A STUDY ON WORKING CAPITAL MANAGEMENT

INTRODUCTION

INTRODUCTION TO FINANCE

Finance is one of the major elements which activates the overall growth of the

economy. Finance is the lifeblood of economic activity. A well-knit financial system directly

contributes to the growth of the economy. An efficient financial systems call for the effective

performance of financial institutions, financial instruments and financial markets.

WHAT IS FINANCE?

Before we begin, first let’s understand the origin of word “FINANCE.”

If we trace the origin of finance, there is evidence to prove that it is as old as human

life on earth. The word finance was originally a French word. In the 18th century, it was adapted

by English speaking communities to mean “the management of money.” Since then, it has found a

permanent place in the English dictionary. Today, finance is not merely a word else has

emerged into an academic discipline of greater significance. Finance is now organized as a

branch of Economics.

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DEFINITION OF FINANCE

Finance is defined in numerous ways by different groups of people. Though it is

difficult to give a perfect definition of finance. Following selected statements will help you

deduce its broad meaning.

1. In General Sense,

“Finance is the management of money and other valuables, which can be easily converted

into cash.

2. According to Experts,

“Finance is a simple task of providing the necessary funds (money) required by the business

of entities like companies, firms, individuals and other on the terms that are most favorable

to achieve their economic objectives”

3. According to Entrepreneurs,

“Finance is concerned with cash. It is so since, every business transaction involves cash directly

or indirectly”

4. According to Academicians,

“Finance is the procurement (to get obtain) of funds and effective (properly planned)

utilization of funds. It also deals with profits that adequately compensate for the cost and risks

borne by the business”

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FEATURES OF FINANCE

1. Investment opportunities

2. Profitable opportunities

3. Optimal mix of funds

4. System of internal controls

5. Future decision making

IMPORTANCE OF FINANCE

The financial management function is an essential for the company, in every stage it has to

take special care in planning, implementing, and controlling of finance.

➢ Finance planning and successful promotion of an enterprise

➢ Acquisition of funds as and when required at the minimum possible cost

➢ Proper use and allocation of funds

➢ Taking sound financial decision

➢ Improving the profitability through financial controls

➢ Increasing the wealth of the inventors and the nation

➢ Promoting and mobilizing individuals and corporate savings. `

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INTRODUCTION TO WORKING CAPITAL

"Short-term survival is a perquisite to long term success". One of the most important areas in

the day to day management of the firm is the proper management of working capital. Working

Capital management is the functional area of the firm.

Working capital represents the difference between current assets and current liability. It

provides an indication of the extent to which a business is able to meet its current obligation

out of the assets, which are held for conversion into cash.

Working capital = Current Assets – Current Liabilities

The working capital management is the life-blood of the business. Its effective provision can

do much to ensure the success of business while its inefficient management can lead not only

to loss of profits but also to the ultimate down face of what otherwise might be considered as

a promising concern. The defective's management of the business, among other things

depends primarily upon the manner in which its short term assets and short run sources of

financing are managed. The working capital management or current assets management.

The concepts of working capital are gross working capital, capital, net working capital,

negative capital. An appropriate level of working level of working capital is to be maintained

as the storage of working capital intercepts the smooth flow of the business activity and

exclusive of curb profitability.

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The management of working capital involves constant vigilance to ensure that the right

composition of working capital is available on a continuing basis to support and promote the

activities of an organization. Efficient working capital management aims level of trade- off

between profitability and risk associated with a firm's level of current assets and current

liabilities.

MEANING

The accounting principle of Board of the American institute of Certified public

Accountant, USA has defined working capital called as net working capital is represented by

the excess of cash assets over cash liabilities and identifies the relatively liquid portion of total

enterprises capital.

Working Capital Management is concerned with the problems that arise in attempting to

manage the Current Assets, Current Liabilities and the inter-relationship that exists between

them

- Working Capital Management means the deployment of current assets and current liabilities

efficiently so as to maximize short-term liquidity.

- Working capital management entails short term decisions - generally, relating to the next

one year period - which is "reversible"

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DEFINITIONS OF WORKING CAPITAL

Working capital has been in several ways as given below.

Operating capital: As the working capital is the capital required to operate the business and

is the, capital invested in the current assets, it is called as operating capital.

Circulating capital: Interchanging used word for working is circulating capital. Gerestenberg

gas suggested this item 'circulating capital' as all the assets of business change from one form

to another.

"A managerial accounting strategy focusing on maintaining efficient levels of both

components of working capital, current assets and current liabilities, in respect to each other.

Working capital management ensures a company has sufficient cash flow in order to meet its

short-term debt obligations and operating expenses".

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

- Deciding Optimum Level of Investment in various WC Assets.

- Decide Optimal Mix of Short Term and Long Term Capital.

- Decide appropriate means of Short Term Financing.

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DETERMINANTS OF WORKING CAPITAL

The total working capital is determined by a wide variety of factors. It should be however

noted that these factors affect different enterprises differently. The following are the factors

which generally influence the working requirements of the firms.

A. INTERNAL FACTORS

• Nature of Enterprise

• Size of business

• Manufacturing cycle

• Firms credit policy

• Access to money market

• Expansion and growth of business

• Profit margin and dividend policy

• Depreciation policy

• Operating efficiency in firm

• Coordinating activities of the firm

B. EXTERNAL FACTORS

• Business cycle fluctuation

• Technological development

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• Seasonal fluctuation

• Environmental factors

• Taxation policy

NEED FOR WORKING CAPITAL FINANCE

The need for working capital finance is over-emphasized. Every business needs some amount

of working capital. The need for working capital arises due to the time gap between

production and realization of cash from sales. There is an operating cycle involved in the sales

and realization of cash. There are time gaps between purchase of raw materials & production,

production & sales and realization of cash.

Thus, working capital is needed for the following purposes.

• For the purpose of raw materials, components and spares.

• To pay wages and salaries.

• To incur day-to-day expenses and overhead costs such as fuel, power and office expenses,

etc.

• To meet the selling costs as packing, advertising etc.

• To provide credit facilities to the customers.

• To maintain the inventories of raw materials, work in progress, stores

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• And spares and finished stock.

TYPES OF WORKING CAPITAL

The working capital admits the following broad classifications:

• Permanent working capital:

Permanent or fixed working capital is the minimum amount, which is required to ensure

effective utilization of fixed facilities and for maintaining the circulation of current assets. This

investment if of a permanent type and as the size of the firm expands the requirement of

working capital also increases.

• Temporary working capital:

Temporary working capital is also called as the fluctuating or variable working capital, which

varies according to the problem and sales. It is the capital required in addition to the working

capital.

• Net working capital:

It is the difference between current assets and liabilities. It is the excess of current assets over

current liabilities. This concept enables a firm to determine the exact amount available at its

disposal for operational requirements.

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• Gross working capital:

It refers to the total current assets of the business. It is also known as circulating capital,

because the current assets are rotating in their

nature.

• Negative working capital:

When a current liability exceeds current assets, it is called as negative working capital.

CONCEPT OF WORKING CAPITAL

There are two concepts of working capital:-

a) Gross working capital.

b) Net working capital.

A. Gross working capital

Gross working capital refers to the firm's investment in current assets. Current assets are

assets which can be converted into cash within an accounting year (or operating

cycle) and include cash, short-term securities, and debtors (accounts receivables or book

debts) bills receivables and stock(inventory).

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CONSTITUENTS OF CURRENT ASSETS

1. Cash in hand and bank balances.

2. Bills receivables.

3. Sundry debtors (less provision for bad debts).

4. Inventories of stock.

5. Short-term loans and advances.

6. Temporary investments of surplus funds.

7. Prepaid expenses.

8. Accrued incomes.

B. Net working capital

Net working capital refers to difference between current assets and current liabilities. Current

liabilities are those claims of outsiders, which are expected to mature for payment within an

accounting year and include creditors (accounts payable), bills payable and outstanding

expenses.

CONSTITUENTS OF CURRENT LIABILITIES

1. Bills payable.

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2. Sundry creditors or accounts payable.

3. Short-term loans, advances and deposits.

4. Dividends payable.

5. Bank overdraft, short-term loans and advances.

6. Provision for taxation, if does not amount to appropriation of profits.

SOURCES OF WORKING CAPITAL MANAGEMENT

The important sources of working capital are as follows:

1. LONG TERM SOURCES

• Term loans from financial institutions

• Floating of debentures

• Raising finance through internal financing

• Retained earnings

• Hypothecation and mortgages.

2. SHORT TERM SOURCES

• Trade creditors

• Factoring

• Bank overdrafts

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• Short term loans

• Accounts receivables

• Commercial papers.

MEANING OF WORKING CAPITAL MANAGEMENT

Working Capital Management refers to the process of managing a company’s short-term

assets (like cash, inventory, and receivables) and short-term liabilities (like payables and short-

term loans).

It ensures that the company has enough liquidity to meet its day-to-day operations without

facing a cash crunch or holding too much idle money.

In simple words, it is about managing current assets and current liabilities effectively to

maintain smooth business operations.

DEFINITION OF WORKING CAPITAL MANAGEMENT

Working Capital Management can be defined as:

“The administration of current assets and current liabilities in such a way that a satisfactory

level of working capital is maintained for the smooth functioning of a business.”

Or simply,

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“It is the management of current assets and current liabilities to ensure sufficient liquidity and

profitability.”

OBJECTIVES OF WORKING CAPITAL MANAGEMENT

The main objectives are:

1. Ensuring Liquidity – To make sure the business has enough cash to pay its short-term

obligations.

