old prjct 9

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  • 7/31/2019 old prjct 9




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    Cash Management is the management of the cash balances of a concern in such a manner as

    to maximize the availability of cash not invested in fixed assets or inventories and to avoid the

    risk of insolvency. According to Keynes there are three motives for holding cash: the

    transactions motive, the precautionary motive, and the speculative motive. The most useful

    technique of cash management is the cash budget.

    Cash management means improvement of the cash flow of a business and reduction of the

    financial risk. Liquidity has become one of the scarce resources and it has become more

    expensive. It is therefore sensible actively to optimize our working capital. In addition to the

    improved cash flow through a reduced amount of tied-up funds, you may also avoid unnecessary

    losses on for example debtors, reduce the purchase price through constructive analysis and active

    dialogue with suppliers, obtain optimum balancing of the supply chain, etc.


    In a business anything done financially affects cash eventually. Cash is to a business is what

    blood is to a living body. A business cannot operate without its life-blood cash, and without cash

    management, there may remain no cash to operate. Cash movement in a business is two-way

    traffic. It keeps on moving in and out of business. The inflow and outflow of cash never

    coincides. Important aspect which is unique to cash management is time dimension associated

    with the movement of cash. Due to non-synchronicity of cash inflow and outflow, the inflow

    may be more than the outflow or the outflow may be more than the inflow at a particular point of

    time. This needs regulation. Hence there is a direct need to control its movement through skillful

    cash management. The primary aim of cash management is to ensure that there should be enough

    cash availability when the needs arise, not too much, but never too little.

    Good cash management leads to good finance management. Active and gainful cash

    management policies designed to speed up turnover, maximize return on investment. Efficient

    management of cash will ultimately result in maximization of the owners wealth.

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    The Minerals and Metals industry has been flourishing since ancient times.Fr.Williams

    Gregor in the year 1879 discovered ilmenite in konwat in England. He found that the black sand

    contains some important metal but he failed to discover it .in 1875 a Hungarian scientist MartinKeinwitch found the same metal contents in the refine minerals. The metal was named

    TITANIUM after of Greek methodology. The geographical survey of India found the presence

    of monazite in the coastal sands of kerala.Besides the minerals deposits are found in

    Tamilnadu,Orissa because of which they also have well established mineral industries.

    Industries play a significant role in almost every economy but India context it is an

    important as oxygen for breathing. Industrial development has been accorded great importance in

    Indian planning. On account of industrial development there is increase in production,

    employment and national income. India is the second largest growing economy in the world.

    This is equally applicable to the Titanium Dioxide industry.

    Titanium Dioxide pigment is authority white powder with high capacity, Brilliant

    whiteness, excellent covering power, and resistance to color change. These opportunities have

    made it authority valuable pigment for authority broad range of applications in the paint, plastic

    goods, inks and paper.

    The pigment is manufactured by processing naturally occurring Titanium containingRutile or Illmenite minerals. Rutile is an impure form or Titanium Dioxide, where as illmenite

    contains titanium combined with iron as authority compound oxide. Though common throughout

    the world, they are most readily exploited in Australia, USA, India and South Africa. Titanium

    bearing minerals found in the coastal sands of the western Kerala coast and in the eastern region

    on Tamil Nadu and Orissa. The minerals sands on the 22km belt in southern Kerala is said to be

    one of the deposit. India today possesses the richest technology for the manufacture of Titanium

    Dioxide through the sulphate and chloride route.

    The two public sector manufactures, TTPL (Titanium tetra chloride Ltd) and KMML

    have substantial capacity addition programmes. The capacity of TTPL is expected to touch

    30000TPA by 2007 and that of KMML is expected to touch 100000 TPA by 2008, apparently,

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    with the above capacities, both TTPL and KMML will produce Tio2 beyond the requirement of

    the country. Keeping this in mind, both these units have started tapping the global market.

    Currently there four unit in India engaged in the manufacturing of Tio2 pigment (Rutile &

    Anatase) with a total combined capacity of 44560 metric tons per annum. These units are:

    1)Kerala minerals and Metals Ltd Chavara, Kollam.

    2)Travancore Titanium products Ltd, Trivandrum.

    3)Kilburn chemical Ltd, Chennai.

    4)Kolmark chemicals Ltd, Kolkata.

    Titanium Dioxide is one of the top 20 inorganic chemicals of industrial importance. It is

    the most important pigment material used. Titanium Dioxide has the highest refractive index

    among the known materials and hence it imparts best pigment properties such as hiding power,

    capacity, etc. Titanium Dioxide is the whitest of the White Pigments. It is used extensively in

    paint, paper, plastic and other industries. High purity titanium dioxide is an important electronic

    material First successful attempt to produce relatively pure titanium dioxide from ilmenite ore

    was made by Rossi in USA in 1908. The first titanium pigment company which intially produced

    composite pigments commenced production at Niagara Falls in 1918. Since those days and even

    today USA has been in the vanguard of development of titanium dioxide industry. Anotherimportant landmark in the history of titanium dioxide was development of improved method of

    thermal hydrolysis by Blumenfeld in 1920 in France. The technology was licensed to a number

    of companies in Europe as well as in USA.


    The Titanium Dioxide industry is growing worldwide. The Indian reserves of Illmenite

    and Rutile is expected to be around 6 crores tones. Beach reserve is also seen in Rathnagiri

    (Mahi), Ganjan (orissa) and Srikakolam (AP).The reserve in Kerala and Tamilnadu is around 25

    million tones, there are about 20 million tones reserves in Orissa. This information threw right in

    to the possibilities of new manufactures and competitions in Titanium Dioxide pigment Industry

    in the Indian market with the increasing demand for the paints, rubber, plastic and printing ink

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    etc. The arrival of new manufactures will be more in the near future. This will ultimately results

    in tight competition.

    The demand of TiO2 highly depended on the finished products likes plastic, paint ,rubber

    ,paper ,printing ink, etc. The demand for the high quality Titanium Dioxide will increase the

    profitability of the business.

    The US$10 billion titanium dioxide pigment industry improved profitability in 2009

    compared to 2008, as variable costs reduced at a faster rate than selling prices. Leading

    producers also idled high cost plants during the year, leading to improved asset portfolios. A

    rebound in demand in the second half of 2009 had plants winding back to full production rates.

    TZ Minerals International Pvt Ltd (TZMI) announced that, according to its annual independent

    in depth analysis of the global TiO2 sector, the weighted average manufacturing cash cost

    decreased by 11% in 2009, while at the same time sector revenues contracted by only 4.5% on a

    US dollar basis. The net result was a further rebound in the industry revenue to cash cost (R/C)

    ratio to 1.21, taking the sector back to profitability levels last seen in 2006.

    There was a significant decrease in the number of plants operating in a negative cash-

    margin position in 2009. Whereas in 2008 TZMI calculated that 27% of the output that year was

    operated with negative cash margins, in 2009 that had decreased back to 11%, or 16 plants. Inparticular sulfate producers saw significant relief in the form of low sulfuric acid and energy

    costs, while some global producers have reset their portfolios by idling high cost plants said

    David McCoy, Senior Partner at TZMI. In 2008 there were only 5 sulfate plants with costs

    below the industry weighted average. In 2009 the number increased dramatically to 14 plants,

    representing 15.5% of the production in the study. The differential in operating cost structures

    between chloride and sulfate process plants nearly halved in 2009 over 2008 levels, coming back

    in line with the differential last seen in 2006.

    In 2009 global pigment demand was estimated at 4.68 million tonnes, down 3.0% from 2008.

    Regionally, the main consuming markets for TiO2 pigment are the major industrialized

    economies of North America, Europe and the increasing role for China. Per capita consumption

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    is highest in North America and Western Europe. The greatest opportunities for growth lie in the

    less developed high population economies, led by China and India.

    Higher titanium feedstock prices are expected to be fully rolled out by 2011 to support

    much needed investment decisions by the suppliers. Pigment manufacturers will have to pass

    through reasonable price increases over the ensuing period just to tread water. Capacity

    utilization rates are expected to rise sharply as the global supply chain is restocked. There will

    still be an extended period of price and profitability recovery until global producers will commit

    to brown fields expansions. There are not expected to be any new pigment plants built outside

    China before 2012.

    In India the titanium dioxide industry arrived almost with the dawn of independence.

    First plant was set-up by the erstwhile State of Travancore in 1950. However, thereafter the

    growth of the Indian industry has been rather sluggish. The per capita consumption of titanium

    dioxide in USA is about 3.4 Kg.The consumption in Asia-Pacific region is about 0.2 Kg. The

    Indian consumption, however, is extremely low at less than 0.05 Kg.

