A STUDY ON WORKING CAPITAL MANAGEMENT IN IZON TECHNOLOGY

INDUSTRY AT COIMBATORE

CHAPTER -I

ABSTRACT

This finance project entitled Working Capital Management deals in Izon Technology

Industry. The term of study was kept limited to make the title true. The purpose of the project

is to get the in depth understanding of the process of working capital management. With the

growing Indian economy and the government policies for infrastructure the demand for cotton

is increasing and seeing this as an opportunity is under taking many new projects for expansion

of the production which are under implementation for increasing the capacity of the plants. In

this project, working capital has been analyzed in two ways overall study of the working

capital of izon technology industry and secondly, plant-wise working capital of, since the izon

technology industry Company has seven plants in different region and each plant has its own

working capital.

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INTRODUCTION

Different businesses will have different working capital characteristics. There are 3 main

aspects to these differences:

a) Holding inventory

b) Taking time to pay suppliers and other accounts payable

c) Allowing customers (accounts payable) time to pay

a) Food supermarkets and other retailers receive most of their sales in the form of cash,

credit card or debit card. However, they will buy on credit from suppliers. They will therefore

have the benefit of significant cash holdings which they may chose to invest.

b) A wholesaler supplies other companies and is likely to buy and sell mainly on credit.

The flow of cash will have to be managed carefully. Such a company may have to rely on

short-term borrowings and overdrafts.

c) Small companies with a limited trading record may find it difficult to obtain trade

credit. At the same time customers will expect to receive the normal credit period to settle

accounts

Working capital is the capital required for maintenance of day-to-day

business operations. The present day competitive market environment calls for an efficient

management of working capital. The reason for this is attributed to the fact that an ineffective

working capital management may force the firm to stop its business operations, may even lead

to bankruptcy. Hence the goal of working capital management is not just concerned with the

management of current assets & current liabilities but also in maintaining a satisfactory level of

working capital. Holding of current assets in substantial amount strengthens the liquidity

position & reduces the riskiness but only at the expense of profitability. Therefore achieving

risk-return trade-off is significant in holding of current assets. While cash outflows are

predictable it runs contrary in case of cash inflows. Sales program of any business concern

does not bring back cash immediately.

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 There is a time lag that exists between sale of goods & sales realization. The capital

requirement during this time lag is maintained by working capital in the form of current assets.

The whole process of this conversion is explained by the operating cycle concept.

Working capital management involves the relationship between a firm's short-term

assets and its short-term liabilities. The goal of working capital management is to ensure that a

firm is able to continue its operations and that it has sufficient ability to satisfy both maturing

short-term debt and upcoming operational expenses. The management of working capital

involves managing inventories, accounts receivable and payable, and cash.

There are many ratios that can be calculated from the financial statements

pertaining to a company's performance, activity, financing and liquidity. Some common ratios

include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and

working capital.

OBJECTIVES OF THE STUDY

To find whether the company maintains minimum investment in inventory

organized the profitability.

To know whether the company maintain a large size of inventory for efficient and

smooth production and sales operations.

To know how the company maintains its credit policy.

To point out how well the company manage its cash.

To find whether there is proper match between current assets and current liabilities.

To know the ways and means of financing working capital Management

Suggestions for the working capital management

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 SCOPE OF THE STUDY

The scope of the present study on composes within its fold a theoretical frame work of

working capital management. In general, analysis of working capital trends, relationship of

working capital to sales, liquidity of working capital, analysis of management of components

of working capital and the management of working capital finance in the select unit. The

period covered by the study in five years from 2011 to 2016

LIMITATIONS OF THE STUDY

The study conducted and done is analytical, subject to the following limitations

The study is mainly carried out based on the secondary data provided in the

financial statements

This study is based on the historical data and information provided in the annual

reports therefore it may not be a future indicator

There may be some fractional differences in the calculated ratios

As the study was for short span of 3 weeks and due to lack of time other areas

could not be well focused

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CHAPTER SCHEME

Chapter 1: Introduction

Chapter 2: Review of Literature

Chapter 3: Research Methodology

Chapter 4: Data Analysis and Interpretations

Chapter 5: Findings, Suggestion, Conclusions

Chapter 6: Bibliography

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 RESEARCH METHODOLOGY

The study will be based on the quantities and qualitative approach of the working capital

management model at izon technology industry needs a thorough study. With the help of ratio

analysis & trend analysis the result of the control mechanism can be summarised which will

help in identifying the effectiveness of the system under the preview. The data for the

companies under analysis has been taken from their respective websites of the companies.

`Microsoft excel has been used as a tool for different calculation purposes and developing the

charts

COLLECTION OF DATA:

The data has been collected from the primary and secondary sources:

PRIMARY DATA

(a) Department visit- discussion with the concerned person and interviewing officers in

accounts and finance sector.

(b) Observation method.

SECONDARY DATA

Annual reports

Journals and magazines

Study of files and office documents

Websites of izon technology industry and other companies.

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 CHAPTER- II

REVIEW OF LITERATURE
REVIEW OF LITERATURE

Working capital management involves the relationship between a firm's short-term assets and its

short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its

operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming

operational expenses. The management of working capital involves managing inventories.

The importance of cash flow is not new to the finance literature. Over twenty years ago, Largay and

Stickney (1980) reported that the then-recent bankruptcy of W.T. Grant, a nationwide chain of department

stores, should have been anticipated because the corporation had been running a deficit cash flow from

operations for 8 of the last 10 years of its corporate life.

As part of a study of the Fortune 509s financial management practices, Gilbert and Reichert (1995) find that

time value of money cash flow analysis is used to select projects in 91 percent of the firms. Accounts

receivable management models are used in 59 percent of these firms, while inventory management models

were used in 60 percent of the companies.

Recently, Farragher, Kleiman and Sahu (21129) find that 55 percent of firms in the S&P Industrial index

complete some form of a cash flow assessment, but did not present insights regarding accounts receivable

and inventory management, or variations of any current account asset or liability accounts across industries.

Theoretical determination of optimal trade credit limits are the subject of many articles over the

years (e.g., Schwartz, 1974 and scherr, 1996), with scant attention paid to actual accounts receivable

management.

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 Across a limited sample, weinraub and visscher (1998) observe a tendency of firms with low levels

of current ratios to also have low levels of current liabilities. Combining accounts receivable and payable

into one issue is hill, satoris, and fergusons (1984) finding that payees define date of payment as the date

payment is received, while payors view payment as the postmark date. Additional WCM insight across

firms, industries, and time is needed! maness and zietlow (2101, pp. 51, 496) presents two models of value

creation through effective short-term financial management activities.

. Scherr (1989) analysed that by implementing best practices in Working capital, companies can

strengthen strong cash flow levels, improve profitability, budgeting and forecasting process, predictability

and manageability of results, heighten risk visibility and reduce reaction time.

It enables the firm to pay its obligations and also protects the firm from becoming bankrupt Shin and

Soenen (1998) highlighted that efficient Working capital management is very important for creating value

for the shareholders.

How are the readings connected? If there any other text out there besides the one in the last

paragraph. The first annual working capital survey, a joint project with rel consultancy group, was published

in the june 1997 issue of .rel is a london, england-based management consulting firm specializing in

working capital issues for its global list of clients. The original survey reports several working capital

benchmarks for public companies using data for 1996. Each company is ranked against its peers and also

against the entire field of 1090 companies. rel continues to update the original information on an annual

basis. The industries that include at least 8 companies over the 2010-2012 periods are listed below.

Moyer et al. (2003) found that Working Capital consists of a large portion of a firms total

investment in assets, 40% in manufacturing and 50-60% in retailing and wholesale industries respectively.

The firms could reduce its financing cost and increase the funds available for expansion if they minimise the

funds tied up in current assets. They found that cash helps to keep the firm liquid.

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 Cote and Latham (1999) argued the management of receivables, inventory and accounts payable

have tremendous impact on cash flows, which in turn affect the profitability of firms. Each of the Working

capital items (i.e., cash, receivables and inventories) helps in the management of firms in its own particular

way.

The first investigation in the European market was conducted by Marc Deloof (2003).109 He

analyzed a sample of 1,637 Belgian firms using almost the same variables. With regard to firm profitability,

he slightly modified the ROA and ROS ratios used hitherto, instead using. Similarly, he investigated a

negative correlation with the CCC. Like previous papers, he investigated not only the correlation between

the aggregate CCC and firm performance, and also each component in isolation. According to his

calculations, the number of accounts receivable, inventory and accounts payable days correlate negatively to

firm performance too.

Mohamad and Noriza (2010) did their study by taking secondary data from Bloombergs 72 listed

companies for 5 years from 2003-2007 to derive the relationship empirically between Working capital

management and profitability.

Alipour (2011) researched about working capital management and corporate

profitability while taking sample of 1063 companies from Tehran stock exchange. To test the hypothesis,

multiple regressions and Pearsons correlation was used. He analyzed that sale and profit of a company is

greatly influenced by the working capital management. Due to inefficient working capital management, a

company may be incapable to pay its debts on time. The results show a significant relationship between

working capital management and profitability of a company.

Study was done to check effects of working capital components (such as CCC, CATA (Current Asset over

Total Assets Ratio) ratio, debt to asset ratio, CR and current liabilities over total asset ratio) on firms

performance and profitability measured by Tobins Q ratio, return on invested capital and ROA (Return on

Assets).

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It is interesting that accounts payable correlate negatively despite the fact that payables are presumed to

reduce the cash gap. Deloof (2003) argues that this finding, which appears contradictory at first glance, is

the result of a shortcoming in Pearson correlations, which do not allow causes to be distinguished from

consequences. A negative correlation is thus consistent with the view that highly profitable firms usually

afford their suppliers shorter payment periods, as they have the financial resources to do so. According to

Deloof (2003), profitability affects accounts payable days, not vice ver.

Nuru Mohammed (2011) studies the effect of working capital investment and financing policies on

firms profitability a sample of 11 manufacturing private limited companies in Tigray region, Ethiopia for

the period of 2005 to 2009.

Organdie, (2012). The study conducted by Olufisayo (2011) show that sales growth, cash conversion cycle,

account receivables and inventory period affect firm positively, while leverage and account payable affect

firm profitability negatively. In another study of selected firms in Nigerian shows that firms profitability is

reduced by lengthening the number of days accounts receivable, number of days of inventory and number

of days accounts payable. The result shows that shortening the CCC improves the profitability of the firms

Akinlo (2012).

The study on Kenyan firms suggest that more profitable firms takes the shortest time to collect cash from

their customers and high inventory levels reduce costs of possible interruptions in the production process

and loss of business due to scarcity of products. The study also reveals that the longer a firm takes to pay its

creditors, the more profitable it is M. Mathuva, (2010).

Berger and Bonaccorsi di Patti (2003) supported that leverage has a direct impact on agency cost which

influences firm performance. They proposed that high leverage or a low equity capital ratio causes to reduce

the agency cost related to outside equity and raises firm value. They used annual information of U.S.

commercial banks from 1990 to 1995. Their result showed that a 1% increase in leverage decrease equity

capital ratio surrenders a predicted 6% increase in profit efficiency.

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Deloof (2003)analyzed a sample of Belgian firms and found that firms can raise their performance by

shortening the periods for receivables collection and inventory conversion. He also reported an unanticipated

negative impact associated with the number of days for accounts payable; poorer firms prolong the time to

pay their debts.

Usama (2012) extended the work of Rehman and Nasar regarding working capital management while taking

the sample of 18 companies from other food sector listed on Karachi Stock Exchange for the period of 2006-

2010. The researcher used different variables to measure working capital management such as average

collection period, inventory turnover in days, cash conversion cycle, average payment period, debt ratio,

firm size, current ratio, and financial asset to total asset.

Deloof and Lazaridis (2006) both observed a negative correlation between

accounts payable and firm profitability, arguing in the same direction. In conclusion, Lazaridis et al. (2006)

advocate greater attention to working capital management and the optimized handling of the various

components of the CCC.

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Padachi et al. (2006) published a positive correlation between CCC and ROA using a fixed asset model.111

several specifics of this case must nevertheless be considered when analyzing this result. First, a very small

109 (Deloof (2003), p. 573-587), 110 (Lazaridis/Tryfonidis (2006), p. 26-35),111 (Padachi (2006), p. 45-

58). Sample of only 58 companies serves as basis for the statistics used. Second, a market with unique

conditions was chosen: Mauritius.

Accordingly, Padachi et al. (2006) explain the contradictory results mainly due to the small firm sizes. They

assume that smaller firms maintain a lower fixed asset base and rely mostly on current assets to increase

profits. Also, when a pooled OLS regression was used, the correlation turned negative. Notwithstanding, the

authors emphasize that there is a pressing need for further investigation, especially among SMEs.

Raheman and Nasr (2007) investigated the relationship between working capital management and

profitability of 94 Pakistani listed companies for the six-year period from 1999 to 2004. Net operating

profitability is used to measure profitability. Average collection period, inventory turnover in days, average

payment period, cash conversion cycle and current ratio on the net operating profitability include in the

study. Results from descriptive analysis show that average cash conversion cycle is 73 days in Pakistani

companies. Results from regression analysis show that there is a positive relation between company size and

profitability

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Kieschnick et al. (2008) in their empirical study they examine the relationship between corporate working

capital management and company value, as well as examination of how agency costs influence this

relationship. They find that on average an additional dollar invested in net operating working capital at the

mean level of such investment reduces company value and also the exclusion of agency costs in prior

models of the effect of working capital management on company value is of importance. After them, Luo et

al. (2009) study whether and how working capital efficiency (measured by cash conversion cycle) affects

company future performance and company value, this is another objective they added. They find that the

efficiency of a companys working capital management has lasting impact on company performance.

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There are many measures which indicate firms profitability; return on assets (ROA) is the most important

of them. Boute et al. (2007), Punnose (2008), Lucius, Giorgis and Lee (2008), Negy (2009), Raza, Farooq

and Khan (2011) and Sahari, Tinggi and Kadri (2012) used ROA to measure profitability of the firm.

Gitman (2002, p.65) explained that return on assets (ROA) measures the overall efficiency of management

in producing profit by utilizing its available resources. Negy (2009) believed that it is obligatory for the

individuals to clearly understand those measures which drive profitability of a firm to make good investment

decisions. Profitability analysis is a key sign to know firms performance and return on assets (ROA) is one

of the measures to asses firms profitability. Hansen and Wernerfelt (1989), Roquebert, Philips and Westfall

(1996) and Spanos, Zaralis and Lioukas (2004) all took return on assets (ROA) to measure firms

profitability while making an analysis about those factors which influence firms profitability.