2. Maintaining Profitability – To avoid excess funds lying idle and ensure resources are used

efficiently.

3. Smooth Operations – To keep day-to-day business activities running without financial

interruptions.

4. Minimizing Risk – To reduce the risk of insolvency by balancing current assets and liabilities.

5. Optimal Utilization of Resources – To avoid both shortage and excess of working capital.

6. Enhancing Firm’s Value – Proper management increases overall financial health and long-

term value of the firm.

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COMPONENTS OF WORKING CAPITAL MANAGEMENT

• Receivable management

• Inventory management

• Cash management

STEPS INVOLVED IN WORKING CAPITAL MANAGEMENT

1. Estimating Working Capital Requirements

• The first step is to assess how much working capital (current assets – current liabilities)

the business needs.

• It depends on sales, nature of business, credit terms, and operating cycle.

2. Forecasting Current Assets

• Estimate the amount of cash, accounts receivable, and inventory required to meet

short-term operations.

• Example: How much stock is needed to avoid shortages but also not overstock.

3. Determining Current Liabilities

• Identify short-term obligations like creditors, bills payable, short-term loans, and

outstanding expenses.

• This helps to plan payments on time without straining liquidity.

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4. Balancing Current Assets & Liabilities

• Ensure there is neither excess working capital (wastage of funds) nor shortage

(liquidity crisis).

• Maintain an optimal level for smooth operations.

5. Managing Individual Components of Working Capital

• Cash Management – Keeping enough cash for payments but not too much idle.

• Receivables Management – Setting proper credit policies and collecting dues on time.

• Inventory Management – Maintaining the right quantity of stock.

• Payables Management – Using supplier credit wisely without damaging relationships.

6. Monitoring & Controlling Working Capital

• Continuously review the working capital position.

• Use ratios like Current Ratio, Quick Ratio, Working Capital Turnover to check efficiency.

ADVANTAGES OF ADEQUATE WORKING CAPITAL

1. Smooth Business Operations – Ensures day-to-day expenses like wages, rent, and bills

are paid on time.

2. Good Credit Reputation – The firm can pay creditors promptly, which builds trust and

goodwill.

3. Better Profitability – Adequate funds help in getting cash discounts, bulk purchase

benefits, and avoiding borrowing at high interest.

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4. Ability to Face Emergencies – Extra liquidity acts as a cushion against unexpected

expenses or downturns.

5. Expansion and Growth – Adequate working capital allows reinvestment in new

opportunities and business growth without financial stress.

DISADVANTAGES OF INADVEQUATE WORKING CAPITAL

1. Difficulty in Day-to-Day Operations – The business may struggle to pay wages,

suppliers, and bills on time.

2. Loss of Reputation – Failure to meet obligations damages the company’s

creditworthiness and goodwill.

3. Higher Borrowing Costs – The firm may have to rely on emergency loans at high

interest rates.

4. Loss of Business Opportunities – Lack of funds may prevent the company from

purchasing raw materials in bulk or taking up profitable projects.

5. Risk of Insolvency – Continuous shortage of working capital can lead to financial

distress and even business closure.

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RESEARCH DESIGN

RESEARCH DESIGN MEANING

A Research Design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with the economy

in procedure”. In fact, the research design is the conceptual structure with in which research

is conducted; it constitutes the blue print for the collection, measurement and analysis of

data, the research design utilized in this study is analytical research.

TITLE OF THE STUDY

A study of working capital management to the study of changes in working capital

position of the company.

SCOPE OF THE STUDY

Decision regarding working capital is complex and is not one time decision. So the

study is to identify the areas of control to have a various components of working capital. The

short term solvency of the firms depends upon proper management working capital in any

organization. An attempt has been made to understand and analyze, interpret and evaluate

the requirements of working capital at HAL also to utilize the cash inventories and accounts

receivable in better way.

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PLANS OF ANALYSIS

The complied data has been analyzed and recast for a better understanding tabulated

in various form and subjected to financial testing. The recast and tabulated financial data has

been further interpreted as per the form conclusions and suggest and recommendation. The

financial tools used for such testing have been in the form ratio analyzes.

COLLECTION OF DATA

The study is derived mainly from sources of information from finance employee of

the company and the major sources of secondary data was annual report of HAL for years

from 2021, 2022, 2023, 2024, 2025 of the balance sheet and profit and loss account of the

company.

METHODOLOGY

The finance management techniques are very much applicable for the engine

division of HAL. The study of the financial management techniques is undertaken to ascertain

the current financial performance of engine division of HAL, in order to improve its financial

strength and keep a sound management.

Data and information are collected from both primary and secondary sources such

as face to face interaction, company’s magazines, Annual reports.

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The financial management tools are identified and discussed in detail. Each tools

are discussed with the background, process of each budget formation. The important aspects

are considered under each budget. The advantages of each budgets are explained.

The approach is broadly classified into the following Categories :-

• Internal Audit

• Budgets

• Cost reduction and MIS

The internal audit is known by the name system audit in the organization. The

system audit is an organizational personnel for whole of the organization.

The performance budget known as revenue budgets and capital budgets known

as investment budgets, target, financial ratios, MOU, MIS reports. Proprietary audit are other

techniques which are studied in the project study.

The required rate of return is to be met for any proposal. Similarly the short term

financial objectives are achieved by the performance budget. This can be more sales, more

profit, reduced expenditure, etc. the actual and the present environment is basis for analysis.

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SWOT ANALYSIS

STRENGTH :-

✓ HAL have a monopoly of its working capital Aeronautics.

✓ Stress on quality and ISO certificate like 9001, 14001.

✓ Brand image and goodwill.

✓ Good work culture, job security and high employment.

✓ Has diversified into industrial and Marine Gas Turbine business.

✓ It has a Well Equipped engine test bed research and development of small gas turbine

aero engines.

✓ It acquired the start of the act technologies for manufacture repair and overhaul

engines.

✓ It also has penetrated export markets.

✓ Incentives health care and other welfare measures given to the employees.

✓ Transportation facility is provided in HAL.

✓ It has good experience in 70 years in the industry.

✓ Healthy food is provided to the employees at the subscribed rate.

✓ Market dominance (market leader in the segment). Almost no competition.

(Company has orders worth 80,000 crore).

✓ Advanced research and development infrastructure.

✓ Current running projects.

✓ Low cost.

✓ Large pool of scientists and technicians.

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✓ Continuous innovation in R&D and process innovation.

✓ Current joint ventures and joint R&D projects.

✓ Government support.

WEAKNESS :-

✓ Since the organization is public sector it lacks a strategic competition in global market.

✓ Bureaucratic way of functioning.

✓ Delay in key research projects and cost overrun. (Forcing govt. to produce product

from foreign companies).

✓ Government control.

✓ Heavily dependent on the government for funding of research projects.

✓ Yet to establish in the international market as a credible aeronautics company (recent

crash of ALH Dhruv in Ecuador).

✓ Too many procedure and system leading to delay in its work.

✓ Lacks diversification.

OPPORTUNITY :-

✓ Modernization of Defense forces.

✓ FDI in Defense production.

✓ Offset clause in defense procurement policy of government of India.

✓ Increasing size of Indian civil aviation industry.

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✓ Maintenance, overhaul and repair.

✓ Export (products and services).

✓ Various foreign companies want to enter the Indian aviation market.

✓ Good support by government predetermined customers and goods contractual

relationship.

✓ It has entered into agreement with UK for servicing of DART engines in South East Asia.

✓ Design of new aircraft bring out the creativity of the engineers of HAL.

✓ Post Indo Us nuclear deal access to dual use technology.

THREATS :-

✓ Fast changing industry landscape.

✓ Government effort to promote private Defense manufacturing industry.

✓ Advent of new technologies.

✓ Joint venture between Indian foreign companies.

✓ Main thing is limited buyers.

✓ Human resource poaching by competitors.

✓ Disinvestment policy of the government.

✓ Raksha Udyog Ratna scheme of govt. of India (Tata Motors, Larsen and Toubro, Tata

Power Company, Mahendra and Mahendra, Godrej and Boyce, Bharat Forge, Infosys

Technologies, Wipro Technologies and Tata Consultancy Services are among the 12

companies).

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LEARNING EXPERIENCE

▪ Proper manner of maintaining punch cards and every time alert security centers.

▪ A company whatever may be its present status, it is trying to achieve higher place and

share in global industry.

▪ The company is increasing in expenditure efficiently with help of latest technology, for

example recruitment to various department it gives only small box in the News Paper

to visit its website for complete details thereby saving the cost of advertising on more

space.

LIMITATIONS OF STUDY

❖ It is based on the data supplied by the factory personnel.

❖ The study is based on only secondary data.

❖ It is based on consultation, decision of all concerned officials.

❖ The study is based on secondary data, obtained from the publish report and as its

finding depends entirely on the accuracy of such data.

❖ Time was major limitation factor of the study.

❖ The period of study was 2020-2025 financial years only.

❖ This report is based on the annual report, which are provided by the company that

cannot be relied upon.

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INDUSTRY PROFILE

The A & D industry is a complex ecosystem that covers the design, development,

manufacturing, and maintenance of aircraft, spacecraft and defense systems.

It is a high-tech industry responsible for national security and technological advancement with

a significant government presence.

