Hatti Gold Mines

8/2/2019 Hatti Gold Mines

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HUTTI GOLD MINES COMPANY LIMITED

EXECUTIVE SUMMARY

The summer project was undertaken at Hutti Gold Mines Company

limited, Hutti. The training was undertaken to understand the WorkingCapital Management at Hutti Gold Mines Company.

My in-plant training project conducted at Hutti Gold Mines Company

consists of two parts:

1. The first part belongs to overall study relating to the organization.

Gold is considered as the king of metals inthe world. The study also

consists of various departments, how they function, policies and

strategies used by each department and how they are able to

achieve their organizational goals.

2. The second part belonging to the finance project is specially focused

on working capital management.

Working Capital plays an important role in the successful operation of

business activities. The need for managing working capital is very

necessary for any business house. Working capital management is a matter

of top priority, as it has a bearing on creditworthiness, liquidity, solvency

and profitability.

Working capital management is a process of determining quantum ofcurrent assets to be held at right time, so as to discharge current liabilities

and there by utilizing them to their optimum extent and at the same time

increasing overall value of the firm by keeping the liquidity position intact.

Objectives:

To study the pattern & procedure followed regarding working capital

management.

To study the different components of working capital of the

corporation.

To understand how effectively the working capital management is in

HGML.

PG Studies VTU, Belgaum 1


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To offer suggestions for improving the efficiency in working capital

management.

To fulfill the requirement of Masters Degree in Management.

Methodology of the Study

1. Primary Data:

It is collection of first hand information. This data is collected

through discussion. The required primary data is collected from the

concerned officers of the Hutti gold mines company limited, Hutti.

The data collected is processed and presented in the data analysisthrough various tables and explanations. The tables are analyzed by

individual current assets and current liabilities and by calculating

working capital for every year.

2. Secondary Data:

It is reviewing relevant information, which is already collected

and making inferences based on the information collected from

secondary data from annual reports of the company. The present

study is mainly based on the secondary data.

Scope of Study:

Scope of the study in General terms is the extent to which it is

possible to cover the subject. This study attempts to cover almost all

the tools and techniques for the purpose of evaluating working

capital management in HGM Co. ltd Hutti.

Study is limited to the information that could be gathered from

personnel and records that were made available.

INTRODUCTION TO GOLD COMPANY

Gold mining has been part of some of the greatest achievements in

history,from early NIZAMS time. Gold sparked off the cultural & heritage

revolution. At the close of 20th century, it was gold revolutionizing the way we live

and are the material of choice for countless products for this millennium. The gold

industry has an important role to play in the development of any industry of a



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nation. It is a critical intermediate for the industrialtion and the strength for gold

smith.

The turn of the century saw the Indian gold industry reaching a stage of

development determined largely by the economic policies. These policies have led

to the decontrol of the gold industry and most other sector of the industrialeconomy. The gold sector in particular saw a series of reforms starting with

removal of licensing control, disbanding of pricing and distribution controls,

discontinuation of gold development fund.,withdrawal of freight equalization fund

and removal of trade restriction on imports along with progressive reduction in

tariff rates.

In India the Hutti Gold Mines company Ltd is the only mine and producer of Gold.

COMPANY HISTORY

This mine is probably one of the ancient metal mines in the world

dating to the pre-Ashoken period. Carbon dating of the old timber collected

from old workings indicated about 2000 years of ancient mining activity.

Between 1887 and 1920 nearly 7.40 tons of gold was recovered from very

rich ore at an average yield of 19 grams per ton. Most of the ore was from

the main mine which was worked by Hutti (NIZAMS) gold mine, an of shoot

of Hyderabad (DECCAN) Company. The main mines were up to a depth of

1056mts. The industry was closed down in 1920 due to technical difficulties

and the First World War.

In 1937 the Nizams decided to prospect the area with a view to

response the mines. In 1940 based on favorable exploratory results, it was

decided to install a plant to treat 100 TPS per day. But before the plant

could be commissioned, mining operation was suspended from 1942 to

1946 due to second world war, the mine was shut down and only pumping

was carried out.



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After the war, the Hyderabad gold mines company Ltd was found

in1947 and regular mine production started in September 1948 at the rateof 130 tons per day. By 1972 this was progressively increased to 600 tons

per day. In the year 1999 increased to 910 tone per day.

With abolition of gold control at commencement of new mines

policies HGML was in a position to greatly expand its activities. It was

proposed to increased production from 2.6 lakhs tones of ore per annum to

5 lakhs tones of ore pre annum after completion of the modernization and

expansion programme by introducing mechanized mining & latest CIP

treatment process technology from the year 2000 to 2001.

COMPANY PROFILE

Hutti Gold Mines Company Limited (HGML), Government of Karnataka

Undertaking (Established in 1947 as Hyderabad Gold Mines), has the

unique distinction of being the only producer of primary gold in the country.

HGML has been active in the exploration, development and

exploitation of gold deposits occurring in Karnataka.

The Companys Corporate office is situated in Bangalore and it

operates two units-The Hutti Gold unit (HGU) in Raichur district and the

Chitradurga Gold unit (CGU) in Chitradurga district with an operating mine

at Ajjanahalli (Tumkur District).

HGU and CGU are fully integrated units, with capacities to produce

600000 TPA and 261000 TPA of ore respectively. The HGML currently



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processes the ore from Hutti Mine and two satellite mines at Uti (opencast)

and Hira-Buddinni (Exploratory underground mine).

Geology & Reserves

Hutti is located at Latitude 16 12 N. Longitude 76 43 E.

The Hutti Gold Deposit is located in the Hutti-Maski Pre-Cambrian

greenstone belt. The auriferous lodes occur within the metaba salts and are

gold quartz sulphide lodes, which are confined to laterally and depth

persistent shear zones.

Gold occurs in native state and is generally associated with quartz

veins and also with sulphide minerals viz., arsnopyrite, purrhotite and

pyrite as inclusion, fracture filling and also replacement in microscopic and

submicroscopic particles.

Localization of gold mineralization is litho logically and mainly

structurally controlled and the ore shoots have typical geometric pattern of

distribution. There are nine parallel lodes exposed on the surface, of which

six lodes are being mined. The Hutti deposit extends for about 4 km strike

length and the width covered by all the parallel lodes is about 1.5 km. The

parallel lodes have a general strike of NNW SSE and dips ranging from

600-700 due West.

The strike length covered by the present mining is 1.4 km and the

proved and probable ore reserves up to the present mine depth of 846 mare 6.76 million tonnes at 5.27 g/t grade. The immediate northern and

southern extensions of Hutti mines also have good potential and detailed

exploration by drilling and exploratory mines development is in progress on

the extensions of New East Reef, Strike Reef, Zone-I Reef, Middle Reef and

Oakleys Reefs.



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INDUSTRIAL PROFILE

While exploration and mining can sometimes be conducted by

individual entrepreneurs or small business, most modern-day mines are

large enterprises requiring large amounts of capital to establish.

Consequently, the mining sector of the industry is dominated by large,

often multinational, mostly publicly-listed companies. . However, what are

referred to as the mining industry are actually two sectors, one

specializing in exploration for new resources, the other specializing inmining those resources. The exploration sector is typically made up of

individuals and small mineral resource companies dependent on pubic

investment. The mining sector is typically large and multi-national

production from their mining operations.



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Miners today do more than just dig tunnels in the Earths subsurface.There are many different jobs, direct and indirect, in the mining industry,

ranging from engineers and lab technicians to geologists and

environmental specialists. Beyond employment directly linked to mine-site

activity, the modern mining industry also employs many other

professionals, including accountants, lawyers, sales representatives, public

relations specialists, not to mention thousands of men and women

involved, who manufacture the machines and equipment necessary to mine

minerals.



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HUTTI GOLD MINES AT A GLANCE:

Location : Hutti, Raichur District, Karnataka, India.

