Working Capital1

A Study on Working Capital Management with special reference to Meritor HVS (India) Pvt Ltd.
, Mysuru
CHAPTER – I
INTRODUCTION
KSOU, Mukthagangothri, Mysuru Page 1

A Study on Working Capital Management with special reference to Meritor HVS (India) Pvt Ltd., Mysuru
1.1 INTRODUCTION
Along with capital structure and capital-budgeting, working-capital management is
one of the financing factors that a corporation's finance manager must decide (Ross
Westerfield, and Jordan, 2010). Many research have been undertaken on the influence of
capital structure and working capital management on profitability with varying degrees of
success depending on the study undertaken, in light of the emphasis that each company
places on maximizing profitability that can be generated from their business operation. In this
study, the working capital management strategy and its components are examined in relation
to the profitability of the business.
In contrast current liabilities are debts that must be repaid immediately or before the
end of the business's operational cycle whichever comes first (Ross, Westerfield, and Jaffe,
2017). Current liabilities typically include short-term debt accrued salaries taxes and other
expenses that must be paid. In order to maximize the firm's profitability and shareholder
value, it is crucial to manage the working capital efficiently (Smith, 1980; Deloof 2003; Dong
and So, 2010). Additionally having an effective working capital management strategy helps
businesses meet their short-term obligations and retain a sufficient liquidity position to enable
them to continue operating (Eljelly, 2004).
Given the significance of the working capital management choice in maximizing the
firm's value and maximizing shareholder wealth numerous scholars have investigated the link
between working capital management and firm performance over the years. However, the
results of several investigations conducted independently and by numerous researchers show
discrepancies. Additionally there is a dearth of research being done on the impact of working
capital management on a company's profitability.
In this research study the effectiveness of working capital management (WCM) is

represented by the CCC and its components—such as the number of days inventories (INV)
account payable (AP) and accounts receivable (ARD)—as well as their effects on firm
profitability as determined by gross operating profit (GDP)—are also examined. In order to
ascertain their impact on the firm's profitability control variables like the current ratio (CR)
firm size (SIZE) sales growth (GROWTH) and debt ratio (DEBT) are also being investigated.
This study also examines the impact of working capital management (WCM) practices

including whether firms in the manufacturing and service sectors use aggressive or
conservative WCM practices.
By concentrating on services and manufacturing firms which are represented by the

trading/services and industrial products sectors respectively this study aims to close the gap
in the study of working capital management on profitability of the firm's performance.
The difference between current assets and current liabilities is frequently used to
define working capital. As a result, managing working capital requires resolving issues that
develop as a result of having to manage current assets, current liabilities, and the relationships
that exist between them. It encompasses all areas of managing current assets and obligations.
BACKGROUND OF STUDY
"The adage "cash is the lifeblood of business" is frequently recited by financial
managers. Working capital management is the management of current or short-term assets
and short-term liabilities. Short-term assets include inventory, loans and advances, debtors,
investments, cash and bank balances, and debtors. Liabilities for the short term include debt,
trade advances, borrowings, and provisions. However, as short-term obligations are related to
short-term assets, the focus is mostly on short-term assets. It is crucial for businesses to
manage their working capital responsibly to reduce risk.
What is the definition of working capital management?

The primary goal of working capital management is to govern a company's current assets and
liabilities in such a way that a suitable amount of working capital is maintained, which means
it is neither insufficient nor excessive. Companies face a number of challenges when it comes
to investing current assets and liabilities, such as determining how much should be spent in
inventories and accounts receivable. What proportion of cash should be invested in
marketable securities?
How much credit should be purchased and how much should still be owed? How much
should be spent on long-term funds to finance assets? What constitutes a good working
capital management strategy? How can working capital management improve Return on
Investment (ROI)? These queries fall under the category of working capital management and

concern the firm's present assets and obligations. Therefore, working capital management is
concerned with the organization's profitability, liquidity, and structural soundness. Working
capital management in this context involves five dimensions:
The creation of policies for the profitability VS liquidity - return and risk trade-off is the
focus of Dimension 1.
Dimension 2 deals with choosing how much current assets should cost in terms of sales,
while Dimension 3 deals with choosing how to finance current assets.
Measurement 4 is focused on good working capital management practices.
Dimension 5 is focused on additional working capital management strategies, including
• Ratio analysis
• Over trading and under trading
• Working capital leverage
Nature of working capital management

The issues that arise while attempting to manage current assets, current liabilities, and the
relationships that exist between them are addressed by working capital management.
Current assets are those assets that, in the normal course of business, may or will be turned
into cash without a loss in value and without interfering with the business' activities. Current
liabilities are obligations that, at the time of their creation, were meant to be settled using the
company's current assets or earnings within a year of normal business operations.
Working Capital Management Objectives

The goal of working capital management is to manage the firm's current assets and
obligations in order to maintain the firm's working capital satisfaction level; thus, the
relationship between current assets and current liabilities is the central theme of working
capital management theory.
Concepts and Definitions of Working Capital

Working capital is divided into two categories: gross and net. The total of all current
assets is referred to as gross working capital. There are two ways to define net working

capital: current assets and current liabilities. a percentage of current assets financed with
long-term capital.
The Operating-Cycle and Working Capital Needs
• A company's working capital requirements are heavily influenced by its operating
cycle. The operating cycle can be described as the time span between the acquisition
of goods or raw materials and the realization of sales.
• The duration and character of the operating cycle may range from one firm to the next
depending on the firm's size and nature.
• A firm's operational cycle is the time required to complete the chronological sequence
of some or all of the following-
• Purchasing of raw materials and services.
• The transformation of raw materials into work-in-progress. • The transformation of
work-in-progress into finished goods.
• Retail sale of finished items.
• Cash conversion of receivables.
Different types of working capital requirements

The need for working capital can be divided into two categories: permanent working capital
and temporary working capital.
Continuous working capital

A corporation must always have a specific level of working capital to fund its operations and
meet its business needs, regardless of the volume of operations. This comprises cash, stocks,
and other short-term investments.
Working capital on a short-term basis

In addition to permanent working capital, the company may require additional working
capital to meet demands caused by changes in sales volume. Because it is required to support
the increased number of sales, this additional working capital is referred to as transitory or
variable working capital.

Forecasting/Estimation of Working Capital Requirements

• Total material, wage, and overhead costs
• The amount of time raw materials are stored before being released to manufacture.
• The length of the production cycle or work in progress, i.e. the time required to
convert RM to FG.
• The length of the sales cycle in which FG must wait for sales.
• The average credit period given to customers.
• The amount of money needed to cover the business's day-to-day expenses.
• Any cash required for advance payments.
• The typical credit period that suppliers will grant.
• Delay in paying wages and other overheads.
The significance of working capital management

Working capital management is critical to a company's financial health and operational
performance. The capacity to employ working capital management to strike a healthy balance
between growth, profitability, and liquidity is a sign of good business management.
A company's working capital, which is the difference between its current assets and current
liabilities or debts, is employed in its day-to-day operations. Working capital is a measure of
a company's operational effectiveness and short-term financial stability. The working capital
ratio, determined by dividing current assets by current liabilities, demonstrates a company's
ability to generate sufficient cash flow to meet short-term obligations and expenses.
Businesses need working capital on a daily basis because they need a consistent stream of
cash to pay bills on time, cover unforeseen expenses, and buy raw materials for
manufacturing goods.
Effective working capital management adds to the efficient operation of a firm and can
increase sales and profitability. Inventory, accounts receivable and payable, and working
capital management are all included. The major goals of working capital management are to
maintain the working capital operating cycle and ensure its orderly expenditure operation,
minimize the cost of capital utilized for working capital, and increase the return on current
asset investments.

Working capital is an easy concept to understand because it is linked to a person's cost of

living and can thus be understood in a more personalized manner. People must reclaim
money owing to them and set aside a fixed amount of money each day to pay their bills and
other regular commitments.
Working capital requirements differ from sector to sector and even amongst closely related
businesses. The timing of asset purchases, the likelihood that a company will write off some
of its past-due accounts receivable, and in some cases, capital-receivable, as well as the
capital-raising efforts a company is undertaking, are a few reasons why this is the case. Other
factors include differences in collection and payment policies.
The preservation of a sufficient balance between a company's current assets and obligations is
the basic goal of working capital management, which is essentially an accounting approach.
An efficient working capital management system assists firms in increasing revenue while
also helping them meet their financial responsibilities.
handling working capital entails handling cash, inventories, payables, and receivables. Key
performance ratios, such as the working capital ratio, the inventory turnover ratio, and the
collection ratio, are frequently used by an effective working capital management system to
identify areas that need attention in order to preserve liquidity and profitability.
1.2 STATEMENT OF THE PROBLEM

This project deals with the study about “Working Capital Management” in MERITOR HVS
(INDIA) LTD.
1.3 SCOPE OF THE STUDY

The scope of the study is established both after and during the execution of the study. The
study's principal purpose was to translate theoretical parts of the study into real-life job
experience. Ratio Analysis and Statement of Changes in Working Capital are methods used
in working capital analysis. Furthermore, the study is based on the preceding five years'
annual reports from Meritor HVS (India) Ltd.

Working capital management has several characteristics that make it a significant issue for
research.
Asset management is an important part of any company's overall management. At the time of
its start, the firm placed a high value on fixed asset management as part of investment
decision-making. However, following the initial investment, management prioritizes working
capital management in day-to-day financial management. Any financial statement will show
that fixed asset investment is rather steady, whereas working capital varies. A robust working
capital position is essential for any successful business. Acceptable inventories, the lowest
level of debtors, the least amount of use of bank facilities for working capital, and so on
demonstrate this. As a result, studying working capital management is important in financial
management.
• The study was conducted to gather practical knowledge about Working Capital
Management and the operations of Meritor HVS (India) Ltd.
• The research was conducted as part of the MBA program as summer in-plant training
to fulfill the MBA degree requirement.
1.4 OBJECTIVES OF THE STUDY

• Research the sources and applications of working capital.
• Investigate the liquidity position using various working capital-related ratios.
• Research the components of working capital such as receivables accounts, cash
management, and inventory management.
• To give recommendations based on the study's findings.
1.5 RESEARCH DESIGN

Sampling unit : Financial Statements.
Sampling Size : Last five years financial statements.
Tools Used: MS-Excel has been used for calculations.

1.6 RESEARCH METHDOLOGY

In preparing of this project the information collected from the following sources.
Primary data:
The Primary data has been collected from Personal Interaction with Finance manager i.e., Mr.
Mahesh Nadkarni and other staff members.
Secondary data:
The primary source of data for this research was annual reports, profit and loss statements for
the five-year period from 2019 to 2023, and additional information gathered from the internet
and text sources.
1.7 LIMITATIONS OF THE STUDY

 The study duration (summer in plant) is short.
 The financial analysis is limited to only five years of data research (from 2019 to 2023).
 Limited engagement with the concerned heads due to their busy schedule.
 The findings of the study are based on the information retrieved by the selected unit.
1.8 CHAPTER SCHEME

CHAPTER – II:
REVIEW OF LITERATURE

Examine the influence of strategic choice on working capital configurations and observe how
the relationship between working capital ratio and operational performance differs depending
on strategy. By clustering the strategic factors of the wholesale and retail industry, we find
three categories of strategies: terminal market strategy, middle market strategy, and hybrid
strategy. Using the panel data of the listed companies of the wholesale and retail industry as
our sample, we analyze the differences in the ways companies configure working capital, the
speed with which working capital adjusts to its target, and the effects of working capital on
performance for companies that make different strategic choices. The empirical results
suggest that working capital is configured and adjusted to its target in different ways under
different competitive strategic choices. This effect is finally transferred to influence the
relationship between working capital configuration and operational performance.
2.1 INTRODUCTION
Working capital and strategic choices are two concepts that have been widely discussed
because they impact many aspects of business and financial management. Since Smith,
working capital has been discussed in holistic terms. The current assets, current liabilities,
cash flow, and working capital policy derived from working capital have been examined
primarily for their impact on a firm's value. Studies on working capital management since
Frecka fall into three competing views. Under one view, higher working capital levels allow
firms to increase their sales and obtain greater discounts for early payments and, hence, may
increase firms' value. Working capital management plays a significant role in the better
performance of manufacturing firms. In this line, authors such as Kim et al. suggest that
working capital decisions affect firm performance significantly and find that firms with
higher values hold a significantly higher investment in working capital than firms with lower
values. The second view suggests that firms with higher working capital levels may face
additional financing expenses which increase their probability of going bankrupt. Firms
characterized by high working capital display high sensitivities of investment in working
capital to cash flow and low sensitivities of investment in fixed capital to cash flow. From
this view, authors such as Shin et al. argue that the firms with higher profits are not motivated
to manage working capital and firm performance. Their findings suggest that there is a
negative relationship between working capital and firm performance.
Unlike previous studies, other authors argue that the relationship between working capital
management and corporate performance is nonlinear. Furthermore, Baños-Caballero et al.

find that there is an inverted U-shaped relation between investment in working capital and
firm performance, which implies the existence of an optimal level of investment in working
capital that balances costs and benefits and maximizes a firm's value.
At the same time, the literature on strategy management theory often suggests that a firm's
overall performance may be contingent upon the nature of the strategic choices a firm makes,
and the literature on resource-based theory suggests that a firm's strategic choices may be
made based on superior resources and may represent the means by which resources are
allocated. That is, a firm's strategic choice must consider its resource allocation, and different
strategic choices and/or resource allocations may lead to different performances. Working
capital configuration, an important aspect of company resources, may be affected by the
strategic choices, as well. Using the Cobb-Douglas model, Hamlin and Heathfield deduced a
relational model of working capital and strategy. They argued that a competitive strategy
influences production flexibility and working capital management, and companies dedicated
to maintaining competitive advantages should strengthen their working capital management
accordingly. Nath et al. suggest that an enterprise's marketing capability, operations
capability, and diversification strategy have an integral influence on firm performance.
Therefore, the question is will the working capital configuration change with the
transformation of strategic choices? If it does, will this relationship affect performance? The
prior empirical evidence is largely limited to the relationships between strategic choices and
performance or between working capital and performance. Thus the impact of strategic
choices on working capital and performance has rarely been examined directly. Therefore, it
is important to investigate the influence of strategy on working capital configuration and the
working capital-performance relationship.
In the present study, the relationship among working capital configuration, performance, and
strategic choices is analyzed. The study was conducted in the context of research on strategic
choices and working capital configuration (how do strategic choices influence working
capital allocation), which has attempted to explain the effects of strategic choices on working
capital. Therefore, the research proceeds from the perspective that strategic choices play a
deciding role in the influence of working capital on performance.
As the first step of our investigation, we must understand the category of strategy that a
company adopts. Describing a strategy with the data at our disposal is the first problem we
face. To capture strategic characteristics and measure a strategy with financial statement level

data, we explored the index to distinguish strategies based on two important strategic value
propositions, “efficiency”, and “cost”. By excavating 10 indicators reflecting capital
investment efficiency and cost control ability and clustering the sample according to the
characteristics of these 10 indictors, we classify the strategies of listed companies in the
wholesale and retail industry into three categories. Based on the strategy recognition and the
two-stage working capital adjustment model, the adjustment speed of working capital and its
influential factors on different strategic choices are analyzed and compared by panel data.
Furthermore, the relationship between working capital ratio and operational performance and
the marginal influence of working capital on performance are also examined by panel data
analysis. To clarify the essential role that strategy plays in working capital and the working
capital-performance relationship, we compare the statistic parameters for samples belonging
to different strategies. The empirical results suggest that working capital is configured and
adjusted to its target in different ways depending on different competitive strategic choices.
This effect is finally transferred to influence the relationship between working capital
configuration and operational performance. The marginal influence of the working capital
ratio on performance is different with different strategies.
This study contributes to the working capital management literature in a number of ways.
First, we construct a model of working capital adjustment based on the target adjustment
model of the capital-structure or target debt ratio (leverage) [33] and conduct an empirical
study on the adjustment path of working capital under different strategies. Second, the paper
investigates the relationship between investment in working capital and firm performance
according to different strategies of firms and the marginal influence of working capital ratio
on performance with different strategies. Third, we estimate the models by using a panel data
methodology to eliminate unobservable heterogeneity and use the generalized method of
moments (GMM) to address possible endogeneity problems.