    Titanium dioxide is produced and marketed in two grades. These are Rutile and Anatase.

    Rutile has close packed structure whereas Anatase has, more open structure. Rutile has higher

    density, higher refractive index, better resistance to chalking and higher hardness. Because ofhigh refractive index, titanium dioxide pigments exhibit the highest hiding power. If the hiding

    power of Rutile is placed at 100 that of Anatase is 78. The hiding power of other common

    pigments such as zinc sulphate, litho phone, white lead etc. ranges between 39 to 10.

    The percentage of consumption in different sectors varies from country to country. In

    USA coatings account for 51%, paper 24%, plastics 14% and other usages 11%. In most

    countries, however, the share of usage in paper industry is lower at about 6-9%. The share of the

    plastic industry is growing in all the countries.

    Presently titanium dioxide is being manufactured in India by three companies. These are

    Travancore Titanium Products Limited, Trivandrum, Kerala Minerals and Metals Limited,

    Quilon and Kolmac Chemicals, Calcutta. The titanium dioxide industry is growing worldwide. A

    number of new projects are on the ground. There is scope for another 10 major projects

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    worldwide before the end of this century. Considering the wealth of mineral and technology

    resources we have, we must ensure a due share of this global expansion of titanium dioxide

    capacity for India.

    World scenario

    The use of Titanium Dioxide (Ti02) is very vast and it is produced in various parts of

    the world at different levels, which includes multinational companies as well as small scale

    companies. The credit of recognizing the existence of titanium goes to amateur geologist and

    paster William Gregor i n 179l.The oxide was independently rediscovered in 1795 by Germen

    chemist Martin Henrich Klaporth i n Rutile from Hungary.Kiaporth found that it contains a new

    element and named it for the Titan of Greek mythology.

    Titan is a God who is very hard to be pleased and since the reactivity of pigment

    was feasible to almost anything. The use of Titanium minerals in welding electrode coating

    gained acceptance inmid thirtees.Titanium metals has been of commercial importance since

    1948.Mining of limonite is carried out several countries like Australia ,Norway ,Sri Lanka

    ,Malaysia ,South Africa. India

    The first titanium pigment company which initially produced composite pigments

    commenced production at Niagara Falls in1918.The first commercial product of titanium

    was an alloy addictive to steel, where Ferro alloys were developed in commercial scale.

    Titanium is far more stable than any other pigment. Its perfect non toxicity and chemical

    inertness make it an ideal choice as a white pigment. The light scattering property of finely

    TitaniurnDioxide is unmatched by any other non material. The chemical is available in two

    crystalline forms, viz Anatase and Rutile, which are of much commercial significance. The

    relatively softer anatase is the right material delustering ar ti fi ci al fibres.T i02 i s the whitest

    of white pigment and has replaced less effective pigments. This is because of the unique

    combination of its superior properties of high refractive index, low specific gravity, high

    hiding power and opacity and no toxicity. It also has high tinting strength and dispersion

    properties as well as chemical stability. The Ti02 marked is unique in that white it is a

    product approaching 100 years old; there are still no functional alternatives that provide the

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    same value in use of customers. The industry has gone through a metamorphosis in the past

    decade. Looking over the next 20 year, at least some new Ti02 pigment will be made, through

    most of the industries additional capacity will come from expansion pigment consumption

    rose sharply in Western Europe and Asia or Pacific (excluding Japan) during the year

    2000.East Asia is presently the most attractive region in the world.

    The event t h a t revolutionized the Ti02 industry wa s the development of chloride

    technology by M/s DuPont around 1959.The chloride technology took the US industry in

    short span. Most of the sulphate route plants was closed or replaced by chloride route plants.

    Usage of Ti02 extremely widespread over 170 countries each spend over and US 1 00000

    per year on Ti02 pigment .Internationa l trade accounts for 55% of global consumption. The

    total reserve of limonite in the world is estimated to be approximatel y 1 7 2 2 million tones.The range of heavy mineral deposit is found in the eastern and western coast of length 60km.

    Ti02 was first produced commercially in 1923 and accounts for approximately 75% of

    the total volume of pigment production. Ultra fine grades of Ti02 h a v e a primary particle

    size or 10-50 km and are used predominantly as ultra violet blockers in sunburns and plastics

    and in the catalyst most commerc ial Titanium Dioxide products are coated with inorganic and

    organic compounds to control and improve surface properties

    In the world there are about 14 major producers of Ti02. Ti02 is produced in 5

    nations, which MNL with large installed capacities

    Top players in the world

    DuPont co, Wellington, USA Ishihara Ltd, Japan Rhone Poulence, France Bayer Lever Kusen, West Germany Kelmira Helsinks, Finland

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    Hoitex, USA Millennium, Germany Fletcha Titanium Products, New Zealand Henduck, Korea

    National Scenario

    The Titanium Dioxide is growing worldwide. In India the Titanium Dioxide industry

    arrived almost with the drawn of independent . India has a large reserve of beach coast of

    Kerala and in the eastern region on Tamil Nadu and Orissa. Beach sand contains the

    important heavy minerals such as limonite, rutile, leucoxene, zircon and silliminite.The

    Indian reserves of limonite and rutile is expected to be around 60 million. The reserves inKerala and Tamil Nadu arc around 25 million tones. Beach reserve is also seen in

    Ratnagiri (Mahi). Ganjas (Orissa), Srikakolam (A.P). These are about 20 million tones

    reserves in Orissa. This information threw light in to possibilities of new manufactures and

    competitions in Ti02 pigment industry in the Indian market with the increasing demand for

    paints, rubber, plastic and printing inketc...The arrival of new manufacturewill be more in

    the near future. This will ultimately results in tight competition. The demand of Ti02 highly

    depended on the finished products like plastics, paints etc... The demand for the high quality

    Ti02 will increase the profitability of the business.India today posses the richest technology

    for the manufacture of Titanium Dioxide through the sulphateand chloride process.

    India has a wealth of Titanium minerals with very low ratio of resource to utilization.

    A sound Titan ium Dioxide industry is essential to ensure optimum utilization of these

    resources as well as to develop a vibrant industry in the field of this strategic mineral. Although

    some technology baseis available in the country for both sulphate and Chlo ri de processes of

    Ti02 pigment manufacture, additional imports of knowhow and technology are considered

    essential to update the existing sulphate and chloride technologies in the country. The Indian

    raw material may be upgraded to synthetic rutile or Titanium slag being exported to fetch

    better returns. Presently synthetic rutile is being manufactured in the country by I.R.E,

    K.M.M.L and three other private companies. Another major project is likely to be set up

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    for manufacture of Titanium slag that can be used for sulphate process, chloride process and

    for the manufacture of Titanium sponge.

    The Titanium Dioxide in dust ry is growing wo rl dw id e. A number of new projects

    are on the ground. The Titanium Dioxide is a product which has to be sold basically in the

    international market in competition with multinationals. Thus only a well planned

    technolo gy and fi na ll y sound p ro j ec t will succeed. The .advantages under the

    environment are ready availability of quality feed stock, low labor cost and less stringent

    pollution Laws. The disadvantages are lack of technology, high power cost and uncertain

    power availability.

    Top players in India

    The two public sector manufactures: TTPL (TITANIUM TETRA CHLORIDE LIMITED),


    unit in India engaged in the manufacturing of Ti02 pigment with a total combined capacity of

    44560 metric tons per annum.These units are:

    K.M.M.L Travancore Titanium Products Limited, Trivandrum Kilburn Chemical Limited, Chennai Kolmar Chemicals Limited, Kolkata

    The Indian paint industry has recorded growth of around 8 0 % during the previous years.

    The Indian paint industry is expected to expand to almost 1.6 and 1.75 million metric tons by

    the year 2005. The current per capita consumption of paints at around 5 kg as compared to

    between 15 kg and 20 kg in the developed countries, that leaves considerable potential in the

    overall demand ofTi02 in India, which is based on 8% growth.

    State Scenario

    At present in Kerala, T.T.P and K.M.M.L are the only two manufacturers who produce

    Titanium Dioxide pigment. Indian Rare Earth Ltd a Govt of Indian undertaking has a mineral

    separation unit in chavara which separates minerals from each sands.K.M.M.L have a mineral

    separation unit in coast area. Bringing more to your everyday life K.M.M.L touches in numerous

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    ways. Be it the dress you wear, the cosmetic you use, the medicines you take, the paints you

    decorate your home .Ti02 is there. It is the only integrated Ti02 factory having mineral

    separation, mining, synthetic rutile and pigment production plant. Manufacturing Ti02 through

    the chloride route, K.M.M.L produces very pure Rutile grade titanium Dioxide pigment.