Key aspects of the A & D industry:

• Sub - industries

The A & D industry can be largely divided into aeronautics (civil and military aircraft and

drones), space (launchers, satellites), and defense (military equipment security systems)

• Technological advancements:

Being in cutting edge industries, it propels innovations regarding artificial intelligence,

cybersecurity or sustainable technologies.

• Markets:

The A & D industry is a global, with its major players in Europe and the US and growing in

countries like India.

• Manufacturing:

It involves a complex supply chain, comprising big system integrators and specialized SMEs.

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• Government Influence:

Governments are the ultimate consumers of defense products and influence the industry

through procurement policies and regulations.

In essence, it is a condition of the aerospace and defense industry being dynamic with

technological innovations, international competition and major government interventions. It

faces certain obstacles and opportunities as it entertains global dynamics and technological

requirements.

The history and growth of the Hindustan Aeronautics Limited is synonymous with the

growth of Aeronautical industry in India over the past 70 years.

The Company which had its origin as the Hindustan Aircraft Company was incorporated

on 23 December 1940 at Bangalore by Shri Walchand Hirachand a farsighted visionary in

association with the Government of Mysore with an Authorized Capital of Rs.4 crores (paid

up capital Rs.40 lakhs) and with the aim of manufacturing aircraft in India. In March 1941, the

Government of India became one of the shareholders in the company holding 1/3 of its paid-

up capital and subsequently took over its management in 1942. In collaboration with the Inter

Continental Aircraft Company of USA, Hindustan Aircraft Company commenced its business of

manufacturing of Harlow Trainer, Curtiss Hawk Fighter and Vultee Bomber Aircraft.

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In December 1945, the company was placed under the administrative control of Min. of

Industry & Supply. In January 1951, Hindustan Aircraft Private Limited was placed under the

Administrative. The Company had built aircraft and engines of foreign design under license,

such as Prentice, Vampire and Gnat aircraft. It also undertook the design and development of

aircraft indigenously. In August 1951, the HT-2 Trainer aircraft, designed and produced by the

company under the able leadership of Dr. V.M Ghatge flew for the first time. Nearly 200

Trainers were manufacture and supplied to the Indian Air Force and other customers. With

the gradual building up of its design capability, the company successfully designed and

developed four other aircraft i.e. ‘Pushpak’ suitable for flying clubs, ‘Krishak’ for Air

Observatory Post (AOP) role, HF-24 Jet Fighter ‘Marut’ and the HJT-16 Basic Jet Trainer ‘Kiran’.

Meanwhile, in August 1963, Aeronautics India Limited (AIL) was incorporated as a company

wholly owned by the Government of India to undertake the manufacture of the MIG-21

aircraft under license. In June 1964, the Aircraft Manufacturing Depot which was set up in

1960 as an Air Force unit to produce the Airframe for the HS-748 transport aircraft was

transferred to AIL. Soon thereafter, the Government decided to amalgamate Hindustan

Aircraft Limited, with AIL so as to conserve resources in the field of aviation where the

technical talent in the country was limited and to enable the activities of all the aircraft

manufacturing units to be planned and co- ordinated in the most efficient and economical

manner.

Amalgamation of the two companies i.e. Hindustan Aircraft Limited and Aeronautics

India Limited was brought about on 1st October 1964 by an Amalgamation order issued by

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Government of India and the company after the amalgamation was named as “Hindustan

Aeronautics Limited (HAL)” with its principal business being design, development,

manufacture, repair and overhaul of aircraft, helicopter, engines and related systems like

avionics, instruments and accessories.

HAL is fully owned Government of India undertaking under the administrative

control of ministry of Defense, Department of Defense production. The authorized capital of

HAL is Rs.600 crore consisting of 60,00,00,000 equity shares having face value of Rs.10 each.

The current programs under progress at HAL are production of SU-30 MKI, Hawk-AJT,

Light Combat Aircraft (LCA), DO-228 Aircraft, Dhruv-ALH and Cheetal Helicopters, Repair

Overhaul of Jaguar, Kiran MKI/IA/II, Mirage, HS-748, AN-32, MIG 21, SU-30MKI, DO-228

Aircraft.

The company takes up maintenance and overhaul services to cover the life cycle

requirement of all the old and new products. Presently, 13 types of aircraft/ helicopters and

17 types of engines are being overhauled. In addition. Facilities exist for repair/ overhaul of

various accessories and avionics fitted on aircraft of Russian, western and Indigenous designs.

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SETH WALCHAND HIRACHAND

HINDUSTAN AERONAUTICS LIMITED (HAL)

HAL came into existence on 1st October 1964. The company was formed by merger of

Hindustan Aircraft Limited with Aeronautics India Limited and Aircraft manufacturing

Department, Kanpur.

The company traces its roots to its pioneering effects of an industrialists with

extraordinary vision the late Seth Walchand Hirachand who set up Hindustan Aircraft Limited

Bangalore in association with the erstwhile princely state of purpose in December 1940. The

Government of India became a shareholder in March 1941 and took over the management in

1942.

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Today HAL has 19 Production units and 10 Research and Design centers in 8 locations in India.

The company has an impressive product track record- 15 types of aircraft/helicopters

manufactured within house R 7 D and 14 types produced under license.

HAL has manufactured over 3658 Aircraft/helicopters, 4178 Engines, and upgraded 272

Aircraft and overhaul over 9643 Aircraft and 29775 Engines.

HAL has been successful in numerous R & D programs developed for both Defense and Civil

Aviation sectors. HAL has made substantial progress in its current projects.

✓ Advanced Light Helicopter – Weapon System Integration (ALH-WSI).

✓ Tejas – Light Combat Aircraft (LCA).

✓ Intermediate Jet Trainer (IJT).

✓ Light Combat Helicopter (LCH).

✓ Various military and civil upgrades.

Dhruv was delivered to the Indian Army, Navy, Air force and the Coast Guard in March

2002, in the very first year of its production, a unique achievement.

HAL has played a significant role for India’s space by participating in the manufacture of

structures for Satellite Launch Vehicles like:

• PSLV (Polar Satellite Launch Vehicle)

• GSLV (Geo-synchronous Satellite Launch Vehicle)

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• IRS (Indian Remote Satellite)

• INSAT (Indian National Satellite)

Apart from these, other major diversification projects are manufacture & overhaul of

Industrial Marine Gas Turbine and manufacture of Composites.

HAL HAS FORMED THE FOLLOWING JOINT VENTURES (JVs):

➢ BAeHAL Software Limited

➢ Indo-Russian Aviation Limited (IRAL)

➢ SNECMA-HAL Aerospace Private Ltd

➢ SAMTEL-HAL Display System Limited

➢ HALBIT Avionics Private Ltd

➢ HAL-Edgewood Technologies Private Ltd

➢ INFOTECH-HAL Ltd

➢ TATA-HAL Technologies Ltd

➢ HATSOFF Helicopter Training Private Ltd

➢ International Aerospace Manufacturing Private Ltd

OUR VISION

“To become a significant global player in the aerospace industry”

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OUR MISSION

“To achieve Self Reliance in design, development, manufacture, upgrade and maintenance of

aerospace equipment diversifying into related areas and managing the business in a climate

of growing professional competence to achieve world class performance standards for global

competitiveness and growth in exports.”

OUR VALUES

CUSTOMER SATISFACTION:

We are dedicated to building a relationship with our customers where we become partners in

fulfilling their mission. We strive to understand our customer’s needs to deliver products and

services that fulfill and exceed all their requirements.

COMMITMENT TO TOTAL QUALITY:

We are committed to continuous improvement of all our activities. We will supply products

and services that conform to highest standards of design, manufacture, reliability,

maintainability and fitness for use as desired by our customers.

COST AND TIME CONSCIOUSNESS:

We believe that our success depends on our ability to continually reduce the cost and shorten

the delivery period of our products and services. We will achieve this by eliminating waste in

all activities and continuously improving all processes in every area of our work.

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INNOVATION AND CREATIVITY:

We believe in striving for improvement in every activity involved in our business by pursing

and encouraging risk-taking, experimentation and learning at all levels within the company

with a view to achieving excellence and competitiveness.

TRUST AND TEAM SPIRIT:

We believe in achieving harmony in work life through mutual trust, transparency, co-operation

and a sense of belonging. We will strive for building empowered teams to work towards

achieving organizational goals.

RESPECT FOR THE INDIVIDUAL:

We value our people. We will treat each other with dignity and respect and strive for individual

growth and realization of everyone’s full potential.

INTEGRITY:

We believe in a commitment to be honest, Trustworthy and fair in all our dealings. We commit

to be loyal and devoted to our organization. We will practice Self Discipline and own

responsibility for our actions. We will comply with all requirements so as to ensure that our

organization is always worthy of trust.

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PODUCTION DETAILS

MALs complex in Bangalore serves as the central location for its design, production, and

research and development efforts, making a significant contribution to the creation or aircraft,

helicopters, engines, avionics, and aerospace components. Here are the man production

highlights pertaining to HAL's activities in Bengaluru:

Aircraft Production:

Light Combat Aircraft (LCA) Tejas: This is HAL's primary homegrown fighter jet, created by the

Aeronautical Development Agency (ADA) with HAL being the main producer. The production

of the Tejas MklA variant is underway, with two lines set up in Bengaluru. HAL aims to

complete the delivery of 12 Tejas Mk1A aircraft by 2025, with plans for 83 Mk1A aircraft and

the introduction of Tejas Mk2 by 2028. The company has addressed supply chain challenges

concerning the GE F414 engines, Vital lor the Mk< version.

