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DEPARTMENT OF COMMERCE
SRI RAMAKRISHNA DEGREE & P.G.(AUTONOMOUS)
COLLEGE
(Affiliated to RAYALASEEMA UNIVERSITY, Kurnool)
Nandyal,Kurnool(Dt),AP
April 2017
CERTIFFICATE
guidance
PVC PIPES PVT LTD Nandyal. Providing me an opportunity for this project work
in their prestigious organization,and staff of Siddharth Pvc Pipes for their valuable
guidance and useful advice and suggestions which made my work easy and
successful.
Finally I would like to thank one and all that helped me in going through my
project work.
H.T.NO. 1540011
CONTENTS
CHAPTER NO PAGENO
One of the most important areas in the day-to-day management of the firm is
the management of working capital. Working capital management is the functional
area of the finance that covers all the current accounts of the firm. It is concerned with
management of the level of individual current assets as well as the management of
total working capital. Financial management means procurement of funds and
effective utilization of these procured funds. Procurement of funds is firstly concerned
for financing working capital requirement of the firm and secondary for financing
fixed assets.
The working capital of the firm is not managed. The term describes a category
of management decisions affects specific types of current assets and current liabilities.
In turn, those decisions should be rooted in the overall Valuation of the firm.
1.2 Definition:
According to Western and Brigham, Working capital refers to a firms
investment in short term assets- cash, short term securities, accounts receivables and
inventories.
From the point of view of time, the term working capital can be divided into
two categories.
1.Current Assets:
a. Inventories Raw Materials
Work in progress
Finished goods
Stores and spares
Miscellaneous Goods
Internal External
1. Production policy
2. Nature of the business
3. Credit policy
4. Inventory policy
5. Abnormal factors
6. Market conditions
7. Conditions of supply
8. Business cycle
9. Growth and expansion
10. Level of taxes
11. Dividend policy
12. Price level changes
13. Operating efficiency
2. Easy loans: a concern having adequate working capital, high solvency and
good
Credit standing can arrange loans from banks on easy and favorable terms.
3. Cash discount: adequate working capital also enables a concern to avail cash
discounts on the purchases and maintaining goodwill.
1. A concern which has inadequate working capital cannot pay its short-term
liabilities in time. Thus, it will lose its reputation and shall not be able to
obtain good credit facilities.
3. It becomes difficult for the firm exploits favorable market conditions and
under take profitable projects.
4. The firm cannot pay its day-to-day expenses, which would increase cost and
reduce the profit of the business.
5. It becomes impossible to utilize efficiently the fixed assets due to the non-
availability of liquid funds.
6. The rate of return on investments will also fall with the shortage of working
capital.
1.11 Working capital cycle ( the operating cycle):
The working capital cycle refers to the length of time between the firms
paying cash for materials, etc., entering in to the production process/ stock and the
inflow of cash from debtors. Suppose a company has a certain amount of cash it will
need raw materials. Some raw materials will be available on credit but, cash will be
paid out for the other part immediately. Then it has to pay labour cost and incurs
factory overheads. These three combined together will constitute work-in-progress.
After the production cycle is complete, work-in-progress will get converted into
sundry debtors. Sundry debtors will be realized in cash after the expiry of credit
period. this cash can again be used for financing of raw materials, work-in-progress,
etc. thus there is a complete cycle from cash to cash where in cash gets converted into
raw materials, work-in-progress, finished goods, debtors and finally into cash again.
Short term funds are required to meet the requirements of funds during this period.
This time period is dependent upon the length of time within which the original cash
gets converted into cash again. This cycle is also known as operating cycle or cash
cycle.
1.12 OPERATING CYCLE
Cash
Working in progress
Credit Sales
Finished goods
Working capital cycle indicates the length of time between companies paying
for materials, entering into stock and receiving the cash from sales of finished goods.
It can be determined by adding the number of days required for each stage in the
cycle. For e.g., a company holds raw materials on an average for 60 days, it gets
credit from the supplier for 15 days, production process needs 15 days, finished goods
are held for 30 days and 30 days credit is extended to debtors. The total of all these
120 days, i.e., 60-15+15+30+30 days is the total working capital cycle.
The determination of working capital cycle helps in the forecast, control and
management of working capital. It indicates the total time lag and the relative
significance of its constituting parts. The duration of working capital cycle may vary
depending on the nature of the business.
