A STUDY ON CASH MANAGEMENT IN CHENCOPTEX AT

CHENNIMALAI

PROJECT REPORT

A Project Report submitted to the BHARATHIAR UNIVERSITY

in partial fulfillment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by

S.JAYANTHI
(Reg. No: 16PMBA016)

Under the Guidance of

Dr.V.G. SUMATHY M.B.A., M.Phil., Ph.D.,

Assistant Professor
Department of Management Science

KONGU ARTS AND SCIENCE COLLEGE

(Autonomous)
Affiliated to Bharathiar University, Coimbatore
Approved by UGC, AICTE, New Delhi & Re-accredited by NAAC
(An ISO 9001:2015 Certified Institution)
Nanjanapuram, Erode - 638107

NOVEMBER - 2017

1
 CERTIFICATE
This is to certify that the project entitled “A STUDY ON CASH

MANAGEMENT IN CHENCOPTEX AT CHENNIMALAI” submitted to the

BHARATHIAR UNIVERSITY, Coimbatore in partial fulfillment of the requirement

for the award of the degree of MASTER OF BUSINESS ADMINISTRATION is a

record of original research work done by S.JAYANTHI (Reg. No: 16PMBA016)

during the period 2016-2018 of his study in the Department of Management Science

at Kongu Arts and Science College (Autonomous), Nanjanapuram, Erode, under

my supervision and guidance and the project has not formed the basis for the award of

any Degree / Diploma / Associate ship / Fellowship or other similar title to any

candidate of any University.

Faculty Guide Head of the Department

( Dr. V.G. SUMATHY) (Dr. P.POONGODI)

PRINCIPAL

Internal Examiner External Examiner

Date of the Viva Voce Examination__________________

2
 DECLARATION

I, hereby declare that the project, entitled “A STUDY ON CASH

MANAGEMENT IN CHENCOPTEX AT CHENNIMALAI” submitted to the

BHARATHIAR UNIVERSITY, Coimbatore in partial fulfillment of the

requirement for the award of the degree of MASTER OF BUSINESS

ADMINISTRATION is a record of original research work done by me during

2016-2018 under the supervision and guidance of Dr. V.G.SUMATHY

M.B.A., M.Phil., Ph.D., Assistant Professor, Department of Management Science,

Kongu Arts and Science College (Autonomous), Erode, and it has not formed the

basis for the award of any Degree / Diploma / Associate ship / Fellowship or other

similar title to any candidate in any University.

SIGNATURE OF THE CANDIDATE

(S.JAYANTHI)
(Reg. No: 16PMBA016)

Place: Erode
Date:

3
 ACKNOWLEDGEMENT

First, I would like to express my profound and grateful thanks to

Thiru. A.K. ILANGO B.Com., M.B.A., L.L.B., Correspondent and Dr. N. RAMAN

M.Com., M.B.A., M.Phil., B.Ed., PGDCA., Ph.D., Principal, Kongu Arts and

Science College (Autonomous), Erode, for giving permission to undertake this

project. I am grateful to thank our Dr.P.POONGODI M.B.A., M.Phil., Ph.D.,

Professor and Head , Department of Management Science for giving constant

encouragement to complete my project.

My sincere and heartfelt thanks go to my beloved faculty guide

Dr.V.G. SUMATHY M.B.A., M.Phil., Ph.D., Assistant professor, Department of

Management Science, for her scholarly counsel, tremendous forbearance, sustained

encouragement and a source of great inspiration during the entire course of this

research work.

I extend my thanks to all my Friends and Family membersfor their kind co-

operation, encouragement and support for the successful completion of my project.

I acknowledge my sincere thanks to my respondents for having co operated

with me in completion of my project.

S.JAYANTHI

4
 CONTENTS

CHAPTER No. PARTICULARS PAGE No.

LIST OF TABLES

LIST OF CHARTS

INTRODUCTION OF THE STUDY

1.1 Introduction 1

1.2 Need for the study 5

I 1.3 Statement of Problem 6

1.4 Objectives of the study 7

1.5 Scope of the Study 8

1.6 Limitations of the study 9

II INDUSTRY PROFILE 10

III RESEARCH METHODOLOGY 17

IV DATA ANALYSIS AND INTREPRETATION 20

FINDINGS, SUGGESTIONS AND CONCLUSION

5.1 Findings 46
V
5.2 Suggestions 48

5.3 Conclusion 49

BIBLIOGRAPHY

APPENDIX

5
 LIST OF TABLES
TABLE NO. TITLE PAGE NO.

4.1 Age group of the Respondents 20

4.2 Occupation of the Respondents 22

4.3 Marital status of the Respondents 24

4.4 Income level of the Respondents 26

4.5 Frequency of buying Instant Products 28

4.6 Source made to buy Instant Foods 30

4.7 Purchase decision of Instant Foods 32

Satisfaction about the information on the

4.8 34
product package

4.9 Advertisement about Instant Foods 36

Opinion about cleanliness of Instant Foods

4.10 38
Package

4.11 Preference of Products 40

4.12 Suggest others to buy instant Products 42

Intension to re-purchase the Instant Food

4.13 44
Products

Level of Satisfaction towards Instant Food

4.14 46
Products

Benefits available in using Instant Products

4.15 48
(Weighted Average)

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4.16 Types of food you refer (Weighted Average) 49

Occupation and Satisfaction of the respondents

4.17 51
(Chi-Square Test)

Marital status and Satisfaction of the

4.18 52
respondents (Chi-Square Test)

Income level and Satisfaction of the

4.19 53
respondents (Chi-Square Test)

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 LIST OF CHARTS
CHART PAGE
TITLE
NO NO