    The different grades churned out by K.M.M.L under brand name "KEMOX" has a ready market

    which asks for more. The commendable work in the research by the R&D department has also

    helped K.M.M.L to add more colors to its portfolio. K.M.M .L is used chloride technology.

    K.M.M.L is also known as Titanium Complex". K.M.M.L is the only zero debt industry in


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    The KMML was established by a private entrepreneur in 1932 as F.X. Peraira and sons

    (Travancore) Pvt. Ltd. During 1956 this concern was taken over by the state govt and was placed

    under the control of its industries department. The units were converted as a limited company

    with effect from 1.4.1972 in the name of Kerala Minerals and Metals Ltd

    India is one of the pioneers in the field of mineral sand industry in India Kerala Minerals and

    Metals Ltd (KMML) is a fully owned Kerala Govt Enterprise. There are about 2000 employees

    in the company at present that are helping KMML to grow.

    KMML, a fully owned Kerala Govt Enterprise is the worlds first fully integrated

    Titanium Dioxide plant .Since its inception, KMML has made an incredible mark in the field of

    mining, mineral processing and manufacturing. With the state of art factories at

    Shankaramangalam and Kovilthottam, KMML has won national acclaim for its impressive

    performance. KMML is the Indias first and only manufacturer of rutile grade Titanium Dioxide

    by Chlorine route. KMML products are marketed under the brand name KEMOX. KEMOX RC

    822 is a multiple application pigment which is in great demand in the world market. KMML also

    produces other grades of Titanium dioxide pigment like RC 800 PG, RC 800, RC 813, and RC

    808.Product range includes Titanium Tetra chloride, Illumenite , Rutile, Leucoxene and

    sillimanite which are the basic raw materials for variety of industrial uses.

    KMML also manufactures iron oxide bricks used for building purposes. The production

    of these bricks from waste iron oxide is an in-house development. Close access to one of the

    worlds richest beaches helps KMML retain its leadership. KMMLs Titanium pigments are

    reputed for their high degree of gloss, tint retention capacities and ease of dispersion. These

    qualities give KMML affordable indent. These qualities give KMML affordable identity in this

    industry. KMML is certified ISO 9002 in the year 2000 for implementing world class quality


    According to the corporate plan, by 2007-2008, the domestic revenue generation will be

    less than 30 percent. They have already proved their capacity to produce internationally

    adaptable quality product at competitive prices.

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    The present global demand of Tio2 is 50 million tones, which is produced by 71

    companies around the world. Of this, 29 million tons of Tio2 is produced by the chloride route

    by 26 companies; he remaining 21 million tones are produced by 45 companies through the

    sulphate process. This it is a clear indication that in the global market, the chloride technology

    products are most in demand.

    To increase its presence in the international market and counter the import competition,

    KMML is all set to expand its Tio2 production capacity. The capacity increase will move in a

    phased manner to 45000 tones to one lakh tones. To achieve this, capacity of the mineral

    separation (MS) plant is being raised from present 50,000 tones to two lakh tones of illmenite.

    Besides a new MS plant, it is planning set up a 1.3 lakh tones synthetic Rutile plant. As per

    current estimate, the first phase expansion would involve and investment of 150 crore while theentire expansion programme would cost an estimated Rs.750 crore. The entire expansion process

    is planned without any imported technical know-how or any major external borrowings other

    infrastructure. The company has to deal with fierce competition in the international markets as

    well as in the domestic market with import duties coming down every year.

    History ofK.M.M.L

    F.X.Pereira &Sons (Travancore) Pvt. Ltd. was established by a dynamic Indian

    entrepreneur, late Sri J .E.A. Pereira who was a man of vision and foresight. Under his able

    management the company prospered in spite of the vagaries of foreign market and the

    competition from the other three firms which were of foreign ownership. Sri Pereira

    constantly tried to improve the mineral separate on technology and for this purpose he

    experimented with the latest ideas then available, even before they had been fully tried in the

    technologically advanced countries. He also attempted to take up further processing of the

    minerals after separation. By mid 1950s his company face financial crisis. Large amounts

    due to the state Government by way of taxes and r o y a l t y fe l l in to arrears and the State

    Govt. took over the management of the company in January 1 9 5 6 .

    From 1956 to 1 972 the company was run by the Industries Department of Govt.

    Kerala under the name "F.X.P. M I N E R A L S In 1956. Sri Pereira passed away in April

    1971 the ownership of the company was transferred to the State Govt. through a sale deed

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    executed by the legal heirs of Sri Pereira. By that time the market for the minerals had

    improved. The State Govt. had come to realize that the mineral deposit of was the richest

    mineral asset of the State and that it had to be exploited on a larger scale for augmenting the

    State's revenue and certain employment opportunities. A fully owned State Govt. undertaking

    by name THE K E R A L A MINERALS AND METALS LIMITED". This company took

    over the assets and liabilities of F.X.P. Minerals

    F.X.P. Minerals used to supply llmnite to Travancore Titanium Products, which

    came into pigment industry in 195l.increasing demand for pigment in the country opened

    the eyes of the Govt. and some private entrepreneurs, to the great potentiality that existed

    in the field. The State Govt. took up and completed an expansion ofT.TP in 1973.K.M.M.L

    was entrusted by the state Govt. in this task.

    Kerala Minerals and Metals Limited are now engaged i n mining and separation of minerals

    in the plant which it inherited from F.X.P Minerals. Recently improvements were made in the

    plant. Adding some new machinery. A major portion of the production is now marketed in

    India and the company has exports i n 55 countries. The company now enjoys 2000 people.

    The company has Mineral Separation Unit, Titanium Dioxide Pigment Unit and Titanium

    Sponge project

    Milestones of K.M.M.L

    1974: Letter for intent for the production of 48000 tones of Ti02 pigment throughChloride

    Process technology .Collaboration agreement with:

    Benelite Corporation of America, USA -Synthetic Rutile Plant WoodallDuck ham.

    UK- ARP

    Kerr Me Gee Chemical Corporation, USA- Titanium Dioxide pigment

    1979: Constructionof plants started at Sankaramangalam , Chavara.

    1983: R&D recognition for K.M.M.L laboratoryby DSIR.

    1984: Commissioned the first integratedTi02 plant in the world

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    Launched for the first time in India. Rutile grade Titanium Dioxide pigment

    Under trade name KEMOX RC - 822

    1992: Launched another grade of Ti02 KEMOX RC 800

    1992: Launched plasticgrade pigment KEMOX RC 800 PG

    1992: Won the first nationalaward for in the efforts in industry for

    Technology absorption under TAAS programmesby DSIR

    1997: A newgrade pigment for the new water based paintapplication was

    Introduced KEMOX RC 813

    1998: Launched another improved grade pigment KEMOX RC 822 SG

    (Renamed as KEMOX RC 802)

    1998: commercial production of Iron Oxide Bricks from the waste Iron Oxide

    -An innovative development by in house R&D

    1998: Supported Combustion process was successfully commissioned in one of

    The streams of Oxidation plant. This in house developed process is significant

    Breakthrough which enables K.M.M.L to improve productivity Of

    The plant and further capacity enhancement.

    1999: By pass system in both streams and support combustion system in other

    Streams were also commissioned.

    1999: Erected and commissioned one more chlorinator in chlorination section.

    2003: New modern Lime Preparation Plant (LPP) for efficient neutralization was


    2004: commissioned new OM plant and added two more digesters in IBP.

    2004: commissioned a new product packaging machine, modern energy efficient

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    Filter and drier system, DCS system in Unit 400.

    2005: World class QMS like ISO 14001 and OSHAS 18000 Implemented.

    2006: Capacity enhancement to 40000MT.

    2006: Foundation stone laid for Titanium Sponge Plant.

    2007: Commissioned Recovery Cyclone.

    2008: commissioned new ETP sludge and oxide pond.

    2009: Development of Nano Titanium particles in laboratoryscale.

    2010: Introduced new production method for Titanium Sponge with the

    Help of DRDO&ISRO.

    2011: Integration of new premises for Titanium Metal production.


    Be a world class product ofmineral sand based value added products''


    To become the nodal agency for promoting and establishing mineral basedindustries in the state to value addition and effective and controlled

    exploitation of the minerals reserves.

    To develop adequate supply base for the services and utility for developmentof the mineral based industry.

    To create more awareness about CSR for chemical industries in the state. To become the leader in controlling Green house Gas emissions. So as to

    promote the concept of Green Earth.

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    K.M.M.L has a worldwide reputation and socially responsible company with an

    eco friendly image. The company derived strength from its dedicated manpower and customer


    Objectives ofK.M.M.L

    To exploit the minerals wealth abundantly available in the coastal belt. To manufacture value added products like Titanium Dioxide and Titanium

    Metal through chloride route technology.

