credit worthiness of customers there can be a problem of recovery in
future which will further push up the working capital requirements.
8. Sales growth: As the sales grow, the working capital needs also go up. Actually it is very
difficult to establish an exact proportion of increase in current assets, as a results of increase in
sales. Advance planning of working capital becomes essential because current assets will have to
be employed even before growth in sales takes place. Once sales start increasing, they must be
sustained. For this a firm will have to expand its production facilities which will require more
investments in fixed assets. This will in turn result in more requirements of current assets which
will increase working capital needs
9. Dividend policy: a company has to pay dividends in cash as per company act 1956. if a liberal
policy is followed for payment of dividends, more working capital will be required. The needs for
working capital will be substantially reduced if dividend policy is conservative.

WORKING CAPITAL MANAGEMENT:-

Working Capital is the key difference between the long term financial management and short term
financial management in terms of the timing of cash. Long term finance involves the cash flow
over the extended period of time i.e 5 to 15 years, while short term financial decisions involve
cash flow within a year or within operating cycle.
Working capital management is a short term financial management. Working capital management
is concerned with the problems that arise in attempting to manage the inter relationship that
exists between them. The current assets refer to those assets which can be easily converted into
cash in ordinary course of business, without disrupting the operations of the firm. Composition of
working capital Major Current assets, cash, accounts receivables, inventory, marketable securities
and major current liabilities, bank overdraft, outstanding expenses, accounts payable, bills
payable.

PROBLEMS FACED BY INADEQUATE WORKING CAPITAL:-

16
1. In case of inadequate working capital, firm may not be able to take advantage of cash
discount.
2. It may not be able to take advantage of profitable business opportunities.
3. It may fail to pay dividend because of non-availability of funds.
4. Short term liabilities cannot be paid because of inadequate working capital, which leads to
borrow funds at exorbitant rates of interest.
5. Fixed assets cannot effectively and efficiently be utilized on account of lack of sufficient
working capital.
6. Its low liquidity position may lead to liquidation of firm thus it may lose its reputation
therefore a firm may not be able to get credit facilities.

CONCEPT OF OPERATING CYCLE:-

If the objective is to maximize shareholders wealth, then sufficient profit is to be generated
through successful sales program. But sales are not converted into cash instantly. There is a time
gap between sale of goods and realization of cash. Working capital in the form of current assets is
required to carry on sales activities during this time gap. The cycle refers to the time gap between
the firms paying cash for raw material, taking up production, building up stock and inflow of cash
from debtors (sales). A company can procure some amount of raw materials on credit, but it has to
pay for the other portion of raw material, labour costs and factory overheads. The combination of
this three is called WIP. On completion of the production cycle WIP is converted into finished
product, which when sold on credit is converted into sundry debtors. On expiry of credit period
cash is realized from sundry debtors. This cash can be re-used for financing raw materials, WIP,
etc. Hence there is a complete cycle from cash to cash, i.e. cash is converted into raw materials,
WIP, finished products, debtors and cash again. The requirement of funds during this time gap is
met by short-term funds. This cycle is called as ‘Working Capital Cycle or Cash Cycle’. The
continuing flow from cash to supplier, to inventory, to accounts receivables and back into cash is
what is called the operating cycle.
Operating cycle shows the length of time between a co.’s paying for raw materials, entering into
stock and realizing the cash from sales of finished products. The
Length of the time can be calculated by adding the number of days needed for each stage in the
cycle.

17
 CHAPTER NO .5 RESEARCH METHODOLOGY

Research in common parlance refers to a search for knowledge. Once can also define research as a
scientific and systematic search for pertinent information on a specific topic. In fact, research is an
art of scientific investigation. The Advanced Learner’s Dictionary of Current English lays down
the meaning of research as “a careful investigation or inquiry specially through search for new
facts in any branch of knowledge.”

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. In it we study the various
steps that are generally adopted by a researcher in studying his research problem along with the
logic behind them. It is necessary for the researcher to know not only the research
methods/techniques but also the methodology. Researchers not only need to know how to develop
certain indices or tests, how to calculate the mean, the mode, the median or the standard deviation
or chi-square, how to apply particular research techniques, but they also need to know which of
these methods or techniques, are relevant and which are not, and what would they mean and
indicate and why.

