Summer Internship Project report On

WORKING CAPTIAL MANAGEMENT OF HIMACHAL

FUTURISTIC COMMUNICATIONS LIMITED (HFCL)
Submitted in partial fulfillment of requirement of Bachelor of
Commerce (Hons.) (B.COM(H)

B.COM(H) - 5th Semester (Morning)

Batch 2017-2020

CERTIFICATE

This is to certify that has successfully completed the project work titled as WORKING
CAPTIAL MANAGEMENT OF HIMACHAL FUTURISTIC COMMUNICATIONS LIMITED
(HFCL) under the guidance for partial fulfillment of requirement for the completion of B.com
course as prescribed by th. This project report is the record of authentic work carried out by
him/her during the period 01/06/19 to 30/07/19. He has worked under my guidance.

CONTENTS

Description Page No.

Acknowledgement (i) 4
Executive Summary 6
Introduction to topic 7 – 16
Objectives 17
Literature review 18 – 21
Company Profile 22 – 31
Research Methodology 32 – 33
Analysis & Interpretation 34 – 37
Findings & Inferences 38 – 47
Limitations 48
Recommendations and Conclusion 49
Bibliography 52

ACKNOWLEDGEMENT

As I write this acknowledgement, I must mention that this is not just a formal
acknowledgement but also a sincere note of thanks and also regard from my side. I feel a
deep sense of gratitude and affection for those who helped and guided me in this project.

It gives me an immense pleasure to express my gratitude for sharing her expertise and
providing valuable guidance from time to time. She played pioneer role in the completion of
my project and kept an anxious eye on my work. I shall always be indebted to her for
providing me with all the relevant material, guidance and advice in accomplishing this project
report. She guided me so that I track on the right path.

In the end, I dedicate this effort of mine to those persons who are light of our life: my family
and my friends who have been behind every successful endeavor in my life.

DECLARATION

I declare that

a. All the work done is my original.

b. I have not used work that is previously produced by any other student or any other person
to submit it as my own.

c. The work confirms to the guidelines for layout, content and style as set out in the
Regulations and Guidelines
 EXECUTIVE SUMMARY

We know that in modern world, banks are playing a key role for the development of an
economy. Business opportunities day by day rising, new products and services come in every
month. Need for data and information about different topics and issue is very essential for
building and operating a business. Information plays a major role in all sector of a society,
whether in social sector or business sector. The Summer Internship Project was carried out
by me on WORKING CAPTIAL MANAGEMENT OF HIMACHAL FUTURISTIC
COMMUNICATIONS LIMITED (HFCL). The main objective of this study was to analyze the
working capital of HIMACHAL FUTURISTIC COMMUNICATIONS LIMITED (HFCL). The
report is divided into five parts which includes- 1. Introduction, 2.Organizational Profile which
deals with the particular characteristics of the organization which define it, 3.Internship
activities which include the type of work I took part in during my contract period, 4.This part
includes a brief discussion on the purpose of the report, process of data gathering, analysis of
the data (The analysis of the research shows that around two-third of their client age are
banking with them from more than two years which is commendable in terms of client
retention)and findings and 5.Suggestions for improvement and Conclusion. The study
encompasses consumer satisfaction or customer service quality of cooperative bank. The
study covers respondents both customers of banks and bankers. The customers belong to
various professions, various places, of both genders, with varied income groups and varied
age groups.

INTRODUCTION TO TOPIC

Working capital management refers to a company's managerial accounting strategy designed

to monitor and utilize the two components of working capital, current assets and current
liabilities, to ensure the most financially efficient operation of the company. The primary
purpose of working capital management is to make sure the company maintains
sufficient cash flow to meet its short-term operating costs and short-term debt obligations.

KEY WORDS

 Working capital management is the analysis and implementation of strategies

surrounding current assets and current liabilities.
 Current assets are any assets that are liquid enough to be turned into cash within the
following twelve month period.
 Current liabilities are obligations due within the upcoming twelve month period.
  A financially efficient company will have more than enough current assets to cover their
current liabilities.
 Three key ratios in working capital management are the working capital ratio, collection
ratio, and inventory turnover ratio

How to Use Working Capital Management

Working capital is made up of current assets minus current liabilities. Current assets include
any assets that can be easily converted into cash within the following twelve month period. In
other words, they are highly liquid assets. Some current assets include cash, accounts
receivable, inventory, and short-term investments. Crrent liabilities include any ob

due within the following twelve month period, such as operating expenses and the current
portion of long-term debt.

Working capital management commonly involves monitoring cash flow, current assets, and
current liabilities through the ratio analysis of key elements of operating expenses, including
the working capital ratio, collection ratio, and the inventory turnover ratio. Efficient working
capital management helps maintain the smooth operation of the net operating cycle, also
known as the cash conversion cycle (CCC)—the minimum amount of time required to convert
net current assets and liabilities into cash.

Working capital management can also help to improve the company's earnings and
profitability through efficient use of company resources. Management of working capital
includes inventory management as well as management of accounts receivables
and accounts payables

. The main objectives of working capital management include ensuring the company will have
enough cash to cover current expenses and debt obligations, minimizing the cost of capital
spent on working capital, and maximizing the return on current asset investments.
Types of Working Capital Management Ratios

Working Capital Ratio (Current Ratio)

The working capital ratio, also referred to as the current ratio, is calculated as current assets
divided by current liabilities. It is considered a key indicator of a company's financial health
since it indicates the company's ability to successfully meet all of its short-term financial
obligations.

Although numbers vary by industry, a working capital ratio below 1.0 is generally indicative of
a company having trouble meeting its short-term obligations. This would mean the company's
debts due in the upcoming year are not able to be covered by its liquid assets. In this case,

the company may have to resort to selling off assets, securing long-term debt, or accessing
other financing options to cover their short-term debt obligations.

Working capital ratios of 1.2 to 2.0 are considered desirable, but a ratio higher than 2.0 may
indicate a company is not effectively using its assets to increase revenues. A high ratio may
indicate that the company is not securing financing appropriately or managing its working
capital efficiently.

Collection Ratio

The collection ratio, also known as the average collection period ratio, is a principal measure
of how efficiently a company manages its accounts receivables. The collection ratio is
calculated as the product of the number of days in an accounting period multiplied by the
average amount of outstanding accounts receivables divided by the total amount of net credit
sales during the accounting period.

