ORGANISATION PROFILE

ORGANISATION PROFILE We are one of the largest pure-play global engineering solutions company with 8000+ associates across 30 global locations specializing in product development, lifecycle support, engineering software and geospatial engineering. Our focus on engineering is reiterated through our workforce that almost entirely comprises of engineers from mechanical, electrical and electronics engineering streams and through our revenue distribution. This focus has enabled us to provide core engineering solutions across a wide range of industries - Aerospace, Automotive, Heavy Equipment & Machinery, Offshore & Marine, Energy, Hi-Tech, Consumer, Medical Devices, Rail, Utilities and Telecom. For over 19 years we have built an engineering ecosystem around Total Customer Centricity and Innovation. We have been central to the process innovation, new technology development and business transformation of leading engineering players through a wide portfolio of engagements. Through our long-term relationships with engineering giants, we have honed our ability to leverage Global Collaborative Engineering to achieve transformational goals in terms of cost leadership, global reach and superior time to market. One of our critical success factors has been our proprietary CPT framework (Customer, People, Process, Tools and Technology & Training) that has helped us achieve tangible and lasting improvements. Our customers include 22 'Fortune 500' and 27 'Global 500' companies whom we engage with in a variety of engagement models that suits their business challenges.

In order to consistently create and deliver services that exceed expectations and enhance the level of business agility, we have set-up a framework of robust internal processes to ensure IP Security, quality-of-solution and on-time delivery. Our Quality Management framework is compliant to ISO 9001, ISO 27001, AS9100B, ISO 13485 and CMMi Level 5 standards. In 2009, Infotech was awarded the IMC RBNQ Performance Excellence Trophy in the service category. It is a recognition of our compliance to the Malcolm Baldrige framework and a testimony to our openness and transparency in governance, ethics and the need to create value for our customers.

We are publicly listed and have enjoyed equity participation from several globally reputed investors.

The Infotech group of companies consists of: Infotech Enterprises Europe Ltd Infotech Enterprises America Inc Infotech Enterprises GmbH Infotech Enterprises Japan K.K Infotech Enterprises Information Technology Services Private Limited TTM Institute of Information Technology Private Limited Infotech Geospatial (India) Ltd

Vision Delivering innovative solutions together for a better future. Mission Provide the best technology services and solutions to industry and governments worldwide. Values Customer Delight Fairness Pursuit of Excellence Integrity and Transparency Leadership by Example

Value Proposition Creating Business Impact By providing reliable, scalable and cost-effective services that combine offshore delivery with local responsibility, we help customers improve speed to market, optimize resources and reduce costs thereby creating measurable business impact.

Providing Expert Solutions Strong domain and technical expertise enables us to provide value to our customers. Delivering Quality Consistently By consistently delivering to specification and schedule we support the performance and reliability of our customers business. By continuously enhancing our quality processes, we are able to meet increasing client expectations.

Building Partnerships Globally Our willingness to invest and build long-term relationships with our customer makes us a reliable global partner .

Board Of Directors B.V.R. Mohan Reddy Chairman & Managing Director B. Sucharitha Whole time Director

International Executive Council B.V.R. Mohan Reddy Chairman & Managing Director John Renard President - UTG and Managing Director, IEEL, UK K. Ashok Kumar Chief Technology Officer B. Ashok Reddy President - Global Human Resources and Corporate Affairs S. Nataraja Senior Vice President Finance & Accounts Krishna Bodanapu President Engineering

Allan Brockett Non-Executive Director Abhay Havaldar Non-Executive Director

M.M. Murugappan Independent Director G.V. Prasad Independent Director J. Ramachandran Independent Director K. Ramachandran Independent Director Jaitirth Rao Independent Director Alain De Taeye

Bhanu Cherukuri Chief Strategy Officer

S.A.Lakshminarayanan Chief Operating Officer - UTG Greg Tilley President - IEAI, USA

N.J. Joseph

Independent Director

Senior Vice President and Head of Europe UTG

According to great Victorian thinker John Ruskin, Quality is never an accident. It is always the result of intelligent effort. Infotech strongly believe in this credo. We are committed to creating and delivering engineering services and solutions that exceed customer expectations and enhance the level of business agility.

Our quality implementation efforts are all pervasive, beginning with our stated goal. Quality Policy

Infotech Enterprises is committed to deliver innovative solutions that delight customers through deployment of robust processes Quality Objectives : Delight customers through delivery excellence. Attract, train and retain talented professionals through active employee engagement. Deliver solutions / services based on cutting edge tools, technologies and methodologies. Continuous process improvement and achieve operational excellence. By emphasizing and reinforcing the need for continuous improvement in all spheres of activity, we ensure that clients receive high quality products and services that help them capitalize on market opportunities. Our Credentials True to our image as a global player, we have developed a reputation for providing our customers with world-class quality. Our solutions are supported by a set of robust internal processes that are compliant to Quality Management System as per ISO 9001, ISO 27001, AS 9100 standards and CMMi Quality Model.

Brief

description

of

the

Standards

that

are

followed:

ISO 9001:2000 Quality Management System Infotech was the first Indian company to gain ISO accreditation for GIS service. We have continued to upgrade our quality management system and the Company is ISO 9001:2000 compliant globally. The ISO certification was conducted by BVQI and is accredited to ANSI, Ukas, and RAB. ISO 27001 Information Security Management Systems ISO 27001 provides a foundation for risk identification and analysis, and build and enforce effective controls for managing Information security that infuses confidence in our customers. The code of practice for information security management provides implementation advice and guidance by means of 39 control objectives and 133 controls, structured under 11 major headings to enable organizations to identify the appropriate security controls relevant to their business

Infotech has instituted the controls by formulating Information Security Management policy and objectives. Developed detailed processes and various control