Proper methodology is an essential characteristic of quality full research studies; research

methodology is the blueprint of the desired research work. Research methodology consist of the
many element which are useful for enhance the objectivity of the research. Research methodology
is used to find out answer of the following question.
1. Which data are used to research work?
2. Which tools are used to data collection?
3. How much respondent of the data?
4. Which methods are used to data analysis?
5. Which of the research areas?

Research can be done primarily with the help of two types of data: -
PRIMARY DATA: -
This is mainly concerned with first hand information. It consists of preparing the questionnaire or
taking interviews, Based on the information received from the answer written in the questionnaire
or the interviews detailed reports is being prepared.
18
SECONDARY DATA: -
Secondary data means data that are already available i.e., they refer to the data which have already
been collected and analyzed by someone else. When the researcher utilizes secondary data, then he
has to look into various sources from where he can obtain them. In this case he is certainly not
confronted with the problems that are usually associated with the collection of original data.
Secondary data may either be published data or unpublished data. Usually published data are
available in: (a) various publications of the central, state are local governments; (b) various
publications of foreign governments or of international bodies and their subsidiary organizations;
(c) technical and trade journals; (d) books, magazines and newspapers; (e) reports and publications
of various associations connected with business and industry, banks, stock exchanges, etc.; (f)
reports prepared by research scholars, universities, economists, etc. in different fields; and (g)
public records and statistics, historical documents, and other sources of published information.
The sources of unpublished data are many; they may be found in diaries, letters, unpublished
biographies and autobiographies and also may be available with scholars and research workers,
trade associations, labor bureaus and other public/ private individuals and organizations.

During my project, I collect the Secondary data for my research through books, documents, annual
reports, news paper, etc to get the detailed information regarding financial statements.

19
CHAPTER NO .6 DATAANALYSIS AND INTERPRETATION

STATEMENT SHOWING CHANGES IN WORKING CAPITAL

FOR THE YEAR 2011-12 AND 2012-13
(Rs. in crores)

2011-12 2012-13 Increase in Decrease in

Particulars working working
capital capital
A) Current Assets

1. Current Investments 3290.30 3009.36 - 280.94

2. Inventories 675.57 636.76 - 38.81
3. Trade receivable 272.31 665.00 392.69 -
4. Cash & cash 76.82 181.04 104.22 -
equivalent
5. Short term loan 475.60 553.55 77.95 -
6. Other current assets 40.36 31.90 - 8.46

Total (A) 4830.96 5077.61 246.65 -

B) Current Liabilities

1. Trade payable 2293.17 1873.34 419.83 -

2. Other current 996.20 887.64 108.56 -
liabilities
3. Short term 1052.07 1409.70 - 357.63
provisions

Total (B) 4341.44 4170.68 170.76 -

Gross Working capital 489.52 906.93 417.41 -

Interpretation:-
Net Increase in Working Capital = 417.41
Above table shows the net increase in working capital because of tremendous increase in cash and
cash equivalents & debtors as well as decrease in trade payables and other current liabilities.

20
 STATEMENT SHOWING CHANGES IN WORKING CAPITAL
FOR THE YEAR 2011-12 AND 2012-13
(Rs. in crores)

Particulars 2012-13 2013-14 Increase in Decrease in

working working
capital capital
A) Current Assets

1. Current Investments 3009.36 3275.89 266.53 -

2. Inventories 636.76 669.55 32.79 -
3. Trade receivable 665.00 920.58 255.58 -
4. Cash &cash 181.04 117.50 - 63.54
equivalent
5. Short term loan 553.55 550.31 - 3.24
6. Other current assets 31.90 22.05 - 9.85

Total (A) 5077.61 5555.88 478.27 -

B) Current Liabilities

1. Trade payable 1873.34 2290.59 - 417.25

2. Other current 887.64 588.08 299.56 -
liabilities
3. Short term 1409.70 1544.33 - 134.63
provisions

Total (B) 4170.68 4423 - 252.32

Gross Working capital 906.93 1132.88 225.95 -

Interpretation:-
Net Increase in Working Capital = 225.95
Above table shows the net increase in working capital because of tremendous increase in current
assets & debtors as well as decrease in other current liabilities.