The collection ratio calculation provides the average number of days it takes a company to
receive payment after a sales transaction on credit. If a company's billing department is
effective at collections attempts and customers are paying their bills on time, the collection
ratio will be lower. The lower a company's collection ratio, the more efficient its cash flow.

Inventory Turnover Ratio

The final element of working capital management is inventory management. To operate with
maximum efficiency and maintain a comfortably high level of working capital, a company must
carefully balance sufficient inventory on hand to meet customers' needs while avoiding
unnecessary inventory that ties up working capital for a long period before it is converted into
cash.

Companies typically measure how efficiently that balance is maintained by monitoring the
inventory turnover ratio. The inventory turnover ratio, calculated as revenues divided by
inventory cost, reveals how rapidly a company's inventory is being sold and replenished. A

relatively low ratio compared to industry peers indicates inventory levels are excessively high,
while a relatively high ratio may indicate inadequate inventory levels. Effective management
out of working capital is actually essential for the profitability as well as maintaining financial
stability of any business. For efficient management you should know the various aspects of

working capital management as well as different components of working capital management.

Working capital is the funds, which is used to run, perform and conduct business activities.
Mostly investors and analyst assess for components of working capital to evaluate company’s
cash flow as their keys elements. For example: how funds are received, how funds are paid,
how well inventory is managed, etc. Such analysis assure whether business constantly keeps
sufficient money to meet with their short-term operating expenses and short-term debt
commitments.

Aspects of Working Capital Management:

There are broadly two sides of working capital management or you can say two aspects of
working capital management. They are as mentioned below:
1. Current Assets:

Current assets are those assets which can be easy convertible to cash within one-year. So
that current assets can be utilized to meet necessary day- to-day operations for a business.
Managing current assets is the primary objective for effective working capital management.
The current assets have always been cash or close to cash means. For example: Short-term
advances, Cash and bank balances, Receivables, Prepaid expenses, Temporary
investments, Inventory of finished goods, Inventory of raw materials, Inventory of work-in-
progress, etc.

2. Current Liabilities:

Current liabilities are claims from external parties which are expected to be payable within one
year of accounting period. For example: Creditors for goods purchased, Short-term
borrowings, Taxes and dividends payable, Outstanding expenses, Advances received against
sales, Other liabilities maturing within a year.

Components of Working Capital Management:

They are several main components of working capital management. For example: cash,
inventory, accounts receivable, trade credits, marketable securities, loans, Insurances etc. Let
us understand some of them below:
1. Cash / Money:

Cash is the most liquid form of funds, hence it is one of the huge important components of
working capital. It is necessary for every business to maintain optimum level of cash in hand
regardless if other existing assets is substantial. Cash act as an effective instrument at
various stages of product life cycle. Cash in hand plays an important role to balance any gaps
arising between productions to distribution cycle.

2. Account Receivable:

Accounts receivable tend to be profits due which is owed to a business by their clients for the
sale of goods. Efficient, timely collection of account receivable is most essential to maintain
financial health of the company’s operation. For example: marketable securities consist of
commercial papers offered by companies, acceptance letter, treasury bill, etc. These
instruments can be bought and sold at quicker and reasonable rate. They usually have less
than one year as their maturity period. This attract company’s to investment additional cash
reserves and also can be used as highly liquid assets.
Accounts receivable have always been under assets side of a company’s balance sheet, but
they are not actually assets until these are typically collected. A commonly used method by
analysts to evaluate the organization’s accounts receivable cycle is that, day’s sales
outstanding, that reveals that the typical average days an organization sales cycle to collect
profits from sale of goods.

3. Account Payable:

Account payable, the money an organization need to pay out throughout the short term, is
also an another key components of working capital management. Normally company’s
effectively maintain balance between maximum cash flow simply by delaying payments as
long as it is fairly potential. In addition, they need to keep positive credit ranks / scores while
dealing with creditors as well as suppliers. Commonly, a business’s average time for account
receivables are significantly shorter than the average time for account payable’s.

4. Stock / Inventory:

Stock is one of the main components of working capital. An organization’s main asset that it
transforms in to sales profits and earnings. The speed at which business sells and restock is
significant to determine its success. Stock are of various types, which includes stock as raw

material, stock as work in progress or stock in finished goods. Investors give consideration to
their stock turnover level become a sign of this strength to sales and as a measure towards
how efficient the business looks in their buying as well as production process. Stock that is
minimal, puts the company into danger zone of getting rid of off product sales. Again
excessively high stock levels express inefficient utilization of working capital.
What is working capital management?

A company’s working capital essentially consists of current assets and current liabilities.
Current assets refer to those assets that can be converted into cash within one year, like
debtors, and stock and prepaid expenses- expenses that have already been paid for. Current
liabilities are the day-to-day debts incurred by a business in its operation. These could be
credit purchases made from vendors (creditors) and outstanding expenses (expenses that are
yet to be paid).

Thus, working capital management refers to monitoring these two components or the short-
term liquidity of your firm.
Three fundamental parameters that help you manage working capital requirements better and
indicate your liquidity standing of your firm are:

1. Working Capital Ratio:

A ratio between the current assets and current liabilities, it signifies the current ability of an
organization to pay off its short-time financial obligations.

2.CollectionPeriodRatio:
Also known as the debtors or accounts receivables turnover ratio, this ratio is indicative of a
company’s ability to convert its debts into cash. The lesser number of days it takes to realise
its payments from its debtors, the better.

3.InventoryTurnoverRatio:
Also known as the stock turnover ratio, this ratio monitors the time a company takes to
converts its goods into cash. Lower the time taken, higher is the company’s stock efficiency.
 Strong working capital management aids a company in having a higher operational efficiency
and hence, higher profitability. For this, Bajaj Finserv offers special working capital
loans which will help your business meet its short-term liquidity smoothly.

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

The primary objectives of working capital management include the following:

 Smooth Operating Cycle: The key objective of working capital management is to ensure a
smooth operating cycle. It means the cycle should never stop for the lack of liquidity whether it
is for buying raw material, salaries, tax payments etc.
 Lowest Working Capital: For achieving the smooth operating cycle, it is also important to
keep the requirement of working capital at the lowest. This may be achieved by
favorable credit terms with accounts payable and receivables both, faster production cycle,
effective inventory management etc.
 Minimize Rate of Interest or Cost of Capital: It is important to understand that the interest
cost of capital is one of the major costs in any firm. The management of the firm should
negotiate well with the financial institutions, select the right mode of finance, maintain
optimal capital structure etc.
 Optimal Return on Current Asset Investment: In many businesses, you have a liquidity
crunch at one point of time and excess liquidity at another. This happens mostly with

seasonal industries. At the time of excess liquidity, the management should have good short-
term investment avenues to take benefit of the idle funds.

