A

Project Report
Of

Financial Management-II

TECHNOLOGIES LTD.

Submitted To: Submitted By:-

COMPANY PROFILE
ULTRATECH CEMENT Ltd
Type:

Public

Traded as:

BSE: 532258

Industry:

Building Materials

Founded:

1983

Headquarters:
Area served:
Key people:

Mumbai , Maharashtra, India

Worldwide
O P Puranmalka, Director

Services:

IT, business consulting and outsourcing services

Revenue:

Increase US$6.7 Billion (FY2014)[citation needed]

Operating income:
needed]
Profit:
needed]

Increase US$335 million (Q3, 2014)[citation

Increase US$1.0 Billion (FY2014)[citation

Number of employees: 100,000

Divisions:

Enterprise Application Services

Custom Application Services
Engineering and R&D Services
Enterprise Transformation Services
IT Infrastructure Management Services
Business Services/BPO1

Website:

www.hcltech.com

INTRODUCTION
HCL Technologies is a leading global IT services company working with
clients in the areas that impact and redefine the core of their businesses.
Since its emergence on global landscape after its IPO in 1999, HCL has
focused on 'transformational outsourcing', underlined by innovation and
value creation, offering an integrated portfolio of services including software
led IT solutions, remote infrastructure management, engineering and R&D
services and Business services.
HCL leverages its extensive global offshore infrastructure and network of
offices in 31 countries to provide holistic, multiservice delivery in key
industry verticals including Financial Services, Manufacturing, Consumer
Services, Public Services and Healthcare & Life sciences. HCL takes pride in
its philosophy of 'Employees First, Customers Second' which empowers its
90,190

transformers

to

create

real

value

for

the

customers.

HCL

Technologies, along with its subsidiaries, had consolidated revenues of US$

5.2 billion, as on 31st March 2014 (on LTM basis).
HCL Technologies has portfolio of services including softwareled IT solutions,
remote infrastructure management, engineering and R&D services and BPO.
HCL has global partnerships with several leading Fortune 1000 firms,
including several IT and technology majors. It provides services to industry
sectors including financial services, manufacturing, aerospace & defense,

telecom, retail & CPG, life sciences & healthcare, media & entertainment,
travel, transportation & logistics, automotive, government and energies &
utilities.
As a $5.2 billion global company, HCL Technologies brings IT and engineering
services expertise under one roof to solve complex business problems for its
clients. Leveraging its extensive global offshore infrastructure and network of
offices in 31 countries.

Why should you consider HCL?

Growth through innovative approaches. Our clients from Fortune 500 corporations to

regional financial services companies that are a lifeline for their local communities partner with us
to discover innovative ways to adapt to shifting regulations, achieve continuous simplification of IT
and operations, improve their customer experience, and gain access to new products and markets.
HCL delivers these benefits with help of its financial IT solutions through a tailored combination of
nine critical factors categorized across three mainstays of value creation.
Leveraging the eco-system

Co-innovation for technology: Identifying end-user insights and developing ideas for a
joint go-to-market

Co-development with partners: Best-in-class products and SI capabilities that reduce risk
and accelerate time to market

Co-creation for thought leadership: Engaging analysts, advisors, and influencers to

create business value from IT
Nurturing the value chain

Fully served customer: Business-aligned IT to offer seamless integration of business

processes, applications, and infrastructure

Cost-structure transformation: Unlocking capital from best-in-class Run The Business

(RTB) processes and reinvesting the savings into a transformational agenda of customers

Front-office transformation: Helping banks and financial services companies address the
evolving needs of the connected-customer community
Expanding the business model

Skin in the game: Joint ventures and special-purpose vehicles that deliver financial value
beyond traditional finance and accounting outsourcing benchmarks

Pricing constructs: Convenient models such as Day 1 Committed Cost Savings and Gain
share models

Collaborative sourcing: Customer-need-based commercial structuring, benchmarked

predictable SLAs, continuous reportage, and process innovation
HCL as a Valuable Partner. Traditional finance and accounting outsourcing models are

beginning to disintegrate in the new normal. CIOs and vendor management offices now seek
partners who can assist them with financial services consulting, and financial services software and
strategies that help reduce supplier fragmentation, align with business objectives, leverage outcomebased models, and seek innovation and value addition beyond the contract. This model also provides
global service delivery and delivery excellence, along with simplified engagement governance.

