Financial Management: Department of M.B.A

DEPARTMENT OF M.B.
FINANCIAL MANAGEMENT
Introduction
Financial management is that managerial activity which is concerned with the
planning and controlling of the firms financial resources. The subject of financial
management is of immense interest to both academicians and practicing managers. It is of
great interest to academicians because the subject is still developing, and there are still certain
areas where controversies exist for which no unanimous solutions have been reached as yet.
Practicing managers are interested in this subject because among the most crucial decisions of
the firm are those which relate to finance, and an understanding of the theory of financial
management provides them with conceptual and analytical insights to make those decisions
skillfully.
The modern thinking in financial management accords a far greater. Importance to
management in decision-making and formulation of policy financial management occupies
key position in top management and plays a dynamic role in solving complex management
problems. They are now responsible for shaping the fortunes of the enterprise and are
involved in allocation of capital.
Financial Decision Areas
Investment analysis
Working capital
management
Sources and cost of funds
Determination of capital
structure
Primary Disciplines
Accounting
Macroeconomics
microeconomics
Other Related disciplines
Marketing
Production
Quantitative methods
Financial management is the life blood of the every business organization. The subject
of financial management is of immense interest to both academicians and
Shareholder wealth maximization
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DEPARTMENT
OF M.B.A
The relationship
between financial management and support disciplines is depicted in
developing, and there are still certain areas where controversies exist which no practicing
managers. Financial management is that managerial activity which i
Financial management is life blood of the every business of the organization. The
subject of financial management is of immense interest to both academicians and practicing
managers. It is of great interest to academicians because the subject is still developing, and
there are still certain areas where controversies exist for which no unanimous solutions have
been reached as yet. Practicing managers are interested in this subject because among the
most crucial decisions of the firm are those which relate to finance, and an understanding of
the theory of financial management provides them with conceptual and analytical insights to
make those decisions skillfully.
Definition:
Financial management is the operations activity of a business that is responsible for
obtaining and effectively utilizing the funds necessary for efficient operations
JOSEPH &MASSIE
Business finance deals primarily with rising administering and disbursing funds by
privately owned business units operating in non financial fields of in industry
PRATHER & WERT
Business finance can be broadly defined as the activity concerned with the planning
controlling and administering the funds used in the business
GUTHMANN&DOUGALL
Scope of Financial Management
Financial management provides a conceptual and analytical framework for financial
decision making. The finance function covers both acquisitions of funds as well as their
allocation. Thus, apart from the issues involved in acquiring external funds, the main concern
of financial management is the efficient and wise allocation of funds to various uses. Defined
in a broad sense, it is viewed as an integral part of overall management.
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DEPARTMENT
OF M.B.A
Thus, financial
management, in the modern sense of the term, can be broken down into
four major decisions as functions of finance. The scope of financial management falls into
three groups.
One view is that finance is concerned with cash.
At the other extremes is the relatively narrow definition that financial management is
concerned with raising and administering funds for an enterprise.
The third approach is that it is an integral part of overall management rather than a
staff specialty concerned with fund raising operations.
Major Areas of Finance Functions:

A firm performs finance functions simultaneously and continuously in the normal
course of the presences. They do not occur in sequence. Finance functions call for skilful
planning, control and executors of a firms activity.
1. Investment Decision:
It relates to the allocation of capital are involve to decision to commit funds to longterm assets which would yield benefits in future. It is one very significant aspect is the task of
measuring the prospective profitability of new investments future benefits are difficult to
measure and cannot be predicted with continuity because of the uncertain future capital
budgeting involves risk.
2. Financing Decision:
Broadly a finance manager must declare when, where and how to acquire funds to
meet the firms investments needs. The finance manager must strive to obtain the best
financing mix or optimum capital structure of this firm. The use of debt affects the return and
rise of shareholders. It may increase the return of the equity funds. A proper balance will have
to be struck between rises and retain.
3. Dividend Decision:
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DEPARTMENT
OFmanager
M.B.A must decide whether the firm should distribute all profits or
The finance
certain term or distribute a portion and retain the balance. The dividend policy should be
determined in terms of its impact on the market value of the firms share. Thus shareholders
are indifferent to the firms dividend policy the finance manager must decide to the optimum
dividend payout ratio.
4. Liquidity Decision:
Along with terms of funds current assets should also be managed efficiently for
safeguarding the firm against the dangerous of ill liquidity and insolvency. An investment in
current assets affects the firm profitability, liquidity and risk. In order to ensure that neither
insufficient nor unnecessary funds are invested finance manager develops some techniques of
managing current assets.
Financial Management plays two basic roles:
To participate in the process of putting funds to work in the business and to control
their productivity.
To identity the need for funds and select sources from which they may be obtained.
The functions of financial management may be classified on the basis of liquidity,
profitability and management.
Liquidity:
Forecasting cash flows, that is matching the inflows against cash flows.
Raising funds.
Profitability:
Cost control
Pricing
Forecasting future profits
Assuring cost of capital.
CASH MANAGEMENT
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DEPARTMENT
OF M.B.A
INTRODUTION;
The cash management study is straightforward maximise liquidity and control cash
flows and maximise the value of funds while minimising the cost of funds. The strategies for
meeting such objectives include varying degrees of long-term planning requirements. This
includes financing the corporation, administration of debts (loans, bonds, commercial papers,
etc.), good relationships with the banks, payments to suppliers and collections from
customers, control of foreign currency and interest positions according to the companys
needs for finance, and finally the reporting and technical support of all these functions.
The corporate process of collecting, managing and (short-term)investing cash.
Frequently corporate treasurers or a business manager is responsible for overall cash
management
Successful cash management involves not only avoiding insolvency (and therefore
bankruptcy), but also reducing days in account receivables (AR), increasing collection rates,
selecting appropriate short-term investment vehicles, and increasing days cash on hand all in
order to improve a company's overall financial profitability.
The term cash management refers to the management of cash resource in such a way that
generally accepted business objectives could be achieved. In this context, the objectives of a
firm can be unified as bringing about consistency between maximum possible profitability
and liquidity of a firm. Cash management may be defined as the ability of a management in
recognizing the problems related with cash which may come across in future course of action,
finding appropriate solution to curb such problems if they arise, and finally delegating these
solutions to the competent authority for carrying them out. The choice between liquidity and
profitability creates a state of confusion. It is cash management that can provide solution to
this dilemma. Cash management may be regarded as an art that assists in establishing
equilibrium between liquidity and profitability to ensure undisturbed functioning of a firm
towards attaining its business objectives.
Cash itself is not capable of generating any sort of income on its own. It rather is the prime
requirement of income generating sources and functions. Thus, a firm should go for minimum
possible balance of cash, yet maintaining its adequacy for the obvious reason of firms
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DEPARTMENT
OF M.B.A deals with maintaining sufficient quantity of cash in such a way
solvency. Cash management
that the quantity denotes the lowest adequate cash figure to meet business obligations. Cash
management involves managing cash flows (into and out of the firm), within the firm and the
cash balances held by a concern at a point of time. The words, managing cash and the cash
balances as specified above does not mean optimization of cash and near cash items but also
point towards providing a protective shield to the business obligations. Cash management is
concerned with minimizing unproductive cash balances, investing temporarily excess cash
advantageously and to make the best possible arrangement for meeting planned and
unexpected demands on the firms cash.
Cash is the important current asset for the operations of the 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 service product manufactured by the firm .The firm
should keep sufficient cash, neither more or less. Cash shortage will dispute the firms
manufacturing operations while excessive cash will simply remain idle, without contributing
anything towards the firms profitability. Thus, a major function of the financial manager is to
maintain a sound cash position
Cash is the money which is firm can disburse immediately without any restriction. The
term cash includes coins, currency and cheques held by the firm, and balances in its bank
accounts sometimes near cash items, such as marketable securities or bank deposits, are also
included in cash. The basic characteristics of near cash assets is that they can readily be
converted in touch . Generally, when a firm has excess cash, it invests it in marketable
securities. This kind of investments contributes some profit to the firm.
Cash flowis inseparable parts of the business operations of firms. A firm needs cash to invest
in inventory, receivable
andFixed assets and to make payment for operating expenses in
order to maintain growth in sales and earnings. It is the way the firm making adequate profits.
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DEPARTMENT OF M.B.A
NEED AND IMPORTANCE OF THE STUDY

Cash management is concerned with management of cash in such a way as to achieve the
generally accepted objectives of the firm- maximum profitability with maximum liquidity of
the firm. It is the management's ability to recognize cash problems before they arise, to solve
them when they arise and having made solution available to delegate someone carries them
out.
An effective and efficient cash management is considered to be important for the following
reasons:
1. Cash management ensures that the firm has sufficient cash during peak times for purchase
and for other purposes.
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DEPARTMENT
OFhelps
M.B.A
2. Cash management
to meet obligatory cash out flows when they fall due.
3. Cash management assists in planning capital expenditure projects.
4. Cash management helps to arrange for outside financing at favorable terms and conditions,
if necessary.
5. Cash management helps to allow the firm to take advantage of discount, special purchases
and business opportunities.
6. Cash management helps to invest surplus cash for short or long-term periods to keep the
idle funds fully employed.
Cash management deals with every year total cash inflows and out flows. The operation has to
maintain certain amount in the form of cash. This study makes a humble attempt to evaluate
the corporate financial position, in terms of cash. Really access to cash also gives the
company the financial flexibility to take expenditure decisions when ever its requires.
CASH MANAGEMENT in K S SUBBAIAH PILLAI & CO helps to know the total
income and expenditure occurred ever year. It helps to analyze the surplus cash and deficit
amount. The management of cash is important because it helps to predict cash flows
accurately, particularly the inflows and outflow
SCOPE OF THE STUDY
The scope of the cash management is managing of cash flows into and out of the firm.
Managing the cash flows within the firm
Financing deficit or investing surplus cash and thus , controlling cash balance at a
point of time
Cash management involves, cash budget which is recorded generally for short periods
such as weekly, monthly, quarterly, half yearly or yearly.
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DEPARTMENT
OF M.B.A tells how cash flows
5 The cash management
OBJECTIVES OF THE STIDY

The desire objectives cash forecast are needed to prepare cash
Budgets .Cash forecasting may be done on short or long-term basis .Generally, forecasting
covering period of one year or less considered short-term; to extending beyond one year are
considered long term
1. To know the working capital requirements of the firm
2. To know the total cash inflows & out flows of the firm
3. To know the liquidity position of the firm
4. To know the current ,liquidity, quick ratios