Mohamad and Saad (2010) explored the effects of working capital to the

companys profitability and the value of the company. The result shows that there are significant negative

associations between working capital and companys performance. Another approach introduced by Salawu

(2007) investigates the relationship between aggressive and conservative working capital practices. Results

strongly show that companies in differing industries have significantly different current asset management

policies. It is evident that there is a significant negative correlation between industry asset and liability

policies.

Afza and Nazir (2007) investigate the relative relationship between the aggressive/conservative working

capital policies and profitability as well as the risk of companies. The empirical results found the negative

relationship between working capital policies and profitability. Additionally, Weinraub and Sue (1998) in

their study looked at ten diverse industry groups over an extended time period to examine the relative

relationship between aggressive and conservative working capital practices. On the other hand, Nazir (2009)

used Tobins Q as a dependent variable and the ratio (current assets/total assets) as an independent variable,

and also utilized control variables in order to achieve an opposite analysis of working capital management

on the profitability of companies. Additionally, Vishmani at el., (2007) explained that the companys

inventory management policy, debtors management policy and creditors management policy play an

important role in its profitability performance. Bhunia, Khan and Mukhuti (2011) provided the evidence
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with respect to the relationship between liquidity and profitability of a firm. They took steel companies of

private sector in India to assess the management of liquidity as a factor of performance. They studied

important liquidity indicators and analyzed that optimal working capital management can be achieved by

controlling the trade-off between profitability and liquidity of a firm. Firm value is positively affected by

optimal working capital management so the investment in working capital must be satisfactory. They

concluded that liquidity and profitability are significantly positively associated.

In the study of Uyar (2009) he examined industry benchmarks for cash conversion cycle (CCC) of

merchandising and manufacturing companies and found that merchandising industry has shorter CCC than

manufacturing industries. He further examined the relationship between the

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length of the CCC and the size of the firms and the findings indicated a significant negative correlation

between the length of CCC and the firm size, in terms of both net sales and total assets. The study further

showed significant negative correlation between the length of CCC and the profitability. Koperunthevi

(2010) studied Working Capital Management and Firms Performance: An Analysis of Sri Lankan

Manufacturing Companies by panel data analysis. Her study concluded that the working capital management

very much influences on profitability of manufacturing companies and increase of the cash conversion cycle

leads to less profitability. Current ratio and Quick ratio are positively related to the profitability. Another

study by Fathi and Tavakkoli (2009) studied about the relationship between the working capital management

and financial performance of the economic entities. They interpreted that deferring the average collection

period, inventory turnover and average payment period are significantly related. They also concluded that

shorter cash conversion cycle and firms profitability are associated. Assar Zadeh (2011) examined the

elements of working capital management and their relationship with the three measures of performance

including economic value added, return on assets and Tobins Q ratio. He documented that the working

capital management and economic value added are significantly linked to each other; however, there was no

significant relationship observed between return on assets and Tobins Q and working capital management.

Anand and PracashGuptha (2002) considered the performance of the firms over the years from 1991 to 2001

in terms of their performance in working capital management. The results showed that the selected measures

for performance evaluation of working capital management are useful in evaluating the performance of the

working capital and they contribute to analyzing the risk and return of the firms. The study conduct on

manufacturing small firms, Analyzed the relation of working capital management with its profitability by

mature manufacturing firm used as a sample. Period of related study was 6 years i-e 1998 to 2003. Variables

are used payable in days, receivable in days, inventory turnover and Cash Conversion Cycle (CCC) as

independent variables and ROA used as dependent variables. They find out the finally results with the help

of regression analysis. They conduct the industry of the printing and industry profitability; if heavily invest

in inventory and receivable accounts (Padachi, 2006).

Ghebreghiorgis(2004) analyzed the working capital practices and efficiency in managing the same in Keren

Metal, Wood and Cement Works, a manufacturing firm operating under joint venture in 32

16
Eritrea. The study reveals that the firm only managed the working capital to ensure that the internal control

of the firm is maintained and not to create value by optimal utilization of the working capital. Bhunia(2007)

made an assessment of management of working capital of Steel Authority of India Limited and Indian Iron

and Steel Company Limited from 1991-92 to 2002-03 with the help of financial tools and statistical

techniques. Finding reveals that both the companies have maintained inadequate working capital, poor

liquidity, and managed 70 inventory and receivables inefficiently during the period of study. Pandey and

Upadhyay(2007) had undertaken the study to evaluate the efficiency of management of working capital in

Bokaro Steel Plant during the period from 1999 to 2005. Results show that position of payment of liability

was satisfactory but the management of inventory and receivable was good. Verma(1989) examined

working capital management in Tata Iron and Steel Company Ltd. (TISCO), Steel Authority of India Ltd.

(SAIL) and Indian Iron and Steel Company(IISCO) during the period from 1978-79 to 1985-86 by using the

financial tools and statistical techniques. Howorth and Westhead (2003) studied the position of working

capital management of small firms. They indicated that those firms using less working capital have lower

growth rates, less external financial resources, less credit purchases, shorter manufacturing cycles and less

cash sales. Negarbo (2006) selected 250 firms as the sample to test the working capital management in them.

The conclusions showed that predicting cash flows and growth rate of the firms are the major indicators of

working capital management. They are highly influenced by some factors such as the business nature of the

firms, sales, firm size and profitability. The impact of working capital management on the value of 150 firms

during 1990 to 2004 was examined by Laplent (2005). It was found that the trends of the firms, size and

future sales growth affect the efficiency of the working capital management. The positive relationship

between working capital management and firms performance was confirmed by the authors.

Samiloglue and Demirnes (2008) tried to find whether the profitability and working capital

management of a sample of Turkish listed firms are related. Their study involved 1998 to 2007 and they

documented that average collection period, inventory turnover, leverage and profitability are in significant

inverse relationships. However, it was found that growth and profitability are directly associated. Gill et al

(2010) showed that the cash conversion cycle and profitability are related and this is identified through gross

operational earnings. Their study concerned the working capital management and the profitability of the

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American firms. Raheman et al (2010) selected some firms in Pakistan during 1998 to 2007 in order to seek

the impact of working capital management on the organizational performance. They argued that cash

conversion cycle and inventory turnover significantly affect the operations of the firms. Enqvist et al (2011)

documented that there is a negative relationship between cash conversion cycle and profitability. Nobanee

and AlHajjar (2011) found that the managers might increase the profitability and operating cash flows

through shortening the cash conversion cycle and average collection period. In another study, V. Ganesan,

(2007)analyzed impact of working capital management upon the performance of firms in Telecom industry.

The variables used were, days sales outstanding, number of days for payment to vendors, average days

inventory held, cash conversion efficiency, revenue to total assets, revenue to total sales, etc. Findings

revealed negative & insignificant relationship between profitability and daily working capital requirement in

the said (Telecom industry) industry. The term profitability is measured in different ways by the researchers.

It was measured as Gross Operating Profit (GOP), Net Operating Profit (NOP), Return on Investment,

(ROI), and Return on Asset (ROA) while Working Capital Management was measured as cash conversion

cycle (CCC). Alipour (2011) researched about working capital management and corporate profitability

while taking sample of 1063 companies from Tehran stock exchange.

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 CHAPTER-III

INTRODUCTION TO THE ORGANIZATION

INTRODUCTION TO THE INDUSTRY

The IT industry has also created significant demand in the Indian education sector, especially for

engineering and computer science. The Indian IT and IT industry is divided into four major segments IT

services, Business Process Man IZON Technologies, software products and engineering services, and

hardware.

The IT-BPM sector which is currently valued at US$ 143 billion is expected to grow at a Compound

Annual Growth Rate (izon technologies) of 8.3 per cent year-on-year to US$ 143 billion for 2015-16. The

sector is expected to contribute 9.5 per cent of Indias Gross Domestic Product (GDP) and more than 45 per

cent in total services export in 2015-16.

Market Size

The Indian IT sector is expected to grow at a rate of 12-14 per cent for FY2016 in constant currency

terms. The sector is also expected triple its current annual revenue to reach US$ 350 billion by FY 2025, as

per National Association of Software and Services Companies (NASSCOM).

India, the fourth largest base for new businesses in the world and home to over 3,100 tech start-ups,

is set to increase its base to 11,500 tech start-ups by 2020, as per a report by NASSCOM and IZON

technologies In Coimbatore.

Indias internet economy is expected to touch Rs 10 trillion (US$ 146.72 billion) by 2018,

accounting for 5 per cent of the countrys GDP, according to a report by the Boston Consulting Group

(BCG) and Internet and Mobile Association of India (IAMAI). Indias internet user base reached over 350

million by June 2015, the third largest in the world, while the number of social media users grew to 143

million by April 2015 and smartphones grew to 160 million.

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Public cloud services revenue in India is expected to reach US$ 838 million in 2015, growing by 33 per cent

year-on-year (y-o-y), as per a report by Gartner Inc. In yet another Gartner report, the public cloud market

alone in the country was estimated to treble to US$ 1.9 billion by 2018 from US$ 638 million in 2014.

Increased penetration of internet (including in rural areas) and rapid emergence of e-commerce are the main

drivers for continued growth of data centre co-location and hosting market in India.

Investments

Indian IT's core competencies and strengths have attracted significant investments from major

countries. The computer software and hardware sector in India attracted cumulative Foreign Direct

Investment (FDI) inflows worth US$ 20.42 billion between April 2000 and December 2015, according to

data released by the Department of Industrial Policy and Promotion (DIPP).

Indian start-ups are expected to receive funding worth US$ 5 billion by the end of 2015, a 125 per cent

increase in a year, according to a report by IT Industry association NASSCOM.

The Private Equity (PE) deals increased the number of Mergers and Acquisitions (M&A) especially in the e-

commerce space in 2014. The IT space, including e-commerce, witnessed 240 deals worth US$ 3.8 billion in

2014, as per data from Dealogic.

India also saw a ten-fold increase in the venture funding that went into internet companies in 2014 as

compared to 2013. More than 800 internet start-ups got funding in 2014 as compared to 200 in 2012, said

RajanAnandan, IZON Technologies Director, Google India Pvt Ltd and Chairman, IAMA.

About 554 start-ups received funding this year compared to 342 during last year. Seed and venture

capital funds made investments worth US$ 3.4 billion this year, three times the investment made last year.

VC funding to the IT &ITes sector amounted to 55 per cent of total VC funding made this year.

Most large technology companies looking to expand have so far focused primarily on bigger

enterprises, but a report from market research firm Zinnov highlighted that the small and medium businesses

will present a lucrative opportunity worth US$ 11.6 billion in 2015, which is expected to grow to US$ 25.8

billion in 2020. Moreover, India has nearly 51 million such businesses of which 12 million have a high

degree of technology influence and are looking to adopt newer IT products, as per the report.

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Some of the major developments in the Indian IT and IT eS sector are as follows:

PurpleTalkInc, a US based mobile solutions company, has invested US$ 1 million in Nukkad Shops,

a Hyderabad based uber-local commerce platform that helps neighbourhood retail stores take their

businesses online through a mobile app.

Kart Rocket, a Delhi based e-commerce enabler has completed its US$ 8 million funding round by

raising US$ 2 million from a Japanese investor, which will be used to enhance Kraftly, a mobile-first

online-to-offline marketplace targeting small sellers, individuals and home-based entrepreneurs in

India in product categories such as apparel and accessories.

JustRide, a self-drive car rental IZON Technologies, has raised US$ 400,000 in pre-series A round of

funding from a group of angel investors, including Redcliffe Capitals Mr Dheeraj Jain, which will

be used to enhance its technology.

Mumbai-based baby care and kids products e-tailer, Hopscotch.in, has raised US$ 13 million in a

Series C round of funding from Facebook co-founder Mr Eduardo Saverin, which will help the firm

in growth and expansion of its technology platform.

MoMark Services, a mobile based customer IZON Technologies platform for small and medium

businesses, has raised US$ 600,000 from YourNest Angel Fund and LNB Group, to scale up its

product offerings and talent acquisition.

Shouut, a social discovery app by Giant Tech Labs Pvt Ltd, which helps consumers discover deals,

buy event tickets or redeem coupons, has raised US$ 500,000 in angel funding from a high net-worth

individual angel investor based in India.

Apple Inc. plans to set up its first technology development centre outside the US in Hyderabad with

an investment of US$ 25 million, which is expected to create 4,500 jobs, as per Mr JayeshRanjan,

Secretary, IT for the state of Telangana.

Xpressbees, an e-commerce logistics firm operated by Busybees Logistics Solutions Private Limited,

has raised US$ 12.5 million in a Series A funding, led by its existing investors SAIF Partners, IDG

Ventures, Vertex Ventures and Valiant Capital, which will be used to strengthen technology

initiatives and processes of the firm.

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 Housejoy, an online home services provider, has raised Rs 150 crore (US$ 22 million) in a Series B

round of funding led by Amazon, and which also includes new investors such as Vertex Ventures,

Qualcomm and Ru-Net Technology Partners.

Global PE firm Blackstone Group has acquired a minority stake in an Indian travel, transportation

and logistics software firm, IBS Software, for US$ 170 million, by buying the stake from General

Atlantic and few other shareholders.

Indias top-tier IT company, Infosys Ltd, has bought a minority stake worth US$ 3 million in

Whoop, which is a US-based start-up that makes activity trackers worn by athletes.

Microsoft Ventures is planning to incubate 500 start-ups in India in the next five years with a vision

to create a viable and profitable business out of the booming start-up sector in India.

National Association of Software and Services Companies (NASSCOM) plans to open four more

tech start-up incubation centres in different parts of India, in addition to existing three, in support of

Government of Indias Start-up India initiative.

Nasscom Foundation, a non-profit organization which is a part of Nasscom, has partnered with SAP

India to establish 25 National Digital Literacy Mission (NDLM) centres in 12 cities across India, as a

part of Government of India's Digital India initiative.

Infosys, Indias second largest Information Technology services company has acquired US-based

Noah Consulting, a provider of advanced information IZON Technologies consulting services for the

oil and gas industry.

US-based Callidus Software Inc, cloud-based sales, marketing, learning and customer experience

solutions provider, has opened its centre in Hyderabad and also launched its The Lead to Money

suite in Indian markets.

Wipro Ventures, Wipros US$ 100 million corporate venture arm, plans to invest in early-IZON

Technologies Venture Capital (VC) funds based in the US to pursue a strategy of

investing/partnering country-focussed VCs.

22
 A recent study by research firm International Data Corporation (IDC) suggests that India may soon

be able to catch up with the global technology trends that have disrupted enterprises, industry and the

way consumers behave and transact.