    Large scale generation of employment in the state. Over all development of local area in particular state in general.

    Key success factors

    Encouraging innovation &technology. Training and empoweringthe work force. Caring for requirements of the society. Compliance with documented quality system. Customers driven continuous improvement.


    On the top of K.M.M.L there is a Chairman, he is the principal secretary to

    Industries Department of Kerala Government. But he is only a part time Chairman since his

    position changes. The Managing Director is the head of K.M.M.L. He is appointed for a

    period of 3 years. He is entrusted to co-ordinate all the functions of the organizationon behalf

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    of the Govt. Board of Directors are promoted ofK.M.M.L and they are 6 in number, who were

    appointed by the Govt. of Kerala. They are appointed for a period of 5 years but the Govt.can

    change them as they with.

    Future Plans

    l. Existing Ilmenite Beneficial Plant 5000 unit per annumcapacity utilization.

    2. Titanium S p o n g e P lan t 5 0 0 m e t r i c tons i n co l l ab or at io n wi th VISMA


    3. Introduction of mineral research Institute. .

    4. Introduction of unit 100 Titanium plant oxygen plant.

    5. Introduction of new fluid dispend boiler.

    6. Enhancementof Mineral Separation Unit.

    7. Introduction of a NANO pigment plant.

    8. Introduction of Titanium oxychloride production.

    9. Introduction of filter plus plant iron oxide cake production.

    10. Introduction of additional chlorinators and Titanium Tetra Chloride plant

    11. Implementation of social accountability standards SA 8000.

    Corporate Social Responsibility

    A desalination plant ensures that ground water levels arc maintained at safe levels

    and the ecological balance is not affected due to the water requirements of the company). A

    centralized effluents neutralization plant which ensures that no harmful wastes are let out.

    Provision of drinking water for surrounding villages has been provided through 52 km of

    pipeline. Regular medical camps and other programs aimed at improving health and

    hygiene of employees. Financial assistance is given to schools, clubs, an d o t h e r charitable

    bodies for pu r c h a s i n g books, furniture and sports goods.

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    Technical collaborations

    The company received a letter of intent for 48000 tons ofTi02 pigment using Chloride

    route technology in 1974. The K.M.M.L entered into technical collaboration with

    multinational corporations like M/s Kers Mc Gee Chemical Corporation of USA for

    Titanium pigment production, M/s Benedict Corporation of America for JBP, M/s Woodall

    Duk ham for ARP. MECON, a Govt. of India undertaking did the detailed engineering.

    Awards and recognitions

    International gold medal award for qualityand efficiency in 2003



    Award for R&Defforts in industry in 1992

    FACT MKK Nair Memorial Productivity Award in 1993-1994

    Energyconservation Award in 1999

    FACTMKK NairAward in 1999-2000

    FACT MKK Nair Memorial Productivity Award in 2000-2001

    Energyconservation Award in 2001

    CAPEXIL Award for best export performancein 2003, 2004&2005

    National Awa rd f or b es t r ev enu e p er fo rmed by G ovt .of Indi a in


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    Product Profile


    1 Titanium Dioxide Paints , Printing inks Plastics,Paper,

    Rubber, Textiles, Ceramics

    TitaniumTetra Chloride

    Titanium Dioxide Pigment,Titanium

    Sponge/ metal, Titanium Salts, Titanium

    oxychloride, Buty Titanate.

    3 Rutile Welding electrodes, Titanium compounds,

    Titanium Dioxide Pigment, Titanium Sponge/metal,

    Titanium Tetra Chloride

    4 Ilmenite Synthetic Rutile, Titanium Dioxide

    Pigment, Titanium Tetra Chloride, Ferro Titanium

    alloys, Welding electrodes, Titanium dioxide Salts.

    5 Leucoxene Welding electrodes, Titanium Dioxide

    Pigment, Titanium compounds, Titanium

    Tetra Chloride

    6 Zircon Ceramics, Foundries Refractories, irconium

    Chemicals, Zirconium metals, Nuclear technology

    7 Silimanite High temperature refractory ceramics

    8 Iron oxide bricks As building material

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    At present K.M.M.L produces about 6 grades of TiO2 pigments are produced in K.M.M.L ,their

    main properties use are:


    RC800 Excellent tining, strength good gloss,

    good dispensability, high brightness.

    Interior glass and semi gloss paints,

    interior decorative and industrial paints

    ,wood finishes , and most printing ink


    RC802 Excellent balance of optical properties

    and durability

    High performance multipurpose

    products.General architectural interior

    and exterior finishes, marine , coal andpower coatings,all classes of waterborne

    and solvent based coatings.

    RC808 Good dispensability , excellent


    Used for coating with glass to which

    prevents the spreading of water. This

    helps the automobile industry to design

    the vehicle without using any wipers.

    RC813 Excellent haze free gloss and gloss

    retention , high tining strength, high


    Malt decorative and emulsion paints, matt

    printing inks.

    RC822 High hiding power in high PVCformulations, good dispensability, good

    durability ,high brightnes.

    Exterior applications and power coating,water and solvent based paints, decorative

    and industrial coatings.

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    RC800PG Finer particles size, blue under stone

    and good dispensability.

    Plastics , rubber and floor tiles.

    Quality System


    K.M.M.L was certified for quality standard IS09001:9004(1nternational

    Organization for Standardization )in June 2000 and was rectified and upgraded to ISO 9001 :2000

    QMS in November 2003 for its Total Production Unit.

    ISO 14001-Environment Management System

    Bureau Virtues Quality) International (BVQI ) issued the certificates with accreditation

    logo UKAS(United Kingdom Accreditation Services) improve the environmental performance

    goals, monitor and measure effectiveness, correct deficiencies and problems ensuring

    authority, good housekeeping and review its management system to promote continuous


    Environment Policy

    a. K.M.M.L has also introduced a number of social welfare schemes forWelfareof people.

    b. Drinking water supply for surrounding villagesthrough a 25 km pipelineNetwork.

    c. Conducting medical camp /hygiene/health program for the public i n

    Association with charitable organizations.

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    d. Offering financial assistance to local schools and clubs for the purchaseOf books, furniture, sports goods .etc...

    e. Supporting rural electrification.

    OHSAS-18001 Safety Management System

    Work place safety is emerging as one of the key risk management and regulatory

    compliance focus areas among ma ny global companies . OHSAS 18001(Occupational

    Health and Safety Assessment Scheme) is authority consensus standard developed

    in1999 by an independent group of national standards bodies and certification bodies.

    Pollution Control

    K.M.M.L has elaborate pollution control system with respect to both air and

    water pollution. The waste (acid) from IBP is send to Effluent Neutralization Plant

    (ENP).ENP consists of Primary Neutralization Tank (PNT) and secondary

    Neutralization Tank (SNT) where it is treated with Caustic Soda solution. The totally

    neutralized slurry from the SNT is pumped to 50000m3 capacity setting pond provided

    with impervious clay, polythene lining at bottom side, where the solids are settled. The

    day solution from setting pond of 25000m3 capacity where the balance solids are

    allowed to settle the clean water from the polishing pond meeting all specification

    situated by pollution control board authorities is pumped in to the Arabian Sea. All

    gases from Chlorination, Oxidation, IBP and ARP arc scrubbed water /line/ caustic

    solution to absorb the toxic gases diluted with fresh air and only let out to theatmosphere through tall slacks.

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    Cash is the important current asset for the operation of business. Cash is the basic input needed

    to keep the business running on a continuous basis. It is also the ultimate output expected to be

    realized by selling the services or product manufactured by the firm. Thus, Cash management isone of the key areas of working capital management. The basic objectives of finanacial

    management are to match the inflows and outflows of cash and ensure the liquidity and adequate

    cash position of a concern during a particular period.

    Its efficient management is crucial to the solvency of the business because cash is the

    focal point of the funds flows in a business. It can be understood in two senses, one is actual cash

    held by firm and deposits withdraw able on demand, and in another sense it includes marketable

    securities, which can be convertible into cash immediately

    The goal of cash management is to reduce the amount of cash that being used within the

    firm. So as to increase profitability, but without reducing business activities or exposing the firm

    to undue risk in its financial objectives.

    Cash flows in connection with credit serve to introduce the concept of Float which is

    the time lag or delay between the moment of disbursement of funds on the part of the customer

    and the moment of receipt of funds on the parts of the seller (ie.,mail time, processing time, and

    clearing time with the banking system)

    Meaning of cash

    The term cash has a variety of meaning. In a narrow sense, that it includes coins,

    currency notes, bank drafts, withdraw by cheque on demand and bank balances in bank accounts.