Infotech has been certified for BS 7799-2:2002 Information Security Management Systems by BVQi. A recertification audit against ISO 27001 ( BS 7799-2005) was also satisfactorily conducted AS 9100 B Aerospace Quality Management System End-product organizations of the aerospace industry face the challenge of assuring the quality of, and integrating product purchased from suppliers throughout the world and at all levels

within the supply chain. For the purpose of achieving significant improvements in quality and safety, and reductions in cost, throughout the value stream the aerospace industry has established the International Aerospace Quality Group (IAQG). This international standard has been prepared by the IAQG The AS 9100 B is aligned to and based on ISO 9001:2000, but with nearly 100 additional requirements specific to aerospace, AS9100 provides suppliers with a comprehensive quality system for providing safe and reliable products to the aerospace industry. AS 9100 standard is now becoming a pre-requisite in aerospace industry to perform business. Infotech has been certified for AS 9100 B certification from UL, India.. CMMi Level 5 Version 1.2 INFOTECH Enterprises Limited (IEL), has successfully been reappraised at maturity level 5 of the Capability Maturity Model Integration (CMMI) Version 1.2 for its Hyderabad center. Capability Maturity Model Integration (CMMI) is developed and managed by Software Engineering Institute (SEI) of Carnegie Mellon University, Pittsburgh, USA. CMMI is accepted worldwide as an excellent model for benchmarking and for improving processes of software and system engineering. Maturity Level 5 is the highest maturity with respect to model and indicates world class processes. The best practices of CMMI have been seamlessly integrated into Infotech QMS and are institutionalized across all services and verticals. This has resulted in business excellence for the company. Infotechs further endeavor is to appraise the software groups across all the Indian centers for CMMI in a phased manner. Infotech is among the first companies globally to be reappraised for CMMi Level 5 version 1.2. ACE GOLD Achieving Competitive Excellence (ACE) is a proprietary quality model of United Technology

Corporation (UTC), USA. As a major supplier of services to United Technologies and their affiliates, this quality model is institutionalized and practiced in Infotechs UTC center of excellence On 16th October 2007 Mr. Steve Finger, President of Pratt & Whitney, visited Hyderabad and formally presented the plaques to the Pratt & Whitney and Hamilton Sundstrand Engineering teams at Hyderabad for their ACE Gold site achievement. These are the 55th and 56th sites in UTC to get ACE Gold status, out of a total of over 900 sites. The Gold level is the highest level of achievement, and it fully integrates the activities and training of lean manufacturing with business metrics. 2006 General Procurement Key Supplier of the Year

Preamble:

Infotech believes in giving back to society in some measure that is proportionate to its success in business. Corporate Social Responsibility (CSR) aims at balancing the needs of all stakeholders. Infotechs CSR initiative goes beyond charity and a responsible company should take into account its impact on the society besides rewarding its stakeholders. Mission: Achieving long-term, holistic development of the community around us by supporting education of underprivileged children through adoption of schools. Vision: To improve quality of education imparted to underprivileged children in schools which lack basic amenities.

Infotechs Initiatives:

Infotech Enterprises Limited contributes 0.5% of its PAT to Infotech Enterprises Charitable Trust (IECT), a Trust formed with the view to implementing its CSR initiatives. IECT would Mr. B. Ashok Reddy, President Global HR & CA receiving the memento from Shri. support initiatives to improve quality of Rameshwar Thakur, formerly Governor of A.P. and Orissa education in schools for underprivileged children in government schools which lack in basic amenities. Infotech adopted the

Government Upper Primary School located in Shamshiguda, Kukatpally to provide qualitylearning environment to students. This enabled the school to upgrade to secondary school and increase the number of students to around 600.

Infotech was chosen for the "2006 General Procurement Key Supplier of the Year" by United Technologies Corporation, Supply Chain Management. United Technologies Corporation has businesses in more than 180 countries and has relationships with more than 50,000 suppliers, customers, and partners. Among them are 22 key suppliers, including Infotech, that service 17

Commodity Groups. Infotech is in the Engineering Services group. Infotech was chosen based on high customer feedback scores and the cost savings for UTC.

Optostruct weight reduction initiatives award Infotechs engineering team reduced the weight of a critical aircraft component by optimizing the current design for better Air Management System. Infotech achieved a 35% reduction in the weight of the component. The customers Air Management System was awarded "Optostruct weight reduction initiatives" award by its customer. Mechanical Design Service Infotech Enterprises mechanical Design services represent more than three decades of knowledge, expertise and project management Skills. The broad range of experiences and knowledge we have provides us with an opportunity to help our customers transform their businesses - and all of these at cost effective prices. Computer Aided Design Product Design Conceptual design, component design, assembly design, Interference checks and tolerance analysis for components and assemblies.

3D Modeling Creation of fully constrained parametric 3D solid models and assembly models from source data and reverse engineering using CMM / laser scanning for Finite Element structural analysis or any other related work.

Data Conversion Legacy Data Migration and digitization into latest CAD systems and model migration

across different CAD platforms.

Drafting & Detailing Generating production drawings & assembly layout drawings as per ISO, DIN, BIS, ASME, ANSI, JIS and client specific standards.

Computer Aided Manufacturing Infotech has strong domain expertise with its associates having good hands on experience in the Manufacturing methods which enables them to deliver solutions for clients in different areas of manufacturing. The solutions are offered in the following areas

NC Tool Path Generation and simulation in various axis modes. Manufacturing process development. Tooling: Mold, Die, Jigs and Fixture Design. Prototype development. Parts Inspection & Validation.