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DEPARTMENT
OFoperational,
M.B.A
5. To know the
financial, investing activities of cash flows
6. To know the long term and short term cash requirements
RESEARCH METHODOLOGY
Short term cash forecasting- sensitivity analysis
Long term cash forecasting- lock box system
Cash balance under certainty- Baumes model
Cash balance under uncertainty- Miller-Orr model
Collect of required data from the annual reports of cub
HD in house, magazines, publications and websites
Reference from text books, journals and relating financial management
The methods to be followed for cash requirements forecasting
Methodology is systematic procedure of collecting information in order to analysis and
variety phenomenon. The collection is done through to principle sources vise
THE DATA INCLUDES

1
2
PRIMARY DATA
SECONDARY DAT
1 PRIMARY DATA
It is the information collected without any references. In this study it
was mainly interviews, with concerned officers and staff, either individually or collectively
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DEPARTMENT
OF M.B.Ahas been verified or supplemented conducting personal with
some of the information
observation
2. SECONDARY DATA
The secondary data was collecting from already published
source such as pamphlets, annual reports return and internal records
LIMITATIONS OF THE STUDY

1
Though the study refers to cash management. A study in K S SUBBAIAH PILLAI &
CO the in depth analysis is restricted to the analysis of capital account and revenue
accounts , cash flows ,balance sheet and cash budget only.
The conclusions may be generalized to the extent of this limitation
The study restricted to limited period of time.
Most of data is generated from the secondary sources .Therefore the accuracy and
authentication of data depends upon the reliability of the source.
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DEPARTMENT OF M.B.A
INDUSTRY PROFILE
Tobacco is a plant that grows natively in north and South America.
It is in the same family as the potato, pepper and poisonous nightshade very
dead plant. The seed of a tobacco plant is very small. A 1 ounce sample
contains about 3, 00,000 seeds.
It is a believed that tobacco began growing in the America about
6,000 B.C., American Indians began using tobacco in many different ways. Such
as in religious and medicinal practices. Tobacco was believed to be a cure all and
was used to dress wounds, as well as a pain killer. Chewing tobacco was
believed to relieve the pain of toothache.
Soon after, sailors brought tobacco back to Europe and the plant was
being grown all over Europe. The major reason for tobaccos growing popularity
in Europe was its supposed healing properties. Europeans believed that tobacco
could cure almost anything, from bad breath.
In 1571, a Spanish doctor named NICOLAS MONARDES wrote a
book about the history of medicinal plants of the new world. In this he claimed
that tobacco could cure 36 health problems.
In 1588, a Virginian named THOMAS HARRIET prompted
smoking tobacco as a viable way to get ones dose of tobacco. Unfortunately, he
died nose cancer (because it was popular them to breath the smoke out through
the nose).
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DEPARTMENTDuring
OF M.B.A
the 1600s, tobacco was so popular that it was frequently
used as money! Tobacco was literally as good as gold! This was also a time
when some of the dangerous effects of smoking tobacco were being realized by
some individuals. In 1610 Sir Francis Beacon noted that trying to quit the bad
habit was really hard.
In 1632, 12 years after the mayflower arrived on Plymouth Rock, it
was illegal to smoke publicly in Massachusetts! This had more to do with moral
benefits of the day than health cancers about smoking tobacco.
In 1760, Pierre LORILLARD established a company in New York
City to process tobacco, cigar and snuff. Today P.LORILLARD is the oldest
tobacco company in the U.S.
TOBACCO: A GROWTH INDUSTRY:In 1776, during the American revolutionary war, tobacco
helped finance the revolution by serving as collateral for loans the American
barrowed from finance! Over the years, more and more scientists began to
understand the chemical in tobacco, as well as the dangerous health effects
smoking produces.
In 1826, the pure form of nicotine was finally discovered.
Soon after, scientists concluded that nicotine was dangerous poison.
In 1836, New Englander sacral green stated that tobacco was an
insecticide, a poison and can kill a man.
In 1847, the famous Phillip Morris was established selling
hand rolled Turkish cigarettes. Soon after in 1849, J.E.Liggette and brother was
established in St. Louis, MO-(the company that has settled out of the big
lawsuits recently) cigarettes became popular around this when soldiers brought it
back to England from the Russian and Turkish soldiers.
Cigarettes in the U.S. were mainly made from scraps left
over after the production of the other tobacco products, especially chewing
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DEPARTMENT
OF M.B.A
tobacco. Chewing
tobacco became quite popular at this time with the cow
boys of the American west.

In 1875, R.J. REYNOLDS Tobacco Company (better known
for its REYNOLDS wrap aluminum foil) was established to produce chewing
tobacco. It was not until the 1990s that the cigarette became the major tobacco
product made and sold. Still in 1901. 3.5 billion Cigarettes were sold, while 6
billion cigars were sold. Along with the popularity of cigarettes however, was a
small but growing anti-tobacco campaign, with some states proposing a total ban
on tobacco?
In 1902, the British Philip Morris set up a New York headquarters
to market its cigarettes including a new famous Marlboro brand. The demand for
cigarettes grew however, and in 1913 R.J.REYNOLDS began to market a
cigarette brand called camel.
WAR AND CIGARETTES: A DEADLY COMBO:The cigarette exploded during world war(1914-1918), where
cigarettes were called soldiers smoke. by 1923, camel controls 45% of the U.S.
market! In 1924, Phillip Morris began to market Marlboro as a womans
cigarette that is a mild as May!
To battle this American tobacco company, maker of the lucky strike brand,
began to market its cigarettes to women and gains 38% of the market. Smoking
rates among female teenagers soon tripled during the years between 1925-1935.
In1939,Americantobacco company introduced a new brand, pall mall, which
allowed American to became the largest tobacco company in the
U.S. during World War II (1939-1945), cigarettes were at an all-time high.
Cigarettes were included in soldiers c-rations (like food). Tb companies sent
millions of cigarettes to the soldiers for free, and when these soldiers came
home, the companies had steady stream of loyal customers. During the 1950s,
more and more evidence was surfacing the smoking linked to lung cancer.
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DEPARTMENT OF M.B.A
In 1952, P.LORILLARD markets its Kent brand with the
Micronite filter, which contained asbestos! This was fortunately discontinued

in1956. In 1953, DR. Ernst L. Wynders fined that putting cigarette war on the
back of mice causes tumours! In 1954, RJ REYNOLDS introduced the Salem
brand, which was the first filter tripped menthol cigarette.
HEALTH HAZARDS REVEALED:In 1964, the surgeon generals report on smoking and health
came out. This report assisted in allowing the government to regulate the
advertisement and sales of cigarettes. The 1960s in general was a time when
much of health hazards of smoking were reported.
In 1965, television cigarette ads were taken of the air in great
BRITAIN. In 1966, those health warnings on cigarette packs began propping up.
In 1968, Bravo a non-tobacco cigarette brand was marketed made primarily of
lettuce, it failed: miserably. Because of the negative press about tobacco, the
major tobacco companies began. To diversity their products PhillipMorris began
to buy in to the miller brewing company, makers of miller beer, miller lite, and
red dog beer. RJ Reynolds tobacco company drops the tobacco company in its
name, and becomes RJ Reynolds industries.
It also began to buy into other products, such as aluminium. Am
tobacco company also drops tobacco from its name, becoming American
brands, Inc. in 1971, television ads for cigarettes are finally taken off the air in
the U.S.cigarettes. However. Was still the most heavily advertised product
second to automobiles? In 1977, the first national great am smoke art took place.
In 1979, the surgeon general reported on the health consequences
of smoking for women. This is in light to the increasing number of women who
were taking up the bad habit. Some attribute is to slick and campaign of the
Virginia slims brand, you have come a long way baby.
THE RECENT PAST:Page | 15
DEPARTMENT OF M.B.A
During the 1980s there were many law suites failed
against the tobacco industry because of the harmful effects of its products.
Smoking became politically in correct, with more public places forbidding
smoking. In 1982, the surgeon general reported that second hand smoke may
cause lung cancer. Smoking in public areas was soon restricted, especially at the
work place. In 1985, lung cancer became the number 1 killer of women. Beating
out breast cancer! Phillip Morris continued to diversify into other products,
buying into general food corporation and craft Inc. in 1985. RJ REYNOLDS
also diversified, buying Nabisco and becoming RJR/NABISCO.
In 1987, congress banned smoking on all domestic flights
lasting less than two hours. In 1990, smoking is banned, expect to Alaska and
Hawaii. In 1990, ben and jerrys (of ice cream fame)boy cots RJR/NABISCO,
and dropped Oreos from its ice cream products.
During the 80s and 90s the tobacco started marketing heavily
in areas outside the U.S, especially developing countries in Asia. Marlboro is
considered the worlds NO 1 most valuable brand of any product with a value
over $ 30 billion! Over this period, there is a battle between coca cola and
Marlboro as the NO1 brand in the world.
In the recent years there is growing evidence that the tobacco
industry has known all along that cigarettes are harmful, but continue to market
and sell them. There is also evidence that they know that nicotine was addictive
and exploited this hidden knowledge to get millions of people hooked on this
dangerous habit.
Tobacco industry is an agro based industry. Tobacco is cultivated
mainly in the states of Andhra Pradesh and Karnataka. Most of the tobacco used
for the manufactures of cigarettes and for exports(is produced from these two
states). Tobacco is grown in Tamilnadu, west Bengal, Uttar Pradesh, Gujarat,
Madhya Pradesh, Maharashtra and Orissa also.
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DEPARTMENTHowever
OF M.B.Athe tobacco grown in these states is of very less quantity
and is not used for manufacture of cigarettes and exports. Several varieties of
tobacco such as Virginia flue cured, Virginia air cured, light soil burly, sun cured
Virginia, nature, chewing tobacco, HDBRG, wrapper tobacco, Bide tobacco and
Hookah tobacco etc. ,are grown in India. Virginia flue cured is a major variety
grown in India. More than 80% of Indian tobacco crop belongs to this variety.
The tobacco cultivation exports and some other industrial
activities are regulated by central government(ministry of commerce)through
tobacco board. Tobacco board is headed by I.A.S officer of senior category
generally from the central government. The board consist of several central
government officers, state government officers, political leaders, representatives
of farmers and reputed industrialists. One of the directors of ML AGRO
PRODUCTS limited is always representing the industrialists in the tobacco
board.
Tobacco board issues licenses to the farmers who are permitted to
grow tobacco. The license regulates the cultivation area. The farmers have to
restrict the cultivation to the given area and must sell the grown tobacco through
tobacco board auctions only. Any violation is an offence and is punishable.
In Virginia flue cured variety the tobacco leaves are separated from
the plant and are cured in tobacco barns are like a furnace when the fumes are
used to cure the green leaves of tobacco plant. Tobacco barns appear like small
goo downs with firing chambers at the bottom fixed to the walls. The green
tobacco leaves of the plant will be arranged in the form of rows inside the barns.
The temperature inside the barns will be regulated by means of flow of hot air
through the firing chambers.
This is a simple technical process by which the green leaf
exposed to hot air at high temperature and cooled slowly over a period of time.
After the curing process, the primary leaf tobacco turns into lemon yellow
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DEPARTMENT
OF M.B.A
colour, gold colour,
brownish yellow colour, brown colour, and dark brown
colour, this tobacco is called katcha tobacco leaf and is ready for sale. The
formers pack different colours in different packages as each colour generally
will be classified as a separate grade which will have a separate price in the
market.
Tobacco must be sold only through tobacco board auctions
platforms under strict rules and regulations. Former or buyer as permitted to
transact in tobacco board auctions platforms. Central government has also
established several tobacco research institutes for betterment of quality of
tobacco in India. The other varieties of tobacco are not regulated by tobacco
board.
The tobacco purchased from the tobacco board auctions platforms
will be graded further whenever required. Grading is process of manual
separation of one variety of leaf from the other and is done mainly on the basis
of colour. Each grade will generally have unique quality parameters.
The graded tobacco is further processed either manually or on
machines. The processing is called DEBUTING and STRIPPING. Workers
separate but of the tobacco leaf. This process can also be done on machines. The
machine processing is called THRESHING. After stripping/ threshing, the
tobacco will be further processed for stabilization of moisture. The process is
called REDRYING. In the process the tobacco first of all will be derived
completely then it will be given stream at the required temperature.
After re-drying process, the tobacco will be packed in the required
packing say bale packing/ case packing etc. the packed tobacco is ready for
export. In India the first threshing plant which is working uninterruptedly for the
last 25/30 years an imported one by MADDI LAKSHMAIAH AGRO
PRODUCTS LIMITED. This was installed at MARTUR and the plant is still
running at high efficiency levels in the country with 98% average efficiency
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DEPARTMENT
M.B.A
level for the lastOFthree
years. There are two plants owned by ITC which can be
compared with this plant in the country. ITC uses their threshing plants for their
threshing plants for their own consumption.
Tobacco industry is fetching more than Rs.9,000crores of
revenue to the central government. It is providing employment two lakhs of
people directly and millions of people indirectly and is also contributing
Rs.1,000crores of forex reserves to the country. The central government is
announcing several restrictions on advertisement and consumption of cigarettes
in the country. It is encouraging the formers by providing several subsidized
fertilizers and by supporting through tobacco board.
TABLE NO: 2.1