2.2 LITERATURE REVIEW

Meritor HVS (India) Ltd is conducting research on working capital management. One way
the firm can function well is by managing its current assets properly and efficiently, as no
company can survive by simply adding some margin to its costs. A corporation must perform
in order to supply its goods at a reasonable price in an environment of constant pricing and
rate of inflation. Working capital management is one way to improve efficiency. Ineffective
working capital management leads to payment failure, which frustrates creditors and
eventually leads to technical insolvency. It is, as many authors have noted, an organization's
lifeblood. Despite its importance, little research has been conducted in this field..
N Jankisan and V.P. Gupta published a case study on working capital management and
profit planning using PERT networks in 2016. In the Journal of Accounting and Finance, S.P.
Deshpande offered a mathematical study of working capital management.
A. Sreekumar and colleagues did research on cash management control limit models at
back branches in 2013. S. Chander and C.K. Mahajan reported on the inventory valuation
debate. J.K. Kundu studied money flow statements, including the consideration of provisions
and their impact on working capital management..
Subash Chandra Singh, Kanta Prasad Singh, and Anil Kumar Sinha the researchers
evaluated various aspects of working capital management in the fertilizer industry in India
during 2011-12 to 2012-13. The sample included Fertilizer Corporation of India Ltd. (FCI)
and its daughter units, Hindustan Fertilizers Corporation Ltd. and National Fertilizer (Projects
and Development) India Ltd., and their working capital management results were compared
with Gujarat State Fertilizer Company Limited in the joint sector.
S. Lal conducted research on financial management in Nepalese state firms in 2011. S.

Kumar investigated the working capital in TV manufacturing firms. Jayaram's research
focused on how working capital is allocated in the corporate sector.
K. Kumar conducted a study on cash on management at selected units of state-level

manufacturing public businesses in 2010. A Singh highlighted the challenges of managing
working capital in Assam's state-owned firms. J. Moray reported on the sugar industry's
working capital management. Dr. M.S. Poonia performed study in the Indian bicycle industry
on loan planning and working capital management. V.M. Saxena and P. Kumar wrote a

Chartered Accountant essay. The significance of a cash disbursement plan in improving

liquidity management was underlined. Management Accountant's K. Gopal discussed how to
successfully manage inventories.
A.K. Sharma conducted research on cash planning and management in the corporate
sector in 2009. K. Gupta looked at the working capital in the fertilizer industry. S.K. Gupta
investigated working capital management in television manufacturing firms. J. Rao spoke
about working capital management in small manufacturing businesses. C.K. Shah studied
working capital management in the pharmaceutical and pharmaceutical businesses. D Singhal
did a case study on management at Haryana's State Level Corporations, while O.P. Sharma
researched working capital management in the zinc business. P. Chand investigated working
capital in Indian State Electricity Boards. S. Srinivasan underlined the necessity of managing
liquidity and profitability in working capital in Indian Management. R.C. Reddy emphasized
working capital management in cooperative sugar mills.
S.C. Bardla in year of 2008. The operational cycle concept was used in forecasting and
regulating working capital. The techno-financial approach to working capital theory was
described by H. Bhattacharya. S.K. Chawla calculated operating capital in an appropriate
method. S. Grai and A Mallick established the role of working capital in manufacturing
businesses. S.P Deshpande used a systematic approach to estimating and forecasting working
capital needs..
S.C. Bardia conducted a research on working capital management in the iron and steel
sector in India in 2006. Dr. Jindal carried out a similar analysis in scooter manufacturing
companies. Dr. Sharma studied working capital management in the textile business. Dr. R.
Jain studied working capital management in government enterprises. Three articles in
Management Accountant were published during this time period, covering subjects like as
planning, funding, and the general aspect of working capital. In Indian Management, G.V.
Chalan and D. Murthy undertook a brief analysis of chosen units of the Indian private
business sector..
N. Agarwal conducted a study on working capital in a sample of paper manufacturing

enterprises in 2017. Dr. T. Hossain conducted research on the management of working capital
in selected units of Bangladesh's cotton textile sector.

H. L. Agarwal created an analytical model of working capital policy in 2004. Dr. Raman
conducted a study on working capital management in the state Road Transport Undertaking
the same year Dr. Satyanarayana Murthi conducted a study on cash management.
B. Banerjee conducted a study on working capital finance under inflationary conditions in

2003. Dr. S. P. Vijayasarathi's 2001 study on working capital challenges in public firms
comprised loans advances, cash, inventories and receivables, and so on. He goes into great
detail on the issues with working capital.
Agarwal, R.N. The total inventory investment equation was developed for individual
businesses in the automobile manufacturing industry, which was divided into two sectors: car
sectors and non-car sectors. His study was based on data from 1959-1960 through 1978-1979.
The Mumbai Stock Exchange's Official Directory had been the principal source of
information. In the examination of two sectors, sales and stock sales ratio were found to be
key explanatory variables. In the automotive sector, only the cost of capital and trend were
relevant, whereas fixed investment and external money flows were significant in the non-
automotive sector. The existing inventory stock was statistically significant in both sectors,
albeit with a negative coefficient, contrary to expectations
Dr. N.K. Agarwal was born in the year 2007. Thirty-four large manufacturing and trading
public limited companies were chosen for the years 1966-1967 through 1973-1974. He
discovered that, while all firms employed scientific techniques to manage the various
components of working capital, there was still potential for inventory, cash, and receivables
investment to be reduced..
Agarwal Working capital management was also studied using a sample of 34 large
manufacturing and trading public limited companies in eleven private sector industries from
1966-1967 to 1976-1977. The study concluded, using the same ratio analysis, questionnaire
responses, and interview data, that, while working capital per rupee of sales has been falling
over the years, there appears to be significant potential for decrease in investment in
practically all segments of working capital.

Warren and Shelton (2000) employed a set of simultaneous equations to simulate a

company's future financial statements. The financial simulation method incorporates future
uncertainty as well as the various interrelationships between current assets, current liabilities,
and other balance sheet accounts. Warren and Shelton developed a model that projected the
firm's future balance sheet, including forecasted current assets and forecasted current
liabilities, using twenty simultaneous equations.
The National Council of Applied Economic Research (NACAER) conducted a research

in this area in 1999, focusing on the breadth in three industries: fertilizer, sugar, and cement.
However, it solely addressed the structural framework of working capital, i.e. working capital
composition. The study did not concentrate on the management of various working capital
components. Misran researched working capital challenges in six selected public sector
enterprises in India from 1990-1991 to 1997-1998. In terms of working capital composition
and utilization, financial ratio analysis and questionnaire responses produced results similar
to the NCAER study. In all of the businesses studied, inventory was the most important
component of working capital. The survey also revealed overstocking of inventories in
relation to each component, relatively low receivables turnover, and more cash than required
by operational requirements, resulting in total working capital mismanagement in public
sector firms.
NACAER (National Council of Applied Economic Research) conducted a study in this

sector in 1998, emphasizing the breadth in three industries: fertilizer, sugar, and cement.
However, it solely addressed the structural framework of working capital, i.e. working capital
composition. The study did not concentrate on the management of various working capital
components.
Dr. Vijayasarathi and R. Rao conducted a study on management of improvements in

public enterprises in 1992. They proposed methods for restricting the amount of
government progress. Aside from these, a few further studies and contributions have focused
on specialized or general elements of working capital management. Some of the most recent
studies and scholarship on working capital are highlighted below.

P.M. Reddy and C.S. Reddy released an analytical investigation on cash and balance
sheet working capital in their accounting finance department. In his study in Management
Accountant, S.N. Basu analyzed working capital in tyre companies. D Banerjee did a case
study on working capital management at Grasim Industries Ltd.
Welter, Working capital arose as a result of the global delay between the time money was
spent on raw material purchases and the time money was received for the sale of finished
product, according to his research. Delay centers are located in virtually every division of
working capital investment, including manufacturing and marketing.

CHAPTER – III
COMPANY PROFILE

3.1 INDUSTRY PROFILE

Companies in this industry manufacture automobile parts, including transmission and power
train components, engines and engine parts, body parts and trim, electronics, braking
systems, steering and suspension components, as well as motor vehicle seating. Major
companies include American Axle & Manufacturing, BorgWarner, Dana Incorporated, Lear
Corporation, and Tenneco (all based in the US); along with Adient and Aptiv (Ireland), Aisin
Corporation and DENSO (both based in Japan), Bosch and ZF Group (both based in
Germany), Faurecia (France), and Magna International (Canada).
Economic expansion in emerging markets worldwide is expected to drive healthy growth in
the auto manufacturing sector over the next several years, which should bolster demand for
auto parts.
The US auto parts manufacturing industry consists of about 5,000 companies with combined
annual revenue of about $300 billion.
COMPETITIVE LANDSCAPE
As the automotive industry adapts to a future that includes electric drivetrains, autonomous
technology, connectivity, and mobility options outside traditional car ownership, suppliers
must evolve to meet these new challenges. Technology content is increasing its share of
overall vehicle value, while hard auto parts are expected to become more commoditized. New
industry entrants including tech firms and consumer electronics companies also present
challenges to established suppliers. To remain competitive, automotive suppliers must
develop fresh strategies that address this wide array of emerging challenges and
opportunities.
Demand for auto parts is driven by new car sales, which are strongly affected by interest
rates.
Introduction
India has become the fastest-growing economy in the world in recent years. This fast growth,
coupled with rising incomes, a boost in infrastructure spending and increased manufacturing
incentives, has accelerated the automobile industry. The two-wheeler segment dominated the
automobile industry because of the Indian middle class, with automobile sales standing at
19.45 million units in FY23.

Significant demand for automobiles also led to the emergence of more original equipment
and auto components manufacturers. As a result, India developed expertise in automobiles
and auto components, which helped boost international demand for Indian automobiles and
auto components. Hence, the Indian automobile industry has a considerable impact on the
auto component industry.
India’s auto component industry is an important sector driving macroeconomic growth and
employment. The industry comprises players of all sizes, from large corporations to micro
entities, spread across clusters throughout the country. The auto components industry
accounted for 2.3% of India’s GDP and provided direct employment to 1.5 million people.
By 2026, the automobile component sector will contribute 5-7% of India's GDP. The
Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2
million by 2026.
The industry is a leader in exports and provides jobs to over 3.7 crore people. From FY16-
FY22, the industry registered a CAGR of 6.35% and was valued at US$ 56.50 billion in
FY22. Exports of auto components grew by 5.2% to Rs. 1.61 lakh crore (US$ 19.49 billion)
in 2023-23 from Rs. 1.41 lakh crore (US$ 19 billion) in 2022-22. In 2023-24 (April-July), the
export value of auto components/parts was estimated at US$ 2.46 billion. North America,
which accounts for 32% of total exports, increased by 8%, while Europe and Asia, which
account for 31% and 26% of total exports, increased by 3% and 4%, respectively. The key
export items included drive transmission and steering, engine components, body/chassis,
suspension and braking etc.
Due to the high development prospects in all vehicle industry segments, the auto component
sector is expected to see double-digit growth in FY22. The industry is expected to stand at
US$ 200 billion by FY26.

Market Size
India’s auto components industry’s market share has significantly expanded, led by
increasing demand for automobiles by the growing middle class and exports globally. Due to
the remarkable growth in demand for Indian auto components, several Indian and
international players have entered the industry. India’s auto component industry is broadly
classified into organised and unorganised sectors. While the unorganised sector consists of
low-valued items and mostly serves the aftermarket category, the organised sector serves
OEMs and includes high-value precision instruments.
The automobile component industry turnover stood at Rs. 5.6 lakh crore (US$ 69.7 billion)
between 2023-23 the industry had revenue growth of 32.8% as compared to 2022-22.
Domestic OEM supplies contributed ~66% to the industry’s turnover, followed by domestic
aftermarket (~12%) and exports (~22.3%), in FY23. The component sales to OEMs in the
domestic market grew by 39.5% to US$ 57.62 billion (Rs. 4.76 lakh crore). Between 2023-
23, exports of auto components grew by 5.2% to Rs. 1.61 lakh crore (US$ 19.49 billion). The
aftermarket for auto components grew by 15% in 2023-23 reaching Rs. 85,333 crore (US$
10.33 billion).
As per the Automobile Component Manufacturers Association (ACMA) forecast, auto

component exports from India are expected to reach US$ 30 billion by 2026. The auto
component industry is projected to record US$ 200 billion in revenue by 2026. Strong

international demand and resurgence in the local original equipment and aftermarket
segments are predicted to help the auto component industry grow 20-23% in FY22.
In fiscal year 2023-24 (April-November), the total number of automobiles sold was 14.18
million units. In (April-November) 2023-24, the total production of passenger vehicles,
commercial vehicles, three-wheelers, two-wheelers, and quadricycles was 15.56 million
units.
Investments
The Indian automobile sector recorded an inflow of huge investments from domestic and
foreign manufacturers. FDI inflow in the sector stood at US$ 35.40 billion between April
2000-September 2023 which is around 5.41% of the total FDI inflows in India during the
same period. Some of the recent investments made/planned for the auto component sector are
as follows:
 In October 2023, Tata Motors signed a definitive agreement to acquire a 27% stake in
Freight Tiger, a software-as-a-service (SaaS) company, for Rs. 150 crore (US$ 17.99
million).
 Auto components maker Happy Forgings to launch IPO on December 19th, 2023. It
comprises a fresh equity issue of Rs. 400 crore (US$ 47.99 million) and an offer for
sale (OFS) of 71.59 lakh shares.
 Ola Electric IPO to be the first auto company in India to launch an IPO in over two
decades (20 years). It has an expected size of Rs. 8,500 crore (US$ 1.01 billion).
 In August 2023, Bosch earmarks US$ 58.11 million (Rs. 480 crore) for R&D and an
additional capex of US$ 58.11 million (Rs. 480 crore).
 In June 2023, Tata Motors will invest US$ 2 billion towards developing new products
and platforms over the next four years.
 In May 2023, Apollo tyres would be making an investment around US$ 133.17
million (Rs. 1,100 crore) in the FY24.
 In May 2023, Gabriel India inks a pact with Inalfa, to invest US$ 20.58 million (Rs.
170 crore) to set up a new manufacturing facility. Inalfa Gabriel Sunroof Systems
(IGSS), in Chennai which will become operational in the first quarter of 2024.
 In May 2023, With Tesla proposing a manufacturing plant in India, the government
plans to come out with a modified production-linked incentive scheme (PLI 2.0) for
electric vehicles and advanced chemistry cell batteries to invite fresh investments.

 In May 2023, Bridgestone looks to expand its retail footprint in India by 20-25%.
 In May 2023, Tata Technologies on Monday announced a partnership with TiHAN
IIT Hyderabad, to collaborate in the areas of Software Defined Vehicles (SDV) and
Advanced Driver Assistance Systems (ADAS) that incorporate the latest technologies.
 In April 2023, GreenCell Mobility invested US$ 181.59 million (Rs. 1,500 crore) to
double EV buses supply in India
 By 2030, Chinese EV manufacturer BYD hopes to control 40% of the Indian EV
market. It already has a manufacturing setup in India, and the current plant's capacity
may be increased by another 10,000–15000 units.
 In 2023-23, Tamil Nadu attracted investment proposals worth US$ 2.20 billion (Rs.
18,063 crore) Tamil Nadu is capitalizing on its previous automotive expertise to enter
the EV industry.
 In February 2023, Bridgestone India, a global leader in tyres and sustainable mobility
solutions, announced that it would be investing over US$ 73.39 million (Rs. 600
crore) to meet the increasing demand for quality passenger tyres in the country.
 In January 2023, NXP Semiconductors inaugurated a new state-of-the-art Systems &
Silicon Innovation lab at NXP Semiconductors Campus in Manyata Tech Park,
Bengaluru.
 In November 2023, Continental Tires, a leading premium tyre manufacturer
inaugurates Its First Commercial Vehicle Alignment Center in Jaipur.
 In November 2023, auto components maker Sona BLW precision forgings ltd.
announced its plans to increase capex by Rs. 1,000 crore (US$ 123.28 million) for its
electric vehicles business.
 In March 2023, Minister of State for Power and Heavy Industries Mr. Krishan Pal
Gurjar, said that Indian and foreign automobile manufacturers have taken initiatives to
develop hydrogen fuel cell vehicles.
 In June 2023, German auto component major ZF inaugurated and expanded its new
tech centre in India.
 In January 2023, e-bike maker Emotorad announced plans to raise US$ 25 million to
expand in the US markets.
 In December 2022, Exponent Energy, an Electric Vehicle (EV) start-up, secured a
pre-series funding of US$ 5 million.