4.1 Age group of the Respondents 21

4.2 Occupation of the Respondents 23

4.3 Marital status of the Respondents 25

4.4 Income level of the Respondents 27

4.5 Frequency of buying Instant Products 29

4.6 Source made to buy Instant Foods 31

4.7 Purchase decision of Instant Foods 33

Satisfaction about the information on the product

4.8 35
package

4.9 Advertisement about Instant Foods 37

4.10 Opinion about cleanliness of Instant Foods package 39

4.11 Preference of Products 41

4.12 Suggest others to buy instant Products 43

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 CHAPTER-I

INTRODUCTION OF THE STUDY

1.1 INTRODUCTION

Cash management refers to a broad area of finance involving the collection, handling

and usage of cash. It involves assessing market liquidity, cash flow, and investments. cash

management or treasury management is a marketing term for certain services related to cash

flow offered primarily to larger business customers. It may be used to describe all bank

accounts such as checking accounts provided to businesses of a certain size but it is more

often used to describe specific services such as cash concentration, zero balance accounting,

and automated clearing house facilities. Financial instruments involved in cash management

include money market funds, treasury bills and certificates of deposit. Cash management is

the corporate process of collecting and managing cash as well as using it for short term

investing. It is a key component of ensuring a company’s financial stability and solvency.

NATURE OF CASH MANAGEMENT

Cash management includes a broad array of solutions and equipment that allow

companies to reduce costs, improve efficiency and increase security when counting, sorting

and processing cash. Though cash management in general can take many forms and there is

no one-size-fits-all approach the nature of great cash management relies on a holistic

approach to meet a company’s unique cash-related needs. In every business organization

working capital primarily cash is very vital component for its going concern as a business

entity. Cash is use at the very start of the operations and until the business organization is

finally dissolved and liquidated and closed.

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In the initial stage of the business organizational cash is needed for the following

1.To pay organizational cost and expenses.

2.To purchase fixed assets.

3.To conduct operations in the production of goods and services or purchase of inventories.

4.To pay marketing and other operational expenses.

When the business is already setup, there should be involving cash to be maintained that will

support the periodic cash requirement. At this stage cash management will come in.

Management of cash is a very vital function in the business operations and the efficient and

proper use of cash is necessary for the attainment of the company’s goal which is primarily

profit.

CONCEPT OF CASH MANAGEMENT

Cash like the blood stream in the human body gives vitality and strength to business

enterprises. Though cash hold the smallest portion of total current assets. However, cash is

both the beginning and end of working capital cycle cash, inventories, receivables and cash.

It is the cash which keeps the business going. Hence, every enterprises has to hold necessary

cash for its existence. Moreover, steady and healthy circulation of cash throughout the entire

business operations is the basis of business solvency.

In the words of R.R. Bari, “Maintenance of surplus cash by a company unless there

are special reasons for doing so, is regarded as a bad sigh of cash management.”

Cash may be interpreted under two concepts. In narrow sense, cash is very important

business asset but although coin and paper currency can be inspected and handled the major

part of the cash of most enterprises is in the form of bank checking accounts which represent

10
claims to money rather than tangible property. While in broader sense cash consists of legal

tender, cheques, bank drafts, money orders and demand deposits in banks. In general nothing

should be considered unrestricted cash unless it is available to the management for

disbursement of any nature. Thus from the above quotations we may conclude that in narrow

sense cash means cash in hand and at bank but in wider sense it is the deposit in banks,

currency, cheques, bank draft etc. in addition to cash in hand and at bank.

MEANING OF CASH MANAGEMENT

Cash management is the corporate process of collecting and managing cash as well as

using it for short term investing. It is a key component of ensuring a company's financial

stability and solvency. Corporate treasurers or business managers are frequently responsible

for overall cash management and the related responsibilities to remain solvent.

BREAKING DOWN CASH MANAGEMENT

Successful cash management involves not only avoiding insolvency but also reducing

the length of account receivables, increasing collection rates, selecting appropriate short-

term investment vehicles and increasing cash on hand to improve a company's cash position

and profitability.

Successfully managing cash is an essential skill for small business developers because

they typically have less access to affordable credit and have a significant amount of upfront

costs to manage while waiting for receivables. Wisely managing cash enables a company to

meet unexpected expenses, and to handle regularly occurring events such as payroll

distribution.

FUNCTIONS OF CASH MANAGEMENT

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 Cash management is the treasury function of a business responsible for achieving

optimal efficiency in two key areas receivables which is cash coming in and payables which

is cash going out.

RECEIVABLE MANAGEMENT

When a business issues an invoice it is reported as a receivable which is cash earned

but yet to be received. Depending on the terms of the invoice, the business may have to wait

30, 60 or 90 days for the cash to be received. It is common for a business to report increasing

sales, yet still run into a cash crunch because of slow or poorly managed receivables. There

are a number of things a business can do to accelerate its receivables and reduce payment

float including clarifying billing terms with customers using an automated billing service to

bill customers immediately using electronic payment processing through a bank to collect

payments and staying on top of collections with an aging receivables report.

PAYABLES MANAGEMENT

When a business controls its payables it can better control its cash flow. By improving

the overall efficiency of the payables process a business can reduce costs and keep more cash

working in the business. Payables management solutions such as electronic payment

processing direct payroll deposit and controlled disbursement can streamline and automate

the payable functions.

Most of the receivables and payables management functions can be automated using

business banking solutions. The digital age has opened up opportunities for smaller

businesses to access the same large-scale cash management technologies used by bigger

companies. The cost savings generated from more efficient cash management techniques

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easily offsets the costs. More importantly management will be able to reallocate precious

resources to growing the business.

1.2 NEED AND IMPORTANCE OF CASH MANAGEMENT

Cash is the most liquid asset and have vital importance for the operation of the

business. Cash is born there beginning and the end of working capital cycle. The effective

management of cash is the key determination of efficient working capital cash like the blood

stream in human body, given vitality and strength to business enterprises. The steady and

healthy circulation of cash through out the business operation is the basis of business

solvency. Every activity in an enterprise it cannot be raised as and when one likes it.

Therefore for obtaining maximum profitability proper and effective management of each is of

paramount importance.