Capital Structure:
DEBT TO EQUITY RATIO: - Following were the debt to equity ratios for the ULTRATECH

CEMENT Ltd. from2010-2014:Year

2010
2011
2012
2013
2014

Debt to
Equity
9.044011596
8.028335089
8.795600665
21.09444304
58.51206514

A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity. It indicates what proportion of equity and

debt the company is using to finance its assets. If a lot of debt is used to
finance increased operations (high debt to equity), the company could
potentially generate more earnings than it would have without this outside
financing. If this were to increase earnings by a greater amount than the
debt cost (interest), then the shareholders benefit as more earnings are
being spread among the same amount of shareholders. However, the cost of
this debt financing may outweigh the return that the company generates on
the debt through investment and business activities and become too much
for the company to handle. This can lead to bankruptcy, which would leave
shareholders with nothing.
Here, ULTRATECH CEMENT Ltd is continuously increasing its proportion of
debt in each year by year.
A ratio is generally considered to be good as in this case creditors and
shareholders contribute equally to the assets of the business. This ratio will
vary from sector to sector.

Times interest ratio:-Following were times to interest ratio for ULTRATECH

CEMENT Ltd. from 2010-2014:-

Year
2010
2011
2012
2013
2014

Times interest
ratio
2.902303237
3.19139956
2.234324694
2.825163723
4.819927812

Interpretation:

- This ratio measures a

companys ability to meet its debt obligations,
failing to meet this obligations could force the
company into bankruptcy. A ratio >2 is
considered to be good , as it is adequate to
protect the creditors interest but less than 1 will mean company is having

problem in paying interest on borrowings. In case of idea company has been

able to maintain its ratio above 2 for all the 5 years consecutively.

Quick ratio: following are quick ratio for ULTRATECH CEMENT Ltd. from mar 2010-mar2014

Year
2010
2011
2012
2013
2014

Quick Ratio
0.3303549
0.3198879
0.3
0.2857393
0.2684149

This ratio is an indicator of the solvency of the company; they aim to

maintain a quick ratio that provides sufficient leverage against liquidity risk.
The ideal quick ratio is 1:1.Here we can see that company has maintained
the ideal ratio all through its 5 years.

Current ratio: - following are the current ratios for the ULTRATECH CEMENT Ltd.
from mar-10 to mar-14:Year
2010
2011
2012
2013
2014

Current
Ratio
1.553955916
1.275286115
0.705580785
1.16169778
1.775900172

Interpretation: This ratio tells us the liquidity position of the company, generally companys

aim to have a ratio at least 1 to ensure that the value of current assets cover the value of current
liabilities a value greater than 1 provides a cushion against unforeseen contingencies that may
arise in the future. Ideal current ratio is 1:1. Since ULTRATECH CEMENT Ltd have ideal ratio.

Z SCORE: - following were the z score calculated from mar-2010 to mar-2014

Calculation of Z SCORE

A
B
C
D
E

2010

2011

0.150
795
0.420
26
0.204
457
0.025
895
0.272
214

0.072
055
0.437
621
0.207
449
0.052
337
1.013
111

2012
0.105
34
0.486
7
0.336
463
0.049
278
1.219
257

2013
0.055
852
0.634
573
0.417
185
0.043
583
1.153
41

2014 Total
0.241
166
0.751
518
0.473
076
0.047
818
1.043
48

0.414
528
2.730
671
1.638
63
0.218
911
4.701
472

Interpretation: - the Z score is helpful in calculating and predicting the probability that
company will go bankrupt in next 2 years.
<=1.1- distress zone
1.1-2.6- grey zone
>=2.6- safe zone
ULTRATECH CEMENT Ltd has its Z-Score between 0.414528 to 4.701472 in 5 years
which means that the co. is at Safe Zone.

