on cash management escorts ltd

8/12/2019 on cash management escorts ltd

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ACNO!LEDGEMENT

At the outset I would like to thank the Management of ESCORTS

AGRI MACHINERY GROUPfor the wholehearted co-operation and

guidance extended by them, which made my summer training project

possible.

I would like to thank M". B#$"$% M$&$'(hief !inancial "fficer#,

M". S. A(($")$* +$ead%mployees&elations, and Mrs. -"$'

C#/"$ +hief 'ecretary 'ystem Manager# for pro)iding me this

opportunity to carry out the project.

I am )ery grateful to my project guide M"./0*$1 2-'#$ (finance

Manager* !inance +epartment# %scorts imited (AM A/0-1# for his

support and suggestions, which led to the completion of this project.

I would also like to thank Mr. 2.2 khanna , Mr. M.M. $alder , Mr.

/itin Aggarwal , Mr. 3ijay /ehra , Mr. &ajee) 4handelwal , Mr. 'unil

2hatia, Mr. &./ katyal, Mr.Ajay 5adhawan , Mrs 'aroj and Mr. &.4.

4ukreja and other staff members for their support and cooperation.

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STUDENT DECLARATION

I, student of 7Masters in 2usiness AdministrationCH. DEVI LALUNIVERSITY, SIRSA hereby declare that the dissertation8thesis entitle

9'tudy of ash Management: of the %scort Agri Machinery roup

(AM# submitted in fulfillment of the training* is my original work and

is not submitted for the award for any other degree, fellowship or similar

title or pri;e.

SHALU VERMA


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EECUTIVE SUMMARY

If the de)elopment capital is what establishes a business, cash flow is

what keeps it going. "ne of the most common downfalls of business is

unexpectedly high running cost. 5hat is important is not just the si;e of

operating costs, but the cash flow-that is when money has to be paid out

in relation to the stream of income arri)ing in. 0hus cash flow

management is of prime importance.

%scorts td. is the holding company of the %scorts roup. ost

restructuring, agri - machinery or tractors ha)e become the focus area of

operations. "ther business i.e. two- wheelers, I0, 0elecom, construction

e=uipment, are controlled through subsidiaries and joint )enture. ost

hi)e off of its pistons business to a joint )enture with a foreign

collaborator, %scorts is focusing on its 9core competence: of tractors.

%scorts ha)e strong hands in house engineering skills, a wide

distribution8ser)ice network and brand franchise.

0he project is small attempt to study the cash management in

%scorts Agri - Machinery group. Added to this fact that mechani;ation

le)el in India is currently )ery low as compared to the world standards.

0o analy;e the performance, published balance sheets of %scortsimited, A'$ !"5 '0A0%M%/0' are been used. 0his project

report is based on financial data up to 6>>?->@ only. 0he financial year

for escorts is from >181>86> to B86>. %scorts is maintaining

the following records which is indicati)e of its professional approachC

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Maintaining proper set of accounting records.

Maintaining an accurate cash book with bank statement

+aily cash inflow cash outflow.

Marking regular forecast of cash re=uirement based upon planed

sales )olume.

Ageing of debts8credits with comparisons to pre)ious month

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TABLE OF CONTENTS

OBECTIVE OF THE TRAINING

ABOUT TRACTOR INDUSTRY

I/0&"+F0I"/

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COMPANY5S PROFILE

%'"&0' 'GM2"

MI''I"/

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2A4&"F/+ "! 0$% 2F'I/%''

2"A&+ "! +I&%0"&'

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'F2'I+%&I%'

2A/4%&'

AGRI MACHINERY GROUP

I/0&"+F0I"/

A&I MA$I/%&G &"F "/0&I2F0I"/


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M"+%&/IJA0I"/ "! A&I- MA$I/%&G &"F

&"+F0'

"MA/G:' !F0F&%

CASH MANAGEMENT

I/0&"+F0I"/

A'$ !"5 MA/A%M%/0

A'$ MA/A%M%/0 'G'0%M

IM"&0A/% "! A'$ MA/A%M%/0

A'$ MA/A%M%/0 '0&A0%I%'