Distance : 80 km west of Raichur,

300 km south west of Hyderabad,

480 km north of

Bangalore.

Railway station : South central railway, Raichur.

Mining History :

1. Ancient mining 2000 years old (Pre Ashokan times )

2. Modern mining 1902 to 1918 (Nizams period)

3. Modern mining-re discovery of parallel lodes and mining from 1947

onwards.

Present Mine depth : 810 meters, 26th level.

Nature of deposit : Arahen lode gold deposit shear zones

controlled gold-quartz-sulphide mine station.

Ore Mined and Gold

produced so far from Hutti

Mines.

Ore

(Million

Tones)

Grade

(gm/Tone)

Total Gold

(Tones)

1. Ore already Mined in

the Main Mine

(During the period

1902 to 1918)

0.38 19.49 7.41

2. Ore Mines so far

from 1948 Onwards

in the present minedon the other parallel

lodes up to 840 m

depth on

31.03.2008.

9.87 5.85 67.10

Total ore mined and 10.25 6.60 74.51



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gold produced so far

VISION AND MISSION:

The corporate vision is to become one of the most vibrant, self reliant,

financially viable, and steady growth oriented mining corporate. The

corporate mission is:

Improve productivity and profitability.

Provide financial stability on long term.

Register steady growth in terms of percentage of capacity utilization,

production of income and overall profitability.

Provide safe working conditions in the mine.

Introduction of modern and effective management apart from

achieving day to day production target.

Promote harmonious and cordial industrial relationship.

Promote Human Resource Development.

Promote Welfare and Community Development.

Have environment friendly and healthy mining and production

process.

Have good health and well being of workers, staff, and employees.

VALUE

Like other precious metals, gold is measured by troy weight and by

grams and when it is alloyed with other metals the term carat is used to

indicate the amount of gold present, with 24 carats being pure gold. The

purity of a gold bar can also be expressed as a decimal figure, known as

the millesimal fineness, such as, 0.995.

The price of gold is determined on the open market, but a procedure

known as the Gold fixing in London, originating in 1919, provides a twice-

daily benchmark figure to the industry.



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Historically, gold was used to back currency in an economic system

known as the gold standard in which one unit of currency was equivalent to

a certain amount of gold. As part of this system, government attempted to

control the price of gold by setting values at which they would exchange it

for currency. For a long period the United States government set the price

of gold at $20.67 per troy ounce but in 1934 the price of gold was set at

$35.00 per troy ounce. By 1961 it was becoming hard to maintain this

price, and a pool of US and European banks began to act together to

defend the price against market forces. But on March 17, 1968, economic

circumstances caused the collapse of this gold pool, and a two-tiered

pricing Scheme was established whereby gold was still used to settle

international accounts at the old $35.00 per ounce ($1.13/g) but the price

of gold on the private market was allowed to fluctuate: this two-tiered

pricing system was abandoned in 1975 when the price of gold was left to

find its free market level. Since 1968 the price of gold on the open markethas ranged widely, with a record high of $850 on 21st January 1980,

slumping to a low of $252.90 on 21st June 1999 (London Fixing). Increased

demand has led to price rising to the $310 mark in 2008.

PRODUCT PROFILE:

Gold has long considered one of the most precious metals, and its

value has been used as the standard for many currencies (Known as the

gold standard) in history. Gold has been used as a symbol for purity, value,

royalty, and particularly roles that combine these properties.

The primary goal of the alchemists was to produce gold from other

substances, such as lead-presumably by the interaction with a mythical

substance called the philosophers stone. Although they never succeeded

in this attempt, the alchemists promoted an interest in what can be done

with substances, and this laid a foundation for todays chemistry. Their

symbol for gold was the circle with a point as its center which was also the

astrological symbol, the Egyptian hieroglyph and the Chinese character for

the sun.

The price of gold is determined on the open market, but a procedure

known as the Gold Fixing in London, originating in 1919, provides a twice-

daily benchmark figure to the industry.

Historically gold was used to back currency in an economic system

known as the gold standard in which one unit of currency was equivalent to

a certain amount of gold. As part of this system, governments attempted to



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control the price of gold by setting values at which they would exchange it

for currency.

For all long period the HGML, Government of Karnataka Undertaking

(Established in 1947 as Hyderabad Gold Mines), has the unique distinction

of being the only producer of primary gold in the country.

HGML has been active in the exploration, development and

exploitation of gold deposits occurring in Karnataka.

The Companys corporate office is situated in Bangalore and it

operates two

units-The Hutti Gold unit (HGU) in Raichur district and the Chitradurga Gold

Unit (CGU) in Chitradurga district with an operating mine at Ajjanahalli

(Tumkur District).

HGU and CGU are fully integrated units, with capacities to produce

6,00,000 TPA and 2,61,000 TPA of ore respectively. The HGML currently

processes the ore from Hutti Mines and two satellite mines at Uti

(opencast) and Hira-Buddinni (Exploratory underground mine).

Gold Bullion Bars Produced By Hutti Gold Mines



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The Hutti GoldBullion Buttons

BOARD OF DIRECTORS:

Sri.Renuka archery (MLA) : Chairman

Miss.Manjulla (IAS) : Managing Director

Sri.D.Y.Venkateh : Executive Director

Smt. Latha Krishna Rao (IAS) : Director

Sri.Yogendra Tripathi (IAS) : Director



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Sri.Mahendra Jain (IAS) : Director

Sri.Ganga Ram Baderiya (IAS) : Director

Sri.Ajay Seth (IAS) : Director

Sri.Arvind G Risbud (IAS) : Director

M/S. P.Rangaswamy & Co. : Auditors

Sri.Vijay Krishna K.T : Company Secretary Consultant

Banks : State Bank of Hyderabad (Hutti)

State Bank of India (Hutti)

Canara Bank (Blore &

Chitradurga) Syndicate

Bank (Hutti) ING VISYA

Bank (Bangalore) Indus

Ind Bank Ltd. (Bangalore)

Axis Bank Ltd. (Bangalore)

FUTURE PLANS OF HGML:

Hutti underground exploration by diamond drilling from 26th level and

up to 30th level to establish strike and depth continuity of ore body for

2nd phase of mining.

Improvement of mine ventilation.

Develop core competence to effectively manage diversification and

other activities.

Ensure complance with various Corporate laws, Labour laws,

Environment laws, and other applicable laws.

Follow fair, sound and acceptable ethical practices in relation to

share holders, customers, suppliers, employees, and other public

authorities.

Strengthen effective and adequate internal control system.

Standardize management information system and computerization.

Ensure and adopt transparent procurement, sale, financial reporting,

audit and practices.



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Implementation of Kannada.

Wind mill power generation:- The company has completed 1st phase

of errectio and commissioning of 4.8 mw mind wind mill along with

polling station bay extension at KPTCL and transmission line. Power

generation started from 19th June 2006. This has added Rs.270 lakhsof revenue generation.

Rationalization of use of compressed air system.

Rationalization of underground pumping system.

Reclamation and development of Greys shaft working.

Preparation of feasibility studies for eventual mining at Hira Buddini

Gold projects.

Hutti south block exploration by diamond drilling from 3rd level to 5th

level to establish parallel reefs so as to increase reserves.