Profit margin:Year
2010
2011

Profit
Margin
0.29459356
2
0.20706367
5

2012
2013
2014

0.28472071
0.36736109
0.44707974
7

Assets turnover:Year
2010
2011
2012
2013
2014

Total Asset turnover

0.272214108
1.013111063
1.219256856
1.15340997
1.043479553

Leverage:2010
DOL

2011
0.025
31

2012
2.4657
97

2013
2.0771
89

2014
2.0506
23

DOL
3
2.5
2
1.5
1
0.5
0
2014

2013

2012

2011

DOL

DFL

2010
1.084

2011
1.078

2012
1.041

2013
1.017

2014
1.011

2010

925

604

203

177

037

DFL
1.1
1.08
1.06
1.04
1.02
1
0.98
0.96
2010

2011

2012

2013

2014

DFL

Return on capital employed:Year

2010
2011
2012
2013
2014

Return on Capital
Employed
0.280930737
0.280999931
0.523910514
0.63731979
0.686433429

Interpretation:- This ratio indicates that higher the value of return on capital employed
indicates company generates more earnings per dollar of capital employed, ULTRATECH
CEMENT Ltd return on capital employed is increasing from 4,609.25-7,104.22.

Dividend decision:From mar-10 till mar-14 dividends of ULTRATECH CEMENT Ltd.

Yr
DPS
EPS
Divide
nd
Yield
Marke
t Price
of
Share
Retain
ed
Earnin
g
Net
Incom
e
Divide
nd
Divide
nd
payou
t ratio

2010

2011

2012

2013

2014

8.384287461

9.980914661

3.19

2.56

1.74

2.47

5.09

3.394448365

1.96088696
7

70.85

83.25

106.4

168.65

154.3

5,110.8
0

7,070.23

9,182.23

12,395.49

16,396.20

123,978.9
0

154,384.00

194,886.90

224,074.50

264,919.70

667.4

1280.4

0.049714127

0.06468512
4

Dividend payout
A reduction in dividends paid is looked poorly upon by investors, and the
stock price usually depreciates as investors seek other dividend-paying
stocks. A stable dividend payout ratio indicates a solid dividend policy by the
company's board of directors. Bosch has given his dividend in the every year
and we can see there is increase in dividend payout in every year which
shows the company is able to increase the price of its share.

Dividend Yield
Dividend yield is a way to measure how much cash flow you are getting for
each dollar invested in an equity position - in other words, how much "bang
for your buck" you are getting from dividends. Investors who require a

minimum stream of cash flow from their investment portfolio can secure this
cash flow by investing in stocks paying relatively high, stable dividend yields.
ULTRATECH CEMENT Ltd has decreased its dividend yield which means that
investors are receiving are less for the amount they have invested.

Retained Earnings
Retained earnings is the percentage of net earnings not paid out
as dividends, but retained by the company to be reinvested in its core
business, or to pay debt. It is recorded under shareholders' equity on the
balance sheet.
In most cases, companies retain their earnings in order to invest them into
areas where the company can create growth opportunities, such as buying
new machinery or spending the money on more research and development.
Should a net loss be greater than beginning retained earnings, retained
earnings can become negative, creating a deficit. The retained earnings
general ledger account is adjusted every time a journal entry is made to an
income or expense account.
We can see that ULTRATECH CEMENT Ltd is increasing its retained earnings
year by year. This means that it is paying no or less dividend to its
shareholders as because company has some growth projects in mind where
it can invest and increase the capital gain.

Degree of financial leverage:Year

2010
2011
2012
2013
2014

Financial Leverage
1.084925263
1.078604211
1.041203182
1.01717739
1.011037274

Interpretation:- This ratio calculates the proportional change in the net

income that is caused by change in the capital structure of a business to
either increase or decrease the amount of debt for which the company is
liable. The ratio for the ULTRATECH CEMENT Ltd is increasing and decreasing
over the years. It means the company is not consistent to its breakeven
point.

Working capital management

Cash conversion cycle:- A cash conversion cycle (or jut cash cycle) is the
amount of time it takes for a company, business or organization to receive
payment for its products after it has paid for its materials or inventory. You
calculate your cash conversion cycle by adding your inventory costs over a
certain time to your accounts receivable costs over that same period and
then subtracting your accounts payable cost over that period.
Cash conversion cycle = days in inventory + days receivable outstandingdays payable outstanding

Day Receivable Turnover Ratio

2010
0.826
978

2011
4.099
827

2012
4.470
553

2013
4.620
469

2014
5.116
749

This much time it takes to collect the cash i.e. accounts receivable

Days payable outstanding:There is No Payable Outstanding shown in Balance Sheet

Days sales outstanding:- A measure of the average number of days that a

company takes to collect revenue after a sale has been made. A low DSO
number means that it takes a company fewer days to collect its accounts
receivable. A high DSO number shows that a company is selling its product
to customers on credit and taking longer to collect money.