The major players in tobacco industry in India are as under
Name of the company
Occupation
% of Business in
India
Cigarette manufacturing
ITC Ltd
&un-manufacturing
50%
tobacco exports
VST industries Ltd
&un-manufacturing
12%
tobacco exports
GTC industries ltd
&un-manufacturing
6%
tobacco exports
Godfrey Phillips India Ltd
&un-manufacturing
tobacco exports
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8%
DEPARTMENT OF M.B.A
The consumption is linked with the habits of the people; the

Cigarette manufacturing and un-manufacturing tobacco usage cannot be
eradicated. Even in countries like USA where anti-tobacco campaign started in
1962. The production of cigarettes and consumption of cigarettes is still
progressing.
TABLE NO: 2.2

Exporters
s.no
Name of the
Company
M.L.A.P
Poliseety
Group
Bommidala
Group
Mittapalli
Group
Other
Companies
Occupation
Cigarette
manufacturing & un
manufacturing
exports
Cigarette
manufacturing & un
manufacturing
exports
Cigarette
manufacturing & un
manufacturing
exports
Cigarette
manufacturing & un
manufacturing
exports
Cigarette
manufacturing & un
manufacturing
exports
Page | 20
% of business
In INDIA
5%
5%
3%
3%
8%
DEPARTMENT
M.B.A
Our OF
MLAP
company has developed strong relationship with overseas
manufacturing in Europe, Russian and middle east. Through there is very good
demand from Russian market. Our company is not exporting much because of
poor economic conditions of the country.
M.L.A.P company as now exporting cigarettes to middle east and
USA by manufacturing the cigarettes on job work basis. The company foresees a
very bright future for this company in tobacco in the coming years.
M.L.A.P. group is the first tobacco company who exported
tobacco to china and is the first company who Imported from china. There was
no imported tobacco in Indian tobacco history before this and after this till now.
The group maintains good relationship with the Chinese tobacco monopoly.
One of the trade delegates that accompanied our honourable prime
minister during his recent visit to china is from MLAP company. Three
ambassadors of china have visited our company in the past as our guests and
expressed their satisfaction on our infrastructure facilities.
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DEPARTMENT OF M.B.A
COMPANY PROFILE
K S Subbiah Pillai Company India Limited is a Public Company

incorporated on 14 January 1972. It is classified as Indian Non-Government
Company and is registered at Registrar of Companies, Chennai. Its authorized
share capital is Rs. 40,000,000 and its paid up capital is Rs. 33,750,000.
K S Subbiah Pillai Company India Limited's Annual General Meeting (AGM)
was last held on 25 September 2014 and as per records from Ministry of
Corporate Affairs (MCA), its balance sheet was last filed on 31 March 2014.
Directors of K S Subbiah Pillai Company India Limited:
Maddi Lakshmaiah
Maddi Seetha Devi
Maddi Venkateswara Rao
Maddi Ramesh, Sekhar Meadem
Rama Mohana Rao Mallavarapu.
K.S.SUBBIAH PILLAI AND COMPANY(INDIA) LTD:K.S.S.p and company limited was acquiring in 1972 with all its
assets K.S.Subbaiah pillai and company (India) limited is the groups leading
tobacco exporting unit. In a field that is extremely competitive, the excellent
performance of the company is an indicator of the trust that it enjoys across the
globe.
SHARE HOLDING PATTERN AND MANAGEMENT OF GROUPS:-
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DEPARTMENT
OFLakshmaiah
M.B.A
Sri Maddi
and his family members are holding 100% of
shares of all the group. The group is totally managed and controlled by Sri
Maddi Lakshmaiah and his family members only.
The group has been successfully improving its business in all of its
activities such as domestic sales, export sales, tobacco processing and other
tobacco development activities, warehousing facilities etc. the group has two
tobacco processing plants and one solvent extraction plant in south India. The
group owns around 1,00,000 square meters of ware housing complexes in south
India.
IN CORPORATION:MLAP company is a limited company (m/s Maddi Lakshmaiah agro products
ltd) which was originally incorporated on 8TH day of October 1970 under the
name, Maddi Lakshmaiahagro products private ltd having passed the necessary
special resolution on the 23RD day of march 2002, in terms of sec 31(1)/44 of the
companies act 1956 the name of the company changed to Maddi lakshamaia
agro products limited.
NATURE OF ACTIVITY: This factory produces good quality tobacco
The production capacity per each day is one lakh 20 tonnes.

The production capacity per year is around 15/16 million tonnes
The current asset capacity per year is around 1.5 million tonnes.
FINACIAL STRUCTURE:Page | 23
DEPARTMENT
OF M.B.A of K.S.S.P. &Co company is 10,00,000.
The initial investment
TURNOVER OF THE COMPANY:The turnover of the group for the financial year 1989-99 standard is at
around Rs800 millions. The net earnings after taxes of the company have been
maintained at Rs150/200 millions per year.
The company has second asset base having asset spread in most of the
prime centres and parts of south India. The group has developed excellent
infrastructure during the past 30 years. Which have been yielding a promising
regular income of more than Rs225 millions every year.
TURNOVER OF THE COMPANY:The turnover of K.S.S.P. &Co for the following years of 2005-2015
is as follows.
TABLE NO:2.3
s.l.no
1
2
3
4
5
6
7
8
9
10
11
PROFIT AFTER TAX:-
NO.OF YEARS
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Amount in Rs in lacks
2370
1693
488
2372
3358
1778
1000
1318
946
1279
1546
Table no:2.4
S.L.NO
NO.OF YEARS
AMOUNT IN Rs IN
LAKHS
Page | 24
DEPARTMENT
OF M.B.A
1
2
3
4
5
6
7
8
2007
2008
2009
2010
2011
2012
2013
2014
109
270
203
312
262
134
103
123
THE PRODUCTS OF THE K.S.S.P. &Co COMPANY AND THEIR MAIN

USES:The various products of the K.S.S.P. &Co company and their economic
uses are as follows.
i.
Karnataka light soil-my sore :

This tobacco is preferred for low nicotine content, high filling capacity
and suitability to blend well any tobacco.
ii.
Monsoon burly:
Used in us blended cigarettes.
iii.
Traditional burly:
Used for pipe mixtures, chewing plugs and hookah tobacco paste.
iv.
Kurnool and Telangana(NATU):

Primarily used for cigarette blending and for hookahtobacco paste
making.
v.
Eluru (NATU TOBACCO):

Mainly used for cheroots, snuff pipe tobacco, cigarette blending and fore
hookah paste making.
vi.
Oriental:
Page | 25
DEPARTMENT
M.B.Ablending.
Used for OF
cigarette
vii.
Century fired cured tobacco:Used in pipe mixers and hookah tobacco paste.
viii.
Bidi tobacco:
Used in the manufacture of bidis, a hand rolled smoking products
made by wrapping tobacco with natural bony leaves.
ix.
Cigar wrapper tobacco:

Mainly used for wrapping the cigars.
x.
Cigar filter tobacco:

Mainly used in the manufacture of cigars and exported to some countries
for use in hookah tobacco paste.
xi.
Cheroot tobacco:
Used for the manufacture of cigars and hookah tobacco paste.
xii.
Lanka tobacco:
For the manufacture of cigars and cheroots.
xiii.
Tamilnadu:
Chewing and cheroot.
xiv.
Black chopadia.
Used as chewing tobacco.
xv.
Red chopadia:
Mostly for chewing also called lal-chopadia and safna. The export
packing ranges from 250 grams- 100 grams and is available in bales of up
to 100 kages.
Page | 26
DEPARTMENT
OF M.B.A
xvi.
Rustic tobacco:
Used as chewing tobacco, hookah tobacco, for tobacco sheet making for
kreteks In Indonesia, pipe mixers and cigarette blending to some extent.
xvii.
Motihari:
Used in the manufacture of various tobacco products such as chewing
tobacco, hookah paste, bidies etc.
xviii.
Southern soil:
Blend with any tobacco.
OBJECTIVES OF THE COMPANY: To serve the nations vital interest in the tobacco related sectors.
To earn a reasonable return on investment
To create a strong research and development in the field of tobacco and

stimulate research and development of developing the exports.
To maximise utilisation of the existing facilities in order to improve

efficient and increased productivity.
To work towards achievement of self-reliance in the field of tobacco,

threshing formulation and distribution systems.
Page | 27
DEPARTMENT OF M.B.A
To import training, conduct seminars, workshops and educational courses

on computers , computer maintenance, software development and
software export and to develop and design software in India.
A broad and start software technology park in India or abroad and to other
relationship management solutions for individuals and organizations both
individually and through strategic alliances with other companies.
To employ experts to investigate and examine in to the condition,

prospects, value, character and circumstances of any business concern and
under takings and generally of any assets property or rights.
To carry on all kinds of agency business.