GMLs Production Performance of the Decade (1993-2008)

Year Ore hoisted

Hutti only (in

tons)

Ore treated

(Hutti +

NP) (in

tons)

Feed

grade

(G/T)

Net grade

(G/T)

Gold

produce

(in kgs)

1993-

94

179924 178338 5.73 5.42 966.40

9

1994-

95

232460 246481 5.51 5.04 1242.7

6

1995-

96

256812 232626 4.82 4.35 1011.2

4

1996-

97

263727 283083 5.52 4.97 1408.0

5

1997-

98

277430 293640 5.3 4.9 1438.0

7

1998-

99

291214 323974 4.93 4.4 1427.1

02

1999- 254529 349084 4.4 4 1395.8



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00 2

2000-

01

260199 335845 5.62 5.31 1784.9

9

2001-

02

379251 409437 6.11 5.67 2333.5

0

2002-

03

460637 525928 5.4 5.02 2640.4

96

2003-

04

483263 623125 5.77 5.4 3096.5

44

2004-

05

480826 592685 6.22 5.9 3507.6

07

2005-06

454351 513722 5.86 5.54 2848.340

2006-

07

484723 522374 5.04 4.7 2336.3

6

2007-

08

470682 562921 5.87 5.27 2808.6

0

ORGANISATION STRUCTURE



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PRODUCTION DEPARTMENT



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Production is the basic activity of all industrial units. All other

activities revolve around this activity. The end product of the production

activity is the creation of goods and services for the satisfaction of the

human wants. The production activity is nothing but the step-by-step

conversion of one form of material into another either chemically or

mechanically. This is done in factories which house manufacturing

processes. The basic input of the production processes are men, machines,

plant, and methods.

An organization capabilities and the intent are strongly reflected in

the product it manufactures. The manufacturing competencies and facilities

echo truly, the R&D extent and the ability to implement it for the best of

the market it targets. The product of mine is used as raw materials on

which the processing is done to create or enhance the form utility. It should

note that the finished product of one manufacturing unit does not always

furnish a readymade product for the ultimate consumption. In a chain of

manufacturing activities, the finished product of processor sometimes

become the raw material (or component) for the other manufacturing firms

falling next in the sequence.

HGML Company has world class manufacturing facilities having to

extract the Gold as well as finished product will be completed through the

manufacturing process.

MINING AND TREATMENT

HGMLs production has steadily increased over the years. In this

process, HGML has been able to develop much needed. Technological

expertise in the field and prepare itself to take new challenges of growth

and development. Over the years, the Company smelting leading to

increased competitiveness of its operations.

HGMLs operation starts with mining of Gold ore. The use of bulk

mining methods viz, large Diablast, Hole stepping and sub-level mining

have achieved higher safety and productivity.

The ore is Crushed ground to very fine Powder. The Grinding output is

subjected to Cyanidation and CIP (Carbon in Pulp) process, where Metallic

Gold leaches and gets adsorbed on activated carbon.



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Gold is recovered through two routes:

Gravity Concentration

Leaching, CIP, Elution, Electro winning Process and there after

smelting to produce Saleable Gold Bullion Bar.

The Brief Description about the Mineral Treatment Plant:-

ROM is of -8 size is crushed to -10 mm size in three stages.

In the first stage, there are three nos of KueKen Jaw Crushes which

act as primary crusher and reduces the ore to -2-1/2 of size stored in

200MT.

In the second stage, 3 standard Simon cone crusher acts as

secondary crusher and reduces the ore to 1 size.

To ease out the load on the Simon cone crusher a vibrating screen

with 1 aperture size is used. The secondary crusher product along with

screen underflow stored in a 400 MT capacity intermediate bin for further

crushing.

In the territory stage, there are two nos of short head and two nosof 4 short head Simon cone crushers. These crushers opening are set at

10mm size and they are in close circuit with vibrating screen.

The final product from crushing plant i.e. -10mm size is stored in a

1500 MT capacity fine ore bin for subsequent treatment i.e. grinding.

The Milling/Grinding process of gold Ore in Hutti employs two distinct

grinding techniques.

In the first technique, grinding is done in two stages, i.e. Primary

grinding and Secondary grinding for further the communition and one8dia*16 long primary mill and three nos of 5-1/2 dia*22-1/2 long tube

mills constitute one stream of grinding in which pebble and smaller size

balls are used as composite grinding media. In the first technique, two such

streams are there and strake tables are used to collect coarse Gold as

concentrate for this circuit.



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In the second technique, Grinding is done by four ball mills of

different sizes i.e. 9*8*, 8*10 and 9*12 and each of them are

independent circuits in which larger sizes balls are used as grinding media

and in these circuit Knelson concentrators are used to collect coarse gold

as concentrate.

In all the milling techniques, cyclones are in close circuit with the

mills so as to get the required sizes (i.e. 80% passing 75 HM) for the

subsequent treatment process.

The concentrates collected from both the techniques are upgrade on

James table and upgraded concentrate is roasted magneted and finally

smelted into bullion buttons.

The entire Cyclone overflows i.e. finely ground ore in the form of

slurry from two stream of 1 technique and 4 stream of 2nd

techniques jointogether in a distributor box from which finely grind ore in the form of

slurry is fed to a high rate Thickner for thickening purpose. The thickened

pulp (60% solid w/w) obtained from thickness are subjected to Cyanidation

process in which cyanide accessible gold in slurry makes complexes with

cyanide in presence of oxygen and dissolve in solution at high pts. To

increase the oxygen potential of slurry H2O2 is added in addition to

compressed air. These Cyanidation or leaching process is carried in a

serried of mechanically agitated zones of agitators of different sizes i.e.

16*16, 20*20 and 11m*11.5m agitator.

The cyanide leached pulp then fed to three nos of 1000 TPD capacity

and one no 300 TPD which are parallel in circuit. The objective of CIP plant

is to absorb dissolved gold in activated carbon from the solution.

The Gold loaded carbon is removed from CIP plant periodically,

selected to acid alkali washed and then eluted in 4 nos of elution columns

with 1.0% NAOH and 0.1% NACN solution qt 95*c for a period for 75 hours.

The solution is then passed through 4 nos of electro winning cells in which

gold is deposited on steel wool cathodes.

The gold loaded steel wool cathodes are manually removed

periodically, subjected to acid digestion, drying and smelted to obtain

Bullion buttons. The bullion buttons thus obtained from table concentrators

and steel wool are cast in to Bullion and then Dispatched for sales.



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Metallurgical Department

The Gold extraction process in HGML practices Mineral Processing,

Hydro electro & Pyro Metallurgical routes. The Major unit processes

involved is described below:

Role: - To extract Gold of 91% pure from ROM at the optimal cost.

Crushing

Mine ore is drawn mainly from the adjacent Mallapa Shaft ore-bin of

1000 tonnes capacity, while ore from the other shafts is brought in to the

crushing circuit via a surface ore-bin of about 200 tonnes capacity

equipped with chain feeder and inclined conveyor belt etc.

ROM is crushed to -10 mm size in three stages. In the first stage

there are three nos. of KueKen Jaw crushers, which act as primary crusher

and crushed ore stored in 200 MT. In the second stage 2 Nos. of 3 standardSymons cone crusher act as secondary crusher and in the tertiary stage,

there are 2 nos. of 3 short head and 2 nos. of 4 short head symon cone

crushers. These crushers are in close circuit with vibrating screen. Crushed

product is stored in a fine ore bin of 1500 tons capacity before feeding to

grinding plant.

Automatic sampler and weight meter and weighbridge provide the

necessary production input details.



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Grinding

Mill Capacity: 1950 TPD

The milling/Grinding process of gold ore in Hutti employs two district

grinding techniques. In the first technique grinding is two stages i.e. one

primary mill and 3 nos. of secondary tube mills constitute one stream of

grinding. Two such streams are there. The discharges of these mills arepassed on strake table spread with blankets which recover coarse gold by

gravity process, and system is in close circuit operation.

In the second technique, single stage grinding is done in four nos. of

independent ball mills in close circuit with cyclone classification system.

The mill discharge is passed through Knelson concentrators to recover the

free gold. The stake tables concentrate and Knelson concentrate is further

upgraded on James table to produce smelt able grade of gold.



