HAL

ACKNOWLEDGEMENT

The report entitled “WORKING CAPITAL MANAGEMENT” a study in Hindustan Aeronautic Limited represents the guidance and co-operation of a few individuals, to whom I would like to express my deep sense of gratitude. I wish to express my sincere thanks to Mr. Suresh Jain (Chairman), Mr. Manish Jain (Vice Chairman), Dr. A. K. Garg (Executive Director), M.P. Singh (HOD), Dr. Sonia Gupta (Course coordinator & project in charge, MBA), and other faculty members for their consistent advice, encouragement and inspiration throughout the project. I would also like to thank Miss Kanika Jain (internal guide) for helping me in completing this project report.

I also express my sense of gratitude to Mr. Arun Narula, Manager (Budget), HAL, Accessories Division, Lucknow. I thank him for his constructive help & valuable suggestions.

At last but not the least I would like to thank my family members and my friends for their help in completing this project.

EXECUTIVES SUMMARY

Finance as a subject of study, has received wide-spread support from both academic and business segment people.

The topic “WORKING CAPITAL MANAGEMENT” in HAL was selected as to understand the financial need and importance with special reference to HAL, Accessories Division, Lucknow.

As the working capital refers to the administration of all the analysis of working capital, ratios and sources and application of funds and the company by studying, interpreting various financial statements using various techniques such as comparative statements analysis, funds flow statement analysis etc.

Even efforts have been made to collect the relevant information about the topic. The present study about WORKING CAPITAL MANAGEMENT in HAL Accessories Division, Lucknow it based on my six week project study in FINANCE AND ACCOUNT DEPARTMENT in HAL.

This training gives me an opportunity to make a study and analysis the system adopted by the organization. It enables me to build the practical knowledge acquired during the class study with practical training received during my project.

Table of Contents

a)

Introduction of topic.

b) Objective of the study.

c) Scope & importance.

d) Company profile.

e) Literature review.

f) Research Methodology.

g) Data Analysis & Interpretation.

h) Findings.

l) Bibliography.

Introduction of topic

This project has given me the opportunity to get aware with the HAL, its environment and functioning of the Finance & Accounts Department. This project report is divided into three different parts.

First part of the includes information about the organization like vision and mission of HAL, its values, financial position, achievements, product line etc is given.

The second part of the report focused on the whole Finance & Accounts Department. This includes objectives & functioning of the various sections of Finance & Accounts Department of the Accessories Division of HAL

Last part of the report focuses on the budgetary system. This includes detailed analysis of working capital, ratios and sources and application of funds and the company by studying, interpreting various financial statements using various techniques such as comparative statements analysis, funds flow statement analysis etc.

OBJECTIVE

OF THE S

TUDY

This training as per scheduled under syllabi has been emphasis on getting aware with the practical environment of an organization and specifically with the concerned department related to the specialization. There are certain objectives stated as under:

1. To get aware with the procedure of financial department.

2. To know how the functions passes through other departments in relation to financial departments.

3. To become familiar with the formats of different documents and their meaning.

4. To know each departments decision effect on finance department and vice-versa.

SCOPE

& IMPORTANCE

Keeping the magnitude of the work in mind the scope of the study has been determined. It covers the outset, a description of the role played by the corporation in improving financial strength of organization. The study has emphasized working capital and its application in different enterprises.

∗ To study the components, determinants of working capital.

∗ To study how to keep the capital that is tied up in the working capital cycle at a minimum and maximizing profit.

2.1

Hindustan Aeronautics Limited (HAL) based in Bangalore, India, is one of Asia's largest aerospace companies. Under the management of the Indian Ministry of Defence, this public sector company is mainly involved in aerospace industry, which includes manufacturing and assembling aircraft, navigation and related communication equipment, as well as operating airports. HAL built the first military aircraft in South Asia and is currently involved in the design, fabrication and assembly of aircraft, jet engines, helicopters and their components and spares. It has several facilities throughout India including Nasik, Korwa, Kanpur, Koraput, Lucknow, and Hyderabad. The German engineer Kurt Tank designed the HF-24 Marut fighter-bomber, the first fighter aircraft made in India.

2.2 HISTORY OF THE COMPANY

Hindustan Aeronautics has a long history of collaboration with several other international and domestic aerospace agencies such as the Airbus Industries, Boeing, Sukhoi Aviation Corporation , Israel Aircraft Industries, RSK MiG, BAE Systems, Rolls-Royce plc, Dassault Aviation, Dornier Flugzeugwerke, Aeronautical Development Agency and Indian Space Research Organization. HAL was established as Hindustan Aircraft in Bangalore in

1940 by Walchand Hirachand to produce military aircraft for the Royal Indian Air Force. The initiative was actively encouraged by the Kingdom of Mysore, especially by the Diwan, Sir Mirza Ismail. The British Government bought a one-third stake in the company by April 1941 as it believed this to be a strategic imperative. Later in April 1942, it bought out the stakes of Walchand Hirachand himself and

other promoters so that it can act freely. The decision by United Kingdom was primarily motivated to boost British military hardware supplies in Asia to counter the increasing threat posed by Imperial Japan during Second World War. However, the Mysore Kingdom refused to sell its stake in the company but yielded the management control over to the British Government. Thus, within 2 years of establishment, it was nationalized.

Hindustan Aeronautics Limited (HAL) came into existence on 1st October 1964. HAL was set up as a amalgamation of Hindustan Aircraft Limited along with Aeronautics India Limited and Aircraft Manufacturing Depot located in Kanpur, India. Hindustan Aeronautics Limited has it headquarter located at Bangalore, India. HAL is one of the largest aerospace company which is run by the Ministry of Defense. The principal activities of HAL involve manufacturing aircraft, aerospace, navigation, and instruments for communication purposes. Apart from these, few other activities performed by HAL are designing, manufacturing, and collecting aircraft, jet engines, helicopters, along with their elements and spares. Hindustan Aircraft Limited which located at Bangalore was incorporated by the industrialist the late Seth Walchand Hirachand in December 1940. The Government of India became a stakeholder of the company in 1941 and seized the management department in 1942. HAL has 19 Production Units and 9 Research and Design Centers in 7 locations in India. The Company has an impressive product track record - 12 types of aircraft manufactured with in-house R & D and 14 types produced under license. HAL has manufactured over 3550 aircraft, 3600 engines and overhauled over 8150 aircraft and 27300 engines.HAL has been successful in numerous R & D programs developed for both Defense and Civil Aviation

∗ Intermediate Jet Trainer (IJT)

∗ Various military and civil upgrades.