To carry on business as merchants in all kinds of goods.
To improve, manage, work, develop, lease, mortgage, abandon or

otherwise deal with all or any part of the property, right and concessions
of the company.
To maintain vicinity of suppliers through K.S.S.P. &Co tobacco packing

and exporters network at optimum costs and provide up to date technical
assistance to the consumer to conceive the valuable energy resources.
Page | 28
DEPARTMENT OF M.B.A
ORGANIZATION STRUCTURE:Departmentalisation of function:- the group has following different

departments.
Personal department:
This department deals with the masters of industrial relations, HRD,
welfare activities, labour legislations, recruitment and issues of wages etc. this is
the main department in the organisation.
Leaf department:
This department deals with the matters of tobacco leaf. It looks after
buying of tobacco from the formers for the processing of tobacco.
Export department:
It looks after the export matters of the organisation. this organisation
exports tobacco leaf to china, Bangladesh and U.K.
Production department:
This department takes care to produce quality tobacco to customers.
Marketing department:
This department takes care of marketing the company tobacco to other
countries such as Russian, Europe, Middle East, Bangladesh, African countries
etc.
They sell varieties of tobacco in market and maintain good relations with
the customers.
This is one of the main important department in this organisation.
a) K.S.S.P. &Co india limited was concentrating on domestic market.
b) It ties up with Indian strongest cigarette manufacturing company,

ITC.
Page | 29
DEPARTMENT
OF M.B.A
MARKET EXPORT:-
K.S.S.P. &Co company was exporting tobacco to Russia, Europe, Middle

East, Bangladesh, African countries etc. these are the various countries in which
K.S.S.P. &Co company is exporting their tobacco.
A BRIEF ACCOUNT OF THE ORGANIZATION:M.L.A.P. group of companies was founded by Mr Maddi Lakshmaiah in
1970. He joined in his family business in 1972. After completing of his
engineering degree. The joint family business started pay back in 1978, dealing
with tobacco exports, well before India.
K.S.S.P. &Co a pioneer in Indian unmanufactured tobacco industry has

been exporting tobacco to all over the world for the past three decades. It has
solidified its relationships with overseas tobacco merchants and manufactures.
K.S.S.P. &Co India Limited was set up at chilakaluripet, a village in A.P

that produces some of the best tobacco in the country. Today it has involved into
a diversified multi-product conglomerate known as group that is recognised
world over for its excellence. The company processes tobaccos and another agro
based products that are used both in the country and exported to the most quality
conscious of world markets.
An emphasis on total quality and dedication to the interests of its clients
world wide is a hall mark of company, the group is excellent well from the date
of its incorporation and has been exporting large volumes of tobacco to Russia,
Page | 30
DEPARTMENT
OF M.B.A
CIS countries U.K,
Europe, African countries, china, Latin American countries,
middle east countries, Bangladesh and Nepal etc. the group established its
branches in Russia and European countries and has strong tiles up with African
and Latin American countries and especially with the neighbour giant china.
ESTABLISHMENT OF THE GROUP:The group is founded by Sri. Maddi lakshmaiah, a mechanical engineer
after 15 years of versatile experience in tobacco industry in 1970 in
chilakaluripet, Guntur, A.P. the group has five major concerns namely.
Maddi Lakshamaiah Agro Products and company ltd(MLAP
Co)
M.L.and company limited(MLCO)
K.S.SUBBIAH PILLAI AND COMPANY LIMITED(KSSP)
M.L.EXPORTS (MLE)
CORAMANDAL AGRO PRODUCTS AND OILS
LTD(CAPOL)
Expecting CAPOL which is engaged in edible oils, all are engaged in

tobacco industry. MLco and MLAP have concentrated on processing activities
where as KSSP and MLE are leading exporters and are recognised by
government of India as export house.
FUTURE PLANS:
The company (Maddi Lakshamaiah) for an ECB from 50 million
dollars and development of regular trade and also infrastructure
projects in India.
Page | 31
DEPARTMENT
OF &Co
M.B.AIndia Limited company is also working on joint venture
K.S.S.P.
basis with U.K. based commodities company for supply of agro

products to south Asian countries.
The company already entered into joint venture with an U.S. based
company by name CARGIL for their entire south Indian needs.
They have worked for joint venture arrangement with Yugoslavian
government for their requirement for India.
This is for above five million dollars of investment in supply of 5000
tones every year.
The company is working with Chinese government for long term
association in tobacco.
Negotiation of ambassador level which are completed and favourable
reports are submitted to respective government.
The only delegating from tobacco industry who is permitted along with
P.M(MrAtal BiharVajpayee ) to the recent role to china is from
K.S.S.P. &Co India Limited.
Page | 32
DEPARTMENT
OF M.B.A
ACHIVEMENTS/AWRDS:-
K.S.S.P. &Co
India
Limited
Company
has
no
particular/peculiar
achievement/awards.
M.L. group (CAPOL Chirala, Prakasam district)got several achievements and
awards.
CAPOL: All Indian cotton seed crushers association, Mumbai awarded CAPOL as
III highest exporter and III highest domestic seller of cotton seed
extraction for the year 1992-1993.
CAPOL is the highest exporter and III highest domestic set of cotton seed
extraction for the year 1993-1994.
CAPOL is the III highest domestic seller of cotton seed extraction for the
year1994-1995.
CAPOL is the II highest domestic seller of cotton seed extraction for the
year1995-1996.
CAPOL is the II highest domestic seller of cotton seed extraction for the
year 1997-1998.
CAPOL is the and III highest domestic cotton seed in the year 19992000.
Page | 33
DEPARTMENT
OFthe
M.B.A
CAPOL is
and III highest exporter of cotton linter in the year2000-
2001.
CAPOL is the and III highest exporter of cotton linters and II highest
domestic seller of cotton seed extraction for the year for the year 20012002.
The company (CAPOL) has been awarded may commendation led by

government of A.P for its continuous harmonious relations with its
employees in the years 1994-1997.
The company (CAPOL) received GOLD UDYOGA PATRA award for

its best quality and
Productivity through Sri PranabMukherjee, honourable union commerce
minister in 1993 and on this occasion, the company (CAPOL) M.D. has been
facilitated by honourable president of India, Dr.sankar dayal sharma.
The company got productivity council award.
The company got II best sport persons in companies in Prakasam

district.
TRACK RECORD:-
Page | 34
DEPARTMENT
OF M.B.A
The company
has 30 years of performances.
It never failed in meeting the scheduled repayments of loans with the

bank. Rather it postponed most of the loans with the lenders.
From the date of its incorporation 1977, tice date, un interruptedly

running in threshing field
LAND MARKS:-
K.S.S.P. &Co exports company was the first Indian company entered
with china to do business.
It was the first company to import tobacco and export tobacco.
Ambassadors have already come (visit) her and the 4TH one is coming
in this angers.
NEGOTIATION:-
Page | 35
DEPARTMENT
OF M.B.A
The company
is trying to develop world class information technology
buildings in Bangalore, Chennai and Hyderabad in the coming five years

time.
The company is going for sheet tobacco plant in joint venture with one of
the Indian best tobacco cigarette manufacturer.
The company is also contemplating for 100% tobacco joint venture

association with one of the best cigarette manufacturer.
The company exports with the second strongest country china, Russia and
India.
The finance manager is associated by a team of experienced management

and non-management staff who takes care of finance and accounts
activities of the organizations.
The export manager (K.S.S.P. &Co India Limited) deals all the matters
regarding the exports departments and directly reports to the managing
director.
MILESTONES OF K.S.S.P. &Co India Limited:M.L.A.P.group has constructed M.L.A.P towers at Mumbai
M.L.A.P towers is a state of the art building with every conceivable
modern feature built to suit individually and companies of international
standing and repute.
Page | 36
DEPARTMENT OF M.B.A
M.L.A.P towers is built with the intention of lease to corporate, it covers

an impressive built up area of 175000 square feet.
MLAP group in information technology:To grade the growing needs and development of IT industry in India, the
group is proposing to develop it parks in India with the investment of 100crores.
The group is developing initially in navy Mumbai around 13866 square
meters, of it park at millennium Business Park. This project is undertaken in
association with the Maharashtra. Industrial development corporation (MIDC), a
corporation of Maharashtra state government.
M.L.A.P. group has got good name in export for raw material
because of sound financial resources.
THRESHING PLANTS:The group has two most modern tobacco threshing plants of which, one is
situated at GNP, Chilakaluripet and another at martur, prakasam D.t., A.P. having
a combined capacity of 105 million kilos per anum and also has four
independent re-drying plants for processing industries of tobacco their own as
well as on commercial basis.
POWER GENERATION:The group has in house power generation up to 6.8ml with the help of
imported generate lets to meet the power fluctuations, power cut and power
facilities etc.
TOBACCO MANUAL PROCESSING FACILITY:The group has grading centres to processes tobacco manually engaging
nearly 5000 labour. Each centre has a minimum area of 20000 square feet of
warehousing and processing pedals.
Page | 37
DEPARTMENT
OF
M.B.A
i.
The
group
has port goo downs at Kakinada.
ii.
The group has ware housing complex at Sanatnagar.
GRADING POINTS:K.S.S.P. &Co India Limited has three grading points at Chilakaluripet,
Martur, Muppavaram and some other on national highway between Guntur and
chilakaluripet and three more in Guntur city.
The goodwill of the company is the asset of the K.S.S.P. &Co India
Company sets the group to stand in a good position.
ORGANIZATION STRUCTURE:The company (K.S.S.P. &Co
India Limited) is under the complete
administrative control of the managing director and he is reported by the director

and he is reported by general manager.
The general manager (K.S.S.P. &Co India Limited) is assisted by five
general managers.
Manager personnel
Manager leaf department
Manager finance
Manager exports
Manager production
The personal department is headed by personnel manager who reports

directly to G.M .he looks after the areas of personnel and administration under
there is a personnel officer, welfare officer and a safety officer.
Page | 38
DEPARTMENT
OF M.B.Aheaded by G.M and assisted by circle manager, a branch
The leaf manager
manager, buyers, factory coordinator and a shift in charge.