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Cyanidation and carbon in pulp process (CIP):

The cyclone overflow from both the techniques is subjected to

thickening in a High rate thickener to remove excess water, which is passedthrough a series of carbon column to recover dissolved gold. The thickened

pulp of specific solid content is mixed with cyanide for leaching in a series

of mechanical agitators at alkaline media. To facilitate leaching hydrogen

peroxide assisted with compressed air is used to improve oxygen potential

in circuit. The cyanide leached pulp is sent to carbon-in-pulp (CIP) unit,

agitated with activated carbon in suspension. The dissolved gold is then

absorbed on carbon as sodium auro cyanide. The gold loaded carbon is

removed from the CIP periodically and carbon is washed with water and

given acid and alkaline treatment.

Elution and Electro-winning Plant:



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The clean & gold loaded carbon is elution columns by maintaining the

specific parameters. The gold in the pregnant solution is recovered in

electrolytic cells using steel wool as a cathode on which the gold is

deposited. The stripped carbon that retails a very little gold is activated and

reused.

Refinery:

The upgrade James table concentrate is roasted, magneted and

finally smelted into bullion buttons. The gold loaded steel wool is manually

removed periodically, subjected to acid digestion, drying and smelted to

obtain bullion buttons. The bullion buttons thus obtained from table

concentrate and steel wool are cast into salable bullion bars weighing 5 to11 Kgs having a purity of 88-91% of gild, 8-11% of silver and balance

impurity.

Assay and R&D Lab:

Activities involved in Assay lab/Sample testing are:



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Crushing of Underground samples

Filtering and drying of grinding samples

Fluxing

Parting

Making cupels

Scrapping of crucibles

Refractory work

Preparation of standard solution and cyanide antidotes

Other miscellaneous work to find Assay value of mine and millsamples

To do any other work as assigned from the time to time

Activities carried out in R&D Lab:

Quality Control

Pollution Control

1. Air pollution (process emission, flue gas emission, ambient air

monitoring)

2. Effluent analysis

3. Domestic sewage analysis.

Mineral analysis

To carryout/involve in R&D project works taken up by the company

To prepare solutions required for R&D works

To do any other work as assigned from time to time.

FINANCE DEPARTMENT

Accounting is the art of recording, classifying and summarizing in a

significant manner and in terms of money, transactions and events which

are in part at least, of financial character and interpreting the result

thereof.



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Introduction:-

Financial department is a vital department of an organization is a

concerned with providing and providing and using cash and credit for

carrying on business correctly.

Finance is regarded as the life blood of a business enterprise this is

because on the modern economy finance is one of the basic needs of all

kinds of economic activities. It is the matter key, which provided access to

all source to be employed in the manufacturing and mechanizing activities.

The finance department should decide when, where and how to achieve

funds to meet the firms, investment needs.

The control issue before the finance department is to determine the

proportion of equity and debt the mix of equity and debt is known as the

capital structure being one of the best run co-operative mills in India,having following membership and paid up share capital structure as on 31st

March 2008.

Financial performance:-

Total income amounted to Rs.32220 lakhs as against Rs.23356

lakhs in the previous year, an increasing of 38%.

Operating profits of Rs.16899 lakhs, against Rs.10065 lakhs in

2006-07, registering a jump of 68%.

Net profit before tax of Rs.14494 lakhs, against Rs.8528 lakhs

in the corresponding previous financaial years.

Earnings per share for the year Rs.3252.

Net worth as at the end of the March 2008 amounted to

Rs.28080 lakhs as against Rs.18932 lakhs in 2006-07.

Foreign exchange transaction:-



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Transaction is foreign currencies are recorded at the exchange rates

prevailing at the time of transaction except in the case of forward contracts

where transactions are recorded at forward contract rates.

Liability in respect of foreign currency transactions at the end of year

recovered by forward exchange contract is update at end of year recoveredby forward exchange contract is updated at end year rates and exchange

difference is adjusted to P&L A/C.

Functions to finance department:-

It prepares and maintains journal books, cash and bank books, ledger

a/c, and a trial balance.

To prepare Trading a/c.

To prepare Balance sheet

To prepare Profit and Loss a/c.

Maintenance of account in which undertaken.

Rate fixing

Supplier bill paying

Cash and Bank balance

It makes calculation and decision regarding the funds of the company

Share capital:-

Authorized capital 10, 00, 000, 00

(1000000 of Rs.100, each)

Issued 3,07,93,328

(3,07,933 2/7 0f Rs.100 each)

Subscribed & paid up

2,96,20,371.47

The HGMLs Company having Authorized Capital of Rs.10,00,00,000

Issued Capital of Rs.3,07,93,328



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Subscribed & Paid up Capital of Rs.2,96,20,371.47

HGML Companys Finance department is having the following department:-

1. Inventory accounting

2. Cost accounting

I. Billing section

II. Bill passing section

3. Employees account section

4. Trust account section

INVENTORY ACCOUNT SECTION:- The HGML Company has having a lot

of stores material items are to be divided into 8 parts (Ledger) according tothe material descriptions. All the materials cannot do in one place thats

way it is divided for the purpose of material stores maintain activities in

gold manner.

The ledgers are:

Chemical and Billing Materials.

Such as, sodium cyanide, Hydrochloric acid, and other chemicals.

Electrical and Underground Spares.

Drill rods, Drill bits, Diamond core bits etc.

Machinery Spares.

Compression Spares, Generator Spares.

Steel materials and Pipe fitting.

Walls, Nut bolt, Rails, Pipes etc.

Tools and miscellaneous material.

General items and tools such as, Cutting blades, Spanners, Pipe

rinch, Boots, Helmets, Uniforms etc.

Transfer Spares



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Fuel, oil, Lubricants, Petrol and Diesel.

Explosives

Used for the Underground department

Sand, Caesarian Poles, Ballasts

Sand is general

Caesarian poles used in Underground department.

Ballasts in Mill section. Especially in Grinding.

Cost codes are also prepared for the purpose of easy task. The codes

decided according to the departments.

Cost Codes:-

Relates to the Administration department

(Hospital, Materials, Security department, Finance, Marketing, HR)

Relates to the Capital items

Relates to the Underground department (Shafts, Mills etc)

Relates to the Milling department (Crushing, Grinding, Cyanide, Assaylab)

Engineering department (Billing, Workshop, Transports)

The user department will be drawing the materials giving the Indent

(Document for evidence to draw the material for purpose of use in the

section). How much they required quantity and the descriptions of

materials and cost code of materials it means the materials and the

particular allocation to be booked.

Brief description about Inventory:-

Indent details like, number, Cost code, Material code and Quantity

are entered.



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After processing the Bills the Material receipts notes (MRN) details

like Material code, Quantity, Bill amount, Freight, Insurance, Entry tax

are entered to arrive at the unit rate of each material.

Through inventory software weighted average rate is arrived and the

same is applied for all material issues. Stores stock ledger andclosing master reports are also computed.

Stock ledger report is sent to stores for reconciliation with Bin card

balances.

Cost code with consumption report is given to costing for completion

the cost sheet.

Cost accounting section:-

The HGML maintained the standard Costing system. Costing section

makes the companies all department expenses checked and then exact

cost will be shown according to the expenses they are incurred while every

days consumption. In every month this department will shown the

transaction expenses accurately in a print of copies. Also incomes from any

department will be prepared according to the Personnel Code and cost

center of the company provided for the different departments and different

employees, on the basis of this Cost Sheet will be prepared.

The main purpose of these formalities, in every month what the unit

of Gold takes the expenses will tally with the expenses of all other

departments, then tallied both difference will be profit or loss of the

company. And also to ascertain the cost per metric ton and cost per gram

of the Gold.

Billing Section:-

Stores Ledger pass the Material Receipt Notes on the basis of this bill will

be ordered.

MRN Base: - This is nothing but the Material Receipt Note received from thestores. On those note bills order will be scrutinized then pass the bill and

give the material code then bill wise fabricate in account wise.

For Example: - A/c codes like,

214001 called as material stock account



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215001 called as capital machinery in stock

Then according to the Vendors code wise individual debit or credit will be

prepared or filled.