The Operating Cycle consists of the following events which continues through
the life of business
1. Management of cash
2. Management of Inventory
3. Management of Receivables
Cash is the money, which a firm can disburse immediately with out any
restriction. The term cash includes coins, currency and cheques held by the firm, and
balance in its bank accounts. Some times near cash items, such as marketable
securities or bank times deposits, are also includes in cash. The basic characteristic of
near cash assets is that they can readily be converted to cash. Generally when a firm
has excess of near cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.
a. Facts of cash management:
Cash management is concerned with the managing of
Cash management assumes more importance than other current assets because
it is the most significant and the least productive asset that a firm holds. It is a
significant because it is used to pay the firms obligations. However, cash is
unproductive. Unlike fixed assets or inventories, it does not produce goods for sales.
Therefore, the aim of cash management is to maintain adequate control over cash
position to keep the firm sufficiently liquid and to be use excess cash in some
profitable way.
b. Cash Planning:
Cash inflows and outflows should be planned to project cash surplus or deficit
for each period of the planning period. Cash budget should be prepared for this
purpose.
C. Managing the cash flows:
The flow of cash should be properly managed. The cash should be accelerated
while, as far as possible, the cash outflows should be decelerated.
The ideal cash management system will depends on the firms products,
organization structure, competition, culture and option available. The task is complex,
and decisions taken can affect important areas of the firm. For example, to improve
collection if the credit period is reduced, it may affect sales. However, in certain
cases, even without fundamental changes, it possible to significantly reduce cost of
cash management system by choosing a right bank and controlling the collections
properly.
The time horizon of a cash budget may differ from firm to firm. A firm whose
business is affected by seasonal variations may prepare monthly cash budgets. Daily
or weekly budgets should be prepared for determine cash requirements if cash flows
extreme fluctuations. Cash budgets for a longer interval may be prepared if cash flows
are relatively stable.
The level of three kinds of inventories for a firm depends on the nature of its
business. A manufacturing firm will have substantially high level of all three kinds of
inventories.
A fourth kind of inventory Firm also maintains suppliers. Suppliers include office
and plant cleaning material Pipes, fuel, light bulbs etc. these materials do not directly
enter into production, but are necessary for production process, usually these supplies
are small part of inventory and do not involve significant investment. Therefore a
sophisticated system of inventory control may not be maintained for them.
2 (a) Need for holding inventory:
There are generally three major motives for holding inventories.
The speculative motive which includes the decision to increase or reduce inventory
levels to take advantage of price fluctuations.
The first question, how much to order, related in the problem of determining
economic order quantity (EOQ) and is answered with an analysis of costs of
maintaining certain level of inventories. The second question when to order arises
because of uncertainty and is a problem of determining the re-order point.
The pipes production serves as the index of the economic development of any
country. Thus PVC Pipes production is very vital from countrys agricultures point of
view. The demand would be growing with increasing technologies and is likely to
reach a staggering level in the decades to come.
On the other hand, the price of pipes has remained stagnant, because prices are
determined by market forces and presently production levels are greater than supply.
A number of industries for the past few years have been finding it difficult to
solve the increasing problems of adopting seriously the management of working
capital. Business concerns intent on developing their business have to use to the
utmost, their available resources for the improvement and development of the
business, there by enabling them profits.
The scope of the study is defined below in terms of concepts adopted and
period under focus.
First, the study management of working capital i.e. gross and net are
used in measuring profitability and liquidity respectively and also to arrive at various
objectives of the study.
Secondly, the study is based on the annual reports of the company for a period
of five years from 2013-14 to 2015-16 (so we study 2012,2013,2014,2015,2016).
The data used for the analysis and interpretation is from annual reports of the
company i.e., secondary forms of data. Ratio analysis is used for calculation purpose.
The project is presented using tables, graphs and with their interpretations. No survey
is undertaken or observation study is conducted by evaluating fixed assets
performance of the company.
2.5 SOURCES OF DATA:
The data needed for this project is collected from the following sources:
1. The data is adopted purely from secondary sources.
2. The theoretical contents are gathered purely from eminent text books and
references.
3. The financial data and information is gathered from annual reports of the
company.
The study of Working Capital management is based on primary as well as secondary
data.
2.6 SECONDARY DATA:
The secondary data was collected from companys annual reports from 2014-15to
2016, various books and through Internet.