    In broader sense, the term cash refers to as near cash assets. Cash is both a fundamental resource

    and the means by which the entity acquires other resources. To manage cash is to manage the

    entity's ability to purchase assets, service debt, pay employees, and control operations. Thus,

    effective cash management directly correlates with the entity's ability to realize its mission,

    goals, and objectives.

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    Cash Management comprises of a series of activities aimed at efficiently handling the

    inflow and outflow of cash. This mainly involves diverting cash from where it is to where it

    is needed. In other words, cash management is the optimization of cash flows, balances and

    short term investments. Cash in this context, may refer either to cash in the form of currency, or

    to other equivalents such as cheques, drafts, deposits, among others. While organizations may

    hold other assets which can potentially be converted to cash, cash management essentially

    deals with the management of liquid cash and near-cash assets such as marketable securities

    and time deposits, which can be readily converted to cash. The primary feature of such

    cash balance is that it has no earning power. Nonetheless, it is crucial to organizations for

    three main reasons:

    TransactionReady cash balances are vital for routine transactions including purchases, operating

    expenses, wages, and other payments such as dividends, taxes and so on.

    Precaution: There may be unanticipated cash requirements as a result of suddenincrease in inventory costs, delay in collection of receivables, among others. And

    maintaining ready cash balances is essential to deal with such unforeseen expenses.

    Speculation: Reserving cash balances is also crucial when firms anticipate decline inprices of raw materials, reduction in interest rates for buying securities, availing early

    payment discounts, among others.


    1. The transaction motive

    The transaction motive requires a firm to hold cash to conduct its business in the ordinary

    course. Firms are in existence to create products or provide services. Production and

    supply of products results in cash inflows and outflows. Firms hold cash in order to

    satisfy the cash inflows and outflows needs that they have.

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    2. The precautionary motive

    The precautionary motives are needed to hold cash to meet contingencies in the future. If

    expected cash inflows are not received as expected cash held on a precautionary basis

    could be used to satisfy short term obligations that the cash inflows may have been bench

    marked for.

    3. Compensating motive

    Banks provides a variety of services to business firms, such as clearances of cheque ,

    supply of credit etc.,for which a minimum balance is required to be kept with the bank ,

    this balance is to competence banks for services rendered.

    4. The speculative motive

    The speculative motive relates to the holding of cash for investigating in profit making

    opportunities as and when they arise. Economist Keynes described this reason for holding

    cash as creating the ability for a firm to take advantage of special opportunities that if

    acted upon quickly will favor the firm. An example of this would be purchased extra

    inventory at a discount that is greater than the carrying costs of holding the inventory.

    Cash management is concerned with the managing of:

    Cash inflows and outflows of the firm Cash flows within the firm Cash balances held by the firm at a point of time by financing deficit or investing

    surplus cash.

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    Cash management is important because it is difficult to predict cash flows accurately. In

    order to resolve the uncertainty about cash flow prediction and lack of synchronization between

    the cash receipts and payments. The firm should develop appropriate strategies for cashmanagement. The firm should evolve strategies regarding the following four facts of cash


    Cash planning Managing the Cash Flows Optimum Cash Level Investing Surplus Cash


    Cash forecasting may be done on short or long term basis.

    1. Short term forecasting methodsShort term forecast generally cover a period of within 12 months. It is also called cash

    budgeting where short financing requirements is focused.

    The receipts and disbursement method The adjusted net income method

    2. Long term cash forecasting:

    All the forecast beyond one year come under this head. These forecasts are

    prepared to forecast of long range investing and financing of a business in term of the

    strategic goals of an enterprise. The main purpose of long-term forecast to meet specific

    requirements for say companys expansion, modernization acquisition etc.


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    Indicate companys future cash needs Helps to evaluate proposed capital projects Helps to improve corporate planning


    Firms can manage cash in virtually all areas of operations that involve the use of cash. The goal

    is to receive cash as soon as possible while at the same time waiting to pay out cash as long as

    possible. The two objectives in managing cash flows are:

    Accelerate cash collections as soon as possible To decelerate or to delay disbursement as soon as possible


    It is important function of cash management. In order to ensure effective cash management

    accelerate collection , slow up disbursement and maximize available cash , the following

    methods can be adopted:

    Accelerating cash collection Concentrating Banking Lock-box system Efficient Inventory Production Management.

    1) Accelerating Cash Collection

    Collection can be accelerated by way of.

    Speed mailing time of payments from customers to the firm Reduce the time during which payments received by the firm remain collected


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    Speed the movements of funds to the disbursement banks Reducing the firms operating cash requirements by speeding up the collection

    2) Concentration Banking

    Concentration banking is the system of decentralization collection of accounts

    receivable. In another words, under this system number of centers are opened for

    collection of payments against sale. The purpose is reducing the time gap between

    dispatch of cheque by customers and actual receipts of same by the concerned firm.

    3) Lock-box system

    A post office box maintained by a firms bank that is used as a receiving point for

    customers remittances.

    Customers are instructed to mail their remittances to the lockbox location Bank picks up remittance several times daily from the lockbox Bank deposits remittances in the customers account and provides a deposit slip

    with a list of payments

    Company receives the list and any additional mailed items

    Another way of minimizing required cash is to increase the inventory turnover rate. It can

    be achieved by:

    Increasing the raw material turnover Decreasing the production cycle-by initiating better production planning and

    control technique, the firm can reduce the length of production cycle.

    Increasing the finished goods turnover.

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    The cash management strategies are generally built around two goals:

    To provide cash needed to meet the obligations To minimize the idle cash held by the firm.

    The financial manager has to strike an acceptable balance between holding too much cash and

    too little cash. This is the focal point of the cash risk return trade-off. A large cash investment

    minimizes the chances of default but penalizes the possibility of the firm.

    A small cash balance target may free the excess cash balance for investment in marketable

    securities and thereby enhancing the profitability as well as value of the firm, but increase

    simultaneously the chances of running out of cash. The risk-return trade-off any firm can be

    reduced to two prime objectives for the firms cash management system, as follows:

    i. Meeting the cash outflows:The primary objective of cash management is to ensure the cash outflows as and when

    required. Enough cash must be on hand to meet the disbursal needs that arise in the normal

    course of business. The firm should be able to make the payments at different points of time

    without any liquidity problem.

    It means that the firm should have sufficient cash to meet the payment schedules and

    disbursement needs. It will help the firm in.

    Avoiding the chance of default in meeting financial obligations, otherwise thegoodwill of the firm

    Availing the opportunities of getting cash discounts by making early or promptpayments and

    Meeting unexpected cash outflows without much problem

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    ii. Minimizing the Cash Balance:

    Investments in idle cash balance must be reduced to a minimum. This objective of

    cash management is based on the idea that unused asset earns no income for the firm. The

    funds locked up in cash balance are dead investments and has no earning. Therefore

    whatever cash balance is maintained the firm is foregoing interest income on that

    balance. The objective of cash management therefore, should be to keep minimum cash



    A. Changing customer paying habits.

    Letters, telephone calls or personal visits. Economic incentive for paying bills faster

    B. Improve the Delivery system

    Regional banking (customers pay bills to banks since they can transfer funds morequickly than mail order delivery)

    Lockbox collection system (firm rents a post office box in a particular city and the bankmonitors the lockbox periodically).

    Electronic communications.

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    1. Treasury billsTreasury bills are short-term government securities. Usually, they are sold at a

    discount and redeemed at par. The difference is the return on security. They can bebought and sold any time, thus they have liquidity. Also they do not have the default risk.

    2. Commercial papers:Commercial papers are short-term, unsecured securities issued by highly

    creditworthy large companies. They are issued with a maturity of three months to one


    3. Certificates of DepositsCertificates of deposits are negotiable instruments evidencing of the deposits of

    funds at a commercial bank for a specified period of time at a specified rate of interest.

    4. Bank depositsA firm can deposit its temporary cash in a bank for a fixed period of time. The

    interest rate depends on the maturity period.


    Following are the important techniques used for the analysis of cash management.

    Cash Flow Statement Ratio Analysis Trend analysis


    An analysis of cash flows is used for short-run planning. A firm needs sufficient cash to pay

    debts maturing in the near future, to pay interest and other expenses and to pay dividend to share

    holders. The firm can make projections of cash inflows and outflows for the near future to

    determine the availability of cash. The cash balance can be matched with the firms need for cash

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    during the period, and accordingly, agreement can be made to meet the deficit or invest the

    surplus cash temporarily.

    A historical analysis of cash flows provides insights to prepare reliable cash flow projection for

    the immediate future. A statement of changes in financial position on cash basis, commonlyknown as the cash flow statement, summarizes the causes of changes in cash position between

    dates of the two balance sheets. It indicates the source and uses of cash.