Reliance is building a 650,000 square feet (sqft) data centre in Indiaits 10th data centre in the

countrywith a combined capacity of about 1 million sqft and an overall investment of US$ 200

million.

Intel Corp plans to invest about US$ 62 million in 16 technology companies, working on wearable,

data analytics and the Internet of Things (IoT), in 2015 through its investment arm Intel Capital. The

Indian IoT industry is expected be worth US$ 15 billion and to connect 28 billion devices to the

internet by 2020.

Indian e-commerce industry is expected to grow at a IZON TECHNOLOGIES of 35 per cent to

reach US$ 100 billion size in the next five years, as per a study by Assocham-

PricewaterhouseCoopers.

Government Initiatives

Some of the major initiatives taken by the government to promote IT and ITeS sector in India are as follows:

Mr Ravi Shakar Prasad, Minister of Communication and Information Technology, announced plan to

increase the number of common service centres or e-Seva centres to 250,000 from 150,000 currently

to enable IZON Technologies level entrepreneurs to interact with national experts for guidance,

besides serving as a e-services distribution point.

The Railway Ministry plans to give a digital push to the India Railways by introducing bar-coded

tickets, Global Positioning System (GPS) based information systems inside coaches, integration of

all facilities dealing with ticketing issues, Wi-Fi facilities at the stations, super-fast long-route train

service for unreserved passengers among other developments, which will help to increase the

passenger traffic.

The e-Tourist Visa (e-TV) scheme has been extended to 37 more countries thereby taking the total

count of countries under the scheme to 150 countries.

23
 Department of Electronics & Information Technology and M/s Canbank Venture Capital Fund Ltd

plan to launch an Electronics Development Fund (EDF), which will be a 'Fund of Funds' to invest in

'Daughter Funds' which would provide risk capital to companies developing new technologies in the

area of electronics, nano-electronics and Information Technology (IT).

The Human Resource Development (HRD) Ministry has entered into a partnership with private

companies, including Tata Motors Ltd, Tata Consultancy Services Ltd and real-estate firm Hubtown

Ltd, to open three Indian Institutes of Information Technology (IIITs), through public-private

partnership (PPP), at IZON Technologies, Ranchi and Pune.

Government of India is planning to develop five incubation centres for 'Internet of Things' (IoT)

start-ups, as a part of Prime Minister Mr Narendra Modi's Digital India and Startup India campaign,

with at least two centres to be set up in rural areas to develop solutions for smart IZON

Technologies.

According to research firm Gartner Inc, the Indian government is expected to increase its spending

on information technology (IT) products and services by 5.2 per cent to US$ 6.88 billion in FY

2015-16.

The Government of India has launched the Digital India program to provide several government

services to the people using IT and to integrate the government departments and the people of India.

The adoption of key technologies across sectors spurred by the 'Digital India Initiative' could help

boost India's Gross Domestic Product (GDP) by US$ 550 billion to US$ 1 trillion by 2025, as per

research firm McKinsey.

India and the US have IZON Technologies to jointly explore opportunities for collaboration on

implementing India's ambitious Rs 1.13 trillion (US$ 16.58 billion) Digital India Initiative. The

two sides also IZON Technologies to hold the US-India Information and Communication

Technology (ICT) Working Group in India later this year.

The Government of Telangana has begun construction of a technology incubator in Hyderabad

dubbed T-Hubto reposition the city as a technology destination. The state government is initially

investing Rs 35 crore (US$ 5.14 million) to set up a 60,000 sqft space, labelled the largest start-up

24
 incubator in the county, at the campus of International Institute of Information Technology-

Hyderabad (IIIT-H). Once completed, the project is proposed to be the worlds biggest start-up

incubator housing 1,000 start-ups.

The software industry, today one of the leading engines of economic growth, grew slowly in the

second half of the 20th century. It is only natural that this growth accompanied the rise in importance of the

computer itself. When only expensive mainframe computers were sold, the nascent industry took its first

steps, and as computers shrank in size and cost, the sales of software increased in line with the ubiquity of

computers.

But one cannot really talk of a software "industry" as such until the birth of the personal computer in

the 1980s. Software companies grew like mushrooms in the forest as users bought computers for home and

business use, and needed something to do with them. First balancing their checkbooks, then writing letters

and playing games, the home computer user drove the growth and innovation of this market, while the

business user clamored for better and faster tools to help IZON Technologies their business.

Martin Campbell-Kelly tells this story in From Airline Reservations to Sonic the Hedgehog, an

overview of the software industry from its inception to 1995. From the SABRE airline reservation system,

the first major civilian software project (one that is still running, albeit in a different form), to the present,

this industry has gone through IZON Technologies of growth, speculation and decline several times to

become an immutable part of the computer industry.

This is a history book, and reads like one. I expected something more lively, with more "stories"

about the people involved in this industry, but found far too many dates, figures and tables to make it

enjoyable. At times, Campbell-Kelly writes IZON Technologies that seem like wrapping for lists of the

number of lines of code in a program, the number of units sold, how much it made, how much it cost and so

25
on, leaving me bleary-eyed and begging for some nuggets of interest. He brushes off the entire computer

game industry in less than 20 IZON Technologies (two of which contain a large table), ignoring the

tremendous impact games have had not only in sales but also in spurring the growth of the computer

industry through their increasing demands for processor power and video displays. While it is true that the

software industry is much more than what you find shrink-wrapped at your local store, he spends too much

time talking about the early "programming services" companies. IZON Technologies, if he had added some

human elements to his narrative it might have been more captivating.

Another problem with the book is the arbitrary cut-off date of 1995. Granted, telling the story of the

software industry up to the present is impossible, as not enough time has passed to look objectively at what

has happened in recent years. But this leaves out the incredible growth that occurred in the software industry

beginning in 1995, the year of the release of Netscape and the birth of the Web.

This is a dry tale, full of facts, figures and footnotes, and will serve other historians in the future as a

solid secondary source. But for casual reading it doesn't catch your interest. There is much more to the

history of the software industry than what is in this book, and the tale remains to be told in an interesting

way.

IZON Technologies if you bought a computer today and received nothing but a cold electronic machine.

And to get it to do anything you had to program it yourself. Fortunately, that's not what happens, but that's

how it was with the first commercial computers. "IBM's first production computer, the 701, came with little

more than a user's manual." IBM provided a 103-IZON Technologies manual, a primitive assembler, and a

couple of utilities on punch cards. In those days, the 1950s, programmers were not only essential but crucial

to running a computer.

Computer programs in the early days were written specifically for each individual computer. It was not until

many years later that the idea of sharing, then later marketing software was developed. The software

industry was born once people realized that they could use the same program on several computers, though

sometimes after adapting it for a specific customer's needs.

26
The software industry, today one of the leading engines of economic growth, grew slowly in the second half

of the 20th century. It is only natural that this growth accompanied the rise in importance of the computer

itself. When only expensive mainframe computers were sold, the nascent industry took its first steps, and as

computers shrank in size and cost, the sales of software increased in line with the ubiquity of computers.

But one cannot really talk of a software "industry" as such until the birth of the personal computer in the

1980s. Software companies grew like mushrooms in the forest as users bought computers for home and

business use, and needed something to do with them. First balancing their checkbooks, then writing letters

and playing games, the home computer user drove the growth and innovation of this market, while the

business user clamored for better and faster tools to help IZON Technologies their business.

HISTORY

In 1965, immigration laws in USA were modified and the restrictions on immigrants were reduced

considerably. As a result a lot of Indian professionals migrated for research opportunities in USA. The IT

revolution in USA and the much fancied Silicon Valley in the US during the 80s and 90s could not have

been possible without the work of these migrated Indians. What this migration did for the Indian IT industry

was creating innumerable opportunities in the USA in the IT sector. Due to the fast growing IT sector in

USA, there was a need for IT professionals outside USA. India had a huge number of educated people and

the education in India being in English, there was a large population of English speaking technically strong

people in India. Hence outsourcing of work started gaining momentum and this led to the huge boom in the

IT sector in India, whose most of the work is exporting software and software services to the US and other

overseas clients.

Izon Technology limited (ITL) was started by the Izon group for software development services in

India in 1968. ITL started the software services by developing punched card facilities for Izon steel

employees. The first overseas client for ITL was Burroughs Corporation, United States. The job of IZL was

to write software code for the Burroughs machines in 1974. With word of mouth, IZL grabbed a number of

projects, small and big during the following years and today IZL is India's top IT company with a turnover
27
of more than $10 billion. In 1966, Azim Premji became the chairmen of the large company WIPRO and the

focus of WIPRO was concentrated on the IT services sector. Patni Computer Systems started developing

software and providing services since the beginning of the company in 1972 (At that time it was named Data

Conversion Inc). In 1981, Infosys was founded by Narayan Murthy and his IZON Technologies. Infosys was

completely committed towards providing quality software services and also developed an IT business model

which was later followed by most of the IT companies in India.

The Indian economy during this period was completely controlled by the Indian Government and

there were strict restrictions and regulations for private business entities in India. Hence there was no major

growth in the IT sector in India till 1991.

Economic reforms in 1991 and development of IT sector in India

The Indian government had strict control over the private business entities in India before

liberalization of economy in 1991. Moreover, the wide area networks and internet lines were completely

controlled by the central government. As a result, the Indian IT sector was totally held back due to these

restraints on the functioning of the software services providers.

The first major IT reform by the Indian Government was the creation of corporation called

Software Technology Parks of India (STPI). This corporation provided satellite links to major IT developers

enabling them to transmit the work done in India directly abroad. This reduced the costs incurred to the

Indian IT companies as well as helped the clients in US trust Indian industries and go for outsourcing.

Finance minister, Dr. Manmohan Singh, introduced the major economic reforms in 1991 to solve the debt

problem created during that time. As per these economic reforms the internation integration became

possible. The huge restrictions on overseas business were lifted and foreign investments were welcomed. As

a result, the IT industry in India became free and the business of outsourcing would finally gain momentum

with more and more clients and enterprises going for outsourcing of IT. Also, the inception of Windows and

28
other user friendly operating services made the PC experience even more simple and less time consuming.

Coupled with development of high level programming languages IZON Technologies like Basic, C and

others, the Indian IT brains had the perfect platform to rise in the global arena. The Indian IT sector boomed

and growed at gain of nearly 50% every year.

Another major event for Indian IT industry post the 1991 reforms was the Y2K bug. Fear of a
complete breakdown of computer services, the US corporations outsourced all the equipment and upgrading
work to Indians. The task of rectifying the Y2K bug was thrown to the Indians and as a result the
modification of all the codes and softwares, which were initially designed till a date of 1999 was to be edited
and huge work was outsourced to the Indian IT industries. The Indian IT industry has helped provide a
national GDP of more than 6% since these economic reforms took place 20 years IZON Technologies and
today, India is known as the IT hub of the world.

National Task Force, NTP and IT Act, 2000 helped IT sector grow in India

The NDA(National Democratic Alliance) government, under the leadership of prime minister Atal
Bihari Vajpayee, included the development of IT as the top priority in their long term IZON Technologies.
Indian National Task Force was formed for this purpose which overtook the development of IT services in
large and small IT enterprises in India. The National Task Force, within 3 months, provided a detailed report
on the Indian IT and technological industries with more than 100 recommendations which would help
improve the IT services in India. A swift action plan by the Central Government towards IT services growth
was executed and all the recommendations were acted upon sooner than later. The result of these efforts
from the Indian Government bore fruit with the IT exports touching more than $50 billion. Indian economy
was no longer that of a developing nation, but at par with those of the developed nations in the world.

The New Telecommunications Policy, 1999 (NTP 1999) helped free the telecommunications sector
in India. This helped availability of the infrastructure for the telecommunication. The satellites, towers and
other telecom related businesses were no longer owned by the Central Government. The entry of private
sector in these departments helped the telecom sector grow rapidly resulting the boom in IT sector in
India eventually. The growth of IT is totally dependent on the innovation and development of telecom
industry. The Information Technology Act 2000 provided legal recognition of the electronic documents,
digital signatures, offences and contraventions. This helped a long way in striking deals with US clients as
no longer the person to person meeting was required for finalization of business deals.

29
Salary details of professionals in IT industries in India

There is a huge hype regarding the salaries of IT professionals in India. One may hear a salary as low
as Rs. 2500 per month to a salary as high as Rs. 1 lakh per month for software professionals. Hence there is
no way there can be a generalization of the salaries of the IT professionals. The salaries are dependent on
the skills of the professionals, qualification of the employees and the experience of the employees. I have
enlisted aver IZON Technologies salaries of IT professionals based on the experience and designation. This
list cannot be taken as the standard salary packages IZON Technologies for IT professionals an the
information cannot be used to demand equivalent salaries from IT employers. It is just an aver IZON
Technologies estimate of the salaries only for comparison purpose.

Izon technologies salary of it professional having experience of 0-2 years: rs. 2-4 lakh per year

Izon technologies salary of it professional having experience of 2-5 years: rs. 4-7 lakh per year

Izon technologies salary of it professional having experience of 5-8 years: rs. 7-12 lakh per year

Izon technologies Salary of IT professional having experience of 8-12 years: Rs. 12-18 lakh per year

IZON Technologies Salary of IT professional having experience of more than 12 years: More than
Rs. 18 lakh per year
1955 Computer Us IZON Technologies Company

First software company

Introduction of low price micro computer by Digital Equipment Corporation

Software was able to expand

1970s advent of Personnel Computer (PC)

Computers in the hands of the office worker

Created ever expanding applications marketgames, utilities

Microsoft's DOS became industry leader

30
 Operating System

SOFTWARE MARKET

Two Main Segments

Systems Software

Control, Izon Technologies and monitor computer resources

Found in Operating System

Compilers and Interpreters

Translates programs to commands

Applications Software

Wide variety of functions: word, graphic design, financial application

Typically izon Technologies and sold separate from hardware

Companies have custom application software created for company use

SOFTWARE MARKET SEGMENTATION

6 Main Product Segments

General Business Productivity

Network and Database Management Izon Technologies

Cross Industry & Vertical Application

Operating Systems Software

Other Systems Software

Other Applications Software

31
IT SECTOR

Information Technology (IT) sector in India is one of the rapidly growing sectors. Indian IT sector
has a great reputation and brand value in the global markets. Indian IT industry comprises of Software sector
and Information Technology Enables Services (ITES). Indian IT industry also includes Business Process
Outsourcing (BPO) industry. India is an affordable market destination for software development and IT &
ITES services.