A'$ "F0!"5

A'$ I/!"5

CASH FLO! STATEMENT

IM"&0A/%

+AIG A'$ !"5 &%"&0

CASH BUDGET

BAN RECONCILIATION

CASH RATIOS

RECEIVABLES MANAGEMENT

PAYABLE MANAGEMENT

RECOMMENDATIONS

LIMITATIONS

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BIBLIOGRAPHY

ANNEURES

OBECTIVES OF THE TRAINING

It is well known fact that we remember 6>K of what we hear, we

remember D>K of what we see but we remember ?EK of what we do.

Fndergoing M.2.A is the first step to prepare myself as a manager and

)isuali;e the e)er-dynamic business world and my main objecti)e while

taking up the training was to familiari;e myself with the working of the

finance department of %scort Agri Machinery roup (AM#

0o present study in %scort Agri machinery group mainly focus on the

following C

&esources of cash inflow of the company.

ash flow factors which ha)e effect of cash inflow.

ash flow statement in the company.

ash flow management in the company

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ABOUT

THE

TRACTOR

INDUSTRY

B


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INTRODUCTION

India:s long-term economic prospects, e)en today, depend to a large

extend on the agricultural sector, which contributes a =uarter to the gross

domestic project and pro)ides li)elihood to 68< of the population. A

gradual and perceptible shift from subsistence farming to enterprise

farming is harbinger of moderni;ation of the agriculture economy andthis will increase the contribution of the sector to the o)erall + in the

time to come. 0he central go)ernment as well as se)eral state

go)ernments is gi)ing due priority to agriculture and rural de)elopments.

A tractor is a product, which has maximum utility in the agricultural

sector. 0he tractor industry is segmented on the basis of the power of the

tractor engine measured in terms of horsepower ($#. 0he maximumconsumption is for -D> $ tractors. 5ith the increase in the a)ailability

of low cost finance for longer tenures, the sale of the tractors is expected

to go up. 0he new trend obser)ed in this sector is the shift in

consumption from majority in the northern states to other parts of the

country, too. 0he soil in the northern states is allu)ial in nature and thus

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re=uires a low powered tractor for tilling it. $owe)er, states located in the

western and southern parts of the country where the soil being laterite or

black etc. is harder and needs high-powered tractors.

0ractor industry in India has passed through )arious ha;es before

reaching where it is today. +uring 1BDE to 1B> demand was met entirely

through import. 0here were


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In 1BBB-6>>>. 'ince then, howe)er the industry declined to

a le)el of 1.?6 lack tractors in the year 6>>6-6>>


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F0%0"e T"$7%" -'&02%"8

0he tractor industry in India has been on a growth trajectory since

the second half of 6>>D, after going through a minimum )ariation for

consecuti)e years. 0he key factors dri)ing this growth are increasing

farm incomes, aggressi)e financing resulting in easy a)ailability of low-

cost credit, sharp in)entory correction and strong export growth.

0he demand in tractor industry is expected to grow mainly due to

the agricultural sector, with the expected increase in agricultural

production. Also, the shift in trend for demand towards higher $ tractors

is expected to continue. 0his will be further strengthened by the launch of

se)eral new models. In the next 6-< year, demand for tractors is expected

to increase significantly in the eastern states, where traditionally, tractor

usage has been low. %xports are expected to increase significantly as

se)eral Indian players are targeting the 7hobby farmingL segment in the

F.', which is considerably large. Also, tractors of most Indian

manufacturers comply with the emission standards accepted in the F.'.

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Most exports are likely to be through o)erseas partnerships or joint

)entures. Mc4inley has also forecasted tractor population re=uirements

of ?E lacs o)er the next 1@ years )s. current population of 6 lacs. 0he

extension of the 1E> per cent deduction on &+ expenditure up to march

>B, in the 2udget 6>>@->B will also benefit the industry in terms of

new product de)elopment besides increase in the area under irrigation

under the 2ahrat /irman roject and the micro irrigation scheme.