 In December 2022, India’s leading automobile platform CarTrade Tech invested US$
100 million for a new acquisition and to accelerate growth.
 In October 2022, Wheels India announced it would invest an additional Rs. 37 crore
(US$ 4.95 million) this year to support global service demand.
 In October 2022, Lucas TVS announced a 20% capacity expansion of its auto and
non-auto businesses by the end of 2022.
 In October 2022, Hero Motor formed a joint venture with Japanese two-wheeler
major Yamaha to manufacture electric motors for e-bicycles for the global market.
 In October 2022, the Maharashtra government signed an MoU with Causis E-Mobility
Pvt. Ltd., a joint venture of UK-based Causis Group, to set up a zero-emission EV
manufacturing facility at Talegaon, near Pune, with an investment of Rs. 2,800 crore
(US$ 317.96 million).
 In October 2022, Sona BLW Precision Forgings Limited, through its wholly owned
subsidiary Sona Comstar eDrive Private Limited (Sona Comstar), entered a
collaboration agreement with Israel's IRP Nexus Group Ltd. to develop, manufacture
and supply magnetless drive motors and matching controller systems for electric two-
and three-wheelers.
 In October 2022, auto component manufacturer MM Forgings Ltd. (MMF) acquired
CAFOMA Autoparts for Rs. 33 crore (US$ 4.38 million).
 In October 2022, TVS Motor Company, collaborated with Tata Power, to boost the
comprehensive implementation of Electric Vehicle Charging Infrastructure (EVCI)
across India and deploy solar-powered technologies at various TVS Motor locations.
 At the Investment Conclave - 2022 in Chennai, the Tamil Nadu government stated
that it received investment commitments totalling Rs. 28,508 crore (US$ 3.85 billion)
from 49 companies. Electronics, automotive components, industrial parks,
information technology and manufacturing are some of the sectors where these
investments are expected to generate about 83,482 jobs in the state.
 The Indian government has outlined US$ 7.8 billion for the automobile and auto
component sector in Production-Linked Incentive (PLI) schemes under the
Department of Heavy Industries.
 In May 2022, the Government of India approved a PLI scheme for manufacturing
advanced chemistry cell batteries at an estimated outlay of Rs. 18,100 crore (US$
247.3 million).

 In March 2022, the government announced plans to offer fresh incentives to

companies manufacturing EVs as part of a broad auto sector scheme. The scheme is
expected to attract US$ 14 billion of investment in the next five years.
 In February 2022, Vedanta Resources launched its newest product — aluminium
cylinder head alloy — a crucial raw material for manufacturing cylinder heads and
other automotive components.
 A cumulative investment of around Rs. 12.5 trillion (US$ 180 billion) in vehicle
production and charging infrastructure would be required until 2030 to achieve
India’s EV ambitions. This is likely to boost demand for auto components from local
manufacturers.
 In January 2022, Suzuki Motor Corp. and Hyundai Motor Co. announced plans to
explore ways to make India a key global hub for sourcing components and enable a
sharp rise in vehicle exports from the country.
 In January 2022, French battery system supplier Forsee Power pledged to invest Rs.
82 crore (US$ 11.18 million) in phase 1 of the India project.
Government Initiatives
The Government has reaffirmed its commitment towards EVs and its mission for 30%
electric mobility by 2030. Budget announced customs duty exemption on the import of
capital goods and machinery required for the manufacture of lithium-ion batteries that
typically power EVs.
The Bharat New Car Assessment Program (BNCAP) will not only strengthen the value chain
of the auto component sector, but it will also drive the manufacturing of cutting-edge
components, encourage innovation, and foster global excellence.
The FAME Scheme was extended for a further period of 2 years up to 31st March, 2024.
The Government of India’s Automotive Mission Plan (AMP) 2006-26 has been instrumental
in ensuring growth for the sector. The Indian automobile industry is expected to achieve a
turnover of US$ 300 billion by 2026 by expanding at a CAGR of 15% from its current
revenue of US$ 74 billion.
In November 2021, the Union Cabinet approved a PLI scheme in automobile and auto
components with an approved financial outlay over a five-year period of Rs. 57,042 crore
(US$ 8.1 billion). In September 2022, the Indian government issued notification regarding a

PLI scheme for automobile and auto components worth Rs. 25,938 crore (US$ 3.49 billion).
In February 2023, the government received an investment proposal worth Rs. 45,016 crore
(US$ 6.04 billion) from 20 automotive companies under the PLI Auto scheme. This scheme
is expected to create an incremental output of Rs. 2,31,500 crore (US$ 31.08 billion).
The government’s AMP 2016-26 will help the automotive industry grow and will benefit the
economy in the following ways:
 The auto industry’s GDP contribution will rise to over 12%.
 Additional ~65 million direct and indirect jobs will be created.
 End-of-life policy will be implemented for old vehicles.
Road Ahead
The rapidly globalising world is creating newer opportunities for the transportation industry,
especially while shifting towards electric, electronic and hybrid cars, which are deemed more
efficient, safe and reliable modes of transportation. Over the next decade, this will lead to
newer verticals and opportunities for auto component manufacturers. To help them adjust to
the shifting dynamics of the sector, the Indian government has already offered various
production incentives. India is also investing heavily in electric car infrastructure.
In December 2021, Power PSU JV EESL announced a plan to install about 500 EV charging
stations in the country. The number of charging stations stood at 1,800 in March 2022 and is
expected to reach 4 lakh by 2026. This would make it easier for the auto component industry
to take advantage of the EV opportunity and expertise in EV components manufacturing, thus
helping India on a global scale. The Indian government is exempting imports of capital goods
and machinery essential to produce lithium-ion cells used in EV batteries from customs duty.
This, coupled with the shift in global supply chains, will help the Indian global automotive

component trade to expand 4-5% to US$ 80 billion by 2026. Moreover, the Indian auto
component industry is predicted to become the third largest in the world.
3.2 COMPANY PROFILE

Meritor Hvs (India) Limited is an unlisted public company incorporated on 13 February,
1998. It is classified as a public limited company and is located in , Karnataka. It's authorized
share capital is INR 3.50 cr and the total paid-up capital is INR 2.43 cr.
Meritor Hvs (India) Limited's operating revenues range is Over INR 500 cr for the financial
year ending on 31 March, 2023. It's EBITDA has increased by 100.54 % over the previous
year. At the same time, it's book networth has increased by 26.44 %. Other performance and
liquidity ratios are available here.
The company provides drivetrain solutions with Axles and Brakes for Heavy Vehicles in
Commercial, Military and Off-Highway applications. they have in-house design,
development and testing facilities to provide the most advanced and reliable drivetrain
solutions for your vehicle.
Meritor HVS (India) Limited (MHVSIL) is a Joint Venture company promoted by Meritor
Heavy Vehicle Systems LLC, USA (a subsidiary of Meritor, Inc., USA) and Kalyani Group,
Pune, India. MHVSIL, along with manufacturing partner, Automotive Axles Limited (AAL)
has been the largest independent axle manufacturer in India since 1983.
Meritor HVS (India) Limited provide drivetrain solutions with Axles and Brakes for Heavy
Vehicles in Commercial, Military and Off-Highway applications. We have in-house design,
development and testing facilities to provide the most advanced and reliable drivetrain
solutions for your vehicle.
History:-
Meritor HVS (india) Limited is a Non-govt company, incorporated on 13 Feb, 1998. It's a
public unlisted company and is classified as'company limited by shares'.
Company's authorized capital stands at Rs 350.0 lakhs and has 69.428566% paid-up capital
which is Rs 243.0 lakhs. Meritor HVS (india) Limited last annual general meet (AGM)

happened on 13 Aug, 2019. The company last updated its financials on 31 Mar, 2019 as per
Ministry of Corporate Affairs (MCA).
Meritor HVS (india) Limited is majorly in Manufacturing (Machinery & Equipments)
business from last 26 years and currently, company operations are active. Current board
members & directors are THIMMAIAH NAPANDA POOVAIAH, BABASAHEB
NEELKANTH KALYANI, BHOOPALAM CHANDRASHEKHARAIAH PRABHAKAR,
JOSEPH A PLOMIN JR, SUBHASH CHAND GUPTA and SUPRITI BHANDARY .
Company is registered in Bangalore (Karnataka) Registrar Office. Meritor HVS (india)

Limited registered address is HOOTAGALLI INDL. AREAOFF.HANSUR ROAD,
MYSORE KA 570018 IN.
Meritor HVS (india) Limited Details

CIN U29221KA1998PLC023383
Date of Incorporation 13 Feb, 1998
Status Active
Company Category Company limited by Shares
Company Sub-category Non-govt company
Company Class Public
Business Activity Manufacturing (Machinery & Equipments)
Authorized Capital 350.0 lakhs
Paid-up Capital 243.0 lakhs
Paid-up Capital % 69.428566
Registrar Office City Bangalore
Registered State Karnataka
Registration Number 23383
Registration Date 13 Feb, 1998

3.3 POLICY ON VISION AND QUALITY
VISION
To be a world class quality manufacturer of axles, providing innovative solutions to
customer at competitive price, that enhance mobility, safety & environment and retain
leadership.
Quality Policy
1. Achieve Customer Satisfaction through supply of the state of art products/ services to
meet and exceed Customer expectations for Technology, Quality Cost, Delivery and
Responsiveness.
2. Committed and focused on world-class Quality and Warranty performance in all aspects
of our operations from engineering to manufacturing.
3. Continually lead in the. New Product Development with innovative solutions, focused
on Product Safety throughout, product design, manufacturing & supply chain.
4. Continually improve Human Resource Systems and practices through Training,
Empowerment and Motivation to achieve Total Employee Involvement, Teamwork and
Respect for each other.
5. Establish Bench Marking Practices to Outperform competitors strategies and enhancing
customer loyalty with differentiated products, superior service and competitive pricing.
6. Exceed our financial and growth objectives through aggressive implementation of our
Business Plan.
7. Continually improve Environment, Health, Safety & community development and
related practices
Customer Satisfaction:
Supply state of the art Products/Services to Customers that meet their expectations for
Quality, Technology, Time, and Responsiveness.
Quality:
Continually improve Effectiveness and Efficiency of Quality Management Systems to
maintain a distinguishable competitive Edge as viewed by Customers.

Human Resources Development:

Establish and Implement leading edge Human Resource Systems and Practices to meet the
business objective through Training, Empowerment, and Motivation in achieving Total
Employee Involvement.
Competition:
(Neutralize) Out Perform Competitors strategies by developing Customer Loyalty with
differentiated products, superior service and competitive Pricing.
Financial Performance:
Exceed our financial and growth objectives through aggressive implementation of our
Business Plan.
Environment & Safety:

Establish and implement suitable environment and safety practices/ systems to fulfill our
social objectives.
3.4 PRODUCTS / SERVICE PROFILE

Products and service profile
Meritor HVS (India) Ltd, we’re dedicated to rear axle solutions that enhance mobility to give
our customers the leading edge. With more than 30 years of axle manufacturing experience
for Indian applications, we’ve become India’s largest independent manufacturer of
commercial truck axles for a broad range of vehicle applications. And, our rear axles are at
the heart of this heritage.
We’ve mastered the combination of precision engineering, component durability, and

lightweight options – all to bring your operation enhanced movement. We can provide a
complete solution for all your needs in form of drive axles, brakes and suspension interfaces.
When your operation needs a drive axle product to move you past the competition..

1) Drive Axles
An axle that is driven by the engine or prime mover is called a drive axle. Modern front-
wheel drive cars typically combine the transmission (gearbox and differential) and front axle
into a single unit called a transaxle. The drive axle is a split axle with a differential and
universal joints between the two half axles. Each half axle connects to the wheel by use of a
constant velocity (CV) joint which allows the wheel assembly to move freely vertically as
well as to pivot when making turns.
In rear-wheel drive cars and trucks, the engine turns a driveshaft (also called a propellor shaft
or tailshaft) which transmits the rotational force to a drive axle at the rear of the vehicle. The
drive axle may be a live axle, but modern rear-wheel drive automobiles generally use a split
axle with a differential. In this case, one half-axle or half-shaft connects the differential with
the left rear wheel, a second half-shaft does the same with the right rear wheel; thus the two
half-axles and the differential constitute the rear axle.[3] The front drive axle is providing the
force to drive the truck. In fact, only one wheel of that axle is actually moving the truck and
trailer down the road.
Some simple vehicle designs, such as leisure go-karts, may have a single driven wheel where
the drive axle is a split axle with only one of the two shafts driven by the engine, or else have
both wheels connected to one shaft without a differential (kart racing). However, other go-
karts have two rear drive wheels too
i) MS04
The MS04 single reduction hypoid solo drive axle is designed for on-highway operation for
Light Commercial Haulage, vocational and bus applications. With a load rating of up to 5
Tonnes the axle supports vehicles with GVW of up to 7 Tonnes. Available in wide number of
ratios varying from 3.7-5.86 with a ring gear PCD of 267mm, the axle provides the best in
performance, durability and enhanced mobility due to better ground clearance.

ii) MS06 100
The MS06 100 single reduction hypoid solo drive axle is designed for on-highway operation
for haulage, vocational truck and bus applications. With a load rating of up to 6 Tonnes the
axle supports vehicles with GVW of up to 12 Tonnes. Available in wide number of ratios
varying from 3.7-6.8 with a ring gear PCD of 305 mm, the axle is a proven performer on the
tough Indian terrain.
iii) MS08 120
axle supports vehicles with GVW of up to 16 Tonnes. Available in wide number of ratios
varying from 3.31-6.83 with a ring gear PCD of 337 mm, the axle is a proven performer on
the tough Indian terrain. With an optional Driver Controlled Differential Lock (DCDL), this
axle from Meritor is ideally suited for light vocational application.

iv) MS13 145
The MS13 145 single reduction hypoid solo rive axle is designed for on-highway operation
axle supports vehicles with GVW of up to 19.2 Tonnes. Available in wide number of ratios
varying from 3.58-6.83 with a ring gear PCD of 389 mm, the axle is a proven performer on
the tough Indian terrain. One of Meritor’s largest selling axles worldwide has been a strong
performer on the Indian terrain. With an optional Driver Controlled Differential Lock
(DCDL), this axle from Meritor is ideally suited for vocational application.
v) MS13 1496
for bus applications. With a load rating of up to 13 Tonnes the axle supports vehicles with
GVW of up to 19.2 Tonnes. Available in wide number of ratios varying from 4.88-6.17 &
with a ring gear PCD of 432 mm. The axle with special bus gearing and low ratios is ideally
suited for comfort oriented and Noise/harshness specific bus applications.

vi) MS131497
for haulage, vocational truck applications. With a load rating of up to 13 Tonnes the axle
supports vehicles with GVW of up to 19.2 Tonnes. Available in wide number of ratios
varying from 3.7-6.83 & with a ring gear PCD of 440 mm, the axle is a proven performer on
the tough Indian terrain. Meritor’s largest selling axle in India has been in successful
operation over a variety of terrain and applications.
vii) MS 14 160
for Haulage and Vocational trucks applications. With a load rating of up to 14 Tonnes the
axle supports vehicles with GVW/GCW of up to 21 Tonnes. Available in wide number of
ratios varying from 4.63-6.83 & with a ring gear PCD of 457 mm. The axle is ideal for tractor
& heavy duty tipper application.

