1. The document presents an analysis of different forecast models for Kota Fibres Ltd, an Indian yarn manufacturer, to address cash flow issues. 2. Key models analyzed include acquiring a new client, reducing inventory levels, a supplier's just-in-time proposal, and improving production efficiency. 3. The unified model combining multiple changes produced the highest projected net profit of 2,274,799 rupees and lowest debt ratio, making it the recommended model to improve Kota Fibres' financial performance and secure future bank loans.

1. LOGO
Kota Fibres
Syndicate 3
Tomi Kuspratama - 29113021
Christian Hamonangan – 29113025
Mattheus Biondi – 29113056
Aditya Ismoyo Achmad - 29113065
Irsyad Ahmadi – 29113072
Lea Shaula Salim – 29113126

2. LOGO
O v e r v i e w
Suppliers
KOTA
FIBRES
LTD.
Merchants End
User
Mills
Polyester Pellets
and other Raw
Materials
Spools of
Yarn
Textiles
Sari’s
and
Textiles

3. LOGO
KOTA FIBRES Ltd
• Growing Yarn Industry with expected annual
demand increase of 15%
• Established Yarn manufacturer since 1962
• Annual sales growth rate 18%
• Inventory policy 60 days
• Credit trem to Distributor 45 days
90.9 million Rupees in projected sales

4. LOGO
The Major Concern
KOTA faces ONE major concern
Cash flow
Cannot Pay Excise Tax
Too Much borrowing
money to bank

5. LOGO
Cashflow is out of sync!
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
Sales
A/R
Inv
A/P
N/P

6. The following issues surfaced in 2001
with Kota Fibres, Ltd.:
LOGO
• 1. Payment of excise tax to move their product
2. Line of credit not being repaid according to the
term.
3. Request for new loans from All-India Bank & Trust
Company.
4. Due to inflation, interest rate may be higher in
upcoming year on the loans

7. LOGO
Forecast Assumption 2001
Exhibit 11
KOTA FIBRES, LTD.
Assumptions
Debt Balance Summary
Jan '01 1,146,268
June '01 32,950,665
Dec '01 3,463,701
Ratio of:
Income Tax/Profit Before Tax 30%
Excise Tax/Sales 15%
This Month Collections of Last Month's Sales 40%
This Month Collections of Month-before-Last Sales 60%
Purchases/ Sales two months later 55%
Wages/Purchases 34%
Annual Operating Expenses/Annual Sales 6.00%
Capital Expenditures (every third month) 350,000
Interest Rate on Borrowings (and deposits) 14.5%
Minimum Cash Balance 750,000
Depreciation/Gross PP&E (per year) 10%
(per month) 0.83%
Dividends Paid (every third month) 500,000

8. LOGO
Exhibit 3
KOTA FIBRES, LTD.
Historical Balance
Sheets (in Rupees)
2000 2001
(Actual) (Forecast)
Cash 762,323 750,000
Accounts Receivable 2,672,729 3,715,152
Inventories 1,249,185 2,225,373
Total Current Assets 4,684,237 6,690,525
Gross PP&E 10,095,646 11,495,646
Accumulated
Depreciation 1,484,278 2,558,009
Net PP&E 8,611,368 8,937,637
Total Assets 13,295,604 15,628,161
Accounts Payable 759,535 1,157,298
Notes to Bank (Deposits
at Bank) 684,102 3,463,701
Accrued Taxes 0 (180,654)
Total Current
Liabilities 1,443,637 4,440,345
Owners' Equity 11,851,967 11,187,816
Total Liabilities and
Equity 13,295,604 15,628,161

9. LOGO
Memos From Management
• Field Sales Manager, the extended credit term of 80 days
net requested by Ponticherry Textiles
• Transportation Manager, proposed raw inventory
requirement from 60 days to 30 days.
• Purchasing Agent, new supplier willing to provide “just in
time” inventory for 35% of material purchase
• Operation Manager, estimate production
efficiency will gain several advantages:
– GPM would rise 2 – 3 %, refelcting
labor saving and production efficiencies

10. LOGO
Critical Questioning
• Why the company still lend the money to the bank?
Beside, in 2000 the company has a good financial
condition or in state gaining profit.
• Mrs. Pundir believe if we stick on the Mr. Metha
forecast model, the bank will not lend the money
again to us. So, Mrs. Pundir wants to modified the
forecast model. Which is the best modified forecast
model for our company?

11. LOGO
The Result (Original Model)
ORIGINAL MODEL (MR MEHTA)
Origin Model
Base Case
Debt Balance Summary
Early Year 2001 838,005
Mid Year 2001 33,009,219
End Year 2001 3,054,055
Gross Sales 90,900,108
Excise Taxes 13,635,016
Net Sales 77,265,092
Cost of Goods Sold 66,993,380
Gross Profit 10,271,712
Operating Expenses 5,454,006
Depreciation 1,073,731
Interest Expense (Income) 1,816,638
Profit Before Taxes 1,908,354
Income Taxes 572,506
Net Profit 1,335,848
Balance New Borrowings 2,678,103
Note :
1. Net Profit vs Net Profit Original Model, it describe the different value (net profit) between original model with the modified model
2. Balance New Borrowing, Its describe the amount of money that company must borrowing to the bank in one year period to finance
the company business and operational activities.