The firm should evolve strategies regarding the following four facts of cash

management.

1. Cash planning

Cash inflows and out flows should planned to project cash surplus or deficit

for each period of the planning period. Cash budget should be prepared for this

purpose.

2. Managing the cash flows

The flow of cash in flow and out flow should be properly managed. The inflow of

cash should be calculated whole as far as possible the out flow of each should be

declared.

3. Investing idle cash

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 The idle cash or precautionary cash balances should be properly invested to earn

profits. The firm should decide about the decision if such cash balance between bank

deposits and marketable securities.

4. Optimum cash level

The firm should decide about the appropriate level of cash balance. The cost of excess

cash and danger of cash deficiency should be matched to determine the optimum level of

cash balances.

Hence an attempt is made in this part to study the size of cash. Cash to current

liabilities and cash turnover in the chencoptex ltd.,

The following is a list of services generally offered by banks and utilized by larger businesses

and corporations

Account reconciliation

Balancing a chequebook can be a difficult process for a very large business, since it issues so

many cheques it can take a lot of human monitoring to understand which cheques have not

cleared and therefore what the company's true balance is. To address this banks have

developed a system which allows companies to upload a list of all the checks that they issue

on a daily basis, so that at the end of the month the bank statement will show not only which

checks have cleared but also which have not. More recently, banks have used this system to

prevent checks from being fraudulently cashed if they are not on the list, a process known

as positive pay.

Advanced web services

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Most banks have an Internet-based system which is more advanced than the one available to

consumers. This enables managers to create and authorize special internal logon credentials

allowing employees to send wires and access other cash management features normally not

found on the consumer web site.

Armored car services/cash collection

Large retailers who collect a great deal of cash may have the bank pick this cash up via

an armored car company instead of asking its employees to deposit the cash.

Automated clearing house

Usually offered by the cash management division of a bank. The automated clearing house is

an electronic system used to transfer funds between banks. Companies use this to pay others

especially employees this is how direct deposit works. Certain companies also use it to

collect funds from customers this is generally how automatic payment plans work. This

system is criticized by some consumer advocacy groups because under this system banks

assume that the company initiating the debit is correct until proven otherwise.

Balance reporting

Corporate clients who actively manage their cash balances usually subscribe to secure web-

based reporting of their account and transaction information at their lead bank. These

sophisticated compilations of banking activity may include balances in foreign currencies as

well as those at other banks. They include information on cash positions as well as 'float'.

Finally, they offer transaction-specific details on all forms of payment activity including

deposits, checks, wire transfers in and out, ACH (automated clearinghouse debits and credits)

investments, etc.

Cash concentration services

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Large or national chain retailers often are in areas where their primary bank does not have

branches. Therefore, they open bank accounts at various local banks in the area. To prevent

funds in these accounts from being idle and not earning sufficient interest many of these

companies have an agreement set with their primary bank whereby their primary bank uses

the automated clearing house to electronically "pull" the money from these banks into a

single interest-bearing bank account.

Controlled disbursement

This is another product offered by banks under Cash Management Services. The bank

provides a daily report typically early in the day that provides the amount of disbursements

that will be charged to the customer's account. This early knowledge of daily funds

requirement allows the customer to invest any surplus in intraday investment opportunities

typically money market investments. This is different from delayed disbursements, where

payments are issued through a remote branch of a bank and customer is able to delay the

payment due to increased float time.

Lockbox—wholesale services

Often companies such as utilities which receive a large number of payments via checks in the

mail have the bank set up a post office box for them open their mail and deposit any checks

found. This is referred to as a lockbox service.

Lockbox—retail services

These are for companies with small numbers of payments sometimes with detailed

requirements for processing. This might be a company like a dentist's office or small

manufacturing company.

Positive pay

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Positive pay is a service whereby the company electronically shares its check register of all

written checks with the bank. The bank therefore will only pay checks listed in that register

with exactly the same specifications as listed in the register (amount, payee, serial number,

etc.). This system dramatically reduces check fraud.

Reverse positive pay

Reverse positive pay is similar to positive pay but the process is reversed with the company

not the bank maintaining the list of checks issued. When checks are presented for payment

and clear through the Federal Reserve System the Federal Reserve prepares a file of the

checks' account numbers, serial numbers and dollar amounts and sends the file to the bank. In

reverse positive pay the bank sends that file to the company where the company compares the

information to its internal records. The company lets the bank know which checks match its

internal information and the bank pays those items. The bank then researches the checks that

do not match corrects any misreads or encoding errors and determines if any items are

fraudulent. The bank pays only "true" exceptions, that is, those that can be reconciled with

the company's files.

Sweep accounts

Sweep accounts are typically offered by the cash management division of a bank. Under this

system excess funds from a company's bank accounts are automatically moved into a money

market mutual fund overnight and then moved back the next morning. This allows them to

earn interest overnight. This is the primary use of money market mutual funds.

Zero balance account

A Zero balance account can be thought of as somewhat of a hack. Companies with large

numbers of stores or locations can very often be confused if all those stores are depositing

17
into a single bank account. Traditionally, it would be impossible to know which deposits

were from which stores without seeking to view images of those deposits. To help correct this

problem banks developed a system where each store is given their own bank account, but all

the money deposited into the individual store accounts are automatically moved or swept into

the company's main bank account. This allows the company to look at individual statements

for each store. U.S. banks are almost all converting their systems so that companies can tell

which store made a particular deposit even if these deposits are all deposited into a single

account. Therefore, zero balance accounting is being used less frequently.

Wire transfer

A wire transfer is an electronic transfer of funds. Wire transfers can be done by a simple bank

account transfer, or by a transfer of cash at a cash office. Bank wire transfers are often the

most expedient method for transferring funds between bank accounts. A bank wire transfer is

a message to the receiving bank requesting them to effect payment in accordance with the

instructions given. The message also includes settlement instructions. The actual wire transfer

itself is virtually instantaneous, requiring no longer for transmission than a telephone call.

