Working Capital & Financial Analysis of MCC PTA India

MCC PTA INDIA CORP. PRIVATE LIMITED
GROWING TOGETHER BEYOND CHEMISTRY
A REPORT ON
WORKING CAPITAL MANANGEMENT
&
FINANCIAL PERFORMANCE ANALYSIS
FOR
MCC PTA INDIA CORP. PRIVATE LIMITED
BY
POOJA GHOSH
ENROLLMENT NUMBER: 12BSPHH010703
IBS HYDERABAD

A Project Report on
Working Capital Management
&
Financial Performance Analysis
For
MCC PTA India Corp. Private Limited
Submitted By:
Pooja Ghosh, 12BSPHH010703
A report submitted in partial fulfillment of the requirements of
MBA Program of IBS Hyderabad
Submitted to:
Mr. Kaushik Dutta Dr. P Hanumantha Rao
Company Guide Faculty Guide
MCC PTA India Corp. Private Limited IBS Hyderabad
Date of Submission: 24th May, 2013

AUTHORIZATION
This report has been prepared under the guidance of Mr.
Kaushik Dutta, Additional Senior Manager-Finance, MCC
PTA India Corp. Private Limited and Dr. P Hanumantha Rao,
IBS Hyderabad. This report is submitted as partial fulfillment
of the requirements of MBA Program of IBS Hyderabad.
Date of Submission: 24th
May, 2013

ACKNOWLEDGEMENT
I would like to take this opportunity to thank all those people who have made working on this report feasible
for me. Firstly, I would like to thank MCC PTA Corp. India Private Ltd.(A subsidiary of Mitsubishi
Chemical Corporation, Japan) for providing me with the opportunity of working with them and providing
me with the flavour of working in a corporate environment. It gave me an opportunity to have a real time
experience and also a chance to implement all those conceptual knowledge which I had acquired in my
textbooks. I would also like to extend my sincere gratitude to Mr. Kaushik Dutta, my company guide for
allowing me to work under his guidance in the company and helping me throughout the Internship Program.
Without his help and support, this project would not have been possible. I extend my special thanks to the
Finance & Banking Department members mainly Mrs. Diya Biswas, Miss Rashmi Mitra for helping me
thoroughly in my day to day working in the company and implementation of my project.
Also, I would like to extend my sincere thanks to my Faculty Guide, Dr P Hanumantha Rao for his
constant help and guidance. I am highly grateful to him for being a source of constant support and providing
help whenever I needed right from the very first day of my internship. Further to this I would like to thank
all the employees working at MCC PTA India Corp. Private Limited for being so cooperative with me. It
has been a great learning experience.

TABLE OF CONTENTS
Authorization..........................................................................................................................................................................i
Acknowledgement..............................................................................................................................................................ii
Abstract..................................................................................................................................................................................iii
Introduction..........................................................................................................................................................................1
Research motivation..........................................................................................................................................................1
Scope of the Study .........................................................................................................................................................2
Research Objectives......................................................................................................................................................2
Literature Review..........................................................................................................................................................3
Research Methodology.....................................................................................................................................................4
Research Design .............................................................................................................................................................4
Data Collection Methods.............................................................................................................................................4
Period of Study................................................................................................................................................................5
Tools and Techniques Used For the Study .........................................................................................................5
Limitations of the Study..............................................................................................................................................5
Economy Industry Analysis............................................................................................................................................8
The Chemical Industry ................................................................................................................................................8
Global Chemical Industry ...........................................................................................................................................9
The Global Scenario of the Chemical Industry................................................................................................11
Trends in the Chemical Industry in 2012 .........................................................................................................11
Indian Chemical Industry.........................................................................................................................................12
The Policy and Promotion of Chemical Industry...........................................................................................13
Challenges Faced By the Indian Chemical Industry......................................................................................13
Strategies for Improving Chemical Industry ...................................................................................................14
Major Chemical Industries in India......................................................................................................................15
Company Overview..........................................................................................................................................................20
Company Profile................................................................................................................................................................29
Awards and Recognitions ........................................................................................................................................22
MCC PTA India Corp. Private Limited’s..............................................................................................................23
Vision and Mission Statement................................................................................................................................23
Product Offer.................................................................................................................................................................25
Main objectives of the Company ...........................................................................................................................26
Safety, Health & Environment Policy..................................................................................................................26
Corporate Social Responsibility Activities........................................................................................................26
Environment Statement............................................................................................................................................27

Working Capital Management.....................................................................................................................................30
Determinants of Working Capital.........................................................................................................................31
Objectives of Working Capital Management....................................................................................................32
Types of Working Capital.........................................................................................................................................32
Working Capital and the Cash Conversion Cycle................................................................................................33
Cash Conversion Cycle-MCC PTA India Corp Private Ltd...........................................................................34
OPERATING CYCLE..........................................................................................................................................................36
Gross Operating Cycle and Net Operating Cycle.................................................................................................37
OPERATING CYCLE OF MCC PTA INDIA CORP. PRIVATE LIMITED......................................................37
Net Operating Cycle And Gross Operating Cycle............................................................................................39
Correlation Analysis ...................................................................................................................................................40
Credit Monitoring Arrangement for Working Capital Needs ........................................................................42
Forms of Bank Finance..............................................................................................................................................42
Receivables Management..............................................................................................................................................46
Objectives of Receivables Management .............................................................................................................46
Purpose of Credit Granting Process in a Company .......................................................................................46
Credit Management At MCC PTA India Corp. Pvt. Ltd. ................................................................................47
Credit Conditions and Its Components ..............................................................................................................48
Credit Monitoring and Control...............................................................................................................................49
Method of Checking Status of Accounts Receivables...................................................................................50
Sales And Collection Figures For The Past 5 Years............................................................................................51
Correlation Analysis ........................................................................................................................................................52
Descriptive Statistics.......................................................................................................................................................53
Moving Average Examination for Credit sales of 5 Years...............................................................................54
Monthly sales as a percentage of Total Yearly Sales.........................................................................................56
Sales Forecasting...............................................................................................................................................................57
Cash Management At MCC PTA India Corp. Private Limited .........................................................................61
Factors for Efficient Cash Management .............................................................................................................61
Cash Management Cycle................................................................................................................................................62
Reasons for Holding Cash.........................................................................................................................................62
Need for Cash Management ....................................................................................................................................63
Facets of Cash Management.........................................................................................................................................63
Receipt and Disbursements Methods Followed by MCC PTA India Corp. Private Limited..............64
Process of Cash Monitoring in the Company ...................................................................................................75
Cash Flow Sensitivity Analysis Of MCC PTA India Corp. Private Limited ................................................76

Inventory Management..................................................................................................................................................79
Ways to Maintain Material Accounting by MCC PTA India Corp. Private Limited ..........................79
Inventory Management System in MCC PTA India Corp. Private Limited..........................................80
Accounts PayableProcess.............................................................................................................................................83
Objectives of the Accounts Payable Department...........................................................................................83
Average Payment Period..........................................................................................................................................84
Procedures for Accounts Payable.........................................................................................................................85
Financial Performance Analysis.................................................................................................................................87
Main Areas of Financial Performance Analysis..............................................................................................87
Types Of Financial Performance Analysis.........................................................................................................87
Tools of Financial Performance Analysis..........................................................................................................88
Objectives of FinancialPerformance Analysis................................................................................................88
Ratio Analysis.....................................................................................................................................................................89
Firm wise Analysis ......................................................................................................................................................89
Liquidity Ratios:...........................................................................................................................................................89
Capital Structure Ratios (Leverage Ratios):.....................................................................................................82
Profitability Ratios:.....................................................................................................................................................93
Turnover Ratios (Activity Ratios):.......................................................................................................................87
Inter-Firm Analysis..........................................................................................................................................................98
Du Pont Analysis...............................................................................................................................................................97
Altman’s Z-Score Analysis..........................................................................................................................................112
Leverage Analysis..........................................................................................................................................................117
Trend Analysis ................................................................................................................................................................120
Trend Analysis of MCC PTA India Corp. Private Limited ........................................................................120
Common Size Statement Analysis ..........................................................................................................................122
Return on Equity Analysis .........................................................................................................................................124
Return on Equity And Its Components............................................................................................................125
Asset Management Ratios..........................................................................................................................................126
Findings & Recommendations.................................................................................................................................128
List of Annexures ...........................................................................................................................................................129
List of illustrations ........................................................................................................................................................129
References.........................................................................................................................................................................130

ABSTRACT
Cash is the lifeline to any business. If this lifeline deteriorates, then automatically the
company’s ability to fund operations, meet capital requirements and reinvests also
deteriorates. So understanding a company’s cash flow situation is essential for making
investment decisions. The best way to judge the company’s cash flow prospects is to analyze
its working capital management.
Working capital management is considered to be a crucial element in determining the
financial performance of any organization. The main purpose of this report is to investigate
the relationship between working capital management and financial performance of MCC
PTA India Corp. Private Limited.
The most crucial part of management is to maintain an adequate liquidity in day-to-day
operations to ensure smooth functioning of its operations. It is therefore suggested that a firm
should invest more on current assets than on fixed assets to maintain adequate liquidity.
However the company’s decision to the level of investment in current assets involves a
tradeoff between risk and return. The firms are supposed to maintain a right balance to
maintain a proper proportion of liquidity and profitability that is if the firm invests more on
current assets it loses in terms of profitability and if it does not invest in current assets it loses
in terms of liquidity to meet its current obligations (payments and short term liabilities).
Working capital management efficiency is vital for this firm as it is into bulk manufacturing
and selling of chemicals. In this company a major bulk of the assets is composed of current
assets. Therefore, it can be said that efficient working capital is the lifeline for this business
and its proper management can ensure success and sustainability of its operations.
This project involves determining a balanced working capital management and examine a
strong relationship between effective working capital management and financial performance
of the company by studying and analyzing company records from 2007-2012. The study
would also involve how the company functions in terms of its other important dimensions
like receivables management, inventory management, payables management and cash
management. I have examined its nearest competitors to find the financial standing of the
company across 5 years.