MARET SHARE OF TRACTOR

INDUSTRY

F" %#e 8e$" 9::;


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13.65%

28.17%

8.00%15.20%

1.36%

8.82%

1.37%

8.14%

6.63%

1.30%7.26%

ESCORTS

MAHINDRA

&MAHINDRAPTL

TAFE

HMT

SONALIKA

FML

TRACTOR INDUSTRY PERFORMANCE

COMPANY 9::>


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COMPANYS

PROFILE

ESCORTS SYMBOL

0he %scorts symbol means more than a seen by eye. It has been prepared

with certain objecti)e in mind and is symbol in more than one way.

0he philosophy behind %scorts and the 9e5in the %scorts is 7enterpriseL.

0he hexagon is a symbol of producti)ity. recision when interposed as a

nut. It symboli;es a craft man ship and mending producti)ity. 0he sprains

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super imposed on the hexagon represent the workers and the people of

%scorts. 0his forms the letter 9%: the first of %scorts a company e)en of

more changing un)eiling the future

MISSION

!or an %nterprise business mission embodies of its endea)or, whichacts as a guiding light for continuous de)elopment growth.

Mission of ESCORTS isC

%ngineering hanges through core competency for greater synergy

reinforcing bonds with customers establishing powerful symbiotic

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relationship with international allies, preparing global market. 0he

company wants to make a lasting difference to its shareholders, its

customers, its business associates, its employee and the country as a

whole. 0he company also gi)es better =uality and better technology to

customer and treats e)ery customer as 7specialL to build respect for, and

loyalty to, %scorts.

?UALITY POLICY

5e shall stri)e to continuously impro)e to meet the e)er N rising

expectation of our customers at the lower cost. %ach one of us must fulfill

the need of our customer, both internal and external with the highest

degree of commitment thereby creating a =uality organi;ation geared to

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ensure total customer satisfaction and the sustained health and prosperity

of our business.

C02%me" O"-e'%$%-'@0o fulfill the re=uirement of our internal and

external customer.

P"7e22 O"-e'%$%-'@0o optimi;e and harmoni;e interrelated process

rather than indi)idual function.

P"ee'%-e Be#$-"@0o pre)ent the mistake to happen.

BACGROUND AND BUSINESS

0he %scorts roup, with %scorts imited as its flagship company, is

among India:s leading corporations operating in the di)erse field of agri

machinery, construction material handling e=uipment, automoti)e

railway ancillaries information technology and financial ser)ices. 0he

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group has 1E modern manufacturing facilities an extensi)e marketing

network spread across the country. 0he genesis of %scorts goes back to

1BDD when two brothers, Mr. $.. /anda and Mr. Gudi /anda, launched a

small agency house, %scorts Agents td., in ahore. 0he company:s

principal acti)ities were trading and representing leading o)erseas

manufacturers for the sale of their products in India. "ne of its

dealerships was for the 7Massey !ergusonL brand of tractors.

In +ecember 1BEB, %scorts agents ltd. was con)erted into a public

limited company and was renamed as %scorts imited (%#. In Oanuary

1B>, % decided to set up manufacturing facilities for making tractors in

India under the 7%scortsL brand name in the 6E-D> $orsepower

categories. % promoted %scorts 0ractors imited in 1BB as joint

)enture with !ord Motor ompany of F'A for the manufacturing of

9!ord: series of tractors. 0he tractors manufactured were in the DE-E> $

range and %0 became the market leader in this segment with a share of

abo)e E>K. onse=uent to !M:s disposal of tractors operations to !ord

/ew $olland, F'A, !ord new holland ac=uired the shares of !M in

%0. !ollowing an agreement in 1BBE to end the joint )enture

association, % ac=uired the entire stake of ford new holland in August

1BBE, making escorts tractors ltd. a subsidiary of %scorts td.