IMPORTANCE OF EFFECTIVE WORKING CAPITAL MANAGEMENT

Although the importance of working capital is unquestionable in any type of business. Working
capital management is a day to day activity, unlike capital budgeting decisions. Most
importantly, inefficiencies at any levels of management have an impact on the working capital
and its management. Following are the main points that signify why it is important to take the
management of working capital seriously.
 Ensures Higher Return on Capital
 Improvement in Credit Profile & Solvency
 Increased Profitability
 Better Liquidity
 Business Value Appreciation
 Most Suitable Financing Terms
 Interruption Free Production
 Readiness for Shocks and Peak Demand
 Advantage over Competitors

DECISIONS IN WORKING CAPITAL MANAGEMENT

If anybody describes the benefits of working capital management in terms of money, it would
most likely be the cost of capital that a business pays on the investment in working capital.
The amount of this cost would depend on two things viz. the quantum of working capital
required and the cost of working capital. The quantum of working capital is decided by the
working capital policies of a company whereas the optimization of the cost of capital is worked
out with working capital management strategies.

WORKING CAPITAL DECIDING FACTORS – LEVEL AND MODE OF

FINANCING

The two main factors that decide the quantum of working capital that a business should
maintain, are liquidity and profitability. Let’s understand the impact of both of these factors in
details.
Nobody denies the importance of liquidity but most have a question that how much that
liquidity should be? What are the right levels of liquidity? We know that a business can’t sit on
unlimited or too high liquidity because higher liquidity means higher investment in working
capital. And higher investment in working capital means higher cost of capital, interest cost in
case financed by bank finance. Therefore, the higher liquidity has a direct impact on the
profitability as the capital cost rises. In essence, the relation between liquidity and profitability
 is inverse. On one hand, higher rather sufficient liquidity is the primary goal of working capital
management. Whereas on the other hand, profitability as an objective aligns with the overall
objective of an organization i.e. wealth maximization.
With that, it is quite clear that a policy that an organization follows would fall between these
pillars. There may be policies that are tilted towards liquidity and others may be towards
profitability. It is then a management decision where do they want to place their
organization’s policy.

WORKING CAPITAL MANAGEMENT POLICIES

Working capital management policies deal with the quantum factor i.e. how much of current
assets should be maintained? These policies, in essence, are different levels of the tradeoff
between liquidity and profitability. Theoretically, following three types of policies are explained
whereas they can be n number of policies depending on where the tradeoff is stricken
between the liquidity and profitability.
 Relaxed Policy / Conservative policy – This policy has a high level of current assets
maintained to honor the current liabilities. Here, the liquidity is very high and the direct impact
on profitability is also high.
 Restricted Policy / Aggressive policy – This policy a lower level of current assets. Here, the
liquidity levels are very low, therefore, the direct impact on profitability is also low.
 Moderate Policy – It lies between the conservative and aggressive policy.
For a detailed and in-depth understanding, you may refer, Working Capital Policy – Relaxed,
Restricted and Moderate.

WORKING CAPITAL MANAGEMENT STRATEGIES

Working capital management strategies deal with the cost of capital factor. The question is –
How the costs of capital are optimized? A business has a choice to select between short-term
vs. long-term sources of capital. Normally, the short term funds are cheaper to long-term but
risky. Short term funds are risky in terms of risk of refinancing and risk of rising interest rates.
 Once they mature, they may not be refinanced by the same financial institution and there is a
possibility of revision in interest rate every time they are renewed.

Let’s divide a firm’s capital investment into two i.e. investment in fixed assets and investment
in working capital. Let’s safely assume that long-term funds finance the fixed assets. Now
remaining is working capital. Let us further divide working capital into two i.e. permanent and
temporary working capital. The nature of permanent working capital is similar to fixed assets
i.e. that level of investment in working is always present and remaining part keeps fluctuating.
The working capital management strategies define how these two types of working capital are
financed.

 Hedging (Maturity Matching) Strategy – This strategy follows the principal of finance i.e.
long-term funds to finance long-term assets and vice versa. In this strategy, the maturities of
currents are matched with the maturity of its financing instrument. It does not have any
cushion or flexibility in case of any delay in the realization of current assets. Although it is a
very ideal strategy but involves a high risk of bankruptcy.
 Conservative – Its a safer strategy where the apart from financing the whole of the
permanent working capital, it finances a part of temporary working capital also.
 Aggressive – It’s a high-risk strategy where the apart from financing the whole of the
temporary working capital, it finances a part of permanent working capital also. For a detailed
and in-depth understanding, you may refer, Working Capital Management Strategies / Approaches.

ADVANTAGES OF WORKING CAPITAL MANAGEMENT

 Working capital management ensures sufficient liquidity when required.

 It evades interruptions in operations.
 Profitability maximized.
 Achieves better financial health.
 Develops competitive advantage due to streamlined operations.
 DISADVANTAGES OF WORKING CAPITAL MANAGEMENT

 It only considers monetary factors. There are non-monetary factors that it ignores like
customer and employee satisfaction, government policy, market trend etc.
 Difficult to accommodate sudden economic changes.
 Too high dependence on data is another downside. A smaller organization may not have such
data generation.
 Too many variables to keep in mind say current ratios, quick ratios, collection periods, etc.

Relevance of Working Capital

The working capital ratio is crucial to creditors as it shows the liquidity of the company. The
liabilities of current nature are paid with current assets like marketable securities, cash, and
cash equivalents. The faster an asset can be converted into liquid cash, more likely that the
company will be able to pay off its debts.

When the current liabilities are exceeded by the current assets, the business will have ample
capital for its daily operations. In other words, it will have enough capital to work with.

This ratio is a measure of a company’s short-term financial health and its efficiency.

Anything that is below 1 is indicative of a negative W/C (working capital). While anything that
is over 2 indicates that the company is not investing the excess assets. Most ideally this ratio
should be between 1.2 and 2.0. Another name for working capital is net working capital.