viii) MS13 177
for Bus applications. With a load rating of up to 13 Tonnes the axle supports vehicles with
GVW/GCW of up to 21 Tonnes. Available in wide number of ratios varying from 2.64-6.17
& with a ring gear PCD of 444.5 mm. The axle is the first indigenously manufactured axle
which is supplied with disc brakes. Unitized bearing and larger pinion bearing make this axle
perfectly suited for new age luxury buses where comfort and safety is paramount.
ix) MS13 245
for Haulage & vocation Truck applications. With a load rating of up to 13 Tonnes the axle
supports vehicles with GVW/GCW of up to 19.2/35 Tonnes respectively. Available in wide
number of ratios varying from 4.1-7.17 & with a ring gear PCD of 431.8 mm. The axle offers
unique benefits by the virtue of having two available ratios in one axle which the driver can
choose between on the move depending on the load and terrain requirements. The axle offers

improved fuel economy over a standard axle by up to 7% with up to 20% improvement in

turnaround time.
x) MS16 616
The MS16 616 Hub reduction hypoid solo drive axle is designed for on/off highway
operation for Haulage & vocational Truck applications. With a load rating of up to 16 Tonnes
the axle supports vehicles with GVW/GCW of up to 35/60 Tonnes respectively. The axle is
available in wide number of ratios varying from 5.4-7.2 (Wheelend ratio 3.46). Featuring a
fabricated housing the axle offers unique benefits by the virtue of having a hub reduction.
Increased ground clearance, improved life and high torque handling ability allow it to
perform in conditions where a single reduction axle cannot. This axle is ideally suited for
Tractor, Tipper and off-highway applications.
xi) MS18 610

The MS18 610 Hub reduction hypoid solo drive axle is designed for on/off highway
operation for Haulage & Vocational Truck applications. With a load rating of up to 18
Tonnes the axle supports vehicles with GVW/GCW of up to 35/60 Tonnes respectively. The
axle is available in wide number of ratios varying from 5.4-7.2 (Wheelend ratio 3.46).
Featuring a cast housing the axle offers unique benefits by the virtue of having a hub
reduction. Increased ground clearance, improved life and high torque handling ability allow it
to perform in conditions where a single reduction axle cannot. This axle is ideally suited for
Tractor, Tipper, deep mining and off-highway applications.
xii) MT26 109
The MT26 109 single reduction hypoid tandem drive axle is designed for on highway
available in wide number of ratios varying from 5.83-6.83. The axle is ideally suited for
Tractor and Tipper applications and with an Inter Axle Differential Lock (IAD) it enables the
vehicle to perform on the harshest of terrain
xiii) MT26 148

vehicle to perform on the harshest of terrain.
xiv) MT26 1495
vehicle to perform on the harshest of terrain.
xv) MT28 160

Tractor and Tipper applications and with an Inter Axle Differential Lock (IAD) & Driver
Controlled Differential Lock (DCDL) it offers tremendous off-roading capability to the
vehicle.
xvi) MT32 616
The MT32 616 Hub reduction hypoid Tandem drive axle is designed for on/off highway
available in wide number of ratios varying from 5.4-7.2 (Wheelend ratio 3.46). Featuring a
fabricated housing the axle offers unique benefits by the virtue of having a hub reduction.
Increased ground clearance, improved life and high torque handling ability allow it to
perform in conditions where a single reduction axle cannot. This axle is ideally suited for
Tractor, Tipper and off-highway applications and is available with an InterAxle Differential
Lock (IAD) and Driver Controlled Differential Lock (DCDL) for tremendous off-roading
capability.

xvii) MT36 610
The MT36 610 Hub reduction hypoid Tandem drive axle is designed for on/off highway
operation for Haulage & Vocational Truck applications. With a load rating of up to 35
reduction. Increased ground clearance, improved life and high torque handling ability allows
it to perform in conditions where a single reduction axle cannot. This axle is ideally suited for
Tractor, Tipper, deep mining and off-highway applications and is available with an InterAxle
Differential Lock (IAD) and Driver Controlled Differential Lock (DCDL) for tremendous
off-roading capability.

2) Non-Drive Axles
The proven leadership of Meritor in the design and manufacture of trailer components began
back in 1930. Today we continue to set the pace for the industry with important new product
innovations.
In India, we have been supplying dead axles to all the major OEs for Haulage and Trailer
application. Built to exact engineering standards of Meritor, these axles have been the
benchmark in the Indian heavy vehicle space. Built to suit popular brake sizes, tag and trailer
axles come with proper suspension interfaces for ease of packaging and fitment. Available in
various load ratings from 10-14 tonnes, suspension interfaces and brake configurations with
these axles complete your vehicle and trailer.
i) Tag Axles
Meritor provides Tag axles for rigid vehicle’s dead axle requirement. These axles are
available in 12-14 Tonne capacity with different brake configurations and multiple of
suspension interfaces to suit each and every requirement. Built to exact engineering standards
and OE specification they provide the best in safety, durability, load carrying capacity, tire
life and reliability.
ii) Trailer Axles

Meritor provides Trailer axles for trailer requirement. These axles are available in 10-14
Tonne capacity with different brake configurations and multiple of suspension interfaces to
suit each and every requirement. Built to exact engineering standards, strict quality inspection
and rigorous design they provide the best in safety, durability, load carrying capacity, tire life
and reliability.
3) Drum Brakes
Meritor is the worldwide braking leader in both size and capability for the commercial
vehicle industry, supplying more than two million brake assemblies per year for trucks,
trailers, buses and coaches. Our brakes can be found on trailers, buses and coaches, and in
such vocational applications as emergency, linehaul, fire and defense. We enjoy a market-
leading position with cost of ownership optimized through the application of advanced
predictive techniques and innovative manufacturing processes.
Meritor is driven by safety. We work daily to engineer safety into every brake system, detail
and control. Safety directs our innovation into every braking product we make, from drum
and air disc brakes, to hubs and drums & friction products
i) 15.5 Inch
Meritor’s 15.5” dia S-Cam Drum Brakes come in large variety of shoe widths (5” to 8”) and
liner grades for different braking/life requirements. Flexible mounting configuration eases
vehicle packaging while the fast shoe replacement design minimizes repair/service time. The
brakes are designed to suit a wide torque requirement band for broad range of applications.
With asbestos free liners Meritor brakes offer the best in durability, performance and safety.

ii) 325 mm
Meritor’s 325 mm dia S-Cam Drum Brakes come in large variety of shoe widths (120/140)
and liner grades for different braking/life requirements. Flexible mounting configuration
eases vehicle packaging while the fast shoe replacement design minimizes repair/service
time. The brakes are designed to suit a wide torque requirement band for broad range of
applications. With asbestos free liners Meritor brakes offer the best in durability, performance
and safety
iii) 410 mm
Meritor’s 410 mm dia S-Cam Drum Brakes come in large variety of shoe widths
(160/180/200/220) and liner grades for different braking/life requirements. Flexible mounting
configuration eases vehicle packaging while the fast shoe replacement design minimizes
repair/service time. The brakes are designed to suit a wide torque requirement band for broad
range of applications. With asbestos free liners Meritor brakes offer the best in durability,
performance and safety.

3) Disc Brakes
Meritor is the first to bring indigenously manufactured disc brake for Heavy Vehicles in India
and in doing so becomes the only braking system manufacturer that offers a complete
portfolio of brakes – Drums and Discs.
Designed to package with 22.5”/19.5” wheel size, the calipers are compatible with anti-lock
braking systems resulting in better vehicle control and stability. For simplified maintenance,
lining changes require only the removal of the lining retention bolt (no swing of caliper).
i) ELSA-225
Meritor’s Elsa 225 Air disc Brake for 22.5” wheel size is a tried, tested and proved product
for high speed applications. Rated to 28KNm of braking torque along with 18.5mm of usable
pad thickness, Elsa 225 is the ultimate in stopping power for commercial vehicles. It
enhances stopping power in an easy to maintain assembly.
It features pad wear sensor for optimum use of brake pads and a vented rotor for greater heat
dissipation and uniform brake performance under all conditions. The design which originated
in high speed environment of Europe has been completely localized for Indian application
and thus is an ideal product for high speed passenger and commercial vehicle application
4) Off-Highway Axles
The world’s leading axle manufacturer, with a century of unsurpassed expertise in axle
engineering, development and manufacturing, has completely re-engineered its global off-
highway drivetrain components business, around you. In fact, no one has a business model

that meets the needs of the global off-highway OE customer the way we do.
We provide the industrial products engineering capabilities and the flexible manufacturing
needed to deliver customized off-highway axles, drivetrain components, wheel ends and
brakes in half the time of our competition. Leveraging over 500 years of combined gearing
design experience, our industrial products engineering team excels in collaboration across
multiple disciplines, including design and development, testing, simulation, field data
acquisition and more.
i) Motor Grader
Meritor Grader axles feature oscillating fabricated steel bogie boxes with a load rating of up
to 12.5 T. Combined with a high-capacity chain for 14-foot blade applications and no-spin
differential provides the grader with tremendous off-roading ability. With drum or wet disc
brake options, Meritor grader axles are best suited to demanding grader applications.
ii) MS13 1495_HR
The MS13 1495 Hub reduction hypoid Tandem drive axle is designed for off highway
operation for Vocational Cranes and Deep mining applications. With a load rating of up to 26
axle is available in wide number of ratios varying from 20.2 – 23.6 (Wheelend ratio 3.46).

Featuring a fabricated housing the axle offers unique benefits by the virtue of having a hub
reduction. Improved life and high torque handling ability allows it to perform in conditions
where a single reduction axle cannot. This axle is ideally suited for deep mining and off-
highway applications and is available with an InterAxle Differential Lock (IAD) and Driver
Controlled Differential Lock (DCDL) for tremendous off-roading capability.
iii) MT28 160
The MT28 160 single reduction hypoid tandem drive axle is designed for off-highway
operation for Cranes and Mining Tippers. With a load rating of up to 28 Tonnes the axle
supports vehicles with GVW/GCW of up to 34/70 Tonnes respectively. The axle is available
in wide number of ratios varying from 4.56-6.83. The axle is equipped with an Inter Axle
Differential Lock (IAD) & Driver Controlled Differential Lock (DCDL) and subsequently
offers tremendous off-roading capability to the vehicle.
iv) MT36 610

The MT36 610 Hub reduction hypoid Tandem drive axle is designed for off highway
operation for Vocational Cranes and Deep mining applications. With a load rating of up to 36
reduction. Increased ground clearance, improved life and high torque handling ability allow it
to perform in conditions where a single reduction axle cannot. This axle is ideally suited for
deep mining and off-highway applications and is available with an InterAxle Differential
Lock (IAD) and Driver Controlled Differential Lock (DCDL) for tremendous off-roading
capability.
5) Defence Axles
Today, we are the largest independent drivetrain producer for tactical wheeled vehicles
globally, providing systems for a complete range of lightweight to heavyweight tactical
vehicles, armored personnel carriers and advanced wheeled combat vehicles for all types of
terrains.
Our full portfolio of axle and brake technology includes all wheel drive systems, high
mobility independent suspensions, drivelines, transfer cases and suspension height control
systems. At Meritor, we take great pride in the opportunity to provide our advanced
technology solutions for military and government applications. And we stand ready to
provide the technology needed to meet every challenge worldwide, backed by global
aftersales support.
i) 611 Series

Meritor’s 611 series of Hub Reduction drive axles are engineered and built for the extreme
demands of the military duty cycle. A proven Meritor designed carrier and Hub reduction
along with ductile iron housing provide increased ground clearance and optimum
maneuverability. This range of axles are available in 4x4, 6x6 and 8x8 applications with 6.8
Tonne capacity of each axle resulting in improved payload and mobility. Optional Limited
slip or No-Spin differential along with ABS & Central Tire Inflation (CTI) ready wheel ends
provide the vehicle with extreme maneuverability and road capability. Stopmaster® self
adjusting drums brake with an option to fit disc brakes offer the best in terms of safety and
stopping power.
ii) HMIS
Meritor’s High Mobility Independent Suspension (HMIS) system offers the best solution for
demanding military tactical wheeled vehicle requirements. The configuration is ideal to
improve ride quality and mobility on armored vehicles and the 35° turn angle offers optimum
maneuverability. Modular architecture allows for common gearing and suspension
components to be used across an entire family of vehicles and multiple chassis types. Proven
Meritor designed carrier and Hub reduction offer unmatched reliability. Along with ductile
iron housing provide increased ground clearance and optimum maneuverability. This range of
axles are available in 4x4, 6x6 and 8x8 applications with 6.8 Tonne capacity of each axle
resulting in improved payload and mobility. Steel coil springs for durability along with 17” of
wheel travel for maximum off-road ability.

Optional Limited slip or No-Spin differential along with ABS & Central Tire Inflation (CTI)
ready wheel ends provides the vehicle with extreme maneuverability and road capability.
Stopmaster® self adjusting drums brake with an option to fit disc brakes offer the best in
terms of safety and stopping power.
iii) Transfer Case
Meritor’s latest range of transfer case offers the best solution for Joint Light Tactical Vehicles
(JLTV) applications to minimize weight and improve packaging. Engineered and built for the
extreme demands of the military duty cycle and currently in use on the Future Tactical Track
System-Utility Vehicle (FTTS-UV). Efficient 2-speed, 3-shaft configuration with Integral
50/50 differential with lockout & better operational security and diagnostics provided by a
wide selection of sensors at all three shift positions – differential lock engagement,
temperature sensor and oil level sensor provide reliability and maximum off-road ability.
The Aluminum housing can be modified for each vehicle to improve packaging or driveline
angles. Three shift positions, including neutral and air-engaged and two-speed design with
1:1 high ratio and deep 2.75:1 low ratio (air-engaged) – enables a fast top speed in high range
while also providing high torque in low range
6) Front Steer Axles

When it comes to saving weight, maintenance time, and money on your fleet’s axle needs,
Meritor has the products you can depend on. With our non-drive front axles, you benefit from
the advanced technology and engineering experience of the industry’s leading manufacturer,
along with the assurance that comes with the industry’s best service support and competitive
warranty coverage.

