Karnataka Law Society’s

Gogte Institute of Technology

(Approved by AICTE, Permanently Affiliated and Autonomous Institution under VTU
Belagavi)

Department of MBA

“JnanaGanga”, Udyambag,Belagavi–590008,Karnataka,India

Project Report
on
CASE STUDIES

Submitted-To : Dr. Prasad Kulkarni

S.NO NAME OF STUDENT DIVISION USN NO

1. Abhijeet Patil A 2GI20BA001
2 Abhishek singh Rajpurohit A 2GI20BA002
3. Alihaanjum Nadaf A 2GI20BA009
4. Nabeel Sajid Ali Jamkhandi A 2GI20BA060
5. Prakash R Shapurkar B 2GI20BA071
6. Saiel Pawaskar B 2GI20BA084
7. Sudeer Hangi B 2GI20BA103
8. Suprit Naik B 2GI20BA108

Subject : Operation Management

Subject-Code : 20MBA302
 TABLE CONTENTS
S.N
NAME OF CASE STUDIES PAGE NO
O
1. Panchvati Handloom Development Corporation Limited 01 – 03

2. Madras Refineries Limited 04 – 05

3. Gambhirpura Collective Farming Society 06 - 07

4. Reliable Texamill Limited 08 -15

5 Biotech pharma Limited 16-18

 Panchvati Handloom Development Corporation Limited

Introduction: -

The Panchvati Handloom Development Corporation The main objective of the

corporation was to promote aid and assist the rehabilitation, growth and
development of the handloom industry in general and, in particular sector.

Industry started some activities Intensive Handloom, Export oriented pilot

production, Raw material depots for procurement.

Questions & Solutions

1) Identify the facilitating factors you see in this organization in relation to its
structure and processes that help in achieving its objectives.

Answer-

1. Staff Flexibility: -

In this organization staff flexibility is company’s strength because all the

employees are comfortable in their work. Also, company fulfilled their needs
and employees are happy with company’s facilities, responses company has
already staff excess. Even with present overheads they can achieve their goals
in next two years.

2. Organization Structure: -

Organization structure is good and well define also board of directors. They
complete their task on time if they achieve their goal organization give
increment to them for further place and there is no hierarchical order for
promotions. And there no fixed number of post project inspector can be trained
by project administrators.

3. Happy Customer: -

Customers are happy because company completed their order on time and they
give good service to the customers. Employees also well experience they

Department of MBA, KLS Gogte Institute of Technology, Belagavi 1

complete their task given time. Company’s quality of the product also good and
company use good row material for the final product that is the reason
customers are happy for company’s product and services.

2) What are the possible inhibiting factors?

Answer: -

 The corporation fund it difficult to expand its activities for paucity of funds
because they have to complete government order on time and organisation
has some expansion problem because they don’t have more money company
have to manage their fund, they decided corporation fund won’t be use for
expansion or other purpose.
 Company has competitors and they well experienced also they come up with
new idea in product also new variety of product according to customers need
and expectations. Competitors has new technology so this company has to
work on new technology and customers need and expectations.

3) Is there a need for changing the organizational structure of this

Corporation?

If there is, why, and how would you reorganise? If there is no need, what are
then mechanisms you would suggest to ensure the continuance of some; of the
positive aspects you notice and to prevent the possible problems?

Answer: - Organization No need to change their organization structure.

Organization has to take feedback from employees and analyse according to

changes of organization structure. And also, company don’t have role conflict
problem company’s employee work any post or any role because any kind of
work they do also managing director need to know employees’ feedback and
what are the problems they are facing. In organization structure all the board of
directors well experienced and employee also happy with their response.
Department of MBA, KLS Gogte Institute of Technology, Belagavi 2
Company has to change their work process for board of directors because they
need to all the middle level management have to do all the work any unexpected
situation.

Company’s employees are flexible they do work in any field in the organization
and technical officers also well-educated they have well experience in technical
field.

4) Predict some of the role dynamics that are likely to emerge as the
Corporation's activities expand.