INTRODUCTION
Working capital management aims at maintaining an optimal balance between
each of the working capital components, that is, cash, receivables, payables
and inventory which is the fundamental part of the business. There is a strong
positive relationship between working capital management and financial
performance of a company. Apparently every organization needs liquidity
for delivering unperturbed services & its own operations. It serves as an
indispensable channel between production and sales. Working capital
management in a manufacturing company plays a vital role because
manufacturing companies need liquidity to carry on their day to day activities
smoothly and it is an important component of their financial management.
Altman’s Z-Score Analysis is an important statistical tool to determine the
financial fitness and solvency of the company. It has been proved that a high
investment in inventories and receivables is associated with low profitability.
Therefore, to assess the financial performance of the company, liquidity and
solvency is not the only parameter to be considered, the other parameters like
profitability, operating efficiency, repayment capacity and financial
efficiency are equally important.
RESEARCH MOTIVATION
MCC PTA India Corp. Private Limited is a subsidiary of Mitsubishi Chemical Corporation,
Japan a Fortune 500 giant of the world and is Japan’s largest diversified chemical industry. It
is also the world’s second largest producer of Purified Terephthalic Acid (PTA). It is an
interesting subject to study the working capital management and financial performance
analysis of this company as working capital is the most important aspect of this company
because it needs lot of funds for the purchase of raw materials and its day to day
expenditures. The working capital cycle time would be an important aspect to look at and
recommend ways to improve the financial performance of the company.

SCOPE OF THE STUDY
The study would elucidate the importance of working capital management on the financial
performance of the company. The findings and analysis of the report would surely give the
management of the company an idea about the strengths and weaknesses of the company.
The company can take suitable measures on how it will spend its funds on day to day
operations and purchase of raw materials and maintain financial stability over the years.
RESEARCH OBJECTIVES
The prime objective of this report is to study the working capital management and financial
performance analysis of MCC PTA India Corp. Private Limited.
1) To make an item wise study of the various components of working
capital and analyze the trend of working capital of the company.
2) Evaluate methods of debtor payments and establishing optimal working
capital cycle for encouraging payment of debtors using short term sources
of funds.
3) Assessment of long term financial viability of the company, to know
whether the company focuses on the profitability aspect more or the
liquidity aspect more.
4) Using Altman’s Z-score analysis to measure the financial condition of
the company and its nearest competitors.
5) Analyze the pattern of sales and its collections (receivables management).
6) The existing pattern of financing current assets of the company
(Preparing Credit Monitoring Assessment Report for need of working
capital needs of the company).
7) Provide the management with appropriate policy recommendations and
desirable financial information that adds value to the company.

LITERATURE REVIEW
Deloof (2003) has investigated the relationship between working capital management and
firm profitability by using the Cash Conversion Cycle (CCC) as a tool for working capital
management. Various ratios can be used to evaluate the company’s short term assets and
liabilities. Well known examples are the liquidity ratios like current ratio and quick ratio
(Volkart, 2006). These ratios focus on the firm’s short term solvency, since they provide an
indication of how well the short term liabilities are covered by short-term assets and hence
examine a firm’s liquidity.
Singh (2008) found that size of the inventory directly affects working capital and its
management. He suggested that inventory was the major component of working capital, and
needed to be carefully controlled. There seems to be a strong relation between the cash
conversion cycle of a firm and its profitability. The three different components of cash
conversion cycle (accounts payables, accounts receivables, and inventory) can be managed in
different ways in order to maximize profitability or to enhance the growth of a company.
Sometimes trade credit is a vehicle to attract new customers. Many firms are prepared to
change their standard credit terms in order to win new customers and to gain large orders
(Nam Sang Cheng & Richard Pike (2003),’The Trade Credit Decision: Evidence of UK
Firms’.’Managerial and Decision Economics’, 24: (419-438).
Samiloglu and Demirgunes (2008) analyzed the effect of working capital management on
firm profitability in Turkey for a period of 1998-2007. Empirical results showed that,
accounts receivables period, inventory turnover period and leverage significantly and
negatively affect profitability. They also proved that cash conversion cycle, size and fixed
financial assets had no statistically significant effect on profitability.
Evaluating financial performance by Jaime F. Zender says that financial performance of a
company can be measured by Return on Equity. The three major determinants of ROE are
profit margin, asset turnover and financial leverage. The Altman Z-score is based on
discriminant analysis and includes financial ratios as inputs (Calandro, 2007). It was
published by Edward I. Altman.

RESEARCH METHODOLOGY
RESEARCH DESIGN
The study is aimed at identifying the need of working capital management of MCC PTA
India Corp. Private Ltd as it involves smooth functioning of day to day functioning of the
operations of the business. This study is important as it identifies the importance of cash
management, inventory management and receivables management of the company. This
company mainly deals with manufacturing and selling of PTA so efficient management of
resources play a vital role. This is appropriate as this study would help in identifying new
opportunities present in the decision situation and it also serves as a step towards further
research activity.
The project focuses mainly on the working capital management and financial performance
analysis of the company with the help of the most appropriate instruments of financial
analysis like ratio analysis, inter firm analysis and trend analysis, cash conversion cycle,
operating cycles of the company from 2008-2012. This would help us to analyze the trend
and pattern of working capital needs and working capital growth of the company. The study
undertakes to develop a financial performance analysis to predict the future sustainability and
solvency of the company.
DATA COLLECTION METHODS
The study under reference is based on Secondary data namely Annual reports and
internal/sales records. Other than that the company’s stock reports, report of physical
verification of fixed assets, debtors & creditors balance confirmation & bank balance
confirmations were also taken into consideration for the convenience of the study. In addition
certain theoretical books were referred for the purpose of the analysis and certain valuable
information was found from different websites.
The study also includes Primary data which was collected by conducting various
discussions and interviews with the managers and employees of the company.

PERIOD OF STUDY
The period of study that was taken into consideration for the study is from fiscal years 2007-
2012.
TOOLS AND TECHNIQUES USED FOR THE STUDY
1) Altman’s Z-score analysis
2) Financial ratio analysis.
3) DuPont Analysis
4) Calculate various components of Return on Equity
5) Comparative financial statements
6) Trend analysis (Indexing)
7) Common size analysis
8) Regression analysis
9) Correlation analysis
10) Moving averages
11) Cash Conversion Cycle for working capital management.
12) Net working capital
13) Certain software was used for interpretation of data.
LIMITATIONS OF THE STUDY
For studying the working capital management and financial performance analysis of MCC
PTA India Corp Private Ltd. certain limitations were faced during the study. The limitations
are as follows:
1) As the study is based on Secondary data, integral restrictions of the
secondary data shall always prevail.
2) There can be a possibility of some factors that may be overlooked while
estimating the financial performance analysis of the company.
Environmental and macro economic factors were not considered while
judging the performance of the company.

3) Due to prevalence of some data access constraints & software limitations
the sample studied was limited. The objective of the study would have
been improved if a large dataset would be available.
4) This study is primarily based on the historical data and information
provided in the Annual Reports so it might not be a good future indicator.
5) Fractional differences may occur in the calculated ratios.
6) Many firms were omitted from the analysis of study because of lack of
data and their inconsistent performance over the years.
7) Analysis is done from 2007-2012 so it might not be a good indicator of
judging the financial performance of the company.

CHEMICAL INDUSTRY
INDUSTRY PROFILE

ECONOMY INDUSTRY ANALYSIS
THE CHEMICAL INDUSTRY-PTA SEGMENT
Del Meyer produced the first PTA. He joined a company named Amoco where a testing of a
new technology developed by a firm called Scientific Design which would convert
paraxylene to terephthalic acid. Chemicals form a part of every human life right from the
food we eat and the clothes we wear to the car we drive. So we can simply say that the
chemical industry contributes to improve the quality of life through one after the other
breakthrough innovations in providing various products and technical solutions in virtually
all sectors of the economy. The chemical industry is extremely critical for the economic
development of the country. This industry is constantly in its path of innovation and
development as it provides fibres, plastics and life materials that make life modern. In our
study we are talking about a chemical industry which produces PTA as their finished product.
PTA is primarily used in polyester production with polyester fibre consuming a large
proportion of global output. BP, Amoco Chemicals, Alfa Mexico, Reliance Industries Ltd,
Mitsubishi Chemical Corporation (MCC), Sinopec, Zhuhai Biyang Chemical Co., Ltd,
Luoyang Petrochemical Co., Ltd Tianjin Petrochemical Co., Ltd. Xiamen Xianglu
Petrochemical Co., Ltd, Jinan Qilu Group Synthetic Fiber Co., Ltd are some of the leading
producers of PTA. Technology licensors for PTA are Dupont, Mitsui, Dow/Inca, Mitsubhishi,
Tuntex, Interquisa, Eastman, Lonza and Hüls/Witten.

GLOBAL CHEMICAL INDUSTRY
The Asian region has emerged to be the largest contributor to the global chemical industry,
which is followed by Europe. If we talk from an individual approach we can say that China
has emerged to be the largest market for chemicals followed by USA, Japan, Germany and
France. International trade has emerged to have a continuous growth with global exports of
chemicals recording an average increase of 6.2% during 2006-2010. The trends that drive the
growth of the chemical industry globally are globalization, urbanization, new patterns of
consumption, convergence of technologies and quality of healthcare.
Just as we could name the companies producing chemicals worldwide we can also look on a
more global scale to how industrialized countries rank in terms of business of chemicals
(production and exports).

The largest corporate that manufactures chemicals worldwide and in numerous countries are:
BASF Chemicals, Mitsubishi Chemicals, DuPont, Dow Chemicals, EXXON Mobil, Eastman
Chemical company along with many other small industries.

THE GLOBAL SCENARIO OF THE CHEMICAL INDUSTRY
The chemical industry is basically the key contributor to the world economy. The size of the
global industry is increasing in a fast scale. The industry is currently underperforming and is
in a trough of the business cycle. Some of the emerging trends of the global chemical
industry that can be leveraged for growth are:
1) Increasing globalization as growth in some mature markets drives the leading players
to explore the new developing markets.
2) There is a steady increasing investment in R&D to gain competitive advantage.
3) There is a steady focus on core businesses, which results in diversified chemical and
multi-product companies divesting businesses or existing non-core product lines.
4) There is an increasing use of IT to transact business and focus is being made in the
supply chain too.
TRENDS IN THE CHEMICAL INDUSTRY IN 2012
There is a steady trend in the chemical industry in the recent years. The various scope that has
been observed in the chemical industry are as follows:
1) Growth in global chemical production (excluding pharmaceuticals) considerably
slower than in previous year (2012: +2.6%; 2011: +3.8%)
2) Increase in demand not as sharp as in 2011
3) Chemical production in the European Union declines by 1.4%
4) Price of Brent blends crude oil comparable with high level of previous year.