The finance manager is assisted by a team of experienced management
and non-management staff that takes care of the finance and accounts activities
of the organization.
The export manager deals all the matters regarding the exports department
and he directly reports to the managing director.
The production manager who is headed by the G.M. is assisted by a plant

engineer and assistant plant engineer and staff of the production department.
METHODS OF PURCHASING TOBACCO:In K.S.S.P. &Co India Limited the method of purchasing of tobacco is of
various types.
When tenders raised in market, documents will be filled up by the
various companies and merchants can purchase them
They have good contracts with various merchants (mediators
between manufacturers and exporters) in reputed companies
Guntur.
Every year they were producing 1000 tons of various grades of
tobacco.
They usually do their business with the international reputed
companies like,
Page | 39
DEPARTMENT OF M.B.A
Universal
Demon
Standard commercial
The company have some direct contacts with other countries and they
directly ask them at the time of requirements.
MARKETTING CHANNELS: Normally they send samples and varieties.
At the time of requirement they send samples through countries.
Participating in exhibitions every year K.S.S.P. &Co India Limited was
taking participation in 56 years.
The people who have connection in tobacco may visit tobacco stalls
usually, even from Europe, Russia and china.
People like manufactures, dealers, bankers, merchants of tobacco may
visit the tobacco exhibitions.
The display the samples of the company and sell the samples.
ANOTHER MODE:The other mode of marketing is through business delegations of tobacco
board of central government, ministry of commerce, government of India,
Guntur. the tobacco board usually, Regularize of crop.
Register of foreigners
Fix the crop size.
1. The board explores marketing possibilities with the help of exporters.
2. Another type of business mode is tobacco trade delegations from different
countries (usually every year 5-6 delegations may takes place).
3. The tobacco delegators meet exporters and inspect all the tobacco
varieties in the company and they take what they want.
4. They get the business through reputation.
5. Customers usually approach them because of the goodwill of the
company.
MODE OF PAYMENT:-
Page | 40
DEPARTMENT
M.B.A receive payment from their buyers through LCs
ExportersOFnormally
(letters of credit).
Sometime through advance payment in terms of D.A &D.F.
Document again payment
Document against acceptance
After customers checkers in the madras port it may send to abroad.
Shipment of tobacco is through Chennai port only.
At the same time shipment of tobacco the partly/buyers send payments to
bank in the companys account.
CREDIT: Some parties asks/needs some time for payment with in certain
period from the date of bill of payment (up to 180 days).
In India there is a rule that on credit basis, the payment must be

done within 180 days from the date.
MARKET RANGE:K.S.S.P. &Co India Limited was marketing 7-10 million kilos of tobacco
every year. But the market range is not fixed. The market range depends on
supplies and demand forces
When there is demand, the company produces more.

In the tobacco field, the marketing range may be flexible based on
internationally supply and demand.
Through tobacco (leaf) is not a finished product, marketing is
flexible.
Page | 41
DEPARTMENT OF M.B.A
TOBACCO EXPORTERS IN INDIA AND COMPITITORS OF K.S.S.P.

&Co INDIA LIMITED:In India, the tobacco exporters as well as the same exporters are the
competitors of K.S.S.P. &Co India Limited.
TOBACCO EXPORTERS IN INDIA:The important tobaccos exported in our country are,
a.
b.
c.
d.
MLAP GROUP
Mittapalli group
Bommidala group
ITC and some other small companies.
In tobacco exports, ITC and out of countries (other countries) like china
comes as competitors to this company.

In which china produces 50 times more of tobacco than India.
During exporting of tobacco to other countries freight charges may be
bared by the company itself.
For door delivery some other charges may be bared by the company.
Tobacco is usually stored in warehouses, re-drying plants, threshing
plants.
MODE OF TRANSPORTATION:Generally the mode of transportation may be four types.
FOB: free on board -- the responsibility may be on the board

C & F:cost & freights-- responsibility of boat and freight
CIF :cost insurance and freight ware house insurance other
DDC: door delivery up to.
MODE OF PACKING:
Usually mode of packing is through in the form of bales and cartons.
The highest or best grade tobacco is golden yellow tobacco.
Page | 42
DEPARTMENT
OF M.B.A
Other varieties
such as black, brown and green tobacco are the lowest
grades of tobacco.
Usually farmers bring tobacco board action flat forms.
Then the manufactures and exports, dealers bid for the tobacco.
Small dealers may sell the tobacco occasionally at good rates.
Action purchasing tobacco may be send to company goo downs and
grading hall.
Then segregation of tobacco may be done by women workers in the
company.
Sometimes/ at some rare caused gambling may be done in tobacco
packing i.e., trick packing (low quality tobacco m
From that bale, the women workers usually separate the leaf.
In this company, at threshing plant, the workers separate the mid
rib(stream portion of the lamina forms the leaf).
Finally that stream becomes scrap-with that scrap bi-products like, pan
masala, ghutkas, jarda etc. may be prepared.
From recon tobacco and sheet tobacco, stream is converted and used in
cigarettes manufacturing(which is of low quality)
In this organization, tobacco processing may be done and packed in the
form of bales or cartons according to customers requirements.
FINANCE DEPARTMENT:In this department deals with,
Cash payments will be checked by cashiers.

Cash bills and credit bills may get from threshing factory engineering
department.
Concerned accounts may be generalized by the accountants and may be
sent to concerned heads.
Credit bills payments will be given in the form of cheques/D.D
Page | 43
DEPARTMENT
M.B.Amay be purchased through action platforms.
In seasonOF
tobacco
Tobacco board will rise invoices

Before purchasing they have to give bank guarantee.
The company will give payments by encase the cheques to tobacco
boards.
Page | 44
DEPARTMENT OF M.B.A
SWOT ANALYSIS
Strength
Effective communication
Online growth
Loyal customers
Strong brand equity
Strong management team
Strong financial position
Pricing
Weakness:
Diseconomies to scale
Low Research and development
No online presents
Not diversified
Opportunity
Acquisition
Financial markets(raise money through debt etc.,)
Online
Product and service expansation
Take overs
Threats:
Competition
Cheaper technology
External changes(govt,politics,taxes etc.,)
Maturing categories(products or services)
Exchange rate flexuations
Page | 45
DEPARTMENT OF M.B.A
Page | 46
DEPARTMENT OF M.B.A
CASHMANAGEMENT
Cash, the most liquid asset, is of vital importance to daily operations of business firms. While
the proportion of corporate assets held in the form of cash is very small, often between 1 and 3
percent, its efficient management is crucial to the solvency of the business because in a very
important sense cash is the focal point of funds flows in a business.
Cash is the important current asset for running the operations in the business. Cash is the basic
need to keep the business running on a continuous basis. For most corporations, both the
inflow and out flow of funds are frequently uncertain .It is therefore important for companies
to maintain a certain degree of liquidity. Cash can take a number of forms, including coin and
currency. Business analysts report that poor management is the main reason for business
failure. Poor cash management is probably the most frequent stumbling block for
entrepreneurs. Understanding the basic concepts of cash flow will help you plan for the
unforeseen eventualities that nearly every business faces
MEANING OF CASH
Cash , is the money which a firm can disburse immediately without any restriction . The term
cash includes coins, currency and cheques held by the firm , and balances in its bank accounts.
Sometimes near cash items , such as marketable securities or bank deposits , are also
included in cash .
OBJECTIVES OF CASHMANAGAEMENT
Cash management is concerned with the managing of ,
Page | 47
DEPARTMENT OF M.B.A
To find cash inflows and outflows of ML company in particularly period of time
To know about the how cash flows in with in the firm in every year.
Cash balances held by firm at a point of time by financing deficit or investing

surplus cash.
To know the source of funds and application of funds in ML company in each year.
To understand the cash management practice in LANCO INFRATECH in every year
IMPORTANCE OF CASH MANAGEMENT

CASH MANAGEMENT
Page | 48
DEPARTMENT
OF M.B.A
Cash is the important
liquid asset for the operations of the business. Cash is the basic
input needed to keep the business running on a continuous basis; it is also ultimate output
expected to be realized by selling the service or product manufacturing. Cash is the
important current asset in working capital management without this we can not perform
the transactions.
CASH & CASH FLOWS

Cash is ready money in the bank or in business. It is not inventory, it is not account
receivable, and it is not property. profit growth does not necessarily mean more cash on
hand profit is the amount of money you expect to make over a given period of time ,
while cash is what you must have on hand to keep your business running . Over time, a
companys profits are of little value if they are not accompanied by positive net cash flow,
you can spend only cash .On
credit, at time it collects its money or cash lately. In the
firm cash collection is more than cash payments the firm goes to surplus. The company
invests its surplus in profit making units.
I f cash payments more than cash collection then company
goes for, deficit .It run its
business properly it takes borrow from outsiders nothing but creditors.
POSITIVE CASH FLOW

If its cash inflow exceeds the outflows, a company has a positive cash flow. A positive
cash flow is a good sign of financial health, but is by no means the only one.
NEGATIVE CASH FLOW

Page | 49
DEPARTMENT OF M.B.A
If its cash outflow exceeds the inflow, a company has a negative cash flow. Reasons for
negative cash flow include too much or obsolete inventory and poor collections on
account receivable .If the company cant borrow additional cash at this point, it may be in
serious trouble.
MOTIVES FOR CASHMANAGEMENT