")er the years, %scorts has sured ahead and e)ol)ed into one of

India:s largest conglomerates. 0ill 1BB


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di)isions into separate companies. 2iwheeler di)ision was spun off to

%scorts Gamaha Motors td., construction e=uipment di)ision to %scorts

construction e=uipment td., telecommunication e=uipment di)ision to

%scorts communication td., % booked gains of &s. 6>B1 million o)er

the four year period 1BBD-BE to 1BB?-B@ though the sale of these the sale

of these di)isions.

0he main products of %scorts group currently comprise of agri-

machinery, information technology, health care, financial ser)ices,

railway components, auto components, construction and material

handling e=uipment.

BOARD OF DIRECTORS

M$'$(-'( D-"e7%" C#$-"m$' Mr. &ajan /anda

-'% M$'$(-'( D-"e7%"2 Mr. /ikhil /anda

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D-"e7%"2 +r. M..4. Menon

+r. '.A. +a)e

+r. .'. ritam

Mr. '.. 2harga)a

S".V-7e P"e2-&e'%181>86> to B86>. 0hey are also

maintaining the daily cash flow report with a purpose of keeping constant

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check on the daily flow of cash i.e cash inflow and cash outflow, for

different products categories, their parts and other miscellaneous.

0he main products at %'"&0' N AM are 7 0&A0"&' 7 which are

a)ailable in three major categoriesC

!armtrac

owertrac

%scorts

0hese products are sold into the market through intermediaries likedealers, stockists and distributors , these parties charge a commission for

the ser)ices pro)ided by them.

Among these parties dealers are gi)en priority o)er the stockists

distributors for the deli)ering the product to the end customer and the

commission also )aries in the same manner.

0he following are the transactions that take place in the daily cash flow

report under the following main headsC

articulars,

Gear to date i.e the )ery first day of the financial year till the

pre)iuos months end (in which the daily report is being made#,

0he pre)ious month,

lan for the ongoing month,

0he particular day for which the report is being made,

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Month to date (from the beginning of the current month till the day

for which report is being made#.

SALES 0his includes the number of tractors sold in the domestic

boundaries as well as o)erseas.

BILLING It is the process of sending accounts to customers for goods

or ser)ices. 0he document used is called an in)oice, the in)oice may be

attached to the goods or forwarded separately. 0he a)erage sale )alue of

each tractor is calculated as a follows @

T%$* 2$*e2 %"$7%"2

N0me" %"$7%"2 2*&

COLLECTION 0he collections is reco)ered from all those parties to

whom the products is being sold. 0he parties in)ol)ed are @

T"$7%"2 + D-"e7% 0his includes the sale made through dealers to the

end customer, for which a predetermined amount is gi)en as commission

to the opposite party. If the dealer fails to make the sale till the due date

than he has to pay interest on it thereon.

T"$7%"2 + S%71-2%2 0his includes the sale made through stockists,

who doesn:t sell the product by themsel)es but sells them through

dealers. 0he credit period allowed to stockists by the company is less in

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comparison than that of dealers, which yields to faster generation of

income .

T"$7%"2 + C#$''e* -'$'7-'( N 0his system is adopted to impro)e the

working capital of the company by a)oiding in)entory pile up and

earning speedy collections. !urthermore, hannel !inancing is an

inno)ati)e option for extending working capital finance to dealers who

ha)e business relationships with large companies. hannel !inancing is

the mechanism through which a 2ank 8 !inancial Institution meets the

)arious

hannel !inancing could co)er C -

D-270'%-'( %"$&e -**2 &"$)' 8 $ 7m/$'8 $77e/%e& 8 -%2

&e$*e"2 &-2%"-0%"2 7#$''e* /$"%'e"2.

P"-&-'( e"&"$% $7-*-%8 % %#e &e$*e"2 &-2%"-0%"2 )# #$e

02-'e22 &e$*-'(2 )-%# *$"(e 7"/"$%e.

OTHER RECEIPTS @Anacknowledgment(usuallytangible#that

paymenthasbeenmade. 0he below mentioned are the transactions

included in it @

B-** &-270'%-'( @ it is a major acti)ity with some of the smaller banks.