INDIAN CHEMICAL INDUSTRY
With Asia’s growing contribution to the chemical industry, India has emerged to be one of
the focus destinations for chemical companies worldwide. Chemical industry is an integral
part of the Indian economy as it contributes around 7% of the Indian GDP. This industry is
vital for the development of agricultural and industrial development in India and has a link
with various other industries such as automotive, consumer durables, engineering, food
processing and more. Major segments in the Indian chemical industry include:
Pharmaceuticals& bulk drugs- In terms of value and volume this industry ranks 4th and 13th
respectively across the globe.
Agrochemicals- India stand as the second largest manufacturer of agrochemicals in Asia.
Petrochemicals and organic chemicals- At the world level, India stands at the 9th position in
terms of polymer consumption and is expected to be in the 3rd position after USA and China
in the coming years.
Dyes- At present India’s share of the dye output globally is at 5% with a manufacturing
capacity of 1, 50,000 tons per annum.
Speciality chemicals- The Indian specialty chemicals industry is at a growing phase and is
valued at an approximated worth of US$ 3billion.
Inorganic chemicals- The Indian organic chemical industry accounts for less than 4.5% of
the global market and it is characterized by high degree of fragmentation across high volume
product areas. The table below shows PTA demand and supply in India
Producer Actual Projected
(kt) 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Capacity 3850 3850 4990 7130 7130 7130
Prod/Cons 3685 3720 4404 6950 6950 6950
Imports 666 1328 1719 486 1042
Exports 303
Consumption 4350 5048 6123 6647 7436 7992
Cons Growth 16% 21% 9% 12% 7%

THE POLICY AND PROMOTION OF CHEMICAL INDUSTRY
In terms of volume of production of chemicals, India is positioned as the third largest
producer of chemicals in Asia, next to China and Japan and is positioned as 12th largest in the
world. The total FDI inflow into India in the chemicals sector was USD 2,927 million from
April 2000 to April 2011, according to the Department of Industrial Policy and Promotion
which is a part of the Ministry of Commerce and Industry and is responsible for FDI policy in
the country. The Indian government has allowed 100% FDI in the chemicals sector. No
licenses are required for production of most of the chemicals. Only a few of the chemicals
which are hazardous need licenses for production.
The chemical industry constitutes more than 13% of India’s total exports. India has a strong
presence in the export market. India exports chemicals to Germany, the UK, the US,
Switzerland, Spain, Singapore and Japan.
CHALLENGES FACED BY THE INDIAN CHEMICAL INDUSTRY
The Indian chemical sector has grown a long way since its early days of independence. The
sector has grown from a small-scale sector to multi-dimensional sector, which is taking on
certain challenges of globalization. There are certain factors which hinders the growth of this
industry:
1) High prices of raw materials- Basic raw materials constitute a major portion of cost
of production in the chemical industry. The constant fluctuation in oil prices affects
the growth projections of the firms.
2) SSI reservation/ Fragmented nature of industry- The Indian chemical industry has
a fragmented structure with more number of units in small-sectors spread in various
parts of the country. Therefore the installed capacities are smaller compared to global
scales. The limitation in the SSI sector put them in disadvantageous position while
tapping export opportunities with large volume.
3) Low R&D levels- The level of R&D investments in the chemical industry is very
low. Without the support of R&D there cannot be reduction in cost of production and
manufacturing improvements.
4) Low level of Common Infrastructure- Generally the chemical industry requires
certain basic infrastructure facilities, both in the process chain as also in the supply
chain.

5) Environmental Regulations- Like any other industry, the chemical industry needs to
comply with regulations such as Occupational Safety and Health and Process Safety
Management regulations.
6) Low Level of Brand Development- There is low level of awareness and interest for
brand development, product development as also market development.
STRATEGIES FOR IMPROVING CHEMICAL INDUSTRY
1) Focus on Core Competence- Innovation is increasing becoming an important factor
to focus on core competence and to become a leading player in speciality products.
Indian chemical manufacturers need to focus on certain selected business segments
where there is competitive advantage.
2) Strengthening Technological Competence- There should be continuous
improvements in production processes and products by investing resources in
technology development. In addition, the industry needs to invest in technological
resources that would lead to specialized product development.
3) Improving Basic Management Capabilities- Indian chemical industry has a good
record of management expertise. With good laboratory practices, total quality
management, good manufacturing practises and total production management things
can be improved.
4) Focus on R&D- Focus on R&D is very important for process innovation, product
development, equipments for production and research related to application/safe use
of chemicals. R&D remains a universal imperative, its purpose and nature varies
across segments.
5) Adhering to Environmental Norms- To garner a greater share in world chemicals
market, Indian chemical industry needs to address various developmental issues such
as sustainable chemical, adherence to safety and health and risk management.
6) Collaboration- The chemical industry needs to enhance their collaborative efforts in
order to improve competitiveness. Collaboration with firms at the global level would
boost them in terms of technology knowhow and also achieve greater level of
industry-institutional partnership for knowledge development and sharing.
7) Increasing IT interface- If chemical firms in India become IT-enabled, they can
bring a drastic change in the entire process cycle right from technology, engineering
and procurement to manufacturing, by integrating them with new business processes.

8) Increasing Consumption Levels of Chemicals- Per capita chemical consumption in
India is quite low as compared to world standards. Increasing consumption in the
domestic market would help it achieve the desired domestic demand.
9) Marketing and Promotion- Indian chemical industry is in an urgent need to focus on
marketing and promotion to achieve greater share in the global chemical trade. The
industry should focus more on export promotion, brand building and market
development.
MAJOR CHEMICAL INDUSTRIES IN INDIA
There are many chemical industries in India. But the companies which are the nearest
competitors of MCC PTA India Corp. Private Limited in India are Indian Oil Corporation
Limited and Reliance Industries Limited. The other chemical industries in India which has a
strong presence in India which can be considered as competition are as follows. These
companies may not be the nearest competitors to our concerned company but they have high
solvency and profitability. The table shows the capacity of the leading chemical industries in
the coming years.
Capacity(kt) Actual Projected
2011-2012 2012-2013 2013-2014 2014-2015 2016-2017
RIL 2050 2050 4330 4330 4330
IOC 530 530 530 530 530
MCPI 1270 1270 1270 1270 1270
Total 3850 3850 4990 4990 4990
TATA Chemicals
Tata Chemicals (TCL) is the second largest producer of soda ash in the world. It is India's
market leader in the branded and iodised salt segment as well as in urea and phosphatic

fertilisers. Established in 1939 at Mithapur in the Indian state of Gujarat, TCL has, over the
last few years, invested in increasing its stake in the global soda ash business. It has acquired
UK-based Brunner Mond group and American company General Chemical Industrial
Products Inc, making the conglomerate the second largest soda ash producer in the world.
JBF Industries
JBF Industries Ltd. stands on a gleaming pinnacle of success as an industry leader in the
Polyester Industry value chain today. JBF is one of the leading Polyester value chain
company`s not only in India and abroad. Despite company`s focus on Indian market, it never
lost the opportunity to cater to the growing polyester markets globally. The company is
amongst the Top 5 Domestic market leaders in Textile grade chips, Bottle grade chips and
Partially Oriented Yarn. Internationally also, JBF is amongst the Top 10 manufacturers of
Bottle grade chips and Polyester Films. JBF's brand value has made its products well
accepted with a majority of domestic customers as well as many multinational corporations.
Aditya Birla Chemicals
Aditya Birla Chemicals is a leading manufacturer of bulk and speciality chemicals and
viscose filament yarn. The business is spread across multiple manufacturing locations in three
countries – India, Thailand and China. Aditya Birla Chemicals is creating a footprint in the
chemicals industry: in the chlor-alkali segment, it is a market leader in India; in viscose

filament yarn, it stands at number two position and in sulphites, it is the third largest
manufacturer in the world. In India, the business operates through four companies: Aditya
Birla Nuvo, Grasim Industries, Aditya Birla Chemicals (India) and Tanfac.
Reliance Industries
Reliance Industries Limited (RIL), India's largest private sector company produces PTA at its
petrochemical complexes. With 2,050 KTA capacity, RIL is 8th largest producer of PTA in
the world. RIL has been able to achieve this position in less than 10 years. RIL's world class
manufacturing technology and strategic interest in this business are the main reasons for this
growth. By end of 1999, almost 85% of total world production was based on PTA and this
continues to grow. Backward vertical integration has been the cornerstone of the evolution
and growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a
strategy of backward vertical integration - in polyester, fibre intermediates, plastics,
petrochemicals, petroleum refining and oil and gas exploration and production - to be fully
integrated along the materials and energy value chain.
BASF Industries
BASF in India manufactures polymers, tanning agents, leather chemicals and auxiliaries,
textile chemicals, dispersions and speciality chemicals, performance plastics, automotive and
coil coatings. BASF in India has over 2070 employees, 9 production sites as well as two
R&D centres that work closely with a Global technology platform. It forms an integral part of

India’s chemical industry with its diverse portfolio of innovative products and solutions that
match the current and the future needs of the ever growing nation.
Indian Oil CorporationLimited(IOCL)
Indian Oil is India's flagship national oil company with business interests straddling the entire
hydrocarbon value chain – from refining, pipeline transportation and marketing of petroleum
products to exploration & production of crude oil & gas, marketing of natural gas and
petrochemicals. It is the leading Indian corporate in the Fortune 'Global 500' listing, ranked
at the 83rd position in the year 2012. Indian Oil’s Purified Terepthalic Acid (PTA) plant was
commissioned at Panipat Refinery, Haryana in June 2006 as a response to expansion in the
downstream polyester sector and also in the light of liquid fuel (Naphtha) surpluses in the
Northern Sector. The fully integrated plant uses Paraxylene (PX) produced by Panipat
Refinery as the main feed stock for manufacture of PTA. PX is produced from aromatic rich
heart cut of Naphtha.