Computer Aided Engineering With its vast experience & Technical Know-how, Infotech offers services in the following areas Finite Element Meshing / Modeling Finite Element Meshing experienced in widely used meshing tools: Finite Element Analysis FE analysis under Static, Dynamic, Linear, Non-linear conditions covering several aspects like:

Stress Analysis Thermal analysis Crash and Impact analysis Fatigue and durability analysis Harmonic analysis Noise & Vibration Analysis Computational Fluid Dynamics (CFD) analysis

Manufacturing Support Our services in the manufacturing areas are broadly in support functions & after market services of our customers to concentrate on the core activities. CNC program for simultaneous multi axes machining for different machine controls, creating process sheets for new designs. Design of special purpose tools, holding fixtures for repair and manufacture of components, Jigs etc. Die and mould design including fabrication support. Tool path simulation using VERICUT After Market support services Repair process sheets, mapping tools etc. NC Tool path generation

Tool Design Infotech supports manufacturing & repair facilities by designing various types of tools for different components in order to facilitate repair, overhaul and manufacture

programs. We also coordinate the tool manufacturing activity in India. Tool houses in India manufacture many of the tools designed by us. We have played a major role in coordination, acceptance and supply of tools to the customer. Some of our design services for the following tools are as following:

Turning Fixtures Milling Fixtures Grinding Fixtures Welding Fixtures EDM Fixtures Tempering Fixtures Press Tools Gauges Composite Tools Design Support Value Engineering Infotech has successfully executed many Value Engineering for customers and there by creating measurable impact in Cost Optimization Weight reduction/optimization Topology optimization Parts optimization

Reverse Engineering We have executed several projects using Reverse Engineering Starting with Laser scanning and CMM data generation. We can provide validated 3D casting & machining model including associated drafting as per customer specified standards and any industry standard CAD platforms like AutoCAD, Unigraphics, CATIA IV & V and Pro-E. We can also provide metallurgical analysis & test services.

Our Expertise on some software tools used.

CAD Unigraphics CATIA Pro/Engineer I-DEAS Solid Edge Solid Works Inventor

CAE Unigraphics ANSYS Hypermesh Pro/Mechanica Fluent CFX-TASC FLOW PATRAN MSC/NASTRAN LS-DYNA I-DEAS

CAM Unigraphics Mastercam Pro/E CATIA I-DEAS Valysis Vericut

Infotech provides expert solutions in Web Technologies Services by providing services like: Application Development Application Migration Application Integration Security and BCP Portals We have evolved dedicated Practice Groups to different technologies to provide cutting edge solution for our customers in the respective technologies. To ensure the best knowledge and solutions is provided to our clients, we have strategic alliances and partnerships with various technology companies like Microsoft, Sun, SAP, Oracle, etc. Through these alliances we are updated on the latest changes and improvements on the technologies which we pass on to our customers. Our technology consultants add immense value with their intrinsic knowledge and domain expertise that goes beyond the customers requirements, resulting in customer delight. Our core competence lies with the following technologies: Microsoft

Sun Java SAP Oracle IBM Linux Software Testing is an integral and critical phase of any software development project. Developers and testers must ensure that newly developed products or product enhancements meet the clients functional and performance requirements and that those products are reliable and able to operate consistently under peak loads.

Infotech provides crucial testing services for software development projects that help companies develop a quality product.

Infotech provides the following testing service:

Functional Testing Requirement Management Testing Test Management Performance Testing (Stress, Load and Performance testing) Defect Tracking Unit testing Integration testing System Testing Acceptance Testing

As the name suggests, Infrastructure Management Services (IMS) is the management of the IT infrastructure of a company. This includes the networks and connectivity, hardware (computers, services, printers, etc), and software. As part of the Infrastructure Management Services (IMS), Infotech provides IT Consulting and IT Services Management (ITSM).

In addition, Infotech offers the following Information Systems Support Services: Technical Support Services Desktop Services Data Center Services Enterprise System Management (EMS) Network Services Storage Services IS Process Consultancy IT Security

Business Intelligence (BI) and Knowledge Management (KM) is the process through which organizations generate value from their intellectual and knowledge-based assets.

Infotech can provide consultancy, design and build the knowledge management solution. Support the organization to deploy the solution. Infotech can organize the existing structured and non-structured data by domain and facilitate with the powerful case based reasoning tool to share and reuse the knowledge database among the stakeholders

A knowledge based organization has a competitive edge over its competitors, as they would be making informed decisions, based on accurate and up-to-date information. Infotech enables organizations to harness the business intelligence that lies within their own information data source, to produce strategic and competitive information leading to greater operational efficiencies and hence productivity and planning.

Infotech offers the following BI and KM services: Data Gathering and Consolidation Workflow & Content Management solutions Enterprise Knowledge Portals Knowledge Based Engineering Business Intelligence KM Consulting Product Offerings to Industry Verticals

Infotech offers the following BI and KM services: Data Gathering and Consolidation Workflow & Content Management solutions Enterprise Knowledge Portals Knowledge Based Engineering Business Intelligence KM Consulting

Infotech follows stringent quality standards in its process and operations. This is reflected in our global standard quality accreditations

ISO 9001:2000 Quality Management System

CMMi Level 5 AS 9100 B Aerospace Quality Management System With strong processes in place, we strive to help companies with their Quality process. We provide quality consultancy for:

Software Development Practices Process Improvement Software Quality Assurance Effective Testing Techniques Training and Facilitating By sharing our quality processes, companies can build strong software development processes and practices, that would lead to greater efficiencies and results.

Infotech Enterprises is a globally reputed provider of geospatial technology solutions and data management services. With 4000 associates and 17 years of wide-ranging customer engagements, we are one of the largest and most accomplished firms in the industry today.

Focused on electric, gas and water utilities, telecom network operators, transportation companies and government agencies, we help our customers leverage geospatial technology and data to improve the way they do business.

Since its inception in 1991, Infotech has acquired significant domain expertise related to the industries it serves and provides software services and solutions to several of the most recognizable names in utilities, telecommunications, transportation &

logistics, manufacturing, retail financial services and government markets.

Aerospace Aerospace & defense industry over the past few years is reeling under heavy pressure to cut costs and shorten the product development time. More

Automotive The automotive industry is passing through a phase of rapid and constant changes in design requirements. More

Consumer Products The consumer durable industry has a growing demand for innovative and smart products characterized by shrinking product lifecycle. More

Medical Devices Increasing global health concerns demand reliable, accurate, safer yet innovative medical devices that range from single-use... More

Heavy Equipment Machinery

&

Energy World energy demand will increase at an average annual rate of about 1.7% More

Unprecedented growth of infrastructure and demand for raw material globally is leading to an increased demand for construction... More

Government Infotech's technology solutions make government agencies more efficient and productive by enhancing... More

HiTech With multi fold increase in global trade and enhanced offshore drilling and production activities. More

Offshore & Marine With multi fold increase in global trade and enhanced offshore drilling and production activities. More

Rail Knowledge and Innovation are the key success factors in today's world. More

Telecom Infotech is a leading solutions provider to the global telecom industry with services that span network planning and configuration to asset and inventory management to ongoing maintenance and support. More

Utilities Infotech helps utilities worldwide transform their traditional business into high performance enterprises by leveraging IT and engineering tools.