Automated Cash Handling

An Automated cash handling is the process of dispensing, counting and tracking cash in a

bank, retail, check cashing, payday loan / advance, casino or other business environment

through specially designed hardware and software for the purposes of loss prevention, theft

deterrence and reducing management time for oversight of cash drawer till operations.

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In the past, other services have been offered the usefulness of which has diminished with the

rise of the Internet. For example, companies could have daily faxes of their most recent

transactions or be sent CD-ROMs of images of their cashed checks.

Cash management services can be costly but usually the cost to a company is outweighed by

the benefits of cost savings, accuracy, efficiencies etc.

1.3 STATEMENT OF PROBLEM

The chencoptex has the difficulty in the cash management. The fund is also

insufficient during the investment period. Here the study is to analyze the data of annual

report and to find the cash dumping in which place it occurs.

1.4 OBJECTIVE OF THE STUDY

To study the company’s level of liquidity.

To study the management of cash flow in the chencoptex ltd.

To calculate the various ratio to analyze the companies strategy.

To study the efficient cash management in the chencoptex ltd.

1.5 SCOPE OF THE STUDY

As the company invested more money in properties and more cash on credit without

maintaining their day to day requirement of cash, majority of current assets may be blocked

into stocks and debtors. In these situation the business enterprise may find acute difficulties

to pay its current liabilities in time which is very important to run the business efficiently. So

19
it may be conclude that if firm is unable to manage its day to day cash requirements then it

may lead to closure of the business.

1.6 LIMITATIONS OF THE STUDY

1. The study is confined to cash management only for the selected unit.

2. Due to incompletion of audit, the current year data (2016-2017) is not available.

3. There are gaps in the published information of the factory due to the reason of

confidentiality of information and the methodology of their combination. Every possible care

has been taken to obviate this limitation but this has been tended to influences the analysis

and data processing of various stages.

CHAPTER – II

INDUSTRY PROFILE

Chennimalai is a place which is situated at perundurai Taluk of Erode District in

Tamilnadu, which is not only a place of pilgrimage but also famous for Handloom Industry in

Tamilnadu.

The chennimalai Industrial Weavers Cooperative Production & Sales Society ltd., no.

AA399 started in the year 1962 with 51 handlooms under the president ship of

Thiru.K.Chinnuswamy Gounder developed rapidly and strengthened its position.

Now there are 515 handlooms and nearly 818 weaver families are benefited from the

society. The society has earned the names of being the Industrial Weavers Cooperative in

Asia.

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AREA OF OPERATION OF THE SOCIETY

Erode, Perundurai and kangayem Taluk of erode District.

MEMBER AND SHARE CAPITAL OF THE SOCIETY

There are 387 male members and 431 female members who are engaged in the

society.

Share capital of members is Rs.1,06,30,130 and Govt of Tamilnadu shares Capital is

Rs.49,00,000

VARIETIES PRODUCED

Bed sheets, Bed spreads, Pillow covers, Towel, Govt. Uniform Varieties and export

varieties.

OBJECTIVES OF THE SOCIETY

A. THE PRINCIPLE OBJECTIVE

The principle objective of the society is to improve the handloom industry and the

economic condition of the weavers residing in the area of operation mentioned above

and for this purpose.

1. To purchase such raw materials and appliances as may be required for the

handloom industry and retail the same either for cash or for credit to the members

residing in these places.

2. To purchase yarn and other raw materials and advance the same to the weavers-

member who shall convert them into finished goods and deliver them to the

21
 society to pay wages for such conversion, and to arrange for the marketing of the

finished goods to the best advantage of the society and the public.

B. THE OTHER OBJECTIVES OF THE SOCIETY ARE

1. To raise the money for the society by issue of shares and by borrowing by way of

deposits or otherwise from the members, from the government and others.

2. To act as the agent for the joint purchase of the domestic and other requirements

of the members and for the sales of their finished products.

3. To undertake any or all welfare schemes sponsored by the government and other

agencies for the benefit of the members.

4. To open sales deposits in places selected by the board of directors by borrowing

by way of deposits or otherwise from the members, from the government and

others.

5. To borrow funds from the government to be utilized for the issues of loan.

6. To members for discharge of prior debts to master weavers contracted prior to the

admission into the society.

7. To run dye factory for the benefit of the society members and to dye the yarn of

other weavers cooperative societies also.

8. To buy or acquire land and to build the residential houses for the benefit of the

weaver members of the society with necessary amenities.

9. To do such activities as may be conductive or incidental to the principle objective

of the societies.

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 WELFARE SCHEMES FOR THE MEMBERS

TAMILNADU COOPERATIVE HANDLOOM WEAVERS SAVINGS AND

SECURITY SCHEME

483 members are now participating on this scheme. The following amounts are
deposited into government under this scheme.

a. MEMBERS CONTRIBUTION : Rs. 162.85 Lakhs

b. STATE GOVT.CONTRIBUTION : Rs. 107.25 Lakhs

c. CENTRAL GOVT.CONTRIBUTION : Rs. 37.81 Lakhs

d. INTEREST : Rs. 176.37 Lakhs

TAMILNADU COOPERATIVE HANDLOOM WEAVERS FAMILY PENSION

SCHEME

There are 317 members are enrolled in this scheme.

17 nominees of deceased members are getting Rs. 1000 each per month as pension

scheme.

TAMILNADU COOPERATIVE HANDLOOM WEAVERS OLDAGE PENSION

SCHEME

401 members are getting each Rs.1000 per month as old age pension.