Dhruv was delivered to the Indian Army, Navy, Air Force and the Coast Guard in March 2002, in the very first year of its production, a unique achievement.

HAL has played a significant role for India's space programs by participating in the manufacture of structures for Satellite Launch Vehicles like

∗ PSLV (Polar Satellite Launch Vehicle)

∗ GSLV (Geo-synchronous Satellite Launch Vehicle)

∗ IRS (Indian Remote Satellite)I ∗ NSAT (Indian National Satellite)

HAL has formed the following Joint Ventures (JVs) :

∗ BAeHAL Software Limited

∗ Indo-Russian Aviation Limited (IRAL)

∗ Snecma HAL Aerospace Pvt. Ltd.

∗ SAMTEL HAL Display System Limited

∗ HALBIT Avionics Pvt. Ltd.

∗ HAL-Edgewood Technologies Pvt. Ltd.

∗ NFOTECH HAL Ltd

Apart from these seven, other major diversification projects are Industrial Marine Gas Turbine and Airport Services. Several Co-production and Joint Ventures with international participation are under consideration.

HAL's supplies / services are mainly to Indian Defence Services, Coast Guards and Border Security Forces. Transport Aircraft and Helicopters have also been supplied to Airlines as well as State Governments of India. The Company has also achieved a foothold in export in more than 30 countries, having demonstrated its quality and price competitiveness.

∗ HAL has won several International & National Awards for achievements in R&D, Technology, Managerial Performance, Exports, Energy Conservation, Quality and Fulfillment of Social Responsibilities.

∗ HAL was awarded the “INTERNATIONAL GOLD MEDAL AWARD”

for Corporate Achievement in Quality and Efficiency at the International Summit (Global Rating Leaders 2003), London, UK by M/s Global Rating, UK in conjunction with the International Information and Marketing Centre (IIMC).

∗ HAL was presented the International - “ARCH OF EUROPE” Award in

Gold Category in recognition for its commitment to Quality, Leadership, Technology and Innovation.

∗ At the National level, HAL won the "GOLD TROPHY" for excellence in Public Sector Management, instituted by the Standing Conference of Public Enterprises (SCOPE).

PRODUCTS IN CURRENT MANUFACTURING RANGE Su 30 MKI

Twin-seater, Multi-role, Long range Fighter / Bomber / Air Superiority Aircraft.

MiG-27 M

Single-seater Tactical Fighter / Bomber with variable sweep wings.

MiG-21 VARIANTS

Single-seater Front line Tactical Interceptor/ Fighter Aircraft.

METALLIC DROP TANKS

The Division manufactures different types of metallic drop (Jettisonable) tanks with capacity of 490 and 800 litres

UNDERCARRIAGE

The Division has facilities and expertise in the manufacture and overhaul of Undercarriages of both MiG-27M and MiG-21 variants. The landing gears are of a conventional tricycle type and consist of one steerable Nose wheel leg and two Main wheel legs to roll the aircraft in motion, on the ground, during take-off run and landing run. The Landing Gear legs have Pneumatic shock absorbers.

EJECTION-SEAT

The Ejection Seat is installed to provide safe escape to the Pilot from the Aircraft while

FLEXIBLE RUBBER FUEL TANKS

The Division manufactures and supplies all types of Rubber Fuel Tanks required for MiG-21 Variants. The Rubber Fuel Tanks are provided with special protection coating against Ozone/heat and adverse climatic conditions. The Division has exported a large number of Rubber Fuel Tanks.

CANOPY

The Division manufactures and overhauls canopies of MiG-21 variants and MiG-27M Aircraft.

AEROSPACE FASTENERS

The Division has a separate complex for manufacturing of Aerospace Fasteners, approximately 7000 types under 400 different standards. Some of the typical items are nuts, bolts, screws, washers, and rivets of various configurations, studs, dowels, pins, plugs, JO Bolts, pipe connections and springs.

AIRCRAFT WESTERN ORIGIN JAGUAR INTERNATIONAL

HAL commenced production of Jaguar International - deep penetration strike and battlefield tactical Support Aircraft in 1979 under license from British Aerospace, including the engine, accessories and avionics. Jaguar aircraft is designed with 7 hard points ( 4 under wing, 2 over

wing and 1 under fuselage) capable of carrying a huge load of various of weapons in different combinations to meet the Customers needs.

DHRUV (ADVANCED LIGHT HELICOPTER) With a proven track record and established technology for manufacture of helicopters and its components, the Helicopter Division commenced series production of Dhruv (Advanced Light Helicopter) in 2000 - 2001. The ALH is a multi-role, multi-mission helicopter in 5.5 ton class, fully designed and developed by HAL. Built to FAR 29

specifications, Dhruv is designed to meet the requirement of both military and civil operators.

CHETAK

The Helicopter Division manufactures the versatile and multi-purpose Chetek Helicopters for Civil and Military applications both for Domestic and International customers.

CHEETAH

The Helicopter Division manufactures the versatile and multi-purpose Cheetah Helicopters for Civil and Military applications both for Domestic and International customers.

basic structure of the Lancer is derived from the reliable and proven Cheetah Helicopter.

2.4 OBJECTIVES OF HAL

∗ To ensure availability of Total Quality People to meet the Organizational Goals and Objectives

∗ To have a continuous improvement in Knowledge, Skill and Competence (Managerial, Behavioral and Technical)

∗ To promote a Culture of Achievement and Excellence with emphasis on Integrity, Credibility and Quality

∗ To maintain a motivated workforce through empowerment of

Individual and Team- building

∗ To enhance Organizational Learning

∗ To play a pivotal role directly and significantly to enhance

Productivity, Profitability and improve the Quality of Work Life 2.5 STRATEGY OF HAL

∗ To be in total alignment with Corporate Strategy.

∗ Maintain Human Resource at optimum level to meet the objectives

and goals of the Company.

∗ Be competent in Mapping, Analysis and Upgradation of Knowledge

and Skills including Training, Re-training, Multi-skilling etc.

∗ Cultivate Leadership with Shared Vision at various levels in the Organization.

∗ Build Cross-functional Teams.

∗ Create awareness of Mission, Values and Organizational Goals through out the Company.

∗ Introduce / Implement personnel policies based on performance that would ensure growth, Rewards, Recognition and Motivation.

2.6 VISION

"To make HAL a dynamic, vibrant, value-based learning organisation with human resources exceptionally skilled, highly motivated and committed to meet the current and future challenges. This will be driven by core values of the Company fully embedded in the culture of the Organization".

2.6.1 MISSION

Enable all those working for HAL to give their best to ensure their all-round growth as well as that of the organization. To become a globally competitive aerospace industry while working as an instrument for achieving self-reliance in design, manufacture and maintenance of aerospace defense equipment and diversifying to related areas, managing the business on commercial lines in a climate of growing professional competence.

