1 31-Jan-16 OVERVIEW OF BALANCE SHEET EQUITY SHARE CAPITAL +RESERVES INVESTMENTS FIXED ASSETS GROSS BLOCK LESS ACC DEP NET BLOCK LIABILITIES ASSETS LOAN.

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Presentation transcript:

1 31-Jan-16 OVERVIEW OF BALANCE SHEET EQUITY SHARE CAPITAL +RESERVES INVESTMENTS FIXED ASSETS GROSS BLOCK LESS ACC DEP NET BLOCK LIABILITIES ASSETS LOAN FUNDS CURRENT LIABILITIES CURRENT ASSETS LOANS & ADVANCES

2 31-Jan-16 Basic Definitions ä Gross working capital: Total current assets. ä Net working capital: Current assets -Current liabilities. ä Working capital policy: ä The level of each current asset. ä How current assets are financed.

3 31-Jan-16 Working capital management: Includes both establishing working capital policy and then the day-to-day control of: Cash Inventories Receivables Short-term liabilities Ratios (current; quick)

4 31-Jan-16 RETURN ON CAPITAL EMPLOYED ROCE PBIT ROCE CAPITAL EMPLOYED SALES Operating Costs Net Fixed Assets Inventory Debtors Cash

5 31-Jan-16 IMPACT OF WORKING CAPITAL ON ROCE

6 31-Jan-16 CASH FLOW DIAGRAM CASH SUPPLIERS DEBTORS SALES CUSTOMER CREDIT DECISIONS INVENTORY DECISIONS COLLECTIONS SUPPLIER CREDIT POLICY EMPLOYEES BANKERS GOVT. LOAN FUNDS EQUITY LONG TERM FINANCIAL MGMT. CAPEX DECISIONS FIXED ASSETS INVEN- TORY PAYABLES SALARIES INTEREST TAX

7 31-Jan-16 PATTERN OF INVESTMENT IN CURRENT ASSETS HINDUSTAN LEVER LTD IN %

8 31-Jan-16 PATTERN OF INVESTMENT IN CURRENT ASSETS HPCL IN %

9 31-Jan-16 PATTERN OF INVESTMENT IN CURRENT ASSETS BPCL IN %

10 31-Jan-16 INVENTORY MANAGEMENT SYSTEMS  Coding System  Classification System  Exception Reporting  Carrying Cost Computation  Computation of Key Inventory Management Ratios

11 31-Jan-16 Inventory Review  SURPLUS ASSET RECOGNITION  DISPOSAL PROCEDURES  SATISFACTION LEVELS (A & B)  CRISIS REQUESTS  TECHNOLOGICAL OBSOLESCENCE

12 31-Jan-16 INVENTORY POLICY REVIEW – STORES/SPARES - OBSOLESCENCE STANDARDISATION VARIETY REDUCTION – INDIGENISATION – VENDOR LEADTIMES SHIFT FROM JIC TO JIT BY REVEALING ODDNON-CONFORMING OBSOLETE DUPLICATE EXCESS SLOW MOVING

13 31-Jan-16 INVENTORY CARRYING COST INTEREST 9 STORAGE 3 DAMAGE 2 OBSOLESCENCE 5 INSURANCE 1 20% + PILFERAGE & RELOCATION

14 31-Jan-16 KEY INVENTORY RATIOS 1. RM STOCK HOLDING RM / CONSUMPTION 2. WIP WIP / COST OF PRODUCTION 3. FINISHED GOODS HOLDING FINISHED GOODS / SALES 4. STORES & SPARES HOLDING STORES&SPARES/CONSUMPTION

15 31-Jan-16 EVALUATION OF CASH MANAGEMENT TECHNIQUES (FLOAT ANALYSIS ) SALES = Rs 14.6 CRORES AVEARGE DAILY RECEIPTS = 14.6/365 = 4 LACS COLLECTION FLOAT = 5 DAYS DAILY UNCOLLECTED BALANCE = 20 LACS REDUCE FLOAT BY 2 DAYS AND RELEASE 8 LACS INTO THE SYSTEM

16 31-Jan-16 PATTERN OF FINANCING CURRENT ASSETS HINDUSTAN LEVER LTD

17 31-Jan-16 PATTERN OF FINANCING CURRENT ASSETS HPCL

18 31-Jan-16 PATTERN OF FINANCING CURRENT ASSETS BPCL

19 31-Jan-16 FINANCING WORKING CAPITAL  BANK BORROWINGS BILL DISCOUNTING EXPORT FINANCING  PUBLIC DEPOSITS 35% OF NET WORTH  COMMERCIAL PAPER  UNSECURED DEBENTURES  INTER CORPORATE DEPOSITS

20 31-Jan-16 WORKING CAPITAL CYCLE

21 31-Jan-16 WORKING CAPITAL CYCLE SAIL

22 31-Jan-16 WORKING CAPITAL CYCLE HPCL

23 31-Jan-16 WORKING CAPITAL CYCLE BPCL

24 31-Jan-16 WORKING CAPITAL CYCLE BPCL

25 31-Jan-16 WORKING CAPITAL CYCLE

26 31-Jan-16 WORKING CAPITAL CYCLE