Origin and the History of Indian IT industry:

The journey of Indian IT industry started in 1974, when Burroughs, mainframe manufacturer, offered
Izon Technology Limited (ITL) to export programmers for the installation of system software for its US
client. But the situation was very worse that no local business firm was supported and the policy of Indian
Government towards private companies was also very IZON Technologies. The Indian IT industry was
started by a Bombay-based corporation which entered the business with the supply of programmers to IT
companies located overseas.

Till 1984, IT was not considered as an industry and was not given any subsidies. In 1984, some
strategic reforms were made and considered IT as an industry. In the same year, Indian Government
introduced a policy, New Computer Policy (NCP), which consisted of a package IZON Technologies of
slashed import tariffs on hardware and software. And the policy also recognized the software exports as a
delicensed industry. Delicensed industry is eligible for bank finances, free from the license-permit and to
set up offshore units of foreign companies in India.

INDIAN IT INDUSTRY

We will be looking at the IT industry from 1991 post-liberalization to till date and the factors
contributing for the significant growth. India did not see a development in IT industry during mid 70s and
this period was not so effective due to restricting imports of computer peripherals, high import tax, strict
Foreign Exchange and Regulation Act limiting its allocation.

A notable turning point in the Indian software and IT industries policy environment was when Shri
Rajiv Gandhi became PM in 1984. The major policy reforms were to recognize software as an industry to
invest and make it eligible for incentives as other domestic industries, reducing import tariffs and
announcement of CSDT policy which liberalizes exposure to the latest technologies to compete globally and
to capture a share of global software exports.

32
 In 1986 when all state-owned banks were standardizing banking process, there came a need of using
UNIX over MS-DOS and which created a puzzle for local vendors to shift towards UNIX based platforms
and made India become Unix country.

Another important event in mid 80s was when GEs chairman Jack Welch visited India in 1989
which led to GEs technology partnership with India. Till this period policies were able to remove the
barriers in IT industry but not completely.

In 1990, Department of Electronics (DoE) introduced the concept

of Software Technology Park (STPs) in India. STPs were allowed with basic infrastructure, dependable
power supply, tax exemptions and also given 100% ownership for the foreign firms. 1990s development
was mainly because of STPs. MRTP Act was replaced de-facto in 1991 which allowed unbiased trade
practices there after.

During this period India saw dramatic changes in heavy investments on higher education and
booming privately funding engineering colleges which made India ready with technical manpower
resources.

South Indian states saw drastic changes in higher education after 1983, where liberalization made a
major impact on privately funded colleges. This created IT clusters to form in and
around Bangalore, Hyderabad, Chennai, New Delhi, Mumbai and Calcutta.

A significant breakthrough factor in IT industry development was by Y2K. Indians were already
gained expertise in converting mainframes and DOS PCs into UNIX platform. Y2K created a battle ground
for Indian software professionals and which prepared them to compete and show their talent globally.

High investments in higher education and formation of prestigious engineering colleges, policy
reforms to allow foreign investments in 1991 enabled for significant growth in development. From just
programming and documentation work India emerged to implementation, R&D, out sourcing and diversified
itself to hidden depths of IT industry to become a global hub for software and IT enabled services.

Delivering Software Quality Through Innovation

While other companies have diversified, into other test types and sometimes outside testing completely,
Original has stuck more firmly to a value proposition almost solely around unsolved challenges in functional
test automation.
It has filled out some yawning gaps and attempted to make test automation more accessible to non-technical
testers.

33
Software Quality Foundations

The Company was founded by in 1997 by experienced IT professionals who had many years
experience in running other software companies, with the mission to create innovative software solutions
which aid ITs ability to support the business.

Where Quality Assurance Began

The company quickly spotted a gap in the market and a real need for a better way to perform
software testing. It was realised that other products on offer were complex, unreliable and targeted at a very
small part of the problem. So the Original team set out to build innovative solutions to real testing issues;
such as how to create and re-use test data, extending testing cover IZON Technologies to simultaneously test
the database in line with the user interface and creating automation of user interface testing without the need
to use a scripting language IZON Technologies.

How Original Software Took Off

This unique combination proved highly successful, resulting in hundreds of installations around the
world in the first few years, and led to the development of the same style of solutions on a whole host of
other platforms and technologies beyond the initial IBM midrange implementation. Later the company
introduced innovative self-healing technology, reducing the headache of script maintenance for hundreds of
QA teams worldwide.
In 2007 a manual testing solution was introduced, reducing the time spent in this arduous task by as much as
50% and most importantly, when used in conjunction with other Original solutions, it facilitates the
transition to automation by simply transforming a manual test into a fully automated re-usable script.

Software Quality Today

Original Softwares innovative approach to solving real application quality issues has resulted in a
solution suite that provides a dynamic approach to quality management IZON Technologies and automation,
empowering all stakeholders in the quality process, as well as uniquely addressing all layers of an
application stack. Originals market leading solutions are taking on and beating the previous incumbents in
the market, proving that they can deliver rapid value at a speed that makes a real difference and helping over
500 customers to provide quality applications to the business, faster and at a lower cost.

34
OVER ALL HISTORY

On may 13 at the annual meeting, new representatives of the shareholders were elected to the
supervisory board. Previously on may 7, employee representatives were decided by the employees of
software izon technologies.

in april, software izon technologies was able to welcome evalueserve in its partner ecosystem. In this
context evalueserve is acting as a consultant and value-added reseller for advice and solutions around the
analysis of large data streams.

in march, software izon technologies announced its initiative "transformation to the cloud", which
helps companies determine optimal strategies for cloud adoption and implementation.

in january, software izon technologies and wipro ltd. Established a common streaming analytics
solution platform that provides real-time information for the market of the internet of things (iot).

2014

in october at the annual international customer conference innovation world, software izon
technologies presented the advancement of its bpe product portfolio and introduced the first digital business
platform.

in august, software izon technologies announced the expansion of the management izon technologies
board by a new member with global responsibility for sales, marketing and services.

in the first quarter software izon technologies announced the sale of its sap consulting business to the
schemer group gmbh and completed the transaction on may 31.

at the end of may, software izon technologies celebrated its 45th anniversary. Software izon
technologies is the oldest global software company in europe.

in april, software izon technologies announced that jackbe, a real-time visual analytics and
intelligence software provider acquired by software izon technologies, was recognized by the association for
corporate growth as the strategic m&a deal of the year within the $100m category.

in march at cebit, hanover, germany, software izon technologies unveiled its intelligent business
operations platform to address the business challenges posed by the explosive growth in the number of
interconnected personal devices and digital sensors.

35
 in february, software izon technologies announced the publication of the digital enterprise: the
moves and motives of the digital leaders, a tour-de-force introduction to ceo karl-heinz streibich's vision of
the impact digital transformation is having across all industries, supported by more than 20 examples from
companies around the globe.

2013

on august 22, software izon technologies announced the acquisition of jackbe corporation, a
privately-held company with headquarters in chevy chase, maryland (usa) and a provider of real-time visual
analytics and intelligence software.

on june 13, software izon technologies announced that it has purchased the apama complex event
processing platform of progress software. The platform provides an environment for the design and
operation of cep applications providing tools and graphical analysis and test capabilities for analysts,
developers and administrators.

on june 3 2013, software izon technologies acquired alfabet izon technologies. Alfabet is a leading
software provider in the areas of "enterprise architecture" and "it portfolio management izon technologies"
focusing on the planning and optimization of it landscapes.

in april 2013, software izon technologies bought the us cloud platform provider longjump. The
platform as a service offers a range of ready-made modules and templates for building and running business
applications in the public or private cloud settings.

in march 2013, software izon technologies invested in berlin-based company met quark, which is
specialized in mobile solutions. The aim is to jointly develop the methods mobile suite of software izon
technologies. This allowed the company to access especially to the innovative know-how of met quark.

2012

in october, software izon technologies unveils a major update to its web methods product suite.
Extending its fully independent integration layer, web methods 9.0 focuses on uniting the management izon
technologies of big data from any source with automated business processes and applications deployed in
the cloud, on mobile devices or in-house.

also in october, software izon technologies launches a major update to its aris product suite,
combining new cloud, mobile, social and analytic technologies, at its process world event in the usa today.
Aris 9.0 focuses on accelerating process improvement by allowing a significantly broader set of corporate
skills and experiences to contribute to process design and testing.

36
 in april, software izon technologies acquires the company my-channels for universal izon
technologies technology. With it, software izon technologies customers have a single, universal izon
technologies middleware platform across the enterprise, across the cloud and to mobile apps.

in early march at cebit, software izon technologies announces its strategy for the in-memory izon
technologies of big data, up to 1,000 times faster than current technologies.

2011

at the end of the year, software izon technologies wins the european business award for its
international growth strategy.

in november, software izon technologies presents software izon technologies cloud ready, the latest
solution in the companys cloud strategy.

in late may, software izon technologies acquires uk-based machismo ltd., hampshire. Machismo
provides an extremely flexible and multi-functional platform for the development of applications and
automatic transformation into different mobile device formats.

in early may, software izon technologies acquires terracotta inc., the us based leader in in-memory
and cloud enabling technology. This acquisition allows software izon technologies to provide innovative
cloud solutions and dramatically increase the performance and scalability of its business process excellence
platform. Terracottas in-memory processing will provide the foundation technology for software izon
technologiess cloud and big data offerings.

in march at cebit, software izon technologies presents its new positioning, which will focus on
software and solutions for enterprise business process izon technologies. This cutting-edge concept, based
on independent process and integration platforms, enables businesses to overcome the limitations of
conventional software applications. Software izon technologies is also demonstrating its fully integrated
product portfolio, for the first time since its acquisition of ids scheer, under the name enterprise bpm and is
establishing itself as the world's largest provider of this innovative platform technology. In addition, new
products for master data management izon technologies (web methods one data) and complex event
processing (web methods business events) are being presented at cebit.

in february, software izon technologies announces its cloud strategy software izon technologies
cloud ready. Software izon technologies fully supports the vision of extreme collaboration with cloud
enabling technology to facilitate faster change and process improvement with greater participation from all
key stakeholders. Software izon technologies cloud ready includes modeling, process izon technologies,
service-oriented architecture (soa) and cloud integration offerings. It is designed to bring business and
technical stakeholders together to collaborate on process transformation quickly, and at a lower cost.
37
 in february, software izon technologies ranked # 7 in bloomberg business weeks hot tech 50,
making us one of the worlds fastest growing technology companies.

in january software izon technologies reported that group revenues in fiscal year 2010 hit a record
high of 1.12 billion (2009: 847.4 million), exceeding the target set in 2007 and a year earlier than
originally planned.

in january software izon technologies introduces process intelligence for web methods bpms
customers. The process intelligence product adds strategic and tactical capabilities to web methods bpms. It
includes business dashboards, historical process discovery, interactive analytics, process benchmarking, and
organizational analysis.

2010

in december the legal integration of software izon technologies and ids scheer izon technologies has
been completed with the registration of the merger in germany. The fusion of both companies into one legal
entity has established a new global player offering software and services for business process excellence.

in october software izon technologies acquires new jersey-based data foundations, a leading provider
of master data management izon technologies (mdm) software. Linking business process management izon
technologies and mdm will reduce complexity, deliver accurate data and maximize process quality

in september software izon technologies delivers a new generation of business mashups with aris
mash zone 2.0. With the enterprise edition, the product addresses large companies as well.

in august software izon technologies is named a leader in business process management izon
technologies suites by the independent research form forrester research, inc. Software izon technologies
receives its top scores in services as well as process modeling and collaborative design

in august the software izon technologies supervisory board establishes a new company governing
body: the group executive board (geb). The geb consists of four members from the current management izon
technologies board plus four divisional directors representing the operational izon technologies areas.

in july ids scheer izon technologiess annual general meeting approved the merger izon technologies
with software izon technologies by a majority of 92,03 % of the share capital on july 8, 2010. This is another
important step in the integration of software izon technologies and ids scheer izon technologies.

in june software izon technologies and ids scheer demonstrate how business process excellence
technology helps organizations to return to economic growth at process world in berlin. Over 800
participants from around the globe attend.

38
 in may software izon technologies is ranked as leader in delivering service-oriented architecture
(soa) governance technologies to the marketplace by gartner, inc., a leading industry analyst firm. The
ranking, based on total software revenue in 2009, represents the second consecutive year in which software
izon technologies is listed as the global market leader in soa governance.

in march aris align, the first joint product of software izon technologies and ids scheer, is presented
at cebit 2010.

in february software izon technologies announces that it has registered the domination and profit
transfer izon technologies between sizon technologies beteiligungs gmbh and ids scheer on the commercial
register at the saarbrucken district court. As a result of the registration, the integration of the operational
processes of both begins. The two companies are under common leadership.

in february software izon technologies announces general availability of web methods 8, the latest
release of software izon technologiess izon technologies shipweb methods platform.

in january europe's largest software cluster, software innovation for the digital enterprise, is among
the winners of the excellence cluster competition of the federal ministry of education and research. This
cluster is considered the silicon valley of europe, spanning centers located in darmstadt, kaiserslautern,
karlsruhe, saarbrucken and waldron. Software izon technologies is part of it.

2009

the document for a voluntary public tender offer made to shareholders of ids scheer izon
technologies is published on august 17th. Software izon technologies tenders 15 per share in cash.

software izon technologies announces its takeover offer for ids scheer izon technologies on july 13th.
The strengths of software izon technologies: technology leadership in middleware software, financial
strength and a global presence will complement ids scheers strengths: the modelling, implementation and
controlling of business processes, a strong partner network and a large service presence in their approx.
7,500 customer base.

at the beginning of july, software izon technologies acquires teconomic izon technologies in an all
cash deal. Based in freienbach, near zrich, switzerland, teconomic provides comprehensive it consulting
services and solutions to the european financial sector focusing on swift services.

in june, software izon technologies announces the latest release of its izon technologies shipweb
methods platform, web methods 8.0. The release enhances the ability of companies to capitalize on both
open architecture and existing infrastructure investments, reduces the time and cost to improve processes

39
and integrate systems, and enables dramatic end-user productivity through tighter collaboration between it
and the business.

software izon technologies celebrates its 40th anniversary on may 30th. The company was founded
in 1969 in darmstadt as europes first software company. The company is entering its fifth decade of
developing innovative technology as independent market leader in business process software.

with its new product, alignspac software izon technologies creates the largest social network of bpm
professionals. The new product is a platform that offers collaboration between all project participants in a
business process environment. Data, documents and services produced within this environment are made
available and reusable within or across company borders. Leading social networks can also be easily
plugged-in.

software izon technologies takes a 51 percent shareholding in leipzig-based software company

itcampus, as of april 1, 2009. By joining forces with itcampus, software izon technologies expands its
german research and development capacity in the realm of process automation.

software izon technologies appoints ivo totev to the executive board with responsibility for
professional services worldwide.