Hindustan Turbo Trainer (HT 1-40): A basic trainer aircraft designed for the Indian Air Force,

manufactured in Bengaluru

Dornier 228: This aircraft is created for military and civil purposes, contributing to regional

connectivity efforts. In 2021, HAL entered a lease with Alliance Air Aviation Limited for two

civil Do-228 aircraft intended for operations in Arunachal Pradesh

Historical Aircraft: HAL Bengaluru has a history of producing models such as the HF-

24 Marut (India's first domestic fighter-bomber designed by Kurt Tank), Harlow PC-5, Curtiss

P-36 Hawk, and Vultee A-31 Vengeance under license during its initial years,

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Helicopter Production:

Advanced Light Helicopter (ALH) Dhruv: A versatile helicopter developed and manufactured

in Bengaluru, utilized by the Indian Army, Navy, and Air Force. Variants Include the armed

Kudra and utility models like Cheetal.

Light Combat Helicopter (LCH) Prachand: This is an indigenous attack helicopter designed for

operations at high altitudes, produced in Bengaluru.

Light Utility Helicopter (LUH): Production has recently commenced to substitute older Cheetah

and Chetak helicopters. Cheetah and Chetak: Licensed models of the Aerospatiale SA 316B

Alouette III, they have been manufactured in Bengaluru since the 1970s for utility and light

transport purposes.

Helicopter Factory: Established in 1970 in Bengaluru, this facility focuses on helicopter

production and modifications. Additionally, a new manufacturing site for helicopters in

Tumkur, near Bengaluru, is now operational to cater to increasing demand.

Engine Production:

HAL's Engine Division in Bengaluru creates engines under license and aids in local

development:

Turbomeca TM 333: Used for HAL Dhruv Mk 1/2 and Cheetal helicopters.

Rolls-Royce Turbomeca Adour Mk 811/871: For the SEPECAT Jaguar and BAE Hawk

Mk 132 aircraft.

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Garrett TPE331-5: Utilized in Dornier 228 aircraft. Bristol Siddeley Orpheus: In production

since 1957 for different aircraft models.

F414-GE-INS6: Negotiations for licensed production of this engine for Tejas Mk2, TEDBF, and

AMCA Mk1 are currently happening in a new facility in Bengaluru.

HAL has signed a memorandum of understanding with GE (USA) to acquire 99 F414 engines

for the LCA Mk2 project, which involves an 80% technology transfer and is valued at around

$1 billion.

Aerospace and Missile Components:

HAL's Aerospace Division located in Bengaluru produces components for ISRO's satellite

launch vehicles, including wing bays, aerodynamic wings, propellant tanks, and aluminum

warhead casings for the Prithvi ballistic missile. The division is also responsible for

manufacturing liquid-rocket engines for the Prithvi at its Engine Test Bed Research and

Development Centre.

The most substantial semi-cryogenic propellant tank (SC120-LOX) was delivered to

ISRO on October 5, 2021, highlighting HAL's advanced manufacturing skills.

ACHIEVEMENTS AND MILESTONES:

➢ Establishment and Early Achievements:

1940: Founded as Hindustan Aircraft Limited in Bengaluru by Walchand Hirachand, marking

the inception of India’s aerospace industry.

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1941-42: The Mysore Kingdom and Government of India became stakeholders, with the

Government assuming full control to support World War II efforts, producing aircraft like the

Harlow PC-5 and Curtiss P-36 Hawk.

1964: Merged with Aeronautics India Limited to form Hindustan Aeronautics Limited,

consolidating facilities in Bengaluru and other locations for unified aerospace production.

➢ Indigenous Aircraft Development:

1960’s: Developed and flew India’s first indigenous Jet Fighter, the HF-24 Marut, designed by

Kurt Tank, establishing HAL Bangalore as a hub for aircraft design.

1980’s- present : Successfully developed and operationalized the Light Combat Aircraft (LCA)

Tejas, India’s first indigenous supersonic fighter, with series production starting in Bengaluru.

Over 40 Tejas Mk1 aircraft delivered, with 83 Mk1A ordered and plans for Mk2 by 2028.

2021: Launched production of the Hindustan Turbo Trainer (HTT-40), a basic trainer aircraft

for the Indian Air Force, designed and built in Bengaluru.

➢ Awards and Recognitions:

2005-06: The Aircraft Upgrade R&D Centre (AURDC) in Bengaluru received the Raksha Mantri’s

Award for the Excellence for MIG-27 upgrades, highlighting HAL’s expertise in aircraft

modernization.

2009-10: Regional Export Award from EEPC, India for the year 2007-2008. This award was

presented on 21st Feb 2010 in Maldives.

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2024: Conferred Maharatna status by the Government of India, recognizing HAL’s financial

performance, strategic importance, and contribution to national self-reliance.

MAJOR CUSTOMETS OF HAL (DOMESTIC & INTERNATIONAL)

DOMESTIC:

DEFENCE & SPACE:

▪ Indian Air Force

▪ Indian Army

▪ Indian Navy

▪ Indian Coast Guard

▪ Indian Space Research Organization

▪ Defense Research & Development Organization

▪ Ordnance Factory Board

CIVIL:

▪ Border Security Force

▪ Oil & Natural Gas Cooperation of India

▪ Govt. of Karnataka

▪ Govt. of Jharkhand

▪ Govt. of Maharashtra

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▪ Geological Survey of India

▪ Bharat Heavy Electricals Ltd.

INTERNATIONAL (EXPORTS) {in Alphabetical order}

Airbus Industries, France

Boeing, USA

Coast Guard, Mauritius

Ecuadorian Air Force, Ecuador

ELTA, Israel

GE Aviation, USA

Hamilton Sundstrand, USA

Honeywell International, USA

Israel Aircraft Industries, Israel

Mauritius Police Force, Mauritius

Moog Inc. USA

Namibian Air Force, Namibia

Nepal Army, Nepal

RAC MIG, Russia

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Rolls Royce Plc, UK

Royal Air Force, Oman

Royal Malaysian Air Force, Malaysia

Royal Thai Air Force, Thailand

Ruag, Germany

Roseboro export, Russia

Suriname Air Force

Turbomeca, France

Vietnam Air Force, Vietnam

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COMPANY PROFILE

THE ENGINE DIVISION

The Engine Division, which is ISO-9002 certified, was set up in 1957 to manufacture Orpheus

turbo jet engines under license from Rolls Royce. In 1959, another license agreement was

signed with Rolls Royce to manufacture Dart engines to power HS-748 passenger aircraft and

overhaul Avon engines fitted on Canberra & Hunter aircraft. Since then, the division has grown

from strength to strength. It is now engaged in the manufacture of Artouste engines for

Chetek/Cheetah helicopters, Adour engines for Jaguar aircraft and Garrett engines for Dornier

aircraft. Engine division also undertakes repair and overhaul of various aero engines operated

by Indian Air force, Indian Navy, Indian Army, Coast Guard, Border Security Force, Corporate

sector, State Government and other civil customers. The division has manufactured more than

aero engines and overhauled & repaired 11,000 engines.

The division, during four decades of its existence, has acquired state-of-art-technologies for

manufacture, repair and overhaul of engines. It has a well equipped CNC shop comprising over

25 machine tools. Facilities also include Electron Beam Welding, vacuum Brazing, Electric

Discharge / Chemical forming machines and others.

The division has also set up shops for special coating processes to combat high temperature

and atmospheric corrosion conditions, protection against surface erosions, such as Plasma

Spray, Aluminum Silicon diffusion coating, Segmental coating.

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Engine and Test bed R & D Centre, which is part of the Engine Division, has Specialized in the

development of small Gas Turbines & Engine Test Beds. The ETBRDC is equipped with

necessary modern infrastructures. The R&D Centre has developed a gas turbine engine for

Pilotless Target Aircraft and jet Fuel Starter for starting the engine of Light Combat Aircraft.

The R & D Centre has also designed and installed engine test beds for Russian and western

origin aero engines on turnkey basis.

NEW PROGRAMMES

Kaveri Engine

Kaveri, the designated engine for LCA, is being developed by GTRE, Bangalore. Various

divisions of HAL are involved in the development and certification. The engine will be

manufactured at engine division, HAL. The materials for engine components include high

strength super alloy such as Inconel on the hot end side and TI-64 on the cold end. The engine

is twin spool, by pass type designed to provide dry thrust of 5291 kg reheat thrust of 8264 kg.

Engines for AJT, IT and ALH

The engines for advanced Jet trainer project and intermediate Jet trainer project will also be

manufactured by engine division in the near future. Further, the division will be participating

in the co-design & coproduction of engine for Advanced Light Helicopters.

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Diversification

Manufacture of auxiliaries such as 750 kw turbo alternator, forced draught turbo blowers and

main circulating turbo pumps for Leander class frigates form part of diversification.