Days payable outstanding: -Days payable outstanding tells how long it takes a
company to pay its invoices from trade creditors, such as suppliers. DPO is
typically looked at either quarterly or yearly.

Interpretation: Since the cash conversion cycle is coming to be +ve in this

case which is bad as it takes more time for this company to collect from its
debtor.

Cash conversion cycle

2010
444.6
564

2011
93.42
459

2012
85.74
276

2013
82.64
024

2014
71.60
074

A metric that expresses the length of time, in days, that it takes for a
company to convert resource inputs into cash flows. The cash conversion
cycle attempts to measure the amount of time each net input dollar is tied
up in the production and sales process before it is converted into cash
through sales to customers. This metric looks at the amount of time needed
to sell inventory, the amount of time needed to collect receivables and the
length of time the company is afforded to pay its bills without incurring
penalties.
Usually a company acquires inventory on credit, which results in accounts
payable. A company can also sell products on credit, which results in
accounts receivable. Cash, therefore, is not involved until the company pays
the accounts payable and collects accounts receivable. So the cash
conversion cycle measures the time between outlay of cash and cash
recovery.
This cycle is extremely important for retailers and similar businesses. This
measure illustrates how quickly a company can convert its products into
cash through sales. The shorter the cycle, the less time capital is tied up in
the business process, and thus the better for the company's bottom line.

Source Of Working Capital

Working capital finance is defined as the capital of a business that is used in

its day-to-day trading operations, calculated as the current assets minus the
current liabilities. For many companies, this is wholly comprised of trade
debtors (that is, bills outstanding) and trade creditors (bills the company in
question has yet to pay).

Short Term Sources of Working Capital Financing

Factoring
Factoring is a traditional source of short term funding. Factoring facility
arrangements tend to be restrictive and entering into a whole-turnover
factoring facility can lead to aggressive chasing of outstanding invoices from
clients, and a loss of control of a companys credit function.

Instalment Credit
Instalment credit is a form of finance to pay for goods or services over a
period through the payment of principal and interest in regular payments.

Invoice Discounting
Invoice Discounting is a form of asset based finance which enables a
business to release cash tied up in an invoice and unlike factoring enables a
client to retain control of the administration of its debtors.

Income received in advance

Income received in advance is seen as a liability because it is money that
does not correlate to that specific accounting or business year but rather for
one that is still to come. The income account will then be credited to the
income received in advance account and the income received in advance will
be debited to the income account such as rent.

Advances received from customers

A liability account used to record an amount received from a customer before
a service has been provided or before goods have been shipped.

Bank Overdraft
A bank overdraft is when someone is able to spend more than what is
actually in their bank account. The overdraft will be limited. A bank overdraft
is also a type of loan as the money is technically borrowed.

Commercial Papers
A commercial paper is an unsecured promissory note. Commercial paper is a
money-market security issued by large corporations to get money to meet
short term debt obligations e.g.payroll, and is only backed by an issuing bank
or corporations promise to pay the face amount on the maturity date
specified on the note. Since it is not backed by collateral, only firms with
excellent credit ratings will be able to sell their commercial paper at a
reasonable price.

Trade finance
An exporter requires an importer to prepay for goods shipped. The importer
naturally wants to reduce risk by asking the exporter to document that the
goods have been shipped. The importers bank assists by providing a letter
of credit to the exporter (or the exporters bank) providing for payment upon
presentation of certain documents, such as a bill of lading. The exporters
bank may make a loan to the exporter on the basis of the export contract.