Working Capital = Current Assets – Current Liabilities

Measure the efficiency of working capital

Working capital efficiency can be measured by certain ratios. The working capital cycle and
other working capital ratios are compared to other industry benchmarks or the company’s
peers.
Some of the measures used in estimating the efficiency of working capital management
include current ratio, days of payables outstanding, days of inventory outstanding, days of
sales outstanding, etc. Due to the small scale of operations in small business, liquidity tends
to be in tight supply and investment in the area of working capital can be an issue.

Many small businesses are unable to fund their operating cycles with account payables and
hence, have to rely on the cash that is generated through the internal sources like the owner,
etc. if the working capital is managed efficiently, the business will be able to free up cash to
pay debts or for reinvestments.

Working Capital can be divided into two main categories:

A. Based on capital

Gross Working Capital

Net Working Capital

B. Based on time period

Fixed Working Capital

Variable Working Capital

Importance of Gross Working Capital

Investments in current assets must not be either excessive or inadequate as it can threaten
the production capacity and the solvency of the company. It also undermines the profit of the
business.

Importance of Net Working Capital

Net working capital is crucial for maintaining a position of liquidity and to make sure that
current assets exceed current liabilities. This is also the number that gives the creditor a clear
picture into the financial soundness of your business.
Estimating the working capital of your business

Unless it is specified otherwise, the calculation of stocks of the finished products and debts
should be made at cost.

Profits are to be ignored when calculating the working capital as profits may or may not used
as working capital and even in the scenario of it being used the amount will be reduced due to
taxes, dividends, etc.

Unless mentioned otherwise, take into consideration the 100 percent value of WIP.

Techniques to analysis working capital

There are several methods to conduct a working capital analysis, these include:

A. Ratio Analysis

This is a simple arithmetic view of the relationship between numbers. It is used to measure
the short-term liquidity of the firm.

Liquidity Ratio

Ratio Formula Description

Current ratio Current Assets/ Current Also known as the Working Capital Ratio
Liabilities and measures the short-term financial
health of a company.

Acid Test Ratio/ Liquid Assets/Current Measures if an asset can be liquidated to

Quick Ratio Liabilities cash in a short period of time without the
loss of value.

Cash Position [(cash & Bank) + short- Includes cash in hand and that in the bank
Ratio/ Absolute term securities]/Current and the temporary investments including
Liquid Ratio Liabilities marketable securities. This ratio must
ideally be 50 percent.

Inventory Turnover Ratio = Cost of Goods Sold/Average Inventory at Cost

When the cost of goods sold is not known one may look at the following numbers:

Ratio Formula Description

Inventory Cost of Goods Sold/Average When the cost of goods sold is not
Turnover Ratio Inventory at Cost known one may look at the other
formulas

Net Sales/Average Inventory at

Cost

Cost of Goods Sold / Average

Inventory at Selling Price

OBJECTIVES

1) To study the WORKING CAPTIAL MANAGEMENT OF HIMACHAL FUTURISTIC

COMMUNICATIONS LIMITED (HFCL).
2) To study about the products and services offered by HIMACHAL FUTURISTIC
COMMUNICATIONS LIMITED (HFCL).

3) To study the limitations faced by the industry.

LITERATURE REVIEW

Himachal Futuristic Communication Limited (HFCL) is a Public Limited Company incorporated

in India. Established in 1987, HFCL is a diverse Telecom Infrastructure Enabler with active
interest spanning Telecom Infrastructure Development, System Integration, and Manufacture
and Supply of High-End Telecom Equipment and Optic Fiber Cable (OFC). Over the past
three decades, HFCL has delivered innovative, customized and competitive Products and
latest Solutions in the High Technology Telecommunications Infrastructure Sector and
implemented several Greenfield Projects including the setting up of CDMA & GSM Networks;
Satellite Communications, Wireless Spectrum Management and DWDM Optical Transmission
Network. The Company is focused on serving new high growth opportunities in Railways,
Homeland Security, Smart Cities and Defence. Government’s initiatives such as Railway
Modernization, Defence Self-Sufficiency, Digital Security, Make in India, Smart Cities etc.
have helped accelerate HFCL’s Growth. Due to extensive work in the Telecom Infrastructure
Space, HFCL has assimilated a knowledge base of constructing formidable Telecom Network
across all kinds of topographies, a feature crucial to Indian geography, in particular. In the
recent times, HFCL is spreading its business spectrum by adding manufacturing of Defence
Gears and turnkey installation of Communication and Signaling Network for Railways. Mr.
Mahendra Nahata is the Promoter Director of HFCL. He is well-renowned as one of the
pioneers in the new age Telecom Sector in India. He had been conferred with the “Telecom
Man of the Millennium” Award by Voice & Data Magazine in 2003. The Company is following
a well-defined CSR Roadmap and undertakes CSR activities towards providing Preventive
Healthcare, Medical Relief, Sanitation & Potable Water, Hunger & Malnutrition Eradication,
Rural Development and quality Education to the needy and deserving. Himachal Futuristic
Communications Ltd (HFCL) is a diverse telecom infrastructure enabler with active interest
spanning telecom infrastructure development system integration and manufacture and supply
of high-end telecom equipment and Optic Fiber Cable (OFC). Their manufacturing facilities
are located at Solan in Himachal Pradesh Salcete in Goa and New Delhi.Himachal Futuristic
Communications Ltd was incorporated on May 11 1987. The company started with
manufacturing transmission Equipment and soon they expanded their product portfolio to

manufacture Access Equipment Optical Fibre Cable Accessories and Terminal Equipment.
The company is geared up for meeting the new generation access network demand in
future.The company was incorporated in the State of Himachal Pradesh and was promoted by
Deepak Malhotra Mahendra Nahata and Vinay Maloo. The company entered into a technical
collaboration agreement with Seiscor Technologies Inc USA for the manufacture of 1+1 and
1+7 Analog Subscriber Carrier Systems and also signed a Memorandum of Undertaking with
Philips Kommunikation Industries AG of Germany for the manufacture of the Digital
Subscriber Carrier System.In the year 1991 the company promoted two new companies
namely Himachal Telematics Ltd at Solan for the manufacture of digital microwave radio
transmission equipments and fax machines and Microwave Communication Ltd for
establishing radio paging network in certain important cities of the country.