"To become a globally competitive aerospace industry while working as an instrument for achieving self-reliance in design, manufacture and maintenance of aerospace defense equipment and diversifying to related areas, managing the business on commercial lines in a climate of growing professional competence."

We are dedicated to building a relationship with our customers where we become partners in fulfilling their mission. We strive to understand our customers ' needs and to deliver products and services that fulfill and exceed all their requirements.

∗ COMMITMENT TO TOTAL QUALITY

We are committed to continuous improvement of all our activities. We will supply products and services that conform to highest standards of design, manufacture, reliability, maintainability and fitness for use as desired by our customers.

∗ COST AND TIME CONSCIOUSNESS

We believe that our success depends on our ability to continually reduce the cost and shorten the delivery period of our products and services. We will achieve this by eliminating waste in all activities and continuously improving all processes in every area of our work.

∗ INNOVATION AND CREATIVITY

We believe in striving for improvement in every activity involved in our business by pursuing and encouraging risk-taking, experimentation and learning at all levels within the company with a view to achieving excellence and competitiveness.

∗ TRUST AND TEAM SPIRIT

We believe in achieving harmony in work life through mutual trust, transparency, co-operation, and a sense of belonging. We will strive for building empowered teams to work towards achieving organisational goals.

We value our people. We will treat each other with dignity and respect and strive for individual growth and realization of everyone's full potential.

∗ INTEGRITY

We believe in a commitment to be honest, trustworthy, and fair in all our dealings. We commit to be loyal and devoted to our organization. We will practice self discipline and own responsibility for our actions. We will comply with all requirements so as to ensure that our organization is always worthy of trust.

2.7 INTERNATIONAL AND DOMESTIC DEALS (I) INTERNATIONAL DEALS

∗ The US$10 billion fifth-generation fighter jet program with the Sukhoi Corporation of Russia.

∗ US$1 billion contract to manufacture aircraft parts for Boeing.

∗ Multi-role transport aircraft project with Ilyushin of Russia worth US$600 million.

∗ 120 RD-33MK turbofan engines to be manufactured for MiG-29K by

HAL for US$250 million.

∗ US$120 million deal to manufacture Dornier 228 for RUAG of Switzerland.

∗ Manufacture of aircraft parts for Airbus Industries worth US$150 million.

∗ US$100 million contract to export composite materials to Israel Aircraft Industries.

∗ US$65 million joint-research facility with Honeywell and planned production of Garrett TPE331 engines.

∗ US$50.7 million contract to supply Advanced Light Helicopter to Ecuadorian Air Force.[11] _{HAL will also open a maintenance base in}

the country.

∗ US$30 million contract to supply avionics for Malaysian Su-30MKM.

∗ US$20 million contract to supply ambulance version of HAL Dhruv to Peru.

∗ Contract of 3 HAL Dhruv helicopters to Turkey in a deal worth US$20 million.

∗ Supply of HAL Dhruv helicopters to Mauritius' National Police in a deal worth US$7 million.

∗ Unmanned helicopter development project with Israel Aircraft Industries.

(II) DOMESTIC DEALS

∗ 180 Sukhoi Su-30MKI being manufactured at HAL's facilities in Nasik and Bangalore. The total contract, which also involves Russia's Sukhoi Aerospace, is worth US$3.2 billion.

∗ 200 HAL Light Combat Helicopters for Indian Air Force and 500

HAL Dhruv helicopters worth US$5.83 billion.

∗ US$900 million aerospace hub in Andhra Pradesh.

∗ US$57 million upgrade of SEPECAT Jaguar fleet of the Indian Air Force.

∗ US$55 million fighter training school in Bangalore in collaboration with Canada's CAE.

∗ 64 MiG-29s to be upgraded by HAL and Russia's MiG Corporation in

a program worth US$960 million. Licensed production of 82 BAe Hawk 132.

2.8 CU ST O M ER S

International Customers Domestic Customers

∗ Airbus Industrie, France

∗ APPH Bolton, UK

∗ BAE Systems, UK

∗ Chelton, UK

∗ Coast Guard, Mauritius

∗ Corporate Air, Philippines

∗ Cosmic Air, Nepal

∗ Dassault Aviation, France

∗ Dowty Aerospace Hydraulics, UK

∗ EADS, France

∗ ELTA, Israel

∗ Gorkha Airlines, Nepal

∗ Hampson, UK

∗ Honeywell International, USA

∗ Island Aviation Services, Maldives

∗ Israel Aircraft Industries, Israel

∗ Messier Dowty Ltd., UK

∗ Mistubishi Heavy Industries, Japan

∗ MOOG, USA

∗ Namibian Air Force, Namibia

∗ Peruvian Air Force , Peru

∗ Rolls Royce Plc, UK

∗ Royal Air Force, Oman

∗ Royal Malaysian Air Force, Malaysia

∗ Royal Nepal Army, Nepal

∗ Royal Thai Air Force, Thailand

∗ Smiths Industries, UK

∗ Snecma, France

∗ Strongfield Technologies, UK

∗ Air India

∗ Air Sahara

∗ Airports Authority of India

∗ Bharat Electronics

∗ Border Security Force

∗ Coal India

∗ Defence Research & Development Organisation

∗ Govt. of Andhra Pradesh

∗ Govt. of Jammu & Kashmir

∗ Govt. of Karnataka

∗ Govt. of Maharashtra

∗ Govt. of Rajasthan

∗ Govt. of Uttar Pradesh

∗ Govt. of West Bengal

∗ Indian Airforce

∗ Indian Airlines

∗ Indian Army

∗ Indian Coast Guard

∗ Indian Navy

∗ Indian Space Research Organisation

∗ Jet Airways

∗ Kudremukh Iron ore Company ltd.

∗ NALCO

∗ Oil & Natural Gas Corporation Ltd.

∗ Ordnance Factories

∗ Reliance Industries

2.9 OTHER HINDUSTAN AERONAUTICS LIMITED PROGRAMS

Apart from the aforementioned upgrades, DRDO has also assisted Hindustan Aeronautics with its programs. These include the HAL Dhruv helicopter and the HAL HJT-36. Over a hundred LRU (Line Replaceable Unit)'s in the HJT-36 have come directly from the LCA program. Other duties have included assisting the Indian Air Force with indigenization of spares and equipment. These include both mandatory as well as other items.

2.10 EVOLUTION AND GROWTH OF THE COMPANY

The Company's steady organisational growth over the years with consolidation and enlargement of its operational base by creating sophisticated facilities for manufacture of aircraft / helicopters, aeroengines, accessories and avionics is illustrated below.