More

As one of the pioneers of offering pure play engineering services, Infotech has always focused on providing pure engineering solutions, including managing the complete product development cycle, from concept development through after-market support in the areas of Mechanical Design, Electronics Design, Technical Publications and Engineering Software Development.

For nearly two decades, Infotech has solved complex engineering assignments for global engineering giants across industries like Aerospace, Automotive, Heavy Engineering, Energy, Rail, Offshore & Marine, Consumer and Medical Devices etc.

Today, Infotech is regarded as one of the best global pure play engineering services partner committed to deliver value beyond cost. The work culture and the engineering ecosystem that Infotech operates in strongly helps in its customers regard Infotech as an extension of their own. More

REVIEW OF LITERATURE

WORKING CAPITAL MANAGEMENT

INTRODUCTION:

Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. Working capital refers to that part of firms capital which is required for financing short term or current assets such as cash, marketable securities, debtors, and inventories. In other words working capital is the amount of funds necessary to cover the cost of operating the enterprise. MEANING:

Working capital means the funds (i.e.; capital) available and used for day to day operations (i.e.; working) of an enterprise. It consists broadly of that portion of assets of a business which are used in or related to its current operations. It refers to funds which are used during an accounting period to generate a current income of a type which is consistent with major purpose of a firm existence. Objectives of working capital: Every business needs some amount of working capital. It is needed for following purposes For the purchase of raw materials, components and spares. To pay wages and salaries.

 To incur day to day expenses and overhead costs such as fuel, power, and office expenses etc. To provide credit facilities to customers etc. FACTORS THAT DETERMINE WORKING CAPITAL: The working capital requirement of a concern depend upon a large number of factors such as Size of business Nature of character of business. Seasonal variations working capital cycle Operating efficiency Profit level. Other factors.

SOURCES OF WORKING CAPITAL:

The working capital requirements should be met both from short term as well as long term sources of funds. Financing of working capital through short term sources of funds has the benefits of lower cost and establishing close relationship with banks. Financing of working capital through long term sources provides the benefits of reduces risk and increases liquidity. Types of working capital: Working capital can be divided into two categories.

Permanent working capital: It refers to that minimum amount of investment in all current assets which is required at all times to carry out minimum level of business activities. Temporary working capital: The amount of such working capital keeps on fluctuating from time to time on the basis of business activities. Advantages of working capital: It helps the business concern in maintaining the goodwill. It can arrange loans from banks and others on easy and favorable terms. It enables a concern to face business crisis in emergencies such as depression. It creates an environment of security, confidence, and over all efficiency in a business. It helps in maintaining solvency of the business.

Disadvantages of working capital: Rate of return on investments also fall with the shortage of working capital. Excess working capital may result into over all inefficiency in organization. Excess working capital means idle funds which earn no profits. Inadequate working capital cannot pay its short term liabilities in time.

MANAGEMENT OF WORKING CAPITAL: A firm must have adequate working capital, i.e.; as much as needed the firm. It should be neither excessive nor inadequate. Both situations are dangerous. Excessive working capital means the firm has idle funds which earn no profits for the firm. Inadequate working capital means the firm does not have sufficient funds for running its operations. It will be interesting to understand the relationship between working capital, risk and return. The basic objective of working capital management is to manage firms current assets and current liabilities in such a way that the satisfactory level of working capital is maintained, i.e.; neither inadequate nor excessive. Working capital sometimes is referred to as circulating capital. Operating cycle can be said to be t the heart of the need for working capital. The flow begins with conversion of cash into raw materials which are, in turn transformed into work-in-progress and then to finished goods. With the sale finished goods turn into accounts receivable, presuming goods are sold as credit. Collection of receivables brings back the cycle to cash. The company has been effective in carrying working capital cycle with low working capital limits. It may also be observed that the PBT in absolute terms has been increasing as a year to year basis as could be seen from the above table although profit percentage turnover may be lower but in absolute terms it is increasing. In order to further increase profit margins, Infotech can increase their margins by extending credit to good customers and also by paying the creditors in advance to get better rates.

WORKING CAPITAL Ratio Analysis is one of the important techniques that can be used to check the efficiency with which working capital is being managed by a firm. The most important ratios for working capital management are as follows NET WORKING CAPITAL: There are two concepts of working capital namely gross working capital and net working capital. Net working capital is the difference between current assets and current liabilities. An analysis of the net working capital will be very help full for knowing the operational efficiency of the company. The following table provides the data relating to the net working capital of Infotech. NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIES

WORKING CAPITAL TURNOVER RATIO: This is also known as sales to working capital ratio and usually represented in times. This establishes the relationship of sales to net working capital. This ratio indicates heather or not working capital has been effectively utilized in making sales. In case if a company can achieve higher volume of sales with relatively small amount of working capital, it is an indication of the operating efficiency of the company. Working Capital Turnover Ratio = Income / Net Working Capital

CASH MANAGEMENT INTRODUCTION: Cash management is one of the key areas of working capital management. Cash is the liquid current asset. The main duty of the finance manager is to provide adequate cash to all segments of the organization. The important reason for maintaining cash balances is the transaction motive. A firm enters into variety of transactions to accomplish its objectives which have to be paid for in the form of cash. MEANING OF CASH: The term cash with reference to cash management used in two senses. In a narrower sense it includes coins, currency notes, cheques, bank drafts held by a firm. n a broader sense it also includes near-cash assets such as marketable securities and time deposits with banks. Objectives of cash management: There are two basic objectives of cash management. They are1 . To meet the cash disbursement needs as per the payment schedule. 2. To minimize the amount locked up as cash balances. Basic problems in Cash Management: Cash management involves the following four basic problems. Controlling level of cash Controlling inflows of cash Controlling outflows of cash Optimum investment of surplus cash.

