Project SynopsisProject Synopsis

STUDY OF STUDY OFWORKING CAPITAL MANAGEMENT

OF PUNJ LLOYD LTD.

(Submitted in partial fulfillment of the requirement of Master of Business Administration, Distance Education,

Guru Jambheshwar University of Science & Technology, Hisar)

Research Supervisor : Submitted by:

MRS. RACHNA AILANI DEEPAKIITM, LECTURERIITM, LECTURER Roll No. 05061223016Roll No. 05061223016

MBA IVth SemesterMBA IVth Semester

Session 2005-07

Directorate of Distance EducationGuru Jambheshwar University of Science & Technology,

Hisar (India)

REVIEW OF LITERATURE AND PROBLEM STATEMENT

The field of financial management has undergone tremendous changes since years.

Existing theories and concepts have been redefined, additional tools & techniques

have been developed and financial environment has changed considerably. In the

present scenario, the theme of financial management has been primarily structured

around the decision making concepts and that too in the three interrelated financial

areas, namely.

INVESTMENT – long term as well as CA;

FINANCING; and

DIVIDEND POLICY.

Punj Lloyd limited (PLL) was incorporated as Punj Lloyd engineering pvt. Ltd. On

26th September 1988 with the specific aim of taking over all the engineering, turnkey

& general construction activities along with other specialized technical services

business of the erstwhile Punj Sons Pvt. Ltd. This had been in business since 1954.

Punj Sons Pvt. Ltd. was a large diversified business group engaged in activities

ranging from general construction to specialized activities such as pipe laying,

insulation etc.

Punj Lloyd Engineering Pvt. Ltd. was renamed Punj Lloyd Pvt. Ltd. on July 11, 1989.

On conversion into a public limited company on 22nd July 1992 the name was

changed to Punj Lloyd Ltd.

Working Capital is an important component especially in the case of an engineering

and construction company like “Punj Lloyd”. Working Capital is generally used for

meeting day to day cash flows, pay wages and salaries when they fall due, pay to

creditors, pay government taxation, etc. Thus effective management of working

capital plays a major part in an organization’s success.

Among other important functions under financing, the most prominent is Working

Capital Management. The success of the business enterprises depends to a large

extent upon the adequacy of working capital. To run a business, dues of material,

wages and other expenses are to be paid in time. Inadequacy of working capital to

finance, operating activities brings downfall to a business in short time. Also at the

time of diversification, need is felt adequately to appropriately restructure the working

capital setup of the industry.

Problem Statement

Management has placed great emphasis on asset quality and this focus has been

institutionalized across the organization, with asset quality parameters being a key

factor in employee performance evaluation. We believe that our adoption of US

GAAP, including its associated provisioning requirements, embodies a more

conservative approach to quantifying credit losses. We believe we are the market

drivers in India in achieving early settlements with troubled borrowers, thus

maximizing our cash flows from these loans. Our Special Asset Management Group,

which will be created to take care of large non-performing loans and problem loans,

has spearheaded our efforts in this direction. If they are inaccurate or incomplete it

will remain which will still lead to a adverse selection problem. Some potential

borrowers have no credit history because they have never borrowed funds before. The

entire effort in this direction constitutes a proactive approach towards identification,

aimed at early-stage solutions to incipient problems.

OBJECTIVE OF THE PROPOSED STUDY

To study the various aspects of working capital concept.

To study different sources of working capital, internal and external,

available to the company for financing working capital.

Main emphasis is on Bank Credits which is the most used method by

companies.

To study how the companies get the projects financed from the banks and

other financial institutions.

RESEARCH METHODOLOGY

The report will contain secondary data. The procedure to collect data will be mainly

through different reference books on financial management & working capital

management along with the material provided by the company on the subject. The

project will be divided into three phases:

The initial phase of the project will deal with an introduction to the working capital,

factors determining working capital, adequacy of working capital & working capital

management.

The next phase will deal with working capital requirement forecasting and working

capital financing. In this, different sources, either internal or external will be

explained.

The third phase will explain the bank credit. This will include the major developments

in bank credit available to the company for working capital requirements & recent

changes along with the financing from financial institutions.

The next phases will deal with modes of security, working capital control and banking

policy, loan application. It also contains

The ending phase will explain the proposal of working capital finance & working

capital raised by Punj Lloyd Ltd.

SCOPE/ RELEVANCE OF PROPOSED STUDY

To achieve this it is necessary to generate sufficient profits. And for earning these

profits firm has to generate adequate sales. However sales does not convert into cash

instantly; there is invariably a time lag between the sales of goods and receipt of cash.

There is, therefore, a need for working capital in the form of current assets to deal

with the problems arising out of the lack of immediate realization of cash against

goods sold. Therefore working capital is necessary to sustain sales activity. These

factors may be used to relate he balance sheet items to sales volume. For the scientific

study of working capital problem, a mathematical model may be developed to state

the important quantitative relationships among different variables. As long as the

general pattern of the production and financial process does not change substantially,

the model will hold good. By studying the existing position and analyzing, the

companies can easily and almost accurately estimate the working capital requirement.

REFERENCE

Basics of Financial Management – Khan and Jain

Financial management – Van Horne

Basic Financial Management – Prasanna Chandra

Websites :

www.google.com

www.punjlloyd.com