FACILITIES AT HAL

Engine Division has extensive manufacturing facilities consisting of conventional machines as

well as CNC facilities. Some of the CNC facilities are :-

• 7 Axis automatic NC NGV grinding centre with facilities like an auto loading & unloading by

Robo and integrated CMM

• 5 Axis machine centers both single spindle and twin spindle

• 4 Axis and 3 Axis machines

• Vertical turret lathes with live spindle

• Disc lathe with touch probe facilities

• Twin spindle vertical grinder

• Jig boring

• Turn mill centre

• CNC Gear Grinder

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Other facilities cover Fabrication and Coatings welding machineries, non-conventional!

machining facilities, few of these are :-

• Electron Beam Welding

• Robotic Plasma Spray Facility

• CNC Electrical Discharge machines

• Wire EDM

• Electro chemical forming

• Chemical size reduction

• Sermetal and other coatings

• All types of electro plating facilities

• Vacuum brazing

• Special welding features such as Fusion welding, Manual, Automatic Circumferential

welding, Longitudinal welding, Orbital welding, Resistance welding (Spot welding, stitch

welding, Seam welding

AREA OF DEPARTMENT

• Finance department

Finance is the life line of any industry. The same applies to HAL Engine Division. Much funds

are generated by sales, raising of equity capital and internal resources and advances from

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government of India. Chief finance is who under the direct control of additional general

manager in finance department of HAL next in order are senior manager, division officer,

accounts officers followed by senior assistant and assistants.

The finance department has been divided into further sections such as :-

• Cash section

• Budget section

• Loan section

• Bill section

• Establishment section

• Compilation section

• ⁠Internal audit section

• Payroll section

In HAL the following accounts registers and ledgers are maintained :-

• Receipts:- All receipts are accepted through cheques and demand drafts.

• Payments :- All payments are made through bank cheque and drafts.

Two types of ledger are maintained by HAL:-

1. General ledger :- All receivables and payables are maintained here.

2. Personal ledger :- All clients and suppliers accounts are maintained in this ledger.

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CURRENTLY INVOLVED IN REPAIR AND OVERHAUL ACTIVITIES OF THE

FOLLOWING ENGINES

POTENTIAL FOR OVERHAUL AND REPAIR

Adour Mk871 for AJT Hawk Mk-132 Aircraft

Hawk Aircraft is powered by Adour MK 871-07 engine. Adour MK 871-07 will be manufactured

by the Division under licence from M/s. Rolls Royce. Adour MK 871-07 is a by pass Turbojet

engine of modular construction. The engine has two stage low pressure and five stage high

pressure axial flow compressors which are driven by separate single stage high pressure and

low pressure turbines connected through co-axial shafts with low pressure shaft passing

through high pressure shaft.

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Shakti 1H1 for ALH

The TM 333 2B2 turbo shaft engine powers ALH Helicopter designed and manufactured by

HAL. The engine will be repaired / overhauled under licence from Turbomeca, France. The

engine is of modular construction with annular air take, two stage axial compressor together

with a centrifugal compressor driven by a single stage turbine. The engine has an annular

reverse flow combustion chamber, a single stage free turbine with a through shaft driving a

reduction gear unit located in the front. The engine has a full authority digital engine control.

Simple installation and easy access for maintenance, fast response time and low specific fuel

consumption are the added features of the engine.

Artouste Engines for Cheetah and Chetak Helicopters

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Artouste IIIB Engine powers both Cheetah and Chetak helicopters. The engine manufacture

commenced in 1962 under licence from Turbomeca, France. The engine has side air intake,

one axial and one centrifugal compressor connected to a three stage turbine.

Adour-804 and Adour-811 for Jaguar Aircraft

Two ADOUR MK 811 Engines powers the JAGUAR Aircraft. ADOUR MK 811 Engines were

manufactured since 1981 under license from M/s. Rolls Royce-Turbomeca. Presently, Division

supports the fleet thru ROH of Engines Division Supports the fleet of Indian defence forces.

Garrett Engines for Dornier Aircraft

The Garrett TPE 331-5 turbo prop engine is being manufactured, overhauled and repaired for

various customers under licence from Garrett Engine Division of Honey Well Company [Earlier

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Allied Signal Aerospace Company, USA] since 1988 and belongs to one of the most popular

series of small turbo prop engines powering a large number of commuter and corporate

aircraft such as Dornier Do-228.

Gnome Engine for Seaking Helicopters

The Gnome 1400-IT engines are being repaired and overhauled under licence from Rolls

Royce, UK and is the power plant for Seaking Helicopter. It is a turbo shaft single spool with 10

stage axial compressor, two stage turbine and free power turbine.

TM 333-2B2 Engines for ALH

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The TM 333 2B2 turbo shaft engine powers ALH Helicopter designed and manufactured by

HAL. The engine will be repaired / overhauled under licence from Turbomeca, France. The

engine is of modular construction with annular air take, two stage axial compressor together

with a centrifugal compressor driven by a single stage turbine. The engine has an annular

reverse flow combustion chamber, a single stage free turbine with a through shaft driving a

reduction gear unit located in the front. The engine has a full authority digital engine control.

Simple installation and easy access for maintenance, fast response time and low specific fuel

consumption are the added features of the engine.

PRODUCT AND SERVICE PROFILE

PRODUCT PROFILE

❖ AIRCRAFT

LCA, HTT-40

DORNIER

IJT

SU-30 MKI

HAWK

❖ CIVIL AVIATION

Dhruv ALH

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Hindustan -228

❖ HELICOPTERS

DHRUV,

RUDRA

LCH

LUH

CHEETAL

LANCER

CHETAK

CHEETAH

❖ SPACE

Heat Shield Assembly

Nose Cone Assembly and Tank and Shrouds

❖ SYSTEM

Avionics

Accessories and Materials

❖ MRO

Aircraft MRO

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Helicopter MRO

Power Plant Services

System

Accessories and Avionics

SERVICE PROFILE

Design and Development Services:

Aircraft and Helicopter Design: HAL Bangalore provides end-to-end design services for

indigenous platforms like the Light Combat Aircraft (LCA) Tejas, Advanced Light Helicopter

(ALH) Dhruv, Light Combat Helicopter (LCH) Prachand, and Light Utility Helicopter (LUH). These

services include conceptual design, prototyping, and testing, conducted through R&D centres,

like the Aircraft Upgrade R&D Centre (AURDC) and Mission and Combat Systems R&D Centre.

Advanced Technology Development: HAL offers specialized R&D services for next-generation

projects, such as the Advanced Medium Combat Aircraft (AMCA) (fifth-generation stealth

fighter) and the Combat Air Teaming System (CATS), integrating manned and unmanned

systems.

Aerospace Components for Space Programs: The Aerospace Division in Bengaluru designs

and develops components for ISRO's satellite launch vehicles, including propellant tanks, wing

bays, and liquid-rocket engines (e.g., SC120-LOX tank for PSLV).

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Manufacturing Services:

Aircraft Production: HAL Bangalore manufactures military aircraft like the LCA Tejas Mk1A,

Hindustan Turbo Trainer (HTT-40), and Dornier 228 for defence and civilian applications,

including regional connectivity under India's UDAN scheme.

Helicopter Production: The Helicopter Division produces multi-role helicopters like

ALH Dhruv (including Rudra and Cheetal variants), LCH Prachand, LUH, and legacy platforms

like Cheetah and Chetak, with a dedicated facility in Tumkur near Bengaluru.

Engine Manufacturing: The Engine Division produces licensed aero-engines, including Rolls-

Royce Turbomeca Adour (for Jaguar and Hawk aircraft), Turbomeca TM 333 (for Dhruv), and

Garrett TPE331-5 (for Dornier 228). Plans are in place for GE F414 production for Tejas Mk2.

Avionics and Accessories: HAL Bangalore manufactures advanced avionics, including

communication systems (UHF, HF, IFF), radio altimeters, and solid-state cockpit voice and flight

data recorders (SSCVFDR) for platforms like Hindustan-228.

PROCESSING AND PRODUCTION ACTIVITES

Processing and Production Activities of HAL, Bangalore

1. Aircraft Manufacturing

Platforms: Produces indigenous aircraft like the Light Combat Aircraft (LCA) Tejas Mk1A,

Hindustan Turbo Trainer (HTT-40), and Dornier 228 for military and civilian applications (e.g.,

UDAN scheme).

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Process:

Design and Prototyping: Conducted at R&D centres like the Aircraft Upgrade R&D

Centre (AURDC) in Bengaluru, using CAD/CAM software and wind tunnel testing.

Component Fabrication: Involves precision machining, sheet metal forming, and composite

manufacturing (e.g., carbon fibre for Tejas airframes).

Assembly: Airframe assembly in dedicated hangars, integrating wings, fuselage, and tail

sections, followed by system integration (avionics, hydraulics, fuel systems).

Testing: Rigorous ground tests (structural integrity, avionics functionality) and flight tests at

HAL's Bengaluru airport facility.

Production Capacity: Two production lines for LCA Tejas Mk1A, targeting 12 deliveries in 2025

and 83 Mk1A aircraft by 2028-29.

Key Facilities: Aircraft Division, Bangalore Complex, with advanced CNC machines,

automated assembly lines, and quality control labs.

2. Helicopter Manufacturing

Platforms: Produces Advanced Light Helicopter (ALH) Dhruv (including Rudra and Cheetal

variants), Light Combat Helicopter (LCH) Prachand, Light Utility Helicopter (LUH), and legacy

Cheetah/Chetak helicopters.

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Process:

Rotor and Airframe Production: Fabricates rotor blades, airframes, and transmission systems

using composites and lightweight alloys.

Assembly: Integrates rotor systems, engines, and avionics in specialized hangars at the

Helicopter Division, Bengaluru, and Tumkur facility. High-Altitude

Testing: Conducts simulated high-altitude tests for platforms like LCH Prachand, designed for

operations up to 6,500 meters.

Quality Assurance: Adheres to AS9100D and ISO 9001:2015 standards, with non-destructive

testing (NDT) for critical components.

Key Facilities: Helicopter Division in Bengaluru and a new manufacturing plant in Tumkur,

enhancing production capacity for LUH and ALH.