PRODUCTS AND SERVICES

 COMPANY PROFILE

During the year 1993-94 the company acquired existing investment companies know as
Kaldev Trader & Investment Ltd which was changed to HFCL-Trade-Invest Ltd and Coubndge
Construction (Delhi) Ltd. Also they entered into agreements with telecom giants namely Kong
Song Communication & Electronics Co Ltd Korea to manufacture radio pagers and satellite
video receivers Dalcons Corporation of Korea for managing credit card information services
and Wireless Telecom Ltd of USA to implement V-sat services. During the year 1995-96
Himachal Telematics Ltd was merged with the company. In the year 1997 the company
bagged a contract to set up an information super highway for the basic telephone project of
Essar Commvision Ltd in Punjab circle. During the year 1996-97 the company's Optical Fibre
Cable Plant in Goa commenced their commercial production. In the year 1998 the company
entered the information technology business by offering software solutions to the telecom
industry.During the year 1998-99 the company has received Purchase Orders worth Rs 22
crore for the supply of STM-1 Optical Line Terminal Equipment and advance Purchase Order
of another Rs 100 crore for STM-16 Systems. In the year 1999 the company forayed into
software exports and developed a state-of-the-art facility at Delhi for that purpose. They
bagged a contract from Reliance WorldTel for setting up Internet backbone in Tamil Nadu.
During the year 1999-2000 the company entered a strategic tie-up with the Kerry Packer
Group of Australia and formed two joint ventures namely Consolidated Futuristic Solutions Ltd
and Excel Netcommerce Ltd in the field of Software and B2B E-commerce respectively. HFCL
Infotel Ltd and Consolidated Futuristic Solutions Ltd became the subsidiaries of the company
during the year 2000-01.During the year 2001-02 the company acquired 74% of equity of HTL
Ltd a public sector undertaking which is the largest switching equipment maker in the country
for Rs 55 crore. HTL Ltd became the subsidiary of the company with effect from October 16
2001. Also the company divested part of their shareholdings in Consolidated Futuristic
Solutons Ltd consequently Consolidated Futuristic Solutions Ltd ceased to be subsidiary of
the company with effect from December 6 2001.During the year 2002-03 the wholly owned
subsidiary company namely HFCL Trade-Invest Ltd merged with the company with effect from
March 31 2003. HFCL Infotel Ltd merged with the Investment Trust of India Ltd a Chennai
based company and was renamed as HFCL Infotel Ltd with effect from September 1 2002.

Also Rajam Finance and Investments (India) Ltd which was renamed as The Investment Trust
of India Ltd became the subsidiary of the company by virtue of their subsidiary relationship
with HFCL Infotel Ltd. The Investment Trust of India Ltd ceased to be the subsidiary of the
Company with effect from September 30 2003.During the year 2003-04 the cable division of
the company entered into Cable TV market and they emerged as a dominant player in that
segment. Also they received the order valuing of about Rs 220 from MTNL. During the year
2004-05 the company completed the biggest ever order of 200 K Lines of WLL CorDect and
60% of CDMA Infrastructure order of MTNL.Moneta Finance (P) Ltd has become the wholly
owned subsidiary of the company with effect from July 11 2006. During the year ended 31
March 2014 HFCL successfully bid and won certain contracts to supply its products as well as
services. HFCL voluntarily sought the delisting of its GDRs from London Stock Exchange and
Luxembourg Stock Exchange. The GDRs listing have been cancelled from London Stock
Exchange and Luxembourg Stock Exchange w.e.f. 21 March 2014 and 23 December 2013
respectively consequent upon resignation by the Depository i.e. Bank of New York (BNY
Mellon). HFCL has not appointed any Successor Depository and has terminated the Deposit
Agreement due to lack of liquidity with virtually no trading taking place and investors'
decreasing interest in depositary receipts.

During the year ended 31 March 2015 HFCL accelerated its performance in both of its
manufacturing and turnkey business segments. In manufacturing of OFC the company
achieved record revenue and profits coupled with full capacity utilisation of the facility in Goa.
Exports of OFC was another breakthrough during FY 2015. Equipment manufacturing saw
production of GSM products.In turnkey projects execution HFCL has successfully completed
high capacity optical transport network for Railtel by deploying 80 channel DWDM system at
over 60 sites along two connecting routes between Delhi - Mumbai. The project is under
annual maintenance contract and based on excellent execution the customer has gone ahead
with 75% expansion order on the company. Another success was the winning of a turnkey
contract for laying OFC network in one of the largest states of the country from BSNL. Further
the company was awarded large project for setting up of GSM network at extremely remote
standalone sites and connecting each site to the national network.M/s HFCL Advance

Systems Private Limited became the wholly owned subsidiary of the company w.e.f. 23rd
February 2015.HFCL achieved its highest ever revenue of Rs 2570 crore in financial year
ended 31 March 2016. It performed well on all the business verticals.

The company has also established itself as a global supplier of OFC products with exports to
over 25 countries in FY 2016 (16 countries in FY 2015). HFCL achieved highest ever export
revenue of Rs 75.27 Crore in FY 2016 (Rs 34.88 Crore in FY 2015) despite tough market
competition from local as well as foreign competitors.In telecom equipment manufacturing
HFCL in FY 2016 started manufacturing low capacity GSM system for rural deployment which
has large business potential in India for next 2-3 years. The company during FY 2015 and FY
2016 participated in four large tenders aggregating to approx. Rs 5000 Crore floated by BSNL
for setting up of countrywide Defence Telecom network. The company has already received
an advance order of Rs 1245 Crore in one tender and the techno-commercial evaluation of
one more tender valued at approx. Rs 2500 Crore has been completed. The company has
stood as lowest bidder in that tender also. HFCL's debts were earlier restructured under
Corporate Debt Restructuring (CDR) mechanism and as stipulated therein the lenders had the
right to claim recompense from the company at the time of its exit from CDR on account of
various sacrifices & waivers made by them in the CDR Package. With the improved financial
performance the company submitted its proposal for exit from CDR mechanism to Monitoring
Institution (MI) i.e. IDBI Bank Limited. The MI has recommended recompense amount of Rs
148.47 Crore on term and working capital loans.