MCC PTA INDIA CORP.
PRIVATE LIMITED
COMPANY PROFILE

COMPANY PROFILE
Mitsubishi Chemical Holdings Corporation was jointly established by Mitsubishi Chemical
Corporation and Mitsubishi Pharma Corporation with a stock-for-stock exchange effective in
October 2005. Thus the MCHC Group currently consists of four core business companies:
Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation, Mitsubishi
Plastics, Inc., and Mitsubishi Rayon, Co., Ltd, and their group companies. As the holding
company, MCHC will further develop and enhance its group portfolio so as to increase
overall Group value.
Mitsubishi Chemical Corporation (MCC), a Fortune 500 giant, is Japan’s largest
diversified chemical company. It is also the world’s second largest producer of Purified
Terephthalic Acid (PTA), and initially began selling the imported chemical in India in the
early ‘90s. As it saw a potential market for polyester products in India, MCC decided to set
its own PTA manufacturing facility in India .In 1997, it decided to enter into a shareholder’s
agreement with the West Bengal Government, setting up an affiliate company, MCC PTA
India Corp. Private Ltd (MCPI), headquartered in Kolkata.
MCPI Share Holdings
 West BengalIndustrialDevelopmentCorporation (05%)
 Mitsubishi Corporation (09%)
 Sojitz Corporation (08%)
 Toyota Tsusho Corporation (05%)
 MarubeniCorporation (05%)
 Sumikin Bussan Corporation (02%)
 Mitsubishi Chemical Corporation (66%)

An initial investment worth Rs. 1475crore (US $380 million at the then prevailing rate),
MCPI emerged as Japan’s largest Foreign Direct Investment (FDI) in India and began
construction of a 3,50,000 -tonne PTA plant at Haldia, West Bengal. The plant commenced
commercial production of PTA in April 2000, equipped with the highest safety and
environment standards. With its efficient technology and efficient management it achieved
over 100% capacity utilization every year. Presently it has a turnover of around 1900crore
per annum. The MCPI Phase-I and Phase-II plants and a green belt of 104 acres are situated
within an approximate area of 324 acres of land.
Backed by a captive power generating facility, the plant is built and operates in compliance
with the highest Indian and International standards, environment norms and safety measures.
A dedicated 13km pipeline from Haldia port carries the principal raw material, Paraxylene,
all the way to the plant. Drawing on the efforts of MCC’s R&D wing, as well as its vast
experience in running similar plants elsewhere, MCPI employs one of the most advanced
PTA technologies across the globe.
AWARDS AND RECOGNITIONS
The various awards won by MCC PTA India Corp. Private Limited are as follows:
1) Environment Excellence Award 2004
2) HR Excellence Award 2011
3) National Safety Council Award for SH&E Performance 2004 to 2006
4) Ramky's- Paryavaran Parirakshak Purashkar-2012
5) SH&E Award from CII - Year 2005

MCC PTA INDIA CORP. PRIVATE LIMITED’S
VISION AND MISSION STATEMENT
MCPI draws on the principles of kaizen, putting quality at the forefront of all its endeavours.
It continuously searches for ways and means to improve progress and advance by inviting the
active participation of every member of the MCPI team in furthering this end.
Regular training and development plans are an integral part of MCPI’s constant process of
learning and evolution, honing manpower skills and developing mental appreciation at every
level within the organization- both on the job and off. This has enabled MCPI to stay in tune
with changing customer needs and preferences by remaining alert to today’s market
environment. Its policy of Total Quality Management gives it a head start in its pursuit of
excellence.
QUALITY POLICY
1) Productquality comes
first.
2) Provide quality
product and services
which meet customer
needs.
3) Continually improve
business processes by
harnessing the spirit,
will and intelligence
of our people.
QUALITY OBJECTIVE
1) Set up systems and
procedures to
facilitate quality in
product, services
and in day to day
operations.
2) Achieve customer
satisfaction where
our productis
used.
3) Build MCPI as an
effective team to
work together to
achieve business
goals.

Vision& MissionStatement
Growthspearheaded by vision
MCPI contributes to the economy and society of India through its business activities,
establishing the interrelationship among people, society and nature.
Among its key objectives are:
 Ensuring stable supplies of PTA-the principal raw material for the manufacturers of
polyester.
 Facilitating development of downstream industries in Haldia and West Bengal
through the most modern, large-scale PTA manufacturing facilities.
 Becoming a leading manufacturer of PTA in South Asia, backed by the advanced
competitive technology of Mitsubishi Chemical Corporation.
Drawing on the efforts of MCC’s R&D wing as well as its vast experience in
running similar plants elsewhere, MCPI employs one of the most advanced PTA
technologies among all MCC plants across the globe.
MissionStatement
We shall be an excellent PTA manufacturer in the World.
The main targets shall be achieved by:
 Ensuring Safety in all the operations and beyond.
 Creating values for stakeholders that include Employees, Customers, Shareholders
and Community at large.
 Being Globally Competitive with respect to the Product Quality & Cost and with
advanced technology from MCHC.
 Achieving stable operation on sustained basis.
 Striving to have zero adverse impact on environment
 Ensuring compliance code of conduct in all the activities.
 Contributing towards the economy and society of India.

PRODUCT OFFER
Purified Terephthalic Acid (PTA) is a white solid powder that is the preferred raw material
and basic building block to produce Polyester Staple Fibres (PSF), Polyester Filament Yarns
(PFY), bottle and industrial grade polyester resins, polyester resins, polyester chips and so on.
Polyester Staple Fibres and Filament Yarns are the substitute of natural cotton and widely
used for production of textiles and garments.
Polyester resins/chips are further processed to produce audio/video tapes, x-ray films,
photographic films, cine films, packaging films, metalized films, tapes, jars, aseptic bottles
for packing mineral water, carbonated drinks, vegetable oils, cosmetics, toiletries, tea, and
coffee and so on.
MCC PTA India Corp. Private Limited with its plant at Haldia producing 1270 KT/Y
currently is the first modern, economic size Purified Terephthalic Acid plant of its kind.
2000 2001 2002 2003 2004 2005
Series 1 289 376 379 429 445 470
289
376 379
429
445
470
0
50
100
150
200
250
300
350
400
450
500
PRODUCTIONINMILLIONTONNES
PTA PRODUCTION FROM 2000-2005

MAIN OBJECTIVES OF THE COMPANY
The main objective of this company is to conduct entire operations:
1. Accident free
2. Protecting the health of all concerned.
3. Zero adverse impact on Environment.
SAFETY, HEALTH & ENVIRONMENT POLICY
Environment Management System
 Process Technology employs low utility consumption as by-product energy even in
low level from the process is effectively recovered. High yield of product from Raw
materials. Low solvent & catalyst consumption. Recovery & recycling of products.
 Scrubbers are used for treating Process off-gas before emission at source.
 Activated sludge with diffused aeration system for Waste Water Treatment.
 ESP is used for treatment of Incinerator flue gas before emission.
 52 acres of land has been developed as Green Belt.
 Well equipped Environmental Monitoring Laboratory facility.
 Hazardous wastes are temporarily stored in Integrated Scrap Yard and finally
disposed to Licensed Treatment Storage Disposal Facility at Haldia.
Safety and HealthPolicy
 Safety comes first in all operations.
 Obey and comply with all applicable statutory regulations & other requirements.
 Develop & improve awareness on Safety & Health standards and procedures.
 Monitor the company’s Safety & Health performance for continual improvement.

CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
MCPI strives in line with its Corporate Principle with regard to its social commitment
initiatives to create a bonding between people, society and nature and treat these three factors
as the key elements for its CSR activities.
Philosophy- MCC PTA INDIA CORP PRIVATE LIMITED recognises the
significance of the philosophy and the concept of CSR, which will add value to the
operations and contribute towards the long term sustainability of the business and
eventually, enhance the interests of the stakeholders and the society.
Objective-The main objective of MCPI is to promote public purposes, social
responsibilities, general charities, development of community and society at large
and maintenance of eco-friendly and harmonious environment.
The Policy Guidelines of CSR activities entail the following basic principles and
core elements and it is the intention of the Company to pursue and preserve the
same all through:
 Care for all stakeholders including interaction with all stakeholders, sharing
information relating to inherent risks and adopting countermeasures thereto
 Ethical functioning through promotion of transparency, good governance
practices grievance redressal system, prevention of employment of child
labour.
 Respect for Human Rights.
 Respect for Environment

ENVIRONMENT STATEMENT
Raw materials Consumptionfor PTA Productionare as follows:
1) Paraxylene
2) Methanol
3) Acetic acid
4) Hydrobromic acid
5) Caustic soda.
Pollutant Dischargedto Environment/Unit ofOutput
Pollution Quantity of pollutants
discharged(mass/day)
Kg/day(avg.)
Concentration of
pollutants
discharged(mass/volume)
Mg/lit(avg.)
% or
variation
from
prescribed
standards
with reasons
Water
COD 1303 102.58 NIL
BOD 353 27.33 NIL
O&G 24 2.02 NIL
F 06 0.51 NIL
FE 03 0.26 NIL
Total Cr BDL BDL NIL
Air
Quantity of pollutants
discharged(mass/day)
Kg/day(avg.)
Concentration of
pollutants
discharged(mass/volume)
Mg/Nm3(avg.)
% or variation
from prescribed
standards with
standard reasons
PM 805 119 NIL
CO AVERAGE VALUES ARE
LESS THAN 0.2%
NIL
MCC PTA’s Corporate Principle is to contribute to the economy and society of India through
its business activities, establishing the interrelationship among people, society, and nature.

MCC PTA has full-fledged Safety, Health & Environmental Policy. Following actions have
been implemented for waste reduction& improving environmental compliance:
PTA Manufacturing Process Technology
Low utility consumption as by-product energy even in a low level from the process is
effectively recovered. There is high yield of PTA from Paraxylene. There is low acetic acid
& catalyst consumption. Processes are operated with stable operation. Recovery & recycling
of by-products is done.
Resource Conservation
Industrial water reduction is due to reduction in timer of backwash and rinse steps. Furnace
oil consumption reduction by PTA product quality optimization is done for resource
conservation. Hot oil heater burner is replaced at periodical intervals. Steam turbine/Gas
expander capacity utilization of air compressor section has resulted in electricity consumption
decrease.
Energy Conservation
As the process technology itself is such that steam is generated as a by-product so it is
effectively used. Boiler is only required during Start up & Shut down of the process for steam
generation. As a part of energy conservation, Energy conservation committee has been
formed in different building and energy manager appointed. Energy audit conducted for the
plant. Furnace oil consumption reduction per tonne of production in the expansion plant is
about 20% less compared to the existing plant and an awareness campaign is conducted for
energy conservation.