2.14 FINANCIAL HIGHLI GHTS OF HINDUSTAN AERONAUTICS L

TD .

Hindustan Aeronautics Limited (HAL) has achieved sales turnover of Rs.11,457 crores during the Financial Year 2009-10. The profit of the Company (Profit Before Tax) soared to Rs.2,688 crores.

Particulars 2008-09 2009-10 Growth over Previous Year Sales 10373 11457 10.45%

VOP 11811 13490 14.22%

Profit before tax 2335 2688 15.12%

Profit after tax 1740 1967 13.05%

ACCESSORIES DIVISION LUCKNOW

Accessories Division of HAL was established in 1970 with the primary objective of manufacturing systems and accessories for various aircraft and engines and attains self sufficiency in this area. Its facilities are spread over 94,000 sqm of built area set in sylvan surroundings. At present it is turning out over 1100 different types of accessories. The Division started with manufacturing various Systems and Accessories viz, Hydraulics, Engine Fuel

System, Air-conditioning and Pressurization, Gyro & Barometric Instruments, Electrical System items, Undercarriages, Electronic items all under one roof to meet the requirements of the aircraft, helicopters and engines being produced by HAL. This was followed up with manufacturing the same range of accessories for MiG series of aircraft, International Jaguar and repair / overhaul of Mirage-2000 & Sea-Harrier accessories. In addition the Division manufactures systems for Civil Aircraft i.e. Avro, Dornier and AN-32 & cheetah, chetak & Advanced Light Helicopters.

The Division, right from the beginning, laid a lot of emphasis on developing indigenous capability for Design and Development of various System and Accessories. This capability has culminated in indigenous design and development of a variety of systems and accessories for the Light Combat Aircraft (LCA) and Advanced Light Helicopter (all versions i.e. Army, Airforce, Navy & Civil) - two prestigious aircraft programs in the country and IJT (Intermediate Jet Trainer). The Division has also developed and has made successful strides into the area of Microprocessor based control systems for the LCA Engine as well as other systems.

The Division diversified not only in other defense applications like tanks and armored vehicles for Army, it l oks commercial applications of hydraulic items. Gyroscopic Equipment, Special Purpose Test Equipment & Group Support Equipment and successfully supplied in the market. The Division has been in the forefront of accessories development and supply not only to Indian Force but to Army, Navy and various Defense Laboratories as well as for Space applications.

PRODUCTS

• INSTRUMENTS, SENSORS, GYROS

Flight instruments, Electrical Indicators, Fuel Gauging Probes, Gyros, Sensors and Switches

• ELECTRICAL POWER GENERATION AND CONTROL

AC/DC Generator, Control and Protection Units, Inverters, Transformer Rectifier Unit, AC/DC Electrical Systems, Actuators

• LAND NAVIGATION SYSTEM

• MICROPROCESSOR CONTROLLER

• UNDERCARRIAGE, WHEELS AND BRAKES

• HYDRAULIC SYSTEM AND POWER CONTROL

Pumps, Accumulators, Actuators, Electro-selectors, Bootstrap Reservoirs and various types of valves

• ENVIRONMENTAL CONTROL SYSTEM

Pneumatics and Oxygen System, Cold Air Unit, Water Extractors, Valve - various types

• EJECTION SYSTEM

Ejection Seats, Release Units etc.

• ENGINE FUEL CONTROL SYSTEM

Booster Pumps, Main and Reheat Fuel Systems, Nozzle Actuators

• GROUND SUPPORT EQUIPMENT AND TEST RIGS

EXPORT PRODUCTS

• Supply of Rotables and Spares of Jaguar International and Cheetah (Lama) / Chetak (Alouette) Helicopters

• Repair / Overhaul of aircraft accessories of MiG series Aircraft, Jaguar International Aircraft, Cheetah (Lama) / Chetak (Alouette) Helicopters and Dornier Multi-role Aircraft

• Supply of Ground Support Equipment for Aircraft such as MiG-23 / 27 / 29, Mirage-2000, Jaguar, Light Combat Aircraft (LCA) Su-30 MKI, Sea Harrier, Dornier DO-228, Avro HS-748 (Specific Version), Cheetah (Lama) / Chetak (Alouette lll), Ml - 17, Advanced Light Helicopter (ALH).

SERVICES

REPAIRS, MAJOR SERVICING AND SUPPLY OF SPARES

The Division carries out Repair and Overhaul of Accessories, with minimum turn-around-time. Site Repair facilities are offered by the Division by deputing team of expert Engineers / Technicians.

Services provided for Military Aircraft • MiG Series

• Kiran MK- I / MK- II • HPT - 32 • SU-30 MKI Civil Aircraft • Dornier-22B • AVRO HS-748 Helicopters • Chetak (Alouette) • Cheetah (Lama)

• ALH (IAF / NAVY / COAST GUARD / CIVIL)

Sub-contract Capabilities

• The Division has comprehensive manufacturing capabilities for various Hi-tech components, Equipment and Systems to customer's specifications and ensures

high quality, reliability and cost effectiveness.

• The Division has over 25 years of experience in producing aeronautical accessories making it an ideal partner for the International Aero Engineering Industry.

The Division also manufactures and supplies complete range of components of Cheetah (Lama) & Chetak (Alouette) Helicopters, Jaguar and MiG series Aircraft to Domestic and International Customers to support their fleet.

FUTURE PLANS

HAL have perspective plan to have minimum growth of 400% (in respect of turnover , PBT, value added and other financial parameters) up to 2016-2017 over current year and minimum turnover from non-defense customers is to be 40%of total turnover(currently 4.43%) by 2016-2017.

repair and overhaul of rotables against R/OH task directly for these customers. The quantum of such work is of the order of Rs. 100 crore / year of repair / overhaul and Rs. 32 crore / year for spare supplies, which is likely to grow to twice this level by the end of the plan period i.e. 2016-2017.

HAL – FINANCIAL PERSPECTIVE

HAL is manufacturing organization and its main customer is Indian Air Force, which HAL various orders for manufacturing, repairs and overhauls, design and development etc and provides 90% amount of ordering in advance and rest 10% after receiving the complete order. So in this way HAL realizes 90% ordering amount before start of the order and only 10% of the amount is blocked. Therefore need of working capital in case of HAL is not much high in respect to the other manufacturing organization. The organization has its corporate office in Bangalore; all the financial activities are controlled from the head office. Since it is a major manufacturing company of the government therefore no investment policy is being followed by its Lucknow Division. The head office controls all the financial policies of different divisions.