Answer: -

 Company got order from central government for 10000 looms and this
ambitious target to company and company said government targets for sake
of numbers and company think about expansion of their corporation
activities. The corporation fund also difficult to expand their activities for
paucity of funds.
 Company has to focus on existing weavers’ company already covered
number of weavers but sustain and development is important for company
point of view. And company had expanded their weavers few years later.
Company has to meet more government orders this is useful for organization
expansion and manage their organization structure and its also help to
compete the competitors.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 3

 Madras Refineries Limited

Introduction

This case describes the inventory practices used by Madras Refineries with
respect to crude and finished products (diesel, kerosene, aviation turbine fuel,
etc.) inventory. The steps taken for managing inventory of crude are: continuous
contact with suppliers, predicting availability of crude over a planning cycle,
and taking corrective action in time. Close contact with customers, improved
logistics, and careful monitoring of refinery operations have resulted in low
finished? goods inventory. Willingness to take reasonable risks to keep
inventory low is derived from the overall corporate culture. The incentives for
holding low inventories results from the government's pricing policies and plant
design. The case leads to identification of the steps needed for inventory
management ?? inventory control by comparison of desired and actual levels of
inventory; cost? effective management of factors leading to inventory; and
developing a low inventory culture. The case also serves as a basis in
motivating just in time inventory practices.

Problems: -

 Although a norm of about 45 days of inventory is generally used for this

industry, it is very difficult to fix any specific norm as a variety of
considerations dictate the inventory levels desired.
 Considering the high cost of crude oil, it is not advisable to store excessive
amounts of crude. On the other hand, low levels of inventory would affect
operations.
 On the other hand, storage capacity provides a limit to the maximum
inventory one can hold. Should a tanker arrive and enough storage capacity
is not available to empty the tanker, it will have to wait and demurrage
charges are high.
Department of MBA, KLS Gogte Institute of Technology, Belagavi 4
 Several kinds of changes occur from the schedule - delays at loading and
unloading ports caused by non-availability of berth, improper documents and
weather conditions; delays in sailing of the ship.
 A tanker may also be held up at intermediate ports because of lack of storage
capacity in the crude oil tanks of the refineries.
 By the general standards of industry, the inventory levels at MRL are low.
 Utility failure is unpredictable and is usually only partial. Such partial
failures, for instance failure of one of the boilers, are estimated to be of 25%
to 50% intensity and may occur about 5 to 6 times a year. It usually takes
somewhere between 3 days to 1 week to restore the total supply of utilities
when a failure occurs.

Solutions: -

 It is very difficult to fix inventory level but the company must set the
inventory level with some fixed inventory because without the inventory the
production will vary and its affect the company profit.
 The MRL company search the alternative to store the crude oil. The
company must set the reordering level (RD) for the inventory when the
inventory storage is good the operations will run in smooth condition.
 The company is paying more charges for waiting for tankers without that,
The MRL will increase its storage capacity with fixing empty tankers in the
plant.
 For several kinds of changes happen in schedule is common but the company
must ready with alternative plan with future analyses.
 The refineries will increase its storage capacity with fixing empty tankers in
the refineries.
 The MRL have to increase its inventory level with standard of industry.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 5

 The MRL install the MIS system that can intimate or remind them that
which boilers need to restores with the time of 4 years.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 6

 Gambhirpura Collective Farming Society

Problems

1. Narendrabhai has no experience of running any type of corporation credit,

marketing, or farming
2. The area is near to river banks which flows through kaira district threatened
with the floods
3. Fertile of the crust of the soil is totally collapsed
4. 90 present of the farmer's belongs to Baraiya community all the members
are illiterate and tradition bond, they don’t have no experience of working in
large groups
5. There was bickering within the groups as well as among the groups
6. Theft and illegal trespass are happening in the plot area
7. Discipline of the society was virtually disintegrated by some of the members
due to thay were taking personal advantages of resources provided by the
society