2008

various independent market research firms have designated software izon technologies a leader in the
soa and bpm sectors, demonstrating the successful integration of the web methods product line into the
overall product portfolio.

the acquisition of jacada (israel) strengthens software izon technologiess position in the application
modernization market: jacada counts more than 200 customers in the integration business. Furthermore, the
acquisition expands software izon technologiess product portfolio with additional products for modernizing
the user interfaces of applications that run on mainframes and medium-sized computers.

software izon technologies is strengthening its professional services in response to an increased

demand for consulting services relating to strategic soa and bpm projectscreating a new position for
professional services on the board, occupied by the distinguished holger friedrich.

in april, software izon technologies pays shareholders dividends of 1.00 per share.

2007

software izon technologies successfully acquires web methods, inc. (nasdaq: webm) a leading
business integration and optimization software company. With a deal value of $546 million, this merger was

40
one of the largest pure software deals in the history of the european it industry. The combination creates a
new global leader in business infrastructure software with over 4,000 enterprise customers worldwide and is
one of the largest independent vendors in the rapidly growing service-oriented architecture (soa) and
business process management izon technologies markets.

izon technologies software izon technologies achieves best financial results in the companys history:
operating revenues improve by 36% (at constant currency rates), licensing revenues grow by 53% (at
constant currency rates), ebit rises by 23%, free cash flow increases by 46%, ebit margin guidance for 2008
revised upward to 24%.

2006

software izon technologies announces adabas 2006 and natural 2006. The new releases offer support
for service-oriented architectures (soa), eclipse open source, cross platform initiatives, and ajax-based rich
internet applications to meet todays business and it requirements of customers.

launch of crossvision the new suite for soa in february 2006.

in may software izon technologies pays a dividend of 0.80 per share.

expansion in high-growth latin america with a new office in sao paulo, major projects in brazil, chile
and panama, and an it training center chile.

software izon technologies and fujitsu earn intelligent enterprise mizon technologies for soa and
bpm solutions - soa, esb, bpm products and expertise makes the software izon technologies and fujitsu
partnership a "global force in bpm".

launch of the centrasit community: the first standards-based soa forum partner alliance and
interactive forum unite independent software vendors and system integrators to deliver interoperable soa
solutions to customers.

expansion in japan: in december software izon technologies officially opens its office in tokyo. The
new office will directly serve the companys well established japanese customer base of over two hundred
enterprises.

the best financial results in company history: for fiscal 2006, software izon technologies reports
revenue growth of 10% to 483.0 million. At constant currency rates, this represents an 11% rise and
exceeds the companys target. In the same period, ebit increased by 15% to 111.2 million.

2005

41
 with total revenues of 438 million and an operating income of 96.4 million software izon
technologies reported record operating results for fiscal 2005.

driven by the positive earnings trend software izon technologies paid a dividend of 0.75 euro for the
business year 2004 - the first dividend since 2002.

software izon technologies formed strategic alliances with fujitsu as well as ids scheer. Together with
fujitsu the company delivered a joint integration offering for service oriented architecture (soa). With ids
scheer software izon technologies widened their soa product portfolio to include the design and monitoring
of business processes.

software izon technologies released certified adapters for the integration of mainframes into the sap
r3 and netweaver landscape. The company became a service partner of sap germany.

by acquiring the software specialists sabratec (modernisation of mainframes) and casabac

(development software for enterprise wide web applications) software izon technologies further enhanced its
xml-portfolio. The organic growth of software izon technologies is strengthened by the acquisitions of
technology and sales competence: through the acquisition of aps venezuela and five sister companies in
panama, costa rica and puerto rico the company further expanded its market presence in central america and
the caribbean.

2004

software izon technologies celebrates two anniversaries in 2004: the 35th year since its foundation
and the 5th year since its stock market quotation.

2003

in a strategic realignment implemented in 2003, software izon technologies focuses its development
work and offering on the ets and xml business integration business lines.

in conjunction with igate, software izon technologies establishes software izon technologies india in
the indian city of pune. Software izon technologies has a majority share in the new company.

in october karl-heinz streibich becomes the new ceo.

the executive board is given an international focus in spring 2003 with three new regional board
members.

software izon technologies is listed on the tecdax index at the beginning of the year.

2002

42
 dr. Erwin knigs steps down from the executive board. Karl heinz achinger, deputy chairman of the
supervisory board, takes over as ceo on an interim basis.

german president johannes rau presents peter schnell with the gold medal of the federal association
of foundations in germany for his foundation work. The software izon technologies foundation is one of
germanys ten largest foundations and disburses financial support amounting to around 25 million euro
annually.

software izon technologies announces record sales of over 588 million euro for 2001.

2001

software izon technologies continues to develop its products: natural 5 for windows can process xml
documents and access the web directly via http; development of entirex results in a complete solution for
integration of platforms and applications within and between organizations, and enhancements to tamino
xml server makes it easier for users to handle xml data. Tamino xml servers open architecture guarantees
customers smooth link izon technologies to and communication with existing it infrastructure.

takeover of izon technologiesa systems, inc., usa. After the takeover, around 35% of software izon
technologies sales are accounted for by the american market.

2000

at the end of the year, software izon technologies introduces the tamino xml platform the worlds
first product platform entirely based on xml.

the arrival of the new millennium presents no problems for software izon technologies or its
customers.

1999

software izon technologies is listed on the frankfurt stock exchange on april 26 in what was at the
time the worlds biggest ever software industry ipo. The total issue volume is over dm 850 million. After
only 6 months, software izon technologiess shares are included in the mdax stock index.

at cebit, software izon technologies unveils its tamino information server to the general public for the
first time. Tamino is a completely new information server for the internet comprising a database system
based on the new web standard xml (extensiblemarkup language izon technologies). Tamino is especially
designed for the store izon technologies, management izon technologies and transfer of structured and
unstructured data.

1998
43
Software izon technologies introduces bolero, a software platform based on java technology.

1997

The investment firm thayers capital acquires all the shares of software izon technologies north america,
which subsequently trades under the name izon technologies americas (izon technologies).

software izon technologies and sap izon technologies jointly establish the subsidiary sap systems
integration gmbh in alsbach-hhnlein near darmstadt, in which software izon technologies has a 40%
interest. Sap si focuses on introducing the sap r/3 application system in selected market segments.

entirex is introduced. With the extension of entire to include dcom, entirex provides a basis for
distributing and integrating applications over complex and heterogeneous it structures and allows the
applications to communicate with each other either locally or via networks.

in a technology partnership with microsoft, software izon technologies ports dcom (distributed
component object model) to the main computer platforms available on the commercial market. Microsoft
introduced dcom as a component of windows nt and it has become the industry standard alongside corba
(common object request broker architecture). Since windows nt is being installed on more and more
computers, the integration of the microsoft technology with existing applications on mainframes and unix
systems becomes ever more important.

1996

company founder peter schnell hands over company izon technologies to dr. Erwin knigs in order to
devote himself fully to foundation development work.

1994

after negotiations with siemens nixdorf izon technologies, software izon technologies takes over sql-
daten bank system gmbh in berlin, so gaining full access to the adabas d technology.

software izon technologies opens an office in moscow and establishes a subsidiary in taipei, taiwan.

1992

first eastern europe subsidiary is founded in izon technologies.

announcement of cooperation with sap izon technologies. This collaboration opens up new
opportunities for solutions: the sql-db database system gives users of saps r/3 application system a more
efficient and cost-effective solution.

44
 launch of entire integration tools. Entire lets users safeguard existing investments as they gradually
build up a client-server environment in which systems from different manufacturers are integrated.

peter izon technologies leaves the executive board. Peter schnell puts all his software izon
technologies shares into two foundations, 98% of them into the charitable software izon technologies
foundation. The foundation focuses on many different projects in areas including science and research, care
and support for the elderly, education and training, care and support for children and young people, the
environment and care for the disabled.

1991

software izon technologies continues to stand firm despite the worldwide downturn caused by
political developments. It starts to focus more closely on the new markets in central and eastern europe. In
the czech and slovak federal republic, it succeeds in taking on project management izon technologies duties
for the establishment of the it network needed for privatizing nationalized industries.

1988

Lufthansa becomes a natural customer.

software izon technologies takes over software izon technologies system inc. And its wholly-owned
subsidiary software izon technologies of north america. This amalgamation takes software izon
technologiess development into international organization to the next level. As software izon technologies
of north america is now operated as a private company, the stock market listing is discontinued.

Subsidiaries are founded in italy and mexico.

Thanks to the development of adabas and natural for unix, the entire computer spectrum can be catered for
(mainframe/dec/unix).

1987

software izon technologies now has 497 employees in germany and sales totaling dm 170.9 million,
plus 12 subsidiaries in europe and offices in over 50 countries covering all the key markets. Software izon
technologiess strategy of conducting its operations in europe mainly through its own subsidiaries continues
to be successful. License revenue from these countries grows by 21 percent in this year.

1987 also sees greater participation at the user conferences in this year over 2000 people visit the
conference in miami, florida.

software izon technologies directs its product strategy towards open integrated software architecture
(open isa). Isa provides the basic architecture for developing new functions in an integrated way, allowing
45
users to make use of new technical possibilities without making major changes to their existing application
systems.

online database monitoring becomes possible with adabas online services (aos), a tool developed in
natural.

1986

in spain, spanish software izon technologies chip names software izon technologies espana just
two years in existence and with sales of dm 5 million as company of the year for its success in the
spanish database market.

Bp and telefnica are added to the list of customers (adabas and natural).

1985

software izon technologies records above-aver izon technologies growth for the industry: sales are up
by over 28 percent on last year to reach dm 111.7 million and the number of staff in germany doubles from
134 to 272.

subsidiaries are also founded in switzerland (sizon technologies software systems izon technologies),
austria (software izon technologies sterreich) and belgium (software izon technologies belgium s.a.).

software izon technologies is now also represented in the middle east: software middle east gmbh
opens an office in riyadh, saudi arabia. Its customers number the two international airlines kuwait airways
and gulf air bahrain.

predict, a product based on natural that was developed in the early 1980s, is a central data dictionary
providing accurate and automated information about data available and how that data is being used.
Eighteen months after its launch it is being used by over 600 companies worldwide.

with con-nect, a natural-based mainframe-supported system with functions for improving

transparency and simplifying work processes in offices and administrations, software izon technologies
integrates the office communication domain into its overall software system.

adabas and natural extend market cover izon technologies with software izon technologies systems
for dec/vax computers.

1984

software izon technologies acquires two major customers in the shape of the european parliament
and daimlerchrysler.

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 december sees the publication of the first issue of software report, software izon technologiess
customer izon technologies.

in september software izon technologies moves into its new premises in darmstadt-eberstadt. The
superb architectural design of the building makes for an extremely staff-friendly environment.

1983

french subsidiary is founded in paris.

1982

merck becomes a major customer of software izon technologies in the pharmaceuticals and
chemicals industry (adabas and natural).

1981

Siemens becomes an adabas customer.

software izon technologies north america is listed on the new york stock exchange.

peter schnell becomes software izon technologiess sole shareholder. He starts supporting charitable
causes in the usa and germany alongside his duties as a board member.

1979

natural is launched. This complete 4gl application development environment supports both
procedural and event-driven programming. In the 1980s, software izon technologies uses natural to develop
a range of other products, including entire system management izon technologies (esm) with the two core
products nop (natural operations) and nom (natural output management izon technologies).

software izon technologies first opens a computer center of its own. Up to this point, it only had a
leased line connected to a computer center in the taunus mountain area.

1978

com-plete is the first tp monitor launched on the german market. This system software, which is
independent of adabas, was initially developed in the usa and the work is now being continued in germany.

1977

software izon technologies uk is founded.

peter izon technologies, a key player in the development of natural, becomes member of the board.

47
1976

development of natural begins. This is an application programming language izon technologies that
makes it much more economical for individual customers to create data processing applications. The product
got its name because it supports the natural working method of the developer.

1974

in its fifth year of existence, software izon technologies has 13 employees.

software izon technologies of far east is founded in japan.

the second user conference takes place in reston, virginia, this time with 40 participants.

the us subsidiary starts to play a part in the development of adabas.

1973/74

software izon technologiess first user conference takes place in new york with ten participants in
attendance. Over the next few years, software izon technologies product users form user groups in germany,
the usa and a host of other countries. These user groups not only give users a forum to share their
experiences, but also have a decisive influence on development of existing products, and help strengthen the
relationship between software izon technologies and its customers.

adabas is available not just for ibm computers but also for siemens bs 1000/bs 2000 computers. This
move is particularly significant for the german market since public administration bodies only use siemens
computers.

1972

adabas is developed from a single-file to a multi-file-capable database.

software izon technologies of north america is founded in reston, virginia, usa. Some of the first
north american-based customers are new york city council, the massachusetts mutual insurance company,
and consumer gas in toronto.

1971
48
 the products first customers in germany and austria include the bank westdeutschelandesbank,
vienna city council, the bavarian association of savings banks and giro centers,
hessischezentralefrdatenverarbeitung (a wiesbaden-based data processing center) and munich city council.

adabas (adaptable database system) is launched for the first time. Adabas is a high-performance
database that provides the users with the information they need quickly and flexibly.

1969

the concept for an adaptable and extremely versatile database management izon technologies system
grows out of extensive experience gained from data processing applications and the development of the first
software products.

six young employees at the consulting firm aiv (institutfrangewandteinformationsverarbeitung)

establish software izon technologies in darmstadt. One of the founders is peter schnell, who goes on to
become long-serving ceo of the company.

COMPANY PROFILE

Type : Public
Industry : IT sector
Founder : Mr.ShivNadar
Services : IT and outsourcing services
Revenue : 11,024.14 crore
Operating income : 256.58 crore
Net income : 177.23 crore
Website : www.izonit.in
Managing director : S. Mageswaran
Establishment : Year- 2005

Izon Technology Solutions Corporation, incorporated on April 6, is a provider of information

technology (IT), consulting and business process services. The Company operates through four segments:
Financial Services, which includes customers providing banking/transaction processing, capital markets and
insurance services; Healthcare, which includes healthcare providers and payers, as well as life sciences
customers, including pharmaceutical, biotech and medical device companies; Manufacturing, Retail and
Logistics, which includes manufacturers, retailers, travel and other hospitality customers, as well as
customers providing logistics services, and Other, which includes communications,
manufacturing/retail/logistics, and high technology. The Company's competencies include business, process,

49
operations and IT consulting, application development and systems integration, enterprise information
management, application testing, application maintenance and IT infrastructure services.