FINANCE

&

ACCOUNTS

FINANCE AND ACCOUNT DEPARTMENT

The finance and accounts department occupies a very important position in any organization as it has a role to play in almost the activities right from conceptualization of a project till its successful implementation for smooth running and thereafter.

FUNCTIONS &

RESPONSIBILITIES:-The Department is entrusted with the following functions and responsibilities:

• To ensure financial discipline as per guidelines of company.

• To advise management for all matters having financial implications including financial co-ordination before commitments are made.

• Regulation of Payments for supply and services including Salaries, Wages and other payments required for furthering legitimate objectives of the company.

• Collecting dues on behalf of the company from the customers as well as other agencies.

• Financial Appraisal of the projects.

• To prepare Budgets and to exercise budgetary control for the utilization of available resources in the best possible manner.

• Interaction with various operating levels in the Division.

• Co-ordination and interaction with the Managing Director and Corporate office.

• To have an effective M.I.S. for prompt reporting to the higher management for decision making.

SECTIONS IN THE DEPARTMENT

• Bills Payable – Inland Bills – Foreign Bills

– Services And Civil Works

• Finance • Payroll • Cash Office • Bills Receivable • Cost Accounts • Material Accounts • Book Keeping

• Budget & M.I.S.

• Time Office

BILLS PAYABLE

OBJECTIVES

• To regulate the payments to suppliers and service providers as per the terms and conditions of the Purchase order/Agreement.

• To ensure that he payment to different parties are made promptly so that supplies and services to the divisions maintained uninterruptedly in furthering the objects of the Organization.

• To ensure that proper accounting is done as per the requirement of statute/standing instructions from the H .O.

• To ensure that all statutory deductions e.g. T.D.S. etc, are made from the Bills of suppliers / services providers and Deposited timely with the appropriate authority.

BILLS PAYABLE (INLAND)

FUNCTIONS

The following are the functions of Bills Payable (Inland) sections:

• Payment of Advance to suppliers as stipulated in the Purchase order.

• Payment of Final Bills.

• Bank dealings with relation to suppliers e.g. Opening of Letter of Credit, Bank Guarantee and payment to bank on the due dates.

• Accounting and pricing of R.D.R.(Receiving cum discrepancy report).

• Maintenance of Commitment Register for Budgetary purpose.

• Payment of Misc. Advances / imprest approved by the competent authority.

FLOW OF WORK

1. All the purchase received is first entered in P.O. register before putting the same in separate file.

2. If the P.O. stipulate for payment of Advance to vendor , an Advance payment is given

3. .After receipt of the goods, suppliers invoice duly linked with relevant R.D.R. are received from the Purchase Department which are scrutinized with reference to

4. In respect of P.O. where payment is stipulated as “Through Bank” the BPI section, after intimation from the bank through Purchase Department, makes entry in the purchase department, makes entry in the Register and after checking the documents with the P.O. passes the invoice and sends the remittance voucher to the cash section to arrange payment and collection of document from the bank by the Purchase Department.

5. In respect of local purchases made on “cheque against delivery basis” the performs invoice is linked with the relevant Purchase Order and the payment is authorized and Remittance voucher is sent to the cash section for making payment.

6. Pending the receipt of R.D.R. from the transit in respect of material received but not taken on charge due to delay in inspection / commissioning / rejections the payment made to suppliers as advance on receipt of goods through Bank Documents / cheque against delivery basis are put in G.I.T. i.e. goods in Transit Account at the year end.

7. In respect to that P.O. where material has been received but the payment has not been released, the appropriate liability is provided for at the year end so as to account for all expenses.

8. Follow up with I.M.M. department for release of R.D.R. in respect of those P.O’s. where advance payment has been made so as to clear advances.

9. In respect of rejected materials, follow-up is to be made with I.M.M. department to get those rejected materials replaced from the vendor so as to clear G.I.T.

BILLS PAYABLE (FOREIGN)

FUNCTIONS

• Payment and accounting of:

– Advances to suppliers as per the terms & conditions of purchase order.

– License fees, Royalty etc as per the License agreement with the foreign collaborators.

– Customs duty, Freight bills – Final bills

• Opening of Letter of Credit on the advice of I.M.M. department and liaisoning with Bank for Foreign Exchange release and payment on maturity date.

• Maintenance of commitment registers for budgetary purpose.

• Maintenance of Deferred liabilities accounts.

• Pricing of R.D.R. with P.O. rates and loading of customs duty, Freight and insurance charges.

• Priced R.D.R. is sent to Material Accounts Section / E.D.P. for punching in batch mode for processing of Material Ledger.

2. All the L.C. opened in favour of Foreign Suppliers as per the terms of Purchase Order are entered in Register to record the particulars about their extension, revalidation and utilization. On maturity of L.C. the Bank advice and sent to cash section for adjustment. Particulars of payments are also noted in the relevant P.O.

3. Where purchase terms provide for “documents through Bank” the Bills Payable section after checking the documents with the purchase order passes the invoice and issues Letter Authority to the Bank for arranging payment.

4. All the Contractual payments in respect of royalty, license fee and technical assistance fees area made as per the license / collaboration agreement after obtaining Foreign Exchange release from the Ministry, R.B.I. and producing N.O.C. from the Income Tax Department.

5. Bills of entry received from the I.M.M. department are entered in the register to record value of goods assessed, amount duly paid to ensure that the duty levied is correct and the amount of duty paid is loaded to the inventory accounts correctly. A copy of B/B is sent to the bank for forwarding the same to R.B.I.

6. After receipt of goods the Stores Department sends the RDR to the Foreign Bills pricing and making necessary accounting.

7. Pending the pricing of RDR, the payments made to the foreign vendors through L.C. / sight drafts are put temporarily in Goods in Transit Accounts.

8. In respect to Material dispatched by the vendor against P.O. raised by us, the liability is provided in our books of accounts if payments have not been made for such supplies.

9. Follow-up with I.M.M. Department for timely release of RDR so as to clear the G.I.T. 10. Co-ordination with the I.M.M. for the replacement of rejected materials so as to clear

BILLS PAYABLE (SERVICES)

• Payment and accounting of advances.

• Payment and accounting of running bills of the contractors.

• Payment and accounting of final bills.

• Adjustment and recovery of advances.

• Accounting and adjustment of earnest money and security deposits.

• Capitalization of buildings.

• Payment of all services bills e.g. Telephone, Electricity, Water, Canteen, Transportation and sanitation etc.

• Payment of all consultants e.g. Architects, Advocates, Part Time Doctors etc.

• Payment of Misc. Advances / Imprest approved by the competent financial authority and their adjustments.