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 WEAVERS WELFARE SCHEMES IMPLEMENTED

1 Members savings & security schemes W.S.S.S. 483 members

2 Mahatma Gandhi bunker bhima yojana M.G.-BBY 483 members

3 Shiksha sahayog yojana scheme S.S.Y 38 members

Scholarship

4 Family Pension scheme F.P.S 317 members

5 Old age pension scheme O.A.P 401 members

6 Handloom weavers health insurance scheme by RSBY H.I.S 668 members

7 Weavers free electricity scheme (Beneficiaries) 369 members

8 Bank loan to weavers 567 members

WEAVERS CREDIT CARD

weavers credit card loan Rs. 25000 = 564 members

E.Muthra Loan Rs.500 = 203 members

MEDICAL FOR THE MEMBERS AND THEIR FAMILIES

In order to provide medical aid to the members and their families, two primary health

centres have been constructed.

A qualified doctor is visiting the P.H.C every day and provides free medical

treatment. Medicine also is supplied free of cost.

24
EDUCATIONAL AID TO MEMBERS CHILDREN

To encourage members children in education free note books are supplied. The

amount is spent from common good fund with prior permission of director of handlooms &

textiles, Chennai.

S.No Year Amount spent under this

head

1 2014-2015 Rs. 1,93,400

2 2015-2016 Rs. 1,96,800

3 2016-2017 Rs. 2,14,300

R.S.B.Y. SCHEME

There are 668 members and their family members are enrolled this scheme. Totally

upto Rs.37500 medical assistance have been giving to every card members family.

PROVIDING HOLIDAY WAGES

All members of this society are paid holiday wages for the 9 national and festival

holidays in a year based on the average wage earned per day during the pervious one month

period.

25
 S.No Year Amount spent under this

head

1 2013-2014 Rs. 7,96,039

2 2014-2015 Rs. 8,55,246

3 2015-2016 Rs. 3,68,534

WEAVERS HOUSING SCHEME

a) 228 houses were allotted to our society under this scheme at weavers colony (1010

colony) M.Pidariyur, Chennimalai.

Details of the scheme(2000-2001)

Central government contribution : Rs. 18,000

Tamilnadu government contribution : Rs. 7,000

Member contribution : Rs. 21,000

Hudco loan : Rs. 40,000

b) Weavers green house scheme : 2013-2014

8 members constructed the houses under the weavers green house scheme

Rs.2,30,000 was sanctioned as subsidy to each house.

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SHIKSHA SAHAYOG YOJANA SCHEME

Under this scheme children of our weaver members have benefited as follows:

Year No. of students Amount Details

benefited Rs.

2011-2012 I 102 61,200 Pending with

Govt.

II 98 58,800 Pending with

Govt.

2013-2014 I 45 27,000 Pending with

Govt.

2015-2016 I 38 22,800 Pending with

Govt.

2016-2017 I 38 22,800 Pending with

Govt.

II 38 22,800 Pending with

Govt.

BUNKAR BIMA YOJANA (2015-16)

There are 483 members are enrolled in this scheme. The amount spend under this

head is about Rs.1,80,000.

ELECTRICTY FREE DISTRIBUTION SCHEME

Claim submitted to electricity board : 369

So far sanctioned : 369

27
MERIT AWARDS

The society has been awarded as “BEST SOCIETY” by the Tamilnadu cooperative

union during the year 1974-1975, 1989-1990, 1990- 1991, 1999-2000, 2003-2004, 2010-2011

and 2014-2015.

The society has been awarded the “SIRUSTI” award by the co-optex for the year

1994-1995.

The society has been selected as “BEST SOCIETY” for the year 1994-95 and 1995-

96 by the government of India and was awarded merit certificate for 1994-95 and “GOLD

MEDAL” for 1995-96.

The society has been awarded as “THE BEST EXPORTERS” awarded by the

government of Tamilnadu during the year 1999-2000.

The society has been awarded ”SILVER MEDAL” for deemed exports from HEPC,

Chennai for the year 2001-2002.

The society has been awarded as “EXPORT FURNISHING” award by D.H&T.

Chennai for the year 2000-2001.

The society has been awarded as “BEST SOCIETY” by erode district cooperative

union during the year 2007-2008.

28
 ABOUT THE INDUSTRY
The weavers cooperative societies organized were of two categories

1. Primary Weavers Co-operative Societies

2. Industrial Weavers Co-operative Societies

In the primary weavers societies, only weavers owing handloom alone can become

eligible to become members of the primary weavers co-operative societies. They remain

under the clutches of master weavers who offered them very low wages and often thrown

them of the out of work.

In order to relieve these loom less weavers from the clutches of the master weavers

and to provide them reasonable wages, continuous work and the benefits of welfare schemes.

It became very essential to organize type of weavers co-operative societies, provide in

glooms, raw materials etc. So, with these objectives the industrial weavers co-operative

societies were under co-operative sector.

The industrial weavers co-operative society provides looms, raw materials, wages and

the benefits of welfare schemes to the loom less handloom weavers who are admitted as its

members. Further the share capital to be remitted to become members of the industrial

weavers a co-operative society has been fixed is rs.10% only per member, so that the entire

loom less members can join the society.

In chennimalai any primary handloom weavers cooperative societies organized and

are functioning well. In order to uplift the socio-economic status of the poor loom less

handloom weavers.

29
 CHAPTER - III

RESEARCH METHODOLOGY

RESEARCH:

Business research is a systematic inquiry that provides information to guide business

decisions and aimed to solve managerial problems. Business research is of recent origin and

it is largely supported by business organizations that hope to achieve competitive advantages.

Research methodology is a way to systematically solve the research problems. It may

be understood as a science of studying how research is done scientifically. It includes the

overall research design, the sampling procedure, data collection method and analysis

procedure.

RESEARCH DESIGN:

Research Design is the “blue print” of the study. Research design is the frame work

that has been created to seek answers to research question

There are various Research design that can be used in the research, the designs used in

this study are;

Quantitative Research: It refers to the data where it is expressed in form of

numbers. The quantitative data is easy to analyze and interpret. The qualitative

data in the other hand does not have definite value, it is just an approximation.

Quantitative Research is accurate data.

30
DATA COLLECTION

Data refers to the information that is acquired from the respondent

by the researcher to do the project. The data are true facts about the report. The

accuracy and the relevancies of the data is respect to the source of collection of

data.