Solution

1. Government granted a plot of 280 acres of land to the farmers

2. Organisation farmers in collective forming society was considered that to be
much better alternative as they would be able to avoid the account scale and
could manually benefits from the collective action
3. Divide the society members in groups big on the religious from Wales the
members can come
4. Availability of land, in relation to the number of members, is so small that
until and unless it can be worked vary intensively, the output will be meagre
from cultivation land
5. Intensive agriculture, and particularly for multiple cropping, the first and
foremost Need is assured irrigation and that means more investment.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 7

6. There is also a need to go in for a high value crop, like tobacco, so that larger
income Can accrue from the same land.
7. Since most of the members are subsistence farmers, they will not be able to
go in for Commercial crops until and unless the supply of the staple food
grain is assured to them.
8. For growing commercial crops, the requirement of cash inputs is very large
and timely availability of modern inputs, particularly fertilisers, has to be
ensured.
9. The problems of draught power have to be resolved.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 8

 Reliable Texamill Limited

Company Profile

 CMD of Reliable Texamill Ltd. – Mr. Shyam Lal

 It manufactures synthetic blended yarn which is a raw material for other

textile weaving mills and also for handlooms and power looms.

 The company is situated in an industrially less developed area in Northern

state.

 The synthetic yarn originates with the mixing up of the different fibres i.e.,
acrylic. Polyester and Viscose as per the blend proposed to be manufactured.

COMPANY BACKGROUND

 The company has licensed capacity of 80000 spindles and existing installed
capacity of 26390 spindles (this includes 6210 spindles added during FY
1981-82).

 The average capacity utilization of the company was 81% during FY 1980-
81 and 85% during FY 1981-82.

 In the year 1979-80, the company could generate net sales of Rs. 191.13
lakh, and incurred a net loss of Rs. 57.11 Lakh. The acute power shortage
was the dominant reason.

 RTL has since been able to increase its sales to Rs. 973.32 Lakh in 1980-81
and to Rs. 1,203.61 Lakh in 1981-82 as against the estimated sales of Rs.
1,767.55 Lakh. It produced 1,315 tons of yarn in 1981-82 against 1,182 tons
during the previous year.

 The management of RTL has distributed the lower actual sales to the
sluggish market conditions that prevailed during the second half of the year

Department of MBA, KLS Gogte Institute of Technology, Belagavi 9

 1981-82, forcing the company to keep its production at low level, and also to
a certain extent due to the company manufacturing substantial quantity of
yarn of lesser counts and blends of lower value to suit the market conditions.

 After incurring a loss in the first year, the company made a net profit before
depreciation of Rs. 32.42 Lakh in 1981-82. Power cuts, high input costs and
increased administrative expenses on account of expansion resulted in poor
profitability.

 RTL has not so far paid any tax and dividends. Its tax Liability is expected to
be nil for quite some time as it enjoys tax benefits being a new unit located
in an industrially less developed area.

PRODUCTION FACILITIES

 The company’s existing production facilities are considered adequate for

operating the spinning mills at the enhanced installed capacity.

 The production process for obtaining the main product, viz... The synthetic
yarn, originates with the mixing up of the different fibers i.e. acrylic,
polyester and viscose as the blend proposed to be manufactured.

 The annual consumption of these fibers generally depends on the product

mix manufactured during the particular year; the actual consumption during
the years 1980-81 and 1981-82 being about 1,973 tons and 2,303 tons,
valued respectively at Rs. 713.11 Lakh and Rs.902.30 Lakh.

 Because of the frequent power cuts, the company built up adequate captive
power generating capacity by installing one more set of 860 kVA diesel
power generator.

 RTL is now planning to replace two sets of 250 kVA by the purchase of one
imported SKODA set of 869 kVA at a cost of Rs. 47.70. The new set is

Department of MBA, KLS Gogte Institute of Technology, Belagavi 10

 expected to be more economical from the point of view of diesel
consumption and usage for longer period.

Competition and Selling

 The company’s end products cater to the needs of large and medium scale
manufactures of fabrics and also handlooms and power looms

 The major accounting, for 80-85 percent of sales.

 The remaining 15-20 percent is sold to small dealers and traders.

 About 65 percent of the company’s sales are being affected on credit terms
ranging from 45 to 60 days depending on market conditions.