    Ratio Analysis

    One of the most important financial tool which have come to be very frequently used for

    analyzing the financial strength and weakness of the enterprise is ratio analysis. Ratio Analysis is

    the process of determines and presenting arithmetical relationship between the figures and the

    group of figures drawn from the statement. The ratio analysis of working capital is used by the

    financial analyst to check upon the efficiency of the working capital of the enterprise. It is found

    out by establishing the relationship between the items of Balance sheet, Trading and Profit and

    Loss account. The ratios relating to cash management, which have been selected for the study,


    a) LIQUIDITY RATIOS1) Current ratio2) Quick ratio3) Absolute liquid ratiob) PROFITABILITY RATIOS4) Gross profit ratio5) Net profit ratio6) Operating ratioc) ACTIVITY RATIOS7) Inventory turnover ratio8) Fixed asset turnover ratio9) Debtors turnover ratio10) Working capital turnover ratio

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    Current Ratio

    Current ratio is the most common ratio for measuring liquidity. It represents the ratio of current

    assets to current liabilities. It is also called as working capital ratio. It is calculated by dividing

    the current assets by current liabilities.

    Current ratio = Current assets / Current liabilities

    Quick ratio

    This ratio is also known as Acid Test Ratio or liquidity Ratio. It shows the relation between the

    quick assets and current liabilities. It is determined by dividing the quick assets by current

    liabilities. The term quick asset refers to the current assets which can be converted into cash


    Quick ratio = Quick ratio/ Current liabilities

    Absolute Liquidity ratio.

    This ratio is obtained by dividing cash by current liabilities. Here the cash involves cash in hand,

    bank balance and investment in securities, treasury deposits etc. A ratio of 0.75: 1 is

    recommended to ensure liquidity. This test is most vigorous to measure a firms liquidity


    Absolute Liquidity Ratio = (cash + marketable securities)/ current liabilities

    Gross profit ratio

    The gross profit ratio plays an important role in two management areas. In the area of financial

    management, the ratio serves as a valuable indicator of the firms ability to utilize effectively

    outside source of fund.

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    Net profit ratio

    This ratio is also called as net profit to sales or net profit margin ratio. It is determined by

    dividing the net income after tax to the net sales for the period and measure the profit per rupee

    of sales. This ratio is calculated as follows:

    Net profit ratio = (Net profit /sales)* 100

    Operating ratio

    Operating ratio measures the cost of operation per rupee of sales. It is generally represented as

    percentage. Thus two elements of the ratio are cost and net sales. Operating expenses and cost of

    goods sold. Its calculated as:

    Operating ratio = (operating cost / net sales)*100

    Inventory turnover ratio

    This ratio indicates whether investment in inventory is sufficiently used or not it. Therefore

    explains whether investment inventories are within the proper limit or not. It also measures the

    effectiveness of the firms sales efforts.

    Inventory turnover ratio = cost of goods sold / average stock

    Fixed asset turnover ratio

    This ratio indicates the extent to which the investments in fixed assets contribute towards sales.

    If compared with the previous year, it indicates that whether the investment in fixed asset has

    been judicious or not.

    Fixed asset turnover ratio = Net sales / fixed assets

    Debtors turnover ratio

    The purpose of this ratio is to discuss the credit collection power and policy of the firm. For this

    ratio a relationship is established between account receivables and the net credit sales of the


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    Debtors turnover ratio = Net credit sales / Average Debtor

    Working capital turnover ratio

    The ratio reflects the turnover of the firms net working capital in the course of the year. It is a

    good measure of trading. The ratio is calculated by dividing net sales by net working capital.

    Working capital turnover ratio = Net sales / Net working capital

    Average Collection Period

    Average Collection Period shows the efficiency of the management in the collection of debts due

    from the debtors. It measures the numbers of days in which the money is collected from sundry

    debtors. A higher ratio increases the chances of bad debt in the business and vice versa. It is

    computed using the following formula.

    Average Collection Period = Number of days in year

    Debtors turnover ratio


    Current assets are invested in various fixed assets to make production and earn considerable

    profit. The efficiency with which assets are managed directly affects the production and volume

    of sales. Current asset to fixed assets ratio helps to measure the efficiency of a firms to utilize its

    level of current assets to fixed assets.

    Current Assets to Fixed Asset Ratio = Current Asset/ Fixed Assets


    The lower the ratio the greater may be the profitability of the concern. 'In a comfortably financed

    business it will probably run not 5 to 10 percent of current assets. Since current liabilities are not

    expected to exceed one-half of the current assets, cash percentage should not run under 10 to 20

    percent of the same. Sometimes debtors and cash are taken together in such a case, 'it may be

  • 7/31/2019 old prjct 9


    stated in a general way that cash and debtors together should be 50 percent of and stock and

    other assets should be remaining 50 percent of the total current assets."It is calculated as:

    Cash to Current Assets Ratio = Cash / Current Assets


    It is one of the most important ratios of assessment of control of cash flows. This ratio provides a

    deep insight into the amount of cash balance held by a concern. In the words of Professor John

    Sengan, The increase in sales is generally associated with larger bank balances.The growth of

    which will increase decrease as the size of business increases."

    Cash to Sales Ratio= Cash/ Sales


    It is yet another measure of assessing the sufficient of cash. Cash turnover ratio is calculated by

    dividing the amount of total sales by the amount of total sales by the amount of total cash

    available at the end of the accounting year. It indicates the number of days for which the

    particular amount of cash held was sufficient to finance the business operations. If a firm

    turnover its cash larger number of times, it can finance a larger volume of sales with relatively

    lesser cash resources. Thereby, increasing the profitability of a concern. While a declining trend

    in this ratio exhibits firm's failure utilizing the available resources to its optimum.

    Total Sales/Total Cash available at the end of the accounting year


    It may be calculated as the ratio of cash to current liabilities. It helps in analyzing the level of

    liquid resources in relation to current obligations. For this purpose, cash is used in broader sense,

    which includes cash balance, bank balance and marketable securities. A higher cash position

    ratio implies that the firms unable to make profitable use of cash resources. So, lower the ratio of

    cash to current liabilities, favorable it is. While, the standard norm set for cash position ratio is


    Cash/Current Liabilities

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    3.2 Trend AnalysisThe tern trend analysis refers to the concept of collecting information and attempting to

    spot a pattern, or trend, in the information. In some fields of study, the term trend

    analysis has more formally defined meanings. Trend analysis is a mathematical technique

    that uses historical results to predict future outcome. This is achieved by tracking


    The straight line trend is given by the equation Y= a+ bX. Here a is the Y interprets and

    b is the spot of the trend line. Here Y value denotes debtors.







    X 2

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    1. To study and analyze the activity and operational efficiency of cash management inK.M.M.L

    2. To analyze the liquidity and profitability of K.M.M.L3. To estimate the inflow and outflow of the cash of the Kerala Minerals and Metals


    4. To estimate the average collection period of debtors.5. To evaluate the uses of funds by the firm and in determining how these uses were


    6. To offer valuable suggestions to improve cash management in K.M.M.LRESEARCH DESIGN

    The research design used in this project is Analytical in nature the procedure using,

    which researcher has to use facts or information already available, and analyze these to make a

    critical evaluation of the performance.

    Data Collection

    Primary Source

    Data are collected through personal interview and discussions with Finance Executives

    Secondary Sources

    The data are collected from the annual reports maintained by the company for the pastfive years viz..,2006-2011

    Data are collected from the companys website. Books and journals pertaining to thetopic

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    This project work was carried out at K.M.M.L, Kerala in their finance departments annual

    report from 2007-2011.

    Tools and Techniques of data collection

    1. Ratio analysis2. Cash flow statements3. Trend analysis4. Schedule of changes in working capital

    Tools used for the projection of Findings

    1. Tabulation2. Percentages3. Ratios4. Percentage bar charts


    The research helps to study and manage the cash inflow and outflow. The study analyses the benchmark of cash required to meet its obligations The study helps to minimize the idle cash held by the firm Necessary actions can be taken in order to improve the financial position of the K.M.M.L

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    The management of the study unit was not willing to disclose all the informationavailable with them. Hence it was not possible to make deep study

    The study was confined to a single unit. Hence the findings of the study cannot begeneralized.

    Time factor is one of the limitations of the study. It was difficult to collect all theinformation in a short span of time. So the scope of the study was limited.

    Accurate data was not available for calculations. The study was conducted with the help of 5yrs data in which current year was not

    included due to unavailability of data.