This versatile material with its superior qualities such as light weight, easy
process ability corrosion resistance, energy conservation, no toxicity etc. many
substitute to a large extent many conventional and costly industrial materials like
wood, metal, glass, jute, lather etc., in the future. The manifold applications of plastics
in the field of automobiles,electronics,electrical,packaging and agriculture give
enough evidence of the immense utility of plastics.
At 80 percent of total requirement for raw material and almost all types of
plastic machines required for the industry are indigenously available. The present
investment in all the three segments of the industry namely production of raw
materials, expansion and diversification of processing capacities, manufacturing of
processing machinery and ancillary equipment is Rs.1250 crores and it provides
employment to more than eight lakh people.
Today India exports plastic products to as many as 80 countries all over the
world. The exports, which were stagnant at around rest 60-70 cores per annum double
to 129 craters. The Plastic industry has taken up the challenge of achieving an export
target of Rs.17 cores.
Major export markets for plastic products and linoleum are Australia,
Bangladesh, Canada, Egypt, Hong Kong, Italy, Kuwait, Federal Republic of Germany,
Sri Lanka, Sweden, Taiwan, U.K., U.S.A., and Russia.
With view to boosting the export, the plastics and linoleums export promotion
council has urged the government to reduce import duty of plastic raw material,
supply indigenous raw materials at international prices, fix duty, draw backs on
weighted average basis and charge freight rate on plastic products on weights basis
instead of volume basis.
3.1.2 Prospects:
The Production of various plastics a raw materials in the country is expected
to double by the end of seventh plan, the consumption of commodity plastics
including LDPE, HDPE, PP, PS AND PVC is immense scope for the use of plastics in
agriculture, electronics, automobile, telecommunications and irrigation and thus, the
plastic industry is on the threshold of an explosive growth.
Role of plastics in the national economy:
Plastics are got perceived as just simple colorful household products in the
mind so common person. A dominant part of the plastics of the percent and future find
their utilization in the areas.
Today the majority of raw materials are obtained from petrol chemical source
and they can be economically produced in large quantities.
Plastics have changed our world and day-by-day they are becoming important.
They own their success to whole series of advantage, which they have over
conventional materials such as:
1. Lightweight
2. Excellent mould ability
3. Attractive colors
4. Low energy requirements for convention
5. Low labor and cost of manufacture
6. Low maintenance & High strength weight ratio
3.1.4 Economic role:
Agriculture is the chief occupation in India. For the developing countries like
India modernization of the agriculture practices assumes pivotal places in improving
the economic status and the process of modernization. Includes usage of higher
productive plastics supplement to greater extent manufacturing of tools required for
new agricultural practices.
The usage of poly vinyl chloride pipes in agricultural fields, lesser water
seepage, which was predominant in earlier practices, with services of P.V.C pipes,
water can be transported efficiently with lesser from the place of higher potential to
the place of lower water potential.
Presently the revolutionary tried in water management speaks much about drip
irrigation, which is developed in Israel and is practiced by all agricultural based
nations in the world. Drip irrigation greatly P.V.C pipes as core tools of
implementation with the services of this sort, P.V.C pipes one way or the other
strengthening the hands of countrys economy.
A part with the referred P.V.C pipes supplemented with fitting is used in
houses for electrical connection and other domestic purposes. Apart from these two
applications it has got wide applications even in industrial sectors. P.V.C pipes with
much unique heart, chemical and physical characteristics serve many industrial
purposes.
Even characteristics of weight and low price attract many more applications.
Rigid PVC pipes have been manufactured in India from the 60s on imported
extrusion lines and there after indigenous plan were few pipes manufactures upto
1979-83. When many extrusion lines were imported from batten field, Cincinnati,
kraaus-maffi etc. the Govt. allowed the imports of sophisticatedand high output
plants, which were not available indigenously.
3.1.5 Pvc pipes in India:
Pipes products have found wide acceptance in India and abroad. PVC is one of
the more versatile plastics. It can be extruded, moulded, calendared and thermoformed
into a multitude of furnished products. The PVC resin can be formulated to give a
wide range of properties ranging from hand, tough materials for load bearing
application lime pipes, windows and doors to flexible materials for products a due as
wire and cable insulation and shooting and flooring.
PVC products cater to both interiors and exteriors. In interiors it can be used
for flooring, profile and cable tray, wall covering modular office systems, houses and
furniture. For exteriors it is used for doors and windows, fencing partitions and
paneling, roofing and rain systems.