3. Engine Manufacturing

Engines: Produces licensed aero-engines, including Rolls-Royce Turbomeca Adour (for Jaguar

and Hawk), Turbomeca TM 333 (for Dhruv), and Garrett TPE331-5 (for Dornier

228). Plans for GE F414 production for Tejas Mk2

Process:

Component Manufacturing: Precision machining of turbine blades, compressors, and casings

using CNC machines and additive manufacturing (3D printing).

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Assembly: Engine assembly in cleanroom environments, integrating components like fuel

systems, turbines, and exhausts.

Testing: Conducts performance tests at the Engine Test Bed Research & Development Centre

in Bengaluru, ensuring compliance with airworthiness standards.

Technology Transfer: Incorporates 80% technology transfer for F414 engines, with a dedicated

facility under development in Bengaluru.

Key Facilities: Engine Division, Bangalore Complex, equipped with advanced testing rigs and

cleanroom assembly lines.

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DATA ANALYSIS AND INTERPRETATION

Meaning

Analysis and Interpretation of Financial Statement refers to such a Treatment of

information contained in the Income Statement and the Position Statement, so as to afford

full diagnosis of the profitability and financial soundness of business.

Distinction here can be made between the two terms- "analysis and interpretation". The term

analysis means methodical classification of the Data given in the financial statements. The

term interpretation means explaining the meaning and signification of the data so simplified.

However both analysis and interpretation are complimentary to each other. Interpretations

are complimentary to each other. Interpretation requires analysis, while analysis is useless

without interpretation.

An adequate amount of working capital is required for the smooth running of the

firm. Working capital usually concerns with the administration of all the current assets and

current liabilities. The project studies the working capital of HAL Engine division, Interprets

and analysis the data; which shows the success or failure and overall efficiency of the firm.

Working capital refers, to the fund invested in current assets, i.e. investment in stocks,

debtors, cash and others.

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A large amount of working capital would mean that the firm has little funds, lower the amount

of working capital, the higher would be the amount of risk. Mismanagement of working capital

leads to failure of the firm. So an enlightened might should maintain the right amount of

working capital on continuous basis.

INTRODUCTION TO RATIO:

Accounting ratios are relationship's expressed in mathematical terms between figures,

which are connected with each other in some manner. The relationship between the numbers

can be expressed by means of dividing one figure by the other.

Ratio analysis is a widely used tool as it's defined as, the systematic use of ratio to interpret

the financial statements. So that the strength and weakness of a firm as well as its historical

performance and current financial condition can be determined.

Ratio analysis does not provide an end in itself but only a mean to understand the business

unit's financial position. There are no of ratio's which can be computed from a single set of

financial statements, but only few can be used in particular situations to focus on the position

of the business houses.

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LIQUIDITY RATIOS

CURRENT RATIO
CURRENT RATIO = CURRENT ASSETS
CURRENT LAIBILITIES

CURRENT
YEAR ASSETS CURRENT LIABILITIES CURRENT RATIO

2025 90,082.32 44,096.02 2.0428

2024 63,015.75 36,323.23 1.7348

2023 51,886.31 30,825.42 1.6832

2022 45,007.12 25,019.85 1.7988

2021 40,179.57 25,511.64 1.5749

Current Ratio
2.50
2.04
2.00 1.73 1.68 1.80
1.57
1.50
Ratio

1.00
0.50
-
2025 2024 2023 2022 2021
Year

INTERPRETATION:
we can interpret that the company's liquidity position has generally improved over the years,
with the highest current ratio observed in 2025. This suggests that the company has become
more capable of covering its short-term liabilities with its short-term assets over time.

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QUICK RATIO
QUICK RATIO= LIQUID ASSETS
CURRENT LAIBILITIES

YEAR LIQUID ASSETS CURRENT LIABILITIES QUICK RATIO

2025 68406.62 44,096.02 1.5513

2024 49789.83 36,323.23 1.3707

2023 39725.64 30,825.42 1.2887

2022 30643.54 25,019.85 1.2247

2021 23619.24 25,511.64 0.9258

Quick Ratio
2.00
1.55
1.37 1.29
1.50 1.22
0.93
Ratio

1.00

0.50

-
2025 2024 2023 2022 2021
Year

INTERPRETATION:

• The quick ratio has generally improved over the years from 2021 to 2025. This indicates
that the company's liquidity position has strengthened, meaning it has become more
capable of covering its short-term liabilities with its liquid assets.
• The highest quick ratio is observed in 2025, suggesting that the company had the most
favorable liquidity position in that Year.
• The quick ratio in 2021 was below 1, indicating that the company might have struggled
to meet its short-term obligations with its liquid assets.

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CASH RATIO
CASH RATIO= CASH & CASH EQVIVALENTS
CURRENT LAIBILITIES

CASH & CASH

YEAR EQVIVALENTS CURRENT LIABILITIES CASH RATIO

2025 38,170.76 44,096.02 0.8656

2024 26,421.84 36,323.23 0.7274

2023 20,306.15 30,825.42 0.6587

2022 14,343.61 25,019.85 0.5732

2021 7,166.33 25,511.64 0.2809

Cash Ratio
1.00 0.87
0.80 0.73
0.66
0.57
0.60
Ratio

0.40 0.28
0.20
-
2025 2024 2023 2022 2021
Year

INTERPRETATION:
• The cash ratio has generally improved over the years from 2021 to 2025 . This indicates that
the company's liquidity position has strengthened, meaning it has Become more capable of
covering its short-term liabilities with its cash and cash equivalents.

• The highest cash ratio is observed in 2025, suggesting that the company had the most
favorable liquidity position in that year 1.

• The cash ratio in 2021 was below 1, indicating that the company might have struggled to
meet its short-term obligations with its cash and cash equivalents

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OPERATING CASH FLOW RATIO

OPERATING CASH FLOW= CASH FROM OPERATIONS
CURRENT LIABILITIES
OPERATING
CASH FROM CURRENT CASH FLOW
YEAR OPERATIONS LIABILITIES RATIO

2025 13643.46 44,096.02 0.3094

2024 8222.82 36,323.23 0.2263

2023 8829.72 30,825.42 0.2864

2022 10032.78 25,019.85 0.4009

2021 15262.72 25,511.64 0.5982

Opg. Cash Flow Ratio

0.70 0.60
0.60
0.50 0.40
0.40
Ratio

0.31 0.29
0.30 0.23
0.20
0.10
-
2025 2024 2023 2022 2021
Year

From this analysis, we can observe that the company's ability to cover its current liabilities
with its operating cash flow has been decreasing over the years, with the highest ratio in 2021
and the lowest in 2024. This trend suggests that the company might be facing increasing
challenges in generating sufficient cash flow from its operations to meet its short-term
obligations.

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PROFITABILITY RATIO

GROSS PROFIT RATIO

GROSS PROFIT = GROSS PROFIT
NET SALES

GROSS PROFIT
YEAR GROSS PROFIT NET SLAES RATIO

2025 10,820.72 30,980.95 34.927

2024 10,198.38 28,161.90 36.2133

2023 6,506.63 26,360.56 24.6832

2022 5,224.76 24,361.47 21.4468

2021 4,270.16 22,368.89 19.0897

Gross Profit Ratio

40.00 34.93 36.21
35.00
30.00 24.68
25.00 21.45
Ratio

19.09
20.00
15.00
10.00
5.00
-
2025 2024 2023 2022 2021
Year

From this analysis, we can observe that the company's gross profit ratio has fluctuated over
the years, with the highest ratio in 2024 and the lowest in 2021. The significant drop in 2023
suggests that the company faced challenges in maintaining its profitability from sales during
that year. However, the ratio improved in 2024 and 2025, indicating a recovery in the
company's ability to generate profit from its sales.

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NET PROFIT RATIO

NET PROFIT = NET PROFIT

NET SLAES

NET PROFIT
YEAR NET PROFIT NET SALES RATIO

2025 8,323.40 30,980.95 26.8661

2024 7,594.45 28,161.90 26.9671

2023 5,824.86 26,360.56 22.0968

2022 5,080.11 24,361.47 20.853

2021 3,234.25 22,368.89 14.4586

Net Profit Ratio

30.00 26.87 26.97
25.00 22.10 20.85
20.00
14.46
Ratio

15.00
10.00
5.00
-
2025 2024 2023 2022 2021
Year

The net profit ratio has shown a positive trend, increasing from 20.85% in 2022 to 26.87% in
2025. This suggests that the company is becoming more efficient in converting sales into
profit.

Overall, the data indicates a positive trend in the company's financial performance, with
increasing net profit, net sales, and stable profit ratios. This suggests that the company is
growing and becoming more profitable over time.

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OPERATING RATIO
OPERATING RATIO = OPERATING RATIO

NET SALES

OPERATING
YEAR PROFIT NET SALES RATIO

2025 30,980.95 30,980.95 100

2024 30,381.08 28,161.90 107.88

2023 26,927.46 26,360.56 102.1505

2022 24,620.02 24,361.47 101.0613

2021 22,754.54 22,368.89 101.724

Operating Ratio
110.00 107.88
108.00
106.00
104.00
Ratio

102.15 101.72
101.06
102.00 100.00
100.00
98.00
96.00
2025 2024 2023 2022 2021
Year

The operating profit ratio has fluctuated slightly but remains relatively stable. It was 101.72%
in 2021 and increased to 107.88% in 2024 before stabilizing at 100% in 2025 1. This indicates
that the company has been able to maintain a healthy margin on its sales, although there were
some fluctuations in the interim years.