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    ENDED 31st

    MARCH 2007

    (Rs in Lakh)

    Cash Flow From Operating Activities

    Net Profit as per P&L Account 2243.24

    Adjustment for

    Add: Depreciation 764.36

    Prior year items 22.42


    Less: Interest income 964.76

    Profit on sale of fixed assets 2.51

    Provision for dividend tax 52.57

    Target plus 442.14

    Provision for Dividend 309.33

    Provision for bad and doubtful debts 158.5

    Prior year items 4.42

    Provision for tax 956

    2890.23 (2103.45)

    Operating profit after working capital changes 139.79

    Add: increase in current liabilities 116.99

    Increase in provision 779.17

    Decrease in Sundry Debtors 1159.16

    Decrease in Loans and Advances 795.5

    Decrease in Inventories 379.28


    Less: Increase in Sundry Debtors 799.15

    Increase in inventories 4158.38

    Increase in advance Tax 788.29


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    Cash flow from investing activities (2375.93)

    Add: Interest income 1486.69

    Sale of fixed assets 10.2

    Miscellaneous 17.53


    Less: Investment in share 17.5

    Purchase of fixed asset 2386.63

    Change in CAP WIP 3874.1


    Cash flow from financing activities (4763.81)

    Net increase in cash and cash equivalent (7139.74)

    Cash and cash Equivalent at the beginning of the year 16090.35

    Cash and Cash Equivalent at the end of the year 8950.61

    (Source: kmml Annual Report)


    The above analysis identifies a net increase in cash and cash equivalents of Rs. (7139.74 lakh) in

    the year 2006-2007. Cash equivalents at the beginning of the year was Rs.16090.35 lakh and

    cash Equivalents at the end of the year was Rs. 8950.6 lakh. Here the cash flow from financing

    activities is more than from the companys investing and operating activities. The reason is that

    the companys changes in the size and composition of the owners capital and additional

    resources provided by the owners and the redemptions of shares.

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    ENDED 31ST

    MARCH 2008

    (Rs in lakh)

    Cash Flow From Operating Activities

    Net Profit as per P&L Account 1043.63

    Adjustment for

    Add: Depreciation 836.69


    Less: Interest income 523.24

    Profit on sale of fixed assets 6.77

    Provision for dividend tax 52.57

    Provision for Dividend 309.33

    Prior year items 24.86

    Provision for tax 360

    1276.77 (440.08)

    Operating profit after working capital changes 603.55

    Add: increase in current liabilities 4186.19

    Increase in provision 453.68

    Decrease in Loans and Advances 293.8


    Less: Increase in Sundry Debtors 1153.08

    Increase in inventories 158.25

    Increase in advance Tax 595.27

    1906.6 3027.07

    Cash flow from investing activities 3630.62

    Add: Interest income 553.55

    Sale of fixed assets 14.01


    Less: Purchase of fixed asset 1963.66

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    Less: Change in CAP WIP 1996.13

    3959.79 (3392.23)

    Cash flow from financing activities 238.39

    Less: Dividend Paid 309.33

    Less: Dividend Tax Paid 52057


    Net increase in cash and cash equivalent (123.51)

    Cash and cash Equivalent at the beginning of the year 8950.61

    Cash and Cash Equivalent at the end of the year 8827.1

    (Source: kmml Annual Report)


    The above analysis identifies a net increase in cash and cash equivalents of Rs. (123.51) in the

    year 2007-2008. Cash equivalents at the beginning of the year was Rs. 8950.61 and cash

    equivalents at the end of the year was Rs. 8827.1 lakh. Cash flow from investing activities is

    more in this year because of the cash advances and loans made to third parties and from the sale

    of fixed assets. Therefore the company got the good cash position and the amounts to meet the


  • 7/31/2019 old prjct 9



    ENDED 31ST

    MARCH 2009

    (Rs in lakh)

    Cash Flow From Operating Activities

    Net Profit as per P&L Account 4674.26

    Adjustment for

    Add: Depreciation 884.45

    Foreign Exchange Fluctuation 8.06

    Prior year items 11.68


    Less: Interest income 1101.7

    Profit on sale of fixed assets 5059

    Provision for bad and doubtful debts 1638.34

    Provision for Dividend 309033

    Prior year items 4.7

    Provision for dividend tax 52.57

    3112.23 (2208.04)

    Operating profit after working capital changes 2466.22

    Add: increase in current liabilities 1955.95

    Increase in provision 466.47

    Decrease in Loans and Advances 553.1

    Decrease in inventories 3791.29


    Less: Increase in Sundry Debtors 597.08

    Increase in advance Tax 2291.93


    Cash flow from investing activities 6344.08

    Add: Interest income 800.94

    Sale of fixed assets 19.36

  • 7/31/2019 old prjct 9



    Less: Purchase of fixed asset and Change in CAP WIP 1545.26


    Cash flow from financing activities

    Less: Dividend Paid 309.33

    Less: Dividend Tax Paid 52.57


    Net increase in cash and cash equivalent 5257.16

    Cash and cash Equivalent at the beginning of the year

    (Effects on foreign exchange fluctuations)



    Cash and Cash Equivalent at the end of the year 14076.2

    (Source: Kmml Annual Report)


    The above analysis identifies a net increase in cash and cash equivalents of Rs. (5257.16 lakh) in

    the year 2008-2009. Cash equivalents at the beginning of the year was Rs.8827.1 lakh and cash

    equivalents at the end of the year was Rs. 14076.2 lakh. The cash was generated from the

    investing and financing activities also. And the operating activities are also enough to meet the

    efficiency of the production.

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    ENDED 31ST

    MARCH 2010

    (Rs in lakh)

    Cash Flow From Operating Activities

    Net Profit as per P&L Account 9245.02

    Adjustment for

    Add: Depreciation 1245.94

    Prior year adjustments 8.13

    Loss on sale of fixed assets 0.05 1254.12Less: interest income 1287.13

    Provision for dimution in the value of land 680.70

    Provision for dividend tax 256.88

    Prior period adjustments 6.52

    Effects of exchange rate changes 9.95

    Provision for expenses on abandoned project 179.26

    Provision for dividend 1546.64

    3967.08 3967.08

    Operating profit before working capital changes 6532.06

    Add: increase in provision 1933.54

    Decrease in inventories/ stock on import license 955.81 2889.35

    Less: increase in Sundry debtors 1506.36

    Decrease in current liabilities 369.67

    Increase in Loans& Advances 236.79

    Increase in advance tax 1701.89

    3814.71 3814.71

    Cash flow from investing activities 5606.70

    Add: Interest income 1002.72

    Sale of fixed assets 0.12

  • 7/31/2019 old prjct 9



    Less: Change in CAP WIP 6525.47

    Cash flow from financing activities 84.07

    Less: Dividend Paid 309.33

    Less: Dividend Tax Paid 52.57 361.90

    Net increase in cash and cash equivalent (277.83)

    Cash and cash Equivalent at the beginning of the year

    (Effects on exchange rate fluctuations)



    Cash and Cash Equivalent at the end of the year 13808.32

    (Source: kmml Annual Report)


    The above analysis identifies a net increase in cash and cash equivalents of Rs. (227.83) in the

    year 2009-2010. Cash equivalents at the beginning of the year was Rs.14076.20 lakh and cash

    equivalents at the end of the year was Rs. 13,808.32 lakh. In this year the company acquired the

    maximum cash flows from the investing and operating activities. Because of the scaled

    operations and the acquired strategic assets.

  • 7/31/2019 old prjct 9



    ENDED 31ST

    MARCH 2011

    (Rs in lakh)

    Cash Flow From Operating Activities

    Net Profit as per P&L Account 6271.33

    Adjustment for

    Add: Depreciation 1419.86

    Prior year adjustments 0.00

    Loss on sale of fixed assets 0.13 1419.99

    Less: interest income 824.54

    Provision for dimution in the value of land 0.00

    Provision for dividend tax 250.90

    Prior period adjustments 0.00

    Effects of exchange rate changes 79.55

    Provision for expenses on abandoned project 0.00

    Provision for dividend 1546.64

    2750.41 2750.41

    Operating profit before working capital changes 4940.91

    Add: increase in provision 1773.18

    Decrease in inventories/ stock on import license 0.00 15002.55

    Less: increase in Sundry debtors 1711.93

    Decrease in current liabilities 0.00

    Increase in Loans& Advances 1354.73

    Increase in advance tax 2847.05

    6237.22 6237.22

    Cash flow from investing activities 13706.24

    Add: Interest income 1221.05

    Sale of fixed assets 0.30


  • 7/31/2019 old prjct 9


    Less: Change in CAP WIP 8367.01 14867.01

    Cash flow from financing activities 60.58

    Less: Dividend Paid 1546.64

    Less: Dividend Tax Paid 256.88 1803.52

    Net increase in cash and cash equivalent (1742.94)

    Cash and cash Equivalent at the beginning of the year

    (Effects on exchange rate fluctuations)



    Cash and Cash Equivalent at the end of the year 12144.93

    (Source: kmml Annual Report)


    The above analysis identifies a net increase in cash and cash equivalents of Rs. (1742.94 lakh) in

    the year 2010-2011. Cash equivalents at the beginning of the year was Rs. 13808.32 lakh and

    cash equivalents at the end of the year was Rs. 12144.93 lakh. In 2010-11 the effects on the

    exchange rate fluctuations and the new project and cash flows from the sale of fixed

    assets,interest income and investing activities leads to the maximization of the cash to meet the

    obligations and the expansion of the production.