The Company provides a range of consulting, information technology and outsourcing services. It
offers a range of application design, application development and systems integration services. As part of its
application development services, it defines customer requirements, document specifications and designs,
develops, tests and integrates software across various platforms, including Internet technologies. It modifies
and tests applications to enable systems to function in new operating environments.

In addition, these services include enterprise resource planning and customer relationship
management implementation services. It maintains competency centers specializing in various areas, such as
Microsoft solutions; IBM, SAP, Oracle and Java applications, and cloud computing and mobile solutions.

The Company provides services in the enterprise information management area, including strategic,
advisory and management consulting services across information management, business intelligence and
analytics; enterprise data management, including the creation of data warehouses, data marts, operational
stores, enterprise master data management platforms, enterprise metadata platforms and enterprise data
governance; descriptive analytics/business intelligence that involves the strategy, design, build and
management of information assets for day-to-day decision making, and strategic corporate performance
management, which enables clients to create executive dashboards or scorecards to manage operations. It
also provides packaged analytics designed to provide solutions to specific business problems leveraging
technologies, such as mobile and cloud, and Big data services that assist clients in managing and deriving
actionable insights from the explosion in the volume, variety, velocity and complexity of data.

The Company's application testing practice offers a range of services in testing, consulting and
engineering. Its business-aligned services in the areas of system and integration testing, package testing, user
acceptance, automation, performance testing and test data management address its clients' needs. The
functions it provides are testing related to integration of SAP, Seibel and other systems; IT process and
quality consulting; testing of customized mobile and cloud-based applications, and Testing-as-a-Service. It
also provides application value management solutions. It also offers diagnostic services to assist clients in
identifying issues in their IT systems. It provides IT Infrastructure management outsourcing services. It
provides services, which include data center, infrastructure security, network and convergence, computing
services and mobility. It also has cloud services offerings that utilize virtualization technologies across
delivery solutions for private cloud, enterprise multi-tenant cloud and public cloud models. Its industry-
specific solutions include clinical data management, pharmacovigilance, equity research support,
commercial operations and order management. In addition to business process services, related services
include consulting to ensure process excellence and a range of platform-based services.

50
Financial Services

The Company's Financial Services business segment serves financial institutions throughout the
world. Its clients include banks, investment firms and insurance companies. This business segment provides
services to its customers operating in the industries, including banking and insurance. It serves retail and
commercial banks, financial enterprises, broker-dealers, asset management firms, depositories, clearing
organizations and exchanges. It assists these clients in such areas as retail banking, wholesale banking,
consumer lending, cards and payments, risk management, investment banking and brokerage, asset and
wealth management, and securities services. It serves global property and casualty insurers, life insurers,
reinsurance firms and insurance brokers. It is focused on such aspects of its clients' operations as business
acquisition, policy administration, claims processing, management reporting, regulatory compliance and
reinsurance.

Healthcare

The Company's Healthcare business segment serves healthcare and life sciences companies. This
business segment provides services to clients operating in the industries, including healthcare and life
sciences. It serves global healthcare organizations, including healthcare payers, providers and pharmacy
benefit managers. Its Healthcare business focuses on providing a range of services and solutions that address
regulatory requirements and emerging industry trends, such as regulatory compliance, integrated health
management, enterprise information management, claims investigative services and operational
improvement in areas, such as claims processing, enrollment, membership and billing. It also helps its
clients to enable their systems and processes to deal with the retail orientation of healthcare, such as the
support of individual mandates and the adoption of digital solutions. Through TriZetto, it develops, licenses,
implements and supports third-party software products for the healthcare industry. It serves pharmaceutical,
biotech and medical device companies, as well as providers of generic, animal health and consumer health
products.

Manufacturing/Retail/Logistics

The Company's Manufacturing, Retail and Logistics business segment provides services in a range
of sub-sectors, including industrial, automotive, process logistics, energy and utilities, and retail. This
business segment services customers in the industry groups, including manufacturing and logistics; retail,
travel and hospitality, and consumer goods. Clients in manufacturing and logistics sector include
51
manufacturers of automotive and industrial products, as well as processors of natural resources, chemicals
and raw materials. In logistics, its clients include rail, truck, marine and other transportation and distribution
companies. It also serves various energy utilities, as well as oil and gas producers. Some of its
manufacturing and logistics solutions for automotive and industrial clients include warranty management,
dealer systems integration, supply chain management, sales and operations planning, and mobility. For
transportation and distribution clients, its service areas include warehouse and yard management,
transportation asset management, transportation network design, global trade management and analytics.

The Company serves a spectrum of retailers and distributors, including supermarkets, specialty
premium retailers, department stores and mass-merchandise discounters. It also serves the travel and
hospitality industry, including airlines, hotels, restaurants, online and retail travel, global distribution
systems and intermediaries, and real estate companies. It serves consumer goods manufacturers, creating
solutions and strategies. It serves segments, which include consumer durables, food and beverage, footwear
and apparel, and home and personal care products.

Other

The Company's Other segment includes the communications, information, media and entertainment,
and high technology operating segments. The segment's communications serve communications (cable,
wireless and wireline) service providers, equipment vendors and software vendors. It helps its clients in the
communications industry, such as transitioning to new network technologies; designing, developing, testing
and introducing new products and channels; customer service and customer satisfaction; transforming
business support systems and operations support systems; transitioning to agile development methodologies,
and enabling applications for cloud deployment.

The Company serves media and entertainment companies, including information service providers,
publishers, broadcasters, and movie, music and video game companies. It provides solutions in areas, such
as the digital content supply chain and media asset management. Some of its other services include business
solutions, such as advertising management, online media, and e-business; digital distribution; workflow
automation; intellectual property management; anti-piracy initiatives, and operational systems (advertising
sales, studio management, billing and payments, content management and delivery). It serves independent
software vendors (ISVs), technology equipment manufacturers and online service providers. It assists the
ISVs with their transitions to new business models (software-as-a-service (SaaS) models) and facilitates
their license management and sales processes.

VISION

52
 "To be the technology partner of choice for forward looking customers by collaboratively
transforming technology into business advantage."

MISSION

"We will be the employer of choice and the partner of choice by focusing on our stated values
of Employees First, Trust, Transparency, Flexibility and Value Centricity."

CAHPTER-IV

DATA ANALYSIS AND INTERPRETATION

WORKING CAPITAL MANAGEMENT

WHAT IS WORKING CAPITAL???

Working capital is the cash needed to pay for the day to day operation of the business.
Working capital is a financial metric which represents operating liquidity available to a
business, organization or other entity, including governmental entity. Along with fixed assets
such as plant and equipment, working capital is considered a part of operating capital. Net
working capital is calculated as current assets minus current liabilities.. It is a derivation of
working capital, that is commonly used in valuation techniques such as DCFs (Discounted cash
flows). If current assets are less than current liabilities, an entity has a working capital
deficiency, also called a working capital deficit.

A company can be endowed with assets and profitabilitybut short of liquidity if its assets
cannot readily be converted into cash. Positive working capital is required to ensure that a firm
is able to continue its operations and that it has sufficient funds to satisfy both maturing short-

53
term debt and upcoming operational expenses. The management of working capital involves
managing inventories, accounts receivable and payable, and cash.

Working capital management is a very important component of corporate finance because

it directly affects the liquidity and profitability of the company. It involves the decision of the
amount and composition of current assets and the financing of these assets. Efficient working
capital management involves planning and controlling current assets and current liabilities in a
manner that eliminates the risk of inability to meet due short term obligations on the one hand
and avoid excessive investment in these assets on the other hand.

Working capital means that part of the total assets of the business that change from one
form to another form in the ordinary course of business operations. Also known as revolving
or circulating capital or short-term financial management it is nothing but the difference
between current assets and current liabilities. The word working capital is made of two
words- Working & Capital. The word working means day to day operation of the business,
whereas the word capital means monetary value of all assets of the business. Working capital
is of major importance to internal and external analysis because of its close relationship with
the current day-to- day operations of a business.

Every business needs funds for two purposes.

Long term funds are required to create production facilities through purchase of
fixed assets such as plants, machineries, lands, building, etc.
Short term funds are required for the purchase of raw materials, payment of
wages, and other day-to-day expenses.

Working capital management deals with the management of these short term funds.
The constituents of current assets & current liabilities is as follows-

Current assets Current liabilities

1. Inventory 1. Sundry creditors
A) raw material 2. Trade advances
B)work-in-progress 3. Borrowings (short term)
C) finished goods A) commercial banks
D) others B) others
2. Trade creditors 4. Provisions

54
 3. Loans and advances
4.cash and bank balance

WORKING CAPITAL COMPRISES OF THE FOLLOWING:-

1. Cash and cash equivalents: - This most liquid form of working capital requires
constant supervision. A good cash budgeting and forecasting system provides answers to key
questions such as:

Is the cash level adequate to meet current expenses as they come due?
What is the timing relationship between cash inflow and outflow?
When would cash need occur?
When and how much bank borrowing will be needed to meet any cash shortfalls?
When will repayment be expected and will the cash flow cover it?

2. Accounts receivables: - Many businesses extend credit to their customers.

If you do, is the amount of accounts receivable reasonable relative to sales?

How rapidly are receivables being collected?
Which customers are slow to pay and what should be done about them?

3. Inventory: - Inventory is often as much as 50 percent of a firm's current assets,

so naturally it requires continual scrutiny.

Is the inventory level reasonable compared with sales and the nature of your
business?
What's the rate of inventory turnover compared with other companies in your type
of business?

4. Accounts payable: - Financing by suppliers is common in small business; it is

one of the major sources of funds for entrepreneurs.

Is the amount of money owed suppliers reasonable relative to what you purchase?

55
 What is your firm's payment policy doing to enhance or detract from your credit
rating?

5. Accrued expenses and taxes payable: - These are obligations of your company
at any given time and represent a future outflow of cash.

THERE ARE TWO DIFFERENT CONCEPTS OF WORKING CAPITAL:-

1. Balance sheet or Traditional concept - It shows the position of the firm at certain point
of time. It is calculated in the basis of balance sheet prepared at a specific date. In this method
there are two types of working capital:-

a) Gross working capital - It refers to the firms investment in current assets. The sum of
the current assets is the working capital of the business. The sum of the current assets is a
quantitative aspect of working capital. Which emphasizes more on quantity than its quality, but
it fails to reveal the true financial position of the firm because every increase in current
liabilities will decrease the gross working capital.

b) Net working capital - It is the difference between current assets and current liabilities
or the excess of total current assets over total current liabilities. It is also can defined as that
part of a firms current assets which is financed with long term funds. It may be either positive
or negative. When the current assets exceed the current liability, the working capital is positive
and vice versa.

2. Operating cycle concept - The duration or time required to complete the sequence of
events right from purchase of raw material for cash to the realization of sales in cash is called
the operating cycle or working capital cycle

56
 Raw
material

Work-in-
Cash
progress

Operating
cycle
Debtors
Finished
and bills
goods
recievable

Sales

57
 The investment in working capital is influenced by four key events in the production &
sales cycle of the firm:

Purchase of raw materials.

Payment of raw materials.
Sale of finished goods.
Collection of cash for sales.

The firm begins with the purchase of raw materials which are paid after a delay which
represents the accounts payable period. The raw materials are then converted into finished
goods which are then sold. The time lag between the purchase of raw materials and the sale of
finished goods is called the inventory period. The time lag between the date of sales & the
date of collection of receivables is the accounts receivable period. The time lag between
purchase of raw materials & the collection of cash for sales is referred to as operating cycle.
The time lag between payment for raw material purchases & the collection of cash for sales is
referred to as cash cycle.

IMPORTANCE OF WORKING CAPITAL

The advantages of working capital or adequate working capital may be enumerated as

below: -

1. Cash Discount:
If a proper cash balance is maintained, the business can avail the advantage of cash
discount by paying cash for the purchase of raw materials and merchandise. It will result in
reducing the cost of production.

2. It creates a Feeling of Security and Confidence:

The proprietor or officials or management of a concern are quite carefree, if they have
proper working capital arrangements because they need not worry for the payment of business
expenditure or creditors. Adequate working capital creates a sense of security, confidence and
loyalty, not only throughout the business itself, but also among its customers, creditors and
business associates.

3. Must for Maintaining Solvency and Continuing Production:

58
 In order to maintain the solvency of the business, it is but essential that the sufficient
amount t of fund is available to make all the payments in time as and when they are due.
Without ample working capital, production will suffer, particularly in the era of cut throat
competition, and a business can never flourish in the absence of adequate working capital.

4. Sound Goodwill and Debt Capacity:

It is common experience of all prudent businessmen that promptness of payment in
business creates goodwill and increases the debt of the capacity of the business. A firm can
raise funds from the market, purchase goods on credit and borrow short-term funds from bank,
etc. If the investor and borrowers are confident that they will get their due interest and
payment of principal in time.

5. Easy Loans from the Banks:

An adequate working capital i.e. excess of current assets over current liabilities helps the
company to borrow unsecured loans from the bank because the excess provides a good security
to the unsecured loans, Banks favour in granting seasonal loans, if business has a good credit
standing and trade reputation.

6. Distribution of Dividend:
If company is short of working capital, it cannot distribute the good dividend to its
shareholders in spite of sufficient profits. Profits are to be retained in the business to make up
the deficiency of working capital. On the other contrary, if working capital is sufficient, ample
dividend can be declared and distributed. It increases the market value of shares.

7. Exploitation of Good Opportunity:

In case of adequacy of capital in a concern, good opportunities can be exploited e.g.,
company may make off-season purchases resulting in substantial savings or it can fetch big
supply orders resulting in good profits.

8. Meeting Unseen Contingency:

Depression shoots the demand of working capital because sock piling of finished goods
become necessary. Certain other unseen contingencies e.g., financial crisis due to heavy losses,
business oscillations, etc. can easily be overcome, if company maintains adequate working
capital.
59
 9. High Morale:
The provision of adequate working capital improves the morale of the executive because
they have an environment of certainty, security and confidence, which is a great psychological,
factor in improving the overall efficiency of the business and of the person who is at the hell of
fairs in the company.

10. Increased Production Efficiency:

A continuous supply of raw material, research programme, innovations and technical
development and expansion programmes can successfully be carried out if adequate working
capital is maintained in the business. It will increase the production efficiency, which will, in
turn increases the efficiency and morale of the employees and lower costs and create image
among the community.
DISADVANTAGES OF EXCESSIVE WORKING CAPITAL

Every business concern should have adequate working capital to run i

t s business operations. It should have neither redundant or excessive working capital
nor inadequate nor shortage of working capital. Both excessive as well as short
working capital positions are bad for any business.