WORKING CAPITAL
MANAGEMENT
AT
MCC PTA INDIA CORP.
PRIVATE LIMITED

WORKING CAPITAL MANAGEMENT
Working capital means the firm’s holding of current or short term assets such as cash,
receivables, inventory and marketable securities. Working capital is the excess of current
assets over the current liabilities. Good working capital management reveals higher returns of
current assets than the current liabilities to maintain a steady liquidity position of a company.
Working capital cycle involves conversions and rotation of various constituents/components
of the working capital. While managing the working capital, two characteristics of current
assets should be kept in mind that is they are short life span and swift transformation into
other form of current asset. The life span of current assets depends upon the time and degree
of synchronisation among them. Therefore a very short life span of current assets results in
fast transformation into other form of current assets for a running business. Four major
dimensions of working capital management are receivables management, inventory
management, cash management and payables management.
DETERMINANTS OF WORKING CAPITAL
1) Nature of Business-
Working capital requirements of a firm depends on the nature of business. Trading
and financial firms have a small investment in fixed assets, but a large sum of money
invested in working capital. Manufacturing businesses invest a substantial amount
invested in working capital and a nominal amount in fixed assets.
2) Operating efficiency
The working capital need of a firm is affected by the operating efficiency of a firm.
The optimum utilization of its resources results in more fund release for working
capital.
3) Technology and Manufacturing Policy-
The manufacturing cycle comprises the purchase and use of raw materials and the
production of finished goods. Larger will be the working capital requirements if the
manufacturing cycle is longer and vice-versa.
4) Credit Policy-
The credit policy of the firm affects working capital by influencing the level of
debtors. A high collection period will mean tie-up of large funds in debtors. Slack
collection procedures can increase the chance of bad debts.
5) Price Level Changes-

Price changes affect the working capital requirements of a firm. Generally, if prices
rise a firm will need to maintain a high amount of working capital and same levels of
current assets need increased investment when prices are increasing.
6) Scale of operations-
The greater the size of the business unit, the larger will be the working capital
requirements. Sometimes it may be observed that even a smaller concern may need
huge working capital due to high overhead charges, this is because of inefficient use
of available resources.
7) Business fluctuations-
Generally firms experience seasonal and cyclical fluctuations in the demand for their
products. These business fluctuations affect the working capital needs of the
company, especially the temporary working capital component.
OBJECTIVES OF WORKING CAPITAL MANAGEMENT
1) Working capital management is used to keep adequate level of short term assets
2) It helps convert an asset from non productive to productive one and vice versa
3) Thus is helps to establish the relationship between current assets and current
liabilities.
4) It helps to optimize the investments in current assets.
5) It helps to see whether the company is able to meet its current liabilities and
obligations.
TYPES OF WORKING CAPITAL
The magnitude of current assets needed is felt constantly. On the basis of time, working
capital can be divided into two categories:
1) Permanent or Fixed Working Capital
This refers to the minimum level of current assets required on a continuous basis
over the entire year. Permanent working capital remains in the business in any
form possible; there is a positive correlation between the amount of permanent
working capital and the size of the business.
2) Temporary working Capital

This capital refers to the additional current assets which are required by the firm
at different times during the operating year. Temporary working capital is
fluctuating sometimes the need might increase and decrease.
WORKING CAPITAL AND THE CASH CONVERSION CYCLE
The difference between current assets and current liabilities is known as net working
capital. It is desirable to keep the cycle as short as possible as this would increase the
effectiveness of working capital.
CashConversionCycle-This is the period between firm’s payment for materials
and collection on its sales. The longer the production process, the more cash the firm
must keep tied up in inventories. The longer it takes customers to pay their bills, the
higher the value of accounts receivable. If a firm can delay paying for its own materials, it
may reduce the amount of cash it needs. In other words, accounts payable reduce net
working capital. It is also popularly known as the cash cycle.
CCC= DIO+DSO-DPO
Where: DIO means Days inventory outstanding
DSO means Days sales outstanding
DPO means Days payable outstanding.
Cycle of
Operations
Cash
Raw
materials
inventory
Finished
Goods
Inventory
Receivables

Generally a company acquires inventory on credit, which results in accounts payable. A
company sells its products on credit, which results in accounts receivable. Cash
conversion cycle therefore measures the time between outlay of cash and cash recovery.
The aim of studying the cash conversion cycle is to change policies relating to credit
purchases and credit sales. Its main aim is to study cash flow of business.
CASH CONVERSION CYCLE-MCC PTA INDIA CORP PRIVATE LTD
Table showing Cash Conversion Cycle
Years 2012 2011 2010 2009 2008 2007
Days salesoutstanding 9.09 10.59 28.50 23.64 25.59 29.40
Days inventoryoutstanding 25.32 50.06 91.88 66.51 59.29 54.01
Days payable outstanding 117.84 159.51 208.22 263.31 136.91 190.72
Cash ConversionCycle -83.44 -98.87 -87.85 -173.16 -52.02 -107.31
117.84
159.51
208.22
263.31
136.91
190.72
-83.44
-98.87-87.85
-173.16
-52.02
-107.31
-200.00
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
200.00
250.00
300.00
2006 2007 2008 2009 2010 2011 2012 2013
Days sales
outstanding
Days inventory
outstanding
Days payable
outstanding
Cash Conversion
Cycle

Observationabout the Cash ConversionCycle
A short cash conversion cycle allows a business to quickly acquire cash that can be used for
debt repayment and additional purchases of the business. A shorter time between cash
outflows and cash inflows means that there is less need of financing and more profits can be
earned. Generally businesses attempt to shorten the cash conversion cycle by speeding
payments from customers and slowing payments to suppliers.
For MCC PTA it has been observed that they take more time to pay to their suppliers but
they receive money from their customers very fast. They show perfect business where cash
comes in before it actually goes out. The negative cash conversion cycle is a major advantage
for this business. When they sell their goods to their customers they get the money right then
and then they have available funds to pay to their suppliers.
It can also be said that a negative or a short cash conversion cycle has its own risks.
Sometimes a strict collection policy and lax payment policy may not be sustainable to the
business. This shows efficient management of working capital by the company as it has a
negative CCC over 6 years of observation (2007-2012). MCC PTA maintains a dominating
relationship in terms of its customers as most of their customers pay in advance.
We can observe that the collection policies followed by this company are very strict and
generally customers pay in advance before goods are supplied. The time it takes for the
company to make payments is very long because they maintain a good relationship with their
dealers and they have good reputation in the world market. So they get a good time period to
pay back money to their suppliers. Although from the observation we can notice that the days
payable outstanding has reduced over the years but the highest time taken was in the year
2009 was 263 days.

OPERATING CYCLE
Operating cycle refers to the time duration which is required to convert sales, after the
conversion of resources into inventories, into cash. The main phases of an operating cycle is
acquisition of resources such as labour, power and fuel, then manufacturing them into
product form which includes conversion of raw material into work in progress into finished
goods and then the final phase is sale of the finished product either in cash or in credit. In the
case of a manufacturing concern, the operating cycle is the length of time necessary to
complete the following cycle of events.
1) Conversion of cash into raw materials
2) Conversion of raw materials into work-in-progress
3) Conversion of work-in-progress into finished goods.
4) Conversion of the finished goods into accounts receivables
5) Finally conversion of debtors and various receivables into cash.

GROSS OPERATING CYCLE AND NET OPERATING CYCLE
The firm’s gross operating cycle can be determined as Inventory conversion period plus
Debtors conversion period. Thus gross operating cycle is given as follows:
Gross Operating Cycle= Inventory conversion period+ Debtors conversion period.
Net Operating Cycle= Gross operating cycle-Creditors deferral period.
The Factors that influence the duration of the Operating Cycle:
1) The payment terms extended to the company by its suppliers are one of the major
factors to be considered. The longer payment terms shortens the operating cycle since
this way the company can delay paying out cash.
2) The credit policy and related payment terms, since a loose credit equates to a longer
interval before customers pay, which extends the operating cycle.
OPERATING CYCLE OF MCC PTA INDIA CORP. PRIVATE
LIMITED
OPERATING CYCLE
Raw Material Storage Period 2008 2009 2010 2011 2012
Annual raw material consumption 13913486 14110509 13301221 26177789 43507560
Annual dailyconsumption 38648.57 39195.86 36947.84 72716.08 120854.3
Average stock of raw materials 1710824 1859144 2221742 2759498 2041125
Raw Material Storage Period(indays) 44.27 47.43 60.13 37.95 16.89
Work-in-ProcessConversionPeriod 2008 2009 2010 2011 2012
Annual cost of production 16320147 16511990 15910221 32480504 51772970
Average daily cost of production 45333.74 45866.64 44195.06 90223.62 143813.8
Work in processinventory 91615 71383.5 162277.5 180847 121329.5

Work In ProcessHolding Days 2.02 1.56 3.67 2.00 0.84
FinishedGoodsConversionPeriod 2008 2009 2010 2011 2012
Cost of GoodsSold 16894725 19399908 16701020 33991099 55119044
Cost of GoodsSold daily 46929.79 53888.63 46391.72 94419.72 153108.5
FinishedGoodsinventory 385897.5 71798.5 75161 30014.5 54350.5
Finishedgoodsholdingdays 8.22 1.33 1.62 0.32 0.35
Average CollectionPeriod 2008 2009 2010 2011 2012
Annual creditsales ofthe company 15984605 15541660 17251548 35381415 51527817
Average daily credit sales 44401.68 43171.28 47920.97 98281.71 143132.8
Average Balance of sundry debtors 1221945 1063787 1176761 1186486 1154564
Average CollectionPeriod 27.52 24.64 24.56 12.07 8.07
average paymentperiod 2008 2009 2010 2011 2012
annual credit purchase 14442633 14236733 13900193 26654328 42383211
average dailycredit purchase 40118.43 39546.48 38611.65 74039.8 117731.1
average balance of sundry creditors 7292367 8603640 10526673 12651721 16049016
average paymentperiod 181.77 217.56 272.63 170.88 136.32
GrossOperating Cycle 82.03 74.96 89.98 52.34 26.15
NetOperating Cycle -99.74 -142.60 -182.65 -118.53 -110.17

NET OPERATING CYCLE AND GROSS OPERATING CYCLE
From the above we can see the gross operating cycle maintains a positive value which
indicates that the inventory conversion period along with the debtors collection period is
positive. The company takes a very long period to make payments to its suppliers which may
be good for the company in the short run but may prove to be a negative factor in the long run
as lax payments by the company is not a good payment policy adopted. The company uses to
this policy of strict collection policy and lax payment policy because of its good reputation in
the market good negotiation skills among its customers and suppliers in the market. In 2012
the net operating cycle shows -110.17 days and this negative value is because of the payment
period being 136 days. The company at present enjoys this opportunity of liquidity to make
immediate payments to its current obligations but this policy needs to be revised in the
coming years to maintain its position in the market.
82.03 74.96
89.98
52.34
26.15
-99.74
-142.60
-182.65
-118.53 -110.17
-200.00
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
0 1 2 3 4 5 6
Gross
Operating
Cycle
Net
Operating
Cycle
2008 2009 2010 2011 2012

CORRELATION ANALYSIS
Correlation analysis helps to see whether two measurement variables co vary. To quantify
the strength of the relationship we calculate the correlation coefficient(r). Its numerical values
range from +1.0 to -1.0. It has been proved that working capital management has a
relationship with the performance analysis of the company. We can say that cash conversion
cycle, current assets/ total assets and current liabilities/ total assets is linked with performance
factors like return on assets and return on equity.
Hypothesis ofthe Study
The following hypotheses were formulated for the study:
H0:- There is no significant relationship between cash conversion cycle and
performance measures.
H1:- There is a significant negative relationship between cash conversion cycle and
performance measures.
The major variables that were taken into considerationare as follows:
ROA= Return on Assets
ROE= Return on Equity
CCC= Cash Conversion Cycle
CATA= Current Assets/ Total Assets
CLTA= Current liabilities/ Total Assets

Results and Analysis of CorrelationAnalysis:
CORRELATION MATRIX
VARIABLES CCC CATA CLTA ROA ROE
CCC 1.000
CATA 0.283 1.000
CLTA -0.145 0.791 1.000
ROA 0.505 0.263 -0.289 1.000
ROE 0.533 0.274 -0.275 0.999 1.000
The table mentioned above displays the correlation values between the working capital
management variables and the firm’s performance variables. The ROE is positively
correlated with CATA and negatively correlated with CLTA. The positive relationship
between CATA and ROE indicates that if more current assets are used to finance the total
assets it will have a positive impact on ROE. ROA and ROE are positively correlated with
CATA consisting of R values of 0.263 and 0.274 respectively. This reveals that current assets
are kept by the firm in relation to the total assets are kept in a conservative position.
Furthermore, we can find that CCC is positively correlated with ROA and ROE consisting of
R values 0.505 and 0.533 respectively. Hence we can say that there is a significant
relationship between CCC and performance measures used in the study. Hence, null
hypothesis is rejected.