The other external applications are in the field of irrigation, portable water
supplies. In the field of irrigation there are several methods to irrigate the fields. There
are minor irrigation projects and major irrigation projects apart from individual
sources like lift irrigation schemes etc., will have canals and lift irrigation schemes
etc., will have pipelines. Cement and GI pipes were the pipes used in conventional
methods of irrigation. Now-a-days PVC pipes replaced the conventional pipes and
they constituted almost 90% in this respect.
Drip irrigation popular in the agricultural sector especially in the field of
horticulture commercial cropping and green ply houses. The drip irrigation concept is
becoming more popular with its advantages like highly yield, water conversion, less
labour cost, less fertilizer, less past management costs, less power costs and many
more advantages. The demand for this concept is increasing at a place of 30%-40%
per annum.
Agriculture a sunrise industry in the Indian economy is mainly dependent on the PVC
pipes for the seawater sector and pumping to their aqua ponds. They are using
pipelines of four to five kilometers of 10-16 diameters pipes.
The state Govt. of A.P is using rigid PVC pipes for the irrigation water
supplies for the past few years. The state Govt. is producing PVC pipes through
APSIDC (AndhraPradesh State Irrigation Development Corporation) for its lift
irrigation schemes. The panchayatraj department is producing pipes for public water
supply schemes. These pipes can be used for the main distributors, sub-distributors
and individual connections.
3.2 COMPANY PROFILE
rayalaseema is economically backward area in andhra pradesh, was rarefied region for
industries. A dynamic entrepreneur sri Gelivi Ramakrishna he determination and hard
work of sri Gelivi Ramakrishna helped him to overcome the problems faced by the
company in the initial years, and with financial assistance from local commercial
banks. The company could overcome the problems of the merger and is running
smoothly.
later the company started manufacturing of pvc pipes, which terminated the
manufacturing of black pipes. This resulted in the formation of a pvt. Ltd. Company
called siddarth pipes pvt ltd. With sri Gelivi Ramakrishna as the managing director.
Step by step companys growth
siddarth pipes pvt.ltd is commission with the objectives of catering to the agriculture
needs of the region. In earlier days tool used for water flow were every ineffective
with high percentage of seepage losses. To counter this has been of siddarthpipes pvt.
Ltd., . the manor irritants in agriculture practices like lack of rain fall ground water
licking. water transport with in the fields has provided magnified thrust to pvc pipes
market. These factors helped siddarth pipes pvt.ltd, to record an excellent growth of
sales. Well-equipped laboratory and quality office looks after the quality. The
department people always striving to the quality.
Siddharth Pvc Pipes Pvt Ltd's Annual General Meeting (AGM) was last held on 13
September 2016 and as per records from Ministry of Corporate Affairs (MCA), its
balance sheet was last filed on 31 March 2016.
Introduction: -
the basis for financial planning, analysis and decision-making is the counting
reports. Two basics financial statements prepared for the purpose of external
reporting to owners, investors and creditors are; balance sheet \annual report
\statement of financial position & profit and loss account \income statement)
3.2.1Sizes:
various sizes ranging from to 10 area offered to customers. Even pipes with
different gauges and sizes are manufactured to suit specific conditions.
3.2.2 Packing:
packing plays less important role in to the products like pvc pipes because the
hallow space inside can be utilized. For the purpose of cubic space utilization in
trucks while transport, organization is adopting the technique like pipes in pipes.
3.2.5. Transportation:
the transportation department of siddarth pipes pvt. Ltd. Is very admirable.
This unique strength of the organization enables the dealers to reduce inventory levels
to the minimum. Thus dealers are also supplemented with dealers to reduce inventory
levels to the minimum. Thus dealers are also supplemented with the benefit of the
lower tied-up capital in the form of inventory.
3.2.6. General Information About The Company
the company is equipped with sophisticated laboratory to carry all tests in
ascertain out going quality level of the pipes. A nandi pipe has got isi trade mark.