The consistent increase in operating profit and net sales indicates that the company has been
growing and becoming more profitable over time. The fluctuations in the operating profit ratio
suggest that while the company has generally maintained its efficiency in generating profit
from sales, there were some years where the efficiency varied. Overall, the data indicates a
positive

trend in the company's financial performance, with increasing profitability and stable profit
ratios.

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RETURN ON CAPITAL EMPLOYED

RETURN ON CAPITAL EMPLOYED = EBIT

CAPITAL EMPLOYED

YEAR EBIT CAPITAL EMPLOYED ROCE RATIO

2025 10,826.61 62,017.10 17.4574

2024 10,198.38 41,660.48 24.4797

2023 6,506.63 36,291.96 17.9285

2022 5,224.76 33,301.14 15.6894

2021 4,272.18 26,360.00 16.207

ROCE Ratio
30.00
24.48
25.00
20.00 17.46 17.93
15.69 16.21
Ratio

15.00
10.00
5.00
-
2025 2024 2023 2022 2021
Year

The consistent increase in EBIT and capital employed indicates that the company has been
growing and becoming more profitable over time. The fluctuations in ROCE suggest that while
the company has generally maintained its efficiency in generating returns from its capital
employed, there were some years where the efficiency varied. Overall, the data indicates a
positive trend in the company's financial performance, with increasing profitability and stable
returns on capital employed.

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RETURN ON ASSET RATIO

RETURN ON ASSET RATIO = LIQUID ASSETS
AVG. TOTAL ASSET

YEAR NET INCOME AVG TOTAL ASSET ROA RATIO

2025 8,323.40 1,06,113.12 7.8438

2024 7,594.45 77,983.71 9.7385

2023 5,824.86 67,117.38 8.6786

2022 5,080.11 58,320.99 8.7106

2021 3,234.25 51,871.64 6.2351

ROA Ratio
12.00
9.74
10.00 8.68 8.71
7.84
8.00 6.24
Ratio

6.00
4.00
2.00
-
2025 2024 2023 2022 2021
Year

The consistent increase in net income and average total assets indicates that the company has
been growing and becoming more profitable over time. The fluctuations in ROA suggest that
while the company has generally maintained its efficiency in generating returns from its
assets, there were some years where the efficiency varied. Overall, the data indicates a
positive trend in the company's financial performance, with increasing profitability and stable
returns on assets.

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RETURN ON EQUITY RATIO

RETURN ON EQUITY RATIO= NET INCOME
SHARE HOLDERS EQUITY

SHARE HOLDERS
YEAR NET INCOME EQUITY ROE RATIO
2025 8,323.40 34,981.61 23.7936
2024 7,594.45 29,138.17 26.0635
2023 5,824.86 23,572.15 24.7107
2022 5,080.11 19,313.13 26.3039
2021 3,234.25 15,412.27 20.9849

ROE Ratio
30.00 26.06 24.71 26.30
23.79
25.00 20.98
20.00
Ratio

15.00
10.00
5.00
-
2025 2024 2023 2022 2021
Year

The ROE has fluctuated over the years. It was 20.98% in 2021, increased to 26.30% in 2022,
and then decreased to 23.79% in 2025 1. This indicates that while the company has generally
maintained its efficiency in generating returns from its equity, there were some years where
the efficiency varied.

INTERPRETATION:
The consistent increase in net income and shareholders' equity indicates that the company
has been growing and becoming more profitable over time. The fluctuations in ROE suggest
that while the company has generally maintained its efficiency in generating returns from its
equity, there were some years where the efficiency varied. Overall, the data indicates a
positive trend in the company's financial performance, with increasing profitability and stable
returns on equity.

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SOLVENCY RATIO

DEBT TO EQUITY RATIO

DEBT TO EQUITY RATIO= TOTAL LIABILITIES
SHARE HOLDERS EQUITY
DEBT EQUITY
YEAR TOTAL LIABILITIES SHARE HOLDERS EQUITY RATIO
2025 71282.45 34,981.61 2.0377
2024 48952.27 29,138.17 1.68
2023 43626.06 23,572.15 1.8507
2022 39072.41 19,313.13 2.0231
2021 36530.65 15,412.27 2.3702

Debt Equity Ratio

2.37
2.50 2.04 2.02
1.85
2.00 1.68
1.50
Ratio

1.00
0.50
-
2025 2024 2023 2022 2021
Year

The debt to equity ratio has fluctuated over the years. It was 2.37 in 2021, decreased to 1.68
in 2024, and then increased to 2.04 in 2025 1. This indicates that while the company has
generally maintained its efficiency in managing its debt relative to its equity, there were some
years where the efficiency varied. The consistent increase in total liabilities and shareholders'
equity indicates that the company has been growing and becoming more profitable over time.
The fluctuations in the debt to equity ratio suggest that while the company has generally
maintained its efficiency in managing its debt relative to its equity, there were some years
where the efficiency varied.

Overall, the data indicates a positive trend in the company's financial performance, with
increasing profitability and stable debt management.

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DEBT TO ASSET RATIO

DEBT TO ASSET RATIO = TOTAL DEBT
TOTAL ASSET

DEBT TO
YEAR TOTAL DEBT TOTAL ASSETS ASSET RATIO
2025 71282.45 1,06,113.12 0.6717
2024 48952.27 77,983.71 0.6277
2023 43626.06 67,117.38 0.6499
2022 39072.41 58,320.99 0.6699
2021 36530.65 51,871.64 0.7042

Debt to Asset Ratio

0.72 0.70
0.70
0.68 0.67 0.67
0.66 0.65
Ratio

0.64 0.63
0.62
0.60
0.58
2025 2024 2023 2022 2021
Year

The debt to asset ratio has fluctuated over the years. It was 0.704 in 2021, decreased to 0.627
in 2024, and then increased to 0.672 in 2025. This indicates that while the company has
generally maintained its efficiency in managing its debt relative to its assets, there were some
years where the efficiency varied.

The consistent increase in total debt and total assets indicates that the company has been
growing and becoming more profitable over time. The fluctuations in the debt to asset ratio
suggest that while the company has generally maintained its efficiency in managing its debt
relative to its assets, there were some years where the efficiency varied. Overall, the data
indicates a positive trend in the company's financial performance, with increasing profitability
and stable debt management.

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TURNOVER RATIOS

FIXED ASSET TURNOVER RATIO

FIXED ASSET TURNOVER RATIO= NET SALES
AVG FIXED ASSET

YEAR NET SALES AVG FIXED ASSET FATR RATIO

2025 30,980.95 9,768.55 3.1714

2024 28,161.90 9,230.32 3.051

2023 26,360.56 8,719.37 3.0232

2022 24,361.47 9,238.82 2.6368

2021 22,368.89 9,568.94 2.3376

FATR
3.50 3.17 3.05 3.02
3.00 2.64
2.34
2.50

2.00
Ratio

1.50

1.00

0.50

-
2025 2024 2023 2022 2021
Year

The FATR has shown a positive trend, increasing from 2.34 in 2021 to 3.17 in 2025 . This
indicates that the company has become more efficient in utilizing its fixed assets to generate
sales over time. The consistent increase in net sales indicates that the company has been
successful in growing its revenue. The stable average fixed asset suggests that the company
has maintained its investment in fixed assets. The increasing FATR indicates that the company
has become more efficient in utilizing its fixed assets to generate sales. Overall, the data
indicates a positive trend in the company's financial performance, with increasing revenue
and improved efficiency in asset utilization.

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INVENTORY TURNOVER RATIO

INVENTORY TURNOVER RATIO = COST OF GOODS SOLD
AVG INVENTORY

YEAR ITR

2025 1.43

2024 2.30

2023 2.22

2022 1.72

2021 1.38

Inv. Turn Over Ratio

2.50 2.30
2.22

2.00 1.72
1.43 1.38
1.50
Ratio

1.00

0.50

-
2025 2024 2023 2022 2021
Year

Higher ITR: Generally, a higher ITR is favourable as it indicates efficient inventory management
and strong sales. The peak in 2024 suggests that the company was performing well in these
areas.

Lower ITR: The decline in 2025 is a concern. It may imply that the company is holding onto
inventory longer, which could lead to higher holding costs and potential obsolescence.

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RECIVEABLES TURNOVER RATIO

RECIVEABLES TURNOVER RATIO = NET CREDIT SALES
AVG RECIVEBALES

NET CREDIT
YEAR SALES AVG A/R RTR RATIO
2025 30,980.95 4,647.54 6.666
2024 28,161.90 4,616.67 6.1
2023 26,360.56 4,719.07 5.5859
2022 24,361.47 4,641.55 5.2485
2021 22,368.89 5,639.36 3.9665

RTR
6.67
7.00 6.10
5.59
6.00 5.25
5.00
3.97
4.00
Ratio

3.00
2.00
1.00
-
2025 2024 2023 2022 2021
Year

The RTR has shown a positive trend, increasing from 3.97 in 2021 to 6.67 in 2025 . This
indicates that the company has become more efficient in collecting its receivables over time.

INTERPRETATION:
• The consistent increase in net credit sales indicates that the company has been successful
in growing its revenue. The stable average accounts receivable suggests that the company has
maintained its receivables. The increasing RTR indicates that the company has become more
efficient in collecting its receivables. Overall, the data indicates a positive trend in the
company's financial performance, with increasing revenue and improved efficiency in
receivables collection.