• Payment of all casual employees.

FLOW OF WORK

1. Advances to contractors are given as per the acceptance letter given to the contractors which are recovered with the interest by way of deduction from on account payment bills in suitable percentage in relation to the progress of work so as to recover all sums advanced by the time 80% of the contract is completed.

2. Material advances to the extent of 75% of the value of materials bought by the contractors and lying at the site are given on certification of the Engineer in charge and are recovered from running / final bills.

3. in respect of running bills the works accounts section links the bill, submitted by contractor duly certified by Engineers-In-charge, with the contract / acceptance letter / work order etc. and arranges payment after deducting Income Tax., balance security deposit and other advances if any and retaining the prescribed percentage of the bill towards the retention money. However, where the contractor has given bank guarantee towards retention money no deduction is to be made on this account.

4. Similarly, the final bill submitted by the contractor is checked with the measurement book and the gross amount payable is determined. The amount settled against running bills, advances if any, penalty for delay in completion of work, recovery towards consumption of material, T.D.S. etc is deducted from the gross amount payable. One half of the security deposit refundable to he contractor is retained as Defect liability deposit.

5. Capitalization the building and other capital works done on receipt of the completion certificate and final bills and the classification of the building is done in accordance with the rules in force.

6. Payment of bills for services e.g. Electricity, Telephone, Water etc. received from the plant maintenance department/ concerned users duly verified by them and approved by the competent authority are made.

7. Payment in respect of other services received by the company is made after it is duly approved by the competent authority.

FINANCE SECTION

• To ensure that the financial discipline is maintained in the division.

• To ensure that all expenditure is incurred with due regard to principles of financial propriety.

• To ensure that financial proposals are routed to the competent authority as per delegation / sub-delegation of powers so as to ensure compliance of the provisions of the Companies Act, the Memorandum and Articles of Association of the company and the relevant rules and regulations of the company and the guidelines issued by the company.

• To ensure that the funds are available in the approved Capital & Performance Budget so as to cover the relevant proposals.

• To submit MIS reports to Corporate Office monthly.

FUNCTIONS

• To scrutinize and give financial concurrence as per delegation of power for each proposal involving :

– Capital expenditure – Revenue expenditure

– Purchase of materials/ stores / tools and other services – Manpower requirement

– Waiver of dues / write off of losses

– Cases involving relaxation of rules etc.as per delegation of powers. – Sale, lease, alienation or disposal of company’s asset.

– Contracts entered into with suppliers / collaborators / sub-contractors.

– Award of contract in respect of civil / electrical works / other works / plant orders.

– Project Reports.

• Certification for availability of funds with reference to Capital & Performance Budgets and appropriation of funds.

PAYROLL SECTION

• To regulate salaries and wages of all employees as per terms of employment.

• To regulate payment of welfare facilities extended by the management e.g. Medical, Interest subsidy, school fee etc.

• Payment and recovery of various natures of advances such as Travel advances, LTC advance, conveyance advance and timely adjustment thereof.

• To ensure timely remittance of amounts recovered from employees to various agencies like LIC, UPICA, HDFC, etc.

• To ensure that all-statutory deductions e.g., PF etc are made from the salaries of the employees and deposited timely with the appropriate authority.

• To ensure proper accounting is done as per the requirement of the statue and corporate office guidelines.

• To adhere to the provisions laid down in the Personnel Manual relevant to the above functions.

• Based on the appointment / transfer notification from Personnel department, individual files are opened in the payroll section to record the particulars of the employees such as grade / group date of appointment / transfer, department code, P.B. No. , scale of pay, quarter details.

• The payroll record is updated from time to time entering therein increment drawn, promotion, transfers etc.

• The master data in regard to all officers / employee is sent to the computer department in respect of basic pay, DA, HRA, CCA etc. and this data is updated every month depending upon the changes.

• The deductions to be made are fed to the computer department by means of deduction statement. Computer department in turn prints out the deduction statement in the form of check list by the 25th _{of every month. Payroll section corrects the same with}

reference to the various documents and recovery register and sends it back to the computer department for the final adoption by 26th_/27th _{of the month.}

• The computer department prints the payroll in the duplication in which one copy is maintained in the payroll section for the record purpose and the original is distributed to the employee concerned.

•

Disbursement of salary & wages

Payment of salary of officers is made through Bank based on the payroll received from the computer department. In case of non-supervisory personnel the payment is made by cash by various groups except few cases where the payment is made through P.N.B. H.A.L. Branch. Cash is drawn two days in advance i.e. last day of the month and filled in the employee and these employees are kept in the safe custody in cash office for disbursement on 1st _{of next month.}

•

Various recoveries made from employees in respect of LIC premium, HDFC loan, Income Tax etc are remitted to the various agencies within the stipulated date by means of cheque.

•

Payment of advances and adjustment thereof and reimbursement of expenses

Various types of advances such as Car / Scooter advance, contingency advance, TA/DA etc are paid and adjusted/ recovered as per the rules of the company. Also reimbursement of expenses like medical, school fee, conveyance, etc is made as per the rules of the company.

•

Accounting procedures

Monthly payroll journal entry is made both for supervisory and non-supervisory personnel and sent to the book keeping section for adoption.

For payment made to persons from other divisions, proper accounting is done to ensure that necessary advice is raised to the concerned division.

CASH SECTION

• To ensure timely drawls of cash from bank to cater to the daily needs of the payments of cash vouchers.

FUNCTIONS

• All amounts collected by different sections either from employees or from external agencies is sent to the Cash Office through Cash Credit Vouchers.

• Cash received in excess of the requirement, cheques, bank drafts, postal orders are deposited into the company’s Bank account the same day for realization

• .Payment to the employees such as medical reimbursement, TA / DA advance, Misc. advance etc. are made through payment vouchers which are punched into the computer through online system. The cash office in turn after proper identification makes the payment through cash teller.

• For payment to outside parties cheques are made on the basis of remittance voucher sent by different section. These cheques are handed over to the Purchase department for taking necessary action / sent to central registry for dispatch to the concerned party.

• Entries are made every day on the basis of Cash Credit vouchers and remittance voucher and the cash balance is arrived at which is certified by the In-charge of cash office.

• Based on the analysis of the payment and receipt transactions computerized monthly Journal Voucher is prepared and send to the Book Keeping section for the adoption.

• Preparation of the monthly Bank Reconciliation statements and the liaisoning with the bank authorities to check any discrepancy.

• Periodical physical verification of cash is done by systems audit representatives and by the internal auditors on the last day of the financial year.