  • 7/31/2019 old prjct 9



    Cash Flow Yield Ratio = Net cash Flows from Operating Activities/ Net income

    Year Net cash Flows from

    operating activities

    Net income Cash flow Yield Ratio

    2006-07 2243.24 34311.02 0.06

    2007-08 1043.63 31127.58 0.03

    2008-09 4674.26 40679.26 0.11

    2009-10 9245.02 48748.45 0.18

    2010-11 6271.33 55982.42 0.11


  • 7/31/2019 old prjct 9


    Net Cash Flow to Sales Ratio

    Cash Flow to Sales Ratio = Net Cash Flow from Operating Activities/ Net Sales

    Year Net Cash Flow from

    Operating Activities

    Net Sales Cash Flow to Sales


    2006-07 2243.24 29574.49 0.07

    2007-08 1043.63 30748.69 0.03

    2008-09 4674.26 41908.91 0.11

    2009-10 9245.02 48398.20 0.19

    2010-11 6271.33 53938.54 0.11












    2006-07 2007-08 2008-09 2009-10 2010-11

  • 7/31/2019 old prjct 9














    2006-07 2007-08 2008-09 2009-10 2010-11

    Series 1

    Series 1

  • 7/31/2019 old prjct 9


    Net Cash Flow to

    Average Total Assets Ratio = Net Cash Flow from Operating Activities/ Average Total Assets

    Year Net Cash Flow from

    Operating Activities

    Average Total Assets Net Cash Flow to

    Average Total Assets


    2006-07 2243.24 41500.05 0.05

    2007-08 1043.63 42959.03 0.02

    2008-09 4674.26 57640.28 0.08

    2009-10 9245.02 63518.36 0.14

    2010-11 6271.33 74262.55 0.08


  • 7/31/2019 old prjct 9











    2006-07 2007-08 2008-09 2009-10 2010-11

  • 7/31/2019 old prjct 9


    Schedule of changes in working capital

    particulars Previous Year



    Current Year









    Current Assets:

    Interest accrued on loan

    and deposits

    Raw materials

    Stores, spares and fuel

    Loose tools

    Finished goods

    Work-in progress

    Sundry debtors

    Cash in hand

    Stamps on hand

    Balance with bank

    Govt treasuryTotal Current Assets(A)

    Current Liability:

    Trade and other creditors

    Advance payment from


    Other liability

    Total Current Liability(B)

    Working Capital(A-B)

    Net Decrease in working



  • 7/31/2019 old prjct 9





    (Rs in lakh)

    Year Current Asset Current liabilities Current Ratio

    2006-07 22531.31 58493.47 3.82

    2007-08 23688.82 10081.66 2.34

    2008-09 26044.46 120371.61 2.16

    2009-10 25961.61 11667.93 2.22

    2010-11 36862.77 27265.53 1.36


    The current ratio of the firm measures the short term solvency of the i.e. its ability to meet short

    term obligation. In a sound business, a ratio of 2: 1 considered to be an ideal norm. The above

    Table shows the relationship between current assets and current liabilitys. This table shows that

    the company having the sufficient current assets for the past 5 years and in the year 2008-2009 is

    the firms current ratio is 2.16. It shows there are sufficient current asset to pay off its current


  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Quick asset Current liabilities Quick ratio

    2006-07 10557.07 58493.47 1.79

    2007-08 11556.33 10081.66 1.14

    2008-09 17703.26 120371.61 1.47

    2009-10 19226.15 11667.93 1.64

    2010-11 18566.78 27265.53 0.74











    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9


    (Source: kmml Annual Report)


    The above table shows the relationship between Quick assets and current liabilitys. So under

    this table the year 2006-2010 the firms quick ratio is more than the basic ratio of 1: 1. It

    represents the company is having sufficient quick assets for the past few years.












    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Absolute

    Liquid Asset




    Liquidity Ratio

    2006-07 8949.26 58493.47 1.51

    2007-08 8814.22 10081.66 0.87

    2008-09 14066.64 120371.61 1.16

    2009-10 13808.32 11667.93 1.18

    2010-11 12144.93 27265.53 0.48

    (Source: kmml Annual Report)


    The standard absolute liquidity ratio is 0.75: 1. This table shows that the absolute liquidity ratio

    in the five year is good for the company. At present the absolute liquidity ratio is in good

    position, indicating that cash form a major part of the current asset.

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Gross Profit Net Sales Gross Profit Ratio

    2006-07 5714.61 29574.49 19.32

    2007-08 8451.49 30748.69 27.48

    2008-09 17466.78 41908.91 41.67

    2009-10 22908.8 48398.20 47.33

    2010-11 6271.33 53938.54 11.62

    (Source: kmml Annual Report)










    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    A high ratio is favorable to the companys financial position. The above table shows that the

    relationship between the firms gross profit of the business and the net sales of the business. The

    highest gross profit ratio is 47.33: 1 in 2010 and the lowest ratio is 19.32 in 2007.












    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Net Profit Net Sales Net Profit Ratio

    2006-07 1237.15 29574.49 4.18

    2007-08 612.74 30748.69 1.99

    2008-09 449.76 41908.91 1.07

    2009-10 6063.23 48398.20 12.53

    2010-11 2811.92 53938.54 5.21

    (Source: kmml Annual Report)


    The net profit ratio is decreasing up to the year 2008-2009. This is due to the increase in

    cost of production. It will affect company survival and profitability. And in the year 2009-2010

    net profit shows an increasing trend.

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Operating Cost Net Sales Operating Ratio

    2006-07 1237.15 29574.49

    2007-08 30748.69

    2008-09 41908.91

    2009-10 48398.20

    2010-11 53938.54

    (Source: kmml Annual Report)









    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    The operating expenses of the company are increasing in the year 2005-2006 and 2006-2007.

    This is because of the operating expenses of the company increase and in the remaining years. It

    is decreased at increasing rate.








    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Cost of Goods Sold Average Stock Inventory turnover


    2006-07 23859.88 11974.24 1.99

    2007-08 22297.20 12132.43 1.84

    2008-09 24442.13 7855.51 3.11

    2009-10 25486.13 7538.33 3.38

    2010-11 53170.5 617.535 86.10

    (Source: kmml Annual Report)


    The table shows there is an increasing trend in the year 2005-2006, after this year the coming

    two years is a slight decrease because of over investment in inventory in the year 2008-2009 the

    turnover ratio is increased.

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    year Net Sales Fixed Assets Fixed assets turnover


    2006-07 29574.49 11746.84 2.51

    2007-08 30748.69 12862.52 2.39

    2008-09 41908.91 17803.97 2.33

    2009-10 48398.20 17803.97 2.71

    2010-11 53938.54 21883.40 1.44

    (Source: kmml Annual Report)












    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    In the year 2005-2010 the fixed assets turnover ratio is a satisfactory level because the fixed

    assets are utilized efficiently and other years the turnovers ratio is decreased.









    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    Year Net Credit Sales Average Debtor Debtors

    turnover ratio

    2006-07 29574.49 1453.40 20.35

    2007-08 30748.69 2606.48 11.79

    2008-09 41908.91 3203.56 13.08

    2009-10 48398.20 4709.92 10.27

    2010-11 53938.54 6421.85 8.39

    (Source: kmml Annual Report)


    In the year 2006-2007 the debtors turnover ratio is increase due to decrease the collection periods

    that implies prompt payment by debtors. In the remaining years debtors turnover ratio is decrease

    because take long period to make payments.

  • 7/31/2019 old prjct 9



    (Rs in lakh)

    (Source: kmml Annual Report)







    2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

    Year Net Sales Working Capital Working capital

    turnover ratio

    2006-07 29574.49 23050.00 1.28

    2007-08 30748.69 20231.02 1.52

    2008-09 41908.91 20215.17 2.07

    2009-10 48398.20 18969.04 2.55

    2010-11 53938.54 9597.24 5.62

  • 7/31/2019 old prjct 9



    In the abov