Fnder this type of lending, bank takes the bill drawn by borrower or his

(borrower:s# customer and pay him immediately deducting some amount

as discount 8 commission. 0he bank then present the bill to theE>
http://ardictionary.com/An/5460http://ardictionary.com/Acknowledgment/1529http://ardictionary.com/usually/7573http://ardictionary.com/Tangible/642http://ardictionary.com/That/2574http://ardictionary.com/Payment/2720http://ardictionary.com/Has/1163http://ardictionary.com/Been/1877http://ardictionary.com/Made/231http://ardictionary.com/An/5460http://ardictionary.com/Acknowledgment/1529http://ardictionary.com/usually/7573http://ardictionary.com/Tangible/642http://ardictionary.com/That/2574http://ardictionary.com/Payment/2720http://ardictionary.com/Has/1163http://ardictionary.com/Been/1877http://ardictionary.com/Made/231


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borrower:s customer on the due date of the bill and collect the total

amount. If the bill is delayed, the borrower or his customer pays the bank

a predetermined interest depending upon the terms of the transaction.

0he following entries could be passed in the co.:s booksC

S$*e2 -** &-270'%-'( @ !ollowing entries are passed during the

sales

Made by the companyC

arty a8c dr. ..........

0o sales a8c ...........

(2eing sale made on credit#

2ank a8c dr. ..........

2ank charges a8c dr. PP.

0o party a8c PP..

( being payment reci)ed#

P0"7#$2e -** &-270'%-'( @ !ollowing entries are passed in the books

purchases made by the company @>->? 6>>?->@

urrent &atio 1.16 1.1

!rom the abo)e table it can be interpreted that %scorts li=uidity position

is not constant. As a con)entional rule a current ratio of 6C1 or more is

considered satisfactory because in a worse situation, e)en if the )alue of

current assets become half, the firm will be able to meet its obligations.

urrent ratio refers to a margin of safety for creditors therefore higher the

current ratio, the greater the margin of safety.

?UIC RATIO

Huick ratio establishes a relationship between =uick or li=uid assets and

current liabilities. An asset is li=uid if it can be con)erted into cash

immediately or reasonably soon without a loss of )alue. In)entories are

considered to be less li=uid therefore calculating =uick ratio they are

deducted from current assets.

Huick &atio Q urrent Assets N in)entory


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urrent liabilities

6>>->? 6>>?->@

Huick &atio >.B> >.BB

%scorts =uick ratio in the current year has decreased in comparison to

pre)ious year, yet it can be considered to be satisfactory, as it is 1C1 times

of current liabilities. Although =uick ratio is more penetrating test of

li=uidity than current ratio. Get it should be used cautiously, as all debtors

may not be li=uid and cash may be immediately needed to pay operating

expenses.

0he )alue of =uick ratio is decreasing e)ery year. 0he satisfactory le)el

of the =uick ratio is 1C1. 0his shows the worse situation of the company.

0he current liabilities are more than the =uick assets.

ACTIVITY RATIOS

Acti)ity &atios are used to e)aluate the efficiency with which the firm

manages and utili;es its assets. 0he ratios are called 0urno)er &atios as

they indicate the speed with which the firm manages and utili;es its

assets.

Acti)ity ratios, which are used to analy;e %scorts effecti)eness in Asset

utili;ation, are

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In)entory 0urno)er &atio

!ixed Assets 0urno)er &atio

5orking apital 0urno)er &atio

+ebtors 0urno)er &atio

reditors 0urno)er &atio

INVENTORY TURNOVER RATIO

It indicates the efficiency of the firm in producing and selling its product.

It is calculated by di)iding sales by a)g. in)entory. In a manufacturing

company in)entory of finished goods is used to calculate in)entory

turno)er.

In)entory 0urno)er Q ost of goods sold

A)g. In)entory

6>>->? 6>>?->@

In)entory turno)er 1D.D6 1E.1>

If the company is comfortably meeting the customer needs with B.?>->? 6>>?->@

+ebtors 0urno)er D.DD D.6B

%scorts debtors turno)er is =uite lower. 0he debtor:s turno)er ratio is

high at 6>>D . 0he ratio is decreasing. Also the debt collection period

has its own importance. 0he debt collection period of %scorts was ?

days in 6>>D but it has increased to BE days . 0his does not show the

satisfactory le)el. 0he shorter the collection period, the better the =uality

of debtors, since a short collection period implies prompt payment by

debtors.