BILLS RECEIVABLE SECTION

• To ensure that dues from the customers in respect of Goods supplied and services rendered are recovered timely as per the Fixed Price Quotation / Price Catalogue approved by the Ministry in accordance with the Government letter issued by the Ministry of defense dated 24th _{Aug., 1995.}

• To ensure that invoices in respect of advances, stage payment, final deliveries are raised timely in order to have smooth cash flow position.

• To ensure that proper accounting is done as per the requirement of statute and accounting instructions laid down by the corporate office.

• To ensure that all statutory payments e.g. Sales Tax, Excise Duty, Custom duty is received from the customer and is deposited timely with the appropriate authority.

FUNCTIONS

The following are the functions of the Bills Receivable section;

• Preparation and rendering of the invoices to I.A.F. in respect of the following activities in accordance with the guidelines laid down in the Government letter dated 30th _{Sept., 1997.}

-Manufacturing activities

The following documents shall be produced in support of the invoices rendered:

* Initial advances are recovered on the basis of Customer order:

i. Firm / forecast task given by the Air Force ; ii. C.R.I. coordinated I.D.T.O. for the divisional task; iii. R.M.S. order

*Subsequent stages / final payment are claimed on the basis of the milestones achieved, dispatch advices, acknowledgement received from the Air Force in the form Q423, Inspection Note certified by the C.R.I. about the progress of the work done in respect of the repairs and overhaul work the payment is strictly regulated based on the nature of work carried out e.g. Functional Test, Defect Investigation, and Zero Hour Servicing, Repaired, Overhauled.

• To prepare and render invoices to Non-IAF customers in respect of the following activities :

– Sales for Customer Financed Projected

– Development Supplies and services rendered to civil customers – Supplies against R.M.S. orders from the Army, Navy.

• To raise the debit on the other divisions as S.I.T. in respect of parts/ accessories supplied for the fulfillment in Engines/ Aircraft/ Helicopters manufactured by them for supply to customers.

• To claim payment from AO (DAD) on the basis of fitment details received from the user divisions.

• To submit invoices for reimbursement of royalty from Air Force and setup Sales for these claims and create claims receivable.

• To follow up with AO (DAD) and other customers for collecting the payment against the invoice raised.

• To provide details to the budget section for compliance of sales budget on the basis of the sales order, firm / forecast task, I.D.T.O. for the Budget estimates, Revised estimates, F.C.

• To collect Sales Tax from the customers and deposit the same.

• To compile Sales Tax returns and submit the same to the IMM department for onwards submission to Sales tax authorities for Assessment.

COST ACCOUNTS SECTION

• To establish a costing system in line with the activities and product range of the division.

• To determine the price releasable from the customer for the products manufactured / repaired / overhauled / serviced / supplied by the division.

FUNCTIONS

• To determine the rate of absorption / recovery of the labour and other overheads for recovering labour cost on the different jobs undertaken i.e. Man-Hour rate computation.

• To accumulate the labour and overheads content of each activity Project-wise based on the evaluated L.T.B. generated by E.D.P. from the Work Orders / Time Dockets.

• To review work orders on which no material / labour cost has been recorded and finding out the reasons for the same.

• To get the W.I.P. statement as on 31st _{March from E.D.P. for all manufacturing}

components , sub-assembly W.I.P., assembly W.I.P. for physical verification by the concerned production shops.

• To ensure that the valuation of W.I.P. has been done correctly keeping in view the percentage of completion of the job.

• To keep track of S.I.T. transactions with the different divisions.

• To keep record of all I.D.T.O. received and issued.

• To send debit advices to other divisions for the items dispatched against I.D.T.O. received from them.

• To accept the debit raised by other divisions for items received by division in respect of requirement raised by H.A.L. through I.D.T.O.

• To evaluate P.C. Memo for S.I.T. Issues, Russian consumption for overhaul and amortization of D.R.E.

• To work out the cost of sales and to reconcile the same with the Design Department for various Customer Financed Projects.

• To work out the royalty payable to different Licensors as per the License Agreement.

• The Liaise with AO (DAD) for verification of claims in respect of lobour booking on production and D.R.E. items and other issues like wage arrears, idle hours atc.

• To prepare Fixed Price Quotation / Price Catalogue for the different items manufactured / repaired / overhauled / serviced / supplied by the division and to get the same approved by the AHQ.

• To submit quotation in respect of enquiries received from Non-IAF and Civil customers.

MATERIAL ACCOUNTS SECTION

• To ensure that all the receipts and issues of materials from stores are recorded and accounted for properly.

• To ensure that all non-moving / slow moving materials are identified as “surplus” by the I.M.M. and a suitable redundancy provision is made against them and are disposed off.

• To ensure that Bin Card balances are reconciled with the Material Ledger balances in co-ordination with I.M.M. and the balances of material ledger tallies with the General Ledger.

FUNCTIONS

• To send the priced R.D.R. received from the Bills Payable section to E.D.P. for punching in the Batch Mode and thus all the receipts are recorded and control is exercised over all the purchase value-wise.

• To generate exception list the missing R.D.R. and getting it resolved with Bills Payable section.

• All the materials drawn excess when returned are credited to stores through Stores Returned voucher.

• The E.D.P. after processing of all M.R. / Issue Voucher prints the material Issue analysis statements monthly indicated

Based on the above statements accounting for issue of materials is done by debit to Work-in-progress / expense / contractors account and credit to relevant inventory account.

• On the basis of list of materials / transfers reclassification indicating the material code NO. / Quantity and value, necessary Journal entries are passed by debit / credit to relevant inventory account.

• On the basis of stock verification sheet indicating stock verification no. material code no. , shortages / overages , necessary Journal entries are passed after obtaining clarification from stores department by debit / credit to stock adjustment account and credit / debit to relevant inventory account after taking approval of C.F.A. wherever required for adjustment / write-off of stores.

• A list of material not moved for over 5 years is given by E.D.P. which is received by stores / concerned programming department materials not required for production or for other purposes are identified and suitable section is taken by I.M.M. for finding their usage in other divisions or is auctioned.

• Redundancy provisions is made in he books of accounts at the rate of 100% for non moving inventory and for closed projects as special provisions on th basis of list given by E.D.P. Further a normal provision at 1.5% is made on the balance inventory.

BOOK KEEPING SECTION

• To compile the accounts of the company are prepared as per the requirement of the statute / corporate office guidelines.

• To assess the performance of the company in the financial terms such as sales, debtors, profit, value of production, value-added etc.

• To furnish data/ information in respect of Income Tax Assessment done at corporate office.

• To get the accounts of the company audited by the internal, statutory and government auditors as prescribed by law.