Bill passing section:-

On the basis of terms & conditions for the passing bill through

purchase order which is made by purchase department including MRN also

prepared. Purchase department sends the purchase order to bill section

and the order includes material Description, Mode of Dispatch, Name of

Transport Company, Mode of Payment etc. are to verified accurately by bill

officer then the bill passes.

Employees Account Section:-

The HGML Companys entire employees accounts are preparedseparately called the employees section.

According to the seniority officer document code will maintained.

For Officers codes above 10000

For Staff codes above 20000

For Employees above 30000

For bellow 10000 codes made for the Non Employees like Co-Operative Society, Deputy GM, MD, and Asst.Secratery.

According to these document codes members advance will pay for

the purpose official use and then return will be pay or not to pay according

the their will and wish but entries will be prepared accurately.

Trust Account Section:-

In this section the company is provide to the employees basic

schemes like Employees Provident Fund, Education Loans, Sick Loans,

Building or House Construction Loans are provided for the purpose ofemployees satisfaction.

Depreciation:-

1. Depreciation on Fixed Assets is provided on straight line method.



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2. Additions to existing assets are depreciated over the remaining

useful life of that asset.

Purchasing Department

This is also one of the important departments in this department theypurchase the materials, which require for production and also for the office

work. Its main function is purchasing the materials. It receives the

requisition letter from the store department to know what type of materials

is required. After receiving this letter they make enquiry and then place the

order.

Purchasing refers to the act of buying an item by price.

Purchasing means procurement of goods and services from some

outside agencies the object of purchasing is to supply materials, semi

finished goods etc. to the production department.

The object of purchasing is procurement of materials of the right

type, right quality, and right quantity and at a right time. Effective

management and control over the use of materials and equipment so as to

avoid waste, duplication and obsolescence of materials and equipments.

Purchase Procedure:

In the HGML Company following procedure is followed in purchasing

department:-

1. RECEIVING PURCHASE REQUISITION:

The first step in the purchase procedure is the receive the

purchase requisition from various department. Request for purchase

of materials are made on a from known as purchase requisition. It

specifies what kind of material is required.

2. EXPLORING THE SOURCE OF SUPPLY:

The purchase manager is usually in contact with several

sources of suppliers of different materials. If the materials are to be

purchased in bulk, he invites quotations from various suppliers in the

form of a tender. When tenders are invited, then the lowest tender



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should be accepted by the purchase department by considering other

factors like quality, terms of payment, modes of delivery etc.

3. PLACING AN ORDER:

After selecting the supplier who has quoted most favorablequotations, the next step to be taken by the purchase manager is to

place the order. The order must be made on a printed form and must

contain such information as number, date, address of supplier,

particulars of goods etc. this order from should prepare in 4 copies.

The original copy should be sent to suppliers, second copy to the

stores department for its future reference.

4. RECEIPT AND INSPECTION:

When the invoice is received from the concerned vendor, it will

be compared with the order form to ascertain whether the ordered

good have been supplied or not. Then these goods are physically

inspected to ascertain whether goods received tally with the invoice.

5. ENTRIES IN THE BOOKS OF ACCOUNT:

After the goods received are closely checked and if found

correct, the receiving clerk prepares goods received note in three

copies. Three copies along with goods received will be sent to stores

department which send one copy to purchase and accounts

department for payment.

HUMAN RESOURCE DEPARTMENT

Human Resource management is a management function that helps

manager recruit, select, train, and develops employees for organization. It

is concerned with the people dimensions in the organization. It is

specialized field that attempts to develop programs, policies and activates

to promote the satisfaction of both individual and organizational needs

goals and objectives.

It is concerned with the people dimensions in management. Since

every organization is made up of people acquiring their services developing

their skills, motivating them to higher levels of performance and ensuring

that they skills, motivating their commitment to the organization are

essential to achieving organizational objectives.

Human resource philosophy:-



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Hutti gold mine Company limited believes that people are greatest

asses and have the potential to grow and be creative with increased

efficiency. In turn, should demonstrate that no compromise can be made by

debiting to traditional respect for the individual and must provides support

and encouragement by creating opportunities and challenges with equity

to.

Make Hutti gold company a peoples organization

Human Resource policy at HGML:-

A policy is a plan of action. It is a statement of intention committee

management to a general course of action. Management drafts a policy

statement to cover some feature of its personnel programmes. The

statement may often consist an expression of philosophy and principal as

well.

Objectives of HR policy at HGML:-

To ensure uniformity of HR policies among the Hutti group of

company.

To ensure that all personnel have a tharrow and uniform

understanding of policies and provide as a guide line in

implementation of these policies.

Enable a new entrant in the department to understand his/her as wellas his/her colleagues function.

Main Human Resource Policy at HGML:

1. Human Resource Policy on Welfare:-

The department supervised the functioning of the HGM Co-op

society, Canteen and the schools. The cable T.V. provided for the

employees residing in the companys colony functioned well.

The company had a 150 bedded fully fledged hospital to caterto the employees and the family members health care and

treatment. During the year Doctor staff rendered medical awareness

& help to surrounding Villages to contain malaria, dengue fever and

Filaria. Aids awareness programs and pulse polio programmes were

conducted during the year. The total no. of patients treated during

the year 2006-07 was 2,10,311.



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Much importance given to the national programs of birth

control and conducted mass laparoscopic camp in a month. During

the year 2006-07 some of the important programmes conducted like

free eye camp, free diabetic check up seminars. With the cop-

operation of Jayadeva institute of Cardiology Bangalore, Eardiac

disease investigation camp, cancer detecting programme & T.B

leprosy detection camp were conducted. Co-Doctors attended

patients for chickengunya and joint pains etc. are surrounding Village

of HGMs camp.

2. Housing :-

The company has having 2365 quarters. These have been

allotted to eligible officers, Staff and Employees. Regular visit made

to colonies by Welfare officers to regulate Health and Hygienic Camp

area.

3. Hospital :-

HGML Company has also most modern Hospital facility with

120 vide capacity. The existed hospital is equipped with modern in

fractures like AC operation theatre, ECG, X-ray, Ultrasound scanner,

Defibrillator with cardiac monitor, Auto analyzer, Lung function test in

computer, Blood bank, Ventilator etc.

4. Education:-

The company organizes periodically training programmes to

employees and officers. Worker education class for staff and workers

is being organized on a regular basis. Merit awards are given to the

children of employees excelling examinations. The Board of Directors

has approved payment of Rs.5 lakhs contribution for construction of

Mathematics, Laboratory by Science Education Trust, Raichur Science

Center, Raichur to the Science education.

5. Safety:-

Safety first, Production must

Safety of the employees, workers, guests and whoever else

present in the responsibility of the industry. JSW is legally and

humanitarianly responsible for every accident within the plant



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boundary. A steel plant is vary hazardous place to be in, no to be

opinion about it.

6. Safety Devices:-

There are many safety accessories available for worker:

Helmets, Protective glasses, Glass masks, Denim jackets, Hand

gloves, Denim trousers, Safety shoes etc. Depending on the work

environment, aluminum jadels, safety belt with hooks, welding

masks, ear plugs, comonitors etc are some of the other safety

equipments used.

7. Counseling scheme:-

The welfare officers conducted several counseling programmes

on Alcoholism, Indebtedness to help the employees and their familiesto solve their problems. Special importance was given to the

employees who are habitual absentees and created among them: as

a result, they have improved their attendance.

Human Resource Policy on Establishment:-

Recruitment

Selection

Promotion

Leave Travel Concession

Transfers

Recruitment:

Recruitment is understood as the process of searching for obtaining

applicants for jobs from whom right people can be selected. The process

begins when new recruits are sought and ends when their applications are

submitted. The result is a pool of applicants from which new employees are

selected.