The firms need to hold cash may be attributed to the following three motives.
1. The Transactions motive
2. The Precautionary motive
3. The Speculative motive
Page | 50
DEPARTMENT OF M.B.A
TRANSACTION MOTIVE
The transaction motive requires a firm to hold cash to conduct its business in the ordinary
course. The firm needs cash primarily to make payments for purchases, wages and
salaries, other operating expenses, taxes, dividends. The need to hold cash would not arise
if there were perfect synchronization between cash receipts and payments. The transaction
motive mainly refers to holding cash to meet anticipated payments whose timing is not
perfectly matched with cash receipts.
PRECAUTIONARY MOTIVE
The precautionary motive is the need to hold cash to meet contingencies in the future. It
provides a cushion or buffer to withstand some unexpected emergency. The precautionary
amount of cash depends upon the predictability of cash flows. If cash flows can be
predicted with accuracy, less cash will be maintained for an emergency.
SPECULATIVE MOTIVE
Speculative motive relates to the holding of cash for investing
in profit making
opportunities as and when they arise. The opportunity to make profit may arise when the
security prices change .The firm will hold the cash, when it is expected that interest rates
will arise and security price will fall. Securities can be purchased when the interest rates
expected to fall: the firm will benefit by the subsequent fall in interest rates and increases
in security prices.
Page | 51
DEPARTMENT OF M.B.A
MODELS OF CASHMANAGEMENT
The cash budget of the firm indicates periods when the firm is expected to have shortage of
funds and surplus of funds. If a shortage is expected, ways and means of overcoming the
shortage must be explored. Several cash management models have added revised these issues
of split between marketable securities and cash holdings .Two of these models.
1. The Baumol model , and
2. The Miller and Orr model
BAUMOL MODEL
Page | 52
DEPARTMENT
M.B.A a model which applies the economic order quantity (EOQ)
William J.BaumolOF
proposed
concept, commonly used in inventory management, to determine the cash conversion size.
The purpose of such an analysis is to balance the income forgone when the firm
Holds cash balances against the transaction costs incurred when marketable securities are
converted in to cash
MILLER AND ORR MODEL

Expanding on the Baumol model, Millers and Orr consider a stochastic generation process for
periodic cash balances changed. As against the completely deterministic assumptions.
FUNCTIONS OF CASH MANAGEMENT

While cash server these functions, it is an idle resource which has an opportunity cost. The
liquidity provided by cash holding is at the expenses of profit sacrificed by foregoing
alternative investment opportunities. Hence the financial manger should follow below
functions.
Establish reliable forecasting and reporting systems.
Improve cash collections and disbursements , and
Achieve optimal conservation and utilization of funds
Page | 53
DEPARTMENT OF M.B.A
STRATEGIES OF CASHMANAGEMENT
The firm should evolve strategies regarding the following four facts of cash management
CASH PLANNING
Cash inflows and out flows should be planned to project cash surplus or deficit for each
period of the planning period .Cash budget prepared for this purpose
MANAGING THE CASHFLOWS

The flow of cash should be properly managed. The cash inflows should be accelerated while
as far as possible, the cash outflows should be decelerated
OPTIMUM CASHLEVEL
Page | 54
DEPARTMENT
OF M.B.A
The firm should decide
about the appropriate level of cash balance. The cost of excess cash
and danged of cash deficiency should be matched to determine the optimum level of cash
balances
INVESTING SURPLUS CASH

The surplus cash balance should be properly invested to earn profits
CASHMANAGEMENT CYCLE
Business
Operations
Cash Collections
Information
&
Control
Deficit
Borrow
Surplus
Invest
Cash Payments
In CASHMANAGEMENT CYCLE we started at business operations stage .Company sale

their products to their customers. At that time only it collected information about the daily
transactions. Company allocated the daily operations into two
Page | 55
DEPARTMENT
OF M.B.A
1. cash collections
2. cash payments
Cash collection made by company when it sold products. with that cash collections firms
goes for surplus or deficit .If it surplus then firm goes for investment in profit making
units .If it deficit it goes for borrowings Cash payments like salary, rent , operating
expenses
Cash Collection and Disbursement

Cash collection and disbursement are important concepts in the present day business world.
These processes have to be done properly so that a company can run its operations without
much difficulty and maintain some stab. The economic definition of cash includes
undeposited checks, but as we all know, an undeposited check isn't really as liquid as the same
amount of cash sitting inside your checking account. So another component of a good cash
management policy involves making sure that checks clear in a timely manner.
Accelerating Collections
The period of time between when a check is written and when it clears and is deposited is
referred to as float. The checks sent to a firm experience three different types of collection
float:
1. Mail float is the length of time that checks are en route to the firm, either through the
postal system or through some sort of electronic transfer.
2. In-house processing float is the length of time that it takes the firm to process and deposit
check payments from its customers once they've been received.
3. Availability float is the length of time necessary for a check to clear through the banking
Page | 56
DEPARTMENT OF M.B.A
system once it's been deposited.
Together, these three types of float span the entire length of time between when a customer
first sends in a payment and when the firm receives cash into its account.
Concentration banking accelerates cash collections from customers by having funds sent to
several geographically situated regional banks and then transferred to a main concentration
account in another bank. The funds can be transferred through depository transfer checks and
electronic transfers.
LOCK BOX SYSEM

The lockbox is the most widely used device in the US to speed up collections of cash. It is a
special post office box set up to intercept trade receivables payments. In Europe it is generally
not used, and other methods are substantially more commonplace
A lockbox system is a collection of geographically dispersed post office boxes, each
maintained for the firm by a bank local to the respective box. For firms with hundreds or
thousands of customers spread across a large region, the ideal situation is to have enough
locations so that no customer is more than a couple of hundred miles from one of the firm's
post office boxes. Having customers send their payments to the closest post office box, and
then having the local bank pick up and handle the payment processing several times a day, the
firm can reduce both mail float and in-house processing float.
A lockbox system reduces mailing time, because cheques are received at a
nearby post office instead of at corporate headquarters. Lockboxes also reduce the firms
processing time, because they reduce the time required for a corporation to physically handle
receivables and to deposit cheques for collection
CLEARING
The instrument o exchange Clearing for the 21st Century Act, which allows
for transmitting electronic images of checks rather than the physical paper instrument of
Page | 57
DEPARTMENT
OF M.B.A
exchange themselves,
is expected to greatly reduce the incidence of check kiting by
substantially shortening the time required for a check to be cleared from one bank to another.
CONTROLLING DISBURSEMENTS
A firm will wish to tie up as little liquidity as possible in disbursements. Firms have, therefore,
developed systems for efficiently managing the disbursement process. The general idea in
such systems is to hold in the bank no more than the minimum amount necessary to pay bills.
We discuss some approaches to accomplishing this goal next.
Zero-balance accounts
With azero-balance accountA disbursement account in which the firm maintains a zero
balance, transferring funds in from a master account only as needed to cover cheques
presented for payment. , the firm, incooperation with its bank, maintains a master account and
a set of sub-accounts. When a cheque is written or electronic payment is to be made on one of
the sub-accounts, the necessary funds are transferred in from the master account. how such a
system might work. In this case, the firm maintains two disbursement accounts, one for
suppliers and one for payroll. As is shown, if the firm does not use zero-balance accounts,
each of these accounts must have a safety stock of cash to meet unanticipated demands. If the
firm does use zero-balance accounts, it can keep one safety stock in a master account and
transfer the funds to the two subsidiary accounts as needed. The master account earns interest
at a similar rate to short-term deposits with the bank. The key is that the total amount of cash
held as a buffer is smaller under the zero-balance arrangement, which frees up cash to be used
elsewhere.
Smart Check Recovery

Smart Check Recovery, offered atno charge,* is a full-service online solution that combines
Page | 58
DEPARTMENT
OF
M.B.A and traditional collections methods to get the highest collection
the practice of both
electronic
rate on the largest percentage of dishonored checks.
CASH FORCASTING AND BUDGETING

Cash budget is the most significant device to plan for and control cash receipts and payments.
A cash budget is a summary statement of the firms expected cash inflows and outflows over a
projected time period. Cash forecasts are needed to prepare cash budgets. Cash forecasting
may be done on short or long term basis
SHORT TERM FORECASTS

It is comparatively easy to make short - term forecasts .The important functions of carefully
developed short term cash forecasts are.
To determine operating cash requirements
To anticipate short- term financing
To manage investment of surplus cash
LONG TERM CASH FORECASTING

Long - term cash forecasts are prepared to give an idea of the companys financial
requirements in the distant future .There are not as detailed as the short term forecasts are
It indicates as companys future financial needs especially for its working capital
requirements.
It helps to evaluate proposed capital projects. It pinpoints the cash required to finance
these projects as well as the cash to be generated by the companys to support them.
It helps to improve corporate planning. Long-term cash forecasts compel cash division
to plan for future and to formulate projects carefully.
Page | 59
DEPARTMENT OF M.B.A
CASH FLOW STATEMENT

The Institute of Charted Accounts of India has issued on accounting standard (AS
3) providing details of now the cash flow statement should be prepared.
MEANING OF CASHFLOW
The cash flow statement provides information about historical changes in cash and cash
equalents. Cash flow classified in to 3 categories.
1. Operating activities
2. Investing activities
3. Financing activities
OPERATING ACTIVITIES
In operating activities cash flows arising from the purchase and sale of dealing or trading in
securities or cash advances and loans made by financial enterprise are usually classified as
operating activities. In this we can also slow the changes in current assets and current
liabilities
INVESTING ACTIVITIES
In investing activities cash flow arising from sale and purchase of fixed assets, sale and
purchase of investment
Page | 60
DEPARTMENT
OF M.B.A
FINANCING ACTIVITIES
Financing activities are activities that result in the size and composition of the owners capital
and borrowing of the enterprise. Cash proceeds from issuing of shares, debentures, loans and
share premium and repayment of long term debt, additional loans.
CASH BUDGET
Cash budget will serve its purpose only if the firm can accelerate its collections and postpone
its payments within allowed limits .The main concerns in collections are;
To abstain payment from customers within the credit period ,and
To minimize the time between customers pays the bill and the time cheques
Once the cash budget has been prepared and appropriate net cash flow established, the
financial manager should ensure that there does not exist significant deviation between
projected cash flow and actual cash flow
Page | 61
DEPARTMENT OF M.B.A
CASH FLOWSTATEMENT FOR THE YEAR 31/3/2011