All Meritor front non-drive steer axles feature the unique Easy Steer bushing technology,
which reduces steering effort and provides longer life. In weight ratings from 6.6 – 7.5
Tonnes, these axles are compatible with a wide range of popular Meritor brake products. Our
front non-drive steer axles feature easy steer bushings to provide a tough, low-friction bearing
surface to help reduce steering effort and give a longer life.
Double draw keys hold the kingpin more firmly in place for superior front-end stability. Our
large-diameter kingpin has a proven, heat-treated design for greater durability and longer
component life while the keystone steering arm uses a stronger forging with an induction-
hardened taper. Finally, our improved durability optimized beam design is available in a
variety of beam drop configurations and adds strength in high-load areas.
i) FG945
Meritor’s FG945 with a load rating of 6.5 Tonnes is ideally suited for Haulage, Vocational
truck and high floor bus application. It features ‘Easy Steer Bush’ for reduced steering effort
with conventional knuckle for better serviceability and reduced maintenance. Designed and
engineered to suit popular drum brake sizes, the axle is engineered for the demanding Indian
application requirements.
With a 45° turn angle and 88.9 mm beam drop it provides the best solution for India’s
growing goods and mass transportation needs. Completely localized the axle is backed by
nationwide support in terms of service and spares.

ii) FH941
Meritor’s FH941 with a load rating of 7.5 Tonnes is ideally suited for Haulage, Vocational
truck and high floor bus application. It features ‘Easy Steer Bush’ for reduced steering effort
with conventional knuckle for better serviceability and reduced maintenance. Unitized
lubricated for life wheelend and 22.5”/19.5” wheel size air disc brakes provide the best in
consistent performance, reliability, performance and safety.
With a 51° turn angle and 76.2 mm beam drop it provides the best solution for India’s
growing goods and mass transportation needs. Completely localized the axle is backed by
nationwide support in terms of service and spare.
iii) FH946
India’s first locally manufactured low floor front steer bus axle with a deep drop beam to suit
low and semi low floor Intra city bus and coach applications. Meritor FH946 with a load
rating of 7.5 Tonnes is suitable for both air suspension & conventional mechanical

suspension. It features ‘Easy Steer Bush’ for reduced steering effort with conventional
knuckle for better serviceability and reduced maintenance. Unitized lubricated for life
wheelend and 22.5” wheel size air disc brakes provide the best in consistent performance,
reliability, performance and safety. With a 51° turn angle and 203 mm beam drop it provides
the best solution for India’s growing Urban and Semi-Urban mass transportation needs. After
proving its performance in advanced markets like North America and Europe the axle has
now been completely localized in India with part validation to ensure price and performance
advantage for the Indian market.
3.5 ORGANIZATION STRUCTURE

3.6 CUSTOMERS
I) DOMESTIC CUSTOMRS
II) INTERNATIONAL CUSTOMERS

3.7 SWOT ANALYSIS

STRENGTH:
As one of the leading firms in its industry, Meritor, Inc. has numerous strengths that enable it
to thrive in the market place. These strengths not only help it to protect the market share in
existing markets but also help in penetrating new markets
 Reliable suppliers – It has a strong base of reliable supplier of raw material thus
enabling the company to overcome any supply chain bottlenecks.
 Strong distribution network – Over the years Meritor, Inc. has built a reliable
distribution network that can reach majority of its potential market.
 High level of customer satisfaction – the company with its dedicated customer
relationship management department has able to achieve a high level of customer
satisfaction among present customers and good brand equity among the potential
customers.
 Good Returns on Capital Expenditure – Meritor, Inc. is relatively successful at
execution of new projects and generated good returns on capital expenditure by
building new revenue streams.
 Strong Free Cash Flow – Meritor, Inc. has strong free cash flows that provide
resources in the hand of the company to expand into new projects.
 Highly skilled workforce through successful training and learning programs. Meritor,
Inc. is investing huge resources in training and development of its employees
resulting in a workforce that is not only highly skilled but also motivated to achieve
more.
 Strong dealer community – It has built a culture among distributor & dealers where
the dealers not only promote company’s products but also invest in training the sales
team to explain to the customer how he/she can extract the maximum benefits out of
the products.
 Successful track record of integrating complimentary firms through mergers &
acquisition. It has successfully integrated number of technology companies in the past
few years to streamline its operations and to build a reliable supply chain.

WEAKNESS:
Weakness are the areas where Meritor, Inc. can improve upon. Strategy is about making
choices and weakness are the areas where a company can improve using SWOT analysis and
build on its competitive advantage and strategic positioning.
 Organization structure is only compatible with present business model thus limiting
expansion in adjacent product segments.
 There are gaps in the product range sold by the company. This lack of choice can give
a new competitor a foothold in the market.
 Limited success outside core business – Even though Meritor, Inc. is one of the
leading organizations in its industry it has faced challenges in moving to other product
segments with its present culture.
 Not very good at product demand forecasting leading to higher rate of missed
opportunities compare to its competitors. One of the reason why the days inventory is
high compare to its competitors is that Meritor, Inc. is not very good at demand
forecasting thus end up keeping higher inventory both in-house and in channel.
 Not highly successful at integrating firms with different work culture. As mentioned
earlier even though Meritor, Inc. is successful at integrating small companies it has its
share of failure to merge firms that have different work culture.
 The profitability ratio and Net Contribution % of Meritor, Inc. are below the industry
average.
 Investment in Research and Development is below the fastest growing players in the
industry. Even though Meritor, Inc. is spending above the industry average on
Research and Development, it has not been able to compete with the leading players
in the industry in terms of innovation. It has come across as a mature firm looking
forward to bring out products based on tested features in the market.
OPPORTUNITY
 Government green drive also opens an opportunity for procurement of Meritor, Inc.
products by the state as well as federal government contractors.
 Decreasing cost of transportation because of lower shipping prices can also bring
down the cost of Meritor, Inc.’s products thus providing an opportunity to the
company - either to boost its profitability or pass on the benefits to the customers to
gain market share.

 Opening up of new markets because of government agreement – the adoption of new

technology standard and government free trade agreement has provided Meritor, Inc.
an opportunity to enter a new emerging market.
 The market development will lead to dilution of competitor’s advantage and enable
Meritor, Inc. to increase its competitiveness compare to the other competitors.
 The new technology provides an opportunity to Meritor, Inc. to practices
differentiated pricing strategy in the new market. It will enable the firm to maintain its
loyal customers with great service and lure new customers through other value
oriented propositions.
 New trends in the consumer behavior can open up new market for the Meritor, Inc. . It
provides a great opportunity for the organization to build new revenue streams and
diversify into new product categories too.
 New customers from online channel – Over the past few years the company has
invested vast sum of money into the online platform. This investment has opened new
sales channel for Meritor, Inc.. In the next few years the company can leverage this
opportunity by knowing its customer better and serving their needs using big data
analytics.
 Stable free cash flow provides opportunities to invest in adjacent product segments.
With more cash in bank the company can invest in new technologies as well as in new
products segments. This should open a window of opportunity for Meritor, Inc. in
other product categories.
THREATS
 Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.
 New technologies developed by the competitor or market disruptor could be a serious
threat to the industry in medium to long term future.
 Increasing trend toward isolationism in the American economy can lead to similar
reaction from other government thus negatively impacting the international sales.
 The demand of the highly profitable products is seasonal in nature and any unlikely
event during the peak season may impact the profitability of the company in short to
medium term.

 The company can face lawsuits in various markets given - different laws and
continuous fluctuations regarding product standards in those markets.
 Liability laws in different countries are different and Meritor, Inc. may be exposed to
various liability claims given change in policies in those markets.
 Shortage of skilled workforce in certain global market represents a threat to steady
growth of profits for Meritor, Inc. in those markets.
 Changing consumer buying behavior from online channel could be a threat to the
existing physical infrastructure driven supply chain model.
LIMITATIONS
Although the SWOT analysis is widely used as a strategic planning tool, the analysis does
have its share of limitations.
 Certain capabilities or factors of an organization can be both a strength and weakness
at the same time. This is one of the major limitations of SWOT analysis . For example
changing environmental regulations can be both a threat to company it can also be an
opportunity in a sense that it will enable the company to be on a level playing field or
at advantage to competitors if it able to develop the products faster than the
competitors.
 SWOT does not show how to achieve a competitive advantage, so it must not be an
end in itself.
 The matrix is only a starting point for a discussion on how proposed strategies could
be implemented. It provided an evaluation window but not an implementation plan
based on strategic competitiveness of Meritor, Inc.
 SWOT is a static assessment - analysis of status quo with few prospective changes.
As circumstances, capabilities, threats, and strategies change, the dynamics of a
competitive environment may not be revealed in a single matrix.
 SWOT analysis may lead the firm to overemphasize a single internal or external
factor in formulating strategies. There are interrelationships among the key internal
and external factors that SWOT does not reveal that may be important in devising
strategies.

3.8 FUTURE GROWTH AND PROSPECTS

With India an emerging hub for global companies, Meritor HVS (India) Ltd. is expanding its
product range and operational excellence to meet the needs of domestic and global OEMs in
India. Meritor (HVS) India Ltd., along with its manufacturing partner Automotive Axles Ltd.
(AAL), a joint venture company promoted by Meritor Heavy Vehicle System LLC, USA, and
the Kalyani Group, Pune, has been the largest independent axle manufacturer in India for the
past three decades.
The company is expanding into new business segments such as LCV, off-highway, military
and suspension to cater to the changing demand of commercial vehicle industry. It is also
making its presence felt in the northern part of India with greenfield footprint expansion
activities. During its 32 years of operations in India, Meritor has developed significant
engineering capability and can apply low-cost approaches to new product initiatives &
manufacturing to compete globally.
The company is focused on new product development to increase relationship with existing
customers and target new customers. There are a slew of new products in the pipeline to be
launched in the coming years, for both LCV and MHCV segments. Last quarter, the company
has launched its first LCV axle called MS10X for Nissan Ashok Leyland’s ‘Partner’ vehicle.
The MS10X is the first global axle developed by Meritor India to meet commercial vehicle
requirements for both Indian and global markets. It meets and exceeds global benchmarks for
reliability and performance at Indian price levels.
It can be applied on LCVs, including conventional 4×2 haulages, buses as well as front-drive
steer axles. The MS10X comes with the integrated carrier design and the axle’s cold formed
housing augments its credentials. Meritor is certain that the new MS10X is superior to other
LCV axles in the market in terms of cost, improved component life, and higher load carrying
capacity. Besides its robust design, the MS10X is customizable for both pneumatic and
hydraulic brakes.

The heavy duty Hub reduction product for mining & construction tipper designated as HR
MT610 recently completed its validation and has been launched with multiple customers with
increased penetration being planned with other clients over the next 12 months. The company
is also working with a few new entrants in the HD tipper segment. It is also coming up with
new axles in off-highway & defence segments for 4×4, 6×6, 8×8, 10×10 & 12×12
applications. The company has also developed new brakes for domestic as well as global
customers.
With respect to its twin-speed axle MS13-245 which offers improvement in fuel efficiency by
7 to 10 per cent and reduction in turnaround time by upto 15 per cent, the company is
emphasizing on bringing in driver awareness for disciplined driving as this concept is new to
the market and also to enable truck owners and driver to achieve the maximum benefit
inherent in the design. Meritor plans to achieve this with two-fold strategy: direct approach,
which includes conducting public demonstrations of this product at leading transportation
hubs, and indirect approach, where the leading OEMs are provided with product tutorial
videos which they in turn use for driver training. The company is also in the initial stages of
upgrading few of its existing axles including C100, MS120, MS160 and MT160.
To create product & brand awareness across the country and ensure consistent product
availability to its OEM partners, the company has expanded its aftermarket network across
the country. The company currently has more than fifty distribution networks in the country.
In last two quarters, it has added seven distribution networks under its belt covering states
like Gujarat, UP, MP, Andhra Pradesh and Himachal Pradesh. It is planning to add more
networks in Tamil Nadu and Karnataka region in near future.
With its focus on new product development, footprint expansion and cost optimization
initiatives, Meritor India is meeting the current market needs and is well-positioned for future
growth.

3.10 FINANCIAL STATEMENT

Balance Sheet Comparison
PARTICULARS 2023 2022 2021 2020 2019
EQUITIES AND
LIABILITIES
SHAREHOLDER'S
FUNDS
Equity Share Capital 95.92 95.92 95.92 95.92 95.92
Total Share Capital 95.92 95.92 95.92 95.92 95.92
Reserves and Surplus 7,702.24 6,998.83 4,867.24 4,134.34 3,505.01
7,702.24 6,998.83 4,867.24 4,134.34 3,505.01
Total Shareholders’ 7,798.16 7,094.75 4,963.16 4,230.26 3,600.93

Funds
Long Term Borrowings
Long Term 9.87 10.38 31.55 32.09 39.51

Borrowings
Deferred Tax 270.33 261.17 207.69 167.78 177.07

Liabilities [Net]
Other Long-Term 3.26 5.96 1.68 0.00 0.12

Liabilities
Long Term 107.35 109.84 94.23 85.25 80.24

Provisions
Total 390.81 387.35 335.15 285.12 296.94

Non-Current
Liabilities

CURRENT LIABILITIES
Short Term 0.00 26.84 0.00 0.00 0.00

Borrowings
Trade Payables 1851.50 1671.26 1333.20 1313.08 1498.84
Other Current 1504.61 1141.63 1021.25 832.71 747.52

Liabilities
Short Term 42.85 36.20 711.39 612.03 537.48

Provisions
Total Current 3398.96 2875.93 3065.84 2757.82 2783.84

Liabilities
Total Capital and 11587.93 10358.03 8364.15 7273.20 6681.71

Liabilities
ASSETS
NON-CURRENT ASSETS
Tangible Assets 2477.44 2512.01 2532.97 1886.42 1973.21
Intangible Assets 91.09 92.67 92.17 79.07 38.09
Capital Work-in- 1391.84 219.76 92.79 139.54 37.95

Progress
Fixed Assets 3960.37 2824.44 2717.93 2105.03 2050.15
Non-Current 1547.33 1598.20 1006.89 775.72 548.19

Investments
Long Term Loans 79.08 70.27 111.23 209.54 94.64

and Advance
Other Non-Current 500.06 434.92 30.54 13.64 6.32

Assets

Total Non-Current 6086.84 4927.83 3866.59 3103.93 2699.30

Assets
Current Assets
Current Investments 1030.01 1315.40 1432.79 1118.06 482.00
Inventories 2178.43 2194.09 1610.12 1802.18 1665.05
Trade Receivables 1138.20 994.63 759.06 728.87 712.36
Cash and Cash 120.84 205.94 155.02 61.81 745.35

Equivalents
Short Term Loans 12.17 13.55 221.94 205.43 201.54

and Advances
Other Current Assets 1021.44 706.59 318.66 252.92 176.10
Total Current 5500.17 5429.63 4497.56 4169.27 3982.41

Assets
Total Assets 11587.93 10358.03 8364.15 7273.20 6681.71

Profit & Loss Statement

PARTICULARS 2023 2022 2021 2020 2019
INCOME
Revenue From 14329.17 14329.17 14162.13 14162.13 13992.15

Operations
(Gross)
Less: Excise / 391.69 391.69 1713.32 1713.32 1533.50

Service Tax /
Other Levies
Revenue From 13937.48 13937.48 12448.81 12448.81 12458.65

Operations
[Net]
Other Operating 230.38 230.38 198.30 198.30 187.23

Revenues
Total Operating 14167.86 14167.86 12647.11 12647.11 12645.88

Revenues
Other Income 277.50 277.50 300.17 300.17 225.30
Total Revenue 14445.36 14445.36 12947.28 12947.28 12871.18
Expenses
Cost of Materials 7100.16 7100.16 6737.45 6737.45 5842.29

Consumed
Purchase of 742.57 742.57 646.53 646.53 524.42

Stock-In-Trade
Changes In 154.12 154.12 -515.58 -151.58 162.86

Inventories of
FG, WIP and

Stock-In Trade
Employee 791.08 791.08 742.83 742.83 664.20

Benefit Expenses
Finance Costs 21.06 21.06 18.86 18.86 23.40
Depreciation and 311.11 311.11 295.43 295.43 238.36

Amortization
Expenses
Other Expenses 2459.43 2459.43 2365.04 2365.04 2972.55
Total Expenses 11579.53 11579.53 10290.56 10290.56 10428.08

CHAPTER – 4
CONCEPTUL FRAME WORK

4.1 THEORETICAL BACKGROUND OF THE STUDY

INTRODUCTION TO CAPITAL: Capital is the driving force behind economic
development. In the modern period, the proportion of capital available influences the level of
economic advancement.
In its most common definition, capital refers to the first investment made by a businessman or
owner when starting a new firm.
Capital (economics), a factor of production wanted for its ability to aid in the production of
other products rather than for its own sake.
Definition:
A factor of production with a defined, movable value linked to it, capital has the ability to
increase its owner's wealth. Since capital is an abstract economic notion, it has many
distinct definitions and categories, but its common denominator is that it has a fixed value,
making it a particular kind of wealth that has the capacity to produce additional wealth.
The following are the characteristics of capital.