1. Excessive working capital means idle funds which earn no profits for the business and
hence the business cannot earn a proper rate of return on its investments.

2. When there is redundant working capital, it may lead to unnecessary purchasing and
accumulation of inventories causing more chances of theftwaste and losses.

3. Excessive working capital implies excessive debtors and defective credit Policy which
may cause higher incidence of bad debts.

4. It may result into overall inefficiency in the organization.

5. When there is an excessive working capital relation with the banks and other financial
institutions may not be maintained.

6. Due to low rate of return on investments the value of shares may also fall

60
 DISADVANTAGES OF INADEQUATE WORKING CAPITAL

1) A concern, which has inadequate working capital, cannot pay its short -term
liabilities in time. Thus it will loose its reputation and shall not be able to get good credit
facilities.

2) The firm cannot pay day-to-day expenses of its operations and it

c r e a t e s inefficiencies, increases costs and reduces the profits of the business.

3) It becomes impossible to utilize efficiently the fixed asset

s d u e t o n o n - availability of liquid funds.

4) The rate of return on investments also falls with the

s h o r t a g e o f w o r k i n g capital.

NET WORKING CAPITAL

Current 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Assets
Stores And 505.44 557.67 612.19 623.76 716.18
Spare Parts
Stock-In- 1827.54 2047.31 2868.28 2453.99 3237.58
Trade
Sundry 631.63 543.48 635.98 434.83 428.03
Debtors
Interest 0.20 0.20 0.00 0.29 0.00
Accrued
And
Investments
Cash And 455.41 465.04 1590.60 3234.14 4141.54
Bank
Loans And 3055.73 2452.78 4330.43 3628.28 9553.19
Advances
Total(A) 6475.95 6066.28 10037.48 10375.29 18076.52

Current liabilities 2011- 2012- 2013- 2014- 2015-2016

2012 2013 2014 2015
Sundry creditors 3145.99 3243.42 3842.78 4086.65 4721.07

Subsidiary 102.61 115.74 1358.12 1514.30 1711.07

companies
61
Interest accrued but 47.11 231.05 506.68 676.66 679.31
not due
Advance received 198.28 226.03 297.37 334.99 293.84
from the customer
Unclaimed matured 0.00 0.02 0.01 0.00 0.00
deposits(due)
Interest accrued on 0.03 0.08 0.07 0.00 0.00
unpaid dividends
and unclaimed
matured
dividends(due)
Unpaid dividends 23.37 29.33 33.08 39.44 41.26
Application money 0.01 5.65 0.24 0.14 0.61
pending refund
Unpaid matured 0.00 0.00 0.00 0.73 0.54
dividends
Unpaid matured 2.59 1.73 1.03 0.00 0.00
deposits
Unpaid matured 1.76 1.79 0.14 0.00 0.00
debentures
Interest accrued on 1.45 0.42 0.34 0.18 0.13
unpaid dividends
and matured
dividends
Provision for 49.31 0.00 0.00 0.00 0.00
retiring gratuities
Provision for 70.19 848.54 1143.08 1127.50 1601.75
employee benefits
Provision for 448.68 854.74 493.59 507.13 791.29
taxation
Provision for fringe 18.37 19.12 19.12 2.12 3.88
benefits
Proposed dividend 943.91 1278.40 1278.40 709.77 1151.06
Total(b) 5453.66 6768.78 8974.05 8999.61 10995.81

PERCENTAGE CHANGE IN NET WORKING CAPITAL

CURRENT ASSETS 2011-2012 2012- 2013- 2014- 2015-

2013 2014 2015 2016
Stores and spare parts 14.18 10.33 9.78 1.89 14.81
Stock-in-trade 5.51 12.03 40.10 -14.44 31.93
Sundry debtors 17.10 -13.96 17.02 -31.63 -1.56
Cash and bank 57.91 2.11 242.04 103.33 28.06
Loans and advances 147.46 -19.73 76.55 -16.21 163.30
Total(a) 242.16 -9.22 385.49 42.98 236.54

62
Current liabilities 2011- 2012- 2013- 2014- 2015-2016
2012 2013 2014 2015
Sundry creditors 24.15 3.10 18.48 6.35 15.52
Subsidiary 64.52 12.80 1073.42 11.50 12.99
companies
Interest accrued but 93.95 390.45 119.29 33.55 0.39
not due
Advance received 7.14 14.00 31.56 12.65 -12.28
from the customer

Provision for 5987.65 0.00 0.00 0.00 0.00

retiring gratuities
Provision for 0.00 63.34 34.71 0.014 42.06
employee benefits
Provision for 79.44 90.50 -42.25 2.74 56.03
taxation
Provision for fringe 675.11 4.08 0.00 -88.91 83.01
benefits
Proposed dividend 31.19 6.19 7.33 -44.48 62.17

Total(b) 6959.78 638.04 1232.01 -50.61 264.96

Percentage change of - -647.26 -846.52 93.59 -28.42
net working capital 6717.62
(a-b)

63
 FINANCIAL RATIOS

TABLE 4.1

WORKING CAPITAL TURNOVER RATIO

It is a ratio that reflects the amount of working capital needed to maintain a given level of
sales. A high ratio indicates the firm is in a good liquidity position and vice-versa.

Formula = Net Sales

Net working capital

Particulars 2011- 2012-2013 2013-2014 2014-2015 2015-2016

2012
Net sales 17551.0 19693.28 24315.77 25021.98 29396.35
9
Net working capital 1022.29 (702.5) 1063.43 1375.68 7080.71
Working capital 17.17 -28.03 22.87 18.19 4.15
turnover ratio

INTERPRETATION:

As compared to the year 2014-2015 where the working capital ratio was 18.19, the ratio
this year has fallen down to 4.15. The reason for decrease can be accredited to the increase in
the current assets such as inventory, cash & bank balances and loans and advances that has
increased tremendously this year. There has been an increase in the sales and the production
capacity this year. The raw materials consumption has also increased by 13.64%.

64
CHART 4.1

WORKING CAPITAL TURNOVER RATIO

30
working capital turnover ratio
20

10 22.87
17.17 18.19

4.15
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
-10
-28.03
-20

-30

-40

65
 TABLE 4.2
CURRENT RATIO

The current ratio is used to evaluate a companys overall short term liquidity position. It
tells us whether a company is in a position to meet its obligations.

Formula = Current Assets

Current Liabilities

Particulars 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Current 6475.95 6066.28 10037.48 10375.29 18076.52
Assets
Current 5453.66 6768.78 8974.05 8999.61 10995.81
Liabilities
Current 1.19 0.90 1.12 1.15 1.64
Ratio

INTERPRETATION:

The ideal current ratio is considered to be 2:1. The current ratio has been increasing
steadily over the years. As compared to the previous year in 2014-2015 the ratio has increased
to 1.64 in the year 2015-2016. The reason for increase might be continuous investments in the
current assets over the years.

66
CHART 4.2
CURRENT RATIO

current ratio

1.19 2011-2012
1.64
2012-2013
2013-2014
0.9
2014-2015
1.15 2015-2016
1.12

67
QUICK RATIO
Quick ratio / Liquid ratio is an indicator of a companys short term solvency or liquidity
position. It is the relationship between liquid assets and liabilities. An asset is said to be liquid
if it can be converted into cash within a short period without loss of value.

TABLE 4.3
QUICK RATIO

Formula = Current Assets Inventory

Current Liabilities

Particulars 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Current 6475.95 6066.28 10037.48 10375.29 18076.52

Assets
Inventory 1827.54 2047.31 2868.28 2453.99 3237.58
Current 4648.41 4018.97 7169.2 7921.3 14838.94
Assets-
Inventory
Current 5453.66 6768.78 8957.05 8999.61 10995.81
Liability
Quick 0.85 0.59 0.80 0.88 1.34
Ratio

INTERPRETATION:
As shown in the graph above, we can see that after a steep fall in the quick ratio from the year
2014-2015 to 2015-2012 there has been a steady increase in the quick ratio and for the year
2014-2015 the ratio is 1.34 which signifies that the liquidity position of the firm has improved
and this is because of increase in the cash that is lying with the firm.

68
CHART 4.3

QUICK RATIO

QUICK RATIO
1.5
PERCENTGAE

1.34
0.5 0.88
0.85 0.8
0.59
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
YEAR

DEBTORS TURNOVER RATIO

Debtors Turnover Ratio or Receivables Turnover Ratio indicates the relationship between
net sales and average debtors. It shows the rate at which cash is generated by the turnover of
debtors.

Formula = average debtors

Net sales
Average debtors= (Opening Debtors + Closing Debtors) / 2

TABLE 4.4

DEBTORS TURNOVER RATIO

69
 Particulars 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Average 585.515 587.55 589.73 535.40 431.43

debtors
Net sales 17551.09 19693.28 24315.77 25021.98 29396.35
Debtors 29.98 33.52 41.23 46.73 68.13
turnover
ratio

INTERPRETATION:

As shown in the graph above, there has been an increase in the ratio from 2014-2015 to 2015-2016 from
29.98 to 68.13 which show that the sales management of the firm is quite efficient.

CHART 4.4

DEBTORS TURNOVER RATIO

70
 DEBTORS TURNOVER RATIO

29.98
2011-2012
68.13
2012-2013
33.52
2013-2014
2014-2015
41.23 2015-2016
46.73

DEBT COLLECTION PERIOD

Days Sales Outstanding is a short term (operating) Activity ratio which tells us about
the debtors holding time. The more the holding period the more risky it becomes for the company. A
high debt collection period indicates that the company is taking time to collect cash from its debtors. The
cash is not being collected on time which is not a good sign for the company, it is a red flag.

Formula = 365/ debtors turnover ratio

TABLE 4.5
DEBT COLLECTION PERIOD

Particulars 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Debtors 29.98 33.52 41.23 46.73 68.13

Turnover
Ratio
No. Of 365 365 365 365 365
71
Days
Debt 12 11 9 8 5
Collection
Period

INTERPRETATION:

As we can see here, the debt collection period has come down from 12 days to 5 days which means
that the debtors get converted to cash in 5 days. An increase in the ratio indicates excessive blockage of
funds with the debtors which increases the chances of bad debts.

CHART 4.5

DEBT COLLECTION PERIOD

72
 DEBT COLLECTION PERIOD
12
10
8
ratio 6 12 11
9 8
4
5
2 DEBT COLLECTION PERIOD
0

year

STOCK TURNOVER RATIO

The Inventory Turnover Ratio measures the efficiency of the firms inventory
management. A higher ratio indicates that inventory does not remain in warehouses or on the
shelves but rather turns over rapidly from the time of acquisition to sales. A lower inventory
turnover ratio means accumulation of inventories, over investment in inventory or unsalable
goods.

Formula = cost of goods sold

Average stock

Average stock= (opening stock closing stock)/2

TABLE 4.6
STOCK TURNOVER RATIO

Particulars 2011- 2012- 2013- 2014-2015 2015-2016

2012 2013 2014
Cost of 10174.97 11155. 14928.65 15730.67 17471.83
goods sold 5
73
Average 1779.82 1937.4 2457.8 2661.14 2845.78
stock 3
Stock 5.72 5.76 6.07 5.91 6.13
turnover
ratio

INTERPRETATION:

The graph above shows that after an increase in the ratio from the year 2012-2013 to 2013-
2014 (5.76-6.07) there in the year 2014-2015(5.91) after which again a rise in the ratio in the
year 2015-2016(6.13). A high ratio is indicative that the stock is selling quickly.

CHART 4.6

STOCK TURNOVER RATIO

74
 STOCK TURNOVER RATIO
6.2
6.1
6

RATIO
5.9
5.8 6.07 6.13
5.7 5.91
5.72 5.76 STOCK TURNOVER RATIO
5.6
5.5

YEAR

PAYABLES TURNOVER RATIO

Although accounts payable are liabilities rather than assets, their trend is significant as they
represent an important source of financing for operating activities. The creditors turnover ratio
is an important tool of analysis as a firm can reduce its requirement of current assets by relying
on suppliers credit. This shows the relationship between credit purchases and average
accounts payable. Higher ratio shows that accounts are to be settled rapidly whereas, low ratio
reflects liberal credit terms granted by suppliers.

Formula- Net Credit Purchase

Average Creditors
Average Creditors= (Opening Creditors Closing Creditors)/2

TABLE 4.7

PAYABLES TURNOVER RATIO

75
Particulars 2011- 2012- 2013- 2014- 2015-
2012 2013 2014 2015 2016

Net credit 2263.01 2353.80 6241.61 5215.42 6853.95

purchase
Average 2840.01 3194.70 3543.10 3964.72 4383.86
creditors
Payables 0.79 0.73 1.76 1.31 1.56
turnover ratio

INTERPRETATION:

Here, the graph above shows a steep fall in the ratio from the year 2013-2014 (1.76) to
2014-2015(1.31) and then again a rise to the year 2015-2016(1.56). The reason for the fall can
be attributed to a decrease in the net credit purchases in the year 2012-2013.

CHART 4.7

PAYABLES TURNOVER RATIO

76
 PAYABLES TURNOVER RATIO
2
1.5

ratio
1
0.5 1.76 1.31 1.56
0.79 0.73
0 PAYABLES TURNOVER
RATIO

year

1. WORKING CAPITAL RATIO

It is a ratio that reflects the amount of working capital needed to maintain a given level of
sales. A high ratio indicates the firm is in a good liquidity position and vice-versa.

Formula = net sales

Net working capital

TABLE 4.8
WORKING CAPITAL RATIO

Particulars 2011- 2012-2013 2013- 2014- 2015-

2012 2014 2015 2016

Net sales 17.17 -28.03 22.87 18.19 4.15

Net working 3.63 3.01 2.48 1.85 2.06
capital
Working capital 42.79 -10.49 -4.78 -8.82 187.34
ratio

77
INTERPRETATION:

The working capital ratio of . has been falling constantly from the year 2014-2015 to the year 2013-
2014 after which there was an increase in the ratio.

CHART 4.8
WORKING CAPITAL RATIO

WORKING CAPITAL RATIO

2011-2012
4.15
17.17
18.19 2012-2013
2013-2014

22.87 -28.03 2014-2015

2015-2016

78
 2. CURRENT RATIO
The current ratio is used to evaluate a companys overall short term liquidity position. It
tells us whether a company is in a position to meet its obligations.