Letter of Credit
A letter of credit is a document that a financial institution issues to a seller of
goods or services which says that the issuer will pay the seller for
goods/services the seller delivers to a third-party buyer. The issuer then
seeks reimbursement from the buyer or from the buyers bank. The
document is essentially a guarantee to the seller that it will be paid by the
issuer of the letter of credit regardless of whether the buyer ultimately fails
to pay. In this way, the risk that the buyer will fail to pay is transferred from
the seller to the letter of credits issuer.

Long Term Source of Working Capital Financing

Equity Capital
Equity capital refers to the portion of a companys equity that has been
obtained (or will be obtained) by trading stock to a shareholder for cash or an
equivalent item of capital value. Equity comprises the nominal values of all
equity issued (that is, the sum of their par values). Share capital can
simply be defined as the sum of capital (cash or other assets) the company
has received from investors for its shares.

Loans
A loan is a type of debt which it entails the redistribution of financial assets
over time, between the lender and the borrower. In a loan, the borrower
initially receives or borrows an amount of money from the lender, and is
obligated to pay back or repay an equal amount of money to the lender at a
later time. Typically, the money is paid back in regular instalments, or partial
repayments; in an annuity, each instalment is the same amount. Acting as a
provider of loans is one of the principal tasks for financial institutions like
banks. A secured loan is a loan in which the borrower pledges some asset
(e.g. a car or property) as collateral. Unsecured loans are monetary loans
that are not secured against the borrowers assets.

Classification Of Working Capital

The amount of funds needed for meeting requirements normally varies from
time to time in every business.
However, business always needs a certain amount of assets in the form of
working capital if it is to carry out its functions.
This permanent need and the variable requirements are the basis for a
convenient classification of working capital as regular, permanent, or
variable as follows:

Permanent or Fixed Working Capital

A part of the investment in current assets is as permanent as the investment
in fixed assets. It covers the minimum amount necessary for maintaining the
circulation of the current assets. Working capital invested in the circulation of
the current assets and keeping it moving is permanently locked up.

The permanent or fixed working capital is of two kinds:

(a) Regular working capital, and

(b) Reserve margin or cushion working capital.

(a) Regular working capital:

It is the minimum amount of liquid capital required to keep up the circulation
of the capital from cash to inventories to receivables and back again to cash.
This would include a sufficient amount of cash to maintain reasonable
quantities of raw materials for processing into finished goods to ensure quick
delivery etc.
(b) Reserve margin or cushion working capital:
It is extra capital required to meet unforeseen contingencies that may arise
in future. These contingencies may crop up on account of rise in prices,
business depression, strikes, lock-outs, fires and unexpected competition. It is needed
over and above the regular working capital requirements.

Variable working capital:

The variable working capital fluctuates with the volume of business. It may
be sub-divided into: (i) Seasonal and (ii) Special working capital.

(i) Seasonal working capital:

It refers to liquid capital needed during the particular season. Beyond initial
and regular working capital, most businesses will require at stated intervals a
large amount of current assets to fill the demands of the seasonal busy
periods.
During the season, the business enterprises have to push up purchase of raw
materials (sugarcane by sugar mills, wool by woollen mills) and employ more
people to convert them into finished goods and thus require large amount of
working capital.

(ii) Special working capital:

It is that part of the variable capital which is needed for financing special
operations such as the organization of special campaigns for increasing sales
through advertisement or other sale promotion activities for conducting
research experiments or execution of special orders of Government that will
have to be financed by additional working capital.
The distinction between permanent and variable working capital is important
in arranging the finance for an enterprise. Permanent working Capital should
be raised in the same way as fixed capital is procured.
It is undesirable to bring regular working capital into business on a shortterm basis because a creditor can seriously handicap the business by
refusing to continue lending permanently. Its only recourse is to curtail
operations unless another lender can be found. Variable capital requirement
can, however be financed out of short term loans from the banks or inviting
public deposits.

CONCLUSION
ULTRATECH CEMENT Ltd. is one of the important players in IT sector of our
country , in capital structure we calculated capital structure, dividend policy,
working capital management and analyzed the various corporate action by
the company, various ratios in capital structure like debt to equity, financial
leverage, quick ratio, Altman z-score etc, then in dividend ratio we calculated
the price to earning ratio , current ratio etc in the working capital
management we calculated the cash conversion cycle how much time it
takes to convert the inventory to sales, how much time to collect the cash