1. Capital is created by humans.
2. Capital is a finite resource.
3. Capital is a human-controllable resource.
4. Capital is a moving target.
5. Capital is a form of human sacrifice.
6. Capital is in short supply.
7. Capital is a non-active factor.
INTRODUCTION OF WORKING CAPITAL:

A business's working capital serves as its heart and brain. Working capital is crucial to the
continued smooth operation of a firm, much as blood circulation is necessary for preserving
life in the human body. Without sufficient operating capital, no business can operate
successfully.
Current assets are operational features of working capital and are generally referred to as
money used to support the business process from gross working capital. Current assets
include cash receivables, inventory, marketable securities kept as short-term investments, and

other assets that are closer to or equivalent to cash. When a business is actually operating, it
requires working capital, and the amount required is typically determined by the level of
production, which is determined by the management's attitude toward risk and the variables
affecting the amount of cash, inventories, receivables, and other current assets required to
support a given volume of production.
The administration of current assets and liabilities is typically a part of working capital
management. The area involves the need for money from diverse sources, which must be
used in a way that is entirely goal-oriented. Effective working capital management is without
a doubt the immediate prerequisite for long-term success.
There is no denying the significance of working capital management; a company's ability to

handle inventory, payables, and receivables effectively determines its liabilities. reducing the
sum of money invested in current assets. Companies can lower their borrowing expenses or
enhance the amount of money available for growth. Current assets and liabilities are moved
from suboptimal levels to ideal levels through extensive managerial efforts.
MEANING OF WORKING CAPITAL

Working capital is defined as the finances (i.e., capital) available and utilized for an
enterprise's daily operations (i.e., working). It broadly consists of that portion of an
organization's assets that are utilized in or connected to present operations. It refers to money
spent during an accounting period to produce current income of a kind consistent with the
main reason for a company's existence.
In Accounting:
DEFINITIONS:
Many scholars provide numerous definitions for the phrase "working capital," some of which
are listed here.
Working capital, according to Weston and Brigham, "refers to a firm's investment in short-
term assets such as cash, short-term securities, accounts receivables, and inventories."
Mead Mallott & Field

“Working capital means current assets”.
Bonnerille
“Working capital is increased by any financial transaction that raises current assets
because they are mutually exclusive.
A company with positive working capital is able to pay off its short-term obligations, and
these businesses are more likely to succeed because they can expand and enhance their
operations.
Negative working capital means that a company currently is unable to meet its short-term
liabilities with its current assets. . Companies with negative working capital may lack the
funds necessary for growth
WORKING CAPITAL MANAGEMENT OBJECTIVES

Effective working capital management is a technique of achieving the firm's goal of adequate
liquidity. It is in charge of managing current assets and current liabilities. Its primary goals
are as follows:
1. To maximize the firm's profit.
2. To aid in the timely payment of bills.
3. To keep enough current assets on hand.
4. To ensure the firms' appropriate cash.
5. It safeguards the firm's viability.
6. To pay off present liabilities.
7. To boost the firm's value.
8. To minimize business risk.
THE NEED FOR THE WORKING CAPITAL

Due to the time lag between manufacturing and the receipt of money from sales, working
capital is required. Every business needs working money to purchase raw materials, semi-
finished goods, stores, and spare parts, among other things, as well as for the purposes listed
below.

1. Obtaining raw materials, spare parts, and other components.

A manufacturing enterprise requires raw materials and other component elements in order to
convert them into finished products; this requires operating capital. Trading businesses
demand less working capital.
2. To cover overhead costs.

Working cash is essential to cover regular overhead costs such as fuel, electricity, office bills,
and other manufacturing charges.
3. To store completed and spare parts, etc.Stock is a type of current asset. A company can be
successful if it can afford to retain an adequate stock of finished goods, work in progress, and
spare components on hand. As a result, adequate operating cash is required.
4. To cover selling and distribution costs. Working capital is required to cover selling and
distribution costs. It includes the cost of packing, commission, and so on.
5. Working capital is necessary for the repair and upkeep of both machinery and factory
buildings.
6. To pay wages, salaries, and other costs, working capital is required.
7. It aids in the management of uncertainty in the corporate world.
WORKING CAPITAL MANAGEMENT

Managing current assets and current liabilities is referred to as working capital management.
Naturally, the management of present assets is the main focus.This makes sense given that
current liabilities are related to current assets. A crucial aspect of financial management is
working capital management. Its
Current asset investment accounts for a sizable portion of total investment; and Current asset
investment and current liability levels must be quickly adapted to changes in sales. Fixed
asset investment and long-term finance, to be sure, are subject to sales swings. However, the
relationship is not as close and direct as it is with working capital components.

CLASSIFICATION OF WORKING CAPITAL
WORKING CAPITAL
On The Basis of On The Basis of Time

Concepts
Gross Working Net Working Permanent / Temporary /

Capital Capital Fixed Working Fluctuating
Capital Working Capital
Initial Working Regular Working

Capital Capital
Seasonal Special Working

Working Capital Capital

I. On The Basis of Concepts

1) Gross Working Capital
Gross working capital is the sum of money invested in different current asset components.
Current assets are ones that can be quickly and readily converted into cash, such as within an
accounting year. Cash on hand, cash in the bank, inventories, accounts receivable, various
debtors, short-term loans, and advances are all examples of current assets.
This model has the following benefits:

i. Financial managers are very concerned with present assets.
ii. Gross working capital ensures that the right amount of working capital is available at
the right time.
iii. It enables a company to maximize its return on investment.
iv. It aids in the consolidation of numerous financial responsibilities.
v. It enables a company to plan and control funds while maximizing return on
investment.
Because of these benefits, gross working capital has become a more widely accepted term in
financial management.
2) Net Working Capital

The distinction between current assets and current liabilities is represented by this. Creditors,
bills payable, and unpaid expenses are examples of current liabilities because they are
anticipated to mature within an accounting year.
Working Capital Management is important for all businesses, but it is especially important
for small businesses. Small businesses invest more in current assets than in fixed assets, so
current assets must be handled well.
As the company expands, the need for operating capital rises. The company must invest
more in debts and inventories as sales increase. Such needs should be brought to the finance
manager's attention so they can be immediately funded.

II. On The Basis of Concepts

1) Permanent / Fixed Working Capital
The bare minimum needed to ensure efficient use of fixed facilities and to keep the flow of
current assets is known as permanent or fixed working capital. Each company is required to
keep a minimum amount of raw materials, work-in-progress, finished goods, and cash on
hand. Because this portion of working is permanently trapped in current assets, this minimal
level of current assets is referred to as permanent or fixed working capital. Due to a growth in
current assets, a business's need for working capital likewise grows as it expands.
a) Initial working capital

A corporation must have enough cash fund to pay its obligations at its formation and during
the formative stage of its operations. Every company need early working capital to
consolidate its position.
b) Regular working capital

Regular working capital is the minimal minimum of liquid capital required to keep funds
flowing from cash inventories to accounts receivable and back again. It includes having
enough cash in the bank and on hand, as well as having enough finished goods and raw
materials on hand.
2) Temporary / Fluctuating Working Capital

Temporary or fluctuating working capital is the money required to fulfill seasonal and
unplanned demands. It is classified into two categories.
a) Seasonal Working Capital

In many corporate industries where the volume of operations varies, the quantity of working
capital varies with the seasons. Seasonal working capital refers to the funds required to meet
an enterprise's cyclical needs.
b) Special Working Capital
Special Working Capital is the capital required to meet any special operations such as
experimenting with new products or new manufacturing techniques, creating interior
advertising campaigns, and so on.

IMPORTANCE OF WORKING CAPITAL

1. Business solvency: Adequate working capital contributes to the business's solvency
by ensuring continuous production.
2. Goodwill: Having enough operating cash allows a company to make timely payments
and build and retain goodwill.
3. Simple loans: Because adequate working capital leads to strong solvency and credit
standing, it is possible to obtain loans from banks and other financial institutions on
simple and favorable terms.
4. Cash discounts: Having enough operating capital allows a company to get cash
discounts on purchases, lowering costs.
5. Consistent Raw Material Supply: Adequate working capital provides consistent raw
material supply and ongoing production.
6. Regular payment of salaries, wages, and other day-to-day commitments: It leads to
employee satisfaction and promotes morale, increases efficiency, lowers waste and
costs, and increases output and profits.
7. Taking advantage of advantageous market conditions: If a corporation has sufficient
working capital, it can take advantage of favorable market conditions by purchasing
in bulk when prices are lower and keeping inventories for higher prices.
8. Ability to Face Crises: During a depression, a person can face the problem.
9. Timely and consistent return on investment: Sufficient working capital enables a
company to pay timely and consistent dividends to its investors, which builds investor
trust and allows the company to raise more cash in the future.
10. Strong morale: Adequate working capital creates a climate of security, confidence,
and strong morale, which leads to overall corporate efficiency.
ADEQUACY OF WORKING CAPITAL:

In order to shield a company from the negative impacts of a decline in the value of current
assets, working capital should be sufficient. It more effectively maintains a company's credit
position and provides for unforeseen events like strikes, floods, fire, etc. It allows inventories
to be held at a level that would allow a company to satisfactorily meet the needs of its clients.
Because there are no delays in procuring supplies, etc., due to credit issues, a company is
able to run its business more effectively.

INADEQUATE OF WORKING CAPITAL:

When a company's working capital is insufficient, it faces a number of problems. Because of a
lack of working cash reserves, the company's growth slows and it becomes difficult to pursue
profitable activities. It is tough to carry out operations strategy and meet the company's profit
targets. When meeting daily duties becomes difficult, operational inefficiencies begin to occur.
Profitability will suffer as a result of inefficient utilization of fixed assets. The company's
inability to take advantage of tempting financing alternatives is due to a lack of working capital
liquidity. When a corporation is unable to meet its short-term obligations, its reputation suffers
and it faces severe credit terms.
EXCESSIVE WORKING CAPITAL RISKS:

Too much working capital is just as bad as not enough. Excessive working capital creates
issues.
1. It leads to a needless accumulation of stocks. As a result, there is a greater chance of
inventory mishandling, waste, theft, and loss.
2. Indication of a faulty credit policy and a lengthy collection period. As a result, there is
a higher incidence of bad debts, which reduces incomes and damages the economy.
3. It makes managers complacent, which contributes to inefficiencies in management.
4. The proclivity to stockpile inventory in order to earn speculative profits, which tends
to liberalize dividend policy, makes it more difficult for the company to deal in the
future when it is unable to generate speculative profits.
WORKING CAPITAL REQUIREMENTS ESTIMATION

Working capital management is an issue of balance. The company must have enough cash on
hand to satisfy its immediate needs. The Bahety chemicals & minerals (pvt) Limited is a
manufacturing company.
When assessing working capital requirements, the following factors must be considered.
They are:
1. Total costs for materials, labour, and overheads.
2. The amount of time raw materials must be stored before being released for manufacture.
3. The length of the production cycle or work-in-process, which is the time it takes to
convert raw materials into finished goods.
4. The length of the sales cycle in which finished goods are held for sale.

5. The average credit period granted to consumers.

6. The quantity of cash required to cover the business's day-to-day expenses.
7. The typical amount of cash needed to make advance payments.
8. The typical credit period that suppliers are expected to grant.
9. Delayed payment of wages and other charges.
OPERATING CYCLE OF WORKING CAPITAL:

The working capital cycle, also known as the operating cycle, is the period between when a
corporation pays cash for suppliers, etc. The working capital cycle or operational cycle is the
time between when firms pay for materials to be added to their inventories and when they
receive payment from sales of finished goods. The operating cycle (working capital) consists
of the following events. Which of the following remains constant during the course of a
business?
CASH
RAW MATERIALS
DEBTORS
FINISHED STOCK WORK-IN-PROGRESS

 Cash is converted into raw resources.

 Raw resources are converted into work in progress.
 Work in progress to finished stock conversion.
 Conversion of finished stock into accounts receivables (Debtors) by sale, and conversion
of account receivables into cash.
FINANCING OF WORKING CAPITAL

Introduction:
After calculating the amount of working capital, a company must select how it will be
financed.
The operating capital in that BCM was financed from the four common sources listed below.
They do,
1. SHARES:
The BCM has issued equity shares in order to raise funds. The equity shares have no set
commitment charges, and the dividend is paid subject to the availability of sufficient cash.
These monies were contributed by the company's own personal resources as well as by the
members.
2. TRADE CREDIT:
The term "trade credit" refers to credit given by product suppliers during regular business
hours. The business gets along well with the trade creditors. so that suppliers can deliver the
goods to the business and be paid afterwards in accordance with the contract or sales invoice.
The business obtains short-term financing from trade creditors in this manner. It is a simple
and practical technique of financing as well as a casual and impromptu source of funding for
the company.
3. BANK CREDIT:
Commercial banks play an essential role in trade and industry finance. A bank provides a
manufacturer or a businessman with short-term, medium-term, and long-term financing.
1. Loans: The BCM (PVT) LTD. has obtained a loan from a commercial bank to meet its
working capital requirements for a set length of time at a fixed interest rate.
Cash Credit / Overdrafts: Under cash credit/overdraft from/arrangement of bank finance, the
bank specifies a defined borrowings/credit limit. The agreed upon credit/overdraft limit is the

maximum that the borrower may draw or borrow. Any number of drawals or withdrawals are
permissible within the designated limit or line of credit, to the extent of his periodic needs.
Because it is flexible and allows the borrower to take only the amount that is actually owed,
this method of working capital financing is very appealing to potential borrowers. Although
borrowed funds are repayable on demand, banks typically do not recall cash advances or roll
them over. Cash credit and overdraft, however, are inconvenient for banks and interfere with
credit planning.
1. CUSTOMER ADVANCES:
Prior to the actual delivery of the goods, The BCM (pvt) Limited follows the habit of
requesting advance payment from customers as soon as orders are submitted. One of the
short-term sources of financing is a client advance of this kind.
A certain percentage of the cost of the items to be sold to clients is paid in advance. Seller
may use the advance funds thusly gathered to satisfy these pressing financial obligations.
WORKING CAPITAL REQUIREMENTS DETERMINANTS

A number of elements must be evaluated by the finance manager in order to calculate
the amount of working capital required by the organization. These elements are discussed
further below.
Business Type:
The type of business has a substantial impact on the quantity of working capital
required. In contrast to manufacturing and trading firms, which must invest heavily in
inventories and accounts receivable, public utilities, such as railways and electric utilities,
require very little working capital because they do not need to hold large inventories and
conduct the majority of their business on a cash basis.
Because BCM is a manufacturing company, it requires greater working capital during

production than at other times.

Working capital has operational features known as current assets, which are funds from gross
working capital that are used to support business operations. Current assets include cash on
hand, inventory, marketable securities kept as short-term investments, and other assets that
are comparable to or equal to cash. When a business is actually operating, it needs working
capital. The amount required is typically determined by the level of production, which
depends on the management's risk tolerance and the factors affecting the amount of cash,
inventories, receivables, and other current assets needed to support a specific volume of
production.
A typical component of working capital management is the control of current assets and
liabilities. The topic involves the requirement for funding from many sources, which must be
utilised in a wholly goal-oriented manner. The immediate requirement for long-term success
is without a doubt effective working capital management.
There is no doubting the importance of working capital management; a company's

obligations are determined by its capacity to properly manage inventory, payables, and
receivables. lowering the amount of cash devoted to existing assets. Companies have the
option of reducing their borrowing costs or increasing the quantity of funding available for
expansion. Through intensive managerial efforts, current assets and liabilities are raised from
suboptimal levels to desirable levels.
By assuring continued manufacturing, adequate working capital helps the company remain
solvent. A corporation may build and maintain goodwill and make on-time payments when it
has enough operational cash. It is possible to get loans from banks and other financial
organizations on straightforward and advantageous terms because having enough operating
capital results in excellent solvency and credit standing. A business can cut costs by obtaining
cash discounts on purchases when it has ample operational capital. A steady supply of raw
materials and continued production are made possible by sufficient working capital. Regular
payment of wages, salaries, and other daily obligations. It results in happier employees and
boosts morale, improves productivity, reduces waste and costs, and raises output and profits.
Profiting from favorable market circumstances: If a company has enough working capital, it
can profit from good market circumstances by making bulk purchases when prices are lower
and holding inventories for higher prices.
.