 Its four branches located in different parts of the country manage the selling
operations of the company.

 The company has been finding it difficult to realize its dues within the
normal credit period allowed to customers.

 The company however, allows a discount ranging between 2 to 2 and half

per cent for sales on demand/cash basis.

Expansion

 After starting commercial production in 1979 it had planned for installation

of 20,000 additional spindles

 Since the company incurred a loss in the very first year, the company
attempted a modest expansion programme involving installation of
additional 6,210 spindles during 1981-08

 The expansion programme was completed with a capital expenditure of

about Rs.276 lakhs against the estimated of Rs.253 lakhs

Department of MBA, KLS Gogte Institute of Technology, Belagavi 11

FUTURE PROSPECTS

 The prices of the basic raw material, viz., viscose/polyester fibers, are lower
in the international market than in India.

 While the prices of viscose/polyester fibers have increased substantially

during the last 2 years i.e., 1980-81 and 1981-82, the prices of RTL’s end
products have, more or less, remained at the same level. The company has
not been able to absorb in the selling prices, the increased cost of inputs.

 With the consumer preference during the recent years having shifted to
blended fabrics and the company’s products being of good quality and well
accepted in the market.

 RTL produced 1182 tons and 1315 tons of yarn during the years 1980-81
and 1981-82 resp.

 In 1982-83, it has planned production of 1758 tones.

 RTL’s production plan for 1982-83 has been devised keeping in view the
changes in the market conditions and other factors.

 RTL has planned to manufacture more quantities of yarn in blends of higher

value during the period 1982-83. Those blends are expected to be more
acceptable in the market.

 The company has projected its energy costs at about 3.4 % of the total cost
of production. The other expenses have been estimated in line with the past
experience.

 RTL had depended on trade credit for meeting its working capital needs and
the trade credits forms about 1/3rd of the current liabilities.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 12

 The normal credit period allowed by the suppliers is 45 days.

 In the past, creditors did not object to RTL’s stretching of payment to them.

 In view of the credit squeeze, they are likely to pressurize hard for early
payment of dues.

 RTL’s performance and financing of its operations.

 In the year 1979-1980, The Company has faced a Net loss of RS.57.11 lakh.

 This loss is due to power cuts and teething troubles.

 In the year 1980-81 the company has generated a Net profit of Rs.24.48 lakh.

 This increase in profits is due to enhanced capacity of the spindles, Effective

usage of Raw materials.

 RTL is received in the market and is supposed to enjoy a premium over the
yarn manufactured by other leading manufacturer in the country.

 Problem of Company managed its working capital in the past.

 RTL has dependent on quiet substantially on trade creditors for meeting its
working capital need.

 Trade credit forms one third of the current liability. (In 1981, 32% is the
trade creditors in total current liabilities. Again in 1982 it is 30%. But they
projected in 1983 the percentage should decrease to 8%.)

 About 65% of the company’s sale are being affected on credit terms ranging
from 45-60 days depending on the market conditions.

 The company is allowing 2- 2.5 % discount for sales on demand or cash

basis.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 13

 The normal credit period allowed by the suppliers is 45 days.

 However, a discount of 2 % for payments within 15 days of the purchase

date is allowed.

 Refer Excel sheet for further Calculations.

Working Capital Calculations

Working Capital = Current Assets-Current Liabilities
Year 1981 1982 1983
Current Assets 580.03 757.47 913.59
Current Liabilities 625.95 805.78 866.16
Working Capital -45.92 -48.31 47.43

Debt Turnover Ratio

Debt Turnover Ratio = Net Sales/ Avg Receivables
Year 1981 1982 1983
Net Sales 973.32 1208.61 2185.94
Average receivables 293.25 269.48 303.19
Debt Turnover Ratio 3.31907928 4.48497106 7.20980243

Average payable period = 365/ Debt Turnover Ratio

Year 1981 1982 1983
Average payable period 109.970256 81.3829109 50.6255204

Creditor Turnover ratio

Creditor Turnover ratio = Net Purchases/ Avg Payables
Year 1981 1982 1983
Net Purchase 685.94 933.67 1649.36

Department of MBA, KLS Gogte Institute of Technology, Belagavi 14

 Average Payable 200.94 239.16 70.79
Creditor Turnover ratio 3.41365582 3.90395551 23.2993361

 What are RTL’S plans to improve its working capital management and
calculation of operating cycle

 RTL planned to replace two sets of 250 kVA by the purchase of one
imported SKODA set of 869 KVA at a cost of Rs.47.70.