The same has been approved by CDR - Empowered Group vide their order dated 22 March
2016 subject to the approval from company's lenders. Subsequent to CDR-EG's approval the
recompense amount has been approved by some of the lenders and approval from remaining
lenders is expected soon. Accordingly the Board of Directors of HFCL at their meeting held on
10 May 2016 approved the recompense amount of Rs 148.47 Crore to exit from CDR
mechanism.HFCL acquired 160000 equity shares of Polixel Security Systems Private Limited
(Polixel) thereby the total equity holding of the company reached upto 94% and Polixel
became the subsidiary of the company w.e.f 9 August 2016. The company further acquired
additional 10856 equity shares of the Polixel thereby the total equity holding of the company
in Polixel has reached to 100% and accordingly Polixel has become the wholly owned
subsidiary of the company w.e.f. 31 March 2017.During the year ended 31 March 2017
HFCL's Goa plant underwent a wholesome modernisation. The annual capacity also was

raised from 5 MFkm to 7.2 MFkm adding some new cable variants in the process. The year
also marked the first full year of operations for the recently commissioned Chennai facility of
HTL a subsidiary company. Consequently the capacity of Spiral Wire Armoured cable was
doubled and the annual capacity for traditional Armoured Cables was raised from 3 MFkm to
4.5 MFkm. Moving up the value chain the company also added FTTH cable in its Chennai
facility during the year.In Turnkey business HFCL accomplished a challenging feat of
developing and commissioning a GSM network in Left Wing Extremist (LWE) region. The
mammoth exercise involved the deployment of more than 500 sites across 6 states. The
company also won a Wifi network turnkey project worth Rs.200 crore from BSNL for roll out of
Wifi services across 16 states in the Northern and Eastern India. In order to increase its
network's backhaul capacity BSNL Mobile Network floated two separate tenders for
microwave backhaul radios. HFCL bagged both these tenders involving supply
commissioning and maintenance of about 10000 radios to be deployed across India. The
order value is Rs.180 crore.The company made significant progress in new business verticals
of Railways Smart Cities and Defence during the year. In Railways business vertical the
company bagged certain orders for a variety of railway signalling linked applications during
the year.

The company signed two contracts totalling Rs.113 crore to execute Trenching & Laying of
Signalling Cables and also for Design Manufacture Supply Installation Testing Commissioning
and incidental services of telecommunication System for the Bhaupur-Khurja section of the
Eastern Dedicated Freight Corridor covering route length of 343 km as a sub-contractor to
Alstom Systems India Pvt. Ltd.In another success the company signed a contract worth Rs.95
crore with Larsen & Toubro Limited for Design Manufacture Supply FAT Installation Testing &
Commissioning Training and DLP at site of the Telecommunication System comprising of
various sub-systems viz. OFC SDH Data Networking Dispatch Telephone EPABX Master
Clock System and Power Supply for STP-17 of the Western Dedicated Freight Corridor Phase
2.In Smart Cities business vertical HFCL bagged two projects in FY 2017 one for Ludhiana
Smart Surveillance & Intelligent Traffic Management Systems and the other for Jaipur
regarding Provisioning & Integration of Wifi Hotspots Interactive Information Kiosks
Surveillance Cameras Environmental Sensors Structural Sensors Smart Lighting Solutions
and Remote Kiosks along with the Facility Management Services.In Defence Business

vertical HFCL signed an MOU with a French MNC as its Technology Partner for Portable
Opto Electronics during the year for manufacturing wide range of Portable Night Vision
Devices. During the year the company submitted RFIs for Weapon Night Sights for various
weapons Electronic Fuses for Artillery Ammunition Manufacture of Mini UAVsDuring the year
ended 31 March 2018 HFCL issued and allotted 45000000 Warrants convertible into equity
shares on preferential basis at a price of Rs16/- per warrant to Promoters/Promoter Group of
thecompanies and Non Promoter persons/entity. The Warrant holders have already paid 25%
of the issue price and balance 75% of the issue price shall be paid at the time of exercising of
Warrants. The Warrants shall be exercised within a period of 18 months from the date of their
allotment i.e. 30th October 2017 in one or more tranches.During FY 2018 HFCL's Goa plant
developed new compact designs for micro optical fibre cables with lesser diameters and new
dry-dry optical fibre cables. These new variants are extremely popular in FTTx networks.
Many product certifications were received including CPR (Construction Products Regulations)
for different product variants. The CPR Certification demands stringent product performance
in the event of fire and is mandatory now for supplies to European countries. The Chennai
plant of HFCL's subsidiary HTL Limited got several product & process approvals including TL-
9000 certification. HTL Limited also implemented SAP ERP system in order to have better
monitoring & control on manufacturing activities. New machines were added for
manufacturing of Steel Wire Armored Cables which is popular in many European countries.
Also various alterations and renovations were carried out in the overall infrastructure to
enhance efficiency and productivity of HTL Limited's manufacturing plant at Chennai.
Consistent efforts to have better control on value chain culminated in addition of FRP and
GFR manufacturing facilities at the Chennai premises of HTL Limited.In FY2018 HFCL
secured a 3-year contract from Nokia for supply of optical fibre cables for Digital Poland
Project funded by EU. During the year under review against the Advance Purchase Order
worth Rs1245 crore approx (including AMC of Rs298 crore) the company has received a
Purchase Order worth Rs 935 crore approx from BSNL for DWDM equipment to be installed
on pan India basis for the Defence Forces under Network for Spectrum Program (NFS). In
Smart Cities business vertical HFCL has received Letter of Intent from RajComp Info Services
Ltd (RISL) for supply Installation and Commissioning of edge networking equipment under
surveillance and Incident response project in the state of Rajasthan.

RESEARCH METHODOLOGY
DATA COLLECTION TECHNIQUES

This project consists of two parts: The first part is a study of the real estate industry, HFCL
Ltd., using secondary data sources. This secondary information has been sourced from the
internet and from business related magazines and newspapers. The second part of the study
has been done using an exploratory research process and a structured questionnaire was
developed for this purpose. For the collection of primary data this was the only method used.
The reason I used this method is because a need was felt for the free influx of information
about the products. Also this method allowed the use of skills gained in class.

SAMPLE DESIGN

The population considered for the purpose of the survey was people residing in Delhi and the
National Capital Region (NCR).

SAMPLING TECHNIQUE USED

Since the information required was not of a very technical nature and also looking at the
scope of the project and the extent of the target segment, the sampling technique employed
was Convenience Sampling. I administered the questionnaires.