A sign of a problematic credit policy and a lengthy collecting period. Bad debts are more
common as a result, which lowers earnings and results in an excessive building of stockpiles.
As a result, it is more likely that inventory may be handled improperly, wasted, stolen, or
lost.
Management becomes complacent as a result, which results in ineffective management. It is

more difficult for the company to survive in the future when it is unable to generate
speculative profits due to the desire to store inventory in order to earn speculative gains,
which tends to liberalize dividend policy.
This diagram depicts the distinction between current assets and current liabilities. Debtors,
unpaid invoices, and unreimbursed expenses are examples of current liabilities because they
are scheduled to mature within an accounting year.
The requirement for operating capital increases as the business grows. As sales rise, the
corporation must invest more in debt and inventory. Such needs ought to be brought to the
attention of the finance manager for prompt funding.
All businesses need to manage their working capital, but small enterprises require it the most.
The management of current assets is important since small enterprises invest more on them
than in fixed assets.

COMPONENTS OF WORKING CAPITAL

The components of working capital are:
 CASH MANAGEMENT
 RECEIVABLES MANAGEMENT
 INVENTORY MANAGEMENT
 e CASH MANAGEMENT:
For the running of the firm cash is the most crucial current asset. Cash is the basic input required
to keep the business functioning continuously it is also the ultimate output expected to be
realized by selling or manufacturing the firm's goods. The company should maintain enough
cash on hand but not too much. A cash shortfall will disturb the firm's manufacturing activities
whilst surplus cash will simply remain ideal and contribute nothing to the firm's earnings
Thus one of the primary responsibilities of the financial management is to maintain a health cash
position. Cash is money that a company can spend quickly and without limitation. The phrase
refers to the firm's coins, currencies, and cheques, as well as the balances in its bank account.
NEED FOR HOLDING CASH

The need for holding Cash arises from a variety of reasons which are,
1. Transaction Motive:
A firm is always engaging in interactions with other entities. While some of these
transactions may not result in an immediate inflow or outflow of cash (for example credit
purchases and sales), others do. As a result, businesses retain a fixed amount of cash on hand
to deal with ordinary transactions that require prompt cash payment.
2. Precautionary Motive:
Contingencies have a knack of appearing when you least expect them. A fire may break out
unexpectedly, accidents may occur employees may go on strike, creditors may present bills
earlier than planned, or debtors may make payments earlier than required. To minimize losses,
the company must be prepared to address these contingencies. Companies typically keep some
amount of cash on hand for this purpose.

 RECEIVABLES MANAGEMENTS:
Receivables or debtors are one of the most important components of current assets that are
formed when a company sells finished items to a client but does not immediately receive
payment for the same. Trade credit occurs when a corporation sells its products or services on
credit and does not immediately receive payment. It is a crucial marketing tool, serving as a
link between the time items are produced and distributed to buyers.
The receivables include three characteristics
1) It contains a risk aspect that should be properly evaluated.
2) It is based on monetary value. The economic value in goods or services goes directly to the
buyer at the point of sale, whereas the seller expects an equivalent value to be obtained later.
3) It implies the future. The buyer will make the cash payment for the products or services
obtained in the future.
A corporation offers trade credit to safeguard its sales from competitors and to entice
potential customers to purchase its items on advantageous terms. Trade credit generates
receivables or book debts for the company to recover in the near future. Customers from
whom receivables must be recovered are referred to as "Trade Debtors." Receivables account
for a significant portion of current assets.
Crediting creditors and granting credit amounts to a blockage of the company's funds.
Because considerable amounts are tied up in trade creditors, the time between the date of sale
and the date of payment must be financed out of working capital. sis.
 INVENTORY MANAGEMENT:
Inventories are products held by a company for eventual sale. Inventories are thus one of the
key aspects that assist the organization in achieving the required level of sales. Raw
materials, semi-finished commodities, and final products are all included in inventories.
Any asset, whether plant, cash, or inventories, should be invested at the optimal level in the
company. Inadequate again disrupts production and leads to revenue losses. Efficient
inventory management should ultimately result in the maximizing of the owner's wealth. It

indicates that, while management should strive to achieve the financial goal of turning
inventory as rapidly as possible, it should also assure adequate inventories to meet production
and sales demand.
The basic objectives of inventory management are operational and financial. In practice, this
means that supplies and spares must be supplied in sufficient quantities to avoid production
from being halted due to a lack of inventory. According to the financial goal, inventories
should not be retained at ideal levels and just the bare minimum of operating resources
should be invested.
The inventory management objectives are as follows:

• To ensure a consistent supply of materials, spare parts, and finished goods.
• To avoid overstocking and understocking of inventories.
• Maintain optimal inventory investments based on operational and sales activity.
• Controlling material costs such that they contribute to lower production and
overall purchasing expenses.
• To reduce losses caused by degradation, pilferage, waste, and damage.
• To establish an effective inventory control structure so that management.
Accountability must be clearly defined at all levels of the organization.
• Ensuring that materials indicated in stock ledgers are actually in the stores by
maintaining perpetual inventory management.
• To deliver high-quality goods at reasonable prices.
BENEFITS OF HOLDING INVENORIES:

Having a large and adequate inventory is very advantageous to any business.
The following are the benefits or advantages of stockpiling:.
1. Reducing orders cost.
2. Continuous production.
3. To avoid loss.
4. Availing quantity discount.
5. It enables the firm to avoid scarcity of goods meant for either production o sale.

HOLDING INVENTORIES COSTS:

Keeping inventory exposes the company to a variety of risks and costs. The risks of
stockpiling can be summarized as follows.
1. Material cost
2. Order cost
3. Storage cost
4. Insurance
5. Obsolescence
6. Spoilage
Each of the aforementioned costs must be handled in the BCM using an efficient inventory
management strategy. That is to say:
EOQ (Economic Order Quantity):

This is the ideal ordering amount for an item of inventory to achieve the lowest overall cost
(order cost plus carrying cost). As the order size increases, the ordering cost decreases, but
the carrying cost increases, and the optimal order, quantity is attained when these two costs
are equal. The firm has always tried to keep an eye on the quantity of safety stock and the
lead-time associated with orders placed..
E.O.Q = √ 2AO
C
A stands for annual consumption. O = Cost of ordering each order. C stands for carrying
cost per unit.
Hypothesis Regarding Working Capital Adjustment

There is a precise level of working capital that objectively maximizes company value.
Previous studies has confirmed the existence of a target working capital level. Banos-
Caballero et al., for example, demonstrated that a goal cash flow cycle exits in firms. If
working capital is scarce, businesses will most likely borrow money at a high interest rate at
the incorrect moment to maintain regular operations and credit, harming their capacity to pay
interest and dividends. A high working capital level, on the other hand, indicates that there is
a significant quantity of liquidity that does not generate further economic benefits, implying

that firms may lack investment prospects and potential development will be influenced.
Businesses should keep adequate working capital on hand.
As a result, businesses must modify their holdings and working capital composition to meet
market demands. Because of variances in adjustment expenses (such as interest, rent, and
conversion charges) and maintenance costs, firms' working capital adjustments vary between
strategy kinds. Clients of businesses with a terminal market approach are a single person with
free purchasing power. Businesses cannot predict the person, place, time, and product
categories of buying behavior. To retain differentiation, they may purse differences, spend
more money on transitory marketing outlays to suit client wants, and keep more short-term
loans. As a result, they may be unconcerned about working capital adjustments. Enterprises
with a medium market strategy, on the other hand, prefer to avoid interest. Clients of
companies that use a hybrid strategy can be either individuals or businesses. Because these
organizations' businesses are complex, they may pay greater attention to liquidity and
working capital policy and alter it as soon as possible.
Measures of working capital

Working capital is defined as the difference between current assets and current liabilities.
This notion refers to the financial plan that a corporation employs. If working capital is less
than zero, current liabilities exceed current assets. In this situation, the corporation advocates
for an unconventional financial plan. Otherwise, if current assets exceed current liabilities, a
portion of long-term capital is invested in short-term assets, and the corporation pursues a
conservative financial strategy. According to this viewpoint, the more the working capital,
the more radical the financial strategy and the safer the short-term liabilities. As a result, we
use this concept of working capital in this study.

CHAPTER - 5
SURVEY, ANALYSIS & INTERPRETATION

A] NET WORKING CAPITAL

An analysis of the net working capital will be extremely beneficial in determining the
company's operational effectiveness.
NET WORKING CAPITAL = CURRENT ASSETS-CURRENT LIABILITIS
Years Current Asset Current Liabilities NWC
2019 4563099.00 2041543.00 2521556.00
2020 9599646.00 3887765.00 5711881.00
2021 9077617.00 2829079.00 6248538.00
2022 11003428.00 3889899.00 7113529.00
2023 11946666.00 4165659.00 7781007.00
INTERPRETATION:-
In 2019, the company had 2521556.00 N.W.C., according to the graph above. The
firm's N.W.C climbed by 5711881.00 in 2020, and it has 6248538.00 N.W.C in 2021
and 7113529.00 N.W.C in 2022. The company's N.W.C is increasing in comparison to
prior years; in 2023, the company will have 7781007.00 N.W.C. This indicates that the
corporation is in a positive situation, and N.W.C has improved significantly faster than
in prior years, indicating liquidity. Meritor HVS (India) Ltd's position is that it always
has more and sufficient operating capital accessible to pay down its existing creditors.

B] RATIO ANALYSIS
INTRODUCTION:
A powerful financial analysis tool is ratio analysis. In 1991, Alexander Hall first mentioned it
in the Federal Reserve Bulletin. The process of comparing one figure to another to produce a
ratio and the evaluation of the ratios of the ratios to produce a proper study of the firm's
operations' strengths and weaknesses is referred to as ratio study. A ratio is the numerical or
quantitative relationship between two accounting data. Ratio analysis is the process of
determining and displaying the relationship between items and groupings of things in
financial statements.
Note: In this project, I employed ratio analysis to support the management of working
capital. I used some of the ratios to achieve the desired result.
Various working capital ratios used by me are as follows:

1. LIQUIDITY RATIOS:
Liquidity refers to a company's capacity to meet its present commitments as they come due.
Short-term commitments are satisfied by realizing funds from current, floating, or circulating
assets.
The following ratios can be used to measure a company's ability to meet its present liabilities.
1. The current ratio
2. The Acid Test Ratio, Quick Ratio, and Liquidity Ratio
3. liquid-to-absolute-liquid ratio
2. TURNOVER/ACTIVITY RATIOS:
These are the ratios that demonstrate how quickly assets are converted or turned over
into sales.
1. Turnover of inventory.
2. Turnover ratio of debtors/accounts receivable.
3. Turnover ratio of creditors to accounts payable.
4. The Working Capital Turnover Ratio.

1. CURRENT RATIO:-
The link between total current assets and total current liabilities is denoted by this term. It
assesses a company's ability to meet present obligations. It represents the rupee worth of
accessible current assets for every rupee of current liabilities. A higher ratio indicates that the
company's current assets surpass its current liabilities. They frequently have a 2:1 ratio.
Current Ratio: Current Assets

Current Liabilities
Year Current Assets Current Liabilities Current Ratio
2019 4563099.00 2041543.00 2.23
2020 9599646.00 3887765.00 2.47
2021 9077617.00 2829079.00 3.21
2022 11003428.00 3889899.00 2.83
2023 11946666.00 4165659.00 2.87
INTERPRETATION:-
According to the graph below, the current ratio in 2019 was 2.23, 2.47 in 2020, and 3.21 in
2021. This shows that the current ratio rises year after year, although it falls to 2.83 in 2022
due to an increase in current liabilities. In 2023, the current ratio grew by 2.87. The present
ratio is bigger than the standard 2:1 ratio. As a result, Meritor HVS (India) Ltd's current
assets are sufficient to satisfy its current liabilities.

2. ACID TEST RATIO / QUICK RATIO / LIQUIDITY RATIO:-

This ratio creates a connection between short-term assets and current liabilities. It
evaluates a company's ability to pay off current debts immediately. A liquid asset is one that
may be swiftly converted into cash without losing value; inventory are considered less liquid.
Because it takes time to transform inventories into cash. This is often referred to as the acid-
test ratio. One to one is the standard fast ratio. Is recognized as adequate.
Quick Ratio = Quick Assets (current assets - Inventory)

Current Liabilities
Year Current Assets Inventories Quick Assets Current Liabilities Quick Ratio
2019 4563099.00 1532455.00 3030644.00 2041543.00 1.48
2020 9599646.00 2161071.00 7438575.00 3887765.00 1.91
2021 9077617.00 3336430.00 5741187.00 2829079.00 2.03
2022 11003428.00 2622901.00 8380527.00 3889899.00 2.15
2023 11946666.00 2360611.00 9586055.00 4165659.00 2.30
INTERPRETATION:-
The quick ratio was 1.48 in 2019 and improved to 1.91 in 2020, indicating that the
corporation maintains a solid fast ratio. The quick ratio climbs to 2.03 in 2021, 2.15 in 2022,
and 2.30 in 2023 as quick assets increase. The fast ratio is greater than the standard ratio of
1:1. As a result, it demonstrates that the company's liquidity is enough.

3. ABSOLUTE LIQUID RATIO:-

The absolute liquid ratio is the relationship between absolute liquid assets and current
liabilities. Absolute liquid assets include cash on hand and cash in the bank. The average ratio
is 0.5:1.
Absolute Liquidity Ratio = Cash & Bank Balance
Current Liabilities
Years Cash & Bank Balance Current Liabilities Absolute Liquidity Ratio
2019 493742.00 2041543.00 0.24
2020 1205660.00 3887765.00 0.31
2021 1033152.00 2829079.00 0.36
2022 1720815.00 3889899.00 0.44
2023 1978938.00 4165659.00 0.47
INTERPRETATION:
The absolute liquidity ratio was 0.24 in 2019, 0.31 in 2020, 0.36 in 2021, and 0.44 in
2022. This means that the Absolute liquidity ratio rises year after year while remaining lower
than the standard ratio. In 2023, the Absolute liquidity ratio improved by 0.47.
As a result, it reveals that the company's liquidity is enough.

1. INVENTORY TURNOVER RATIO:-

The inventory turnover ratio counts the number of times a year that stock is turned over,
or sold. This metric assesses a company's sales and inventory levels. A high ratio indicates
strong sales, rapid inventory turnover, and a low inventory level. A low stock turnover ratio
indicates that the business is slowing or that there is an excess of goods.
Inventory Turnover Ratio = Net Sales
Closing Inventory
Year Net Sales Closing inventory Inventory Turnover ratio
2019 19542081.00 1532455.00 12.75 Times
2020 31321229.00 2161071.00 14.49 Times
2021 27894285.00 3336430.00 8.36 Times
2022 38496046.00 2622901.00 14.68 Times
2023 42345651.00 2360611.00 17.94 Times
INTERPRETATION:
The inventory t/o ratio was 12.75 times in 2019, 14.49 times in 2020, and 8.36 times in 2021,
according to the graph above. The increase was 14.68 times and 17.94 times in the years
2022 and 2023, respectively.
This demonstrates that the company's sales have increased.

2. INVENTORY HOLDING PERIOD :-

This timeframe shows the average amount of time it takes to clear the stocks. It depicts how
long it takes stocks to transform from raw resources to finished items.
Inventory Holding Period = Days in a year

Inventory turn over ratio
Year Days in a Year Inventory Turnover Ratio Inventory Holding Period
2019 365 12.75 Times 28.63 Days
2020 365 14.49 Times 25.19 Days
2021 365 8.36 Times 43.66 Days
2022 365 14.68 Times 24.86 Days
2023 365 17.94 Times 20.34 Days
INTERPRETATION:
The holding duration for inventory varies throughout time. There were 28.63 days in 2019. It
fell to 25.19 days in fiscal year 2020, then rose to 43.66 days in fiscal year 2021 before
falling to 24.86 days and 20.34 days in fiscal years 2022 and 2023, respectively.
This shows that the company is minimizing inventory-holding days in order to increase sales.