S.NO
A.
Particulars
31/3/2011
Cash flow from operating activities

Net profit before tax &prior period adjustments
Adjustments for
Depreciation
Interest paid
Interest received
Income from investments
Guarantee commission received
Profit/loss on forward contracts
Profit/loss on foreign exchange fluctuations
Loss on sale of fixed assets
Operating profit before working
.capitalchanges
Adjustments for working .capital changes
(Increase) / decrease in sundry debtors
(Increase) / decrease in inventories
(Increase) / decrease in other current assets
(Increase) / decrease in loans & advances
(Increase) / decrease in current liabilities and
provisions
Cash generated from operating activities-A
127756648
Cash flow from investing activities

Purchase of fixed assets
Purchase of investments
Interest received
Sale of fixed assets
Net cash from investing activities-B
Page | 62
120583786
36827704
43424478
(7605069)
(166933)
(154611)
(3453005)
(32950391)
64671
163743491
38314867
46543858
(2919473)
(325306)
(12986303)
79251867
268463295
(106565340)
(60651660)
55160667
(14494325)
4555505
(3645471)
7122240
(2251933)
9891623
Direct Tax paid

I.T refund
Net cash from operating activities-A
B.
31/3/2012
133908185
(17378755)
170041151
(46787417)
17628287
104749055
(64641424)
105399729
(9448956)
7605069
154611
166933
3453005
860286
2790948
(55390710)
2919473
325306
12986303
224082
(38935546)
DEPARTMENT OF M.B.A
Cash flowfrom financing activities
Borrowings made during the year
C.
Repayments
Interest paid
Exchange fluctuations
Net cash from financing activities
D.
Net increase/decrease in cash &Cash

equivalents(A+B+C)
Cash &cash equivalents at the beginning of the
period
Cash &cash equivalents at the end of the period
144302149
(369738426)
(43424478)
32950391
(235910363)
653959987
(512512335)
(46543858)
(79251867)
15651927
(128370360)
82116108
156007573
27637213
73891461
156007573
INTERPRETATION:
Net cash from operating activities decreased from105399729 of 2011 to 104749055 of
2012.Net cash from investing activities also increased from (38935546) of 2011 to 2790948of
2012.Net cash from financing activities decreased 15651927 of 2011 to (235910363) of 2012.
in the 2011-12 cash inflows are decreased than the cash out flows
TABLE SHOWING CASH FLOWS FOR THE YEAR 31/3/2012

SNO ACTIVITIES NAMES
CASH INFLOW
Page | 63
CASH OUTFLOOW
DEPARTMENT OF M.B.A
OPERATING ACTIVITIES 19,76,82,766
30,24,31,823
94,48,956
FINANCING ACTIVITIES 17,72,52,540
1,22,39,904
41,31,62,904
GRAPHICAL REPRESENTATION OF CASH FLOWS FOR THE

YEAR
31/3/2012
45
40
35
30
25
20
15
Cash inflows
10
Column1
5
0
Cash flow statement for the year 31-3-2013

S.no.
Particulars
31-3-2013
Page | 64
31-3-2012
DEPARTMENT
A.
Cash OF
flowM.B.A
from operating activities
Net profit before tax &prior period
adjustments
Adjustments for
Depreciation
Interest paid
Interest received
Operating profit before working.
capitalchanges
Adjustments for working. capital changes
provisions
Cash generated from operating activities
B.
C.
Direct Tax paid

I.T refund
Interest received
Sale of fixed assets
Borrowings made during the year
Repayments
Interest paid
D.
Page | 65
116010828
127756648
35879139
45917183
(987759)
(243614)
(352884)
2986898
(3767621)
36827704
43424478
(7605069)
(166933)
(154611)
(3453005)
(32950391)
64671
195394224
163743491
(47946)
(70861116)
(106565340)
96673523
55160667
4302920
4555505
1258216
7122240
(27827838)
9891623
198939929
133908185
(24388600)
174551329
(46787417)
17628287
104749055
(152403121)
(1440000)
987759
352884
243614
(2986898)
1789250
(9448956)
7605069
154611
166933
3453005
860286
(153456512)
2790948
406446384
(358634427)
(45917183)
3767621
144302149
(369738426)
(43424478)
32950391
5662395
(235910363)
26757212
(128370360)
DEPARTMENT
OF M.B.A
equivalents(A+B+C)
27637213
156007573
Cash &cash equivalents at the beginning of

the period
Cash &cash equivalents at the end of the
period
54394425
27637213
INTERPRETATION:
Net cash from operating activities increased 104749055 of 2012 to 174551329of 2013.Net
cash from investing activities decreased 2790948 of 2012 to( 153456512) of 2013.Net cash
from financing activities increased (235910363) of 2012 to 5662395 of 2013.In the 2012-13
cash inflows are increased than the cash out flows.
TABLE SHOWINGCASH FLOWS FOR THE YEAR 31/3/2013
CASH INFLOW CASH OUTFLOOW
30,30,28,707
33,73,507
15,68,30,019
41,02,14,005
40,45,51,610
Page | 66
DEPARTMENT OF M.B.A
GRAPHICAL REPRESENTATION OF CASH FLOWS FOR THE

YEAR
31/3/2013
45
40
35
30
25
20
15
Cash inflows
10
Column1
5
0
Cash flow statement for the year 31-3-2014

S.no
Particulars
31-3-2014
Page | 67
31-3-2013
DEPARTMENT
A.
Cash OF
flowM.B.A
from operating activities
adjustments
Adjustments for
Depreciation
Interest paid
Interest received
Finance costs
Divided income
Operating profit before working. capital
changes
(Increase) / decrease in trade payables
(Increase) / decrease in short term borrowings
provisions
Cash generated from operating activities-A
Direct Tax paid
B.
Interest received
Dividend income
Increase in deposits
C.
D.

Long term Borrowings made during the year
Repayments
Interest paid
Dividend paid
equivalents(A+B+C)
Page | 68
5331461
116010828
55482340
35879139
45917183
(5873694)
(987759)
(243614)
(353819)
(352884)
2986898
33744458
(3767621)
47403840
(403813)
(195190) (47946)
135135583
195394224
56188140
(70861116)
(25052093)
96673523
8876484
4302920
4472029
1258216 68546898
(13290688)
(27827838)
(73724681)
198939929
161151672 (24388600)
(22039847)
174551329
139111825
(152403121)
(68274126)
(1440000)
987759
5873694
352884
353819
243614
403813
(2986898)
1789250
(35800)
(153456512)
(61678600)
406446384
(32324977) (358634427)
(45917183)
(47403840)
(33744458) 3767621
(113473275)
5662395
36040050
26757212
DEPARTMENT
OF M.B.A
Cash &cash
equivalents at the beginning of
the period
period
54394425
27637213
18354375
54394425
INTERPRETATION:
Net cash from operating activities decreased 174551329 of 2013 to 139111825 of 2014 .Net
cash from investing activities also increased (153456512) of 2013 to (61678600) of 2014.Net
cash from financing activities decreased 5662395 of 2013 to (113473275) of 2014.In the
2013-14 cash inflows are decreased than the cash out flows.
Page | 69
DEPARTMENT
OF M.B.A
SNO ACTIVITIES
NAMES
28,00,45,650
66,31,326
6,83,09,926
00
11,34,73,275
GRAPHICAL REPRESENTATION OF CASHFLOWS FOR THE YEAR

31/3/2014
35
30
25
20
15
Cash inflows
10
Column1
5
0
CASH FLOW STATEMENT FOR THE YEAR 31-3-2015

SNO
A.
Particulars
31-3-2015
Cash flow from operating activities

adjustments
Adjustments for
Page | 70
26595030
31-3-2014
5331461
DEPARTMENT
OF M.B.A
Depreciation
Interest received
Finance costs
Divided income
Operating profit before working. capital
changes
(Increase) / decrease in trade payables
(Increase) / decrease in short term
borrowings
(Increase) / decrease in current liabilities
and provisions
Cash generated from operating activitiesDirect Tax paid
I.T refund
B.
Purchase of fixed asset
Interest received
Dividend income
Increase in deposits
C.

Cash flow from financing activities
Long term Borrowings made during the
year
Interest paid
equivalents(A+B+C)
Cash &cash equivalents at the beginning of
the period
period
Page | 71
55060911
(1689622)
(352884)
(173188)
17077681
37528005
(27485)(203275)
55482340
(5873694)
(353819)
33744458
47403840
(403813)
(195190)
133815173
(105735429)
220132838
(5597600)
(36525840)
8802622
(47743163)
135135583
56188140
(25052093)
8876484
4472029
68546898
(13290688)
(15412673)
151735928
(5878300)
5735100
151592728
(73724681)
161151672
(22039847)
139111825
(26394228)
1571940
1689622
352884
27485
173188
(421931)
(68274126)
5873694
353819
403813
(35800)
(23001040)
(61678600)
(52697683)
(32324977)
(37528005)
(47403840)
(17077681)
(33744458)
(107303369)
(113473275)
2128831
9
36040050
18354375
54394425
39642694
18354375
DEPARTMENT OF M.B.A
INTERPRETATION:
net cash from operating activitiesincreased139111825of 2014 to 151592728 of 2015
net cash from investing activities also increased (61678600) of 2014 to (23001040)of 2015
net cash from financing activities increased (113473275) of 2014 to (107303369) of 2015.
in the 2014-15 cash inflows are decreased than the cash out flows.