Determining safety level for cash: The finance manager has to take into account the minimum cash balance that the firm must keep to avoid risk or cost of running out of funds. Such minimum level may be termed as safety level of cash. The finance manager determines the safety level of cash separately both for normal periods and peak periods. Under both cases he decides about two basic factors. They areDesired days of cash: It means the number of days for which cash balance should be sufficient to cover payments. Average daily cash flows: This means average amount of disbursements which will have to be made daily Criteria for investment of surplus cash. In most of the companies there are usually no formal written instructions for investing the surplus cash. It is left to the discretion and judgment of the finance manager. While exercising such judgment, he usually takes into consideration the following factors-Security: This can be ensured by investing money in securities whose price remains more or less stable. Liquidity: This can be ensured by investing money in short term securities including short term fixed deposits with banks. Yield: Most corporate managers give less emphasis to yield as compared to security and liquidity of investment. So they prefer short term government securities for investing surplus cash.

Maturity: It will be advisable to select securities according to their maturities so the finance manager can maximize the yield as well as maintain the liquidity of investments. Cash Management in the Organization: The cash management is carried out in seaways by CTM (Corporate Treasury Management). CTM is a commonly followed procedure in most of the companies. Ratio Analysis is one of the important techniques that can be used to check the efficiency with which cash management is being managed by a firm. The most important ratios for cash management are as followsCASH TO CURRENT ASSETS RATIO: This ratio establishes the relationship between the cash and the current assets. It is calculated as follows Net Cash = Cash in hand +Cash at Bank Cash to Current Assets Ratio = Net Cash / Current Assets

CASH TO CURRENT LIABILITIES RATIO: This ratio establishes the relationship between the cash and current liabilities. It is calculated as follows. Cash to Current Liabilities Ratio = Net Cash / Current Liabilities

RECEIVABLES MANAGEMENT

Introduction: Receivables constitute a significant portion of the total assets of the business. When a firm seller goods or services on credit, the payments are postponed to future dates and receivables are created. If they sell for cash no receivables created. Meaning: Receivable are asset accounts representing amounts owed to the firm as a result of sale of goods or services in the ordinary course of business. Purpose of receivables: Accounts receivables are created because of credit sales. The purpose of receivables is directly connected with the objectives of making credit sales. The objectives of credit sales are as follows Achieving growth in sales. Increasing profits. Meeting competition. Factors affecting the size of Receivables: The main factors that affect the size of the receivables are Level of sales. Credit period. Cash discount.

Costs of maintaining receivables: The costs with respect to maintenance of receivables are as follows: Capital costs: This is because there is a time lag between the sale of goods to customers and the payment by them. The firm has, therefore to arrange for additional funds to meet its obligations. Administrative costs: Firm incur this cost for manufacturing accounts receivables in the form of salaries to the staff kept for maintaining accounting records relating to customers. Collection costs: The firm has to incur costs for collecting the payments from its credit customers. Defaulting costs: The firm may not able to recover the over dues because of the inability of customers. Such debts treated as bad debts. Receivables management: Receivables are direct result of credit sale. The main objective of receivables management is to promote sales and profits until that point is reached where the ROI in further funding of receivables is less than the cost of funds raised to finance that additional credit (i.e.; cost of capital). Increase in receivables also increases chances of bad debts. Thus, creation of receivables is beneficial as well as dangerous. Finally management of accounts receivable means as the process of making decisions relating to investment of funds in this asset which result in maximizing the overall return on the investment of the firm. In Receivables management the Ratio Analysis is one of the important techniques that can be used to check the efficiency with which receivables management is being managed by a firm. The most important ratios for receivables management is ROI = Net profit/ Share holders fund

RATIO ANALYSIS:

Ratio Analysis is a powerful tool o financial analysis. Alexander Hall first presented it in 1991 in Federal Reserve Bulletin. Ratio Analysis is a process of comparison of one figure against other, which makes a ratio and the appraisal of the ratios of the ratios to make proper analysis about the strengths and weakness of the firms operations. The term ratio refers to the numerical or quantitative relationship between two accounting figures. Ratio analysis of financial statements stands for the process of determining and presenting the relationship of items and group of items in the statements. Ratio analysis can be used both in trend analysis and static analysis. A creditor would like to know the ability of the company, to meet its current obligation and therefore would think of current and liquidity ratio and trend of receivable. Major tool of financial are thus ratio analysis and Funds Flow analysis. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit account The financial analyst may use ratio in two ways. First he may compare a present ratio with the ratio of the past few years and project ratio of the next year or so. This will indicate the trend in relation that particular financial aspect of the enterprise. Another method of using ratios for financial analysis is to compare a financial ratio for the company with for industry as a whole, or for other, the firms ability to meet its current obligation. It measures the firms liquidity. The greater the ratio, the greater the firms liquidity and vice-versa.

A ratio can be defined as a numerical relationship between two numbers expressed in terms of (a) Proportion (b) Rate (c) Percentage. It is also define as a financial tool to determine an interpret numerical relationship based on financial statement yardstick that provides a measure of relationship between two variable or figures. Meaning and Importance: Ratio analysis is concerned to be one of the important financial tools for appraisal of financial condition, efficiency and profitability of business. Here ratio analysis iS useful from following objects. 1. Short term and long term planning 2. Measurement and evaluation of financial performance 3. Stud of financial trends 4. Decision making for investment and operations 5. Diagnosis of financial ills 6. Providing valuable insight into firms financial position or picture

ADVANTAGES& DISADVANTAGES OF RATIO ANALYSIS ADVANTAGES: The following are the main advantages derived of ratio analysis, which are obtained from the financial statement via Profit & Loss Account and Balance Sheet.