Which speaks for itself for the quality of the pipes? Numbers of statistical quality
control techniques are applied to sustain the quality level of the product. Managers at
the company are dynamic and are well educated. Supervisory staff or intermediate
managerial staff are able in talking their area are not highly educated. Most of the
employees are skilled is uniqueness of workers in siddarth pipes pvt. Ltd., there is
non-indulgence in trade union activities.as the company is located in industrial estate
of nandyal, it is facilitated with good communication networks, which includes telex,
fax machine, and internet company has also got the support of electronic data
processing. The companys major strength is considered to be transportation vehicles,
a unique cash outflow justifies itself by providing good reputation of the company
through improved customer service.
through initially the company approached the external sources for financial aid
now the financial status of the company is the very sound and is being run only with
self-finance excepting for loans taken for hypothecation of machinery and stock from
sbi nandyal. The company follows cash and carry policy for nandi brand. The product
is not delivered until the cash is paid and financial department with the help of
marketing department looks after these transactions.
3.2.8.Marketing Department:
marketing manager who reports to executive director, an assistant marketing
manager who reports and 20 salesmen headed by 30 sales representatives who are
headed by assistant marketing manager heads the marketing departments effective
management of the marketing department in the organization.
3.2.9 Personal Department:
the personal department consists the details of the executives and workers of
the organization. The organization is formed with sri Gelivi Ramakrishna as the
managing director and executive director who reports managing director. Two
marketing managers, financial manager, public relations officer and quality control
officer who all reports to executive director. Other than executives there are thousand
works in the organization.
sri Gelivi Ramakrishna locally well known industrialist with the base at
nandyal, kurnool district has been successful entrepreneur and management. Is
technically qualified person with b.e.(mechanical) from r.e.c.(warangal) and with
work experience at baarc(bombay). He has daringly ventured and established
industries in and around nandyal from 70s. As year went of he has established most
successfully the following nandi group of companies.
1. Gelivi Pipes
2. Gelivi School
3. Gelivi Venkata subbaiah settee cotton mill
4. Chandra banu Pipes industries
5. Gelivi weigh bridge
6. Gelivi mobile pollution testing center
India has a vibrant private sector driven edible Pipes industry. With the right macro-
economic policies now in place, the sub-sector has made a huge turn around and it is
no longer an eyesore.
The edible Pipes industry is now one of the leading sustainers of the positive annual
economic growth rates India has enjoyed for over a decade now.
Indias demand for edible Pipes has been growing at a rate of 8-9 per annum. The
national demand for edible Pipes is projected to reach over 110.25 lakh MT in 2005
up from 100.96 lakh MT in 2016. National production as of 2016 stood at 54.54 lakh
MT making India a net importer of edible Pipes to the tune of over 46.92 lakh MT.
This gives investment opportunities into the edible Pipes industry. Trained, trainable
as well as unskilled labour is readily available for prospective investors in the sector
to utilize.
Pipesseeds and edible Pipess are two of the most sensitive essential commodities.
India is one of the largest producers of Pipesseeds in the world and this sector
occupies an important position in the agricultural economy covering an area of 24.38
million hectares and accounting for the production of 20.87 million tonnes of
Pipesseeds during the year 2014-2015. India contributes about 9% of the world
Pipesseeds production, about 7% of the global production of protein meal and is the
4th largest edible Pipes economy in the world. Export of Pipes meals, Pipesseeds and
minor Pipess for the financial year 2014-2015 slightly declined from 3.96 million
MTs in 2013-99 to 3.15 million tons in 2014-2015. However, in terms of value,
realization has gone up from Rs.3180/- crores to Rs.3327/- crores. The share of India
in the world Pipes meal export market is about 7%.
India is a vast country and inhabitants of several of its regions have developed
specific preference for certain Pipess largely depending upon the Pipess available in
the region. For example, people in the South and West prefer groundnut Pipes while
those in the East and North use mustard seed/rapeseed Pipes. Likewise several
pockets in the South have a preference for coconut and Sesame Pipes.
Inhabitants of northern plain are basically hard fat consumers and therefore prefer
Vanaspati, a term used to denote a partially hydrogenated edible Pipes mixture.
Vanaspati has an important role in our edible Pipes economy. Its production is about
one million MT annually. It has around 13% share of the edible Pipes market. It has
the ability to absorb a heterogeneous variety of Pipess which do not generally find
direct marketing opportunities because of consumers preference for traditional Pipes
such as groundnut Pipes, mustard Pipes, sesame Pipes etc. For example, newer Pipess
like Soya bean, sunflower, ricebran and cottonseed and Pipess from tree and forest
sources have found their way to the edible pool largely through vanaspati route.