There are 2 types of data collection;

 Primary data

 Secondary data

Primary data:

Primary data refers to the first hand data that is acquired by the researcher

from the respondent. These data are considerably accurate and the dependency

is more on the primary data as compared to the secondary data.

Secondary data:

The secondary data are the information that is acquired from the

source of data which was already be collected by someone, or it may be

available easily in the market.

31
 CHAPTER – IV

DATA ANALYSIS AND INTREPRETATION

DEBTORS VELOCITY
It shows the speed with which collections are made from debtors in other words the

days of credit allowed to debtors to make payment. Credit sales should be taken and in

absence of information relating to credit and cash sales the total sales mentioned in a problem

can be taken as the numerator. The main components of accounts receivable turnover ratio

are average trade debtors and net credit annual sales. The purpose of this ratio includes the

amount of trade debtors and bills receivable. The point which should be remembered while

calculation of the debtors turnover ratio is that provision for bad and doubtful debts should

not be deducted since this may given an impression that some amount of receivable has been

collected. If the information about opening and closing balances of trade debtors and credit

sales is not available, then the debtors turnover ratio can be calculated by dividing the total

sales by the balance of debtors.

Credit Sales
Debtors turnover ratio =
Debtors
Debtors
Debtors Velocity = × No of working days
Credit Sales

32
 CALCULATION OF DEBTORS TURNOVER RATIO

Year Sundry Debtors Credit Sales Debtors turnover

ratio

2011-2012 32824984 108326208 3.3001

2012-2013 36433716 102972820 2.8263

2013-2014 41069646 110427409 2.6888

2014-2015 44261178 114069492 2.5772

Source: Annual reports

From the above table it is observed that, during 2011-2012 the debtors

turnover ratio was 3.3001 which was decreased to 2.8263 in the year 2012-2013. In the year

2013-2014 and 2014-2015 it was 2.688 and 2.5772 respectively.

Hence there was a decreasing trend in its debtor turnover ratio for last four

years.

33
 SUNDRY DEBTORS

3.5

2.5
BEBTORS TURNOVER RATIO

1.5

0.5

0
2011-12 2012-13 2013-14 2014-15
YEAR

34
 CALCULATION OF DEBTORS VELOCITY

Year Sundry Credit Sales No. Of. Working Debtors velocity

Debtors days

2011-2012 32824984 108326208 210 63days

2012-2013 36433716 102972820 190 67days

2013-2014 41069646 110427409 180 66days

2014-2015 44261178 114069492 180 69days

Sources : Annual Reports

From the above table it is observed that, during 2011-2012 the debtors

velocity was 63 which was increased to 67 in the year 2012-2013. In the year 2013-2014 and

2014-2015 it was 66 and 69 respectively. Here the standard days for debtors velocity is 70

days. Hence there was a efficient debtors velocity is maintained in the company.

35
DEBTORS VELOCITY

70

69

68

67
COLLECTION PERIOD

66

65

64

63

62

61

60
2011-12 2012-13 2013-14 2014-15
YEAR

CREDITORS VELOCITY
It shows the speed with which payments are made for creditors in other words

the day of debt allowed by creditor to make the payment. Accounts payable turnover ratio

indicates the credit worthiness of the company. A high ratio means prompt payment to

suppliers for th goods purchased on credit and a low ratio may be a sign of delayed payment.

Accounts payable turnover ratio also depends on the credit terms allowed by suppliers.

Companies who enjoy longer credit periods allowed by creditors usually have low ratio as

compared to others. A high ratio is desirable but company should always avail the credit

facility allowed by the suppliers.

36
 Credit Sales
Creditors turnover ratio =
Creditors

Creditors
Creditors turnover ratio = × No of working days
Credit sales

CALCULATION OF CREDITORSTURNOVER RATIO

Year Sundry Credit Sales Creditors turnover

Creditor ratio

2011-2012 1350639 108326208 36.0533

2012-2013 1335571 102972820 36.4438

2013-2014 9909876 110427409 6.2884

2014-2015 3634567 114069492 12.7197

Source : Annual reports

From the above table it is observed that, during 2011-2012 the creditors turnover ratio

was 36.0533 which was increased to 36.4438 in the year 2012-2013. In the year 2013-2014

and 2014-2015 it was 6.2884 and 12.7197 respectively.

Hence there was a decreasing trend in its creditors turnover ratio for last four

years.

37
 SUNDRY CREDITORS

40

35

30

25
CTR

20

15

10

0
2011-12 2012-13 2013-14 2014-15
YEAR

38
 CALCULATION OF CREDITORS VELOCITY

Year Sundry Credit Sales No. Of. Working Creditors velocity

creditors days

2011-2012 1350639 108326208 210 26days

2012-2013 1335571 102972820 190 24days

2013-2014 9909876 110427409 180 25days

2014-2015 3634567 114069492 192 25days

Sources : Annual Reports

From the above table it is observed that, during 2011-2012 the creditors

velocity was 26 which was decreased to 24 in the year 2012-2013. In the year 2013-2014 and

2014-2015 it was 25 and 25 respectively. Here the standard creditors velocity is 25 days.

Hence there was a efficient creditors velocity is maintained in the company.

39
 CREDITORS VELOCITY

26.5

26

25.5
PAYMENT PERIOD

25

24.5

24

23.5

23
2011-12 2012-13 2013-14 2014-15
YEAR

40
STOCK TURNOVER RATIO

Inventory are the stocks of the product of a company and component therefore that

make up the product. Inventories constitute the most significant part of the cash management.

Inventories in Indian Industries constitute more than 60 percent of the current assets.