37,09,32,187
38,15,119
2,68,16,159
00
10,73,03,369
Page | 72
DEPARTMENT
M.B.A
GRAPHICAL OF
REPRESENTATION
OF CASH FLOWS FOR THE
YEAR
31/3/2015
40
35
30
25
20
15
Cash inflows
10
Column1
5
0
GRAPHICAL REPRESENTATION FROM 2011-2015:
Page | 73
DEPARTMENT OF M.B.A
4
2
0
-2
2011-12
2012-13
2013-14
2014-15
-4
Column2
-6
-8
-10
-12
-14
INTERPRETATION FOR ABOVE GRAPH:

2011-12 net cash is in Rs(12,83,70,360)
2012-13 net cash is in Rs 2,67,57,212
2013-14 net cash is in Rs3,60,40,050
2014-15 net cash isin Rs 2,12,88,319
In the 2011-12 year cash flow showing the negative cash flows but in the year 2012-13 is
showing the positive cash flows and also 2013-14 shows the positive cash flowsOverall cash
flow position of the company is not satisfactory. Even though it got positive cash flow in
2013&2014
Cash ratios in the year of 2011

1) Current ratio or working capital ratio (in rupees):
=
current assets
Page | 74
DEPARTMENT OF M.B.A
Current liabilities
=
=
817001823
125982205
6.48:1
2) Quick ratio
= Quick assets
Current liabilities
Quick assets = current assets (stock + prepaid expenses)
=
475100955
135873828
3.50:1
3) Absolute liquid ratio

= Absolute liquid assets
Current liabilities
Absolute liquid assets=cash+ bank balance + marketable securities
=
=
375863173
135873828
2.77:2
INTERPRETATION:
The current ratio of the company is, 6.48: 1 for the year 2011, & the quick ratio of the
company is 3.50:1 for the year 2011.which represents a satisfactory liquidity position. It might
be more beneficial to the company if it might have transferred certain liquid funds to long
term investments because the ideal current ratio of 2:1 and ideal quick ratio of 1:1
Page | 75
DEPARTMENT OF M.B.A

=
=
=
current assets
Current liabilities
591122166
135873828
4.35:1
2) Quick ratio
Page | 76
DEPARTMENT OF M.B.A = Quick assets

Current liabilities
=
304375965
135873828
2.24:1

Current liabilities
Absolute liquid assets=cash+bank balance+ marketable securities
=
=
105701083
135873828
0.77:1
INTERPRETATION:
The current ratio of the company is. 4.35: 1 for the year 2012, & Quick ratio is 2.24:1 for the
year 2012 .which represents a satisfactory liquidity position. It might be more beneficial to the
company if it might have transferred certain liquid funds to long term investments because the
ideal current ratio of 2:1 and ideal quick ratio of 1: 1
Page | 77
DEPARTMENT OF M.B.A

=
=
=
current assets
Current liabilities
583634211
108045990
5.40:1
2) Quick ratio
= Quick assets
Current liabilities
=
226026894
108045990
Page | 78
DEPARTMENT OF M.B.A
=
2.09:1

Current liabilities
=
=
125283751
108045990
1.16:2
INTERPRETATION:
The current ratioof the company is, 5.40: 1 for the year 2013,& the quick ratio of the company
for the year 2013 is 2.09:1.Which represents a satisfactory liquidity position It might be more
beneficial to the company if it might have transferred certain liquid funds to long term
investments because the ideal current ratio of 2:1 and ideal quick ratio of 1: 1
Page | 79
DEPARTMENT OF M.B.A

=
=
=
current assets
Current liabilities
509895694
393499008
1.30:1
2) Quick ratio
= Quick assets
Current liabilities
=
127236284
393499008
0.32:1

Current liabilities
Page | 80
DEPARTMENT
OFassets=cash+
M.B.A
Absolute liquid
bank balance + marketable securities
=
=
23137698
393499008
0.059:1
INTERPRETATION:
The current ratio of the company is, 1.30: 1 for the year 2014, & quick ratio of the company is
0.32:1.which represents not a satisfactory liquidity position because,the ideal current ratio of
2:1 and ideal quick ratio of 1:1
Page | 81
DEPARTMENT OF M.B.A

=
=
=
current assets
Current liabilities
433250892
321540550
1.35:1
2) Quick ratio
= Quick assets
Current liabilities
=
270724320
321540550
0.84:1

Current liabilities
=
=
29274493
321540550
0.091:1
Page | 82
DEPARTMENT OF M.B.A
INTERPRETATION:
The current ratio of the company is, 1.35: 1 for the year 2015, & the quick ratio of the
company is 0.84:1 .which represents not a satisfactory liquidity position. Because,the ideal
current ratio of 2:1 and ideal quick ratio of 1: 1
TABLE PRESENTATION OF RATIOS
SN
O
YEAR
CURRENT RATIO
QUICK RATIO
ABSOIUTE LIQUID RATIO
2011
6.48:1
3.50:1
2.77:2
2012
4.35:1
2.24:1
0.77:1
2013
5.40:1
2.09:1
1.16:1
2014
1.30:1
0.32:1
0.059:1
2015
1.35:1
0.84:1
0.091:1
Page | 83
DEPARTMENT OF M.B.A
FINDINGS
In 2012 operating activities and financing activities are decreased but investing
activities are increased .The net cash flow decreased.
In 2013 operating activities& financial activitiesare increased but investing activities

are decreased . Net cash flow is increased.
In 2014 operating and financing activities are decreased but investing activities are
increased.Net cash flow is increased.
In 2015 operating activities are decreased, financing and investing activities are
increased.Net cash flow is increased.
In 2012 the cash out flows were recorded by 21.04 cores .which shows very clearly
that there is a shortage of funds in that year 2012 up to the amount of 12.83 cores
In 2013 the company has maintained the positive growth .which is recorded as
2.67crores
In 2014 the Kssp & Co growth is Rs.0.9282 cores net increased when compared to the
2013.
In 2016 the company has not recorded any growth; hence it is in good position.
The current ratio is fluctuating in all the years of the study from 2011 to 2015.it has
recorded very low ratios of 1.30:1,1.35:1 in the years 2014,2015 respectively.
The quick ratio is keep on decreasing from one year to another year. it was recorded
very low ratios of 0.32:1,0.84:1 in the years 2014, 2015 respectively
The absolute liquidity ratios are keep on fluctuating from 2009 onwards. It was
recorded very low ratios of 0.77:1,0.059:1,0.091:1 in the years 2012,2014 &2015
respectively
Page | 84
DEPARTMENT OF M.B.A
SUGGESTIONS
Concentrate on 2012 financial activities because it incurred loss in that financial year.
It mostly affected the other activities operating and financing activities.
In 2013 the investing activities incurred the loss it mostly affected the
operating&financing activities.
In 2014 mostly concentrate on the operating activities & financial activities. It mostly
affected the investing activities.
In 2015 the operating and investing activities incurred the loss .It mostly affected the
financing activities.
It is suggested to the company that current ratios in the years 2014, 2015 are very low,
so the company has to concentrate more on improving its current assets position
Page | 85
DEPARTMENT OF M.B.A
CONCLUSION
The project study includes a keen analysis of Cash Management with the K s Subbiah Pillai &
Co . To understand the cash management in K s Subbiah Pillai & Co . ltd, two parameters one
Cash Flow Statement and another Ratio Analysis are taken. The study includes even a deep
understanding of complete Maddilakshmaiah group, specialized revision on Maddi
lakshmaiah &co ltd
I want to conclude that financial position of the company is satisfactory .It maintaining the
good cash managing system .It managing the cash inflow and cash outflows very good
manner.
BIBILOGRAPHY
Page | 86
DEPARTMENT OF M.B.A
BOOK NAME
FINANCIAL
MANAGEMENT
NAME OF
THE
AUTHOR
M.Y.Khan &Jain
PUBLISHER
TATA Mc.Graw Hill
FINANCIAL
MANAGEMENT
Prasanna chandra
TATA Mc.Graw Hill
FINANCIAL
MANAGEMENT
I.M.Panedey
Vikas publishers
INTERNET SITES
WWW.ML&CO LTD.COM
WWW.TOBACO INDUSTRY.COM
Page | 87

Financial Management: Department of M.B.A

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Financial Management: Department of M.B.A

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DEPARTMENT OF M.B.

Financial Decision Areas

Sources and cost of funds

Other Related disciplines

Major Areas of Finance Functions:

andFixed assets and to make payment for operating expenses in

NEED AND IMPORTANCE OF THE STUDY

SCOPE OF THE STUDY

Managing the cash flows within the firm

OBJECTIVES OF THE STIDY

1. To know the working capital requirements of the firm

3. To know the liquidity position of the firm

4. To know the current ,liquidity, quick ratios

6. To know the long term and short term cash requirements

THE DATA INCLUDES

LIMITATIONS OF THE STUDY

The conclusions may be generalized to the extent of this limitation

The study restricted to limited period of time.

boys of the American west.

Micronite filter, which contained asbestos! This was fortunately discontinued

During the 1980s there were many law suites failed

TABLE NO: 2.1

The consumption is linked with the habits of the people; the

TABLE NO: 2.2

K S Subbiah Pillai Company India Limited is a Public Company

NATURE OF ACTIVITY: This factory produces good quality tobacco

The production capacity per each day is one lakh 20 tonnes.

THE PRODUCTS OF THE K.S.S.P. &Co COMPANY AND THEIR MAIN

Karnataka light soil-my sore :

and suitability to blend well any tobacco.

Kurnool and Telangana(NATU):

Eluru (NATU TOBACCO):

Cigar wrapper tobacco:

Cigar filter tobacco:

To earn a reasonable return on investment

To create a strong research and development in the field of tobacco and

To maximise utilisation of the existing facilities in order to improve

To work towards achievement of self-reliance in the field of tobacco,

To import training, conduct seminars, workshops and educational courses

To employ experts to investigate and examine in to the condition,

To carry on all kinds of agency business.

To improve, manage, work, develop, lease, mortgage, abandon or

To maintain vicinity of suppliers through K.S.S.P. &Co tobacco packing

ORGANIZATION STRUCTURE:Departmentalisation of function:- the group has following different

b) It ties up with Indian strongest cigarette manufacturing company,

K.S.S.P. &Co company was exporting tobacco to Russia, Europe, Middle

K.S.S.P. &Co a pioneer in Indian unmanufactured tobacco industry has

K.S.S.P. &Co India Limited was set up at chilakaluripet, a village in A.P

Expecting CAPOL which is engaged in edible oils, all are engaged in

basis with U.K. based commodities company for supply of agro

The company (CAPOL) has been awarded may commendation led by

The company (CAPOL) received GOLD UDYOGA PATRA award for

The company got II best sport persons in companies in Prakasam

It never failed in meeting the scheduled repayments of loans with the

From the date of its incorporation 1977, tice date, un interruptedly

It was the first company to import tobacco and export tobacco.

buildings in Bangalore, Chennai and Hyderabad in the coming five years

The company is also contemplating for 100% tobacco joint venture

The finance manager is associated by a team of experienced management

M.L.A.P towers is built with the intention of lease to corporate, it covers

The group has ware housing complex at Sanatnagar.

India Limited) is under the complete

administrative control of the managing director and he is reported by the director