Of late, things have changed through technological means such as refining, bleaching
and De-odouraisation, all Pipess have been rendered practically colorless, odorless
and tasteless and, therefore, have become easily interchangeable in the kitchen. Newer
Pipess which were not known before have entered the kitchen, like those of
cottonseed, sunflower, palm Pipes or its liquid fraction, palmolein, Soya bean and
ricebran. All of them are again essentially bland, processed edible Pipess. About 60-
70% predominantly groundnut and mustard seeds are used to make non-refined or
filtered Pipess. These tend to have a strong and distinctive test preferred by most
traditional customers.
About 70% of these filtered Pipess produced are by the organized and semi-organized
sector plants producing from 2015-10000 MT per month. It is often branded by large
manufacturers. The lower quality and generally lower cost filtered Pipes produced is
mainly by the small scale village based processors. The Pipes is mostly sold loose
directly to the consumers from a variety of containers, often within 2-3 days of
production. These local crushers will produce between half and two MTs per month.
This decentralized production and marketing pattern may account for around 20% of
all edible Pipess in the country. The share of raw Pipes, refined Pipes and vanaspati in
the total edible Pipes market is respectively 42.0%, 42.7% and 13.4%.
All agricultural activities in the country will be guided under the Plan for the
Modernization of Agriculture (PMA). The PMA is part of the Government of Indias
broader strategy of poverty eradication contained in the Poverty Eradication Action
Plan (PEAP). Strategically the PMA objectives include:
1. Deepening decentralization
2. Reduction in public sector activities in favour of the private sector
3. Adoption of productivity enhancing technologies
Health consciousness
In the wake of the dropsy epidemic Delhi High Court banned the sale of loose
mustard Pipes in Delhi on 26th August, 2013. Several States including Delhi banned
the sale of loose mustard Pipes. As a consequence, availability of mustard Pipes
reduced considerably and prices went up.
In order to improve the situation and restore the confidence of the consumers, trade
and industry as also of the farmers, the Honble Minister for Food & Consumer
Affairs and the Secretary, Department of Sugar & Edible Pipess held a series of
meetings with the Government officials as also with the trade & industry, and the
following measures were taken:-
(ii) The Department of sugar & Edible Pipess, (Directorate of Vanaspati, Vegetable
Pipess & Fats) intensified Quality Control measures so as to ensure quality of edible
Pipes including vanaspati;
(iii) Operation of a few manufacturing units whose products were found adulterated
were suspended till they ensured adequate analytical facilities for checking the purity
of the samples to the satisfaction of the Government of India.
(iv) Use of mustard Pipes in the manufacture of vanaspati was banned on 11.9.2013.
The ban was lifted on 5.11.2013 only after adequate quality measures were ensured;
Again an order has been issued on 12.06.2015 for use of indigenous Pipess @25% by
weight and use of 30% expeller mustard Pipes in the manufacture of Vanaspati Crude
Palm Pipes (CPO) and its fraction thereof shall not be used by the producers other
than those who are equipped with fully capture hydrogen generation facilities.
(v) Monitoring of quality of edible Pipes was made stringent and surprise checks and
frequency of regular inspections also increased.
(vi) In order to expeditiously normalize the sale of safe edible Pipes in the market to
the consumers, on the recommendations of the Coordinating Group, 39 laboratories of
the DMI/BIS were initially accorded recognition for the purpose of analysis of edible
Pipes samples. Department has so far recommended for according recognition to a
total of 560 laboratories equipped with necessary analytical facilities. Among the
laboratories recommended for according recognition are the laboratories of NDDB at
Mother Dairy, Delhi, a laboratory of Delhi Vegetable Pipes Traders
Association also at Delhi, etc;
(ix) In order to ensure uniformity of approach and uniformity of results, the procedure
for sampling and methods of analysis for fats and Pipess including the Thin Layer
Chromatography (TLC) method for detection of argemone Pipes in edible Pipes in all
testing laboratories was prescribed.
