Project Synopsis

STUDY OF WORKING 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 : MRS. RACHNA AILANI

IITM, LECTURER

Submitted by: DEEPAK

Roll No. 05061223016 MBA IVth Semester

Session 2005-07

Directorate of Distance Education Guru 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 organizations 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