Officials always try to have stock of inventories to facilitate production and marketing

of the product. It requires more amount of investments and shall increase the cost of

production by way of interest payable on such investment. Inventories are significant

elements in cost process also. Therefore it is very essential to a proper management and

control over the investment in industries. Hence in this part and attempt is made to study the

size, growth, advances and composition of inventories on chencoptex ltd.,

Credit Purchase
Stock turnover ratio =
Average inventory

(Opening stock + Closing stock)

Average inventory =
2

41
 CALCULATION OF STOCK TURNOVER RATIO

Year Credit Opening stock Closing stock Stock turnover

purchase ratio

2011-2012 48695043 33318282 26698987 1.6227

2012-2013 48673220 26698987 29864980 1.7209

2013-2014 62317128 29864980 43508157 1.6986

2014-2015 46230704 43508157 35391135 1.9223

Sources : Annual Reports

From the above table it is observed that, during 2011-2012 the Stock turnover

ratio was 1.6227 which was increased to 1.7209 in the year 2012-2013. In the year 2013-2014

and 2014-2015 it was 1.6986 and 1.9223 respectively.

Hence there was a fluctuating trend in its stock turnover ratio for last four

years.

42
 STOCK TURNOVER RATIO

2.5

2
STOCK TURNOVER RATIO

1.5

0.5

0
2011-12 2012-13 2013-14 2014-15
YEAR

OPERATING CYCLE
43
 The operating cycle of a firm begins with the acquisition of materials and ends with

the collection of receivables. It may be divided into four stages.

1. Raw material and storage stage

2. Work in process stage

3. Finished goods inventory stage

4. Debtors collection stage

The working capital requirement mainly depends on the level of operations and length of

operating cycle.

Year Raw Finished Debtors Creditors Operating

materials goods collection payment cycle

storage period period

period

2010-2011 87.67 26.04 34.39 34.51 113.59

2011-2012 94.66 28.98 31.59 24.31 130.92

2012-2013 115.88 32.44 24.26 22.61 149.97

2013-2014 128.11 39.55 24.74 20.11 172.29

2014-2015 145.66 45.72 31.79 30.76 192.41

Average 114.39 34.54 29.35 26.46 151.83

Source : Annual Report

The above table shows the raw material storage period is the maximum. The greater

raw material storage period has also increased the operating cycle.

44
 The working process shows worth of cost of production on the average is held in the

form of working in process inventory reflecting efficiency in the management of work in

process.

The figure represents the worth of cost of sales on the average has been held in the

form of finished goods inventory.

Average collection period denotes that days worth of credit sales are held on an

average in the form of finished goods inventory. This reflects high turn over of account

receivable indicating efficiency in the management of receivables.

Chencoptex has an average period of 70 days indicating that 70 days worth of capital

purchases are held in their form of sundry creditors. Although sundry creditors is a non

interest bearing current liability a reduction in the average payment period is likely to

enhance the image of the company from its suppliers point of view.

The end result of the calculation is reflected in the operating cycle whose duration is

152 days consequently the operating cycle repeat itself on the average 1.36 times in a year.

45
200
180
160
140
120
100
80
60
40
20
0
2010-2011 2011-2012 2012-2013 2013-2014

CAPITAL TURNOVER RATIO

46
 This shows the number of times the capital has been rotated in the process of carrying

on business. Efficient utilisation of capital would lead to higher profitability. The relationship

between sales and capital employed is known as capital turnover ratio. The ratio is calculated

as

Sales
Capital turnover ratio =
Capital employed

Net sales = cash sales + credit sales – sales return

Capital employed = share capital + long term loan + reserves

Where sales means sales less sales return and capital employed refers to total long

term funds of the business concern i.e., equity share capital, preference share capital, reserves

and surplus and long term borrowed funds.

47
 CALCULATION OF CAPITAL TURNOVER RATIO

Year Sales Capital employed Capital turnover

ratio

2011-2012 178450 148708 1.2

2012-2013 254500 169666 1.5

2013-2014 300000 176471 1.7

2014-2015 350000 175000 2

Source : Annual Report

The above table shows relationship between the sales and capital employed. During

2011-2012 the capital turnover ratio was 1.2 which was increased to 1.5 in the year 2012-

2013. In the year 2013-2014 and 2014-2015 it was 1.7 and 2 respectively. Company’s net

working capital is increasing year by year. Because sales are increasing year by year. So the

capital turnover ratio is showing increasing trend.

48
 CAPITAL TURNOVER RATIO

2.5

2
CAPITAL TURNOVE RRATIO

1.5

0.5

0
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

49
 FIXED ASSESTS TURNOVER RATIO

This shows how best the fixed assets are being utilised in the business concern. The

relationship between sales and fixed assets is known as fixed assets turnover ratio. The ratio

is calculated as

Sales
Fixed assets turnover ratio =
Fixed assets

Fixed assets means fixed assets less depreciation.

Generally speaking, the higher the ratio, the better, because a higher ratio indicates the

business has less money tied up in fixed assets for each unit of currency of sales revenue. A

declining ratio may indicate that the business is over invested in plant, equipment, or other

fixed assets.

50
 FIXED ASSETS TURNOVER RATIO

Year Sales Fixed assets Fixed assets

turnover ratio

2011-2012 8678480 4339240 2

2012-2013 9386386 3128795 3

2013-2014 9978831 2217518 4.5

2014-2015 10368683 2073737 5

Source : Annual Report

During the study period, the company’s fixed assets turnover ratio is showing the

utilization of fixed assets in the business concern. During 2011-2012 the fixed assets turnover

ratio was 2 and it was increased to 3 during 2012-2013. In the year 2013-2014 and 2014-2015

it was 4.5 and 5 respectively. This shows the growth of fixed asset year by year.

51
 FIXED ASSETS TURNOVER RATIO

4.5

4
FIXED ASSETS TURNOVER RATIO

3.5

2.5

1.5

0.5

0
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

52
 CURRENT RATIO

This ratio is used to assess the firm’s ability to meet its current liabilities. The
relationship of current assets to current liabilities is known as current ratio.