CREDIT MONITORING ARRANGEMENT FOR WORKING
CAPITAL NEEDS
Banks are the main institutional sources of working capital finance in India. After trade
credit, bank credit is the most important source of financing working capital requirements. A
bank considers a firm’s sales and production plans and the desirable levels of current assets in
determining its working capital requirements. The amount which is approved by the bank for
the company’s working capital is called the credit limit. In reality, banks do not lend 100% of
the credit limit, they deduct margin money.
FORMS OF BANK FINANCE
Overdraft-
Under the overdraft facility, the borrower is allowed to withdraw funds in excess of the
balance in his current account up to a certain specified limit, during a stipulated period.
Cash Credit-
It is a popular method of bank finance for working capital in India. Under this method, a
borrower is allowed to withdraw funds from the bank up to the sanctioned credit limit. He is
not required to borrow the entire sanctioned credit at once, rather he can draw periodically to
the extent of his requirements and repay it by depositing surplus funds in his cash credit
account.
Working Capital Loan-
A borrower sometimes requires ad hoc temporary accommodation, in excess of the
sanctioned credit limit, to meet unforeseen contingencies. Banks provide such
accommodation through a demand loan account or a separate non-operable cash credit
account.

First method of Lending by MCC PTAIndia Corp. Private Limited
2006 2007 2008 2009 2010 2011 2012 2013
1 Total Current Assets 894.78 701.93 740.72 678.44 924.14 1062.60 1124 120
2 Other Current
Liabilities
917.74 653.98 1040.14 1201.55 1401.24 1910.29 1871 2656
(other than bank
borrowings)
3 Working Capital Gap -22.96 47.95 -299.42 -523.11 -477.10 -847.69 -746 -2537
4 Min. stipulated Net
Working Capital
-5.74 11.99 -74.86 -130.78 -119.28 -211.92 -187 -634
(25% of WCG)
6 Item 3 minus item 4 -17.22 35.96 -224.57 -392.33 -357.83 -635.77 -560 -1903
7 Item 3 minus item 5 -22.96 250.52 499.66 118.41 0.00 39.97 0 34
8 Maximum
permissible bank
finance
-22.96 35.96 -224.57 -392.33 -357.83 -635.77 -560 -1903
(lower of 6 or 7)
9 Excess borrowings
representing
0.00 214.56 724.23 510.75 357.83 675.74 560 1936
shortfall in NWC
First method of lending
In view of the bank lending, MCC PTA India Corp. Private Limited borrows from SBI.
Under the first method, the borrower will contribute 25% of the working capital gap; the
remaining 75% can be financed from bank borrowings. The above table shows the company’s
working capital finance and we can see that MCC PTA needs to borrow a huge amount of
money for its working capital needs and we see an increasing trends in needs for funds from
2006-2013.

SecondMethod of Lending by MCC PTA India Corp. Private Ltd.
2006 2007 2008 2009 2010 2011 2012 2013
1 Total Current
Assets
894.78 701.93 740.72 678.44 924.14 1062.60 1124 120
2 Other Current
Liabilities
917.74 653.98 1040.14 1201.55 1401.24 1910.29 1871 2656
(other than bank
borrowings)
3 Working Capital
Gap
-22.96 47.95 -299.42 -523.11 -477.10 -847.69 -746 -2537
4 Min. stipulated Net
Working Capital
223.70 175.48 185.18 169.61 231.04 265.65 281 30
(25% of Total
Current Assets)
6 Item 3 minus item
4
-246.66 -127.53 -484.60 -692.72 -708.14 -1113.34 -1028 -2567
7 Item 3 minus item
5
-22.96 250.52 499.66 118.41 0.00 39.97 0 34
8 Maximum
permissible bank
finance
-246.66 -127.53 -484.60 -692.72 -708.14 -1113.34 -1028 -2567
(lower of 6 or 7)
9 Excess borrowings
representing
223.70 378.05 984.26 811.14 708.14 1153.31 1028 2600
shortfall in NWC
SecondMethod of Lending
The above table shows the second method of lending by the company. Under this method, the
borrower contributes 25% of the total current assets. The remaining of the working capital
gap can be bridged from the bank borrowings. In the second method we see a rising trend of
borrowing by the banks for the company’s working capital needs. For its working capital
needs

RECEIVABLES MANAGEMENT
AT
MCC PTA INDIA CORP. PRIVATE
LIMITED

RECEIVABLES MANAGEMENT AT
MCC PTA India Corp. Private Limited
In a manufacturing company like MCC PTA India Corp Private Ltd observation of
receivables management was a very important dimension of working capital management.
The receivables management of this company is very efficient and it takes place at the Head
Office in Kolkata. Receivables are one of the three components of working capital, the other
being inventory and cash management. According to Robert N. Anthony, “Accounts
receivables are amounts owed to the business enterprise, usually by its customers. Sometimes
it is broken down into trade accounts receivables; the former refers to amounts owed by
customers, and the latter refers to the amounts owed by employees and others”.
OBJECTIVES OF RECEIVABLES MANAGEMENT
1) It helps to attain the optimum volume of sales.
2) It helps to exercise control over the cost of credit and maintain it on a minimum
possible level.
3) It helps to plan and maintain a short average collection period.
PURPOSE OF CREDIT GRANTING PROCESS IN A COMPANY
1) Competition- Generally a higher degree of competition is one of the prime reasons
for credit granting policy by a firm.
2) Company’s bargaining power- If a company has a higher bargaining power it may
allow no or a very less credit period. In this case the company should have a strong
negotiating power and also sell such a product which is very strong and enjoys
monopoly power, a strong brand image and has a strong position in the market.
3) Buyer’s status- The prominent buyers demand easy credit terms because of their bulk
purchases and higher bargaining power. If there is interest in giving credit period the
company allows a credit period to the buyer.
4) Relationship with traders-Sometimes companies extend credit to customers to build
long term relationships with them and maintain a healthy relationship with them.
5) Marketing tool- Credit policy is used as a marketing tool, particularly when new
merchandise is launched or when a company wants to push its weak product.

6) Industry practice- Small companies have been found guided by industry norm more
than the large companies. Sometimes they continue giving credit because of past
practice rather than industry practice.
CREDIT MANAGEMENT AT MCC PTA INDIA CORP. PVT. LTD.
Credit Policy FollowedBy MCC PTA India Corp. Private Limited
MCC PTA INDIA CORP. PRIVATE LIMITED has a very structure acknowledged as credit
control commission, which develops and renders good service.
The credit control commission is steered by the Finance and Administration Head Mr.
Kaushik Dutta and consists of all sales managers along with the Vice President, Mr. Gupta
and other concerned executives as its members. As a general rule, credit is granted to a client
who takes huge and perennial orders. One time clients are not permitted for credit. Generally
credit period is not given to most of the customers as the company enjoys a monopoly
position in terms of its finished goods. The basic intention of this department is to set the
standard and also have the overall control of the credit position, thereby holding on the
financing of the working capital cost efficiently and forbidding any liquidity issues from
arising.
Credit Terms
Credit terms refer to the terms and conditions on which the trade credit will be made
available. It specifies the terms and duration of credit and payment terms by the customers.
These relate to the repayment of the amount under the credit sale. These terms can be
conciliated after the examination of number of factors. The various factors which must be
taken into account are:
1) The seller company’s place in the market and the credit conditions on which it is
purchasing from its own providers.
2) The availability of the capital it needs to finance its credit sales & whether this is to be
adopted and if so at what cost; also the availability of capital to finance the payment
of other overheads.
3) There are competitive factors which affect the credit terms.

4) The volume of sales contrived and how these will be spread over the range of
customers.
5) The profit margin to be earned when credit period is given to the customers by the
company.
CREDIT CONDITIONS AND ITS COMPONENTS
Credit Period
This is the duration of time for which trade credit is extended. During this
time period the clients must pay the overdue amount. There are only two
customers who are allowed a credit period as they are big customers and they
purchase a bulk amount of the finished product from MCC PTA India Corp.
Private Ltd. The credit period allowed to these customers are:
1) Reliance Industries Limited-
Reliance Industries Limited is a big customer of this company and hence they buy
goods in bulk quantity. They are given a credit period of 30 days or sometimes even
extended credit period is allowed to them to maintain a steady relationship with them.
2) JBF Industries-
JBF Industries is the second biggest customer that they have in India and they are
customers who buy bulk amount of PTA from this company. The company is known
for its strong financial position and hence MCC PTA provides them with credit
period. Goods are transported via rail or road. Different credit terms are set for goods
transported by rail and goods transported by road.7 days for road transportation
and 23 days for rail transportation is given to JBF Industries. Credit period is often
extended to them as they are a big customer of MCC PTA India Corp. Private Ltd.
3) Advance customers-
These are customers who pay the amount in advance before they receive the goods.
Mostly all the vendors pay money in advance and hence the receivables management
do not run from the risk of bad debts. Since the company incurs a heavy transportation
cost so they ask for cash before delivery (CBD). Mostly all the other customers pay
their bills before goods are being delivered to them as MCC PTA India Corp. Private
Ltd. stands out to be a monopoly in terms of production and sale of PTA in India.