a) The analysis helps to grasp the relationship between various items in the financial statements. b) They are useful in pointing out the trends in important items and thus help the management to forecast c) With the help of ratios, inter firm comparison made to evolve future market strategies. d) Out of ratio analysis standard ratios are computed and comparison of actual with standards reveals the variances. This helps the management to take corrective action. e) The communication of that has happened between two accounting the dates are revealed effective action. f) Simple assessments of liquidity, solvency profitability efficiency of the firm are indicted by ratio analysis. Ratios meet comparisons much more valid. DISADVANTAGES: Ratio analysis is to calculate and easy to understand and such statistical calculation stimulation thinking and develop understanding. But there are certain drawbacks and dangers they are.

i) There is a trendy to use to ratio analysis profusely. ii) Accumulation of mass data obscured rather than clarifies relationship. iii) Wrong relationship and calculation can lead to wrong conclusion. 1. In case of inter firm comparison no two firm are similar in size, age and product unit.(For example :one firm may purchase the asset at lower price with a higher return and another firm witch purchase the asset at asset at higher price will have a lower return) 2. Both the inter period and inter firm comparison are affected by price level changes. A change in price level can affect the validity of ratios calculated for different time period. 3. Unless varies terms like group profit, operating profit, net profit, current asset, current liability etc., are properly define, comparison between two variables become meaningless. 4. Ratios are simple to understand and easy to calculate. The analyst should not take decision should not take decision on a single ratio. He has to take several ratios into consideration. STANDARDS OF COMPARISON: 1. Ratios calculated from the past financial statements of the same firm. 2. Ratio developed using the projected or perform financial statement of the same firm 3. Ratios of some selected firm especially the most progressive and successful, at the same point of time. 4. Ratios of the industry to which the firm belongs.

IMPORTANCE OF RATIO ANALYSIS

In the preceding discussion in the form, we have illustrated the compulsion and implication of important ratios that can be calculated from the Balance Sheet and Profit & Loss account of a firm. As a tool of financial management, they are of crucial significance. The importance of ratio analysis lies in the fact and enables the drawing of inferences regarding the performance of a firm. Ration analysis is a relevant in assessing the performance of a firm in respect of the following aspect. CAUTION IN USING RATIOS: 1. It is difficult to decide on the proper bases of comparison. 2. The comparison rendered difficult because of difference in situation of two companies or of one-company for different years. 3. The price level change makes the interpretation of ratios invalid 4. The difference in the definition of items in the balance sheet and Profit & Loss statement make the interpretation of ratios difficult. 5. The ratios calculated at a point of time are less informative and defective as they suffer from sort term changes. 6. The ratios are generally calculated from the past financial statement and thus are no indicators of future.

LIQUIDITY Vs PROFITABILITY ANALYSIS Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and profit loss account. Management should particularly interest in knowing financial strengths and weakness of the firm to make their best use and to be able to spot out financial weakness of the firm to take a suitable corrective actions. Financial analysis is the starting point of making plans, before using any sophisticated forecasting and planning procedures. Major tools of financial analysis are ratio analysis and funds flow analysis. Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. MEANING AND IMPORTANCE Ratio analysis is concerned to be one of the important financial tools for appraisal of financial condition, efficiency and profitability of business. Here ratio analysis is useful from following objectives. 1. Short term and long term planning. 2. Measurement and evaluation of financial performance. 3. Study of financial trends. 4. Decision making for investment and operations. 5. Diagnosis of financial ills. 6. Providing valuable insight into firms financial position or picture.

TYPES OF RATIOS 1. Current Ratio 2. Quick Ratio 3. Absolute Quick Ratio 4. Net Profit Ratio 5. Debtors Turnover Ratio 6. Inventory Turnover Ratio

CURRENT RATIO

The current ratio is calculated by dividing current assets by current liabilities. Current ratio = current assets/current liabilities The current ratio is a measure of the firms short-term solvency. It indicates the availability of current assets in rupees for every one rupee of current liabilities. A ratio of greater than one means that the firm has more current assets than current liabilities claims against them. A standard ratio between them is 2:1. QUICK RATIO: This ratio establishes a relationship between quick of liquid assets and current liabilities. It is an absolute measure of liquidity management of the concern. An asset is liquid if it can be converted in to cash immediately or reasonably soon without a loss of value, if ignores totally the stocks. Because inventories normally require some time for realizing into cash: their value also has a tendency to fluctuate. The standard quick ratio is 1:1. Quick Ratio = Quick Assets/Current Liabilities

ABSOLUTE QUICK RATIO:

Since cash is the most liquid assets necessary to examine the ratio of cash and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash. Therefore, they may be included in the consumption of absolute quick ratio. Absolute quick ratio = Absolute Quick Assets/Current Liabilities

NET PROFIT RATIO:

As every business is to earn profit, this ratio is very important because it measures the profitability of sales. A business may yield high gross income but low net income because of increasing operating and non-operating expenses. This situation can easily be detected by calculating this ratio. The profits used for this purpose may be profits after/before tax. To obtain this ratio, the figure of net profits after tax is divided by the figure of net profits after tax is divided by the figure of sales the ratio is also known as sales margin as we can ascertain with its help the margin which the sales leave later deducting all the expenses. The unit of expression is percentage, as is the case with profitability ratios. Net Profit Ratio = (Net Profit / Net Income) X100

DEBTORS TURNOVER RATIO: Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash. In other words, the DTR is a test of the liquidity of the debtors of a firm. The liquidity of firms receivables can be examined in two ways they are DTR and Average Collection Period. Debtors turnover ratio = Net Income / Avg. Debtors

INVENTORY TURNOVER RATIO:Inventory turnover ratio indicates the efficiency of the firm in producing and selling its products. It is calculated by dividing the cost of goods sold by the average inventory. The average inventory is the average of open and closing balance of inventory. Inventory turnover Ratio= Cost of Goods Sold / Average Inventory

CURRENT ASSETS TO TOTAL ASSETS RATIO:

Current assets play an important role in day-to-day functioning of an organization. So, every firm should maintain adequate current assets so as to meet the daily requirements of business. If the proportion of current assets in total assets exceeds then the required limit, there will be some idle investments on such assets. At the time, the proportion of current assets in total should not less than requirements. So, every firm should maintain

the adequate quantity of current assets. But during the situations of peak demand, should employ more current assets and vice-versa. Particularly in case of production organizations, there is heavy importance to the current assets than fixed assets. This kind of analysis will enable the managers to understand the working capital position of the firm. Data relating to the proportion of working capital in total assets is depicted as follows-This ratio establishes the relationship between the current assets and total assets. Current Assets to Total Assets Ratio = Current Assets / Total Assets

CURRENT ASSETS TO NET INCOME OR SALES RATIO:

The current assets are used for the purpose of generating sales. A ratio of current assets to sales reveals that how best the assets are applied in business for turnover. As per the above said ratio, a low proportion of current assets in relation to sales indicates better turnover of the company and vice-versa, which will show positive impact on profitability. The data relating to this aspect is provided as follows and it is calculated as follows. Current Assets to net income ratio = Current assets / net income

CURRENT ASSETS TO FIXED ASSETS RATIO:

Total assets in any business contain both fixed and current assets. For properly functioning of the organization in terms of production and marketing it is necessary to maintain a properly balance between them. If the proportion of fixed assets increases, it will be a negative impact on the firms liquidity and if current assets increase, production increases and which causes impact on the demand for the product. In view of effective management of funds and to invest on both fixed and current assets, it is necessary to take the decision as soon as possible. Data relating to the ratio between current assets to fixed assets is depicted as follows. Current Assets to fixed Assets Ratio = Current Assets / Fixed Assets

DATA ANALYSIS AND INTERPRETATION

NET WORKING CAPITAL

Table - 1

Year 2007 2008 2009 2010 2011

Current Assets 1643444006 2484531357 5103581454 4295923643 6434643356

Current liabilities 598890483 718135838 1644391474 1899597026 1925837010

Net working Capital 1044553523 1766395519 3459189980 2396326617 4508806346

Net working Capital

5,000,000,000 4,000,000,000 3,459,189,980 2,396,326,617 1,766,395,519 1,044,553,523 4,508,806,346

Networking 3,000,000,000 Capital 2,000,000,000

1,000,000,000 0

2007

2008

2009

2010

2011

Year

Interpretation: the above table shows that the networking capital is incresed form the years 2007 to 2011. The current year networking capital is Rs. 4,50,88,06,346. The current assets are increased due to the libilaites are drecreased.

CURRENT RATIO Table - 2

Current Liabilities 598890483 718135838 1644391474 1899597026 1925837010

Year 2007 2008 2009 2010 2011

Current Assets 1643444006 2484531357 5103581454 4295923643 6434643356

Current ratio 2.74 3.46 3.10 2.26 3.34

Source of Data: Annual Reports of Infotech

Current ratio
4.00 2.00 0.00 2007 2008 2009 2010 2011 2.74 3.46 3.10 2.26 3.34

Interpretation: The above table shows that the current ratio varying from 2.74 to 3.34 in study period the years 2007 to 2011. The Current ratio is low 2.26 in the year 2010. The current ratio in year is high 3.34. The current ratio is a measure of the firms short-term solvency. It indicates the availability of current assets in rupees for every one rupee of current liabilities. A ratio of greater than one means that the firm has more current assets than current liabilities claims against them.

QUICK RATIO Table - 3

Current Liabilities 598890483 718135838 1644391474 1899597026 1925837010

Year 2007 2008 2009 2010 2011

Quick Assets 1643444006 2484531357 5103581454 4295923643 6434643356

Quick ratio 2.74 3.46 3.10 2.26 3.34

Source of Data: Annual Reports of Infotech

Quick ratio
4.00 2.00 0.00 2007 2008 2009 2010 2011 2.74 3.46 3.10 2.26 3.34

Interpretation: The above table shows that the quick ratio varying from 2.74 to 3.34 in study period the years 2007 to 2011. The quick ratio is low 2.26 in the year 2010. The quick ratio in year is high 3.34. This ratio establishes a relationship between quick of liquid assets and current liabilities. It is an absolute measure of liquidity management of the concern. An asset is liquid if it can be converted in to cash immediately or reasonably soon without a loss of value, if ignores totally the stocks

ABSOLUTE QUICK RATIO

Table - 4
Absolute Liquid Assets 2007 2008 2009 2010 2011 455801620 832727897 2556532322 1798529757 2938627127

Year

Current liabilities 598890483 718135838 1644391474 1899597026 1925837010

Absolute Liquid Ratio 0.76 1.16 1.55 0.95 1.53

Source of Data: Annual Reports of Infotech

Absolute Liquid Ratio

2.00 1.50 1.00 0.50 0.00 2007 2008 2009 2010 2011 0.76 1.16 1.55 0.95 1.53

Interpretation: The above table shows that the absolute liquid ratio varying from 0.76 to 1.53 in period of the study. The absolute liquid ratio is low 0.76 in the year 2007. The absolute liquid ratio in year is high 1.53. Cash is the most liquid assets necessary to examine the ratio of cash and its equivalent to current liabilities. Trade investment or marketable securities are equivalent of cash.

NET PROFIT RATIO Table - 5

Year 2007 2008 2009 2010 2011

Net Profit 650454260 585571125 708621670 1267646170 1178803555

Net Income 3549401331 4540856926 5438111516 6079498346 6797135134

Net Profit Ratio 18.33 12.90 13.03 20.85 17.34

Source of Data: Annual Reports of Infotech

Net Profit Ratio

25.00 20.00 15.00 10.00 5.00 0.00 18.33 12.90 13.03 20.85 17.34

2007

2008

2009

2010

2011

Interpretation: The above table shows that the Net Profitability ratio varying from 18.33 to 17.34 in period of the study. The net profit ratio is low 12.90 in the year 2008. The net profit ratio in year is high 20.85 in the year 2010. The profits used for this purpose may be profits after/before tax later deducting all the expenses. The unit of expression is percentage, as is the case with profitability ratios.