A too low collection period is also not necessarily fa)orable as it may

indicate a )ery restricti)e collection and credit policy. 2ecause of the fear

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of bad debt loses the firm may be selling to those only whose financial

conditions are sound and who are )ery prompt in making the payments.

CREDITOR TURNOVER RATIO

reditors 0urno)er Q 0otal urchases

reditors

6>>->? 6>>?->@

reditors 0urno)er


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!ORING CAPITAL TURNOVER RATIO

5orking capital turno)er ratio has its own significance in the business

organi;ations. It shows the efficiency of the firm. $ow much sale that the

company get with the utili;ation of the limited working capital.

5orking apital 0urno)er Q /et 'ales

/et 5orking apital

6>>->? 6>>?->@

5orking.ap.0urn. 11


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0he term recei)able is defined as 7debt owed to the firm by

customers arising from sales of goods in the ordinary course of businessL.

0he sale of goods on credit is an essential part of modern day business.

0he credit sales are generally made on open account in the sense that

there are no formal obligations through a financial instrument. $owe)er

extension of credit in)ol)es risks and cost. Management should weigh

the benefits as well as the cost to determine the goal of recei)able

management. 0he benefits from recei)ables are the increased sales and

profits anticipated because of more liberal policy. 5hen firm extend trade

credit, i.e. in)est in recei)ables, they intend on increase the sales le)el.

0he moti)e of liberal credit policy can be either growth oriented or sales

retention. 0he extension of credit has a major impact on sales, costs and

profitability. "ther things being e=ual, a relati)ely liberal policy and

therefore higher in)estments in recei)ables will produce larger sales.

$owe)er the cost will be higher with liberal policies then with more

stringent measures. 0herefore account recei)able management should

aim at a trade- of between profit and risk.

0he costs associated with the extension of credit and account recei)ables

are

collection cost

capital cost

delin=uency cost

default cost

DECISION AREAS

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CREDIT POLICIES

0he credit policy of a firm pro)ides the framework to

determine whether or not to extend credit to a customer and also how

much credit to extend. It has two broad dimensions, the first is credit

standard and second is the credit analysis. redit standards represent the

basic criteria for the extension of credit to customers. 0he trade- off with

reference to credit standards co)ers collection costs, a)erage collection

period, le)el of bad debts losses and le)el of sales. 5ith a relaxed credit

standard the collection costs, bad debts expenses and sales goes up and inre)erse case )ice-)ersa happens. 0he second aspect of credit policy is

credit analysis. It begins with obtaining credit information of the

customers and ends up with the analysis of the obtained credit

information. Information can be collected either internally or externally.

Internal source of credit information is deri)ed from the records of the

firm. 0he analysis of credit information should co)er both =ualitati)e as

well as =uantitati)e aspects. 0he =uantitati)e aspect is based on the

a)ailable financial statements whereas =ualitati)e aspects co)er the

=uality of management.

CREDIT TERMS

0he second decision area in accounts recei)able management is

the credit terms. After the credit standard ha)e been establish and the

credit worthiness of the customers is assessed, the management of a firm

must determine the terms and conditions on which trade credit will be

made a)ailable. redit terms ha)e three components C credit period, cash

discount and cash discount period. redit period is the duration of time

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for which trade credit is extended whereas cash discount is the amount by

which the o)er the due amount will be reduced thus benefiting the

customer. 0he credit terms like the credit standard affect the profitability

as well as the cost of the firm therefore a firm should determine the

credit terms on the basis of cost-benefit trade-off.

COLLECTION POLICIES

0he collection policies refer to the procedures followed to

collect account recei)able when after expiry of the credit period they

become due. 0his policy co)ers two aspects C first is the degree of effort

to collect the o)er due and second is the type of collection efforts.