Credit Limit
A credit limit is a maximum amount of credit which the firm will extend at a point of time.
The decision on the magnitude of credit depends on the amount of contemplated sales and the
customer’s financial strength. The credit limit must be viewed periodically. This function is
performed by the credit control department of the company and they do not have any fixed
set of rules for it. If in case credit period is granted then credit limit is set by negotiations.
CollectionEfforts
The firm should follow a well laid-down collection policy. The firm must be in constant
touch with the customers by prompting him about his payment schedule in a firm manner. A
daily report is maintained at this firm concerning total sale and to see the debtors and cash
position of the company. The company does not need to put much effort in terms of
collection as all their customers pay their bills in advance.
CREDIT MONITORING AND CONTROL
MCC PTA maintains a strict credit monitoring policy. They just have two debtors who buy
goods on credit and they maintain credit terms with the company. Rest all the other customers
pay in advance. For this reason the company does not need to maintain an aging schedule of
debtors. The credit policies are decided by the company and the customers via negotiation.
There is a negligent chance of bad debts in this company because of such a credit policy.
They can easily maintain this monopoly position in the market as they do not have
competition in the market that produces PTA. Since they are a big brand and maintain good
reputation in the world market so such strict collection policies are accepted by the
customers. PTA is an important chemical and MCC PTA is one such company which is
known for its high level quality and brand image in the market.
Proper follow-up is maintained with the debtors of this company. Efficient and capable
Accounts Managers are nominated for this purpose. These Accounts Managers are
responsible for the collection purpose and follow-up of the customers. Follow up can be done
in one of the following ways:
1) Phone
2) Fax
3) E mail

4) Personal visits.
METHOD OF CHECKING STATUS OF ACCOUNTS RECEIVABLES
A steady sales register and month wise sales details, customerdetails are maintained for the
audit purpose.
The Sales and Accounts Receivables are prepared forpreparing a budget forfuture predictions.
Daily sales balance is checked to confirm all the sales receipts and this file is sent to bank for
fund transfer on a daily basis.
The accounts statement is prepared customerwise and any increase/ decreaseof accounts
receivables are recorded on a monthly basis.
In order to havea steady vendorcontrolthecompany requires debit note.
This input of sales collection is registered in SAP.
Sales receipts amount is checked with themarketing department on daily basis.
A daily file for the different customers is maintained to record all sales receipts.

SALES AND COLLECTION FIGURES FOR THE PAST 5
YEARS
SALES VS COLLECTIONS FIGURES-5YEARS
MONTH SALES TOTAL COLLECTIONS
INR INR
Jan-07 1,60,11,27,220.76 1,80,00,28,788.90
Feb-07 1,28,38,44,845.16 1,48,38,55,567.87
Mar-07 1,04,54,05,492.47 1,23,86,75,675.55
Apr-07 1,45,27,30,604.33 1,23,86,75,675.55
May-07 1,56,69,35,953.25 1,95,79,99,118.88
Jun-07 1,63,51,15,690.98 1,76,50,75,195.64
Jul-07 1,56,73,68,784.68 1,57,21,51,272.40
Aug-07 1,63,75,57,525.54 2,37,92,27,349.16
Sep-07 1,67,37,35,667.90 2,18,63,03,425.93
Oct-07 1,69,83,77,720.20 2,29,33,79,502.69
Nov-07 1,21,89,38,528.01 2,40,04,55,579.45
Dec-07 1,27,75,91,091.93 2,50,75,31,656.22
Jan-08 1,07,29,06,402.02 2,61,46,07,732.98
Feb-08 86,35,52,119.50 2,72,16,83,809.74
Mar-08 1,21,46,42,106.72 2,82,87,59,886.51
Apr-08 93,50,63,501.04 2,93,58,35,963.27
May-08 1,58,94,41,407.40 3,04,29,12,040.03
Jun-08 1,60,08,25,619.38 3,14,99,88,116.79
Jul-08 2,08,66,75,308.27 3,25,70,64,193.56
Aug-08 57,40,26,580.13 3,36,41,40,270.32
Sep-08 58,15,28,535.00 3,47,12,16,347.08
Oct-08 1,01,45,01,915.00 3,57,82,92,423.85
Nov-08 81,40,62,375.00 8,68,53,68,500.61
Dec-08 95,00,18,829.41 1,20,75,55,422.63
Jan-09 1,13,12,24,847.18 2,56,52,98,280.00
Feb-09 1,26,73,42,758.20 1,17,39,93,375.89
Mar-09 1,18,61,03,100.00 2,41,73,11,528.21
Apr-09 1,64,44,71,582.01 1,90,86,16,432.31
May-09 1,79,30,46,225.04 1,39,99,21,336.41
Jun-09 1,70,21,98,688.34 1,89,12,26,240.52
Jul-09 1,12,57,72,929.90 1,12,25,31,144.62
Aug-09 1,85,27,85,387.96 2,87,38,36,048.72
Sep-09 1,63,17,10,086.14 1,26,51,40,952.82
Oct-09 1,71,08,37,038.91 1,71,64,45,856.93
Nov-09 1,33,35,36,182.00 1,33,50,761.03

Dec-09 1,27,12,96,338.00 4,83,90,55,665.13
Jan-10 35,01,30,777.00 30,03,60,569.23
Feb-10 1,12,91,28,498.40 12,15,86,65,473.33
Mar-10 2,82,00,12,232.80 1,22,29,70,377.44
Apr-10 2,83,14,81,817.00 3,37,81,04,128.50
May-10 3,02,94,02,033.00 3,11,42,07,996.99
Jun-10 2,33,05,75,415.00 2,89,43,89,086.68
Jul-10 3,52,36,84,684.00 3,40,20,94,171.31
Aug-10 2,11,84,52,703.00 2,75,54,95,370.25
Sep-10 1,76,18,18,820.00 2,07,27,33,299.54
Oct-10 2,99,56,81,955.60 3,04,48,28,795.66
Nov-10 3,11,87,52,717.00 3,28,82,95,561.09
Dec-10 4,30,66,29,233.60 4,43,92,14,629.54
Jan-11 3,66,19,48,717.00 4,04,31,18,374.23
Feb-11 3,70,09,49,030.40 4,23,92,20,734.03
Mar-11 3,97,95,56,352.20 4,07,27,20,471.60
Apr-11 2,99,59,87,056 3,21,64,86,395.68
May-11 2,53,76,27,148 3,20,72,67,408.60
Jun-11 3,11,24,16,554 3,47,20,12,726.66
Jul-11 3,09,89,20,538 3,32,90,69,343.79
Aug-11 2,40,44,52,093 3,22,63,60,503.36
Sep-11 4,55,67,08,900 4,63,10,64,011.76
Oct-11 3,15,35,64,207 3,16,09,78,468.53
Nov-11 3,90,77,88,997 4,12,88,39,448.11
Dec-11 4,08,59,57,171 4,49,64,64,098.75
Jan-12 3,80,88,82,269 3,78,57,92,930.88
Feb-12 2,94,22,76,552 3,43,18,83,322.23
Mar-12 3,03,70,12,345 5,87,46,14,948.13
CORRELATION ANALYSIS
Results and Analysis
Correlation Matrix
VARIABLES SALES COLLECTIONS
SALES 1
COLLECTIONS 0.2480 1

The table mentioned above displays the correlation values between the sales of the company
and its collections for the past 5 years in a monthly basis. The sale of the company is
positively correlated with the collections of the company. The positive relationship between
sales and collection indicates that the receivables management of the company is healthy.
Sales and collections are positively correlated consisting of R value of 0.2480. We can hence
conclude that the relationship between these two variables is perfect.
DESCRIPTIVE STATISTICS
CREDIT SALES COLLECTIONS
Mean 2069435009 Mean 2991205403
Standard Error 135925168.9 Standard Error 229074930.8
Median 1686056694 Median 2915112525
Mode #N/A Mode 1238675676
Standard Deviation 1070275850 Standard
Deviation
1803737809
Sample Variance 1.14549E+18 Sample Variance 3.25347E+18
Kurtosis -0.707389261 Kurtosis 11.28228179
Skewness 0.618108878 Skewness 2.590407151
Range 4206578123 Range 12145314712
Minimum 350130777 Minimum 13350761.03
Maximum 4556708900 Maximum 12158665473
Sum 1.28305E+11 Sum 1.85455E+11
Count 62 Count 62
Largest(1) 4556708900 Largest(1) 12158665473
Smallest(1) 350130777 Smallest(1) 13350761.03

MOVING AVERAGE EXAMINATION FOR CREDIT SALES OF 5
YEARS
Moving average is the analysis of showing the variable which by average of the past event
and represent the variables in percentage of movement. It helps in defining the trend of sales
and also helps in sales forecasting too.
The table below shows 3 monthly and 6 monthly moving averages of
the credit sales from January 2010 to March2012
Credit Sales 3 Monthly Moving
Averages
6 Monthly Moving
Averages
Jan-10
35,01,30,777.00
#N/A #N/A
Feb-10
1,12,91,28,498.40
#N/A #N/A
Mar-10
2,82,00,12,232.80
#N/A #N/A
Apr-10
2,83,14,81,817.00 2,45,25,06,145.30
#N/A
May-10
3,02,94,02,033.00 2,75,28,67,874.45
#N/A
Jun-10
2,33,05,75,415.00 2,92,87,85,987.25
#N/A
Jul-10
3,52,36,84,684.00 2,75,05,28,708.75 2,54,03,91,054.74
Aug-10
2,11,84,52,703.00 2,43,36,32,905.50 2,63,07,75,386.40
Sep-10
1,76,18,18,820.00 2,59,99,09,540.65 2,65,58,71,061.09
Oct-10
2,99,56,81,955.60 2,49,86,76,548.90 2,69,69,09,761.09
Nov-10
3,11,87,52,717.00 3,04,57,20,681.55 2,87,93,70,789.74
Dec-10
4,30,66,29,233.60 3,52,07,53,155.80 3,06,95,66,975.74
Jan-11
3,66,19,48,717.00 3,69,70,69,924.50 3,09,48,90,453.80
Feb-11
3,70,09,49,030.40 3,91,22,70,833.30 3,36,07,62,403.69