12. LOGO
The Result (Pondicherry)
ACCUQIRED PONDICHERRY
Exihibit 4
Pondicherry
Debt Balance Summary
Early Year 2001 1,024,993
Mid Year 2001 35,804,700
End Year 2001 3,591,694
Gross Sales 96,900,108
Excise Taxes 14,535,016
Net Sales 82,365,092
Cost of Goods Sold 71,415,380
Gross Profit 10,949,712
Operating Expenses 5,814,006
Depreciation 1,073,731
Interest Expense (Income) 2,000,596
Profit Before Taxes 2,061,378
Income Taxes 618,413
Net Profit 1,442,965
Net Profit vs Net Profit Origin Model 107,116
Balance New Borrowings 2,407,591

13. LOGO
The Result (Inventory)
30 DAY INVENTORY
Exhibit 5
Inventory
Debt Balance Summary
Early Year 2001 848,785
Mid Year 2001 22,987,471
End Year 2001 2,533,979
Gross Sales 90,900,108
Excise Taxes 13,635,016
Net Sales 77,265,092
Cost of Goods Sold 66,993,380
Gross Profit 10,271,712
Operating Expenses 5,454,006
Depreciation 1,073,731
Interest Expense (Income) 1,297,873
Profit Before Taxes 2,446,101
Income Taxes 733,830
Net Profit 1,712,271
Net Profit vs Net Profit Origin Model 376,423
Balance New Borrowings 1,644,098

14. LOGO
The Result (Hibachi JIT)
HIBACHI JIT
Exhibit 6
Hibachi JIT
Debt Balance Summary
Early Year 2001 1,053,956
Mid Year 2001 25,873,621
End Year 2001 3,070,901
Gross Sales 90,900,108
Excise Taxes 13,635,016
Net Sales 77,265,092
Cost of Goods Sold 66,993,380
Gross Profit 10,271,712
Operating Expenses 5,454,006
Depreciation 1,073,731
Interest Expense (Income) 1,481,449
Profit Before Taxes 2,262,526
Income Taxes 678,758
Net Profit 1,583,768
Net Profit vs Net Profit Origin Model 247,920
Balance New Borrowings 2,181,020

15. LOGO
The Result (Report From OM)
EFFICIENCY CALCULATION
Exhibit 7
Report From OM
Debt Balance Summary
Early Year 2001 838,005
Mid Year 2001 33,009,219
End Year 2001 3,054,055
Gross Sales 90,900,108
Excise Taxes 13,635,016
Net Sales 77,265,092
Cost of Goods Sold 66,993,380
Gross Profit 10,579,864
Operating Expenses 5,454,006
Depreciation 1,073,731
Interest Expense (Income) 1,816,638
Profit Before Taxes 2,235,488
Income Taxes 670,646
Net Profit 1,564,841
Net Profit vs Net Profit Origin Model 228,993
Balance New Borrowings 2,678,103

16. LOGO
The Result (Unified Model)
MERGE MODEL
(Exhibit 4 + 5 + 6 +7)
Unified (P+I+H+E) Model
Debt Balance Summary
Early Year 2001 796,767
Mid Year 2001 20,079,404
End Year 2001 2,046,685
Gross Sales 96,900,108
Excise Taxes 14,535,016
Net Sales 82,365,092
Cost of Goods Sold 71,415,380
Gross Profit 11,278,204
Operating Expenses 5,814,006
Depreciation 1,073,731
Interest Expense (Income) 1,140,753
Profit Before Taxes 3,249,713
Income Taxes 974,914
Net Profit 2,274,799
Net Profit vs Net Profit Origin Model 938,951
Balance New Borrowings 1,691,074

17. LOGO
The Result (Comparasion Model)
Model Net Profit
Net Profit vs Net Profit
Origin Model
Balance New
Borrowings
Base Case 1,335,848 2,678,103
Pondicherry 1,442,965 107,116 2,407,591
Inventory 1,712,271 376,423 1,644,098
Hibachi JIT 1,583,768 247,920 2,181,020
Efficiency 1,564,841 228,993 2,678,103
Unified (P+I+H+E) Model 2,274,799 938,951 1,691,074

18. LOGO
Final Analysis
1. In inventory models based on comparasion model
Table, we see in comparasion model table the
value of “new balance borrowing” which is
1,644,098 in the lowest amount for the company
should lend the money to the bank.
2. In unified (Pondicherry + Inventory + Hibachi
+ Eficiency) models based on comparasion
model Table , we see in comparasion model table
the value of “ne net profit “ which is 2,274,799 are
in the highest amount for the company can gain in
the period 2001.

19. LOGO
Conclussion (Part 1)
1. If the company wants reduce the money
should lend to the bank as less as possible,
the forecast model we recommended to the
Mrs.Pundir are “Inventory Model”.
2. If the company wants had a good financial
performance, the model we recommended
to the Mrs.Pundir are “Unified Model”.
Which is provide the largest profit and can
be a good promised for submit the loan
proposal to the bank.

20. LOGO
Conclussion (Part 2)
MODEL DEBT RATIO
Inventory 61%
Unified 51%
1. The lowest debt ratio, it means the better financial company
performance and the better company has the power to pay
the debt.
2. So, we concluded the unified model is the best model. We
recommended Mrs. Pundir to accept Pondicherry textile
proposal, changing raw material requirement 30 days,
accept Hibachi’s proposal just in time, and do the production
efficiencies reflecting the labor service.