HGML comp. recruiting through the following methods:

Advertisement



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Employment exchange office

News paper

Trade associations

Contractors

Selection:-

Next to recruitment, the logical step is selection of qualified and

competent people. In HGML selection is conducted through process of

picking individuals out of pool of job candidates with requisite qualifications

and competence to fill jobs in the organization.

Promotion:-

Promotion is the upward reassignment of an individual in an

organizations hierarchy, accompanied by increased responsibilities,

enhanced status, and usually with increased income, through not always

so. On being promoted, the greater are the implications of the individual

decision on the enterprise.

In HGML Company, promotion committee, Central seniority,

Concerned department hand, Managers, HRD secretary, etc. are conducted

the meeting according to senior employee with roaster wise will be

promoted.

Leave Travel Concession:-

The HGML company provides the leave travel concession for the

employees once in a two years and every year local fair Festivals the

company must be paid Rs.1500 for every employees.

Transfers:-

The HGML company also made the transfers one department to

another department for the purpose of employees different skills as toreduce the boredom.

Human Resource policy on Training:-

During the year regular refresher courses were conducted at VT

Centre for workers in 34 batches and 335 workers were trained. 18 In-hours

programs were conducted on various topics for HGM workers, Supervisors,



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and officers. 51 workers, staff and officers attended for residential. And non

residential training and seminars conducted outside by various

organizations. Cordial industrial relationship between management and

workers continued and there was no strike, lockout during the year.

Training methods followed by HGML

On the job Training:

A. Job Rotation

B. Apprentices

C. Coaching

D. In house training

Off the job Training:

A. Lecturing and Seminars

B. Work Conferences

C. Video presentation

D. Case study

Other various departments:-

Main stores department

Exploration department

Mining department

Engineer department

Security department

SWOT ANALYSIS

SWOT analysis is a analysis of STRENGTH, WEAKNESS, OPPORTUNITY

AND THREATS of the Company. This is used to analysis the company

environment will help each and every company to know the present

situation of the company.

STRENGTH:



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This is only a reputed Gold Extraction Company in India.

It has been producing the product as the standard specified by the

Government of Karnataka.

Fully computerized environment.

Its continuous and larger production unit in India.

Product quality is the strength of the company.

The work environment is full of excitement, creativity, and innovative

atmosphere.

The company having the more number of manufacturing plants

premises and around the Karnataka State.

WEAKNESS:

Absenteeism is the main problem in the Company.

Huge sound and air pollution in the production department.

Workers are not well qualified.

Problems occur in the production process well lead to one hour

stoppage which is cause for loss of Rs.218400

OPPORTUNITY:

Company is having the excellent growth opportunity because of

different plants in different location.

Company is having the good hold in the market so it will help to earn

more profit.

In the capacity of the plant is the increasing direction.

It ties in the vicinity of large potential and unexplored market ofSouthern India.

THREATS:



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There is no closer competition to the extraction industries of Gold but

the liberalized rates to import the gold is one of the problem from

domestic companies.

Gold is non abundant resource which cannot be available in future if

company extract continuously.

Huge power consumption and power failure.

Foreign currency fluctuation.

INTRODUCTION TO FINANCIAL MANAGEMENT



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Finance is defined as the money at the time when it is required.

Every firm needs finance whether it is small, medium, and big to carry in its

operation and to a show its targets. And it is rightly said that finance is

lifeblood of an enterprise. Without adequate finance, no enterprise can

possibly accomplish its objective.

Management is a vital function control with all aspects of business

management, have become a sort of pre-requisite for the successful carrier

in dynamic business environment. The present study is concerned in Hutti

Gold Mines Company Limited, Hutti.

Technically analysis of working capital in which the present project

report is an important part of financial managing current assets is more

difficult than management of fixed assets and the finance management

needs to strike a balance both profitability and liquidity. If liquidity more

there will be adverse effect of profitability is given more weight age is togreater risk.

A business enterprise with adequate working capital is always a

position to evil advantage of any favorable opportunities. The present study

related to the working capital management Hutti Gold Mines Company Ltd,

Hutti. Sources control and effective utilization of the working capital by the

company.

An endeavor has been made to study and analyze the assisting

pattern and utilization of financial resources and analyze the five year ofworking capital management, receivable management. The project

primarily deals with the study of financing and utilization of available

resources and measuring the perform of the company.

Working capital

Meaning:

Working capital management can be defined as that aspect of

financial management which is concerned with the safeguarding and

controlling of the firms current assets, and planning for sufficient funds to

pay current bills.

Working capital management is concerned with all decisions and acts

that influence the size and effectiveness of working capital. The goal of

working capital management is to manage each of the firms current assets



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and current liabilities in such a way that an acceptable level of networking

capital is maintained.

The important aspects of working capital are:

Determining the requirements of working capital.

Financing the requirements and

Efficient utilization of requirement of working capital.

Working capital management involves taking decisions regarding:

The need to invest funds in current assets

The amount of funds to be invested in each type of current assets

and their relative proportion.

The proportion of long term and short term funds to finance the

current assets and

To finance these current assets through appropriate sources of funds.

The term working capital management means managing the firms

current assets and current liabilities in such a way that, it will help to

reach the organizational goals.

Current Assets:

Its referring to those assets which in the ordinary course of business

can be, converted into cash within one year without undergoing a

diminution in value and without disrupting the operations of the firm. The

major current assets are cash, marketing securities, accounts receivable

and inventory.

Current Liabilities:

These are those which are intended, at their inception to be paid in the

ordinary course of business, within a year, out of the current assets orearnings of the concern. The basic current liabilities are accounts payable,

bills payable, bank overdraft and outstanding expenses.

The interaction between current assets and current liabilities is the main

them of the working capital management. Because if the firm cannot

maintain a satisfactory level of working capital, it is likely to because



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insolvent and may even be forced into bankruptcy. The current assets

should be managed efficiently in order to maintain the liquidity of the firm.

Concepts of Working Capital Management:

1. Gross working capital:

The term gross working capital refers to the firm's investment in

current assets. This includes cash, short term securities, debtors (accounts

receivable book debts bills receivable) and stock (inventory).

2. Net working capital:

The term net working capital refers to the difference between

current assets and current liabilities.

Working capital will arise when assets exceed current liabilities and

a negative working capital will occurs when liabilities are in excess of

current assets.

Net working capital is a qualitative concept. It indicates the

liquidity position of the firm and suggests the extent to which needs

may be financed by permanent sources of funds.

Need for Working Capital:

The need for working capital to run the day to day business

activities be over emphasized.

Every firm should aim at maximizing the wealth of its

shareholders. In this case a firm should earn sufficient return from itsoperations. Earning a steady amount of profit requires successful

sales do not convert into cash instantaneously.

Working capital categories into:

1. Fixed or permanent working capital



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The need for current assets arises because of the operating

cycle. Operating cycle is a continues process and, therefore the need

for current assets is felt constantly. There is always a minimum level

of current assets, which is continuously required by the firm to carry

on its business operations. This minimum level of current asset is

referred to as permanent or fixed working capital.

2. Fluctuating or temporary working capital

The change in production and sale, leads change in working capital.

For example: Extra inventory of finished goods will have to be

maintained to support the peak periods. On the hand investment in

raw material work in progress and finished goods will fall if the

market is slack.

The extra working capital needed to support the changing

production and sales activities called fluctuating or temporary

working capital.

Permanent and temporary working capitals are necessary to

facilitate production and sale through the operating cycle, but

temporary working capital is created by the firm to meet liquidity

requirements.

The permanent working capital line need not be horizontal if

the firms requirement for permanent capital is decreasing over a

period.

Objective of working capital:

To ensure adequate liquidity of a firm

To minimize the risk and

The contribution to the maximization of firms value.

Principles of Working Capital:



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Principles of risk assumption.

Net worth position.

Maturity of payment and

Cost of capital.