Mar-11
3,97,95,56,352.20 3,58,46,10,289.00 3,53,70,72,151.74
Apr-11
2,99,59,87,056 3,30,35,29,896.65 3,47,16,35,750.60
May-11
2,53,76,27,148 3,15,63,96,777.55 3,47,07,30,584.46
Jun-11
3,11,24,16,554 2,93,62,37,823.90 3,29,82,00,770.74
Jul-11
3,09,89,20,538 2,78,83,54,083.05 3,11,85,58,395.89
Aug-11
2,40,44,52,093 3,29,31,24,521.20 3,24,08,09,805.86
Sep-11
4,55,67,08,900 3,30,34,11,434.55 3,12,28,10,928.03
Oct-11
3,15,35,64,207 3,50,56,28,549.50 3,25,30,68,348.17
Nov-11
3,90,77,88,997 3,92,60,04,818.95 3,47,42,58,351.49
Dec-11
4,08,59,57,171 3,73,90,48,161.25 3,57,37,53,453.69
Jan-12
3,80,88,82,269 3,68,62,26,247.35 3,55,13,75,741.43
Feb-12
2,94,22,76,552 3,46,85,32,084.15 3,64,17,41,491.66
Mar-12
3,03,70,12,345
Apr-12
May-12
Jun-12
0
500000000
1E+09
1.5E+09
2E+09
2.5E+09
3E+09
3.5E+09
4E+09
4.5E+09
0 5 10 15 20 25 30
Value
Data Point
Moving Average
Forecast

Inference from the Moving Average Examination:
In the above table we see the moving averages of the credit sales of the past 5
years. We can conclude that the sales are on an increasing trend but it may not
be a good future indicator as sales may not remain the same in the future.
MONTHLY SALES AS A PERCENTAGE OF TOTAL YEARLY
SALES
Year CreditSales % of Total Sales
Jan-08 1,07,29,06,402.02 8.07%
Feb-08 86,35,52,119.50 6.49%
Mar-08 1,21,46,42,106.72 9.13%
Apr-08 93,50,63,501.04 7.03%
May-08 1,58,94,41,407.40 11.95%
Jun-08 1,60,08,25,619.38 12.04%
Jul-08 2,08,66,75,308.27 15.69%
Aug-08 57,40,26,580.13 4.32%
Sep-08 58,15,28,535.00 4.37%
Oct-08 1,01,45,01,915.00 7.63%
Nov-08 81,40,62,375.00 6.12%
Dec-08 95,00,18,829.41 7.14%
TOTAL FOR 2008 13,29,72,44,698.87 100.00%
Jan-09 1,13,12,24,847.18 6.41%
Feb-09 1,26,73,42,758.20 7.18%
Mar-09 1,18,61,03,100.00 6.72%
Apr-09 1,64,44,71,582.01 9.32%
May-09 1,79,30,46,225.04 10.16%
Jun-09 1,70,21,98,688.34 9.64%
Jul-09 1,12,57,72,929.90 6.38%
Aug-09 1,85,27,85,387.96 10.50%
Sep-09 1,63,17,10,086.14 9.24%
Oct-09 1,71,08,37,038.91 9.69%
Nov-09 1,33,35,36,182.00 7.56%
Dec-09 1,27,12,96,338.00 7.20%
TOTAL FOR 2009 17,65,03,25,163.68 100.00%
Jan-10 35,01,30,777.00 1.15%
Feb-10 1,12,91,28,498.40 3.72%
Mar-10 2,82,00,12,232.80 9.30%

Apr-10 2,83,14,81,817.00 9.34%
May-10 3,02,94,02,033.00 9.99%
Jun-10 2,33,05,75,415.00 7.69%
Jul-10 3,52,36,84,684.00 11.62%
Aug-10 2,11,84,52,703.00 6.99%
Sep-10 1,76,18,18,820.00 5.81%
Oct-10 2,99,56,81,955.60 9.88%
Nov-10 3,11,87,52,717.00 10.29%
Dec-10 4,30,66,29,233.60 14.21%
TOTAL FOR 2010 30,31,57,50,886.40 100.00%
Jan-11 3,66,19,48,717.00 8.89%
Feb-11 3,70,09,49,030.40 8.98%
Mar-11 3,97,95,56,352.20 9.66%
Apr-11 2,99,59,87,056 7.27%
May-11 2,53,76,27,148 6.16%
Jun-11 3,11,24,16,554 7.56%
Jul-11 3,09,89,20,538 7.52%
Aug-11 2,40,44,52,093 5.84%
Sep-11 4,55,67,08,900 11.06%
Oct-11 3,15,35,64,207 7.66%
Nov-11 3,90,77,88,997 9.49%
Dec-11 4,08,59,57,171 9.92%
TOTAL FOR 2011 41,19,58,76,764 100.00%
SALES FORECASTING
Sale is the life blood of any business. With an accurate sales forecast one can plan for the
future. It is a crucial part of financial planning in a business. It is a self assessment tool to
predict future performance. Sales forecasting uses past figures to predict short term or long
term performance. Without sales forecast it becomes difficult to steer the company in the
right direction. The overall effect of accurate sales forecasting helps a business to run
efficiently and increasing profit and serving its customers better.

SALES FORECASTING
MONTH LAST YEAR CHANGE FORECAST
Jan-08
1,07,29,06,402.02
5.00% 5,36,45,320.10
Feb-08
86,35,52,119.50
5.00% 4,31,77,605.98
Mar-08
1,21,46,42,106.72
5.00% 6,07,32,105.34
Apr-08
93,50,63,501.04
5.00% 4,67,53,175.05
May-08
1,58,94,41,407.40
5.00% 7,94,72,070.37
Jun-08
1,60,08,25,619.38
5.00% 8,00,41,280.97
Jul-08
2,08,66,75,308.27
5.00% 10,43,33,765.41
Aug-08
57,40,26,580.13
5.00% 2,87,01,329.01
Sep-08
58,15,28,535.00
5.00% 2,90,76,426.75
Oct-08
1,01,45,01,915.00
5.00% 5,07,25,095.75
Nov-08
81,40,62,375.00
5.00% 4,07,03,118.75
Dec-08
95,00,18,829.41
5.00% 4,75,00,941.47
Jan-09
1,13,12,24,847.18
5.00% 5,65,61,242.36
Feb-09
1,26,73,42,758.20
5.00% 6,33,67,137.91
Mar-09
1,18,61,03,100.00
5.00% 5,93,05,155.00
Apr-09
1,64,44,71,582.01
5.00% 8,22,23,579.10
May-09
1,79,30,46,225.04
5.00% 8,96,52,311.25
Jun-09
1,70,21,98,688.34
5.00% 8,51,09,934.42
Jul-09
1,12,57,72,929.90
5.00% 5,62,88,646.50
Aug-09
1,85,27,85,387.96
5.00% 9,26,39,269.40
Sep-09
1,63,17,10,086.14
5.00% 8,15,85,504.31
Oct-09
1,71,08,37,038.91
5.00% 8,55,41,851.95
Nov-09
1,33,35,36,182.00
5.00% 6,66,76,809.10
Dec-09
1,27,12,96,338.00
5.00% 6,35,64,816.90
Jan-10 35,01,30,777.00 5.00% 1,75,06,538.85
Feb-10 1,12,91,28,498.40 5.00% 5,64,56,424.92

Mar-10 2,82,00,12,232.80 5.00% 14,10,00,611.64
Apr-10 2,83,14,81,817.00 5.00% 14,15,74,090.85
May-10 3,02,94,02,033.00 5.00% 15,14,70,101.65
Jun-10 2,33,05,75,415.00 5.00% 11,65,28,770.75
Jul-10 3,52,36,84,684.00 5.00% 17,61,84,234.20
Aug-10 2,11,84,52,703.00 5.00% 10,59,22,635.15
Sep-10 1,76,18,18,820.00 5.00% 8,80,90,941.00
Oct-10 2,99,56,81,955.60 5.00% 14,97,84,097.78
Nov-10 3,11,87,52,717.00 5.00% 15,59,37,635.85
Dec-10 4,30,66,29,233.60 5.00% 21,53,31,461.68
Jan-11 3,66,19,48,717.00 5.00% 18,30,97,435.85
Feb-11 3,70,09,49,030.40 5.00% 18,50,47,451.52
Mar-11 3,97,95,56,352.20 5.00% 19,89,77,817.61
Apr-11 2,99,59,87,056 5.00% 14,97,99,352.82
May-11 2,53,76,27,148 5.00% 12,68,81,357.38
Jun-11 3,11,24,16,554 5.00% 15,56,20,827.70
Jul-11 3,09,89,20,538 5.00% 15,49,46,026.88
Aug-11 2,40,44,52,093 5.00% 12,02,22,604.65
Sep-11 4,55,67,08,900 5.00% 22,78,35,445.01
Oct-11 3,15,35,64,207 5.00% 15,76,78,210.37
Nov-11 3,90,77,88,997 5.00% 19,53,89,449.87
Dec-11 4,08,59,57,171 5.00% 20,42,97,858.54
-
1,02,45,91,97,512.95 5,12,29,59,875.65

CASH MANAGEMENT
AT
MCC PTA INDIA CORP. PRIVATE
LIMITED

CASH MANAGEMENT AT MCC PTA INDIA CORP.
PRIVATE LIMITED
Cash is the most liquid asset, and it is referred to be the life blood of a business
enterprise. Its efficient management is very crucial to the solvency of the business because
cash is the focal point of the fund flows in a business. Larger cash and bank balances indicate
higher liquidity position of a company and if cash is not put in a bank it does not fetch any
return to the company. Generally, the higher liquidity position attained by holding a large
amount of cash will result in lower profitability and when it is put in banks it fetches profits.
FACTORS FOR EFFICIENT CASH MANAGEMENT
1) Prompt Billing and Mailing
A time lag occurs from the date of dispatching goods to the date of preparing invoice
documents and mailing the same to the customers. So if this time gap can be
minimized remittances can be expected early.
2) Collection of Cheques and Remittances of Cash
Delay in the receipt of cheques and depositing the same in the bank will result in
delayed cash realization. Delay can be reduced by collecting and depositing cash/
cheques from customers.
3) Centralized Purchases and Payments to Suppliers
If there are bulk purchases then there is a scope to obtain purchase discounts on
certain limits which helps to reduce the cost. If cash receipts get consolidated at the
head office the disbursement schedule can be more effectively implemented. Under
the centralized purchase system arrangements can be made with the supplier’s for
direct shipment of materials to the company’s units located at different parts. This will
reduce transportation costs and other related costs.

CASH MANAGEMENT CYCLE
REASONS FOR HOLDING CASH
The firm needs to hold cash for three main motives:
Transaction motive-
The firm requires holding cash to conduct its business in the ordinary course. The firm needs
cash to make payments, make various purchases and run certain operations.
Precautionary motive-
The firm needs to hold cash to meet certain contingencies in the future. It provides a cushion
or buffer to withstand some unexpected emergency.
Speculative motive-
The firm needs to hold cash for investing in profit-making opportunities as and when they
arise. The firm may speculate on material’s prices and if the prices are supposed to fall the
firm can postpone materials’ purchasing and make purchases in the future when the prices
fall.

Working Capital & Financial Analysis of MCC PTA India

Working Capital & Financial Analysis of MCC PTA India

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