21
1) CURRENT ASSETS

Year Rs. in Crores

2011-12 4830.96
2012-13 5077.61
2013-14 5555.88

10
1010
2010
3010
4010
5010
2012 2013 2014
6010

YEAR

INTERPRETATION: -
Above table and graph shows that the current assets of the Hero Moto corp. ltd are constantly
increased. In the year 2012 the current assets was 4830.96, it is become 5077.61 in the year 2013
and in the year 2014 the current assets is increased up to 5555.88.

2) CURRENT LIABILITIES

22
Year Rs. in Crores
2011-12 4341.44
2012-13 4170.68
2013-14 4423

5010
4510 2012 2013 2014
4010
3510
3010
2510
2010
1510
1010
510
10

YEAR

INTERPRETATION: -
Above table and graph shows that the current liabilities of the Hero Moto corp. ltd are decreased
and increased. In the year 2012 the current liabilities was 4341.44, it is become 4170.68 due to
repayment of liabilities, in the year 2013 and in the year 2014 the current liabilities is increased
up to 4423.

3) INVENTORIES

23
Year Rs. in Crores
2011-12 675.57
2012-13 636.76
2013-14 669.55

680
670
660
650
640
630
620
610
2012 2013 2014
YEAR

INTERPRETATION: -
Above table and graph shows that the Inventories of the Hero Moto corp. ltd are decreased and
increased. In the year 2012 the Inventories was 675.57, it is become 636.76, in the year 2013 and
in the year 2014 the Inventories is increased up to 669.55.

24
4) SUNDRY DEBTORS

Year Rs. In Crores

2011-12 272.31
2012-13 665.00
2013-14 920.58

1000
900
800
700
600
500
400
300
200
100
0
2012 2013 2014

YEAR

INTERPRETATION: -
Above table and graph shows that the sundry debtors of the Hero Moto corp. ltd are constantly
increased. In the year 2012 the sundry debtors was 272.31, it is become 665.00 in the year 2013
and in the year 2014 the sundry debtors is increased up to 920.58.

25
5) CASH AND CASH EQUIVALENTS

Year Rs. in Crores

2011-12 76.82
2012-13 181.04
2013-14 117.50

200
180
160
140
120
100
80
60
40
20
0
2012 2013 2014

YEAR

INTERPRETATION: -
Above table and graph shows that the cash and cash equivalents of the Hero Moto corp. ltd are
increased and decreased. In the year 2012 the cash and cash equivalents was 76.82, it is increased
up to 181.04, in the year 2013 and in the year 2014 the cash and cash equivalents is decreased up
to 117.50.

26
 6. SHORT TERM LOAN ANDADVANCES

Year Rs. in Crores

2011-12 475.60
2012-13 553.55
2013-14 550.31

580
560
540
520
500
480
460
440
420
2012 2013 2014
YEAR

INTERPRETATION: -
Above table and graph shows that the short term loan and advances of the Hero Moto corp. ltd are
increased and decreased. In the year 2012 the short term loan and advances was 475.60, it is
increased up to 553.55, in the year 2013 and in the year 2014 the short term loan and advances is
decreased up to 550.31.

27
7) OTHER CURRENT ASSETS

Year Rs. in Crores

2011-12 40.36
2012-13 31.90
2013-14 22.05

45
40
35
30
25
20
15
10
5
0
2012 2013 2014

INTERPRETATION: -
Above table and graph shows that the other current assets of the Hero Moto corp. ltd are
constantly decreased. In the year 2012 the other current assets was 40.36, it is become 31.90 in
the year 2013 and in the year 2014 the other current assets is decreased up to 22.05.