E27"% L-m-%e& has a ;ero debt credit policy. $owe)er it is gi)ing the

following facilities to its dealers to promote the sales, as liberal credit

policy has a direct impact on sales.

CHANNEL FINANCE FACILITIES

0he company arranges these facilities with )arious

bankers for the company dealers to support their cash needs. 0he goods

are sold on credit against hundis. $undis can be drawn for E> or ?E or B>

days subject to =ualifying criteria of bank.

CREDIT FACILITIES

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%scort pro)ides thirty days interest free credit to the dealers. !or this in

respect of all hundis the company bears days interest and the

remaining cost of interest, delayed payment charges are borne by the

dealers.

PENALTY ON BOUNCING OF HUNDIES CHE?UES

2ouncing of hundis8 che=ues drawn in fa)or of the

company is )iewed )ery strongly and usually following actions are taken.

0ractor supplies are suspended and restored only after all dues are

cleared.

All charges debited by the bank such as collection charges, penal

interest are debited to the dealer.

0he bank extending channel financing policy ha)e clearly stated

that if a dealer has two or more bouncing he will be black listed

and his limit will be withdrawn with immediate effect. ompany

also makes sales to such dealers only against letter of credit or

demand draft.

CASH DISCOUNT ONEARLY PAYMENT

ash discount of 1K is payable on tractors dispatched against

funds a)ailable in the form of letter of credit or demand draft. Interest is

charged8 paid at 16K per annum on outstanding8 credit balance early

payment incenti)e.

PAYABLE MANAGEMENT

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reditors are a )ital part of effecti)e cash management and should

be managed carefully to enhance the cash position. urchasing initiates

cash outflows and an o)er-;ealous purchasing function can create

li=uidity problems. A better strategy is to shrink the )endor base

radically, then use one:s clout to negotiable longer terms with the

)endors. 3endor rationali;ation is a process that can pay off in a big way.

Apart from the =uestion that who should authori;e purchasing in the

company N should it be tightly managed or spea among a number of

(junior# peopleR 0he following comes under good payable management.

urchase =uantities should be geared to demand forecasts.

"rder =uantities should be used which takes account of stock

holding and purchasing costs.

0he cost to the company of carrying stock should be clearly

defined.

A ompany should ha)e alternati)e sources of supply. It should

get =uotes from Major suppliers and shop around for the best

discounts, credit terms and reduce dependence on a single supplier.

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RECOMMENDATIONS

?E


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LOANS AND ADVANCES

'pecial efforts should be made to analy;e loans ad)ances, which

are between


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0hough high payout days may be appartenly beneficial for the company.

It has it )ery hea)y long term cost like high interest cost, bad credit

ratings and shyness of good =uality 8 standard suppliers.

RATIOS

0he company should try to impro)e its current situation. 0he ratios,

which are taken in this research to e)aluate the company:s position, are

urrent ratio, Huick ratio and Acti)ity ratio. 0hese ratios show the actual

position of the company. 0he Huick ratio is declining since 6>>1->6 till

now. 0here is a drastic declining in the working capital turno)er ratio.

0his ratio goes to N)e position in current year compared to pre)ious. 0he

+ebts collection period is >->?, which is not upto

the ideal ratio. 0his shows that the current assets are e=ual to the current

liabilities. /ot satisfactory.

OTHERS

More attention must be gi)en to market forecasts can be made and

the surplus of in)entory is reduced to minimum

ompany should not follow the competitors only. /ew products

should be produced for the farmers ha)ing low income and small

holdings.

roper market sur)ey should be carried out. 0he company should

explore the export market to study the present and prospecti)e

demand.

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roper in)entory plans should be made in order to reduce the

carrying cost.

/ew market strategies should be de)ised from time to time. 0his is

because, e)en if the tractor is of good =uality, the competitors may

produce the same product with additional features and at lower

prices.

Marketing network should be enhanced. ompany should also

produce more tractors of higher $.. 2ut new de)elopments should

be made continuously in order to sur)i)e in this competiti)e world.