SAMPLE SIZE

I have restricted the sample size to 50 respondents. This was done keeping in mind the time
constraints and the fact that I felt that this number would be enough to serve the information
needs required to show the trends.

H F C L - COMPANY INFO

Chairman (Non-Executive) : M P Shukla

Managing Director : Mahendra Nahata

Director : Arvind Kharaband a

Company Secretary : Manoj Baid

Director : R M Kastia

Nominee (IDBI) : Ranjeet Kumar Soni

Independent Director : Surendra Singh Sirohi

Independent Director : Ved Kumar Jain

Independent Director : Tamali Sen Gupta

AUDITOR : S Bhandari & Co

IND NAME : Telecommunications - Equipment

HOUSE NAME : HFCL

Registered office
8 Electronics Complex, Chambaghat,Solan,Himachal Pradesh-173213 Ph: 91-1792-230644
E-mail: investor@hfcl.com/secretarial@hfcl.com
URL: http://www.hfcl.com

ANALYSIS AND INTERPRETATION

Listing Details - Himachal Futuristic Communication
Key Dates

Year Ending Month Mar

AGM Date (Month) Sep
Book Closure Date (Month) Sep

Listing Information
Face Value Of Equity Shares 1
Market Lot Of Equity Shares 1
BSE Code 500183
NSE Code HFCL
BSE Group N.A.

Whether The Company Forms A Part Of The Following Indices -

Sensex No
Nifty No
BSE-100 No
BSE-200 No
S&P CNX 500 Yes
CNX Midcap No

CNX FMCG No

The Stock Exchange, Mumbai, National Stock

Exchange of India Ltd., Luxembourg Stock
Exchange, London Stock Exchange
Listed On
 FINDINGS AND INFERENCES

1999

- Himachal Futuristic Communications Ltd (HFCL), the telecom

equipment manufacturing company, has forayed into software

exports. The company has developed a state-of-the-art facility

at Delhi for this purpose.

- Issues relating to letters of intent (LI) issued to Himachal

Futuristic Communications Ltd (HFCL), Basic Teleservices and

Techno Telecom for basic services will also be referred to the

Attorney-General.

- Himachal Futuristic Communications Ltd (HFCL), a Delhi-based

telecom equipment manufacturer, has bagged a contract from

Reliance WorldTel for setting up Internet backbone in Tamil

Nadu.

- Himachal Futuristic Communications Ltd. have already signed

MOU with seven states. The cost of setting up backbone network

in each state is to the tune of 0 million.

- The company has set up cellular networks in Delhi, Punjab,

Tamil Nadu and Gujarat and network for basic services in

Rajasthan and Punjab.

2000

- The Company has taken its first big leap in the doctom

business by acquiring a 45 per cent stake in online shopping

mall jaldi.com from Satin Credit & Leasing Ltd for an

undisclosed amount.

- The Company and Publishing and Broadcasting Ltd. have formed a

joint venture company called HFCL-Nine Broadcasting Pvt., Ltd.

- The Company proposes to raise the limit on foreign

institutional holdings in the company to 40 percent.

- The Management of the company has decided to disinvest its

entire shareholding of 3,49,99,500 shares of Rs. 10/- each in

Fascel Ltd. the sales will be at a premium of Rs. 10/- per

share.
- Telecom equipment and services company Himachal Futuristics

Communication is in talks with global elecom majors for an

alliance to set up their manufacturing base in India.

- The Company and Australia's Kerry Packer group company

Consolidated Press Holdings has bagged the ISO-9001 quality

certification within six months of its operations.

- The promoters of the Company have acquired 38 lakh shares in

the city-based IVRCL Infrastructures & Projects Ltd. a

construction major having presence mostly in western and

northern India.

- A joint venture between the company and Kerry Packer-promoted,

Consolidated Press Holdings, has joined hands with Stemcor, one

of the largest steel trading giants and iSteelAsia, the

business-to-business steel marketplace, to float the joint

venture, iSteel India.

- The Company allottment of 15,76,809 No. o fequity shares and

55,88,841 No. of equity shares of Rs 10 each to Ecom.Com Ltd. on

April 10, and June 24, respectively at a premium of Rs 1,440 per

share.
2001

- The Company has entered into an alliance with Cisco Systems

Inc, to offer Cisco's data products and networking equipment to

telecom infrastructure providers in India.

- HFCL Infotel Ltd., a fully owned subsidiary of Himachal

Futuristic Communications has tied up with the Punjab government

for implementing a private network of both voice and data as

part of the state's e-governance initiatives.

2002

-GTB recalls all short-term loans amounting to Rs.185cr from HFCL.

-HFCL bags the prestigious World Bank Funded Project in association

with Thales for putting in place a system of comprehensive national

radio spectrum management and monitoring systems.

2003

-HFCL sells 3.43% stake to M/s Transatlantic Corporation.

-HFCL embarks upon the business restructuring exercise aimed at

improving effeciency at all levels by remaining focussed on the

business.

-ICICI Bank converts part of its loan into 12.65% stake in the

company

- Converted 32 Foreign Currency Convertible Bonds (FCCBs) of US S

50,000 each into 6259144 equity shares at a price of Rs 11.70 per

share. The issued and subscribed capital has been increased by

6259144 equity shares and stands at 290919303 equity shares of the

face value of Rs 10/- each.

2004

-Converts 19 Foreign Currency Convertible Bonds (FCCBs) of US$ 50,000

each into 36,79,017 equity shares at the price of Rs. 11.70/- per

share.

-HFCL sets up new co for applications development

2005

- HFCL inks Rs 450 cr contract with Reliance Infocomm.

2006

- Himachal Futuristic Communications Ltd (HFCL) has informed that the

Board of Directors of the company had accorded its approval for the

investment upto Rs 4 million into the Equity capital of Monata

Finance Pvt Ltd (MFPL) on June 14, 2004 so as to make MFPL a wholly

subsidiary of the Company.

- HFCL slash long distance tariffs in Punjab by 75 pc

2010

- HimachlFutur - Joint Venture Agreement between the Company &

Dragonwave INC.

-HimachlFutur - Adoption of Rework of CDR Package.

2011

- HimachlFutur - Adoption of Rework of CDR Package.

2012
- HFCL clarifies on tie up news with RIL for 4G launch

2014

-Himachal Futuristic appointed Mr.Rajiv Sharma as Nominee Director of

the IDBI Bank Limited.