Importance of working Capital

Adequate working capital creates certainty, security and confidence

in the minds of the persons in the management as well as in the minds of

creditors and workers.

It creates a good credit standing for the firm because credit standing

depends upon the ability to pay promptly. A Company with adequate

working capital is always able to meet current liabilities.

It ensures solvency and stability of the enterprises it also ensures

continuity in production and sales. It enables the company to take

advantage of cash discount offered by the suppliers of raw materials or

merchandise. It enhances the prestige of the company and moral of its

workers because a company with adequate working capital is always able

to pay wages and salaries promptly.

It enables the company to procure loans from banks on easy and

competitive terms. In times of boom, it enables the company to meet

increasing demands for its products. In times of depression the company to

overcome the crisis successfully. It enables the company to hold carry on

its business successfully and active continued progress and prospective. It

enable the company to carry on its business successfully and active

continued progress and prosperity.

Operating efficiency:



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The operating efficiency of the management is also an important

determine of the level working capital position through operating efficiency.

Management cannot control the rise in prices; it can ensure the efficient

utilization of resources by eliminating waste, improving coordination and a

fuller utilization of existing resources. Efficiency of operations and a fuller

utilization existing resources. By eliminating waste, improving co-ordination

of resources the pace of cash cycle and improves the working capital

turnover. It releases the pressure on working capital by improving

profitability and improving the internal generation of funds.

The level of working capital is determined by a wide variety of factors

which are partly internal to the firm and party external (environmental) to

it. Effective working capital management requires effective planning and a

constant review of the needs for an appropriate working capital strategy.

Estimation of working capital requirements:

Expenses on raw materials, labors and overhead.

Length of time the raw material to be held in stock.

Length of time the raw materials remain in manufacturing process in

semi finished form.

Length of time, finished goods are held in go down waiting sales.

Credit period granted to the sundry debtors.

Credit period granted by the sundry creditors and

Time gap in the payment of wages, salaries and other operating

expenses.



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Operating cycle:

Operating cycle is time duration required to convert sales, after the

conversion of resources into inventories into cash. Investment in current

assets such as inventories and debtors is realized during the firms

operating cycle which is usually less than a year.

Figure-1

Operating cycle of manufacturing company



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Figure-2

Operating cycle of mining company

Design of the Study

Title of the Study: A study on WORKING CAPITAL MANAGEMENT IN HUTTI

GOLD MINES COMPANY LIMITED, HUTTI.

Project field: Finance

Project duration: 6 weeks

Introduction:-

The most profitable function of an organization is to make the

working capital. Sanctioning credit to customers and others out of current

assets and current liabilities at its disposal is one of the principal services of

an organization. It is the current assets and current liabilities, which bring

most of the earnings for an organization and establish valuable ties with

the community.

It is concerned with the management of sources, control and

effective utilization of working capital management. The study helps in

evaluating of working capital management in Hutti gold mines Company

limited.

Need for study:



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I have selected this topic for the study because Working Capital

management plays an important role in the company; so as it to be

maintained in a good and better way so as to fulfill the present and future

need of the company. Every firm should aim at maximizing the wealth of its

shareholders. In this case a firm should earn sufficient return from its

operations. Earning a steady amount of profit requires successful sales do

not convert into cash instantaneously.

Therefore, it is important to manage the Working Capital

management carefully by using scientific and systematic techniques.

Statement of problem:

Project report is a systematic study of refuses associated with

working capital management or problem intended to resolve the problem

with application of management concepts and skills, it provides a practicalexperience.

A study on working capital management in HGML company

Hutti is done because working capital one of the important

requirement to have a smooth flow of operation.

If the company neglects the importance of level of working

capital requirement, there is a chance of adverse effect on

liquidity on profitability.

Problem associated application of theoretical concepts to the

practical problem.

Problem raised due to inefficiency of working capital

management.

Objective of the study:

The main objective of this study is:-

To study the pattern and procedure following regarding working

capital management

To study the different components of working capital of the

corporation.

To understand how effectively the working capital management in

HGM co.ltd Hutti.



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To offer suggestion for improving the efficiency in working capital

management

To fulfill the requirement of Master Degree in Management.

Scope of study:

Scope of the study in General terms the extent to which it is possible

to cover the subject. This study attempts to cover almost all the tools and

techniques for the purpose of evaluating working capital management in

HGM Co.ltd Hutti.

Limitation of the study:

1. The study is confined to the extent of interpreting financialstatements, which are provided by the company.

2. Restriction on behalf of the company.

3. Study of inter firm comparison is not made.

4. There is very less scope for collection of confidential financial data.

5. The study focuses only on working capital.

Methodology of the study:

The success of any study depends upon the methodology adopted

i.e. the techniques on the way of approaching to gather information

from different sources.

Sources of Data:-

Primary Data

Secondary Data

Primary Data:

It is collection of first hand information. This data is collected through

discussion. The required primary data collected from the concerned officers

of the Hutti gold mines co.ltd Hutti.

Secondary Data:



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It is reviewing which relevant information, which is already collected is and

making inferences based on the information collected. The required

secondary data collected from annual reports of the company. The present

study is mainly based on the secondary data.

Data Presentation:

The data collected have been presented in the form of tables and graphs.

Data analysis and Interpretation:

The data collected are used to calculate working capital by applying the

following formula:

Working capital= Current assets Current liabilities

The data have analyzed with the help of trend rations 2001-02 isconsidered be base year whose value is equal to 100.then. The values for

subsequent years i.e. 2001-02 to 2007-08 are calculated with the base

year value on year to year basis.

FINANCE DEPARTMENT STRUCTURE



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The working capital is calculated for a period of six years i.e. 2001-02

to 2007-08. They are presented in the form of tables and graphs. This is

divided into three sections. Section-I presents the analysis and

interpretation of over all current assets and current liabilities. Section-II

presents the analysis interpretation of individual items of current assets

while section-III presents the analysis and interpretation on of individual

items of current liabilities.

The following current assets and current liabilities:-

A. Current Assets:

1. Inventory

2. Sundry Debtors

3. Cash and Bank

4. Other Current Assets

5. Loans and Advances

B. Current Liabilities:

1. Sundry Creditors

2. Provisions



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Section-I

1. Current assets and current liabilities during the year 2001-02

and 2002-03, the following information is relating to different currentassets and current liabilities during the 2001-02 & 2002-03 presented in

table-1

Table No-1

Current Assets 2001-02 & 2002-03

Sl.

No

Particulars Amount

(2001-02)

(Rs. Inlakhs)

Amount

(2002-03)

(Rs. Inlakhs)

Percent

age

(2001-02)

Percent

age

(2002-03)

1 Inventories 1401.65 1607.41 54.07 48.61

2 Sundry Debtors 133.69 0 5.16 0

3 Cash and Bank 61.72 785.96 2.38 23.77

4 Other Current

Asset

34.59 32.45 1.33 0.98

5 Loans andAdvances

960.60 881.06 37.06 26.64

Total 2592.25 3306.88 100.00 100.00

Table No-1 A

Current Liabilities 2001-02 & 2002-03

Sl.

No

Particulars Amount

(2001-02)

(Rs. inlakhs)

Amount

(2002-03)

(Rs. inlakhs)

Percent

age

(2001-02)

Percent

age

(2002-03)

1 Current Liabilities

(Sundry

Creditors)

1983.96 3558.31 49.68 83.25



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2 Provisions 2009.45 716.07 50.32 16.75

Total 3993.41 4274.38 100.00 100.00

Working Capital = Current assets Current liabilities

Working Capital (2001-02) = Rs.2592.25- Rs.3993.41

= Rs.-1401.16

Working Capital (2002-03) = Rs.3306.88 4274.38

= Rs.-967.50

Information relating to various current assets and current liabilities

included in the year 2001-02 and 2002-03.

