Finance and production management

1. FINANCE AND PRODUCTION
MANAGEMENT
Guided By: Prof.S.R.Pahuja
M.Pharm, Asst.Prof. Dept.of Pharmaceutics
Presented By: Arjun S.Dhawale
B.Pharm IV year
S.G.S.P.S.INSTITUTE OF PHARMACY,AKOLA

2. CONTENT
• Finance Management
1) What is Finance?
2) Types of finance
3) Source of finance
• Production Management
1) Introduction
2) Types of production system
3) Production planning
4) Production control
• References
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3. Finance Management
 What is Finance?
“Finance can be defined as the provision of
money for smooth running of business
organisation as and when firm requires it.”
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4. Aspects of financial planning
 Estimating the amount of capital to be raised
 Determination of securities to be raised
 Lying down effective policies
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5. Types of FINANCE
1. Fixed capital
2. Working capital
Fixed capital:
 Invested in permanent assets(land, plant
machinery, furniture, building)
Working capital:
 Required for purchasing raw material, daily
expenses such as wages ,rents, salaries,
taxes, interest, etc.
 It is revolving or circulating capital
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6. The Working capital is of two types:
1. Fixed working capital
2. Variable working capital
Fixed working capital
 Needed immediately after establishment of new
business
 To maintain minimum level of stock of raw
materials
 To pay regular expenses
Variable working capital
 Additional working capital arising out of
seasonal demand of product or
 Any unpredictable, sudden increase in the
volume of business
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7. Source of Finance
1. Owned capital
2. Loan capital/borrowed capital
Owned capital:
 Contributed by the owner, partners,
shareholders
 Represents the net asset
 It is surplus left after pay off and sale
Loan capital:
 Raised from financial institutions, industrial
banks
 Periodic payment of interest
 Repayment of loan capital after expiry
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8. Sources of finance classified on the basis of
duration:
1. Long-term finance
2. Medium-term finance
3. Short-term finance
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9. Long-term finance
 long period i.e upto 10yr or more.
 Often invested in fixed assets such as land
,building,plant,machinery etc.
Can be raised through –
a) Shares
b) Debentures
c) Ploughing back of own profit
d) Financial institutions
Shares
A share is a unit of capital expressing the ownership
relationship between the company and the
shareholder.
 Preference shares
 Ordinery shares
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10. • Preference shares:
 Referred as preferred stock
 Preference shareholder gets fixed profit and
remainder is divided among the ordinary shareholders
• Ordinary shares/equity shares:
 Real owners of the organisation as the company is
controlled by them
 Dividend is paid after preference shares has been paid
Debentures
 It is a document or certificate issued by the company
acknowledging loan and also gives an undertaking of
repay with specified borrowed sum along with
interest to the debenture-holder on a prescribed time
period
 Debenture-holders are Creditors not share-holders
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11. Ploughing back of own profit
 Re-investment of profit
 Not distributed or partially distributed among partners,ordinary share-
holders
 Reserve fund
Financial institutions
 Set up by center & state Gov.
 To provide long-term & medium-term finance to industrial concern
 Fixed low rate of interest
 Examples-
o Industrial Finance Corporation of India(IFCI) July1948: rendering
financial assistance,period 25 yrs
o Industrial Development Bank of India(IDBI) July 1964,aimes
toward coordinate,regulate,supervise the activities other financial
institutions
o Industrial credit &Investment Corporation of India(ICICI)
January1955
o Industrial Reconstruction Bank of India(IRBI) to nurse sick
industry
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12.  For period less than 2 years
 To meet seasonal and current
expenditure,purchase,payment.
Sources of credit raising finance for short term:
1. Trade credit
2. Bank credit
3. Installment credit
Medium-term finance:
 Remain invested period between 2 to 10 years
 Used to implement, expansion, extension or
modernization programmes of a business
 Raised through shares ,debentures, term loans from
banks and public deposits
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Short term finance:

13. Production Management
Introduction:
“Production is defined as a procedure of
converting a set of input namely, men
material, methods, money,information and
labour into finished products or services”
Production Management refers to application of
management principles to the production
function in a factory”
Production principles are planning ,organizing,
directing, controlling.
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14. Production system
“Production system may be defined as the
framework of activities with which the inputs
are transformed into value-added product”
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MEN
MATERIALS
ENERGY
GP
Plant &
facilities
Goods &
services
Input Output
Production
process

15. Types of production system
1. Continuous Production
2. Intermittent Production
“Continuous Production involves uninterrupted flow of
material into methods and machine to produce standardized
finished products in large quantities”
 Flow production system.
 Raw material enter at one point and finished product leaves
at the other.
 Materials are handled by fully automatic systems.
 Ex. tomato sauce ,juice ,ice cream production
 Essential for mass production
“Intermittent Production involves interrupted flow of
materials into methods and machines to produce
standardized finished products in small quantities”
 The conventional production system of pharmaceutical
formulations namely tablets, capsules, liquid orals
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16. Intermittent production further classified as
a. Batch production type
b. Job order production type
Batch Production type:
 Same production line can be used for next product
 Repetitive production of goods the quantity of
which is known
 Consumer demand, small scale business run
Job order Production:
 Each job is different from previous with respect to
its type specification,quality,quantity
 A job production is undertaken after receiving the
order with specifications
 Number of items produced is small and high
degree of control is involved
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Job shop:
“A job shop involves a number of machine centers,
each with a fundamentally different activity to
manufacture product”
 Closed job shop: is one in which products are
manufactured as per the requirement of
organization and outside jobs are not accepted
 ex. Machine shop making automobile parts.
 Open job shop: An open job shop makes products
as per the requirement of the organization as well
as outside customers are received.

18. Production Planning
“Production planning is defined as the preparation of
detailed plan to manufacture a product”
After , What to produce? And How much to produce?
Next is ,How to Produce?
Procedure:
1. Planning of process
2. Planning of materials
3. Planning of layout
4. Setup time
5. Route sheets
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19. Production Control
 Production control is the activity of
monitoring and controlling any perticular
production or operation”
production system involves four stages viz.
obsrvation ,analysis, correction ,post-
operative evaluation.
Progress control
Flow control
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20. Functions of Production Control
 Receives work progress reports
 Compares them with scheduled plan
 Removes cause of delay in production
 Modifies the schedules or plant capacities
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21. References:
 R.M.Mehta,Drug Store And Business
Management,Vallabh Prakashan,Fifth edition
2010,page no.144 to 150
 C.V.S. Subrahmanyam, Pharmaceutical
Production And Management,Vallabh
Prakashan,Reprint 2015,pg.no. 67 to 91
 www.Investopedia.com
 www.wikipedia.com
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22. 4/6/2022
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