28
8) SUNDRY CREDITORS

Year Rs. in Crores

2011-12 2293.17
2012-13 1873.34
2013-14 2290.59

2500

2000

1500

1000

500

0
2012 2013 2014
YEAR

INTERPRETATION: -
Above table and graph shows that the sundry creditors of the Hero Moto corp. ltd are decreased
and increased. In the year 2012 the sundry creditors was 2293.17, it is become 1873.34, in the
year 2013 and in the year 2014 the sundry creditors is increased up to 2290.59.

29
 09) OTHER CURRENT LIABILITIES

Year Rs. in Crores

2011-12 996.20
2012-13 887.64
2013-14 588.08

1200

1000

800

600

400

200

0
2012 2013 2014
YEAR

INTERPRETATION: -
Above table and graph shows that the other current liabilities of the Hero Moto corp. ltd are
constantly decreased. In the year 2012 the other current liabilities was 996.20, it is become 887.64
in the year 2013 and in the year 2014 the other current liabilities is decreased up to 588.08.

30
10) SHORT TERM PROVISIONS

Year Rs. in Crores

2011-12 1052.07
2012-13 1409.70
2013-14 1544.33

1800
1600
1400
1200
1000
800
600
400
200
0
2012 2013 2014
YEAR

INTERPRETATION: -
Above table and graph shows that the short term provisions of the Hero Moto corp. ltd are
constantly increased. In the year 2012 the short term provisions was 1052.07, it is become
1409.70 in the year 2013 and in the year 2014 the short term provisions is increased up to 1544.33.

31
 CHAPTER NO .7 LIMITATIONS OF THE PROJECT

1. The duration of project was only two months; therefore it was not sufficient for the study.

2. This analysis about working capital management of Hero Moto Corp Ltd. is mainly based on its
financial statements only. With limited time period for completion this project, it was not possible
to consider each and every factor, which might have affected the depth and the accuracy of the
analysis.

3. This analysis about working capital management is applicable for the period of only 2011-12 to
2013-14 and its extrapolation may or may not hold true for future forecasting of performance of
Hero Moto Corp Ltd.

4. The response from employees about data collection is one of the limitations of this project report.

5. The study is done on only one organization so it does not provide any scope of comparison with
other organization.

32
 CHAPTER NO.8 CONCLUSION

1. The current assets of Hero Moto Corp Ltd are constantly increased.

2. The current liabilities of Hero Moto Corp Ltd have mix results from analysis.

3. The sundry debtors of Hero Moto Corp Ltd are constantly increased.

4. The tremendous growth in cash and cash equivalents of Hero Moto Corp Ltd.

5. The other current assets of Hero Moto Corp Ltd are constantly decreased.

6. The sundry creditors of Hero Moto Corp Ltd are constantly increased and decreased.

7. The other current liabilities of Hero Moto Corp Ltd are constantly decreased.

8. The short term provisions of Hero Moto Corp Ltd are constantly increased.

9. The sales of Hero Moto Corp Ltd are constantly increased.

10. The debt amounts of Hero Moto Corp Ltd are constantly decreased.

11. The earning per shares of Hero Moto Corp Ltd is constantly decreased.
33
 CHAPTER NO.9 RECOMMENDATIONS

1. The constant growths in current assets are effect on working capital so Hero Moto Corp Ltd
should maintain the sufficient level of current assets.

2. The constant growths in debtors are adverse effect on working capital so Hero Moto Corp Ltd
should maintain the sufficient level of debtors and recover the maximum debtors as possible.

3. Hero Moto Corp Ltd should maintain the sufficient cash and cash equivalents to satisfy the
emergency need of working capital.

4. Hero Moto Corp Ltd should maintain the proper ratio of current assets and current liabilities.

34
 CHAPTER NO.10 BIBLIOGRAPHY

1) “N. M. Vechalekar” (Twelfth Edition) , “Financial Management," Nirali Prakashan, Pune

2) “I.M. Pandy” (Tenth Edition), “Financial Management”, Vikas publication, New Delhi

3) “C. R. Kothari” (2004), “Research Methodology- Method and techniques“, New age

International publisher, New Delhi

4) Annual Report of Hero Moto Corp Ltd.

5) Financial report of Hero Moto Corp Ltd.

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