Graph No-1 Current Assets 2001-02 & 2002-03

Graph No-1 A Current Liabilities 2001-02 & 2002-03

The total current assets of Rs.3306.88 lakhs (2002-03) has increased

compared to Rs. 2592.25 lakhs (2001-02) and this indicates better

improvement of current assets. The total current liabilities of company as

increaed in 2001-03 (Rs.4274.38 lakhs) as compared to 2001-02

(Rs.3993.41 lakhs). Give to raise in current liabilities the production



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activities also increased. But the working capital is negative and it is not so

good to the company in both the years 2001-02 and 2002-03.


and 2004-05, the following information is relating to different current

assets and current liabilities during the 2003-04 and 2004-05 presentedin table-2

Table No-2


Sl.

No

Particulars Amount

(2003-04)(Rs. in

lakhs)

Amount

(2004-05)(Rs. in

lakhs)

Percent

age

(2003-

04)

Percent

age

(2004-

05)

1 Inventories 2776.68 3953.32 53.74 30.77

2 Sundry Debtors 0 0 0 0

3 Cash and Bank 302.94 745.71 5.86 5.80

4 Other Current

Asset

16.17 15.98 0.31 0.12

5 Loans and

Advances

2070.83 8134.07 40.09 63.31

Total 5166.62 12849.08 100.00 100.00

Table No-2 A



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Sl.

No

Particulars Amount

(2003-04)

(Rs. inlakhs)

Amount

(2004-05)

(Rs. inlakhs)

Percent

age

(2003-04)

Percent

age

(2004-05)

1 Current

Liabilities

(Sundry

Creditors)

2922.04 1781.98 60.47 19.93

2 Provisions 1910.19 7157.75 39.53 80.07

Total 4832.23 8939.72 100.00 100.00



= Rs. 334.39


= Rs.3909.35

Graph No-2 Current Assets 2003-04 & 2004-05



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Graph No-2 A Current Liabilities 2003-04 & 2004-05

The total current asssets of 2004-05 as increased to Rs.12849.08

lakhs as compared to Rs.5166.62 lakhs in 2003-04. And also the total

current liabilities ofcompany as increased to Rs.8939.72 lakhs (2004-05)as compared to above three years report is considered. Give to rise in

both current assets and current liabilities short term working capital

requirement as increased in 2004-05 to Rs.3909.35 lakhs as compared

to Rs.334.39 lakhs in 2003-04 year. The increased in working capital

shows a pasitive sign to improve production activities in the company.


and 2006-07, the following information is relating to different current



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assets and current liabilities during the 2005-06 and 2006-07 presented

in table-3

Table No-3


Sl.No

Particulars Amount

(2005-06)(Rs. inlakhs)

Amount


Percentage

(2005-06)

Percentage

(2006-07)

1 Inventories 3749.47 4969.88 43.05 27.54

2 Sundry Debtors 0 6.24 0 0.03

3 Cash and Bank 241.80 741.59 2.78 4.114 Other Current

Asset15.10 16.07 0.17 0.09

5 Loans andAdvances

4704.02 12312.51 54.00 68.23

Total 8710.39 18046.29 100.00 100.00

Table No-3 A


. No

Particulars Amount


Amount

(2006-07) (Rs.in lakhs)

Percentage

(2005-06)

Percentage

(2006-07)

1 Current Liabilities(Sundry Creditors)

1304.33 3231.44 22.23 24.48

2 Provisions 4563.11 9968.28 77.77 75.52

Total 5867.44 13199.72 100.00 100.00


Working Capital (2005-06) = Rs. 8710.39 5867.44



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= Rs. 2842.95

Working Capital (2006-07) = Rs. 18046.29 13199.72

= Rs. 4846.57

Graph No-3


Graph No-3 A


As compared to previous years total current assets and total current

liabilities of the company as increased to this year. The total current assets

of the company as gone up by Rs.18046.29 lakhs (2006-07) from

Rs.8710.39 lakhs (2005-06). As, well as the total current liabilities as gone



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up by Rs.13199.72 lakhs (2006-07) as that of Rs.5867.44 lakhs(2005-06). It

is said that more working capital is flowing into the company this leads to

more production processes.

4. Current assets and current liabilities during the year 2007-08,

the following information is relating to different current assets and

current liabilities during the 2007-08 presented in table-4

Table No-4

Current Assets 2007-08

Sl.

No

Particulars Amount

(Rs. inlakhs)

Percenta

ge

1 Inventories 5028.68 18.45

2 Sundry Debtors 76.88 0.28

3 Cash and Bank 9096.11 33.37

4 Other Current

Asset

94.90 0.35

5 Loans andAdvances

12959.84 47.55

Total 27256.41 100.00

Table No-4 A

Current Liabilities 2007-08

Sl.

No

Particulars Amount

(Rs. in

lakhs)

Percent

age

1 Current Liabilities

(Sundry Creditors)

3070.76 22.40

2 Provisions 10640.30 77.60



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Total 13711.06 100.00


= Rs. 27256.41 13711.06

= Rs. 13545.35

Information relating to various current assets and current liabilities

included in the year 2007-08.

Graph No-4

Current Assets 2007-08

Graph No-4 A

Current Liabilities 2007-08



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By seeing all years report this years total current assets and total

current liabilities as gradually increased to Rs.27256.41 lakhs in 2007-08

and also current liabilities as rised to Rs.13711.06 lakhs. Altimately

increase in current assets and current liabilities as let in increase inworking capital and this leads to increase in production of Gold.

ESTIMATION OF CURRENT ASSETS

Raw material inventory:-

The investment in raw material inventory is estimated on the basis of

the following formula.

Work in progress inventory:-

The relevant costs to determine work in process inventory are the

proportionate share of costs of raw material and conversion costs

(labors and manufacturing overhead costs excluding depreciation).


Cost of raw material * Average inventory holding periods

(months/days)

12 Months/365da s


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Finished goods inventory:-

Working capital required for financing the finished goods inventory is

given by factor summed up as follows.

Debtors:-

The working capital tied up in debtors should be estimated in relation

to total cost price (excluding depreciation) symbolically.


Estimated WIP cost (Rs) * Average time spend of WIP

inventory (months/days)

12 Months 365da s

Cost of goods produced (Rs) * finished goods holding

periods (months/days)

12 Months 365da s

Cost of Sales (Rs) * Average debt collection periods

(months/days)

12 Months 365da s


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Cash and Bank balance:-

After the above factor of working capital needs cash and bank

balance are also very important. Firms nowadays require keeping

some amount of cash balance for emergency purpose. It is difficult to

lay down the exact procedure of determining the amount.

ESTIMATION OF CURRENT LIABILITIES

The working capital needs of the business firms are lower to that

extent such needs are not through the current liabilities (other than the

bank credit) arising in the ordinary course of the business. The important

current liabilities, in the context are trade creditor, time lag in the payment

of wages salaries and advance receipts.

Trade Creditors:-

Time lag in payment of :-

Wages and Salaries:-


Raw Material Cost (Rs)* Credit period allowed by creditors

(months/days)

12 Months/365days

Wages & Salaries Cost (Rs)* Time lag in payment of

wages & salary

12 Months/365days


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Advance received:-

Advance receipts are current liabilities. The advance payment received

from customers makes impact on working capital.

Bills payables:-

Bills payables are also short term liabilities so it is taken in the

current liabilities, so it will be payable in a short period of time so

it is a one of current liabilities.

Short-term bank loans:-

The loan taken for the period of less than one year is called as

short-term loan; it is also a kind of current liability.

RATIO ANALYSIS

Ratio analysis is the one of the powerful tool of the financial analysis. A

ratio can be defined as The indicates quotient of two mathematical

expression and as the relationship between two figures. It is expressed

where one figure is divided by another. If 10,000 divided 4,000 the ratio

can be expressed as 0.4 or 2:5 or 40%.

Important of Ratio Analysis:-

The

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