 It planned to undertake an expansion Program for installation of another

20000 additional spindles. This expansion Program was completed with a
capital expenditure of about Rs.276 lakh against estimated cost of Rs.253
lakh.

 It also has planned to manufacture more quantities of yarn in blends of

higher value during the period 1982-1983.

 The problem of financial plan prepared by RTL and modification

suggest in the plan

 The financial plan of the firm is to increase the sales by producing high
quality yarn and also increase the production.

 Many factors are supporting their plan

1. The power supply in the state is showing signs of improvement.

2. Consumers prefer good quality blended fabrics and RTL is known for its
premium product.

So, if the company goes for increasing its production, then the company will get
a greater number of customers.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 15

Scope for Modification –

 They may go for importing their basic raw materials from the international
markets as prices of polyester and fibers are lower in international market.

 In domestic market they are procuring raw material at a high price. They
may go for strategic supplier relationship management.

 They have scope for increasing their production capacity up to 80,000

spindles as they are currently using 26390 spindles.

 From the future perspective, they can also go for one more diesel power
generator so that they can maximize capacity utilization.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 16

 Biotech pharma Limited
Problems
 The parent company did not launched any new formula not provided any
technical assistance for vitamin b.

 Import policy of 1st April 1998 liberalised the existing import policy. The
price of imported landed at Rs145 from Rs220 per gram.

 Sales was reduced compared to previous year.

 The cost of production on vitamin b was higher than selling price.

 According to the consultant, biotech does not have new technology.

 Biotech was unable to complete with input market as the manufacturing cost
was high.

 Biotech has very large amount of finished products in inventory and for the
production will be an issue.

 The large-scale consumers of biotic has already placed orders with force
esuppliers.

 Not having adequate funds to make modifications.

 The company was highly dependent on vitamin b for its profits.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 17

Solusation

 Mr karanjia engineer is the company and reduce the share of parent company
by 40% by 1984 and plan to do it 0% by 1988.

 He also rationalize the operations to reduce the cost in manufacturing,

marketing and distribution .They chose to reduce the cost of production
rather launching new formula.

 Currently the production cost is 137 rupees. But if the company can suspend
the production and sell their products at the market range.

 As the prices of the drug increase and the production was costing higher than
the sellling.

 So I would suggest the company to stop the production and sell the stock
products and improve companies production technology.

 As Mr Srinivas suggested that on his engineering analysis on vitamin b he

can reduce cost by at least Rs25 pogram. Help the company to reduce the
price. Shrinivas also suggested to suspend the production and utilise the time
to make the necessary engineering changes. With Mr Shankar and Mr
Srinivas can temporally redeploy the workers unit.

 The company could further establish new machines with upgraded

technologies or they can buy used machineries which are upgraded.

 Import policies the company was finding it difficult to compete with import
market. The biotic could buy the drug at bulk from import market and
refined it and sell it at a reasonable price.

 Biotech can't stop its production as the production cost is high and it will
increase the burden. I would suggest to sell the finished products first and

Department of MBA, KLS Gogte Institute of Technology, Belagavi 18

 use the time to improve the manufacturing to reduce cost by planting new
machines.

 The company can explore the market and supply the drug to new consumer
as it shouldn't be an issue because previously the biotech was the only
company to provide vitamin b so it it can use its brand name to to sell the
drugs.

 The company can raise funds from public or they can even take loan from
industrial banks.

 The company should come up with new drugs and reduce its dependency on
vitamin b so they can survive the crisis for a particular drug.

Department of MBA, KLS Gogte Institute of Technology, Belagavi 19