There are two major features which have very significantly contributed to the
development of this sector. One was the setting up of the Technology Mission on
Pipesseeds in 1986. This gave a thrust to Government's efforts for augmenting the
production of Pipesseeds. This is evident by the very impressive increase in the
production of Pipesseeds from about 11.3 million tonnes in 1986-87 to 24.9 million
tonnes in 2013-2015. There was some setback in 2014-2015 because of the
unseasonal rain followed by inclement weather. The production of Pipesseeds
declined to 20.8 million tonnes in 2014-2015. However, as per available information,
the Pipesseeds scenario in 2015-01 was expected to be again discouraging. Because of
the swift measures taken by the Government to restore the confidence of the
consumers, trade and industry and the farmers, the mustard Pipes controversy does
not seem to have had a perceptible adverse effect on the farmers. In fact, as per
available information, mustard seed production in 2015-01 could decline from 6
million tonnes. The other dominant feature which has had significant impact on the
present status of edible Pipesseeds/Pipes industry has been the programme of
liberalization under which the Government's economic policy allows greater freedom
to the open market and encourages healthy competition and self regulation rather than
protection and control. Controls and regulations have been relaxed resulting in a
highly competitive market dominated by both domestic and multinational players.
This Department is operating three Plan Schemes which are as under: R&D
Programme for "Development of Vegetable Pipess". This is mainly to augment the
availability of quality products; "Modernization of the Laboratory of the Directorate
of VVO&F. This is for introducing modern equipments for testing of Pipess and fats;
and "Strengthening of Directorate of VVO&F". This is for providing more technical
staff to widen the scope of monitoring the Pipess industry.
The basic objective of the Plan Schemes is to coordinate and concentrate research
efforts designed to improve the yield of Pipess and co-products, both quantitatively
and qualitatively. The R&D work is basically carried out in three phases:- Phase-I:
Research and Development Phase-II: Technology propagation including
demonstration of the technology developed Phase-III: Efforts for the adoption of
technology by the industry.
The thrust areas identified by STAC for R&D work are: Application of frontier areas
of technology such as membrane refining technology, bio-interesterification etc. of
Pipesseed/Pipes processing. Technology for upgradation of non-edible Pipess to
edible Pipess/edible grade Pipess such as neem Pipes, castor Pipes, non-edible rice
bran Pipes etc. Detoxification of Pipesseeds/Pipes-cakes/extraction. Upgradation of
huller rice bran and refining of rice bran Pipes. Development of Soya bean Pipes with
improved stability. Storage suitability of unrefined and refined edible vegetable
Pipess. Work relating to nutritional aspects of newer Pipess particularly with regard to
the suitability for human consumption.
Opportunities:
Investment Opportunities
The edible Pipes industry is now one of the leading sustainers of the positive annual
economic growth rates India has enjoyed for over a decade now. Indias demand for
edible Pipes has been growing at a rate of 8-9% per annum. The national demand for
edible Pipes is projected to reach over 110.25 lakh MT in 2005 up from 100.96 lakh
MT in 2016. National production as of 2016 stood at 54.54 lakh MT making India a
net importer of edible Pipes to the tune of over 46.92 lakh MT. This gives investment
opportunities into the edible Pipes industry.
Strategic location
India is strategically positioned within the South of the Asian continent that includes
the SAARC countries, an economic grouping with a market of over 1500 million
people. This location gives India a commanding importance as a base for regional
trade and investment.
Macroeconomic factors
1. Population growth:-
3. Purchasing power:
4. Pipesseeds crop:
4.14 Threats:
Raw materials supply of edible Pipes industry is directly related with the agricultural
production of Pipes seeds. That agricultural production in India has a fluctuating trend
is now a new thing. Agriculture here still depends largely on monsoon rains and the
intensity of the latter has significant influence on production. Significantly, even the
agriculturally rich state with better irrigation network; have witnessed sharp changes
in their production of late.
A firm profitability will tend to be a higher when other firms are blocked from
entering the industry. New entrants can reduce the industry profitability because
they add new production capacity and can substantially erode existing firm market
position
In the Edible Pipes industry threat of new entrants is moderate
because of these reasons.
1. Higher capital requirement:-
In this industry high investment is required and there is a high fixed
cost so new entrant cant enter easily.
2. Higher economies of scale:-
In this industry production cost per unit is high so economies of
scale are very low in edible Pipes industry.
3. Less capacity utilization:-
In this industry particularly in India, there is a very less capacity
utilization of total available production capacity.
4. Customer Loyalty:-
In this industry switching probability is low so customers hesitate
to switch to other new brands.
Substitutes are alternative product types that perform essentially the same
function. In edible Pipes industry there are no perfect substitutes as it is an
essential requirement.