FUNCTIONS

• Journal entries originated by the various sections of the Finance and Account Department are sent to the book keeping section. These entries are serially numbered and punched into the computer and thereby posted to the general ledger.

• Preparation of the trial Balance, Profit & Loss account and Balance Sheet. Accounts are computerized and are drawn for every quarter as on 30th _{June, 30}th _{Sept, 31}st

December, and final accounts as on 31st _{March of each financial year.}

• Maintenance of Fixed Asset register and depreciation schedule.

i. For all capital items purchases, RDR are furnished by the bills payable section like details of assets like building etc capitalized are also furnished by civil works

ii. Depreciation on capital asset in calculated as per the policy of the company and is reckoned accordingly as an operating expense of the division.

• Inter Divisional Transaction are accounted through control account adjustment advices which are reconciled twice in a year at the clearing house.

• Physical verification of fixed asset is done as per the guidelines of the corporate office.

• To provide support to other sections of accounts in their reconciliation and control function.

BUDGET SECTION

• To layout a comprehensive plan of action expressed in financial and physical terms and to achieve the targets of the company against the available resources.

• It is a tool in the hands of the management to establish goals, objectives, and targets of the company and measures the performance against the above targets.

• To ensure the overall control over expenditure, it is necessary that all expenditures (except that of contingent nature) are authorized.

FUNCTION

• To ensure that capital facility is made available in time to meet the production requirement. The proposal are classified under three categories i.e. plant and machinery, civil works and others.

• Presenting estimates and expenditure in terms of function, programs activities and project with their financial and physical aspects closely interwoven.

• The targets set are critically reviewed from the point of view of availability of resources and their optimal utilization and to achieve cost reduction.

• Analysis of variance and to find out the reasons of such variances and take suitable remedial measures.

• All the important budgets like production, sales, profit and loss, working capital etc after the approval of the Board are broken into the monthly budgets to ensure uniform production from month to month.

TIME OFFICE SECTION

• Maintenance of leave records and feeding of attendance records to computer department.

• Maintenance of attendance record of Casual Mails, Project Engineer and Contract Diploma Technicians.

• Receipt of approved leave application.

• To maintain the leave ledger PB No. wise for all the personnel. Credit is given to each account according to his entitlement as per the guidelines laid down by the corporate office and the posting is done simultaneously from the attendance reports received from the concerned department.

• To verify the applications of V.L. encashment and advice accordingly to payroll section.

• To make calculations for payment of attendance bonus to Group A to Group D employees.

• To make the calculations for provisions of vacation leave to be accounted for in final accounts.

• To verify the applications for advanced vacation leave approved through P/A Department and making adjustment thereof in subsequent time period.

• To maintain night duty roaster of officers deputed on night duty and to ensure that time off claimed in lieu of such duty is not availed beyond 90 days.

• To verify the time off claimed in the lieu of extra work done/ Sunday / sports duty / scout duty etc.

• To advice the payroll section for payment of ex-gratia in accident cases.

• To provide data to payroll section for payment of single wages in lieu of work done on general holidays and double wages in lieu of work done on National holidays.

• To provide data for gratuity payment in case of final settlement.

• To provide data to payroll section for deduction of time losson the basis of late arrival report received from security department.

PROVIDENT FUND SECTION

• To ensure timely collection of Provident fund money recovered from members every month by the employer.

• To invest the provident fund accumulations improved securities as stipulated by statute.

• To make payment of loans to members as per the rules/ guidelines/ bye-laws.

• To prepare Income and Expenditure account and Balance Sheet of the Fund and getting the same duly audited and approved by Trustees.

• To file the returns of Provident fund to RPFC.

FUNCTIONS

• The PF subscription of members is deducted monthly from salary. The amount so deducted (which is 12% of Basic pay and DA) along with Company’s contribution is collected from the Payroll section before 10th _{of each month and credited to Fund’s}

account.

• Payment of loans (Refundable and Non-Refundable) to members as per the rules of the company, subject to availability of funds.

• The investment of Provident Find money is made in the approved securities and details of investment is approved by the Board of trustees.

• To maintain Family Pension Account of each member and remittance to RPFC at the stipulated dates and file monthly and yearly returns.

• To remit the amount of PF deductions for contractual / casual workers by cheque to RPFC and file the return in respect of the same.

• To distribute the annual statement of Pf to all the members in the format prescribed by RPFC.

• To make final payment of Pf due to a member on his retirement/resignation or to the nominee in the case of death of a member as per rules.

• To maintain accounts of Provident Fund Transactions and get audited by the statutory auditors of the company and approved by the Board of Trustees.

• To file the monthly returns in the prescribed formats and submit to RPFC by 25th _of

each month in respect of Provident Fund and Family Pension Fund.

FLOW OF WORK IN

FINANCE & ACCOUNTS DEPARTMENT

Functioning of the Finance & Account Department is divided into two

parts:-1. Personal Section 2. Official Section PERSONAL TIME SECTION PAYROLL SECTION CASH OFFICE

In Personal Section there are three departments Time Office, Payroll Section, Cash Office. Functioning of Personal Section starts with the Time Office. This section is responsible for calculating the attendance of employee and maintains records of it. Payroll section is concerned with salary, wages, and incentives correspondence with the Time Office. In Cash Office LTC reimbursement, encashment of leaves, medical payment is done by cash and cheque. During the service period certain amount is deducted from the salary of the employee for the future security of employee known as Provident Fund and Pension Fund.

OFFICIAL

FINANCE & BUDGET (File Approval) IMM (Commercial Deptt.) PURCHASE DEPTT. (Purchase Order) BILLS PAYABLE

(Payment)

COSTING & MATERIAL A/C

(Accounting Process)

BOOK KEEPING (Book Entry)

BILLS RECEIVABLE (Sales)

In Official section there are eight departments. First of all in Budget Department budget is made for different Projects according to the order received. After that in Finance Section scrutinizing function is performed this has a major role to play in capital and revenue expenditure decision in regard to purchase of material / stores / tools and other services. Then IMM gives the final approval and issues the purchase order. On the basis of this purchase order Bills Payment department do the payment to the suppliers of raw material, machinery and tools etc. when the raw material is transformed into the finished goods then the Costing & Material account do the costing of it to find the final cost of the finished product. This data is stored in the Book Keeping Section to know the financial position of the organization.

3.1 INTRODUCTION

Cash is the lifeline of a company. If this lifeline deteriorates, so does the company's ability to fund operations, reinvest and meet capital requirements and payments. Understanding a company's cash flow health is essential to making investment decisions. A good way to judge a company's cash flow prospects is to look at its working capital management (WCM).

Working capital, also known as net working capital, is a financial metric which represents operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.

A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.