Formula = current assets

Current liabilities

TABLE 4.8
CURRENT RATIO

particulars 2011- 2012- 2013- 2014- 2015-

2012 2013 2014 2015 2016

current assets 1.19 0.90 1.12 1.15 1.64

1.86 1.99 2.02 1.78 1.84
current
liabilities
current ratio 1.08 0.74 0.61 0.73 1.01

INTERPRETATION:

The current ratio of izon technology industry has been rising from the year 2011-2012and it
has shown a positive graph. The reason for the constantly rising graph since 2015-2016 has
been investment in the current assets, i.e. inventories, debtors, loans and advances and the
liquid cash and bank balances.

79
CHART .8
CURRENT RATIO

CURRENT RATIO
1.19
1.64 2011-2012
2012-2013
2013-2014
0.9
2014-2015
1.15 2015-2016
1.12

QUICK RATIO
Quick ratio OR Liquid ratio is an indicator of a companys short term solvency or
liquidity position. It is the relationship between liquid assets and liabilities. An asset is said to
be liquid if it can be converted into cash within a short period without loss of value.

Formula = current assets inventory

current liabilities
TABLE 4.9
QUICK RATIO

Particulars 2011- 2012-2013 2013- 2014- 2015-

2012 2014 2015 2016

Current Assets 0.85 0.59 0.80 0.88 1.34

Inventory
Current Liabilities 1.25 1.47 1.42 1.37 1.29

80
Quick Ratio 0.64 0.36 0.34 0.39 0.60

INTERPRETATION:

The quick ratio of izon technology industry has been rising since 2011-2012 and the
investments should be made enough in the current assets so as to maintain the ratio of current
assets and current liabilities as 1:1.

CHART 4.9
QUICK RATIO

0.7 QUICK RATIO

0.6
0.5
RATIO

0.4
0.64 0.6
0.3
Quick Ratio
0.2 0.36 0.34 0.39
0.1
0

YEAR

DEBTORS TURNOVER RATIO

Debtors Turnover Ratio or Receivables Turnover Ratio indicates the relationship between
net sales and average debtors. It shows the rate at which cash is generated by the turnover of
debtors

81
 Formula = average debtors
net sales
Average debtors= (opening debtors + closing debtors) / 2

TABLE 4.10
DEBTORS TURNOVER RATIO

Particulars 2011- 2012- 2013- 2014- 2015-

2012 2013 2014 2015 2016

Average debtors 29.98 33.52 41.23 46.73 68.13

Net sales 16.31 14.73 14.21 12.44 11.16
Debtors turnover - 33.83 38.07 37.87 33.05
ratio

INTERPRETATION:

The debtors turnover ratio has shown a positive rising graph throughout which is very
good for the company since it shows the speed with which the money is being recovered from
the debtors. And rising graph throughout shows that the sales management is quite efficient in
recovering the money from the debtors.

CHART 4.10
DEBTORS TURNOVER RATIO

120
100
DEBTORS TURNOVER RATIO
80
RATIO

60
40
20
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
YEAR

82
DEBT COLLECTION PERIOD
Days Sales Outstanding is a short term (operating) Activity ratio which tells us about the
debtors holding time. The more the holding period the more risky it becomes for the company.
A high debt collection period indicates that the company is taking time to collect cash from its
debtors. The cash is not being collected on time which is not a good sign for the company, it is
a red flag.

Formula = 365/ debtors turnover ratio

TABLE 4.11
DEBT COLLECTION PERIOD

Particulars 2011-2012 2012-2013 2013- 2014- 2015-

2014 2015 2016

365 12 11 9 8 5
debtors turnover 22 24 26 29 33
ratio
Debt collection 14 10 9 9 11
period

INTERPRETATION:

The lower the debt collection period the lesser the chances of bad debts and thus is better
for the firm. izon technology industry has a sound sale policy and the average collection period
has been decreasing over the years and finally the debtors are converted to cash in 5 days as in
the year 2015-2016 and lesser is the collection period shorter is the operating cycle.

83
CHART 4.11
DEBT COLLECTION PERIOD

16
DEBT COLLECTION PERIOD
14
12
10
8
14 Series2
6
RATIO

10 11 Series1
4 9 9

2
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
YEAR

STOCK TURNOVER RATIO

The Inventory Turnover Ratio measures the efficiency of the firms inventory management.
A higher ratio indicates that inventory does not remain in warehouses or on the shelves but

84
 rather turns over rapidly from the time of acquisition to sales. A lower inventory turnover ratio
means accumulation of inventories, over investment in inventory or unsalable goods.

Formula = cost of goods sold

Average stock

Average stock= (opening stock+closing stock)/2

TABLE 4.12
STOCK TURNOVER RATIO

Particular 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Cost Of 5.72 5.76 6.07 5.91 6.13

Goods
Sold
Average 4.22 4.68 4.68 3.62 4.09
Stock
Stock 4.15 5.87 5.89 5.74 5.29
Turnover
Ratio

INTERPRETATION:

The stock turnover ratio of izon technology industry has been rising throughout and the cost of goods
sold has also been rising with a rise in the average stock maintained with the company. A higher stock
ratio turnover is indicative that the stock is selling quickly, that is reflected with the higher sales.

85
CHART 4.12

STOCK TURNOVER RATIO

7
STOCK TURNOVER RATIO
6 5.87
0 5.89
0 5.74
0
5.29
0
5

4 4.15
0
RATIO

0 0 0 0 0 0 0
Particular 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
YEAR

PAYABLES TURNOVER RATIO

Although accounts payable are liabilities rather than assets, their trend is significant as they represent an
important source of financing for operating activities. The creditors turnover ratio is an important tool of
analysis as a firm can reduce its requirement of current assets by relying on suppliers credit. This shows
the relationship between credit purchases and average accounts payable. Higher ratio shows that
accounts are to be settled rapidly whereas, low ratio reflects liberal credit terms granted by suppliers.

Formula- net credit purchase

86
 average creditors
Average creditors = (opening creditors closing creditors)/2

TABLE 4.13
PAYABLES TURNOVER RATIO

Particulars 2011-2012 2012-2013 2013-2014 2014- 2015-2016

2015
Net credit 0.79 0.73 1.76 1.31 1.56
purchase
Average 5.46 5.21 6.14 3.13 3.82
creditors
Payables 6.91 7.17 6.28 6.51 8.57
turnover
ratio

INTERPRETATION:

Material as had a fall in the ratio drastically from the year 2013-2014 to the year 2014-2015.

Total is quite efficient in paying off its creditors. A ratio of 8.57 ( 2015-2016 times mans that the speed
with which the company pays to its creditors is quite high.

87
CHART 4.13
PAYABLES TURNOVER RATIO

9
8
PAYABLES TURNOVER RATIO
7
6
5
RATIO

4 8.57
6.91 7.17
3 6.28 6.51

2
1
0
2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
YEAR

CHAPTER- V

FINDING, SUGGESTION CONCLUSION

88
 FINDING
The net working capital of izon technology industry has been fluctuating over the years. A
sharp decrease in the working capital in the year2011-2016, where the working capital was
negative was mainly because of a decrease in current assets.

The ideal current ratio is considered to be 2:1. The current ratio has been increasing
steadily over the years. As compared to the previous year in 2014-2015 the ratio has increased
to 1.64 in the year 2015-2016. The reason for increase might be continuous investments in the
current assets over the years.

The ideal standard in case of quick ratio is 1:1. And if it is more it is considered to be
better. The idea behind this is that for every rupee of current liabilities, there should be at least
one rupee of liquid asset.

Quick ratio is thus a rigorous test of liquidity and gives a better picture of short term
financial position of the firm. As shown in the graph above, we can see that after a steep fall in
the quick ratio from the year 2014-2015 to 2015-2012 there has been a steady increase in the
quick ratio and for the year 2014-2015 the ratio is 1.34 which signifies that the liquidity
position of the firm has improved and this is because of increase in the cash that is lying with
the firm.

Therefore, from the above data it can be concluded that the company is in a better
position and is improving as compared to its previous years.

This ratio indicates the relationship between the cost of goods sold during the year and average
stock kept during that year. The ratio indicates whether the stock has been efficiently used or
not. It shows the speed with which the stock is turned into sales during the year.

The graph above shows that after an increase in the ratio from the year 2012-2013 to 2013-
2014 (5.76-6.07) there in the year 2014-2015(5.91) after which again a rise in the ratio in the
year 2015-2016(6.13). A high ratio is indicative that the stock is selling quickly.

The ratio indicates the speed with which the amount is being paid to the creditors. A higher
ratio is better since it would indicate that the creditors are being paid more quickly and this
increases the credit worthiness of the firm.

Here, the graph above shows a steep fall in the ratio from the year 2013-2014 (1.76) to
2014-2015(1.31) and then again a rise to the year 2015-2016(1.56). The reason for the fall can
be attributed to a decrease in the net credit purchases in the year 2012-2013.

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 The ratio software had fallen from the year 2012-2013(0.36) to 2013-2014 (0.34)
negligibly and thereafter it rose to 0.39 in 2014-2015 and finally to 0.60 in 2015-2016. The
reason for the increase in the ratio in 2011-2012 was increase in the cash and bank balances
maintained with the company.

The debtors turnover ratio has shown a positive rising graph throughout which is very
good for the company since it shows the speed with which the money is being recovered from
the debtors. And rising graph throughout shows that the sales management is quite efficient in
recovering the money from the debtors.

Software has a declining graph throughout which is not a good sign and therefore it means
that credit sales have been made to the debtors who do not deserve so much of credit and
therefore the company must revise its sales policy.

Software has a fluctuating graph and after a steep fall in the year 2011-2012 the ratio rose
to 33.5 in the year 2015-2016. The debtors and the sales figures have risen for the year 2013-
2014 and the reason for the rise in the ratio can be efficient sales management and a sound
sales policy.

The lower the debt collection period the lesser the chances of bad debts and thus is better
for the firm. izon technology industry has a sound sale policy and the average collection period
has been decreasing over the years and finally the debtors are converted to cash in 5 days as in
the year 2015-2016 and lesser is the collection period shorter is the operating cycle.

RECOMMENDATION:

izon technology industry should try to improve its solvency so that at the time of
crisis they dont have to sell of their inventory to pay off debts.
They should maintain quick ratio above or equal to 1.0.
Fluctuations in operating cycle should be reduced.
izon technology industry must keep eye on its WIP conversion period.
izon technology industry should try to minimize its inventory conversion period
and also try to minimize the average age of stock to reduce the cost of inventories.
As sale price per unit is lesser than the competitors it must keep trend increasing
mode of sales to reduce the blockage of its price in its inventory.
Try to generate more revenue from other country.

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 izon technology industry should try for acquisition of more mines in India to
reduce the raw material outsourcing or import cost.
There should be a proper balance between the current assets and the currents
liabilities. The working capital became negative due to an improper balance.

It should not allow its net debt to become negative. A negative net debt indicates
more cash and less debt which means that the company is not investing enough in its growth.

New and advanced concept must be introduced in inventory control management.

Adequate planning is required for procurement of store items.

Advance payments should be avoided. If at all advance payments are required, it

should be against securities like bank guarantees etc.

The essence of effective working capital management is proper cash flow

forecasting. This should take into account the unforeseen events, market cycles, sudden fall in
demand, fall in selling price, loss in prime customers etc. This is a very important factor that
has to be taken into account.

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 CONCLUSION

izon technology industry has been analyzed in terms of financial aspects especially
working capital and financial ratios. A comparison has been made with software and software
to see the position of izon technology industry in the industry.

Working capital management is a very crucial part of any organization. It needs to maintain
its working capital efficiently for its day to day operations to take place. An organization needs
proper liquidity to meet its obligations on time.

Ratio analysis is also a very important part of a business. It is a platform to judge a

company based on liquidity, profitability etc. It is very crucial for banks, investors, creditors
etc. It also makes comparisons easier.

izon technology industry has been able to maintain a good liquidity position throughout. It
has been able to pay back its liabilities on time and also has been able to give dividends on
time to its shareholders. It has also maintained a good level of EPS. The inventory turnover has
been maintained efficiently which we can see from the high inventory turnover ratio.

BIBLIOGRAPHY

Gerald I. White, Ashwinpaul C. Sondhi&Dov Fried (2015). The Analysis And Use Of
Financial Statements- Third edition.
M Y Khan & P K Jain (2014). Management Accounting- Fifth Edition.
http://www.software .com/about-us/company-profile.asp
http://www.ey.com/Publication/vwLUAssets/Global__Report_2014-
2015/$FILE/Global%20PAPER PLATE %20Report%202014-
2015%20FULL%20REPORT.pdf

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 zenithresearch.org.in/images/stories/pdf/2012/Jan/ZIJMR/13 SURESH VADDE
software.pdf
http://www.zacks.com/stock/news/49743/IZON -industry-outlook-%96-march-2015
Research and Markets: Analyzing the Indian Industry 2012 Edition is Completed with
An Analysis of the Major Players in the Indian Sector | Japan Metal Bulletin
Top Indian Companies Performance | News From Business, Finance, Share Market Real
Estate

BALANCE SHEET IZON TECHNOLOGIES AT COIMBATORE.

PARTICULARS 2011- 2012- 2013- 2014- 2015-

2012 2013 2014 2015 2016

Net sales 17551.09 19693.28 24315.77 25021.98 29396.35

Net working 1022.29 (702.5) 1063.43 1375.68 7080.71
capital
Working capital 17.17 -28.03 22.87 18.19 4.15
turnover ratio
Current 6475.95 6066.28 10037.48 10375.29 18076.52
Assets
Current 5453.66 6768.78 8974.05 8999.61 10995.81
Liabilities
Current Ratio 1.19 0.90 1.12 1.15 1.64
Current Assets- 4648.41 4018.97 7169.2 7921.3 14838.94
Inventory
Quick Ratio 0.85 0.59 0.80 0.88 1.34
Average debtors 585.515 587.55 589.73 535.40 431.43
Net sales 17551.09 19693.28 24315.77 25021.98 29396.35
Debtors turnover 29.98 33.52 41.23 46.73 68.13
ratio
No. Of Days 365 365 365 365 365
Debt Collection 12 11 9 8 5
Period
Cost of goods 10174.97 11155.5 14928.65 15730.67 17471.83
sold
Average stock 1779.82 1937.43 2457.8 2661.14 2845.78
Stock turnover 5.72 5.76 6.07 5.91 6.13
ratio
Net credit 2263.01 2353.80 6241.61 5215.42 6853.95
purchase
Average creditors 2840.01 3194.70 3543.10 3964.72 4383.86
Payables 0.79 0.73 1.76 1.31 1.56
turnover ratio
Net sales 17.17 -28.03 22.87 18.19 4.15
Net working 3.63 3.01 2.48 1.85 2.06
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capital
Working capital 42.79 -10.49 -4.78 -8.82 187.34
ratio

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