Table of five force analysis
4. Obsolete technology.
5. Very low margin because of stiff competition, inefficiency of operations etc.
Speculative nature of the trade.
To enhance the production of Pipesseeds, the strategy for area expansion was adopted
in the late 1980s and early 1990s by the Technology Mission on Pipesseeds & Pulses
(TMOP), which was set up in May, 1986. The production of Pipesseeds, which
increased significantly in the 1980s, has hit a plateau in the 1990s. In fact, the target
fixed by the Ministry of Agriculture was during the year 1990-1991 to 1993-1994. In
the year 2012-98 to 2014-2015 the production of Pipesseed has considerably reduced
which is evident from the following table
[Figures in
Lakh MT]
NAME OF THE PIPES 2014-2015 2015-2016 *
Pipesseeds Pipess Pipesseeds Pipess
A.PRIMARY SOURCE
Groundnut 53.11 12.22 64.10 14.74
Rapeseed & Mustard 59.58 18.47 40.90 12.68
Soya bean 67.92 10.87 50.90 8.14
Sunflower 8.00 2.64 6.60 2.18
Sesame 5.18 1.61 5.40 1.67
Nigerseed 1.50 0.45 1.00 0.30
Safflower 2.77 0.83 1.70 0.51
Castor 7.77 3.11 9.00 3.60
Linseed 2.89 0.87 2.40 0.72
Sub Total 208.72 51.07 182.00 44.54
B.SECONDARY SOURCE
Coconut 4.50 5.60
Cottonseed 5.00 4.60
Rice-bran 5.00 4.80
Solvent Extracted Pipess 2.50 2.00
Tree & Forest Origin
(Source: www.kisanwatch.org )
There has been a persistent gap between demand and domestic availability of edible
Pipess. The Government, with a view to avoiding scarcity of this item and
consequential rise in prices, has been allowing import of edible Pipess. The net
availability of Edible Pipess from all domestic sources, Actual Consumption and
Import during the years 2011-2012 to 2015-2016 are as under
SUPPLY OF EDIBLE PIPESS FOR THE YEARS 2011-97 to 2015-2016 (In Lakh
MT)
(in Lakh MT )
(Lakh MTs)
EXPORT:
The total exports during 2014-2015 in terms of quantity declined from 3.96 Million
MT to 3.15 Million MT and FOB earnings increased from Rs.332/- Crores to Rs.
189/- Crores mainly due to drastic fall in exports of rapeseed meal and rice bran
extractions and lesser of FOB realisation. The exports of Pipes, minor Pipess/fats and
Pipes during the last five years are as under
Value in Rs/Crores] [Qty.InLakhMT]
Business Concerns
Free imports, low import duties and slump in global prices - lead to`dumping
CHAPTER-V
3) Current ratio of the company for the years 2011-12, 2012-13, 2013-14, 2014-
15 and 2015-16 are 1.92,3.93,6.73,8.03,9.40 respectively. Higher the ratio
better is coverage. Standard ratio is 2:1, which shows that the companys
current ratio is more than the standard ratio.
4) Quick ratio during the study period has been increasing that is for the year
2011-12 is 1.14, 2012-13 is 3.34, 2013-14 is 4.21, 2014-15 is 7.24, 2015-16 is
7.42, which shows these ratios are above the standard ratio of 1:1
5) Cash ratio which shows the short-term solvency of the firm in terms of cash
during the study period are 0.02, 0.03, 0.06, 0.10, 0.14 which is not up to the
standard ratio of 0.5:1.
7) Debtors turnover ratio has been showing the decreasing trend during the study
period except in the year 2015-16 which is not good for the company.
2) As the companys current ratio is more than the standard ratio, it should
decrease the current assets which are in the form of sundry debtors, inventory
etc.
3) The firm so maintaining the current assets satisfactory, but at the same time
more than 50% of current assets are blocked in the form of receivables. This is
due to giving credit sales to his customers and maximum portion of sales are
in credit terms only. If at all there is any possibility, the company should
reduce the credit sales and receivables holding period and to bridge the gap
between the excess and shortage of working capital.
8) The sales of the company are showing fluctuating trends. So the company
should maintain proper control on sales.
5.3 Conclusion:
Under the light of the inferences drawn from the analysis, it is no exaggeration
SIDDARTH PVC PVT LTD is fair and reasonably good and thus promising future
Web Sites
Company website:
www.gelivi.com