Current Asset
Current Ratio =
Current Liability

YEAR CURRENT CURRENT RATIO RECOMMENDED GROWTH

ASSET LIABILITY

2011-2012 30146720 23733119 1.270 2:1 Base Year

2012-2013 40069966 30591399 1.309 2:1 +0.039

2013-2014 58791889 47465411 1.238 2:1 -0.032

2014-2015 67713364 55202019 1.226 2:1 -0.044

Source : Annual Report

During the study period, the company’s current ratio is showing the company’s

liquidity position. It shows the current ratio is not meeting company standard 2:1. So this will

clearly showing poor liquidity position.

53
 CURRENT RATIO

0.047
0.0468
0.0466
0.0464
0.0462
0.046
0.0458
0.0456
0.0454
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

LIQUIDITY RATIO
This ratio is used to assess the firm’s short term liquidity. The relationship of liquid
assets to current liabilities is known as liquid ratio. It is otherwise called as quick ratio or acid
test ratio.

Liquid assets

Liquidity ratio =

Current liability

YEAR LIQUID CURRENT RATIO RECOMMENDED GROWTH

ASSETS LIABILITY

2011-2012 20293873 23733109 0.885 1:1 Base year

2012-2013 22070360 30591398 0.721 1:1 -0.134

54
2013-2014 30034798 47465411 0.632 1:1 -0.223

2014-2015 23362665 55202018 0.423 1:1 -0.432

Source : Annual Reports

During the study period, the company liquid position is below industry standard. So

that this is showing poor liquidity management.

LIQUIDITY RATIO

0.047
0.0468
0.0466
0.0464
0.0462
0.046
0.0458
0.0456
0.0454
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

GROSS PROFIT RATIO

This ratio indicates the efficiency of trading activities. The relationship of gross profit

to sales is known as gross profit ratio. Gross profit is taken from the trading account of a

55
business concern. Otherwise gross profit can be calculated by deducting cost of goods sold

from sales. Sales means net sales.

Gross profit

Gross profit ratio = × 100

Net sales

YEAR GROSS SALES RATIO GROWTH

PROFIT

2011-2012 2141400 44202565 4.84 Base year

2012-2013 803557 47253143 18.63 13.79

2013-2014 8639179 50656123 17.05 12.21

2014-2015 10341030 70436056 14.28 9.44

Source : Annual Report

The gross profit of the company was 4.84 during the year 2011-2012 which increases

to 18.63 during the year 2012-2013. Then the gross profit decreases to 17.05 and 14.28

during the year 2013-2014 and 2014-2015 respectively. The above table shows increasing

sales reflected in profitability.

56
 GROSS PROFIT RATIO

0.047
0.0468
0.0466
0.0464
0.0462
0.046
0.0458
0.0456
0.0454
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

NET PROFIT RATIO

This ratio determines the overall efficiency of the business. The relationship of net

profit sales is known as net profit ratio. Net profit is taken from the profit and loss account of

the business concern or the gross profit of the concern less administration expenses, selling

and distribution expenses and financial expenses.

Net profit
Net profit ratio = × 100
Net sales

YEAR NET PROFIT SALES RATIO GROWTH

2011-2012 3160379 44202565 7.15 Base year

2012-2013 4819773 47253143 10.20 3.05

2013-2014 3400035 70436056 6.17 -0.44

57
 2014-2015 3971155 121747757 5.63 -1.52

Source : Annual Report

The net profit ratio was 7.15 during the year 2011-2012 which increases to 10.20

during the year 202-2013. Then the net profit ratio was decreases to 6017 and 5.63 during the

year 2013-2014 and 2014-2015 respectively.

NET PROFIT RATIO

0.047
0.0468
0.0466
0.0464
0.0462
0.046
0.0458
0.0456
0.0454
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

OPERATING PROFIT RATIO

This ratio is an indicator of the operational efficiency of the management. It establishes the

relationship between operating profit and sales.

Operating profit
Operating profit ratio = ×100
Net sales

58
 YEAR OPERATING NET SALES RATIO GROWTH

PROFIT

2011-2012 2045912 44202565 0.046 Base year

2012-2013 2148785 46824565 0.046 0.000

2013-2014 2398455 50653123 0.047 0.001

2014-2015 2891956 70436056 0.047 0.001

Source : Annual Report

The operating profit ratio was 0.046 during the year 2011-2012 and 2012-2013 which

was increases to 0.047 during the year 2013-2014 and 2014-2015 respectively.

OPERATING PROFIT RATIO

0.047
0.0468
0.0466
0.0464
0.0462
0.046
0.0458
0.0456
0.0454
2011-2012 2012-2013 2013-2014 2014-2015
YEAR

59
 FINDINGS
 The highest debtors ratio is 3.3001 during the year 2011-2012, there is a decreasing
trend in the debtors turnover ratio.
 The least debtors velocity is 63 days during the year 2014-2015, this shows that the
collection period is less than the standard period.
 The highest creditors ratio is 36.0533 during the year 2011-2012, there is a fluctuating
trend in the creditors turnover ratio.
 The highest creditors velocity is 26 days during the year 2012-2013, this shows that
the payment period is greater than the creditors velocity.
 The highest stock turnover ratio is 1.9223 during the year 2014-2015, there is a
increas9ing trend in it.
 The growth of the sales in increasing trend with the high sales of 114069492 during
the year 2014-2015.
 The fixed asset is 6962316 during the year 2014-2015 it increases the fixed asset year
by year.
 The profit shows the increasing trend in the analysis, the highest profit is made during
2014-2015 with 4819774.
 The capital turnover ratio is 2 during the year 2014-2015. This also shows the
fluctuating trend in it.
 The fixed assets is increased to 5 during the Year 2014-2015, this also shows the
increasing trend in it.

SUGGESTION

CONCLUSION

From the for gong analysis, it can be emphasized that basically the object of cash
management centres the success of level of liquidity , its management of cash balance and its
short term investment strategies. Thus the company need to concentrate on improving current
assets level in order to have higher profitability in future.

60