GROSS PROFIT RATIO Table - 6

Year 2007 2008 2009 2010 2011

Gross Profit 962465332 720185098 661518577 1548263077 1314342990

Net Income 3549401331 4540856926 5438111516 6079498346 6797135134

Gross Profit Ratio 0.27 0.16 0.12 0.25 0.19

Source of Data: Annual Reports of Infotech

Gross Profit Ratio

0.30 0.20 0.10 0.00 2007 2008 2009 2010 2011 0.27 0.16 0.25 0.19 0.12

Interpretation: The above table shows that the Gross profit ratio varying from 18.33 to 17.34 in period of the study. The Gross Profit ratio is low 12.90 in the year 2008. The gross profit ratio in year is high 20.85 in the year 2010. The profits used for this purpose may be profits after/before tax later deducting all the expenses. The unit of expression is percentage, as is the case with profitability ratios.

DEBTORS TURNOVER RATIO

Table - 7
Debtors turnover ratio 0.76 0.66 1.25 1.42 1.63

Year 2007 2008 2009 2010 2011

Net Income 598890483 718135838 1644391474 1899597026 1925837010

Avg. Debtors 788089415 1081979234 1313301709 1334235846 1178897467

Source of Data: Annual Reports of Infotech

Debtors turnover ratio

2.00 1.50 1.00 0.50 0.00 2007 2008 2009 2010 2011 0.76 0.66 1.25 1.42 1.63

Interpretation: The above table shows that the Debtors turnover ratio increasing from 0.76 to 1.63 in period of the study. The Debtors turnover ratio is low 0.76 in the year 2008. The debtors turnover ratio in year is high 1.63 in the year 2011. Debtors constitute an important constituent of current assets and therefore the quality of the debtors to a great extent determines a firms liquidity. It shows how quickly receivables or debtors are converted into cash.

CURRENT ASSETS TO FIXED ASSETS RATIO Table 8

Current Assets to Fixed assets Ratio 0.53 0.33 0.61 0.73 0.70

Year 2007 2008 2009 2010 2011

Current Assets 598890483 718135838 1644391474 1899597026 1925837010

Fixed Assets 1140029393 2178606849 2675881039 2599303799 2763139821

Source of Data: Annual Reports of Infotech

Current Asstes to Fixed assets Ratio

0.80 0.60 0.40 0.20 0.00 2007 2008 2009 2010 2011 0.53 0.33 0.61 0.73 0.70

Interpretation: The above table shows that the current assets to fixed assets ratio varying from 0.53 to 0.70 in period of the study. The current assets to fixed assets ratio is low 0.33 in the year 2008. The current assets to fixed assets ratio in year is high 0.73 in the year 2010. Properly functioning of the organization in terms of production and marketing it is necessary to maintain a properly balance between them. If the proportion of fixed assets increases, it will be a negative impact on the firms liquidity and if current assets increase, production increases and which causes impact on the demand for the product.

WORKING CAPITAL TURNOVER RATIO Table - 9

Net Working Capital 2733857521 6256245719 8038347890 6899011083 9079500932

Year 2007 2008 2009 2010 2011

Net Income 598890483 718135838 1644391474 1899597026 1925837010

Working Capital Ratio 0.22 0.11 0.20 0.28 0.21

Source of Data: Annual Reports of Infotech

Working Capital Ratio

0.30 0.25 0.20 0.15 0.10 0.05 0.00 2007 2008 2009 2010 2011 0.11 0.22 0.20 0.28 0.21

Interpretation: The above table shows that the working capital ratio varying from 0.22 to 0.21 in period of the study. The working capital ratio is low 0.11 in the year 2008. The working capital ratio in year is high 0.28 in the year 2010. This ratio indicates heather or not working capital has been effectively utilized in making sales. In case if a company can achieve higher volume of sales with relatively small amount of working capital, it is an indication of the operating efficiency of the company.

NET WORTH OR RETURN ON INVESTMENT Table - 10

Shareholders funds 2733857521 6256245719 8038347890 6899011083 9079500932

Year 2007 2008 2009 2010 2011

Net Profit 650454260 585571125 708621670 1267646170 1178803555

Net worth or R O I 23.79 9.36 8.82 18.37 12.98

Source of Data: Annual Reports of Infotech

Net worth or ROI

25.00 20.00 15.00 10.00 5.00 0.00 23.79 18.37 12.98 9.36 8.82

2007

2008

2009 Net worth or ROI

2010

2011

Interpretation: The above table shows that the ROI varying from 23.9 to 12.98 in period of the study. The ROI is low 8.82 in the year 2009. The ROI in year is high 23.79 in the year 2007. Management of accounts receivable means as the process of making decisions relating to investment of funds in this asset which result in maximizing the overall return on the investment of the firm.

FINDINGS AND SUGGESTIONS

FINDINGS AND SUGGESTIONS

The performance of the company has been very good since the past five years.
The Current Ratio and quick ratio of the company is very high due to high receivables, which is due to the nature of business. The Quick ratio is well above the 1:1 level due to high receivables. The Debtors Turnover Ratio have shown steady improvement indicating an improved cash flow position. The working capital turnover ratio is increasing and decreasing it indicates that the working capital is not utilizing properly . The Gross Profit and Net Profit margin have increased and decreasing significantly during the last three years given the losses during the years. Since 2011 there is no improvement has it shows the cost of goods are very high it is very bad to the organization. The net profit is depending on the operating expenses the operating expenses are high corresponding the sales. The operating expenses should decrease.

During the last five years the company has shown steady improvement in its net working capital. It has improved from Rs. 1044553523 to Rs 4508806346 in the following years 2007 to 2011. And the current year 2011 the working capital is 4508806346 . This indicates efficient utilization of the resources of the company.

ANNEXURE

BIBLIOGRAPHY

BIBLIOGRAPHY

IM PANDY KHAN & JAIN S.N. MAHASHWARI JAIN AND NARANG

FINANCIAL MANAGEMENT ACCOUNTING FOR MANAGEMENT FINANCIAL ACCOUNTING AND ANALYSIS FINANCIAL ACCOUNTING

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