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Although e)ery effort has been in to collect the rele)ant

information through the sources a)ailable, still some rele)ant information

could not be gathered.

B028 S7#e&0*e C'7e"'e& Ee70%-e2@ 0he concerned executi)es

were ha)ing )ery busy schedule because of which they were reluctant to

gi)e appointment.

T-me@0he time duration could not pro)ide ample opportunity to study

e)ery detail of working capital management of the company.

U'$)$"e'e22@ %xecuti)es were unaware of many terms related to

working capital study while asking to them.

C'-&e'%-$* I'"m$%-'@ As the company on account of confidential

report has not disclosed some figures. Moreo)er, in some cases separate

accounts of di)ision are not separately maintained thereby, leading to

restrictions in study.

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BIBLIOGRAPHY

BOOS

!inancial Management- '.4 upta

Management Accountancy-+ k ole

ost and Management Accountancy, './.Maheshwari

!inancial Management And olicy, Oames .3an $orne

!ORLD !IDE !EB

www.escortsagri.com

www.economictimes.com

www.planware.com

www.icraindia.com

O%#e" %#$' !e

M.I.' of the company

Annual &eports

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ANNEURES

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PROFIT AND LOSS ACCOUNT

A%A!CE '/EE& A' #!((

1'&oct 2))45 3)t'eptem7er 2))+ 1stoct 2))6 8 3)tsept 2))4

O#$%+', +')$ 2>012.00 2>0*2.04M$%+! )'"$ 1>470.66 1>540.01M'?%+', $@#$'"$" 47.68 50.7*P$%")''$! $@#$'"$" 202.63 204.02

S$!!+', $@#$'"$" 114.57 118.63A+'"%+$ $@#$'"$" 6*.12 57.45E@#$'"$" #+!+"$ / /C)" )? "!$" 1>*04.66 1>*70.*0O#$%+', #%)?+ 107.34 121.14O;$% %$%%+', +')$ 0.04 20.85

A="$ PBDIT 107.38 141.**F+''+! $@#$'"$" 55.*3 8*.78D$#%$++)' 42.87 44.*7O;$% %+$ )??" / 3.32

A="$ PBT 8.58 3.*2T@ ;%,$" 47.13 /10.8*

A="$ PAT /38.55 14.81N)' %$%%+', +$" 17.56 /21.25

O;$% ')' "; ="$'" 32.86 /R$#)%$ '$ #%)?+ 11.87 /6.44E%'+," $?)%$ ##%)#%++)' /133.5* /145.46E+ ++$' / /P%$?$%$'$ ++$' / /D++$' @ / /R$+'$ $%'+'," /133.5* /145.46

@


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1'C& 2))45 3)t'EP& 2))+ 1st #C& 2))6 8 3)&/'EP& 2))4

E+ ";%$ #+! *0.71 83.6*

S;%$ ##!++)' )'$ / /P%$?$%$'$ ";%$ #+! / /R$"$%$" & "%#!" 645.4* 563.38S$%$ !)'" 422.63 414.04

'"$%$ !)'" 14.44 31.10&otal 1143(24 1)92(219%)"" !)( 1>415.*3 1>436.*6L$"" - %$!+)' %$"$%$ 466.46 471.*0L$"" - !$ $#%$++)' 5*3.41 583.24N$ !)( 356.06 381.82C#+! )%(/+'/#%),%$"" 14.43 13.40I'$"$'" 425.7* 425.13C%%$' ""$"> !)'" & '$" 1>131.*8 1>325.61L$"" - %%$' !++!++$" & #%)+"+)'" 776.14 1>06*.68T)! '$ %%$' ""$" 355.84 255.*3M+"$!!'$)" $@#$'"$" ') %+$' 11.00 15.*3&otal 1163(12 1)92(21B))( !$ )? ')$ +'$"$'" 4*4.53 4*3.87

M%($ !$ )? )$ +'$"$'" 1.*8 3.31C)'+',$' !++!++$" 168.40 318.74N$% )? $+ ";%$")"'+',:L"B

In)entory -DEMisc.expenditure -.


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on cash management escorts ltd

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