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WORKING CAPITAL RATIO

WORKING CAPITAL RATIO= NET SALES
TOTAL WORKING CAPITAL

YEAR NET SLAES WORKING CAPITAL WCTR RATIO

2025 30,980.95 13,178.34 2.3508
2024 28,161.90 99,338.98 0.2834
2023 26,360.56 82,711.73 0.3187
2022 24,361.47 70,026.97 0.3478
2021 22,368.89 65,691.21 0.3405

WCT Ratio
2.35
2.50

2.00

1.50
Ratio

1.00
0.28 0.32 0.35 0.34
0.50

-
2025 2024 2023 2022 2021
Year

The WCTR has shown a positive trend, increasing from 0.34 in 2021 to 2.35 in 2025. This
indicates that the company has become more efficient in utilizing its working capital to
generate sales over time.

The consistent increase in net sales indicates that the company has been successful in growing
its revenue. The fluctuations in working capital suggest that the company has experienced
variations in its short-term financial health. The increasing WCTR indicates that the company
has become more efficient in utilizing its working capital to generate sales. Overall, the data
indicates a positive trend in the company's financial performance, with increasing revenue
and improved efficiency in working capital utilization.

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PAYABLES RATIO
PAYABLES RATIO= PURCHASES
AVG PAYABLES

YEAR PURCHASES AVG A/P PTR RATIO

2025 19,913.83 5,110.84 3.8963

2024 13,017.73 3,414.67 3.8122

2023 10,792.83 3,137.34 3.4401

2022 9,408.92 2,559.77 3.6756

2021 8,585.88 2,246.15 3.8224

Payables Ratio
4.00 3.90
3.90 3.81 3.82
3.80
3.68
3.70
Ratio

3.60
3.50 3.44
3.40
3.30
3.20
2025 2024 2023 2022 2021
Year

The PTR has fluctuated slightly but remains relatively stable. It was 3.82 in 2021 and increased
to 3.90 in 2025. This indicates that the company has generally maintained its efficiency in
paying off its suppliers, although there were some fluctuations in the interim years.

The consistent increase in purchases and average accounts payable indicates that the
company has been growing and becoming more active in its procurement activities. The stable
PTR suggests that the company has generally maintained its efficiency in paying off its
suppliers, although there were some years where the efficiency varied. Overall, the data
indicates a positive trend in the company's financial performance, with increasing
procurement activities and stable payables management.

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EARNINGS RATIO
EARNINGS/PROFIT RATIO
EARNINGS RATIO = NET INCOME
AVG NO. OF SHARES
EARNINGS
YEAR NET INCOME AVG NO. OF SHARES RATIO
2025 8,323.40 125.00 66.5872
2024 7,594.45 114.00 66.6179
2023 5,824.86 174.00 33.4762
2022 5,080.11 152.00 33.4217
2021 3,234.25 97.00 33.3427

Earning Ratio
66.59 66.62
70.00
60.00
50.00
40.00 33.48 33.42 33.34
Ratio

30.00
20.00
10.00
-
2025 2024 2023 2022 2021
Year

The earnings ratio has shown a positive trend, increasing from 33.34 in 2021 to 66.59 in

2025. This indicates that the company has become more efficient in generating earnings per
share over time.

The consistent increase in net income indicates that the company has been growing and
becoming more profitable over time. The fluctuations in the average number of shares
suggest that the company has experienced variations in its share structure, which could be
due to stock splits, buybacks, or other corporate actions. The increasing earnings ratio
indicates that the company has become more efficient in generating earnings per share,
which is a positive sign for shareholders. Overall, the data indicates a positive trend in the
company's financial performance, with increasing profitability and improved efficiency in
generating earnings per share.

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DIVIDEND YIELD RATIO

DIVIDEND YIELD RATIO = DIVIDEND PER SHARE
SHARE PRICE

DIVIDEND PER DIVIDEND YEILD

YEAR SHARE SHARE PRICE RATIO

2024 1,972.89 114.00 1730.6052

2023 1,671.94 174.00 960.885

2022 1,337.55 152.00 879.9671

2021 1,003.16 97.00 1034.1855

Dividend Yield Ratio

2,000 1,731

1,500
961 1,034
Ratio

880
1,000

500

-
2024 2023 2022 2021
Year

The dividend yield ratio has fluctuated significantly. It was 1,034.19% in 2021, increased to
1,730.61% in 2024.

The fluctuations in the dividend per share and dividend yield ratio suggest that the company's
dividend policy has varied over the years. The increase in share price indicates a positive trend
in the company's stock value, which is a good sign for investors. However, the drop in the
dividend yield ratio to 0% in 2025 indicates that the company did not pay any dividends that
year, which could be a concern for shareholders who rely on dividend income.

Overall, the data indicates that while the company has shown a positive trend in its stock
value.

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DIVIDEND PAYOUT RATIO

DIVIDEND PAYOUT RATIO = DIVIDENDS
NET INCOME
DIVIDEND
PAYOUT
YEAR DIVIDENDS NET INCOME RATIO

2024 1,972.89 7,594.45 25.978

2023 1,671.94 5,824.86 28.7035

2022 1,337.55 5,080.11 26.3291

2021 1,003.16 3,234.25 31.0167

Dividend Payout Ratio

32.00 31.02
31.00
30.00 28.70
29.00
Ratio

28.00
27.00 25.98 26.33
26.00
25.00
24.00
23.00
2024 2023 2022 2021
Year

The dividend payout ratio has fluctuated significantly. It was 31.02% in 2021, increased to
28.70% in 2023.

The fluctuations in the dividends and dividend payout ratio suggest that the company's
dividend policy has varied over the years. The consistent increase in net income indicates a
positive trend in the company's profitability.

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FINDINGS

Liquidity Ratios

• Current Ratio: The company's liquidity position has generally improved over the years, with

the highest current ratio observed in 2025. This suggests that the company has become more

capable of covering its short-term liabilities with its short-term assets over time

• Quick Ratio: The quick ratio has also improved over the years, indicating a strengthened

liquidity position. The highest quick ratio was observed in 2025, suggesting the most favorable

liquidity position in that year

• Cash Ratio: The cash ratio has generally improved from 2021 to 2025, indicating that the

company has become more capable of covering its short-term liabilities with its cash and cash

equivalents.

Profitability Ratios

• Gross Profit Ratio: The company's gross profit ratio has fluctuated over the years, with the

highest ratio in 2024 and the lowest in 2021. The significant drop in 2023 suggests challenges

in maintaining profitability from sales during that year. However, the ratio improved in 2024

and 2025, indicating a recovery

• Net Profit Ratio: The net profit ratio has shown a positive trend, increasing from 20.85% in

2022 to 26.87% in 2025. This suggests that the company is becoming more efficient in

converting sales into profit

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Solvency Ratios

• Debt to Equity Ratio: The debt to equity ratio has fluctuated over the years. It was 2.37 in

2021, decreased to 1.68 in 2024, and then increased to 2.04 in 2025. This indicates that while

the company has generally maintained its efficiency in managing its debt relative to its equity,

there were some years where the efficiency varied.

• Debt to Asset Ratio: The debt to asset ratio has also fluctuated, indicating variations in the

company's efficiency in managing its debt relative to its assets

Turnover Ratios

• Fixed Asset Turnover Ratio (FATR): The FATR has shown a positive trend, increasing from 2.34

in 2021 to 3.17 in 2025. This indicates that the company has become more efficient in utilizing

its fixed assets to generate sales over time.

• Inventory Turnover Ratio (ITR): The ITR peaked in 2024, suggesting efficient inventory

management and strong sales. However, the decline in 2025 is a concern as it may imply that

the company is holding onto inventory longer, leading to higher holding costs and potential

obsolescence.

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Earnings Ratios

• Earnings Ratio: The earnings ratio has shown a positive trend, increasing from 33.34 in 2021

to 66.59 in 2025. This indicates that the company has become more efficient in generating

earnings per share over time.

These findings suggest that while the company has shown improvements in various financial

metrics over the years, there are areas that require attention, such as inventory management

and debt management. Overall, the data indicates a positive trend in the company's financial

performance, with increasing profitability and improved efficiency in asset utilization.

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SUGGESTIONS

✓ There should be proper strategy for the effective utilization of the working capital.

✓ HAL has to have good relation with its supplier who provides the trade credit in the

form working capital.

✓ The company has to make effort for utilization of the resource to the optimum extent

so that it can still improve its total assets turnover ratio.

✓ Factory should reduce the production at less cost and strategies more used to improve

the performance products.

✓ The company must reduce the cost of goods sales and production.

✓ The company must utilize the man power effectively and efficiently to improve its

profit.

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CONCLUSION

HINDUSTAN AERONAUTICS LIMITED established state of the art & futuristic product by

providing manufacturing solutions to the end users.

The performance of HINDUSTAN AERONAUTICS LIMITED has been indeed gratifying and

satisfactory by under taking several strong measures like, taking up productivity improvement

projects at customers end. Providing tooling solutions, stepping up cost reduction activities.

The growth materialized by introduction of new products and improvements accomplished in

product performance and service to levels comparable with those of the world class

manufacturers operating in the global market. During the year under review, the company

also receives MANY Exports award for its outstanding export performance.

ANALYSIS

The company could design, Manufacture and supply special tools to meet the critical

requirements of their valued customers.

I wish the leader all the success in its path and hope that it will enhance the productivity of

Indian industries by being the leader in supplying high technology quality products and

services.

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