SUGGESTIONS AND RECOMMENDATIONS

Working capital is vital for the day-to-day operations of a company, such as procuring raw
materials, payment of wages, salaries and overheads, and making sure that production
matches demand, among other key objectives. That is why companies are constantly looking
for ways to improve their working capital position.

The simplest formula for improving the working capital position is to collect receivables
early and slow down the payables. This is, of course, easier said than done. Many companies
often find the reverse happening and run short on cash. Hence, a company has to constantly
monitor its cash flow. There should be enough funds for meeting short-term debts, but that
should not come at the cost of losing return on investments (ROI) in assets.

14 Best Way to Manage and Improve Working Capital

1. Incentivize Receivables:

Give incentives to customers who pay on time. Identifying delinquency early and taking
prompt action will prevent accounts from aging too much. Do not transact business with
customers who have a history of defaulting.

2. Meet Debt Obligations:

Ensure that all debt obligations are met on time. Use electronic payment systems to ensure
timely payments, and avoid situations that delay payments and attract penalty.

3. Choose Vendors Who Offer Discounts:

Discounts from vendors will help save finances. Maintain a good relationship with them. When
your company is facing a cash flow crunch, this relationship will go a long way in receiving
some leniency.
4. Analyze Fixed and Variable Costs:

Determine whether fixed and variable costs can be reduced. If you examine carefully, you will
be able to identify expenses that are wasteful. By eliminating such expenses, you will have
more liquidity for working capital.

5. Examine Interest Payments:

You should examine the interest on loans or other forms of fixed debt. Check whether you are
eligible for a modification in interest rates and thereby pay a lower fixed amount every month.
Early clearing of loans can help reduce the cost of paying future installments. All this is
saving, and can be added to the working capital.

6. Manage Inventory:

Do not overstock your inventory. Make sure that finished goods are sold as soon as possible
and are not idling away in the warehouse. Cut products and services that are not performing.

7. Automate Accounts Receivable and Payment Monitoring:

Automating allows you to track inflows and outflows with ease. Make sure you have strong
collection teams to chase delinquent customers. Reward staff members who are able to
collect dues effectively.

8. Resolve Disputes with Customers and Vendors:

Resolve disputes with customers and vendors as early as possible. If a case goes to court,
make sure that it is resolved without undue delay so that unnecessary legal expenses are not
incurred. Receivables held up because of disputes are a major cause for concern for many
companies.

9. Identify Other Ways to Improve Working Capital:

Your working capital position can always be improved by earning higher profits, issuing
company stock, taking on more debt, and selling assets for cash. However, these strategies
should only be considered as the last resort.
10. Take Advantage of Tax Incentives:

Tax incentives save money, which can then subsequently be channeled into the working
capital funds.

11. Use Up-to-date Financial Information:

Keep financial statements and reports current and calculate quick ratios on a periodic basis.
This will enable your company to have a clear picture of the financial position at all times and
will provide you with avenues for improvement.

12) When Revenues are Down:

Even in declining revenue cycles companies can improve working capital and liquidity with
good processes supported by information systems that deliver actionable data on a timely and
automatic basis. Improving the value and productivity of staff resources, especially if business
is flat or declining, releases needed cash to operations. Automation empowers staff with tools
that help them improve available cash in any situation.

13) Bonuses Tied To Working Capital:

A sharp and welloiled OTC team is a tremendous asset, but few Credit and Collections teams
are actually incentivized to improve key working capital metrics like DSO, DTP and DPD.
Review historical averages to obtain a baseline for these cyclical metrics. Set a goal and
reward the individuals, teams and departments that unlock critical working capital trapped in
current OTC processes. Reward creativity and inspire exceptional contributions from others in

the process. With an effective combination of technology and process, substantial impact can
be achieved.

14) Crystal Clear Communications:

During proactive, preterm communication with customers, ask if the invoices were received, if
they are clear and accurate, consistent with contract terms, reflect sales specials or
promotions they believe they should receive, whether three-way matching requirements have
been met and if the invoice has been approved to pay. If not, identify problems such as credit
terms or discount entitlements that are preventing timely payments and record them for future
reporting and root-cause analytics. Shorten Days to Pay (DTP) by confirming that credit
terms, conditions and timing are understood before payment term is reached. 10) Don’t Be
DPO Fodder: Customers may try to optimize their working capital by practicing DPO (Days
Payable Outstanding) optimization methodologies—a euphemism for slow-pay. Automated
visibility into the customer’s changing payment trends keeps you ahead of the payment curve
by letting you proactively communicate with customers and become one of the exceptions
(preferred payee) to their standard DPO payment strategy.

Many companies are forced to issue stock or take on debt when they run out of working
capital. Your business can avoid this by constantly keeping an eye on the working capital
position and finding ways to increase it through better management of the cash flow,
customers, and vendors.

LIMITATIONS
 Sample size may not be exact representative of the universe. There is possibility of
some error to a limited extent.

 The time period of the research was limited.

CONCLUSION
Himachal Futuristic Communications (HFCL) is engaged in the business of manufacturing
telecom products and provides turnkey solutions and basic telephony and ISP services. The
company manufactures access equipment, optical fibre cables, accessories and terminal
equipment. The product range of the company includes Radio Terminals,CorDECT- WLL
systems,CDMA- WLL systems,SDH Transmission,SDH-Access,DWDM,Digital Cross Connect
(DXC),Loose tube cable,Uni tube cable,ADSS Aerial cable,Metallic self supporting aerial
cable,Corrugated steel tape armoured cable,Wire armoured cable,Simplex / Duplex
cable,Cord cable,Terminated quick deployable cable with hermaphroditic
connectors,Terminated cord ccables / Pigtails with user specified connectors,etc.The
company`s R&D facility is engaged in developing new products in order to increase their
product portfolio and presence. The company also engagged in the business of Telecom
Products, Turnkey Contracts and Services

BIBLIOGRAPHY

1. http://www.hfcl.com/electronics/
2. https://www.moneycontrol.com/india/stockpricequote/telecommunications-
equipment/himachalfuturisticcommunication/HFC

3. https://www.moneycontrol.com/annual-
report/himachalfuturisticcommunication/HFC/2018

4. https://www.business-standard.com/company/h-f-c-l-1189/information/company-history
5. https://www.moneycontrol.com/company-
facts/himachalfuturisticcommunication/listing/HFC#HFC