3. DEBTORS / ACCOUNTS RECEIVABLES TURNOVER RATIO:-

The debtor turnover ratio reflects the firm's debt collection speed. This ratio computes the
number of debtors (receivables) that were turned over during a certain period.
Turnover of Debtors = Average Net / Sales Debtors
Because credit sales information was not available for DTR computation, we used total net
sales rather than credit sales in BCM.
.
Year Net Sales Average Debtors Debtors Turnover Ratio

2019 19542081.00 2201381.00 8.88 Times
2020 31321229.00 4958527.00 6.32 Times
2021 27894285.00 1805948.00 15.44 Times
2022 38496046.00 3787274.00 10.16 Times
2023 42345651.00 4355365.00 9.72 Times
INTERPRETATION:
It is apparent that the debtor turnover ratio has fluctuated over time. In 2019, it occurred 8.88
times. It declined to 6.32 times in 2020, increased to 15.44 times in 2021, but decreased to
10.16 times and 9.72 times in 2022 and 2023, respectively. This demonstrates that the
corporation is not collecting debts quickly.

4. DEBTORS COLLECTION PERIOD :-

Debtors collection period assesses debtor quality since it gauges how quickly or
slowly money is collected from them. A shorter collection period means that debtors will pay
on time. It lowers the likelihood of bad debts. A prolonged collection duration implies that
credit collection performance is excessively permissive and inefficient.
Average Collection Period = Days in a Year
Debtors Turnover Ratio
Year Days in a Year Debtors Turnover Ratio Debtors Collection Period
2019 365 8.88 Times 41.10 Days
2020 365 6.32 Times 57.75 Days
2021 365 15.44 Times 23.64 Days
2022 365 10.16 Times 35.92 Days
2023 365 9.72 Times 37.55 Days
INTERPRETATION:
Debt collection periods have changed over time. In 2019, there were 41.10 days. It climbed
to 57.75 days in 2020, but it declined to 23.64 days in 2021. Following that, the years 2022
and 2023 saw an increase to 35.92 and 37.55 days, respectively.
This demonstrates the company's inefficient credit collection performance.

5. CREDITORS/ACCOUNTS PAYABLES TURNOVER RATIO:-

Creditor turnover ratio is a statistic that measures how many times debts are paid in a
year. The following formula is used to compute this ratio.
Turnover of Creditors = Net Purchases

Creditors on the Average
Note: In the BCM, we used total purchases rather than credit purchases because credit
purchases information was not accessible for CTR estimates.
Year Net Purchases Average Creditors Creditors Turnover Ratio

2019 11691090.00 1673515.00 6.98 Times
2020 17778675.00 3492127.00 5.09 Times
2021 18896828.00 2649781.00 7.13 Times
2022 23605773.00 2658999.00 8.88 Times
2023 27146639.00 3057849.00 8.88 Times
INTERPRETATION:
It is apparent that the creditor turnover ratio has changed over time. In 2019, it occurred
6.98 times. It declined to 5.09 times in 2020, but then increased to 7.13 times and 8.88 times
in 2021 and 2022, respectively. It is the same in 2023 as it was in 2022. It demonstrates that
the corporation pays its debtors on time.

6. CREDITORS PAYMENT PERIOD:-

The Creditors Payment Period is the average number of days it takes the company to pay its
creditors and other debts payable.
Average Payment Period = Days in a Year

Creditors Turnover Ratio
Year Days in a Year Creditors Turnover Ratio Average Payment Period
2019 365 6.98 Times 52.29 Days
2020 365 5.09 Times 71.71 Days
2021 365 7.13 Times 51.19 Days
2022 365 8.88 Times 41.10 Days
2023 365 8.88 Times 41.10 Days
INTERPRETATION:
The average payment period has changed throughout time. In 2019, there were 52.29 days. It
grew to 71.71 days in 2020, but declined to 51.19 days and 41.10 days in 2021 and 2022,
respectively. It is the same in 2023 as it was in 2022. It implies that the corporation has taken
the necessary efforts to ensure quick payment to creditors.

7.WORKING CAPITAL TURNOVER RATIO:-

This ratio represents the number of times the working capital is turned over during the
year. This ratio gauges the firm's efficiency in utilizing working capital. A greater ratio
suggests efficient working capital utilization, while a low ratio indicates contrary. A large
working capital turnover, on the other hand, is not a favorable position for any business.
Working Capital Turnover Ratio = Net Sales

Net Working Capital
Year Net Sales Net Working Capital WCTR

2019 19542081.00 2521556.00 7.75 Times
2020 31321229.00 5711881.00 5.48 Times
2021 27894285.00 6248538.00 4.46 Times
2022 38496046.00 7113529.00 5.41 Times
2023 42345651.00 7781007.00 5.44 Times
INTERPRETATION:
The working capital t/o ratio varies from year to year, peaking at 7.75 times in 2019 before
falling to 5.48 times and 4.46 times in 2020 and 2021, respectively. However, it rises to 5.41
and 5.44 times in 2022 and 2023, respectively. This demonstrates that the corporation is
making good use of its operating capital.

C] STATEMENTS OF FUND FLOW

Working capital principles for calculation purposes
PRESENT ASSETS
If current assets rise as a result, so will working capital. Working capital will reduce if current
assets diminish as a result of this.
PRESENT LIABILITIES
If current liabilities rise as a result of this, working capital will fall.
If the current obligations fall as a result of the increase in working capital.
Statement of Changes in Working Capital: The goal of this statement is to determine the rise
or reduction in working capital and to compare two fiscal years.

Table 1: Statement of Changes in Working Capital for the Year 2019-2020
Effect on working capital

As on 31-3- As on 31-3-
Particulars
2019 2020 Increase Decrease
CURRENTASSETS
Inventories 2001305.00 1532455.00 __ 468850.00
Sundry-debtors 1438810.00 2201381.00 762571.00 __
Cash & Bank-balance 503667.00 493742.00 __ 9925.00
Other-current-assets 134364.00 148822.00 14458.00 __
Loans-and-Advances 193081.00 186699.00 __ 6382.00
(A)Total Current Assets 4271227.00 4563099.00
CURRENT LIABILITIES
Sundry creditors 1606195.00 1673515.00 __ 67320.00
Provisions 511561.00 368028.00 143533.00 __
(B)Total Current Liabilities 2117756.00 2041543.00
(A)-(B) Net Working Capital 2153471.00 2521556.00
Increase in Working Capital 368085.00* __ __ 368085.00*
TOTAL 2521556.00 2521556.00 920562.00 930487.00
INTERPRETATION:
According to the preceding table, there was a net growth in working capital of Rs 368085.00
between 2018-19 and 2019-18. It shows that Meritor HVS (India) Ltd has adequate
operational capital. 20
This is due to the following factors: 1. Increase current assets such as Sundry debts by Rs
762571.00 and other current assets by Rs 14458.00. In addition, inventories fell by Rs
468850.00, cash and bank balances fell by Rs 9925.00, and loans and advances fell by Rs
6382.00.

2. An increase of Rs 67320.00 in current obligations, such as Sundry creditors, and a drop of

Rs 143533.00 in Provisions.

As on 31-3- As on 31-3-
Particulars
CURRENT ASSETS
Inventories 1532455.00 2161071.00 628616.00 __
Sundry debtors 2201381.00 4958527.00 2757146.00 __
Cash & Bank balance 493742.00 1205660.00 711918.00 __
Other current assets 148822.00 78260.00 __ 70562.00
Loans and Advances 186699.00 1196128.00 1009429.00 __
CURRENT LIABILITIES
Provisions 368028.00 395638.00 __ 27610.00
Increase in Working Capital 3190325.00* __ __ 3190325.00*
TOTAL 5711881.00 5711881.00 5107109.00 5107109.00
INTERPRETATION:
1. According to the table below, there was a significant net increase in working capital
of Rs 3190325.00 between 2019-20 and 2020-21. When comparing 2017-2018 to
2018-19. This is because of 2.
2. Current assets increased by Rs 628616.00, Sundry debtors increased by Rs
2757146.00, Cash and bank balance climbed by Rs 711918.00, and Loans and
Advances increased by Rs 1009429.00. In addition, other current assets fell by Rs
70562.00.

3. There is an increase in current liabilities, such as Sundry creditors (Rs 1818612.00)

and Provisions (Rs 27610.00)..


As on 31-3- As on 31-3-
Particulars
CURRENT ASSETS
Inventories 2161071.00 3336430.00 1175359.00 __
Sundry debtors 4958527.00 1805948.00 __ 3152579.00
Cash & Bank balance 1205660.00 1033152.00 __ 172508.00
Other current assets 78260.00 189683.00 111423.00 __
Loans and Advances 1196128.00 2712404.00 1516276.00 __
CURRENT LIABILITIES
Sundry creditors 3492127.00 2649781.00 842346.00 __
Provisions 395638.00 179298.00 216340.00 __

__ __
Increase in Working Capital 536657.00* 536657.00*
TOTAL 6248538.00 6248538.00 3861744.00 3861744.00
INTERPRETATION:
1. There was a net increase in working capital of Rs 536657.00 between

2020-21 and 2021-22, as shown in the preceding figure. In comparison between the years
2018-19 and 2019-20.
2. This is due to an increase in current assets such as inventories of Rs
1175359.00, other current assets of Rs 111423.00, loans and advances of Rs 1516276.00,
and a drop in Sundry debtors of Rs 3152579.00, cash and bank balance of Rs 113618.00.
3. Current liabilities such as Sundry creditors are reduced by Rs 842346.00,
and Provisions are reduced by Rs 216340.00.


As on 31-3- As on 31-3-
Particulars
CURRENT ASSETS
Inventories 3336430.00 2622901.00 __ 713529.00
Sundry debtors 1805948.00 3787274.00 1981326.00 __
Cash & Bank balance 1033152.00 1720815.00 687663.00 __
Other current assets 189683.00 206206.00 16523.00 __
Loans and Advances 2712404.00 2666232.00 __ 46172.00
CURRENT LIABILITIES
Provisions 179298.00 1230900.00 __ 1051602.00

__ __
Increase in Working Capital 864991.00* 864991.00*
TOTAL 7113529.00 7113529.00 2667512.00 2667512.00
INTERPRETATION:
1. Working capital increased by Rs 864991.00 between 2021-22 and 2022-23, according to

the table below. When compared to the fiscal years 2019-20 and 2020-21.
2. There is an increase in current assets such as Sundry debtors of Rs 1981326.00, Cash &
Bank balance of Rs 687663.00, Other current assets of Rs 16523.00 and a drop in
inventories of Rs 713529.00, Loans and Advances of Rs 46172.00.
3. There is a Rs 9218.00 increase in current liabilities, such as Sundry creditors and
Provisions.

CHAPTER – VI
SUMMARY OF FINDINGS, SUGGESTION &
CONCLUSION

6.1 FINDINGS
Meritor HVS (India) Ltd's working capital was improving and exhibiting a positive working
capital per year.
 The current and quick ratios of Meritor HVS (India) Ltd are higher, at 2.87 and 2.30,
respectively.
 In 2019-20, the inventory turnover ratio is extremely low. It climbed by 6.32 times in
2020-21 when compared to 2019-20, and it increased by 3.26 times in 2021-22 when
compared to 2020-21.
In 2019-20, the debtor turnover percentage is extremely high. It declined by 5.28 times in
2020-21 when compared to 2019-20, and it decreased by 0.44 times in 2021-22 when
compared to 2020-21.
 The creditor turnover ratio grew between 2019-20 and 2020-21. It was the same in 2021-
22 as it was in 2020-21.
 In 2019-20, the working capital turnover ratio is quite low. It climbed by 0.95 times in
2020-21 when compared to 2019-20, and it increased by 0.03 times again in 2020-21

6.2 SUGGESTIONS
 Every year, the company's working capital grows. Profit increases year after year, which
is a healthy indicator for the organization. It must continue to maintain it in order to
manage the firm in the long run. The current and quick ratios are almost at typical levels.
Working capital management as a result. Meritor HVS (India) Ltd is pleased and must
remain so.
 The corporation has adequate operating capital and a stronger liquidity position. The
efficient use of this short-term capital should boost the turnover. To reduce bad debts, the
organization should take preventative measures for investing and collecting funds from
receivables.
 The corporation has adequate operating capital and a stronger liquidity position. The
efficient use of this short-term capital should boost turnover.
 Creditor turnover ratio grew from 2018-19 to 2019-20, but remained unchanged in 2022-
2023. The corporation pays its creditors on time. This is a good indicator for the business.
On-time payment to suppliers will increase the firm's credibility. It must keep it if it is to
remain competitive in the market.
 The organization is properly employing working capital, which is beneficial to the
company. It must continue to do so.

6.3 CONCLUSIONS
Meritor HVS (India) Ltd did a study on working capital management to examine the
company's financial status. The financial situation of the organization is examined using the
annual report tool from 2018-19 to 2022-23.
Meritor HVS (India) Ltd has a solid financial position. Inventory turnover has grown in the
last year, which is a healthy indicator for the organization. The company's liquidity condition
is excellent. In terms of investments in current assets, sufficient monies have been invested.
The corporation should exercise caution in making more investments in current assets, as this
would divert monies that could otherwise be used productively. Overall, the company is
progressing thanks to strong management.

BIBLIOGRAPHY
TEXT BOOKS
 M.Y.Khan / P.K Jain, Financial Management Text, Problem’s Cases, 5 TH Edition,Tata

McGraw –Hill Publishing Company Limited, New Delhi, 2007.
 Prasanna Chandra, Financial Management Theory and Practice, 5TH Edition,
 Tata McGraw –Hill Publishing Company Limited, New Delhi, 2001.
 Annual Report of Bahety Chemicals & Minerals Private Limited.
WEB SITE VISITED

www.google.com
www.wikipedia.org
www.transtutors.com

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A Study on Working Capital Management with special reference to Meritor HVS (India) Pvt Ltd.

KSOU, Mukthagangothri, Mysuru Page 1

In this research study the effectiveness of working capital management (WCM) is

KSOU, Mukthagangothri, Mysuru Page 2

By concentrating on services and manufacturing firms which are represented by the

What is the definition of working capital management?

KSOU, Mukthagangothri, Mysuru Page 3

Nature of working capital management

Working Capital Management Objectives

Concepts and Definitions of Working Capital

KSOU, Mukthagangothri, Mysuru Page 4

Different types of working capital requirements

Continuous working capital

Working capital on a short-term basis

KSOU, Mukthagangothri, Mysuru Page 5

Forecasting/Estimation of Working Capital Requirements

The significance of working capital management

KSOU, Mukthagangothri, Mysuru Page 6

Working capital is an easy concept to understand because it is linked to a person's cost of

1.2 STATEMENT OF THE PROBLEM

1.3 SCOPE OF THE STUDY

KSOU, Mukthagangothri, Mysuru Page 7

1.4 OBJECTIVES OF THE STUDY

1.5 RESEARCH DESIGN

Tools Used: MS-Excel has been used for calculations.

KSOU, Mukthagangothri, Mysuru Page 8

1.6 RESEARCH METHDOLOGY

1.7 LIMITATIONS OF THE STUDY

1.8 CHAPTER SCHEME

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2.2 LITERATURE REVIEW

S. Lal conducted research on financial management in Nepalese state firms in 2011. S.

K. Kumar conducted a study on cash on management at selected units of state-level

KSOU, Mukthagangothri, Mysuru Page 14

Chartered Accountant essay. The significance of a cash disbursement plan in improving

N. Agarwal conducted a study on working capital in a sample of paper manufacturing

KSOU, Mukthagangothri, Mysuru Page 15

B. Banerjee conducted a study on working capital finance under inflationary conditions in

KSOU, Mukthagangothri, Mysuru Page 16

Warren and Shelton (2000) employed a set of simultaneous equations to simulate a

The National Council of Applied Economic Research (NACAER) conducted a research

NACAER (National Council of Applied Economic Research) conducted a study in this

Dr. Vijayasarathi and R. Rao conducted a study on management of improvements in

KSOU, Mukthagangothri, Mysuru Page 17

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KSOU, Mukthagangothri, Mysuru Page 19

3.1 INDUSTRY PROFILE

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As per the Automobile Component Manufacturers Association (ACMA) forecast, auto

KSOU, Mukthagangothri, Mysuru Page 22

KSOU, Mukthagangothri, Mysuru Page 23

KSOU, Mukthagangothri, Mysuru Page 24

KSOU, Mukthagangothri, Mysuru Page 25

 In March 2022, the government announced plans to offer fresh incentives to